Court of Appeal Supreme Court New South Wales Medium Neutral Citation: James Adam Pty Ltd v Fobeza Pty Ltd [2020] NSWCA 311 Hearing dates: 4 November 2020 Decision date: 03 December 2020 Before: Bell P at [1]; Macfarlan JA at [3]; Leeming JA at [4]. Decision: Appeal dismissed, with costs. Catchwords: CONTRACTS - construction - mistake - whether mistake can be corrected by construction - contract for sale of proposed lot defined by reference to sketch plan - vendor obliged to procure subdivision in accordance with sketch plan - sketch plan showed area of 2001m2 - purchaser entitled to rescind if registered plan contained area of 2100m2 or more - whether literal meaning of language created absurdity or inconsistency - whether objective intention self-evident - consideration of relationship between construction and rectification - consideration of the term "rectification" Legislation Cited: Married Women's Property Act 1882 (UK) Surveying and Spatial Information Regulation 2017 (NSW), cl 66 Cases Cited: Bache v Proctor (1780) 1 Dougl 382; 99 ER 247 Bowler v Hilda Pty Ltd (2001) 112 FCR 59; [2001] FCA 342 Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101; [2009] UKHL 38 East v Pantiles (Plant Hire) Ltd (1981) 263 EG 61 Energy World Corporation Ltd v Maurice Hayes & Associates Pty Ltd [2007] FCAFC 34; 239 ALR 457 Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53 Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust [2019] 1 NZLR 161; [2018] NZSC 75 Harker-Mortlock v Commonwealth Bank of Australia [2019] NSWCA 56 HDI Global Specialty SE v Wonkana No. 3 Pty Ltd [2020] NSWCA 296 Holding & Barnes Plc v Hill House Hammond Ltd [2001] EWCA Civ 1334; [2002] 2 P & CR 11 Hunt v Hunt (1862) 4 De GF & J 221; 45 ER 1168 ING Bank NV v Ros Roca SA [2011] EWCA Civ 353; [2012] 1 WLR 472 Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184 McHugh Holdings Pty Ltd v Newtown Colonial Hotel Pty Ltd (2008) 73 NSWLR 53; [2008] NSWSC 542 Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297 National Australia Bank Ltd v Clowes [2013] NSWCA 179 Newey v Westpac Banking Corporation [2014] NSWCA 319 Perpetual Ltd v Myer Pty Ltd [2019] VSCA 98 Saxby Soft Drinks Pty Ltd v George Saxby Beverages Pty Ltd [2009] NSWSC 1486; 14 BPR 27,213 Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liquidation) (2019) 99 NSWLR 317; [2019] NSWCA 11 Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 SZOXP v Minister for Immigration and Border Protection (2015) 231 FCR 1; [2015] FCAFC 69 Tatham v Huxtable (1950) 81 CLR 639; [1950] HCA 56 Wilson v Wilson (1845) 14 Sim 405; 60 ER 415 Wilson v Wilson (1854) 5 HL Cas 40; 10 ER 811 Texts Cited: J Bentham, An Introduction to the Principles of Morals and Legislation (University of London, The Athlone Press, 1970) J Carter, The Construction of Commercial Contracts (Hart Publishing, 2013) R Catterwell, A Unified Approach to Contract Interpretation (Hart Publishing, 2020) R Goff, "The Search for Principle" (1983) 69 Proceedings of the British Academy 169 J D Heydon, Heydon on Contract (Lawbook Co 2019) D Hodge, Rectification (2nd ed 2016, Sweet & Maxwell) D McLauchlan, "The lingering confusion and uncertainty in the law of contract interpretation" [2015] LMCLQ 406 F Pollock, Principles of Contract (Stevens & Sons, 7th ed, 1902) J Tarrant, Rectification of Documents (Federation Press, 2020) Category: Principal judgment Parties: James Adam Pty Ltd (Appellant) Fobeza Pty Ltd (First Respondent) William Kevin Young (Second Respondent) Representation: Counsel: M Ashhurst SC, G Farland (Appellant) D Price (Respondents) Solicitors: Kardos Scanlan (Appellant) Don McDougall Lawyer (Respondents) File Number(s): 2020/00163188 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division (Real Property List) Citation: [2020] NSWSC 597 Date of Decision: 20 May 2020 Before: Darke J File Number(s): 2019/351438 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the decision] James Adam as vendor and Fobeza as purchaser entered into a contract for the sale of rural land. One of the parcels of land to be sold had not come into existence at the date of contract, and was described as "Lot 102" in a proposed plan of subdivision. "Lot 101" in the proposed subdivision was to be excluded from the sale. Annexed to the contract was a sketch plan of the proposed subdivision, and cl 39 of the contract provided that completion of the contract was conditional "upon the registration of the plan of subdivision in accordance with the sketch plan". The sketch plan was drawn by a registered surveyor, and stated that all dimensions and areas on the plan were "preliminary only". The boundaries of proposed Lot 101 were precisely defined in the sketch plan by lengths and bearings, but its area was incorrectly stated to be "2001m2". The correct area of proposed Lot 101 was in fact 2205m2, and this area was stated on the plan of subdivision when it was registered. The registered plan of subdivision had almost precisely the same dimensions and bearings as the sketch plan. The vendor notified the purchaser of the subdivision following registration, in accordance with the contact, and later that day the purchaser purported to rescind pursuant to cl 41 of the contract. Clause 41 granted the purchaser a right to rescind if the area of Lot 101 "in the plan of subdivision as registered is shown on the plan as being 2,100 sq. m or more". The vendor denied the validity of the notice of rescission, and served a notice to complete. The purchaser brought proceedings seeking a declaration that it had validly rescinded and the return of its deposit. The vendor sought a declaration that the contract be construed so as to read "2100" as "2310" in cl 41, on the basis that because 2100 was approximately 5% greater than 2001 (the incorrect area of Lot 1), a figure of 2310 was appropriate, being approximately 5% greater than 2205 (the correct area of Lot 1). The primary judge held that the purchaser had validly rescinded. The vendor appealed to the Court of Appeal. The issues in the appeal were: i) Whether the literal construction of cl 41 was absurd; and ii) Whether, if so, the intended meaning of cl 41 was self-evident. Consideration was also given to: iii) The distinction between rectification by construction and rectification in equity. The Court (Leeming JA, Bell P and Macfarlan JA agreeing) held, dismissing the appeal: As to issue (i): 1. The contract contained an error sufficiently absurd or inconsistent to engage the first limb of the doctrine of rectification by construction. The absurdity or inconsistency flowed from the fact that the sketch plan identified both a precise physical area by dimensions and bearings and an area of 2001m2, the latter being used to derive the area in cl 41 on which the purchaser's right of rescission depended. The vendor's obligation to register the plan of subdivision "in accordance with the sketch plan" was apt to pick up the precise dimensions and bearings, but if the vendor complied with this obligation, as it did in this case, the purchaser would have a right to rescind. There was no rational basis for imputing such an intention to the parties: at [1], [3], [44]-[46], [55]-[56]. Wilson v Wilson (1854) 5 HL Cas 40; 10 ER 811; and HDI Global Specialty SE v Wonkana No. 3 Pty Ltd [2020] NSWCA 296 discussed. As to issue (ii): 2. Even where it is clear that something has gone awry in the language of a contract, construction is to no avail if it is unclear how the absurdity or inconsistency should be resolved: at [1], [34], [63]. Energy World Corporation Ltd v Maurice Hayes & Associates Pty Ltd [2007] FCAFC 34; 239 ALR 457; Perpetual Ltd v Myer Pty Ltd [2019] VSCA 92; and ING Bank NV v Ros Roca SA [2011] EWCA Civ 353; [2012] 1 WLR 472 referred to. 3. Unlike cases where there is a binary choice between constructions, and it is self-evident which is to be taken to have been the parties' objective intention, here there were a number of possible constructions of cl 41, none of which was self-evident: at [1], [3], [66]-[71]. As to issue (iii), per Bell P, Macfarlan JA agreeing: 4. The use of "rectification" in the context of both common law contractual construction and equitable rectification is apt to confuse. The principles of contractual construction associated with Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53 need not be elevated to the status of a "doctrine": at [2], [3]. per Leeming JA: 5. The doctrines of "rectification by construction" and "rectification in equity" both correct a demonstrable mistake in a written instrument. However, they remain conceptually distinct: at [26]-[34]. Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liquidation) (2019) 99 NSWLR 317; [2019] NSWCA 11; Harker-Mortlock v Commonwealth Bank of Australia [2019] NSWCA 56; Perpetual Ltd v Myer Pty Ltd [2019] VSCA 98; Bowler v Hilda Pty Ltd (2001) 112 FCR 59; [2001] FCA 342; and Holding & Barnes Plc v Hill House Hammond Ltd [2001] EWCA Civ 1334; [2002] 2 P & CR 11 referred to. 6. Ordinarily, ascertainment of the true meaning of a document as a matter of construction should precede rectification in equity: at [35]-[36]. Harker-Mortlock v Commonwealth Bank of Australia [2019] NSWCA 56; Saxby Soft Drinks Pty Ltd v George Saxby Beverages Pty Ltd [2009] NSWSC 1486; 14 BPR 27,213; Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust [2019] 1 NZLR 161; [2018] NZSC 75; and Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 referred to. Judgment 1. BELL P: I have had the benefit of reading the judgment of Leeming JA and agree with it subject to one minor qualification. 2. I would personally eschew the terminology of "rectification by construction". Whilst Leeming JA makes very plain the distinction between this concept and the equitable doctrine of rectification, the use of "rectification" in both contexts is, in my opinion, apt to confuse. Rectification in equity is a mainstream doctrine and the principles associated with it are well understood in Australia and are set forth in leading texts. So also, decisions such as Fitzgerald v Masters (1956) 95 CLR 420 are well understood as permitting a contract to be construed in very limited circumstances in a way that involves a recognition that the drafting of the contract has miscarried. The principles of contractual construction most closely associated in Australia with Fitzgerald v Masters do not, in my opinion, need to be elevated to the status of a "doctrine" or fixed with a label which might be thought to undermine the importance of courts adhering to the language parties have chosen to employ in setting out the nature and scope of their contractual relations. 3. MACFARLAN JA: Subject to the same qualification as stated by Bell P, I agree with Leeming JA. 4. LEEMING JA: This appeal raises a single point: whether the primary judge (Darke J) erred in dismissing the appellant/defendant's cross-summons for "rectification" (understood as a matter of construction, as distinct from rectification in equity) of a clause conferring a right of rescission in a contract for the sale of land. Background 1. There are no contested facts. The appellant, James Adam Pty Ltd, and the first respondent, Fobeza Pty Ltd, entered into a contract for the sale of land near Cowra. James Adam was the vendor, Fobeza was the purchaser, and the purchase price was $2,250,000 with a deposit of $112,500. One of the parcels of land to be sold had not come into existence at the date of the contract (17 May 2019). It was described as "Lot 102 in proposed plan of subdivision, as referred to in clause 39 of 'Padua' 1380 Reg Hailstone Way Woodstock, being Lot 1 in Deposited Plan 841539, folio 1/841539." 2. Clause 39 was as follows: "39.0 Subdivision of Lot 1 in Deposited Plan 841539 39.1 The Vendor discloses that it has agreed to transfer 2001 square metres of the subject lot, being Lot 1 in DP 841539, to the Cowra Council and Rural Fire Services for use as its depot for the area. 39.2 Annexed herewith is an email dated 14 May 2019 from Core Rural Consulting to the Vendor's Solicitor, including a sketch plan of the proposed subdivision of the subject lot and in which is described proposed Lots 101 and 102, and showing the location and width of a proposed easement for electricity mains. The vendor discloses and the purchaser agrees and acknowledges that proposed Lot 101 is excluded from the sale, and that proposed Lot 102 is included in the sale. 39.3 Completion of the contract is conditional upon the registration of the plan of subdivision in accordance with the sketch plan, including creation, location and width of the proposed easement. In the event the subdivision is not effected on or before the date for completion clause 41 hereof shall apply." 1. The sketch plan annexed to the contract, to which cl 39.2 referred, was as follows. 1. The sketch plan contains a great deal of information. It is convenient to notice certain aspects immediately. 1. The plan was derived from the existing Deposited Plan identifying the vendor's land, Lot 1 of Deposited Plan 841539. It was styled a "Plan of Subdivision". If and when something like it but in registrable form was registered, two new lots would be created: lot 102 (the number appears to the left/west of the depot) and lot 101 (the number appears towards the eastern boundary of the depot, to the east of the circled water tank). 2. The draft sketch includes a box, under the heading "DRAFT PLAN", which contains the following: "THIS PLAN IS NOT CHECKED OR REGISTERED BY THE LAND TITLES OFFICE ALTERATIONS MAY BE REQUIRED PRIOR TO ITS ACCEPTANCE AND REGISTRATION ALL DIMENSIONS AND AREAS STATED ON THIS PLAN ARE PRELIMINARY ONLY AND ARE SUBJECT TO CONFIRMATION AND FURTHER SURVEY THE POSITION AND NATURE OF EASEMENTS TO BE CREATED ARE SUBJECT TO FURTHER SURVEY. ADDITIONAL EASEMENTS MAY BE REQUIRED" 1. The boundaries of proposed lot 101 are precisely defined. Their lengths and bearings are stated to be 71.905m with a bearing of 351º12'40" (western boundary), 38.465m with a bearing of 270º (southern boundary), 33.935m with a bearing 180º (eastern boundary) and 61.835m with a bearing 126º54' (boundary adjoining road reserve). The placement of the boundaries on the physical land is also clear. The western boundary follows an existing "HINGE JOINT FENCE". The southern and eastern boundaries are described as "NOT FENCED", but the eastern boundary meets the road reserve at a spot where the bearing of the road reserve alters from 102º28'40" to 126º54'. The boundary along the road reserve corresponds with a "NETTING FENCE". It will be noted that the plan, although a "sketch plan", was drawn by a registered surveyor. 2. Proposed lot 101 is stated to be "2001 m2". Proposed lot 102 is stated to be 101.525 ha "(BY DED'N)". There was evidence establishing that that was a reference to "by deduction", based on the subtraction of the area of lot 101 from the area of the existing lot in the plan. 3. The area of Lot 101 as stated in the sketch plan is wrong. Although stated to be 2001m2, it was in fact some 10% larger. That was readily demonstrable on the face of the sketch plan, although there was no suggestion that either vendor or purchaser was aware of this. Areas of parcels of land with straight line boundaries are easily calculated by dividing them into triangles. If a line is drawn connecting the north east corner with the south west corner, the areas of the two triangles may easily be determined. One is a right angled triangle, with approximate area ½ x 33.935m x 38.465m = 652.7m2. The other is a triangle with sides measuring 71.905m and 61.835m, with the included angle in the north western corner being 171º12'40" – 126º54' = 44º18'40", and thus with an approximate area of ½ x 71.905m x 61.835m x sin (44º18'40") = 1553.0m2. The sum of those two areas is some 2205.7m2. 4. No explanation for the error appeared in the evidence, despite the surveyor making an affidavit. He was not cross-examined. As will be seen, the area in fact of proposed lot 101 in the (very slightly altered) plan which was registered was 2205m2. 1. Clause 39.3 made the contract conditional upon the registration of the plan of subdivision "in accordance with the sketch plan", and provided further that if the subdivision were not effected on or before the date for completion, cl 41 would apply. 