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N11a. Estoppel by convention
GENERAL
- Should be raised in advance of FTT hearing
"[56] The argument that there was an estoppel by convention was not raised in advance of the FTT hearing. The argument formed no part of HMRC's case to the FTT nor of their Skeleton Argument, it being raised for the first time in counsel's closing submissions. HMRC failed to call any officer who had been involved either in the sending of the original letter or in subsequent conversations with BDO. Instead, HMRC sought to rely on the documents before the FTT and the cross-examination of Mr Tinkler. This is unsatisfactory. It is always important that the precise nature of an alleged estoppel and of the factual circumstances giving rise to it are clearly articulated. It is also generally desirable that the parties should have a proper advance opportunity to consider any such case and the need for evidence." (Tinkler v. HMRC [2019] EWCA Civ 1392, §56, Hamblen LJ)
- FTT has jurisdiction to consider estoppel
"[41] When we turn to apply these principles to the facts in this case, it is clear that the FTT was right to conclude that HMRC cannot be estopped by the 1993 Agreement from reaching the disputed decisions to charge NICs in accordance with section 167 ITEPA." (MWL International Ltd v. HMRC [2026] UKUT 62 (TCC), Adam Johnson J and Judge Thomas Scott - see also Tinkler UKSC where no issue was raised re HMRC relying on estoppel against T)
"[224] In this case, HMRC did not make any submissions to the effect that the Tribunal did not have jurisdiction to consider arguments based on estoppel by convention. We have not therefore considered this point in any detail although record that, bearing in mind the statutory framework which we have already discussed in the context of legitimate expectation, we do not see any obvious reason why the Tribunal would not have jurisdiction to consider arguments based on estoppel by convention in the context of an appeal against a recovery assessment, particularly given that this does not fall into the category of public law arguments." (Queenscourt Limited v. HMRC [2024] UKFTT 460 (TC), Judge Vos)
- Burden of proof on party asserting estoppel
"[18] ... As regards estoppel by convention, the burden of proof is upon HMRC as it is HMRC who raises it and relies upon it. The standard of proof in all these respects is of course that of the balance of probabilities." (Cattrell v. HMRC [2024] UKFTT 67 (TC), Judge Chapman KC)
Distinguishing concepts
- Estoppel by convention depends on a shared assumption rather than a representation or promise
"[29] The doctrine of estoppel by deed overlaps with the doctrines of estoppel by representation and estoppel by convention. The basis of estoppel by representation is that the representor induced the representee to enter into the relevant transaction on the faith of a statement in circumstances which would make it unfair that the representor should go back on the statement. The basis of estoppel by convention is that the parties expressly or impliedly agreed that a certain state of facts or law was to be treated as true for the purposes of the transaction, and that it would be unfair for one or other to resile from the basis on which the transaction had proceeded." (Prime Sight Limited v. Lavarello [2013] UKPC 22
"[102] Two alternative kinds of estoppel are raised, estoppel by convention (where the parties act on a common, erroneous, assumption) and estoppel by representation (where one party has represented, erroneously, a state of affairs to be so and the other has relied upon that representation to his detriment)..." (Smithkline Beecham plc v. Apotex Europe Ltd [2006] EWCA Civ 658)
[68]...In a convention estoppel case, the assumption arises by inference or implication rather than from anything said expressly..." (London Borough of Hillingdon v. ARC Limited [2000] EWCA Civ 191, Arden J)
Whereas estoppel by representation requires C to believe the representation is true, the parties may conduct their dealings on the basis of an assumption they both know to be incorrect - see below.
- Basis of estoppel by convention is consensual
"[73] Estoppel by convention is not founded on a unilateral representation, but rather on mutually manifest conduct by the parties based on a common, but mistaken, assumption of law or fact: its basis is consensual. Its effect is to bind the parties to their shared, even though mistaken, understanding or assumption of the law or facts on which their rights are to be determined (as in the case of estoppel by representation) rather than to provide a cause of action (as in the case of promissory estoppel and proprietary estoppel); and see Snell's Equity 33rd ed at 12-012. If and when the common assumption is revealed to be mistaken the parties may nevertheless be estopped from departing from it for the purposes of regulating their rights inter se for so long as it would be unconscionable for the party seeking to repudiate the assumption to be permitted to do so (and see, for example, The "Vistafjord" [1988] 2 Lloyds Rep 343 at 353 in the judgment of Bingham LJ, as he then was).
...
[79]...The essence of the principle is that the parties have conducted themselves on a conventional basis which is, wittingly or unwittingly, different from the true basis..." (Dixon v. Blindley Heath Investments Limited [2015] EWCA Civ 1023)
Nature + effect of estoppel by convention
- Estoppel v. waiver
"[56] That makes it unnecessary to consider the other grounds of appeal. As Latham CJ said in Grundt at 658,
"The line between estoppel, which precludes a person from proving and relying upon a particular fact, and waiver which involves an abandonment of a right by acting in a manner inconsistent with the continued existence of the right, is not always clearly drawn."
[57] In the present case the waiver analysis does not fit naturally with the language of the deed of assignment and the Board considers that the Court of Appeal was justified in rejecting the company's argument that there was some form of collateral waiver." (Prime Sight Limited v. Lavarello [2013] UKPC 22)
- Prevents the party from denying the assumed facts or law
"It is settled that an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared by them both or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption: The August Leonhardt [1985] 2 Lloyd's Rep. 28; The Vistafjord [1988] 2 Lloyd's Rep. 343; Treitel, Law of Contracts, 9th ed., at 112-113. It is not enough that each of the two parties acts on an assumption not communicated to the other. But it was rightly accepted by counsel for both parties that a concluded agreement is not a requirement for an estoppel by convention." (Republic of India v. India Steamship Co [1997] UKHL 40, Lord Steyn - quoted at §39 of Tinkler UKSC as a "clear and simple" setting out of the elements of the doctrine)
INTERACTION WITH STATUTORY REGIMES AND POWERS
- Estoppel by convention can in principle operate against HMRC, but more limited
"[25] Estoppel by convention can in principle operate against HMRC. The leading authorities, such as Tinkler and Benchdollar, concern whether estoppel by convention operated on the facts against the taxpayer[2]. Nevertheless, Mr Pritchard did not seek to argue that HMRC were exempt from the doctrine of estoppel by convention, and we consider that he was right not to do so.
[26] However, the circumstances in which estoppel by convention will operate against HMRC will be limited. As Chitty on Contracts puts it, "equitable estoppel may be successfully invoked against the Crown and public authorities, but not to the same extent as it is available against private parties":14-053." (MWL International Ltd v. HMRC [2026] UKUT 62 (TCC), Adam Johnson J and Judge Thomas Scott)
"[15] [HMRC] contended that it was necessary to apply the dicta of Finlay J in Williams v Grundy's Trustees, KB 1933, 18 TC 271, “nothing is better settled than the principle that there is no estoppel as against the Crown”.
A blunder cannot prevent HMRC from collecting tax. The mistake was unfortunate but cannot prevent HMRC collecting the tax which is chargeable and due to be collected.
...
[23] The principle of no estoppel against the Crown operated to override the mistake by HMRC." (Frost v. HMRC [2010] UKFTT 344 (TC), Judge Radford)
- Estoppel cannot be invoked to achieve what contract could not
"[40] ... (3) To the extent that it would not be possible for the relevant body (in this case HMRC) to avoid or abrogate the relevant statutory provisions by contract, then estoppel cannot be invoked to achieve what contract could not: Tinkler, Southend-on-Sea and Keen v Holland." (MWL International Ltd v. HMRC [2026] UKUT 62 (TCC), Adam Johnson J and Judge Thomas Scott)
- Person cannot extend their capacity by estoppel
"[305] ... A contract that is ultra vires the powers of a company is void, and it cannot be validated: see Chitty on Contracts (31st Ed, 2012) vol 1 at paragraphs 9-020 and 9-024, citing the judgment of Russell J in York Corp v Henry Leetham & Sons, [1924] 1 Ch 557, 573: "An ultra vires agreement cannot become intra vires by means of estoppel, lapse of time, ratification, acquiescence, or delay". Although this was said in the context of the capacity of a local authority, the editors of Chitty clearly understand it to be a wider statement of principle, and I agree. The same is said by the editors of Spencer Bower, The Law relating to Estoppel by Representation, (4th Ed, 2004) at paragraph VII.6.1: "nor [can] a company become entitled by estoppel to exceed its statutory powers or those given to it by its memorandum of association". The position relating to companies incorporated under the Companies Acts is illustrated by Ashbury Railway Carriage and Iron Co v Riche, (1875) LR 7 HL 653 and Great North-West Central Ry v Chamlebois, [1899] AC 114. In my judgment the representations in the Master Agreement and the Management Certificate do not enable Credit Suisse to argue that Vestia are estopped from disputing that the ultra vires contracts were within their capacity or from disputing the authority of Mr de Vries and Mr Staal to make the ultra vires contracts." (Credit Suisse International v. Stichting Vestia Groep [2014] EWHC 3103 (Comm), Andrew Smith J)
- Or: If the purpose of the statute would be frustrated by the unilateral act of one party, court can vindicate the statute by holding that the relevant act is negated by estoppel
"[21]...It is clear that parties may not contract out of a statute whose application is compulsory, but if a party by his unilateral act would frustrate the operation of the statute, I do not see why the court should not vindicate the statute by holding, if the facts justify it, that the relevant act is negated by the operation of an estoppel. I do not consider that would give rise to any unacceptable want of clarity. In those circumstances I would uphold the judge on the application of the estoppel found by him unless we are prevented from doing so by the nature of the estoppel in question." (Newport CC v. Charles [2008] EWCA Civ 1541, Laws, Longmore, Richards LJJ - albeit, CoA went on to hold that estoppel could not found a cause of action for possession)
- Policy of statutory time limit not frustrated by estoppel arising as a result of dishonest conduct preventing public authority being aware time limit commenced
"[21] The appellant's actions in my judgment, if they prevent the local authority from seeking an order for possession, would wholly frustrate this policy. Their effect is that the appellant can never be evicted from the property which is larger than he needs and might be occupied by a family who indeed need it, never at least unless another ground under Schedule 2 were adventitiously to arise. The notion that the time limits set an overriding policy aim which on the facts of this case the local authority's claim for possession would frustrate is entirely unreal, yet that must be the burden of Mr Barnes' submission. The statutory policy is in fact as I see it frustrated and flagrantly so if Mr Barnes is right, and, because of the appellant's dishonesty, the respondent cannot rely on ground 16..." (Newport CC v. Charles [2008] EWCA Civ 1541, Laws, Longmore, Richards LJJ)
- If statute imposes a positive duty on grounds of public policy, no estoppel by convention
"[40] We agree with Mr Gordon that there is no absolute rule that estoppel cannot "defeat a statute". However, we do not accept his formulation of the circumstances in which estoppel by convention will operate. We consider that the following principles can be drawn from the authorities:
(1) The starting point is to identify and consider the terms of the legislation against which estoppel by convention is sought. That was emphasised in all of the authorities discussed above.
(2) If the statutory provision imposes a positive duty "enacted for the benefit of a section of the public, that is, on grounds of public policy in a general sense", then estoppel by convention cannot operate to prevent the performance of that duty: Maritime Electric. While such a duty might commonly be found in areas such as planning legislation, we consider that this description should not be applied unduly narrowly. As is observed in Chitty on Contracts[3], "it is difficult to see what kinds of statutory duties would fail to satisfy this test, but their Lordships perhaps had in mind duties imposed under a private Act of Parliament". In relation to tax legislation, any requirement for a policy of public benefit is likely to be satisfied." (MWL International Ltd v. HMRC [2026] UKUT 62 (TCC), Adam Johnson J and Judge Thomas Scott)
- Determine whether the statutory provisions are being "overridden"?
"[40] ... (4) It is necessary to determine on the facts and by reference to the statutory provisions against which estoppel is sought whether those provisions would be "overridden" (Keen v Holland) or "undermined" (Tinkler) by the estoppel: Keen v Holland and Tinkler. If they would, estoppel will not be available." (MWL International Ltd v. HMRC [2026] UKUT 62 (TCC), Adam Johnson J and Judge Thomas Scott)
- Same principles apply where statutory provision confers a power or discretion
"[40] ... (5) These principles apply not only where the statutory provision in question imposes a duty but also where it confers a power or discretion: Southend-on-Sea. In Laker Airways, Lord Denning described the underlying principle in the following terms:
…The underlying principle is that the Crown cannot be estopped from exercising its powers, whether given in a statute or by common law, when it is doing so in the proper exercise of its duty to act for the public good, even though this may work some injustice or unfairness to a private individual - see [Maritime Electric]…"
...
[49] It does not affect this conclusion that section 8 ToFA (whether or not read with the general collection and management powers conferred on HMRC) refers to a decision by an officer of the Board. As we have explained, the policy behind excluding estoppel in this situation would apply whether or not the relevant statutory provisions were characterised as duties or discretionary powers. In any event, we would agree with the FTT (at [131] of the Decision) that section 8 does not require or confer a discretion on an officer. Rather, it envisages a decision that a person is liable to pay NICs. In relation to the Cars such a decision did not involve an exercise of discretion, since liability arose unless the terms of the exemption in section 167 were met. We discuss this area further below in relation to legitimate expectation." (MWL International Ltd v. HMRC [2026] UKUT 62 (TCC), Adam Johnson J and Judge Thomas Scott)
Estoppel and jurisdiction
- Estoppel cannot extend statutory jurisdiction
I need not consider whether this amounted to a consent to widening the reference to the tribunal, because, in my judgment, it is a fundamental principle that no consent can confer on a court or tribunal with limited statutory jurisdiction any power to act beyond that jurisdiction, or can estop the consenting party from subsequently maintaining that such court or tribunal has acted without jurisdiction. If the High Court, having general jurisdiction, proceeds in an unauthorised manner by consent there may well be estoppel. And an arbitrator, or other tribunal deriving its jurisdiction from the consent of parties, may well have his jurisdiction extended by consent of parties. But there is no analogy between such cases and the present case. The tribunal in the present case had no power to state a case except with regard to some matter arising out of the exercise of its limited statutory jurisdiction, and this stated case does not deal with any such matter. I am, therefore, of opinion that the stated case was not properly before the Court of Appeal and is not properly before your Lordships. Accordingly this House ought to refuse to answer the question set out in the case stated." (Essex CC v. Essex Incorporated Congregational Church Union [1963] AC 808 at 821)
- Distinction between statute giving a defence to proceedings (e.g. limitation - estoppel can apply) and excluding jurisdiction
"However it is important to observe that section 34 does not expressly apply the doctrine of merger in judgment to foreign judgments. It simply provides that "No proceedings may be brought" on a cause of action in respect of which a foreign judgment of the relevant kind has been given. Founding themselves upon these words, the plaintiffs submitted that the intention of Parliament was to do no more than create a defence, which was capable of being defeated by estoppel or waiver. A similar view was expressed in a note on the present case in (1992) 108 L.Q.R. 393 by Mr. Lawrence Collins, the general editor of Dicey & Morris, The Conflict of Laws.
