Citation(s) [1950] 1 KB 671 Location United Kingdom | End date 1950 | |
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Ruling court Court of Appeal of England and Wales Similar Bell v Lever Brothers, Great Peace Shipping, Cooper v Phibbs, Courturier v Hastie, McRae v Commonwealth Disposals | ||
Solle v Butcher [1950] 1 KB 671 is an English contract law case, concerning the right to have a contract declared voidable in equity. Denning LJ reaffirmed a class of "equitable mistakes" in his judgment, which enabled a claimant to avoid a contract. Denning LJ said,
Contents
This would have essentially recognised a wider application of a duty of disclosure in most cases, triggered by actual knowledge of one party that another party was mistaken about terms. The case was doubted by a subsequent Court of Appeal case, The Great Peace, but the issue has not finally been resolved by the UK Supreme Court.
Facts
Mr Solle, a tenant, claimed that he should be repaid money over the statutory rent regulation for a flat he leased, and Butcher, the landlord, counterclaimed that their contract should be void because both were mistaken about rent regulation applying. Mr Charles Butcher had leased the flat in Maywood House, Beckenham, to Mr Godfrey Solle at £250 a year, believing that the Rent Acts did not apply to the property. The Increase of Rent and Mortgage Interest (Restrictions) Act 1920 sections 1 and 14 and Rent and Mortgage Interest (Restrictions) Act 1938 section 7 regulated rent rises, and gave tenants basic rights upon renewal, to prevent the housing market becoming unaffordable. Butcher was in fact in a business partner, doing real estate, with Solle. In 1947, Butcher had bought that flat, with four others, that were damaged by a land mine in the war. He spent money renovating them and leased them out. In 1939, the first flat had been leased out to a third party at the regulated rent of £140 a year. In fact, the Rent Acts did apply, so without going through statutory procedures for letting, the true rent should have been fixed at the first flat’s previous rent, of £140. Solle and Butcher’s business relationship had deteriorated, and so when Solle realised the mistake about rent regulation, he claimed the overpaid rent back (i.e. restitution) from Butcher. Butcher counterclaimed to rescind the whole contract for common mistake.
Judgment
The Court of Appeal held by a majority (Jenkins LJ dissenting) that there should be no order for restitution of the overpaid rent, and the contract should be rescinded on terms (i.e. with conditions attached) that Solle be allowed to choose whether to have a lease at £250, or whether to leave the flat.
Bucknill LJ held that Butcher, the landlord, was entitled to rescind the contract, saying the following.
Denning LJ, concurring, said the contract was valid at law, but voidable in equity. The court would have the discretion to impose terms for the contract being set aside. He said the following.
Jenkins LJ, dissenting, said the contract could not be rescinded because it was a mistake of law.
Significance
The doctrine of equitable mistake was doubted by the Court of Appeal's ruling in Great Peace Shipping Ltd v Tsavliris (International) Ltd in 2002. It remains a point of contention whether mistake in equity does, and should, enable rescission for wider reasons than acknowledged in The Great Peace and its restrictive interpretation.