LLB20503:RECTIFICATION 18/01/2022

LEARNING OUTCOME

• By the end of the topic students will be able to:

• i. define rectification & relevant provisions under
the SRA
• ii. Identify the conditions/situations which allows
RECTIFICATION rectification
LLB 20503 - LAW & EQUITY
SEM 1 2021/2022
• iii. List out available bars to a remedy of
MURSHAMSHUL K MUSA rectification

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Outline of topic

• Introduction
• Nature INTRODUCTION
• Relevant Provisions under SRA 1950 &
• BOP
• Sources of mistake
NATURE
• Mistake - Common mistake & Unilateral mistake rectification
• Fraud
• Limitations

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Introduction Introduction
• A discretionary remedy – A CORRECTION of an instrument that fails to
• Rectification - an equitable remedy normally granted in a accurately express the intention of the parties.
situation where a written instrument does not accord with the
true agreement of the parties. • Is founded on the fact that the relevant instrument does not accord
with the intention of the parties
• If by mistake, a written instrument does not accord with the
true agreement of the parties, equity has the power to reform • Rectification starts from the premise that, as a matter of construction,
or rectify that instrument so as to make it accord with the true the relevant document does not bear the meaning for which the party
agreement/understanding. seeking rectification contends
• What is corrected – not the mistake in the contract but the instrument
• Proper function : to correct a mistake in the way in which a recording it
document has purported to record the parties’ transaction: it is
about putting the record straight, and it cannot alter the • Rectification claims are highly fact specific – each decided on its own
bargain itself. facts.

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Introduction Scope

• Rectification does not mend bargains; it mends the expression of bargains. The • Remedy is available to rectify various kinds of instruments provided the conditions
court should ask itself: is this a case of mending a document or mending a necessary for its grant are satisfied.
bargain? • Covers various conveyancing documents e.g. documents or instruments relating
to sale & leasehold agreements, building contracts; various kinds of insurance
• An exception to Parol Evidence Rule (sec 92 of Evidence Act 1950); wherein policies, bills of exchange, deeds poll, settlements and wills, instruments of
rectification allows oral evidence to alter a written document. appointment, bonds and company registers - may be proper subject-matter for
rectification.
• Parol evidence rule : a substantive common law rule in contract law that prevents • Can be applied to any part of a relevant document by adding, deleting or
a party to a written contract from presenting extrinsic oral evidence that adds to, varying provisions set out therein, and even by substituting the name of an
subtract from, vary or contradict the written terms of the concluded contract. intended party for a name that has been wrongly inserted.
• In rectification, oral evidence is allowed to be submitted before the court to • WHITE V. WHITE(1872) L.R. 15 Eq. 247, an executed conveyance purported to
prove that the document has wrongly recorded the intention of the parties. convey only part of real estate when the agreed intention of parties was to pass
the whole estate. Bacon, V.C. ordered that the deed of conveyance be rectified
so as to conform with the agreed intention of the parties.

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DIAGRAM ON RECTIFICATION Nature

• Objective of remedy : to align instruments with the intentions that they are
Antecedent
PARTIES negotiating agreement Due to mistake or meant to express, and not to rectify the whole bargain entered/agreed
an agreement (common intention fraud earlier on by parties.
of parties)
• James V-C in MACKENZIE V COULSON [1869]: ‘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. But it is always necessary for a
The instrument, does plaintiff to show that there was an actual concluded contract antecedent to
not embody the instrument which is sought to be rectified; and that such contract is
= RECTIFICATION OF
intention of parties
INSTRUMENT inaccurately represented in the instrument.’
as per antecedent
agreement

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Nature Nature

• The remedy presupposes an antecedent contract; and there must be proof that • Maxim: equity looks to the intention of the parties and not
by common mistake of the parties the final completed instrument as executed
fails to give proper effect to the antecedent contract. the words.
• Necessary for a P seeking rectification to show that there was an actually • Allowed rectification or amendments only to the extent to
concluded contract antecedent to the instrument which is sought to be rectified;
and that such contract inaccurately represented in the instruments.
reflect the agreement originally intended by parties.
• In deciding whether there has been a relevant mistake, evidence of the parties’ • May be effected by consent of parties.
actual understanding and intention is admissible – as it would be impossible for a
court to know whether the execution of the document involved a mistake on the • As equitable remedy – it is subject to court discretion to
part of one or both parties without such evidence. grant it.
• Evidence of the previous oral agreement must inevitably be admitted. Without
actual antecedent agreement there is no rectification.

