Littman & Anor v Aspen Oil (Broking) Ltd

Where a contractual clause is plainly nonsensical because of an obvious drafting error, the court may correct the wording by construction if the intended correction is clear from the document and its commercial context. The court should seek a coherent meaning rather than treat the clause as void for uncertainty. A proposed alternative requiring the court to omit substantial words and invent new language is construction, not correction.

Rectification for unilateral mistake may also be available where the parties had no antecedent agreement on the disputed term, if the established requirements are met and it would be inequitable for the other party to rely on a known drafting mistake. Deliberate silence in the face of an obvious error may justify rectification.

The landlords appealed against Hart J’s determination of a preliminary issue in [2005] EWHC 1369 (Ch). A five-year lease contained a mutual break clause. Its proviso made the tenant’s compliance with the lease conditions relevant only where notice was given by the landlord, although that formulation was commercially nonsensical.

The tenant argued that the clause should be read literally, or alternatively treated as void for uncertainty. The landlords argued that “Landlord” should be read as “Tenant”, or that the lease should be rectified. Hart J accepted both the construction argument and, alternatively, the rectification argument. The central issues were whether the error could be corrected as a matter of construction and whether unilateral rectification was available despite the absence of a prior agreement on the disputed condition.

1. Appeal dismissed. The court upheld Hart J’s construction of clause 10.
2. Lord Justice Jacob held that the words “in the case of a notice given by the landlord” should be construed as referring to a notice given by the tenant. The clause was commercially nonsensical as drafted because it conditioned the landlord’s exercise of the break right on the tenant’s performance. A reasonable reader would identify both the mistake and the necessary correction from the words used. The tenant’s alternative hypothesis required ignoring a substantial string of words and supplying wholly new language, which was not construction.
3. The court applied the approach in ICS v West Bromwich BS, including the possibility that background may show that parties used the wrong words or syntax. The fact that the corrected clause imposed an onerous condition on the tenant did not justify retaining a nonsensical meaning. Nor should the court readily conclude that the clause, lease or bargain was void where a coherent meaning could be found.
4. Jacob LJ further held that rectification for unilateral mistake would have been available. The four requirements identified by Buckley LJ in Thos. Bates v Wyndhams (Lingerie) were accepted to be satisfied: the mistaken party’s erroneous belief, the other party’s knowledge of the mistake, the failure to draw it to attention, and a mistake calculated to benefit the other party. Deliberately taking advantage of the obvious drafting error was inequitable.
5. Lord Justice Longmore agreed on construction but expressed no concluded opinion on rectification. Lord Justice May agreed with Jacob LJ’s construction reasons and stated that, if necessary, he would have agreed on rectification.

• Court of Appeal (Civil Division): [2005] EWCA Civ 1579. Appeal from the Chancery Division dismissed.
• Chancery Division: Hart J determined the preliminary issue in favour of the landlords, construing “Landlord” in the proviso as “Tenant” and alternatively granting rectification; [2005] EWHC 1369 (Ch).