Taking the section in isolation, the words of the statute are certainly amenable to this approach. Indeed, similar provisions in statutes of limitation (for example, sections 2 and 5 of the Limitation Act 1980 - "An action shall not be brought after …") have been held to be capable of waiver. Furthermore, in Kammins Ballrooms Co. Ltd. v. Zenith Investments (Torquay) Ltd. [1971] A.C. 850, which was concerned with section 29(3) of the Landlord and Tenant Act 1954 in which it was provided that "No application under section 24(1) of this Act shall be entertained" unless made within a certain period, not only did this House hold that the words in question did not have the effect of ousting the jurisdiction of the court, but Lord Reid, at p. 860B, relied upon the "well established principle that any provision ousting the jurisdiction of the court must be construed strictly." On this approach, the words of section 34 can appropriately be read as providing no more than a bar against proceedings by the plaintiff rather than excluding the jurisdiction of the court.
I then ask myself: does the fact that the function of section 34 is to overcome the difficulty created by the old rule that the doctrine of merger in judgment does not apply to foreign judgments require any different conclusion? For my part, I do not think so. To achieve the requisite result of giving effect to the policy underlying the principle to res judicata in the circumstances specified in section 34, there was no need for Parliament to invoke the highly technical doctrine of merger in judgment; the same practical result could be achieved by the simple words chosen in the section. And if the effect is that the statutory bar created by the section may be the subject of waiver or estoppel or contrary agreement, the result is only that in a case such as this the general rule of public policy enshrined in the principle of res judicata is subject to a particular exception which enables practical justice to be done in rare cases, without any harm being done to the rule of public policy.
For these reasons, I am of the opinion that it is open to the plaintiffs to raise the plea of waiver or estoppel in the present case." (Republic of India v. India Steamship Co Ltd [1993] AC 410 at 423 - 424)
"The plaintiffs appealed to the House of Lords: Republic of India and Another v. India Steamship Co. Ltd. [1993] A.C. 410. Counsel for the plaintiffs argued that the causes of action in the foreign and English proceedings were distinct. The House ruled that there was an identity between causes of action in the two sets of proceedings. But Lord Goff of Chieveley, speaking for a unanimous House, held that section 34 operated as a bar against proceedings rather than as an exclusion of jurisdiction. Accordingly, the operation of section 34 could in principle be defeated by agreement, waiver or estoppel. Lord Goff concluded that the matter ought to be remitted to the Admiralty Court to consider the issue of estoppel or waiver." (Republic of India v. India Steamship Co [1997] UKHL 40, Lord Steyn)
- Parties cannot agree/assume that the facts are such as to confer jurisdiction on the court/give it a power it would not otherwise have
"[47]...Similarly, just as a court may refuse in some circumstances to enforce a contract on grounds of public policy (a topic closely related to illegality), the same will apply to a contractual convention. So in Welch v Nagy [1950] 1 KB 455 the Court of Appeal held that just as parties to an agreement to rent unfurnished premises were not competent to contract out of provisions of the Rent Restriction Acts which protected tenants under such agreements, so a tenant could not be estopped from proving that a tenancy was an unfurnished tenancy by entering into an agreement which described it as a furnished tenancy. The effect of such an estoppel would have been to confer on the courts a jurisdiction which Parliament had said that they should not have, namely an untrammelled power to make orders for possession of unfurnished premises. In short, contractual estoppels are subject to the same limits as other contractual provisions, but there is nothing inherently contrary to public policy in parties agreeing to contract on the basis that certain facts are to be treated as established for the purposes of their transaction, although they know the facts to be otherwise." (Prime Sight Limited v. Lavarello [2013] UKPC 22)
- Distinction between estoppel as to fact going to jurisdiction v. fact essential to cause of action within jurisdiction
"Having regard to the view which I formed upon this aspect of the case, I do not consider it necessary to refer to the other cases cited on behalf of the tenants such as Langford Property Co Ltd v Goldrich [1948] 2 All ER 439 or Watkins v Emslie (1982) 261 EG 1192, [1982] 1 EGLR 81, nor the cases cited to demonstrate the distinction between agreements or estoppel which purport to enlarge the jurisdiction of the court and those which relate to an admitted state of facts essential to prove the cause of action arising within the ambit of the court's jurisdiction. In my view, it is clear law that the parties cannot by any route enlarge the jurisdiction of the tribunal before whom a matter falls to be decided. The question arising upon this appeal is whether or not the effect of the estoppel pleaded is to enlarge the jurisdiction of the court or whether it concerns solely an estoppel which precluded the tenants from denying an essential fact necessary to establish their right to a new lease — namely, that at the time of the application the premises were occupied by the tenants for the purposes of a business carried on by them. Thus in this case the question in issue is whether the assertion that the tenants were not in occupation for the purposes of their business impugns the jurisdiction of the court, or whether it is one which arises within the ambit of the court's jurisdiction as exemplified by the examples given by Atkin LJ in the Dutton case at p 421. In my view the tenants' contention does not give rise to any question of jurisdiction but arises as an issue relevant to their claim for a new tenancy." (Benedictus v. Jalaram Ltd [1989] 1 EGLR 251 re whether tenants were in occupation)
Estoppel on procedural matters
- "Procedural only" requirements can give rise to estoppel (but requirement to serve counter-notice within 2 months not procedural only)
"Had the question been procedural only no difficulty would have arisen, for the parties had consented to the course taken before the Lands Tribunal, but, in my opinion, the jurisdiction of the tribunal is circumscribed by the terms of the Act so that it has no power in this matter to do other than deal with objections put forward within the statutory time limit of two months." (Essex CC v. Essex Incorporated Congregational Church Union [1963] AC 808 at 828)
- TMA s.9A permissive as to the method of giving notice of enquiry: parties could have agreed alternative method
"[81] The situation with which we are concerned is distinguishable. Section 9A TMA requires that a notice of enquiry is given to the taxpayer; and section 115(2) provides one method by which that notice may be given. But it would have been open to the parties (ie HMRC and Mr Tinkler) to agree expressly the method by which the notice of enquiry was to be given (including, it would seem, that a notice of enquiry given to Mr Tinkler’s tax advisers would have counted). It follows from the TMA being permissive as to the method of giving notice that an estoppel by convention, by which HMRC and Mr Tinkler/BDO operated on the basis that a valid enquiry had been opened (ie that a particular method had been used), does not undermine the purpose of the Act. As, applying the principles of estoppel by convention, Mr Tinkler is otherwise estopped from denying that HMRC opened a valid enquiry, there is nothing in the statutory provisions, purposively interpreted, that requires the court to reject that estoppel.
[82] There is an additional reason, on the facts, supporting that conclusion. We have seen, at para 15 above, that the FTT found that Mr Tinkler and/or his PA knew of HMRC’s enquiry in November 2005. Even if, contrary to the view taken in the last paragraph, the purpose of section 9A would otherwise be undermined by the operation of the estoppel by convention, there cannot be any conceivable undermining of the statutory purpose once the taxpayer actually knows of the enquiry. After November 2005, therefore, there has been no conceivable statutory reason why the taxpayer should be protected by rejecting the operation of estoppel by convention." (HMRC v. Tinkler [2021] UKSC 39)
"[38] Lord Burrows then distinguished Keen v Holland, on the basis that section 9A was permissive as to the method of giving notice to a taxpayer, so that estoppel by convention would not "undermine the purpose of the Act": [81]." (MWL International Ltd v. HMRC [2026] UKUT 62 (TCC), Adam Johnson J and Judge Thomas Scott)
Estoppel on substantive matters
- 12 month time limit for serving notice after previous tenant death: estoppel that previous tenant not dead
"[4] In this case paragraph (a) of ground 16 was satisfied but no section 83 notice was given, nor were the possession proceedings commenced within 12 months of the death...
...
[13] Mr Barnes' submission that the matters in question did not amount to a representation capable of giving rise to an estoppel was put forward with great economy and elegance, but for my part I would reject it. The appellant continued, as I have said, to live in the property, paying rent in his mother's name for all the world as if she were still alive. That would inevitably lead any person or party having to do with the matter to assume that the pretended position was in fact the truth. I am driven to say that in my view the district judge's findings based on the express evidence of the appellant himself disclose a pattern of deliberate dishonesty persisted in to the detriment of the local authority over a considerable period, a pattern of behaviour which amply justifies as a matter of fact the circuit judge's conclusion that an estoppel arose." (Newport CC v. Charles [2008] EWCA Civ 1541, Laws, Longmore, Richards LJJ)
- No estoppel to prevent HMRC applying the clear terms of the NICs legislation in the face of an inconsistent agreement
"[46] We consider that the requirement to own another car cannot fairly be described as an adequate means of reflecting the statutory requirement that any private use be merely incidental, or as a methodology for enforcing that requirement. Section 167(3)(d) is requiring in unequivocal terms that any actual usage of the car must be no more than incidental. Under the provisions of the 1993 Agreement, it would be perfectly possible for an employee to own another car but not use it at all, and/or to use the "pooled" car exclusively for private purposes. The 1993 Agreement contained no requirement as to actual usage at all[4]. An estoppel on the basis of such an agreement would prevent HMRC from applying the clear terms of the statute.
[47] HMRC could not have bound themselves by contract to fail properly to apply the terms of section 167 in this way in exempting the Cars from NICs. It follows that they could not be estopped from applying those plain statutory terms, as they did in the disputed decisions applying NICs.
[48] By the same token, the effect of enforcing the estoppel would also be to override and undermine the statutory private use requirement in section 167(3)(d)." (MWL International Ltd v. HMRC [2026] UKUT 62 (TCC), Adam Johnson J and Judge Thomas Scott)
- No estoppel allowing HMRC to treat persons as partners based on misrepresentation ("taxing statute requires [partnership] actually to exist)
"[35] But I also think that Mr Barlow is correct in his basic submission that an estoppel of this kind (whether under s.14 or generally) cannot operate to satisfy statutory conditions which depend on a particular state of affairs. So for example in re C & M Ashberg (The Times 17th July 1990) Mr Gavin Lightman Q.C (sitting as a Deputy High Court Judge) held that for the purposes of giving the Court jurisdiction to wind up an insolvent partnership under ss.220 and 221 of the Insolvency Act 1986, it was not sufficient for the petitioner to prove that by virtue of s.14 of the Partnership Act someone had allowed himself to be held out as a partner. For ss. 220-221 to apply there had to be an insolvent partnership. The jurisdiction to wind up could not be conferred by a process of estoppel between the would be partner and the petitioning creditor. It depended upon the existence of an actual partnership. This case is not concerned with questions of jurisdiction as such, but the same principle seems to me to apply. For all of the Respondents to be the taxable person they must be carrying on business in partnership within the meaning of s.45(1). Those words seem to me to mean what they say. They require there to be an actual partnership and not a situation in which some of the individuals involved merely hold themselves out as partners by entering their names on form VAT2. I do not accept that the conditions set out in s.45(1) can be satisfied by a process of estoppel. A taxing statute requires them actually to exist." (HMRC v. Pal [2006] EWHC 2016 (Ch), Patten J)
Estoppel creating a cause of action
- Query whether estoppel by convention must not create a cause of action (i.e. determining the correct tax to be paid)
"[76] The particular concern about allowing promissory estoppel and estoppel by convention to create a cause of action is that this might undermine the requirement of consideration for the validity of a contract. However, that concern is not relevant to the facts of this case which do not concern contractual dealings. In any event, in the context with which we are concerned, even if one were to insist that the estoppel by convention can support, but must not create, a cause of action in relation to the mutual dealings between HMRC and a taxpayer, it would appear that that restriction is satisfied. The underlying duty to pay tax is imposed by statute and the estoppel relates merely to the dealings between HMRC and the taxpayer in connection with the procedure by which HMRC determine the correct amount of tax to be paid under the statute.
[77] Neither counsel made any submissions on the cause of action/defence issue and it was not referred to in any of the judgments below. I therefore say no more about it. It is sufficient for our purposes to make clear that the scope of estoppel by convention extends to the mutual dealings about tax between HMRC and the taxpayer that were in play in this case." (HMRC v. Tinkler [2021] UKSC 39)
- Summary (shared assumption that it would be unconscionable to go back on)
"[53] As I have already said, both counsel submitted that the Benchdollar principles, subject to the Blindley Heath amendment to the first principle, applied in this case. I agree. This judgment therefore affirms that those principles, as amended by Blindley Heath, are a correct statement of the law on estoppel by convention in the context of non-contractual dealings. What I have also sought to do is to explain the ideas underpinning the first three principles which may provide assistance in the understanding and application of those principles." (HMRC v. Tinkler [2021] UKSC 39 - see the summary in the Court of Appeal, below)
"[53] As summarised in Chitty on Contracts (32nd edition) at 4-108:
"Estoppel by convention may arise where both parties to a transaction "act on assumed state of facts or law, the assumption being either shared by both or made by one and acquiesced in by the other." The parties are then precluded from denying the truth of that assumption, if it would be unjust or unconscionable (typically because the party claiming the benefit has been "materially influenced" by the common assumption) to allow them (or one of them) to go back on it."
[54] The parties were agreed that the principles governing estoppel by convention arising out of non-contractual dealings are conveniently summarised in the judgment of Briggs J in HMRC v Benchdollar Limited and Ors [2009] EWHC 1310 (Ch), [2010] 1 All ER 174 at [52]. This summary was approved by the Court of Appeal in Blindley Heath Investments Ltd & Anor v Bass [2015] EWCA Civ 1023, [2017] Ch 389 at [91], subject to one qualification explained at [92]. If that qualification is made to the first paragraph of the summary, the amended summary is as follows:
(1) It is not enough that the common assumption upon which the estoppel is based is merely understood by the parties in the same way. The assumption must be shown to have crossed the line in a manner sufficient to manifest an assent to the assumption.
(2) The expression of the common assumption by the party alleged to be estopped must be such that he may properly be said to have assumed some element of responsibility for it, in the sense of conveying to the other party an understanding that he expected the other party to rely on it.
