Unusual action for alleged breach of confidentiality — Claim that a contract made by intending vendors of land to keep confidential the amounts of offers made by possible purchasers, including an offer from the plaintiff company, and to accept (subject to contract) the highest offer, had been broken by defendants — Plaintiffs complained that the amount of their offer had not been kept confidential, but had been disclosed to another of the potential purchasers, who made a higher offer — Plaintiffs then increased their offer, but the offer from the other was accepted — Held, after an exhaustive review of conflicting evidence, that no contractual obligation as to confidentiality had been established — The action accordingly failed on the facts and questions of legal liability and damages did not arise — Action dismissed
This action
was brought by Trees Ltd, a company trading as a timber merchant, against three
defendants, Mr M A L Cripps and two others, who were the executors of the will
of the second Lord Parmoor. The land which was the subject of the action was a
wood of about 94 acres, called Mousells Wood, part of woodlands near Frieth in
the Chilterns.
Christopher
Clark (instructed by Batt, Broadbent & Beecroft, of Salisbury) appeared on
behalf of the plaintiffs; P J Millett QC and Graham Platford (instructed by
Shenton, Pitt, Walsh & Moss, of Winchester) represented the defendants.
Giving
judgment, NOURSE J said: This is an action for breach of an alleged contract of
an unusual kind, namely a contract by intending vendors of land to keep the
amount of an offer made by one possible purchaser confidential from other
possible purchasers and to accept the highest offer, subject to contract. The
crucial question of fact is whether there was any contractual obligation as to
confidentiality. If there was, there are a number of other questions on
liability and damages.
The plaintiffs
are a company called Trees Ltd. They trade as timber merchants, at the material
time from an address near Salisbury. Their managing director was and is Mr R H
Ward. The defendants are the three executors of the will of the second Lord
Parmoor, who died in 1977. The first defendant, Mr Anthony Cripps, is a nephew
of his.
I will in
general state the facts as I find them, referring to the evidence only in areas
of difficulty and importance.
At his death
the assets of Lord Parmoor’s estate included some freehold woodlands near
Frieth in the Chilterns which had been in the family for over 100 years. One of
those was a wood of an area of about 94 acres known as Mousells Wood, which in
early January 1979 the executors decided to sell. For some years prior to Lord
Parmoor’s death his agent had been Mr M R Carlisle, a partner in the firm of
Lawrence, Son & Laird, then with an office in Marlow some 4 miles away from
Frieth. Mr Carlisle continued to act for the executors after Lord Parmoor’s
death. By then Mr Cripps knew him well, having had various dealings with him
over a period of some years.
On January 9
1979 Mr Cripps wrote to Mr Carlisle instructing him on behalf of the executors
to go ahead with selling Mousells Wood. Mr Carlisle was told that any offers he
thought suitable should be passed on to the executors for final acceptance, but
Mr Cripps said that they would of course be mainly guided by Mr Carlisle’s
advice. At that time Mr Carlisle hoped that the sale price would be in the
region of £28,000-£30,000.
The property
was put on to the market at the end of February, and within a week Mr Carlisle
received over the telephone an offer of £40,000, subject to contract, from Mr T
E Ryland, who lives nearby at Dovers Farm, Frieth, and whose house looks out on
to Mousells Wood.
Because the
property had only just been put on the market and because it was being sold for
executors Mr Carlisle did not feel that it would be prudent to confirm the sale
at that point. Mr Cripps agreed.
On March 10,
after a meeting with Mr Carlisle at Marlow, he wrote identical letters to the
executors’ solicitor, Mr Peter Pitt, and his two co-executors, with a copy to
Mr Carlisle. That letter contained the following passage in relation to
Mousells Wood:
Mark thought
he might get about £35,000. He has had a firm offer of £40,000. There is
considerable local interest, and I have discussed with him the best next steps.
My strong recommendation is that we instruct him to let the matter ride for two
or three weeks or more at his discretion, the length of time depending on the
interest raised, that when he feels the time is right he should write to all
parties who have shown interest and request the best offer of each by a stated
date within 14 to 28 days and that we should then accept the best offer.
Mr Cripps added
that he thought Mr Carlisle had done magnificently to get so good an offer so
soon.
On March 19 Mr
Pitt wrote to Mr Carlisle in order to confirm that he should proceed in
accordance with Mr Cripps’ recommendation. The fourth paragraph of that letter
was in these terms:
When you
think the property has been on the market for a sufficient length of time we
then suggest that you tell all interested parties that you, on behalf of the
executors, invite them to make their best offer over £40,000. No doubt when you
have received such offers you will write to Tony (copy to me) and report the
best offer.
