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Court of Appeal decides in Bashir v Ali & Khan

In Bashir v Ali & Khan [2011] EWCA Civ 707 (Judgment 20/6/11) the Court of Appeal decided the fact that the ordinary meaning of the words of a contract that may give one party a good bargain does not open up the possibility of Chartbrook rectification by construction. However, the presence of a commercial advantage that was so great the ordinary meaning of the words of a contract that could be said to be arbitrary and irrational could not be ruled out.

Brie Stevens-Hoare instructed by Murdochs successfully appealed having been given permission to appeal by the Judge at first instance. The case concerned a contract for the sale of property made at auction. The property consisted of a shop, a first floor flat and a ground floor studio flat situated at the rear of the property. No one realised the ground floor studio was there: not the vendors, the purchaser nor the auction who valued the property.

The property was described in various ways in the auction materials which formed the contract. There were references to the address and title number relating to the whole of the property. In addition the property was described as “comprising a shop and a first floor flat”.

The auction material provided for the sale of a freehold subject to an existing tenancy of the shop and the grant of a 125 year lease of the first floor flat. The existence of the ground floor studio was discovered by the vendor’s solicitors just before completion. The vendor argued the contract related to the sale of part of the freehold, which would have created a flying freehold.

The judge at first instance decided the sale was subject to the grant of a third lease of the ground floor flat. The Court of Appeal concluded the wording was clear.