(3) The person alleging the estoppel must in fact have relied upon the common assumption, to a sufficient extent, rather than merely upon his own independent view of the matter.
(4) That reliance must have occurred in connection with some subsequent mutual dealing between the parties.
(5) Some detriment must thereby have been suffered by the person alleging the estoppel, or benefit thereby have been conferred upon the person alleged to be estopped, sufficient to make it unjust or unconscionable for the latter to assert the true legal (or factual) position." (Tinkler v. HMRC [2019] EWCA Civ 1392, §§53 - 54, Hamblen LJ)
"[222] The relevant principles can be summarised as follows:
(1) There must be an expressly shared common assumption between the parties.
(2) The sharing of the common assumption must include words or conduct from which the necessary sharing or assent to the assumption can properly be inferred.
(3) The expression of the common assumption by the party alleged to be estopped (in this case HMRC) must be such that they may properly be said to have assumed some element of responsibility for it, in the sense of conveying to the other party an understanding that they expect the other party to rely on it.
(4) The person alleging the estoppel (Queenscourt) must in fact have relied upon the common assumption, to a sufficient extent, rather than relying upon their own independent view of the matter.
(5) That reliance must have occurred in connection with some subsequent mutual dealing between the parties.
(6) Some detriment must thereby have been suffered by the person alleging the estoppel (Queenscourt) or some benefit must thereby have been conferred upon the person alleged to be estopped sufficient to make it unjust or unconscionable for the latter to assert the true legal (or factual) position." (Queenscourt Limited v. HMRC [2024] UKFTT 460 (TC), Judge Vos)
INGREDIENTS
Misrepresentation
- Not significant that C induced D's assumption by misrepresentation
"[56] However, with respect to the Court of Appeal, I do not think anything significant turns on that misrepresentation in this case. In particular, as we have seen by reference to Amalgamated Investment, The Amazonia and Benchdollar, it is not a bar to estoppel that HMRC initiated the mistake or that, as in Benchdollar, HMRC was careless in relation to that mistake or induced the other party’s mistake by a misrepresentation. The Court of Appeal regarded those factors as highly relevant to its decision not least in deciding on the unconscionability aspect of estoppel by convention. With respect, this gave those factors far too much weight. On these facts, it was largely irrelevant that HMRC may be said to have initiated the common mistake by a misrepresentation and to have been careless in doing so." (HMRC v. Tinkler [2021] UKSC 39)
- But cannot use estoppel by convention to defeat claim for misrepresentation
"[67] Before moving on to those two additional issues, there is one clarificatory point about the general relationship between misrepresentation and the unconscionability element of estoppel by convention. This particular point does not arise on the facts of this case but it is relevant in thinking more generally about estoppel by convention. I have made clear that, on the facts of this case, and in line with Benchdollar, HMRC’s misrepresentation is no bar to its invocation of estoppel by convention. But one can postulate facts where the invocation of estoppel by convention might be used to try to undermine a claim based on the misrepresentation. Say, for example, A makes a negligent misrepresentation to B that a particular fact (X) is true. X is untrue. B suffers loss by relying on A’s negligent misrepresentation. When B finds out the truth, B brings a claim against A for damages for the tort of negligent misstatement. Estoppel by convention is raised by A as a defence to that claim applying the argument that A and B shared a common assumption that X is true, which was relied on by A, so that B is estopped from denying that X is true; and if X cannot be said to be untrue, B cannot establish the alleged misrepresentation by A. This hypothetical example serves to illustrate that one needs an explanation as to why estoppel by convention does not undermine claims for misrepresentation.
[68] The best explanation is that, where estoppel by convention would serve to undermine the cause of action for misrepresentation, it would not be unconscionable for the misrepresentee (B in the above example) to be able to deny estoppel by convention even if A has detrimentally relied on B’s affirmation of the common assumption. The fifth principle in Benchdollar could not therefore be satisfied by A. But, of course, this is not a problem on the facts of this case because estoppel by convention is not here being invoked by HMRC to defeat a cause of action by Mr Tinkler for misrepresentation. Indeed, no such claim against HMRC could possibly succeed because Mr Tinkler has suffered no loss consequent on HMRC’s negligent misrepresentation." (HMRC v. Tinkler [2021] UKSC 39)
(1) COMMON ASSUMPTION OF FACT OR LAW
- Assumption may be as to facts or law
"It is settled that an estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared by them both or made by one and acquiesced in by the other. The effect of an estoppel by convention is to preclude a party from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption: The August Leonhardt [1985] 2 Lloyd's Rep. 28; The Vistafjord [1988] 2 Lloyd's Rep. 343; Treitel, Law of Contracts, 9th ed., at 112-113. It is not enough that each of the two parties acts on an assumption not communicated to the other. But it was rightly accepted by counsel for both parties that a concluded agreement is not a requirement for an estoppel by convention." (Republic of India v. India Steamship Co [1997] UKHL 40, Lord Steyn)
- Understanding may relate to factual or legal basis on which current transaction is proceeding even if it includes reference to events in the future
"[64] On examination, none in my view can stand without qualification:
i) Present fact. This proposition accurately records what was said in the 1977 case. But that was relatively early in the development of the law, before even the general restatement of the principles in the Amalgamated Investment case (1982). It is inconsistent with the basis on which the Indian Endurance case proceeded at all levels. Although Lord Steyn spoke of an assumption of "fact", the alleged assumption related to what was expected to happen in the English proceedings in the future. The parties' common understanding on that issue, if established, would have been sufficient to found the estoppel. That shows that the understanding may relate to the factual or legal basis on which a current transaction is proceeding, even if that understanding includes reference to events in the future." (ING Bank NV v. Ros Roca SA [2011] EWCA Civ 353, Carnwath LJ)
- Must be targeted at the specific matter in relation to which estoppel said to arise
Conduct manifesting that D knew larger claim would be put forward not sufficient to estop D from raising procedural defence to that larger claim
"Initially, the owners pleaded issue estoppel as a defence to the claim: they said that the plaintiffs could and should have brought their whole claim before the court in Cochin. The owners applied to strike out the claim. The summons came before the Admiralty Judge who was then Mr. Justice Sheen. The judge allowed the owners to amend their defence to rely upon section 34 of the Civil Jurisdiction and Judgments Act 1982. Section 34 provides as follows:
"No proceedings may be brought by a person in England and Wales . . . on a cause of action in respect of which a judgment has been given in his favour in proceedings between the same parties, or their privies . . . in a court of an overseas country, unless that judgment is not enforceable or entitled to recognition in England and Wales . . . ."
Sheen J. held that the cause of action was the same as that on which the plaintiffs had relied when they obtained judgment in India. He held that section 34 of the Act of 1982 was an absolute bar to the English proceedings.
...
Clarke J. set out the primary facts and his inferences in detail. Staughton L.J. summarised the facts and the findings of the judge in his judgment. It is unnecessary for me to cover the same ground. Instead I deal with the matter quite shortly. Clarke J. found established a manifestation of consent to the basis upon which the proceedings in Cochin were proceeding, namely that it was limited to the shortage claim and the larger claim could proceed elsewhere: at 346, col.1. It is, however, not enough to show that the owners by their conduct manifested that they knew that the larger claim would be put forward in other proceedings. It is true that the common assumption does not have to extend specifically to the bar under section 34. But in order to establish an estoppel by convention the plaintiffs had to prove that the owners evinced by their conduct that they were content that the taking of a judgment in Cochin would not prejudice the resolution of other proceedings on their merits, that is, that in future proceedings no plea or defence on the basis of a judgment in Cochin would be raised whatever the outcome of the proceedings in Cochin." (Republic of India v. India Steamship Co [1997] UKHL 40, Lord Steyn)
- Common assumption would need to be not just that C had a valid claim but that D would not take limitation defence
"[62] A shared assumption is not on the authorities sufficient to establish an estoppel unless it is communicated. It follows that if in this case there was no shared assumption to the effect that ARC had a valid claim that was not time-barred, there could be no communication by LBH that it was making any such assumption. It also follows from what we have said above that the communication required would in any event be not simply that ARC had a valid claim but also that LBH would not take any defence that might be open to it on the basis of a statutory limitation period." (London Borough of Hillingdon v. ARC Limited [2000] EWCA Civ 191, Arden J)
- Certainty
"[64] On examination, none in my view can stand without qualification:
[...]
ii) Sufficiently certain. The proposition refers to a comment in the concurring judgment of Ralph Gibson LJ in Troop v Gibson, on a point which he acknowledged was unnecessary for the decision. With respect, I find more persuasive the way in which the point was expressed in the leading judgment of Sir John Arnold P. After referring to the extensive argument on the need for a "representation" to be clear and unequivocal to found an estoppel, he said that the same question did not arise in relation to estoppel by convention:
"Since this is of a consensual character and the terms of the convention, just as those of a contract once the language is established by the evidence, must be interpreted by the court and the only true meaning is that decided upon by the court." (p 3K-L)" (ING Bank NV v. Ros Roca SA [2011] EWCA Civ 353, Carnwath LJ)
"[102] Two alternative kinds of estoppel are raised, estoppel by convention (where the parties act on a common, erroneous, assumption) and estoppel by representation (where one party has represented, erroneously, a state of affairs to be so and the other has relied upon that representation to his detriment). It was not disputed that for either kind of estoppel, the representation or common assumption as the case may be, must be unambiguous and unequivocal. That is inherent in the very nature of an estoppel." (Smithkline Beecham plc v. Apotex Europe Ltd [2006] EWCA Civ 658)
- Express statement may demonstrate implicit assumption
"[69] The first point is true as far as it goes. The estimate was not intended to be, and could not be, a final figure. But there is no reason to think that it was to be other than a genuine estimate on the information then available, albeit one that might need to be revised. I see nothing to support the judge's suggestion the parties might have intended no more than a "ball park" figure. Furthermore, even if the assumption related overtly to the total transaction costs, the court is entitled to enquire what that necessarily implied in relation to the assumed ING fees, on the information known to the parties. Adopting Sir John Arnold's words, it is for the court to "interpret" the assumption, so as to arrive at its correct meaning for the purposes of the alleged estoppel." (ING Bank NV v. Ros Roca SA [2011] EWCA Civ 353, Carnwath LJ)
- No assumption that insurer would not exercise right to discharge itself from cover where neither party aware of the right
"[32] Thus formulated it seems to me that the argument based on the estoppel by convention runs into the same difficulties as waiver. Mere silence, inactivity or failure to take a point cannot be enough to found an estoppel by convention. Furthermore I am attracted by the way in which the judge dealt with this point. In other words if estoppel by convention works in this situation at all the common assumption must relate to Axa’s non-assertion of its right to treat itself as discharged from cover. As neither party was aware of this right there was no such assumption." (HIH Casualty Plc v. AXA Corporate Solutions [2002] EWCA Civ 1253)
- Proceeding on the basis of an estimate even after all elements needed to be accurate were available
"[70] The Fernandez email is important in this context. It shows, first, that by early November, all the elements needed to make an accurate estimate of ING's fees were available, and, secondly, that the assumed amount of transaction costs was irredeemably inconsistent with a calculation of fees based on EBITDA 2006. At the very least the estimate implied a shared assumption that, notwithstanding the reference to EBITDA 2006 in the agreement, that was not the basis on which the fees were to be calculated." (ING Bank NV v. Ros Roca SA [2011] EWCA Civ 353, Carnwath LJ)
Awareness that assumption is incorrect
- Parties may proceed on the basis of a common assumption even if they know it to be incorrect
"[45] The law is correctly analysed by Spencer Bower at page 197:
"… an estoppel by convention need not involve any misleading of a representee by a representor, nor is it essential that the representee shall be shown to have believed in the assumed state of facts or law. The full facts may be known to both parties; but if, even knowing those facts to the full, they are shown to have assumed a different state of facts or law as between themselves for the purposes of a particular transaction, then a convention will be established. The claim of the party raising the estoppel is, not that he believed the assumed version of facts or law was true, but that he believed (and agreed) that it should be treated as true."
[46] This passage refers to estoppel by convention and not expressly to estoppel by deed. However, there is no logical reason to treat declaratory statements in a deed which are intended to be contractually binding as less effective than any other express or implied contractual convention. The law as stated by Spencer Bower not only carries the considerable authority of Dixon J, who was a master of the common law, and is supported by earlier authorities to which reference has been made, but more fundamentally it accords with the principle of party autonomy which underlies the common law of contract." (Prime Sight Limited v. Lavarello [2013] UKPC 22)
- But if C originally proceeded on the basis the assumption was correct and later discovers it was wrong, that may end the common assumption or affect reliance
"[65] In the present cases, in relation to claims which became statute barred only after September 2001, the prejudice occasioned to the Revenue by the loss of the ability to pursue those claims was in no sense reliant upon the convention. The Revenue had been advised in terms that the acknowledgements and part payments did not have the effect assumed by the convention, and knew that, nonetheless, those claims could still be saved by the taking of prompt protective steps.
[66] While it is tempting to speculate that the Revenue might have held its hand in relation to those claims out of some perception that the exchanges of correspondence which I have described would have made it unconscionable for it to do otherwise, I consider it quite wrong to draw any inference to that effect. Mr Smith was, so I was informed, still employed by the Revenue at the time of the trial. He was not called to give evidence, and it did not appear that Mr Wythes even asked Mr Smith what had been the reason for the decision in September 2001 not to take any protective steps. Where a party declines without explanation to call an apparently available witness who could have given favourable evidence on a relevant matter, it is not for the court to exercise a sympathetic imagination in filling the consequential void." (HMRC v. Benchdollar Limited [2009] EWHC 1310 (Ch), Briggs J)
(2) ASSUMPTION MUST BE SHARED
- C must know the D shares the common assumption
"[51] It may be helpful if I explain in my own words the important ideas that lie behind the first three principles of Benchdollar. Those ideas are as follows. The person raising the estoppel (who I shall refer to as “C”) must know that the person against whom the estoppel is raised (who I shall refer to as “D”) shares the common assumption and must be strengthened, or influenced, in its reliance on that common assumption by that knowledge; and D must (objectively) intend, or expect, that that will be the effect on C of its conduct crossing the line so that one can say that D has assumed some element of responsibility for C’s reliance on the common assumption." (HMRC v. Tinkler [2021] UKSC 39)
[115] We agree with [the taxpayer], and find as a fact that the Inspector knew the Cars would be used for some private journeys. We make that finding for the following reasons:
(1) Mr Walpole told the Inspector that the Cars were regarded as "travelling offices", because they contained phone equipment. It would have been an obvious and inescapable inference that the Cars were regularly used for all types of journey, including those with a private purpose, because otherwise there was a high risk that calls from customers would be missed.