2. Clause 41 was (by some margin) the longest and most elaborate separately negotiated clause in the contract. It was headed "DA, Subdivision and Completion". That is unsurprising. Until and unless lots 101 and 102 were created, the conveyance could not proceed in the form agreed, and the timing of and the conditions upon the subdivision were not within the control of either party. 3. Clause 41.1(a) provided that the Vendor and Purchaser agreed that "The Vendor must promptly lodge and use all reasonable endeavours at its cost, and without contribution from the Purchaser, to procure approval of any development application or other application necessary for the registration of the plan of subdivision in the terms set out in clause 39." 1. It is not necessary to summarise all aspects of clauses 41.1(b)-(j). Clauses 41.1(b) and (c) required notice to be given by the vendor to the purchaser of the application. Clause 41.1(d) provided that if the subdivision was refused, the purchaser had a right to rescind or else to acquire the entirety of the (unsubdivided) land. Clauses 41.1(f) and (g) required the vendor to notify the purchaser of any approval of the subdivision, and to satisfy any conditions to approval. 2. Clauses 41.2, 41.3 and 41.4 relevantly provided: "41.2 Subdivision a) Completion of this contract is subject to and conditional on the registration by LRS NSW of the plan of subdivision in the terms set out in clause 39, and as provided in this clause. b) The Vendor must promptly use all reasonable endeavours, at its cost, and without contribution from the Purchaser, to procure the lodgement and registration of the plan of subdivision on or before the date for completion. c) The Vendor must promptly provide to the Purchaser a copy of the plan as lodged with LRS NSW, and at its cost, and without contribution from the Purchaser, promptly satisfy any requisition on timely basis to allow registration of the plan of subdivision, and the creation and issue of separate title deeds for proposed lots 101 and 102 by the date for completion. d) The Vendor must notify the Purchaser within 2 business days after the plan of subdivision is registered, and must provide to the Purchaser registration details of the plan, and details of the folio identifier for the proposed lot 102. e) If the plan of subdivision is not registered by 1 November 2019, then the Purchaser may, within 2 business days after that date, either: i. by notice to the Vendor, rescind this Contract, and clause 19 applies; or ii. by notice to the Vendor, extend the date for completion to a date on or before 31 January 2020. … 41.3 Purchaser's right of rescission a) The Purchaser may rescind this contract if the area of lot 102 in the plan of subdivision as registered is shown on the plan as being 2,100 sq. m or more, or if the location or the width of the easement are substantially different to that shown on the sketch plan set out in clause 39. b) A right of rescission under clause 41.3(a) may only be exercised within 5 business days after notice is given under clause 42.2(d). c) If the Purchaser does not serve a notice in accordance with clause 41.3(b), the Purchaser must proceed to completion within 15 business days after notice is given under clause 41.2(d). 41.4 Completion The date for completion is the date which is the latest of: a) 1 November 2019; and b) 15 business days after the day on which the Purchaser serves a notice on the Vendor under clause 41.1(d)ii; and c) If notice has been given under clause 41.2(e)ii, 31 January 2020." 1. There are errors in cl 41. The reference in cl 41.3(a) to "lot 102" is obviously an error for lot 101; lot 102 was the residual land after the fire depot lot had been removed, and was expected to be more than 1,000,000m2. Further, the reference in cl 41.3(b) to "clause 42.2(d)" must be read (for there is no cl 42.2(d)) as a reference to cl 41.2(d). That makes sense of the provision, as well as corresponding with what appears in the otherwise identical closing words of cl 41.3(c). The parties were agreed as to this. These are two uncontroversial instances of "obvious errors" – where the literal meaning is an absurdity and it is obvious what the intended wording must have been. As the primary judge observed at [42], these are good examples of where merely as a matter of construction the written form of the contract may and should be departed from. 2. A plan very similar to the sketch plan was registered on 22 October 2019. Unlike the sketch plan, it appears to have been in registrable form (in particular, it appears to comply with cl 66 of the Surveying and Spatial Information Regulation 2017 (NSW) by providing the details of the GNSS validation). Nonetheless, it had almost precisely the same dimensions and bearings as the sketch plan. The lineal dimensions of the lot which became lot 101 were identical, and the only difference in the bearing was that the eastern boundary was at 179º58'20" (ie a mere 1 minute and 40 seconds of arc difference). The registered plan identified the area as 2205m2. There was unchallenged evidence that that was the correct area. 3. The plan of subdivision was in fact registered on 22 October 2019 as Deposited Plan 1257896. The vendor notified the purchaser in accordance with the contract, on 24 October 2019. The purchaser later that day purported to rescind, pursuant to cl 41.3(a). The purchaser purported to do so on two independent bases: 1. the small parcel comprising lot 101 was more than the 2100m2, noting that the reference to lot 102 was "clearly intended to refer to lot 101", and 2. "the location of the easement is substantially different to the location shown in the contract". 1. The vendor denied the validity of the notice of rescission, and served a notice to complete. Proceedings were commenced shortly thereafter, on 8 November 2019. The purchaser sued for a declaration that it had validly rescinded, and sought the return of the deposit. The vendor by cross-summons sought an order for specific performance, and joined Mr Young who had guaranteed the purchaser's obligations. The reasons of the primary judge 1. The primary judge found that the purchaser was entitled to rescind on the first basis, but not entitled to rescind on the second. There is no notice of contention, so the latter may be passed over. There is no challenge to the primary judge's finding that the area of proposed lot 101 on the sketch plan should in fact have been 2205m2. 2. The critical issue was the construction of the contract (there were other issues, but none mattered). The vendor sought an order in its cross-summons that the contract be construed so as to read "2100" as "2205" in cl 41.3(a) or alternatively that the contract be rectified by replacing "2100" in cl 41.3(a) by "2205". By the time of the hearing, the vendor had eschewed rectification in equity, but was maintaining that "2100" should be replaced by "2310", on the basis that because 2100 was around 5% greater than 2001, a figure of 2310 should replace 2100, being around 5% greater than the actual area of 2205m2. 3. There was no dispute as to the applicable principles. The primary judge recorded the clear distinction between rectification as a matter of construction, as opposed to rectification in equity, at [39], by reference to Mainteck Services Pty Ltd v Stein Heurtey SA (2014) 89 NSWLR 633; [2014] NSWCA 184 at [116] and Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liquidation) (2019) 99 NSWLR 317; [2019] NSWCA 11 at [5]. His Honour framed the test to be applied as follows, at [40]-[41]: "In order for a mistake to be corrected as a matter of construction it is necessary that two conditions be satisfied. These are, first, that the literal meaning of the contractual words is an absurdity, and secondly, that it is self-evident what the objective intention is to be taken to have been (see National Australia Bank Ltd v Clowes [2013] NSWCA 179 at [34]; Mainteck Services Pty Ltd v Stein Heurtey SA (supra) at [117]; Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liquidation) (supra) at [8]-[9]). The Court must be satisfied of those matters to a high level of conviction (see Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liquidation) (supra) at [10]). Where those conditions are met, ordinary processes of contractual construction operate so that an absurd literal meaning is displaced by a meaningful legal meaning (see National Australia Bank Ltd v Clowes (supra) at [34])." 