The Club Schanck Resort Company Limted v Cape Country Club Pty Ltd [2001] VSCA 2

The Club Schanck Resort Company Limted v Cape Country Club Pty Ltd [2001] VSCA 2 - VSCA 2001 case summary — Zoe

[11]

With a view to bringing the deed poll to tax The Commissioner of Stamp Duties relied (as did the present appellant both here and at first instance) on the decision of the Court of Appeal in Frederick E. Rose (London) Ltd. v. William H. Pim Junior & Co. Ltd.[3]. That case has amused generations of law students, being made memorable on account of its revelation of a possible arcane distinction between Algerian, Moroccan and Tunisian horsebeans on the one hand and feveroles on the other, the entertaining judgment of Denning, L.J. and the exceedingly distinguished Bar representing the respondent, who failed on appeal to sustain the primary judgment. Sheller, J.A. in Carlenka took a measure of trouble to demonstrate that some of the statements contained in the judgment of Denning, L.J. in Rose v. Pim were such as to confine too narrowly the availability of equitable relief by way of rectification of instruments. In particular his Honour pointed out, by reference to authority, that the availability of that relief depends on "disconformity between the form or effect of the document executed and the intention of the parties or party who executed it", and is not confined, as Denning, L.J. had it, to cases where "the parties were in complete agreement on the terms of their contract, but by an error wrote them down wrongly." Sheller, J.A. appears to have accepted, and in effect to have applied, the decision of Brightman, J. in Re Butlin's Settlement Trusts[4], who considered rectification to be available "... where the words of the document were purposely used but it was mistakenly considered that they bore a different meaning from their correct meaning as a matter of true construction." Sheller, J.A. further disapproved, by reference to authority, of the view expressed by Denning, L.J. in Rose v. Pim that proof of disconformity between the terms of a document and intention of the party or parties executing it must, in order that rectification may be ordered, be limited to evidence of outward acts.

[61]

If I may say so, what I have quoted from the judgment of Sheller, J.A. is apt to mislead if taken out of context and that may have happened here; for we do not know with what emphasis the matter was argued below. The most obvious case for rectification is "where particular words have been added, omitted or wrongly written as the result of careless copying or the like"[16]. In contrast it has been said that a mistake merely about the effect of the language used will not justify rectification - as was concluded by the Court of Appeal in Rose v. Pim itself and by the High Court in Maralinga Pty. Ltd. v. Major Enterprises Pty. Ltd.[17]; see also Bacchus Marsh Concentrated Milk Co. Ltd. v. Joseph Nathan & Co. Ltd per Higgins, J.[18] To that extent, then, a distinction may be drawn between mistake as to form and mistake as to effect. In Carlenka, the parties had agreed upon amending a trust deed to empower the trustee to distribute income to a certain company. The amendment was drawn and settled by solicitors and yet by mistake the words used were apt to empower the trustee to distribute not just income, but also capital, thereby attracting significant consequences for duty. Hence the application to have the amending deed rectified to achieve what had been intended and no more. The words chosen for the amendment had been chosen deliberately; it could not be said otherwise of the work of the solicitors engaged. None the less - and no doubt in part because the common intention was regarded as being to achieve a particular legal result in the way of distributing income only and the amending deed was itself necessarily complex and legalistic in nature - the amending deed was held not to have given effect to the common intention of the parties and so rectification was ordered. It was in that context that Sheller, J.A. referred in passing to the availability of rectification where there was disconformity "between the form or effect of the document executed" and the common intention.

[68]

Where rectification of a document is sought on the ground of common mistake, as was the case here, before the remedy is granted it must be established that the mistake is one which relates to the embodying of the parties' intention in the written agreement - see Pukallus v. Cameron[24]. As Phillips, J.A. has shown, no such mistake occurred in this case. The mistake which the parties made was to assume that the tribunal had jurisdiction or power to do what the terms of settlement contemplated. They proceeded to make the agreement on that wrong assumption, but there was no mistake as to the embodying of their common intention in the terms of settlement. They agreed that, failing agreement between them, either could request the tribunal to determine the level of the ongoing charges and that, subject to the appeal process, such a determination would be binding. What they so agreed upon was faithfully reproduced in the written agreement signed by them. Unlike the situation in Commissioner of Stamp Duties (N.S.W.) v. Carlenka Pty. Ltd.[25], the document here, on its true construction, did not wrongly state the parties' intention. Thus, there is no basis on which the court could properly rectify the terms of settlement. The situation is not dissimilar to that which prevailed in Pukallus where the parties signed a contract of sale of land which was identified by reference to title particulars, believing that the area contained a bore and some cultivated land. In fact, both lay outside the subject land. It was held that the contract could not be rectified so as to include the bore and the cultivated land because that mistake was not a mistake in the embodiment of the parties' intention in the written agreement, but was a mistake as to what features were within the boundaries of the land sold. The parties in Pukallus, like the parties in the present case, proceeded to reach an agreement on a wrong assumption but made no mistake in embodying their agreement in the document which they executed with the intention that it be binding on them.

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Judgment (87 paragraphs)

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Legislation Cited (2)