Denning LJ reaffirmed a class of "equitable mistakes" in his judgment, which enabled a claimant to avoid a contract.

The Court of Appeal held by a majority (Jenkins LJ dissenting) that there should be no order for restitution of the overpaid rent, and the contract should be rescinded on terms (i.e. with conditions attached) which Solle be allowed to choose whether to have a lease at £250, or whether to leave the flat.

Bucknill LJ held that Butcher, the landlord, was entitled to rescind the contract, saying the following: In my opinion, therefore, there was a common mistake of fact on a matter of fundamental importance, namely, as to the identity of the flat with the dwelling-house previously let at a standard rent of 140l.

Much of the difficulty which has attended this subject has arisen because, before the fusion of law and equity, the courts of common law, in order to do justice in the case in hand, extended this doctrine of mistake beyond its proper limits and held contracts to be void which were really only voidable, a process which was capable of being attended with much injustice to third persons who had bought goods or otherwise committed themselves on the faith that there was a contract.

It is true that the landlord was under a mistake which was to him fundamental: he would not for one moment have considered letting the flat for seven years if it meant that he could only charge 140l.

Any other view would lead to remarkable results, for it would mean that, in the many cases where the parties mistakenly think a house is outside the Rent Restriction Acts when it is really within them, the tenancy would be a nullity, and the tenant would have to go; with the result that the tenants would not dare to seek to have their rents reduced to the permitted amounts lest they should be turned out.

The court, it was said, had power to set aside the contract whenever it was of opinion that it was unconscientious for the other party to avail himself of the legal advantage which he had obtained: Torrance v Bolton[7] per James L.J.

It is now clear that a contract will be set aside if the mistake of the one party has been induced by a material misrepresentation of the other, even though it was not fraudulent or fundamental; or if one party, knowing that the other is mistaken about the terms of an offer, or the identity of the person by whom it is made, lets him remain under his delusion and concludes a contract on the mistaken terms instead of pointing out the mistake.

The friend looked up a book which he then had with him called the Clerk's Remembrancer and gave it as his opinion that the lands belonged to the youngest brother.

Lord Chancellor King declared that the documents were obtained by a mistake and by a misrepresentation of the law by the friend, and ordered them to be given up to be cancelled.

The principle so established by Cooper v Phibbs has been repeatedly acted on: see, for instance, Earl Beauchamp v Winn,[11] and Huddersfield Banking Co Ld v Lister.

[12] It is in no way impaired by Bell v Lever Bros Ld, which was treated in the House of Lords as a case at law depending on whether the contract was a nullity or not.

[13] Applying that principle to this case, the facts are that the plaintiff, the tenant, was a surveyor who was employed by the defendant, the landlord, not only to arrange finance for the purchase of the building and to negotiate with the rating authorities as to the new rateable values, but also to let the flats.

On the defendant's evidence, which the judge preferred, I should have thought there was a good deal to be said for the view that the lease was induced by an innocent material misrepresentation by the plaintiff.

If and in so far as Angel v Jay[15] decided that an executed lease could not be rescinded for an innocent misrepresentation, it was in my opinion, a wrong decision.

In the ordinary way, of course, rescission is only granted when the parties can be restored to substantially the same position as that in which they were before the contract was made; but, as Lord Blackburn said in Erlanger v New Sombrero Phosphate Co:[17] "The practice has always been for a court of equity to give this relief whenever, by the exercise of its powers, it can do what is practically just, though it cannot restore the parties precisely to the state they were in before the contract."

If the lease were set aside without any terms being imposed, it would mean that the plaintiff, the tenant, would have to go out and would have to pay a reasonable sum for his use and occupation.

The situation is similar to that of a case where a long lease is made at the full permitted rent in the common belief that notices of increase have previously been served, whereas in fact they have not.

When Sir John Romilly MR, was faced with a somewhat similar problem, he gave the tenant the option either to agree to pay the proper rent or to go out: see Garrard v Frankel;[18] and when Bacon V-C. had a like problem before him he did the same, saying that "the object of the court is, as far as it can, to put the parties into the position in which they would have been in if the mistake had not happened": see Paget v Marshall.

I think that this court should follow these examples and should impose terms which will enable the tenant to choose either to stay on at the proper rent or to go out.

The same assessment should be made here, because the sums payable for use and occupation are not rent, and the statutory provisions about notices of increase do not apply to them.

The doctrine of equitable mistake was doubted by the Court of Appeal's ruling in Great Peace Shipping Ltd v Tsavliris (International) Ltd in 2002, and Lord Phillips MR formally disapproved of the Solle v Butcher judgement.

Solle v Butcher had troubled academic and practising lawyers for decades, and there was some relief when the Great Peace case was decided.

[citation needed] Nevertheless, it remains a point of contention whether mistake in equity does, and should, enable rescission for wider reasons than acknowledged in The Great Peace and its restrictive interpretation.