(2) One of the requirements agreed at the Meeting was that employees who used the Cars each had access to a personal car owned privately. That requirement only makes sense if it was a proxy for the statutory condition that "any private use of the car made by the employee was merely incidental to the employee's other use of the car". The Inspector therefore accepted the Cars would be used for all types of journey, although as the directors had personal cars owned privately, the number of journeys with a private purpose could be expected to be lower than if this was not the position.
[116] We therefore find that there was a common assumption that the Cars were pool cars provided the Appellants kept to the terms agreed in the Meeting. We also agree that the Inspector, acting on behalf of the Inland Revenue, assumed responsibility for that assumption, knowing it would be relied on, and that the Appellants did rely on it. It follows that the requirement in Tinkler that the Inspector's conduct must have "crossed the line" (see §111) has also been met." (MWL International Ltd v. HMRC [2024] UKFTT 402 (TC), Judge Redston)
- No estoppel if no assent to HMRC's assumption
"[49] However, Tinkler was a factually different situation as the taxpayer (through his advisor) was actively engaged in responding to the enquiry during the time when a notice of enquiry could have been given. In the present case, however, Mr Cattrell (through PWC) was involved in agreeing to the RSA in 2005 and there was then no contact until October 2013 at the earliest.
[50] I find that there was a shared assumption that a notice of enquiry had been given. HMRC were clearly of the view that a notice had been given, as shown from its records and internal memoranda. For the reasons set out above, I find that Mr Cattrell had received the notice of enquiry and so, contrary to Mr Lynam's submissions, did understand that a notice of enquiry had been given (although there is nothing to say that Mr Cattrell understood the legal ramifications of this). However, this shared common assumption did not cross the line. Crucially, the RSA was predicated on the need to issue a notice of enquiry if one had not already been issued. Crucially, paragraph (i) of the RSA provided that, "HMRC will open enquiries into all other individuals within the RSA but will not request information and documentation relating to the GS loss claims." Similarly, paragraph (c) provided that, "The RSA does not affect the statutory rights and obligations of either the individual or HMRC." The RSA did not, therefore, manifest an assent to any assumption that a notice of enquiry had already been given, as the RSA itself catered for the possibility that it had not been given. Although there was no such reservation in the communications in 2013 and 2014 (which did appear to assume that the enquiry was valid) these are after the date upon which a notice of enquiry could have been given under section 9A of the TMA 1970 and so any reliance upon that would not be detrimental reliance as HMRC were by then already out of time.
[51] It follows that the RSA did not constitute an assumption of responsibility either, as the RSA did not provide for or otherwise indicate that Mr Cattrell accepted that a notice of enquiry had been given. I accept that he was, through PWC as his agent, indicating (and, indeed, agreeing) that he would participate in the RSA. However, for the reasons set out above, the RSA still on its face envisaged a need to give a notice of enquiry where one had not been given." (Cattrell v. HMRC [2024] UKFTT 67 (TC), Judge Chapman KC)
- Shared assumption not proven by conduct consistent with different understanding (e.g. consistent with duty to use best endeavours rather than unqualified duty)
"[36] In my view this argument cannot succeed. It is unlikely, though not impossible, that each of the parties assumed that clause 1 of the agreement imposed an unqualified obligation on BAL in this respect, despite the fact that it was expressed in terms of an obligation to use best endeavours, but cogent evidence would be necessary to establish both that they had shared that assumption to the knowledge of each other and that they had conducted themselves on that basis. In my view there is no such evidence. All Mr. Shepherd could point to was a longstanding practice under which Jet2 (along with other airlines) submitted flight schedules for the ensuing six-month period which were accepted, with or without negotiation and modification, by BAL. That is sufficient to demonstrate that Jet2 did submit flight schedules and that they were in practice accepted by BAL, but it falls far short of demonstrating that the parties shared a common assumption that Jet2 had a right to insist on aircraft movements taking place outside normal opening hours and that BAL had an obligation to accommodate them. The need for a shared common assumption, in the sense that each party must have acted in the knowledge that the other shared its understanding of the position, is reflected in the passage in Lord Steyn's speech in The 'Indian Grace' (No. 2), to which I referred earlier. The evidence in the present case is more consistent with ordinary business co-operation than with the reliance on, and recognition of, a legal obligation." (Jet2.com Limited v. Blackpool Airport Limited [2012] EWCA Civ 417)
- Persons who ceased to be involved before the events said to have created erroneous assumption cannot have shared it
"[51] To these difficulties may be added the following:
i) In the present case the estoppel is said to have bound former employees who had left the Scheme before any of the events which are said to have created the erroneous assumption. Such a person cannot realistically be said to have shared the assumption..." (Trustee Solutions Limited v. Dubery [2006] EWHC 1426 (Ch), Lewison J)
- Must be the actual assumption held (rather than some modification of it)
"[51] To these difficulties may be added the following:
...
iii) Since none of the documents relied on informed male members about their entitlement to pension accrued during a Barber window period of pensionable service, there is a possible conflict between the assumption relied on as constituting the convention, and European law; unless the assumption is modified to take account of the effects of the Barber judgment. But if it is so modified, how can it be said that the members (or, for that matter, the trustees) had that modified assumption?
iv) If the shared assumption is anything other than that which was expressly stated to members of the scheme (i.e. any retrospective element is stripped out of it), it is unrealistic to suggest that the members shared the altered assumption, unless they are to be endowed with unusual knowledge of pensions law and/or the detailed contents of the rules. Ex hypothesi they do not have the latter; since if they did there would be no estoppel at all." (Trustee Solutions Limited v. Dubery [2006] EWHC 1426 (Ch), Lewison J)
Acquiescence rather than sharing
Groups of persons
- Estoppel by convention might apply where the defendant acquiesces in the other party's assumption
"[148] There are authorities that suggest that an estoppel by convention may arise where an assumption is shared by one party and acquiesced in by the other – see Republic of India v India Steamship Company Co Ltd ("The Indian Endurance and the Indian Grace") [1998] AC 878 at 913-914. However, that is not how the present case as to estoppel by convention has been put in the present case." (Ashworth v. Philbin [2025] EWHC 494 (Ch), HHJ Cawson KC)
- Pension trusts cannot be altered by estoppel insofar as that would bind future beneficiaries
"[50] There are a number of difficulties about applying this principle to pension schemes so as to create estoppels binding on members of the scheme, the trustees and the sponsoring company alike. They were outlined by Morritt V-C in Redrow plc v Pedley [2002] Pens LR 339, para 60 and following.
i) The pension scheme embodies not only the terms of a contract between individual members and the trustees but also a trust applicable to the fund comprising the contributions of members and surpluses derived from the past in which present and future members may be interested. Such trusts cannot be altered by estoppel because there can be no such estoppel binding future members..." (Trustee Solutions Limited v. Dubery [2006] EWHC 1426 (Ch), Lewison J)
(3) CONDUCT OF D MUST HAVE CROSSED THE LINE
- Estoppel re pension rules requires proof each and every member has by his course of dealings adopted a particular interpretation/accepted a given state of facts
"[50] There are a number of difficulties about applying this principle to pension schemes so as to create estoppels binding on members of the scheme, the trustees and the sponsoring company alike. They were outlined by Morritt V-C in Redrow plc v Pedley [2002] Pens LR 339, para 60 and following.
...
ii) It is necessary to show that the principle is applicable to all existing members. It is not necessary for that purpose to call evidence relating to each and every member's intention. But that will not absolve a claimant from adducing evidence to show that the principle must be applicable to the general body of members as such.
iii) What must be proved is that each and every member has by his "course of dealing put a particular interpretation on the terms of" the Rules or "acted upon the agreed assumption that a given state of facts is to be accepted between them as true". This involves more than merely passive acceptance. The administration of a pension scheme on a particular assumption as to the yardstick by which contributions or benefits are to be calculated may well give rise to a relevant assumption on the part of the trustees. It requires clear evidence of intention or positive conduct to bind the general body of members to such an assumption. Receipt of the benefit or payment of the contribution, without more, is unlikely to be enough." (Trustee Solutions Limited v. Dubery [2006] EWHC 1426 (Ch), Lewison J)
- Something must have crossed the line sufficient to manifest assent to the assumption
"[21] The expansion provided by Lord Burrows was that in relation to the "common assumption" described in the first of these principles, "something must be shown to have 'crossed the line' sufficient to manifest an assent to the assumption.": Tinkler at [50]." (MWL International Ltd v. HMRC [2026] UKUT 62 (TCC), Adam Johnson J and Judge Thomas Scott)
- Manifest conduct which is based on a common assumption
""All estoppels must involve some statement or conduct by the party alleged to be estopped on which the alleged representee was entitled to rely and did rely. In this sense all estoppels may be regarded as requiring some manifest representation which crosses the line between representor and representee, either by statement or conduct. It may be an express statement or it may be implied from conduct, for example by the alleged representor to react to something said or done by the alleged representee so as to imply a manifestation of assent which leads to estoppel by silence or acquiescence. Similarly, in the case of so called estoppels by convention, there must be some mutually manifest conduct by the parties which is based on a common but mistaken assumption. The alleged representor's participation in this conduct can then be relied on by the representee as a basis for this form of estoppel....
... There cannot be any estoppel unless the alleged representor has said or done something, or failed to do something, with a result that -- across the line between the parties -- his action or inaction has produced some belief or expectation in the mind of the alleged representee, so that depending on the circumstances it would thereafter no longer be right to allow alleged representor to resile by challenging the belief or expectation which he had engendered. To that extent at least therefore, the alleged representor must be open to criticism." (K Lokumal v. Lotte Shipping (The August Leonhardt) [1985] 2 Lloyd's Rep 28)
- D must have played such a part in the adoption of the assumption that it would be unjust if D were free to ignore it
"[90] Again, Dixon J's judgment in Grundt explains the position (and the evidential burden) clearly (see page 675):
"The justice of an estoppel is not established by the fact in itself that a state of affairs has been assumed as the basis of action or inaction and that a departure from the assumption would turn the action or inaction into a detrimental change of position. It depends also on the manner in which the assumption has been occasioned or induced. Before anyone can be estopped, he must have played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it." (Dixon v. Blindley Heath Investments Limited [2015] EWCA Civ 1023)
- Assumption not demonstrated by conduct which is consistent with holding and not holding the assumption
"[54] The female members who carried on working after the age of 60 may or may not have done so on the assumption that they had to work until the age of 65 in order to become entitled to a full pension. There is no evidence one way or another. It must not be forgotten that under the rules of the Scheme a member who reaches the Normal Retirement Date may elect to postpone receipt of a pension while he or she continues in service. That may have happened in these cases. To the extent that such female members continued to make contributions to the scheme (if they did, as to which there is again no evidence) then, as Morritt V-C said, that is not enough." (Trustee Solutions Limited v. Dubery [2006] EWHC 1426 (Ch), Lewison J)
- Actions and beliefs of agent attributable to principal
"[26] By filling in and returning Form 64-8, Mr Tinkler was making clear to HMRC that BDO had general authority to deal with HMRC in relation to his tax affairs including dealing with questions arising under an enquiry. That apparent conferral of authority was very wide indeed. As we have seen in para 7, it stated that BDO was authorised to act on behalf of the taxpayer in connection with “any matters within the responsibility of [HMRC]”. There was a limited carve out from that conferral of apparent authority in relation to being given an enquiry notice. But in all other respects, including making clear to HMRC that Mr Tinkler was assuming that a valid enquiry had been opened, BDO had Mr Tinkler’s apparent authority to act on his behalf. Put in shorthand, BDO had the apparent authority of Mr Tinkler for the estoppel-raising conduct alleged.
[27]...The FTT went on to find that, although not necessary to do so (because apparent authority was enough), BDO had Mr Tinkler’s express instructions, and hence actual authority, to write the letter to HMRC of November 2005. And at para 145, it concluded that, for the purpose of estoppel by convention, “the actions and beliefs of BDO are properly attributed to Mr Tinkler.” I agree." (HMRC v. Tinkler [2021] UKSC 39)
Unambiguous
- Conduct crossing the line unambiguously giving rise to a clear assumption of fact or law on the faith of which both parties unequivocally proceed
"[88] However, the different results in the conjoined cases referred to above exemplify the necessity, if an estoppel by convention is to be established, of demonstrating conduct "crossing the line" and unambiguously giving rise to a clear assumption of fact or law on the faith of which both parties unequivocally proceed." (Dixon v. Blindley Heath Investments Limited [2015] EWCA Civ 1023)
- If conduct could be reasonably be interpreted in more than one way, C should seek clarification rather than rely
"[56] Patten LJ then observed that the courts have tended to a relatively strict application of the requirement that a representation should be unambiguous. He referred to Lord Hailsham LC's explanation of Bowen LJ's dictum rather than that of Lord Cross, before concluding, on the facts, that it would not have been reasonable for the claimant in that case to rely upon the representation in the manner for which she had contended.
[57] On the basis of these decisions, it seems to me that the weight of authority is to the effect that for a plea of promissory estoppel to succeed, there must have been a clear and unequivocal statement; and that if ambiguous words were used which could reasonably be interpreted in several ways (one of which would not support the alleged estoppel) then those words will not found an estoppel unless the representee seeks and obtains clarification of the statement." (Closegate Hotel Development (Durham) Limited v. McLean [2013] EWHC 3237 (Ch), Richard Snowden QC)
- Necessary clarity from D's failure to pick up on a point made by C likely to be limited
"[164] Mr Huntington relies on the failure of Mr Myhal to contradict his assertion, made in his memorandum of 20th April 2005 (see paragraph 155 above), that his rights in relation to the LTIP lay under the contract as constituting, in context, a representation or acceptance that he was so entitled, from which Imagine could not fairly resile in the light of the fact that, in reliance upon it, he acted on the assumption that that was accepted, and never considered, or asked lawyers to consider, that the position might be different or that his contract had been varied.
