Gibson v Manchester City Council
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE ORMROD,LORD JUSTICE GEOFFREY LANE |
| Judgment Date | 17 January 1978 |
| Judgment citation (vLex) | [1978] EWCA Civ J0117-4 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Plaint No. 74 55704 |
| Date | 17 January 1978 |
[1978] EWCA Civ J0117-4
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the Manchester County Court
(His Honour Judge Bailey)
The Master of the Rolls
(Lord Denning)
Lord Justice Ormrod and
Lord Justice Geoffrey Lane
MR. G. CARMAN, Q.C. and MR. B. CAULFIELD (instructed by Messrs. Hargreaves & Co., Solicitors, Manchester) appeared on behalf of the Plaintiff (Respondent).
MR.H. FRANCIS, Q.C. and MR. A.W. SIMPSON (instructed by L. Boardman, Esq., Solicitor, Manchester) appeared on behalf of the Defendants (Appellants).
REVISED JUDGMENT
This is a test case affecting some 350 tenants of council houses in the City of Manchester. The council tenant is fir. Robert Gibson. He is a senior clerk in the works department of the corporation. He has been with them for many years.
In 1968 Manchester began to sell houses to council tenants. But at that time it was very restricted. Only one-quarter of one per cent of their houses were allowed to be sold to council tenants Mr. Gibson was one of the very first who applied to buy his house. But there was a long list of applicants, and his name did not come up at that time. In June 1970 the restriction was lifted. Thenceforward the corporation was enabled to sell its houses to council tenants without any restriction at all.
Mr. Gibson himself followed all the prescribed procedures. He made his application in good time and in good order. He was entitled to beneficial terms because of his long tenure. He was able to buy his house at 20 per cent below the market price, and also to have a mortgage from the corporation on favourable terms.
All was going well with his application until May 1971. Then, to his dismay, things went wrong for Mr. Gibson. There was a change in the control of the Manchester Corporation. Previously the Conservatives had been in control. Afterwards labour gained control. Under the Conservatives the policy of the corporation had been to sell council houses to tenants, but when the Labour administration took over in May 1971 that policy was reversed. The Labour-controlled administration decided not to sell council houses to tenants. They realised however they could not go back on existing contracts. So they gave instructions to their officers that they were to fulfil existing contracts but not to make any fresh contracts. The new Labour controlled administration saidto the town clerk: "You must fulfil those contracts by which we are legally bound, but not those by which we are not legally bound".
We have had cases arising out of this new policy. In 1974 there was Storer v. Manchester City Council (1974) 1 Weekly Law Reports 1403. There were about 120 tenants like Mr. Storer. The corporation argued: "The contracts have not formally been exchanged. So we are not legally bound to sell council houses to Mr. Storer and the other tenants". This court held that, although there was not an actual exchange of contracts, nevertheless there was an agreement with a sufficient note or Memorandum to satisfy the Statute of Frauds. So the corporation were liable to sell the houses to those 120 tenants.
Now we have Mr. Gibson and 350 tenants like him. The arrangements have not gone nearly as far as in Mr. Storer's case. The question is whether there was a concluded contract. The county court judge held that there was and he ordered it to be specifically performed. The corporation appeal to this court.
So I must go through the material letters - to see whether there was a concluded contract between the parties. In November 1970 the corporation sent to the tenants a brochure. It gave details of the scheme which they were inaugurating for the purchase by the tenants of those houses, giving favourable terms as to price and as to mortgages. Mr. Gibson immediately replied. He paid £3 as the administration fee. He sent forward his application on the printed form:
"Please inform me of the price of buying my Council house. I am interested in obtaining a mortgage from the Corporation to buy the house. Please send me the details …". He gave his name, and said that he had been a tenant of this house for 12 years ormore.