1. The dispositive reasoning was at [43]-[58]. His Honour accepted that the area in respect of proposed lot 101 on the sketch plan which was annexed to the contract should have been stated as 2205m2 rather than 2001m2. His Honour then said: "However, a reasonable person in the position of the parties to this contract would not have appreciated the existence of the error. The error might have been discoverable through the performance of calculations of the type performed by Mr Chapman, but that is not something that reasonable persons in the position of the parties would be expected to be able to do. In these circumstances, and having regard to the notes on the plan, a reasonable reader of the sketch plan would regard it as showing the approximate location, shape and size of the proposed lot 101. So viewed, the provisions of Additional Clauses 34.4, 39.3 and 41.2(a) should not be read as imposing, as a condition to be satisfied before completion, a requirement for registration of a plan of subdivision precisely in accordance with the sketch plan (including its dimensions and angles). That the parties contemplated that at least in some respects deviation from the sketch plan might occur, yet completion be required, is made clear by the terms of Additional Clause 41.3(a). Read in its context, including Additional Clause 39.1 (which refers to an agreement to transfer 2001m2 to the Council) and the sketch plan (which describes proposed lot 101 as having an area of 2001m2), Additional Clause 41.3(a) operates so that the plaintiff would have to accept an area of lot 101 of up to 2100m2, but could rescind if the area was 2100m2 or any greater. Similarly, changes in the location of the width of the easement would have to be accepted provided that they were not substantial." 1. His Honour then addressed a submission that the sketch plan should be rectified so as to read 2205m2, and rejected it, on the basis that it was not absurd, that it was consistent with cl 39.1, and that completion was not conditional on registration of a plan of subdivision which was precisely in accordance with the sketch plan. His Honour rejected a submission that the obligation to register a plan which was "in accordance with" the sketch plan was a requirement to lodge a plan with the dimensions and angles shown in the sketch plan, as opposed to area, for two reasons. The first was that the area was a product of the dimensions and angles. The second was that "the area of lot 101 was specifically identified as a foundation for the right of rescission provided by Additional Clause 41.3(a)", such that the area "thus assumed a particular contractual importance". 2. His Honour gave a further basis for declining to construe the contract in the way sought by the vendor at [51]: "In any case, I do not think that it is self-evident what the objective intention is to be taken to have been. The defendant suggested that if the sketch plan is read as if the area for proposed lot 101 was 2205m2, Additional Clause 43.1(a) should be read as referring to 2310m2 rather than 2100m2. Even if the former is correct, the latter does not necessarily follow. The contention seems to assume, based on the difference between 2001m2 and 2100m2, an intention to maintain the same relative difference if the area stated on the sketch plan is changed. That is only one possibility. It is far from self-evident." 1. His Honour concluded, on this limb of the argument, that he was not satisfied, to the high level required, that this was a case where a mistake in the language could be corrected as a matter of construction. It followed that the contract was validly rescinded, the purchaser was entitled to the return of the deposit, and the cross-summons was dismissed. 2. The vendor has appealed. Having regard to the contract price, its appeal is as of right. Comparing and contrasting the doctrines at law and in equity Nomenclature 1. Some find it natural to use "rectification by construction" and "rectification in equity" to refer to the distinct doctrines at common law and in equity. Both doctrines "rectify", which is to say "correct", a demonstrable mistake in a written instrument. The reference to "construction" in the first, and "equity" in the second, captures the principal distinction between the doctrines. The fact that the doctrines are distinct, and some of the differences between them, were summarised in Seymour Whyte Constructions at [15]: "The doctrines at law and in equity remain conceptually distinct ... Conceptually, there is a world of difference. The requirements of ex facie absurdity or inconsistency and clarity as to what the parties must be taken to have intended ensure that rectification by construction remains an aspect of determining the objectively manifested legal meaning of contractual words, and accommodates the truth that sometimes, even in a formal legal document, the parties will make mistakes which are nonetheless readily identified and corrected. On the other hand, rectification in equity turns on the discrepancy between the written instrument and a separately proven contrary common intention, which was intended to have been incorporated into the instrument, such that it is unconscientious for a party to insist on performance in accordance with the written instrument. Rectification in equity is a departure – albeit one which is narrowly circumscribed by the insistence on cogent proof – from the objective theory of contract." 1. The Australian legal system often uses similar names for different doctrines which resemble each other; consider statutory contribution (between tortfeasors) and equitable contribution (where there are coordinate liabilities). Moreover, the legal system regularly gives different meanings to the same word, depending on context; consider the multiplicity of meanings given to such basic words as "equity" and "right", or the difference between "contributory negligence" at common law (where it was a complete defence) and under statute (where it authorises a reduction in damages). Perhaps the clearest example is the word "law" itself. The poverty of the English language continues to disappoint and confuse civilian lawyers nearly two and a half centuries after Jeremy Bentham's complaint: "In most of the European languages there are two different words for distinguishing the abstract and the concrete senses of the word law: which words are so wide asunder as not even to have any etymological affinity. In Latin, for example, there is lex for the concrete sense, jus for the abstract: in Italian, legge and diritto: in French, loi and droit: in Spanish, ley and derecho: in German, gesetz and recht. The English is at present destitute of this advantage": J Bentham, An Introduction to the Principles of Morals and Legislation (University of London, The Athlone Press, 1970), p 294. 1. The names given to legal concepts are important, in part because they shape the connotation of a legal principle and thus the way people think about it. An example may be seen in Lord Goff's disdain for "proximity", noted in his 1983 Maccabean Lecture, "The Search for Principle" ("my literal mind rebels against the use, in the context of negligence, of the word 'proximity' ... I think of the word as relevant to time or space or order"). 2. But there is no universal usage to describe the two doctrines, either in academic writing or in judgments. "Rectification by construction" is the term used in the most comprehensive account of the topic of which I am aware, namely, D Hodge, Rectification (2nd ed 2016, Sweet & Maxwell), ch 2. But other writers reserve "rectification" for the equitable doctrine (see eg J Carter, The Construction of Commercial Contracts (Hart Publishing, 2013, pp 305-306); J D Heydon, Heydon on Contract (Lawbook Co 2019), p 281; J Tarrant, Rectification of Documents (Federation Press, 2020), ch 2). Turning to judgments, in addition to those of this Court upon which the primary judge relied, recent appellate examples of "rectification by construction" may be found in Harker-Mortlock v Commonwealth Bank of Australia [2019] NSWCA 56 at [43] and Perpetual Ltd v Myer Pty Ltd [2019] VSCA 98 at [122]. However, there are also many instances of courts maintaining that "rectification" not be used for a process of construction. One example is Bowler v Hilda Pty Ltd (2001) 112 FCR 59; [2001] FCA 342 at [11]. Another is found in the judgment of Sir Martin Nourse in Holding & Barnes Plc v Hill House Hammond Ltd [2001] EWCA Civ 1334; [2002] 2 P & CR 11 at [47]: "[correcting clear errors by construction] enables the court to correct an obvious clerical error in a document that it may conform with the obvious intention of the parties. Although in a loose sense the document is rectified, indeed the process is sometimes referred to as common law rectification, it is not rectification in the correct sense. It remains an exercise in construction." 