Dean & Dean Solicitors v Dionissiou-Moussaoui

Where parties sign a document intended to record their contractual agreement, the court must construe that document according to its terms. Earlier communications may provide context, but cannot replace the written terms. If the document is said to contain a mistake or to fail to reflect an earlier oral agreement, rectification must be properly pleaded and proved. A court must not rewrite a contract because another arrangement appears fairer or commercially more sensible. Where a trial judge has reached contractual conclusions without the necessary findings of primary fact, the appellate court may set aside the decision and remit the claim for retrial.

The claimant, an employed solicitor, claimed commission under her employment agreement with the defendant firm. The parties had exchanged telephone calls and emails before signing a letter on 27 January 2005 setting out salary, commission thresholds, collection requirements and a minimum billing obligation.

Following a four-day trial, the Central London County Court treated the letter as the contract but construed it by reference to earlier communications and the perceived purpose and fairness of the arrangement. It found that there was one billing threshold, based on fees billed rather than collected, and dismissed the counterclaim. The defendant appealed, arguing that the judge had disregarded the contractual document and rewritten its terms. The central issue was whether the judge had been entitled to depart from the signed letter without properly pleaded and proved rectification or findings of an anterior oral agreement.

1. Appeal and contractual document. The appeal was allowed to the extent that the claim and counterclaim were remitted for retrial before a different judge. The letter of 27 January 2005 was clearly intended to be contractual. It was signed by both parties and expressly recorded acceptance of its terms.
2. Construction and rectification. There is a fundamental distinction between a contractual document and a document that merely evidences an orally concluded contract. Where a document is contractual, the court must construe it. Earlier communications may provide context and background, but cannot be substituted for the written terms. If the written agreement is alleged to have failed to record an earlier oral agreement, that agreement must be clearly pleaded and proved, and the appropriate relief is rectification.
3. Error in the court below. The signed letter provided for two thresholds and required the relevant billing to be collected. The judge nevertheless adopted a different arrangement by relying on the perceived purpose of the agreement and what appeared to be a sensible payment-by-results system. In doing so, he effectively rewrote the contract. The respondent’s alleged forensic agreement that the letter was not contractual was unsupported by the pleadings, inconsistent with the letter and inconsistent with the trial judge’s own treatment of it.
4. Appellate disposal. The judge had not made the primary findings of fact necessary to support the respondent’s alternative case based on an oral agreement or rectification. The Court of Appeal therefore could neither enforce the letter as necessarily binding nor uphold the terms found below. The claim and counterclaim had to be retried. The costs of the proceedings, including the appeal, were left to the discretion of the judge conducting the retrial.
5. Procedural guidance. Pleadings must identify the allegations and issues on which the trial proceeds. If they do not represent the parties’ cases, they must be amended or replaced by an agreed written statement of the basis of trial.

• Court of Appeal (Civil Division): In [2011] EWCA Civ 1331, the appeal from the Central London County Court was allowed to the extent necessary to set aside the order and remit the claim and counterclaim for retrial before a different judge.
• Central London County Court: His Honour Judge McMullen QC determined the contractual issues, directed the basis for determining the commission claim, and dismissed the counterclaim. The Court of Appeal held that the contractual findings were unsustainable.