Daventry District Council v Daventry & District Housing Ltd

Daventry District Council v Daventry & District Housing Ltd

The majority held that, applying the objective test for rectification for mutual mistake as set out in Chartbrook, the parties shared a mistaken belief that the executed contract reflected their prior accord, when in fact it did not. The inclusion of clause 14.10.3 was not an objective renegotiation but a drafting error, and the conduct of DDH's agent contributed to the misunderstanding. Therefore, rectification should be granted to reflect the prior accord, making DDH liable for the pension deficit.

Parties
Appellant: Daventry District Council; Respondent: Daventry & District Housing Limited
Jurisdiction
England and Wales
Judgment Date
09 May 2011
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court
Outcome
Appeal allowed
Legal Topics
Rectification of Contracts, Mutual Mistake, Unilateral Mistake, Interpretation of Contracts, Equitable Remedies
Contract Law Equity Rectification of Contracts Mutual Mistake Unilateral Mistake Interpretation of Contracts Equitable Remedies

Case Brief

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Parties

Daventry District Council

Appellant

Daventry & District Housing Limited

Respondent

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court

Legal Issues

  1. 1 Whether the Transfer Contract should be rectified to reflect the parties' prior accord regarding liability for a pension deficit
  2. 2 Whether there was a mutual or unilateral mistake justifying rectification
  3. 3 Whether the parties' conduct and communications objectively indicated a change from the prior accord

Ratio Decidendi

The majority held that, applying the objective test for rectification for mutual mistake as set out in Chartbrook, the parties shared a mistaken belief that the executed contract reflected their prior accord, when in fact it did not. The inclusion of clause 14.10.3 was not an objective renegotiation but a drafting error, and the conduct of DDH's agent contributed to the misunderstanding. Therefore, rectification should be granted to reflect the prior accord, making DDH liable for the pension deficit.

Court Disposition

Appeal allowed

Orders

  • Rectification of the Transfer Contract to reflect the parties' prior accord, subject to further argument on precise wording if not agreed