“Subject to contract” and proprietary estoppel

In Secretary of State for Transport v Christos ([2003] EWCA Civ 1073, CA (Eng)) the Secretary of State for Transport proposed to acquire property owned by Mr and Mrs Christos in connection with the construction of the Channel Tunnel Rail Link. The negotiations were “subject to contract” from the outset. A price of GBP500,000 had been agreed in the course of these negotations. Mr and Mrs Christos became concerned, after several months, that the Secretary of State was trying to renegotiate the price. On 26 October 1999, the Secretary of State’s representative wrote to say that their valuers had no instructions to renegotiate. A few days later there was a meeting in which, so Mr and Mrs Christos contended, representations were made that the price would be GBP500,000 (less a small discount to reflect a defect in title that had been identified). The solicitors acting for Mr and Mrs Christos informed the Secretary of State’s representatives that they would imminently be exchanging contracts to buy a new property and would be relying on the compensation to pay part of the purchase price.

The question was whether the Secretary of State was now bound to pay the GBP500,000 that had been agreed. It was held that there was no contract because the negotiations had all been “subject to contract”. Nor was there an estoppel (alleged to be based on the letter of 26 October and the subsequent meeting) to prevent the Secretary of State from relying on a valuation to show that the market value of the property was less than GBP500,000. Attorney-General of Hong Kong v Humphreys Estate (Queen’s Gardens) was applied and Salvation Army Trustee Co Ltd v West Yorkshire Metropolitan CC was distinguished ([45]).

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