BL-2023-MAN-000072 - [2025] EWHC 2442 (Ch)

My consideration of Together’s counterclaim for rectification proceeds on the basis that, contrary to my determination above, JAK is correct that the language of clause 13 is clear and unambiguous in its favour such that the effect of clause 13 is, unrectified, that as JAK determined the JAK Loan Agreement before Together terminated its loan agreement with Mulbury, JAK is entitled to priority as against Together in respect of the proceeds of sale of the Property.

Together’s case as to rectification is pleaded in paragraph 23 of its Counterclaim, as follows:

“23.

In the alternative to paragraph 22, if the meaning and effect of clause 13 of the Deed of Postponement is to somehow give priority to the JAK Charge (which is vehemently denied for the aforesaid reasons), Together asserts that the Deed of Postponement contained an error, which was a common mistake made by the parties to the contract. Together asserts that:

a.

This error is apparent from the fact that such an interpretation would defeat the object of the Deed of Postponement and would be contrary to the obligation on JAK, within the [Development Services Agreement], to offer the Property as unencumbered security, and to subordinate the JAK Charge behind that of any funding institution.

b.

This error was not discovered until on or around 17 May 2023 when JAK first put forward its proposed interpretation.

c.

Both Together and JAK had, since Together was first approached by Mulbury for a loan, intended that the Together Charge (and the right to use any sale proceeds to discharge that charge) would take priority to the JAK Charge.

d.

This common intention is evinced by virtue of, inter alia, the various discussions between the parties, the aforesaid [Development Services Agreement], and the remaining passages within the Deed of Postponement.

e.

This intention continued up to, and including, the execution of the Deed of Postponement, and which document (on the assumption that Together’s primary case is not accepted) failed to reflect the parties’ true intention for the reasons aforesaid.

f.

The executed Deed of Postponement should, for the reasons aforesaid, be rectified accordingly.”

On behalf of JAK, Mr Hodge took a number of pleading points, in particular:

However, at paragraph 38 of his Skeleton Argument for trial, Mr Demachkie set out the wording that he maintained would give effect to the parties’ common intention, as follows:

“13.

Expiry of Term

It is hereby agreed and declared between the First Chargee and the Second Chargee that if the term of the loan agreement associated with the Second Charge comes to an end before the term of the loan agreement associated with the First Charge all sums due and payable by the Chargor pursuant to the Second Charge will be paidpayable to the Second Chargee in accordance with the loan agreement associated with the Second Charge notwithstanding, but without any alteration to, the priority of the First Charge provided by this deed.”

Over and above these pleading objections, it is JAK’s case that there is simply no cogent evidence to support a case as to common mistake as to the effect of clause 13, or a common intention that it should have an effect different to its proper construction as contended for by JAK, let alone there being any evidence of outward expression of accord in relation thereto.