1. The important thing is that whatever language be used to describe the two doctrines, it be clear what is meant. The doctrines have similarities but are also quite different. The difference is important to the outcome of this appeal. Common features of both doctrines 1. Both doctrines are founded on an error in the expression of an instrument. Both doctrines result in the legal meaning departing from what would otherwise be the ordinary meaning of the instrument. And both doctrines involve an elevated standard of proof. Like other doctrines which displace the orthodox approach to construction, such as sham or non est factum, there is a need to keep these doctrines within narrow limits. Although rectification by construction does not resort to the parties' subjective intentions, it remains an aspect of construction which is circumscribed lest it detract from the certainty and predictability of ordinary principles of the construction of written documents. 2. In the case of rectification in equity, reference is regularly made to the need for "clear and convincing proof" (or variants to the same effect), as explained in Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 at [451]-[461] and Newey v Westpac Banking Corporation [2014] NSWCA 319 at [170]. Rectification in equity turns upon establishing that the document does not reflect the parties' actual intentions, viewed objectively from their words or actions: Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 at [41]-[42] and [103]-[104]. 3. Evidence of the parties' intentions is not to the point in rectification by construction. Instead, as the primary judge said, it is necessary to conclude that the literal meaning is absurd or inconsistent, and that it is clear what the objective intention is to be taken to have been. The elevated standard of proof applies to both limbs of that test. 1. In respect of the existence of an obvious error, Lord Hoffmann explained that the court does "not readily accept that people have made mistakes in formal documents": Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101; [2009] UKHL 38 at [23]. Further, "[c]ourts which are asked to delete, insert or rewrite part of a contract because of what is said to be an obvious error should bear steadily in mind that imperfections and infelicities and ambiguities in contractual language commonly reflect the give and take of negotiations, or the parties' appreciation that some obscurities are incapable of resolution": Seymour Whyte Constructions at [10]. 2. The condition that the correct meaning be "self-evident" or "clear" must also be satisfied to a high level of conviction. It must be "perfectly clear what legal meaning [was] to be given to the literally absurd words": National Australia Bank Ltd v Clowes [2013] NSWCA 179 at [38]. 1. Both aspects were captured in the formulation by Dixon CJ and Fullagar J in Fitzgerald v Masters (1956) 95 CLR 420 at 426-427; [1956] HCA 53 that words may be supplied, omitted or corrected in an instrument where "it is clearly necessary in order to avoid absurdity or inconsistency". Ordinarily, construction before rectification in equity 1. Further, there is a hierarchy in the two doctrines, in the manner indicated by this Court's decision in Harker-Mortlock v Commonwealth Bank of Australia at [43], endorsing what had been said in Saxby Soft Drinks Pty Ltd v George Saxby Beverages Pty Ltd [2009] NSWSC 1486; 14 BPR 27,213 at [10]: "Generally speaking, proceedings for rectification ought not be brought if whatever mistake appearing in the written instrument is such that the true meaning of the document could be ascertained as a matter of construction without recourse to extrinsic evidence. A decision as to the true construction of an instrument may be adequate relief. Courts both of law and of equity regularly insert, delete, alter and interpret words in such a fashion as to make the document sensible, without necessary recourse to any doctrine of rectification. In effect they employ a doctrine of rectification by construction ..." 1. The same point was made more recently by the Supreme Court of New Zealand in Green Growth No 2 Ltd v Queen Elizabeth the Second National Trust [2019] 1 NZLR 161; [2018] NZSC 75 at [55] (William Young and O'Regan JJ) and [140] (Elias CJ, with whom Ellen France J agreed in this respect). That is not to deny that sometimes rectification in equity may be appropriate even where the error can be rectified as a matter of construction, for example out of an abundance of caution lest there be confusion: see Franklins Pty Ltd v Metcash Trading Ltd at [539]. Absurdity or inconsistency of the literal construction of cl 41.3(a) 1. Mr Ashhurst, who appeared for the vendor at first instance and in this Court, challenged both limbs of the reasoning of the primary judge, as he needed to do if the appeal were to succeed. I shall deal with each in turn. 2. The vendor submitted that the primary judge had failed to address its submission that the mistake was not merely the wrong area stated on the sketch plan, but also that that wrong area had been carried through to the contractual right of rescission in cl 41. It submitted that the consequence of construing cl 41 in accordance with its literal meaning was that a vendor who complied with the contractual obligation to lodge a plan in accordance with the sketch plan would thereby inevitably trigger the purchaser's right of rescission. This was, so it was said, sufficiently absurd or inconsistent to engage the doctrine of contractual rectification. 3. One aspect of the vendor's submission was that the area shown in the sketch plan was wholly derivative from the primary information recorded in the sketch plan, namely, the dimensions and bearings. The appellant contended that the precise lengths and bearings of the proposed new lot were unambiguously identified on the sketch plan, drawing comfort from the fact that in very substantial measure, those bearings and distances also appeared on the plan as registered. 4. Against this, Mr Price, who appeared for the purchaser in this Court and at first instance, supported the workability of the construction upheld by the primary judge, maintaining that it was open to the vendor to lodge for registration a lot which was around 2001m2 in area (or, in any event, was less than 2100m2 in area), in the vicinity identified on the plan. There might be debate as to whether doing so would be "in accordance with" the sketch plan, but in circumstances where dimensions and areas were expressly preliminary, it was contended that there was no reason to doubt that it would be. 5. The purchaser made an elaborate submission to the effect that it was not possible on the face of the sketch plan to identify from the sketch plan where precisely the proposed eastern and western boundaries of the new lot met Reg Hailstone Way. I do not accept this. That after all is the point of a survey, even one which is a "sketch plan". My reasons follow from what has already been said concerning the plan above. The northern extremity of the eastern boundary runs from a "kink" in the road reserve, where the bearing of the reserve shifts from 102º28'40" to 126º54'. Along the boundary of the lot and the road reserve the sketch plan discloses a series of little "x"'s, and also the words "netting fence". It is to be expected that the boundary between the private land and the road reserve would be fenced. There is no reason to doubt that that point is readily identifiable on the land. Similarly, the western boundary of the proposed lot coincides with something described on the sketch plan as "hinge joint fence". Those two identifiable features easily enable the sketch plan to identify a precise area of land (in fact one would be sufficient). So identified, the plan states that the four boundaries of the proposed lot are of dimensions 71.905m, 38.465m, 33.935m, and 61.835m. 6. A second aspect of the purchaser's submission has more force. This turned on the fact that, on the face of the contract, a measure of primacy was given to the area, as opposed to the dimensions, of the proposed lot. Thus the disclosure in cl 39.1 was an agreement to transfer "2001 square metres" of the subject lot, and the contractual right of rescission in cl 41.3(a) turned upon whether the area was "2,100 sq m" or more. That is to say, the clauses which were central to the mechanics of the parties' bargain to agree to convey a parcel of land not presently in existence spoke in terms of area rather than dimensions and bearings. 