Transview Properties Ltd v City Site Properties Ltd

Rectification for unilateral mistake requires convincing proof that the written instrument fails to record the parties’ relevant intention and that the defendant engaged in sharp practice. A mistaken omission is insufficient where the provision was deliberately removed with the claimant’s knowledge or at its request. In assessing disputed recollections of historic commercial conversations, the court should test witness evidence against contemporary documents, objective facts, motives and overall probabilities. Delay amounts to laches only where it is coupled with relevant prejudice. Acquiescence requires circumstances in which the right-holder’s conduct reasonably leads the other party to assume that the right will not be exercised.

Transview purchased an office block from City Site Properties under a sale agreement containing overage provisions. Transview sought rectification to insert an overage-abatement clause, alleging that the clause had been removed by sharp practice without its knowledge. City Site contended that removal had been agreed and that a substantially equivalent provision was to be recorded in a side letter, later varied to impose a six-month repayment deadline.

The central issues were whether the sale agreement or a side letter contained an overage-abatement provision, whether the requirements for unilateral mistake rectification were met, and whether laches or acquiescence defeated the claim.

1. Claim dismissed. The court found that the sale agreement was executed in the form intended by the parties and contained no overage-abatement clause. The proposed clause had been removed deliberately after a request made on Transview’s behalf. The removal was communicated conspicuously through the third draft and its red-lined version.
2. In resolving the conflicting accounts of telephone conversations, the court applied the approach identified in Grace Shipping v Sharp & Co [1987] 1 Lloyd’s Law Rep. 207. Historic recollections, particularly where refreshed from documents after the event, must be tested against contemporary documents, objective facts, motives and overall probabilities. The approach drew on the passage from Armagas Ltd v Mundogas S.A. (The Ocean Frost) [1985] 1 Lloyd’s Rep. 1.
3. The court rejected Transview’s allegation of sharp practice. There was no sufficient evidence that City Site had dishonestly or covertly removed the clause. Accordingly, the necessary basis for unilateral mistake rectification was absent.
4. The court also held, obiter, that it would not have accepted the defences of laches or acquiescence. The 2006 redemption negotiations disclosed neither delay coupled with relevant prejudice nor conduct reasonably leading City Site to assume that the right would not be exercised.
5. The court further observed, obiter, that a provision in the terms of the proposed Goodman letter might have been rectified into the contract if such a claim had been made and the necessary facts established. It would not, however, have assisted Transview because the required repayment was not made within six months of completion.