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

The appellant agreed to lease a salmon fishery from respondents, believing they owned it. In fact, the fishery belonged to the appellant himself under earlier settlements. The House of Lords held the agreement should be set aside for common mistake, but subject to the appellant compensating the respondents for improvements made to the fishery.

Facts

The appellant, Edward H. Cooper, entered into an agreement on 14 October 1863 to become tenant of the salmon fishery of Ballysadare from the respondent William Phibbs, who acted as trustee for the other respondents (the daughters of Edward Joshua Cooper). The appellant believed the fishery belonged to the respondents, when in truth he was himself the owner as tenant in tail under settlements of 1827 and 1858.

The fishery had been conveyed to the lunatic Joshua Edward Cooper in 1806, and was subject to a settlement deed of 1827 containing covenants extending to ‘all other estates of inheritance’ of which the lunatic should die seised. Edward Joshua Cooper (the lunatic’s nephew) had expended considerable sums obtaining an Act of Parliament in 1837, purchasing fishery rights, and making canal cuts to improve the fishery.

The Mistake

Edward Joshua Cooper had represented to the appellant that he owned the fishery in fee simple. After Edward Joshua’s death in 1863, the appellant entered into the lease agreement based on this misrepresentation, not knowing that the fishery was bound by the 1827 settlement and belonged to him.

Issues

1. Whether the fishery was comprised within the settlement of 1827.

2. Whether the agreement could be set aside on grounds of common mistake.

3. Upon what terms relief should be granted.

Judgment

The House of Lords held that the fishery was clearly included in the 1827 settlement under the general words ‘all other estates of inheritance and hereditaments.’ Lord Cranworth stated that parties are not at liberty to speculate about intention when words actually include the property in question.

Lord Westbury addressed the distinction between mistake of law and mistake of fact, explaining that while the maxim ‘ignorantia juris non excusat’ applies to general law, private rights of ownership are matters of fact. When parties contract under mutual mistake as to their relative rights, the agreement is liable to be set aside.

The Lords held that Edward Joshua Cooper stood as trustee of the fishery and the powers granted to him by the 1837 Act of Parliament were obtained in his fiduciary capacity. Any rights acquired under those powers were therefore subject to the trusts of the 1827 settlement.

Terms of Relief

Relief was granted subject to conditions: the appellant must pay occupation rent for certain premises, and the respondents were entitled to a lien upon the property for the moneys expended by their father in obtaining the Act, purchasing fishery rights, and making improvements, with interest at 4 per cent from Edward Joshua Cooper’s death.

Implications

This case established the important principle that contracts entered into under common mistake as to the parties’ respective rights may be set aside in equity. It clarified that private rights of ownership are matters of fact, distinguishable from general legal principles covered by the maxim ‘ignorantia juris non excusat.’ The case also affirmed that a person in a fiduciary position who acquires property or powers by virtue of that position holds such acquisitions subject to the same trust obligations.

Verdict: Appeal allowed. The decree of the Lord Chancellor of Ireland was reversed. Declarations were made that the fishery was bound by the 1827 settlement, that Edward Joshua Cooper held the property as trustee, and that the agreement of 14 October 1863 was made under common mistake and should be set aside. Relief was subject to the appellant paying occupation rent and the respondents’ entitlement to a lien for expenditure on improvements.

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