7. Further, the sketch plan itself stated that "all dimensions and areas stated on this plan are preliminary only and are subject to confirmation and further survey". If the parties were to achieve certainty, there is force in the proposition that it was necessary to identify some precise (albeit arbitrary) criteria concerning the lot which was to come into existence when the subdivision was registered. On the face of the contract, they had chosen an area not exceeding 2100m2. 8. The purchaser's submissions are not without force. Nevertheless, I would on balance accept the vendor's submission and conclude that the contract not merely contains an error, but also that it is sufficiently absurd or inconsistent to engage the first limb of the doctrine of rectification by construction. 9. The absurdity or inconsistency is that the sketch plan identifies both a precise physical area on the vendor's land and 2001m2, the latter is more than 10% smaller than the former and has been used to derive the areas in cl 39.1 and 41.3(a), but the obligation to register the plan is one which is "in accordance with the sketch plan", which is apt to pick up the very precise dimensions and bearings. If the vendor complies with its obligations to cause to be registered a plan in accordance with every single bearing and dimension identified in the sketch plan, save for the area (which is essentially what the vendor did in the present case), then the purchaser has a right to rescind. 10. The absurdity or inconsistency is not so self-evident as the confusion between the references to "lot 101" and "lot 102" or the cross-reference to a non-existent clause. One needs to look a little less superficially at how the parties' bargain will operate in practice in order to reach the confident conclusion that something has gone wrong with the language. Further, it may be said that nothing has gone wrong with the language as such; the reference to "2100 sq m" in cll 39 and 41 was intentional. This is not a "[m]ere verbal blunder", which as Pollock once noted common law courts had corrected without difficulty: F Pollock, Principles of Contract (Stevens & Sons, 7th ed, 1902), pp 255-256. Even so, that presents no obstacle to the contract being construed so as to correct the error at common law, as is illustrated by the speeches in Wilson v Wilson (1854) 5 HL Cas 40; 10 ER 811. That litigation was more important at the time for Chancery's preparedness to enforce a contract which the ecclesiastical courts would regard as void: see Hunt v Hunt (1862) 4 De GF & J 221; 45 ER 1168 and SZOXP v Minister for Immigration and Border Protection (2015) 231 FCR 1; [2015] FCAFC 69 at [44]-[47]. Even so, Wilson v Wilson repays careful re-reading, and not merely for Lord St Leonards' familiarity with the distinction between rectification in equity and rectification as a matter of construction. Perhaps the most familiar passage is at 66-67; 822: "Now it is a great mistake if it is supposed that even a Court of Law cannot correct a mistake, or error, on the face of an instrument: there is no magic in words. If you find a clear mistake, and it admits of no other construction, a Court of Law, as well as a Court of Equity, without impugning any doctrine about correcting those things which can only be shown by parol evidence to be mistakes – without, I say, going into those cases at all, both Courts of Law and of Equity may correct an obvious mistake on the face of an instrument without the slightest difficulty." 1. The actual deed in Wilson v Wilson was a case of a "clear mistake" which "admits of no other construction". Yet while the decision is often cited as an instance of a construction whereby "John" was read as "Mary", the reasoning process is somewhat different from the self-evidently erroneous references to lot 102 and (non-existent) cl 42.2(d). In order to explain why that is so, more precise attention to the facts and the background is required. Wilson v Wilson 1. Mr John Wright Henniker Wilson and Mrs Mary Wright Henniker Wilson had married in 1839. Mary had brought very substantial estates to the marriage, all of which under the marriage settlement went to John, save for two estates (Drayton Lodge and Chelsea Park) and £3,000 in consols (I am simplifying slightly). The freehold in Drayton Lodge had been held to her use under her aunt's will, and that was continued under the marriage settlement. Her leasehold interest in Chelsea Park was held on trust for John during his life, thereafter for Mary for her life, and thereafter for John absolutely (see earlier proceedings before the Vice Chancellor Wilson v Wilson (1845) 14 Sim 405 at 406; 60 ER 415 at 416). 2. In 1843, Mary instituted a suit for nullity of marriage in the Consistory Court of London. (This civilian court pre-dated the short-lived Court for Divorce and Matrimonial Causes created in 1858 which was in turn replaced by the Probate, Divorce and Admiralty Division of the High Court of Judicature in 1875.) That suit was compromised by a deed of separation. The parties to the deed were John, Mary, and the two trustees of Mary's marriage settlement. Deeds of separation were very common at the time. Sir Lancelot Shadwell VC said (in relation to the controversial seventh article of the deed which became the subject of the second appeal to the House of Lords): "I looked also into Wood's Conveyancing, published in 1770, that is seventy-five years ago, and there are a vast number of precedents of articles of separation, with the usual accompaniment of the trustees covenanting to indemnify the husband against the debts of the wife: and, therefore, I must say that I have no doubt on that part of the case:" at 419; ER 420. 1. Under the deed, by the first article John permitted Mary to live separately from him. Under the second article Chelsea Park was resettled so as to be held for Mary's separate use during her and John's joint lives. Drayton Lodge and the consols continued to be held under the marriage settlement (third article), and all other property received by John on marriage was to be reconveyed to trustees for Mary's separate use during their joint lives (fourth article). This took place decades before the Married Women's Property Act 1882 (UK), which explains the use of trustees holding property to Mary's separate use, and their being parties to the deed. 2. The deed also contained as its seventh article a covenant that so long as John paid all outgoings in respect of the property up until 24 June 1843, and otherwise observed the articles of the deed, then all the expenses of the property should thereafter be paid by Mary during her life, and "that he, the said John W H Wilson, his heirs, executors and administrators, and his and their estates and effects shall be indemnified therefrom, and from all the present debts and liabilities of the said John W H Wilson" by the trustees. It was established that there had been a mistake. Counsel had drafted an indemnity in favour of the husband "from all the present debts and liabilities of the said Mary Wright Henniker Wilson" but a clerk had made a copying error, which passed undetected into the fair copies which were exchanged between the parties and ultimately executed. There is some resemblance with the surveyor's error, which passed undetected into the contract between the parties to this appeal, but gives rise to an unavoidable inconsistency in the operation of the contract. 