Spencer Bower: Reliance-Based Estoppel: The Law of Reliance-Based Estoppel and Related Doctrines 9781847665706, 9781784510657, 9781784512149

Table of contents :
Spencer Bower: Reliance-Based Estoppel
Foreword
Preface to the fifth edition
Preface to the first edition
Memoir
Contents
Table of statutes
Table of statutory instruments
Table of cases
Part I
General Principles
Chapter 1
Introduction: definition and treatment
Estoppel
Reliance-based estoppel
The modern doctrines: overlapping categories
Historical development
Estoppel by representation of fact deployable offensively and as a rule of law
Theoretical basis and justification: unfair change of position
Classifications rejected
Unified doctrine
Chapter 2
Representations of fact; promises; representations of law; representations as to rights
Introduction
Significance
Representation of law
Constituent elements of a representation of fact
Representation of fact distinguished
Statements of law and as to rights
Chapter 3
Responsibility
Introduction
Representations
Breach of duty to speak
Estoppel by negligence
Chapter 4
Unequivocality and construction
Introduction
The representation must be unambiguous
Thorner v Major
Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd
Unequivocality and reasonable understanding: conclusion
Other issues: fraud, proprietary estoppel, conduct, silence
Recent examples
Construction
Meaning of the representation: law or fact?
Complex or qualified representations
Chapter 5
Inducement and reliance; the effect of estoppel as to a fact
Introduction
Inducement
Intention of B to be responsible for reliance
Materiality
Change of position
The consequences of estoppel as to a fact
Questions of law and fact
Chapter 6
Parties to the estoppel
Introduction
Persons who may raise the estoppel
Persons bound by the estoppel
Chapter 7
The defence of illegality
Introduction
General principles
Formality
Waiving the protection of a statute
Ultra vires
Other applications
No estoppel as to jurisdiction
Statutory duty and discretion
Foreign law
Chapter 8
Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title
Estoppel by convention
The effect of an estoppel by convention
Further aspects of estoppel by convention
Estoppel by contract
Estoppel by deed
Estoppel as to title
Part II
Particular Applications of Reliance-Based Estoppel
CHAPTER 9
Applications of reliance-based estoppel to various relationships
Agency, partnership and ownership by estoppel
Landlord and tenant
Bailor and bailee
Patentee and licensee
Customer and banker
Employers, trustees and members of occupational pension schemes
Chapter 10
Miscellaneous estoppels
Companies
Contracts of insurance
Chapter 11
Statutory estoppel
Sale of goods
Bills of exchange
Bills of lading
The Partnership Act 1890
Part III
Proprietary Estoppel, Election, Promissory Estoppel and Procedure
Chapter 12
Proprietary estoppel
Introduction
The evolution of proprietary estoppel
Property
Parties
Raising the equity: the scope of the inquiry
A"s misapprehension
A"s change of position
B"s responsibility for A"s change of position
Unconscionability
Defences
The nature of the equity; third parties
Satisfying the equity
Overlap with other reliance-based estoppels
Proprietary estoppel and constructive trusts
Chapter 13
Election
Introduction
Common law election
Equitable election
Chapter 14
Promissory estoppel
Introduction
The elements of promissory estoppel
The limitations of promissory estoppel
Chapter 15
Stating the case
General principle
The need to plead
Consequences of failure
Appeal
Estoppel against amendment
Index

Citation preview

Spencer Bower: Reliance-Based Estoppel

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Spencer Bower: Reliance-Based Estoppel The Law of Reliance-Based Estoppel and Related Doctrines Original text, entitled ‘The Law Relating to Estoppel by Representation’, by George Spencer Bower Sometime one of His Majesty’s Counsel and a Master of the Bench of the Inner Temple “Take thou the truth as thou hast told it to me” Tennyson, Gareth and Lynette

Fifth edition Piers Feltham BA (Cantab), Barrister of Gray’s Inn Peter Crampin QC MA (Oxon), Barrister of the Middle Temple Tom Leech QC MA (Oxon), Barrister of Lincoln’s Inn Joshua Winfield MA (Oxon), Barrister of the Inner Temple and Lincoln’s Inn First edition (1923) George Spencer Bower Second edition (1966) Sir Alexander Turner Third edition (1977) Sir Alexander Turner Fourth edition (2004) Piers Feltham, Daniel Hochberg, Tom Leech

Bloomsbury Professional An imprint of Bloomsbury Publishing Plc Bloomsbury Professional Ltd 41–43 Boltro Road Haywards Heath RH16 1BJ UK

Bloomsbury Publishing Plc 50 Bedford Square London WC1B 3DP UK

www.bloomsbury.com BLOOMSBURY and the Diana logo are trademarks of Bloomsbury Publishing Plc © Bloomsbury Professional Ltd 2017 All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. While every care has been taken to ensure the accuracy of this work, no responsibility for loss or damage occasioned to any person acting or refraining from action as a result of any statement in it can be accepted by the authors, editors or publishers. All UK Government legislation and other public sector information used in the work is Crown Copyright ©. All House of Lords and House of Commons information used in the work is Parliamentary Copyright ©. This information is reused under the terms of the Open Government Licence v3.0 (http://www.nationalarchives.gov.uk/doc/ open-government-licence/version/3) except where otherwise stated. All Eur-lex material used in the work is © European Union, http://eur-lex.europa.eu/, 1998–2017. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. ISBN: HB: 978-1-84766-570-6 ePDF: 978-1-78451-214-9 ePub: 978-1-78451-213-2 Typeset by Compuscript Ltd, Shannon To find out more about our authors and books visit www.bloomsburyprofessional.com. Here you will find extracts, author information, details of forthcoming events and the option to sign up for our newsletters

Foreword

It is a great pleasure to welcome the fifth edition of what is perhaps the greatest of Spencer Bower’s monographs. Published in 1923 as Estoppel by Representation, it bore that title in successive editions published in 1966, 1977 and 2004. It now appears as Reliance-Based Estoppel, for reasons explained in the first chapter, particularly at paragraphs 1.5 to 1.10. George Spencer Bower was an outstanding classical scholar, as is recorded in more detail in the memoir printed in this volume. He seems to have had a special reverence for the tragedies of Sophocles, whose chorus often refers to problems of law and justice. Quotations from Philoctetes and Ajax used to stand as epigraphs to this work and The Doctrine of Res Judicata respectively. No translation was provided, Spencer Bower apparently assuming that all his readers would be as scholarly as he was. Life has moved on. As Lord Millett said in his foreword to the fourth edition, there is now ‘less Latin, and certainly less Greek’. Nor is there much of ­Spencer Bower’s original English text, as the huge growth of case-law, not only in ­England but in all common law jurisdictions, has made it essential for the editors to undertake a great deal of rewriting. The result is a comprehensive and (where needed) critical survey of the cases and of the academic commentary on them. The editors (all of whom are currently in practice at the Chancery bar) have, however, been faithful to Spencer Bower’s guiding principles, and have indeed restored an essential feature from which Sir Alexander Turner departed in his second and third editions. In every field of human study, there are unifiers and splitters. Spencer Bower was very much a unifier. In the admirably short preface to his first edition, he wrote that ‘“Estoppel by deed”, the so-called “estoppel by negligence”, the so-called “equitable estoppel”, and the various rules referred to as “election”, “waiver”, “encouragement”, “acquiescence”, “approbation and reprobation” … are … neither more nor less than examples, applications, corollaries, or off-shoots, of that great central doctrine of estoppel by representation’. Sir Alexander Turner, a distinguished New Zealand judge, did not feel able to follow that unifying approach, but it has now been restored with adjustment. Despite the increasing complexity and occasional inconsistency of the modern case-law, the editors espouse and maintain ‘the view that a single purpose underlies all forms of [reliance-based] estoppel’ (paragraph 1.8, adapting Potter LJ in National Westminster Bank plc v Somer International (UK) Ltd [2002] QB 1286 at [38]). They deal deftly with the problem presented, in this context, by proprietary estoppel (paragraph 1.14), and except estoppel by deed as binding by agreement or declaration under seal. The new title of this edition, Reliance-Based Estoppel, is to my mind a clearer expression of the underlying principle. The editors give credit for the phrase to Professor (now Tribunal Judge) ­Elizabeth

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Foreword

Cooke’s Modern Law of Estoppel (2000), though I suspect that it may be one of those phrases that was generated almost spontaneously. I warmly commend this work for its clear, open-minded and comprehensive treatment of a difficult but rewarding subject. Robert Walker House of Lords

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Preface to the fifth edition

Spencer Bower entitled the first edition of this work ‘Estoppel by ­Representation’ because he considered that one person’s responsibility for another’s reliance on a proposition that will found an estoppel always depends on the former having made a representation. Acceptance of Professor Ben McFarlane’s point, that this is not necessarily so in the case of an estoppel based on silence when there is a duty to speak, has led us to change the title of the current edition to ­‘Reliance-Based Estoppel’. Since this is an expression previously coined by Professor ­Elizabeth Cooke, its adoption leads us also to pay due respect to her and Professor McFarlane’s important textbooks in the field, together with those of Sean Wilken QC and Karim Ghaly and of The Hon Ken Handley AO OStJ QC, not to overlook the authors of the numerous learned articles we have gratefully cited, as we diffidently make our own contribution to the debates surrounding the doctrines of estoppel, with the hope of assisting judges and lawyers in their application and refinement. As in the fourth edition, we also salute Sir Alexander Turner’s development of Spencer Bower’s original work of 1923 in his editions of 1966 and 1977. Since the fourth edition of this work in 2004, the House of Lords has decided two proprietary estoppel cases – Cobbe v Yeoman’s Row Property Management Ltd and Thorner v Major – the combined effect of which, we suggest, helps to define one of the criteria for a reliance-based estoppel founded on a representation, namely that the party estopped actually intends the estoppel raiser to act in reliance on the representation, or is reasonably understood to intend him so to act. Other developments in the doctrine of proprietary estoppel have required a complete revision of the related chapter, Chapter 12, in this edition. Thorner v Major confirms too the submission in the fourth edition that unequivocality is a requirement for any reliance-based estoppel founded on a representation. Some other views expressed in the fourth edition have also found judicial favour, such as the recognition that an estoppel may be founded on a representation of law (Briggs v Gleeds), that a party may preclude itself from denying a proposition by contract as well as another’s reliance (Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd and Springwell Navigation Corp v JP Morgan Chase Bank), and that an estoppel by deed binds by agreement or declaration under seal rather than by reason of reliance (Prime Sight Ltd v Lavarello). Although the judicial jury remains out on other positions taken in the last edition, we have maintained and developed them out of a conviction that they are correct. With the adjustment reflected in the change of title, and distinguishing the foundation of estoppels that bind by deed and by contract, the most fundamental of these positions is the furtherance of Spencer Bower’s unificatory project by the identification of the reliance-based estoppels as aspects of a single principle preventing a change of position that would be unfair by reason of responsibility for prejudicial reliance. This position has many ramifications, amongst which vii

Preface to the fifth edition

are the following: that reliance-based estoppels have common requirements of responsibility, causation and prejudice; that estoppel by representation of fact is, like the other reliance-based estoppels, a rule of law; that the result of estoppel by representation of fact may, accordingly, be mitigated on equitable grounds to avoid injustice; that the result of an estoppel by convention depends on whether its subject matter is factual, promissory or proprietary; that a reliance-based estoppel (other than a proprietary estoppel, which uniquely generates a cause of action) may be deployed to complete a cause of action where, absent the estoppel, a cause of action would not lie, unless it would unacceptably subvert a rule of law (in particular, the doctrine of consideration); that a reliance-based ­estoppel as to the existence of a right in or over property generates a discretionary remedy; and that the prohibition on the deployment of a promissory estoppel as a sword should be understood as an application of the defence of illegality, viz that an estoppel may not unacceptably subvert a statute or rule of law. For the reasons that we set out in the text, we believe that the overview now possible enhances the coherence of the law of estoppel as a whole, thereby facilitating its understanding and application. We have attempted to state the law as at 1 January 2017. Piers Feltham Radcliffe Chambers Lincoln’s Inn Peter Crampin QC Radcliffe Chambers Lincoln’s Inn Tom Leech QC Herbert Smith Freehills Joshua Winfield Radcliffe Chambers Lincoln’s Inn

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Preface to the first edition

Estoppel by representation is conceived in this work as embracing every form of estoppel known to the law of England other than estoppel per rem judicatam, which rests on totally distinct principles, and in which representation plays no part. The reasons for this view are stated in the Introduction, and in other parts of the book to which references are there made, and in which it is submitted that ‘estoppel by deed’, the so-called ‘estoppel by negligence’, the so-called ‘equitable estoppel’, and the various rules referred to as ‘election’, ‘waiver’, ‘encouragement’, ‘acquiescence’, ‘approbation and reprobation’, and the like, are essentially (though not always so nominated in express terms) neither more nor less than examples, applications, corollaries, or off-shoots, of that great central doctrine of estoppel by representation which, in its widest comprehension and truest sense, it is the design of this treatise to expound. G. Spencer Bower 2 Hare Court, Temple April, 1923

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Memoir

George Spencer Bower was born on October 12th, 1854, the son of George Bower of St. Neots. He died on September 4th, 1928, aged 73 years. He was a scholar of Winchester and New College, retaining all his life an intense Wykehamical patriotism. His record at Oxford was a distinguished one, including first classes in both Classical Schools, the Gaisford Greek Prose and the Chancellor’s English Essay; and classical literature never ceased to be the interest nearest to his heart. He was called to the Bar by the Inner Temple in 1880, and acquired an extensive and miscellaneous junior practice. Like many of his profession he enjoyed the society of actors, being a friend of some of the most notable theatrical personalities of the day, including Sir Henry Irving and Sir Charles Wyndham, whose daughter he married in 1885. He took silk in 1903, and, although his practice within the Bar was never very extensive, it included such famous cases as that which ended with the ‘Osborne Judgment’ of the House of Lords in 1909. Spencer Bower was one of the two leading counsel for the successful appellant, Osborne. He was made a Bencher of his Inn in 1912, an honour that he greatly appreciated and of which he took full advantage. He thoroughly enjoyed the social life of the Benchers, among whom he was the acknowledged arbiter on points of classical scholarship. His name is remembered by lawyers – and will long continue so to be remembered – for the series of textbooks which he published in the 1920s, all on some aspect of the law as to representations of fact. These books, besides remaining classic authorities on the subjects with which they deal, have a special charm in the great wealth of literary illustration (largely drawn from his beloved classical authors) with which Spencer Bower delighted to illustrate his work. It was said of him that a quotation from Horace might set him off on a veritable flood-tide of reminiscences of great advocates and judges; a point of law reported from the courts might give him occasion to quote a hundred lines of Shakespeare, Homer or Sophocles (he could actually recite the whole of the Oedipus Tyrannus). It was as a scholar of the old type, knowing the authors through and through by constant daily intercourse, that he himself said that he would best like to be remembered; and those who read this book may add this thought to the regard in which they continue to hold him, more than 85 years after his death, still as a contemporary expositor of the living law.

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Contents

Foreword v Preface to the fifth edition vii Preface to the first edition ix Memoir xi Table of statutes xxiii Table of statutory instruments xxvii Table of cases xxix Part I General Principles Chapter 1 Introduction: definition and treatment  3 Piers Feltham Estoppel 3 A bar that disables one party and thereby enables another  3 Reliance-based estoppel  5 Requirements for reliance-based estoppel  9 The modern doctrines: overlapping categories  11 Estoppel by representation of fact  15 Estoppel by representation of law  16 Proprietary estoppel  17 Promissory estoppel  20 Estoppel by convention  22 Estoppel by contract; estoppel by deed; estoppel as to title  22 Estoppel by silence or acquiescence; estoppel by negligence  23 Election 24 Whether title, relation or status can be established by estoppel  25 Historical development  26 Estoppel by representation of fact deployable offensively and as a rule of law  31 Rule of evidence: the previous view  31 Deployable offensively as well as defensively  33 A rule of law  36 Conflict of laws  43 Theoretical basis and justification: unfair change of position  44 Meaning of unconscionability  46 Unconscionability objective and equivalent to unfairness  47 Unconscionability not an alternative to the requirements for an estoppel  47 Unconscionability not an additional requirement  49

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Contents

Correspondence of unconscionability with responsibility for reliance and detriment  50 Whether requirements for estoppel may be relaxed by reference to unconscionability  52 Fairness and the result of an estoppel  55 Classifications rejected  56 Acquiescence and encouragement as terms peculiar to proprietary estoppel 56 Silence as a representation  58 Duty to speak  60 Silence as a cause but not a representation: summary  62 Reliance-based estoppel by silence: foundation of the duty to speak  63 Equitable estoppel and common law estoppel: a false distinction  66 Unified doctrine  67 Reliance-based estoppel: no bright lines  70 Common requirements  75 Chapter 2 Representations of fact; promises; representations of law; representations as to rights  77 Piers Feltham Introduction 77 Responsibility and representation  77 Representation of fact or law  78 Significance 79 Representation of law  81 Constituent elements of a representation of fact  82 Communication 83 Relation to matter of fact  85 Representation of fact distinguished  87 Statements as to intention  87 Statements of opinion or belief  89 Exaggeration, puffing and negotiating stances  91 Statements of facts and promises  92 Statements of law and as to rights  95 Statements of law and fact  96 Warranty of authority  96 Private rights  97 Rent Acts  99 Insurance 100 Foreign law  100 Statements of law and as to rights: conclusion  101 Chapter 3 Responsibility  105 Joshua Winfield Introduction 105 Representations 106 Representations in language  106 Representation by conduct  106 xiv

Contents

Proving representation by conduct  107 Payment 108 Concealment 108 Representation by silence or inaction  109 Breach of duty to speak  110 Duty to speak  111 No duty to speak  119 Estoppel by negligence  124 Elements of the doctrine  125 Limited scope of the doctrine  126 The duty of care  127 Negligence in the transaction – proximate cause  131 Parting with property, indicia of title or documents signed in blank  131 Non est factum  137 The ‘facilitation’ theory  137 Criticism of the theory  138 Chapter 4 Unequivocality and construction  141 Piers Feltham Introduction 141 Unequivocality 141 Construction 144 The representation must be unambiguous  145 Principle 145 Strictness 147 Thorner v Major 151 Lord Hoffmann; subjective unequivocality; subsequent acquiescence  151 Lord Scott and Lord Rodger  154 Lord Walker and Lord Neuberger  154 Thorner v Major: summary  155 Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd 160 Unequivocality and reasonable understanding: conclusion  162 Other issues: fraud, proprietary estoppel, conduct, silence  163 Fraud 163 Proprietary estoppel  164 Conduct 165 Silence 166 Recent examples  168 Construction 173 Meaning of the representation: law or fact?  174 Complex or qualified representations  176 Statements in a single document  176 Qualified and conditional representations  177 Oral representations  180 Series of documents  180 Written and oral statements  181 Language and conduct  182 xv

Contents

Chapter 5 Inducement and reliance; the effect of estoppel as to a fact  185 Joshua Winfield Introduction 185 Inducement 187 Inducement and reliance  187 Actual inducement in result  188 Inference of inducement from materiality  188 Inducement to inactivity  190 No actual inducement  191 Constructive notice or knowledge of the truth  194 Causation 196 Intention of B to be responsible for reliance  201 Materiality 212 Receipts for money and goods; bills of lading  214 Change of position  217 What amounts to change of position?  218 Expenditure after receipt of money  226 Damage repaired  227 The standard against which the detriment is measured  229 A different test for promissory estoppel?  232 Inequity without detriment?  233 Onus of proof  235 The consequences of estoppel as to a fact  237 Questions of law and fact  240 Chapter 6 Parties to the estoppel  243 Joshua Winfield Introduction 243 Persons who may raise the estoppel  244 The representee or person to whom a duty is owed  244 Persons entitled to the benefit of an estoppel on the death or disability of A  247 Successors in title of A  248 Persons bound by the estoppel  252 The person responsible  252 Death or disability of the person responsible  253 Insolvency of the person responsible  255 Successors in title of the person responsible  257 Trustees 271 Chapter 7 The defence of illegality  279 Piers Feltham Introduction 279 The defence  279 Summary 280 Defences considered elsewhere  281 xvi

Contents

General principles  282 Protection of statutory and common law rules  282 Public policy  283 Application to rules of equity  284 Weighing public policy and the justice of the case  285 Statutory construction  286 Formality 287 Detrimental reliance on an informal contract for the sale of land  288 Deeds 292 Actionstrength and informal guarantees  293 Formality: summary  294 Waiving the protection of a statute  295 Common issue  295 Benefit 296 Paternalism 297 Estoppel into protection  298 Ultra vires  301 Other applications  303 Infants 303 Mental incapacity  303 Marriage, divorce and parenthood  304 Creditors 305 No estoppel as to jurisdiction  305 Royal prerogative  305 Waiver of procedural irregularity  306 Estoppel from denying facts  307 Principled distinction  307 Statutory duty and discretion  308 No estoppel against performing public duty  308 Discretion 310 Possible exceptions  310 Legitimate expectation displaces estoppel in the sphere of government  311 Estoppel in private dealings of public authorities  312 Foreign law  313 Chapter 8 Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title  315 Piers Feltham Estoppel by convention  316 Introduction 316 General statement of requirements  320 Communication of the shared assumption  321 Inducement 330 Actual or presumptive intention to induce  330 Actual inducement  335 xvii

Contents

Mutual dealings  336 Unjust benefit or detriment  339 The effect of an estoppel by convention  340 The ‘Indian Endurance’ 340 Effect of convention as to fact  343 Effect of convention as to (non-proprietary) rights: suspensory 344 Effect of convention as to (non-proprietary) rights: illegality 346 Convention as to proprietary rights  349 Clean hands  349 Effect of estoppel by convention: conclusion  350 Further aspects of estoppel by convention  350 Belief in the assumed state of facts irrelevant  350 Illegality/public policy  351 Estoppel by contract  352 Principle 352 Construction and effect  355 Cross-estoppel by contract  356 Statutory control  358 Receipt in a contract or deed  358 Estoppel by deed  360 Definition and foundation  360 History 362 Operation 363 Defences 365 Construction of the deed  366 Development 370 Estoppel as to title  370 Binding by agreement  370 Two historical doctrines of estoppel by deed as to title  372 Part II  Particular Applications of Reliance-Based Estoppel Chapter 9 Applications of reliance-based estoppel to various relationships 375 Peter Crampin QC Agency, partnership and ownership by estoppel  375 Holding out as agent  379 Holding out as partner  380 No estoppel  380 Limitation on authority must be express  381 Continuing nature of representation  383 Representations of ownership or non-agency or independence  383 Holding out a third person as principal of the representor  385

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Contents

Representations that the representor has no principal  386 Questions of law and fact  386 Landlord and tenant  387 Acts and conduct of the tenant which involve a recognition of the landlord’s title  388 Acts on the part of the landlord which involve recognition of the tenancy  392 ‘Election cases’  393 Who are entitled and bound by the estoppel  393 Limits of the estoppel as between landlord and tenant  394 Eviction of tenant by title paramount  396 Surrender by act and operation of law  397 Physical surrender no longer necessary  399 Tripartite transactions  401 Feeding the estoppel  402 Bailor and bailee  404 Analogy with estoppel between landlord and tenant  405 Estoppel of the bailee  406 Estoppel of the bailor  406 Illegality 407 Eviction by title paramount  407 Statutory modification by the Torts (Unlawful Interference with Goods) Act 1977  409 Patentee and licensee  410 Licence never used  411 Exclusive licence does not found estoppel  411 Limits on the estoppel  412 Customer and banker  413 Customer estopped by negligence in the drawing of cheques and the like  413 Banker estopped by entries in passbook in certain cases  413 Banker not estopped by honouring cheque  414 Customer not estopped by passbook  414 Forged cheques  416 Employers, trustees and members of occupational pension schemes  416 Chapter 10 Miscellaneous estoppels  421 Tom Leech QC Companies 421 Share certificates and transfers  421 Cheques and bills of exchange  437 Contracts of insurance  438 Payment of premiums  438 Non-disclosure 441 Breach of warranty and other policy terms  448 The Insurance Act 2015  453

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Contents

Chapter 11 Statutory estoppel  457 Peter Crampin QC Sale of goods  457 Codification of the nemo dat rule and of estoppel as an exception to it  457 Dispositions by mercantile agents, sellers and buyers in possession  460 Waiver of rights and election between inconsistent rights  478 Bills of exchange  480 Estoppels against the acceptor of a bill  481 Estoppels against the maker of a promissory note  481 Fictitious or non-existent payees  482 Estoppels against the drawer of a bill (first indorser of a promissory note)  482 Estoppels against the indorser of a bill or note  482 Signatures in blank  482 Estoppels in respect of forged or unauthorised signatures  484 Bills of lading  485 Definition 485 No estoppel between immediate parties  486 Estoppels arising from negotiation  486 Parties 487 The Bills of Lading Act 1855  488 The Carriage of Goods by Sea Act 1971  490 The Carriage of Goods by Sea Act 1992  491 Situations in which estoppel is not made out; illegality  495 The Partnership Act 1890  496 Holding out  496 Notice to partners  496 Dissolution 497 Part III Proprietary Estoppel, Election, Promissory Estoppel and Procedure Chapter 12 Proprietary estoppel  501 Peter Crampin QC Introduction 501 The doctrine’s place in equity and estoppel  502 The elements of proprietary estoppel  504 The evolution of proprietary estoppel  508 Standing by  508 The misprediction form of the estoppel  512 Willmott v Barber 514 Crabb and Taylors Fashions 515 Cobbe 516 Property 518 Property within the doctrine  518 xx

Contents

The need for property  519 Whose property?  521 After-acquired property  521 Certainty of interest  521 Parties 525 Minors and mentally disordered persons  525 The Crown  525 Statutory corporations  525 Trustees 526 Co-owners 527 Principal and agent  527 Fluctuating bodies of persons  528 Raising the equity: the scope of the inquiry  528 A’s misapprehension  530 Source of the misapprehension  530 Belief in a present right  531 Mistakes and mispredictions  532 Content of the misapprehension  538 B’s knowledge or ignorance of A’s misapprehension  538 A’s change of position  540 Detriment 540 Reliance 543 B’s responsibility for A’s change of position  547 By dishonestly standing by  548 By encouragement  549 Unconscionability 560 Defences 561 Equity satisfied  561 General equitable defences  562 Informality 563 The nature of the equity; third parties  572 Registered land  572 Unregistered land  573 Proprietary estoppel easements and registered land  579 The position where the equity does not bind a purchaser for value  579 Satisfying the equity  580 The different approaches taken by the courts  580 Factors taken into account in exercising the discretion  585 Examples of the exercise of the discretion  588 Overlap with other reliance-based estoppels  592 Proprietary estoppel and constructive trusts  594 Chapter 13 Election  599 Tom Leech QC Introduction 599 Common law election  608 Election between substantive rights  609 xxi

Contents

Election between remedies  627 Election between persons  634 Equitable election  639 Instruments 639 Litigation 642 Chapter 14 Promissory estoppel  647 Tom Leech QC Introduction 647 The High Trees principle  649 Subsequent treatment  652 The elements of promissory estoppel  654 Promise or representation  654 Legal relationship  667 Reliance 671 Detriment 673 Effect 676 Inequitable 680 The limitations of promissory estoppel  681 Chapter 15 Stating the case  687 Piers Feltham General principle  687 The need to plead  688 Consequences of failure  689 Prejudice 690 No prejudice  691 Appeal 692 Second appeal  693 Estoppel against amendment  693 Index  695

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Table of statutes

All references are to paragraph number Administration of Justice Act 1982 s 21�������������������������������������������������������  13.52 Agricultural Holdings Act 1986 Sch 3�����������������������������������������������������  8.12 Arbitration Act 1950 s 13A����������������������������������������������������  4.42 Bills of Exchange Act 1882���������������������   11.67 Pt II�������������������������������������������������������   11.71 s 2���������������������������������������������������������   11.70 s 7���������������������������������������������������������   11.72 s 20����������������������  3.34, 3.39, 3.48, 9.7, 11.12, 11.13, 11.76, 11.77, 11.78 s 24�������������������������������������������������������   11.79 s 29�������������������������������������������������������   11.70 s 54������������������������������������������  11.69, 11.70 s 55������������������������������������������  11.73, 11.75 s 81�������������������������������������������������������  9.11 s 88�������������������������������������������������������   11.71 s 89������������������������������������������  11.71, 11.74 s 90�������������������������������������������������������   11.43 Bills of Lading Act 1855��������������������������   11.83 s 1��������������������������������������������  11.90, 11.91 s 3�������������������������������   11.91, 11.94, 11.104 Carriage by Air Act 1961�������������������������    7.9 Carriage of Goods by Sea Act 1971���������   11.95 Carriage of Goods by Sea Act 1992����������������������������������������  11.83, 11.94 s 1������������������������������������������������  11.81, 11.84 s 2������������������������������������������������  11.86, 11.98 s 4�������������������������������������������������  5.39, 11.84, 11.97, 11.98, 11.99 s 5���������������������������������   11.99, 11.100, 11.104 Companies Act 1948 �������������������������������   14.23 s 75�������������������������������������������������������  10.2 Companies Act 1985 ss 35–36�����������������������������������������������  5.11 s 35A����������������������������������������������������  7.36 s 183�����������������������������������������������������  10.2 s 349�����������������������������������������������������   10.22 Companies Act 1989 �������������������������������  10.2 Companies Act 2006��������������������������������  3.18 s 43�������������������������������������������������������  10.2 s 44����������������������������������������������  10.13, 10.14 s 70�������������������������������������������������������  10.2 s 82�������������������������������������������������������   10.22 s 83�������������������������������������������������������   10.22 s 113�����������������������������������������������������  10.1 s 125����������������������������������������������  10.1, 10.17 s 126����������������������������������������������  10.1, 10.20 s 127������������������������������������������������  10.1, 10.6 s 128B���������������������������������������������  10.1, 10.5 s 128F���������������������������������������������������  10.1 s 588�����������������������������������������������������   10.15 s 768�����������������������������������������������������  10.2 s 769�����������������������������������������������������  10.2

Companies Act 2006 – contd s 771�����������������������������������������������������  10.2 s 775�����������������������������������  10.3, 10.16, 10.17 Consumer Credit Act 1974 ����������������  7.29, 7.32, 7.33, 8.73, 9.52, 11.34 s 56�������������������������������������������������������  3.39 s 127�����������������������������������������������������  7.31 Consumer Insurance (Disclosure and Representation) Act 2012 s 11����������������������������������������������  10.26, 10.40 Consumer Rights Act 2015 Pt 1, Ch 2������������������������������������  11.60, 11.62 s 1���������������������������������������������������������   11.65 s 2���������������������������������������������������������   11.65 s 9���������������������������������������������������������   11.65 s 10�������������������������������������������������������   11.65 s 11�������������������������������������������������������   11.65 s 13�������������������������������������������������������   11.65 s 14�������������������������������������������������������   11.65 s 19�������������������������������������������������������   11.65 s 22�������������������������������������������������������   11.66 s 23�������������������������������������������������������   11.66 s 24�������������������������������������������������������   11.66 s 62�������������������������������������������������������  8.76 Sch 1, paras 11–14�������������������������������   11.60 Deeds of Arrangement Act 1914��������������  7.42 Distress for Rent Act 1737 s 18������������������������������������������������  13.5, 13.33 Equality Act 2010 s 61�������������������������������������������������������  9.84 Factors Act 1823��������������������������������������   11.11 Factors Act 1825��������������������������������������   11.11 Factors Act 1842��������������������������������������   11.11 Factors Act 1877 s 3�������������������������������������   11.11, 11.26, 11.28 s 4�������������������������������������   11.11, 11.29, 11.31 Factors Act 1889 s 1��������������������������   11.16, 11.18, 11.19, 11.20 s 2������������������������   3.39, 9.7, 11.3, 11.9, 11.11, 11.13, 11.14, 11.15, 11.16, 11.22, 11.23, 11.24, 11.25, 11.36, 11.37, 11.38, 11.39, 11.40, 11.41, 11.42, 11.44, 11.45, 11.53, 11.57 s 8����������������������   9.7, 11.3, 11.9, 11.11, 11.13, 11.14, 11.23, 11.26, 11.27, 11.28, 11.29, 11.30, 11.31, 11.48, 11.53, 11.57 s 9����������������������   9.7, 11.3, 11.9, 11.11, 11.13, 11.14, 11.18, 11.23, 11.27, 11.28, 11.29, 11.30, 11.31, 11.33, 11.34, 11.36, 11.37, 11.39, 11.40, 11.53, 11.57 s 10�������������������������������������������������������   11.11 Finance Act 1961�������������������������������������   11.76 Finance Act 1963 s 67�������������������������������������������������������    9.7 Finance Act 1970�������������������������������������   11.76

