Cindat Nephthys Holding Limited v Hunter Holdings Limited

Summary judgment may be granted on a rectification claim, although such claims ordinarily require a fact-sensitive inquiry. The court must critically assess whether the proposed rectification has a real prospect of success and may decide disputed factual issues where the documentary and witness evidence cannot realistically establish the required case.

Rectification for common mistake requires proof of a prior concluded agreement, or of a common intention shared by both parties and outwardly expressed between them, which the document fails accurately to record. An entire agreement clause is not necessarily a bar. Where sophisticated parties, advised by experienced lawyers, agree detailed contractual wording, there is a strong presumption that they intended to be bound by those words.

Cindat applied for summary judgment under CPR 24 on its claim that Hunter Holdings Limited, described in the agreement as Oaktree, had breached an amended and restated shareholders’ agreement.

The agreement gave Cindat an unqualified right, after the fourth anniversary of completion, to require Oaktree to purchase its shares in a property-holding company. Cindat exercised that right. Oaktree resisted payment and counterclaimed for rectification, alleging that the put option should have been limited to circumstances in which the business plan was changed to permit indefinite holding of the property.

The central issue was whether Oaktree’s rectification case had a real prospect of success, despite conflicting witness evidence about the negotiations and later communications.

1. Summary judgment. The court granted summary judgment to Cindat. The relevant question was whether Oaktree’s rectification case had a real prospect of success, assessed with proper critical scrutiny. A factual dispute does not automatically require a trial.
2. Rectification. Rectification for common mistake required proof either of a prior concluded contract which the document failed to implement, or of a common intention on the relevant matter, shared by both parties and outwardly expressed through communication between them. The evidence did not disclose a realistic prospect of proving either basis.
3. Documentary evidence and negotiations. The correspondence and successive drafts expressly recorded agreement to the wider put option eventually contained in clause 8.1. They contained no indication that the parties had agreed the narrower restriction now advanced. The absence of supporting documents, the parties’ subject-to-contract negotiations, the detailed involvement of sophisticated commercial parties and experienced lawyers, and the failure to amend clause 8.1 all strongly undermined the alleged mistake.
4. Commercial and evidential considerations. The proposed restricted option was commercially difficult to explain and the principal witness evidence supporting rectification was vague and unconvincing. Later conversations did not amount to convincing proof of the alleged common intention. The question whether particular negotiators had authority to bind their principals was fact-sensitive and could not alone be resolved summarily, but it did not prevent judgment on the claim as a whole.
5. Entire agreement clause. Clause 22 was not relied upon as the basis of the decision. An entire agreement clause may itself form part of a mistaken expression of the parties’ common intention and is not necessarily a bar to rectification.
6. Orders. Oaktree was ordered to pay the Put Option Price and take the steps required to effect transfer completion.