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Nature Nature

• The basic principle of the remedy was explained in the English case • FACTS: Rose, a London merchant, placed an order with Pim for Moroccan
of FREDERICK [Link] (LONDON) LIMITED V WILLIAM [Link] JUNIOR & horsebeans, having discussed and agreed with him that this commodity
CO LIMITED [1953] 2 QB 450 . would be accepted by Rose’s Egyptian buyer as “feveroles”. Both parties
were mistaken, in Egypt horsebeans were not feveroles.
• “ Rectification is concerned with contracts and documents, not with
• Rose sought rectification of the contract on the basis that both parties had
intentions. In order to get rectification it is necessary to show that the
intended to buy and sell feveroles. The Court of Appeal dismissed the
parties were in complete agreement on the terms of their contract,
claim.
but by an error wrote them down wrongly, and in this regard, in
order to ascertain the terms of the contract, you do not look into the • The contract meant what the parties had said in it (horsebeans) not what
they had intended to say in it (feveroles).
inner minds of the parties, into their intentions, any more than you do
in the formation of any other contract.” • Thus a mistake in the terms of the agreement will not be rectified if the
mistake is intended by the parties to the agreement.
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SRA – s 30-33
• S 30 – When instrument may be rectified
• S 31 – Presumption as to intent of parties

RELEVANT PROVISIONS OF SRA • S 32 – Principles of rectification

• S 33 - Specific enforcement of rectified contract
1950

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Sec 30 of SRA 1950 Sec 31-33 0f SRA 1950

• When instrument may be rectified - When, through fraud or a mutual • Sec 31. Presumption as to intent of parties - For the purpose of rectifying a
mistake of the parties, a contract or other instrument in writing does not contract in writing, the court must be satisfied that all the parties thereto intended
truly express their intention, either party, or his representative in interest, to make an equitable and conscientious agreement.
may institute a suit to have the instrument rectified: and if the court find it • Sec 32. Principles of rectification - In rectifying a written instrument, the court
clearly proved that there has been fraud or mistake in framing the may enquire what the instrument was intended to mean, and what were intended
instrument, and ascertain the real intention of the parties in executing the to be its legal consequences, and is not confined to the enquiry what the
same, the court may in its discretion rectify the instrument so as to language of the instrument was intended to be.
express that intention, so far as this can be done without prejudice to rights • Sec 33. SP of rectified contract – A contract in writing may be first rectified and
acquired by third persons in good faith and for value. then, if the plaintiff has so prayed in his plaint and the court thinks fit specifically
enforced.

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Gist of Sec 30 SRA 1950 Gist of Sec 30 SRA 1950

• A. the contract or instrument is in writing; • Zuraidah Ali et al : 4 conditions to be fulfilled :
• B. there is fraud by one party, or mutual mistake by both in framing the • 1. there must be a genuine agreement which is different from the
document; expressed agreement
• C. the written document does not ‘truly express their intention’; • 2. through fraud or mutual mistake of the parties the instrument in question
• D. the court can ascertain the ‘real intention of the parties’; and did not truly express the intention of parties.
• E. relief would not prejudice the rights acquired by third parties in good • 3. court has to find clear proof that there has been fraud or mutual mistake
faith and for value in framing of instrument & must ascertain real intention of parties in
executing the agreement.
• Accordingly parties who can ask for rectification - parties to the contracts
or their representatives in interest. • 4. rectification granted only if without prejudice to BFWN.

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Gist of Sec 30 SRA 1950 Gist of Sec 30 SRA 1950

• a. Contract /instrument to be in writing • B. Fraud or mutual mistake
• Not applicable to oral contract • Cross refer with Section 17, 21-23 of Contracts Act 1950
• There must an agreement/instrument which is different from the • Fraud - must be specifically pleaded, otherwise the court may
antecedent agreement by parties disregard it
• The standard of proof - balance of probabilities
• A mutual mistake had to be shared by both parties, except
where the mistake was made by one party only, but caused by
the fraud of the other

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Gist of Sec 30 SRA 1950 Gist of Sec 30 SRA 1950 - Intention

