Interpretation and Rectification: Lord Hoffmann’s Last Stand

Abstract

In this article, the author analyses the recent decision of the House of Lords in Chartbrook Ltd v Persimmon Homes Ltd concerning the law of contract interpretation and rectification. After explaining the difficult facts of the case and the reasons given by their Lordships for reversing the judgments of the lower courts on the interpretation issue, which were based on the plain meaning of the clause in dispute, the author discusses the further, albeit obiter, ruling that evidence of prior negotiations is inadmissible as an aid to interpretation. He argues that the reasons for this conclusion given in the main judgment of Lord Hoffmann are unconvincing and suggests that, in this respect, Chartbrook is unlikely to be followed by the New Zealand Supreme Court in view of that Court’s decision in Gibbons Holdings Ltd v Wholesale Distributors Ltd that evidence of subsequent conduct is admissible as an aid to interpretation. The author also discusses Lord Hoffmann’s ruling on the alternative claim in Chartbrook for the equitable remedy of rectification and suggests that, while his Lordship’s conclusion is correct, the reasoning is difficult and likely to generate further debate as to the requirements for granting that remedy.

Keywords: Contract, Interpretation, Rectification,Chartbrook Ltd v Persimmon Homes Ltd

JEL Classification: K12