[165] In order for any representation or convention to found an estoppel the representation or the manifestation of the assumption must be clear and unequivocal. Such a representation can arise by implication from what is said. Similarly the acts of the person alleged to be estopped may manifest an assumption, even though not spelt out in terms, if the only reasonable conclusion from his conduct is that he is proceeding on that assumption. But the circumstances in which a representation of the necessary clarity may be derived from a failure to pick up on a point made by the alleged representee are likely to be limited." (Huntington v. Imagine Group Holdings Ltd [2007] EWHC 1603 (Comm), Christopher Clarke J)
Failure to speak
- Failure to respond to point in 9 page letter not entitling C to assume D was indicating acceptance
"[168] Secondly, it does not seem to me that Mr Myhal's response was such that Mr Huntington was entitled to assume that Mr Myhal was indicating an acceptance of the proposition. The April 2005 memorandum was a nine page document, containing a number of points. Mr Myhal's e-mail of 3rd May was less than a page in length; and was largely composed of a statement of what Imagine intended to do, rather than an engagement with the several points raised in the memorandum to which it was a response. The final paragraph indicated that Imagine was going to act in the way proposed even if some managers felt that what was proposed violated the terms of their contracts. But that does not constitute an acceptance, let alone a clear acceptance, of the proposition." (Huntington v. Imagine Group Holdings Ltd [2007] EWHC 1603 (Comm), Christopher Clarke J)
- Circumstances where a reasonable person would expect other person, acting honestly and responsibly, to bring true facts to attention of party known to be acting under mistake
"[93] Nevertheless, particular circumstances can make a difference, and it is possible to formulate a general principle as to why that should be so. Thus in Moorgate Mercantile Co Ltd v. Twitchings [1977] AC 890 at 903 Lord Wilberforce, in a dissenting speech but which in this respect has borne fruit, spoke of the possibility that, in a particular situation which affected two parties, a reasonable man would expect the other party, "acting honestly and responsibly" either to make something known or face the consequences of not doing so. In Republic of India v. India Steamship Co (No 2) (The "Indian Endurance") [1998] AC 878 at 914 Lord Steyn approved Lord Wilberforce's observation as "helpful as indicating the general principle underlying estoppel by acquiescence". As Bingham J had put it some years earlier in Tradax Export SA v. Dorada Compania Naviera SA (The"Lutetian") [1982] 2 Lloyd's Rep 140 at 157, after citing Spencer Bower and Turner, Estoppel by Representation, 3rd ed at 49:
"More recently, Lord Wilberforce in Moorgate…provided persuasive authority for the proposition that the duty necessary to found an estoppel by silence or acquiescence arises where a reasonable man would expect the person against whom the estoppel is raised, acting honestly and responsibly, to bring the true facts to the attention of the other party known by him to be under a mistake as to their respective rights and obligations. (Lord Wilberforce dissented on the outcome, and expressed the principle in proprietary terms appropriate to that case, but neither of these things in my judgment diminishes the significance of what he said.)"
[94] Bingham J there applied the principle to a dispute about withdrawal under a time charter, in other words it affected parties to an existing contract. The charterers had tendered payment of hire in an amount which they believed to be correct, as the owners knew. The penalty of failure to pay punctual hire was that owners had the power to withdraw the vessel. By keeping silent about their own calculations of hire, the owners thwarted the charterers' attempt to live up to their contract. The owners were held to be estopped from exercising their right to withdraw (see issue (7) at 156). Bingham J concluded:
"The relationship of owner and charterer is not one of the utmost good faith. One must be careful not to impute unrealistically onerous obligations to those who may choose to conduct their relations in a tough and uncompromising way. There is nonetheless a duty not to conduct oneself in such a way as to mislead. I have no doubt that the owners knew that the charterers believed they had paid the right amount. It was their duty, acting honestly and responsibly, to disclose their own view to the charterers. They did not do so and indeed thwarted the charterers' attempts to discover their views. Their omission to disclose their own calculation led the charterers to think, until a very late stage, that no objection was taken to their calculation. It would in my view be unjust in the circumstances if the owners could rely on the incorrectness of a deduction which they had every opportunity to point out at an earlier stage and which their failure to point out caused the charterers to overlook. I answer this question in favour of the charterers." " (ING Bank NV v. Ros Roca SA [2011] EWCA Civ 353, Rix LJ)
- Silence/failure to take a point not sufficient by itself
"[32] Thus formulated it seems to me that the argument based on the estoppel by convention runs into the same difficulties as waiver. Mere silence, inactivity or failure to take a point cannot be enough to found an estoppel by convention. Furthermore I am attracted by the way in which the judge dealt with this point. In other words if estoppel by convention works in this situation at all the common assumption must relate to Axa’s non-assertion of its right to treat itself as discharged from cover. As neither party was aware of this right there was no such assumption." (HIH Casualty Plc v. AXA Corporate Solutions [2002] EWCA Civ 1253)
- Failing to raise problem with enquiry notice where HMRC would reasonably expect it to be raised
"[59] One of my essential disagreements with the Court of Appeal’s approach to the facts may be expressed by saying that this was not a case where BDO was simply repeating back to HMRC the mistake/misrepresentation (that the notice had been validly served). BDO’s conduct went further than that. Indeed, in addition to the positive conduct of BDO referred to in the previous two paragraphs, there is the point that BDO had wide apparent authority to deal with HMRC on behalf of Mr Tinkler. Had there been a problem with the enquiry notice, HMRC would reasonably have expected BDO to raise that problem. Far from doing that, BDO conducted itself, with Mr Tinkler’s apparent authority, on the basis that there was a valid enquiry underway. By so doing, BDO affirmed HMRC’s mistaken assumption." (HMRC v. Tinkler [2021] UKSC 39)
- Failure to protest can be sufficient only where failure to protest implies a manifestation of assent
"[47] The case on estoppel rested heavily on Mr Jones' failure to protest. A failure to react or protest can give rise to an estoppel but only where that failure implies a manifestation of assent: The August Leonhardt [1985] 2 Lloyd's Rep 28 at 34, cited with approval in Tinkler at [36]. Mr Jones' actions as revealed by the email traffic are consistent with his assertion of his interest in the property; and inconsistent with his assent to what Mr Proctor was proposing." (McCarthy v. Jones [2023] EWCA Civ 589, Lewison, Baker, Laing LJJ)
- If person asserts their rights, not bound to continue to assert rights every time they are infringed
"[48] I consider that there is considerable force in that answer. If someone asserts their rights, I do not consider that they are bound to continue to assert those rights every time they are infringed; still less where on the face of it Mr Jones was presented by Mr Proctor with what appeared to be a fait accompli." (McCarthy v. Jones [2023] EWCA Civ 589, Lewison, Baker, Laing LJJ)
- Failing to plead a time bar at the appropriate time
"[49] In order to found a claim that a person is estopped from asserting a legal right, in this case the right to say that the Defendant's counterclaim may not be brought because the two year time limit had expired, it is necessary to show that the person has made a clear and unequivocal representation that the right will not be asserted; see Ace Insurance v Surendranath Seechurn [2002] EWCA Civ 67 per Ward LJ at paragraphs 17-125. If the representation is said to have been made by conduct it is necessary to show that the person was aware of his right and that the course of conduct on which he engaged was inconsistent with reliance upon that right; see The Superhulls Cover Case [1990] 2 Lloyds Rep.431 per Phillips J. at p.450.
[50] For the reasons I have already given it was incumbent upon the Claimant, if it wished to rely upon the time bar point, to take that point promptly after the Defendant had stated in its Statement of Case that it sought judgment in respect of the damage it had sustained and a reference to assess that damage. On 11 January 2010 prior to the CMC the parties agreed the Case Memorandum and List of Issues. The Claimant was aware that the Defendant had not commenced proceedings within the two year time limit and yet, although quantum was stated to be one of the issues in the action, the Claimant did not raise reliance on the time bar as being one of the issues in the proceedings. The Claimant's conduct in failing to inform the Defendant at the time of the CMC that it was intending to rely on the time bar was, in my judgment, a clear and unequivocal representation that the Claimant was not relying upon the time bar. If the Claimant had been intending to rely upon the time bar the Claimant ought to have informed the Defendant (and the Court) of that by the time of the CMC at the latest. Its failure to take the point by that time was, in one sense, silent conduct, but it was silent conduct at a time when the Claimant had a duty to take the point if it wished to rely upon it. Silence in that context is a clear statement that the time bar point is not to be relied upon. It is inconsistent with an intention to rely upon the point." (MIOM 1 Limited v. Sea Echo ENE [2011] EWHC 2715 (Admlty), Teare J)
- Expressly reserving right to rely on other points
"[44] In my view that is not the correct assessment of those sentences in the context of the whole letter. In particular, that assessment does not take account of the important words "The foregoing is without prejudice to all the remaining terms and conditions of the policy". To my mind those words are a clear indication that Liberty and its lawyers were reserving the right to rely on any of those remaining terms and conditions of the policy in the future if advised to do so. I also think it is important that the final phrase in the letter begins with the two words "along with", which makes that last sentence disjunctive. In short, Fowler, Rodriguez & Chalos were saying, on behalf of Liberty, that the insurers reserved the right to rely on other terms of the policy in support of its denial of coverage and also reserved the right to rely on any other defences that might be discovered after further investigations. With great respect to the judge's view, I cannot regard the wording of the letter as making any representation, let alone an unequivocal one, that Liberty was not going to rely in the future on any legal rights that it had because of Argo's actual (although unstated) breach of the Hold Harmless Warranty." (Liberty Insurance PTE Ltd v. Argo Systems FZE [2011] EWCA Civ 1572, Aikens LJ)
- Silence and inaction not usually construed as representation that person will not rely on particular legal rights in future
"[46] The last element on which the judge concentrated was the fact that Liberty did not advert to the breach of the Hold Harmless Warranty point for nearly seven years after the letter of 18 July 2003 until it was raised in its Defence in the English proceedings. The judge stated (at [36]) that the period of almost seven years was "of itself a powerful factor", when coupled with the fact that Liberty stood by "while Argo took the steps it did in the US proceedings…". Saying nothing and "standing by", ie. doing nothing, are, to my mind, equivocal actions. This court has stated that, in the absence of special circumstances, silence and inaction are, when objectively considered, equivocal and cannot, of themselves, constitute an unequivocal representation as to whether a person will or will not rely on a particular legal right in the future.[17] In my view, there are no special circumstances in this case that are capable of turning the silence and inaction of Liberty into an unequivocal representation to Argo that it did not intend to enforce its strict legal rights based on a breach of the Hold Harmless Warranty." (Liberty Insurance PTE Ltd v. Argo Systems FZE [2011] EWCA Civ 1572, Aikens LJ)
- Representation that D did not then have in mind advancing a limitation defence not assurance that no limitation point would be taken
"[129] The judge was plainly right to express the view that the letter of 18th May 2001 "did amount to a reasonably clear representation that the defendants and their advisers did not then have in mind the advancing of a limitation defence to all or any part of the claim". However, it seems to me that there are two problems, which may in practice be connected, with the contention that the letter amounted to a positive representation to that effect. First, as already mentioned, the letter was expressed in tentative terms, making it clear that there is no concession on liability, merely an expression of expectation of such a concession. Hence, it would not be right to characterise the letter as containing a positive representation whether put in terms of irrevocable intention or assurance, that no limitation point would be taken. Secondly, until the House of Lords gave judgment in Cave on 25th April 2002, the law would have been understood to have been such that there was no limitation defence, because of the provisions of s32(1)(b) as interpreted by the Court of Appeal in Brocklesbury -v- Armitage & Guest (note) [2002] 1 WLR 598, a case decided in 2000, and overruled by Cave. Accordingly, it is scarcely surprising that, as at May 2001, Barlows were not raising any limitation point in correspondence." (Law Society v. Sephton [2004] EWCA Civ 1627, Neuberger LJ)
- Repeatedly conducting oneself on the basis that no pre-emption rights existed giving rise to estoppel
"[93] The question whether the parties manifested assent to the assumption by something said or some conduct which clearly crossed the line is largely a question of fact. The Judge was convinced that such assent was indeed manifested and we see no reason to depart from that conclusion. Indeed, what in the Judgment is described as the "heated discussion" at the Board Meeting of 20 July 2010 about the transfer of shares to MSK 050 which gave effective control of the company to the Dixon interest to the prejudice of the Bass interest, in the course of which Mr Bass sought to raise a number of arguments against approval of the transfer but never raised any question of pre-emption rights, is not explicable except on the basis that all present made manifest their assumption, or at least (in the case of Mr Dixon) were prepared to proceed on the footing, that there was no impediment on which Mr Bass could rely to object to that transfer.
...
[98] We have already alluded to the seven instances of dealings with shares relied on by the Judge in paragraph [131] of the Judgment as demonstrating such an assumption. Whilst accepting that not all the instances are individually persuasive, it seems to us that the Judge's conclusion that (a) this was not a case of mere silence, inactivity or failure to take the point (unlike the HIH Casualty decision) and that (b) between 2004 and 2011 the parties conducted themselves on the basis of a positive assumption that no valid rights of pre-emption existed, was amply justified." (Dixon v. Blindley Heath Investments Limited [2015] EWCA Civ 1023)
Silence on assumption + conduct crucially based on assumed state of affairs
D must (objectively) intend or expect that C will rely on D's affirmation of the common assumption
"[51] It may be helpful if I explain in my own words the important ideas that lie behind the first three principles of Benchdollar. Those ideas are as follows. The person raising the estoppel (who I shall refer to as “C”) must know that the person against whom the estoppel is raised (who I shall refer to as “D”) shares the common assumption and must be strengthened, or influenced, in its reliance on that common assumption by that knowledge; and D must (objectively) intend, or expect, that that will be the effect on C of its conduct crossing the line so that one can say that D has assumed some element of responsibility for C’s reliance on the common assumption.
[52] It will be apparent from that explanation of the ideas underpinning the first three Benchdollar principles that C must rely to some extent on D’s affirmation of the common assumption and D must (objectively) intend or expect that reliance. This is in line with the paragraph from Spencer Bower, The Law Relating to Estoppel by Representation, 4th ed (2004) p 189, which was cited by Briggs J just before his statement of principles:
“In the context of estoppel by convention, the question here is whether the party estopped actually (or as reasonably understood by the estoppel raiser) intended the estoppel raiser to rely on the subscription of the party estopped to their common view (as opposed to each, keeping his own counsel, being responsible for his own view).” (HMRC v. Tinkler [2021] UKSC 39)
"[69] As we can see from the summary of the principles seen in Tinkler, estoppel by convention is a technical doctrine. It is useful in the contexts in which it was developed, namely commercial disputes where parties have adopted a conventional reading of, for example, a lease or a contract. Its requirements are demanding; the mere sharing of a common assumption is not enough, there has to be communication and there has to be an intention that the person alleging the estoppel was to rely upon the communicated assumption." (G&A Gorrara Ltd v. Kenilworth Court Block E RTM Co Ltd [2024] UKUT 81 (LC), Judge Cooke)
- Exchange of letters by solicitors showed "quite clearly" assent to assumption that appeal would be determined on its merits/no procedural defence would be raised
"In this case the exchange of letters between solicitors on 3 and 6 August 1990 in relation to the draft award shows quite clearly that both parties assumed that the fact that an award was "Dated at Paris" was no obstacle to the exercise by the English courts of their supervisory jurisdiction under the Arbitration Acts 1950 and 1979.