• C. Intention of the parties • Court needs to look at both the language & substance used in the instrument and
• Intention of parties as per sec 31 is to make an equitable and ascertain whether the real intentions of the parties have been correctly expressed
conscientious agreement in the instrument.
• Rectification can be granted even if there is only a common continuing • Case: JOSCELYNE v NISSEN & ANOTHER [1970] 2 Q.B. 86 Court of Appeal:
intention to contract, rather than a concluded contract, at the time of • “…that it was not necessary to find a concluded contract antecedent to the
reducing the agreement to writing. agreement; that a court had jurisdiction to rectify an agreement if there was a
• Vital to establish the intention of the parties as to their intention at the time common continuing intention in regard to a particular provision of the agreement,
of execution of the document and not at a prior time but that an outward expression of accord and convincing proof that the concluded
instrument did not represent the parties' common intention were required”
• Sec 32 – court needs to determine intention of parties with regard to
meaning & legal consequence at time contract was made. • Followed in THOMAS BATES LTD v WYNDHAM’S LINGERIE LTD [1981] 1 WLR
505

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Case: Zakaria Daud V. Siti Hussin & Ors Decision of the court - continue
[2004] 1 CLJ 844
• 2 lots of lands, namely Lot 196 and Lot 639. Lot 196 was owned by three sisters who
• The denial of one of the parties that the deed as it stands is contrary to his
were predecessors of title of R & Lot 639 was owned by five persons three of whom were intention ought to have considerable weight, and unless the other party can
the sisters owning Lot 196. convince the court that the document does not represent both parties' intentions
at the time of execution, rectification will only exceptionally be ordered.
• In 1932, a transfer was made. It was registered in the A 's favour. The particulars of the
registration reveal that Lot 196 was the subject matter of the transfer. • Indeed, it has been said that it is not sufficient that the written contract does not
• A asserted that the parties to the transfer did not intend that Lot 196 should be the subject represent the true intention of the parties; it must be shown that the written
matter of the transfer. He contended that the parties intended to transfer Lot 639 to him. contract was actually contrary to the intention of the parties”
His case is that it was pursuant to that mistake that he remained in possession in Lot 639 • It is essential that the extent of the rectification should be clearly ascertained and
for all these years. defined by evidence contemporaneous with or anterior to the contract.

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BOP
+ On the party seeking rectification
+ ZAKARIA DAUD V. SITI HUSSIN & ORS [2004] 1 CLJ 844 : “the evidence
in support of the proof of common mistake should be irrefragable. In other
words it should be cogent and must meet a very high standard of proof. The
rationale behind this requirement is not difficult to discern. The transaction
BOP entered into between the parties and by the documents executed between
them voluntarily and for good and valuable consideration are not to be set
aside by the court willy-nilly for the slightest reason. Were it so, the law
would be riddled with uncertainty and commerce will come to a standstill.”
+ Extrinsic & parol evidence will be admitted to ascertain the true intent of
parties.

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BOP BOP

+ Test of strong irrefragable evidence – must be something more than + No reasonable doubt upon the mind that the instrument does not
highest degree of probability. embody the final intention of parties
+ Evidence ‘should be cogent and must meet a very high standard of + Similar to the decision laid down in the English case of FOWLER V
proof’ (ZAKARIA DAUD V SITI HUSSIN). FOWLER 1859 where Lord Chelmsford LC held:
+ The BOP is on the party seeking rectification. He must produce + “A party seeking rectification must establish clearly ‘that the alleged
'convincing proof' not only that the document to be rectified was not intention to which he desires’ (the instrument) ‘to be made
in accordance with the parties' true intentions at the time of its conformable continued concurrently in the minds of all parties down
execution, but also that the document in its proposed form does to the time of its execution, and also must be able to shew exactly
accord with their intentions. and precisely the form to which the deed ought to be brought’.”

