Monday, 15th MayContract: Rectification and precise scope of intention of parties

Contract: Rectification and precise scope of intention of parties

CA & CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd  [2017] VSCA 11

The respondents were licensed real estate agents. The appellants were property developers who entered into written sales authorities with each of the agents. The agents commenced proceedings for recovery of their claimed commission. The developers cross-claimed that the agents were not entitled to commission because the sales authorities contravened the Estate Agents Act 1980 (Vic). The agents sought to amend their statements of claim to seek relief by way of rectification of the sales authorities.

The issue on appeal was whether the agent’s amended claim, seeking relief by way of rectification, should be struck out. This raised a question:

• Whether contravention of an Act precludes rectification in respect of that contravention; and
• As to the proper test for whether amended pleadings should be struck out with no right to re-plead.

Held:

The central consideration in whether the court will order rectification of an instrument is the precise scope of the intention of the parties. If the rectified document would not reflect the common intention of the parties, then the remedy will not be granted. In this case, rectification will not necessarily defeat or undermine the purpose of the Estate Agents Act, and the Court should take a proportionate response to the contravention.

The agent’s amended claim did not have no real prospects of success, in the sense of being fanciful. Accordingly, the amended claim should not be struck out.

NSWCA cases considered include:

• Caringbah Investments Pty Ltd v Caringbah Business and Sports Club Ltd (in liq) [2016] NSWCA 165
• Mayo v W & K Holdings (NSW) Pty Ltd (in liq) [2015] NSWCA 119
• High Court cases considered include:
• Nelson v Nelson (1995) 184 CLR 538
• Simic v New South Wales Land and Housing Corporation [2016] HCA 47; 91 ALJR 108