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Chwee Kin Keong v Digilandmall.com Pte Ltd [2005] 1 S.L.R. 502 (CA (Sing))
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Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd [2002] EWCA Civ
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*L.Q.R. 393
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GREAT Peace Shipping Ltd v Tsavliris Salvage (International) Ltd
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[2003] EWCA Civ 1407; [2003] Q.B. 679 (
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Great Peace
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) (noted by Reynolds (2003) 119 L.Q.R. 177 and Midwinter (2003) 119 L.Q.R. 180) is
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Solle v Butcher
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[1950] 1 K.B. 671, CA and denying the existence of an equitable jurisdiction to
set aside contracts made under a fundamental common mistake. Common mistakes in the
making of contracts therefore have legal effect only within the common law. In
principle, where the contract is not void at law, equitable jurisdiction could be
invoked when it would be unconscionable for a person to take advantage of legal
rights; the problem is in defining the circumstances that amount to
unconscionability in specific types of situations. Unconscionable behaviour in the
procuring of the formation of agreements has been an ancient and fertile area for
equitable intervention, including cases where one party has taken advantage of the
mistake of another. The Court of Appeal in
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Solle v Butcher
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purported to extend the equitable jurisdiction such that, in the absence of
blameworthy behaviour of either party at the time of contracting, the court could
still rescind the contract on the application of one of the parties on the basis of
a common fundamental mistake; it could be unconscionable for a party to insist on
strict contractual rights because of the mistake.
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The question whether the equitable jurisdiction to set contracts aside for
}
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unilateral
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mistakes has survived
}
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Great Peace
}
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has not been decided in the English courts, although its continued existence has
been assumed:
}
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Huyton SA v Distribuidora Internacional de Productos Agricolas SA de CV
}
}
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[2003] 2 Lloyd\rquote s Rep. 780 and
}
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Harrison v Halliwell Landau
}
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[2004] EWHC 1316 (QB). This question came squarely before the Singapore Court of
Appeal in
}
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Chwee Kin Keong v Digilandmall.com Pte Ltd
}
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[2005] 1 S.L.R. 502 (P. H. Yong C.J., H. T. Chao J.A., and T. C. Kan J.). The
court gave a resounding affirmative answer, and further hinted strongly that, even
in respect of common mistakes, it may not follow
}
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Great Peace.
}
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The defendant mistakenly offered a model of colour laser printer for sale on a
website at S$66. Six individuals, in communication with one another, rapidly
entered into a number of (online) transactions with the defendant to purchase 1,606
of them, after checking that the printer was worth nearly S$4,000 in the market,
with the prospect of some S$6 million profits in
}
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*L.Q.R. 394
}
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total. Other purchasers accepted the defendant\rquote s mistake and cancellation
of their orders, but the six individuals sued when the defendant refused to honour
their purchases. The claims were dismissed in the High Court ([2004] 2 S.L.R. 594;
noted [2004] Sing. J.L.S. 227). V. K. Rajah J.C. found that the conduct of the
claimants had been \ldblquote predatory\rdblquote , and that they knew of the
mistake of the defendant. Thus, all the contracts were void at common law. He also
held the same common law result to follow on the alternative finding that the
claimants only had constructive knowledge.
}
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In
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obiter,
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he found the position in
}
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Great Peace
}
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{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
to be also persuasive for unilateral mistakes, and thus opined that there was no
equitable jurisdiction to set contracts aside for unilateral mistakes.
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\u160\'3f
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The Court of Appeal affirmed the decision on different grounds. In a joint
judgment, it held that only
}
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actual
}
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knowledge of another\rquote s mistake would render a contract void at common law
(at [53]) (
}
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{\b0 \cf1 \f2 \ul0 \strike0 \i1 \fs20 \sa0 \sb0
cf. Chitty on Contracts
}
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{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
(28th ed., 1999), at para.5-035). It also held that the court had equitable
jurisdiction to rescind a contract for unilateral mistake, but emphasised that
there must be an element of impropriety involved before the jurisdiction could be
invoked. Some \ldblquote sharp practice\rdblquote or \ldblquote unconscionable
conduct\rdblquote had to be shown; negligence was not enough (at [77]). Further,
it was not enough to show constructive knowledge; it had to be shown what advantage
had been taken with the constructive knowledge (at [78]). Conscious omission to
disabuse a party mistaken as to a serious or fundamental matter would be a
sufficient reason for invoking the equitable jurisdiction (at [73]), as would the
deliberate refraining from bringing suspicion of a possible mistake to the
attention of the mistaken party (at [80]). Agreeing with the finding of facts at
first instance, the Court of Appeal held that even if the claimants did not have
actual knowledge, the sharp practice involved would have provided justification for
rescission in equity.
