KPMG LLP v Network Rail Infrastructure Ltd

KPMG LLP v Network Rail Infrastructure Ltd

The Court of Appeal held that Network Rail failed to prove by convincing evidence that the parties' intentions remained unchanged after the omission of the relevant words in the break clause, and thus rectification was not available. However, the court found that the lease should be construed, with reference to the 1974 draft lease, to correct the obvious mistake and give effect to the parties' intention of three break opportunities, all dependent on a rent review, rather than five as contended by KPMG.

Parties
Appellant: KPMG LLP; Respondent: Network Rail Infrastructure Limited
Jurisdiction
England and Wales
Judgment Date
27 April 2007
Procedural Posture
Civil Appeal / Appeal From Chancery Division to Court of Appeal
Outcome
Appeal dismissed
Legal Topics
Rectification of Contracts, Construction of Leases, Mistake in Contractual Documents, Break Clauses, Interpretation of Written Instruments
Contract Law Land Law Rectification of Contracts Construction of Leases Mistake in Contractual Documents Break Clauses Interpretation of Written Instruments

Case Brief

Summary, issues, holding and outcome

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Parties

KPMG LLP

Appellant

Network Rail Infrastructure Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From Chancery Division to Court of Appeal

Legal Issues

  1. 1 Whether the lease should be rectified to correct an omission in the break clause due to mutual mistake
  2. 2 Whether the lease, as drafted, provides three or five opportunities for the lessee to break the lease
  3. 3 Whether the court can correct the mistake by construction rather than rectification

Ratio Decidendi

The Court of Appeal held that Network Rail failed to prove by convincing evidence that the parties' intentions remained unchanged after the omission of the relevant words in the break clause, and thus rectification was not available. However, the court found that the lease should be construed, with reference to the 1974 draft lease, to correct the obvious mistake and give effect to the parties' intention of three break opportunities, all dependent on a rent review, rather than five as contended by KPMG.

Court Disposition

Appeal dismissed

Orders

  • The appeal by KPMG LLP is dismissed.