That second
sentence to my mind makes it clear that there was at that stage no variation in
the executors’ instructions to Mr Carlisle to pass on any suitable offers to
the executors for final acceptance. Mr Carlisle himself had no authority to
accept any offer, even one made subject to contract.
Mr Carlisle
continued with the marketing of the property, and about the middle of April he
received over the telephone an offer of £44,000, subject to contract, from Mr W
H A Lockhart of the Northampton office of Jackson-Stops & Staff, who was
acting for an undisclosed principal. Mr Carlisle had told Mr Lockhart that he
would have to offer £45,000 to get the property, but eventually, after several
long telephone conversations, Mr Lockhart only offered the lower figure. Mr
Carlisle then telephoned Mr Ryland and told him that he had got an offer of
£44,000, whereupon Mr Ryland offered £45,000, subject to contract.
On April 20 Mr
Carlisle wrote and reported these events to Mr Cripps. That letter did not
reach Mr Cripps until April 25. After telephoning both his co-executors Mr
Cripps replied on the same day, informing Mr Carlisle that they had all three
agreed that he should go ahead and sell to Mr Ryland at £45,000. Mr Cripps
added that he considered it a first-class piece of work on Mr Carlisle’s part.
In fact Mr
Carlisle did not at that stage go ahead and sell to Mr
Co, agricultural and forestry surveyors of Chesham, and was told that they had
a client who was particularly interested in the property. Mr Carlisle thought
that this was a sufficient ground not to go ahead and sell to Mr Ryland until
this other offer had been explored.
It was at this
point that Mr Ward and the plaintiff company first came into the picture.
Shortly after Mr Carlisle had spoken to John Clegg & Co, Mr John Clegg of
that firm spoke to Mr Ward over the telephone. They had had many dealings together
in the past. Mr Clegg thought that Mr Ward might be interested in Mousells Wood
and told him as a guideline that he would have to pay £40,000 to get it. Mr
Clegg said that he was acting for another client whom he described to Mr Ward
as being ‘mildly interested’. Mr Clegg immediately sent Mr Ward a copy of the
particulars. Mr Ward was indeed very interested in the wood. It is very rare
for woodlands to come up for sale in the Chilterns. It appears that it has
probably happened only about half-a-dozen times over the last 10 years.
On Friday 27
or Monday April 30 Mr Ward and his son Timothy, then in his early twenties and
just starting in the business, went to look at Mousells Wood. I am fairly
certain that it was on the latter date, but it does not much matter. Mr Ward’s
first impression was that the quality of the timber was, if anything, higher
than the average quality of beech in the Chilterns, and his instinct was that
it was worth well in excess of £40,000. He then went straight to Mr Clegg’s
office in Chesham to confirm his interest. Mr Clegg was not there, but Mr Ward
spoke to Mr C M Gee of that firm, who tried to telephone Mr Carlisle at Marlow
but found that he was out. Mr Ward then drove to Mr Carlisle’s office in
Marlow. He left his son outside and went in and found that Mr Carlisle was
there. It was now the late afternoon. There then took place between Mr Ward and
Mr Carlisle a conversation on which the outcome of this case largely depends.
Mr Ward and Mr
Carlisle had not met before. Mr Carlisle had never come across him or the
plaintiff company in timber or woodland dealings and knew nothing about them.
Mr Carlisle had received a message from Clegg & Co to say that Mr Ward was
coming, and he naturally assumed, although wrongly, that Mr Ward was the client
of that firm who had been mentioned to him over the telephone a day or two
previously. Mr Ward’s evidence in chief as to the conversation between him and
Mr Carlisle was to the following effect. He said that he was interested in
purchasing woodlands. He said that the plaintiff company were primarily timber
merchants, although they were interested in forestry as well. Mr Ward thought
the asking price was £40,000 or around, that being the figure which he had been
told by Mr Clegg. Mr Ward said he was prepared to offer £40,000. Mr Carlisle
said that one or two people were interested and that he felt that Mr Ward would
have to offer in excess of £45,000. Mr Carlisle then suggested that as Mr Ward
and two others were interested, Mr Ward might think it fair for the three of
them to be asked to make their best offer in writing and the highest offer
would be acceptable. Mr Ward replied to the effect that he thought that that
was a very good idea, provided that the offers were kept strictly confidential.
