Duttons Brewery Ltd v Leeds City Council

Compensation for compulsory acquisition of public house — Dispute as to date at which compensation should be assessed — Appeal by acquiring authority against judge’s declaration that compensation should be assessed as at date of entry — Court of Appeal divided, Stephenson LJ dissenting — Whether compensation should be assessed as at May 1968 when an alleged agreement for compensation was made or as at June 1976 when entry by acquiring authority took place — Value of licensed premises based on ‘barrelage’ had increased substantially between these two dates from an ‘agreed’ figure of £15,000 to £78,000 claimed by brewers — Dispute as to whether the phrase ‘subject to a Contract to be approved by me’ in a letter from town clerk to brewers’ solicitor bore the usual conveyancing meaning, so that there was no binding agreement, or whether in the context the agreement was binding — Stephenson LJ, expressing a minority view, considered that the agreement was binding, so that the figure for compensation should be £15,000 — Oliver and Fox LJJ held that the words ‘subject to a Contract to be approved by me’ should be given their normally understood meaning, so that there was no binding agreement and the compensation should be assessed as at date of entry — Decision of trial judge upheld, but on different grounds, and appeal dismissed This was an appeal from a decision of Nourse J on an originating summons issued by the plaintiffs, Duttons Brewery Ltd, respondents to the present appeal, for a declaration that the defendants, the present appellants, Leeds City Council, were bound to compensate the respondents for the acquisition of licensed premises on the basis of the value at the date of entry by the appellants. The premises in question were The New Inn, Upper Town Street, Bramley, Leeds. Nourse J’s judgment is reported at (1980) 256 EG 919, [1980] 2 EGLR 21. P Ground QC and J Behrens (instructed by Sharpe, Pritchard & Co, agents for James Rawnsley, Leeds City Council) appeared on behalf of the appellants; Peter Millett QC, B J Knight QC and R J C Wilmot-Smith (instructed by Farley, Parker & Pickles, of Blackburn) represented the respondents. Giving judgment, STEPHENSON LJ said: This appeal concerns the compulsory purchase by the Leeds City Council (‘the council’) of The New Inn, Upper Town Street, Bramley in that city, a tied public house owned by Duttons Brewery Ltd (‘the brewers’). The brewers let it to a licensee named Johnson in 1960. It was one of over 400 properties included in the City of Leeds (Bramley) Part V Compulsory Purchase Order 1964 made by the council on March 4 1964 and confirmed by the minister on March 19 1965. Thereafter, things moved slowly as such things often do. The council gave the brewers and all others interested in the property notice to treat on April 3 1967. In May 1968 the figure for compensation to be paid was ‘agreed’ at £15,000. I use that word in its ordinary sense, but put it between inverted commas to preserve the brewers’ contention that the agreement was not legally binding. But the council was in no hurry to take possession and the brewers were in no hurry to give it. The sales at The New Inn, which had been going down during the years 1962 to 1967, were going up. The council did not give notice of intention to enter and take possession until May 4 1976 and possession was not given and taken until June 30 1976. The council did not execute a deed vesting in themselves the fee simple in the property until November 10 1978. By that time the value of these licensed premises, a value based on ‘barrelage’, had risen above £15,000 to a figure which the brewers claim to be £78,000. So on January 24 1979 the brewers issued an originating summons for a declaration that the council was bound to compensate them for their freehold interest in the premises known as The New Inn, ‘such compensation to be assessed in accordance with the statutory rules, the said premises to be valued rebus sic stantibus as at the date of entry by the council, namely June 30 1976’. That declaration Nourse J granted on June 27 1980 and from his order the council appeals to this court. Before the judge the council took a preliminary point that he had no jurisdiction to determine the issue raised by the summons because it was a question of disputed compensation which had to be referred to the Lands Tribunal by virtue of section 6 of the Compulsory Purchase Act 1965. The learned judge had no hesitation in rejecting the point and the council’s appeal against that part of his28 decision is not pursued. I need therefore say no more about it except that it has led the brewers, at the suggestion of Oliver LJ, to amend their summons to raise the real questions argued below by seeking a declaration that on June 30 1976 ‘there was no subsisting binding and enforceable agreement (1) for the sale by (the brewers) and the purchase by (the council) of the said premises; or (2) for the amount of compensation payable (by the council to the brewers) for the compulsory acquisition thereof’. The learned judge decided those questions partly in the council’s favour and held that there was a binding agreement as to price or compensation in 1968. But he decided in favour of the brewers that the agreement as to compensation no longer stood because it was subject to an implied term or condition that completion by entry should take place within a reasonable period after June 1968, and that reasonable period expired in 1971 or shortly thereafter. The judge found it unnecessary to decide whether the agreement had been ‘abandoned’ by the council, and whether it was still enforceable by specific performance. The implication upon which the judge rested his judgment in favour of the brewers is challenged by the council in their notice of appeal, Mr Ground for the council pointing out that it accepted what was and still remains a subsidiary argument not expressed in the summons or any affidavit. Mr Millett for the brewers asks us to affirm the judge’s decision both on that ground and on the other grounds which the judge rejected or did not decide. The correspondence between the parties, their solicitors and their valuers shows that the figure of £15,000 was negotiated on the trade (barrelage) figures of The New Inn and included a figure for depreciation to fixtures and fittings. On April 19 1968 the brewers wrote to their solicitors and to their valuers. To the solicitors they wrote as follows: The above property that is, The New Inn at Bramley has been the subject of a compulsory purchase order by the Leeds Corporation and our agents, Messrs Spencer, Son & Gilpin, have now agreed compensation with the licensed property valuer at £14,500; in addition to this figure the licensed property valuer has agreed to pay this company £500 in respect of depreciation of fixtures and fittings. The corporation have also agreed to pay your charges and those of Messrs Spencer, Son & Gilpin. The sale is, of course, with vacant possession but as yet we have had no intimation from the town clerk as to when the corporation might require possession of these premises and we propose to carry on trading until such time as the corporation can give a firm date as to when completion of the purchase of this property can be expected. We should be pleased if you would bear in mind that under the terms of the tenancy agreement the tenant would normally require three months’ notice to terminate the tenancy and we should be obliged if you would take this point up with the town clerk as and when his department contact you in connection with the sale of this property, as the licensed property valuer’s report will not yet have been forwarded to the town clerk. To the valuers they wrote: We have considered at some length what you say as regards this property and in the circumstances we are prepared to accept the licensed property valuer’s offer of £15,000 in respect of these premises, though we feel in this case that the licensed property valuer’s offer is not over generous. Their valuers wrote to them and to their solicitors on April 23 and 26 respectively the letters which I shall read. In the first letter they wrote: We note that you are prepared to accept the licensed property valuer’s offer of £15,000 in connection with this property and when we receive the formal offer from him we will inform your solicitors accordingly. We note what you say with regard to the licensed property valuer’s offer. This is an unfortunate case in as much as the trade at this house has shown a steady decline over the last few years and it cannot be attributed to slum clearance where we could have argued that this had a detrimental effect. We feel that in all the circumstances we have got the best possible figure for this house. In the other letter they wrote: On behalf of our mutual clients we have negotiated the compensation in connection with the above property. The details of the agreement reached with the licensed property valuer are as follows: 1. The premises to be acquired are freehold and comprise the New Inn and they refer to the plan which identifies it. 2. The sale is to be with vacant possession. 