Gibson v Manchester City Council [1979] UKHL 6 (08 March 1979) http://www.bailii.org/uk/cases/UKHL/1979/6.

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You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Gibson v Manchester City Council
[1979] UKHL 6 (08 March 1979)
URL: http://www.bailii.org/uk/cases/UKHL/1979/6.html
Cite as: [1979] UKHL 6, [1979] 1 WLR 294

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JISCBAILII_CASE_CONTRACT

Parliamentary Archives,
HL/PO/JU/4/3/1349

Die Jovis 8° Martii 1979

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.

Gibson (A.P.) (Respondent) v. The Council of the City of Manchester (Appellants).

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HOUSE OF LORDS

GIBSON (A.P.) (RESPONDENT)

v.

THE COUNCIL OF THE CITY OF MANCHESTER

(APPELLANTS)

Lord Diplock
Lord Edmund-Davies
Lord Fraser of Tullybelton
Lord Russell of Killowen
Lord Keith of Kinkel

Lord Diplock
My Lords,
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 Conser-
vative 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.
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 require-
ments 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.
In the Manchester County Court where the action started, the case was
pleaded in the conventional way. The particulars of claim alleged an offer

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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 con-
stituted 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.
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.
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.
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.
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

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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 con-
tractual 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.
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 expres-
sing 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.
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 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).
....
" Maximum mortgage the Corporation may grant : £2,177 repayable

" over 20 years

" Annual fire insurance premium : £2.45

" Monthly Repayment charge calculated by

" (i) flat rate repayment method: £19.02

....

" If you wish to pay off some of the purchase price at the start and
" therefore require a mortgage for less than the amount quoted above,
" the monthly instalment will change; in these circumstances, I will
" supply new figures on request. The above repayment figures apply
" so long as the interest rate charged on home loans is 8½%. The
" interest rate will be subject to variation by the Corporation after

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" giving not less than three months' written notice, and if it changes,
" there will be an adjustment to the monthly instalment payable. This
" letter should not be regarded as 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.
" Yours faithfully,

" (Sgd) H. R. PAGE

" CITY TREASURER
" Mr. Robert Gibson "
My Lords, the words I have italicised seem to me, as they seemed to
Geoffrey Lane L.J., to make it quite impossible to construe this letter as a
contractual offer capable of being converted into a legally enforceable open
contract for the sale of land by Mr. Gibson's written acceptance of it. The
words " may be prepared to sell " are fatal to this; so is the invitation, not,
be it noted, to accept the offer, but " to make formal application to buy "
upon the enclosed application form. It is, to quote Geoffrey Lane L.J., a
letter setting out the financial terms on which it may be the council will be
prepared to consider a sale and purchase in due course.
Both Ormrod L.J. and the county court judge in reaching the conclusion
that this letter was a firm offer to sell the freehold interest in the house for
£2,180, attached importance to the fact that the second paragraph, dealing
with the financial details of the mortgage of which Mr. Gibson had asked
for particulars, stated expressly, " This letter should not be regarded as a
" firm offer of a mortgage. " The necessary implication from this, it is
suggested, is that the first paragraph of the letter is to be regarded as a firm
offer to sell despite the fact that this is plainly inconsistent with the express
language of that paragraph. My Lords, with great respect, this surely must
be fallacious. If the final sentence had been omitted the wording of the
second paragraph, unlike that of the first, with its use of the indicative
mood in such expressions as " the interest rate will change ", might have
been understood by council tenants to whom it was addressed as indicating
a firm offer of a mortgage of the amount and on the terms for repayment
stated if the council were prepared to sell the house at the stated price.
But whether or not this be the explanation of the presence of the last sentence
in paragraph 2, it cannot possibly affect the plain meaning of the words
used in paragraph 1.