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Sources of mistake

• Rectification is an equitable remedy that can be granted were a mistake,

either mutual or unilateral, has been made a legal document that does
not accord with the true intention of the parties
• Among reasons identified for the occurrence of mistakes in instruments:

Sources of mistake • Greater complexity of legal documentation

• Reduced time-frames for completion
• Rising pressure on legal costs
• Expanding resort to multiple drafts and computer-generated documents
• Thus the need to seek rectification of mistakes in documents/instruments

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Sources of mistake

• Per Lord Neuberger of Abbotsbury MR in DAVENTRY DC V DAVENTRY &

DISTRICT HOUSING LTD [2012] 1 WLR 1333: “Where someone makes a
mistake it is often difficult, or even impossible, to explain the mistake or
expand on its nature, beyond identifying it as such. Misreading, muddle,
carelessness, failure to engage, confusion are all possible explanations, but
they do not take matters much further forward. As, for instance with an
GROUNDS FOR
act of negligence, one knows it when one sees it (at least sometimes), but
it is often impossible to explain or expand on it. Often the mistake or
R E C T I F I C AT I O N
negligent act is almost by definition inexplicable, even by the person guilty
of the negligent act or mistake - consider the familiar statement after the
event along the lines ‘I simply cannot understand how I could have done/
not done/ thought/ not thought that’.

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The requirements for mistake in

rectification

MISTAKE • The remedy is essentially founded on the well-known contractual

concept of mutual mistake.
• There are two types of mistakes that can be remedied by
rectification – common/mutual mistake and unilateral.
• Difference between mutual & unilateral mistake explained in THAM
KONG v OH HIAM & ORS 1968 1 MLJ 44 per Syed Agil Barakbah LP: ‘
COMMON/MUTUAL The mistake is mutual where the parties misunderstand each other
MISTAKE and are at cross purposes. In unilateral mistake only one of the
parties suffers from some mistakes.

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The requirements for mistake in The requirements for mutual mistake in

rectification rectification
• In SOUTHWIND DEVELOPMENT S/B v HASS PLANTATION S/B 1996 5 MLJ • CL conditions in ordering rectification:
Richard Malanjum J observed: …for a mistake to be mutual, it must be
common to both parties, and it is essential that the parties should have • A. there must be an actually concluded contract antecedent to
precisely the same intention on the point on which the document is
inaccurate. the instrument to be rectified
• For rectification based on common mistake it needs to be proven - that at • B. there must be clear evidence of the real intention
the time of executing the written contract the parties had a common
intention (even if not amounting to a binding agreement) which, as a • C. there must be a mistake common to both parties, and it must
result of mistake on the part of both parties, the document failed have existed at the time of the execution of the instrument
accurately to record it.
• Where there is common intention as to a provision leading up to execution
• D. the mistake must be exactly proved i.e. Claimant needs to show
and the written instrument does not conform to that intention because of how the precise form in which instrument to be drawn up
a mistake, the court may adjust the writing accordingly.
• E. the mistake must be one of expression only.

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The requirements for mutual mistake in

Common/mutual mistake
rectification
• OH HIAM & ORS v THAM KONG 1967 1 MLJ 65, 1980 2 MLJ 159 PC an appeal from the
• In order for a rectification to succeed, the claimant must decision of the Federal Court which reversed the decision of the High Court.
firstly establish that there is common mistake in the • Disputes involving sale of pieces of land, 6 plots of rubber land in Gombak and a half-plot
of land, Lot 3660 in Setapak. A widow, entered into S&P of the 6 plots or rubber land and
instrument of transaction between the two parties. not the half-plot in Setapak as that was their family home. However in the application of
the Letter of Administration for the sale of the rubber land, the application, mistakenly
• Once the common mistake has been established, the included the 7th plot land that was the half plot of land in Setapak.
court will have the power to rectify the instrument as to • Issues: Whether the Widow-App can claim rectification on the ground of common
ensure that the equity in law is preserved. mistake based on the mistake committed by the broker during the preparation of the
agreement in the sale and purchase of the 7th plot of land (Lot 3660)?
• Evidence + circumstances showed that neither vendor nor purchaser knew or intended to
include Lot 360 when the contract was signed. The element of common mistake is fulfilled
in this case as both parties did not intend that Lot 3660 to be included in the sale.