Mr Ward said that Mr Carlisle assured him that that would be the case. Mr Ward
said that he knew from the particulars of sale that Mr Carlisle was acting for
executors and that he realised that it was normally the duty of executors to
obtain the best price for the property they were selling.
In
cross-examination Mr Ward said that he had a very clear recollection of the
meeting. He said that he did not think that Mr Carlisle had said that he was
acting for executors but that Mr Ward took that as read. Mr Ward said that he
thought it would have been very unusual for someone in Mr Carlisle’s position
to have to refer offers to his client. On the other hand, Mr Ward accepted that
it would be common-place in some cases for him to have to refer offers to his
clients, who would have the final decision. Then Mr Ward did say that Mr
Carlisle had said that offers had to be in writing. He said that that was both
his present and his former recollection. He said that there was no need for
that to be specified in the letters to which I will shortly come, because it
was obvious that the offers would have to be in writing. He denied that it was
merely an assumption of his or that it was an improvement in his evidence. He
did not accept that the whole arrangement was so informal. He repeated that he
had said that he thought it would be a fair procedure, provided that the
letters were kept confidential. He then said that Mr Carlisle was not committed
to the procedure at the end of the meeting; that he, Mr Ward, would have been perfectly
happy with an auction sale if Mr Carlisle had later chosen to adopt that
procedure. He said that there was no question at the end of the meeting of Mr
Carlisle having been committed to the particular procedure. Finally he again
repeated that the assurance as to confidentiality was given. That, he said, was
the whole crux of why he was bringing these proceedings.
Mr Carlisle’s
evidence in chief as to the conversation with Mr Ward was to this effect. He
said that, as he had already been told by John Clegg & Co, Mr Ward did
appear interested. He was anxious, because he believed that offers had already
been made, to be given an opportunity himself. Mr Carlisle said that he told Mr
Ward that his clients were executors and that for that reason Mr Carlisle put
to Mr Ward the method which had been put to him by Mr Cripps and Mr Pitt. Mr
Carlisle said that he could not recall the precise terms in which this was
expressed, but he said words to the effect, ‘Would you agree this is sensible’
or, ‘This is the way I am going to deal with it.’ However, Mr Carlisle said that if Mr Ward had
disagreed with the method he (Mr Carlisle) would have said that this or that
was going to be the way it was done. He emphasised that his clients were
executors and therefore under a duty to obtain the best price. That was why he
(Mr Carlisle) was prepared to allow Mr Ward to come in. The corollary was that
Mr Carlisle would have to go to the others to be fair and to give them another
opportunity. Mr Carlisle did not say that the offers had to be submitted in
writing. He did not say that the offers would be kept confidential. Mr Carlisle
said that as he saw it he was dictating the terms as to how the offer should be
submitted, and that he could not see why he should in any way have wished to
hinder his clients in restricting their movements in accepting offers from
whomsoever they wished. From Mr Carlisle’s recollection Mr Ward agreed that
that was a reasonable basis. Indeed Mr Carlisle thought that Mr Ward thanked
him for the opportunity. He agreed that they discussed various other aspects of
the wood, felling licences and so on, but that any indications which Mr
Carlisle gave would have been of a general nature and that he would have
expected Mr Ward to make his own inquiries. Mr Carlisle did not recall Mr Ward
making an offer. He did not recall if he disclosed the amount of existing
offers. He thinks it is possible he told Mr Ward that there had been offers in
the mid-£40,000s, and he recognised that he must have told him that they were
about £45,000, but he said that he did not regard that as improper. Mr Ward’s
evidence was then put to Mr Carlisle and he said that he did not recall Mr Ward
saying that the system would be all right provided that the offers were
confidential. He said that he did not give an assurance to Mr Ward that his
offer would be treated confidentially. Then he said he did not recall anything
about that subject at all. He was then asked another question which he said had
been put the wrong way round, and then he said that if anything had been said
about confidentiality he would have recalled it.
In
cross-examination Mr Carlisle agreed that it was obvious Mr Ward was a man with
a commercial interest and that he tried to give him helpful information about
the commercial potentialities of the wood. He said that he would have been
acting against his client’s interests if he had not given him all the
information he could. He repeated that he did not say anything about the offers
being in writing. He repeated that he did not recall any proviso about the
offers being treated confidentially. He agreed that Mr Ward was prepared to
accept the method proposed but that he did not recall any question of his
insisting on confidentiality.
