Gibson v Manchester City Council

JurisdictionUK Non-devolved
JudgeLord Diplock,Lord Edmund-Davies,Lord Fraser of Tullybelton,Lord Russell of Killowen,Lord Keith of Kinkel
Judgment Date08 March 1979
Judgment citation (vLex)[1979] UKHL J0308-1
Date08 March 1979
CourtHouse of Lords
Gibson (A.P.)
(Respondent)
and
The Council of the City of Manchester
(Appellants)

[1979] UKHL J0308-1

Lord Diplock

Lord Edmund-Davies

Lord Fraser of Tullybelton

Lord Russell of Killowen

Lord Keith of Kinkel

House of Lords

Upon Report from the Appellate Committee to whom was referred the Cause Gibson (Respondent) against The Council of the City of Manchester (Appellants), That the Committee had heard Counsel on Wednesday the 24th day of January last upon the Petition and Appeal of the Council of the City of Manchester of Town Hall, Manchester M60 2LA praying that the matter of the Order set forth in the Schedule thereto, namely an Order of Her Majesty's Court of Appeal of the 17th day of January 1978 might be reviewed before Her Majesty the Queen in Her Court of Parliament and that the said Order might be reversed, varied or altered or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen in Her Court of Parliament might seem meet; as also upon the Case of Robert Gibson lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal of the 17th day of January 1978 complained of in the said Appeal be, and the same is hereby, Discharged except as to Costs: And it is further Ordered, That there be no Order as to Costs in this House save that the Respondent's costs be taxed in accordance with Schedule 2 to the Legal Aid Act 1974: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Manchester County Court to do therein as shall be just and consistent with this Judgment.

Lord Diplock

My Lords,

1

This is an action for specific performance of what is claimed to be a contract for the sale of land. The only question in the appeal is of a kind with which the courts are very familiar. It is whether in the correspondence between the parties there can be found a legally enforceable contract for the sale by the Manchester Corporation to Mr. Gibson of the dwelling-house of which he was the occupying tenant at the relevant time in 1971. That question is one that, in my view, can be answered by applying to the particular documents relied upon by Mr. Gibson as constituting the contract, well-settled, indeed elementary, principles of English law. This being so, it is not the sort of case in which leave would have been likely to be granted to appeal to your Lordships' House, but for the fact that it is a test case. The two documents principally relied upon by Mr. Gibson were in standard forms used by the corporation in dealing with applications from tenants of council houses to purchase the freehold of their homes under a scheme that had been adopted by the council during a period when it was under Conservative Party control. Political control passed to the Labour Party as a result of the local government elections held in May 1971. The scheme was then abandoned. It was decided that no more council houses should be sold to any tenant with whom a legally binding contract of sale had not already been concluded. At the date of this decision there was a considerable number of tenants, running into hundreds, whose applications to purchase the houses which they occupied had reached substantially the same stage as that of Mr. Gibson. The two documents in the same standard form as those on which he principally relies had passed between each one of them and the corporation. So their rights too are likely to depend upon the result of this appeal.

2

My Lords, the contract of which specific performance is sought to be enforced is a contract for the sale of land. It is thus subject to the requirements as to writing laid down in section 40 of the Law of Property Act 1925; but nothing turns on this since the only contract that is alleged is one made by letters and accompanying documents passing between the parties. The outcome of this appeal depends upon their true construction.

3

In the Manchester County Court where the action started, the case was pleaded in the conventional way. The particulars of claim alleged an offer in writing by the corporation to sell the freehold interest in the house to Mr. Gibson at a price of £2,180 and an acceptance in writing of that offer by Mr. Gibson. The judge (Judge Bailey) followed the same conventional approach to the question that fell to be decided. He looked to see whether there was an offer of sale and an acceptance. He held that, upon their true construction, the documents relied upon as such in the particulars of claim did amount to an offer and an acceptance respectively and so constituted a legally enforceable contract. He ordered specific performance of an open contract for the sale to Mr. Gibson of the freehold interest in the house at the price of £2,180.

