CHRISTOPHER ALISTAIR GRIBBON v CHRISTOPHER ANTHONY LUTTON LUTTONS DUNFORD (A FIRM) [2001] EWCA Civ 1956

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (JACOB J)
[2001] EWCA Civ 1956Case No Case No: A3/2000/3566/CHANFVenue Royal Courts of Justice, Strand,, London, WC2A 2LL, Wednesday 19 December 2001
Between
CHRISTOPHER ALISTAIR GRIBBONAppellantCHRISTOPHER ANTHONY LUTTON LUTTONS DUNFORD (A FIRM)Respondents
Before
Lord Justice PillLord Justice Robert WalkerMr Justice LaddieMr N Dowding QC (instructed by Bevan Ashford, Bristol BS1 4TT for the appellant)Mr D Drake (instructed by Beachcroft Wansbroughs, Bristol BS99 7UD for the respondents)Date 19 December 2001
[1]Mr Justice Laddie: This is an appeal from a judgment of Jacob J dated 15 November 2000 whereby he dismissed Mr Christopher Gribbon's action for professional negligence against Mr Christopher Lutton and Luttons Dunford (the defendants), his former solicitors. The background to this dispute[2]The essential facts are as follows. Mr Gribbon was negotiating to sell some land to a Mr Wynn. As a result of difficulties encountered during the negotiation, by December 1993 Mr Gribbon was seeking from Mr Wynn a non-refundable deposit of £21,600. It was to be held by Mr Lutton as stakeholder on the basis that(i) if a binding contract was entered into, it would be treated as the deposit,(ii) if no contract was entered into for any reason other than the default of Mr Gribbon it was to be paid to him, and(iii) if no contract was entered into owing to the default of Mr Gribbon it was to be repaid to Mr Wynn.[3]A meeting was held on 9 December 1993 which was attended by, amongst others, Mr Gribbon and Mr Wynn and their respective solicitors, Mr Lutton and Mr Robins. Mr Wynn was reluctant to pay a non-refundable deposit. Mr Gribbon threatened to walk away from the negotiations. Eventually Mr Wynn wrote out a cheque and handed it to Mr Lutton. He paid it on the basis that it would be non-refundable if he failed to enter into a conditional contract by 15 December. In the event no contract was signed. Both Mr Gribbon and Mr Wynn claimed the deposit. Then Mr Lutton's firm, Luttons Dunford, issued interpleader proceedings. At an early stage in those proceedings, Mr Lutton appreciated that there might be a conflict of interests between him and his client and, as a result, he ceased acting for Mr Gribbon who was thereafter represented by different solicitors.[4]The interpleader proceedings came on for trial in March 1996 before Mr Recorder Greenwood. Mr Gribbon's case, supported by evidence from Mr Lutton, was that(i) Mr Wynn had agreed that the deposit would be non-refundable in the event that a conditional contract was not entered into by 15 December 1993 for any reason other than Mr Gribbon's default, and(ii) in return, Mr Gribbon had agreed that he would not deal elsewhere until that date (that is to say there was a 'lock-out' agreement). Both of these were disputed by Mr Wynn.[5]Apparently it was common ground before the Recorder that if it had been agreed that the deposit was non-refundable, Mr Gribbon would nonetheless only be entitled to the deposit if he could show that he had provided consideration in the form of the lock-out agreement. The Recorder found that(i) the deposit was paid by Mr Wynn on the basis that it would be non-refundable if he failed to sign a conditional contract, but(ii) there was no lock-out agreement. In the absence of the only consideration asserted, the Recorder found that the agreement that the deposit was not refundable was unenforceable. The result was that the deposit was repayable to Mr Wynn. Mr Gribbon's lawyers advised him not to appeal. Luttons Dunford complied with Mr Recorder Greenwood's decision and paid the deposit back to Mr Wynn. The current proceedings[6]In November 1996, Mr Gribbon commenced the present proceedings for negligence against the defendants on the ground that either Mr Lutton should have ensured that the agreement that the deposit was non-refundable was legally enforceable or he should have advised that it was not.[7]The trial took place before Jacob J on 15 November 2000. The defendants took only one point, namely that, contrary to the decision of Mr Recorder Greenwood, Mr Gribbon and not Mr Wynn was entitled to be paid the deposit. If this were right, then Mr Gribbon could not have been negligent. On the other hand if the deposit was not payable to Mr Gribbon, as the Recorder had held, the defendants were liable for negligence, the only remaining issue being quantum. In these circumstances, there was no challenge to any of the Recorder's findings of fact but the defendants contended that he was wrong in law. For that reason, no evidence was called and Jacob J did not make any new findings of fact.[8]Before the judge, Mr Gribbon advanced two arguments. First, he said that Mr Recorder Greenwood's decision was correct. The deposit was refundable to Mr Wynn. Second, he said that, even were that not the case, the defendants were precluded from asserting otherwise. They had participated in the proceedings before the Recorder and were estopped from asserting that the deposit was non-refundable.[9]Jacob J did not accept either of these arguments and found for Mr Lutton and his firm. As Mr Dowding, who appeared before us on behalf of the appellant, put it in his skeleton argument, the result is that in two separate legal proceedings both involving Mr Gribbon and the defendants, two different Judges have come to opposite conclusions on the same facts. As between Mr Gribbon and Mr Wynn, Mr Gribbon is not entitled to the deposit, but as between him and the defendants, he is.[10]On this appeal, Mr Dowding has argued that the judge was wrong on both the issues before him. It is convenient to consider first the issue of whether the deposit was non-refundable. Was Mr Gribbon entitled to the deposit held by Luttons Dunford?[11]The starting point in answering this question is a determination of the nature of the relationship between the stakeholder and the parties who have an interest in the deposit. Since this case relates to the proposed purchase of land, it is convenient to refer to the parties as the vendor, the purchaser and the stakeholder. It is important to bear in mind that in a normal case there exist two distinct contracts. The first is the contract between the vendor and purchaser which determines when and to whom the deposit will be paid. The second is the contract between the vendor and purchaser on the one hand and the stakeholder on the other. Since in the type of situation being considered here there are three parties, this latter contract has been referred to in the authorities as tripartite. The scope and purpose of the tripartite contract is very limited. It provides that the stakeholder shall keep the deposit pending a triggering event and then shall pay in response to that event. It is no part of the function of the tripartite agreement to create the triggering event. The matter can be put another way; the vendor/purchaser contract determines who is entitled to the deposit after the triggering event, the tripartite agreement provides that the stakeholder must deal with the deposit in accordance with the entitlement to it defined by the vendor/purchaser contract and, until the triggering event, he must retain it in accordance with the joint instructions of the vendor and purchaser. Therefore the tripartite contract does not create either the vendor's or purchaser's entitlement to the stake, but gives effect to the entitlement as between them which is determined by the vendor/purchaser contract. Although the two contracts may be entered into at the same time, that need not be so.[12]Since the tripartite contract does not define entitlement between vendor and purchaser but responds to an entitlement determined elsewhere, what happens in a case where the deposit is paid by the purchaser to the stakeholder in advance of there being any enforceable contract between him and the vendor? Prima facie, since it is the purchaser's money and the vendor has no legal entitlement to it, the purchaser can demand its return to him at any time in advance of an enforceable vendor/purchaser contract being put in place. Thus if there is an unenforceable promise by the purchaser to pay a sum of money to the vendor, the vendor acquires no legal entitlement to it and the fact that the sum may have been paid to a stakeholder does not create an entitlement to it. The stakeholder can and must respond to a demand for repayment by the purchaser. The tripartite agreement does not alter who is and who is not entitled to the deposit.[13]This analysis is supported by authority. The necessity for distinguishing between the vendor/purchaser contract on the one hand and the tripartite contract on the other is clear from the judgment of Millett LJ, as he then was, in Manzanilla Ltd v Corton Property And Investments Ltd [1996] EWCA Civ 942:
"26. Where a stakeholder is involved, there are normally two separate contracts to be considered. There is first the bilateral contract between the two principals which contemplates two possible alternative future events and by which the parties agree to pay a sum of money to a stakeholder to abide the happening of one or other of them. In the present case it consisted of a series of written contracts for the sale of land, and the relevant events were the failure of the contracts by the repudiatory breach of one party or the other. The second contract is the tripartite contract which results from the deposit of the money with the stakeholder on terms that he is to keep it until one or other of the relevant events happens and then pay it to one or other of the parties accordingly. The stakeholder is a party to the second contract but not the first. His rights and obligations are not normally expressly spelled out. They are implicit in the transaction itself, and must be discovered, not by implying terms, but by analysing the relationship of the parties which arises from the deposit of the money."
