In the recent case of Baltimore Wharf SLP v Ballymore Properties Limited and WSP UK Limited [2026] EWHC 312 (TCC), the court considered the question of whether a legally binding settlement of an underlying construction dispute was reached on 24 September 2024. In doing so, the court assessed the parties’ competing views on the effect of correspondence labelled “subject to contract”.
Factual background
In the evening of 15 July 2023, the roof of a nursery collapsed at Baltimore Wharf in London. A claim was subsequently brought against Ballymore Properties Limited (the defendant) by the property owner pursuant to a collateral warranty. The allegation against the defendant was that the collapse was caused by the failure of the connection between the nursery roof steel beams and the reinforced concrete frame. The defendant brought a Part 20 claim against WSP UK Limited (the Part 20 defendant) following the service of proceedings in May 2024.
Settlement negotiations
During a stay of proceedings, the parties entered into settlement negotiations. In August 2024, the defendant’s solicitors circulated a draft settlement agreement marked “Subject to contract and without prejudice save as to costs”.
The defendant’s solicitor asked the claimant’s solicitor on 24 September 2024 if the agreement was “agreed”. The claimant’s solicitor responded: “I confirm that the settlement agreement with WSP’s amends is agreed”.
Following this exchange, bank details were shared and the defendant’s solicitor issued an “executed version” of the agreement which did not include the “subject to contract” or “without prejudice” headers.
Legal issues
The defendant and the Part 20 defendant subsequently applied for summary judgment, asserting that the exchange on 24 September constituted a legally binding settlement. They contended that the “subject to contract” restriction had been “necessarily implied” to be removed on the basis that the terms were fully settled and the parties’ subsequent conduct. The relevant conduct included circulating a Tomlin order and sharing bank details.
The claimant argued that merely reaching an agreement on terms does not remove the “subject to contract” umbrella. The court’s primary question was therefore to determine whether the “subject to contract” restriction had been removed.
Decision
Ultimately, the court concluded that the claimant was entitled to change its mind before the document was executed. There was no “necessary implication” that the parties had abandoned the protection afforded by “subject to contract”. In particular, it was noted that the document which had been agreed by the claimant’s solicitor had “subject to contract” on every page.
Recorder Singer KC referred to Joanne Properties Ltd v Moneything Capital Ltd EWCA Civ 1541 as the primary authority. This precedent established that, if negotiations begin as “subject to contract”, that condition stays in place until express agreement by the parties to remove it, or such an agreement is “necessarily implied”.
The court also ruled that, where a contract is alleged to be contained in documents, conduct occurring after those documents is generally not to be considered an aid in determining whether a binding contract was formed. In any event, it was concluded that the conduct in this case was “ambiguous”.
Key takeaways
This decision serves as an important reminder of the robustness of the “subject to contract” restriction. To show that this “umbrella” has been removed is a high bar, and the courts will not readily hold that it has been waived without a clear departure from the reservation.
A failure to reflect settlement terms that may be agreed “in principle”, in a binding agreement signed by all parties, can lead to ambiguity and allow parties to change their mind, even after extensive negotiations. This recent case, therefore, provides a timely reminder for parties to ensure that settlement agreements are properly executed, enforceable and effectively bring disputes to an end.