3. The licence authorising the sale of beer, wines and spirits for consumption on the premises is excluded from the sale and remains the property of the vendors. 4. There are no fixed charges or onerous restrictions or liabilities affecting the property. 5. Subject to the above conditions, compensation in settlement of all heads of claim to be the sum of £15,000 (fifteen thousand pounds). 6. Included in the compensation at 5 above is an item representing depreciation of fixtures, fittings and trade effects. These remain the property of the vendors, subject to their removal before delivery up of possession. 7. In addition to the compensation set out at 5 above, the acquiring authority to pay the proper legal costs of the vendors and to make a contribution of £184 16s (one hundred and seventy-six guineas) towards surveyor’s fees. No doubt you will be hearing from the corporation in the matter in due course. Thereupon the brewers’ solicitors wrote to the town clerk of the council on April 29; and that letter reads: We understand that you will shortly be hearing from the licensed property valuer indicating that compensation has been agreed in the above matter at £14,500 and in addition you have been recommended to pay £500 in respect of the depreciation of fixtures and fittings and the legal charges and surveyor’s fees. If your corporation are to accept these terms we shall be glad if you will let us know when you will require vacant possession and in this respect perhaps you will bear in mind that under the terms of our clients’ tenancy agreement with the present tenant the tenant would normally require three months’ notice. On May 6 they sent the town clerk a copy of the valuers’ letter to them of April 26; their letter reads: We refer to our letter of the 29th ultimo and enclose a copy of Messrs Spencer Son & Gilpin’s letter setting out the terms. We propose to dispose of Contracts and enclose therefore full abstract of title to enable you to proceed. To that the town clerk replied on May 29: I refer to your letter of May 6 and have to inform you that the city council have now approved the purchase of the above property from your clients at the price of £15,000 subject to a Contract to be approved by me. The corporation will also pay your legal costs in accordance with the extra statutory scale, amounting to £100 and surveyors’ fees of £184 16s on completion. In view of the fact that notice to treat has been served in respect of the property, I agree that contracts may be dispensed with and will let you have a draft conveyance for approval in due course. I have requested the city architect to let me know when vacant possession will be required and I will write to you again on this point as soon as possible. There followed a further letter from the town clerk to the brewers’ solicitors, dated June 7: Further to my letter of May 29, I am now informed by the city architect that it is unlikely that this property will be required for redevelopment before 1971. On June 12 the town clerk sent the brewers’ solicitors the draft conveyance for approval and on June 27 they returned the draft conveyance ‘duly approved’. This the town clerk acknowledged on July 2 and on July 23 he wrote: I now enclose engrossment of the Conveyance for execution by your client. Please let me know when you are ready to complete. That letter was followed by the following exchange of letters on July 29 and August 5. The brewers’ solicitors wrote to the town clerk as follows: We have heard from our clients in this matter and they are surprised at receiving the document for sealing so soon. When they instructed us in the sale of this property on April 19 last, they notified us that they had no intimation as to when your corporation would require the above premises and that they intended to carry on trading until such times as your corporation could give a firm date. They inform us that you will not require this public house until 1971 though you will require the adjoining unlicensed properties prior to this date. Perhaps you will kindly let us know whether or not there has been any change in your requirements. 29 The reply from the town clerk was: I refer to your letter of July 29 and confirm that the corporation’s requirements regarding possession of this property are unchanged. The engrossment of the conveyance was forwarded to you in the routine way and I overlooked the fact that completion will be deferred for some three years. On August 8 the brewers’ solicitors informed the brewers accordingly: ‘We have now heard from the Leeds Corporation that they will not require the public house until 1971′. 1971 came and went, and so did 1972. Then, on February 28 1973, the brewers’ valuers took up the question of compensation with the council’s valuer in the following letter: You will recall that in 1968 we negotiated compensation with you in respect of the above property. These premises were never taken over by the local authority and in fact are still open and trading. We have now received a letter from our clients and they request that we reopen negotiations with you for revised compensation. The trading has increased considerably over the last four years and for your information we set out details below and they there set out the years 1969-70, 1970-71, and the nine months to December 31 1972, with the figures for draught beer (barrels), bottled beer (barrels) and wines and spirits (gallons). When you have had an opportunity of considering this we shall be pleased to hear further from you in the matter and arrange to discuss revised terms. The brewers’ valuers made the same request direct to the council on March 13: We negotiated compensation with the licensed property valuer in respect of the above property in April 1968. The sale of the property was not completed and in fact it has continued to be occupied and trading since that date. The premises are still as of to date trading and there are no indications as to when the corporation will want the property. In the circumstances, our clients requested that we write to you with a view to reopening negotiations for a revised figure of compensation. We should be pleased if you would confirm that you are prepared to reopen negotiations and that you will instruct the licensed property valuer accordingly. To that the council’s chief legal officer replied on March 21 as follows: As you are no doubt aware notice to treat was served on April 3 1967 and the compensation settled on April 29 1968 that should be May 29; it is an obvious mistake thus creating a binding contract. In the circumstances the corporation are not prepared to reopen negotiations for a revised figure of compensation. In addition, I would remind you that the accepted date for assessment of compensation is either the date when possession is taken or the date when the compensation is agreed, whichever is the earlier. On April 11 1973 the brewers’ solicitors wrote to the council expressing surprise at the council’s attitude and said ‘we feel that our clients do have an arguable case in that compensation was settled on the basis of a fairly early completion, and it is, of course, some five years before our clients were called upon to complete’. The council’s chief legal officer rejected this request; he saw no reason to refer the matter to the council and was equally unmoved by a subsequent appeal to fair play over a moral issue. He took his stand on the principles laid down by statute and case law. ‘The relevant date,’ he wrote, ‘for assessment of compensation where notice to treat applies was considered by the House of Lords in the case of Birmingham Corporation v West Midland Baptist (Trust) Association Inc [1970] AC 874 when it was decided that in their view the right date for assessment of compensation would be either the date on which the acquiring authority take possession of the property or the date when the value is agreed, whichever is the earlier’. There the matter rested until the notice of entry on August 22 1975, followed by possession on June 30 1976 after a further unsuccessful attempt to reopen negotiations on the amount of compensation payable. By July the brewers’ solicitors and the council were discussing in correspondence the issue whether there was or was not a binding contract to complete, based on the compensation assessed in 1968 on an average maintainable trade basis. Was there?  