[14]The consequences which flow when a purchaser pays a deposit to a stakeholder in advance of a legally binding contract between the vendor and purchaser were considered by Pennycuick V-C in Potters v. Loppert [1973] Ch 399:
"It is necessary for the understanding of this matter to recognise at the outset the difference between a pre-contract deposit and a deposit paid upon or after the conclusion of a contract. I refer to the latter as a contract deposit. The practice of requiring a purchaser to pay a deposit on the conclusion of a contract is of long standing. Such a deposit serves the dual purpose of an earnest to bind the bargain and as part payment of the purchase price. The deposit is frequently paid to some person – usually the estate agent or a solicitor employed by the vendor as a stakeholder. Broadly, it is the duty of the stakeholder to deal with the deposit according to the event. In comparatively recent times – put as approximately the last 40 years – a practice has arisen of requiring the prospective purchaser to pay a deposit in advance of the conclusion of a contract. Unless and until the contract is concluded, the prospective purchaser is entitled to require the return of his deposit at any time. Upon conclusion of a contract the deposit stands in the same position as a contract deposit. Such a deposit is frequently paid to some person – again, usually the estate agent or solicitor employed by the vendor – expressed to be a stakeholder, though doubt has been cast upon the accuracy of that expression in relation to a pre-contract deposit. It is the duty of the stakeholder to deal with the deposit according to the event; that is, to return the deposit to the prospective purchaser upon request before the conclusion of a contract, and thereafter, on conclusion of the contract, to deal with it according to how the contract works out."
(p 405) And, to emphasise the point,

the judge repeated that view later in his judgment:

"I turn now to the law in relation to pre-contract deposits. … Unless and until a contract is concluded, the prospective purchaser can require the return of the deposit at any time, and upon conclusion of the contract the deposit assumes the position of an ordinary contract deposit."
(p 413)[15]In these passages "contract" and "pre-contract" clearly refer to the bipartite contract between the vendor and the purchaser.[16]Basing himself on these authorities, Mr Dowding argued that the Mr Wynn, the potential purchaser, was entitled to call for the return of his deposit because he had not entered into an enforceable contract with Mr Gribbon under which the deposit would become non-refundable. The reason for this was that the only consideration given by Mr Wynn was his promise to continue negotiating. As was common ground before us, that is not consideration recognised by the law. Alternatively, a contract to negotiate is void for uncertainty. This was the basis of the successful argument before Mr Registrar Greenwood.[17]It is convenient to start by considering the two bases upon which the judge held against Mr Gribbon. First, he drew a parallel with a gift made by Mr Wynn to Mr Gribbon. Thus he said:
"Now, if the deposit had been paid over directly to the vendor on the basis "
If we do not go through on this transaction by 15th December you can keep the deposit" it would be difficult to see why, the transaction not having gone through, he could not keep the deposit. In Chillingworth v Esche [1924] 1 Ch 97, where a deposit had been paid but there was no express provision that it could be kept if the transaction did not go through, the thinking of Sir Ernest Pollock MR at the time was (p 108):
"In all the circumstances of this case I think the deposit is recoverable by the purchasers. There was no provision made in the documents which could justify the vendor in declining to return it. Though if he had by appropriate words made provision for that in the documents such a provision could have been upheld"
There was some discussion as to whether that obiter observation was correct and, if so, why. One is thinking here about a situation where there is no binding contract, just a deposit paid over to the putative purchaser. It was suggested that the passage was wrong in law even though it is in a case which is really rather well known and has been around for 75 years. I think that the explanation for why the passage is obviously right is simple. If a man agrees to another man that he keeps some money, he will keep it. You can call it a gift, or whatever, but if you part with your money on the basis that somebody else can have it then they can. The case itself was concerned with a situation where there had been no such agreement and then the money, the deposit, went back to the purchaser. But if it is agreed that it is not going to him then there is no reason why it should. This case is complicated by the fact that the money was not paid over directly to the vendor but to the solicitor as stakeholder. However, I can see no reason why the result should not be the same. This purchaser had agreed that if he did not go through with the transaction then the deposit would be forfeit. As an earnest of his intention to go ahead he put the deposit with the stakeholder. But it was not a mere earnest as sometimes, indeed very frequently, deposits are. The purchaser had agreed what was to happen to the money if there was no contract of sale by 15th December; in that event, it was not to be held by the stakeholder for him but was to be held by the stakeholder solely for the other party, the vendor. It is argued that the vendor would have no machinery for a claim against the stakeholder. I do not see why. It seems to me almost elementary that where the stakeholder is holding, as an agreed stakeholder, money for two parties and one of them has agreed that the money should go to the other party the stakeholder must hand it over to the other party. That is to say, if there was no tripartite stakeholder. It seems to me that the solicitors would plainly be bound to hand the money over to the vendor once the claim of the other party had gone."[18]This proceeds on the basis that payment of a deposit to a stakeholder, in the absence of a binding agreement between the vendor and purchaser, can be equated with a payment of it directly to the vendor, the stakeholder holding it "solely for the other party, the vendor". It was not clear whether Mr Drake supported this approach. In any event, in my view it is not correct.[19]When a person gives money to another as a gift, the recipient thereby obtains title to it by delivery. If all he receives is a promise to pay without consideration, he cannot enforce the promise. The payment of a deposit to a stakeholder is not a gift by the purchaser to the vendor and the vendor does not acquire title. Furthermore, this conclusion cannot be avoided by treating the stakeholder as an agent for the vendor. As Millett LJ said in Manzanilla :
"The relationship between the stakeholder and the depositors is contractual, not fiduciary. The money is not trust money; the stakeholder is not a trustee or agent; he is a principal who owes contractual obligations to the depositors: Potters v Loppert [1973] Ch. 399, 406; Hastingwood Ltd. v Saunders Bearman [1991] Ch. 114, 123. The underlying relationship is that of debtor and creditor, and is closely analogous to the relationship between a banker and his customer."
