Chartbrook Ltd. v. Persimmon Homes Ltd. et al., (2009) 398 N.R. 201 (HL)

• Case Date: Wednesday July 01, 2009
• Jurisdiction: Canada (Federal)
• Citations: (2009), 398 N.R. 201 (HL)

Chartbrook Ltd. v. Persimmon Homes Ltd. (2009), 398 N.R. 201 (HL)

MLB headnote and full text

Temp. Cite: [2009] N.R. TBEd. DE.036

Chartbrook Limited (respondents) v. Persimmon Homes Limited and others (appellants) and another (respondent)

([2009] UKHL 38)

Indexed As: Chartbrook Ltd. v. Persimmon Homes Ltd. et al.

House of Lords

London, England

Lord Hope of Craighead, Lord Hoffmann, Lord Rodger of Earlsferry, Lord Walker of Gestingthorpe and Baroness Hale of Richmond

July 1, 2009.

Summary:

Chartbrook Ltd. entered into an agreement with Persimmon Homes Ltd., a house-builder, for the development of a site owned by Chartbrook. Pursuant to the agreement, Persimmon would obtain planning permission and then, pursuant to a licence from Chartbrook, enter into possession, construct a mixed residential and commercial development and sell the properties on long leases. Chartbrook would grant the leases at the direction of Persimmon, which would receive the proceeds for its own account and pay Chartbrook an agreed price for the land. Planning permission was obtained and the development was built; however, a dispute arose as to the price which became payable under the terms of the contract. The trial judge and Court of Appeal determined the issue in favour of Chartbrook. Persimmon appealed, arguing that its view of the price payable should be adopted as a matter of construction of the contract itself, or alternatively, that the courts below should have considered pre-contractual negotiations in determining the intentions of the parties or were mistaken as to the principles upon which rectification could be granted.

The House of Lords allowed the appeal. The court held that the case could be resolved on the basis of construction alone in favour of Persimmon. However, given that the alternative arguments raised matters of considerable general importance, the court considered both issues. The court opined that there was no need to depart from the exclusionary rule respecting pre-contractual negotiations. The court opined also that since both parties were mistaken in thinking that the agreement reflected their prior consensus, had Persimmon not succeeded on the basis of construction, it would have been entitled to rectification.

Contracts - Topic 7408

Interpretation - General principles - Understanding of the parties - [See Contracts - Topic 7430].

Contracts - Topic 7430

Interpretation - Ambiguity - Admissibility of extrinsic evidence - The House of Lords discussed the rule that evidence of pre-contractual negotiations was inadmissible for the purposes of drawing inferences about the meaning of a contract - The court opined that there was no need to depart from that exclusionary rule - See paragraphs 1 to 4, 28 to 47, 69, 70, 96, 97 and 101.

Deeds and Documents - Topic 5051

Rectification - When available - General - The House of Lords, per Lord Hoffmann, referred to the requirements for rectification as follows: "(1) the parties had a common continuing intention, whether or not amounting to an agreement, in respect of a particular matter in the instrument to be rectified; (2) there was an outward expression of accord; (3) the intention continued at the time of the execution of the instrument sought to be rectified; (4) by mistake, the instrument did not reflect that common intention" - See paragraph 48 - The court discussed what a party had to be mistaken about to justify rectification and whether this was to be determined on a subjective or objective basis - See paragraphs 1, 48 to 67, 71, 96, 97 and 101.

Cases Noticed:

Prenn v. Simmonds, [1971] 1 W.L.R. 1381 (H.L.), refd to. [paras. 2, 28, 69, 99].

Inglis v. Buttery (John) & Co. (1877), 5 R. 58, refd to. [paras. 3, 28].

River Wear Commissioners v. Adamson (1877), 2 App. Cas. 743 (H.L.), refd to. [para. 4].

Investors Compensation Scheme Ltd. v. West Bromwich Building Society, [1998] 1 W.L.R. 896 (H.L.), refd to. [paras.14, 21, 93].

Bank of Credit and Commerce International S.A. v. Ali et al., [2002] 1 A.C. 251; 268 N.R. 204 (H.L.), refd to. [paras. 14, 33].

Kirin-Amgen Inc. v. Hoechst Marion Roussel Ltd., [2005] R.P.C. 169, refd to. [para. 14].

Jumbo King Ltd. v. Faithful Properties Ltd., [1999] H.K.C.F.A.R. 279, refd to. [para. 14].

Birmingham City Council v. Walker, [2007] N.R. Uned. 122; [2007] 2 A.C. 262 (H.L.), refd to. [paras. 17, 94].

Mannai Investment Co. v. Eagle Star Life Assurance Co., [1997] A.C. 749; 215 N.R. 321 (H.L.), refd to. [para. 21].

East v. Pantiles (Plant Hire) Ltd. (1981), 263 E.G. 61, refd to. [para. 22].

KPMG LLP v. Network Rail Infrastructure Ltd., [2007] Bus. L.R. 1336, refd to. [para. 23].

Inglis v. Buttery (John) & Co. (1878), 3 App. Cas. 552 (H.L.), refd to. [paras. 28, 69].

Bank of Scotland v. Dunedin Property Investment Co., [1998] S.C. 657, refd to. [para. 30].

Alexiou v. Campbell, [2007] UKPC 11, refd to. [para. 30].

Yoshimoto v. Canterbury Golf International Ltd., [2001] 1 N.Z.L.R. 523, refd to. [para. 32].

Countess of Rutland's Case (1604), 5 Co. Rep. 25b, refd to. [para. 36].

Pepper v. Hart, [1993] A.C. 593, refd to. [para. 38].

National Bank of Sharjah v. Dellborg, [1997] EWCA Civ. 2070, refd to. [para. 40].