\par
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\u160\'3f
\par
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The confirmation of the equitable jurisdiction to rescind a contract for unilateral
mistake is not surprising; this aspect of equity pre-dated, and never depended on,
}
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Solle v Butcher.
}
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Two further points are notable. First, the court circumscribed the operation of
common law in unilateral mistakes in favour of the more flexible jurisdiction of
equity. It also noted concern that the common law technique could lead to prejudice
to third parties (at [82]). The solution adopted also helpfully shifts the
assessment of the propriety of pre-contractual conduct (which was thought in the
High Court to be relevant also in common law unilateral mistake) to equity, where
the tools are more familiar. Secondly, the court made it clear that it was not
merely confining
}
{\b0 \cf1 \f2 \i1 \fs20
{\b0 \cf1 \f2 \ul0 \strike0 \i1 \fs20 \sa0 \sb0
Great Peace
}
}
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
to common mistakes. It was justifiably critical of
}
{\b0 \cf1 \f2 \i1 \fs20
{\b0 \cf1 \f2 \ul0 \strike0 \i1 \fs20 \sa0 \sb0
Great Peace
}
}
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
 for putting too much weight on the lack of definition of the equitable
jurisdiction as a reason for overruling
}
{\b0 \cf1 \f2 \i1 \fs20
{\b0 \cf1 \f2 \ul0 \strike0 \i1 \fs20 \sa0 \sb0
Solle v Butcher.
}
}
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
It simply found that there was no logic to the denial of existence of this
equitable jurisdiction (at [74]). Moreover, the basis of the relief is
}
{\b1 \cf33 \f2 \i1 \fs20
{\b1 \cf33 \f2 \ul0 \strike0 \i1 \fs20 \sa0 \sb0
*L.Q.R. 395
}
}
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
the unconscionability in insisting on the performance of the contract (at [80]),
even if, in the context of this case, the unconscionability stems from impropriety
in pre-contractual behaviour. Thus, it seems likely that the court will reject
}
{\b0 \cf1 \f2 \i1 \fs20
{\b0 \cf1 \f2 \ul0 \strike0 \i1 \fs20 \sa0 \sb0
Great Peace
}
}
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
even in a case of common mistake.
\par
}
}
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
This is, it is submitted, a right move. While there are legitimate fears that a
general power to set aside contracts for common mistake in
}
{\b0 \cf1 \f2 \i1 \fs20
{\b0 \cf1 \f2 \ul0 \strike0 \i1 \fs20 \sa0 \sb0
Solle v Butcher
}
}
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
involves judicial adjustments of contractually-allocated risks, they may be met by
a clearer delineation of what risks lie within or outside contractual allocation
(see Reynolds, above), and clearer demarcation of the circumstances that amount to
unconscionable insistence of legal rights in a contract based on a common
fundamental mistake,
}
{\b0 \cf1 \f2 \i1 \fs20
{\b0 \cf1 \f2 \ul0 \strike0 \i1 \fs20 \sa0 \sb0
e.g.
}
}
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
 where there has been unjust enrichment or serious failure of consideration for
which the developing law of restitution has not been able to provide a remedy.
}
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
Indeed,
}
{\b0 \cf1 \f2 \i1 \fs20
{\b0 \cf1 \f2 \ul0 \strike0 \i1 \fs20 \sa0 \sb0
Great Peace
}
}
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
did not close this route off completely; there is residual equitable jurisdiction
where there has been (equitable) \ldblquote fraud or surprise upon an ignorant
party\rdblquote (above, at [110]). As to its relationship with common mistake at
law, the Singapore court may well adopt a similar strategy: to confine the scope of
the common law strictly while using the more flexible equitable jurisdiction at its
fringes (though, no doubt, sparingly).
\par
}
}
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\u160\'3f
\par
}
{\b0 \cf1 \f2 \ri0 \i0 \qj \fs20 \li0
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20
}
{\b0 \cf1 \f2 \i0 \fs20
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
T. M. YEO.
}
}
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20
\par
}
}
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa200 \sb0
\u160\'3f
\par
}
}
}
{\b0 \cf1 \f2 \ul0 \strike0 \i0 \fs20 \sa0 \sb0
\u160\'3f
\par
}
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{\trowd \lastrow \trleft0
\clpadb400 \clpadfb3 \clbrdrt \clbrdrb \clbrdrl \trql \clvertalt \clwWidth10080 \
cellx10080
\intbl
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{\b1 \qc \cf1 \f2 \ri0 \i0 \fs22 \li0
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Footnotes
\par
}
}
}
}\b1 \qc \cf1 \f2 \ri0 \ul0 \strike0 \i0 \li0 \fs22 \sa0 \sb0 \intbl \cell \row }}\
par
}
}
}
}\sect }