Borough of Milton Keynes v Viridor (Community Recycling MK) Ltd (No 2)

Rectification may correct a written contract where the parties shared a continuing intention, expressed that intention outwardly, and the instrument failed to record it by mistake. Minor post-agreement revisions do not prevent rectification unless they show that the executed contract was a materially different agreement. An entire agreement clause may be relevant, but it does not bar rectification where the clause itself forms part of an instrument that fails to record the parties’ true agreement. Laches requires delay after discovery of the mistake causing practical injustice or detriment. Acquiescence requires evidence that the claimant accepted the erroneous position.

The claimant Council contracted with the defendant to operate a waste-recycling facility. The defendant’s accepted final tender specified a fixed annual payment of £500,000 indexed for inflation, but an earlier incomplete version of the payment mechanism was mistakenly included in the executed contract. The claimant sought rectification by substituting the completed tender version.

The defendant relied on alleged procurement irregularities, lack of consensus, subsequent negotiations, an entire agreement clause, laches and acquiescence. The central questions were whether the requirements for common or unilateral mistake were satisfied and whether later events made rectification inequitable.

1. Preliminary submissions. The defendant’s unpleaded procurement arguments were rejected. In any event, the final tender complied with the Public Contracts Regulations 2006. Competitive dialogue could leave tenderers to submit detailed proposals concerning the payment mechanism, including profit share and indexation. Any alleged non-compliance had no relevant effect because both tenderers were treated equally and there was no suggestion of distorted competition or discriminatory treatment (paras [28]-[45]).
2. Common mistake. The requirements stated in Swainland Builders Ltd v Freehold Properties Ltd, as approved in Chartbrook v Persimmon, were satisfied: the parties had a common intention as to the indexed £500,000 fixed payment; there was an outward expression of accord through acceptance of the final tender; that intention continued when the contract was executed; and the written instrument failed to record it because the wrong IGPM was inserted (paras [46]-[71]).
3. Minor clarifications and revisions did not make the executed contract a different agreement. Pindos Shipping Corporation v Fredrick Charles Raven (The Mata Hari) turned on extensive changes and did not establish that any later change bars rectification. The Court of Appeal’s treatment in Dunlop Haywards Ltd v Erinaceous Insurance Services Ltd confirmed that point (paras [60]-[66]).
4. Unilateral mistake. Alternatively, the requirements identified in Thomas Bates & Son Ltd v Wyndham’s (Lingerie) Ltd were satisfied on the hypothesis that the defendant knew of the claimant’s mistake before execution, failed to disclose it, and appreciated that the omission benefited the defendant (paras [72]-[75]).
5. An entire agreement clause did not prevent relief. Although such a clause may be relevant, where the case for rectification is strong, the agreement constituting the parties’ entire agreement is the contract as rectified. The clause was therefore immaterial here (paras [76]-[79]).
6. Laches and acquiescence. The relevant period for laches began when the claimant discovered the mistake in March 2012. The claimant promptly notified the defendant, subsequent delay was shared, and no detriment was established. The evidence also did not show acquiescence in non-indexation. Later payment arrangements concerned the mechanics of payments on account and did not alter the parties’ underlying entitlements (paras [100]-[117]).
7. The contract was rectified by replacing the incomplete IGPM with the completed version from the defendant’s final tender. The rectified contract preserved the agreed deduction of £5 per tonne before the 30/70 profit split.