The next day,
May 1, Mr Ward telephoned Mr Carlisle. The latter could not recall this
conversation, but Mr Ward said in evidence that he was then told by Mr Carlisle
that he had written to confirm that he and two others would be asked to tender
and that the highest tender would be accepted. Mr Carlisle told him that the
two others were a client of Jackson-Stops & Staff and one fairly local, who
Mr Ward thought (wrongly) was the other client of John Clegg & Co. In fact
it was Mr Ryland.
On the same
day Mr Carlisle wrote four letters. The order in which he wrote them is
uncertain and not of importance. I will refer to them in the order which I find
convenient. First he wrote to Mr Lockhart of Jackson-Stops & Staff stating
that he had received instructions from the executors to ask the three interested
parties to submit their offer within seven days, and inviting him to submit his
highest offer, subject to contract only, as soon as possible. Secondly, he
wrote to Mr Ryland in somewhat apologetic terms, stating that on the advice of
the executors’ solicitors he had to write to ask Mr Ryland to let him know
within the next seven days whether or not he would be
contract was his final offer for the wood. Mr Carlisle added a postscript in
manuscript to the effect that he knew Mr Ryland was away in Scotland, so he
should not take the seven days too seriously but should let Mr Carlisle know as
soon as he could. Thirdly, he wrote to Mr Ward in the following terms:
Further to
our telephone conversation I can confirm that I have now received instructions
from the executors to ask you to submit your highest offer for this woodland
within the next seven days. I can also confirm that there are two other
interested parties who I have advised to submit their offers, and I have
instructions from the executors to accept the highest offer, which will be
subject to contract only. I look forward to hearing from you.
Fourthly, Mr
Carlisle wrote to Mr Cripps. The first paragraph of that letter was in the following
terms:
Further to
your letter re the above I have now had a third party interested at the same
sort of figures.
In the second
paragraph Mr Carlisle told Mr Cripps that he had decided that to be fair to all
parties he should give them all one last chance to put in their highest offer
for the wood. The third paragraph was in the following terms:
Despite your
instructions therefore I have written to the interested parties asking them for
their final offers, and without doubt the highest offer will be taken and I
will notify you accordingly.
As to these
letters the following observations can be made at this stage. First, Mr
Carlisle had not in fact received any further instruction or communication from
the executors between receipt of Mr Cripps’ letter of April 25 and the time
when the letters were written. As Mr Carlisle acknowledged in his letter to Mr
Cripps, he had decided off his own bat, very properly as I would think, to keep
the position open with a view to obtaining higher offers. Secondly, although
those were not in fact his instructions, Mr Carlisle’s letter to Mr Ward can
only be read as meaning that he had in fact got instructions from the executors
to accept the highest offer subject to contract. Thirdly, that was not said
either to Mr Lockhart or to Mr Ryland. Fourthly, the use of the word ‘now’ in
the letter to Mr Ward would naturally lead him to believe that Mr Carlisle had
gone back to the executors since the time of the telephone conversation that
morning or at least since their meeting the previous day. Fifthly, none of the
letters to the three interested parties, and in particular that to Mr Ward,
said anything about offers having to be submitted in writing or their being
confidential.
On May 3 Mr
Cripps, who was then in Birmingham, wrote to Mr Carlisle in reply to his letter
of May 1 in the following terms:
You are
absolutely right to proceed as you are doing in view of the interest of a third
party. The executors are really leaving it to you to sell in the manner and at
the time and price which in your judgment is most suitable.
On one view
the second sentence of that letter suggests that the executors had indeed
varied their instructions to Mr Carlisle and authorised him to accept the
highest offer on their behalf, subject to contract, and for that purpose, for
example, to commit them to an obligation of confidentiality without referring
back to them. However, on a fair reading of that letter in the light of what
had gone before I am satisfied that that was not the case. I do not think ‘really’
meant ‘in reality’, and I certainly do not think that that letter can be
regarded as having so radically transformed Mr Carlisle’s instructions. In my
view he never had actual authority at any material time to accept the highest
offer on the executors’ behalf, or to commit them to an obligation of
confidentiality.
The seven-day
period was not treated either by Mr Carlisle or by his firm as limiting the
last date for offers to be put in. Mr Carlisle was out of his office on holiday
during the whole of the week beginning Monday, May 7, and Mr Ward was
ultimately told by Mr Carlisle’s secretary that he could put in his offer at
any time before 5 pm on Friday, May 11. In practice the view was clearly taken
that the offers should be ready for Mr Carlisle’s consideration when he
returned to the office first thing Monday, May 14. In the meantime Mr Ward and
his son spent a great deal of time and incurred a certain amount of expense,
estimated at round £300, in investigating the prospects and valuing the wood on
a commercial basis. Mr Ward handed in his offer to Mr Carlisle’s secretary at
Marlow at 4.30 pm on Friday, May 11.
