High Court of Justice in Northern Ireland Chancery Division Decisions

"The vendor shall procure (at its own expense) and transfer to the purchaser all easements including sight lines necessary to satisfy road service requirements attached to the planning permission referred to at 4. above."

Mr Fee looked forward "to hearing from you as soon as possible with a copy of the accepted contract".

"The contract (other than in a sale by auction) shall be formed upon receipt by the Purchaser or his solicitor of a copy of the Purchaser's offer as accepted by the Vendor (or on his behalf). …."

Although not expressly stated 'accepted' here means in practice signed by or on behalf of the vendor. When I suggested to Mr Donal Fee that the words 'subject to contract' on his letter therefore really meant "subject to the enclosed contract" he agreed that that was the case. It seems to me that there is little, if any, difference between his view of that matter and the view put forward in evidence by the vendor's expert witness Mr Ian Huddleston, solicitor, of Messrs L'Estrange and Brett, in examination in chief and cross-examination.

"Thank you for your letter of 26 July 2007. While we appreciate receiving a Contractual Offer it does not take into account the request made by our client in our letter of 20 July 2007. We would be obliged if you would confirm that your client accepts that the planning condition will be satisfied once the matter has been passed by the local council in which case Special Condition 4 would read as follows:

[Revised special condition 4 is set out.]

Please confirm that this is acceptable.'

You have added a special condition 5 about sight lines etc. This is not acceptable to our client. Without prejudice to this it believes that the development as per the planning application can be fully accommodated within the confines of its title. It will not procure anything further. If it was to assuage your client's concerns our client would be happy for a new Special Condition 5 to read as follows:

'For the avoidance of doubt the permission referred to in 4 above shall only be applicable if it can be fully implemented within the confines of the Vendor's title.'

We have requisitioned the company's office for search and we will let you have same shortly. We look forward to hearing from you as soon as possible.

The Companies Office search was forwarded on 10 August.

"We refer to previous correspondence in this matter. Our client has now spoken further to its roads engineer and planning consultants and have (sic) been advised that the development can be fully implemented within the confines of the site and that the planning application is likely to be passed for approval by the local council towards the end of this month with the green form issuing shortly thereafter. It is therefore prepared to live with your original special conditions as opposed to altering same and we are pleased to enclose copy accepted contract. We look forward to receiving cheque for deposit as soon as possible."

The deposit was £160,000 which, in accordance with practice, had not yet been proffered.

"The defendant swore on oath that at no time had his first solicitors any authority to sign any contract on his behalf. It was acknowledged to be law before us that a solicitor has no ostensible or apparent authority to sign a contract of sale on behalf of a client so as to bind him when there is no contract in fact. An auctioneer, it was said, has ostensible authority, but a solicitor has not. It would seem, therefore, that if the defendant is to be bound by his contract, then the buyer has to prove that a solicitor had authority in fact to sign it. Now here the defendant swore on oath an affidavit that his solicitor had no such authority. That disclosed a triable issue such as to entitle him to leave to defend in the action."

This seems to me consistent with the opening of the judgment of Danckwerts LJ in the same case at page 703. " It is well settled law that a solicitor prima facie has no authority to sign a contract of sale and purchase on behalf of its client. He must either have express authority or the circumstances must be such that implied authority can be inferred from them." (My underlining). It can be seen therefore that this case does not address the issue of whether express authority is required for a solicitor to reject an offer on behalf of her client. Furthermore the court must look at the evidence to see if such authority in fact existed or can be inferred from the circumstances. I shall return to that point.

"I agree that the words 'your reply by return of post' fixes the time for acceptance and not the manner of accepting. But that time elapsed; there was no acceptance within the limited time. So far from there being an acceptance, it seems to me that the plaintiff's letter of 27 November rejects that offer; it rejects it on the ground that the price is higher than the plaintiff is willing to give. That offer is, therefore, not accepted within the limited time but is rejected and it seems to me is at once dead."