4

The corporation's appeal against this judgment was dismissed by a majority of the Court of Appeal (Lord Denning M.R. and Ormrod L.J.); Geoffrey Lane L.J. dissented. Lord Denning M.R. rejected what I have described as the conventional approach of looking to see whether upon the true construction of the documents relied upon there can be discerned an offer and acceptance. One ought, he said, to "look at the correspondence as a whole and at the conduct of the parties and see therefrom whether the parties have come to an agreement on everything that was material." This approach, which in referring to the conduct of the parties where there is no allegation of part performance appears to me to overlook the provisions of section 40 of the Law of Property Act 1925, led him however to the conclusion that there should be imported into the agreement to be specifically performed additional conditions, against use except as a private dwelling-house and against advertising and a restriction not to sell or lease the property for five years. These are conditions which would not be implied by law in an open contract for the sale of land. The reason for so varying the county court judge's order was that clauses in these terms were included in the standard form of "Agreement for Sale of a Council House" which, as appears from the earlier case of Storer v. Manchester City Council [1974] 1 WLR 1403, was entered into by the Corporation and council tenants whose applications to purchase the freehold of their council house reached the stage at which contracts were exchanged. There was, however, no reference to this standard form of agreement in any of the documents said to constitute the contract relied on in the instant case, nor was there any evidence that Mr. Gibson had knowledge of its terms at or before the time that the alleged contract was concluded.

5

Lord Justice Ormrod, who agreed with the Master of the Rolls, adopted a similar approach but he did also deal briefly with the construction of the document relied upon by Mr. Gibson as an unconditional offer of sale by the corporation. On this he came to the same conclusion as the county court judge.

6

Lord Justice Geoffrey Lane in a dissenting judgment, which for my part I find convincing, adopted the conventional approach. He found that upon the true construction of the documents relied upon as constituting the contract, there never was an offer by the corporation acceptance of which by Mr. Gibson was capable in law of constituting a legally enforceable contract. It was but a step in the negotiations for a contract which, owing to the change in the political complexion of the council, never reached fruition.

7

My Lords, there may be certain types of contract, though I think they are exceptional, which do not fit easily into the normal analysis of a contract as being constituted by offer and acceptance; but a contract alleged to have been made by an exchange of correspondence between the parties in which the successive communications other than the first are in reply to one another, is not one of these. I can see no reason in the instant case for departing from the conventional approach of looking at the handful of documents relied upon as constituting the contract sued upon and seeing whether upon their true construction there is to be found in them a contractual offer by the corporation to sell the house to Mr. Gibson and an acceptance of that offer by Mr. Gibson. I venture to think that it was by departing from this conventional approach that the majority of the Court of Appeal was led into error.

8

The genesis of the relevant negotiations in the instant case is a form filled in by Mr. Gibson on 28 November 1970 inquiring what would be the price of buying his council house at 174 Charlestown Road, Blackley, and expressing his interest in obtaining a mortgage from the corporation. The form was a detachable part of a brochure which had been circulated by the corporation to tenants who had previously expressed an interest in buying their houses. It contained details of a new scheme for selling council houses that had been recently adopted by the council. The scheme provided for a sale at market value less a discount dependent on the length of time the purchaser had been a council tenant. This, in the case of Mr. Gibson would have amounted to 20%. The scheme also provided for the provision by the corporation of advances upon mortgage which might amount to as much as the whole of the purchase price.

9

As a result of that inquiry Mr. Gibson's house was inspected by the corporation's valuer and on 10 February 1971 the letter which is relied upon by Mr. Gibson as the offer by the corporation to sell the house to him was sent from the City Treasurer's Department. It was in the following terms:

"Dear Sir,

Purchase of Council House

Your Reference Number 82463 03

I refer to your request for details of the cost of buying your...

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57 cases
3 books & journal articles
  • Contract Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2001, December 2001
    • 1 December 2001
    ...approach has not really found favour and was all but rejected in the House of Lords decision of Gibson v Manchester City Council[1979] 1 WLR 294. However, the High Court decision of Overseas Union Insurance Ltd v Turegum Insurance Co[2001] 3 SLR 330 (see also supra, the “Introduction” and “......
  • Offer and Acceptance
    • Canada
    • Irwin Books The Law of Contracts. Third Edition Formation
    • 4 August 2020
    ...du Revenu) v Simpsons-Sears Ltd , [1986] RL 37 (Que CA). 23 [1974] 3 All ER 824 (CA). Compare with Gibson v Manchester City Council , [1979] 1 WLR 294, [1979] 1 All ER 972 (HL), rev’g [1978] 2 All ER 583 (CA) (“may be prepared to sell” not an offer). For discussion of agreements “subject to......
  • Preliminary sections
    • Nigeria
    • DSC Publications Online Sasegbon's Laws of Nigeria. Volume 14 Preliminary sections
    • 10 July 2016
    ...Gibbs v. Messer (1891) A.C. 248……………………………………………………......………….724 Gibson v. Manchester City Council (1979) 1 W.L.R. 294. ………………………......…………..549 Gilber Akindeyen Awomuti v. Alhaji Jim Salami (1978) 3 S.C. 105………………......…………685 Giwa v. Erinmilokun (1961) All N.L.R. 294…………………………………….............

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