On the 10th February, 1971 the corporation sent to him the first of what I may call the contract documents. The City Treasurer wrote saying:
"I refer to your request for details of the cost of buying your Council house. The Corporation may be prepared to sell the house to you at the purchase price of £2,725 less 20% = £2,180 (freehold)". (That 20 per cent was a discount allowed to Mr. Gibson because of his tenancy). The letter continued: "The details which you requested about a Corporation mortgage are as follows:-
Maximum mortgage the Corporation may grant: £2,177 repayable over 20 years
Annual fire insurance: £2.45
Monthly repayment charge, calculated by:-
(i) flat rate repayment method £19.02"
After some further details, the letter said:
"This letter should not be regarded as a firm offer of a mortgage. If you would like to make formal application to buy your Council house, please complete the enclosed application form and return it to me as soon as possible".
That is just what Mr. Gibson did. He filled in his application form and returned the form. But he left the purchase price blank and wrote a covering letter of the 5th March, 1971. In it he said that there were various defects in the house, particularly in the tarmac path. He said that there was a lot of work to be done and he wanted either the price to be lowered or the corporation to repair the premises.
The corporation replied on the 12th March, 1971 in the following terms: "Dear Sir, I refer to your letter concerningcertain repairs to the path. Account is taken of the general condition of the property at the time of the survey and valuation and the price is fixed accordingly, allowing for such defects as there may be. I regret I cannot authorise repairs of this nature at this stage". So there it was. Mr. Gibson's suggestion was not accepted by the corporation. They said, in effect, that they would stand by their offer in the letter of the 10th February, 1971 but would not modify it. In reply, on the 18th March, 1971, Mr. Gibson wrote this letter:
"Ref your letter of 1:2th March … In view of your remarks I would be obliged if you will carry on with the purchase as per my application already in your possession".
It seems to me clear that, by writing that letter, Mr. Gibson discarded the suggestion which he had made in the covering letter. He returned to the simple application which was already in their possession, of which they had intimated their acceptance. As I view this letter of the 12th March, 1971, they had intimated that they would accept his application if he did not press this point about repairs.
We have had much discussion as to whether Mr. Gibson's letter of the 18th March, 1971 was a new offer or whether it was an acceptance of the previous offer which had been made. I do not like detailed analysis on such a point. To my mind it is a mistake to think that all contracts can be analysed into the form of offer and acceptance. I know in some of the text books it has been the custom to do so: but, as I understand the law, there is no need to look for a strict offer and acceptance. You should 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. If by their correspondence and theirconduct you can see an agreement on all material terms, then there is a binding contract in law even though all the formalities have not been gone through, for that proposition I would refer to Brogden v. Metropolitan Railway Company (1877) 2 Appeal Cases 666 House of Lords.
It seems to me that on the correspondence I have read - and, I may add, on what happened after - the parties had come to an agreement in the matter. Let me say what happened afterwards. Mr. Gibson telephoned to the department and was told that his case was being dealt with. He did much work on the house in the belief that all was well. The corporation took the house off the list of maintenance to tenants and put it on the list of owner-owned houses where the owners had to do the maintenance themselves. Then on Wednesday, 26th May, 1971 there was an announcement in the newspapers that all transactions might be stopped. He wrote on Friday, 28th May, this letter to the corporation:
"I have already put glass doors on internally at considerable expense and have made enquiries for replacement of certain window-panes. It seems rather a high-handed decision to take at this stage of the proceedings, with little or no consideration for the feelings of the unfortunate tenant".
The housing manager replied that all applications were being held in abeyance. Mr. Gibson wrote on the 25th June saying:
"When the Tory Council took control, we were contacted by phone to let us know of the change in the situation and saying that it was in order for us to go ahead with alterations … I realise that it was done verbally but nevertheless the message was passed and I feel sure that your officers will not deny that it was so". The whole story shows to my mind quite clearly that the parties were agreed? and, if there had been no change in thecontrol of the local authority, there can be no doubt whatever that this sale would have gene through.
Mr. Gibson followed the matter up. He went to two local councillors who took it up with the town clerk. In a letter of the 2nd July the town clerk wrote to Councillor Goldstone, saying: "In the course of time Mr. Gibson's application was dealt with by the City Estates and Valuation Officer,...
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