Mr. Gibson did fill in the application form enclosed with this letter. It
was in three sections; section A headed " Application to buy a council
" house ". Section B " Application for a loan to buy a council house " and
section C " Certificate to be completed by all applicants." He left blank the
space for the purchase price in section A and sent the form to the corporation
on 5 March 1971 with a covering letter in which he requested the corporation
either to undertake at their own expense to carry out repairs to the tarmac
path forming part of the premises or to make a deduction from the purchase
price to cover the cost of repairs. The letter also intimated that Mr. Gibson
would like to make a down payment of £500 towards the purchase price
instead of borrowing the whole amount on mortgage. In reply to the request
made in this letter the corporation, by letter of 12 March 1971, said that the
condition of the property had been taken into consideration in fixing the
purchase price and that repairs to the tarmac by the corporation could not

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be authorised at this stage. This letter was acknowledged by Mr. Gibson

by his letter to the corporation of 18 March 1971 in which he asked the
corporation to " carry on with the purchase as per my application already in
" your possession."
My Lords, the application form and letter of 18 March 1971 were relied
on by Mr. Gibson as an unconditional acceptance of the corporation's offer
to sell the house; but this cannot be so unless there was a contractual offer
by the corporation available for acceptance, and, for the reason already
given 1 am of opinion that there was none. It is unnecessary to consider
whether the application form and Mr. Gibson's letters of 3 and 18 March
1971 are capable of amounting to a contractual offer by him to purchase the
freehold interest in the house at a price of £2,180 on the terms of an open
contract, for there is no suggestion that, even if it were, it was ever accepted
by the corporation. Nor would it ever have been even if there had been no
change in the political control of the council, as the policy of the corporation
before the change required the incorporation in all agreements for sale of
council houses to tenants of the conditions referred by the Master of the
Rolls in his judgment and other conditions inconsistent with an open contract.
I therefore feel compelled to allow the appeal. One can sympathise with
Mr. Gibson's disappointment on finding that his expectations that he would
be able to buy his council house at 20 per cent below its market value in
the autumn of 1970 cannot be realised. Whether one thinks this makes it
a hard case perhaps depends upon the political views that one holds about
council housing policy. But hard cases offer a strong temptation to let them
have their proverbial consequences. It is a temptation that the judicial mind
must be vigilant to resist.

Lord Edmund-Davies
My Lords,
This is a hard case—and we all know where hard cases can take a judge.
It is also a test case, some 350 others being in a like situation to the
respondent. Mr. Gibson had been employed by the Manchester City
Corporation for sixteen years and, since March 1959, tenant of their dwelling-
house, 174 Charlestown Road, Blackley. As long ago as July 1968 he had
intimated to the corporation his desire to buy his home, and to that end he
had completed and sent them in the following December the form of
application to purchase with which they supplied him. Events moved
slowly, and in June 1970 Mr. Gibson enquired when he might have a
decision on his application and whether he might meanwhile be permitted to
make certain improvements, including the repair of paths. It was in
September 1970 that the corporation resolved to sell the freeholds of their
dwellings and not (as hitherto) merely leasehold interests. In October 1970,
their Housing Manager wrote to Mr. Gibson, apologising for the delay and
regretting that "... it is not possible to indicate how long it will be before I
" will be able to give you the opportunity of purchasing your house ", adding
that in due course the property would be valued and the applicant informed of
the result. In the following month, the corporation circulated those tenants

who, like Mr. Gibson, had already expressed their desire to purchase their
homes, and enclosed a brochure entitled " Full details of how you can
" buy your council house ". This began: " The City Council are prepared
" to sell freehold . . . any Council house ... to the tenant of that house,
" providing he has been in occupation of it for at least one year ", at
market value less a discount to be calculated according to the length of his

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occupation. Particulars were also given about mortgage facilities.

