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RECTIFICATION

Rectification is an equitable remedy that is normally granted in a situation where a written instrument does not accord with the true agreement of the parties.  If by mistake, a written instrument does not accord with the true agreement of the parties, equity has the power to reform or rectify that instrument so as to make it accord with the true agreement.

What is rectified is not a mistake in the transaction itself (the agreement or contract), but rather a mistake in the way which that transaction has been expressed in writing.  If for example the intention or the agreement is agreed at 1.5 million as the purchase price, if the document shows a different price of 150,000 what is being rectified is the way the agreement has been translated in writing.

The mistake that has been analysed in the case of Mackenzie, where it was stated that ‘courts of equity do not rectify contracts, they only rectify instruments purporting to have been made in pursuance of the terms of the contract.”

Whiteside v. Whiteside
Evershed M.R. stated that Rectification is a discretionary remedy “which must be cautiously watched and jealously guarded.

The rules are strict and the courts are hesitant to give rectification remedy.

For remedy of rectification to apply there must be:

1.            Absence of an alternative remedy rectification will not be granted e.g
(a)          addition in instrument-collateral contract;  (
(b)          parties voluntarily agree to rectify instrument;
(c)          obvious clerical, typographical or grammatical error- court corrects as a matter of construction.

2.            Mistake

Parties must show final and genuine agreement and that the instrument failed to record it.  Oral evidence is admissible to prove agreement.  In order to show that the written instrument does not reflect what the parties agreed on.

Remedy exists to correct, not improve instrument.

Gross Mistake – can be
  • Common mistake – common to both or all parties to the instrument – rectification will be granted as a general rule.
  • Unilateral mistake – one party incorrectly records a term of the agreement; term is accepted bona fide by the other party.
  • The general rule is no rectification.

EXCEPTIONS

·         Fraud
·         Estoppel – there is no deliberate intention to defraud but the mistake is not brought to the attention of the other party.
·         Equitable election – Paget v. Marshall (1884) 28 Ch. D – the court puts defendant where he has to choose rectification or rescission.
·         Unilateral transactions e.g. Deed Poll.


Riverlate Properties Ltd v. Paul

Roberts & Co Ltd v Leicestershire

Burden of Proof of Mistake

Very high standard of proof.  Strong irrefragable evidence, strong unshakeable evidence with a high degree of conviction

There must be evidence of the clearest and most satisfactory description that will establish the mistake with a high degree of conviction and leave no fair and reasonable doubt that the deed does not embody the final intention of the parties.

Difficult in particular circumstances e.g.

  • Passage of years – Fredensen v. Rothschild – lapse of over 33 years.  Held: Time begins to run from discovery of mistake
  • Where the Plaintiff is a solicitor who drafted the instrument: Ball v Storie

Examples of instruments that the court will rectify
  • Mercantile documents e.g. policies of marine insurance.  Mackenzie v. Coulson
  • Bills of exchange
  • Transfer of shares forms
  • Conveyancing documents
  • Consent order (agreement inter parties)
  • Land Register – RLA Cap 300 Section 143 – deals

Instruments that will not be rectified
·         Memorandum and Articles of Association of a company.  These have provisions stipulating how they are to be altered or amended.
·         A Will cannot be rectified except for fraud; where there is not fraud – a codicil is prepared.
·         The Constitution. There is a special procedure for amending the constitution and courts cannot do that
·         Acts of Parliament – have a procedure for amending them;

RECTIFICATION DEFENCES

There are certain defences that can be pleaded by the defendant against an order to rectification

1.            Contract no longer capable of performance – Equity does not act in vain.  (for example where the subject matter is destroyed i.e. vegetables have perished or goods lost at sea)

2.            It cannot be granted to the prejudice of bona fide purchaser for value without notice:  Smith v. Jones.

3.            Laches or acquiescence: Beale v Kyte

·         Carelessness of P is no defence, only increases burden of proof of mistake but cannot be used as a defence to defeat a claim of rectification  -

EFFECT OF RECTIFICATION ORDER

·         No new document needs to be executed;
·         Copy of court order endorsed on instrument being rectified;
·         Decree has retrospective

 
 
 

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