It can be seen that the judge was not confining his remarks to the time point.

The letter of 24 November reads:

"We beg to offer you 800 tons at 69 shillings per ton delivered at p., and awaiting your reply by return remain etc."

The letter of 27 November from the plaintiff read:

"Your price is high; if I made the quantity 1200 tons delivery 200 tons a month for the first six months of next year I suppose you would make the price lower?"

It is interesting to note that the judges viewed the terms of this letter as a rejection of the offer.

"The power to accept an offer may be terminated by any unambiguous intimation, express or implied, by the offeree to the offeror that he rejects the offer. This will generally remain true notwithstanding that the offer was stated to be open for a certain period as yet unexpired. A rejection cannot be effective as such unless and until communicated to the offeror; but, thereafter, the offer cannot be accepted unless subsequently revived by the offeror, or unless the original offer was intended to continue notwithstanding a rejection."

There is no doubt here of communication by the offeree to the offeror. The first proposition is supported not only by Tinn v Hoffman op. cit. but also by Thornbury v Bevill (1842) 1 Y&C Ch. Cas 554, per Knight Bruce V-C. I conclude therefore that in this action the court must determine three issues –

(a) Whether the terms of the letter of 8 August constituted a rejection of the purchaser's offer to purchase;

(b) Whether the author of letter had authority to write it on behalf of the vendor, either expressed or implied;

(c) Whether the presence of the words "subject to contract" on the letter prevented it constituting a rejection of the offer.

I will deal with these in turn.

Rejection

The court looks at the language of the letter. Firstly one notes that special condition 4 has been rewritten extensively and, as previously pointed out, in a material and substantial way ie. that the vendor will not make the sale subject to planning permission but merely to a recommendation to approve from the "local council". The letter goes on to say of special condition 5 : "This is not acceptable to our client." It seems to me that that language is clear and emphatic. To say that one does not accept something is merely a less stark way of saying one rejects it. Furthermore the very next sentence reads:

"Without prejudice to this it believes that the development as per planning application can be fully accommodated within the confines of its title."

The revised special condition 5 is therefore subject to this phrase without prejudice. That would normally carry the implication that the preceding words ie. "not acceptable" were with prejudice. I can see no reason why the court should disregard that normal interpretation. Finally the letter goes on to offer special condition 5 which is again materially different to that put forward by the purchaser in its offer. Instead of the vendor being obliged to buy the land for sight lines to make the development work the vendor is merely saying, in effect, that the purchaser can withdraw if the sight lines do not work within the land already acquired. Indeed the letter reads : "It will not procure anything further." This is a clear rejection of the purchaser's condition that the vendor must procure more land if it is needed. I therefore conclude that the language of the letter does amount to a rejection of the purchaser's offer sent with its solicitor's letter of 26 July. I consider that Mr Fee and his clients were entitled to treat it as a rejection, although not debarred from repeating their earlier offer if they so wished in time.

Authority

"However your client has now purported to 'accept' the Contract without hearing anything further from us. Your client has effectively made a counter offer which our client may either accept or reject. We shall confirm our client's position in due course but in the meantime the position remains that there is no binding contract between the parties."