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Table of statutes Financial Services and Markets Act 2000�������������������������������������������  3.18 Gaming Act 1835�������������������������������������   11.78 Gaming Act 1845�������������������������������������  9.15 Highways Act 1980 s 130�����������������������������������������������������  7.49 Human Fertilisation and Embryology Act 1990 ������������������������������������������   14.25 Insolvency Act 1986 ss 220, 221�������������������������������������������    9.8 s 436��������������������������������������������  6.38, 12.172 Insurance Act 2015 ���������������������������������   13.22 Pt 2 (ss 2–8)�����������������������������������������   10.40 Pt 3 (ss 10, 11)��������������������������������������   10.40 Pt 4 (ss 12, 13)�������������������������������������   10.40 s 1���������������������������������������������������������   10.40 s 3������������������������������������������������  10.41, 11.60 s 9���������������������������������������������������������   10.40 s 10�������������������������������������  10.40, 10.43, 13.9 s 12�������������������������������������������������������   10.44 s 14�������������������������������������������������������   10.40 s 17�������������������������������������������������������   10.40 s 21�������������������������������������������������������   10.40 Sch 1�����������������������������������������������������   10.42 Interpretation Act 1978 Sch 1�����������������������������������������������������   11.18 Joint Stock Companies Act 1867 s 25�������������������������������������������������������   10.15 Land Charges Act 1925 s 13�������������������������������������  7.13, 7.26, 12.165 Land Charges Act 1972 s 4(6)�������������������������������������������  7.13, 12.165 s 5(7)����������������������������������������������������  6.41 s 17(1)��������������������������������������������������  6.41 Land Registration Act 1925���������������������  6.45 s 70(1)���������������������������������������  12.77, 12.168 Land Registration Act 2002 s 11�������������������������������������������������������  12.177 s 27�������������������������������������������������������  6.57 ss 28–31�����������������������������������������������  6.44 s 28�����������������������������������������������  6.57, 12.77, 12.176, 12.177 s 29�����������������������������������������������  6.44, 12.77, 12.176, 12.177 s 33�������������������������������������������������������  6.57 s 116������������������  1.34, 6.37, 6.38, 6.44, 12.77, 12.168, 12.169, 12.171, 12.172 Sch 3�����������������������������������������������������  6.57 para 2����������������������������  6.44, 12.77, 12.176 Sch 4, para 3�����������������������������������������  12.177 Landlord and Tenant Act 1954 ����������������  5.23 Pt II������������������������������������������������  9.18, 13.33 s 25�����������������������������������������  4.62, 6.11, 7.30 s 26�������������������������������������������������������   13.33 s 29(3)��������������������������������������������������   13.10 s 38A����������������������������������������������������  7.30 Landlord and Tenant Act 1987 Pt I��������������������������������������������������������   12.35 Landlord and Tenant Act 1988 ����������������    7.7 s 5(2)����������������������������������������������������  4.44 Law of Property Act 1925 s 2(1)(ii)�����������������������������������������������  6.58 s 2(1)(iv)�����������������������������������������������  6.62 s 40���������������������������������  7.22, 12.147, 12.183

Law of Property Act 1925 – contd s 52�������������������������������������  7.19, 9.38, 12.159 s 53����������������������������������������������  6.13, 12.160 s 53(1)�����������������������������  7.19, 10.19, 12.161, 12.162, 12.163 s 53(2)�������������������������������������������  7.19, 10.19 s 56�����������������������������������������  6.12, 7.23, 8.88 s 56(1)��������������������������������������������������  8.84 ss 62, 63�����������������������������������������������  6.13 s 68������������������������������������������������  5.39, 10.25 s 76(1)(B)���������������������������������������������  6.11 s 199�����������������������������������������������������  6.43 s 205�����������������������������������������������������  9.38 s 205(1)(xxi)�����������������������������������������  6.58 Sch 2, Pt II��������������������������������������������  6.11 Law of Property (Miscellaneous Provisions) Act 1989 s 1��������������������������������������  7.23, 9.81, 12.143, 12.144, 12.145, 12.146 s 2������������������������  7.14, 7.15, 7.16, 7.17, 7.18, 7.19, 7.22, 7.26, 12.76, 12.137, 12.146, 12.147, 12.149, 12.150, 12.151, 12.152, 12.153, 12.154, 12.155, 12.156, 12.157, 12.158, 12.182, 12.183, 14.40 Leasehold Reform, Housing and Urban Development Act 1993 �������������������  7.30 Marine Insurance Act 1906 ���������������������   14.20 s 17����������������������������������������������  10.26, 10.44 s 18���������������������������������������������  10.26, 10.27, 10.30, 10.33, 10.40, 10.41 s 19�����������������������������������  10.26, 10.33, 10.40 s 20����������������������������������������������  10.26, 10.40 s 33�������������������������������������������������������   10.34 s 34�������������������������������������  10.34, 10.43, 13.9 s 54�������������������������������������������������������   10.25 Mental Capacity Act 2005 ����������������������  7.40 Minors’ Contracts Act 1987���������������������  6.18 s 3(1)����������������������������������������������������  7.39 Misrepresentation Act 1963 ��������������������  4.55 Misrepresentation Act 1967 ��������������������  2.17 s 2(1)����������������������������������������������������  5.24 s 3���������������������������������������������������������  8.76 Moneylenders’ Act 1900��������������������������  7.29 Partnership Act 1890��������������������������������    9.2 s 5���������������������������������������������������������    9.8 s 14��������������������������  9.8, 11.13, 11.106, 13.49 s 16�������������������������������������������������������  11.108 s 36������������������������   5.11, 9.13, 11.110, 11.111 Pensions Act 1995 s 62�������������������������������������������������������  9.84 Perpetuities and Accumulations Act 1964 s 9(4)����������������������������������������������������    7.7 Rent Act 1977������������������������������������������  7.30 Road Traffic Act 1988������������������������������   10.38 Sale and Supply of Goods Act 1994��������   11.60 Sale of Goods Act 1893 s 11�������������������������������������������������������   13.14 s 21(1)�����������������������������������  9.4, 11.2, 11.14, 11.47, 11.48, 11.51, 11.53 s 25����������������������������������������������   11.11, 11.48 s 62�������������������������������������������������������   11.19

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Table of statutes Sale of Goods Act 1979 s 2���������������������������������������������������������   11.30 s 11����������������������������������   11.59, 11.60, 11.61, 11.62, 11.63, 11.64, 13.9 ss 12–15�����������������������������������������������   11.60 s 21(1)�����������������  1.34, 3.39, 6.46, 11.2, 11.3, 11.4, 11.5, 11.14, 11.41, 11.47 s 21(2)��������������������������������������������������  11.9 s 24�����������������������������   9.7, 11.9, 11.11, 11.13, 11.14, 11.26, 11.27, 11.28, 11.35, 11.48, 11.57 s 25�����������������������������   9.7, 11.9, 11.11, 11.13, 11.14, 11.18, 11.27, 11.29, 11.30, 11.31, 11.32, 11.33, 11.34, 11.35, 11.36, 11.37, 11.39, 11.40, 11.41, 11.57 s 26�������������������������������������������������������   11.16 s 35������������������������������������������������  13.9, 13.27 s 35A����������������������������������������������������   11.62 s 43�������������������������������������������������������   11.30 s 61�����������������������������������   11.18, 11.19, 11.43 s 62(2)�����������������������������������������  11.10, 11.48 Statute of Frauds 1677�����������������������������  7.25 s 4�������������������������������������  7.14, 12.152, 14.40 Stock Transfer Act 1963 �������������������������    9.7 s 1��������������������������������������������������  10.2, 10.16 s 2(2)����������������������������������������������������   10.16

Supply of Goods and Services Act 1982 ������������������������������������������������  9.52 Theft Act 1968�����������������������������������������   11.40 Torts (Interference with Goods) Act 1977��������������������������������������������  8.90, 9.52 s 3���������������������������������������������������������   13.39 s 7(2)����������������������������������������������������  9.60 s 8���������������������������������������������������������  9.61 s 8(1)����������������������������������������������������  9.60 Trustee Act 2000 s 31(1)��������������������������������������������������  6.50 Trusts of Land and Appointment of Trustees Act 1996 s 6���������������������������������������������������  6.56,12.54 s 6(1)�����������������������������������������������  6.59, 6.61 s 8(1)����������������������������������������������������  6.56 Unfair Contract Terms Act 1977���������  4.55, 7.29 s 2���������������������������������������������������������  8.76 s 2(2)����������������������������������������������������  5.29 Value Added Tax Act 1994 s 45�������������������������������������������������������    9.8 Wills Act 1837 �������������������������������  7.26, 12.164 Workmen’s Compensation Act 1897�������������������������������������������������  2.23

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xxvi

Table of statutory instruments

All references are to paragraph number Civil Procedure Rules 1998, SI 1998/3132 r 1.1������������������������������������������������������  15.7 r 8.1������������������������������������������������������  15.1 Pt 7�������������������������������������������������������  15.2 Pt 8�������������������������������������������������������  15.2 Pt 11����������������������������������������������  5.42, 13.54 r 15.8����������������������������������������������������  15.2 r 16.5���������������������������������������������  12.59, 15.5 r 17.3���������������������������������������������  15.7, 15.14 Pts 31–33����������������������������������������������  15.2 r 52.11��������������������������������������������������  15.12 Companies (Trading) Regulations 2008, SI 2008/495��������������������������������������  10.22 Irish Free State (Consequential Adaptation of Enactments) Order 1923, SR&O 1923/405������������������������������  11.110 Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009, SI 2009/1804 reg 26���������������������������������������������������  10.16

Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009, SI 2009/1917����������������������������������������  10.14 Uncertificated Securities Regulations 2001, SI 2001/3755��������������������������  10.2 reg 23���������������������������������������������������  10.4 reg 24����������������������������������������������  10.4, 10.6 reg 28���������������������������������������������������  10.5 reg 33���������������������������������������������������  10.5 reg 35����������������������������������������������  10.5, 10.6 reg 36����������������������������������������������  10.5, 10.6 reg 46����������������������������������������������  10.5, 10.6 Sch 4�����������������������������������������������������  10.4 Uncertificated Securities (Amendment) Regulations 2013, SI 2013/632��������  10.4

xxvii

xxviii

Table of cases

All references are to paragraph number A AAG Investments Ltd v BAA Airports Ltd (Rev 1) [2010] EWHC 2844 (Comm)�����������������������  4.52 Abbey National Building Society v Cann (1989) 57 P & CR 381, [1989] 2 FLR 265, [1989] Fam Law 314, CA; affd [1991] 1 AC 56, [1990] 1 All ER 1085, [1990] 2 WLR 832, 60 P & CR 278, [1990] 2 FLR 122, [1990] Fam Law 397, 22 HLR 360, [1990] 17 LS Gaz R 32, [1990] NLJR 477, HL�������������������������������������������������������������������  3.45, 6.37, 8.31, 9.50, 9.51 Abigail v Lapin [1934] AC 491, 51 WN 149, 103 LJCP 105, [1934] All ER Rep 720, 51 CLR 58, 151 LT 429, 24 SRNSW 395, 8 ALJ 198, HL����������������������������������������������������������  3.26, 3.29, 3.42 Abraham v Commissioner of Police for the Metropolis [2001] 1 WLR 1257�������������������������������  5.31 Ace Insurance SA-NV v Seechurn. See Seechurn v Ace Insurance SA-NV ACG Acquisition XX LLC v Olympic Airlines SA (in liquidation) [2012] EWHC 1070 (Comm), [2012] 2 CLC 48����������������������������������������������������������������������������������������  5.45, 8.67, 8.68 Actavis UK Ltd v Eli Lilly & Co [2016] EWHC 234 (Pat)�������������������������������������������������������  5.14, 5.17 Actionstrength Ltd (t/a Vital Resources) v International Glass Engineering IN.GL.EN SpA [2003] UKHL 17, [2003] 2 AC 541, [2003] 2 All ER 615, [2003] 2 WLR 1060, [2003] NLJR 563, [2003] BLR 207, 147 Sol Jo LB 418, [2003] 2 All ER (Comm) 331����������������  3.7, 7.9, 7.14, 7.25, 7.26, 8.25, 12.4, 12.152, 14.40 Acute Property Developments Ltd v Apostolou [2013] EWHC 200 (Ch), [2013] Bus LR D22���������  9.2 Adamson, ex p. See Collie, Re, ex p Adamson ADS Aerospace Ltd v EMS Global Tracking Ltd [2012] EWHC 2310 (TCC), 145 Con LR 29���������������������������������������������������������������������������������������������������������������������������������  1.18, 2.16 African Gold Concessions and Development Co, Re, Markham and Darter’s Case [1899] 1 Ch 414, 68 LJ Ch 215, 6 Mans 84, 47 WR 509, 80 LT 282, 15 TLR 143; affd [1899] 2 Ch 480, 68 LJ Ch 724, 81 LT 145, 15 TLR 491, CA����������������������������������������������������  5.10, 10.15 Agar v Young Car & M 78, pre-SCJA 1873�����������������������������������������������������������������������������������  8.90 Agip (Africa) Ltd v Jackson [1990] Ch 265, [1992] 4 All ER 385, [1989] 3 WLR 1367, [1990] BCC 899, 134 Sol Jo 198, [1990] 2 LS Gaz R 34; affd [1991] Ch 547, [1992] 4 All ER 451, [1991] 3 WLR 116, 135 Sol Jo 117, CA ������������������������������������������������  13.43, 13.47 Agip SpA v Navigazione Alta Italia SpA, The Nai Genova and Nai Superba [1984] 1 Ll Rep 353, CA������������������������������������������������������������������������������������������������������������  1.90, 1.93, 3.16, 5.25 Agrosin Pte Ltd v Highway Shipping Co Ltd, The Mata K [1998] 2 Ll Rep 614���������������  11.99, 11.101 AIB Group (UK) Plc v Mark Redler & Co Solicitors [2014] UKSC 58, [2015] AC 1503������������   13.41 AIB Group (UK) Plc v Turner [2015] EWHC 3994 (Ch)��������������������������������������������������������������    3.9 Airways Aero Associations Ltd v Wycombe DC [2010] EWHC 1654 (Ch)����������������������  4.4, 7.32, 7.48 AJ Building and Plastering Ltd v Turner [2013] EWHC 484 (QB), [2015] TCLR 3, [2013] Ll Rep IR 629��������������������������������������������������������������������������������������������������������������������������   15.10 Ajayi (t/a Colony Carrier Co) v RT Briscoe (Nigeria) Ltd [1964] 3 All ER 556, [1964] 1 WLR 1326, 108 Sol Jo 857, PC��������������������������������������������  5.55, 14.2, 14.10, 14.23, 14.26, 14.33, 15.13 Aker Oil and Gas Technology UK Plc v Sovereign Corporate Ltd [2002] CLC 557����������������  1.73, 5.61 Akiens v Salomon (1992) 65 P & CR 364, sub nom Salomon v Akiens [1993] 1 EGLR 101, [1993] 14 EG 97, CA��������������������������������������������������������������������������������������������  4.51, 5.27, 12.121 Akrokerri (Atlantic) Mines Ltd v Economic Bank [1904] 2 KB 465, 73 LJKB 742, 9 Com Cas 281, 52 WR 670, [1904–7] All ER Rep 1054, 48 Sol Jo 545, 91 LT 175, 20 TLR 564������������������������������������������������������������������������������������������������������������������������  2.12, 9.71 Alan (WJ) & Co Ltd v El Nasr Export and Import Co [1972] 2 QB 189, [1972] 2 All ER 127, [1972] 2 WLR 800, [1972] 1 Ll Rep 313, 116 Sol Jo 139, CA��������������������  5.54, 5.56, 14.2, 14.21, 14.26, 14.28 Alchorne v Gomme (1824) 2 Bing 54, 2 LJOSCP 118, 9 Moore CP 130��������������������������������������  9.18 Alexander Eccles Ltd, Re [1935] NZLR 86�����������������������������������������������������������������������������������  5.45 Alexis v YM International Realty Ltd [2016] HKDC 48���������������������������������������������������������������  13.48 Algar v Middlesex County Council. See Local Government Superannuation Acts 1937 and 1939, Re, Algar v Middlesex County Council Alghussein Establishment v Eton College [1988] 1 WLR 587�������������������������������������������������  1.70, 7.36 Alhamrani v Alhamrani [2014] UKPC 37��������������������������������������������������������������������������������������  4.46

xxix

Table of cases Ali v Khan [2002] EWCA Civ 574�������������������������������������������������������������������������������������������������  8.87 Ali v Rahman (14 February 1996, unreported)�������������������������������������������������������������  1.87, 12.24, 12.34 Aliakmon, The. See Leigh & Sillivan Ltd v Aliakmon Shipping Co Ltd, The Aliakmon Alicia Hosiery Ltd v Brown, Shipley & Co Ltd [1970] 1 QB 195, [1969] 2 All ER 504, [1969] 2 WLR 1268, [1969] 2 Ll Rep 179, 113 Sol Jo 466����������������������������������������������������  5.40 Alipour v UOC Corp [2002] EWHC 937 (Ch), [2002] 2 BCLC 770��������������������������������������  10.8, 10.17 Allan v Bower (1790) 3 Bro CC 149����������������������������������������������������������������������������������������������  1.38 Allcard v Skinner (1887) 36 Ch D 145, 56 LJ Ch 1052, 36 WR 251, [1886–90] All ER Rep 90, 57 LT 61, 3 TLR 751, CA�������������������������������������������������������������������������������������������������������   13.26 Allen v Hay (1922) 69 DLR 193 (Sup Ct Can)������������������������������������������������������������������������������  1.63 Allen v Robles (Compagnie Parisienne de Garantie third party) [1969] 3 All ER 154, [1969] 1 WLR 1193, [1969] 2 Ll Rep 61, 113 Sol Jo 484, CA����������������������������������������������������  10.34, 13.27 Allen v Wood (1834) 1 Bing NC 8, 3 LJCP 219, 4 Moo & S 510, 131 ER 1020��������������������������  6.17 Allied Maples Group Ltd v Simmons & Simmons (a firm) [1995] 4 All ER 907, [1995] 1 WLR 1602, [1995] NLJR 1646, CA ������������������������������������������������������������������������������������������������  5.46 Allied Marine Transport Ltd v Vale do Rio Doce Navegacao SA, The Leonidas D [1983] 3 All ER 737, [1984] 1 WLR 1, [1983] 2 Ll Rep 411, 127 Sol Jo 729; revsd [1985] 2 All ER 796, [1985] 1 WLR 925, [1985] 2 Ll Rep 18, 129 Sol Jo 431, [1985] LS Gaz R 2160, CA ����������������������������������������������������������������������������������������������������������������  3.17, 4.42, 14.18 Allison (Kenneth) Ltd v AE Limehouse & Co (a firm) [1992] 2 AC 105, [1991] 4 All ER 500, [1991] 3 WLR 671, 135 Sol Jo 172, HL��������������������������������������������������������������������������������  8.3, 8.5 Alma Shipping Corp v Union of India, The Astraea [1971] 2 Ll Rep 494�������������������������������������   14.33 Alman and Benson v Associated Newspapers Group Ltd (unreported)�����������������������������������������  4.54 Al-Wazir (Abdullah Abbas) v Islamic Press Agency [2001] EWCA Civ 1276������������������������������   10.14 Amalgamated Investment and Property Co Ltd (in liquidation) v Texas Commerce International Bank Ltd [1982] QB 84, [1981] 1 All ER 923, [1981] 2 WLR 554, 125 Sol Jo 133; affd [1982] QB 84, [1981] 3 All ER 577, [1981] 3 WLR 565, [1982] 1 Ll Rep 27, 125 Sol Jo 623, CA��������������������������������������������������������������������������������  1.7, 1.28, 1.48, 1.59, 1.102, 2.25, 2.31, 2.36, 2.37, 2.39, 3.15, 5.10, 5.27, 5.36, 8.3, 8.5, 8.6, 8.10, 8.26, 8.30, 8.34, 8.36, 8.38, 8.45, 8.46, 8.48, 8.57, 8.58, 8.61, 11.98, 12.13, 12.17, 12.106, 12.182, 14.2, 14.9, 14.22, 14.23, 14.41 Amazonia, The. See Furness Withy (Australia) Pty Ltd v Metal Distributors (UK) Ltd, The Amazonia Ambrose Lake Tin and Copper Mining Co, Re, ex p Taylor, ex p Moss (1880) 14 Ch D 390, 49 LJ Ch 457, 28 WR 783, 42 LT 604, CA�����������������������������������������������������������������������������  5.10 Anderson, Re, Pegler v Gillatt [1905] 2 Ch 70, 74 LJ Ch 433, 53 WR 510, 92 LT 725����������������  6.17 Anderson Antiques (UK) Ltd v Anderson Wharf (Hull) Ltd [2007] EWHC 2086 (Ch)����������������  7.18 André & Cie SA v Ets Michel Blanc & Fils [1979] 2 Ll Rep 427, CA�������������������������������������  2.31, 2.34 André et Cie SA v Marine Transocean Ltd, The Splendid Sun [1981] QB 694, [1981] 2 All ER 993, [1981] 3 WLR 43, [1981] 2 Ll Rep 29, [1981] Com LR 95, 125 Sol Jo 395, CA��������������������������������������������������������������������������������������������������������������������������  3.17, 4.42 Andrews v Mockford [1896] 1 QB 372, 65 LJQB 302, 73 LT 726, 12 TLR 139, CA�������������������    6.3 Angus v Clifford [1891] 2 Ch 449, 60 LJ Ch 443, 39 WR 498, 65 LT 274, 7 TLR 447, CA���������  2.16 Anon (1709) 2 Eq Ca Abr 522���������������������������������������������������������������������������������������������  12.13, 12.189 Antclizo, The. See Food Corp of India v Antclizo Shipping Corp, The Antclizo Appleby v Cowley (1982) Times, 14 April�������������������������������������������������������������������������������������  5.48 Arctic Shipping Co Ltd v Mobilia AB, The Tatra [1990] 2 Ll Rep 51����������������������  3.9, 3.14, 5.47, 5.62 Argo Systems FZE v Liberty Insurance Pte Ltd. See Liberty Insurance Pte Ltd v Argo Systems FZE Argy Trading Development Co Ltd v Lapid Developments Ltd [1977] 3 All ER 785, [1977] 1 WLR 444, [1977] 1 Ll Rep 67, 120 Sol Jo 677�������������������������������������  2.17, 14.21, 14.36 Ariff v Rai Jadunath Majumdar Bahadur [1931] UKPC 9�������������������������������������������������������������   12.21 Aristocrat Property Investments v Harounoff [1981–2] 2 HLR 102�����������������������������������������  7.29, 7.30 Arkwright v Newbold (1880) 17 Ch D 301, 49 LJ Ch 684, 28 WR 828, 42 LT 759; on appeal (1881) 17 Ch D 301, 50 LJ Ch 372, 29 WR 455, 44 LT 393, CA�������������������������������������  3.12, 4.35 Armagas Ltd v Mundogas SA, The Ocean Frost [1986] AC 717, [1985] 3 All ER 795, [1985] 3 WLR 640, [1985] 1 Ll Rep 1, 129 Sol Jo 362, [1984] LS Gaz R 2169, CA; affd [1986] AC 717, [1986] 2 All ER 385, [1986] 2 WLR 1063, [1986] 2 Ll Rep 109, 2 BCC 99197, 130 Sol Jo 430, [1986] LS Gaz R 2002, [1986] NLJ Rep 511, HL�������������������������������  9.2, 9.7, 9.9, 9.10, 12.56 Armstrong v Sheppard & Short Ltd [1959] 2 QB 384, [1959] 2 All ER 651, [1959] 3 WLR 84, 123 JP 401, 103 Sol Jo 508, CA�����������������������������������������������������������������  3.13, 12.12, 12.13, 12.24

xxx

Table of cases Armstrong v Strain [1951] 1 TLR 856; affd [1952] 1 KB 232, [1952] 1 All ER 139, [1952] 1 TLR 82, CA��������������������������������������������������������������������������������������������������������������������������  2.22 Arnold v Cheque Bank (1876) 1 CPD 578, 40 JP 711, 45 LJQB 562, 24 WR 759, 34 LT 729���������������������������������������������������������������������������������������������������������  3.20, 3.28, 3.34, 3.51 Artworld Financial Corp v Safaryan [2009] 2 EGLR 27 �������������������������������������������������  4.41, 4.44, 4.53 Asfar & Co v Blundell [1896] 1 QB 123, 65 LJQB 138, 8 Asp MLC 106, 1 Com Cas 185, 44 WR 130, 40 Sol Jo 66, 73 LT 648, 12 TLR 29, CA�����������������������������������������������������������   10.26 Ashberg (C & M), Re (The Times, 17 July 1990)�����������������������������������������������������������������������  7.43, 9.8 Ashburn Anstalt v Arnold [1989] Ch 1, [1988] 2 All ER 147, [1988] 2 WLR 706, 55 P & CR 137, 132 Sol Jo 416, [1987] 2 EGLR 71, [1988] 16 LS Gaz R 43, 284 Estates Gazette 1375, CA����������������������������������������������������������������������������������  6.37, 6.45, 6.49, 6.59, 12.38, 12.175 Ashbury Railway Carriage and Iron Co Ltd v Riche (1875) LR 7 HL 653, 44 LJ Ex 185, 24 WR 794, 33 LT 450������������������������������������������������������������������������������������������������������������������������  7.36 Asher v Whitlock [1865] LR 1 QB 1�����������������������������������������������������������������������������������������  1.21, 1.33 Ashpitel v Bryan (1863) 3 B & S 474, 32 LJQB 91, 9 Jur NS 791, 1 New Rep 265, 11 WR 279, 7 LT 706; affd (1864) 5 B & S 723, 11 LT 221, sub nom Aspitel v Bryan 33 LJQB 328, 12 WR 1082, ExCh�����������������������������������������������������������������������������  8.1, 8.64, 8.70, 8.78, 8.80, 11.72 Ashwell, Re, ex p Salarnan [1912] 1 KB 390, 81 LJKB 360, 19 Mans 49, 56 Sol Jo 189, 106 LT 190, 28 TLR 166����������������������������������������������������������������������������������������������������������������  6.20, 6.21 Ashworth (Oliver) (Holdings) Ltd v Ballard (Kent) Ltd [2000] Ch 12, [1999] 2 All ER 7919 [1999] 3 WLR 57, sub nom Ballard (Kent) Ltd v Oliver Ashworth (Holdings) Ltd [1999] 2 EGLR 23, [1999] 16 LS Gaz R 36, [1999] 19 EG 161, CA������������������  1.32, 13.2, 13.5, 13.7, 13.8, 13.12, 13.32, 13.33 Assaubayev v Michael Wilson & Partners Ltd [2014] EWCA Civ 1491, [2015] CP Rep 10, [2014] 6 Costs LR 1058, [2015] PNLR 8�������������������������������������������������������������������������������  7.46 Assicurazioni Generali SpA v Arab Insurance Group (BSC) [2002] EWCA Civ 1642, [2002] 2 CLC 242 ������������������������������������������������������������������������������������������������������������������������������  5.13 Astley Industrial Trust v Miller [1968] 2 All ER 36�����������������������������������������������������������������������   11.23 Astraea, The. See Alma Shipping Corp v Union of India, The Astraea Athos, The. See Telfair Shipping Corp v Athos Shipping Co SA, Solidor Shipping Co Ltd, Horizon Finance Corp and AN Cominos, The Athos Atlantic Lines & Navigation Co Inc v Hallam Ltd, The Lucy [1983] 1 Ll Rep 188����������������������  5.13 Atlantic Shipping and Trading Co v Louis Dreyfus & Co [1922] 2 AC 250, 91 LJKB 513, 15 Asp MLC 566, 27 Com Cas 311, [1922] All ER Rep 559, 66 Sol Jo 437, 127 LT 411, 38 TLR 534, 10 Ll L Rep 446, 707, HL�����������������������������������������������������������������������������������������������  13.8 A-G v Baliol College, Oxford (1744) 9 Mod Rep 407������������������������������������������������������  12.104, 12.188 A-G v Blake (Jonathan Cape Ltd third party) [2001] 1 AC 268, [2000] 4 All ER 385, [2000] 3 WLR 625, [2000] NLJR 1230, [2000] EMLR 949, [2000] 2 All ER (Comm) 487, sub nom A-G v Blake [2001] IRLR 36, [2000] 32 LS Gaz R 37, 144 Sol Jo LB 242, HL�������������������   13.40 A-G v Lord Hotham Turn & R 209, [1814–23] All ER Rep 448, pre-SCJA 1873; affd 3 Russ 415, [1814–23] All ER Rep 448, pre-SCJA 1873���������������������������������������������������������������������������  8.90 A-G v Stephens, Putney Charity (1855) 20 JP 70, 26 LTOS 189, sub nom A-G v Stephens 6 De GM & G 111, 25 LJ Ch 888, 2 Jur NS 51, 4 WR 191����������������������������������������������������  9.21 A-G (HM) (ex rel Co-operative Retail Services Ltd) v Taff Ely Borough Council. See Co-operative Retail Services Ltd v Taff Ely Borough Council A-G for Ceylon v Silva [1953] AC 461, [1953] 2 WLR 1185, [1953] 1 Ll Rep 563, 97 Sol Jo 384, PC��������������������������������������������������������������������������������������������������������������������������  7.38, 7.51 A-G for New South Wales v Quin (1990) 170 CLR 1��������������������������������������������������������������������  7.51 A-G of Belize v Belize Telecom Ltd [2009] 1 WLR 1988�������������������������������������������������������������  8.88 A-G of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd [1987] AC 114, [1987] 2 All ER 387, [1987] 2 WLR 343, 54 P & CR 96, 131 Sol Jo 194, [1987] LS Gaz R 574, PC�����������������������������������������������������������������������������  1.66, 2.16, 3.12, 4.51, 5.27, 5.29, 7.48, 12.4, 12.35, 12.121, 12.129, 14.17, 14.40 A-G of Victoria v Ettershank (1875) LR 6 PC 354, 44 LJPC 65, PC����������������������������������������  6.16, 7.12 A-G to Prince of Wales v Collom [1916] 2 KB 193, 85 LJKB 1484, 114 LT 1121, 32 TLR 448������������������������������������������������������������������������������������������������  6.16, 12.13, 12.50, 12.56 Attwood v Small (1838) 6 Cl & Fin 232, [1835–42] All ER Rep 258, sub nom Small v Attwood 2 Jur 226, 246, HL������������������������������������������������������������������������������������������������������������������  5.10 Aubergine Enterprises Ltd v Lakewood International Ltd [2002] EWCA Civ 177, [2002] 1 WLR 2149, [2002] 15 LS Gaz R 34, [2002] NLJR 364�������������������������������������������������������������������  4.51 Augier v Secretary of State for the Environment (1978) 38 P & CR 219��������������������������������������   14.24 August Leonhardt, The. See Lokumal (K) & Sons (London) Ltd v Lotte Shipping Co Pte Ltd, The August Leonhardt