When Mr
Carlisle got back into his office on Monday, May 14, at about 9 am he found two
letters which had been opened by his secretary the preceding week and two
sealed envelopes. The first of the letters which had been opened was one dated
May 8 from John Clegg & Co, which had been dictated by Mr Clegg but signed
by Mr Gee in his absence. That letter contained an offer on behalf of a company
called Evershed Estates Ltd in the sum of £47,500. Mr Carlisle still thought at
that stage that that was an offer put forward on behalf of Mr Ward or one of
his companies. In fact Evershed Estates Ltd is an in-house company of John
Clegg & Co which they sometimes use for making bids on behalf of
undisclosed principals. Their principal on this occasion was not Mr Ward but
someone else whose identity is still unknown.
The second of
the letters which had been opened was one from Mr Lockhart of Jackson-Stops
& Staff, enclosing a revised offer in a sealed envelope, which Mr Lockhart
said he would expect Mr Carlisle to open at the same time as the other offers.
The first of the unopened letters put forward that bid which was in the sum of
£51,150, subject to contract. The second of the unopened letters was one dated
May 11 marked ‘private and confidential’, and signed by Mr Ward on behalf of
the plaintiff company. That letter made an offer in the sum of £55,550, subject
to contract. I certainly infer that the envelopes in which the last two letters
were contained were both marked ‘private and confidential’, or words to that
effect.
The first
thing that Mr Carlisle noticed about all this was that he had received no
further offer from Mr Ryland. He took the view that the latest round of offers
was incomplete without that. His evidence was that there was an outstanding
message in the office telephone book for him to ring Mr Ryland urgently,
although Mr Ryland does not recollect anything about that. In any event, Mr Carlisle
then spoke to Mr Ryland on the telephone. Mr Ryland requested guidance as to
the size of the increase necessary, and Mr Carlisle told him that he would have
to offer in excess, or well in excess, of £55,000. In cross-examination Mr
Carlisle agreed, and I would certainly hold, that this was tantamount to the
disclosure to Mr Ryland of the amount of Mr Ward’s offer. Mr Ryland asked for
time in order to consult his accountant and his bank. Mr Carlisle agreed and
asked him to contact him again by midday. I think that probably the next thing
that happened was that Mr Ward telephoned Mr Carlisle to inquire the state of
play. There is a dispute as to what precisely was said in that conversation. Mr
Ward said that Mr Carlisle said that he would be opening ‘the tenders’ at noon.
ie 12 o’clock precisely. Mr Carlisle said that he would never on that or any
other occasion have used the word ‘tenders’. He said that he told Mr Ward that
he would not be in a position to give him an answer until midday, that being the
time by which Mr Ryland was to come back to him. Also before midday Mr
Carlisle, who had now realised that John Clegg & Co’s client could not have
been Mr Ward or any company of his, was telephoned by Mr Gee of that firm, and
also Jackson-Stops & Staff. Mr Carlisle told them that their offers of
£47,500 and £51,150 respectively were no good. Mr Gee also spoke that morning
to someone in Jackson-Stops & Staff. Mr Gee cannot now remember in which of
those two telephone calls he was told it, but in one or other he heard that a
much higher offer had been received, which he was led to believe was about
£55,000. I think it more likely that Mr Gee got this from Jackson-Stops &
Staff, who had heard it direct from Mr Carlisle.
Around midday
Mr Ryland rang Mr Carlisle back and made an offer of £56,000. Shortly
afterwards Mr Ward telephoned Mr Carlisle again. Mr Carlisle told him that he
had received a higher offer. Mr Ward said that he was very surprised and Mr
Carlisle said that he was surprised also. Mr Carlisle confirmed in evidence
that he was surprised, since he had been proved badly wrong in his original
estimate and also did not think that Mr Ryland would go from £45,000 to
£56,000. Mr Carlisle recalls that Mr Ward was pleasant and polite and thanked
him for the opportunity which he had been given.