Mr. Gibson filled in and submitted to the corporation a form attached
to the brochure and beginning, " Dear Sir, Please inform me of the price of
" buying my Council house ". The reply thereto, dated February 10th 1971,
and signed by the City Treasurer, is important as it was the tenant's case
that this constituted an offer by the corporation to sell. I set out its material
parts:
" Purchase of Council House
" 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).
" The details which you requested about a Corporation mortgage
"are as follows:— maximum mortgage the Corporation may grant:
" £2,177 repayable over 20 years . . .
..." 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."
The form itself, which Mr. Gibson completed on March 3rd, 1971, was
headed: "Application to buy a Council house and application for a
" mortgage. " He left the purchase price blank, but filled in the particulars
required in relation to his application for a loan. And he signed the
certificate at the end of the form, which was worded in this way:
" I have read the explanatory leaflet [i.e. the brochure] on how to
" buy my Council house and your letter stating the costs involved, and
" now wish to purchase my Council house. The above answers are
" correct and I agree that they shall be the basis of the arrangements
" regarding the purchase and, if appropriate, the loan between myself
" and the Manchester Corporation."
Mr. Gibson sent off that form under cover of a letter dated March 5th,
1971, the opening paragraph of which read:
" With reference to enclosed application for purchase of above
" property. Before the transaction is finalised I would appreciate
" your comments on the following." [There followed a complaint that,
although the Corporation's ' Direct Works' Department had under-
taken to repair Mr. Gibson's tarmac paths, nothing had been done].
" I would therefore like your assurance that Direct Works will not
" exclude these premises when re-surfacing or re-laying starts, or
" alternatively would you deduct an amount of money from the
" purchase price and I will undertake the repairs myself. Whichever
" decision you arrive at I would like to make an initial cash payment
" of £500—so I would be obliged if you will let me have the figures
" to allow for the deposit mentioned. I have left the purchase price
" blank on the application form until I hear from you."
On March 12th the Housing Manager retorted that, as the general condition
of the property had been taken into account in arriving at the price of
£2,180, he could not authorise repairing the paths. On March 18th
Mr. Gibson replied by a letter which was said to constitute his acceptance
of the corporation's alleged offer to sell and which read in this way:
" Reference your letter of March 12th ... 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."

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The corporation did not reply to that letter. In May 1971 the political
control of the corporation changed hands and the scheme to sell off
council houses was suspended. In July 1971 it was formally discontinued.
My Lords, it was on the basis of the foregoing documents and
correspondence that Mr. Gibson instituted proceedings in the county court
in September 1974 for specific performance of what he, in effect, submitted
was an open contract whereby the corporation had agreed to sell to him the
freehold of his dwelling for £2,180. It was pleaded that the corporation
had so offered by their letter of February 10th 1971 and the accompanying
application form, the acceptance (as I understand) being conveyed by
Mr. Gibson's completing and returning that form and later " unconditionally
" accepted the said offer by letter to the defendants dated 18th March 1971."
Reliance was also sought to be laid upon an internal memorandum passing
between two of the corporation's departments which was said to constitute
an admission by the corporation that they had—presumably by that
date—sold the freehold to Mr. Gibson. It is convenient to mention also at
this stage that both in the county court and in the Court of Appeal the
plaintiff relied further upon the fact that during 1971 the Town Clerk,
in the course of a letter he sent a city councillor who had espoused
Mr. Gibson's case, had written regarding the Treasurer's letter of February
10th 1971:
" Mr. Gibson accepted this offer, but before the papers could be
" passed to me for preparation of the formal contract the local elections
" intervened. Since then no more contracts have been prepared, pending
" a formal decision being taken by the present Council regarding the
" policy to be adopted in relation to the sale of Council houses . . ."
It is, however, right to observe that, later in his same letter, the Town
Clerk wrote of the unwisdom of Mr. Gibson's having carried out certain
alterations "... before there was a binding contract in existence ",
although these words may—or may not—have been intended to refer to
the absence of any " formal contract ", a fact to which the writer also
adverted.
The pleaded defence was simple: The corporation had made no offer;
alternatively, if they had, Mr. Gibson had not accepted it; the internal
memorandum constituted no admission; and there was non-compliance with
section 40 of the Law of Property Act 1925. None of these pleas found
favour with the learned county court judge, who ordered specific performance.
The appeal was dismissed in extemporary judgments delivered by Lord
Denning, Master of the Rolls, and Ormrod L.J., with Geoffrey Lane L.J.
dissenting. The majority upheld the pleaded case of offer and acceptance,
whereas Geoffrey Lane L.J. held that it failed in limine as it was impossible
to regard the corporation's letter of February 10th 1971 as an offer to
sell. I agree with him, and for the reasons he gave. These are to be
found at [1978) 1 W.L.R. 529D to 530E and there would be no advantage
in my repeating them. There was at best no more than an invitation by
the corporation to tenants to apply to be allowed to purchase freeholds.
I am not, however, with Geoffrey Lane L.J. in treating Mr. Gibson's
letter of March 5th 1971 (regarding non-repair of his tarmac paths) as a
counter-offer which had the effect of destroying an offer to sell—if the
corporation had made one. On the contrary, I read it as merely exploratory
of the possibility of a reduction in price in the eventuality indicated. In
other words, this case is like Stevenson v. McLean (1880) 5 Q.B.D. 346
and unlike Hyde v. Wrench (1840) 3 Beav. 334. But that point is of no
practical importance in this appeal, for, even had there been an offer, I hold
that Mr. Francis, Q.C., was right in submitting that there followed no
acceptance, but nothing more than an application to buy at an unstated