[20]I should add two comments. First, Jacob J's approach is difficult to reconcile with Potters v Loppert , a decision which was cited with approval by the Court of Appeal in Manzanilla and the correctness of which was not challenged by Mr Drake. Second, it was not suggested by the judge or Mr Drake that the deposit could be considered to have been paid over as a gift to the stakeholder.[21]The second basis upon which

the Judge held that Mr Gribbon was entitled to the deposit was expressed as follows:

"I turn next to the question of whether or not in fact there was a contract of stakeholdership, a tripartite contract. This is important only if I am wrong about the irrelevance of such a contract. It was argued there was none. It was said that the position is very different from that which would have obtained if there had been a contract for the sale of the land. Until that moment, it was suggested, there really was no tripartite contract at all notwithstanding the fact that the two parties and the solicitor had all agreed everything at a meeting. The analysis was that the vendor was not contributing any consideration to the arrangement and-therefore was not party to it. The conventional view of the tripartite contract when there is an underlying contract for the sale of land is that the consideration which passes to the stakeholder is his entitlement to the interest on the money which he is holding as a stake. It is a bit of artificial reasoning to reach that result. I am not sure that you would not get the same result even if it had been agreed that the interest was to form part of a stake itself. But accepting, as I do for the moment, the conventional argument, I see no reason why it should not apply here. Even though the money was only coming from the purchaser, the vendor was still contributing significantly to the tripartite arrangement and providing consideration thereby. He was nominating the stakeholder in the first place; it was his solicitor. So his solicitor had an entitlement to the interest as a result of being nominated by the vendor. Furthermore, the solicitor's right to interest was precisely because it was an arrangement between the vendor and the purchaser that the solicitor was to hold the money. So the vendor has contributed to that arrangement. I have no difficulty in seeing that there was a tripartite contract here."
[22]Mr Drake relied on this approach. He argued that Mr Gribbon's entitlement to the deposit arose out of the tripartite agreement itself and was enforceable. Thus in his supplementary skeleton argument he said:
"… a trilateral contract was created between them, that Mr Gribbon could enforce in the event of Mr Wynn refusing to exchange. The consideration provided by Mr Gribbon can be said to derive from …"
[23]I do not accept this argument either. It is based on the assumption that the entitlement to the deposit is determined by the tripartite agreement itself. However, as explained above, this is fallacious. It is the vendor/purchaser contract which determines entitlement. In the circumstances, Mr Drake's arguments designed to show that there was sufficient consideration to support the enforceability of the tripartite agreement were beside the point. What counted was whether there was an enforceable bipartite agreement between Mr Wynn and Mr Gribbon. As Mr Registrar Greenwood held, there was not.[24]As a fall-back position, Mr Drake also argued that even in the absence of a contractual entitlement, Mr Gribbon was entitled to the deposit on restitutionary principles. He said that if a purchaser pays money to a stakeholder pursuant to an agreement that, in a particular event, it will be forfeit to the vendor, then, if the event does happen, the vendor can recover the money from the stakeholder as money had and received, perhaps on the basis that there has been an attornment of the money.[25]At first blush, this seems to be no better an argument. Mr Gribbon could only maintain a restitutionary claim to the deposit if he had some form of title to it in the first place. For reasons set out above, he never did, in the absence of an enforceable bipartite agreement between him and Mr Wynn.[26]However Mr Drake said that this was too narrow a view. He argued that there is no reason why a vendor and purchaser cannot, as a matter of bi-lateral analysis, have contingent rights of a restitutionary rather than contractual nature. It is in support of this proposition that he relied in particular on the passage in Chillingworth v Esche cited in the extract from Jacob J's judgment set out above. It does not appear that Jacob J based his conclusion on this restitutionary argument but rather on the gift analogy which I have considered already. In any event, for the reasons set out below, I do not agree that this is a sound foundation for what is, in substance, an attempt to avoid the well-known principle – many would call it a defect – in our law that a contract which is not supported by consideration is unenforceable, with the result that parties to it are not kept to their bargain, no matter how solemn their promises may be.[27]In Chillingworth v Esche purchasers agreed to purchase freehold land from the vendor "subject to a proper contract to be prepared by the vendor's solicitors". The purchasers also acknowledged that he had paid to the vendor £240 "as deposit and in part payment of the said purchase money". The money had been paid directly to the vendor. The purchasers eventually refused to execute the contract drawn up by the vendor's solicitors, even though it had been approved by their own solicitors, and asked for their deposit back. The vendor refused. Since the deposit was already in the hands of the vendor, the purchasers brought proceedings seeking an order that the deposit be returned. At first instance (see [1923] 1 Ch 576), Asbury J dealt with the case on the assumption that there was no binding contract between purchasers and vendor. He held that the purchasers were not entitled to recover. He noted that the deposit had been paid by the purchasers:
"voluntarily … with full knowledge of the contents of the document and expressly paid 'as deposit and in part payment of the said purchase money'."
(p 580)[28]He then looked to see whether the purchasers had any enforceable claim for recovery of the money already in the vendor's hands. He held there was none. Accordingly the vendor succeeded.[29]The Court of Appeal first resolved the issue of whether or not there was a binding contract. It held there was not. It then considered whether, in the absence of contract, the purchasers could recover the deposit. It should be noticed that the court was not considering the position of a stakeholder, but was concerned with a case in which the vendor already had the deposit in his hands. It would have been easy to conclude that the vendor had acquired title to the deposit by delivery. The court did not do so. On the contrary, it appears to have approached the issue of the vendor's entitlement to retain as one determined solely by contract. Thus Pollock MR said:
"… this Court having come to the conclusion that the nature of that agreement was inchoate, it follows that if at a time before execution of the further agreements were broken off, the deposit ought to be repaid to the purchasers."
(p 105) and "Mr Luxmoore says that the result of such a finding is that the money paid on deposit is recoverable, on the ground that there never was a contract, and I think that prima facie he is right, and that the deposit is recoverable and ought to be repaid to the plaintiffs." (p 106)[30]These passages are consistent with what Pennycuick V-C said in Potters v. Loppert :
"Unless and until the contract is concluded, the prospective purchaser is entitled to require the return of his deposit at any time."
[31]Therefore the question must be asked, whether the brief obiter dictum of Pollock MR in Chillingworth v Esche which was relied on by Mr Drake undermines this consistent approach. The full passage in the Master of the Rolls' judgment reads as follows:
"In Howe v. Smith where the nature of a deposit was considered and the right of a purchaser to the return of it, Bowen LJ said: "
The question as to the right of the purchaser to the return of the deposit money must, in each case, be a question of the conditions of the contract. In principle it ought to be so, because of course persons may make exactly what bargain they please as to what is to be done with the money deposited. We have to look to the documents to see what bargain was made". And Cotton and Fry LJJ say substantially the same thing. Therefore we have to consider what in fact was the effect of the document of July 10, 1922, not forgetting the contemporaneous documents, and to ask ourselves whether this deposit was by those documents intended to pass irrevocably to the vendor if the purchasers did not carry out the transaction. In all the circumstances of this case, I think the deposit is recoverable by the purchasers. There was no provision made in the documents which would justify the vendor in declining to return it; though if he had, by appropriate words, made provision for that in the document, such a provision could have been upheld." ([1924] 1 Ch 97, 107-108)[32]It seems to me that, read in the context of the whole paragraph, the last half sentence does not signal an important new development in the law, as it surely would do if Mr Drake's interpretation of it were right. On the contrary, it is consistent with the approach in Potters v Loppert . It is difficult to see how the judge could have intended to say that there could be a non-contractual entitlement to a deposit when, in the same paragraph, he had cited with approval the view of Bowen LJ in Howe v. Smith that a right to the return of the deposit "must, in each case, be a question of the conditions of the contract".[33]In my view the dictum has a simpler meaning which does not render the paragraph self contradictory. The word "document" in the last sentence, refers back to "the document of July 10, 1922". All the judge was saying was that, if that had been a binding contract, suitable wording could have been inserted into it to make the deposit non-refundable. Such a view would be uncontroversial. Indeed, a binding contractual obligation could easily have been achieved in the present case if a suitable form of wording, involving for example a lock-out provision, had been put in place. It follows that I do not accept this part of Mr Drake's argument either.[34]Finally on this issue, I do not accept the argument that attornment provides an alternative route. Mr Dowding drew our attention to the following passage in Bowstead & Reynolds on Agency (16 th ed 1996):
"A large group of mainly nineteenth century cases establishes that where an agent holds a fund for his principal and is directed by that principal to pay it to a third party, and notifies the third party that he is willing to do so, he becomes liable to the third party, and the principal's authority becomes irrevocable. It is now clear that the liability is in restitution, and it is submitted that the only way in which the cases can be justified in the light of modern notions is as a sort of attornment of money, whereby the agent holds a fund for the principal and then attorns to the third party, this being evidenced by his promising to pay the third party."