That might,
for all I know, have been an end of the matter. But in the early afternoon of
the same day Mr Gee telephoned Mr Ward. At that stage Mr Gee was also under the
mistaken belief that the client of his firm on whose behalf the offer of
£47,500 had been made was Mr Ward or a company of his. I should make it clear
that although it was Mr Gee who had signed the offer of May 8 and telephoned Mr
Carlisle on the morning of May 14, the matter had effectively been handled
throughout by Mr Clegg himself. In any event, Mr Gee telephoned Mr Ward to tell
him that what he thought had been Mr Ward’s offer of £47,500 was no good. In
the course of the
was not Mr Ward. In the course of the conversation Mr Gee, not unnaturally,
passed on to Mr Ward the information which he (Mr Gee) had received about the
bid of £55,000. That aroused Mr Ward’s suspicions. After he had put the
telephone down he thought about it all for an hour or so and then telephoned
his solicitor, who could not help because he also acted for Mr Carlisle’s firm.
However, he arranged for Mr Carlisle to telephone Mr Ward at home that evening,
which he duly did. I can take that telephone conversation from Mr Carlisle’s
evidence in chief. He said that Mr Ward’s attitude had changed totally since
the morning. He was obviously extremely cross, the gist of his accusations
being that Mr Carlisle had double-crossed him and had disclosed the amount of
his offer to some other party. Mr Carlisle did not deny that. He agreed to
speak to Mr Ward again the following morning. By that time he had spoken to his
partner and he said that their view was that the sale had not been a sale by
tender and that there had therefore been nothing wrong in the disclosure. Mr
Ward then levelled his bid at £56,000, although there is another dispute as to
how that came about. He says that Mr Carlisle asked him if he wished to improve
on his offer, but Mr Carlisle says that it was not at his invitation. He says
that Mr Ward insisted that the executors should be contacted and that both
offers should be put before them. Mr Ward said that he offered to go up to
£56,000 so that the estate should not be any the worse off. He was not prepared
to go higher because he did not want to get into a Dutch auction. He threatened
proceedings if his bid was not accepted.
Mr Ward was
telephoned twice by Mr Carlisle on the following day, Wednesday, May 16. In the
second call Mr Carlisle informed Mr Ward that he had instructions from the
executors’ solicitors to accept Mr Ryland’s bid of £56,000 and not Mr Ward’s.
In his evidence Mr Cripps gave two reasons for this choice. First, he said that
his personal preference was always for a local resident who would be likely to
be interested in the wood as an amenity. If necessary, he would have been
prepared to top up any small shortfall in price, say £600, out of his own
resources. Secondly, he would not on principle have wished to enter into a contract
with someone who had already threatened proceedings.
On the same
day (May 16) the plaintiff company’s present solicitors wrote a letter before
action. It was prepared on Mr Ward’s instructions and read to him over the
telephone before it was despatched. Mr Ward received a copy of it the next day
and did not make any correction to it. The letter was addressed to Mr
Carlisle’s firm and it contained the following passage:
You as agents
for the executors of the estate of the late Baron Parmoor of Frieth presently
have the authority to sell that wood. During April of this year you informed
Trees Ltd of certain terms on which offers for the said wood would be accepted
and among those terms was a provision that the highest of three offers,
including one from Trees Ltd, received by a certain time would be accepted and
made the subject of a contract for the sale of the wood. Trees Ltd submitted an
offer in accordance with those terms, as did two other parties, but contrary to
the terms suggested the property was then offered to a fourth party and the
extent of our client’s offer disclosed to that fourth party.
The writ in
these proceedings was issued on November 19 1979. No interlocutory proceedings
were taken by the plaintiff company. The executors unsuccessfully brought an
application before Slade J and the Court of Appeal to strike out the statement
of claim on the ground that it disclosed no reasonable cause of action. The
last fact which I should mention at this stage is that during 1979 Mr Ryland
did indeed purchase Mousells Wood for the sum of £56,000. He is still the
owner.
As I indicated
at the outset the crucial question of fact is whether at the meeting between Mr
Ward and Mr Carlisle on April 30 the executors were committed by Mr Carlisle to
an express contractual obligation to keep all offers, or at least Mr Ward’s
offer, confidential from other possible purchasers. Although Mr Clark, who
appears for the plaintiff company, did not make any concessions to this effect,
I should state at this stage that it is clear to me that there is no other
basis on which it could succeed in this action. It has not been suggested that
there was any implied obligation. Further, if there was no obligation express
or implied as to confidentiality I do not see how an agreement by the executors
to accept the highest offer, subject to contract, could possibly be
enforceable. That would amount merely to an agreement to negotiate over the
terms of a contract with him who made the highest offer. An agreement of that
nature cannot be enforceable in law.
