FSHC Group Holdings Ltd v GLAS Trust Corporation Ltd [2019]

Court: UK Court of Appeal

Facts: FSHC provided security for a transaction to GLAS, the creditors' security agent. Due to a mistake, FSHC's security interest was not assigned to GLAS. They later executed two security deeds, mistakenly believing these deeds provided no additional security. In reality, the deeds imposed more burdensome requirements, leading FSHC to seek rectification.

Issue: Whether rectification could be granted based on the parties' common continuing intention despite a lack of clarity in the deeds.

Held: Rectification was granted. The Court ruled that a common mistake had occurred, and the parties' continuing common intention was assessed subjectively.

Key Judicial Statement: Legatt LJ: Where rectification is sought due to a prior contract, an objective test applies. If based on a continuing common intention, it must be actual and subjectively understood by both parties. The case overturned Chartbrook v Persimmon (2009), which applied an objective standard in all cases.

💡 Leveluplaw: The FSHC ruling sets a precedent for distinguishing between objective and subjective tests in rectification cases, promoting fairness where parties share a genuine but mistaken intention in formal contracts.