I agree with the judge that there was, and I find nothing which happened after 1968 to put an end to it or vary it or prevent the council from relying on it. I shall deal with this question first, together with all the additional grounds raised in the respondents’ notice on the brewers’ behalf, before I consider the finding of an implied term or conditional agreement on which the judge based his decision in favour of the brewers. I put the cart before the horse because it was put there — wisely — by counsel for the brewers both below and before this court. Those additional grounds are: (1)  No binding and enforceable contract was ever made by the plaintiff and the defendant because (a) It was ‘subject to contract’, and/or (b) the notice to treat upon which the acquisition proceeded was in respect of the plaintiff’s freehold interest subject to a tenancy whereas the price of £15,000 was negotiated in respect of the plaintiff’s freehold interest with vacant possession; alternatively, (2) On the assumption that the terms of purchase were agreed between the plaintiff and the defendant in May 1968 for the purchase of the plaintiff’s freehold interest at £15,000, by May 1976 the defendant (a) had abandoned their contractual entitlement to purchase the plaintiff’s said interest at the said price or (b) by the date the defendant entered and took possession of the plaintiff’s premises in June 1976 (pursuant to notice of entry served pursuant to section 11 of the Compulsory Purchase Act 1965) the defendant has lost any right to specific performance of the said agreement. Ground (1)(b) seems to have been argued first below, and the judge disposed of it as follows: First, he that is, Mr Millett says that the parties were not negotiating the amount of compensation which would be payable by the council for the acquisition of the interest to which the notice to treat applied, that is to say Duttons’ freehold interest subject to Mr Johnson’s tenancy, but that they were negotiating for the acquisition of the whole freehold interest with vacant possession. Mr Millett says that the agreement by Duttons was to give vacant possession, and accordingly that was the interest in respect of which compensation was being or must be taken to have been negotiated. I must say that I find this argument a little unrealistic. It seems to me that the parties were in practice negotiating the amount of the compensation which would be payable in respect of the freehold subject to the tenancy. That is borne out both by the fact that the council knew about the tenancy before the price was finally agreed, and also by the fact that the council later paid Mr Johnson a substantial amount of money and I interpolate that it was in fact £10,000 for his own interest. And even if Mr Millett’s view of the negotiations was correct, it does not, in my judgment, follow that the agreement as to the £15,000 was not binding so far as Duttons’ actual interest was concerned. In the circumstances, I reject Mr Millett’s argument on that point. I agree with all that and have only to add that, while it is true that vacant possession was referred to in the letter of April 26 1968, the council knew that Mr Johnson was the tenant of these licensed premises, the valuation was the valuation of the council’s licensed property valuer and the council met Mr Johnson’s claim for disturbance compensation with a separate payment of £10,000. The council were clearly valuing and purchasing the brewers’ freehold interest subject to Mr Johnson’s tenancy, which was itself in terms determinable immediately upon the giving of notice to treat and notice to cease trading; so that it would not have reduced the purchase price appreciably, if at all. Ground (1)(a) has more substance, so much more that it has been accepted by both my brothers and will defeat this appeal. What the judge said about that was this: The second argument on this part of the case is based on the terms of the town clerk’s letter of May 29 1968, to which I have already referred. Mr Millett says that that letter makes it clear that the council only entered into the agreement as to the price subject to a contract to be approved by the town clerk, that is to say, subject to contract in the sense in which that term is understood by conveyancers. He has referred me for this purpose to the Munton case I shall refer to that later from which it is clear that if that was a correct view of the relationship between the parties, then there certainly was not a binding agreement as to price. However, that is not, in my view, a correct reading of the town clerk’s letter of May 29. That letter, like many which come to be scrutinised in the30 course of proceedings in this court, is not perhaps with hindsight as happily worded as it might have been. But, in my judgment, it would be putting altogether too strained an interpretation upon it to say that the words ‘subject to a Contract to be approved by me’ meant that the council’s approval of the purchase price of £15,000 had only been on terms that there would actually be a contract in a form approved by the town clerk and that that contract would be signed and exchanged on both sides in accordance with normal conveyancing practice. Clearly the town clerk did not understand it in that way because he went on to say that he agreed that contracts might be dispensed with. It seems to me that the natural and normal meaning of the words ‘subject to a Contract to be approved by me’ is that the council were leaving it to the town clerk to deal with the contract, and if he decided that this was a case where it was not necessary to have contracts, that would be all right by them. So I reject Mr Millett’s argument on that point as well. With that also I agree. The true construction of the town clerk’s letter of May 29 1968 has to be ascertained against the background of the notice to treat and the relevant facts and law. I take the law from what Lord Denning MR said in Munton v GLC [1976] I WLR 649 at pp 652 and 653 and 655, and from the statement by the editors of vol 8 of ed 4 of Halsbury’s Laws of England, para 136, there mentioned by Lord Denning, and quoted by the judge in his judgment. The statement in that paragraph reads: The effect of serving a notice to treat is to establish a relation analogous in some respects to that of vendor and purchaser, a relation which binds the owner of the land to give up the land subject to his being paid compensation, and which binds the undertakers or acquiring authority to take the land, but there is no contract of sale until the price is ascertained and the land remains the property of the landowner. Both parties have the right to have the price ascertained and the purchase completed in manner provided by the Lands Clauses Acts or the Compulsory Purchase Act 1965 or any Acts modifying those Acts. The Master of the Rolls’ statement, with which both Scarman LJ and Goff LJ agreed, is this: Two propositions are settled. First, when a notice to treat is given, it binds the acquiring authority to purchase and the owner to sell at a price to be ascertained: see Mercer v Liverpool, St Helen’s and South Lancashire Railway Co [1903] 1 KB 652, 664, approved by the House of Lords [1904] AC 461, 463. Second, when there is an unconditional agreement fixing the price — whether in writing or by word of mouth — it is the equivalent of a binding contract between the parties: see Harding v Metropolitan Railway Co (1872) 7 Ch App 154. Lord Hatherley LC said at p 158: ‘. . . when the price is ascertained . . . you have then all the elements of a complete agreement, and, in truth, it becomes a bargain made under legislative enactment between the railway company and those over whom they were authorised to exercise their power’. In Dart on Vendors and Purchasers, 8th ed (1929), vol 1, p 256, it is said: ‘Where, however, the price is ascertained . . . the contract is complete, and may be specifically enforced by or against the company’. Similar statements will be found in In re Cary-Elwes’ Contract [1906] 2 Ch 143 and Halsbury’s Laws of England, 4-ed, vol 8 (1974) para 136. The paragraph I have just read. Once therefore a notice to treat has been served and there is an agreement on the price, a binding obligation is created which is equivalent to a contract between the parties. Thereafter the acquiring authority can call for a conveyance and completion, as indeed can the vendor whose property is acquired. Nothing further remains to be agreed unless the agreement is made conditional or subject to contract. If the vendor will not execute the conveyance, the authority has only to pay the ascertained price to the