[35]It will be seen that this is dependent on the stake being held as an agent on behalf of the purchaser and there then coming into existence an agreement to change masters so that it is held by the stakeholder as agent for the vendor. However, as explained above, the stakeholder is not an agent for either party. He does not hold the money on trust. He holds it under contract or quasi-contract.[36]It follows that Mr Registrar Greenwood's decision was correct. Mr Lutton and his firm failed to secure for their client an enforceable bipartite agreement under which the deposit would be forfeit if Mr Wynn failed to purchase. That could have been achieved easily by incorporating an express lock-out clause into the arrangement, as Mr Lutton unsuccessfully asserted he had done. The claim in negligence against them succeeds accordingly. In the light of this finding, it is not strictly necessary to consider the question of issue estoppel. However, because it was argued fully on the appeal and it could have significant consequences in other cases, it is considered below. Was Mr Lutton estopped from asserting that Mr Gribbon was entitled to the deposit?[37]Mr Dowding argued that the result of the hearing before Jacob J would be incomprehensible to a layman. Two different judges had come to opposite conclusions on the same facts. He said that Mr Gribbon was estopped from advancing a case which was inconsistent with the final decision of Mr Recorder Greenwood and Jacob J should have so held.[38]Jacob J dismissed this argument in the following terms:
"I was interested in the [estoppel] argument at first. I think the answer lies in the nature of the position of the solicitors as stakeholders. They were not in breach of contract when they interpleaded rather than pay the money over to the vendor. Stakeholders faced with rival claims are entitled to interplead, it is in the nature of their office. It follows that the fundamental plank in the issue estoppel argument falls away."
[39]This appears to be based upon a view that solicitors are entitled to interplead and, for that reason, estoppel does not run against them. I did not understand Mr Drake to argue in support of any such principle.[40]Most of the argument before us concentrated on issue estoppel, the relevant principles of which are set out in the judgment of May LJ in Specialist Group International v. Deakin [2001] EWCA CIV 77 :
"If a claim has been explicitly determined in previous concluded proceedings between the same parties, that claim cannot be raised again, other than on appeal, unless there is fraud or collusion. If a necessary element of a claim has been explicitly determined in previous concluded proceedings between the same parties, that issue cannot be raised again, if, as is likely but not inevitable, it would be an abuse to raise that issue again. This may also extend to an implicitly necessary element of the previous determination necessary"
[41]Passages to similar effect are to be found in a number of judgments in the House of Lords and Court of Appeal. For example, in Arnold v. National Westminster Bank [1991] 2 AC 93, their Lordships cited with approval a passage from the judgment of Diplock LJ in Mills v. Cooper [1967] 2 QB 459 as follows:
"[The issue estoppel] doctrine, so far as it affects civil proceedings, may be stated thus: a party to civil proceedings is not entitled to make, as against the other party, an assertion, whether of fact or of the legal consequences of facts, the correctness of which is an essential element in his cause of action or defence, if the same assertion was an essential element in his previous cause of action or defence in previous civil proceedings between the same parties or their predecessors in title and was found by a court of competent jurisdiction in such previous civil proceedings to be incorrect, unless further material which is relevant to the correctness or incorrectness of the assertion and could not by reasonable diligence have been adduced by that party in the previous proceedings has since become available to him."
[42]This passage was also referred to with approval in Hunter v. Chief Constable of the West Midlands Police [1982] AC 529 in which Lord Diplock said:
"Nevertheless it is my own view, which I understand is shared by all your Lordships, that it would be best, in order to avoid confusion, if the use of the description "issue estoppel" in English law, at any rate (it does not appear to have been adopted in the United States), were restricted to that species of estoppel per rem judicatam that may arise in civil actions between the same parties or their privies, of which the characteristics are stated in a judgment of my own in Mills v. Cooper that was adopted and approved by this House in Reg. v. Humphrys [1977] AC 1, the case in which it was also held that "issue estoppel" had no place in English criminal law."
