Rectification

The equitable remedy of rectification is used when the written contract doesn’t convey the real intention of the parties to the contract. In this case, the court would order a modification of the written document in order to make sure that it reflects the real intention of the parties. In English law, the rule was summarised in Fowler v Fowler [1] as follows:

“Only after the court has been satisfied by evidence which leaves no ‘fair and reasonable doubt’ that the deed impeached does not embody the final intention of the parties. This evidence must make it clear that the alleged intention to which the plaintiff asks that the deed be made to conform, continued concurrently in the minds of all the parties down to the time of its execution; and the plaintiff must succeed in showing also the precise form in which the instrument will express this intention.”

In the case of Joscelyne vs. Nissen[2] , a father agreed to let his daughter take over his car hire business on the condition that she would take care of certain household expenses. However, due to a mistake, the written agreement did not place these responsibilities on the daughter. The court ordered a rectification of the agreement in order to make it reflect the true intention of the parties.

In order for this remedy to apply, the following requirements have to be met:

  1. There was a prior agreement between the parties before the written agreement.
  2. The intention of the parties must remain unchanged from the time of the prior agreement till the time of the written agreement in contention.
  3. The written agreement must be different from what the parties originally intended.
  4. The evidence for mistake must be clear and unambiguous

 

In Craddock bros .v. Hunt.[3] for example a vendor orally agreed to sell to a purchaser a certain piece of  property . by a mistake the written contract  embodying the agreement include an adjoining yard which the parties had exempted from the sales and the subsequent conveyance actually conveyed this land to the purchaser . The court ordered that the conveyance be rectified to bring it in line with the parties, agreement.

The principle of rectification which, as earlier stated is an equitable remedy was deliberated by the court in The Vessel “Leona II” v. First Fuels Ltd[4], In July 1997, in a suit instituted by the 1st respondent herein First Fuels Limited; judgement was given by the Federal High Court in favour of the 1st respondent against Alpha Marine Services Limited who became the judgement debtor from whom the vessel “Leona II” was seized. In execution of the judgement, the Federal High Court ordered that the vessel which had earlier been arrested and detained be sold by the Admiralty Marshall. Subsequently, there followed negotiations and orders for the sale of the vessels which amounted to nought. However, after the collapsed negotiations and orders and after successive adjournments, the matter again came before the Trial Court and the court ordered inter alia that the Admiralty Marshall should execute transfer of ownership of the vessel to either Integrated Oil & Gas Ltd or Interglobal Invested Ltd, whichever of them pay first and irrespective of the amount that either of them might pay. On a later adjourned date, the Trial Court called upon the Admiralty Marshall who confirmed that the First Bank cheque of $300,000 has been received in favour of the vessel from Integrated Oil & Gas Ltd and a deed of transfer was executed.

More than six months after the deed of transfer had been executed and the bill of sale has been issued, the appellants applied to the Trial Court for an order that the buyer should show cause why-

The bill of sale relating to the vessel M/T Leona II should not be rectified by deleting the expression- “USD 300,000 only paid to us” where those words occur and substituting the expression with “USD 300,000 and further sums to be paid to us in accordance with the terms of the agreement dated 19.10.98, a copy of which was annexed to the affidavit of one Captain Ihenacho deposed to 2.11.98”

The trial court granted the terms as prayed because the Admiralty Marshall signed the agreement contrary to the expressed order of the court while \integrated Oil and Gas Limited signed it in breach of an earlier agreement it entered into as to the price for purchase of the vessel, an agreement under such circumstances that were at best voidable unless rectified to be in line with the court order and agreement between the parties.

The appeal to the Court of Appeal having been dismissed, the appellants appealed to the Supreme Court which dismissed the appeal.

The court held that Rectification in ordinary language is the correction of a mistake. However when used in the context of equitable remedy, it is of written documents and is about correcting a mistake in recording what the maker or makers of the document had recorded.

On object for rectification and duty on party seeking- Basically, the object of a suit for rectification is to bring a document, which was intended to give effect to a prior agreement into harmony with that prior agreement. For rectification to receive consideration the antecedent agreement must be clear and unequivocal and must have continued unchanged until the execution of the final document. It must therefore be proved that the final document did not carry out the parties’ earlier and unchanged agreement.

On jurisdiction of courts of equity with respect to rectification of documents- this is to bring the written document executed in pursuance of an antecedent agreement in conformity with that agreement. The conditions to the exercise of that jurisdiction are that there must be an antecedent contract and the common intention of embodying or giving effect to the whole of that contract by writing; and there must be clear evidence that the document by common mistake failed to embody such contract and either contained provisions not agreed upon or omitted something that was agreed upon, or otherwise departed from the terms.

On relevant considerations for application of remedy of rectification-

From the nature of the equitable relief of rectification, it follows that the proper questions to ask when the document to be rectified embodies the terms of a prior agreement are:

  1. Whether there was a prior agreement;
  2. What the terms of the prior agreement were;
  3. Whether the document faithfully embodied the terms of such agreement.

When the document to be rectified is a document other than one embodying the terms of a contract; an error in the document can be rectified provided the error or omission was one expressing the manifest intention of the maker. That the decision or manifest intention of the maker had been influenced by misrepresentation, mistake or fraud or tainted by want of authority is not a valid ground for the remedy of rectification of a document which accurately records the maker’s intention or decision.

Summarily, OGUNDARE J.S.C stated; “…if the appellant has any cause or causes of action at all, it is certainly not for the rectification of the said bill of sale in this matter. The sale agreement between the Admiralty Marshall and the respondent resulting in the bill of sale appeared not to have been the result of any mistake in what those two agreed upon. That being so, there could be no cause for rectification”.

The power of the court to rectify a written agreement between two parties is only exercise with extreme caution. Uwaifo. JCA, in Mbonu v. Nwoti[5] quoting Bennett, j in Fredensson v. Rothscheld stated as follows;

“To substitute a new agreement for one which the parties have deliberately subscribe ought only to be permitted upon evidence of a different intention of clearest and most satisfactory description it is clear that a person who seeks to recertify a deed upon the ground of mistake must be required to establish in the clearest and most satisfactory manner that the alleged  intention to which, it desires to be made conformable was contained concurrently in the minds of all parties down to the time of execution and must also be able to show exactly and precisely the form to which the deed out to be brought.”

The doctrine of rectification was applied in the Canadian Case of Calgary v. Northern Construction Co [6]Here, An error in calculations was made by a clerk of a tenderer, resulting in a bid $180,000 less than it should have been. It was only after the tender had been selected that the contractor discovered his staff’s mistake. But the court found that the error was:

“… to motive and not to terms” The tender sum sent to the city was the term which Northern intended to offer. It decided to offer that term because of a mistake, a mistake which offered it a false reason or motive to make that offer. By the traditional rule, then, the construction contract is enforceable notwithstanding this mistake.” The court then declined to interfere with the contract under equity because it could not find the contract Unconscionable as there was no “grossly disproportionate burden upon the tenderer.”

 

[1] (1859) 4 DeG & J 250 at 264

[2] [1970] 2 QB 86

[3] [1923] Ch 136

[4] [2002] 18 NWLR

[5] (1991) 7NWLR Part 206 (737)

[6] 67 A4 95 (1986)

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