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Writing - s2 of 1989 Act

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Rectification

Munt v Beasley
[2006] EWCA Civ 370

Facts

This case concerned a house divided into two flats. The freeholder landlord lived on the ground floor. The tenant held a long lease of and lived in the flat above. A recipe for disaster in many cases. The main dispute concerned the use of the roof space. The tenant had converted the loft so that he could make use of it. The landlord objected. As a matter of construction of the lease the loft space was not part of the demise.

Decision

The CA held that the lease should be rectified so as to include the loft. "Access to loft space" was expressly mentioned in the sales particulars and the landlord admitted in his evidence that he believed that the lease included the loft (see para 35).

The principle

The following statement of principle is to be found in the judgment of Mummery LJ:
    "I would also accept Mr Morshead's submission that the recorder was wrong to treat "an outward expression of accord" as a strict legal requirement for rectification in a case such as this, where the party resisting rectification has in fact admitted .. that his true state of belief when he entered into the transaction was the same as that of the other party and there was therefore a continuing common intention which, by mistake, was not given effect in the relevant legal document. I agree with the trend in recent cases to treat the expression 'outward expression of accord' more as an evidential factor rather than a strict legal requirement in all cases of rectification"

Oun v Ahmad
[2008] EWHC 545 (Ch)

Summary

This case illustrates that rectification is not always available just because the parties have made a mistake in connection with a document. The parties� only mistake was as to the effect of the contract (it was in fact unenforceable because it failed to comply with the requirements of s2 of the Law of Property (Miscellaneous Provisions) Act 1989), but the omission from the contract of how the price was to be apportioned was deliberate on their part and so could not be rectified.

The facts

This case concerned a contract for the sale of land, fixtures and fittings and the goodwill of a business for £75,000. A second handwritten document indicated how the price was to be apportioned between the land, the fixtures and fittings and the goodwill, and the parties expressly agreed that how the price was to be apportioned should not be recorded within the contract itself.

The decision

Morgan J. held that the contract could not be rectified so as to contain details of how the price was to be apportioned, since the parties had expressly agreed that this should not be recorded within the contract. This meant that the contract did not comply with s 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (which requires that all the terms of the transaction should be included within a single document) and so was not binding. Although it was argued that a mistake of law had therefore been made by the parties in relation to the effect of the contract, Morgan J. held that rectification was not available because of the parties' express agreement, notwithstanding their mistake of law.


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