NHS Commissioning Board v Silovsky

In construing a detailed commercial agreement, the court identifies what the parties agreed, rather than correcting an imprudent bargain by reference to commercial common sense. A term is implied only where the proposed wording reflects what reasonable people would understand the contract to mean. Rectification for common mistake requires a continuing common intention, an outward expression of accord, and a written instrument that fails by mistake to record that intention. Rectification for unilateral mistake requires the mistaken belief, the other party’s knowledge of it, and unconscionable conduct in failing to correct it. Evidence of a party’s undisclosed subjective policy does not assist construction.

The claimant, successor to a primary care trust, sought repayment of approximately £428,000 from two general practitioners. A 2007 Personal Medical Services Agreement specified annual premises payments of £77,238. The claimant argued that the sum should vary under the National Health Service (General Medical Services - Premises Costs) (England) Directions 2004, either because the agreement contained an implied term or because it should be rectified.

The defendants applied for summary judgment, contending that the agreement fixed the annual payment and that neither rectification case had an evidential basis. The central issues were the proper construction of the agreement and whether either form of rectification had a real prospect of success.

1. Summary judgment. On issues of law, the court was as well placed to decide the matter at the interlocutory stage as at trial. Factual issues potentially affected by fuller investigation were assumed in the claimant’s favour.
2. Construction and implication. The 2007 agreement, read against its relevant factual background, provided for a fixed annual premises payment of £77,238. The omission of the express provision linking payments to the GMS Premises Directions in the earlier agreement was equivocal, but the claimant bore the burden of showing that the same arrangement had nevertheless been agreed. In a detailed, professionally drafted and negotiated agreement, it was not so obvious that the payment was variable that the court could supply the missing wording. Commercial undesirability and the resulting windfall did not justify rewriting the bargain. The claimant’s evidence of the Trust’s undisclosed policy was subjective-intention evidence and was inadmissible for construction.
3. Common mistake. The claimant had no real prospect of proving a continuing common intention concerning variable premises payments, an outward expression of accord, or a written instrument which failed by mistake to record that intention. Evidence that there had been no relevant discussions did not establish an outwardly expressed accord, and the Local Medical Committee had no authority to contract for the defendants.
4. Unilateral mistake. Even assuming that the Trust mistakenly believed that the agreement incorporated the GMS Premises Directions, there was no evidence that the defendants knew of that mistake or of the Trust’s mistaken belief. Nor had unconscionable conduct been pleaded or supported. The reasoning in George Wimpey UK Ltd v VI Construction Ltd [2005] EWCA Civ 77 was applicable.
5. The defendants were entitled to summary judgment. The claim was dismissed. The court observed that the claimant could have terminated the agreement on six months’ notice and offered a replacement contract with clear variable-payment wording.