vendor or into court with interest: Lands Clauses Consolidation Act 1845, section 76, Compulsory Purchase Act 1965, section 11, replacing Acquisition of Land (Authorisation Procedure) Act 1946, Sched 2, para 3(1). The council, we were told, have paid the £15,000 with interest into an account pending the resolution of this dispute. But a compulsory purchase may be subject to contract and if the compensation is agreed subject to contract there is no concluded agreement to buy and sell. That was plainly the position in Munton’s case [1976] 1 WLR 649 and that would be the position here if the first paragraph of the letter of May 29 1968 stood alone. But, as the judge pointed out, it has to be read with the second paragraph, and read against the legal position created by a notice to treat and the preceding letters from the brewers’ side, agreeing the £15,000 and suggesting that contracts should be ‘disposed of’, which was rightly understood by the town clerk as meaning ‘dispensed with’. We have not got the resolution of the council which gave the town clerk authority to approve the contract in this case or generally, but I think we must take it to have been correctly reproduced in the first sentence of the letter and to have required the agreement between the council and the brewers to be indeed subject to contract, but to a contract approved by him. That must, however, mean that if he approved the contract the ordinary exchange of contracts would follow without any need to refer their terms to the council. If then the council were content to leave the approval of the contract to their town clerk, why should he not dispense with the exchange of contracts altogether if the brewery did not insist on them but indeed suggested doing without them, and go straight to a conveyance reciting, as the draft conveyance did, the agreement come to and leaving undecided only the date for completion?  The town clerk understood his authority in this way, so did the brewers and so did the council, as is shown by the course of subsequent events and correspondence. So did the judge, and so, with the greatest respect to the opinion of those who think differently, do I. The court cannot, of course, look at subsequent correspondence to aid the interpretation of a written contract or the letters in which it was concluded; but it is a striking fact that no one questioned the existence of a binding contract until the letter of July 7 1976 from the brewers’ solicitors, and though there was in that letter a reference to the case of Munton just decided, the point that the agreement was not binding because it was subject to contract was not made even then. Now it is taken on behalf of the party which invited the council to dispense with contracts and kicked, not against the compulsory purchase but the price paid for it; and the absence of that which was treated by both parties as an unnecessary formality is to be declared fatal to a purchase disliked and disputed only because it has turned out to be underpriced. I would accordingly hold, like the judge, that the agreement to sell at £15,000 was not subject to contract. Grounds (2)(a) and (b) I must now consider because I feel bound to differ from the ground of the judge’s decision which made it unnecessary for him to consider them. It is not easy to infer abandonment of contractual rights from inactivity or of an interest in land from delay. But the courts have long ago come to the aid of unwilling vendors of property compulsorily acquired by purchasers who delay completion to the prejudice of those helpless vendors and have held that a notice to treat can be abandoned by lapse of time. What Lord Romilly MR said in 1868 in Richmond v North London Railway Co, LR 5 Eq 352 at pp 358-9 has been endorsed by Lord Upjohn both when sitting at first instance in Grice v Dudley Corporation [1958] Ch 329 at p 339; and when giving the judgment of this court in Simpsons Motor Sales (London) Ltd v Hendon Corporation [1963] Ch 57 at p 82, which was affirmed in the House of Lords [1964] AC 1088. There Lord Evershed, with the agreement of all their Lordships, pointed out (at pp 1117 amd 1118) that ‘as regards delay the court will and should be somewhat less strict in the case of a local authority exercising the powers and duties relating to housing and like matters than it was in the past in cases of railway corporations, which were regarded as private undertakers seeking to make profits for themselves’. In Ystalyfera Iron Co v Neath and Brecon Railway Co (1873) LR 17 Eq 142, at p 149 Sir George Jessel MR was less sympathetic to the landowner, but Lord Upjohn preferred (in Grice’s case) the view of Lord Romilly MR in Richmond’s case that ‘a notice to treat cannot operate for an indefinite time: it must be acted upon within a reasonable time or it must be deemed to be abandoned’, for it would be ‘obviously inequitable to permit the railway company for an indefinite time to keep this notice over the head of the landowner, fettering his enjoyment of his property’. In the present case it is common ground that, in the absence of any agreement to the contrary, the council would be under a duty to complete the compulsory purchase in a reasonable time and that the brewers could have executed the conveyance and, in the words of Sir George Jessel MR in the Ystalyfera Iron Co case, forced the31 council on by giving notice to complete at any time and so making time of the essence; but they naturally chose to continue trading. And although it is not true to say that they requested the council to delay completion, as their trade turned out they welcomed the long postponement. Told in 1968 that the property would not be required before 1971 and completion would be deferred for some three years, and told in 1970 that it would not take place until some time in 1971 they made no protest and never suggested that the delay would have any effect on what their own valuers described in a letter to their solicitors of December 18 1968 as the compensation agreed with the district valuer of the council, or that the compensation was provisionally agreed, until their valuers requested a reopening of negotiations for revised compensation in their letter of February 28 1973. Thereafter the council were affirming the contract, including the agreement to pay £15,000 compensation, and in my judgment the delay and inactivity before and after 1973, surprising, annoying and even regrettable though it may have been, was not such as to amount to laches or misconduct or to cause such injustice to the brewers as to constitute abandonment or repudiation of the contract or the council’s right under it to purchase the brewers’ freehold interest in the premises at £15,000. If that be right, I do not see that there would be any justification for the court’s refusing to decree specific performance of the contract of sale and purchase to either party. There are incidents of ordinary contracts of sale and purchase of land which apply to what have been called parliamentary or statutory contracts after notice to treat, and there may be cases where delay in completing a sale and purchase of land may be such as to entitle the prompt and eager party to accept it as a repudiation, or the court to refuse specific performance. But where, as here, there is initially mutual consent to long delay, there must in my opinion be a clear intimation by that party that his consent is exhausted and he wants his contract performed or terminated. The brewers gave no such intimation but claimed revision of a term of the contract. Furthermore, the council needed no decree of the courts to enforce their contract; they had their statutory rights and I agree with Mr Ground’s submission that it is irrelevant to consider the question whether, if they had required a decree, a court of equity would have granted it. My rejection of both these grounds is, I think, supported by the affidavit evidence of Mr Duxbury for the council that the council did not need the land until 1976 and by the further affidavit evidence of Mr Booth Lee, the council’s compulsory purchase officer, which we admitted to deal with the implied term point, as to the practice of the council, resulting from the unpredictable delays to which compulsory purchase orders are subject, to allow owners to continue trading from the premises and to complete without delay if the owner wishes to cease trading and to vacate the premises. I come finally to the ground on which the judge felt able to decide the case in the brewers’ favour. The judge dealt with Mr Millett’s argument that the agreement as to price was conditional on completion taking place by 1971 or shortly thereafter, and in any event long before June 30 1976 in this way. The learned judge said: the first question here is: Was there an agreement that the compensation should still be £15,000, even if completion did not take place during the period which was within the contemplation of the parties in June 1968?  