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Dear all,

On the, I suspect, reasonable assumption that legislation will not be forthcoming in the near future, this is something that really must go further up to the House of Lords. I don't think we can just take the Court of Appeal's word for it. After 50 years and several Court of Appeal decisions (Nutt v Reed, Magee v Pennine Insurance, William Sindall v Cambridgeshire County Council) accepting Solle v Butcher, you have to wonder whether they are not being over-bold. That said, they cannot be faulted, on my first reading at least, for not developing their argument properly, whatever you may think of its merits.

Basically in a nutshell they argue that the circumstances in which a court of chancery would permit rescission of a contract for mistake was not clear in the C19. They take the example of Cooper v Phibbs and say that although the claimant probably thought he had no chance in a court of law, because his mistake was as to existence of his equitable rights, that Bell v Lever Bros confined its effect, and those of other C19 cases to situation where the contract was void at law, para 118. They go on to claim that we have never satisfactorily defined fundamental mistake in equity as anything different to at law, para 131, 153, and that if we want to give relief in more cases than we do at law at present that is a question for the relaxation of the common law rules, para 156. Effectively the CA argue that Denning LJ in Solle was trying to overrule the House of Lords! What he did was say that relief ought to be given in more cases than you are prepared to give it, but I'm going to instead.

While I take the point about the definition of the equitable jurisdiction being somewhat mysterious (I don't know what fundamental means either), you could say much the same about the common law test. Treitel has a neat test to do with the identity, as opposed to attributes of an object, but that like most tests doesn't seem to help. I don't know what it means at common law either. Not knowing what it means is a reason for finding a test that defines the ambit for relief satisfactorily, not abolishing equitable relief altogether. After all it does not seem obviously absurd to have some very very very serious mistakes making a contract void, merely serious mistakes making it voidable, and everything else just being a mess up you have to deal with. There are very good reasons why you might not wish to expand the ambit of complete avoidance and nullity, but rather make a contract voidable. Protection of third parties springs immediately to mind.

Duncan Sheehan

-----Original Message-----

From: Enrichment - Restitution & Unjust Enrichment Legal Issues
[mailto:ENRICHMENT@LISTS.MCGILL.CA]On Behalf Of Steve Hedley
Sent: Wednesday, October 16, 2002 2:20 PM
To: ENRICHMENT@LISTS.MCGILL.CA
Subject: [RDG:] Solle v. Butcher bites the dust

Great Peace Shipping v. Tsavliris
Court of Appeal, 14 October 2002

http://www.law.cam.ac.uk/restitution/archive/englcases/great_peace_2.htm

The court of appeal holds that there is no distinct equitable doctrine of common mistake.

The true, common law doctrine is as follows:

"(i) there must be a common assumption as to the existence of a state of affairs; (ii) there must be no warranty by either party that that state of affairs exists; (iii) the non-existence of the state of affairs must not be attributable to the fault of either party; (iv) the non-existence of the state of affairs must render performance of the contract impossible; (v) the state of affairs may be the existence, or a vital attribute, of the consideration to be provided or circumstances which must subsist if performance of the contractual adventure is to be possible. " (para 76)

This doctrine is closely analogous to the doctrine of frustration, and "Just as the Law Reform (Frustrated Contracts) Act 1943 was needed to temper the effect of the common law doctrine of frustration, so there is scope for legislation to give greater flexibility to our law of mistake than the common law allows." (para 162).

Sundry observations on the scope of equity, circumstances when the court of appeal may depart from its own decisions, and other matters.

Enjoy,

Steve Hedley

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FACULTY OF LAW, UNIVERSITY OF CAMBRIDGE

ansaphone : +44 1223 334931
www.stevehedley.com
fax : +44 1223 334967

Christ's College Cambridge CB2 3BU
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