xxxi

Table of cases Austin v Keele (1987) 72 ALR 579, 10 NSWLR 283, 61 ALJR 605, PC����������������������  5.7, 6.39, 12.201 Austotel Pty Ltd v Franklins Selfservice Pty Ltd (1989) 16 NSWLR 582, NSW CA��������������  5.10, 5.27 Australasian Temperance & General Mutual Life Assurance Society Ltd v Johnson [1933] NZLR 408��������������������������������������������������������������������������������������������������������������������������  3.13, 5.45 Australian Bank of Commerce v Perel [1926] AC 737, 95 LJPC 185, 135 LT 586, PC����������������  9.11 Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14��������  1.6, 1.56 Australian Steel and Mining Corp Pty Ltd v Corben [1974] 2 NSWLR 202, CA���������������������  3.12, 5.16 Avimex SA v Dewulf & Cie [1979] 2 Ll Rep 57����������������������������������������������������������������������������   14.11 Avocet Industrial Estates LLP v Merol Ltd [2011] EWHC 3422 (Ch)�������������  1.88, 1.92, 3.9, 3.21, 3.24 Avon County Council v Howlett [1983] 1 All ER 1073, [1983] 1 WLR 605, 81 LGR 555, [1983] IRLR 171, 127 Sol Jo 173, 133 NLJ 377, CA�����������������������������������������  1.18, 1.51, 1.57, 2.28, 3.7, 5.49, 5.50, 5.63, 5.66, 12.195 Avon Insurance Plc v Swire Fraser Ltd [2000] 1 All ER (Comm) 573����������������������������������������������  5.14 Avrora Fine Arts Investment Ltd v Christie, Manson & Woods Ltd [2012] EWHC 2198 (Ch), [2012] PNLR 35�����������������������������������������������������������������������������������������������������������������  2.23, 8.76 AW Hall & Co Ltd, Re (1887) 17 Ch D 712����������������������������������������������������������������������������������   10.15 Awwad v Geraghty [2001] QB 570 ��������������������������������������������������������������������������������������������  7.1, 15.6 Axa Sun Life Services Plc v Campbell Martin Ltd [2011] EWCA Civ 133, [2012] Bus LR 203, [2011] 2 Ll Rep 1, [2011] 1 CLC 312, 138 Con LR 104���������������������������������������������������  8.72, 8.76 Axa Versicherung AG v Arab Insurance Group (BSC) [2015] EWHC 1939 (Comm), [2016] Ll Rep IR 1�����������������������������������������������������������������������������������������������������������������������  8.32, 10.27 Aylmer, Re, ex p Bischoffsheim (1887) 20 QBD 258, 57 LJQB 168, 36 WR 231, 4 TLR 174, CA������������������������������������������������������������������������������������������������������������������������  7.43 Ayres v Moore [1940] 1 KB 278����������������������������������������������������������������������������������������������������   11.70 Ayrey v British Legal and United Provident Assurance Co [1918] 1 KB 136, 87 LJKB 513, 118 LT 255, 34 TLR 111�����������������������������������������������������������������  2.25, 2.33, 10.24, 10.35, 10.36, 13.3 Azov Shipping Co v Baltic Shipping Co [1999] 2 Ll Rep 159, [1999] 2 All ER (Comm) 453 ��������������������������������������������������������������������������������������������������������  1.48, 2.28, 2.36, 7.5, 8.56, 8.57, 8.59, 14.14, 14.25, 14.36, 14.41 B Baddeley v Earl of Granville (1887) 19 QBD 423, 51 JP 822, 56 LJQB 501, 36 WR 63, [1886–90] All ER Rep 374, 57 LT 268, 3 TLR 759���������������������������������������������������������������  7.29 Baglehole v Walters (1811) 3 Camp 154, 170 ER 1338, [1803–13] All ER Rep 500��������������������    3.8 Bahia and San Francisco Rly Co, Re (1868) LR 3 QB 584, 9 B & S 844, 37 LJQB 176, 16 WR 862, 18 LT 467��������������������������������������������������������������������  1.45, 1.46, 5.31, 6.3, 10.8, 10.17, 10.18 Bailey and Whites Ltd v House (1915) 31 TLR 583, DC������������������������������������������������������������  3.34, 9.9 Bain Securities Ltd v Curmi (1990) 1 ACSR 91����������������������������������������������������������������������������   13.47 Baines v Swainson (1863) 4 B & S 270, 32 LJQB 281, 2 New Rep 357, 11 WR 945, 8 LT 536����������������������������������������������������������������������������������������������������������������������������������  9.10 Baird Textile Holdings Ltd v Marks and Spencer Plc [2001] EWCA Civ 274, [2002] 1 All ER (Comm) 737�����������������������������������������������������������������������  1.25, 1.28, 1.48, 1.49, 1.59, 1.87, 1.105, 1.117, 4.2, 4.11, 5.27, 8.20, 8.29, 8.48, 8.57, 8.58, 12.3, 12.34, 12.47, 14.11, 14.13, 14.21, 14.22, 14.23, 14.36, 14.38, 14.39, 14.40, 14.41 Baker v Baker [1993] 2 FLR 247, [1993] Fam Law 475, 25 HLR 408, [1993] 14 LS Gaz R 43, CA�����������������������������������������������������������������������������  1.59, 1.87, 5.48, 12.60, 12.93, 12.188, 12.189 Balbosa v Ali [1990] 1 WLR 914, 134 Sol Jo 545, [1990] 20 LS Gaz R 35, PC�������������������������������  13.8 Balkis Consolidated Co v Tomkinson [1893] AC 396, 63 LJQB 134, 1 R 178, 42 WR 204, 37 Sol Jo 729, 69 LT 598, 9 TLR 597, HL �  1.33, 1.68, 5.25, 5.31, 5.42, 6.3, 7.9, 7.12, 10.8, 10.10 Ballard (Kent) Ltd v Oliver Ashworth (Holdings) Ltd. See Ashworth (Oliver) (Holdings) Ltd v Ballard (Kent) Ltd Bank Leumi v Akrill [2014] EWCA Civ 907���������������������������������������������������������������������������������    8.8 Bank Negara Indonesia v Hoalim [1973] MLJ 3, PC������������������������������������������������������������  12.83, 14.24 Bank of Baroda Ltd v Punjab National Bank Ltd [1944] AC 176, [1944] 2 All ER 83, 114 LJPC 1, 88 Sol Jo 255, 60 TLR 412, PC������������������������������������������������������������������������������������������  2.14 Bank of Credit and Commerce International SA v Ali [2000] 3 All ER 51, [2000] ICR 1410, [2000] IRLR 398, [2000] IRLR 398, sub nom Naeem v Bank of Credit and Commerce International SA [2000] NLJR 650, CA; affd sub nom Bank of Credit and Commerce International SA v Ali [2001] UKHL 8, [2002] 1 AC 251, [2001] 1 All ER 961, [2001] 2 WLR 735, [2001] ICR 337, [2001] IRLR 292, [2001] NLJR 351, 145 Sol Jo LB 67���������������������������������������������������������������������������������������������������������������������������������  3.12, 3.16

xxxii

Table of cases Bank of England v Cutler [1908] 2 KB 208, 77 LJKB 889, 52 Sol Jo 442, 98 LT 336, 24 TLR 518, CA���������������������������������������������������������������������������������������������������������������������  1.33, 6.32, 10.8 Bank of England v Vagliano Bros. See Vagliano Bros v Governor & Co of Bank of England Bank of Hindustan, China and Japan Ltd v Alison (1871) LR 6 CP 222, 40 LJCP 117, 19 W 505, 23 LT 854, Ex Ch��������������������������������������������������������������������������������������������������������������������  5.10 Bank of India v Svizera Holdings BV [2013] EWHC 4097 (Comm)��������������������������������������������    8.9 Bank of Ireland v Evans’ Charities Trustees in Ireland (1855) 5 HL Cas 389, 3 WR 573, 3 CLR 1066, 25 LTOS 272������������������������������������������������������������������������������������������������������������  3.28, 3.34 Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd, The Good Luck [1988] 1 Ll Rep 514; on appeal [1990] 1 QB 818, [1989] 3 All ER 628, [1990] 2 WLR 547, [1989] 2 Ll Rep 238, [1990] 10 LS Gaz R 34, CA; revsd [1992] 1 AC 233, [1991] 3 All ER 1, [1991] 2 WLR 1279, [1991] 2 Ll Rep 191, [1991] NLJR 779, HL���������������������  3.12, 3.32, 5.26, 10.34, 10.35, 10.36 Bank of New York Mellon v GV Films Ltd [2009] EWHC 3315 (Comm) �����������������������������������   13.27 Bank of Scotland v Hussain [2010] EWHC 2812 (Ch) ���������������������������������������������������  3.45, 5.25, 7.40 Bank of Scotland v Wright [1991] BCLC 244���������������������������������������������������������������������������  5.10, 7.14 Bank of Scotland Plc v Waugh & others [2014] EWHC 2117 (Ch), [2015] 1 P & CR DG3�������������������������������������������������������������������������������������������������������������������  7.23, 8.88 Bankart v Tennant (1870) LR 10 Eq 141, 34 JP 628, 39 LJ Ch 809, 18 WR 639, 23 LT 137 ���������������������������������������������������������������������������������������������������������������������������������������  12.18, 12.20 Bankers Trust Co v Namdar (14 February 1997, unreported) CA��������������������������������  7.15, 7.26, 12.153 Bankruptcy Notice, Re [1924] 2 Ch 76, 93 LJ Ch 497, [1924] B & CR 188, 68 Sol Jo 458, 131 LT 307, CA������������������������������������������������������������������������������������������������  2.28, 2.31, 6.20, 7.7, 7.42 Banner Homes Group Plc v Luff Developments Ltd [2000] Ch 372, [2000] 2 All ER 117, [2000] 2 WLR 772, [2000] 2 BCLC 269, [2000] 06 LS Gaz R 35, [2000] EGCS 15, 144 Sol Jo LB 83, 79 P & CR D29, CA�������������������������������������������������������������������������  5.61, 12.201 Banner Industrial and Commercial Properties Ltd v Clark Paterson Ltd [1990] 2 EGLR 139, [1990] 47 EG 64����������������������������������������������������������  5.43, 13.4, 13.24, 13.42, 13.50, 14.29, 14.35 Banning v Wright [1972] 2 All ER 987, [1972] 1 WLR 972, 48 TC 421, 51 ATC 111, [1972] TR 105, 116 Sol Jo 509, 223 Estates Gazette 1939, L(TC) 2451, HL������������������������������������������  13.7 Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1997] AC 191, HL����������������������  3.37 Banque des Marchands de Moscou (Koupetschesky) v Kindersley [1951] Ch 112, [1950] 2 All ER 549, 66 (pt 2) TLR 654, CA����������������������������������������������������������������������������������������������  13.5 Banque Financière de la Cite SA (formerly Banque Keyser Ullmann SA) v Westgate Insurance Co Ltd (formerly Hodge General and Mercantile Co Ltd). See Banque Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd Banque Jacques-Cartier v Banque d’Epargne de la Cite et du District de Montreal (1887) 13 App Cas 111, 57 LJPC 42, PC��������������������������������������������������������������������������������������������������������   13.23 Banque Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd [1990] 1 QB 665, [1987] 2 All ER 923, [1987] 2 WLR 1300, [1987] 1 Ll Rep 69, 131 Sol Jo 775, [1987] LS Gaz R 1965; revsd [1990] 1 QB 665, [1989] 3 WLR 25, 133 Sol Jo 817, [1989] 26 LS Gaz R 33, [1988] NLJR 287, sub nom Banque Financière de la Cite SA v Westgate Insurance Co Ltd [1989] 2 All ER 952, [1988] 2 Ll Rep 513, CA; affd sub nom Banque Financière de la Cite SA (formerly Banque Keyser Ullmann SA) v Westgate Insurance Co Ltd (formerly Hodge General and Mercantile Co Ltd) [1991] 2 AC 249, [1990] 3 WLR 364, [1990] 2 Ll Rep 377, 134 Sol Jo 1265, [1990] NLJR 1074, sub nom Banque Financière de la Cite; SA v Westgate Insurance Co Ltd [1990] 2 All ER 947, HL�����������������������������������������������������  3.10, 3.12, 3.32, 5.24 Barbados Trust Co Ltd v Bank of Zambia [2006] EWHC 222 (Comm), [2006] 1 Ll Rep 723�����  3.22 Barber v Guardian Royal Exchange Assurance Group (Case 262/88) [1990] ICR 616�����������������  9.84 Barber v Imperio Insurance Co (UK) Ltd (15 July 1993, unreported)�������������������������������������������   10.31 Barclays Bank Ltd v Stasek [1957] Ch 28, [1956] 3 All ER 439, [1956] 3 WLR 760, 100 Sol Jo 800��������������������������������������������������������������������������������������������������������������������������������������  9.44 Barclays Bank Ltd v Taylor [1974] Ch 137, [1973] 1 All ER 752, [1973] 2 WLR 293, 23 P & CR 172, 117 Sol Jo 109, 227 Estates Gazette 497, CA�����������������������������������������������������������������  3.26 Barclays Bank Ltd v TOSG Trust Fund Ltd [1984] BCLC 18�������������������������������������������������������   11.43 Barclays Bank Plc v Unicredit Bank AG [2012] EWHC 3655 (Comm), [2013] 2 Ll Rep 1, [2014] 1 BCLC 342, [2013] Bus LR D78���������������������������������������������������������������������������������������  8.9, 8.75 Barclays Bank Plc v Wright [1990] BCC 663��������������������������������������������������������������������������������    1.7 Barclays Bank Plc v Zaroovabli [1997] Ch 321, [1997] 2 All ER 19, [1997] 2 WLR 729���  9.51, 12.105 Baring v Corrie (1818) 2 B & Ald 137, [1814–23] All ER Rep 283����������������������������������������������  9.17 Barings Plc v Coopers & Lybrand [2002] 2 BCLC 410 ����������������������������������������������������������������  2.20 Barratt Bros (Taxis) Ltd v Davies (Lickiss and Milestone Motor Policies at Lloyds, third parties). See Lickiss v Milestone Motor Policies at Lloyds

xxxiii

Table of cases Barrett v Barrett [2008] EWHC 1061 (Ch)�������������������������������������������������������������������������������������    7.1 Barrow Mutual Ship Insurance Co Ltd v Ashburner (1885) 54 LJQB 377, 5 Asp MLC 527, 54 LT 58, CA������������������������������������������������������������������������������������������������������������������  5.42, 7.12, 8.87 Bartholomew’s Case, Re (1898) 67 LJ Ch 677�������������������������������������������������������������������������������    6.2 Bartlam v Evans. See Evans v Bartlam Barton v Armstrong [1976] AC 104, [1975] 2 All ER 465, [1975] 2 WLR 1050, 119 Sol Jo 286, 3 ALR 355, [1973] 2 NSWLR 598, PC����������������������������������������������������������������������������������  5.13 Barton v County NatWest. See County NatWest Bank Ltd v Barton Barton v London and North Western Rly Co (1889) 24 QBD 77, 59 LJQB 33, 38 WR 197, 62 LT 164, 6 TLR 70, CA������������������������������������������������������������������������������������������������������������������  3.25 Basham, Re [1987] 1 All ER 405, [1986] 1 WLR 1498, [1987] 2 FLR 264, [1987] Fam Law 310, 130 Sol Jo 986, [1987] LS Gaz R 112�����������������������  1.20, 12.6, 12.22, 12.34, 12.44, 12.45, 12.46, 12.78, 12.93, 12.97, 12.112, 12.197, 12.201 Bastin v Bidwell (1881) 18 Ch D 238��������������������������������������������������������������������������������������������   12.20 Bateman v Hunt [1904] 2 KB 530, 73 LJKB 782, 52 WR 609, 91 LT 331, 20 TLR 628, CA�������  5.39 Bates v Todd (1831) 1 Mood & R 106������������������������������������������������������������������������  5.38, 11.88, 11.104 Bates (Thomas) & Son Ltd v Wyndham’s (Lingerie) Ltd [1981] 1 All ER 1077, [1981] 1 WLR 505, 41 P & CR 345, 125 Sol Jo 32, 257 Estates Gazette 381, CA����������������������������������������  3.16 Batten Poole v Kennedy [1907] 1 Ch 256, 76 LJ Ch 162����������������������������������������������������������  1.65, 9.21 Battersbee v Farrington (1818) 1 Wils Ch 88, 1 Swan 106������������������������������������������������������������  6.20 Bawden v London, Edinburgh and Glasgow Assurance Co [1892] 2 QB 534, 57 JP 116, 61 LJQB 792, 36 Sol Jo 502, 8 TLR 566, CA����������������������������������������������������������������������������������������  5.11 Baxendale v Bennett (1878) 3 QBD 525, 43 JP 204, 47 LJQB 624, 26 WR 899, 40 LT 23, CA�����������������������������������������������������������������������  1.65, 2.12, 3.28, 3.34, 3.37, 3.48, 11.77 Baxter v Combe (1850) 1 Ir Ch R 284��������������������������������������������������������������������������������������������  9.63 Bay of Plenty Electricity Ltd v Natural Gas Corp Energy Ltd [2002] 1 NZLR 173����������������������  6.24 Bayler (Keith) Rogers & Co v Cubes Ltd (1975) 31 P & CR 412�������������������������������������������������  4.62 Baynes Clarke v Corless [2009] EWHC 1636 (Ch)���������������������������������������������������������  1.17, 1.73, 5.61 BDW Trading Ltd v JM Rowe (Investments) Ltd [2010] EWHC 1987 (Ch)���������������  3.16, 13.2, 13.16, 13.19, 13.24 Beale v Harvey [2004] 2 P & CR 18, CA���������������������������������������������  12.2, 12.59, 12.188, 12.191, 15.5 Bean (William) & Sons Ltd v Flaxton RDC [1929] 1 KB 450, 26 LGR 335, 92 JP 121, 98 LJKB 20, 139 LT 320, CA�����������������������������������������������������������������������������������������������������������������  7.28 Bear Stearns Bank Plc v Forum Global Equity Ltd [2007] EWHC 1576 (Comm)������������������������  8.32 Beasant v Northern Life Assurance Co [1923] 2 DLR 1086, 32 Man R 471, [1923] 1 WWR 362����������������������������������������������������������������������������������������������������������������������������   10.23 Beaton v McDivitt (1987) 13 NSWLR 162������������������������������������������������������������������������������������  5.48 Beattie v Lord Ebury (1872) 7 Ch App 777, 41 LJ Ch 804, 20 WR 994, 27 LT 398; affd (1874) LR 7 HL 102, 38 JP 564, 44 LJ Ch 20, 22 WR 897, 30 LT 581���������������������������������������������  2.28 Beauchamp (Earl) v Winn (1873) LR 6 HL 223, 22 WR 193���������������������������������������������������  2.28, 2.31 Beaufort (Duke) v Patrick (1853) 17 Beav 60�����������������������������  6.17, 6.34, 6.43, 12.13, 12.175, 12.190 Bechuanaland Exploration Co v London Trading Bank Ltd [1898] 2 QB 658, 67 LJQB 986, 3 Com Cas 285, 79 LT 270, 14 TLR 587��������������������������������������������������������������������������������  3.34 Beckingham v Hodgers (2 July 2002, unreported)�������������������������������������������������������������������������  4.43 Beesly v Hallwood Estates Ltd [1960] 2 All ER 314, [1960] 1 WLR 549, 104 Sol Jo 407; affd [1961] Ch 105, [1961] 1 All ER 90, [1961] 2 WLR 36, 105 Sol Jo 61, CA���������������������  2.28, 6.41, 7.5, 7.13, 7.26, 14.40 Bell v General Accident Fire & Life Assurance Corp Ltd [1998] 1 EGLR 69, [1998] 17 EG 144, [1997] EGCS 174, CA����������������������������������������������������������������������������  1.29, 7.31, 8.90, 9.18, 9.47 Bell v Lever Bros Ltd [1932] AC 161, 101 LJKB 129, 37 Com Cas 98, [1931] All ER Rep 1, 76 Sol Jo 50, 146 LT 258, 48 TLR 133, HL�������������������������������������������������������������������������  3.12, 15.10 Bell v Marsh [1903] 1 Ch 528, 72 LJ Ch 360, 51 WR 325, 47 Sol Jo 296, 88 LT 605, CA��������������������������������������������������������������������������������������������������������  1.42, 3.4, 3.27, 3.28, 5.5, 5.10, 6.17 Bell Bros v Hudson Bay Insurance Co (1911) 44 SCR 419�����������������������������������������������������������   10.23 Bellairs v Tucker (1884) 13 QBD 562, DC������������������������������������������������������������������������������������  5.10 Belle River Community Arena Inc v Kaufmann Co Ltd (1978) 87 DLR (3d) 761������������������������  3.16 Belvoir Finance Co Ltd v Harold G Cole & Co Ltd [1969] 1 WLR 1877����������������������������  11.23, 11.41 Benedictus v Jalaram Ltd (1988) 58 P & CR 330, [1989] 1 EGLR 251, CA�������������������  7.43, 7.45, 7.46 Bennett v Bennett (18 May 1990, unreported) CA�������������������������������������������������������������������������  4.40 Bensley v Burdon (1830) 8 LJOS Ch 85�������������������������������������������������������������������  6.9, 8.88, 9.4, 11.50 Bentinck v London Joint Stock Bank [1893] 2 Ch 120, 62 LJ Ch 358, 3 R 120, 42 WR 140, 68 LT 315, 9 TLR 262������������������������������������������������������������������������������������������������������  3.44, 6.17, 9.7

xxxiv

Table of cases Bentley (Henry) & Co and Yorkshire Breweries Ltd, Re, ex p Harrison (1893) 69 LT 204, CA����������������������������������������������������������������������������������������������������������������������  3.45, 5.42, 6.6, 9.12 Benton v Campbell, Parker & Co [1925] 2 KB 410, 89 JP 187, 94 LJKB 881, [1925] All ER Rep 187, 69 Sol Jo 842, 134 LT 60, 41 TLR 662, DC�����������������������������������������������   13.45 Bentsen v Taylor Sons & Co (No 2) [1893] 2 QB 274, 63 LJQB 15, 7 Asp MLC 385, 4 R 510, 42 WR 8, 69 LT 487, 9 TLR 552, CA��������������������������������������������������������������������������������  2.25, 13.3 Benwell v Hinxman (1835) 1 Cr M & R 935, 3 Dowl 500, 4 LJ Ex 99, 5 Tyr 509, pre-SCJA 1873������������������������������������������������������������������������������������������������������������������������  13.3 Berezovsky v Abramovich [2011] 1 WLR 2290�����������������������������������������������������������������������������  1.42 Berg (V) & Son Ltd v Vanden Avenne-Izegem PVBA [1977] 1 Ll Rep 499, CA��������������������������   14.33 Berg (E & L) Homes Ltd v Grey (1979) 253 Estates Gazette 473, CA������������������������������������������  5.48 Berge Sisar, The. See Borealis AB v Stargas Ltd, The Berge Sisar Berkley v Poulett [1997] 1 EGLR 86���������������������������������������������������������������������������������������������  6.37 Berkley v Watling, Nave and Crisp (1837) 7 Ad & El 29, 6 LJKB 195, 1 Jur 378, 2 Nev & PKB 178, Will Woll & Dav 429�������������������������������������������������������������������������������������������  11.88, 11.104 Berridge v Benjies Business Centre [1997] 1 WLR 53, [1997] ICR 58, PC����������������������������������  1.54 Besseler Waechter Glover & Co v South Derwent Coal Co Ltd [1938] 1 KB 408, [1937] 4 All ER 552, 107 LJKB 365, 43 Com Cas 86, 158 LT 12, 54 TLR 140, 59 Ll L Rep 104������������   14.32 Besseman v Wright (1858) 6 WR 719��������������������������������������������������������������������������������������������  9.65 Bethell Construction Ltd v Deloitte and Touche [2011] EWCA Civ 1321��������������������  1.90, 3.21, 11.80, 14.18, 14.19 Betteley v Reed (1843) 4 QB 511, 12 LJQB 172, 3 Gal & Dav 561, 7 Jur 507������������������������  9.54, 9.59 Beverley Acceptances v Oakley [1982] RTR 417, CA�����������������������������������������  3.28, 3.41, 11.3, 11.15, 11.16, 11.17, 11.23 Bexley, London Borough of v Maison Maurice Ltd [2006] EWHC 3192 (Ch), [2007] 1 EGLR 19���������������������������������������������������������������������������  7.53, 7.54, 12.5, 12.93, 12.183, 12.188 BG Plc v Nelson Group Services (Maintenance) Ltd [2002] EWCA Civ 547�������������������������������  2.20 Bhullar v McCardle (10 April 2001, unreported) CA���������������������������������������������������������������������  6.44 Bibby v Stirling (1998) 76 P & CR D36, CA���������������������������������������������������������������������������������  5.48 Bibby Factors Northwest Ltd v HFD Ltd [2015] EWCA Civ 1908, [2016] 1 Ll Rep 517, [2016] 2 BCLC 303�����������������������������������������������������������������������������������������������������������  3.21, 6.24 Bickerton v Walker (1885) 31 Ch D 151, 55 LJ Ch 227, 34 WR 141, 53 LT 731, CA�������������  5.39, 9.14 Biddle v Bond (1865) 29 JP 565, 6 B & S 225, 34 LJQB 137, 11 Jur NS 425, 5 New Rep 485, 13 WR 561, [1861–73] All ER Rep 477, 12 LT 178������������������������������  8.90, 9.35, 9.36, 9.52, 9.53, 9.54, 9.55, 9.58, 9.59 Biggs v Evans [1894] 1 QB 88, 58 JP 84, 69 LT 723, 10 TLR 59�������������������������������������������  3.51, 11.23 Bikam OOD v Adria Cable SARL [2013] EWHC 1985 (Comm)������������������������������������������������������  8.78 Bilbie v Lumley (1802) 2 East 469, [1775–1802] All ER Rep 425����������������������������������������������������  2.28 Billson v Crofts (1873) LR 15 Eq 314, 37 JP 565, 42 LJ Ch 531, 21 WR 504, pre-SCJA 1873�������  8.84 Bilta (UK) Ltd (in liquidation) v Nazir [2015] 2 WLR 1168������������������������������������������������������  7.1, 15.6 Binder v Alachouzos [1972] 2 QB 151����������������������������������������������������������������������������������������  7.6, 8.67 Birch v Peese and Partners [1941] 1 KB 615���������������������������������������������������������������������������������  2.25 Birkdale District Electric Supply Co Ltd v Southport Corp [1926] AC 355, 24 LGR 157, 90 JP 77, 95 LJ Ch 587, 134 LT 673, 42 TLR 303, [1926] All ER Rep Ext 714, HL����������������������  7.48 Birmingham v Renfrew (1937) 57 CLR 666, HCA������������������������������������������������������������������������  12.174 Birmingham and District Land Co v London and North Western Rly Co (1888) 40 Ch D 268, [1886–90] All ER Rep 620, 60 LT 527, CA��������������������  1.41, 14.3, 14.4, 14.6, 14.23, 14.26, 14.33 Birmingham Midshires Mortgage Services Ltd v Sabherwal (1999) 80 P & CR 256, CA�����������  6.34, 6.39,6.43, 12.201 Bishop v Balkis Consolidated Co Ltd (1890) 25 QBD 512, 59 LJQB 565, 2 Meg 292, 39 WR 99, 63 LT 601, 6 TLR 450, CA�����������������������������������������������������������������������������������������������������   10.16 Bishop of Oxford v Wise (1678) Ld Nott Ch Cas 2 849����������������������������������������������������������������  1.36 Bisset v Wilkinson [1927] AC 177, 96 LJPC 12, [1926] All ER Rep 343, 136 LT 97, 42 TLR 727, PC �������������������������������������������������������������������������������������������������������������������������������������������  2.20 Bittlestone v Cooke (1856) 6 E & B 296, 25 LJQB 281, 2 Jur NS 758, 4 WR 493�����������������������  8.86 Blacklocks v JB Developments (Godalming) Ltd [1982] Ch 183, [1981] 3 All ER 392, [1981] 3 WLR 554, 43 P & CR 27, 125 Sol Jo 356���������������������������������������������������������������������������  6.44 Blackstone (David) Ltd v Burnetts (West End) Ltd [1973] 3 All ER 782, [1973] 1 WLR 1487, 27 P & CR 70, 117 Sol Jo 894, 228 Estates Gazette 1118�����������������������������������������������  4.61, 13.31 Blanchet v Powell’s Llantivit Collieries Co Ltd (1874) LR 9 Exch 74, 43 LJ Ex 50, 2 Asp MLC 224, 22 WR 490, 30 LT 28����������������������������������������������������������������������������������  5.34, 11.93, 11.102 Blankley v Central Manchester and MCUH NHS Trust [2014] EWHC 168 (QB), [2014] 1 WLR 2683, [2014] 2 All ER 1104, [2014] 2 Costs LR 320, (2014) 138 BMLR 30������������������������  8.26