In order to
determine the crucial question of fact I must return to the evidence of Mr Ward
and Mr Carlisle. The great bulk of Mr Ward’s evidence in chief was taken from a
written record of the material events which had been made by him on or after
May 16 1979, after he had been advised to make it by his new solicitor. Mr
Millett, who appears for the executors, made no objection to Mr Ward’s
referring to this record for the purpose of refreshing his memory, although I
agree with him that it became clear as the case went on that it was in
substance the first proof, or the first and second proofs, of Mr Ward’s
evidence in this case. Most of Mr Ward’s evidence on important matters was
taken straight from it. The record consists of entries in Mr Ward’s office
diary over the period from April 30 to May 16 1979, the material events of each
day having been recorded in the space allocated to that date. Mr Ward
maintained that the various entries were made in the course of what was one
more-or-less continuous record, started shortly after speaking on the telephone
to his new solicitor on May 16. Without going into detail I think it clear that
the record contains internal evidence to show that it was composed on at least
two, or perhaps three, different occasions. Mr Ward’s answers to Mr Millett’s
questions on this point were less than helpful. I was left with the impression
that Mr Ward was on the defensive as to the accuracy of the record. However
that may be, the record was made at a time when it was probable that
proceedings would ensue and at a time when Mr Ward was undoubtedly indignant at
the way he had been treated. I will certainly accept that it was completed
within a reasonably short period after May 16 but its accuracy must still be
accepted with some caution.
As for Mr
Carlisle, and subject to one important reservation, I think that he tried to
give his evidence to the best of his recollection. He was notably less confident
in his recollection of material events than Mr Ward, and he certainly had
opportunities of improving his recollection which he did not take. The
important reservation I have is in regard to Mr Carlisle’s evidence about his
letter to Mr Ward of May 1. It seems to me that on any fair reading that letter
was misleading in two respects. First, it suggested, wrongly, that Mr Carlisle
had gone back to the executors to take further instructions. Secondly, it
stated, also wrongly, that Mr Carlisle had received instructions from the
executors to accept the highest offer.
In his
evidence in chief Mr Carlisle could not explain why he used the word ‘now’. As
to the statement that he had instructions to accept the highest offer, he said
that that was badly written, but that what he meant was that the executors
genuinely intended to sell and were not floating the property on the market
merely to test its value, and that they would in all probability accept the
highest offer. While I fully sympathise with Mr Carlisle’s plea that when he
writes that sort of letter he does not expect it to come up for scrutiny in
court, I do not think that the meaning which he would now seek to get out of it
is the meaning which he intended it to have at the time. Mr Carlisle’s job was to
get the best price which he could, and so far he had been successful to that
end. I think that it had been left at the meeting on April 30 that Mr Carlisle
would obtain the executors’ instructions to accept the highest offer, and that
the letter of May 1 was intended to confirm that those instructions had been
obtained. In my view that was what Mr Carlisle then intended Mr Ward to think.
He knew that he had not in fact got the instructions, but he was confident that
he would be able to get them, as is shown by the terms of the last paragraph of
his letter to Mr Cripps of the same date. He put it to Mr Ward in the terms he
did because he thought it would help things along and encourage Mr Ward to make
a good offer.
Mr Ward is
convinced that it was agreed on April 30 that the offers would have to be in
writing. I am satisfied on the evidence that that was not the case. It is true
that the three offers, other than that of Mr Ryland, were subsequently
submitted in writing, but there was no requirement to that effect. Mr Ryland’s
two previous bids had been made over the telephone, and so had Mr Lockhart’s
bid of £44,000. None of the letters to the interested parties of May 1 referred
to writing. In particular, the letter to Mr Ryland did not suggest that he was to
adopt any procedure other than that which he had adopted to date. A formal
requirement that offers should be in writing might have hindered Mr Carlisle in
his efforts to get the best price, and I do not think that it would have
occurred to him or that he would have agreed to it. It is also to be noted that
Mr Ward’s record says nothing about writing. I think the true position was that
Mr Ward assumed that the offers would have to be in writing and that this
assumption has become the basis of his recollection. I am prepared to accept
that
point wrong and I agree with Mr Millett that this is a significant point in
relation to the reliability of his recollection of other matters as well.
In his
evidence Mr Ward gave two reasons why he wanted his offer to be kept
confidential from other possible purchasers. First, he said that without it he
would not have embarked on the expense and effort of making his detailed
valuation of the wood. Secondly, he said that without it Mr Carlisle would have
been able, as he in fact did, to go back to others and use his offer as a means
of getting a better price from them. I think that Mr Ward, who evidently
regarded the whole matter as a formal one akin to a sale by tender, certainly
assumed that confidentiality was a part, and a necessary part, of the
arrangement. I think that he was encouraged in that by the terms of Mr
Carlisle’s letter to him of May 1. He no doubt assumed that an agreement to
accept the highest offer would not be of much value without confidentiality.
