Cooper v Phibbs [1867] UKHL 1 (31 May 1867)

A nephew leased a fishery that, unbeknown to both him and his cousins (the lessors), he already owned. The House of Lords set the agreement aside for mutual mistake, establishing that a mistake as to a private right of ownership is a mistake of fact.

Facts

The appellant, Cooper, believing he had no entitlement, entered into an agreement to lease a salmon fishery from the respondents (his uncle’s daughters, represented by Phibbs). Both parties believed the fishery belonged to the respondents as heirs of the deceased uncle. Cooper’s uncle had previously assured him that he was entitled to the fishery. After entering the lease, Cooper discovered that he was, in fact, the beneficial owner of the fishery for life under a settlement. The property was already his own (res sua). Cooper then filed a bill to have the lease agreement set aside and delivered up to be cancelled.

Issues

The central legal issue was whether a contract could be set aside on the ground of a common or mutual mistake, where both parties enter into it under a misapprehension as to their relative and respective rights. Specifically, the court considered whether the mistake as to the ownership of the fishery constituted a mistake of fact, which could void the contract, or a mistake of law, from which equity would typically not grant relief.

Judgment

The House of Lords held that the agreement was invalid and should be set aside. The judgment distinguished between a mistake of general law and a mistake concerning a private right, classifying the latter as a mistake of fact.

Lord Cranworth’s Reasoning

Lord Cranworth found that the parties had acted under a mutual mistake regarding their rights. He stated that the appellant had, in truth, agreed to lease his own property:

The consequence was, that the present Appellant, when, after the death of his uncle, he entered into the agreement to take a lease of this property, entered into an agreement to take a lease of what was, in truth, his own property – for, in truth, this fishery was the property of the Appellant.

He concluded that such an agreement, based on a fundamental mistaken assumption, was liable to be set aside in equity. However, he also acknowledged that the respondents, acting in good faith, had spent money improving the property based on their mistaken belief of ownership. Therefore, any relief granted must be on terms that are just to both parties. The court decided that the respondents should have a lien or charge on the fishery for their expenditure.

Lord Westbury’s Reasoning

Lord Westbury delivered a highly influential speech clarifying the distinction between mistakes of law and fact. He argued that the maxim ‘ignorantia juris haud excusat’ (ignorance of the law is no excuse) applies to general law, not to private rights of ownership.

It is said, ‘Ignorantia juris haud excusat;’ but in that maxim the word ‘jus’ is used in the sense of denoting general law, the ordinary law of the country. But 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.

He concluded that the parties’ mistaken belief about the title to the fishery was a mistake of fact, which vitiated the agreement. The agreement was therefore ‘liable to be set aside’ in equity, subject to equitable terms that would compensate the respondents for their improvements.

Implications

The decision in Cooper v Phibbs became a foundational case for the doctrine of common mistake in contract law, particularly within equity. It established the principle of res sua (‘the thing was already his’), where a contract to buy or lease one’s own property is void. More significantly, it established that a mistake as to a private right, even if it depends on rules of law, is treated as a mistake of fact for the purposes of seeking equitable relief like rescission. This case demonstrates the flexibility of equity to intervene and set aside a contract where enforcing it would be unconscionable due to a fundamental, mutual mistake, while also ensuring that the remedy is applied fairly by imposing conditions (such as the lien for improvements) to protect the other party’s legitimate expenditure.

Verdict: The House of Lords ordered that the lease agreement be set aside, but granted the respondents a lien over the fishery for the value of money they had spent on its improvements.

Source: Cooper v Phibbs [1867] UKHL 1 (31 May 1867)