Summary

Where it was obvious not only that a mistake had been made in formulating the clause of a lease dealing with the right to terminate, but also obvious what that mistake was, the court would correct the mistake as a matter of construction.

Facts

The appellant tenant (T) appealed against the determination ((2005) EWHC 1369 (Ch)) of a preliminary question of the construction of a lease in favour of the respondent landlords (L). The lease was of commercial premises in London for a term of five years. Clause 10 of the lease provided that either party could terminate the lease at the end of the third year of the term by giving not less than six months' notice in writing provided that up to the termination date "in the case of a notice given by the landlord" the tenant had paid the rent and duly observed and performed the tenant's covenants. T purported to bring the lease to an end pursuant to that clause. L disputed the effectiveness of that notice on the grounds that T was in breach of its obligations under the lease as at the termination date and contended that the words "in the case of a notice given by the landlord" were nonsensical and should be read as if they said "in the case of a notice given by the tenant" or "in the case of a notice given to the landlord". The judge held that the word "landlord" in the proviso to clause 10 should be read as "tenant"; alternatively, if that were wrong, that clause 10 should be rectified to that effect. On appeal, T accepted that the clause as it stood was commercially nonsensical. T submitted that the substitution of landlord for tenant in the clause was not the only possible mistake and that it was possible to hypothesise another reasonable drafting error with the result that the clause was void for uncertainty if it could not be rectified.

Held

(1) As a matter of construction, the word "landlord" in clause 10 of the lease had to be construed as "tenant". That was what the parties must have intended; to give the word "landlord" its normal meaning would be absurd. There had been a mistake in drafting the clause. It was the kind of mistake that could easily be made by any draftsman. T's alternative hypothesis, which required a mistake in relation to whole lines of text rather than a single word, was fanciful. (2) It was not necessary to decide whether the judge was right to hold that the clause should be rectified but the majority inclined to the view that the four conditions for the rectification of a unilateral mistake were made out and that in the circumstances it did not matter that, unlike any previous case, the result of rectification would be to put the parties in a contractual position that they had never agreed since T's deliberate attempt to take advantage of the other side's obvious drafting error was inequitable, Thomas Bates & Son Ltd v Wyndhams (Lingerie) Ltd (1981) 125 SJ 52 considered.

Appeal dismissed.