Equity and Common Mistake

Critically assess the role of equity in cases of common mistake.

Denning LJ's argument in Solle v Butcher has been criticised in many respects. His quick dismissal of Bell v. Lever Brothers was short-sighted; in fact every judge considered the position of equity and disallowed its jurisdiction 1. Furthermore, it has been argued that if equity was allowed in this case, the outcome would still have been the same 2 ; yet Denning LJ claimed the opposite 3. As if not himself convinced of the irrelevance of Bell, he states that, "in any case, the principle of Cooper v. Phibbs has been fully restored by Norwich Union Fire Insurance Society, Ltd., v. William H. Price, Ltd. 4 " 5; yet even here he is mistaken as this case discussed and was decided under common law 6. There does not appear to be any suggestion in any of the judgments he refers to that contracts not void in common law could be set aside in equity; rather, "it is quite plain that an action would lie at law" 7. equity

He argues that it is possible to disregard the common law need to assess whether a contract is void when determining whether or not an equitable remedy is available because, traditionally, courts of equity dealt with mistake questions "presupposing that a contract was good at law" 8 ; rather than presupposing such a thing, courts of chancery before the Judicature Act did not even consider it 9. Furthermore, the other cases cited in support of this extension were not conclusive proponents of the theory 10. Worse still, he did not lay down any guidelines as to the limits of this broader category . 11 Instead he blurs boundaries and lacks clarity: at one point he confuses mistake and misrepresentation so that it is not longer possible to distinguish the two 12.

It is important to note that Denning LJ's peers did not endorse his doctrine in their judgments in Solle v. Butcher 13. Several decisions have applied Solle v. Butcher; yet few can be considered as outright authoritative support for the principle. Most were heard at first instance and therefore hold comparatively little weight with the profession as a whole 14; Grist v. Bailey also did not propound equity outright but first asked if common law could be applied before considering it.

equity It has been suggested that the facts in Magee v. Pennine Insurance Co. Ltd. 15 were indistinguishable from Bell v. Lever Brothers 16; yet the doctrine was applied by Denning LJ alone, unsupported by his peers. Similarly, in Rose v. Pim 17 the doctrine was advanced by Denning LJ, obiter, but neither of the other judges.

There are only three Court of Appeal cases not involving Denning LJ that supported his doctrine 18. It is also important to consider the recent Court of Appeal decision, which unanimously claims to curtail equitable common mistake 19…

  1. Lord Blanesburgh at 190 & 200, Lord Warrington and Viscount Hailsham at 206, Lord Atkin at 219-221, and Lord Thankerton at 236 of Bell v. Lever Brothers; see also Atiyah & Bennion, "Mistake in the construction of contracts", 441 including fn 62.[^ Return]
  2. Grunfeld, "A study in the relationship between common law and equity in contractual mistake", 304 fn 48.[^ Return]
  3. Solle v. Butcher, 694.[^ Return]
  4. Norwich Union Fire Insurance Society Ltd. v. William H. Price Ltd. [1934] A.C. 455[^ Return]
  5. Solle v. Butcher, 694.[^ Return]
  6. Norwich Union Fire Insurance Society Ltd. v. William H. Price Ltd., 462; see also Atiyah & Bennion, "Mistake in the construction of contracts", 441-442.[^ Return]
  7. Lindley L.J. in Huddersfied Banking Co., Ltd. v. Lister [1895] 2 Ch 273 at 281; see also Atiyah & Bennion, "Mistake in the construction of contracts", 441.[^ Return]
  8. Solle v. Butcher, 692.[^ Return]
  9. McTurnan, "An approach to common mistake in English law", 45.[^ Return]
  10. Ibid.[^ Return]
  11. McTurnan, "An approach to common mistake in English law", 47.[^ Return]
  12. Solle v. Butcher, 695.[^ Return]
  13. Lord Bucknill considered the relevant issue to be the effect of alterations with respect to the 'change of identity' rule in the Rent Restrictions Act rather than one of private rights; and Lord Jenkins (dissenting) based his decision on whether or not the mistake was one of fact or one of law and, in finding it to be one of law, dismissed the appeal.[^ Return]
  14. Grist v. Bailey [1967] 1 Ch 532; Arenson v. Arenson [1973] Ch 346; Campbell v. Edwards [1976] 1 WLR 403; Baber v. Kenwood [1978] 1 Lloyds Rep 175; Laurance v. Lexcourt Holdings Ltd. [1978] 1 WLR 1128; Associated Japanese Bank (International) Ltd. v. Credit du Nord SA [1989] 1 WLR 255. For a discussion on the relevance of this last case to Solle v. Butcher and equity, see G. H. Treitel, "Mistake in contract" in Law Quarterly Review Volume 104 1988, pp 503-504.[^ Return]
  15. Magee v. Pennine Insurance Co. Ltd. [1969] 2 QB 507.[^ Return]
  16. Phang, "Common mistake in English law: the proposed merger of common law and equity", 301.[^ Return]
  17. Rose v. Pim [1953] 2 Q.B. 450; Nutt v. Reed (21st October 1999); West Sussex Properties Ltd v. Chichester District Council (28th June 2000).[^ Return]
  18. Nutt v. Reed (21st October 1999).[^ Return]
  19. Tsavliris Salvage (International) Ltd. v Great Peace Shipping Ltd. [2002] EWCA Civ No 1407 [^ Return]

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