A $100 Million Drafting Mistake: Contract Rectification in the FX Group Holdings v Perpetual Trustee Co

Last Updated on 22/07/2026 by Damin Murdock and Malak Amgad

In commercial contracts, mistakes or ambiguous definitions can significantly alter the reality of the agreement. In a recent landmark case, the Supreme Court of NSW highlighted this reality in FX Group Holdings Pty Ltd v Perpetual Trustee Co Ltd as trustee of the CPEC 8 Trust A (formerly the CHAMP IV Trust A) (No 3) [2025] NSWSC 1055. The decision offers important takeaways about contractual construction, correction by construction and the high threshold of contract rectification. 

Case background

The dispute stems from a 2018 transaction in which a private equity firm (the vendor) sold its investment in the financial trading platform Pepperstone to FX Holdings Pty Ltd. The vendor fully funded the purchase, with the intention of being repaid within five years out of Pepperstone’s dividends. 

One of the core pillars of the deal was a “super returns” clause, which meant that once the $150 million loan was repaid, the vendor was entitled to an equal share of any profits exceeding a $25 million threshold for four years. 

This transaction framework was documented in a Heads of Agreement, but when the Share Sale Agreement was drafted, the definition of “Equity Proceeds” was amended. This is why, when the loan was finally repaid in May 2022, the financial dispute emerged. 

FX Group Holdings argued that the wording of the Sale Agreement allowed them not only to offset the $25 million threshold, but also the total principal and interest repayments, before any super returns were due. This interpretation counted the loan twice, denying the vendor over $100 million in expected profits. 

The ruling

The court rejected FX Group Holdings’ claims and ruled in favour of the vendors. The case clarifies three important principles in contract law:

• The importance of context and commercial purpose

The Court found that the definition of “equity proceeds” was ambiguous, and by examining the text, context and commercial purpose of the sales agreement, including the heads of agreement, the judge found that the parties could not have intended to count loan repayments twice before being entitled to profits. 

The court also found that even if the natural meaning of the text is what FX Group claims, the court would have applied “correction by construction”. This is a legal mechanism that allows the court to interpret text differently when the literal meaning of the text leads to a commercially absurd result. 

• Rectification via common mistake

Alternatively, the vendors argued that if the contract did mean what the plaintiff claimed, it was a mistake and should be fixed. The Court agreed. The evidence showed that when signing the deal, both sides clearly intended to follow the original rules they had already agreed to in the Heads of Agreement.

• Unilateral Mistake and Unconscionability

Crucially, the evidence showed that representatives of FX Group spotted the drafting issue before signing the final contract but chose to stay silent. The Court ruled that because they knowingly let the vendors sign a flawed contract to gain an unfair advantage, the Court had the right to step in and fix it.

Simply put, the law will not let you take advantage of a major drafting error if you knew about it before signing and deliberately stayed silent.

Quick Lessons from the case

• Never rely on text alone. Financial formulas, profit thresholds, and payout clauses must be stress-tested with real math and multiple scenarios before signing.
• The court will look at what your active deal managers intended, even if an institutional trustee ultimately signs the paperwork.
• Keep detailed records of your early emails, term sheets, and initial agreements. If the final contract ends up being vague or broken, these documents are your best lifelines in court.

If you need support drafting or reviewing contracts,  feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our newsletter via our Website, and subscribe to our YouTube, LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favorable Google review.  

DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.