It seems to me that if you take into account the method of assessing compensation in this case and the fact that the date of entry was very much at the dictation of the council, the answer to that question must be ‘No’. I find it impossible in the circumstances to construe the agreement between the parties as being that the price should be £15,000, irrespective of the date on which entry was actually made. Entry might not have been made until 1980, 1985 or even later. In my judgment, Duttons’ agreement to accept the £15,000 necessarily assumed that entry would be made and the sum paid within a reasonable period after June 1968. That reasonable period expired in 1971 or shortly thereafter. It is not necessary for me to be more precise than this because it is on any footing clear that June 30 1976, or even (so there should be no doubt about it) January 1 1976, was well outside any period which was reasonable, or which could have been within the contemplation of the parties in June 1968. On that ground, therefore, I hold that the agreement as to price no longer stands and that it had ceased to stand by January 1 1976 at the latest. In the circumstances, it must follow that compensation falls to be assessed as at the date of entry on June 30 1976 in accordance with the decision of the House of Lords in the Birmingham Corporation case, to which the council’s chief legal officer had referred in the correspondence which I have read. I have considered the further evidence, not only of Mr Booth Lee for the council but of Mr Sampson for the brewers on this point, and I am not surprised to find Mr Booth Lee saying that if during the negotiations in 1968 the brewers had asked when completion would take place the council’s answer would have been ‘when we need the premises or at any time earlier should you wish to (complete)’, and Mr Sampson saying that the brewers would never have agreed to the sum of £15,000 if they had been told in 1968 that entry would be delayed until 1976. Whether he would have sworn to the same answer if the barrelage of The New Inn had continued to decline during those years, I feel some doubt. But then there would have been no originating summons. Much as I sympathise with the judge’s implication of this term or condition, I see no commercial necessity for it and no room for it in the circumstances of this case. The judge found it ‘very strange’ if the council, having put off entry until 1976, were still able to assert a right to pay compensation agreed on the basis of the most recent barrelage figures in 1968. So at first did I, and I am not unhappy to find that my brothers are able to uphold the judge’s decision, but on a different ground and one for which there is more to be said, and much more has been said, by Mr Millett. If, however, as I would hold, the brewers made a binding agreement to sell for £15,000, with every necessary term expressed except the date of completion left uncertain by agreement, they cannot get out of it by implying a term which could so easily have been expressed but if expressed might not have been agreed to by the council. The compensation could have been agreed provisionally at £15,000 and made subject to revision or renegotiation after the expiration of a particular number of years or if the value of the property or its trade increased. But it was not. It is therefore not open to the brewers to take the compensation to the Lands Tribunal for assessment. I am accordingly of the opinion that the brewers should be held to their agreement as to price which still stands, the appeal allowed and the declaration they obtained from the judge set aside. But as my brothers are of the contrary opinion, this appeal will be dismissed. Giving judgment in favour of dismissing the appeal, OLIVER LJ said: I entirely agree that, for the reasons given by my Lord, the existence of an implied term to the effect stated by the learned judge cannot be supported, for I do not see how a term can be implied into a contract except upon the supposition that, if it had been brought to the attention of the parties, they would both have agreed to its inclusion. It is, in my judgment, perfectly plain that the defendants would not have agreed to anything of the sort, and if that were the only matter in issue, I too would be in favour of allowing the appeal. There are, however, a number of points which are raised by the respondent’s notice — points which were either decided by the learned judge against the plaintiffs or which, because of the view which he took of the case, it became unnecessary to decide; and on the principal and critical point of the initial agreement I have felt compelled to a conclusion different from that reached by the learned judge and by my Lord. Logic and convenience suggest that I should deal first with that point, which is the first ground advanced in the respondent’s notice, for one thing that is common ground is that if the defendants are to succeed on this appeal they must demonstrate that the amount of compensation payable was contractually and unconditionally agreed. That is not disputed and it appears clearly from the decision of this court in Munton v Greater London Council and, in particular, from the passage from the judgment of the Master of the Rolls at p 652 of the report in [1976] 1 WLR 649, the passage already read by my Lord. In that case a negotiation of the amount of compensation had taken place in correspondence which as expressly made ‘subject to contract’ and it was held that the amount so agreed could not be treated, there never having been any completed contract, as the agreed compensation payable under a statutory contract constituted by a notice to treat followed by agreement of the amount of compensation. The landowner’s right32 on a compulsory purchase is to have the compensation assessed in accordance with statutory rules and he is not to be deprived of that right save by a binding contract to relinquish it. Mr Millett’s submission is that the instant case is substantially indistinguishable from Munton’s case and his submission rests, as regards this point, on the true construction to be put upon the letter from the town clerk to the plaintiffs’ solicitors of May 29 1968 read in conjunction with the surrounding circumstances, and the earlier and immediately subsequent correspondence. Mr Millett’s argument proceeds in two connected, but to some extent independent, steps. First he says that what was under negotiation between the parties was not merely the agreement of the sum of compensation payable under the notice to treat but the terms of a privately negotiated contract of sale — negotiated no doubt under the threat of the notice to treat, but otherwise independently of it. That was what was offered to the defendants and it was that which they accepted subject to contract; and the town clerk’s acceptance of a suggestion (of which I surmise the defendants themselves were in fact unaware) that contracts should be dispensed with does not bring into being a contract of wholly different nature, that is to say a statutory contract. This submission as to the nature of the agreement under negotiation is not critical to Mr Millett’s argument but it assists him (if correct) in his approach to the true construction to be placed on the correspondence. In substance it bases itself on the fact that the property was subject to Mr Johnson’s tenancy and that all that the notice to treat purported to affect was the plaintiff’s interest in the land subject to that tenancy. What was offered in their valuers’ letter was the property with vacant possession. Thus, the argument proceeds, although the notice to treat no doubt triggered the negotiations, the contract being negotiated was a different contract from the statutory contract which would have resulted from the mere agreement of the compensation. The learned judge rejected this as artificial and I think he was right to do so. The correspondence prior to the plaintiffs’ valuers’ offer of April 26 was entirely upon the footing that what was being agreed was compensation only and although it is true that, technically, the only interest which could be compulsorily acquired under the notice to treat was the freehold subject to the tenancy, Mr Ground has pointed out that the tenancy itself contained a term terminating the tenant’s interest upon service of a notice to treat and reducing it to a mere licence which would determine immediately the landlords chose to give up possession to the acquiring authority. From a valuation point of view, therefore, the tenancy was of minimal significance. This, however, does not dispose of Mr Ground’s difficulty, because the question remains, was the amount of compensation, assuming that to be the sole subject-matter of the negotiation, ever unconditionally agreed?  