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Case: Foo Lian Sin & Anor v Ng Chun Lin & Anor
Common/mutual mistake [2006] 1 MLJ 457

• DUNDEE FARM LTD v. BAMBURY HOLDINGS LTD [1978] 1 NZLR 647. Vendor's • P was the tenant of shop house No 9, adjoining shop house No 11 which
intention was to sell 544 acres (220 ha) of their farmland. Unfortunately, the was occupied by D. Both shop houses was originally owned by Hung and
subsequent sale agreement was complicated by the fact that the 544 acres was subsequently sold to the parties.
on numerous titles, and by mistake the vendor's solicitors included in the sale
agreement a title for a 12 acres (4.9 ha) block, on the mistaken belief that these • P claimed that a mutual mistake had occurred in the conveyance of the
12 acres were part of the farm. two shop houses resulting in D becoming the registered proprietors of shop
• However, these extra 12 acres were not even near the farm, and was instead the house No 9 which was purchased by them and P becoming the registered
vendor's residential lifestyle block 3 miles (4.8 km) away in Pukekohe. proprietors of shop house No 11.
• When the vendor notified the purchaser of this mistake, the purchaser refused to • D denied that there was such a mistake.
settle on the sale contract, upon which the vendor brought an action for • The learned judge, having been satisfied that there was a mutual mistake
rectification and specific performance. in conveyance of the respective lots to the respective parties, made an
• The High Court of New Zealand in this case ruled that as it was a pure mistake that order directing the registrar or land administrator to make necessary
the extra title was included, and that the purchaser's position had not changed, rectification of the respective register document of title as well as on the
they ruled in favour of both rectification and for specific performance. issued document of title.

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Foo’s case - continue Tay Tho Bok case

• D appealed. • TAY THO BOK & ANOR V SEGAR OIL PALM ESTATE S/B 1996 3 MLJ 181
• P entered into an agreement to purchase 11 pieces of land from the defendant.
• Court of Appeal : After paying a deposit and signing the agreement, P found that part of the land was
being used by the Public Utilities Board for water pipelines and by Tenaga Nasional
• “…from the point of view of the D wanted to buy land described Bhd for transmission cables.
with the shop house standing on it. That is what they got. P might • P argued that the purchase price ought to be reduced to reflect the presence of
have been mistaken in thinking that they were purchasing shop these encumbrances. D refused, and argued that they had no knowledge of any
house No 9 when they bought the land. If that is the case, that is land acquisition by the Public Utilities Board and that they did not make any
representation that the transmission lines did not run across the land.
their mistake. It may be that the solicitor had made a mistake. If that
• P claimed that D had dishonestly concealed relevant material facts from them and
is the case, then P should have sued the solicitor. Whether it was the had misled them into believing that the transmission lines and pipelines were not within
mistake of the P or the solicitor, the mistake is not a mutual mistake the land concerned.
between D and P . On that ground we are of the view that there • Issue : whether there was active concealment of the existence of the transmissions
was no mutual mistake as between the parties. and pipelines on the land by the D prior to the signing of the agreement

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Tay case Mutual mistake - recap

• High Court : acts of D amounted to fraud within the meaning of section 17 of the • Thus in order for rectification of a mutual mistake is must be
Contracts Act. Evidence that D knew the existence of the transmission lines and
pipelines on the said land prior to the signing of the sale and purchase agreement. It founded upon the applicant showing :
was found that there was such concealment as the D's agents had informed the P,
when they went to view the land, that the boundary of the land was up to the • that the parties had reached a prior agreement whose terms are
transmission lines and pipelines and those structures were not within the land.
definite and ascertainable,
• Court of Appeal upheld High Court's finding on fraudulent misrepresentation. P had
applied to the Court of Appeal for rectification of the agreement to reflect the • that the agreement was still effective when the instrument was
reduced purchase price in view that part of the land was taken up by water pipes
and high tension cables. executed,
• The Court of Appeal did not allow the plaintiff's application for rectification but held
that the agreement was terminated by the defendant's fraudulent misrepresentation. • that the instrument fails to record accurately that prior agreement,
• There was no mutual mistake as both parties had agreed for S&P of the 11 plots of • and that if rectified as proposed, the instrument would carry out the
land & they did not misunderstand each other on the subject matter to be sold.
agreement.

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UNILATERAL MISTAKE

MISTAKE • Rectification may be available where the claimed mistake is only made by one
party – where typically because the instrument in question formalizes a unilateral
acts such as a trust, or that the where the instrument was intended to record an
agreement between the parties, but one party says that the instrument does not
accurately do so, while the other party says that it does.
• There are demanding preconditions that are required to rectify a unilateral
mistake:

UNILATERAL MISTAKE • 1. that the party resisting rectification knew or ought to have known about the
mistake
• 2. and that permitting the party to take advantage and mistake would amount to
fraud or the equivalent of fraud

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UNILATERAL MISTAKE UNILATERAL MISTAKE