3. John maintained that the deed meant what it said. However, Lord St Leonards accepted Mary's submission that the reference to "the said John Wright Henniker Wilson" in the seventh article was a reference to "the said Mary Wright Henniker Wilson". He pointed to the absence of any account of the husband's debts in the deed (so as to identify what the trustees were committing themselves to) and the fact that "[n]o man living, who knows anything about the construction of deeds, ever heard of a covenant entered into by a wife and her Trustees to indemnify her husband against his own debts": at 67-68. He said that the "other construction which is contended for by the [husband] is irrational and absurd": at 69. And he insisted that this was done "without parol evidence, and upon the mere frame of the deed read in a sensible way": at 68. 4. Likewise, Lord Cranworth LC explained the absurdity thus at 55: "[W]hat is the meaning of saying that he is to be indemnified against all his present debts, so long as he continues to perform the covenants? That, again, is unmeaning. So long as he performs the covenants he shall be indemnified against the accruing debts of his wife; that I understand; but that as long as in future he continues to perform the covenants, he shall be indemnified against his own actual existing personal debts, existing at that moment, has no meaning; because when once those debts have been paid by the Trustees, he has nothing to do but to break the covenants, and he may laugh at the stipulation." 1. It may be seen that the conclusion that the literal meaning was "irrational and absurd" or had "no meaning" was, for both Lords St Leonards and Cranworth, a consequence of an examination of its practical operation. 2. One and a half centuries later, and indeed after judgment in the present appeal was reserved, in HDI Global Specialty SE v Wonkana No. 3 Pty Ltd [2020] NSWCA 296 at [51], Meagher JA and Ball J suggested that requiring "absurdity or inconsistency" may be unduly narrow: "'[A]bsurdity or inconsistency' may not strictly be required: cf Fitzgerald v Masters (1956) 95 CLR 420 at 426-427; [1956] HCA 53 (Dixon CJ and Fullagar J). The reasons of the plurality in Fitzgerald v Masters made no reference to such a requirement, treating the problem simply as one of the discernment of the parties' intention from the whole of the agreement, while earlier authorities referred only to the presence of a 'palpable' or 'obvious' mistake: Bache v Proctor (1780) 99 ER 247; 1 Dougl 384 (Buller J); Wilson v Wilson at ER 822, 823 (Lord St Leonards). There is accordingly much to be said for the modern English position, which requires a 'clear' mistake: Pink Floyd Music Ltd v EMI Records Ltd [2011] 1 WLR 770; [2010] EWCA Civ 1429 at [21] (Lord Neuberger MR, Laws and Carnwath LJJ agreeing on that point). In any event, if absurdity is required, 'something opposed to reason' will suffice: Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297 at [13] (Basten JA, McColl and Campbell JJA agreeing)." 1. That suggestion has, to my mind, considerable force. But it is not necessary to go so far in order to resolve this appeal. Although I think there is a "clear mistake", I would go further and conclude, for the reasons given above, that the literal meaning of cl 41.3 is "something opposed to reason" (Miwa), or is "irrational and absurd" (Lord St Leonards) or discloses "absurdity or inconsistency" (Fitzgerald v Masters). There is no rational basis for imputing to the parties an intention that the purchaser was free to rescind the contract if the vendor complied with the obligation to subdivide in accordance with the very precise dimensions and bearings on the sketch plan. Is the intended meaning self-evident? 1. Accepting as I do that the first condition necessary for correction of the contract by construction is satisfied, it does not follow that the vendor's construction may be upheld. The second condition necessary for correction of the contract by construction is that "it is self-evident what the objective intention is to be taken to have been": Seymour Whyte Constructions at [8]. In Tatham v Huxtable (1950) 81 CLR 639 at 645; [1950] HCA 56, Latham CJ approved what had been said in the first edition of Jarman on Wills: "It often happens, however, that the misuse of some word or phrase is so palpable on the face of the will, as that no difficulty occurs in pronouncing the testator to have employed an expression which does not accurately convey his meaning. But this is not enough: it must be apparent, not only that he has used the wrong word or phrase, but also what is the right one; and, if this be clear, the alteration of language is warranted by the established principles of construction." 1. In England, this requirement was expressed by Brightman LJ in East v Pantiles (Plant Hire) Ltd (1981) 263 EG 61 as follows: "it must be clear what correction ought to be made in order to cure the mistake". Lord Hoffmann quoted that statement approvingly in Chartbrook Ltd v Persimmon Homes Ltd at [22], but expressed the second condition for correction by construction as requiring that "it should be clear what a reasonable person would have understood the parties to have meant": at [25]. 2. This further requirement is essential, and for at least two reasons. First, the conclusion that an instrument is "absurd" may be contestable in any particular case. This is well recognised. Thus Professor McLauchlan has said that "distinguishing between an unduly favourable bargain and a commercially absurd bargain that was not intended is no easy task": D McLauchlan, "The lingering confusion and uncertainty in the law of contract interpretation" [2015] LMCLQ 406 at 436. Dr Catterwell writes that "[t]he distinction between absurdity and unreasonableness is difficult to define beyond illustrative examples": R Catterwell, A Unified Approach to Contract Interpretation (Hart Publishing, 2020), p 62. The judgments in ING Bank NV v Ros Roca SA [2011] EWCA Civ 353; [2012] 1 WLR 472 (mentioned below) are an example. 3. Secondly, as Meagher JA and Ball J said in HDI Global Specialty SE at [53], "the application of those criteria should not obscure the fact that the question remains one of the ascertainment of the parties' objective intention through the application of ordinary principles of construction. That is not to say that the two criteria need not be satisfied. It is rather to emphasise that they are merely steps involved in reasoning to a conclusion that by one word or phrase the parties meant something else." 1. That is to say, the task is one of construction. This is signally different from rectification in equity. Only if, as a matter of construction, and to a sufficiently high level of certainty, one can be satisfied what words should be inserted in the instrument to cure the absurdity, can a rectifying meaning be given to it. Cases where there is a binary choice and cases where there are many possibilities 1. A common class of case is where there are precisely two possibilities, and the wrong one has been recorded in the instrument. The decisions mentioned above fall into that class. When "John" was read as "Mary" in Wilson v Wilson, when "inconsistent" was read as "consistent" in Fitzgerald v Masters, and when "lessor" was read as "lessee" in McHugh Holdings Pty Ltd v Newtown Colonial Hotel Pty Ltd (2008) 73 NSWLR 53; [2008] NSWSC 542, the absurdity or inconsistency was obvious, and so too was what had been intended. The only people with debts to be indemnified in the separation deed were the husband John and the wife Mary. The confusion between "inconsistent" and "consistent", and between "lessor" and "lessee" is similarly binary. Similarly, the "palpable mistake" mentioned by Buller J in Bache v Proctor (1780) 1 Dougl 382 at 384; 99 ER 247 at 247 where a bond provided that it should be void if the obligor did not pay was readily cured by deleting the word "not". 