Solle v Butcher [1950]

Defendant made structural alterations to flat.
Let it to plaintiffs.
Both parties mistakenly believed it was ‘new’ dwelling
house and not subject to controlled rent.
Court of Appeal held mistake would afford grounds for
relief in equity, but lease was not nullity from beginning.
Denning LJ:
Contract liable to be set aside in equity if parties
were under common misapprehension either as to facts or to their relative and
respective rights, provided misapprehension was fundamental and party seeking
to set it aside was not himself at fault.
[Important points:
1.  Case
represents origin of idea that common law and equity have different doctrine of
mistake.
2.  Denning’s
judgment relies on v narrow interpretation of Bell – that once parties have reached overt agreement, breach of
express or implied condition required for mistake at common law.
Yet
in reality, Bell test must have been
intended to be wider than this.
So equitable doctrine of mistake built on unstable
foundations.
3.  Denning also
stated court has power to set aside contract wherever it is unconscientious for
other party to avail himself of his legal advantage.
Yet subsequent cases do not support ‘unconscientious’
test.
Rather, mistake must be ‘substantial’, though need not
be so fundamental as to make contract void at common law.
4.  Denning also
stated equity had superseded common law where contractual mistake concerned.
But better view that of Steyn LJ in Associated Japanese Bank.]