Anderson v Lambie

Where parties agree upon the essential subject matter of a transaction, but their formal deed mistakenly expresses a materially different transaction, Scots law permits the deed to be reduced. The error need not be a clerical error. It must be proved to the demanding standard appropriate to the reduction of a probative deed.

This principle differs from the construction of agreed words. A party cannot challenge a deed merely because the court gives its words an unintended meaning. A Scottish court also cannot rectify a deed by making a new bargain for the parties. Reduction is the proper remedy, subject to third-party rights and other relevant equities. If a disposition superseding earlier missives is reduced, the missives may revive as the parties’ enforceable contract.

The appellant agreed to sell, and the first respondent agreed to buy, a 197-acre farm occupied by agricultural tenants. Both parties’ solicitors mistakenly used a description from an earlier title deed which also included 34 acres occupied for colliery purposes. The resulting disposition therefore conveyed both properties.

The Lord Ordinary reduced the disposition after finding that both parties had intended the sale to comprise the farm alone. The First Division of the Court of Session reversed that decision and dismissed the action. The appellant appealed to the House of Lords.

The central questions were whether Scots law permitted reduction of a recorded disposition for common essential error affecting the subjects conveyed, whether the parties’ actual intentions could be investigated, and whether the evidence established the alleged common error.

1. Appeal allowed unanimously. Lord Morton of Henryton, Lord Reid and Lord Keith of Avonholm delivered reasoned speeches allowing the appeal. Lord MacDermott agreed with all three. The disposition was reduced because it conveyed land which neither contracting party had intended to include.

2. Per Lord Reid and Lord Keith, when both parties intend their transaction to concern one subject but, through a common mistake arising after agreement, their deed is expressed as concerning materially different subjects, the deed may be set aside. Relief is not confined to a slip of the pen or another narrowly defined clerical error. A conveyancing mistake has the same effect where it causes the deed to express the parties’ agreement incorrectly in an essential respect.

3. Per Lord Reid, a distinction must be drawn between an erroneous expression of an antecedent agreement and the unintended legal meaning of words which the parties deliberately adopted. In the latter situation, the court construes the agreed words and the parties remain bound by them. In the former, the deed may be challenged because the mistake prevented it from recording the transaction upon which the parties had agreed.

4. Per Lord Reid and Lord Keith, a Scottish court cannot rectify a deed by altering it or making a new bargain for the parties. Partial reduction is available only where the relevant part is genuinely severable and its removal does not create a new contract. In the present case, reduction of the disposition as a whole was the competent remedy.

5. Per Lord Reid and Lord Keith, the recorded disposition ordinarily superseded the earlier missives and became the measure of the parties’ rights. That rule did not prevent an inquiry into whether the disposition itself was reducible. The missives were important evidence of the parties’ intentions, but were not conclusive. The court could examine all relevant evidence, subject to the heavy burden borne by a party seeking reduction of a probative deed.

6. Per Lord Reid and Lord Keith, the evidence established beyond fair and reasonable doubt that, when the missives were concluded, both parties intended the transaction to comprise the farm alone. The first respondent’s later belief that the colliery land had been included arose only after the missives. The dispositive description was therefore the product of common essential error.

7. Per Lord Reid, the faith of the Register of Sasines principally protects third parties who acquire rights in reliance upon the record. It did not prevent reduction between the original parties where no third-party right would be prejudiced.

8. Following reduction, the missives revived as an enforceable contract for the farm, and the appellant remained bound by his undertaking to grant a new disposition implementing them. The respondents were ordered to pay three-quarters of the appellant’s costs in the House of Lords and Outer House, together with five guineas for Inner House expenses.

1. House of Lords: Allowed the appeal unanimously, reversed the First Division and restored reduction of the disposition: Anderson v Lambie [1954] 1 WLR 303.
2. First Division of the Court of Session: By interlocutor dated 16 December 1952, recalled the Lord Ordinary’s interlocutor and dismissed the action.
3. Outer House of the Court of Session: Lord Mackintosh, sitting as Lord Ordinary, held proof before answer and reduced the disposition.