...
Whilst it is quite true that in general there is no obligation to disclose defences, this is not the case where there has been a common assumption that the defence is not available and one or other or both parties have acted on that assumption. In my judgment it would be unconscionable now to allow Mr. Outhwaite to renege from the common assumption which extended not only to the fact that applications under the Acts of 1950 and 1979 could be made within a specified time, but by necessary implication that in respect of an award which stated on its face that it was "Dated at Paris" such applications could and would be heard and determined on their merits. In relation to any future awards the position will, of course, be different." (Hiscox v. Outhwaite [1992] 1 AC 562 at 575...577 (CoA))
- Acquiscence: D's silence must be reasonably understood as meaning that D intends C to rely on the assumption (rather than, e.g. that D believes it can do nothing about the situation)
"[209] First, I think that, in order to create an estoppel by acquiescence, the circumstances in which B acquiesces in the assumption which A has made, must be such that B's silence can reasonably be understood, and is in fact understood by party A, as meaning that B intends A to rely upon the assumption. Otherwise, I can see no injustice in B resiling from the assumption.
[210] Second, I think that A must in fact have relied upon the common assumption, to a sufficient extent, rather than merely upon his own independent view of the matter. What makes it unfair for B to go back on the assumption is that B's failure to object has been a material inducement to A to follow a particular course of conduct.
[211] In the present case, I do not think that Richmond's failure to object to what NWCF was doing could reasonably have been understood as meaning that Richmond assumed any element of responsibility for any assumption made by the Levines that what they were doing was lawful. I think the most that could reasonably have been inferred from Richmond's failure to object, in the circumstances here, was a grudging and unhappy acceptance that Richmond could do nothing about the situation.
[212] Nor do I accept that the Levines understood Richmond's silence as meaning that Richmond accepted that what NWCF was doing was lawful..." (Richmond Pharmacology Limited v. Chester Overseas Limited [2014] EWHC 2692 (Ch), Stephen Jourdan QC)
- Need not expect that C will rely solely on D's affirmation of the common assumption
"[52]...For a similar statement, using the same wording of C’s reliance on “the subscription” of D to the common assumption, see the present edition of that work, Spencer Bower: Reliance-Based Estoppel, 5th ed (2017), para 8.26. But this is not to suggest that C must be relying solely on D’s affirmation of, or subscription to, the common assumption as opposed to C relying on its own mistaken assumption. It is sufficient that, as D intended or expected, D’s affirmation of, or subscription to, the common assumption strengthened, or influenced, C in thereafter relying on the common assumption." (HMRC v. Tinkler [2021] UKSC 39)
- Agent "must have intended or expected" that HMRC would rely on affirmation of common assumption that valid enquiry opened (by not checking thereafter)
"[61] The important points, in relation to the first three of the principles in Benchdollar, are that both parties shared a mistaken common assumption; that BDO had made manifest to HMRC that it was sharing, and acting on, that common assumption (eg BDO’s conduct on 6 July 2005 and clearly again on 24 November 2005 had “crossed the line”); and that HMRC was thereafter relying, as BDO must have expected and intended, on the affirmation of the common assumption in relation to its subsequent mutual dealing with BDO. As BDO must have intended or expected, BDO’s affirmation of, or subscription to, the common assumption strengthened, or influenced, HMRC in thereafter relying on the common assumption. Using the words of the second principle in Benchdollar, BDO had “assumed some element of responsibility” for the common assumption and for HMRC’s reliance on it." (HMRC v. Tinkler [2021] UKSC 39)
"[91] The present appeal tests the need for that element of taking responsibility to a more stringent extent. I admit to having been in some real doubt about it. But I am satisfied, for the reasons given by Lord Burrows at para 61, that the requirement was met. On Mr Tinkler’s behalf BDO expressly asserted and thereby affirmed the existence of a valid enquiry in circumstances where it was reasonably apparent that the Revenue would rely on BDO’s subscription to that common assumption, even if only in the negative sense that the Revenue would not thereafter check that the enquiry had been duly opened, and notice of it duly served on Mr Tinkler, before the limitation period for doing so ran out, as they might have done if no such affirmation had been provided." (HMRC v. Tinkler [2021] UKSC 39, Lord Briggs)
Examples: not sufficient
- Reliance where D had no reason to expect or anticipate it not sufficient
"[89] Like Lord Burrows I do consider that the requirement for some assumption of responsibility by D for the shared assumption does, generally at least, carry with it this additional element. It goes to the heart of what makes it unconscionable for D later to resile from the assumption, after C has relied to some extent on D’s earlier subscription to it. That reliance by C may be subordinate to C’s reliance upon its own view or advice about the reliability of the assumption, but it must have influenced C’s thinking: see Benchdollar at para 55. Reliance of that kind, in circumstances where D had no reason to expect or anticipate it, would not make it unconscionable for D then to resile from it, but reliance of that kind which D could reasonably be expected to foresee would do so." (HMRC v. Tinkler [2021] UKSC 39, Lord Briggs)
- Negotiating without drawing other side's attention to imminent expiry of limitation period not sufficient
"[57]...However no authority has been cited to us, apart from the decision of the judge in this case, whereby a party has been held disentitled from relying on a limitation defence merely because he has continued to negotiate with another party about the claim after the limitation period had expired and without anything being agreed about the manner in which the claim was to be resolved if negotiations broke down. What was happening here was that the parties were negotiating without any regard to the limitation period. At its extreme the point may be put as it was expressed by Mr Harper in his written argument: "if the judge is right, it means that unless a negotiating party expressly draws the other side's attention to the expiry of the limitation period and expressly negotiates against the background of that threat he will be held estopped from taking the point."" (London Borough of Hillingdon v. ARC Limited [2000] EWCA Civ 191, Arden J - described in Tinkler UKSC as a "clear illustration of there being no conduct 'crossing the line'" §41))
- Negotiating and requesting details of claim not sufficient to prevent party raising defence which it later discovers is available
"[60] In our judgment the correspondence on examination reflects LBH's position. The evidence simply does not establish a shared assumption communicated one to the other that limitation was not a defence to be relied on as a basis on which negotiations proceeded post-April 1988. The point can be tested by considering other defences open to LBH apart from limitation, for example betterment or an equitable bar such as laches. It could not be suggested that by agreeing to pay ARC's surveyor's fees LBH was restricted from raising any such defence. It is difficult to see how any distinction for this purpose can be drawn between a limitation defence and any other form of defence. There has to be more to establish a convention than simply a request for details of ARC's claim. Where parties are acting on the basis of some generally assumed view of the law, which turns out to be wrong, more is needed than simply an assumption as to the legal position if a party is to be estopped from taking a defence which he then discovers is available to him." (London Borough of Hillingdon v. ARC Limited [2000] EWCA Civ 191, Arden J - described in Tinkler UKSC as a "clear illustration of there being no conduct 'crossing the line'" §41))
- C telling D that there would be proceedings in England + D not stating anything not sufficient to prevent D relying on procedural bar arising as a result of Indian proceedings
"Once this distinction is kept in mind it is clear that there was insufficient evidence to warrant a finding that an estoppel by convention was established. Ultimately, on appeal to the House of Lords, counsel for the plaintiffs relied on two aspects of the evidence. The first was a telephone conversation on 14 August 1989 between Captain Singh of the Steamship Mutual Association (representing the owners) and Mr. Wilson of Clyde & Co. (the plaintiffs' solicitors). Mr. Wilson was unaware of any Indian proceedings. Captain Singh mentioned that there were two sets of proceedings pending in India, viz proceedings for particular average loss in Cochin and proceedings in Calcutta for general average loss. Mr. Wilson asked for an extension of time to serve a writ in England. Captain Singh refused this request. Captain Singh was left with the impression that Clyde & Co. would issue a writ in the Admiralty Court. Contrary to the owners' case the judge found that Captain Singh did not mention that English jurisdiction would be contested, or, if he did so, that it was done in a way not calculated to impress itself on Mr. Wilson. This evidence shows merely that the plaintiffs' solicitors informed the owners that there would be English proceedings. It falls markedly short of establishing a common assumption, manifested by the exchanges between the parties, that no plea arising from the fact of a judgment would be taken in the English proceedings." (Republic of India v. India Steamship Co [1997] UKHL 40, Lord Steyn)
- Negotiating and making payments on account, including after expiry of time limit, not sufficient to amount to assurance time limit would not be relied on
"[41] As to estoppel by convention, it is clear from the decisions of the Court of Appeal in Hillingdon (No.2) and Bridgestart that a shared assumption that compensation would be paid is not sufficient to defeat a defence of limitation. What is required is a common assumption that no defence of limitation would be relied on. The existence of that assumption must be communicated between the parties. There was no such assumption and no such communication, in this case. Following the clarification by the Court of Appeal in Hillingdon (No.1) that a limitation defence is applicable to a claim for compensation it seems unlikely that such a mutual assumption will rarely, if ever, be encountered again.
[42] The acquiring authority did more than just negotiate, it made advance payments to Mr Khan under section 52 of the Land Compensation Act 1973, including after the expiry of the limitation period, but the making of such payments is not inconsistent with an acquiring authority reserving the right to rely on a defence of limitation if agreement is not ultimately reached on the fair level of compensation. An advance payment is a reflection of the acquiring authority’s assessment of the value of the claim and a reflection of its willingness to compensate the land owner for what he has lost. The expiry of the limitation period does not affect the power of an acquiring authority to agree and pay compensation, as the Lands Tribunal (George Bartlett QC, President) pointed out in Bhattacharjee v Blackburn with Darwin Borough Council ACQ/10/1999 at paragraph 32. It follows that neither a willingness to negotiate after the expiry of a limitation period, nor a willingness to pay compensation up to the level which the acquiring authority considers fair, can be taken to be representations that an authority will not rely on a defence of limitation, especially in response to a claim made many years after the payment." (Khan v. Tyne & Wear Passenger Transport Executive Authority [2015] UKUT 43 (LC))
- Conducting a claim in India in which reference was made to a larger claim being brought in England did not prevent D relying on procedural bar arising as a result of Indian proceedings
In the second place the plaintiffs relied on the way in which the proceedings in Cochin were conducted. The plaintiff made clear in the Plaint that the claim was confined to the short delivery of a small quantity of cargo. The Plaint recited that the plaintiffs had notified the owners of a large claim in respect of an "alleged total loss of entire consignment." In his judgment the judge pointed out that the claim before him was only in respect of the small claim in respect of short delivery. He noted that the plaintiffs appeared to have a further and much larger claim. That is the extent of the relevant evidence. The statements by the advocates admitted in evidence do not reveal that anything more of significance was said by either side about the basis on which the claim was being conducted. All that can be inferred from the conduct of the proceedings in Cochin is that there was a larger claim which would be pursued elsewhere. The evidence does not begin to show that the defendants evinced an attitude that they were content that judgment should be given in Cochin, and that whatever the outcome of the proceedings in Cochin they would not raise a plea or defence elsewhere on the basis of the fact of a judgment in Cochin. There was no evidence to warrant such a finding." (Republic of India v. India Steamship Co [1997] UKHL 40, Lord Steyn)
Examples: sufficient
- Signing and returning an acknowledgment of claim based on the shared assumption that it would prevent limitation period expiring
"[54] Secondly, I consider that in each of the three types of case, the employers assumed a sufficient degree of responsibility for the shared assumption, in the sense that (in Types (1) and (2)) by returning acknowledgements specifically referring to section 29(5) as a positive response to the Revenue's expressed wish that they should do what was necessary to start time running again, the employers sufficiently expressed a desire and intention that the Revenue should rely upon that assumption. In Type (3) the employer initiated the assumption." (HMRC v. Benchdollar Limited [2009] EWHC 1310 (Ch), Briggs J)
- Correspondence by T's agent indicating it too believed valid enquiry opened, believing + intending HMRC to rely on that
"[57] More fundamentally, I also respectfully disagree with the Court of Appeal that BDO did not endorse or affirm the truth of the statement. HMRC believed, mistakenly, that it had opened a valid enquiry because the necessary requirement of giving the taxpayer a notice of enquiry had been complied with. When BDO replied to HMRC on 6 July 2005, it was making the same mistake as HMRC in thinking that a valid enquiry had been opened because it too thought, by reason of the copy letter, that the necessary requirement of giving the taxpayer a notice of enquiry had been complied with. There was therefore a common mistaken assumption that a valid enquiry had been opened. BDO’s conduct crossed the line because, by its reply of 6 July 2005, it was indicating to HMRC that it too believed, and was acting on the belief, that a valid enquiry had been opened. Even if BDO’s acknowledgement, by its letter to HMRC of 6 July, would otherwise have been insufficient to make clear to HMRC that it shared that mistake, the contents of that letter put that beyond doubt. BDO not only said that it would respond on the questions raised in relation to capital gains by 22 August 2005 as requested by HMRC but also, and in particular, it pointed out that, as regards the gilt strip loss, it could not amend the Return “as the Return is now the subject of a section 9A TMA 1970 enquiry”. By its reply, BDO had endorsed or affirmed HMRC’s mistaken assumption. Thereafter, HMRC were relying, as BDO expected and intended, on the affirmation of the common assumption." (HMRC v. Tinkler [2021] UKSC 39)
- Failure to speak where parties engaged in joint project and each entitled to assume other would not knowingly conceal significant information
"[71] Would it be unjust or unconscionable to allow ING to go back on that assumption? In my view, it would. I do not see this as depending on the precise terms of the agreement, nor (as was discussed in argument) on whether they gave rise to, or negated, a "duty to speak" on the part of ING. It is enough that ING and Ros Roca were engaged in a joint project, in which each was entitled to assume that the other would act consistently, and would not knowingly conceal information of significance to the project or their relationship in it. Applying the words of Lord Wilberforce, a reasonable man, in Ros Roca's position, would have expected its financial adviser, acting "honestly and responsibly", and with Mr Fernandez's knowledge of the figures, to have taken steps to make its position known. By contrast with the facts of the Indian Endurance case, these were "special circumstances" which required ING to do more than simply acquiesce in Ros Roca's continued use of a calculation which they believed, or had reason to believe, was wrong." (ING Bank NV v. Ros Roca SA [2011] EWCA Civ 353, Carnwath LJ)
(4) DETRIMENTAL RELIANCE
- Can be more difficult to prove given estoppel is based on inference or implication rather than express representation
"[68]... In a convention estoppel case, the assumption arises by inference or implication rather than from anything said expressly and this presents difficulties when it comes to showing that the party seeking to rely on the estoppel took some course on the faith of the assumption as communicated to him by the party to be estopped..." (London Borough of Hillingdon v. ARC Limited [2000] EWCA Civ 191, Arden J)
- No detrimental reliance where did not occur to C that there might be a statutory limitation
"[68]... Moreover the difficulties for ARC in this case are increased because on the facts found by the judge it never occurred to Mr Smith and Mr Thompson (representatives of ARC) that there might be a statutory limitation point. In those circumstances, reliance, which is here a matter of inference, cannot be shown..." (London Borough of Hillingdon v. ARC Limited [2000] EWCA Civ 191, Arden J)
- Must be reliance on the common assumption (i.e. the fact that the other party shared it) rather than one's own view
"[68]... The further points on causation made by Mr Harper are in our judgment also sound, namely that ARC was really acting on the basis of the widely-held view of the law rather than anything LBH is shown to have said or done. In this connection, it is worthy of note that ARC's position was at all times prior to the decision of the Court of Appeal in this case on 7 April 1999 that its claim to compensation was not statute-barred, and that the question of estoppel was not raised at any time in correspondence and only emerged in ARC's skeleton argument lodged for the hearing before Mr Burnton QC..." (London Borough of Hillingdon v. ARC Limited [2000] EWCA Civ 191, Arden J)
"[75] Second, even if the assumption is re-characterised as an assumption that the estate was to be managed as a single unit and not block by block, estoppel by convention cannot succeed because of the evidence of Mr Hodgkins, who was the director of the respondent at the material time, which the FTT accepted. He said that he did not rely upon any common assumption communicated to him by the appellants. He said (I quote from the transcript, set out in the grounds of appeal):
"... it was just never an issue. We never talked about it because we just thought it was the right thing to do. I didn't raise the subject with anyone about how the estate should be managed. You know, it's just how it was. It had always been managed that way. ... it never entered anyone's head to discuss how the estate should be managed. It just carried on as before and before I was involved."
