Seafood ShackLtd v Darlow

Correction of a mistaken name in a formal instrument is part of the single task of interpreting the instrument in its context. The court may correct the wording where it is clear that something has gone wrong and clear what a reasonable person would have understood the parties to mean. Background and context are relevant to that assessment.

Construction cannot cure a misnomer where the available evidence leaves two possible entities as the intended party. Rectification for common mistake additionally requires a common continuing intention and an outward expression of accord. Where neither remedy is available, the named party remains the contracting party, even if that party never existed.

Seafood Shack Limited claimed that a lease granted by Alan Darlow, naming Seafood Shack UK Limited as tenant, should be construed or rectified so as to name Seafood Shack Limited instead. The named company had never existed. A related subsidiary occupied and traded from the premises before entering liquidation, and its liquidators disclaimed any interest.

The court was directed to determine four preliminary issues: whether Seafood Shack Limited was a party to the lease; whether rectification should be granted; whether the landlord’s re-entry was lawful; and whether the claimant was entitled to possession.

1. Construction. The court treated correction of mistakes and construction of the instrument as aspects of one interpretative task. The relevant question was what a reasonable person, possessing the background knowledge available to the parties, would have understood the language to mean. The principles in East v Pantiles (Plant Hire) Ltd [1982] 2 EGLR 111, as qualified in KPMG LLP v Network Rail Infrastructure Ltd [2007] EWCA Civ 363, and stated in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, were applied.
2. The lease and its context did not enable a reasonable person to identify whether Seafood Shack Limited or its subsidiary was intended. Companies House information did not resolve that ambiguity. The misnomer therefore could not be corrected by construction.
3. Rectification. Rectification for common mistake required a common continuing intention as to the tenant’s name and an outward expression of accord. The parties had not shared an intention that Seafood Shack Limited should be tenant, and there had been no outward expression of accord to that effect. Rectification was accordingly unavailable.
4. Seafood Shack Limited was not a party to the lease. The subsidiary’s occupation was likely to have created a tenancy at will, but that interest was disclaimed by its liquidators. The landlord’s subsequent repossession was lawful, and the claimant had no entitlement to possession.
5. The four preliminary issues were therefore determined against the claimant. The judgment records no further order on costs or final relief.