xxxv

Table of cases Blindley Heath Investments Ltd v Bass [2015] EWCA Civ 1023, [2016] 4 All ER 490��������������    4.2, 4.41, 4.44, 8.21 Blomqvist v Zavarco Plc [2016] EWHC 1143 (Ch), [2016] Bus LR 907, [2016] BCC 542������������������������������������������������������������������������������������������������������������������������  10.15, 10.17 Bloomenthal v Ford. See Veuve Monnier et ses Fils Ltd, Re, ex p Bloomenthal Bloomsbury International Ltd v Sea Fish Industry Authority [2009] EWHC 1721 (QB), [2010] 1 CMLR 12 ����������������������������������������������������������������������������������������������������������������������������  5.49 Bloor (JS) (Measham) Ltd v Calcott (No 2) (2001) Times, 12 December�������������������������������������  7.30 Blue Haven Enterprises Ltd v Tully [2006] UKPC 17�������������  1.66, 1.70, 1.89, 1.93, 3.10, 12.13, 12.24 Blyth v Dennett (1853) 13 CB 178, 22 LJCP 79, 20 LTOS 209������������������������������������������������  9.26, 9.28 BMW Financial Service (GB) Ltd v Hart [2012] EWCA Civ 1959, [2013] 2 Ll Rep 313������������   13.28 Board v Board (1873) LR 9 QB 48, 43 LJQB 4, 22 WR 206, [1861–73] All ER Rep 803, 29 LT 459������������������������������������������������������������������������������������������������������������������  1.65, 5.42, 6.31 Board of Trade v Steel Bros & Co Ltd [1952] 1 Ll Rep 87������������������������������������������������������������  4.54 Boliden Ore and Metals Co v Dawn Maritime Corp [2000] 1 Ll Rep 237������������������������������������  6.15 Bolkiah v State of Brunei [2007] UKPC 63���������������������������������������������������������������������  4.2, 5.42, 14.30 Bolsom (Sidney) Investment Trust Ltd v E Karmios & Co (London) Ltd [1956] 1 QB 529, [1956] 1 All ER 536, [1956] 2 WLR 625, 100 Sol Jo 169, 167 Estates Gazette 179, CA�������������������������������������������������������������������������������������������������������������  2.31, 2.35, 4.2, 5.23, 5.25 Bolton Metropolitan Council v Municipal Mutual Insurance Ltd [2006] EWCA Civ 50, [2006] 1 WLR 1492 ������������������������������������������������������������������������������������������������������  10.38, 13.20 Bonus Garment v Karl Rieker GmbH & Co [1995] HKC 721�������������������������������������������������������   13.48 Boots the Chemist Ltd v Street [1983] 2 EGLR 51, 268 Estates Gazette 817�������������������������������  6.13 Borealis AB v Stargas Ltd [1999] QB 863, [1998] 3 WLR 1353, sub nom Borealis AB (formerly Borealis Petrokemi AB) v Stargas Ltd, The Berge Sisar [1998] 4 All ER 821, [1998] 2 Ll Rep 475, CA; affd sub nom Borealis AB (formerly Borealis Petrokemi AB) v Stargas Ltd (Bergesen DY AJS, third party), The Berge Sisar [2001] UKHL 17, [2002] 2 AC 205, [2001] 2 All ER 193, [2001] 2 WLR 1118, [2001] 1 Ll Rep 663, [2001] 20 LS Gaz R 43, [2001] 1 All ER (Comm) 673�������������������������������������������������������������������������������������������������   11.98 Borries v Imperial Ottoman Bank (1873) LR 9 CP 38, 43 LJCP 3, 22 WR 92, 29 LT 689�����������  5.12, 9.14, 9.17 Bostock v Bryant (1990) 61 P & CR 23, 22 HLR 449, [1990] 2 EGLR 101, [1990] 39 EG 64, CA �������������������������������������������������������������������������������������������������������������������������������������������  4.40, 5.48 Bottin International Investments v Venson [2006] EWHC 3112 (Ch)�������������������������������������������  8.68 Boucraa, The. See L’Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Co Ltd, The Boucraa Boulton v Jones (1857) 2 H & N 564, 27 LJ Ex 117, sub nom Bolton v Jones 3 Jut NS 1156, 6 WR 107, 30 LTOS 188���������������������������������������������������������������������������������������������������������  3.16 Bourne v Freeth (1829) 9 B & C 632, 7 LJOSKB 292, L & Welsb 1, 4 Man & Ry KB 512���������  4.50 Bowen v Hall (1881) 6 QBD 333, 45 JP 373, 50 LJQB 305, 29 WR 367, 44 LT 75, CA��������������  5.45 Bowes v East London Waters Works Co (1820) Jac 324����������������������������������������������������������������  6.55 Bowes v Foster (1858) 2 H & N 779, 27 LJ Ex 262, 4 Jur NS 95, 6 WR 257, 30 LTOS 306�����  5.39, 5.40 Bowie’s Trustees v Watson [1913] SC 326, [1912] 2 SLT 458, 50 SCLR 202������������������������������  9.14 Bowman v Rostron (1835) 2 Ad & El 295n�����������������������������������������������������������������������������������  9.62 Bowman v Taylor (1834) 2 Ad & El 278, 4 LJKB 58, 4 Nev & MKB 264����������������������  8.1, 8.20, 8.31, 8.82, 8.88, 9.62 Box v Midland Bank Ltd [1979] 2 Ll Rep 391; revsd [1981] 1 Ll Rep 434, CA���������������������������  2.20 Boyce v Wyatt Engineering [2001] EWCA Civ 692, (2001) Times, 14 June, [2001] All ER (D) 16 (May)����������������������������������������������������������������������������������������������������������������������������������   13.54 BP Exploration Co (Libya) Ltd v Hunt (No 2) [1982] 1 All ER 925, [1979] 1 WLR 783, 123 Sol Jo 455; affd [1982] 1 All ER 925, [1981] 1 WLR 232, 125 Sol Jo 165, CA; affd [1983] 2 AC 352, [1982] 1 All ER 925, [1982] 2 WLR 253, 126 Sol Jo 116, HL�����������������  5.10, 7.5, 14.11, 14.17, 14.22, 14.27, 14.33, 14.35 BP Exploration Operating Co Ltd v Chevron Shipping Co [2001] UKHL 50, [2003] 1 AC 197���������������������������������������������������������������������������������������������������������������������������������  5.13 BP Oil International Ltd v Target Shipping Ltd [2012] EWHC 1590 (Comm), [2012] 2 Ll Rep 245�����������������������������������������������������������������������������������������������������������������������������������  3.12 BP Plc v Aon Ltd [2006] 1 All ER (Comm) 789����������������������������������������������������������������  4.2, 8.21, 8.57 Bradbury v Taylor [2013] WTLR 29, CA�����������������������������������������������������������  4.26, 4.29, 8.24, 12.181, 12.183, 12.185, 12.189, 12.204 Bradford and Bingley Building Society v Seddon (Hancock) (t/a Hancocks (a firm), third parties) [1999] 4 All ER 217, [1999] 1 WLR 1482, [1999] 15 LS Gaz R 30, 143 Sol Jo LB 106, [1999] All ER (D) 594, CA�����������������������������������������������������������������������������������������������������   13.46

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Table of cases Bradford Third Equitable Benefit Building Society v Borders [1941] 2 All ER 205, 110 LJ Ch 123, 57 TLR 616, HL���������������������������������������������������������������������������������������  3.19, 5.24 Bradmount Investments Ltd v Williams De Broe Plc [2005] EWHC 2449 (Ch)���������������������������  1.93 Braithwaite v Gardiner (1846) 8 QB 473, 15 LJQB 187, 10 Jur 591, 6 LTOS 367�����������������������   11.67 Brandt v Liverpool, Brazil and River Plate Steam Navigation Co Ltd [1924] 1 KB 575, 93 LJKB 646, 16 Asp MLC 262, 29 Com Cas 57, [1923] All ER Rep 656, 130 LT 392, CA������������������������������������������������������������������������������������������������������������������������������������  5.39, 11.86 Brass Mist Ltd, Re (1986) 2 BCC 99����������������������������������������������������������������������������������������������  3.41 BRB (Residuary) Ltd v Connex South Eastern Ltd [2008] EWHC 1172 (QB), [2008] 1 WLR 2867����������������������������������������������������������������������������������������������������������������������������    5.7 Bremer Handelsgesellschaft mbH v Bunge Corp [1983] 1 Ll Rep 476, CA���������  4.9, 4.43, 14.11, 14.35 Bremer Handelsgesellschaft mbH v Deutsche Conti-Handelsgesellschaft mbH [1983] 1 Ll Rep 689�����������������������������������������������������������������������������������������������������  3.24, 4.61, 4.62, 5.43 Bremer Handelsgesellschaft mbH v Finagrain Compagnie Commerciale Agricole et Financière SA [1981] 1 Ll Rep 224; revsd [1981] 2 Ll Rep 259, CA����������������������������������������������������������  3.24 Bremer Handelsgesellschaft mbH v Mackprang Jnr [1979] 1 Ll Rep 221, CA����������������  1.96, 3.24, 4.9, 4.10, 4.61, 13.9, 14.2, 14.14, 14.16, 14.17, 14.20 Bremer Handelsgesellschaft mbH v Raiffeisen Hauptgenossenschaft eG [1982] 2 Ll Rep 599, CA�����������������������������������������������������������������������������������������������������������������������  4.43, 5.10 Bremer Handelsgesellschaft mbH v Vanden Avenne-Izegem PVBA [1977] 1 Ll Rep 133; on appeal [1977] 2 Ll Rep 329, CA; revsd [1978] 2 Ll Rep 109, HL����������������  3.24, 4.7, 4.9, 4.10, 4.43, 5.7, 5.42, 5.43, 5.54, 5.62, 13.9, 14.2, 14.11, 14.14, 14.20, 14.28 Bremer Handelsgesellschaft mbH v Westzucker GmbH [1981] 1 Ll Rep 207�����������  3.5, 3.24, 4.9, 4.10 Brewer v Westminster Bank Ltd [1952] 2 All ER 650, 96 Sol Jo 531, [1952] 2 TLR 568������������  3.20 Brewer d Onslow (Lord) v Eaton (1783) 3 Doug KB 230�������������������������������������������������������������  5.30 Bridge v Campbell Discount Co Ltd [1962] AC 600, [1962] 1 All ER 385, [1962] 2 WLR 439, 106 Sol Jo 94, HL�������������������������������������������������������������������������������������������������������������������  1.68 Bridgestart Properties Ltd v London Underground Ltd [2004] EWCA Civ 793����������������������  1.96, 4.44, 8.14, 14.11, 14.21 Bridgewater v Griffiths [2000] 1 WLR 524������������������������������������������������������������������������������������  3.15 Briggs v Gleeds [2015] Ch 212�����������������������������������������������������  1.19, 2.8, 2.19, 2.28, 2.34, 2.35, 6.15, 6.51, 7.23, 7.24, 8.88, 9.81, 12.145 Briggs v Jones (1870) LR 10 Eq 92, 23 LT 212�����������������������������������������������������������������������������  9.14 Bright v Bright [1954] P 270, [1953] 2 All ER 939, [1953] 3 WLR 659, 117 JP 529, 97 Sol Jo 729���������������������������������������������������������������������������������������������������������������������������  7.41 Brightlingsea Haven Ltd v Morris [2008] EWHC 1928 (QB), [2009] 2 P & CR 11 ����������������  5.44, 7.9, 7.13, 12.190 Brikom Investments Ltd v Carr [1979] QB 467, [1979] 2 All ER 753, [1979] 2 WLR 737, 39 P & CR 326, 123 Sol Jo 182, 251 Estates Gazette 359, CA������������������������  4.53, 4.58, 5.7, 5.13, 5.28, 5.29, 5.54, 6.11, 6.13, 6.31, 14.6, 14.21, 14.22, 14.26, 14.32, 14.36 Brikom Investments Ltd v Seaford [1981] 2 All ER 783, [1981] 1 WLR 863, 42 P & CR 190, 1 HLR 21, 125 Sol Jo 240, 258 Estates Gazette 750, CA���������������������������������������  2.28, 2.32, 14.36 Brimnes, The, Tenax Steamship Co Ltd v The Brimnes (Owners) [1973] 1 All ER 769, [1972] 2 Ll Rep 465, sub nom Tenax Steamship Co Ltd v Reinante Transoceania Navegacion SA, The Brimnes [1973] 1 WLR 386, 117 Sol Jo 244; affd [1975] QB 929, [1974] 3 All ER 88, [1974] 3 WLR 613, [1974] 2 Ll Rep 241, 118 Sol Jo 808, CA����������������������������������������������  5.10 Brindley, Re, ex p Taylor Sons & Co [1906] 1 KB 377, 13 Mans 1, 54 WR 301, [1904–7] All ER Rep 1027, 94 LT 116, 22 TLR 155, sub nom Re Brindley, ex p Brindley 75 LJKB 211, CA�����������������������������������������������������������������������������������������������������������������������������������  13.3 Brinnand v Ewens (1987) 19 HLR 415, [1987] 2 EGLR 67, 284 Estates Gazette 1052, CA������������������������������������������������������������������������������������������������������������  3.21, 12.60, 12.84, 12.104 Bristol and West Building Society v Henning [1985] 2 All ER 606, [1985] 1 WLR 778, 50 P & CR 237, 17 HLR 432, 129 Sol Jo 363, [1985] LS Gaz R 1788, [1985] NLJ Rep 508, CA�������������������������������������������������������������������������������������������������������������������������������������������  6.41 Bristol and West Building Society v Mothew (t/a Stapley & Co) [1998] Ch 1, [1996] 4 All ER 698, [1997] 2 WLR 436, [1996] NLJR 1273, 140 Sol Jo LB 206, [1997] PNLR 11, sub nom Mothew v Bristol & West Building Society 75 P & CR 241, CA���������������������������������������  5.4, 5.10 Bristol Cars Ltd v RKH (Hotels) Ltd (1979) 38 P & CR 411, 251 Estates Gazette 1279, CA�������������������������������������������������������������������������������������������������������  3.24, 5.62, 6.31, 13.33, 14.40 Bristol Corp v Sinnott [1917] 2 Ch 340������������������������������������������������������������������������������������������  7.29 Bristol Rovers (1883) Ltd v Sainsbury’s Supermarkets Ltd [2016] EWCA Civ 160���������������������  8.55

xxxvii

Table of cases Brit UW Ltd v F & B Trenchless Solutions Ltd [2015] EWHC 2237 (Comm), [2016] Ll Rep IR 69����������������������������������������������������������������������������������������������������������������������������������������   13.15 Britannia Steamship Insurance Association Ltd v Ausonia Assicurazioni SpA [1984] 2 Ll R 98, CA�������������������������������������������������������������������������������������������������������������������������������������  1.63 British Airways Board v Taylor [1976] 1 All ER 65, [1976] 1 WLR 13, [1976] 1 Ll Rep 167, 140 JP 96, [1977] Crim LR 372, 120 Sol Jo 7, HL������������������������������������������������������������������������  2.24 British Bank of the Middle East v Sun Life Assurance Co of Canada (UK) Ltd [1983] 2 Ll Rep 9, [1983] BCLC 78, HL����������������������������������������������������������������������������������������������������������  9.10 British Equitable Insurance Co v Great Western Rly Co (1868) 38 LJ Ch 132, 17 WR 43, 19 LT 476; on appeal (1869) 38 LJ Ch 314, 17 WR 561, 20 LT 422������������������������������������������������  3.19 British Linen Co v Cowan (1906) 8 F 704��������������������������������������������������������������������������������  3.25, 9.17 British Mutual Banking Co Ltd v Charnwood Forest Railway Co (1887) 18 QBD 714, 52 JP 150, 56 LJQB 449, 35 WR 590, [1886–90] All ER Rep 280, 57 LT 833, 3 TLR 498, CA������������  7.36 British Railways Board v A J A Smith Transport Ltd [1981] 2 EGLR 69, 259 Estates Gazette 766 �������������������������������������������������������������������������������������������������������������������������������������������  3.24, 4.62 British Steel Corp v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504����������������  121.123 British Wagon Co Ltd v Gray [1896] 1 QB 35, 65 LJQB 75, 44 WR 113, 40 Sol Jo 83, 73 LT 498, 12 TLR 64, CA����������������������������������������������������������������������������������������������������������������  7.43 British Workman’s and General Assurance Co Ltd v Cunliffe (1902) 18 TLR 425; affd (1902) 18 TLR 502, CA����������������������������������������������������������������������������������������������������������������������  2.33 Broad v Perkins (1888) 21 QBD 533, 53 JP 39, 57 LJQB 638, 37 WR 44, 60 LT 8, 4 TLR 775, CA�����������������������������������������������������������������������������������������������������������������������������������  7.44 Brocklesby v Temperance Permanent Building Society [1895] AC 173, 59 JP 676, 64 LJ Ch 433, 11 R 159, 43 WR 606, 72 LT 477, 11 TLR 297, [1895–9] All ER Rep Ext 2099, HL�����������������������������������������������������������������������������������������������������������  3.45, 9.14, 10.21 Brook v Biggs (or Briggs) (1836) 2 Bing NC 572, 5 LJCP 143, 2 Scott 803, 1 Hodg 462������������  9.19 Brook v Hook (1871) LR 6 Exch 89, 40 LJ Ex 50, 19 WR 508, 24 LT 34������������������  4.58, 11.70, 11.80 Brooke v Haymes (1868) LR 6 Eq 25������������������������������������������������������������������������������  8.31, 8.87, 8.88 Brooks and Burton Ltd v Secretary of State for the Environment [1978] 1 All ER 733, [1977] 1 WLR 1294, 76 LGR 53, 35 P & CR 27, 121 Sol Jo 617, CA����������������������������������������������  7.50 Brown v Amalgamated Union of Engineering Workers [1976] ICR 147, 119 Sol Jo 709�������������  7.36 Brown v Gregson [1920] AC 860���������������������������������������������������������������������������������������������������   13.51 Brown v Raphael [1958] Ch 636, [1958] 2 All ER 79, [1958] 2 WLR 647, 102 Sol Jo 269, CA��������������������������������������������������������������������������������������������������������������������������������������  2.19, 2.20 Brown v Thorpe (1841) 11 LJ Ch 73����������������������������������������������������������������������������������������������  3.14 Brown v Westminster Bank Ltd [1964] 2 Ll Rep 187���������������������������������������������������������������  3.16, 5.11 Brown & Root Technology Ltd v Sun Alliance and London Assurance Co Ltd [1996] Ch 51, [1995] 3 WLR 558; revsd [2001] Ch 733, [2000] 2 WLR 566, 75 P & CR 223, [1997] 1 EGLR 39, [1997] 7 LS Gaz R 29, [1997] 18 EG 123, 141 Sol Jo LB 38, CA�������������  5.43, 14.35 Brownlie v Campbell (1880) 5 App Cas 925, HL���������������������������������������������������������������  4.9, 5.23, 8.67 Brownsville Holdings Ltd v Adamjee Insurance Co Ltd, The Milasan [2000] 2 Ll Rep 458, [2000] 2 All ER (Comm) 803������������������������������������������������������������������������������������������  10.35, 13.9 Brudenell-Bruce v Moore [2012] WTLR 931��������������������������������������������������������������������������������  8.79 Brudnell v Roberts (1762) 2 Wils 143��������������������������������������������������������������������������������������������  9.33 Bruton v London and Quadrant Housing Trust [2000] 1 AC 406, [1999] 3 All ER 481, [1999] 3 WLR 150, 31 HLR 902, [1999] 2 EGLR 59, [1999] NLJR 1001, [1999] 30 EG 91, [1999] EGCS 90, 78 P & CR D21, HL��������������������������������������������������������  1.29, 6.25, 7.5, 8.90, 8.91, 9.18 Buckingham v Trotter (1901) SR (NSW) 253��������������������������������������������������������������������������������   13.45 Buckland v Commissioner of Stamp Duties [1954] NZLR 1194���������������������������������������������������  8.31 Budejovicky Budvar Narodni Podnik v Anheuser-Busch Inc [2009] EWCA Civ 1022����������������  1.68 Building Estates Brickfields Co, Re, Parbury’s Case [1896] 1 Ch 100, 65 LJ Ch 104, 2 Mans 616, 44 WR 107, 40 Sol Jo 67, 73 LT 506��������������������������������������������������������������������������������������   10.15 Bulley v Bulley 9 Ch App 739, 44 LJ Ch 79, 22 WR 779, 30 LT 848, pre-SCJA 1873�����������������  8.84 Bullock v Bullock [1960] 2 All ER 307, [1960] 1 WLR 975, 104 Sol Jo 685�������������������������������  7.41 Bullock v Lloyds Bank Ltd [1955] Ch 317, [1954] 3 All ER 726, [1955] 2 WLR 1, 99 Sol Jo 28�����������������������������������������������������������������������������������������������������������������������������   13.29 Bulmer (H P) Ltd and Showerings Ltd v J Bollinger SA and Champagne Lanson Père et Fils [1977] 2 CMLR 625, [1978] RPC 79, CA������������������������������������������������������������������������������   12.24 Bunge SA v Compagnie Europeenne de Cereales [1982] 1 Ll Rep 306�����������������������������������  3.24, 4.43 Bunny (D & H) Pty Ltd v Atkins [1961] VR 61�����������������������������������������������������������������������������    9.8 Burgis v Constantine [1908] 2 KB 484, 77 LJKB 1045, 11 Asp MLC 130, 13 Com Cas 299, [1908–10] All ER Rep 1337, 99 LT 490, 24 TLR 682, CA��������������������������������������  3.42, 6.55, 9.14 Burkinshaw v Nicholls (1878) 3 App Cas 1004, 48 LJ Ch 179, 26 WR 819, 30 LT 308, HL��������������������������������������������������������������������������  1.65, 1.114, 6.3, 6.5, 6.6, 6.20, 8.71, 10.15

xxxviii

Table of cases Burrough’s Adding Machine Ltd v Aspinall (1925) 41 TLR 276, CA�������������������������������������������  8.67 Burrows v Rhodes [1899] 1 QB 816, 63 JP 532, 68 LJQB 545, 48 WR 13, [1895–9] All ER Rep 117, 43 Sol Jo 351, 80 LT 591, 15 TLR 286���������������������������������������������������������������������������  2.30 Burrows v Sharp (1991) 23 HLR 82, CA�����������������������������������  12.181, 12.184, 12.188, 12.189, 12.190 Burton, Re [1938] NZLR 637���������������������������������������������������������������������������������������������������������  7.42 Burton v Liden [2016] EWCA Civ 275, [2016] Fam Law 687������������������������������������������������������  5.43 Business Environment Bow Lane Ltd v Deanwater Estates Ltd [2007] EWCA Civ 622, [2007] L & TR 26��������������������������������������������������������������������������������������������������������������������  5.27, 6.11, 7.18 Bute (Marquess) v Barclays Bank Ltd [1955] 1 QB 202, [1954] 3 All ER 365, [1954] 3 WLR 741, 98 Sol Jo 805��������������������������������������������������������������������������������������������������������������  4.7, 14.12 Buttery v Pickard [1946] WN 25����������������������������������������������������������������������������������������������������  14.4 C Cadbury Schweppes Plc v Halifax Share Dealing Ltd [2006] EWHC 1184 (Ch), [2006] BCC 707������������������������������������������������������������������  3.28, 5.51, 6.3, 10.8, 10.9, 10.10, 10.11, 10.18 Cadogan Finance Ltd v Lavery and Fox [1982] Com LR 248, 132 NLJ 1101���������������  3.28, 3.31, 3.37, 3.41, 11.3 Cadorange Pty Ltd v Tanga Holdings Pty Ltd [1990] 20 NSWLR 26�������������������������������������������  12.189 Cahn and Mayer v Pockett’s Bristol Channel Steam Packet Co [1899] 1 QB 643, 68 LJQB 515, 8 Asp MLC 517, 4 Com Cas 168, 47 WR 422, 43 Sol Jo 331, 80 LT 269, 15 TLR 247, CA��������������������������������������������������������������������������������������������������   11.32, 11.40, 11.42 Cairncross v Lorimer (1860) 7 Jur NS 149, [1843–60] All ER Rep 174, 3 LT 130, 3 Macq 827, HL������������������������������������������������������������������������������������������������������������������������������  3.4, 12.12 Cairns v Burgess (1905) 2 CLR 298�����������������������������������������������������������������������������������������������  3.21 Calgary Milling Co Ltd v American Surety Co of New York [1919] 3 WWR 98, PC��������������  2.31, 8.57 Callaghan v Thompson (3 November 1999, unreported)���������������������  10.31, 13.17, 13.18, 13.23, 13.24 Cambridgeshire and Isle of Ely County Council v Rust [1972] 2 QB 426, [1972] 3 All ER 232, [1972] 3 WLR 226, 70 LGR 444, 136 JP 702, 116 Sol Jo 564, DC���������������������������������������  7.28 Camden London Borough v Secretary of State for the Environment and Barker (1993) 67 P & CR 59, [1993] EGCS 83���������������������������������������������������������������������������������������������������������  7.51 Camerata Pty Inc v Credit Suisse Securities (Europe) Ltd [2011] 2 BCLC 54�������������������������  8.68, 8.72 Cameron v Murdoch [1983] WLR 321; affd (1986) 63 ALR 575, PC����������������������������������  6.13, 12.189 Campbell v Campbell [2016] EWHC 765 (Ch)������������������������������������������������������������������������������   12.34 Campbell v Griffin [2001] WTLR 981 �����������������������������������������������������  1.59, 5.48, 5.60, 12.93, 12.95, 12.112, 12.184, 12.186, 12.188, 12.189, 12.190 Campbell v Redstone Mortgages Ltd [2014] EWHC 3081 (Ch), [2015] 1 P & CR DG18������������  7.23 Campbell Discount Co Ltd v Gall [1961] 1 QB 431, [1961] 2 All ER 104, [1961] 2 WLR 514, 105 Sol Jo 232, CA������������������������������������������������������������������������  3.28, 3.31, 3.35, 3.37, 3.46, 7.29 Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steamships Ltd [1947] AC 46, [1947] LJR 385, 62 TLR 666, PC�����������������������������  1.53, 1.64, 3.40, 4.7, 4.50, 5.5, 5.39, 11.86, 11.101, 11.102, 11.104 Canadian Imperial Bank of Commerce v Bello (1991) 64 P & CR 48, 24 HLR 155, [1991] NPC 123, [1992] 3 LS Gaz R 32, 136 Sol Jo LB 9, CA������������������������������������������������������������������  6.44 Canadian Pacific Railway Co v R [1931] AC 414, 100 LJPC 129, [1931] All ER Rep 113, 145 LT 129, PC��������������������������������������������������������������������������������������������������������������  1.36, 6.16, 12.21 Cancer Research Campaign v Ernest Brown & Co (a firm) [1997] STC 1425, [1998] PNLR 592�������������������������������������������������������������������������������������������������������������������������������  3.21 Canmer International Insurance v UK Mutual Assurance [2005] 2 Ll R 479��������������������������������    8.9 Cannan v Reynolds (1855) 5 E & B 301, 26 LJQB 62, 1 Jur NS 873, 3 WR 546, 3 CLR 1400, 25 LTOS 176���������������������������������������������������������������������������������������������������������������������������   13.42 Cannon v Hartley [1949] Ch 213, [1949] 1 All ER 50, [1949] LJR 370, 92 Sol Jo 719, 65 TLR 63, Ch D����������������������������������������������������������������������������������������������������������������������������������  8.79 Canterbury Corp v Cooper (1908) 99 LT 612; affd (1908) 7 LGR 908, 73 JP 225, 53 Sol Jo 301, 100 LT 597, [1908–10] All ER Rep Ext 1284, CA���������������������������������������������������  7.36, 8.87, 9.44 Cantiere Meccanico Brindisino v Janson [1912] 3 KB 452, 81 LJKB 1043, 12 Asp MLC 246, 17 Com Cas 332, 57 Sol Jo 62, 107 LT 281, 28 TLR 564, CA Carlton v Bowcock (1884) 51 LT 659���������������������������������������������������������������������������������������  9.21, 9.36 Caparo Industries Plc v Dickman [1990] 2 AC 605, [1990] 1 All ER 568, [1990] 2 WLR 358, [1990] BCLC 273, [1990] BCC 164, 134 Sol Jo 494, [1990] 12 LS Gaz R 42, [1990] NLJR 248, HL���������������������������������������������������������������������������������������������������  3.18, 3.32, 5.25, 5.28, 5.35 Capcon Holdings Plc v Edwards [2007] EWHC 2662 (Ch)������������������������������������������������������  1.74, 5.60 Cape Asbestos Ltd v Lloyds Bank Ltd [1921] WN 274�����������������������������������������������������������������  4.43

xxxix

Table of cases Cape Distribution Ltd v Cape Intermediate Holdings Plc [2016] EWHC 1119 (QB), [2016] Ll Rep IR 499��������������������������������������������������������������������������������������������������������������������������������  8.8 Capel & Co v Sim’s Ships Composition Co Ltd (1888) 57 LJ Ch 713, 36 WR 689, 58 LT 807, 4 TLR 458������������������������������������������������������������������������������������������������������������������������  4.35, 13.28 Capell v Winter [1907] 2 Ch 376, 76 LJ Ch 496, 51 Sol Jo 570, 97 LT 207, 23 TLR 618������������  5.39 Capita ATL Pension Trustees Ltd v Gellately [2011] EWHC 485 (Ch)�����������������������������������������  4.28 Capital Bank Cashflow Finance v Southall [2004] EWCA Civ 817����������������������������������������������  8.79 Capron v Government of Turks and Caicos Islands [2010] UKPC 2����������������  1.68, 1.70, 12.29, 12.123 Captain Gregos (No 2), The. See Cia Portorafti Commerciale SA v Ultramar Panama Inc, The Captain Gregos (No 2) Cardigan (Earl of) v Moore [2012] EWHC 1024 (Ch), [2012] WTLR 931, 14 ITELR 967, [2012] 2 P & CR DG8������������������������������������������������������������������������������������������������������������������������  8.79 Cardwell v Lucas 611 Ex 52, 2 Gale 203, 2 M & W 111, pre-SCJA 1873�������������������������������������  8.84 Caribbean Co, Re, Crickmer’s Case (1875) 10 Ch App 614, 24 WR 219��������������������������������������   10.15 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256, 57 JP 325, 62 LJQB 257, 4 R 176, 41 WR 210, 67 LT 837, 9 TLR 124, CA���������������������������������������������������������������������������������������������    6.4 Carmichael v National Power Plc [1999] 1 WLR 2042�����������������������������������������������������������������  4.47 Carpenter v Buller (1841) 10 LJ Ex 393, 8 M & W 209������������������  3.2, 8.1, 8.36, 8.70, 8.82, 8.86, 8.88 Carr v London and North Western Rly Co (1875) LR 10 CP 307, 39 JP 2799 44 LJCP 109, 23 WR 747, [1874–80] All ER Rep 418, 31 LT 785����������������������������������  1.18, 1.65, 2.14, 3.27, 3.28, 3.30, 5.5, 5.10, 5.12, 5.23, 5.25, 5.35, 5.40, 5.41, 5.45, 5.50, 9.53 Carr-Glynn v Frearsons [1999] Ch 326, CA�����������������������������������������������������������������������������������   13.52 Carritt v Real and Personal Advance Co (1889) 42 Ch D 263, 58 LJ Ch 688, 37 W 677, 61 LT 163, 5 TLR 559�����������������������������������������������������������������������������������������������������������������������  9.14 Carter v Boehm (1766) 1 Wm Bl 593, [1558–1774] All ER Rep 183, 3 Burr 1905�����������������  3.8, 10.27 Carter v Carter (1857) 3 K & J 617, 27 LJ Ch 74, 4 Jur NS 63, 112 RR 308, 30 LTOS 349���������������������������������������������������������������������������������������������������������������������������  8.86 Carter v Whalley (1830) 1 B & Ad 11, 8 LJOSKB 340, L & Welsb 297���������������������������  9.9, 9.13, 9.17 Cassa di Risparmio della Repubblica di San Marino v Barclays Bank Ltd [2011] EWHC 484 (Comm), [2011] 1 CLC 701�����������������������������������������������������������������������������������������������  4.54, 8.73 Catchpole v Trustees of Alitalia Airlines Pension Scheme [2010] EWHC 1809 (Ch), [2010] ICR 1405������������������������������������������������������  5.45, 6.7, 6.52, 6.54, 7.8, 8.7, 9.78, 9.85, 12.54, 12.89 Caughey, Re, ex p Ford (1876) 1 Ch D 521, 45 LJ Bcy 96, 24 WR 590, 34 LT 634, CA��������������  3.14 Cave v Cave (1880) 15 Ch D 639, 28 WR 798, sub nom Chaplin v Cave, Cave v Cave 49 LJ Ch 505, 42 LT 730������������������������������������������������������������������������������������������������������������������  6.39 Cave v Mills (1862) 7 H & N 913, 31 LJ Ex 265, 8 Jur NS 363, 10 WR 471, 6 LT 650������������  1.65, 3.7 Cawdor (Lord) v Lewis (1835) 1 Y & C Ex 427����������������������������������������������������������������������������  12.185 Celsteel Ltd v Alton Holdings Ltd [1985] 1 WLR 204������������������������������������������������������������������  12.177 Central Estates (Belgravia) Ltd v Woolgar (No 2) [1972] 3 All ER 610, [1972] 1 WLR 1048, 24 P & CR 103, 116 Sol Jo 566, 223 Estates Gazette 1273, CA�������������������������������������  4.61, 11.43 Central Klondyke Gold Mining and Trading Co Ltd, Re, Savigny’s Case [1899] WN 1, 5 Mans 336���������������������������������������������������������������������������������������������������������������������������  6.9, 6.20 Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130, [1956] 1 All ER 256n, [1947] LJR 77, 175 LT 332, 62 TLR 557������������������  1.26, 1.40, 2.15, 5.24, 5.46, 5.54, 6.13, 13.6, 14.3, 14.4, 14.6, 14.8, 14.9, 14.10, 14.21, 14.26, 14.28, 14.30, 14.31, 14.32 Central Newbury Car Auctions Ltd v Unity Finance Ltd [1957] 1 QB 371, [1956] 3 All ER 905, [1956] 3 WLR 1068, 100 Sol Jo 927, CA������������������������������������������������  1.7, 3.28, 3.31, 3.34, 3.41, 5.52, 8.64, 11.3, 11.6, 11.40 Central Rly Co of Venezuela (Directors etc) v Kisch (1867) LR 2 HL 99, 36 LJ Ch 849, 15 WR 821, 16 LT 500������������������������������������������������������������������������������������������������������������������������  2.22 Central Street Properties Ltd v Mansbrook Rudd & Co Ltd [1986] 2 EGLR 33, 279 Estates Gazette 414�����������������������������������������������������������������������������������������������������������������������������  5.27 Central Trust and Safe Deposit Co v Snider [1916] 1 AC 266, PC��������������������������  6.38, 12.161, 12.172 Centrica Plc v Premier Power Ltd [2006] EWHC 3068 (Comm)���������������������������������������������  8.54, 8.55 Centrovincial Estates Plc v Merchant Investors Assurance Co Ltd [1983] Com LR 158, CA�������  3.16 Century (UK) Ltd SA v Clibbery [2004] EWHC 1870 (Ch)��������  4.14, 4.44, 4.53, 5.7, 5.13, 5.43, 12.89 Cerealmangimi SpA v Toepfer, The Eurometal [1981] 3 All ER 533, [1981] 1 Ll Rep 337, [1981] Com LR 13���������������������������������������������������������������������������������������������������������  14.20, 14.26 CF Partners (UK) LLP v Barclays Bank Plc [2014] EWHC 3049 (Ch)����������������������������������  14.1, 14.35 Chadwick v Abbotswood Properties Ltd [2005] 1 P & CR 10�������������������������������������  12.5, 12.40, 12.78 Chadwick v Manning [1896] AC 231, 65 LJPC 42����������������������������������������  1.90, 1.99, 2.14, 3.15, 3.21

