Solle v Butcher [1950]

Court: Court of Appeal

Facts: Mr. Charles Butcher, the landlord, leased a flat to Mr. Godfrey Solle, the tenant, under the mistaken belief that the Rent Acts did not apply to the property. The Rent Acts regulated rent increases and provided tenant rights upon renewal. After discovering the Rent Acts did apply, Solle sought repayment of overpaid rent. Butcher counterclaimed, arguing that the lease should be void due to the common mistake regarding rent regulation.

Issue: Can a contract be declared voidable in equity due to a common mistake about material facts, and what are the appropriate terms for rescission?

Held: The Court of Appeal, by a majority, decided that the contract should be rescinded, but with terms to prevent unjust enrichment. Bucknill LJ found that there was a common mistake regarding the nature of the property and the applicable rent regulation, justifying rescission. Denning LJ agreed, emphasizing that the contract was valid at law but voidable in equity. He highlighted that equity could set aside a contract where one party was misled by a material misrepresentation or where there was a common misapprehension of facts.

Key Judicial Statement: Denning LJ stated, "The contract is valid at law but voidable in equity due to the common mistake. Equity has the power to set aside contracts on terms to ensure justice, particularly where one party seeks to exploit another’s innocent mistake."

💡Leveluplaw: This case illustrates the doctrine of equitable mistakes, where a contract, though valid at law, can be set aside if a party was misled by a common mistake about material facts. It emphasizes the role of equity in providing relief when one party would unfairly benefit from another’s innocent error and underscores the importance of setting aside contracts on fair terms.