[43]Mr Dowding argued that issue estoppel applied here. He said that the issue of who was entitled to the deposit was litigated in the interpleader proceedings in which Mr Lutton and his firm were involved. They were parties to those proceedings. A final decision was reached which bound his firm and with which it had to and did adhere. It is not open either to the firm or Mr Lutton to re-open the issue here.[44]In considering this argument it is necessary to have in mind the characteristics of an interpleader action. First the party interpleading must claim no interest in the subject matter in dispute other than for charges or costs. Second he must not collude with any of the claimants to the subject matter. Third he must be willing to pay or transfer that subject matter into court or to dispose of it as the court directs. Normally the interpleader is obliged to serve evidence confirming compliance with each of these requirements. The interpleader here was brought under the then applicable County Court rules. They confirm the obligation of the interpleader to meet these requirements. The action then proceeds as a dispute between the opposing claimants to the subject matter. Although the interpleader's costs may be recovered from one or other of the claimants, his role is to abide by the decision of the court as to which of the claimants is entitled to the subject matter. Because his role is passive once the proceedings have been commenced, it is not open to him to appeal that decision.[45]An interpleader is a particularly appropriate procedure to use where there is a dispute as to the entitlement to a deposit held by a stakeholder. Which of the claimants gets the stake is dependent on a decision as to which has a legal claim to it. This in turn is dependent upon whether or not there is a bipartite agreement between them and, if so, its terms. As the extract from Manzanilla set out above makes clear, the stakeholder is not a party to this contract. He is only a party to the tripartite agreement under which he acts as stakeholder. As was further explained in Manzanilla : "(5). If the occurrence of the event is disputed, the stakeholder cannot safely pay either party, for if he mistakenly pays the party not entitled the payment will not discharge his liability to the other. In these circumstances he may(i) interplead and pay the money into Court;(ii) retain the money pending the resolution of the dispute; or(iii) take the risk of paying one party. The choice is entirely his. (6). If he takes the second course, he may notify the parties that he is content to abide the outcome of the dispute. There is then no need to join him in any proceedings which are taken to resolve it. If he is not joined, the Court cannot order the money to be paid to the successful party. All it can do is to declare that the successful party is entitled to give a good receipt for the money: see Smith v Hamilton [1951] Ch. 175. (7). If the stakeholder is not content to abide the outcome of the proceedings, he may be joined in order to bind him." (Judgment para 27)[46]How, then, do these considerations impact upon Mr Gribbon's assertion of an issue estoppel binding Mr Lutton and his firm? As I have said already, Mr Dowding relies upon the apparent absurdity of Mr Lutton being able to argue in these proceedings for a result which is the opposite of that in other proceedings in which he and his firm were "involved". However that alone cannot determine whether issue estoppel arises. Mr Dowding conceded, as he had to, that the possibility of two inconsistent decisions was inherent in the fact that there are two separate issues namely, entitlement to the deposit and liability in negligence. If the deposit had been paid not to Mr Lutton but to Mr Wynn's solicitor, Mr Robinson, or some other third party as stakeholder and Mr Registrar Greenwood had held that it should be paid over to Mr Wynn, Mr Gribbon would have been able to sue his solicitor for negligence and, in those proceedings, no question of an estoppel could have arisen because his solicitor would not have been a party to or "involved" in the first proceedings. Thus if Mr Lutton had not been the stakeholder he would have been free to argue that Mr Registrar Greenwood's decision was wrong.[47]Mr Lutton and his firm were "involved", as Mr Dowding put it, in the interpleader proceedings. However they were never in any real sense parties to them. They could not plead a case for or against the purchaser's or vendor's claims. They could not present arguments to the court. They could not challenge by cross-examination any of the evidence given. They could not appeal the decision. It can be argued that if the issue estoppel asserted here were effective, Mr Lutton and his firm would never have had the opportunity of defending themselves. They want to assert that they had delivered to Mr Gribbon what he wanted, namely an enforceable non-refundable deposit from Mr Wynn. It must be open to them to put forward that case at least in one set of proceedings. It was not open to them to do that in the interpleader proceedings which they had initiated.[48]These arguments are directed to watering down that part of the definition of issue estoppel which requires that there should have been "previous civil proceedings between the same parties". I do not think it is appropriate to do so. For better or for worse, as Lord Diplock said in Hunter , issue estoppel is a term of art. I have come to the conclusion that the better view is that Mr Lutton and his firm were never "parties" to the dispute which was litigated in the interpleader proceedings in any sense relevant to the creation of issue estoppel as defined above. It follows that no issue estoppel arises here.[49]However, that is not an end of the matter. Both Arnold and Hunter , and particularly the latter, are of significance in that they emphasise that issue estoppel, properly so called, is but one facet of a wider rule of public policy, namely that it can be an abuse of process to litigate matters which have been litigated or should have been litigated in earlier proceedings. Issue estoppel is but a species within the bigger genus called estoppel per res judicata. Hunter demonstrates that a litigant may be estopped from advancing a claim which has been the subject of previous court proceedings, even in a case where issue estoppel does not apply. As Lord Diplock said in that case: "... if what Hunter is seeking to do in initiating this civil action is an abuse of the process of the court, as I understand all your Lordships are satisfied that it is, the question whether it also qualifies to bear the label "issue estoppel" is a matter not of substance but of semantics." ( [1982] AC 529 , 540E)[50]The question to be asked here is not whether this is a case of issue estoppel but whether, in all the circumstances, it would be an abuse, in accordance with the wider concepts of res judicata, for Mr Lutton to ask the court to come to a different conclusion to that arrived at by Mr Registrar Greenwood and he should be estopped from doing so for that reason.[51]Although Mr Lutton was not a party to the bilateral contract between Mr Wynn and Mr Gribbon and was not a party, in a relevant sense, to the interpleader proceedings, that appears to me to concentrate too much on the form of the proceedings and not enough on the substance of what was going on before Mr Registrar Greenwood. As the stakeholder, Mr Lutton had the option to follow one of the alternative courses referred to in Manzanilla , each of which would eventually have resulted in the court determining who was entitled to, and to whom Mr Lutton had to pay, the deposit. Choosing the convenient option of the interpleader proceedings does not alter the substance of what Mr Lutton was seeking, namely a binding ruling from a competent court as to who was entitled to the deposit. Such a ruling would not only resolve the conflict between vendor and potential purchaser but it also ensured that Mr Lutton could safely pay the deposit to one without fear of being sued by the disappointed party for breach of his own obligations under the stakeholder agreement.[52]It seems to me that, having obtained a binding ruling and the benefits that flowed from it in relation to his obligations under the stakeholder agreement, it would be an abuse of process for him to seek to challenge that ruling for the purpose of defeating a claim made against him by the vendor which flowed, at least in part, from that ruling. The case is within that wider principle. Mr Lutton's attempt to challenge Mr Registrar Greenwood's decision in these proceedings amounts to an abuse of process.[53]Mr Drake said that if his client were estopped in circumstances like this, it would be a disincentive to other stakeholders to using the convenient interpleader procedure and that is an outcome which should be avoided. There are at least two answers to this. First, the problem will probably only arise where the stakeholder is the adviser to the loser in the interpleader proceedings and that loss is attributable to the adviser's negligence. This is likely to be a very small number of cases. Secondly, one should not lose sight of the fact that an interpleader is only a convenient procedure for resolving the substantive dispute between vendor and purchaser. If in any doubt, the stakeholder can take one of the other two routes suggested by Millett LJ in Manzanilla . Such a disincentive to using a non-mandatory procedure is a small and acceptable price to pay for avoiding the possibility of conflicting decisions on the same issue from two courts.[54]It follows that on this issue also, I would allow the appeal.

Lord Justice Robert Walker:

[55]I consider that in the interpleader proceedings Mr Recorder Greenwood reached the right conclusion on the issues as they were presented in the pleadings and as they were argued before him. I consider that if the case had been pleaded and argued differently before the Recorder he might (indeed, should) have reached a different conclusion and held that the deposit was payable to Mr Gribbon. But I would allow this appeal on the ground that, under the doctrine of issue estoppel, Mr Lutton (with whom I include the solicitors' firm of which he was a partner) ought not to have been permitted to challenge the Recorder's decision. So I reach the same outcome as Laddie J, but by a different route.[56]Jacob J said at the beginning of his judgment that the facts of the case were short and not in dispute. That is correct in the sense that at the trial before Jacob J neither side challenged the Recorder's findings of fact. Instead Mr Lutton sought to attack his conclusion on grounds which had not been pleaded or argued in the interpleader proceedings. In those earlier proceedings there had been severe conflicts on issues of fact, and the facts were far from simple.[57]That is reflected in the Recorder's long judgment which made careful findings of fact, for instance as to what happened at the end of the meeting of 9 December 1993:
"Although Lutton wished to draft the terms of agreement there and then, this was impossible due to Robins' pressure of appointments and Gribbon was keen to get away for his holiday."
