Narandas-Girdha and Another v Bradstock [2016].

The Court of Appeal was required to assess whether circumstances can arise where it may be necessary to take into consideration deleted words in a contract.

Background

Mr Parekh had entered into an individual voluntary arrangement (IVA) with his creditors, but later sought to have it set aside due to modifications in the arrangement to the conditions that had existed in the original arrangement.

The relevant condition which was found at clause 4.3 of the contract read:

“The acceptance of my Individual Involuntary Arrangement is conditional upon the acceptance of the Arrangement for my wife/husband, following acceptance the estates shall be combined for dividend purposes and treated as one… the Supervisor will be paid a combined contribution for the benefit of the creditors…”

Modifications were made to the contract, including the following amendment:

“Clause 4.3 is to be substituted with “I agree to pay the Supervisor for the benefit of the creditors not less than £230 per month for the duration of the Voluntary Arrangement”.

The original condition was not crossed out;  however the modification had effectively deleted clause 4.3.

Mr Parekh had argued that despite the substitution, the remainder of the contract had referred to the IVA being conditional and that in the first instance, the judge should not have paid regard to the deleted wording as it was clear.

Outcome

The Court of Appeal considered Mopani Copper Mines Plc v Millenium Underwriting Ltd [2008] and dismissed Mr Parekh’s appeal.

It was held that there are two circumstances where deleted words in a contract may be considered:

  1. Where deleted words in a printed form may resolve ambiguity of neighbouring paragraphs, and
  1. Where the deleted words show what it is that the parties agreed that they did not agree.

The Court of Appeal ruled that due to the ambiguity in the remainder of the contract, the deleted words could be used to resolve this ambiguity. In this case the second circumstance had applied. The fact the modification was made to override clause 4.3 in its entirety showed that the conditions were not agreed.

Comment

This should serve as warning to all! The use of comparison technology and functions such as track changes and strikethroughs could result in having provisions imposed; even when they no longer had a place in the contract at all!

Contracts should be drafted and reviewed with the utmost diligence, with the intentions of the parties entering the contract to be clear. However, this may not always be possible; if not, careful consideration should be given as to whether to leave the deleted text in the final draft. If not, as seen deleted words in a contract may still be taken into account.

The above is a general position on the law as at July 2016 and does not constitute legal advice. For further information, please contact Shubha Nath.

 

 

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