Cooper v Phibbs (1867) LR 2 HL 149

Cooper agreed to take a lease of a salmon fishery from relatives who believed they were entitled to let it. He shared that belief, having understood from his uncle that he had no relevant ownership interest. It was subsequently discovered that Cooper himself held a beneficial life interest in the fishery. He sought to set aside the lease agreement. The respondents claimed protection for expenditure associated with the property. The litigation consequently involved not just the shared mistake but also the rights of other beneficiaries and the conditions on which relief could be granted.

Could the lease agreement stand when both parties were mistaken about Cooper’s existing beneficial interest, and what protection was required for expenditure and other beneficiaries?

The House of Lords held that the agreement could not stand on the basis on which the parties had made it. Cooper had contracted under the mistaken belief that he lacked the beneficial interest which he in fact held. The respondents shared the misapprehension about their respective rights in the fishery.

Relief required attention to the interests of all persons concerned in the property. The respondents asserted expenditure which could support an equitable lien, and those questions could not properly be resolved without the necessary parties. The case therefore concerned both setting aside the mistaken arrangement and doing equity on the resulting adjustment. It should not be reduced to a declaration that the claimant simply received unrestricted ownership free of any accounting or security claim.

A shared mistake concerning the parties' existing private rights in property can undermine an agreement made to acquire a right already held. Relief may require conditions, accounting or protection for expenditure. Identify the actual proprietary interests and the contract's allocation of risk before treating every ownership error alike.

Cooper is the classic illustration of res sua: contracting to acquire a right already belonging to the apparent purchaser or lessee. Its equitable reasoning and procedural conditions are important historical features. Read with Bell and Great Peace when analysing the modern English doctrine of common mistake, rather than treating nineteenth-century equitable language as a free-standing current jurisdiction. The decision also shows that unwinding an agreement may require protection of other interests, not simply cancellation in favour of one party.