xl

Table of cases Chagos Islanders v Attorney General [2004] EWCA Civ 997�������������������������������������������������������  1.70 Chalmers v Pardoe [1963] 3 All ER 552, [1963] 1 WLR 677, 107 Sol Jo 435, PC��������  5.44, 7.13, 7.28, 12.22, 12.165, 12.181, 12.182, 12.189 Champion Concord Ltd v Leu (No 2) (2011) 14 HKCFAR 837����������������������������������������������������  7.47 Chan Pui Chun v Leung Kam Ho [2002] EWCA Civ 1075�����������������������������������������������������������  12.201 Chandris v Isbrandtsen-Moller Co Inc [1951] 1 KB 240, [1950] 1 All ER 768, 94 Sol Jo 303, 66 (pt 1) TLR 971, 83 Ll L Rep 385; revsd [1951] 1 KB 240, [1950] 2 All ER 618, 94 Sol Jo 534, 66 (pt 2) TLR 358, 84 Ll L Rep 347, CA������������������������������������������������������������������������   13.16 Channel Island Ferries Ltd v Sealink UK Ltd [1987] 1 Ll Rep 559; affd [1988] 1 Ll Rep 323, CA����������������������������������������������������������������������������������������������������������������������������������  4.2, 4.7 Chanter v Leese (1838) 8 LJ Ex 58, 1 Horn & H 224, 4 M & W 295; affd (1839) 9 LJ Ex 327, 5 M & W 698������������������������������������������������������������������������������������������������������������  9.62, 9.64, 9.65 Chapman v Michaelson [1908] 2 Ch 612; affd [1909] 1 Ch 238, 78 LJ Ch 272, 100 LT 109, 25 TLR 101, CA���������������������������������������������������������������������������������������������������������������������������  7.29 Chapman v South Holland DC [2006] EWHC 27 (Ch)������������������������������������������������������������������  7.54 Chapman (JA) & Co Ltd v Denizcilik Ve Ticaret AS (14 November 1997, unreported)���������������   10.24 Chartered Trust v Davies [1997] 2 EGLR 83���������������������������������������������������������������������������������  2.22 Chase Manhattan Equities Ltd v Goodman [1991] BCLC 897, [1991] BCC 308�������������������������  5.14 Chatfields-Martin Walter Ltd v Lombard North Central Plc [2014] EWHC 1222 (QB)���������������  3.14 Chattey v Farndale Holdings Inc (1996) 75 P & CR 298, [1996] NPC 136, [1997] 1 EGLR 153, [1997] 06 EG 152, CA������������������������������������������������������������������������������������������������������������  6.45 Chaudhary v Yavuz [2011] EWCA Civ 1314, [2013] Ch 249, CA���������������������������  6.44, 12.176, 12.177 Cheesman v Exall (1851) 20 LJ Ex 209, 6 Exch 341�������������������������������������������������������  9.52, 9.53, 9.55 Chellaram (P S) & Co Ltd v China Ocean Shipping Co, The Zhi Jiang Kou [1991] 1 Ll Rep 493������������������������������������������������������������������������������������������������������������������������������  5.62, 8.14 Cheltenham and Great Western Union Rly Co v Daniel (1841) 2 QB 281, 2 Ry & Can Cas 728, 6 Jur 577�����������������������������������������������������������������������������������������������������������������������������  5.42, 7.29 Chemical Venture, The. See Pearl Carriers Inc v Japan Line Ltd, The Chemical Venture Cherry and M’Dougall v Colonial Bank of Australasia (1869) LR 3 PC 24, 6 Moo PCCNS 235, 38 LJPC 49, 17 WR 1031, 21 LT 356, [1861–73] All ER Rep Ext 1891�������������������������������  2.30 Chesterfield and Midland Silkstone Colliery Co Ltd v Hawkins 3 H & C 677, 34 LJ Ex 121, 11 Jur NS 468, 13 WR 841, 12 LT 427, pre-SCJA 1873��������������������������������������������������������  8.84 Chestertons v Barone [1987] 1 EGLR 15, 282 Estates Gazette 87, CA��������������������������������  13.46, 13.47 Chin v Miller (1981) 56 FLR 359���������������������������������������������������������������������������������������������������  5.62 China National Foreign Trade Transportation Corp v Evlogia Shipping Co SA of Panama, The Mihalios Xilas [1979] 2 All ER 1044, [1979] 1 WLR 1018, [1979] 2 Ll Rep 303, 123 Sol Jo 521, HL��������������������������������������������������������������������������������������  3.24, 13.7, 13.12, 13.16 China-Pacific SA v Food Corp of India, The Winson [1981] QB 403, [1980] 3 All ER 556, [1980] 3 WLR 891, [1980] 2 Ll Rep 213, 124 Sol Jo 614, CA; revsd [1982] AC 939, [1981] 3 All ER 688, [1981] 3 WLR 860, [1982] 1 Ll Rep 117, 125 Sol Jo 808, HL�������������������������������������������������������������������������������������������������  2.25, 2.31, 2.36, 4.11, 4.62, 9.53, 14.2, 14.10, 14.11, 14.12, 14.21 Christchurch Gas Co v Kelly (1887) 51 JP 374, 3 TLR 634����������������������������������������������������������   10.15 Christenson v Furs and Fashions Ltd [1971] NZLR 129����������������������������������������������������������������  9.46 Chun v Ho [2002] EWCA Civ 1075�����������������������������������������������������������������������������������������������   12.93 Church of England Building Society v Piskor [1954] Ch 553, [1954] 2 All ER 85, [1954] 2 WLR 952, 98 Sol Jo 316, 163 Estates Gazette 350, CA��������������������������������������������������������������  8.31, 9.51 Cia Portorafti Commerciale SA v Ultramar Panama Inc, The Captain Gregos (No 2) [1990] 2 Ll Rep 395, CA���������������������������������������������������������������������������������������������������������������  8.10, 8.35 Cie Française d’Importation et de Distribution SA v Deutsche Continental Handelsgesellschaft [1985] 2 Ll Rep 592����������������������������������������������������������������������������������������������������������������   14.18 Ciechocinek, The. See Ismail v Polish Ocean Lines, The Ciechocinek CIFAL Groupe SA Grontmij Investment Management SAS v Meridian Securities (UK) Ltd [2013] EWHC 3553 (Comm)���������������������������������������������������������������������������������������������  8.26, 8.59 CIN Properties Ltd v Rawlins [1995] 2 EGLR 130, [1995] 39 EG 148, CA���������������������������������    6.4 Citizens’ Bank of Louisiana v First National Bank of New Orleans (1873) LR 6 HL 352, 43 LJ Ch 269, 22 WR 194����������������������������������������������������������������������������������������  1.18, 2.14, 5.23 City Fur Manufacturing Co Ltd v Fureenbond (Brokers) London Ltd [1937] 1 All ER 799���������   11.20 City Permanent Building Society v Miller [1952] Ch 840, [1952] 2 All ER 621, [1952] 2 TLR 547, CA������������������������������������������������������������������������������������������������������������������������  9.51 Citypark Properties Ltd v Bolton Metropolitan Borough Council (1 March 2001, unreported)����  7.36 Civil Aviation Authority v Internationale Nederlanden Aviation Lease BV and European Organisation for the Safety of Air Navigation [1997] 1 Ll Rep 96n��������������������������������������   14.35

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Table of cases Civil Service Musical Instrument Association Ltd v Whiteman (1899) 63 JP 441, 68 LJ Ch 484, 43 Sol Jo 507, 80 LT 685���������������������������������������������������������������������������������  12.18, 12.24 Claridge v Mackenzie (1842) 11 LJCP 72, 4 Man & G 143, 4 Scott NR 796��������������������������������  9.21 Clark, Re, ex p Beardmore [1894] 2 QB 393, 63 LJQB 806, 1 Mans 207, 9 R 498, [1891–4] All ER Rep 302, 38 Sol Jo 492, 70 LT 751, 10 TLR 459, CA������������������������������������������������������  6.20 Clark v Adie (No 2) (1877) 2 App Cas 423, 46 LJ Ch 598, 26 WR 45, 37 LT 1, HL����������������  9.62, 9.68 Clark v Clark [2006] EWHC 275 (Ch)�������������������������������������������������������������������������������������������  12.183 Clark v Sheehan [1997] NZLR 1038����������������������������������������������������������������������������������������������  5.38 Clark (H) (Doncaster) Ltd v Wilkinson [1965] Ch 694, [1965] 1 All ER 934, [1965] 2 WLR 751, 109 Sol Jo 110, CA �����������������������������������������������������������������������������������������������������������  2.31, 5.10 Clark (WG) (Properties) Ltd v Dupre Properties Ltd [1992] Ch 297, [1992] 1 All ER 596, [1991] 3 WLR 579, 63 P & CR 343, 23 HLR 544, [1991] 2 EGLR 59, [1991] 42 EG 125, Ch D����������������������������������������������������������������������������������������������������������������������������������������  8.90 Clarke, ex p (1791) 3 Bro CC 238��������������������������������������������������������������������������������������������������  1.36 Clarke, Re, ex p Debtor v S Aston & Son Ltd [1967] Ch 1121, [1966] 3 All ER 622, [1966] 3 WLR 1101, 110 Sol Jo 923, DC�������������������������������������������������������������������������������������������  3.13 Clarke v Mackintosh (1862) 4 Giff 134������������������������������������������������������������������������������������������  5.10 Clarke v Marlborough Fine Art (London) Ltd [2002] 1 WLR 1731, [2002] 03 LS Gaz R 26, 145 Sol Jo LB 278, [2002] All ER (D) 105 (Jan)��������������������������������������������������������������������������   13.54 Clarke v Meadus [2010] EWHC 3117 (Ch), [2013] WTLR 199�����������������������������������  5.62, 6.36, 12.10, 12.11, 12.172 Clarke v Swaby [2007] UKPC 1, [2007] 2 P & CR 2 (Jam)����������������������������������������������������������  5.48 Clarke and Chapman v Hart (1858) 6 HL Cas 633, 27 LJ Ch 615, 5 Jur NS 447, 32 LTOS 380�������������������������������������������������������������������������������������������������������������������������������������  3.14, 9.14 Clarkson Booker Ltd v Andjel [1964] 2 QB 775, [1964] 3 All ER 260, [1964] 3 WLR 466, 108 Sol Jo 580, CA��������������������������������������������������������������������������������������������������������  13.46, 13.47 Clavering’s Case (1720) Prec Ch 535, 24 ER 240��������������������������������������������������������������������������   12.13 Cleaver, In re [1981] 1 WLR 939���������������������������������������������������������������������������������������������������  12.174 Cleverley v Gas Light and Coke Co (1907) 24 TLR 93, HL����������������������������������������������������������  2.23 Close Asset Finance Ltd v Taylor [2006] EWCA Civ 788�������������������������������������������������������������  8.77 Close Bros Ltd v Ridsdale [2012] EWHC 3090 (QB)��������������������������������������������������������������������  4.51 Closegate Hotel Development (Durham) Ltd v McLean [2013] EWHC 3237 (Ch), [2014] Bus LR 405���������������������������������������������������������������������������������������������������������������  4.8, 4.38, 14.12 Clough v London and North Western Rly Co (1871) LR 7 Exch 26, 41 LJ Ex 17, 20 WR 189, [1861–73] All ER Rep 646, 25 LT 708����������������������������������������������  13.3, 13.27, 13.28, 13.30 CMA CGM SA v Beteiligungs-Kommanditgesellschaft MS Northern Pioneer Schiffahrtgesellschaft mbH & Co [2002] EWCA Civ 1878, [2003] 3 All ER 330, [2003] 1 WLR 1015, [2003] 1 Ll Rep 212, [2003] 09 LS Gaz R 28, [2002] All ER (D) 286 (Dec), [2003] 1 All ER (Comm) 204�������������������������������������������������������������������������������������������������   14.16 CP Holdings Ltd v Dugdale (22 May 1998, unreported)����������������������������������������������������������������  8.38 CPC Consolidated Pool Carriers GmbH v CTM Cia Transmediterranea SA, The CPC Gallia [1994] 1 Ll Rep 68������������������������������������������������������������������������������������������������������������������  4.51 Coaks v Boswell (1886) 11 App Cas 232, 55 LJ Ch 761, 55 LT 32, HL����������������������������������������  3.12 Coastal Estates Pty Ltd v Melevende [1965] VR 433�����������������������������������������������������������  13.27, 14.16 Coasters Ltd, Re [1911] 1 Ch 86, 80 LJ Ch 89, 18 Mans 133, 103 LT 632������������������������������������   10.15 Coates v London and South Western Rly Co (1879) 44 JP 154, 41 LT 553�����������������������������������  5.31 Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752�����������������������  1.2, 1.9, 1.16, 1.18, 1.21, 1.22, 1.59, 1.66, 1.68, 1.69, 1.70, 1.72, 1.78, 1.87, 1.96, 1.111, 1.117, 2.17, 4.11, 4.26, 4.29, 4.32, 4.40, 4.44, 4.51, 4.55, 5.2, 5.3, 5.6, 5.19, 5.20, 5.21, 5.22, 5.27, 7.3, 7.16, 7.17, 8.24, 8.26, 12.4, 12.7, 12.18, 12.19, 12.20, 12.24, 12.25, 12.26, 12.28, 12.33, 12.34, 12.38, 12.66, 12.75, 12.83, 12.112, 12.115, 12.123, 12.137, 12.150, 12.151, 12.152, 12.154, 12.186, 12.196, 12.198 Cobbold v Greenwich LBC (9 August 1999 unreported) CA���������������������������������������������������������   15.14 Cohen v Freedman (1921) 20 AWN 55 �����������������������������������������������������������������������������������������  3.40 Colchester Borough Council v Smith [1992] Ch 421, [1992] 2 All ER 561, [1992] 2 WLR 728, [1992] 11 LS Gaz R 32, CA����������������������������������������������������������������������������������������������������  8.67 Colchester DC v Smith [1991] Ch 448�������������������������������������������������������������������������������������������  8.38 Cole v North Western Bank (1875) LR 10 CP 354, 44 LJCP 233, [1874–80] All ER Rep 486, 32 LT 733, Ex Ch��������������������������������������������������������������������������������������������������  3.41, 11.16, 11.23 Collie, Re, ex p Adamson (1878) 8 Ch D 807, 47 LJ Bcy 103, 26 WR 890, 38 LT 917, CA����������������������������������������������������������������������������������������������������������������  5.42, 5.50, 13.42, 13.47

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Table of cases Collier v P & M J Wright (Holdings) Ltd [2007] EWCA Civ 1329, [2008] 1 WLR 643��������������  5.42, 5.54, 5.55, 14.2, 14.4, 14.7, 14.8, 14.30 Collins v Claughton [1959] 1 All ER 95, [1959] 1 WLR 145, 103 Sol Jo 111, CA�����������������������  9.46 Collins (Philip) Ltd v Davis [2000] 3 All ER 808, [2000] EMLR 815���������������������  1.57, 3.7, 5.49, 8.54 Collis v Emmet (1790) 1 HBL 316�������������������������������������������������������������������������������������������������  1.36 Colonial Bank v Cady and Williams. See Williams v Colonial Bank Colonial Bank v Hepworth (1887) 36 Ch D 36, 56 LJ Ch 1089, 36 WR 259, 57 LT 148, 3 TLR 650������������������������������������������������������������������������������������������������������������������������  1.42, 10.21 Colonial Bank v Whinney (1886) 11 App Cas 426�������������������������������������������������������������������������  11.3 Combe v Combe [1951] 2 KB 215, [1951] 1 All ER 767, 95 Sol Jo 317, [1951] 1 TLR 811, CA�����������������������������������������������������������������������������  1.25, 7.5, 8.30, 11.54, 14.9, 14.21, 14.35 Comitti v Maher (1905) 94 LT 158, 22 TLR 121���������������������������������������������������������������������������  7.42 Commercial Bank of Scotland v Rhind (1860) 3 Macq 643, 32 Sc Jur 283, 22 D 2, HL����������������������������������������������������������������������������������������������������������������  9.71, 9.73, 9.75 Commercial Banking Co of Sydney Ltd v R H Brown & Co [1972] 2 Ll Rep 360, HC of A�������  2.19 Commercial Union Assurance Plc v Sun Alliance Group Plc [1992] 1 Ll Rep 474��������������������  4.2, 8.21 Commission for New Towns v Cooper (Great Britain) Ltd [1995] Ch 259, [1995] 2 All ER 929, [1995] 2 WLR 677, 72 P & CR 270, [1995] NPC 34, [1995] 2 EGLR 113, [1995] 26 EG 129, 139 Sol Jo LB 87, CA�������������������������������������������������������  3.8, 3.16, 5.11, 12.97 Commonwealth of Australia v Clark [1994] 2 VR 333���������������������������������������������������������������  5.42, 6.4 Commonwealth of Australia v Verwayen (1990) 170 CLR 394, 95 ALR 321, 64 ALJR 540�������������������������������������������������������������  1.38, 1.61, 1.68, 1.87, 1.105, 2.35, 5.42, 5.46, 5.50, 5.69, 6.4, 8.14, 12.182, 12.186, 12.188, 12.194, 13.7, 13.11, 13.23, 14.23, 14.29, 14.35, 15.14, 15.16 Commonwealth Scituate Savings Bank 137 Mass 301 1884����������������������������������������������������������   14.36 Commonwealth Trust v Akotey [1926] AC 72, 94 LJPC 167, [1925] All ER Rep 270, 134 LT 33, 41 TLR 641������������������������������������������������������������������������������������������������������������������������  3.51, 11.6 Compagnia Tirrena Di Assicurazioni SpA v Grand Union Insurance Co Ltd [1991] 2 Ll Rep 143������������������������������������������������������������������������������������������������������������������������������  10.24 Compania Naviera Vasconzada v Churchill and Sim [1906] 1 KB 237, 75 LJKB 94, 10 Asp MLC 177, 11 Com Cas 49, 54 WR 406, 50 Sol Jo 76, 94 LT 59, 22 TLR 85�������������������  1.42, 5.39, 5.45, 5.50, 11.102 Companies Acts, Re, ex p Watson (1888) 21 QBD 301, 52 JP 742, 57 LJQB 609, sub nom Re Sheffield Permanent Building Society, ex p Watson 36 WR 829, 59 LT 401�������������������������  7.36 Company (No 001946 of 1991), Re a, ex p Fin Soft Holdings SA [1991] BCLC 737�������������  5.25, 5.34 Compass Group UK and Ireland Ltd v Mid Essex Hospital Services NHS Trust [2012] EWHC 781 (QB), [2012] 2 All ER (Comm) 300��������������������������������������������������������������������������������  8.73 Concessions Trust, Re, McKay’s Case [1896] 2 Ch 757, 65 LJ Ch 909, 3 Mans 274, 75 LT 298, 12 TLR 636�����������������������������������������������������������������������������������������������������������������������������   10.16 Confetti Records v Warner Music UK Ltd [2003] EWHC 1274 (Ch)��������������������������������������������  5.27 Connecticut Fire Ins Co v Kavanagh [1892] AC 473���������������������������������������������������������������������  15.13 Connolly v Bellway Homes Ltd [2007] EWHC 895����������������������������������������������������������������������  2.20 Consort Deep Level Gold Mines Ltd, Re, ex p Stark [1897] 1 Ch 575, 66 LJ Ch 297, 45 WR 420, 76 LT 300, 13 TLR 265, CA���������������������������������������������������������������������������������������������������  4.50 Container Transport International Inc and Reliance Group Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Ll Rep 476, CA����������������������������������������������������������  10.28 Contour Homes v Rowan [2007] EWCA Civ 842��������������������������������������������������������������������������  7.43 Cood v Cood (1863) 33 Beav 314��������������������������������������������������������������������������������������������������  1.63 Cook v Thomas [2010] EWCA Civ 227������������������������������������������������������������������������������  12.96, 12.197 Cook Industries v Tradax Export SA [1985] 2 Ll Rep 454, CA�����������������������������������������������������  3.22 Cook Industries Inc v Meunerie Liegeois SA [1981] 1 Ll Rep 359�������������������������������  4.62, 5.42, 14.17 Cooke v Loxley (1792) 5 Term Rep 4���������������������������������������������������������������������  7.12, 8.90, 9.18, 9.21 Cooke (Isaac) & Sons v Eshelby (1887) 12 App Cas 271, 56 LJQB 505, 35 WR 629, [1886–90] All ER Rep 791, 56 LT 673, 3 TLR 481, HL��������������������������������������������������������������  5.6, 5.10, 6.21 Coombes v Smith [1986] 1 WLR 808, [1987] 1 FLR 352, [1987] Fam Law 123, 130 Sol Jo 482, [1986] LS Gaz R 2238������������������������������������������������������������������  5.7, 12.24, 12.91, 12.100, 12.201 Cooper v Blandy (1834) 1 Bing NC 45, 3 LJCP 274, 4 Moo & S 562����������������������������  1.42, 6.26, 9.21, 9.22, 9.28, 9.35 Cooper v Cooper (1874) LR 7 HL 53������������������������������������������������������������������������������������  13.50, 13.51 Cooper v Meyer (1830) 10 B & C 468, 8 LJOSKB 171, L & Welsb 172, 5 Man & Ry KB 387�����������������������������������������������������������������������������������������������������������������������������  1.36, 11.67 Cooper v Phibbs (1867) LR 2 HL 149, 15 WR 1049, 16 LT 678, [1861–73] All ER Rep Ext 2109���������������������������������������������������������������������������������������������������������������������������  1.114, 2.31

xliii

Table of cases Cooper v Simmons (1862) 26 JP 486, 7 H & N 707, 31 LJMC 138, 8 Jur NS 81, 10 WR 270, 5 LT 712����������������������������������������������������������������������������������������������������������������������������������  7.39 Cooper v Tamms [1988] 1 EGLR 257��������������������������������������������������������������������������������������������  5.10 Co-operative Bank plc, Re [2013] EWHC 4074 (Ch) �������������������������������������������������������������������   14.11 Co-operative Retail Services Ltd v Taff Ely Borough Council (1979) 39 P & CR 223, 250 Estates Gazette 757, [1979] JPL 466, CA; affd sub nom A-G (HM) (ex rel Co-operative Retail Services Ltd) v Taff Ely Borough Council (1981) 42 P & CR 1, HL��������������������������������  7.38, 7.51 Co-operative Wholesale Society v Chester-le-Street District Council (1996) 73 P & CR 111 ��������������������������������������������������������������������������������������������������������  8.14, 13.11, 13.33, 14.24, 14.40 Corbett v Corbett (otherwise Ashley) [1971] P 83, [1970] 2 All ER 33, [1970] 2 WLR 1306, 114 Sol Jo 131��������������������������������������������������������������������������������������������������������������������������������  7.41 Cornillie v Saha (1996) 72 P & CR 147��������������������������������������������������������������������������������  13.30, 13.31 Cornish v Abington (1859) 4 H & N 549, 28 LJ Ex 262, 7 WR 504�����������������������  5.23, 5.25, 5.42, 5.71 Cornish v Midland Bank Plc (Humes, third party) [1985] 3 All ER 513, 1985 FLR 298, [1985] NLJ Rep 869, CA��������������������������������������������������������������������������������������������������������������������  2.31 Cornish v Searell (1828) 8 B & C 471, 6 LJOSKB 254, 1 Man & Ry KB 703������������������������  4.50, 9.23 Corrigal v London & Blackwall Rail Co (1843) 5 M & G 219�������������������������������������������������  5.42, 7.43 Cotching v Bassett (1862) 32 Beav 101�����������������������������������������������������������������  12.93, 12.132, 12.190 Cotterrell v Leeds Day (16 June 2000, unreported) CA�����������������������������������������������������������������  8.14 Cottrell-Dormer v Bristol Corp (1950) 2 P & CR 230�������������������������������������������������������������������  7.36 Cory v Gertcken (1816) 2 Madd 40, 17 RR 180�����������������������������������������������������������������������������  6.18 Council of City of Sydney v Wilson Parking Australia Pty Ltd [2015] NSWLEC 42�������������������   14.29 Countess of Rutland’s Case (1604) 5 Co Rep 25b��������������������������������������������������������������������������  4.59 County NatWest Bank Ltd v Barton [1999] 33 LS Gaz R 31, [2002] 4 All ER 494n, sub nom Barton v County NatWest Ltd [1999] EGCS 103, [1999] Ll Rep Bank 408, CA�������������  3.12, 5.16 Couper v Albion Properties Ltd [2013] EWHC 2993 (Ch)����������������������������������������������  1.29, 6.26, 8.90 Cousens v Grayridge Pty Ltd [2000] VSCA 96������������������������������������������������������������������������������  8.77 Covell v Sweetland [1968] 1 WLR 1466����������������������������������������������������������������������������������������  2.31 Coventry Permanent Economic Building Society v Jones [1951] 1 All ER 901, [1951] WN 218, [1951] 1 TLR 739�������������������������������������������������������������������������������������������������������������������  9.51 Coventry, Sheppard & Co v Great Eastern Rly Co (1883) 11 QBD 776, 52 LJQB 694, 49 LT 641, CA�������������������������������������������������������������������������������������������������������������  3.28, 5.40, 6.3 Cox v Bruce (1886) 18 QBD 147, 56 LJQB 121, 6 Asp MLC 152, 35 WR 207, 57 LT 128, 3 TLR 167, CA������������������������������������������������������������������������������������������������������������������������  5.10 Cox, Patterson & Co v Bruce & Co (1886) 18 QBD 147����������������������������   11.90, 11.93, 11.100, 11.104 Crabb v Arun District Council [1976] Ch 179, [1975) 3 All ER 865, 1975] 3 WLR 847, 119 Sol Jo 711, CA����������������������������������������������������  1.21, 1.59, 1.99, 1.103, 4.11, 5.24, 5.27, 5.32, 6.15, 7.48, 9.13, 12.3, 12.13, 12.15, 12.17, 12.18, 12.19, 12.22, 12.24, 12.26, 12.27, 12.56, 12.58, 12.59, 12.70, 12.75, 12.78, 12.81, 12.92, 12.93, 12.103, 12.111, 12.113, 12.120, 12.133, 12.172, 12.186, 12.187, 12.188, 12.189, 12.190, 12.193, 12.197, 14.6, 14.9, 14.22 Crabb v Arun District Council (No 2) (1977) 121 Sol Jo 86, CA���������������������������������������������������  12.190 Crabbe v Townsend [2016] EWHC 2450 (Ch)�������������������������������������������������������������������  8.9, 8.32, 8.43 Cracknall v Janson (1879) 11 Ch D 1, 27 WR 851, 40 LT 640, CA�����������������������������������������������  8.84 Craig & Rose v Delargy (1879) 16 Sc LR 750��������������������������������������������   11.90, 11.93, 11.102, 11.104 Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305, 26 ALR 326, [1920] VLR 459, HC of A; affd sub nom Yorkshire Insurance Co Ltd v Craine [1922] 2 AC 541, 91 LJPC 226, [1922] All ER Rep 505, 66 Sol Jo 708, 128 LT 77, 38 TLR 845, 11 Ll L Rep 1, 67, PC��������������������������������������������������������������������������������������  1.68, 2.14, 2.24, 2.31, 4.41, 5.25, 5.29, 8.64, 10.38, 13.7 Cramaso LLP v Viscount Reidhaven’s Trustees [2014] UKSC 9, [2014] AC 1093�����������������������  3.19 Credit Lyonnais Bank Nederland NV (now known as Generale Bank Nederland NV) v Export Credits Guarantee Department [1996] 1 Ll Rep 200, [1996) CLC 11; affd [1998] 1 Ll Rep 19, sub nom Generale Bank Nederland NV (formerly Credit Lyonnais Bank Nederland NV) v Export Credits Guarantee Department [1997] 34 LS Gaz R 29, 141 Sol Jo LB 194, CA; affd sub nom Credit Lyonnais Bank Nederland NV (now known as Generale Bank Nederland NV) v Export Credits Guarantee Department [2000] 1 AC 486, [1999] 1 All ER 929, [1999] 2 WLR 540, [1999] 1 Ll Rep 563, 143 Sol Jo LB 89, HL�����������������������������  2.20, 9.10 Credit Suisse v Allerdale Borough Council (1994) 159 LG Rev 549, [1995] 1 Ll Rep 315; affd [1997] QB 306, [1996] 4 All ER 129, [1996] 3 WLR 894, [1996] 2 Ll Rep 241, CA ������������������������������������������������������������������������������������������������������  7.14, 7.36, 8.3, 8.43