Mr Gribbon was about to fly to the United States for three weeks' holiday, leaving Mr Lutton with a power of attorney enabling him to exchange contracts. These facts might be thought to have been relevant to whether Mr Lutton was negligent in failing to obtain a lock-out agreement or to warn Mr Gribbon of the consequences of the absence of a lock-out agreement (see paragraphs 17A to 19 of the reamended defence). But at trial, it seems, Mr Lutton took his stand on the simple issue (raised by paragraph 16 of his defence as amended in March 2000) that the payment of £21,600 was a non-refundable deposit. The alternative defences seem to have been abandoned. Unfortunately the judge did not, in his extempore judgment, clearly identify which of the pleaded issues were still live.[58]Before the Recorder Mr Gribbon's claim to the deposit was based squarely and solely on the assertion of a lock-out agreement of the type which the House of Lords recognised as enforceable in Walford v Miles [1992] 2 AC 128, 139. Before Jacob J Mr Lutton succeeded, not on that point but on two alternative grounds.[59]The first and primary ground was based not on contract but on unjust enrichment (that expression is not used in the judgment but the judge cited Hastingwood Property v Saunders Bearman Anselm [1991] Ch 114 in which the deputy judge, Mr Edward Nugee QC, referred at pp.123-4 to an action for money had and received). The other, alternative ground was based on a finding of a contract supported by consideration moving from Mr Gribbon in that he was nominating his solicitor as the stakeholder. I am in agreement with what Laddie J has said about the alternative, contractual analysis, and I cannot usefully add to what he has said.[60]In relation to unjust enrichment, it is reasonably clear that the relationship between a deposit-payer and a stakeholder may be explained otherwise than on a contractual basis: see not only Hastingwood but also Potters v Loppert [1973] Ch 399, 405-6 (in which Sir John Pennycuick V-C referred to a quasi-contractual obligation) and a case referred to in Mr Drake's skeleton , Guardian Ocean v Banco do Brasil [1991] 2 LLR 68, 87 (Hirst J); [1994] 2 LLR 152, 160 (Court of Appeal). The claim to restitution can be classified as arising out of a transfer which is non-voluntary because the intention to transfer is qualified.[61]In his Introduction to the Law of Restitution (1988) pp.223-4 Professor Birks gives two examples concerned with deposits:
"But the basis of a payment is not always specified in a contract or as a contractual reciprocation. Take the case in which I see a house which I want to buy. I immediately pay a small deposit, say £200. My intention is merely to show bona fides and establish good will. The payment is made 'subject to contract'. A month later I call whole thing off; no contract materialises. I can recover the £200. There is no need to twist the facts into an implied contract under which you promise to repay in the event of the negotiations being aborted. That is one way to conclude for repayment, but the temptation to adopt that approach is a reflection of the old insecurity about all non-contractual analyses. It is quite sufficient to say that when my purchase goes off the consideration for the payment fails. There can be a consideration in this sense without there being a contract about the payment. The phrase 'subject to contract' means, as a matter of construction, that my payment was conditional on the successful conclusion of the contract. That is, the only consideration for the payment was the making of that contract. Without that contract, the consideration failed. It would have been different if the exercise of construction had shown that the payment was intended to operate as a sanction against my withdrawal. If that had been the basis of the payment, there would have been no failure of consideration when I did withdraw."
[62]No direct authority is cited for the last proposition (the reader is invited to compare Howe v Smith (1884) 27 Ch D 89 and Mayson v Clouet [1924] AC 980 , both cases in which there was a concluded contract). But in principle the proposition must be right, if the sanction of forfeiture has been clearly stipulated. It may be that this was what Jacob J had in mind in the passage of his judgment quoted by Laddie J at paragraph 17 above, but it is hard to be sure as his reasoning is not clear: he spoke sometimes in terms of gift and sometimes in terms of contract.[63]In this court Mr Drake did make written and oral submissions along these lines, although in his oral submissions he subordinated this point to his case based on contract, and he relied particularly on a difficult argument based on attornment of money. I agree with Laddie J that that argument fails for the reasons which he gives.[64]However I find the simpler version of Mr Drake's argument to be compelling. If a prospective vendor has been as sorely tried as Mr Gribbon was by a prevaricating purchaser, and if he stipulates for the payment of a non-returnable deposit linked to a clearly-defined condition, the purchaser should lose any claim to return of the deposit if he fails to meet the condition. I agree with the judge that Sir Ernest Pollock MR was right in his dictum in Chillingworth v Esche [1924] 1 Ch 97, 108:
"In all the circumstances of this case, I think the deposit is recoverable by the purchasers. There was no provision made in the documents which would justify the vendor in declining to return it; though if he had, by appropriate words, made provision for that in the document, such a provision could have been upheld."
There is nothing in Walford v Miles which is inconsistent with this: in that case the House of Lords was concerned with whether there can be a valid and enforceable contract to negotiate.[65]However this point was not pleaded or argued before the Recorder. Before him the only issue was whether the parties had entered into a lock-out contract, and he found that they had not, and that Mr Wynn could reclaim his deposit. That decision was reached in interpleader proceedings commenced by Mr Lutton's firm in the Gloucester County Court. In my view Mr Lutton ought not to have been permitted to reopen that point in the proceedings commenced by Mr Gribbon.[66]On this point Mr Drake correctly emphasised, at the outset of his submissions, that issue estoppel (like the so-called principle in Henderson v Henderson (1843) 3 Hare 100 as now understood: see Johnson v Gore Wood [2001] 2 WLR 72 , 89-90 and Justice K R Handley's recent paper A Closer Look at Henderson v Henderson ) does not arise automatically, but only when relitigation would be an abuse of process. Mr Drake cited the statement of principle by May LJ in Specialist Group International v Deakin (23 May 2001, [2001] EWCA CIV 777 paras 22-3):
"As Aldous LJ said during the hearing, the authorities taken as a whole tend to encourage elaborate technical submissions which many percipient non-lawyers would scarcely understand. Cause of action estoppel and issue estoppel are not readily understandable phrases to a non-lawyer. It should not be necessary to have to pick for hours over the precise text of a dozen or so law reports to find out what in the end is reasonably straight forward and understandable law capable of being simply expressed. I would try to express it simply as follows. If a claim has been explicitly determined in previous concluded proceedings between the same parties, that claim cannot be raised again, other than on an appeal, unless there is fraud or collusion. If a necessary element of a claim has been explicitly determined in previous concluded proceedings between the same parties, that issue cannot be raised again, if, as is likely but not inevitable, it would be an abuse to raise that issue again. This may also extend to an implicitly necessary element of the previous determination. The previous determination may include a settlement. If a claim or issue has not been determined in previous concluded proceedings between the same parties, there may nevertheless be circumstances in which, as a matter of public and private interest on a broad merits-based procedural judgment, it would be an abuse for a party to raise that claim or issue. Such circumstances may, depending on the facts, exist where the litigant could and should have raised the matter in question in earlier concluded proceedings. There may in particular cases be other elements of abuse, including oppression of another party; but abuse of process is a concept which defies precise definition in the abstract. The court will only stop a claim as an abuse after the most careful consideration."
