The case concerned an appeal against the order at first instance of a judge who dismissed the appellant’s attempt to set aside an Individual Voluntary Arrangement (IVA).
The judge had construed the IVA, taking into account the Proposal and a modification later made to it. Counsel for the appellant argued that the judge had erred in law by having regard to the wording that was removed by the modification. He argued that once the parties to a contractual negotiation had agreed to remove certain provisions of a draft and replace them, those provisions could not be taken into account in interpretation.
The Court of Appeal disagreed. They upheld the first instance decision, and cited with approval the decision of Clarke J in Mopani Copper Mines plc v Millenium Underwriting Ltd , concluding that the relevant principle is this:
If the fact of deletion shows what it is the parties agreed they did not agree and there is ambiguity in the words that remain, then the deleted provision may be an aid to construction, albeit one that must be used with care.
Finding that the wording of the Proposal as modified by the modification was thoroughly ambiguous, the Court of Appeal found it entirely legitimate in this case to have regard to the wording removed by the modification.
While not a construction case, this case is important as it demonstrates the Court of Appeal’s support for the principle established in the lower courts (in Mopani Copper Mines, and more recently in Murphy v Beckton ) that in appropriate cases regard may be had to deleted wording.
The case is particularly relevant to parties who draft construction contracts, in which wording is routinely deleted from standard forms. The message to take from this is to think about what you are deleting, as well as what you leave in!