xliv

Table of cases Credit Suisse International v Stichting Vestia Groep [2014] EWHC 3103 (Comm), [2015] Bus LR D5�������������������������������������������������������������������������������������������������������  7.36, 8.68, 8.69, 8.73 Creery v Summersell and Flowerdew & Co Ltd [1949] Ch 751, [1949] LJR 1166, 93 Sol Jo 357���������������������������������������������������������������������������������������������������������������������������  4.61 Cremdean Properties Ltd v Nash (1977) EGLR 60������������������������������������������������������������������������  8.76 Cremer v General Carriers SA [1974] 1 All ER 1, [1974] 1 WLR 341, 117 Sol Jo 873, sub nom Peter Cremer, Westfaelische Central Genossenschaft GmbH and Intergraan NV v General Carriers SA, The Dona Mari [1973] 2 Ll Rep 366�������������������������������  5.7, 5.39, 5.46, 5.62, 11.103 Cremer (Peter) v Granaria BV [1981] 2 Ll Rep 583����������������������������������������������������  4.62, 14.17, 14.26 Cresswell v Jeffreys (1912) 28 TLR 413, DC; on appeal (1912) 29 TLR 90, CA�����������  2.14, 2.28, 6.15 Crestsign Ltd v National Westminster Bank Plc [2014] EWHC 3043 (Ch), [2015] 2 All ER (Comm) 133�����������������������������������������������������������������������������������������������������������������������  8.68, 8.76 Cribb v Kynoch Ltd (No 2) [1908] 2 KB 551, 77 LJKB 1001, 1 BWCC 43, 52 Sol Jo 581, 99 LT 216, 24 TLR 736, CA��������������������������������������������������������������������������������������������������������������  6.18 Croft v Lumley (1858) 22 JP 639, 6 HL Cas 672, 27 LJQB 321, 4 Jur NS 903, 6 WR 523, 10 ER 1459, [1843–60] All ER Rep 162, 31 LTOS 382��������������������������������������������������������������������   13.30 Crofts v Middleton (1855) 2 K & J 194, 1 Jur NS 1133; on appeal (1856) 8 De GM & G 192���������������������������������������������������������������������������������������������������������������������������������������  9.19 Cromford Rly Co v Lacey (1829) 3 Y & J 80���������������������������������������������������������������������������������  5.42 Cropper v Smith (1884) 26 Ch D 700, 53 LJ Ch 891, 1 RPC 81, 33 WR 60, 51 LT 729, Griffin’s Patent Cases 60, CA; affd sub nom Smith v Cropper (1885) 10 App Cas 249, 55 LJ Ch 12, 2 RPC 17, 33 WR 753, 53 LT 330, HL���������������������������������������������������������  5.7, 5.10, 6.4, 6.6, 8.81 Crossco No 4 Unlimited v Jolan Ltd [2011] EWCA Civ 1619������������  4.40, 4.51, 8.9, 12.60, 12.66, 14.1 Crossfield & Co v Kyle Shipping Co Ltd [1916] 2 KB 885, 85 LJKB 1310, 13 Asp MLC 410, 22 Com Cas 67, [1916–17] All ER Rep 906, 115 LT 285, CA��������������������������������������  8.67, 11.102 Crossley v Dixon (1863) 10 HL Cas 293, 32 LJ Ch 617, 9 Jur NS 607, 1 New Rep 540, 11 WR 716, 8 LT 260, HL��������������������������������������������������������������������������������������������������  9.66, 9.68 Crosstown Music Co 1 LLC v Rive Droite Music Ltd [2010] EWCA Civ 1222, [2012] Ch 68�����������������������������������������������������������������������������������������������������������������������������������������  13.19 Crown Aluminium Ltd v Northern & Western Insurance Co Ltd [2011] EWHC 1352 (TCC)�����������������������������������������������������������������������������������������������������������������������������   14.20 Crowther v Rayment [2015] EWHC 427 (Ch), [2015] Bus LR 690����������������������������������������������  7.43 Cullen v Thomson’s Trustees (1862) 26 JP 611, 9 Jur NS 85, [1861–73] All ER Rep 640, 6 LT 870, 4 Macq 424, HL��������������������������������������������������������������������������������������������������������������  5.25 Cumberland Court (Brighton) Ltd v Taylor [1964] Ch 29, [1963] 2 All ER 536, [1963] 3 WLR 313, 107 Sol Jo 594������������������������������������������������������������������������������������������������������������  1.34, 9.49 Cundy v Lindsay (1878) 3 App Cas 459, 42 JP 483, 14 Cox CC 93, 26 WR 406, [1874–80] All ER Rep 1149, 38 LT 573, sub nom Lindsay & Co v Cundy 47 LJQB 481, HL���������������������  3.16 Curtis v Pulbrook [2011] EWHC 167 (Ch), [2011] 1 BCLC 638��������������������������������������������������   10.19 Curtis v Williamson (1874) LR 10 QB 57, 44 LJQB 27, 23 WR 236, 31 LT 678�������������������  13.3, 13.47 Customs & Excise Commissioners v Hebson Ltd [1953] 2 Ll Rep 382����������������������������������������  5.31 Cuthbertson v Irving (1859) 4 H & N 742, 28 LJ Ex 306, 5 Jur NS 740, 33 LTOS 328; affd (1860) 6 H & N 135, 29 LJ Ex 485, sub nom Irving v Cuthbertson 6 Jur 1211, 8 WR 704, 3 LT 335, Ex Ch����������������������������������������  1.29, 1.65, 6.12, 6.26, 6.29, 6.31, 6.37, 8.90, 9.18, 9.19, 9.21, 9.24, 9.31, 9.32, 9.35, 9.47 Cutler v Bower (1848) 11 QB 973, 17 LJQB 217, 12 Jur 721, 11 LTOS 173��������������������������������  8.88 D D & C Builders Ltd v Rees [1966] 2 QB 617, [1965] 3 All ER 837, [1966] 2 WLR 288, 109 Sol Jo 971, CA������������������������������������������������������������������  5.31, 5.42, 14.6, 14.30, 14.33, 14.35 Dabbs v Seaman (1925) 42 WN 146, 36 CLR 538, 31 ALR 402, 26 SRNSW 291, HC of A��������������������������������������������������������������������������������������������  3.2, 8.20, 8.31, 8.70, 8.71, 8.80 Dadourian Group International Inc v Simms [2009] EWCA Civ 169, [2009] 1 Ll Rep 601�����������������������������������������������������������������������������������������������������������������������  5.13, 5.14 Daejan Properties Ltd v Mahoney (1995) 28 HLR 498, [1995] NPC 7, [1995] 2 EGLR 75, [1995] 45 EG 128, CA�������������������������������������������  7.31, 7.33, 7.34, 7.46, 7.47, 8.66, 11.14, 12.149 Dalton v Fitzgerald [1897] 2 Ch 86, 66 LJ Ch 604, 45 WR 685, 41 Sol Jo 560, 76 LT 700, 13 TLR 456, CA����������������������������������������������������������������������������������������������������������������������  6.34 Dann v Spurrier (1802) 7 Ves 231, [1775–1802] All ER Rep 115������  1.38, 3.12, 12.13, 12.18, 12.107, 12.108 Daraydan Holdings Ltd v Solland International Ltd [2004] EWHC 622 (Ch), [2005] Ch 119���������   13.40 Daulia Ltd v Four Millbank Nominees Ltd [1978] 1 Ch 231, CA��������������������������������������������������  12.183

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Table of cases Daval Aciers d’Usinor et de Sacilor v Armare Srl, The Nerano [1996] 1 Ll Rep 1, CA����������������  5.36 Davenport v R (1877) 3 App Cas 115, 47 LJPC 8, [1874–80] All ER Rep 157, 37 LT 727������������������������������������������������������������������������������������������������  4.47, 4.61, 6.16, 7.12, 7.48 Daventry DC v Daventry and District Housing Ltd [2010] EWHC 1935 (Ch)������������������������������  3.12 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353, 109 ALR 57, 66 ALJR 768, 24 ATR 125, HC of A��������������������������������������������������������������������������������������  2.28 Davies v Davies [2014] EWCA Civ 568, [2016] WTLR 1175, [2016] WTLR 1547, [2014] Fam Law 1252, [2014] 2 P & CR DG12��������������������������������������������������������������������������������   12.59 Davies v Davies [2015] EWHC 1384 (Ch)�������������������������������������������������������������  12.42, 12.188, 12.190 Davies v Davies [2016] EWCA Civ 463, [2016] 2 P & CR 10, [2016] Fam Law 815������������  1.38, 12.7, 12.31, 12.95, 12.138, 12.179, 12.182, 12.184, 12.188, 12.189, 12.191 Davies v London and Provincial Marine Insurance Co (1878) 8 Ch D 469, 26 WR 794, 38 LT 478, sub nom Davies v London and Provincial Marine Insurance Co 47 LJ Ch 511�������������  3.19 Day v Harris [2013] EWCA Civ 191, [2014] Ch 211, [2013] 3 WLR 1560, [2013] WTLR 591, 16 ITELR 111, (2013) 157(12) SJLB 35, CA�������������������������������������������������������������������������  4.44 De Beers Abrasive Products Ltd v International General Electric Co of New York Ltd [1975] 2 All ER 599, [1975] 1 WLR 972, 119 Sol Jo 439��������������������������������������������������������������������  2.22 De Bussche v Alt (1878) 8 Ch D 286, 47 LJ Ch 381, 3 Asp MLC 584, [1874–80] All ER Rep 1247, 38 LT 370, CA������������������������������������������������������������������  1.88, 3.4, 5.25, 12.12, 12.13, 13.23 De Gorter v Attenborough & Son (1905) 21 TLR 19���������������������������������������������������������������������   11.23 De Lisle v Union Bank of Scotland [1914] 1 Ch 22, 83 LJ Ch 166, 58 Sol Jo 81, 109 LT 727, 30 TLR 72, CA������������������������������������������������������������������������������������������������������������������������  5.39 de Maurier (Jewels) Ltd v Bastion Insurance Co Ltd and Coronet Insurance Co Ltd [1967] 2 Ll Rep 550�����������������������������������������������������������������������������������������������������������������������������������   10.35 De Mesnil (Baron) v Dakin (1867) LR 3 QB 18, 8 B & S 650, 37 LJQB 42, 16 WR 145������������  5.31 De Tchihatchef v Salerni Coupling Ltd [1932] 1 Ch 330, 101 LJ Ch 209, [1931] All ER Rep 233, 146 LT 505����������������������������������������������������������������������������  1.18, 2.11, 2.31, 3.19, 5.23, 6.17, 8.57 de Vigier v IRC [1964] 1 WLR 1073, HL��������������������������������������������������������������������������������������  6.55 Dean v Bruce [1952] 1 KB 11, [1951] 2 All ER 926, 95 Sol Jo 710, [1951] 2 TLR 1030, CA����������������������������������������������������������������������������������������������������������  5.67, 7.29, 14.2, 14.9 Debenham v Mellon (1880) 6 App Cas 24, 45 JP 252, 50 LJQB 155, 29 WR 141, 43 LT 673, HL��������������������������������������������������������������������������������������������������������������������  9.13, 9.17 Debenham’s Ltd v Perkins (1925) 133 LT 252�������������������������������������������������������������������������������   13.45 Debs v Sibec Developments Ltd [1990] RTR 91������������������������������������������  3.40, 3.41, 5.31, 11.7, 11.41 Debtor (No 23 of 1939), Re; Debtor v Petitioning Creditor and Official Receiver [1939] 2 All ER 338, [1938–1939] B & C 163, 83 Sol Jo 376, 160 LT 443, 55 TLR 620, CA�������������������  1.56, 5.67 Decouvreur v Jordan (1987) Times, 25 May, CA���������������������������������������������������������������������������  7.14 Dedames v National Farmers’ Union Mutual Insurance Society Ltd [2009] EWHC 2805 (QB)�������������������������������������������������������������������������������������������������������������������������������   10.31 Deepak v ICI [1998] 2 Ll R 139�����������������������������������������������������������������������������������������������������  4.54 Delaforce v Simpson-Cook (2010) 78 NSWLR 483, NSWCA�����������������������������������  6.57, 12.92, 12.93, 12.182, 12.187, 12.188 Dempsey v Celtic Football and Athletic Co Ltd [1993] BCC 514, CSOH������������������������������������  10.2 Dent v Glen Line Ltd (1940) 45 Com Cas 224�������������������������������������������������������������������������������  11.103 Deputy Comr of Taxation (NSW) v Chamberlain (1990) 93 ALR 729������������������������������������������  3.16 Derby v Scottish Equitable Plc. See Scottish Equitable Plc v Derby Derby & Co Ltd v ITC Pension Trust Ltd [1977] 2 All ER 890�����������������������������������������������������  4.51 Destine Estates Ltd v Muir [2014] EWHC 4191 (Ch)�������������������������������������������  1.29, 8.64, 8.78, 10.23 Destra Software Ltd v Comada (UK) LLP [2013] EWHC 1575 (Pat)�������������������������������������������  1.47 Deutsche Bank AG v Sebastian Holdings Inc (Rev 1) [2013] EWHC 3463 (Comm)����������������  8.9, 8.75 Deutsche Bank (London Agency) v Beriro & Co (1895) 1 Com Cas 255, 73 LT 669, 12 TLR 106, CA�������������������������������������������������������������������������������������������������������������������  3.7, 5.45 Deutsche Bank (Suisse) SA v Khan [2013] EWHC 482 (Comm)��������������������������������������������������  3.21 Devenish Nutrition Ltd v Sanofi-Aventis SA [2008] EWCA Civ 1086, [2009] Ch 390����������������   13.40 Devonshire (Duke of) v Eglin (1851) 14 Beav 530, 20 LJ Ch 495�����������  12.13, 12.172, 12.189, 12.190 Dewar v Maitland (1866) LR 2 Eq 834������������������������������������������������������������������������������������������   13.53 Dextra Bank and Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193, PC������������������  2.31 DHN Food Distributors Ltd v Tower Hamlets BC [1976] 1 WLR 852, CA����������������������������������  12.175 Diab v Regent Insurance Ltd [2007] 1 WLR 797, PC��������������������������������������������������������������������  4.44 Dickinson v Valpy (1829) 10 B & C 128, 8 LJOSKB 51, L & Welsb 6, S Man & Ry KB 126�������������������������������������������������������������������������������������������������������������������������  5.10, 9.17 Dillwyn v Llewellyn (1862) 4 De GF & J 517, 31 LJ Ch 658, 8 Jur NS 1068, 10 WR 742, 6 LT 878�������������������������������������������������  1.38, 12.47, 12.78, 12.83, 12.132, 12.159, 12.175, 12.189

xlvi

Table of cases Dimmock v Hallett (1866) 2 Ch App 21, 31 JP 163, 36 LJ Ch 146, 12 Jur NS 953, 15 WR 93, 15 LT 374��������������������������������������������������������������������������������������������������������������������������������  2.22 Dinsdale Moorland Services Ltd v Evans [2014] EWHC 2 (Ch), [2014] 2 Costs LR 217������������    7.5 Dionissis v R, The Laura (1865) 3 Moo PCCNS 181, 2 Mar LC 225, 252, 6 New Rep 321, 13 WR 369, 12 LT 685, 13 LT 133, PC����������������������������������������������������������������������������������    3.2 Diplock, In re, Diplock v Wintle [1948] Ch 465, CA���������������������������������������������������������������������  12.178 Distributors and Warehousing Ltd, Re [1986] BCLC 129, 1 BCC 99, 570, [1986] 1 EGLR 90, 278 Estates Gazette 1363�����������������������������������������������������������������������������������  4.7, 8.80, 8.83, 8.88 District Bank Ltd v Webb [1958] 1 All ER 126, [1958] 1 WLR 148, 102 Sol Jo 107�������������������  8.88 Dixon v Blindley Heath Investments Ltd [2015] EWCA Civ 1023, [2016] 4 All ER 490�����������  1.5, 1.7, 1.84, 1.96, 1.97, 1.99, 4.9, 4.42, 4.43, 5.10, 5.61, 8.1, 8.7, 8.9, 8.13, 8.14, 8.17, 8.21, 8.30, 8.54, 8.55, 8.62, 10.2, 14.20 Dixon v Kennaway & Co [1900] 1 Ch 833, 69 LJ Ch 501, 7 Mans 446, 82 LT 527, 16 TLR 329������������������������������������������������������������������������������  5.45, 5.62, 10.8, 10.10, 10.11, 10.12 Dixon v Winch [1900] 1 Ch 736, 69 LJ Ch 465, 48 WR 612, 44 Sol Jo 327, 82 LT 437, 16 TLR 276, [1900–3] All ER Rep Ext 1728, CA������������������������������������������������������������������  5.11 Doddington’s Case, Hall d Doddington v Peart (1594) 2 Co Rep 32b, Poph 60, 1 Roll Abr 872, sub nom Hall v Combes Cro Eliz 368������������������������������������������������������������������������������������  8.88 Dodsworth v Dodsworth (1973) 228 Estates Gazette 1115, [1973] EGD 233, CA��������������  12.22, 12.93, 12.184, 12.185, 12.188, 12.189 Doe d Brune v Martyn (1828) 8 B & C 497, 7 LJOSKB 60, 2 Man & Ry KB 485�����������������������    6.2 Doe d Bullen v Mills (1834) 2 Ad & El 17, 4 LJKB 10, 4 Nev & MKB 25����������������������������������  6.26 Doe d Chandler v Ford (1835) 3 Ad & El 649, 5 LJKB 25, 1 Har & W 378, 5 Nev & MKB 209���������������������������������������������������������������������������������������������������������������������������  2.23, 8.87 Doe d David v Williams (1835) 7 C & P 322���������������������������������������������������������������������������������  9.28 Doe d Downe (Lord) v Thompson (1847) 9 QB 1037, 11 Jur 1007, 8 LTOS 408�������������������������  6.29 Doe d Gaisford v Stone (1846) 3 CB 176, 15 LJCP 234, 10 Jur 480, 7 LTOS 207�������������������  6.26, 8.84 Doe d Harvey v Francis (1837) 2 Mood & R 57����������������������������������������������������������������������������  9.21 Doe d Higginbotham v Barton (1840) 11 Ad & El 307, 9 LJQB 57, 4 Jur 432, 3 Per & Dav 194, [1835–42] All ER Rep 546�����������������������������������������������������������������������������������������������������  9.21 Doe d Johnson v Baytup (1835) 3 Ad & El 188�����������������������������������������������������������������������������  9.31 Doe d Knight v Rowe (1826) 2 C & P 246, Ry & M 343���������������������������������������������������������������  5.25 Doe d Knight v Smythe (1815) 4 M & S 347���������������������������������������������������������������������������������  9.34 Doe d Levy v Horne (1842) 3 QB 757, 7 JP 178, 12 LJQB 72, 3 Gal & Dav 239, 7 Jur 38����������  8.87 Doe d Lumley v Earl of Scarborough (1835) 3 Ad & El 2, 4 LJKB 172, 4 Nev & MKB 724; revsd sub nom Scarborough (Earl) v Doe d Savile (1836) 3 Ad & El 897, 6 LJ Ex 270, 6 Nev & MKB 884, Ex Ch������������������������������������������������������������������������������������������������������  8.88 Doe d Manton v Austin (1832) 9 Bing 41, 1 LJCP 152, 2 Moo & S 107���������������������������������������  9.34 Doe d Marchant v Errington (1839) 6 Bing NC 79, 9 LJCP 9, 3 Jur 1126, 8 Scott 210�����������  8.84, 9.19 Doe d Morecraft v Meux 4 B & C 606, 4 LJOSKB 4, 7 Dow & Ry KB 98, pre-SCJA 1873��������  13.3 Doe d Nepean v Budden (1822) 5 B & Ald 626, 1 Dow & Ry KB 243�����������������������������������������  9.36 Doe d Plevin v Brown (1837) 7 Ad & El 447, 8 LJQB 49, 2 Nev & PKB 592, Will Woll & Dav 677������������������������������������������������������������������������������������������������������������������������������  9.21, 9.23 Doe d Preece v Howells (1831) 2 B & Ad 744, 9 LJOSKB 332����������������������������������������������������  8.87 Doe d Roberts v Roberts (1819) 2 B & Ald 367�����������������������������������������������������������������������������  8.87 Doe d Strode v Seaton (1835) 2 Cr M & R 728, 5 LJ Ex 73, 1 Gale 303, Tyr & Gr 19�����������������  9.47 Doe d Shelton v Shelton (1835) 3 Ad & El 265, 4 LJKB 167, 1 Har & W 287, 4 Nev & MKB 857��������������������������������������������������������������������������������������������������������������������������������  8.84 Doe d Williams v Lloyd (1839) 5 Bing NC 741, 9 LJCP 83, 3 Jur 265, 751, 8 Scott 93���������������  6.17 Doey v London and North Western Rly Co [1919] 1 KB 623, 88 LJKB 737, 120 LT 612, 35 TLR 290, DC�����������������������������������������������������������������������������������������������������������������������������������  5.31 Doheny v New India Assurance Co Ltd [2004] EWCA Civ 1705�������������������������������������������������   10.29 Dona Mari, The. See Cremer v General Carriers SA Donaldson v Freeson (1934) 51 CLR 598��������������������������������������������������������������������������������������  5.41 Donegal International Ltd v Zambia [2007] EWHC 197 (Comm)��������������������������������������������  1.15, 8.68 Doneghan v Ghadami [2007] EWCA Civ 944�������������������������������������������������������������������������������  5.13 Dornier GMBH v Cannon (1991) SC 310��������������������������������������������������������������������������������������  9.10 Dornoch Ltd v Westminster International BV [2009] 2 CLC 226�����������������������������������������������  1.63, 8.9 Downderry Construction Ltd v Secretary of State for Transport [2002] ACD 62��������������������������  5.25 Downs v Chappell [1996] 3 All ER 344, [1997] 1 WLR 426, CA��������������������������������������������  5.10, 5.13 DPP v Ray [1974] AC 370��������������������������������������������������������������������������������������������������������������  2.23 Drayton v Dale (1823) 2 B & C 293, 2 LJOSKB 20, 3 Dow & Ry KB 534����������������������������������   11.67

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Table of cases Drew v Nunn (1879) 4 QBD 661, 43 JP 541, 48 LJQB 59 1, 27 WR 810, [1874–80] All ER Rep 1144, 40 LT 671, CA����������������������������������������������������������������������������������������������������������  6.19, 9.13 Drexel Burnham Lambert International NV v El Nasr and Etablissement Abou Nasr El Bassatni [1986] 1 Ll Rep 356�����������������������������������������������������������������������������������  4.11, 14.12, 14.13, 14.36 DRL Ltd v Wincanton Group Ltd [2010] EWHC 2896 (QB)���������������������������������������������������  1.96, 8.17 DS Rendite Foods v Titan Maritime [2013] EWHC 3492 (Comm)�����������������������������������������������  8.73 Dubai Islamic Bank PJSC v PSI Energy Holding Co BSC (Rev 2) [2011] EWHC 1019 (Comm) �������������������������������������������������������������������������������������������������������������������������  4.7, 4.44, 8.74, 13.13 Dudley and District Benefit Building Society v Emerson [1949] Ch 707, [1949] 2 All ER 252, [1949] LJR 1441, 93 Sol Jo 512, 65 TLR 444, CA����������������������������������������������������������������  9.31 Dudley Muslim Association v Dudley MBC [2015] EWCA Civ 1123, [2016] 1 P & CR 10 ������������������������������������������������������������������������������������������������������������������������������  7.16, 7.53, 12.149 Du Jardin v Beadman Bros Ltd [1952] 2 QB 712������������������������������������������������������   11.37, 11.40, 11.41 Duke v Ashby (1862) 7 H & N 600, 31 LJ Ex 168, 8 Jur NS 236, 10 WR 273�����������������������������  9.21 Dun & Bradstreet Software Services (England) Ltd v Provident Mutual Life Assurance Society [1996] NPC 57, [1996] EGCS 62; revsd sub nom Dun & Bradstreet Software Services (England) Ltd v Provident Mutual Life Assurance Association [1997] NPC 91, [1998] 2 EGLR 175, [1996] EGCS 89, CA�������������������������������������������  2.31, 4.7, 13.32, 14.2, 14.11, 14.19 Dunbar Assets Plc v Butler [2015] EWHC 2546 (Ch), [2015] BPIR 1358������������������������������������   14.34 Duncan v Missouri State Life Insurance Co 60 F 648 (1908, 8 Cir)����������������������������������������������   10.24 Dunedin Corp v Cotton [1923] NZLR 1031�����������������������������������������������������������������������������������  9.54 Dunston v Paterson (1857) 22 JP 23, 2 CBNS 495, 26 LJCP 267, 3 Jur NS 982, 29 LTOS 199����������������������������������������������������������������������������������������������������������������������  1.56, 5.67 Durham v BAI (Run Off) Ltd [2009] 2 All ER 26����������������������������������������������������  4.2, 8.20, 8.21, 8.25 Durham Fancy Goods Ltd v Michael Jackson (Fancy Goods) Ltd [1968] 2 QB 839, [1968] 2 All ER 987, [1968] 3 WLR 225, [1968] 2 Ll Rep 98, 112 Sol Jo 582���������������������������������  10.22, 14.23 Durrant v Heritage [1994] EGCS 134������������������������������������������������������������������������  5.7, 12.188, 12.189 Durrant v Holdsworth (1886) 2 TLR 763���������������������������������������������������������������������������������������  9.17 Dutton v Sneyd Bycars Co Ltd [1920] 1 KB 414, CA��������������������������������������������������������������������  7.43 Dyer v Dyer (1682) 2 Cas in Ch 108�����������������������������������������������������������������������������������������  1.36, 1.38 Dyer v Potter [2011] EWCA Civ 1417�������������������������������������������������������������������������������������������   13.14 Dyson Ltd v Qualtex (UK) Ltd [2004] EWHC 2981 (Ch)��������������������������������������������������������  5.10, 5.43 Dzekova v Thomas Eggar LLP [2015] EWHC 2600 (QB)������������������������������������������������������������    9.9 E Eaglesfield v Marquis of Londonderry (1875) 4 Ch D 693, 24 WR 568, 34 LT 113; on appeal (1876) 4 Ch D 693, 25 WR 190, 35 LT 822, CA; affd (1878) 26 WR 540, 38 LT 303, HL�����������������������������������������������������������������������������������������������������������  2.28, 2.29, 5.10 Earl of Oxford’s Case (1615) 1 Ch Rep 1�����������������������������������������������������������������������  1.36, 1.38, 12.13 Easat Antennas Ltd v Racal Defence Electronics Ltd (21 June 2000, unreported)������������������������  8.59 Ease Faith Ltd v Leonis Marine Management [2006] 1 Ll R 673���������������������������������������������  8.32, 8.35 East v Maurer [1991] 2 All ER 733, [1991] 1 WLR 461, CA��������������������������������������������������������  2.17 East India Co v Vincent (1740) 2 Atk 83, [1558–1774] All ER Rep 615�������������������������������  1.38, 12.13, 12.78, 12.121, 12.190 Eastaugh v Crisp [2006] EWHC 2298 (Ch)���������������������������������������������������������������������  5.62, 15.3, 15.9 Eastern Distributors Ltd v Goldring (Murphy, third party) [1957] 2 QB 600, [1957] 2 All ER 525, [1957] 3 WLR 237, 101 Sol Jo 553, CA������������������������������������������������  1.33, 1.34, 3.31, 3.39, 3.42, 6.32, 6.34, 6.46, 9.4, 9.5, 10.18, 11.3, 11.13, 11.14, 11.27, 11.48, 11.51, 11.52, 11.53, 11.54, 11.55, 11.56 Eastgate, Re [1905] 1 KB 465��������������������������������������������������������������������������������������������������������  2.23 Easton v London Joint Stock Bank (1886) 34 Ch D 95, CA����������������������������������������������������������   10.20 Eaton v Lake (1888) 20 QBD 378, 57 LJQB 227, 36 WR 277, 59 LT 100, 4 TLR 230, CA������������������������������������������������������������������������������������������������������������������������������  3.13, 3.20 Eaves, In re [1940] Ch 109, CA������������������������������������������������������������������������������������������������������   12.12 Economic Fire Office Ltd, Re (1896) 12 TLR 142�������������������������������������������������������������������������   10.23 Economides v Commercial Union Assurance Co Plc [1998] QB 587�������������������������������������  2.20, 10.26 Eddystone Marine Insurance Co, Re [1894] WN 30, 38 Sol Jo 253, 10 TLR 274�������������������������   10.15 Eden v Smith [1800] 5 Ves 341������������������������������������������������������������������������������������������������������  2.25 EDF Energy Networks (EPN) Plc v BOH Ltd [2009] EWHC 3193 (Ch), [2010] 2 P & CR 3���������������������������������������������������������������������������������������  3.21, 3.24, 6.11, 7.29, 7.30, 8.7 Edge v Duke (1849) 18 LJ Ch 183���������������������������������������������������������������������������������������������������  10.35

