“BACKGROUND (A) By a written agreement dated24 June 2011 , Party 1 sought to retain Party 3 for the provision of the services of Party 2 who at all material times was a director of Party 3. A true copy of the Agreement is attached as Schedule 1 to this deed. (B) It was at all material times the common intention of all parties that Party 1 would engage the services of Party 3 by entering into a retainer contract with Party 3 the terms of which had been agreed prior to the date of execution of the Agreement. It was further intended and it was the understanding of all parties that Party 2 would in his capacity as director of Party 3 sign the Agreement and in that capacity as director would bind Party 3 to the contractual terms which had been agreed with Party 1 (C) For the avoidance of any doubt, at all material times the Parties have regarded and acted on the basis that the Agreement was entered in to and operated as between Party 1 and Party 3. AGREED TERMS 1. CONFIRMATION / RECTIFICATION All references within the Agreement to 'You' and 'Your' were at all times a reference to and intended as a reference to Party 3. The Parties hereby mutually agree that the Agreement, properly construed, constitutes an agreement entered in to as between Party 1 and Party 3 and for the avoidance of any doubt, with effect from the date of the Agreement, the parties confirm their Intention was that Party 1 was to contract with Party 3 and, so far as may be necessary to give effect to that intention, the Parties repeat and make that assertion under the terms of this Deed of Rectification.”
“[22] In East v Pantiles (Plant Hire) Ltd (1981) 263 EG 61 Brightman LJ stated the conditions for what he called ‘correction of mistakes by construction’: ‘Two conditions must be satisfied: first, there must be a clear mistake on the face of the instrument; secondly, it must be clear what correction ought to be made in order to cure the mistake. If those conditions are satisfied, then the correction is made as a matter of construction.' ‘Two conditions must be satisfied: first, there must be a clear mistake on the face of the instrument; secondly, it must be clear what correction ought to be made in order to cure the mistake. If those conditions are satisfied, then the correction is made as a matter of construction.' [23] Subject to two qualifications, both of which are explained by Carnwath LJ in his admirable judgment in KPMG LLP v Network Rail Infrastructure Ltd [2007] Bus LR 1336, I would accept this statement, which is in my opinion no more than an expression of the common sense view that we do not readily accept that people have made mistakes in formal documents. The first qualification is that ‘correction of mistakes by construction’ is not a separate branch of the law, a summary version of an action for rectification. As Carnwath LJ said, at p 1351, para 50: ‘Both in the judgment, and in the arguments before us, there was a tendency to deal separately with correction of mistakes and construing the paragraph ‘as it stands’, as though they were distinct exercises. In my view, they are simply aspects of the single task of interpreting the agreement in its context, in order to get as close as possible to the meaning which the parties intended.’ [24] The second qualification concerns the words ‘on the face of the instrument’. I agree with Carnwath LJ, paras 44-50, that in deciding whether there is a clear mistake, the court is not confined to reading the document without regard to its background or context. As the exercise is part of the single task of interpretation, the background and context must always be taken into consideration. [25] What is clear from these cases is that there is not, so to speak, a limit to the amount of red ink or verbal rearrangement or correction which the court is allowed. All that is required is that it should be clear that something has gone wrong with the language and that it should be clear what a reasonable person would have understood the parties to have meant. In my opinion, both of these requirements are satisfied.”
“The party seeking rectification must show that: (1) the parties had a common continuing intention, whether or not amounting to an agreement, in respect of a particular matter in the instrument to be rectified; (2) there was an outward expression of accord; (3) the intention continued at the time of the execution of the instrument sought to be rectified; (4) by mistake, the instrument did not reflect that common intention.”
“… we are unable to accept that the objective test of rectification for common mistake articulated in Lord Hoffmann’s obiter remarks in the Chartbrook case correctly states the law. We consider that we are bound by authority, which also accords with sound legal principle and policy, to hold that, before a written contract may be rectified on the basis of a common mistake, it is necessary to show either (1) that the document fails to give effect to a prior concluded contract or (2) that, when they executed the document, the parties had a common intention in respect of a particular matter which, by mistake, the document did not accurately record. In the latter case it is necessary to show not only that each party to the contract had the same actual intention with regard to the relevant matter, but also that there was an ‘outward expression of accord’ - meaning that, as a result of communication between them, the parties understood each other to share that intention.”
“… the communication necessary to establish an outwardly expressed accord or common intention which each party understands the other to share need not involve declaring that agreement or intention in express terms. The shared understanding may be tacit. … This point is summarised in Chitty on Contracts, 33rd ed (2018), vol 1, para 3-064, in the statement that an accord ‘may include understandings that are so obvious as to go without saying, or that were reached without being spelled out in so many words’.”
“With the final year of Michael’s 3 year contract with TMG about to kick off, and the success of the current arrangement, we would like to touch base regarding extending the deal past Sept 30, 2011.”
“I have spoken to Michael over the weekend and of course we here are very pleased with the way he has settled into his new media life and the relationship between the Telegraph and Michael. I would be delighted to move into contract discussions with you on a new contract that would keep Michael with the Telegraph for the foreseeable future.”
“Ben tells me discussions have progressed re MV’s next contract with TMG, so just wanted to touch base with you on that and to see where we are re figure and contributions.”
“Just to keep you updated, only delay in getting a contract to you is that Executive Director’s PA is off ill, so it looks like it will be middle of next week until we get a draft across to you. Terms to be included will be 4 year deal,£90k per annum year one plus RPI each year after, no fixed number of articles. Content as regards Fantasy Cricket tbc.”