The examination-in-chief was largely directed to the issue of whether or not her letter of 8 August constituted a counter-offer rather than the point now in issue as to whether it was a rejection. The witness said in her examination-in-chief and at the beginning of her cross-examination that she used the words subject to contract to avoid entering into contract inadvertently or creating a memorandum which would comply with the statute of frauds. Subject to contract means, she said, subject to subsequent formal contract, if one comes into being. This is a correct summary of the law in my view but not the case being put on behalf of her client. She was cross-examined by counsel who was seeking to elicit that she would have had instructions from her client before sending out the letter of 9 May with the enclosed contract. I have to say the witness was not frank or direct in dealing with this quite simple point. As she said after quite a lengthy passage she could not see what the point of counsel's question was but seemed unwilling to answer the question directly. While a residential conveyance may be quite straightforward without much change entrepreneurial clients could and would change instructions "every day of the week" she said. Counsel put it to that the 14 June letter was written under her client's instructions and she agreed that it would be approved by her client "to the best of my knowledge". But that letter expressly says that she had taken her client's instructions so this qualification is a little hard to understand. She said this particular client did tend to change its mind and while therefore she was satisfied at 14 June that that was it's position it might well be that the client would change it's mind later. She later indeed described them as very unusual clients doing unusual deals all the time. She would have discussed with her client the specific changes made by Mr Fee in the contract sent with the letter of 26 July, for that was all her client would have been interested in. She did not say in the letter that her client was happy with everything else in the letter of 26 July for she had not discussed that with them. But of course the rest of the material in the contract had indeed been put forward by her on her clients behalf, as she ultimately agreed with counsel. She asked her clients to focus on Mr Fee's special conditions 4 and 5 before writing the letter of 8 August. She said that she was enquiring of Mr Fee in that letter could the contract be changed but that is not, I find, a correct summary of the terms of the letter. She would have discussed it with her client but they would rely on her for the precise drafting. She also said that this letter was not only subject to contract but without prejudice to the original contract but those latter words do not appear in her letter of 8 August. She said the very reason she did not send back a draft contract but sent a letter marked subject to contract was because she did not want to make a counter offer. I concluded and warned that the witness was evading an answer to a perfectly proper question from counsel, which was not objected to, as to what was in her mind at the time of writing the letter. A little later in answer in counsel she said that what she had said on 8 August was: "Thank you for your letter. Is it possible to vary certain things before the contract is concluded?" but it can be seen that that is not in fact what she wrote in the letter. Counsel asked in different ways several times, without objection from his opponent, whether her client's instructions were that special conditions 4 and 5 were not acceptable to them. I regret to say that he never got a straight answer to that question. Mr Fee Q.C. pointed out that in her letter she said her clients would not "procure anything further" by way of additional lands for sight lines. She said this was not an invention of hers but that her client had so instructed her. That is what she had been told by her clients. In re-examination Mr Horner asked the witness whether she had authority to make a counter offer by her letter of 8 August. She answered definitely not. Mr Horner then asked: "Did she have authority to kill the contract on behalf of her client?". She answered "No". That concluded her evidence save for some answers to myself which I need not set out. I am satisfied that the witness did not intend to make a counter offer on behalf of her clients by the letter of 8 August and that she did not do so. This was partly because the letter was marked subject to contract and partly because she did not send a revised contract back with the letter. I think her mind was alert to this point. I feel it was not alert to the point that her letter might constitute a rejection of the earlier offer. In any event, it is clear that these were clients who were engaging in more than one transaction and that these transactions were of a substantial kind. Furthermore it is clear from the documents and her evidence that they were clients who changed their minds from time to time. I fully accept that Ms Carson is a careful and cautious solicitor as she said herself. I am satisfied that she would not have written the letter of 8 August without clear instructions from her client. The precise wording of the letter may have been left to her but despite her best efforts to try and protect them it is clear to me that they had conveyed to her, in so many words, that special condition 4 would have to be changed and that 5 as drafted by Mr Donal Fee was indeed not acceptable to them. She had authority to write the letter. It is then a matter of law as to what the effect of the letter was. I am satisfied that if her clients had said to her that they were very unhappy about these conditions but please make sure we do not lose the offer of 26 July in case we are prepared to put up with the conditions, she would have said that to the court. That was not the case. There was no attendance note offered relating to the period in question. Legal professional privilege had apparently been invoked on both sides although it might have been thought that it could have been waived by the client if it had chosen to do so. This was not done. However that is to one side. I am satisfied that the defendant's solicitors had authority to write the 8 August letter conveying the substance and effect of what was set out therein.

Subject to contract