Equitable Rescission of Contracts for Mistake in Canada After Great Peace: Whither Solle v. Butcher?

Abstract

In 1949, Lord Denning of the Court of Appeal of England in Solle v. Butcher held that equity could rescind a contract in respect of which all parties had made the same mistake, provided that the mistake was "fundamental" and the party seeking rescission was not at "fault." Since then, the decision has been under attack. In 2002, the same court in Great Peace purported to overrule Solle v. Butcher, but in 2020 the UK Supreme Court, in one sentence in an otherwise unconnected decision, suggested that equitable contractual rescission may not be dead yet. This article explores Solle v. Butcher in the context of Canadian law in general and a tax context in particular. It concludes that equitable contractual rescission is alive and well and living in Canadian tax law.

Keywords: Contracts, equity, rescission