“All looks in order”
“Sorry for the delays on this. The person who arranges issuing of new contracts is off with bronchitis, so scheduled to be off for a while. I’ll speak to Legal and see if I can amend the last contract as a first draft.”
“How we looking at getting the draft across to me?” (8) By an email sent on30 March 2011 , Mr Reoch told Mr Fairbrother: “Sorry again for delay. The relevant person in Editorial is off sick for the foreseeable which has caused issues as regards contracts. I have requested an emailed copy of the current MV contract from Legal, which I will amend and forward to you for checking. We will go off the general terms agreed with you and ISM’s lawyers on the first contract (which should really simplify the process) so will forward you the draft tomorrow for checking”
“Again, sorry for the delay. Draft of the new 4 year contract attached as per terms agreed previously”
“I am happy with the contract. Can you send two copies to our office for signing and we will return a copy.”
“… a manifestation of one very important fact in this case; this is that the 2011 agreement was not some new contract made between parties for the first time - it was made because the two previous contracts, each of one year's duration, were about to expire, and in circumstances where there had been considerable discussion and negotiations leading to the adoption of the buyer's agent form right at the beginning in 2009. It is therefore a reasonable assumption to make, at least as a starting point, that one would expect the parties to contract on essentially the same terms going forward, or at least to ask rhetorically why they would now choose to contract on a different basis, especially one which was inconsistent with the way in which AML operated.”
“Where, on the. other hand, the document is found not to carry out the true intention of the parties, and rectification, whilst enabling that intention to be carried out, incidentally gives or may give, one of the parties a tax advantage, the case is not an authority for saying that such presence or possibility of such tax advantage, is a bar to relief.”
“Pausing there, I think it is clear from what Lord Justice Etherton was saying that at least in the case of mutual or common, as opposed to unilateral mistake, it is very hard to see how there can be, save perhaps exceptionally, the operation of a discretion to exclude relief once the court has found (a) that the parties had a continuing common intention, (b) that the written document did not reflect it, and (c) that state of affairs had come about as a result of a mistake made by both of them. I should only add for the sake of completeness that at paragraph 223 of his judgment Lord Neuberger contemplated that there could be cases, even where there is rectification for common mistake, where the court could decide as a matter of discretion not to award it, although he did not consider that this would apply on the facts of Daventry.”
“In the present case, the claim to rectification was formulated in response to a claim by HMRC for additional inheritance tax. In my judgment, the effect of the authorities is that the court cannot rectify a document merely because it fails to achieve the fiscal objectives of the parties to it. A mere misapprehension as to the tax consequences of executing a particular document will not justify an order for its rectification. The specific intention of the parties as to how the fiscal objective was to be achieved must be shown if the court is to order rectification. The court will order the rectification of a document only if it is satisfied by cogent evidence (sufficient to counteract the effect of the parties’ to the relevant document) that: (1) the document does not give effect to the true agreement or arrangement between the parties, and (2) there is an issue, capable of being contested, between the parties; it being irrelevant, first, that rectification of the document is sought or consented to by all of them; and, secondly, that rectification is desired because it has beneficial fiscal consequences. Conversely, the court will not order rectification of a document if the parties’ rights will be unaffected, and if the only effect of the order will be to secure a fiscal benefit for one or more of them.”
“On the basis of the law as explained by Judge Hodge and usefully, in my judgment, supplemented by the two judgments of Graham J from which I have quoted, I am entirely satisfied that this is a case in which I can and should make an order for rectification, mirroring the terms of the deed of rectification which has already been executed by the parties. This is not a case where such relief is sought in order belatedly to achieve tax advantage in the abstract. Rather, just as Judge Hodge found on the facts of his case, this is one where the claimant has clearly and cogently demonstrated a specific common intention as to how those fiscal objectives were to be achieved, that is by severing a number of the joint tenancies that existed between John and Violet prior to John’s death, thereby ensuring that the estate of John at the time of his death contained assets at least matching the amount of the nil rate IHT band, and by taking advantage of that band by the granting of specific bequests in at least that sum.”
“… the court will not order rectification of a document if the parties’ rights will be unaffected, and if the only effect of the order will be to secure a fiscal benefit for one or more of them.”
“Where someone makes a mistake it is often difficult, or even impossible, to explain the mistake or expand on its nature, beyond identifying it as such. Misreading, muddle, carelessness, failure to engage, confusion are all possible explanations, but they do not take matters much further forward. As, for instance, with an act of negligence, one knows it when one sees it (at least sometimes), but it is often impossible to explain or expand on it. Often, the mistake or negligent act is almost by definition inexplicable, even by the person guilty of the negligent act or mistake - consider the familiar statement after the event along the lines ‘I simply cannot understand how I could have done/ not done/ thought/ not thought that’.”
“… the court will not order rectification of a document if the parties’ rights will be unaffected, and if the only effect of the order will be to secure a fiscal benefit for one or more of them.”
“In my judgment the principle established by these cases is that the court will make an order for the rectification of a document if satisfied that it does not give effect to the true agreement or arrangement between the parties, or to the true intention of the grantor or covenantor and if satisfied that there is an issue, capable of being contested, between the parties or between the covenantor or a grantor and the person he intended to benefit, it being irrelevant first that rectification of the document is sought or consented to by them all, and second that rectification is desired because it has beneficial fiscal consequences. On the other hand, the court will not order rectification of a document as between the parties or as between a grantor or covenantor and an intended beneficiary, if their rights will be unaffected and if the only effect of the order will be to secure a fiscal benefit.”