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Table of cases Edgington v Fitzmaurice (1885) 29 Ch D 459, 50 JP 52, 55 LJ Ch 650, 33 WR 911, 53 LT 369, 1 TLR 326, CA�������������������������������������������������������������������������������������������������������������������  2.16, 5.13 Edlin v Battaly (1675) 2 Lev 152����������������������������������������������������������������������������������������  12.13, 12.189 Edmunds v Best (1862) 1 New Rep 30, 7 LT 279���������������������������������������������������������������������  6.20, 6.21 Edmunds v Bushell & Jones (1865) LR 1 QB 281�������������������������������������������������������������������������  9.10 Edmundson v Thompson and Blakey (1861) 2 F & F 564, 31 LJ Ex 207, sub nom Edmanson v Thompson and Blakey 8 Jur NS 235, 5 LT 428, sub nom Edmondson v Thompson 10 WR 300���������������������������������������������������������������������������������������  5.10, 6.14, 9.9, 9.17 EDO Corp v Ultra Electronics Ltd [2009] EWHC 682 (Ch)�����������������������������������������������������  7.43, 14.2 Edray Ltd v Canning [2015] EWHC 2744 (Ch), [2015] 5 Costs LR 877��������������������������������������   14.19 Edwards v Brown (1831) 1 Cr & J 307, 9 LJOS Ex 84, 1 Tyr 182������������������������������������������������  8.88 Edwin Coe LLP v Aidiniantz [2014] EWHC 3994 (QB), [2015] 1 Costs LO 129������������������������    4.4 Edwin Shirley Productions Ltd v Workspace Management Ltd [2001] 2 EGLR 16, [2001] 23 EG 158��������������������������������������������������������������������������������������������������������������������������  5.27, 12.6 Effort Shipping Co Ltd v Linden Management SA, The Giannis NK [1998] AC 605, [1998] 1 All ER 495, [1998] 2 WLR 206, [1998] 1 Ll Rep 337, [1998] 07 LS Gaz R 32, [1998] NLJR 121, 142 Sol Jo LB 54, HL�������������������������������������������������������������������������������������������   11.98 Egyptian International Foreign Trade Co v Soplex Wholesale Supplies Ltd and P S Refson & Co Ltd, The Raffaella [1985] 2 Ll Rep 36, [1985] FLR 123, [1985] BCLC 404, CA��������������  9.7, 9.10 Eid v Al-Kazemi (No 3) [2004] EWCA Civ 1811��������������������������������������������������������������������������  5.50 Eight Representative Claimants v MGN Ltd [2016] EWHC 855 (Ch), [2016] 3 Costs LO 413 �����������������������������������������������������������������������������������������������������������������������������������������  13.5, 13.58 El Chiaty (Hamed) & Co (t/a Travco Nile Cruise Lines) v Thomas Cook Group Ltd, The Nile Rhapsody [1992] 2 Ll Rep 399; affd [1994] 1 Ll Rep 382, CA���������������������������������������������  8.36 Electrolux Ltd v Electrix Ltd (1954) 71 RPC 23, CA���������������������������������������������������������������������   12.24 Elite Business Systems UK Ltd v Price [2005] EWCA Civ 920����������������������������������������������������    9.9 Ellen v Great Northern Rly Co (1901) 17 TLR 453, CA�����������������������������������������������������������  5.38, 5.71 Ely v Robson [2016] EWCA Civ 774, [2016] WTLR 1383, [2016] Fam Law 1221, [2017] 1 P & CR DG1�������������������������������������������������������������������������������������������������������������������������  7.17, 12.155 Emery v UCB Corporate Services Ltd [2001] EWCA Civ 675��������������  14.2, 14.11, 14.26, 14.27, 14.29 Emilien Marie, The (1875) 44 LJ Adm 9, 2 Asp MLC 514, 32 LT 435, [1874–80] All ER Rep Ext 2236����������������������������������������������������������������������������������������������������������������������������������   11.90 Emirates Trading Agency Llc v Sociedade De Fomento Industrial Private Ltd [2015] EWHC 1452 (Comm), [2016] 1 All ER (Comm) 517, [2015] 2 Ll Rep 487, [2015] 1 CLC 963��������������������������������������������������������������������������������������������������������  1.19, 2.28, 2.35, 8.44 Empson’s Case, Re. See Victoria Permanent Benefit Building Investment and Freehold Land Society, Re, Empson’s Case Energy Venture Partners Ltd v Malabu Oil and Gas Ltd [2013] EWHC 2118 (Comm) ���������������  8.75 Enfield London Borough Council v Arajah [1996] 2 EGLR 21, [1995] EGCS 164, CA���������������  5.27 English v English [2010] EWHC 2058 (Ch)����������������������������������������������������������������������������������  5.45 Equitable Fire and Accident Office Ltd v Ching Wo Hong [1907] AC 96, 76 LJPC 31, 96 LT 1, 23 TLR 200, PC����������������������������������������������������������������������������������������������������������������������   10.23 Equitable Life Assurance Society v Hyman [2002] 1 AC 408, [2000] 3 All ER 961, [2000] 3 WLR 529, 144 Sol Jo LB 239, [2001] Ll Rep IR 99, HL�������������������������������������������������������    3.5 Ermoupolis, The. See Ulysses Compania Naviera SA v Huntingdon Petroleum Services Ltd, The Ermoupolis Ernst & Young v Butte Mining Plc [1996] 1 WLR 1605����������������������������������������������������������������  3.21 Errington v Errington [1952] 1 KB 290, CA����������������������������������������������������������������������������������  12.175 Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175�������������������������������������������������������������������������  2.31 Espley v Wilkes (1872) LR 7 Exch 298, 41 LJ Ex 241, 26 LT 918������������������������������������������������    3.2 Essex County Council v Essex Inc Congregational Church Union [1963] AC 808, [1963] 1 All ER 326, [1963] 2 WLR 802, 14 P & CR 237, 127 JP 182, 107 Sol Jo 112, [1963] RVR 151, HL���������������������������������������������������������������������������������������������������������������������  7.43, 7.44 Esso Petroleum Co Ltd v Mardon [1976] QB 801, [1976] 2 All ER 5, [1976] 2 WLR 583, [1976] 2 Ll Rep 305, 120 Sol Jo 131, 2 BLR 85, CA������������������������������������������������������������������������  2.20 Ets Soules & Cie v International Trade Development Co [1980] 1 Ll Rep 129, CA���������������  5.10, 5.13, 13.8, 13.14 Eurocopy Plc v Teesdale [1992] BCLC 1067, CA��������������������������������������������������������������������������  5.10 Eurometal, The. See Cerealmangimi SpA v Toepfer, The Eurometal European Asian Bank AG v Punjab and Sind Bank [1983] 2 All ER 508, [1983] 1 WLR 642, [1983] 1 Ll Rep 611, [1983] Com LR 128, 127 Sol Jo 379, CA������������������������������  2.14, 2.31, 4.37 Eurymedon, The. See New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd, The Eurymedon

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Table of cases Evans, Re, ex p Salaman [1916] HBR 111�������������������������������������������������������������������������������������  6.20 Evans v Amicus Healthcare [2004] EWCA Civ 727�������������������������������������������  7.28, 7.41, 14.11, 14.25 Evans v Bartlam [1937] AC 473, [1937] 2 All ER 646, 106 LJKB 568, 81 Sol Jo 549, 53 TLR 689, sub nom Bartlam v Evans 157 LT 311, HL�������������������������������������������������������  1.42, 2.14, 13.4 Evans v James Webster & Bros Ltd (1928) 34 Com Cas 172, 73 Sol Jo 60, 45 TLR 136, 32 Ll L Rep 218��������������������������������������������������������������������������������������������������������  5.10, 5.39, 5.72, 11.104 Evanson v Crooks (1911) 106 LT 264, 28 TLR 123���������������������������������������������������������������������������  2.33 Evenden v Guildford City Association Football Club Ltd [1975] QB 917, [1975] 3 All ER 269, [1975] 3 WLR 251, [1975] ICR 367, [1975] IRLR 213, 10 ITR 95, 119 Sol Jo 460, CA����������������������������������������������������������������������������������������������������������������������������������  14.22, 14.36 Exchange Securities and Commodities Ltd (in liquidation), Re [1988] Ch 46, [1987] 2 All ER 272, [1987] 2 WLR 893, [1987] BCLC 425, 131 Sol Jo 356, [1987] LS Gaz R 979�������  1.18, 2.11, 5.23, 5.66, 6.20, 6.21, 6.23 Excomm Ltd v Guan Guan Shipping (Pte) Ltd, The Golden Bear [1987] 1 Ll Rep 330���������������  4.42 Expert Clothing Service & Sales Ltd v Hillgate House Ltd [1986] Ch 340, [1985] 2 All ER 998, [1985] 3 WLR 359, 50 P & CR 317, 129 Sol Jo 484, [1985] 2 EGLR 85, [1985] LS Gaz R 2010, 275 Estates Gazette 1011, 1129, CA�����������������������������������������������������������������������������  4.61 Express Newspapers Plc v News (UK) Ltd [1990] 3 All ER 376, [1990] 1 WLR 1320, [1990] FSR 359����������������������������������������������������������������������������������������������������������������  13.5, 13.55, 13.58 F Fadallah v Pollak [2013] EWHC 3159 (QB)������������������������������������������������������������������������������������  11.23 Fairfax Gerrard Holdings Ltd v Capital Bank Plc [2007] 1 Ll Rep 171���������������������   11.16, 11.23, 11.45 Fairfield Shipbuilding and Engineering Co Ltd v Gardner, Mountain & Co Ltd (1911) 11 Asp MLC 594, 104 LT 288, 27 TLR 281����������������������������������������������������������������  2.24, 4.50, 5.45, 9.54 Fairstate Ltd v General Enterprise & Management Ltd [2010] EWHC 3072 (QB)���������  2.23, 7.14, 7.26 Fairtitle d Mytton v Gilbert (1787) 2 Term Rep 169�������������������������������������������������  7.1, 7.36, 8.87, 15.6 Falcke v Scottish Imperial Insurance Co Ltd (1886) 34 Ch D 234������������������������������������������������   12.13 Farquharson v Pearl Assurance Co Ltd [1937] 3 All ER 124������������������������������������������������  10.23, 10.25 Farquharson Bros & Co v C King & Co [1902] AC 325, 71 LJKB 667, 51 WR 94, [1900–3] All ER Rep 120, 46 Sol Jo 584, 86 LT 810, 18 TLR 665, HL���������������������  2.14, 3.28, 3.31, 3.34, 3.40, 3.43, 3.51, 5.10, 9.9, 9.17, 11.3, 11.4 Farrall v Davenport (1861) 3 Giff 363, 8 Jur NS 862; affd 8 Jur NS 1043, 5 LT 436��������������������  1.38 Farrow v Orttewell [1933] Ch 480, 102 LJ Ch 133, [1933] All ER Rep 132, 149 LT 101, 49 TLR 251, CA������������������������������������������������������������������������������������������������������������  1.46, 2.31, 2.32, 9.29 Faure Electric Accumulator Co Ltd v Phillipart (1888) 58 LT 525, 4 TLR 365�����������������������������  7.12 Fell v Parkin (1882) 52 LJQB 99, 47 LT 350���������������������������������������������������������������������������������  5.45 Felthouse v Bindley (1862) 11 CBNS 869, 31 LJCP 204, 10 WR 423; affd (1863) 1 New Rep 401, 11 WR 429, 7 LT 835������������������������������������������������������������������������������������������������������  3.23 Fenner v Blake [1900] 1 QB 426, 69 LJQB 257, 48 WR 392, 82 LT 149, DC����������������  5.42, 9.46, 14.4 Fenner v Duplock (1824) 2 Bing 10, 2 LJOSCP 102, 9 Moore CP 38�������������������������������������������  9.21 Feret v Hill (1854) 15 CB 207��������������������������������������������������������������������������������������������������������  2.16 Fern Advisors Ltd v Burford [2014] EWHC 762 (QB), [2014] BPIR 581�������������������������������������   13.41 Ferno Holdings Pty Ltd v Lee (1992) NSW Conv R 55–645�������������������������������������������������������������  8.80 Ferrier v Stewart (1912) 15 CLR 32�����������������������������������������������������������������������������������  2.14, 8.1, 8.64 FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45, [2015] AC 240������������������������������������������������������������������������������������������������������������������������������������   13.40 Fickus, In re [1900] 1 Ch 331���������������������������������������������������������������������������������������������������������   12.12 Fielden v Christie-Miller [2015] EWHC 87 (Ch), [2015] WTLR 1165, 18 ITELR 369, [2015] 2 P & CR DG5���������������������������������������������������������������  1.74, 4.29, 4.44, 6.15, 6.47, 6.48, 6.49, 6.53, 6.54, 6.61, 7.8, 12.52, 12.53, 12.55, 12.56, 15.4 Film Investors Overseas SA v Home Video Channel Ltd [1996] 45 LS Gaz R 30, [1997] EMLR 347�����������������������������������������������������������������������������������������������������������������������  1.87, 12.34 Filmer v Lynn (1835) 1 Har & W 59, 4 Nev & MKB 559�����������������������������������������������������������������  9.17 Finagrain SA Geneva v P Kruse Hamburg [1976] 2 Ll Rep 508, CA�����������������  4.62, 5.62, 13.16, 14.26 Financial Techniques (Planning Services) Ltd v Hughes [1981] IRLR 32, CA�����������������������������  3.22 Finch v Lloyds TSB Bank Plc [2016] EWHC 1236 (QB)��������������������������������������������������������������  8.74 Fine Art Society Ltd v Union Bank of London Ltd (1886) 17 QBD 705, 51 JP 69, 56 LJQB 70, 35 WR 114, 55 LT 536, 2 TLR 883, CA�������������������������������������������������������������������  3.28, 3.32, 3.34 First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Ll Rep 194, [1993] BCLC 1409, [1993] BCC 533, CA����������������������������������������������������������������������������������������������������  9.10 First Laser Ltd v Fujian Enterprises (Holdings) Co Ltd [2012] HKCFA 52����������������������������������  1.63

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Table of cases First National Bank Plc v Thompson [1996] Ch 231, [1996] 1 All ER 140, [1996] 2 WLR 293, 72 P & CR 118, [1995] 32 LS Gaz R 30, 139 Sol Jo LB 189, CA�������������������  1.8, 1.17, 1.29, 1.35, 1.36, 1.103, 1.106, 6.26, 6.31, 8.84, 8.88, 8.90, 8.92, 9.18, 9.47, 9.48 First National Bank Plc v Walker [2001] 1 FCR 21, [2001] 1 FLR 505, [2001] Fam Law 182, [2001] NPC 4, CA��������������������������������������������������������������������������������������  13.5, 13.25, 13.48, 13.56 First Sport Ltd v Barclays Bank Plc [1993] 3 All ER 789, [1993] 1 WLR 1229, CA��������������������    9.9 First Subsea Ltd v Balltec Ltd [2014] EWHC 866 (Ch)�����������������������������������������������������������������    7.5 Firth & Sons v De Las Rivas [1893] 1 QB 768, 62 LJQB 403, 41 WR 493, 37 Sol Jo 456, DC������������������������������������������������������������������������������������������������������������������������������  4.50 Fish v Kempton (1849) 7 CB 687, 18 LJCP 206, 13 Jur 750, 13 LTOS 72������������������������������������  9.14 Fisher v Brooker [2009] 1 WLR 1764��������������������������������������������������  1.21, 1.62, 1.70, 1.75, 1.87, 1.91, 5.48, 5.60, 12.13, 12.34, 12.188, 15.8, 15.11 Fisher, Renwick & Co v Calder & Co (1896) 1 Com Cas 456�������������������������������������������������������  1.42 Fitzroy Robinson Ltd v Mentmore Towers Ltd [2009] EWHC 1552 (TCC)���������������������������������  8.83 Flattery v Secretary of State for Communities and Local Government [2010] EWHC 2868 (Admin)�����������������������������������������������������������������������������������������������������������������������������������  7.52 Flinn v Flinn [1999] 3 VR 712������������������������������������������������������������������  12.47, 12.129, 12.188, 12.190 Flowermix Ltd v Site Devt (Ferndown) Ltd (11 April 2000, unreported)��������������������������������������  4.40 Foakes v Beer (1884) 9 App Cas 605, 54 LJQB 130, 33 WR 233, [1881–5] All ER Rep 106, 51 LT 833, HL������������������������������������������������������������������������������������������  5.42, 14.4, 14.8, 14.30, 14.31 Foligno v Martin 22 LJ Ch 502, pre-SCJA 1873����������������������������������������������������������������������������  8.84 Folkes v King [1923] 1 KB 282, 92 LJKB 125, 28 Com Cas 110, [1922] All ER Rep 658, 67 Sol Jo 227, 128 LT 405, 39 TLR 77, CA�������������������������������������������������������������������   11.23, 11.40, 11.57 Follit v Koetzow (1860) 24 JP 612, 2 E & E 730, 29 LJMC 128, 6 Jur NS 651, 8 W 432, [1843–60] All ER Rep 761, 2 LT 178�������������������������������������������������������������������������������������  7.28 Fontana NV v Mautner [1980] 1 EGLR 68, 254 Estates Gazette 199������������������������  1.5, 5.8, 5.13, 5.52, 14.14, 14.26, 14.29, 14.34 Food Convertors Ltd v Wiltshire Council [2016] EWHC 136 (Admin)����������������������������������������  7.50 Food Corp of India v Antclizo Shipping Corp, The Antclizo [1986] 1 Ll Rep 181; on appeal [1987] 2 Ll Rep 130, CA; affd [1988] 2 All ER 513, [1988] 1 WLR 603, [1988] 2 Ll Rep 93, 132 Sol Jo 752, [1988] NLJR 135, HL�������������������������������������������  3.17, 4.10, 4.11, 4.42, 14.13 Foodco UK LLP v Henry Boot Developments Ltd [2010] EWHC 358 (Ch)������������������  8.68, 8.72, 8.73, 8.76, 8.83 Foran v Wight (1989) 168 CLR 385, 88 ALR 413��������������������������������������������������  2.18, 2.28, 2.35, 5.46 Forbes v Ralli [1925] UKPC 31�������������������������������������������������������������������������������������������  12.20, 12.189 Forsythe International (UK) Ltd v Silver Shipping Co Ltd and Petroglobe International Ltd, The Saetta [1994] 1 All ER 851, [1994] 1 WLR 1334, [1993] 2 Ll Rep 268�������������������������   11.35 Fortisbank SA v Trenwick International Ltd [2005] EWHC 399 (Comm), [2005] 2 Ll Rep IR 464������������������������������������������������������������������������������������������������  1.5, 4.44, 8.14, 8.32, 14.2 Foskett v McKeown [2001] 1 AC 102, [2000] 3 All ER 97, [2000] 2 WLR 1299, 144 Sol Jo LB 231, [2000] Ll Rep IR 627, HL�����������������������������������������������������������������������������������������������   13.41 Foster, Re, Barnato v Foster [1920] 3 KB 306, 89 LJKB 958, 64 Sol Jo 600, 123 LT 769, 36 TLR 721, CA�����������������������������������������������������������������������������������������������������������������������������������    6.2 Foster, Re, Hudson v Foster (No 2) [1938] 3 All ER 610, 82 Sol Jo 665, 159 LT 29, 54 TLR 1059 ����������������������������������������������������������������������������������������������������������������������������  1.87, 12.34, 12.189 Foster v Mackinnon (1869) LR 4 CP 704, 38 LJCP 310, 17 WR 1105, 20 LT 887, [1861–73] All ER Rep Ext 1913��������������������������������������������������������������������������������������������������������������������  5.31 Foster v Mentor Life Assurance Co (1854) 3 E & B 48, 23 LJQB 145, 18 Jur 827, 2 CLR 1404, 22 LTOS 305�������������������������������������������������������������������������������������������������������������  1.65, 8.81, 8.84 Foster v Robinson [1951] 1 KB 149, [1950] 2 All ER 342, 94 Sol Jo 474, 66 (pt 2) TLR 120, CA �������������������������������������������������������������������������������������������������������������������������������������������  9.20, 9.42 Foster v Tyne Pontoon & Dry Docks Co and Renwick (1893) 63 LJQB 50, 9 TLR 450��������  5.10, 5.62, 5.71, 10.9, 10.11 Foster v Usherwood (1877) 3 Ex D 1, 47 LJQB 30, 26 WR 91, 37 LT 389, CA���������������������������  7.43 Foster Wheeler Ltd v Hanley [2009] Pens LR 39 ��������������������������������������������������������������������������  9.83 Fox v Clifton (1830) 6 Bing 776, 8 LJOSCP 257, L & Welsb 300, 4 Moo & P 676����������������������    9.9 Fox v Martin [1895] WN 36, 64 LJ Ch 473�����������������������������������������������������������������������������������  3.44 France v Clark (1884) 26 Ch D 257, 53 LJ Ch 585, 32 WR 466, 50 LT 1, CA��������������  3.44, 3.48, 10.21 Frans Maas (UK) Ltd v Sun Alliance & London Insurance Plc [2003] EWHC 1803 (Comm), [2004] 1 Ll Rep 484����������������������������������������������������������������������������������������������������������������   10.31 Fraser, Re, ex p Central Bank of London [1892] 2 QB 633, 9 Morr 256, [1891–4] All ER Rep 939, 36 Sol Jo 714, 67 LT 401, CA��������������������������������������������������������������������������������������  9.2, 9.13

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Table of cases Fraser v Pendlebury (1861) 31 LJCP 1, 10 WR 104�����������������������������������������������������������������������  8.86 Fraser Shipping Ltd v Colton [1997] 1 Ll Rep 586���������������������������������������������������������������  10.38, 13.23 Frear v Frear [2008] EWCA Civ 1320, [2009] FCR 727�������������������������������������������  13.50, 13.51, 13.52 Free Grammar School of John Lyon v Mayhew (1997) 29 HLR 717������������������������������  3.24, 5.50, 7.30 Freeman v Cooke (1848) 6 Dow & L 187, 18 11 Ex 114, 2 Exch 654, 12 Jur 777, [1843–60] All ER Rep 185, 12 LTOS 66������������������������������������������������������  1.18, 1.36, 1.39, 2.22, 3.9, 3.13, 3.27, 4.56, 5.23, 5.25, 5.34, 6.20, 11.3 Freeman v Sovereign Chicken Ltd [1991] ICR 853, [1991] IRLR 408, EAT��������������������������������  9.10 Freeman and Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, [1964] 1 All ER 630, [1964] 2 WLR 618, 108 Sol Jo 96, 189 Estates Gazette 963, CA��������������������������������������������������������������������������������������������  1.47, 5.47, 8.57, 9.2, 9.7, 10.12 French v Howie [1906] 2 KB 674, 75 LJKB 980, 95 LT 274, CA�������������������������������������������������  9.17 Friends’ Provident Life Office v British Railways Board [1996] 1 All ER 336, [1995] NPC 143, [1995] 2 EGLR 55, [1995] 48 EG 106, CA����������������������������������������������������������������������������  9.43 Front Commander, The. See Tidebrook Maritime Corp v Vitol SA of Geneva Fry v Moore (1889) 23 QBD 395, 58 LJQB 382, 37 WR 565, [1886–90] All ER Rep 309, 61 LT 545, CA�����������������������������������������������������������������������������������������������������������������������������������  7.44 Fry and Mason v Smellie and Taylor [1912] 3 KB 282, 81 LJKB 1003, 106 LT 404, CA���������������  3.45, 3.50, 10.21 Fuel Economy Co Ltd v Murray [1930] 2 Ch 93, 99 LJ Ch 456, 47 RPC 346, 143 LT 242, CA�����������������������������������������������������������������������������������������������������������������������������������������������  9.68 Fuentes v Montis (1867–68) LR 3 CP 268��������������������������������������������������������������������������������  9.4, 11.48 Fuller v Glyn, Mills, Currie & Co [1914] 2 KB 168, 83 LJKB 764, 19 Com Cas 186, 58 Sol Jo 235, 110 LT 318, 30 TLR 162����������������������������������������������������������  3.44, 9.7, 9.12, 10.21 Fuller’s Theatre and Vaudeville Co v Rofe [1923] AC 435, 92 LJPC 116, 128 LT 774, 39 TLR 236�����������������������������������������������������������������������������������������������������������������������������   13.23 Fung Kai Sun v Chan Fui Hing [1951] AC 489, 95 Sol Jo 431, [1951] 2 TLR 47, PC������������  3.16, 3.20, 4.4, 5.45, 5.46, 5.62, 12.109 Furness Withy (Australia) Pty Ltd v Metal Distributors (UK) Ltd, The Amazonia [1990] 1 Ll Rep 236, CA���������������������������������������������������������  1.48, 1.63, 2.28, 2.31, 2.34, 7.56, 8.14, 8.63 G G v M (1885) 10 App Cas 171������������������������������������������������������������������������������������������������������������  7.41 Gabrin v Universal Music Operations Ltd [2003] EWHC 1335 (Ch)���������������������  1.71, 3.13, 4.43, 5.16 Gaden v Newfoundland Savings Bank [1899] AC 281, 68 LJPC 57, 80 LT 329, 15 TLR 228, PC�������������������������������������������������������������������������������������������������������������������������������  5.38, 9.71 Galaxidis v Galaxidis [2004] NSWCA 111������������������������������������������������������������������������������������  11.189 Galaxy Aviation v Sayegh Group Aviation [2015] EWHC 3478 (Comm)�������������������������������������    9.9 Gallie v Lee [1969] 2 Ch 17�����������������������������������������������������������������������������������������������������������  3.47 Gan v Wood [1998] EGCS 77, CA�������������������������������������������������������������������������������������������������  5.43 Gandy v Gandy (1885) 30 Ch D 57, 54 LJ Ch 1154, 33 WR 803, [1881–5] All ER Rep 376, 53 LT 306, 1 TLR 520, CA������������������������������������������������������������������������������������������������  1.65, 5.42 Garnac Grain Co Inc v HMF Faure and Fairclough Ltd and Bunge Corp [1968] AC 1130, [1967] 2 All ER 353, [1967] 3 WLR 143n, [1967] 1 Ll Rep 495, 111 Sol Jo 434, HL����������������������   13.28 Garnat Trading & Shipping (Singapore) Ltd v Baominh Insurance Corp [2010] EWHC 2578 (Comm)�����������������������������������������������������������������������������������������  10.26, 10.27, 10.28, 10.29, 10.38 Garrard v Lewis (1882) 10 QBD 30, 31 WR 475, 47 LT 408�����������������������������������������������������  9.7, 9.12 Gascoigne v Gascoigne [1937] 4 All ER 396, HL��������������������������������������������������������������������������  8.87 Gator Shipping Corp v Trans-Asiatic Oil Ltd SA and Occidental Shipping Establishment, The Odenfeld [1978] 2 Ll Rep 357��������������������������������������������������������������������������  1.7, 3.28, 3.33, 3.40, 3.47, 6.24, 11.3 Gaunt v Wainman (1836) 3 Bing NC 69, 3 Scott 413, 2 Hodg 184, sub nom Grant v Wainman 5 LJCP 344����������������������������������������������������������������������������������������������������������������������������  8.84, 9.19 Gaydamak v Leviev [2012] EWHC 1740 (Ch)������������������������������������������������������������������������������  5.26 GE Capital Bank Ltd v Rushton [2006] 1 WLR 899, CA��������������������������������������������������������������   11.43 Geest Plc v Fyffes Plc [1999] 1 All ER (Comm) 672���������������������������������������������������������������������    3.9 General and Finance Facilities Ltd v Hughes (1966) 110 Sol Jo 847���������������������������������������������  3.16 General Finance, Mortgage and Discount Co v Liberator Permanent Benefit Building Society (1878) 10 Ch D 15, 27 WR 210, 39 LT 600, [1874–80] All ER Rep Ext 1597����������������  1.65, 2.23, 3.41, 8.83, 8.88, 8.93 Geniki Investments International Ltd v Ellis Stockbrokers Ltd [2008] EWHC 549 (QB), [2008] 1 BCLC 662 ����������������������������������������������������������������������������������������������������������  3.19, 3.20

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Table of cases Gerson (Michael) (Leasing) Ltd v Wilkinson [2001] QB 514, [2001] 1 All ER 148, [2000] 3 WLR 1645, [2000] 35 LS Gaz R 37, [2000] 2 All ER (Comm) 890, CA����������������������������   11.35 Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm)���������������������������������  5.49 Ghazaani v Rowshan [2015] EWHC 1922 (Ch)��������������������������������������������������������������������  7.16, 12.155 Ghost’s Trusts, Re (1883) 49 LT 588�����������������������������������������������������������������������������������������  4.50, 8.81 Giannis NK, The. See Effort Shipping Co Ltd v Linden Management SA, The Giannis NK Gibbins v Buckland (1863) 1 H & C 736, 32 LJ Ex 156, 9 Jur NS 207, 1 New Rep 370, 11 WR 380, 8 LT 87����������������������������������������������������������������������������������������������������������������������������  9.33 Gilford Motor Co v Horne [1933] Ch 935��������������������������������������������������������������������������������������  12.189 Gill v Woodall [2009] EWHC B34 (Ch)����������������������������������������������������������������  12.93, 12.115, 12.183 Gillett v Abbott (1838) 7 Ad & El 783, 7 LJQB 61, 2 Jur 300, 3 Nev & PKB 24, 1 Will Woll & H 91����������������������������������������������������������������������������������������������������������������������������  8.88 Gillett v Holt [2001] Ch 210, [2000] 2 All ER 289, [2000] 3 WLR 815, [2000] 1 FCR 705, [2000] 2 FLR 266, [2000] Fam Law 714, [2000] 12 LS Gaz R 40, 144 Sol Jo LB 141, 80 P & CR D3, [2000] WTLR 195, CA������������������������������������������������������������������������������  1.6, 1.20, 1.74, 1.75, 1.77, 1.86, 4.11, 4.40, 5.23, 5.24, 5.27, 5.32, 5.42, 5.43, 5.51, 5.60, 8.30, 12.2, 12.4, 12.6, 12.7, 12.11, 12.44, 12.47, 12.59, 12.66, 12.88, 12.89, 12.91, 12.93, 12.112, 12.116, 12.121, 12.129, 12.164, 12.173, 12.174, 12.186, 12.187, 12.188, 12.189, 12.190, 12.197 Gillette Safety Razor Co v A W Gamage Ltd (1909) 26 RPC 745, 25 TLR 808����������������������  9.63, 9.64 Gillman, Spencer & Co v Carbutt & Co (1889) 37 WR 437, 61 LT 281, 5 TLR 365, CA�������������  5.40 Gissing v Gissing [1971] AC 886, [1970] 2 All ER 780, [1970] 3 WLR 255, 21 P & CR 702, 114 Sol Jo 550, 216 Estates Gazette 1257, HL�����������������������������������������������������������������  12.197, 12.203 Giumelli v Giumelli (1999) 196 CLR 101������������������������������������������������������  1.105, 6.34, 12.29, 12.182, 12.184, 12.188, 12.189, 12.200 Gleeds Retirement Benefits Scheme, Re [2015] Ch 212����������������������������������������������������������������  2.11 Glencore Grain Ltd v Flacker Shipping Ltd, The Happy Day [2001] 1 Ll Rep 754, [2001] 1 All ER (Comm) 659; revsd sub nom Glencore Grain Ltd v Flacker Shipping Ltd, The Happy Day [2002] EWCA Civ 1068, [2002] 2 All ER (Comm) 896���������  6.15, 13.11, 13.17, 13.23, 14.15 Glencore Grain Rotterdam BV v Lebanese Organisation for International Commerce (Lorico) [1997] 4 All ER 514, [1997] 2 Ll Rep 386, CA����������������������������������������������������������������������   13.27 Glencore International AG v MSC Mediterranean Shipping Co SA [2015] EWHC 1989 (Comm), [2015] 2 Ll Rep 508, [2015] 2 CLC 253��������������������������������������������������������������������������������  4.44 Globe Motors Inc v TRW Lucas Varity Electric Steering Ltd [2014] EWHC 3718 (Comm)�����������������������������������������������������������������������������������������������������  2.13, 2.20, 2.21, 8.9, 8.75 Gloyne v Richardson [2001] BCLC 69�������������������������������������������������������������������������������������  8.54, 8.55 Godden v Merthyr Tydfil HA (1997) CA Transcript 370����������������������������������������������  7.15, 7.26, 12.153 Godfrey v Lees [1995] EMLR 307���������������������������������������������������������������������������������  1.87, 3.13, 12.34 Godfrey v Turnbull and Macauley (1795) 1 Esp 371, sub nom Godfrey v Macaulay Peake 209n������������������������������������������������������������������������������������������������������������������������������  9.13 Goff v Gauthier (1991) 62 P & CR 388�������������������������������������������������������������������������������������  2.16, 2.22 Goldcorp Exchange Ltd (in receivership), Re [1995] 1 AC 74, [1994] 2 All ER 806, [1994] 3 WLR 199, [1994] 2 BCLC 578, [1994] NLJR 7929 sub nom Kensington v Unrepresented Non-allocated Claimants [1994] 24 LS Gaz R 469 138 Sol Jo LB 127, PC��������������������  6.20, 6.32, 9.4, 9.72, 10.18, 12.44 Golden Bear, The. See Excomm Ltd v Guan Guan Shipping (Pte) Ltd. The Golden Bear Goldsworthy v Brickell [1987] Ch 378, [1987] 1 All ER 853, [1987] 2 WLR 133, 131 Sol Jo 102, [1987] LS Gaz R 654, CA�������������������������������������������������������������  4.10, 5.24, 5.42, 5.48, 13.1, 14.2, 14.14, 14.21, 14.27, 15.2 Golstein v Bishop [2013] EWHC 881 (Ch), [2014] Ch 131, [2013] 3 WLR 572��������������������������  4.44 Gonthier v Orange Contract Scaffolding Ltd [2003] EWCA Civ 873�����������������������������  1.84, 4.51, 12.4, 12.121, 12.139 Good Luck, The. See Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd, The Good Luck Goode v Harrison (1821) 5 B & Ald 147�������������������������������������������������������������������������������������  6.4, 9.13 Goodtitle d Edwards v Bailey (1777) 2 Cowp 597, [1775–1802] All ER Rep 554������������  1.35, 8.1, 8.80 Goodwin v Robarts (1876) 1 App Cas 476, 45 LJQB 748, 24 WR 987, [1874–80] All ER Rep 628, 35 LT 179, HL�������������������������������������������������������������������������������������������������  2.23, 3.40, 10.10 Gordon v James (1885) 30 Ch D 249, 34 WR 217, 53 LT 641, [1881–5] All ER Rep Ext 1206, CA���������������������������������������������������������������������������������������������������������������������������������  9.14 Gordon v Selico (1996) Times, 26 February����������������������������������������������������������������������������������    3.8 Gordon’s Will Trusts, Re [1978] Ch 145, CA������������������������������������������������������������������������  13.50, 13.51

