Mistake in Tenancy Agreement Contract - Rectification

Sometimes mistakes happen when drafting a tenancy agreement. A typical question may be:

I advertised a property at £450pcm. The particulars showed this amount, and so did the advert. On signing the tenancy, the tenant also paid £450 first month's rent and a £450 deposit. The following month, £357 rent was paid instead of £450, along with a letter pointing out that the tenancy agreement stated the rent was £357.00pcm, which was all they would pay from now on. On investigation, I have found I have made a mistake on the tenancy agreement, and the rent does state £357pcm when it should have said £450. The tenancy is for twelve months.

Ideally, an agreement should be reached with the tenant(s), and a new tenancy should be drawn up and signed by all parties reflecting the corrections made. If the tenant does not agree to make the changes, rectification could be considered through the courts as a last resort. 

Crucially, in the example given above, there is a good amount of evidence showing that both parties intended the rent to be £450. In particular, this is evidenced by the tenant paying £450 at the commencement of the tenancy.

Rectification

Rectification is an equitable remedy by which the court corrects instruments to effect the real bargain between the parties. Courts of Equity do not rectify contracts; they may and do rectify instruments purporting to have been made in pursuance of the terms of contracts. [Mackenzie v Coulson (1869) L.R. 8 Eq. 368, 375, per James V.C.] 

Thus what is corrected is not the bargain but the expression of the bargain. For a claim to rectification to succeed on the ground of a common mistake, it must be shown by convincing evidence [Joscelyne v Nissen [1970] 2 Q.B. 86, 98; Lansdown Estates Group Ltd v TNT Roadfreight (UK) Ltd [1989] 2 E.G.L.R. 120; London Regional Transport v Wimpey Group Services Ltd (1987) 53 P. & C.R. 356; Brimican Investments v Blue Circle Heating [1995] E.G.C.S. 18.]: 

(1) that the parties to the lease had a continuing common intention regarding the terms of the lease; 

(2) that intention continued up to the moment when the lease was executed; 

(3) that some outward expression of accord manifested the common intention; 

(4) that the lease as executed does not represent the true intention of the parties at the moment of the execution of the lease; 

(5) that the lease, if rectified, would represent their true intention at that time. [ibid.] 

The outward expression of accord may be shown by estate agents' particulars [Central & Metropolitan Estates v Compusave [1983] 1 E.G.L.R. 60.] 

The remedy of rectification requires some mistake in the document sought to be rectified.  Rectification is usually granted where words in a lease have been wrongly omitted or included. [e.g. Cowen v Truefitt Ltd [1899] 2 Ch. 309 (parcels wrongly described).] 

The fact that the mistake was negligent is no bar to relief [Weeds v Blaney [1978] 2 E.G.L.R. 84, CA.]; nor is a clause which states that the written agreement is the parties' entire agreement. [JJ Huber (Investments) v Private DIY Co [1995] E.G.C.S. 112.] 

Actions for rectification are assigned to the Chancery Division [Supreme Court Act 1981 s.61; Sch.1.] However, any other Division of the High Court may treat an instrument as rectified if the defendant to an action sets up facts which, in the Chancery Division, would entitle him to have it rectified. [ibid.] 

A claim for specific performance may be joined in the same action as a claim for rectification.

Correction of errors by construction

In some cases, the court can correct errors as a matter of construction without recourse to the remedy of rectification. To do so, the mistake must be apparent. [Wilson v Wilson (1854) 5 H.L. Cas. 40.] 

The principle applies "where a reader with sufficient experience of the sort of document in issue would inevitably say to himself 'Of course, X is a mistake for Y.' " [East v. Pantiles (Plant Hire) (1982) 263, E.G. 61.] 

Thus the court may correct an obvious misnomer of one of the parties [Nittan (U.K.) v. Solent Steel Fabrications [1981] 1 Lloyd's Rep. 633.]; or an obviously erroneous reference to a clause in the lease. [Booker Industries Pty. v. Wilson Parking (QLD) Pty. (1982) 149 C.L.R. 600.] 

However, The law of construction excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification [para 11.007 Woodfall Landlord & Tenant]. 

Therefore, an application for correcting the error as a matter of construction is most likely unsuitable in this case because the key evidence is the adverts and particulars, essentially the negotiations leading to the execution of the tenancy.

What next

The Chancery Division is part of the High Court, and a senior judge will handle the case. Although the Guild can assist, it is advisable to employ the services of a solicitor. Hopefully, an adequate letter before action outlining all the evidence would put off a tenant from continuing or defending the claim because there could be high costs involved if they were unsuccessful. 

The problem, of course, is a question of costs. Claims in the High Court such as this can be expensive, so a balance will need to be struck over the value of a claim. 

A cheaper "gamble" would be to take the matter to the small claims court or issue a section 8 notice on Ground 10 (any amount of rent arrears). This would be issued in the hope that the court would look at the case and order that the total rent is "lawfully" due. 

Of course, a savvy judge may dismiss the claim because the tenancy must first be rectified, as discussed above. However, because of the relatively low cost of bringing these proceedings against a claim for rectification, it may be worth the gamble. 

Note: If an agent has made this error, it is our opinion that the landlord will still be entitled to be paid the total proper rent, as this would have been a mistake made by the agent that shouldn't affect the landlord.

Further articles

You can also look at our Slip of Pen Errors article, which deals with incorrect dates in notices. There is a summary of rectification here.