• In the case of Cooper v Phibbs [1867] UKHL 1, the principle of res sua is established by the judges.
  • This contract case concerned common mistakes and rescission.
  • This case involved equity in contract rather than basing the judgment on common law principles.

Facts of the Case

  • C and D contracted for a salmon fishery after C’s uncle told C that the fishery belonged to him. C and D mistakenly believed that D owned the property.
  • After C discovered his position as the life tenant, C attempted to set aside the three year lease as a result of finding out this information.

Issues

  • Whether both parties made a common mistake.
  • Whether the lease could be set aside.

Held by House of Lords

  • Appeal dismissed – contract was voidable because of the equitable interest and the common mistake between both parties.

Lord Cranworth

Lien

  • The lease should be set aside for C but D requires a lien based on the funds used for the care and maintenance of the fishery.
  • “It is impossible to decide the merits of this claim in the absence of the persons entitled to the corpus of the estate. On the marriage of the Appellant, in 1858, the property was settled to uses, and on trusts, for the benefit of the Appellant and his wife, and the issue of the marriage. The Appellant, therefore, has not brought before the Court all the persons interested in this question. If the Respondents succeed in establishing their lien, it will be a lien affecting the life interest of the Appellant, as well as the rest of the corpus of the property, and so justice would not be done to them if we were to give relief to the Appellant by simply setting aside the agreement on which they claim a lien”.

Lord Westbury

Mistake

  • At the time of contracting both parties had the same knowledge of facts hence this was a mutual mistake.
  • “When the word “jus” is used in the sense of denoting a private right, that maxim has no application. Private right of ownership is a matter of fact; it may be the result also of matter of law; but if parties contract under a mutual mistake and misapprehension as to their relative and respective rights, the result is, that that agreement is liable to be set aside as having proceeded upon a common mistake. Now, that was the case with these parties – the Respondents believed themselves to be entitled to the property, the Petitioner believed that he was a stranger to it, the mistake is discovered, and the agreement cannot stand.”

Editor’s Notes

  • This unusual case shows the exceptional circumstance of res sua meaning when the ownership actually lies in the hands of the buyer not the seller.

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