Bratton Seymour Service Co. v. Oxborough, [1992] B.C.L.C. 693 (C.A.), refd to. [para. 40].

Homburg Houtimport BV et al. v. Agrosin Private Ltd. et al. - see Ship Starsin, Re.

Ship Starsin, Re, [2004] 1 A.C. 715; 307 N.R. 100 (H.L.), refd to. [para. 40].

R. v. National Insurance Commissioner; Ex parte Hudson, [1972] A.C. 944 (H.L.), refd to. [para. 41].

Partenreederei MS Karen Oltmann v. Scarsdale Shipping Co.; Ship Karen Oltmann, Re, [1976] 2 Lloyd's Rep. 708, refd to. [para. 43].

Shore v. Wilson (1842), 9 Cl. & Fin. 355, refd to. [para. 45].

Butlin's Settlement Trusts, Re, [1976] Ch. 251, refd to. [para. 46].

Amalgamated Investment & Property Co. (Liquidation) v. Texas Commerce International Bank, [1982] Q.B. 84 (C.A.), refd to. [para. 47].

Swainland Builders Ltd. v. Freehold Properties Ltd., [2002] 2 E.G.L.R. 71, refd to. [para. 48].

Smith New Court Securities Ltd. v. Scrimgeour Vickers (Asset Management Ltd.) et al., [1997] A.C. 254; 206 N.R. 30 (H.L.), refd to. [para. 56].

Joscelyne v. Nissen, [1970] 2 Q.B. 86 (C.A.), refd to. [para. 59].

Lovell and Christmas Ltd. v. Wall (1911), 104 L.T. 85 (C.A.), refd to. [para. 59].

Rose (Frederick E.) (London) Ltd. v. Pim Jr. (William H.) & Co., [1953] 2 Q.B. 450 (C.A.), refd to. [para. 60].

Etablissements Georges et Paul Levy v. Adderley Navigation Co. Panama SA; Ship Olympic Pride, Re, [1980] 2 Lloyd's Rep. 67, refd to. [para. 61].

Cohen (George) Sons & Co. v. Docks and Inland Waterways Executive (1950), 84 Lloyd's Rep. 97, refd to. [para. 62].

Britoil plc v. Hunt Overseas Oil Inc., [1994] C.L.C. 561 (C.A.), refd to. [para. 63].

Cambridge Antibody Technology Ltd. v. Abbott Biotechnology Ltd., [2005] F.S.R. 590, refd to. [para. 64].

Carmichael v. National Power plc, [1999] 1 W.L.R. 2042, refd to. [para. 64].

Millers v. Miller (1822), 1 Sh. App. 309, refd to. [para. 69].

Miliangos v. Frank (George) Textiles Ltd., [1976] A.C. 443 (H.L.), refd to. [para. 70].

United Railways of the Havana and Regla Warehouses Ltd., Re, [1961] A.C. 1007 (H.L.), refd to. [para. 70].

Antaios Compania Naviera S.A. v. Rederierna A.B., [1985] A.C. 191 (H.L.), refd to. [para. 93].

MacDonald v. Dextra Accessories Ltd. et al., [2005] N.R. Uned. 124; [2005] 4 All E.R. 107 (H.L.), refd to. [para. 94].

Oxfordshire County Council v. Oxford City Council et al., [2006] N.R. Uned. 169; [2006] 2 A.C. 674 (H.L.), refd to. [para. 94].

Authors and Works Noticed:

Bingham, A New Thing Under the Sun: The Interpretation of Contract and the ICS Decision (2008), 12 Edinburgh L.R. 374, pp. 374 to 390 [para. 37].

House of Lords, Practice Statement (Judicial Precedent), [1966] 1 W.L.R. 1234, generally [para. 41].

McLauchlan, David, Contract Interpretation: What is it About? (2009), 31:5 Sydney L. Rev. 5, pp. 5 to 51 [paras. 32, 45].

McLauchlan, David, The Drastic Remedy of Rectification for Unilateral Mistake (2008), 124 L.Q.R. 608, pp. 608 to 640 [para. 57].

Nicholls, My Kingdom for a Horse: The Meaning of Words (2005), 121 L.Q.R. 577, generally [para. 99]; pp. 577 to 591 [para. 32].

Smith, Marcus, Rectification of Contracts for Common Mistake, Joscelyne v. Nissen and Subjective States of Mind (2007), 123 L.Q.R. 116, pp. 116 to 132 [para. 57].

Spigelmann, From Text to Contract: Contemporary Contractual Interpretation (2007), 81 A.L.J. 322, generally [para. 37].

Valcke, Catherine, On Comparing French and English Contract Law: Insights from Social Contract Theory (January 16, 2009), generally [para. 39].

Counsel:

Christopher Nugee, Q.C., and Julian Greenhill (Instructed by Mayer Brown International), for the appellant;

Robert Miles, Q.C., and Timothy Morshead (Instructed by Carter-Ruck), for the respondent.

Agents:

[Not disclosed.]

This appeal was heard on March 31, and April 1 and 2, 2009, before Lord Hope of Craighead, Lord Hoffmann, Lord Rodger of Earlsferry, Lord Walker of Gestingthorpe, and Baroness Hale of Richmond of the House of Lords. The decision of the House was given on July 1, 2009 and the following speeches were delivered:

Lord Hope of Craighead - see pararagraphs 1 to 4;

Lord Hoffmann - see paragraphs 5 to 67;

Lord Rodger of Earlsferry - see paragraphs 68 to 71;

Lord Walker of Gestingthorpe - see paragraphs 72 to 97;

Baroness Hale of Richmond - see paragraphs 98 to 101.