Lawbite: Mistakes can be common and costly

• United Kingdom

• Litigation and dispute management
• Real estate litigation - LawBite

10-09-2018

CDS (Superstores International) Limited v Place Road Properties Limited (Unreported)

The County Court in Bristol has agreed to rectify the rent and rent review provisions in a lease on the basis that the agreement was reached under a mistake.

The parties completed a new lease of business premises on the Isle of Wight in June 2017 following a lengthy 6 year period of negotiations. Throughout those negotiations and until May 2017 the rent and rent review clauses in the draft lease reflected the parties’ agreement that there be a 50% rent reduction over the first three years of the term, and fixed rental increases every 5 years of the term.

In a tracked version of the draft lease sent by the landlord’s solicitors to the tenant’s solicitors in May 2017, however, the rent and rent review clauses had been amended to remove the rent reduction and substitute the rent review clause with more landlord-friendly wording. The tenant’s solicitors did not review this version and these amendments were not raised to his attention by covering email/ letter or in discussions with the landlord’s solicitors.

Unusually the lease was then completed whilst the tenant’s solicitor was driving his car in France. In the circumstances, and without the draft lease before him, he asked the landlord’s solicitors to take him through any significant changes to a previous draft of the lease. The landlord’s solicitors took him through some changes but not the rent and rent review provisions (at court he asserted unconvincingly that this was because he believed the tenant’s solicitors to be asking only for those changes made to the post-May 2017 draft).

It was only after completion that the tenant and its solicitors realised that the rent and rent review provisions had been altered. It applied to the court for an order rectifying the lease to reinstate the original rent and rent review provisions on the basis of common or unilateral mistake.

The Court made the order sought. It stated that the landlord’s solicitors had known, or suspected, that the tenant’s solicitors mistakenly believed that the rent and rent review provisions were as reflected in the pre-May draft. Further, that he had taken advantage of the situation to the benefit of his client. It found that at no point had the parties discussed a revision to these provisions let alone reached an agreement on these amended terms.

Key points

• It is common to say that certain cases are fact specific but where mistake is argued they truly are. What needs to be evidenced depends on whether common mistake or unilateral mistake is being argued but can involve the respective parties’ intention, beliefs and awareness which can be difficult to demonstrate. A lot rests on how compelling the witness evidence is.
• Whilst the tenant’s solicitor was not heavily criticised for not reading the May 2017 tracked version of the draft lease or for completing by telephone without access to the documents the court did comment that he was careless in this respect. The situation may have been avoided had the circumstances been different.
• The landlord had suggested to the court that it may reach the conclusion that there was no concluded agreement at all. The Court reject this interpretation.