Baltimore Wharf SLP v Ballymore Properties Limited & Anor

Where negotiations begin subject to contract, that condition ordinarily continues throughout the negotiations. It is removed only by express agreement or by an implication that is necessary on the objective facts. The court will not lightly infer such removal.

An unqualified acceptance of terms negotiated subject to contract is not, by itself, sufficient to create a binding settlement. Subsequent conduct may be relevant in limited circumstances, but where the issue is whether the parties had reached a binding agreement by the relevant date, later conduct is generally not a legitimate aid to construction. Even if considered, ambiguous conduct will not establish the necessary implied removal.

The claimant brought proceedings concerning the collapse of a nursery roof. The defendant and Part 20 defendant applied for summary judgment or strike-out on the basis that the dispute had been settled by an agreement reached on 24 September 2024. The claimant had agreed by email to terms contained in a draft settlement agreement, but the draft remained marked subject to contract and the claimant had not signed the later execution version.

The court had to decide whether the parties had formed a legally binding settlement or whether the subject-to-contract condition remained effective. The applications also included an application to amend the defence.

1. Applications dismissed. The court was not satisfied that there was no reasonably arguable defence to the contention that a binding settlement had been concluded. Permission to amend the Defence was refused because the proposed argument had no real prospect of success.
2. Summary judgment was concerned with whether there was a reasonably arguable defence, not with finally determining the settlement issue on the balance of probabilities. The relevant question was whether the subject-to-contract reservation had been removed.
3. Following Joanne Properties Ltd v Moneything Capital Ltd [2020] EWCA Civ 1541, once negotiations are conducted subject to contract, the condition ordinarily continues throughout. It can be removed only by express agreement or by an implication that is necessary on the facts. The court will not lightly infer that result, consistently with RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Co KG [2010] UKSC 40.
4. The claimant’s email stating that the settlement agreement was agreed confirmed agreement to the terms, but did not demonstrate any necessary implication that the subject-to-contract reservation had been abandoned. The continued marking of the travelling draft was significant. A reply accepting terms negotiated subject to contract could not, without more, create a binding agreement.
5. The court followed the analysis in Newbury v Sun Microsystems [2013] EWHC 2180 (QB), as approved in Bieber & Others v Tethers Ltd (in liquidation) [2014] EWHC 4205 (Ch), that subsequent conduct is generally inadmissible when determining whether documents had created a binding agreement by an earlier date. The court nevertheless considered the later conduct in case that analysis was wrong. It was ambiguous and did not establish removal of the reservation.

First-instance decision. No appellate history was stated in the judgment.