I respectfully agree with that as a clear and concise summary of the principle to be applied.[67]Issue estoppel is therefore sensitive to the facts of the particular case. Because of the way this litigation has developed this court does not have a clear picture of all the relevant facts. But it is reasonably clear that it was Mr Lutton's decision to resort to interpleader proceedings (commenced on or about 24 January 1994); that at that stage he was still acting for Mr Gribbon, and that he did act for him for a short time in the course of the interpleader proceedings; and that he ceased to act for him because Mr Robins (Mr Wynn's solicitor) wrote to the Law Society, which expressed the view that Mr Lutton was in a position of conflict of interest. So Mr Gribbon was, it seems, aware of a possible claim against Mr Lutton from a fairly early stage. But on the limited facts known to the court I do not think that Mr Gribbon can be criticised for not making a claim against Mr Lutton until after the Recorder's decision (and counsel's advice to Mr Gribbon not to appeal).[68]Mr Drake submitted that if it is now fair for Mr Gribbon to sue Mr Lutton for negligence, it must be fair for Mr Lutton and his firm to defend themselves against that claim. It is impossible to quarrel with that general proposition: it was or would have been open to Mr Lutton to defend himself on the ground that he did the best he could in the crisis which developed, with highly inconvenient timing, on 9 December 1993; or on the ground that Mr Gribbon would have taken a chance and done the same, even if he had been warned; or on the other pleaded grounds which I have already mentioned. But I do not consider that it would be fair to allow him to defend himself on the ground that the Recorder was wrong in ordering him to repay the deposit to Mr Wynn. It is an unfortunate coincidence that that is apparently the only ground on which Mr Lutton and his advisers wish to contest the negligence claim.[69]The principal ground for the perception of unfairness is, as I understand it, that Mr Lutton adopted a neutral position in the interpleader proceedings, and could not have appealed against the Recorder's decision. That is so. But Mr Lutton is a solicitor (as the Recorder said, an experienced and painstaking solicitor) and it was his decision to commence the interpleader proceedings, and to carry on with them after the conflict of interest had been drawn to his attention. There were other courses which he could have taken. As Millett LJ said in Manzanilla Ltd v Corton Property and Investments Ltd (13 November 1996 [1996] EWCA CIV 942 para 27), the choice was entirely his.[70]Although a stakeholder who has recourse to interpleader proceedings must have no claim to the subject-matter of the proceedings, he is just as much a party to the proceedings as the rival claimants. Indeed the proceedings are in effect a consolidated form of two sets of proceedings against him (see De la Rue v Hernu, Peron & Stockwell Ltd [1936] 2 KB 164, a case which was not cited but which is not controversial). The stakeholder who has recourse to interpleader proceedings obtains the great advantage of disposing of competing claims against him while normally being protected as regards his own costs. Having obtained that advantage he ought not in my view to be allowed to adopt a quite different position in subsequent litigation to which one of the claimants is a party, especially in circumstances where the costs already incurred must be very large in relation to what is at stake.[71]The judge recorded that in the short time available counsel had found no authorities on estoppel arising as a result of interpleader proceedings. Before this court counsel referred to two old cases ( Williams v Richardson (1877) 36 LT 505 and Re Hilton (1892) 67 LT 594) but it was common ground that they were of no real assistance, since in both the estoppel arose as between the rival claimants.[72]The point must be decided on principle and on the court's perception of what is fair and what would be abusive. Here either course could lead to hardship for one side or the other in a case which is not, I fear, likely to enhance the percipient non-lawyer's respect for the legal system. But in my view the balance tips in favour of Mr Gribbon and against Mr Lutton.[73]I would therefore allow this appeal.

Lord Justice Pill:

[74]In December 1993 Mr Lutton held the sum of £21,600 as stakeholder. When the interpleader proceedings were heard by Mr Recorder Greenwood in March 1996, Mr Gribbon's claim to that sum was based solely on the existence of an express lock-out agreement between him and Mr Wynn. That, and that alone, was claimed to be the consideration moving from Mr Gribbon which made enforceable Mr Wynn's promise that, if no contract was entered into for any reason other than the default of Mr Gribbon, the sum was to be paid to Mr Gribbon. The Court is concerned with whether the vendor can enforce the purchaser's promise. The fact that the sum promised was held by a stakeholder is immaterial to the resolution of that question. The same issue would have arisen had the money been paid to the vendor with a promise that, in the same event, it was not returnable.[75]The learned Recorder set out the events of early December 1993 in great detail. His conclusion was: "The payment of a deposit to be forfeited in circumstances such as this, ie the payer not entering into a contract of purchase land can be enforceable but only if the consideration for payment is a ' lock out ' agreement as already described. I find in terms that the payment of the deposit by Wynn was not in consideration of a 'lock out' agreement." (The emphasis in this and other citations from the judgment is that of the Recorder.)[76]In the proceedings before the Recorder, it was pleaded and argued on behalf of Mr Gribbon that a lock-out obligation was an express term of the agreement under which the sum of £21,600 was paid to the stakeholder. Had it been argued as an implied term, the argument may well have succeeded. The Recorder found:
"In the circumstances I do not accept that the terms of agreement reached on 9 th December 1993 were as the first claimant Gribbon contends. The suggestion of treating with others played no direct part as consideration for payment of the deposit."
It appears to me that a term that Mr Gribbon would not negotiate elsewhere [the lock-out] could readily have been implied. It may be that in using the word "direct" the Recorder had in mind the word "express" or "specific". Elsewhere in his judgment the Recorder referred to the absence of any reference in documents to a "specific agreement" about lock-out. I also refer to paragraph 60 of the judgment: "In his evidence Wynn was at pains to stress that in the knowledge of Gribbon was departing for a fairly lengthy holiday abroad, he had no fear that Gribbon, or Lutton on his behalf, would conclude terms for a sale elsewhere before 16/12 or even later . He did not therefore anticipate any negotiations or indeed a sale taking place while Gribbon was abroad .[77]I agree with Robert Walker LJ that had the case been pleaded and argued differently before the Recorder he might (and should) have reached a different conclusion and held that the sum was payable to Mr Gribbon. Mr Dowding QC, for the appellant, submits to this Court that, in the absence of a lock-out clause, Mr Wynn's promise that, if he failed to sign a conditional contract, the deposit would be non-refundable, was unenforceable. I have already referred to the possibility that a lock-out term should have been implied.[78]Mr Dowding relies upon the conclusion of Lord Ackner in Walford v Miles [1992] 2 AC 128 at 138H that "a bare agreement to negotiate has no legal content". Lord Ackner stated that "a duty to negotiate in good faith is unworkable in practice as it is inherently inconsistent with the position of a negotiating party". Lord Ackner cited the statement of Lord Denning MR in Courtney & Fairbairn Ltd v Tolaini Brothers (Hotels) Ltd [1975] 1 WLR 297 at 301:
"If the law does not recognise a contract to enter into a contract (when there is a fundamental term yet to be agreed) it seems to me it cannot recognise a contract to negotiate. The reason is because it is too uncertain to have any binding force … It seems to me that a contract to negotiate, like a contract to enter into a contract, is not a contract known to the law … I think we must apply the general principle that where there is a fundamental matter left undecided and to be the subject of negotiation, there is no contract."
In reaching his conclusion, Lord Ackner stated (at p 138C):
"The reason why an agreement to negotiate, like an agreement to agree, is unenforceable, is simply because it lacks the necessary certainty. The same does not apply to an agreement to use best endeavours."
[79]I doubt whether the general principle, as expressed by Lord Ackner, that a bare agreement to negotiate has no legal content covers the present facts. I do not accept that Mr Wynn's promise should be unenforceable for want of consideration. The circumstances demonstrate more than a "bare" agreement to negotiate.

