Rectification

Rectification is a discretionary equitable remedy which allows for the correction of an instrument which has failed to record the actual intentions of the parties to a contract. This a corrective, not speculative measure.

In MacKenzie v Coulson it was stated that while Courts of Equity do not rectify contracts they may and do rectify instruments purporting to have been made in pursuance of the terms of contracts. This view was similarly expressed in Irish Life Assurance v Dublin Land Securities.

Originally it was necessary to show that there was a valid and enforceable agreement to the instrument sought to be rectified. However, in Monaghan CC v Vaughan it was held that it was not necessary to have a concluded and binding agreement, provided that there was common continuing intention.

In Swainland Builders v Freehold Properties Ltd it was stated that the party seeking rectification must show that 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, that there was an outward expression of accord, that the intention continued at the time of the execution of the instrument sought to be rectified and that by mistake, the instrument did not reflect the common intention.

It is vital that this common intention can be ascertained with precision and a number of claims for rectification have failed on this ground. This was seen in Ferguson v Merchant Banking Ltd where a lack of precision led to an inability to constitute a contract.

The standard of proof for rectification is ‘convincing proof’ which lies between the balance of probabilities and beyond all reasonable doubt. This was stated in Joscelyne v Nissan. In Boliden Tara Mines Ltd v Cosgrove it was stated that the proof on the balance of probability should be used.

For rectification to be available it is necessary to establish that the instrument in question does not accord with the actual terms agreed by the parties and that if rectified it will do so. Where there is no lack of conformity between the document and the concurrent intention, the basis for rectification does not exist.

In Lac Minerals Ltd v Chevron Mineral Corporation of Ireland  a claim for rectification cannot succeed where it is not made by either of the parties involved in the original agreement but by a party who affected by it.

As a general rule the Courts only rectify an agreement in writing where there has been a mutual mistake, where it fails to record the intentions of both parties. However, a party that has entered into an agreement by mistake may be entitled to rectification if he established that the other party concluded the agreement with knowledge of this mistake. This position was accepted in Lucey v Laurel Construction Co.

A summary of the circumstance in which the court will permit rectification for unilateral mistake is contained in the judgement of Justice Binnie in the decision of the Supreme Court of Canada in which he stated that the plaintiff must establish that the terms agreed to orally were not written down properly. The error may be fraudulent or it may be innocent. What is essential is that at the time of execution of the written document the defendant knew or ought to have known of the error and the plaintiff did not. Moreover, the attempt of the defendant to rely on the erroneous written document must amount to fraud or the equivalent of fraud.

Oral evidence which expressly contradicts the terms of the written agreement may therefore be adduced and the onus lies firmly on the plaintiff to establish grounds for rectification.  The burden of proof has lessened somewhat in recent years. The position in this jurisdiction seems to be that while it has been accepted that the ordinary civil standard of proof should apply the nature of the case being made inevitably demands that the proof adduced be convincing in view of the fact that it will contradict a written enforceable agreement.

Unlike other types of equitable remedy such as injunctions and specific performance, which may be withheld on discretionary grounds leaving the plaintiff to a remedy in damages, if rectification is refused the instrument in question remains effective in its original form and the plaintiff may have no remedy whatsoever.

Reasons the remedy may be refused:

1. Laches / acquiescence

2. Conduct of the Plaintiff

3. Undue hardship to the Defendant

4. If it will serve no real purpose

5. If a bona fide purchaser for value without notice has acquired an interest under the instrument

It is important to note that while most forms of inter partes agreements can be rectified it is generally accepted that a Court has no jurisdiction to justify a will unless a manifest error has occurred.