Rectification Chartbrook and continuing intention

Daventry & District Housing Ltd v Daventry DC [2011] EWCA Civ 1153

The Court of Appeal was split over the how the principles in Chartbrook apply when considering whether an established common intention continues up to the date of the contract. Nigel Jones QC and Alison Meacher represented a specially formed RSL involved in a dispute over who was responsible for the initial £2.4M payment required to eliminate a pension fund deficit upon the transfer of local authority housing staff as part of a large scale voluntary transfer.

Etherton LJ, giving the minority judgment concluded that the existence of a common intention at the point of execution had to be assessed objectively.

By way of contrast Toulson LJ asked whether objectively there was any renegotiation or new and different common intention and the Master of the Rolls determined the issue by reference to the objective observer’s conclusions about the parties’ subjective intentions assessed by reference to their outward expressions. The guidance that the courts give as to the proper way to apply the test laid down in Chartbrook is now uncertain and further guidance will be required (in other cases or possibly by the Supreme Court in this case).