Storer v Manchester City Council
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE STEPHENSON,LORD JUSTICE LAWTON |
| Judgment Date | 06 June 1974 |
| Judgment citation (vLex) | [1974] EWCA Civ J0606-2 |
| Court | Court of Appeal (Civil Division) |
| Date | 06 June 1974 |
(Appeal from Judge Steel, Manchester County Court)
[1974] EWCA Civ J0606-2
The Master of the Rolls
(Lord Denning,)
Lord Justice Stephenson
Lord Justice Lawton
In The Supreme Court of Judicature
Court of Appeal.
MR. H.E. FRANCIS, Q. C., and MR. A.M. SIMPSON, instructed by Messrs. Sharpe, Pritchard & Co., Agents for Mr. R. Calderwood (Manchester) appeared for the Appellants (Defendants).
MR. B.I. CAULFIELD, instructed by Messrs. Harsrenves & Co., (Manchester) appeared for the Respondent (Plaintiff).
In Hay of 1971 there was a change in the control of the Manchester Corporation. Previously the Conservatives had been in control. Afterwards it was Labour.
The change had legal repercussions. During the Conservative administration the policy of the Corporation was to sell their Council houses to tenants on favourable terms. They were willing to sell to any sitting tenant who had been in occupation more than a year. The sale price was to be the market value of the house of sold with vacant possession, but with a reduction for the tenant according to the length of time he had been in the premises as a tenant. He might get a reduction of from 10 to 20 per cent on the price. Furthermore, the Corporation were ready to give him a 100 per cent mortgage. When the Labour administration took over in May 1971 that policy was reversed. The Labour-controlled administration decided that they would not sell Council houses to tenants. But they realised that 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. Now in many cases tenants had filled in carious forms applying to buy their houses, but the contracts of sale had not been exchanged. The tenants claim that firm contracts had been made even though the contracts had not been exchanged. But the Town Clerk thought that the contracts were only binding when contracts of sale had been exchanged. So he wrote this letter to the tenants:-
"At their meeting on 7th July, 1971, the Council decided to discontinue the scheme for the sale of Council houses, and to proceed only with those cases where contracts have been exchanged. As contracts have not been formally exchanged in this case, I am unable to proceed with the proposed sale."
Now Mr. Storer, one of the tenants, has brought this action to test that ruling.
The facts are these:-
Mr. Storer was a tenant of a Council house, 167 Moorcroft Road, Wythenshawe. On 15th November, 1970, he filled in a request for information asking for the price and the details of any mortgage. On 14th January, 1971, the Corporation wrote saying that they "may be prepared to sell the house to you at the purchase price of £2,750", less a discount of 17 per cent. (as he had had a Council house for several years), malting a net sum of £2,282. If he were granted a mortgage, it would be for £2,279 repayable over 25 years. They said in their letter:-"This letter should not be regarded as a firm offer of a mortgage". Later on, however, they did make a firm offer, as I will show.
On 11th February, 1971, Mr. Storer filled in an application form to buy a Council house. He said: "I now wish to purchase my Council house". In it he asked for a loan on mortgage.
On 9th March, 1971, the City Treasurer wrote to him: "The Corporation will lend £2,279 repayable over 25 years with interest at 8½ per cent…… The total monthly instalment payable will be £14.98." On the same day — 9th March 1971 - The Town Clerk himself wrote a letter which is of crucial importance in the case:-
"Dear Sir: Sale of Council House.
I understand you wish to purchase your Council house and enclose the agreement for sale. If you will sign the agreement and return it to me, I will send you the agreement signed on behalf of the Corporation in exchange. From the enclosed list of solicitors, who ore prepared to act for you and advise you on the purchase, please let me know the name of the firm that you select, as soon as possible."
Enclosed with that letter there was a form headed:-
"City of Manchester. Agreement for Sale of a Council House" The Corporation had filled in various details, such as the name of the purchaser, the address of the property, the price, the mortgage, amount, and the monthly repayments. There was this item left blank:-
7 Date when your tenancy ceases and mortgage repayments will commence."
followed by these clauses:-
8 Freehold to be conveyed or transferred by the Corporation.
9 There will be no abstract or investigation of title …….
10 Deeds of Conveyance or Transfer and Mortgage to be in the Corporation's standard forms, including conditions against use except as a private dwellinghouse and against advertising and a restriction not to sell or lease the property for five years.
11 Warning As from the date mentioned in 7 above the property is at your risk. If you are taking a mortgage from the Corporation it will be insured for you but the cost recharged to you.
If you are not taking a Mortgage insure it at once.
Your responsibility for repairs and for payment of rates also start from that day.
My solicitors are……….
Mr. Storer filled in that form. He filled in the name of solicitors, Messrs. Hargreaves & Co. He signed the form himself and returned it on 20th March 1971. So he had done everything which he had to do to bind himself to the purchase of the property. The only thing left blank was the date when the tenancy ceases.
The sale would have gone through, no doubt, within a short time but for the Corporation and the Town Clerk's office being so pressed. The Housing Manager passed a note to the Town Clerk suggesting that the sale be completed with effect from Monday, 22nd March or Monday, 12th April. But nothing more was done before the Election which brought a change of control in the Corporation. The Town Clerk's staff were, apparently, overworked and did not deal with the matter in tine. Then inMay 1971 there was the Election, In July 1971 the Corporation, tinder the new control, resolved that there were to be no more sales to Council tenants; but the Corporation recognised that they had to go on with the cases where the Corporation were legally bound.
Thereupon the Town Clerk wrote to Mr. Storer and other tenants in like situation a letter saying:- "As the contracts have not been formally exchanged in this case, I am unable to proceed with the proposed sale". The tenant took the advice of Messrs. Hargreaves & Co. Some 120 other tenants also took advice. They were advised that there was a binding contract, even though formal contracts had not been exchanged. So this case of Mr. Storer has come as a test case for Manchester Corporation. It is to decide whether or not "exchange" is necessary in order to form a concluded contract.
When parties arrange for a sale 'subject to contract", that means, as a rule, that there is no binding contract until the contracts of sale have been formally exchanged. That is clear from ( Eccles v. Bryant and Pollock 1948) Chancery D.93. But where there is no arrangement "subject to contract", the only question is whether a contract has been concluded. See Biggs v. Boyd Gibbins, reported in 1971, 1 Weekly Law Reports, at page 913. One example is where one solicitor is acting for both sides, such as in Smith v. Mansi, reported in 1963, 1 Weekly Law Reports, at page 26. It is "an artificial nonsense - Lord Justice Danckwerts said, to have on exchange of contracts where there is only one solicitor acting. The present case is, I think, another example. The Corporation put forward to the tenant a simple form of agreement. The very object was to dispense with legal formalities. One of the formalities - exchange of contracts - was quite unnecessary. The contractwas concluded by offer and acceptance. The offer was contained in the letter of 9th March in which the Town Clerk said: "I enclose the agreement for sale. If you will sign the agreement and return it to me I will send the agreement signed on behalf of the...
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