That assumption was later evidenced by the marking of his letter of May 11
‘private and confidential’. But none of this means that Mr Ward in fact sought
and obtained an express assurance from Mr Carlisle on April 30 that his offer
would be treated confidentially. Indeed, all the evidence other than Mr Ward’s
record and his evidence in this court, points to the contrary.
Mr Carlisle’s
evidence, as I have so far referred to it, really comes to this. He does not
recall anything about the subject at all, but he is sure that he would not have
given an assurance of confidentiality if he had been asked to do so. The
question was put to him again in cross-examination, and he answered it to this effect.
He said that if Mr Ward had insisted on confidentiality he would certainly have
recalled it because the immediate corollary of that is that you are making the
whole thing a lot more formal. You are in effect binding not only yourself but
your clients, which would have been contrary to Mr Carlisle’s instructions at
the time. Then he said that perhaps his immediate reaction would have been that
he would have seen it as restricting his ability to negotiate. He wanted
flexibility to negotiate. He was then asked why that was necessary, and he said
that he might have received instructions from his clients to negotiate. He
added that in his experience one is always anxious to protect flexibility and
manoeuvrability, because circumstances might arise when that option would be
useful. He added that one does not know how things are going to work out,
particularly when you are dealing with people you do not know. When the
arrangement is subject to contract someone might always drop out.
There seems to
me to be a lot to be said for that, particularly when one remembers that
informality which had been adopted to date, and the fact that Mr Carlisle had
already made use of existing offers on more than one occasion. One thing which
is clear to me is that over the material period Mr Carlisle took every step
which was reasonably open to him to obtain the best possible price for his
clients. I am satisfied that if it had been proposed to him that they should
become subject to a contractual obligation as to confidentiality he would
immediately have seen a warning light and have refused to agree to it.
Next, it is to
be noted that none of the letters to the interested parties of May 1 expressly
referred to confidentiality. It is true that Mr Lockhart of Jackson-Stops &
Staff sent in his client’s revised offer in a sealed envelope, and he expected
that Mr Carlisle would open it at the same time as the others. But that does
not mean that Mr Lockhart understood that that was legally to be an end of the
matter and that each bid was as a matter of law to be kept confidential from
other offerors.
Then it seems
to me that I must pay close regard to the manner in which Mr Ward first
complained of Mr Carlisle’s actions. Neither his nor Mr Carlisle’s account of
their telephone conversation on the evening of May 14 suggests that Mr Ward
accused Mr Carlisle of having gone back on an express assurance. The complaint
was that the offer had been disclosed. To the same effect, and more
significantly, is the letter before action of May 16. The complaint there was
that contrary to the terms of the agreement the property was offered to a
fourth party and that the extent of Mr Ward’s offer was disclosed to that
fourth party. That complaint appears to rest, like Mr Ward’s assumption, on an
implied obligation not to disclose. I would have thought that one thing that
that letter would have made clear, had it been the case, was that Mr Ward was
relying on an express obligation not to disclose. Mr Ward has taken throughout
a very grave view of Mr Carlisle’s conduct, and I would have expected him to
say from the start, had it been the case, that Mr Carlisle had gone back on his
word and disregarded the express assurance he had freely given him.
While I have
had to criticise Mr Carlisle’s letter to Mr Ward of May 1 his conduct in
cynically disregarding an express assurance given on April 30 by using Mr
Ward’s offer to get a better one from Mr Ryland would have been far more
serious. I do not believe that Mr Carlisle would have done it, even if he had
given such an assurance in the first place.
In the end I
am satisfied that there never was an express contractual obligation as to
confidentiality and I so find. I think it possible — I put it no higher than
that — that Mr Ward did mention that point at the meeting on April 30, perhaps
as an expression of his assumption, but I am satisfied that it never got across
to Mr Carlisle and that he certainly gave no assurance on it. I will only add
that I have considerable sympathy with Mr Ward’s assumption, which is one of
standing in the moral sphere. But I regret that in this area the law is a long
way behind considerations of that sort, and that it does not imply what Mr Ward
assumed.
The result is
that this action fails on the facts. That makes it unnecessary, and I think
undesirable, for me to consider the various questions on liability and damages,
several of which were interesting, and all of which were very well argued on
both sides. The action must be dismissed.
The action
was dismissed with costs.
