## Facts

- Ready Mixed Concrete Ltd and Roose Industries Ltd entered a written supply contract for “metal chips” and “all-in” aggregate materials used in concrete production.
- The contract contained detailed quality specifications for metal chips but omitted comparable written specifications for the all-in materials.
- A dispute arose over whether the all-in materials met the parties’ agreed standard.
- Ready Mixed alleged the metal-chip specifications were intended to apply to the all-in materials as well, and that their omission from the written contract was a mistake; it sought rectification and consequential relief for breach on the contract as rectified.
- The contract included an arbitration clause for any dispute “arising out of or in connection with” the contract.
- Roose applied for a stay of the court action to compel arbitration; the trial court refused, reasoning rectification was for the court and beyond an arbitrator’s jurisdiction.
- Roose appealed the refusal to stay.

## Issues

1. Whether a claim seeking rectification of a contract falls within a broadly worded arbitration clause covering disputes “arising out of or in connection with” the contract.
2. Whether an arbitrator’s lack of power to grant formal equitable rectification requires the court to refuse a stay and retain the dispute.

## Decision

- The Court of Appeal allowed the appeal and set aside the order refusing a stay.
- The court held the dispute fell within the arbitration clause despite being framed to include rectification.
- The proceeding was stayed so the dispute could be determined in arbitration.

## Legal Principles

- Broad arbitration clauses extending to disputes “arising out of or in connection with” a contract generally capture disputes about the contract’s true terms and the parties’ contractual rights and obligations.
- The presence of a pleaded rectification claim does not, by itself, remove a dispute from arbitration where the substance is contractual and arbitral determination can yield effective relief.
- Even if an arbitrator cannot formally rectify the written instrument, the arbitrator may determine the parties’ actual agreement and decide liability and remedies on that basis (i.e., proceed on the contract as found to reflect the true agreement).
- Courts should avoid allowing parties to circumvent agreed arbitration by tactical pleading that relabels a contractual dispute as one requiring equitable relief.
- If formal rectification is later needed, the court may provide limited assistance consistent with the arbitral determination, rather than using the possibility of equitable relief as a reason to deny a stay at the outset.

## Conclusion

The Court of Appeal enforced the parties’ broad arbitration agreement by staying court proceedings, holding that disputes involving alleged mistakes in a written contract and requests for rectification can be referred to arbitration when the arbitrator can decide the parties’ substantive contractual rights by determining the true agreement.


Roose Indus. Ltd. v. Ready Mixed Concrete Ltd., [1974] 2 N.Z.L.R. 246 (N.Z. C.A. 1974)