A Study in the Relationship Between Common Law and Equity in Contractual Mistake

AuthorC. Grunfeld
Publication Date01 Jul 1952
DOIhttp://doi.org/10.1111/j.1468-2230.1952.tb00240.x
A
STUDY IN
T€IE
RELATIONSI-IIP
BETWEEN COMMON LAW AND
EQUITY
IN CONTRACTUAL MISTAKE
THE
starting point
for
this study is the recent case of
Solle
V.
Butcher.'
There, the broad facts were that after making struc-
tural alterations in a certain flat the defendant let it to the plaintiff
for
scvcn years at a rent
of
E250
pa. without having given notice
of improvements under the Increase of Rent and Mortgage Interest
(Restrictions) Acts,
1920,
ss.
2
and
3
and
1038,
s.
7
(4)
which
would legally have entitled him to charge the
E250
pa. instead of
the previously established standard rent of
E.14~3
pa. The lease
having been executed, however, notice under the Acts became
The reason
for
the omission to give notice was that,
following upon somc consultation bctwccn the parties, it was decided
that the structural alterations had
so
altered the identity of the
'(
dwelling-house
"
as to make it a
"
new
"
dwelling-house and to
release the new dwelling-house from the old standard rent. After a
little over a year had elapscd, the lessee brought action against the
lessor. He alleged that no change
of
identity had in fact occurred
and that the lawful rent
of
the house was still the standard rent
of
ElaO,
and claimed recovery of the amount ovcrpaid. By way
of
counterclaim, the lessor alleged (inter alia) that the leasc was
entered into in circumstances of common mistake and further was
voidable
on
the ground of innocent misrepresentation and, con-
sequently, he was entitled to eject the lcssec. The Court of Appeal
held that in fact there had been no changc of identity and that
therefore the standard rent remained at
$1430
p.a.; but that the
lease, being voidable in equity on the ground
of
common mistake
(though not innocent misrepresentation), would be set aside on
terms securing possession to the tenant and the rent of
$250
pa.
to the landlord
to
run, in effect, from the very beginning of the
tenant's occ~pancy.~ Jenkins
L.
J.
dissentcd on the ground that
the leasc contract remained unrcscindable because the mistake was
one of law.
The bilateral mistake of the parties in the case was variously
described by the various learned judges as a mistake relating to
(i) the effect of the structural alterations on thc identity
or
nature
of the property as being a ncw
or
old dwelling-house,"
or
(ii) the
*
[1050]
1
1i.R.
G71.
SolZe,
today.
would
be
otlicr\visc
dccided
tlioagh
on
a
2
SoZZe
v.
Butcher,
supra,
600.
Scc
ah0
Megarry,
The
Rent
Acts,
Gth
ed.,
262-3.
3
In
regard
to
tho pcriod Beforc rescission, thc
2250
\\'as
niadc
subject
lo
a11
oppropriatc reduction
on account
of
tho landlord's Inilure
to
do
crrtain
rcpnirs.
4
Bucknill
L.J.
in
the
instnut case,
at
68G.
297
different groiind
in
accordancc with
thc House
of
Lords'
decision ill
,?,n)~gfor(l-
rinsi]
A.C.
223.
298
THE
MODERN LAW REVIEW
VOL.
15
(private) right of the lessor to raise thc rent without any necd
to give noticc of improvcmcnts,5
or
(iii) the effect of thc
"
change
of identity rule
))
and the Rent Restriction Acts on the rent charge-
able for the dwclling-housc in its altered condition.'' Before
focusing fully on those matters that forin the main theme of this
study, some remarks need to be made regarding the narrower
and more immediate implications of the case. These revolve about
thc varying vicws of thc kind of mistake that was present in
Solle,
which, in their turn, involve the issue of the distinction between
law and fact in the present context, the definition of "private
right
))
in the sense of the rule in
Cooper
V.
Phibbs
and the type
of
''
fundamental fact
)'
illustrated in the instant case.
By section
12
of the
1920
Act the standard rent chargeable for
a house falling within the scope of the Rent Restriction Acts is
''
the rent at which the dwelling-house was let on the 3rd August,
1913,
or
.
.
.
in the case of a dwelling-house which was first let
after the said 3rd August, the rent at which it was first let."
By a judicial innovation originating in
Phillips
v.
Barnett,8
the
Acts have bccn glossed to the extent that if, as a rcsult of struc-
tural alterations, a dwelling-house undergoes a substantial change of
identity, the house, as altered, will be regarded as
n
new
"
dwelling-
house," and the landlord will, in its first post-transformation letting,
be free to charge the full supply-and-demand rent which becomes
thereupon the standard rent.
It
has further been held in an
unbroken line of rent restriction cases that the question whether a
substantial change
of
identity
for
the purposes of the Act has been
effected
or
not is a question
of
fact.'
In
Solle
v.
Butcher,
the parties, if one adopt the majority view of
the evidence,'O understood the relevant provisions of the Rent
Restriction Acts, understood the change of identity rule, but were
mistaken as to the effect
of
the structural alterations upon the
identity of thc house. From this primary mistake flowed the
secondary mistake that the lessor had by the alterations without
more acquircd a legal right to ask what rent he pleased in the lease in
question." Whilst the law-fact distinction
is
one incapable
of
precise delineation in a sentence,
a
sufkient approximation for the
5
Dcnning
L.J.
ibid.,
692, G94-5.
a
Jenkins,
L.J.,
ibid.,
G98,
704, 705, 706.
7
(1867)
L.R.
2
H.L.
149.
8
[1922]
1
1C.B.
222.
See
Megarry,
op. cit.,
81
et
SCQ.
9
Phillips
v.
Baraelt,
ibid.,
at
227-8;
Sinclair
v.
Powcll
[l922]
1
K.B.
393,
400;
Marckbaitk
v.
Campbell
[1923] 1
K.B.
245, 250;
Wuodltead
v.
Ptcttmn
[I9231
1
1C.B.
28.2,
255;
Sttttoti
v.
Baylcy
[I9231
2
K.B.
GOi,
700;
IVilliavrs
v.
Perry
[I0241
1
K.13,
!)X.
910;
Llarrell
v.
Pordrce
[1932]
A.C.
G7G,
G81-2;
Eyre
v.
Ilayties (1!)45)
G'2
'P.L.R.
G3;
Ellis
v.
Sismatr
[1948]
1IC.B.
G53,
GG5;
Ileitins
v.
Wlteeler
[1948]
2
K.B.
GI, 65-6;
Mitchell
v.
Barties
[1950]
1
K.B.
418,
451;
and
Sollc
V.
Birlclicr.
10
For
the
conlrary view taken
by
Jcnkins
L..J.
see
Solle,
sicpro,
7Oi.
11
Owing
to
his view
of
(lie
facts
and
consequent
mode
of
cxpressing
the
rclcrant
inistakc
in
tlic
case. Jenkins
1J.a.
aiopted
what
1
haw
called
the
secondary
niistake
as
thc
priinnry.
4lso-set,ible-BucknilI
L.J.
at
G8G.
Scc
passages
cited in n.
7,
supra.

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