[76] Mr Walsh for the respondent argued that the FTT's finding of reliance was correct, but did not say why this evidence did not make it clear that there was no reliance by the respondent on anything communicated by the appellants." (G&A Gorrara Ltd v. Kenilworth Court Block E RTM Co Ltd [2024] UKUT 81 (LC), Judge Cooke)
- Need not rely solely on the common assumption, as long as it is a material part of C's thinking
"[52]...For a similar statement, using the same wording of C’s reliance on “the subscription” of D to the common assumption, see the present edition of that work, Spencer Bower: Reliance-Based Estoppel, 5th ed (2017), para 8.26. But this is not to suggest that C must be relying solely on D’s affirmation of, or subscription to, the common assumption as opposed to C relying on its own mistaken assumption. It is sufficient that, as D intended or expected, D’s affirmation of, or subscription to, the common assumption strengthened, or influenced, C in thereafter relying on the common assumption." (HMRC v. Tinkler [2021] UKSC 39)
"[55] Thirdly, I consider that, albeit to a subordinate extent, the Revenue did rely upon the shared assumption, in deciding thereafter not to issue protective recovery proceedings against those employers who had returned signed acknowledgements or made part payments. For this purpose I see no reason why reliance should mean anything different from that which it means in connection with the law of misrepresentation. It is not necessary that the Revenue should have relied solely or exclusively upon the employer's expression of the shared assumption, but only that it should have been a significant part of the Revenue's thinking, in the sense of having been actively present in the Revenue's mind at the time when it decided not to bring immediate protective recovery proceedings. On the facts, I consider that the Revenue relied primarily upon the combination of the receipt of the signed acknowledgments and part payments, coupled with its own (ill-informed) view of the law. Nonetheless the fact that the employers who signed acknowledgements or made part payment did so in terms in which they expressed their own concurrent (but equally ill-informed) understanding as to their effect was in my judgment a material consideration for the Revenue in deciding not to bring recovery proceedings against them." (HMRC v. Benchdollar Limited [2009] EWHC 1310 (Ch), Briggs J)
- May be relying on common assumption where there is doubt as to its correctness
"[58] In relation to claims for NICs arising from the 1994/95 tax year, the Revenue had in reliance upon the shared understanding that the acknowledgements and part payments were effective to postpone the running of time in fact allowed the primary limitation period for those claims to expire by, at the latest, the end of May 2001. By then, the Revenue had been given reason to think that the efficacy of those acknowledgements and part payments was in doubt, but did not know, prior to obtaining advice to that effect on 9th August, that they were in fact ineffective. The Revenue therefore suffered a detriment in reliance upon the shared assumption, in relation to claims arising from the 94/95 tax year, from which it could not extricate itself in or after August 2001. At the same time, the employers subject to disputed claims for that tax year had enjoyed the full anticipated benefit of the Revenue's reliance upon the assumed effectiveness of the acknowledgements and part payments, in the sense that they had not been visited with protective recovery proceedings in the meantime and, subject to certain isolated possible exceptions, continued to enjoy that benefit until the resolution of the statutory appeals." (HMRC v. Benchdollar Limited [2009] EWHC 1310 (Ch), Briggs J)
- Detrimental reliance must be reasonably taken and reasonably foreseeable
"[93] When it comes to estoppel by representation or promissory estoppel, it seems to me very unlikely that a claimant would be able to satisfy the test of unconscionability unless he could also satisfy the three classic requirements. They are (a) a clear representation or promise made by the defendant upon which it is reasonably foreseeable that the claimant will act, (b) an act on the part of the claimant which was reasonably taken in reliance upon the representation or promise, and (c) after the act has been taken, the claimant being able to show that he will suffer detriment if the defendant is not held to the representation or promise. Even this formulation is relatively broad brush, and it should be emphasised that there are many qualifications or refinements which can be made to it.
[94] The requirement for these three features, at least in relation to estoppel by representation, was very clearly put by the Privy Council in Tai Hing Cotton Mill Ltd –v- Liu Chong Hing Bank [1986] AC 80 at 110, in the following terms:
"[T]he essence of estoppel is a representation (express or implied) intended to induce the person to whom it is made to adopt a course of conduct which results in detriment or loss…"
[95] I can see no reason, in theory or in practice, why this should not be equally true of promissory estoppel. In the present case, despite the argument on his behalf to the contrary, it seems to me that there is no reason for thinking that Mr Hutchison should for some reason be excused from satisfying each of these three normal requirements of a claim of estoppel by representation (or promissory estoppel) if he is to make out his case." (Steria Limited v. Hutchinson [2006] EWCA Civ 1551)
Reasonableness and foreseeability
Examples
- Detrimental reliance by not taking steps to correct mistake
"Turning to the fifth and final principle in Benchdollar, it is not in dispute that HMRC’s reliance was detrimental because, by reason of HMRC acting on the affirmed common assumption that a valid enquiry had been opened, it did not send another notice of enquiry to Mr Tinkler before the expiry of the 12 months’ time limit on opening an enquiry into the 2003/04 Return. And if the enquiry were treated as invalid, the 30 August 2012 closure notice - by which HMRC were able to deny BDO’s tax claim of over £635,000 (see para 13 above) - would also have to be treated as invalid. Correspondingly, Mr Tinkler would stand to gain some £635,000 if estoppel by convention could not here be established by HMRC." (HMRC v. Tinkler [2021] UKSC 39)
- Replying and conducting oneself on the basis that the mistaken assumption is correct can be sufficient
"[59] One of my essential disagreements with the Court of Appeal’s approach to the facts may be expressed by saying that this was not a case where BDO was simply repeating back to HMRC the mistake/misrepresentation (that the notice had been validly served). BDO’s conduct went further than that. Indeed, in addition to the positive conduct of BDO referred to in the previous two paragraphs, there is the point that BDO had wide apparent authority to deal with HMRC on behalf of Mr Tinkler. Had there been a problem with the enquiry notice, HMRC would reasonably have expected BDO to raise that problem. Far from doing that, BDO conducted itself, with Mr Tinkler’s apparent authority, on the basis that there was a valid enquiry underway. By so doing, BDO affirmed HMRC’s mistaken assumption.
...
[61] The important points, in relation to the first three of the principles in Benchdollar, are that both parties shared a mistaken common assumption; that BDO had made manifest to HMRC that it was sharing, and acting on, that common assumption (eg BDO’s conduct on 6 July 2005 and clearly again on 24 November 2005 had “crossed the line”); and that HMRC was thereafter relying, as BDO must have expected and intended, on the affirmation of the common assumption in relation to its subsequent mutual dealing with BDO. As BDO must have intended or expected, BDO’s affirmation of, or subscription to, the common assumption strengthened, or influenced, HMRC in thereafter relying on the common assumption. Using the words of the second principle in Benchdollar, BDO had “assumed some element of responsibility” for the common assumption and for HMRC’s reliance on it." (HMRC v. Tinkler [2021] UKSC 39)
- Not having opportunity to mitigate effect of retrospective decision
"[122] We agree, and find that the retrospective nature of the decisions meant that the Appellants were unable to take steps to mitigate their position, so as to reduce or eliminate the NIC charges, and they therefore suffered detriment." (MWL International Ltd v. HMRC [2024] UKFTT 402 (TC), Judge Redston)
- Detriment could arise after expiry of limitation to which common assumption said to relate, but extent of detriment relevant
""[69]...There is no evidence as to the amount of loss which ARC suffered apart from the loss of its phase I claim. It may have lost a considerable amount of management time dealing with the claim or it may have to pay Strutt & Parker for the difference between their fees on Ryde's scale (which we were told vary according to the amount of compensation obtained) and fees determined on some other basis. The phase II claim may be for a significant amount. Assuming for the moment that such loss could be shown and is not trivial, it would not in our judgment be an insuperable hurdle for ARC that any estoppel arose after the expiration of the limitation period for phase 1. But clearly the amount of any such detriment would be a factor to be taken into account if it had been necessary to determine the issue of unconscionability. (London Borough of Hillingdon v. ARC Limited [2000] EWCA Civ 191, Arden J)
(5) DETRIMENTAL RELIANCE MUST BE IN THE COURSE OF SUBSEQUENT DEALINGS
"[227] The problem faced by Queenscourt, however, is the requirement that the reliance must have occurred "in connection with some subsequent mutual dealings between the parties" and that some detriment must "thereby" have been suffered by Queenscourt.
[228] As we have said, the reliance identified by Ms Brown is the giving of the second error correction notice seeking a further repayment of VAT. However, the detriment which she relies on is the impact on the Group's business which we have already described in our discussion of the legitimate expectation arguments."
(Queenscourt Limited v. HMRC [2024] UKFTT 460 (TC), Judge Vos)
- No detrimental reliance where C became aware common assumption was wrong before limitation period expired but did not take steps
"[62] In relation to claims which only became statute barred after 10th/11th September 2001, the analysis of the question of injustice or unconscionability assumes an altogether different aspect. The Revenue could have taken steps to protect those claims from becoming statute barred either by issuing protective claim forms or by seeking to make effective tolling agreements with the relevant employers. Those NIC claims did not therefore become statute barred by virtue of the Revenue's reliance upon the shared assumption." (HMRC v. Benchdollar Limited [2009] EWHC 1310 (Ch), Briggs J)
- Deciding not to take a procedural step (e.g. commence a formal claim) may be part of mutual dealings
"[56] It became common ground between counsel that a decision by the Revenue not to protect their claim from becoming statute barred by bringing recovery proceedings against employers who provided acknowledgements or part payments was properly to be regarded as an aspect of their mutual dealings. In my judgment that is correct. A decision not to take an available step in dealings between parties may be as much an aspect of their common dealings as a decision to take that step. For example, in Amalgamated Investments & Property Co Ltd v. Texas Commerce International Bank Ltd [1982] QB 84, an important aspect of the detrimentally reliant conduct of the bank was its decision not to call in the loans or enforce other securities for them at a time when it believed that the plaintiffs were liable as guarantors." (HMRC v. Benchdollar Limited [2009] EWHC 1310 (Ch), Briggs J)
- HMRC enquiry is mutual dealings
"[62] In my view, there is also no difficulty at all in HMRC satisfying the fourth principle in Benchdollar that requires the reliance to be “in connection with some subsequent mutual dealing between the parties”. HMRC’s reliance on the common assumption that a valid enquiry notice had been served was in connection with carrying out the enquiry, which included mutual dealings such as questions being asked by HMRC about the Ukrainian properties which were answered by BDO, and HMRC, in the light of those answers, issuing a closure notice. I examine later, albeit to reject, Mr Thomas’ submission that a particular narrow meaning must be given to “mutual dealings”.
...
[77] ... It is sufficient for our purposes to make clear that the scope of estoppel by convention extends to the mutual dealings about tax between HMRC and the taxpayer that were in play in this case." (HMRC v. Tinkler [2021] UKSC 39)
- Submitting tax returns and numerous enquiries is mutual dealings
"[118] We have already found as facts that the Appellants submitted their payroll returns on a on the basis of their understanding of the common assumption agreed at the Meeting, and that there had been "numerous tax enquiries" into the Appellants. That is sufficient to meet the requirement that subsequent mutual dealing took place between HMRC and the Appellants." (MWL International Ltd v. HMRC [2024] UKFTT 402 (TC), Judge Redston)
Scope of subsequent dealings covered by the estoppel
- Scope depends on the purpose for which the assumption was made
"[64] On examination, none in my view can stand without qualification:
[...]
iv) Particular transaction. This proposition is based on a passage in the concurring judgment of Purchas LJ in Troop v Gibson, not adopted in the other judgments. That refers in turn to a statement by Eveleigh LJ in the Amalgamated Investments case ([1982] QB 84, 126):
"The estoppel does not go beyond the transaction in which it arose. The representation or assumed state of facts are not to be held irrefutable beyond the purpose for which the representation or assumption were made."