This brings me to the second step in Mr Millett’s argument, and it is necessary, at pain of repeating to some extent ground already covered by my Lord, to refer again to the correspondence. For relevant purposes it starts with the defendants’ licensed property valuer’s letter of August 18 1967 from which it is quite clear that what is being negotiated is not a contract but an amount which he can recommend for the approval of the defendants. It is unnecessary to refer in any detail to the course of the negotiations prior to April 1968, when the plaintiffs, having taken their own valuers’ advice, wrote to their solicitors approving the figure of £15,000 suggested and asking them to take up with the town clerk the question of when completion would be required — a matter of some little importance to them because they were intending to carry on trading until completion and they wanted to give three months’ notice before terminating Mr Johnson’s occupation (although in fact they were not bound to do this). On the same day, April 19, they wrote to their valuers saying that they were prepared to accept the licensed property valuer’s figure. On April 26 1968 the plaintiffs’ valuers wrote the important letter to the plaintiffs’ solicitors to which my Lord has already referred. Thereupon the plaintiffs’ solicitors wrote to the town clerk the letter dated April 29 1968. Two things are, I think, clear from this letter. First, it is clear that it was not in the contemplation of the writer that any agreement between the valuers bound anybody. The terms suggested were being put forward as an offer which was open for acceptance, not as a record of a completed bargain already made. Secondly, the letter stresses the importance of some clear information as to a completion date. No reply to this letter was received at this stage and on May 6 the offer which it contained was superseded by a new offer, because the solicitors sent to the town clerk a copy of the valuers’ letter to them of April 26, to which I have already referred. They added ‘We propose to dispose of’ (and I think that is a malapropism for ‘dispense with’) ‘Contracts’ (with a capital C) ‘and enclose therefore full abstract of title to enable you to proceed’. So here was an unconditional offer, accompanied by an intimation that the vendors’ solicitors were prepared to dispense with formal contract — that is to say to let the matter rest on the correspondence alone and proceed straight to conveyance. It is, I think, unarguable that anybody was bound at this stage. I come then to the crucial reply of the town clerk, which begins by referring to the letter of May 6 — that is, the letter of offer. My Lord has already read this letter, but I think it will be convenient for me to read it again. It is in these terms: Dear Sirs, I refer to your letter of May 6 and have to inform you that the city council have now approved the purchase of the above property from your clients at the price of £15,000 subject to a Contract to be approved by me. The corporation will also pay your legal costs in accordance with the extra statutory scale, amounting to £100 and surveyors’ fees of £184.16s, on completion’. Now if this letter had terminated there, it would in my judgment be equally unarguable that any binding agreement had been concluded. Indeed, I do not think that Mr Ground was disposed seriously to quarrel with that proposition. What is said, however — and this was the argument which appealed to the learned judge — is that the prima facie significance of that first paragraph is not only neutralised but nullified by the next paragraph. So I will read the remainder of the letter. It continues: In view of the fact that notice to treat has been served in respect of the property, I agree that contracts may be dispensed with and will let you have a draft conveyance for approval in due course. I have requested the city architect to let me know when vacant possession will be required and I will write to you again on this point as soon as possible. Nothing further occurred until June 7, when the town clerk wrote again saying that the property was unlikely to be required before 1971. Five days later he sent a draft conveyance for approval and that was returned approved on June 27. This document recites an agreement for the payment of the sum of £15,000 by way of compensation and Mr Ground prays this in aid as evincing the intention of the parties. It does not appear to me, however, that this document can be of any relevance in determining the question of the contractual or non-contractual effect of the correspondence, much less as in itself constituting a contract. This was merely the town clerk’s draft of a suitable form of conveyance to give effect to a transaction which both parties then clearly intended to effect and it cannot, in my judgment, have any bearing upon the question of whether either party was contractually bound by the correspondence to effect it. Equally the mere approval of a form of conveyance by the plaintiffs’ solicitors cannot in itself constitute a contract. Following approval of the form of conveyance, the town clerk had an engrossment prepared and sent it to the plaintiffs’ solicitors for execution by their clients, on July 23 1968. They replied expressing some surprise in the light of the information which had been given regarding the date on which the premises were likely to be required, and asking whether the defendants had changed their requirements. The response was that the conveyance had been sent as a matter of routine and that completion would be deferred for some three years. Accordingly the conveyance never was executed and had not been executed in 1973, when the plaintiffs sought to reopen the question of compensation. That suggestion was resisted by the defendants on the footing that there was and remained a binding agreement between the parties fixing the compensation once and for all at £15,000 no matter when the transaction came to be completed and that conten-33 tion has been maintained both before the learned judge and in this court. It rests, and can only rest, upon the construction of the town clerk’s letter of May 29 1968, for there is nothing before or after that which could arguably give rise to any binding obligation. Mr Ground submits that the case is a simple one of a coalescence of three ingredients — a compulsory purchase order, a notice to treat issued under it, and an agreement of the amount of compensation to be paid. Those three ingredients in conjunction constitute a statutory contract. The second paragraph of the letter of May 29 1968, he submits, simply reflects the town clerk’s appreciation that the only element missing at that stage was the agreement of the purchase price, an element which he himself supplied by agreeing to dispense with the formal contract which had been suggested in the first paragraph. The letter has, he submits, to be read against the background that the parties were perfectly familiar with the mechanics of a compulsory purchase order and, in particular, that formal exchange of documents was unnecessary to produce a binding agreement. Against that background the announcement in the first paragraph that the defendants had approved the purchase at £15,000 ‘subject to a Contract to be approved by me’ does not, it is argued, carry the connotation that the lawyer would expect in a normal conveyancing transaction, but merely signifies an authority to the town clerk to deal with the matter in the way which he thinks best. By agreeing to dispense with contracts he signified the defendants’ final and unconditional acceptance of the plaintiffs’ offer and a binding agreement resulted as soon as the letter was dispatched. That was an argument which impressed the learned judge. He said: That letter, like many which come to be scrutinised in the course of proceedings in this court, is not perhaps with hindsight as happily worded as it might have been. But, in my judgment, it would be putting altogether too strained an interpretation upon it to say that the words ‘subject to a Contract to be approved by me’ meant that the council’s approval of the purchase price of £15,000 had only been on terms that there would actually be a contract in a form approved by the town clerk and that contracts would be signed and exchanged on both sides in accordance with normal conveyancing practice. Clearly the town clerk did not understand it that way because