The Recorder found:

"From Gribbon's point of view, there was no point in attending the meeting on 9 th December, unless Wynn agreed to pay a non-refundable deposit. Although he had threatened to do so many times (according to Robins), it is clear that from the outset, Gribbon indicated to all assembled at the meeting that he would walk away, never to return, if Wynn did not oblige. … This was not just a good-faith deposit. It was paid on the basis that Gribbon would walk away immediately if it were not paid." (Mr Robins was Mr Wynn's solicitor.) Later the Recorder stated: "
Counsel for Wynn suggested to Lutton that the payment of the deposit was ' for the right to have the opportunity to enter into a contract ' faced with Gribbon threatening in clear terms to ' walk away and never return ' if the non-refundable deposit was not paid. I consider that Wynn paid his deposit under that clear threat which he genuinely believed at the time would be carried out. This was the consideration for his non-returnable deposit. He would not otherwise have agreed."[81]In those circumstances, Mr Gribbon's attendance at the meeting and his remaining there to give Mr Wynn a yet further opportunity to enter into the contract was consideration which rendered Mr Wynn's promise enforceable. There was a factual benefit to Mr Wynn ( Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1 . I do not accept that the law declines to render Mr Wynn's promise enforceable in such circumstances.[82]I should prefer to follow that contractual route and am reluctant to follow another route which circumvents the requirement for consideration. I agree with Laddie J's analysis of Chillingworth v Esche [1924] 1 Ch 97 with the sole qualification that the words relied upon by Robert Walker LJ do demonstrate the interest of the law in upholding bargains.[83]Robert Walker LJ, having referred to Professor Birks' work, has concluded that Mr Gribbon was entitled to the money because he stipulated for the payment by Mr Wynn of a non-returnable deposit linked to a clearly-defined condition which Mr Wynn failed to meet, that is to enter into the conditional contract. In the language of Professor Birks, the payment was in the circumstances "intended to operate as a sanction against … withdrawal".[84]That principle circumvents the requirement for consideration. The vendor's claim to the money can be enforced not because he has given consideration for the promise but because he has imposed a burden on the purchaser by stipulating that in a certain event the purchaser loses any right to the money. That is tantamount to enforcing a bare promise by the purchaser.[85]Professor Birks writes of a "sanction against withdrawal". In the language of Lord Ackner in Walford (p 138G), however, "either party is entitled to withdraw from those negotiations, at any time and for any reason". The purchaser is entitled to withdraw from negotiations and keep his money and, in contractual terms, a "sanction against withdrawal" can be imposed only if consideration is given by the party purporting to impose the sanction.[86]Such consideration was given in this case and a contractual route to enforcing the vendor's claim was in my view available. I agree with Robert Walker LJ that, on the facts found by the Recorder, Mr Wynn, the "prevaricating purchaser", should have lost any claim to the return of the money when he failed to enter the contract with the "sorely tried" prospective vendor. Since, however, what in essence is being enforced is a promise to pay (or not to claim return), I do see difficulties in the non-contractual route proposed. I would consider taking it only in a case, unlike the present case, where the contractual route is closed.[87]I agree with Laddie J and with Robert Walker LJ that the judge's attempt to base the vendor's entitlement to the deposit on a tripartite agreement between vendor, purchaser and stakeholder is not acceptable.[88]However, for the reasons I have given, I agree with the conclusion of the judge though by a different route.[89]The judge was therefore correct in finding that a different conclusion about the right to the sum of money with the stakeholder should have been reached in 1996. I find the judge correct, however, not only on a different basis from his but on a basis not argued before him and, though ventilated in the course of argument in this Court, not adopted by Mr Drake. Argument as to what should follow does not, however, arise because Robert Walker LJ and Laddie J, though they differ from each other as to why, have concluded that the judge was wrong in his conclusion that Mr Lutton and his firm of solicitors were entitled to raise in this action the question decided by the Recorder. I do very much doubt, however, whether in the circumstances I could have been persuaded to uphold the judge's conclusions on the merits.[90]The appeal must therefore be allowed. As to the second issue, I agree with Laddie J that issue estoppel does not arise. However, Laddie J goes on to find that it was an abuse of process for Mr Lutton to raise in this action the issue decided by the Recorder and I disagree with that conclusion. For a solicitor to act as a stakeholder is a valuable service and it will often be valuable for a solicitor to one of the parties to a transaction to act as such. When a dispute arises between the parties as to which of them should have the money held by the stakeholder, it is important that a convenient procedure is available to resolve that issue. That is provided by the entitlement of the stakeholder to interplead.[91]The role of a stakeholder has been described by Laddie J at paragraph 44 of his judgment. That straightforward procedure, which it is in the interest of the parties to follow, is not achieved if the stakeholder raises issues of his own in the proceedings. If he does so, he defeats the purpose of the exercise and may well be acting against the interests of the parties to the dispute. While the stakeholder may take other possible courses, that will often be contrary to the interest of the parties in resolving, in as straightforward a manner as possible, what is to happen to the money held. The good sense of what the stakeholder did in this case is demonstrated by the differing judicial views which have emerged as to the proper disposal of the money held. The stakeholder is not a party to the action in any real sense. I respectfully adopt the reasoning of Laddie J at paragraph 47 of his judgment.[92]That being so, it is not in my view an abuse of process for Mr Lutton, in subsequent proceedings, to defend the claim in negligence against him by arguing that the Recorder's decision was wrong or, as in the present case, that it was made in the absence of arguments which could have been put, probably successfully, by one of the then contesting parties. The stakeholder was unable to take before the Recorder points which, in the action in negligence against him, have found favour with the judge, or with this Court, or both. Mr Lutton's participation in the present action is on an entirely different basis from that in the interpleader proceedings.[93]It is no less an abuse of process for the claimant in the present action to bring a claim against Mr Lutton which he could have made, directly or in the alternative, in the proceedings in 1996. Indeed, the case that it is the claimant who is abusing the process of the Court is stronger because on my finding, and that of Robert Walker LJ, the Recorder should have found for Mr Gribbon had Mr Gribbon put further points to him. Having failed to do that, Mr Gribbon can, on the majority view on the procedural issue, make good his failure by suing Mr Lutton in negligence. If it is now fair for Mr Gribbon to sue Mr Lutton for negligence, it is certainly fair for Mr Lutton and his firm to defend themselves against that claim.[94]The value of solicitors acting as stakeholders and the value of interpleader proceedings should not be diminished by a perceived danger that a person acting as stakeholder, and taking a course which is in the interest of the parties, thereby deprives himself of the opportunity to defend himself if an action in negligence is brought against him by one of the parties. The balance is in my view in favour of permitting the stakeholder to defend himself in present circumstances. While the number of cases in which the present problem actually arises may turn out to be small, the deterrence to helpful and sensible dealing could be substantial. The result is to place the stakeholder in the hands of other parties in litigation over whose conduct he has no control. It was the way in which the case was conducted on behalf of Mr Gribbon which led to a decision by the Recorder which has now formed the basis for Mr Gribbon's claim in negligence against the defendant. That I regard as a greater mischief than the presence on the record of conflicting decisions on the facts.[95]In considering the question of abuse, I have sought to apply a "broad, merits-based judgment" taking account of the "public and private interests involved" and "all the facts of the case" as recommended by Lord Bingham in Johnson v Gore Wood and Co (a firm) [2001] 2 WLR 72 , 90. Though by a different route, I agree with the conclusion of the judge. However, for reasons given earlier, I agree that the appeal should be allowed.

Order

Appeal allowed; costs of the appeal to be the appellants; judge's order as to costs below reversed; appellant to have the costs of the action to date; detailed assessment of all costs; application for permission to appeal to the House of Lords refused. (Order not part of approved judgment)

Cited in 4 later judgments