• Rarely ordered if mistake is one-sided • If unilateral mistake exists, the party seeking rectification can
• Reason – consequences of a rectification order on the non-
only succeed in their claim if they can prove that the other
mistaken party, might be disadvantage as they believe that the
party had committed fraud or were aware about the mistake.
contract was true. • Stated in Snell on Equity:
• To obtain rectification for unilateral mistake, CL requires claimant to • By what appears to be a species of equitable estoppel, if one
prove that D knew of the mistake when D entered into the written party to a transaction knows that the instrument contains a
agreement. mistake in his favour but does nothing to correct it, he (and
those claiming under him) will be precluded from resisting
• Either actual knowledge of mistake or D willfully/recklessly omitting
rectification on the ground that the mistake is unilateral and
to do what a reasonable & honest person would have done – if NOT not common.
– no rectification.
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Case: YUSON BIEN & ANOR V BANKERS

UNILATERAL MISTAKE - recap
TRUST CO LTD [1980] 1 MLJ 32
• Where only one party to a document is acting under a mistake, rectification • A had applied to rectify an agreement by including two pieces of
would have the result of imposing on the defendant a bargain which he did not, land described as Lots 40 and 85 on the ground of mutual mistake.
and did not intend to, make, and relieving the claimant from a bargain which he
did, albeit did not intend to, make On the facts it appeared that R, the executors and trustees of the
estate of the deceased had obtained a court order for the sale of
• Rectification for unilateral mistake is a “drastic” remedy which is available only in
limited circumstances; and the conditions for the grant of such relief must be
all or any of the immovable properties of the estate by public
strictly satisfied auction or by private contract.
• In a claim based on unilateral mistake, the parties’ subjective states of mind are • They caused a valuation of the properties to be prepared and this
relevant. stated that the two lots had been sold and no longer belonged to
• In the case of unilateral mistake, the claimant’s conduct (such as its own the estate. R relied on the valuation reports and never intended to
carelessness in reading the document carefully) may preclude the remedy if the sell the two lots, which they considered did not form part of the
claimant’s own deficiencies rather than the defendant’s unconscionable estate.
conduct caused the mistake

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Yuson’ s case Yuson’s case- decision

• A had agreed to buy the properties belonging to the estate • There is no need for “ a prior contract, but a prior common
• In the draft agreement the two lots were included by mistake but subsequently intention.“
they were deleted and the agreement signed and duly endorsed. Later it was
discovered that only part of the two lots had in fact been sold and that the two • The burden of proving this common and continuing intention lies
lots still belonged to the estate. upon the party who claims that the written contract should be
• Wan Suleiman FJ: “The terms of proposal of R were unambiguous and rectified
unmistakable and the answer of A when the agreement was engrossed was an
unequivocal and unconditional acceptance. Consequently, A were bound in the • If the evidence is such as to satisfy that common intention did not
absence of fraud or warranty however clearly they might afterwards make it appear in the written document then there is a case for
appear that they were labouring under a mistake in their acceptance of the
proposal. They cannot be allowed to escape from the effect of their agreement rectification.
by merely showing that they understood the terms in a different sense from that
which the terms bear in their legal effect”

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UNILATERAL MISTAKE UNILATERAL MISTAKE

• A ROBERTS AND CO LTD v LEICESTERSHIRE COUNTY COUNCIL 1961 2 All ER 545 in which the • Held: ‘a party is entitled to rectification of a contract upon proof that he
court considered the circumstances required for rectification of a contract after a believed a particular term to be included in the contract, and that the
unilateral mistake. other party concluded the contract with the omission or a variation of that
• The P-company submitted a tender to the D-council for the construction of a school. term in the knowledge that the first party believed the term to be
included.
Negotiations followed during which P submitted a revised tender containing an amended
price and stating the completion period of 18 months for the first time. D responded with • P need to prove that D had actual knowledge of P’s mistake to succeed
in rectification. Evidence demonstrated that during meetings held
unequivocal acceptance of the tender. However, D- council failed to mention that it had between P-Co and D-Council at all times P was negotiating under the
resolved that the completion period ought to be 36 months and had changed the term impression that the period was 18 months as initially proposed and the D
accordingly. It was clear that the greater the contract period, the greater the price of the knew about this mistaken impression but did not correct it.
job. Therefore, the substitution of 18 months with 36 months was significant. • The agreement was rectified to reinstate the 18 months initial period.
• Pennycuick J allowed the company’s claim for rectification. • This decision was followed in subsequent cases.