he went on to say that he agreed that contracts might be dispensed with. It seems to me that the natural and normal meaning of the words ‘subject to a Contract to be approved by me’ is that the council were leaving it to the town clerk to deal with the contract, and if he decided that this was a case where it was not necessary to have contracts, that would be all right by them. Despite Mr Ground’s persuasive argument, I find myself unable to take that view of the letter. Accepting that it was written in the context of a compulsory purchase, with the procedure under which the town clerk was doubtless familiar, it has also to be borne in mind that it is a letter written by someone whose position makes him, almost by definition, a skilled and experienced conveyancer, with the most complete familiarity with the invariable — or almost invariable — and certainly the natural and prima facie meaning and effect of the expression ‘subject to contract’ in any conveyancing correspondence. It seems to me quite inconceivable that the significance of this expression in the defendants’ resolution, which must be assumed to be correctly set out in the letter, could possibly have escaped him. Equally it seems to me to be impossible to resist the conclusion that the resolution had, and was intended to have, the effect classically attributed to the formula used, that is to say, that the defendants were to be free to withdraw unless and until a formal agreement in terms approved by their legal adviser had been executed and exchanged. That such a formal agreement was contemplated seems to me entirely clear from the use of the capital C in the word ‘Contract’. It was not merely to be subject to arriving at a binding agreement but subject to ‘a Contract’ (ie a formal written contract). In Chillingworth v Esche [1924] 1 Ch 97 Sargant LJ at p 114 observed: ‘I do not say that the phrase makes the contract containing it necessarily and whatever the context a conditional contract. But they are words appropriate for introducing a condition, and it would require a very strong and exceptional case for this clear prima facie meaning to be displaced’. This was quoted by Goff LJ in the Munton case at p 656 where, explaining his own decision in the exceptional case of Michael Richards Properties Ltd v St Saviours, Southwark [1975] 3 All ER 416, he went on to say: ‘There may be other cases — I do not know — in which the facts might again be so strong and exceptional as to require the court to treat the words ‘subject to contract’ as meaningless. If there be any such other cases, they must indeed be rare . . .’. For myself I find no strong or exceptional circumstances in the instant case which would lead me to the conclusion that the defendants’ resolution meant anything other than exactly what it said. If that is right, then I find myself unable to read the first paragraph of the town clerk’s letter as signifying anything other than this: ‘The city council has authorised me to write to you accepting your offer subject to a formal agreement to be prepared by me and exchanged in the usual way’. Then comes the question, what is the effect of the second paragraph?  I cannot see that this carries the matter any further. What this appears to me to be signifying with tolerable clarity is that, although the offer is accepted ‘subject to contract’, so that, at this stage, there is no binding agreement, the fact that a notice to treat has been served means that the plaintiffs are bound to convey with or without a binding agreement, so that a formal contract can safely be dispensed with and the matter can proceed to completion without any binding agreement ever coming into existence. In other words, they can take matters on trust until conveyance. But to dispense with a contract cannot make a contract, and I find myself unable to accept Mr Ground’s submission to the contrary. What he suggests, if I understand his argument correctly, is that what this paragraph means is in effect this: ‘The council have agreed, subject to my preparing a formal agreement; but we both know that a formal agreement is unnecessary when a notice to treat has been given. All that is needed is that the figure of compensation should be unconditionally agreed, and on behalf of the council, I now unconditionally agree it’. Now apart from the difficulty that this is not what the letter says — it says merely that ‘I agree that contracts may be dispensed with’ — it is flatly contradictory of the first paragraph, where the town clerk sets out the limits imposed by his principal on his own authority. He is the defendants’ solicitor for the purpose of this transaction and would not ordinarily have any ostensible authority to make a contract on their behalf. A fortiori he would and could not be thought to have any such authority when he has, in this very letter, set out the extent of the terms which the defendants have authorised him to accept. Furthermore there still remained an outstanding matter which, whether crucial to a statutory contract or not, was undetermined, namely the date for completion, a gap which can hardly be said to have been satisfactorily filled by an intimation (on June 7) that ‘it is unlikely that this property will be required for redevelopment before 1971’. As to the argument that the town clerk himself did not attribute to the words used the well-established and sanctified meaning which they have to every conveyancer, this, assuming it to be true, seems to me to be irrelevant, for whether the offer made met with an unqualified and unconditional acceptance has to be judged not by what the writer may have intended in his private thoughts, but by an objective appraisal of the words which he has used in the context in which he has used them. Equally irrelevant, as it seems to me, is the fact that no express suggestion that there had not been any binding agreement was made prior to July 1976, after the report of the Munton case had appeared. It may well be that up to that time, the parties did in fact think that they were bound by a statutory contract, since it was not, prior to that case, clear that an agreement of the amount of compensation had, in order to constitute a statutory contract, to be a final and binding agreement. I find myself unable, therefore, to accept the learned judge’s analysis of the position, and I am unpersuaded by Mr Ground’s arguments that the parties ever reached the stage of a binding agreement on the amount of the compensation. Accordingly, although for different reasons from those given by the learned judge. I take the view that his conclusion was correct and I would dismiss the appeal. 34 The view which I take of the case makes it unnecessary to deal with the further grounds argued by Mr Millett, but I should perhaps add this: I am quite satisfied that, on any analysis, the argument based upon abandonment must fail. Abandonment of a contract must depend upon either the expression or an inference of an intention to abandon and if there is one thing clearer than another in this case it is that the defendants, if they ever achieved the contractual position which they claim, never intended to abandon it. The argument advanced by Mr Millett and based on the inability of the defendants, after this lapse of time, successfully to claim specific performance is one that I find more difficult. I am not sure, speaking for myself, that it is a complete answer to assert, as Mr Ground claims, that the defendants had no need to seek the assistance of equity to enforce the contract because they could obtain possession and convey the legal estate without any assistance from the court by reliance on their statutory powers. This is no doubt the case, but the contract that is sought to be performed is not simply a contract to convey the land and give possession. It is a contract to forgo the right to have the compensation assessed in accordance with the statutory rules. Now, as Mr Millett points out, there is ample authority for the propositions (a) that in a case of a compulsory purchase where no compensation has been agreed or assessed, the right to rely on a notice to treat may be lost by failure of the acquiring authority to proceed within a reasonable time (Grice v Dudley Corporation and Simpsons Motor Sales (London) Ltd v Hendon Corporation); and (b) that under an ordinary contract for sale a party may lose his right to enforce by long delay even though there has been no notice to complete (see Mills v Haywood (1877) 6 ChD 196 and Accuba Ltd v Allied Shoe Repairs Ltd [1975] 1 WLR 1559). I am not wholly convinced, therefore, that it necessarily follows that, simply because the amount of compensation has been agreed, the owner of land compulsorily acquired is for ever precluded