2. In contrast, even where it is clear that something has gone awry, construction is to no avail if it is unclear how the absurdity or inconsistency should be resolved. In Energy World Corporation Ltd v Maurice Hayes & Associates Pty Ltd [2007] FCAFC 34; 239 ALR 457, a Full Court of the Federal Court (Moore, Tamberlin and Gyles JJ) allowed an appeal on this point, saying at [11]: "It may be accepted that the word 'lesser' gives no practical content to the words 'or the Term (as extended or renewed) is not renewed'. In that sense, it may be said that there is an inconsistency. However, the terms of cl 8.6 do not enable a conclusion to be drawn as to how the inconsistency should be resolved. It could be cured just as easily by omitting the words 'or the Term (as extended or renewed) is not renewed' as by substituting 'greater' for 'lesser'. Put another way, the terms of the clause do not enable the conclusion to be drawn that the contractual intention was to provide the Consultant with a termination payment of a minimum of six months on non-renewal of the term. The principle of construction in question does not enable a court to speculate as to the proper resolution of the inconsistency." 1. That paragraph was also endorsed by the Victorian Court of Appeal in Perpetual Ltd v Myer Pty Ltd at [124] and [146]. 2. A similar instance is the decision of the Court of Appeal of England and Wales in ING Bank NV v Ros Roca SA, where a fee for financial services was calculated by a formula including a fraction with a denominator "EBITDA 2006". The transaction did not take place until the end of 2007. The company's earnings before interest, tax, depreciation and amortisation were significantly different in 2006 and 2007; the consequence of using the different EBITDA amounts upon the fee was the difference between €6,700,000 or €943,922.44. Carnwath LJ, as he then was, doubted that the first limb of the test was satisfied, but rested his decision on the fact that "EBITDA 2006" could not be replaced by "EBITDA 2007" as a matter of construction, because: "there was no expectation that the Transaction would necessarily be linked to any form of EBITDA valuation. It is equally plausible that the very uncertainty of the concept would have led the parties to wish to define EBITDA by reference to a particular year. If so, it is understandable that they should have adopted the year 2006, given their reasonable expectation that the transaction would be concluded within a timescale for which the 2006 EBITDA would remain relevant. The fact that no-one may have contemplated the actual transaction being delayed beyond that time is not in itself a reason for rewriting the agreed formula": at [28]. Stanley Burnton LJ agreed. Rix LJ wrote to similar effect at [80]-[83], although his Lordship was unpersuaded that the first limb of the test was satisfied, on the basis that the contract would have operated perfectly well if the timing had proceeded as expected. Impossible to determine what should replace "2,100 sq m" in cl 41.3 1. The vendor maintained that the reference to "2,100 sq m" in cl 41.3 was from the incorrect area of 2001m2 found in the sketch plan and in cl 39.1, to which some 5% had been added. That may be so. But this is quite different from the binary choices in the cases mentioned above. Here there are a number of possibilities. 2. It is far from clear that the figure of 2100m2 was objectively intended to represent an area larger than the area of 2001m2 stated on the sketch plan and in cl 39.1 by a specific proportion. The vendor says it is approximately 5% larger, and so it is, but that is not sufficient to identify the basis on which 2100m2 has been selected. It may be the multiple of 100 which is larger than the area indicated on the sketch plan. It may also be the multiple of 10 which is closest to 5% larger than the area indicated on the sketch plan. There are other possibilities too. 3. The actual area of the land delineated by the dimensions and bearings on the sketch plan is found to be 2205m2. What number should be inserted into cl 39.1 and 41.3(a)? Should it be 2300m2 (which is the multiple of 100 larger than the area), or 2320m2 (which is the multiple of 10 closest to 5% larger than the area) or (as was raised when the appeal was heard) should it indeed be exactly 5% greater than 2205 which (to the nearest square metre) is 2315m2? There is no way of determining. 4. (I note for completeness that one further possibility canvassed in argument may be put to one side. This was whether the reference to "2,100 sq m" in cl 41.3(a) was merely a typographical error for "2,001 sq m". It is easy to see how such a purely typographical error might have been made, in a provision in which the error confusing lots 101 and 102 was not detected. However, I do not accept that is so. The same area appears in cl 39.1, where it is directly linked to the sketch plan. Further, if the area shown on the sketch plan had been correct and the vendor complied with its obligations to register a plan in accordance with the sketch plan, then if the reference in cl 41.3 was to 2,001 sq m, the contractual right of rescission would be engaged. That is not a sensible intention to impute to the parties.) 5. True it is that it would not matter if cl 41.3(a) had contained a reference to 2300m2 or 2315m2 or 2320m2. In any case, there would not have been a right to rescind, as the area of 2205m2 stated on the registered plan would not exceed any of them. But while each of those possible figures may be arguable, none is self-evident. And although the differences are slight, as a matter of construction that is of no import, for it is on the precise figure determined by the contractual "correction" that the purchaser's right to rescind will depend. Clause 41 is a bespoke clause which was essential to the parties' bargain to produce a presently binding agreement to convey lots of land which were not at the time of contract in existence, and the contract must be construed in light of the circumstances which existed at the time of execution, rather than in the light of events as they actually occurred: Energy World Corporation Ltd at [11]. 6. For similar reasons, the fact that the total area of land to be conveyed to the purchaser (more than a million square metres) is a fraction of a percent smaller is not to the point. To be fair, Mr Ashhurst very properly placed no real reliance on that consideration. The parties have agreed upon a contractual right of rescission, and that right must be capable of being articulated with precision. Conclusion and orders 1. It does not matter that in the present case the notice of rescission would be invalid irrespective of whether the reference in cl 41.3(a) to "2,100 sq m" were rectified to "2300 sq m" or "2315 sq m" or "2320 sq m" or some other area. In order for the contract to be rectified as a matter of construction, it is necessary for it to be self-evident what the objective intention is taken to have been. The primary judge was correct in reasoning, at [51], that this was not self-evident. This is not a case of a mere slip, where a word is missing, a concept confused with its antonym, or a clause misnumbered or incorrectly cross-referenced in the contract. There is no clear or self-evident solution to the absurdity that the figure of 2100m2 presents. 2. In summary, it is clear that something has gone wrong. But the error is not one which can be cured as a matter of construction. That outcome ought not to come as a surprise. The parties' written bargain was informed by the erroneous area on the surveyor's sketch plan, but where neither appreciated that there was an error, it is impossible as a matter of construction to impute to them how their bargain would have been framed had the error not been made. 3. I propose that the appeal be dismissed, with costs. ********** Amendments 07 December 2020 - [60] - "Meagher and Ball JJ" changed to "Meagher JA and Ball J" 10 May 2021 - [11]: "endeavors" changed to "endeavours" in the quote. [65]: "Stanley Burton LJ" changed to "Stanley Burnton LJ". DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 May 2021