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In West Sussex Properties Ltd v Chichester DC, CA, 28/6/00, the appellant won an order for rescission of a lease on the ground of common mistake: both the appellant and the respondent had misconstrued the terms of a rent review clause contained in the lease, and as a result the appellant had overpaid rent to the respondent for a number of years.

In the course of argument, counsel for the respondent suggested that the court should, in rescinding the agreement, impose terms so as to exclude the recovery by the appellant of the overpayments of rent, essentially on the ground that the respondent was a local authority whose finances would be disrupted if it now had to pay the money back.

Morritt LJ replied to this argument as follows:

'It is not suggested that the defence to the restitutionary claim of change of position by the Council has been established so as to defeat the claim to that extent. Nor is it denied that on rescission of the agreement the amounts overpaid are to be regarded as the property of the Lessee in the hands of the Council. As such they would be recoverable as a matter of right: Foskett v McKeown [2000] 2 WLR 1299, 1304H (Lord B-W). In these circumstances, whilst accepting that the court has jurisdiction to impose terms on the grant of equitable relief, I can see no reason to impose any terms precluding the Lessee from recovering its own property in the hands of the Council.'

Sir Christopher Staughton, concurring, also stated that although he was at first attracted by the proposal that the council's finances should not be disrupted:

'... on reflection I do not think that such a term would be appropriate in this case. It is, I suppose a common occurrence that a District Council's forecast of its financial affairs for the coming year is falsified to some extent. And as Morritt LJ points out, the overpaid money is to be regarded as, in effect, the Lessee's money.'

I take the portion of Lord B-W's speech referred to to be the bit where he says that the court has no discretion to vary 'hard-nosed' equitable property rights - but it strikes me that he was dealing there with a case where the claimants' property rights pre-dated the court's intervention, whereas here the whole question was whether the court would bring property rights into being for the appellant by ordering rescission of the contract - at its discretion.

It also strikes me that the court's lack of interest in the disruption of public finance point might have ramifications for Woolwich claims in the future.

__________________________________________
Dr Charles Mitchell
Lecturer in Law
School of Law
King's College London
Strand
LONDON WC2R 2LS

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