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UNILATERAL MISTAKE

• THOMAS BATES AND SONS LTD v WYNDHAM’S LINGERIE LTD followed the decision
held in the case of A ROBERTS.
• In this case, an application was made for rectification of a rent review clause in a
lease. When executing the lease, the tenants’ officer, Mr Avon, noticed that the
rent review clause in the lease drafted by the landlords was defective by not
including a provision related to default of agreement.
• The trial judge held that the conduct of Mr Avon, who had not given evidence,
amounted to sharp practice (unconscionable conduct). It was held that the
FRAUD
tenants knew of the omission and of the landlords’ mistake.
• When establishing the right to rectification of a document, the claimant does not
have to meet more than the civil standard of balance of probabilities, but
convincing proof is required to counteract the cogent evidence of the parties’
intention displayed by the instrument.

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Fraud Fraud

• An act of fraud can be construed by fulfilling the elements under section • In TAY THO BOK’s case the court held that to prove fraud as
17 of the Contracts Act.
per contract law, it must be shown that the D has been guilty
• In TAY THO BOK& ANOR v SEGAR OIL PALM ESTATE SDN BHD, This case of a deliberate wrong by inducing the party to act to his
illustrates a case of fraud by concealment of material facts which induced
the other party to enter into the contract. detriment. The fact that the D’s agent has made fraudulent
• The Court relied on section 17 (b) of the Contracts Act which provide that misrepresentation concerning the existence of structures which
there must be the following elements: were not intended to be part of the sale constituted fraud as
• i) an active concealment of a fact, and per under sec 17 of Contact Act.
• (ii) the concealment was made by a person who has knowledge of it. • Civil cases – is to be proved on a balance of probabilities.
• In case of unilateral mistake, the claimant can succeed in rectification if • If involved immovable properties - more than the highest
can prove fraud of the other party or that the other party was aware of
the mistake – see A ROBERTS & Co LTD. degree of probabilities.

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Limits of rectification Grounds For Refusal of Rectification

• Rectification is not available to change the substance of the • 1. Acquiescence

transaction, or to correct an error in the transaction itself
• 2. Discretionary Remedy
• It is not available merely to save a party from the consequences of
an improvident bargain • 3. Unilateral Mistake
• It is not available where the parties had no intention at all as regards • 4. Bona Fide Purchaser
a particular matter, even if they clearly would have done so had
• 5. Delay defeats equity
that matter been brought to their minds
• Rectification cannot be invoked to re-write the course of history - • 6. Alternative suitable remedy
contract
• An erroneous assumption cannot justify an order for rectification
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Specific performance of rectified

BONA FIDE PURCHASER
contract
• Bona fide purchaser for value means any person who provides • Section 33 of SRA
consideration, including money or property, to a seller or transferor of real
• A contract in writing may be first rectified and then, if the plaintiff
property or personal property equal to the fair market value of the real or
personal property sold or transferred. has so prayed in his plaint and the court thinks fit, specifically
enforced.
• A bona fide purchaser for value without notice (BFPFVWN) is a good-faith
buyer who has paid a stated price for a property without knowledge of • This provision states the usual effect of a successful suit for
existing prior claims or equitable interests. rectification which then leads onto specific performance of the
• If the contract indicates that the parties have provided consideration contract as rectified.
acceptable to equity, rectification will not be granted.
• The nature of the type of interest in respect of which this relief is to be
given is referred to as an equitable and conscientious agreement.
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Re cap References

• Rectification is not a way to retroactively allow one party to change • ZURAIDA ALI ET AL – EQUITY & EQUITABLE REMEDIES
a subsequently recognized error of judgment by one or both parties,
nor is it to be used as a substitute for due diligence and the • MOHSIN & WAN AZLAN – EQUITY & TRUST IN MALAYSIA
importance of written contracts to commercial activities
• S ATKINS – EQUITY & TRUST
• Rectification is not a do over and like many equitable remedies, is
only granted in specific and exceptional cases.
• It will not substitute a better judgment or proper due diligence,
• And requires strong evidence in order to for a court to exercise its
equitable jurisdiction.
• Under SRA 1950 Malaysia, relevant provisions are under Chapter III
sec 30-33.

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