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price, coupled with an application for a loan.

The offer and acceptance approach obviously presenting certain difficulties,
the majority held in the Court of Appeal that it was not the only one, and
it is undoubted that, as Cheshire and Fifoot observed (Law of Contract,
9th Edition, 26) "... there are cases where the courts will certainly hold

" that there is a contract even though it is difficult or impossible to

" analyse the transaction in terms of offer and acceptance: see e.g. Clarke
" v. Earl Dunraven [1897] A.C.59". The Master of the Rolls said (at
523 H) that in such cases—
" 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 their conduct you can see an agreement on all
" material terms—which was intended thenceforward to be binding—
" then there is a binding contract in law even though all the formalities
" have not been gone through: see Brogden v. Metropolitan Railway
" Co. (1877) 2 App. Cas. 666."
On that alternative basis, Lord Denning concluded that the parties had in
truth contractually bound themselves. His first ground for so concluding
was the nature of the correspondence between the parties, and I have already
indicated why, for my part, I hold that of itself this disclosed the making
of no contract. His second ground was that, in the belief that a contract
to sell would emerge, the plaintiff did much work in repairing and improving
his house and premises. But no evidence was called as to when such work
had been done, and it appears from the correspondence that, although as
far back as June 1970 Mr. Gibson had enquired whether he might proceed
to improve the property, "... to the mutual benefit of the City and
" myself until such time as my case comes up for consideration ", the
corporation's reply in the following October gave no encouragement to the
tenant to execute any improvements, and concluded, " If at any time you
" decide to withdraw your application I should be obliged if you would
" let me know." It is therefore impossible to conclude that improvements
were executed on the basis that the corporation had already committed
themselves to sell. Nor, with respect to the Master of the Rolls, can it be
material that, entirely unknown to Mr. Gibson, the corporation at one
stage took 174 Charlestown Road off the list of houses being maintained
by them and put it on the list of " pending sales ", for that action had
been taken in February 1971 in relation to all cases where the Direct Works
Department had been notified that sales were " proceeding ". And it has to
be observed that this alteration in the list was effected a month earlier than
the time when, according to the plaintiff's pleaded case, he accepted the
corporation's " offer " to sell. And, finally, the Town Clerk's letter to
Councillor Goldstone already referred to, cannot in my judgment have
relevance to the matter of consensus ad idem. I have already sought to
show that, read as a whole its wording is equivocal; and, even were it clear,
the proper question is not whether the Town Clerk considered that a
contract had been concluded but whether this was so in fact and in law.
My Lords, there are further difficulties in Mr. Gibson's way. It is
common ground that, had the corporation not altered its policy, the parties
would in the ordinary way have entered into a standard " Agreement for
" Sale of a Council House ", such as that concluded in Storer v. Manchester
City Council [1974] 1 W.L.R. 1403. That agreement contained a provision
that:

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" Deeds of Conveyance or Transfer and Mortgage to be in the

" Corporation's standard forms including 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."
But in the instant case no such agreement was ever prepared or referred to,
and it is not suggested that Mr. Gibson ever had knowledge of any special
conditions, and still less that he assented to them. And as these special
conditions are not such as may be implied in an open contract for the sale
of land, their introduction would create—from his point of view—the
difficulty of non-compliance with Section 40 of the Law of Property Act
1925 and therefore unenforceability. I am accordingly in respectful
disagreement with the Master of the Rolls, who concluded (at 525 D) that—
"... such a clause is to be imported into the correspondence: or
" alternatively, when granting specific performance, the court in its

" discretion should include such a clause. The order should be for
" specific performance of an agreement for the sale of a council house
" containing the clauses in the form in general use in Manchester. It is
" a contract for sale on the terms of the usual agreement for selling a
" council house."
In the result, the alternative approach adopted in the Court of Appeal did
not in my judgment avail the plaintiff.
My Lords, although this appeal could, as I have indicated, have been
disposed of with considerable brevity, I have dealt with it at some length.
This I have thought it right to do for three reasons. First, out of respect
for the Court of Appeal, from whose majority judgment I am differing.
Second, because this is indeed a hard case for Mr. Gibson, who had long
wanted to buy his house and had every reason to think he would shortly
be doing so on distinctly advantageous terms until the corporation's bomb-
shell announcement. And, thirdly, because there are many tenants in a
like situation and it is right that they should be fully informed why this
appeal is being allowed. Sympathetic though one must be to Mr. Gibson,
for the reasons I have indicated I am forced to the conclusion that this
House should uphold the dissenting judgment of Geoffrey Lane L.J. and
allow the appeal.

Lord Fraser of Tullybelton

My Lords,
I have had the advantage of reading in draft the speeches prepared by my
noble and learned friends Lord Diplock and Lord Russell of Killowen. I
agree with both of them and, for the reasons stated by them, I would allow
this appeal.

Lord Russell of Killowen

My Lords,
The allegation of the respondent of a concluded contract for sale to him
of his council house was quite simply based. He alleged an offer by the
appellant to sell contained in the letter dated 10 February 1971 written by
the City Treasurer to him: he alleged acceptance by him of that offer to
him by a combination of the application form and his letter dated 18 March
1971. Thus he said was a contract for sale constituted, of which he claimed
specific performance: a plain case of a contract constituted by offer to sell
capable of acceptance as such. I do not see the relevance to the case of

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general references to consensus in the judgments below. There was no oral

evidence.
My Lords, I cannot bring myself to accept that a letter which says that
the possible vendor " May be prepared to sell the house to you " can be
regarded as an offer to sell capable of acceptance so as to constitute a
contract. The language simply does not permit such a construction. Nor
can the statement that the letter should not be regarded as a firm offer of
a mortgage operate to turn into a firm offer to sell that which quite plainly
it was not.
On that short ground I would allow the appeal and set aside the orders
of the Court of Appeal and the county court judge, save as to costs having
regard to the terms upon which leave to appeal was given by the Court of
Appeal. For the same reasons there should be no order for costs in this
House.

Lord Keith of Kinkel

My Lords,
I have had the advantage of reading in draft the speech of my noble and
learned friend Lord Diplock. I agree entirely with his reasoning and
conclusions, and accordingly I too would allow the appeal.
311373 Dd 0353246 140 3/79

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