from demanding that compensation be assessed in accordance with the statutory rules if there has been a long and unexplained delay on the part of the acquiring authority in implementing the statutory contract thus arrived at. Having regard, however, to what I believe to be the correct analysis of the contractual position between the parties, I prefer not to express a concluded view on the point. Agreeing that the appeal should be dismissed, Fox LJ said: I agree with my Lords, and for the reasons which they have given, that the judge’s conclusion as to the implication of a term cannot be supported. The next question is whether any binding contractual relationship for the disposition of the land ever came into existence at all. If it did not, then the council must fail. In considering that question, I disregard Mr Johnson’s tenancy, which seems to me to be of no practical significance; it came to an end upon the service of the notice to treat and became a mere licence. A notice to treat having been served, there were two modes by which a contract could have come into existence. The first is by an ordinary private contract for sale at a price. The second is by what is sometimes called a parliamentary contract. The position was stated by the Court of Appeal in Munton v GLC [1976] 1 WLR 649 at p 625 in the judgement of Lord Denning MR as follows: First, when a notice to treat is given, it binds the acquiring authority to purchase and the owner to sell at a price to be ascertained: see Mercer v Liverpool, St Helen’s and South Lancashire Railway Co [1903] 1 KB 652, 664, approved by the House of Lords [1904] AC 461, 463. Second, when there is an unconditional agreement fixing the price — whether in writing or by word of mouth — it is the equivalent of a binding contract between the parties: see Harding v Metropolitan Railway Co (1872) 7 Ch App 154. Lord Hatherley LC said at p 158: ‘. . . when the price is ascertained . . . you have, then all the elements of a complete agreement, and, in truth, it becomes a bargain made under legislative enactment between the railway company and those over whom they were authorised to exercise their power’. What is asserted in the present case is that there was a parliamentary contract by reason of the unconditional agreement of the purchase price between the parties. Negotiations as to the price commenced in August 1967. It is evident from the valuation officer’s letter of August 18 1967 to the plaintiffs’ valuers that the valuation officer did not regard it as his function to conclude any agreement as to the amount. He says: ‘I am instructed to negotiate and if possible agree with you terms of compensation which . . . I can recommend for the approval of the Corporation’. Negotiations proceeded. On April 19 1968 the plaintiffs wrote to their own solicitors approving the figure of £15,000 which was suggested. On April 26 the plaintiffs’ valuers wrote the letter to the plaintiffs’ solicitors setting out the details of the agreement which they had reached with the valuation officer. On April 29 the plaintiffs’ solicitors wrote to the town clerk, saying: We understand you will shortly be hearing from the licensed property valuer indicating that compensation has been agreed in the above matter at £14,500 and in addition you have been recommended to pay £500 in respect of the depreciation of fixtures and fittings and the legal charges and surveyors’ fees. If your corporation are to accept these terms we shall be glad if you will let us know when you will require vacant possession. . . . It is clear that that letter does not regard the valuers as having committed their clients to anything. The letter was not recording an agreement; it was asking if certain terms were acceptable. In fact on May 6, the plaintiffs in effect put forward a new offer because they sent to the town clerk a copy of the plaintiffs’ valuers’ letter of April 29. The letter of May 6 concluded ‘We propose to dispose of contracts and enclose therefore full abstract of title to enable you to proceed’. ‘Dispose of’ I take to mean ‘dispense with’. The reply to that letter is the town clerk’s letter of May 29. It is upon the construction of that letter that the present issue depends. On June 7 the town clerk wrote to say that the property was unlikely to be required before 1971. Soon after he sent the draft conveyance for approval; it was approved on June 27. Mr Ground’s case for the council is that the parties were familiar with the procedure of compulsory purchase, under which a formal contract was not necessary for the purpose of producing a binding agreement. All that was necessary was to agree the price. It is contended, rightly, that the plaintiffs had made an offer to sell at £15,000. That offer, it is said, was accepted by the town clerk, on behalf of the council, when by the letter of May 29 he agreed to dispense with contracts. If one takes the letter of May 29, apart from the second paragraph (which accepts the proposal to dispense with contracts), it seems to me quite clear, on well-settled principles, that no binding contract of any kind resulted. That is the consequence of the words ‘subject to a Contract to be approved by me’. The negotiating party was the council. The terms of the council’s acceptance are, I must assume, correctly set out in the letter. They indicate that the council is not to be bound except by a formal contract to be approved by the town clerk. The ordinary meaning and effect of the words ‘subject to contract’ have been stated in many cases; Munton v GLC (supra) and Chillingworth v Esche [1924] 1 Ch 97 may be taken as examples. Looking at the matter thus far the words used in the letter of May 29 in my view exclude a binding agreement. But that is not the end of the matter. There may, it is said, be cases in which the ordinary meaning of ‘subject to contract’ is displaced. It is contended that in the present case, concerned as it was with a compulsory purchase, the words ‘subject to a Contract to be approved by me’ gave the town clerk authority, if he thought fit, to dispense with formal contracts and to reach a binding agreement on compensation. He did that, it is said, by agreeing in the second paragraph to dispense with contracts. The judge held that ‘it would be putting altogether too strained an interpretation upon it to say that the words ‘subject to a Contract to be approved by me’ mean that the council’s approval of the purchase price of £15,000 had only been on terms that there would actually be a contract in a form to be agreed by the town clerk’. In considering the matter I put aside any question of what the town clerk thought the words ‘subject to a Contract to be approved by me’ meant. All that we can do is to construe the letter. Looking at the letter, I am unable to read it as meaning anything35 other than that the council approves the purchase of the property at £15,000 subject to contract; the form of the contract was to be approved by the town clerk but the agreement was, in essence, to be a ‘subject to contract’ transaction in the ordinary sense. That in my view is the ordinary meaning of the language. It was a letter written, on a conveyancing matter, by the officer of the council responsible for conveyancing matters. It used familiar conveyancing language, which in my view must be given its ordinary meaning. I come then to the second paragraph of the letter of May 29. I do not think that it advances the council’s case at all. In my view the paragraph is saying no more than ‘There has been a notice to treat so do not let us bother with contracts’. I do not think that throws any light upon the meaning of ‘subject to a Contract to be approved by me’ in paragraph 1. It is in no way inconsistent with the meaning which I have attributed to those words. Further, as to the effect of the second paragraph I make the following comments. First, the town clerk is agreeing to dispense with contracts relating to a disposal of land. That seems to me to be altogether remote from an intention to create a contract for such disposal. Secondly, the contracting party under the agreement sought to be established is the council. It is not the town clerk and, although the town clerk may have, in practice, greater powers than a solicitor on an ordinary purchase, his authority from the council is stated in terms in the letter of May 29. In my view he has no authority to do anything except to settle the form of a contract for the purchase mentioned in the letter. In my judgment there was never any binding agreement as to the price or anything else. Accordingly, the council has no enforceable agreement and the appeal fails. The appeal was dismissed with costs. Leave to appeal to the House of Lords was refused.