In so far as there is a tension between the first sentence, which might be said to limit consideration to the ambit of a particular transaction, and the second which looks more widely at its "purpose", I would prefer the latter; but I doubt if Purchas LJ intended such a precise definition." (ING Bank NV v. Ros Roca SA [2011] EWCA Civ 353, Carnwath LJ)
UNCONSCIONABILITY
- Unconscionability unlikely to have additional role if 5 principles met
"[64] What about unconscionability? This was mentioned as part of the fifth of Briggs J’s principles in Benchdollar; and in other leaner formulations - such as that of Lord Steyn in The Indian Endurance - it has been put forward as playing an even more central role. In most cases, in line with Briggs J’s statement of principles, unconscionability is unlikely to add anything once the other elements of estoppel by convention have been established and, in particular, where it has been established that the estoppel raiser has detrimentally relied on the common assumption. However, one can certainly envisage exceptional cases where unconscionability may have a useful additional role to play. For example, even if all the other elements of estoppel by convention can be made out, fraudulent conduct by the estoppel raiser would rule out estoppel by convention (see, by analogy, D and C Builders Ltd v Rees [1966] 2 QB 617 in which duress by the promisee in inducing the promise ruled out promissory estoppel). But such examples are likely to be rare. Even though HMRC was primarily at fault on the facts of this case - by carelessly sending the notice of enquiry to the wrong address and its consequent misrepresentation to BDO - I agree with the approach in Amalgamated Investment, The Amazonia and Benchdollar so that that does not amount to unconscionable conduct barring the establishment of estoppel by convention.
[65] Although unnecessary to my decision, I am reinforced in my view that unconscionability here supports the application of estoppel by convention by the findings of the FTT regarding Mr Tinkler’s knowledge. As we have seen at para 15 above, the FTT found that Mr Tinkler and/or his PA knew of HMRC’s enquiry in November 2005. At that time, Mr Tinkler could have informed HMRC that no notice of enquiry had been received by him. That would have left HMRC with sufficient time, within the 12-month deadline, to issue a replacement notice of enquiry. But Mr Tinkler and/or his PA did not do that. In those circumstances, it may be thought particularly unconscionable for him to raise this point for the first time over nine years later." (HMRC v. Tinkler [2021] UKSC 39)
- Fact that C is primarily at fault for mistaken assumption not a bar
"[64]...Even though HMRC was primarily at fault on the facts of this case - by carelessly sending the notice of enquiry to the wrong address and its consequent misrepresentation to BDO - I agree with the approach in Amalgamated Investment, The Amazonia and Benchdollar so that that does not amount to unconscionable conduct barring the establishment of estoppel by convention." (HMRC v. Tinkler [2021] UKSC 39)
BRINGING ESTOPPEL TO AN END
- Particularly unconscionable where D could but did not have informed C of the mistake
"[65] Although unnecessary to my decision, I am reinforced in my view that unconscionability here supports the application of estoppel by convention by the findings of the FTT regarding Mr Tinkler’s knowledge. As we have seen at para 15 above, the FTT found that Mr Tinkler and/or his PA knew of HMRC’s enquiry in November 2005. At that time, Mr Tinkler could have informed HMRC that no notice of enquiry had been received by him. That would have left HMRC with sufficient time, within the 12-month deadline, to issue a replacement notice of enquiry. But Mr Tinkler and/or his PA did not do that. In those circumstances, it may be thought particularly unconscionable for him to raise this point for the first time over nine years later." (HMRC v. Tinkler [2021] UKSC 39)
- By giving reasonable notice + C failing to act within a reasonable time thereafter
"[63] The next question is whether in any event the estoppel was brought to an end by the letter of 18 March 1994. It was common ground that in this case any estoppel could be brought to an end by the giving of reasonable notice that LBH intended to rely on the limitation defence. During that period ARC would have the option of referring its claim to the Lands Tribunal and if it did so LBH would (if it had been estopped immediately before notice was given) be estopped from relying on any statutory limitation defence in the proceedings so commenced. Put another way it would not be unconscionable for LBH to rely on a limitation defence if it gave such notice and proceedings were not commenced with a reasonable time thereafter." (London Borough of Hillingdon v. ARC Limited [2000] EWCA Civ 191, Arden J)
- C entitled to a reasonable time to react to the disappearance of the assumption
"[64] In our view the letter of 18 March 1994 was an effective warning that if indeed there was a good limitation point LBH considered itself free to take it. From that date it could no longer even be suggested that the parties were proceeding on some shared assumption, and ARC were no longer entitled to rely on there being a common assumption. If a common assumption existed up to this moment in time, ARC were entitled to a reasonable time to re-act to the disappearance of their assumption..." (London Borough of Hillingdon v. ARC Limited [2000] EWCA Civ 191, Arden J)
[60]...Again, the effect of a party becoming aware of the untruth of the shared assumption is not necessarily to kill the estoppel stone dead there and then. The reliant party is commonly afforded a limited time in which to protect itself from the consequences of a discovery of the true legal or factual position: see for example Arden LJ's analysis in London Borough of Hillingdon v. ARC Ltd [2000] EWCA Civ 191, at paragraph 64, where she said:
"If a common assumption existed up to this moment in time, ARC were entitled to a reasonable time to re-act to the disappearance of their assumption. In the circumstances of this claim that period might be measured in weeks rather than days, but not in months."
On the facts of the present cases, a reasonable time for the Revenue to react did include the period between 9th August and 10th/11th September 2001. There is no need artificially to extend the period beyond that date, since by then the Revenue had made a conscious decision not to take steps to protect itself in relation to any claims for which the primary limitation period was still running at that later date." (HMRC v. Benchdollar Limited [2009] EWHC 1310 (Ch), Briggs J)
- Time to react to disappearance of assumption about limitation defence measured in weeks not months
"[64] ... In the circumstances of this claim that period might be measured in weeks rather than days, but not in months. Even if that were too harsh a view, once the position had been more firmly clarified in October 1994, a swift response for ARC was required. To take advantage of any estoppel ARC would have to have started proceedings within about 2 months of this date. That period would give sufficient time to establish if there was any room for agreement with LBH and obtain Counsel's opinion itself if it wished. On any basis the delay of a further period of eleven months was too long. We appreciate that the parties had already been dealing with this claim for many years and that it is not unusual for claims to be referred to the Lands Tribunal many years after the local authority has entered the property being acquired but that it probably a good reason for acting quickly rather than a reason for further dilatoriness. The point on delay is not capable of being met by asserting that any prejudice or at least the greater prejudice would be suffered by ARC and not LBH. There was no reason why proceedings could not be started immediately. For these reasons alone in our judgment the appeal must as respects convention estoppel be allowed." (London Borough of Hillingdon v. ARC Limited [2000] EWCA Civ 191, Arden J)
EXAMPLES
- Taxpayer estopped from denying validity of VAT option to tax land
"[75] Mr Simpson submitted that the principle of estoppel by convention was plainly engaged, because all the requirements in the list set out by Briggs J were satisfied:
(1) From 6 March 2008, when Officer Bounds wrote to HMRC acknowledging that the Jubilee Centre was opted to tax, until Mr Ali’s letter of 12 November 2018, both parties had proceeded on the common assumption that there was a valid OTT in place. Rolldeen had “crossed the line” so as “to manifest an assent to the assumption” when Mr Mufid submitted Form VAT1614A to HMRC and followed this with the letter to Officer Bounds. Both documents explicitly stated that Rolldeen had made no exempt supplies in relation to the Jubilee Centre, and both had been signed by Rolldeen’s director, Mr Shaheen.
(2) Rolldeen assumed responsibility for the common assumption when Form VAT1614A and the letter were sent to Officer Bounds.
(3) HMRC had relied on the common assumption that the OTT was valid.
(4) There was subsequent mutual dealing between the parties, because Rolldeen reclaimed input VAT on costs relating to the Jubilee Centre and HMRC had accepted that this VAT was validly deductible, and made any related repayments.
(5) HMRC would suffer significant detriment if there was no valid OTT, because there would be no VAT on the sale of the Jubilee Centre. In addition to that £50,000, Rolldeen had claimed significant input tax in relation to the Jubilee Centre, forming part of the £122,797.94 included on its VAT returns during the period for which Rolldeen had owned the property. HMRC was unable to recover that VAT because the Jubilee Centre had been sold on 2 March 2015. Almost eight years has passed since that date, well outside the time limit for raising an assessment (see VATA s 77(1)(a)).
[76] I agree with Mr Simpson that all the principles set out in Benchdollar are satisfied for the reasons he gives. I also agree that by signing and submitting the form VAT1614A, and subsequently confirming the position in the letter to Officer Bounds, Rolldeen’s conduct “crossed the line”, because it must have objectively intended that HMRC would accept that no previous exempt supplies had been made." (Rolldeen Estates Limited v. HMRC [2023] UKFTT 359 (TC), Judge Redston)
- T estopped from denying it was the person liable for customs debt
"[253] Dealing with the requirements seriatim, and employing the language the Supreme Court set out, first there was a common assumption of fact and law between HMRC who raise the estoppel and QHH against whom the estoppel was raised that QHH were liable for the customs debt. As we have set out at [94] above the conduct of QHH throughout crossed the line between the parties that cemented that common assumption. Secondly, QHH by its conduct and correspondence conveyed to HMRC that they expected HMRC to rely upon that common assumption so that QHH must bear not only some element but all of the responsibility for the common assumption. There were numerous occasions for QHH to either amend the customs declaration so that IDD’s EORI was shown or at least disabuse HMRC so as to be clear QHH were not liable for the customs debt. Instead, time after time, as we have found, QHH simply proceeded upon the assumption, common to both parties, that they were liable for the customs debt; expecting HMRC to proceed on that basis. Thirdly, HMRC relied upon that common assumption, not just its own view. Officer Katib formed her view that QHH were liable for the customs debt which was the reason for her compliance visit. What happened at that visit and thereafter, as we have found, demonstrates that her view was cemented by the common assumption shared by HMRC and QHH that QHH were liable for the customs debt. Fourthly, that reliance occurred in the subsequent dealings between the parties crystallising at the issue of the C18 Notice. Fifthly, the benefit to QHH of not being liable for the customs debt and the shared detriment to HMRC of that situation being able to be asserted would, before us, lead to the non-payment of six figures worth of duty when that customs debt was clearly owed by the VAT group member IDD, that group headed by QHH." (Quantum House Holdings Ltd v. HMRC [2025] UKFTT 117 (TC), Judge Rudolf KC)
- T estopped from denying HMRC validly opened statutory enquiry
"[85] Standing back from the detail, what Mr Tinkler and his advisers have done is to take at a late stage what can fairly be described, on the facts of this case, as a technical point (that the notice of enquiry was sent to the wrong address) even though that has not caused Mr Tinkler any prejudice. It is entirely satisfactory that, by reference to estoppel by convention, the law has the means to avoid such a technical point succeeding." (Tinkler v. HMRC [2021] UKSC 39)
- Taxpayer estopped from relying on illegality of conduct of HMRC to which it was a party/benefited from
“In other words, the claim would be that the liability under the self-assessments (and therefore for the surcharges) arose because company income was declared on personal returns as the result of an (alleged) unlawful agreement with HMRC. Whether the agreement with HMRC was unlawful is a matter of public law, in other words, it is a question of whether HMRC exceeded the discretion entrusted to it by Parliament by entering into the 1999 and 2006 agreements which permitted Mr Byrne to declare company income on his personal return. Putting aside the issue whether this Tribunal has jurisdiction to consider a case that the (alleged) illegality of an act by HMRC should be a ‘defence’ for an appellant, it seems to us in any event that the appellant is estopped from asserting any illegality against HMRC when he was a party to the alleged unlawful agreement and clearly benefited from it. Therefore, we consider that even if he could prove illegality, and even if the Tribunal had jurisdiction to consider it, the appellant is estopped from alleging the illegality in these circumstances.” (Byrne v. HMRC [2017] UKFTT 144 (TC), §65, Judge Mosedale).
- HMRC not estopped from belatedly arguing that new claim settled by earlier proceedings
"[41] In the event, it is not necessary for us to resolve that issue or to determine whether HMRC can be said to have acquiesced in TTSL pursuing the Claim Appeal by failing to make their strike out application until July 2021. That is because we are satisfied that it is a necessary ingredient of estoppel by acquiescence, as for any estoppel by representation, that the party claiming the benefit of the estoppel has suffered detriment. The FTT made a clear finding that TTSL had not suffered any detriment and it has not appealed that finding." (Telent Technology Services Limited v. HMRC [2024] UKUT 183 (TCC), Green J and Judge Cannan)
"[99] In my judgment, a party can change its view of the law at any time subject to the other party having a fair opportunity to respond. In other words, as Mr Elliott said, it is a matter of case management...
[100] Although the subject matter of Tower was closure notices and the context was the Tribunal’s jurisdiction to decide appeals under TMA s 50, it is clear that there is a wider application for the principle that a party may introduce new legal arguments subject to the requirements of proper case management...
...
[106] It follows from the above that the Appellant has not shown it has suffered detriment by way of costs or otherwise. I also considered Mr Jones’s submission that HMRC had acted unconscionably. However, as Lord Burrows said in Tinkler, this is the position only in “rare or exceptional cases”, and Mr Jones did not explain why this was such a case, and I could think of no basis on which it satisfied those requirements." (Telent Technology Services Limited v. HMRC [2022] UKFTT 147 (TC), Judge Redston)
- T estopped from denying address provided was his address
"[85] Those conditions apply to Mr Milhill:
(1) Mr Milhill was responsible for the mistaken assumption that the address provided to HMRC was his address, and he expected HMRC to rely upon that assumption.
(2) HMRC in fact relied upon that common assumption to a sufficient extent.
(3) That reliance occurred in connection with the subsequent mutual dealing between the parties in relation to Mr Milhill's tax affairs.
(4) If, in consequence, the decisions were not duly notified to Mr Milhill, that would be a detriment to HMRC, and it would be unjust or unconscionable for him to assert the true legal position.
(5) Mr Milhill's provision of Ms Griffiths' address to HMRC as being his own address "crossed the line" and the parties operated on the basis of that common mistaken assumption.
Therefore, even if the law of agency were not to apply, Mr Milhill would be estopped from relying on non-notification of the HMRC decisions which were sent to Ms Griffiths' address." (Milhill v. HMRC [2025] UKFTT 919 (TC), Judge Redston)
- HMRC not estopped from denying EIS relief after granting authorisation letters
"[153] We do not consider there was any shared assumption or representation that could give rise to estoppel. The Appellants submitted their compliance statements asserting that the statutory requirements were met, and HMRC's authorisation did not, in our view, endorse those assertions. The language in the EIS2 authorisation letters, explicitly states that the authorisation does not guarantee the availability of relief and that the requirements of the scheme must continue to be met. We consider this negates any suggestion that it represented the requirements had been permanently satisfied. In these circumstances, we are unconvinced that HMRC waived its right to challenge compliance with the statutory requirements or that they are estopped from doing so, as relief is always subject to subsequent review and withdrawal under section 234." (York SD Limited v. HMRC [2025] UKFTT 877 (TC), Judge Sukul)