liii

Table of cases Gosling v Birnie (1831) 7 Bing 399, 9 LJOSCP 105, 5 Moo & P 160��������������������������������������  9.54, 9.59 Gould v Bacup Local Board (1881) 45 JP 325, 50 LJMC 44, 29 WR 471, 44 LT 103, DC�����������  7.48 Gouldsworth v Knights (1843) 8 JP 8, 12 LJ Ex 282, 11 M & W 337, 63 RR 619������������������������  6.12 Government of Swaziland Central Transport Administration and Alfico Aussenhandels GmbH v Leila Maritime Co Ltd and Mediterranean Shipping Co SA, The Leila [1985] 2 Ll Rep 172����������������������������������������������������������������������������������������������������������������  8.3, 8.10, 8.45 Government of State of Penang v Beng Hong Oon [1972] AC 425, [1971] 3 All ER 1163, [1972] 2 WLR 1, 115 Sol Jo 889, PC�������������������������������������������������������������������������������������  9.19 Grace Shipping v Sharp & Co [1987] 1 Ll R 207���������������������������������������������������������������������������  4.59 Graham v Ingleby (1848) 5 Dow & L 737, 3 New Pract Cas 53, 1 Exch 651, 10 LTOS 307��������  7.29 Graham v Secretary of State for the Environment [1993] JPL 353���������������������������������������  14.21, 14.24 Grant v Edwards [1986] Ch 638, [1986] 2 All ER 426, [1986] 3 WLR 114, [1987] 1 FLR 87, [1986] Fam Law 300, 130 Sol Jo 408, [1986] LS Gaz R 1996, [1986] NLJ Rep 439, CA ��������������������������������������������������������������������������������������������������������  5.7, 6.39, 12.97, 12.181, 12.201 Grant v Norway (1851) 10 CB 665, 20 LJCP 93, 15 Jur 296, 16 LTOS 504�����������������������������������������������������������������������������������������������������������   11.88, 11.93, 11.96, 11.98 Grant v Wainman. See Gaunt v Wainman Gravenor v Woodhouse (1822) 1 Bing 38, 7 Moore CP 289�����������������������������������������������������  9.21, 9.23 Graves v Key (1832) 3 B & Ad 313�����������������������������������������������������������������������������������������������  5.38 Greasley v Cooke [1980] 3 All ER 710, [1980] 1 WLR 1306, 124 Sol Jo 629, CA������������������  5.7, 5.62, 12.89, 12.91, 12.93, 12.96, 12.97, 12.172, 14.26 Great North-West Central Railway v Charlebois [1899] AC 114���������������������������������������������������  7.36 Grecia Express, The. See Strive Shipping Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd, The Grecia Express [2002] EWHC 203 (Comm) Green v Horne (1694) 1 Salk 197���������������������������������������������������������������������������������������������������  8.81 Green v Rutherforth (1750) 1 Ves Sen 462, [1558–1774] All ER Rep 153������������������������������������  7.43 Greenish v White. See White v Greenish Greenwood v Martins Bank Ltd [1932] 1 KB 371, 101 LJKB 33, 37 Com Cas 1, 146 LT 32, 47 TLR 607, CA; affd [1933] AC 51, 101 LJKB 623, 38 Com Cas 54, [1932] All ER Rep 318, 76 Sol Jo 544, 147 LT 441, 48 TLR 601, HL�������������������������������������������������  1.18, 1.42, 1.51, 1.90, 1.93, 3.9, 3.11, 3.16, 3.20, 3.27, 5.12, 5.23, 5.45, 5.46, 5.50, 5.51, 5.62, 5.64, 9.74 Greer v Kettle [1938] AC 156, [1937] 4 All ER 396, 107 LJ Ch 56, 82 Sol Jo 133, 158 LT 433, 54 TLR 143, HL���������������������������������������������������������������������������������������  1.29, 5.31, 6.12, 7.23, 8.1, 8.31, 8.70, 8.71, 8.77, 8.79, 8.80, 8.85, 8.87, 8.88, 8.89 Gregg v Wells (1839) 10 Ad & El 90, 8 LJQB 193, 3 Jur 555, 2 Per & Dav 296��������������������������  3.13 Gregory v Doidge (1826) 3 Bing 474, 4 LJOSCP 159, 11 Moore CP 394�������������������������������������  9.21 Gregory v Mighell (1811) 18 Ves 328���������������������������������������������������������������  1.38, 12.16, 12.18, 12.21 Gresham (Lord), Re (1886) 31 Ch D 466���������������������������������������������������������������������������������������   13.52 Gresham Life Assurance Society v Crowther [1914] 2 Ch 219, 83 LJ Ch 867; affd [1915] 1 Ch 214, 84 LJ Ch 312, [1914–15] All ER Rep 991, 59 Sol Jo 103, 111 LT 887, CA�����������������������������������������������������������������������������������������������������������������������������  5.12, 5.25, 6.34 Greville v Venables [2007] EWCA Civ 878 ����������������������������������������������������������������������  1.33, 6.4, 8.59 Grey v Manitoba & NW Railway Co of Canada [1897] AC 254���������������������������������������������������   15.13 Grievson v Grievson [2011] EWHC 1367 (Ch)�������������������������������������������������������������������������  9.79, 9.85 Griffith v Evans (1882) 30 WR 427, 46 LT 417, DC����������������������������������������������������������������������  7.28 Griffiths v Williams (1977) 248 Estates Gazette 947, CA�������������������������������������  12.22, 12.112, 12.172, 12.181, 12.185, 12.189 Grissell v Swinhoe (1869) LR 7 Eq 291�����������������������������������������������������������������������������������������   13.52 Grist v Bailey [1967] Ch 532, [1966] 2 All ER 875, [1966] 3 WLR 618, 110 Sol Jo 791�������������  2.31 Gross v Lewis Hillman Ltd [1970] Ch 445, [1969] 3 All ER 1476, [1969] 3 WLR 787, 113 Sol Jo 737, 212 Estates Gazette 909, 212 Estates Gazette 1023, CA��������������������������������������������  5.28 Grove Developments Ltd v Balfour Beatty Regional Construction Ltd [2016] EWHC 168 (TCC), [2016] Bus LR 480, 165 Con LR 153������������������������������������������������������������������������  4.44 Grundt v Great Boulder Pty Gold Mine Ltd (1937) 59 CLR 641, 11 ALJ 272�������������������  1.5, 1.6, 1.56, 5.51, 5.52, 8.17, 8.64, 8.80, 8.90, 9.32, 14.29 GS Fashions Ltd v B & Q Plc [1995] 4 All ER 899�����������������������������������������������������������������������   13.31 GSP Fortuna Ltd v Dean International Trading SA [2014] EWHC 2208 (Comm)������������������������    8.9 Gurney v Evans (1858) 3 H & N 122, 27 LJ Ex 166, 30 LTOS 308����������������������������������������������    9.8 Gurtner v Beaton [1993] 2 Ll Rep 369, 1 S & B AvR VII/723, CA�����������������������������������������������    9.7 Guy v Waterlow Bros and Layton Ltd (1909) 25 TLR 515����������������������������������������������  2.14, 2.16, 2.28

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Table of cases H Habermann v Koehler (1996) 73 P & CR 515, CA�������������������������������������������������������������������  6.38, 6.44 Habermann v Koehler (No 2) [2000] EGCS 125, CA�������������������������������������������������������  12.172, 12.174 Habib Bank Ltd v Habib Bank AG Zurich [1981] 2 All ER 650, [1981] 1 WLR 1265, [1982] RPC 1, 125 Sol Jo 512, CA���������������������������������������������������������������������������������������  1.66, 5.7, 12.26 Haden Young Ltd v Laing O’Rourke Midlands Ltd [2008] EWHC 1016 (TCC)�����  1.43, 1.49, 8.9, 8.59 Hadenfayre Ltd v British National Insurance Society Ltd, Trident General Insurance Co Ltd and Lombard Elizabethan Insurance Co Ltd [1984] 2 Ll Rep 393���������������������������������������  10.31, 10.35 Haddow v Morton [1894] 1 QB 565, 63 LJQB 431, 9 R 275, 70 LT 470, CA�������������������������������  13.3 Hair v Prudential Assurance Co Ltd [1983] 2 Ll Rep 667, 133 NLJ 282���������������������������������������   10.29 Halifax Building Society v Thomas [1996] Ch 217, [1995] 4 All ER 673, [1996] 2 WLR 63, CA�������������������������������������������������������������������������������������������������������������������������������������������   13.40 Halifax Plc v Curry Popeck [2008] EWHC 1692 (Ch)����������������������������������������������������������  6.44, 12.168 Halifax Sugar Refining Co, Re [1891] WN 29, CA������������������������������������������������������������������������   10.15 Halifax Union v Wheelwright (1875) LR 10 Exch 183, 39 JP 823, 44 LJ Ex 121, 23 WR 704, 32 LT 802�������������������������������������������������������������������������������������������������������������������������������������  3.27 Hall v Batley Corp (1877) 42 JP 151, 47 LJQB 148, 37 LT 710����������������������������������������������������  7.29 Hall v Butler (1839) 10 Ad & El 204, 8 LJQB 239, 2 Per & Dav 374��������������������������������������  9.19, 9.35 Hall d Doddington v Peart. See Doddington’s Case Hall v West End Advance Co Ltd (1883) Cab & El 161����������������������������������������������������������������  3.51 Hamble Fisheries Ltd v L Gardner & Sons Ltd, The Rebecca Elaine [1999] 2 Ll Rep 1, CA�������    6.4 Hameed v Qayyum [2009] EWCA Civ 352�����������������������������������������������������������������������������������  12.200 Hamel-Smith v Pycroft & Jetsave Ltd (5 February 1987, unreported)����������������������������������������  8.3, 8.35 Hamerton v Stead (1824) 3 B & C 478, 5 Dow & Ry KB 206, sub nom Hammerton v Stead 3 LJOSKB 33�����������������������������������������������������������������������������������������������������������������������������  9.45 Hamilton v Geraghty (1901) 18 WN 64, 152, 1 SRNSW Eq 81����������������������������������������������������  6.13 Hamilton v Watson (1845) 12 Cl & Fin 109, HL���������������������������������������������������������������������������    3.9 Hammersmith and Fulham London Borough Council v Top Shop Centres Ltd [1990] Ch 237, [1989] 2 All ER 655, [1989] 3 WLR 643, 133 Sol Jo 877, [1989] 2 EGLR 66, [1989] 41 EG 121�������������������������������������������������������������������������������  4.51, 4.62, 5.7, 5.46, 5.47, 5.48, 6.26, 6.31, 12.132 Hampshire CC v Gillingham [2000] EWCA Civ 105���������������������������������������������������������������  7.28, 7.49 Hampshire CC v Supportway Community Services Ltd [2006] LGR 836������������������������������������  7.53 Hancock, Re [1905] 1 Ch 16�����������������������������������������������������������������������������������������������������������   13.53 Handler v Mutual Reserve Fund Life Association (1904) 90 LT 192, CA�������������������������������������   10.23 Hannah Blumenthal, The. See Wilson (Paal) & Co A/S v Partenreederei Hannah Blumenthal, The Hannah Blumenthal Hanning v Top Deck Travel Group Ltd (1993) 68 P & CR 14, [1993] 22 LS Gaz R 37, CA����������������������������������������������������������������������������������������������������������������������������  3.24, 5.44 Hanno (Heinrich) & Co BV v Fairlight Shipping Co Ltd, The Kostas K [1985] 1 Ll Rep 231�������������������������������������������������������������������������������������������������������������������������  8.3, 8.45 Happy Day, The. See Glencore Grain Ltd v Flacker Shipping Ltd, The Happy Day Haq v Island Homes Housing Association [2011] 2 P & CR 17����������������������������������  4.51, 12.4, 12.121 Harding v Ambler (1838) 7 LJ Ex 132, 1 Horn & H 48, 2 Jur 305, 3 M & W 279���������������������  1.29, 8.1 Hardman v Booth (1863) 1 H & C 803, 32 LJ Ex 105, 9 Jur NS 81, 1 New Rep 240, 11 WR 239, 7 LT 638����������������������������������������������������������������������������������������������������������������������������������  3.16 Hardman v Willcock (1831) 9 Bing 382n����������������������������������������������������������������������������������  9.55, 9.58 Hardwick v Johnson [1978] 1 WLR 683, CA���������������������������������������������������������������������������������  12.175 Harnam Singh v Jamal Pirbhai [1951] AC 688, PC�����������������������������������������������������������������  2.32, 15.13 Harper v Interchange Group Ltd [2007] EWHC 1834 (Comm)�����������������������������������������������������    8.9 Harriette N, The. See Statoil ASA v Louis Dreyfus Energy Services LP, The Harriette N Harris v Harris [1952] 1 All ER 401, 116 JP 127, 96 Sol Jo 152, [1952] 1 TLR 429������  7.28, 7.41, 7.43 Harris v Kent [2007] EWHC 463 (Ch)������������������������������������������������������������������������������������  1.87, 12.34 Harris v Truman (1882) 9 QBD 264, 51 LJQB 338, 30 WR 533, 46 LT 844, CA��������������������  6.20, 6.21 Harris v Williams-Wynne [2005] EWHC 151 (Ch)������������������������������������������������������������������������  1.74 Harrison v Douglas (1835) 3 Ad & El 396, 1 Har & W 380, 5 Nev & MKB 180��������������������������   10.35 Harrison v Harrison [2013] VSCA 170�������������������������������������������������������������������������������  12.43, 12.182 Harrison v Shepherd Homes Ltd [2011] EWHC 1811 (TCC), (2011) 27 Const LJ 709�����������������  13.15, 13.18, 13.22, 13.25 Harrison v Wells [1967] 1 QB 263, [1966] 3 All ER 524, [1966] 3 WLR 686, 110 Sol Jo 619, CA������������������������������������������������������������������������������������������������������������������������������  9.33, 9.34 Harse v Pearl Life Assurance Co [1904] 1 KB 558, 73 LJKB 373, 52 WR 457, [1904–7] All ER Rep 630, 48 Sol Jo 275, 90 LT 245, 20 TLR 264, CA�������������������������������������������������������  2.28, 2.33

lv

Table of cases Hart v Frontino and Bolivia South American Gold Mining Co Ltd (1870) LR 5 Exch 111, 39 LJ Ex 93, 22 LT 30������������������������������������������������������������������������������������������������������  10.8, 10.11 Hart v O’Connor [1985] AC 1000��������������������������������������������������������������������������������������������������  7.40 Hartell v Blackler [1920] 2 KB 161, 89 LJKB 838, 123 LT 171, DC���������������������������������������  4.61, 9.26 Hartlelid v Sawyer and McClockin Real Estate Ltd [1977] 5 WWR 481��������������������������������������  5.10 Hartley v Hymans [1920] 3 KB 475, 90 LJKB 14, 25 Com Cas 365, [1920] All ER Rep 328, 124 LT 31, 36 TLR 805����������������������������������������������������������������������������������������������������  2.25, 5.42, 13.6 Hartog v Colin and Shields [1939] 3 All ER 566���������������������������������������������������������������������������  3.16 Harvard Securities Ltd (in liquidation), Re, Holland v Newbury [1997] 2 BCLC 369, [1998] BCC 567�������������������������������������������������������������������������������������������������������������������  6.20, 6.21, 6.23 Harvey v Truro Rural District Council [1903] 2 Ch 638����������������������������������������������������������������  7.49 Hasham v Zenab [1960] AC 316, [1960] 2 WLR 374, 104 Sol Jo 125, PC�����������������������������������  5.31 Haslemere Estates Ltd v Baker [1982] 3 All ER 525, [1982] 1 WLR 1109, 126 Sol Jo 463���������  6.41 Haugesund Kommune v Depfa ACS Bank [2010] Ll R PN 21������������������������������������������������������  7.36 Haygarth v Wearing (1871) LR 12 Eq 320, 36 JP 132, 40 LJ Ch 577, 20 W 11, 24 LT 825����������  2.22 Hayne v Maltby (1789) Dav Pat Cas 156, 3 Term Rep 438, 100 ER 665���������������������������������  9.62, 9.67 Hayward v Hayward (otherwise Prestwood) [1961] P 152, [1961] 1 All ER 236, [1961] 2 WLR 993, 105 Sol Jo 570�����������������������������������������������������������������������������������������������������������������  7.41 Hazel v Akhtar [2002] 2 P & CR 17�����������������������������������������������������������������������������������������������  4.43 Hazell v Hammersmith & Fulham LBC [1992] 2 AC 1�����������������������������������������������������������������  7.36 HB Property Developments Ltd v Secretary of State for the Environment (17 February 1998, unreported)���������������������������������������������������������������������������������������������������������������������  13.24, 13.25 Heald v Kenworthy (1855) 24 LJ Ex 76, 10 Exch 739, 1 Jur NS 70, 3 WR 176, 3 CLR 612, 24 LTOS 260��������������������������������������������������������������������������������������������������������������������������������    3.4 Heane v Rogers (1829) 9 B & C 577, 7 LJOSKB 285, 4 Man & Ry KB 486��������������������������������    6.2 Heap v Motorists’ Advisory Agency Ltd [1923] 1 KB 577, 92 LJKB 553, [1922] All ER Rep 251, 67 Sol Jo 300, 129 LT 146, 39 TLR 150����������������������������������   3.28, 3.32, 11.8, 11.16, 11.43, 11.45 Hearn v Younger [2005] Pens LR 49����������������������������������������������������������������������������������������������  9.83 Heath v Crealock (1874) 10 Ch App 22, 44 LJ Ch 157, 23 WR 95, 31 LT 650������������������������  2.23, 8.88 Heather, Re [2010] EWCA Civ 196������������������������������������������������������������������������������������������������  7.49 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, [1963] 2 All ER 575, [1963] 3 WLR 101, [1963] 1 Ll Rep 485, 107 Sol Jo 454, HL��������������������������������������������������������  3.32, 5.29 Heilbutt v Nevill (1870) LR 5 CP 478, 39 LJCP 245, 18 WR 898, 22 LT 662, Ex Ch������������������  6.20 Heilbut, Symons & Co v Buckleton [1913] AC 30, 82 LJKB 245, 20 Mans 54, [1911–13] All ER Rep 83, 107 LT 769, HL���������������������������������������������������������������������������������������������������������  5.13 Helby v Matthews [1895] AC 471, 60 JP 20, 64 LJQB 465, 11 R 232, 43 WR 561, [1895–9] All ER Rep 821, 72 LT 841, 11 TLR 446, HL�����������������������������������������������������������������������  9.52, 11.29 Helden v Strathmore Ltd [2011] EWCA Civ 542���������������������������������������������������������������������������  8.39 Helene, The. See Ohrloff v Briscall, The Helene Hemmens v Wilson Browne (a firm) [1995] Ch 223, [1993] 4 All ER 826, [1994] 2 WLR 323, [1994] 2 FLR 101, [1993] 45 LS Gaz R 45����������������������������������������������������������������������������  5.29 Hemmings v Sceptre Life Association Ltd [1905] 1 Ch 365, 74 LJ Ch 231, 92 LT 221, 21 TLR 207�����������������������������������������������������������������������������������������������������������������������������   10.31 Henderson v Henderson [1843] All ER Rep 378, 67 ER 313, (1843) 3 Hare 100�������������������������   13.56 Henderson & Co v Williams [1895] 1 QB 521, 64 LJQB 308, 14 R 375, 43 WR 274, 72 LT 98, 11 TLR 148, CA�����������������������������������������������������������������������������  1.42, 3.43, 9.53, 9.54, 11.3, 11.6 Henrik Sif, The. See Pacol Ltd v Trade Lines Ltd and R/I Sif IV, The Henrik Sif Henry v Henry [2010] UKPC 3, [2010] 1 All ER 988��������������������������������  5.48, 5.60, 6.36, 12.6, 12.188 Herbert v Doyle [2008] EWHC 1950 (Ch)���������������������������������������  1.70, 7.14, 7.15, 7.17, 7.19, 12.139, 12.151, 12.152, 12.154, 12.201, 15.10 Herbert v Pegrum [2005] EWCA Civ 120���������������������������������������������������������������������������������  4.44, 8.79 Hercules Insurance Co, Re, Brunton’s Claim (1874) LR 19 Eq 302, 44 LJ Ch 450, 23 WR 286, 31 LT 747���������������������������������������������������������������������������������������������������������  3.16, 3.21, 6.20, 6.24 Herdman v Wheeler [1902] 1 KB 361, 71 LJKB 270, 50 WR 300, 46 Sol Jo 139, 86 LT 48, 18 TLR 190, [1900–3] All ER Rep Ext 1394, DC�����������������������������������������������������������  9.17, 11.78 Hermitage v Tomkins (1699) 1 Ld Raym 729��������������������������������������������������������������������������������  8.88 Heron Garage Properties Ltd v Moss [1974] 1 All ER 421, [1974] 1 WLR 148, 28 P & CR 54, 117 Sol Jo 697, 229 Estates Gazette 439��������������������������������������������������������������������������������  13.8 Herrick v Kidner [2010] EWHC 269 (Admin)��������������������������������������������������������������������������  7.28, 7.49 Heskell v Continental Express Ltd [1950] 1 All ER 1033, [1950] WN 210, 94 Sol Jo 339, 83 Ll L Rep 438����������������������������������������������������������������������������������������������������������������������   11.93 Heugh v Chamberlain (1877) 25 WR 742���������������������������������������������������������������������������������  6.14, 9.62 Hewlett v LCC (1908) 72 JP 136, 24 TLR 331������������������������������������������������������������������  5.6, 7.28, 8.14

lvi

Table of cases Hewlins v Shippam (1826) 5 B & C 221����������������������������������������������������������������������������������������   12.12 Heyman v Flewker (1863) 13 CB (NS) 519�����������������������������������������������������������������������������������   11.16 Heyting v Dupont [1964] 2 All ER 273, [1964] 1 WLR 843, 108 Sol Jo 277, CA����������������������������  7.43 Hickman v Haynes (1875) LR 10 CP 598, 44 LJCP 358, 23 WR 872, 32 LT 873�����������  1.41, 1.51, 13.6 Highlands Insurance Co v Continental Insurance Co [1987] 1 Ll Rep 109n���������������������������������  2.20 Highway Foods International Ltd, In re [1995] BCC 271 �����������������������������������������   11.27, 11.30, 11.31 HIH Casualty & General Insurance Ltd v Axa Corporate Solutions [2002] EWCA Civ 1253, [2003] Ll Rep IR 1�������������������������������������������  4.42, 10.32, 10.35, 10.36, 13.9, 14.11, 14.15, 14.20 HIH Casualty & General Insurance Ltd v Axa Corporate Solutions (21 December 2001, unreported); on appeal [2002] EWCA Civ 1253, [2002] 2 All ER (Comm) 1053, [2002] Ll Rep IR 325�����������������������������������������������������������������������������������  1.90, 1.93, 1.96, 3.15, 8.17, 10.35 HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6, (2003) 147 Sol Jo LB 264, [2003] Ll Rep IR 230, [2003] 1 All ER (Comm) 349������������������  10.26, 10.33, 13.8 HIH Casualty & General Insurance Ltd v Chase Manhattan Bank [2003] 2 Ll Rep 61�����������������  8.73 Hill v Manchester and Salford Water Works Co (1831) 2 B & Ad 544, 1 LJKB 230��������������������  8.87 Hill v Saunders (1825) 4 B & C 529, 4 LJOSKB 2, 7 Dow & Ry KB 17��������������������������������������  9.36 Hillingdon London Borough Council v ARC Ltd (No 2) [2000] 3 EGLR 97, [2000] RVR 283, 80 P & CR D29, CA���������������������������������������  4.44, 8.10, 8.14, 8.35, 13.11, 14.11, 14.26, 14.33, 14.35 Hills v Laming (1853) 23 LJ Ex 60, 9 Exch 256����������������������������������������������������������������������������  9.62 Hinde v Hinde [1953] 1 All ER 171, [1953] 1 WLR 175, 97 Sol Jo 47, CA����������������������������������  7.43 Hindle v Hick Bros Manufacturing Co Ltd [1947] 2 All ER 825, CA��������������������������������������  9.21, 9.36 Hirschfeld v London Brighton and South Coast Rly Co (1876) 2 QBD 1, 46 LJQB 94, [1874–80] All ER Rep 1191, sub nom Herschfield v London Brighton and South Coast Rly Co 35 LT 473��������������������������������������������������������������������������������������������������������������������  2.31 Hiscox v Outhwaite [1992] 1 AC 562, [1991] 3 All ER 124, [1991] 2 WLR 1321, [1991] 2 Ll Rep 1, CA; affd [1992] 1 AC 562, [1991] 3 All ER 641, [1991] 3 WLR 297, [1991] 2 Ll Rep 435, HL����������������������������������������������������������������  1.66, 1.73, 7.43, 8.14, 8.54, 8.63 Hiscox v Outhwaite (No 3) [1991] 2 Ll Rep 524����������������������������������������������������������������������  1.25, 4.11 HMRC v Benchdollar [2010] 1 All ER 174������������������������������������������  1.7, 1.73, 1.117, 5.10, 5.21, 5.61, 8.6, 8.8, 8.19, 8.22, 8.35, 8.55, 8.59 HMRC v Pal [2006] EWHC 2016 (Ch), [2008] STC 2442, [2007] BTC 5967, [2008] BVC 3, [2006] STI 74����������������������������������������������������������������������������������������  5.43, 7.13, 7.28, 9.8 Hoare v McCarthy (1916) 22 CLR 296������������������������������������������������������������������������������������������  6.15 Hobs v Norton (1682) 2 Cas in Ch 128, sub nom Hobbs v Norton 1 Vern 136�����������������������������  1.36 Hodgkinson & Corby Ltd v Wards Mobility Services Ltd [1997] FSR 178 ���������������������������������  4.52 Hodgson, Re, Beckett v Ramsdale (1885) 31 Ch D 177, 55 LJ Ch 241, 34 WR 127, [1881–5] All ER Rep 931, 54 LT 222, 2 TLR 73, CA����������������������������������������������������������������������������  9.13 Hodgson v Lipson [2009] EWHC 3111 (QB)���������������������������������������������������������������������������������  4.11 Hodgson v Toray Textiles Europe Ltd [2006] EWHC 2612 (Ch)���������������������������  1.90, 3.21, 9.84, 9.85 Hogarth Shipping Co Ltd v Blyth, Greene, Jourdain & Co Ltd [1917] 2 KB 534, 86 LJKB 1426, 14 Asp MLC 124, 22 Com Cas 334, 61 Sol Jo 544, 117 LT 290, 33 TLR 429, CA������  4.57, 11.102 Hogg v Skeen (1865) 18 CBNS 426, 34 LJCP 153, 11 Jur NS 244, 5 New Rep 279, 13 WR 383, 11 LT 709��������������������������������������������������������������������������������������������������������������������������������    9.8 Hoicrest Ltd, Re [2000] 1 BCLC 194���������������������������������������������������������������������������������������������  10.1 Holding v Elliott (1860) 5 H & N 117, 29 LJ Ex 134, 8 WR 192, 1 LT 381�����������������������������  5.10, 5.40 Holding & Management (Solitaire) Ltd v Ideal Homes North West Ltd [2004] EWHC 2408 (TCC)��������������������������������������������������������������������������������������������������������������������������������������  4.44 Holdsworth v Lancashire and Yorkshire Insurance Co (1907) 23 TLR 521�������������������������  10.35, 10.36 Holiday Inns Inc v Broadhead (1974) 232 Estates Gazette 951�����������������������������  12.66, 12.185, 12.189 Holland, Re, Gregg v Holland [1901] 2 Ch 145; revsd [1902] 2 Ch 360, 71 LJ Ch 518, 9 Mans 259, 50 WR 575, 46 Sol Jo 483, 86 LT 542, 18 TLR 563, CA�����������������������������������������������  6.20 Holland v Manchester and Liverpool District Banking Co Ltd (1909) 14 Com Cas 241, 25 TLR 386���������������������������������������������������������������������������������������������������������������  5.42, 5.64, 9.71 Holliday v Western Australian Insurance Co Ltd (1936) 54 Ll L Rep 373������������������������������������   10.24 Holman v Howes [2007] EWCA Civ 877���������������������������������������������������������������������������������������  12.183 Holman v Johnson (1775) 1 Cowp 341������������������������������������������������������������������������������������������  5.44 Holme v Brunskill (1877) 3 QBD 495, 42 JP 757, 47 LJQB 610, 38 LT 838, CA�������������������������  9.45 Holt v Markham [1923] 1 KB 504, 92 LJKB 406, [1922] All ER Rep 134, 67 Sol Jo 314, 128 LT 719, CA�����������������������������������������������������������������������������������������������������������  3.7, 5.49, 5.52 Hone v Boyle, Low, Murray & Co (1891) 27 LR Ir 137, CA���������������������������������������������������������  9.14 Hong Kong Bank of Canada v Phillips [1998] 2 WWR 606, [1998] Ll Rep Bank 343�����������������  9.71 Hooley Hill Rubber and Chemical Co Ltd and Royal Insurance Co Ltd, Re [1920] 1 KB 257, 88 LJKB 1120, 121 LT 270, 35 TLR 483; affd [1920] 1 KB 257, 89 LJKB 179, 25 Com Cas 23, 122 LT 173, 36 TLR 81, 1 Ll L Rep 3, 25, CA������������������������������������������������������������  2.31, 2.33

lvii

Table of cases Hoover Ltd v Hetherington [2002] PLR 297�����������������������������������������������������������������������������  4.51, 9.83 Hopgood v Brown [1955] 1 All ER 550, [1955] 1 WLR 213, 99 Sol Jo 168, 165 Estates Gazette 172, CA �������������������������������������������������������������������  1.14, 1.18, 12.24, 12.72, 12.74, 12.77, 12.78, 12.83, 12.93, 12.192, 12.193, 15.10 Hopkins v TL Dallas Group Ltd [2004] EWHC 1379 (Ch)������������������������������������������������������������  9.12 Horry v Tate and Lyle Refineries Ltd [1982] 2 Ll Rep 416�������������������������������������������������������  2.31, 5.13 Horsfall v Halifax and Huddersfield Union Banking Co (1883) 52 LJ Ch 599������������������������  5.41, 6.15 Horsfall v Thomas (1862) 2 F & F 785, 1 H & C 90, 31 LJ Ex 322, 8 Jur NS 721, 10 WR 650, 6 LT 462����������������������������������������������������������������������������������������������������������������������������������    3.8 Horton v Westminster Improvement Comrs (1852) 21 LJ Ex 297, 7 Exch 780, 19 LTOS 219 ���������������������������������������������������������������������������������������  7.1, 8.31, 8.36, 8.64, 8.66, 8.71, 8.77, 8.78 Hough v Guardian Fire and Life Assurance Co Ltd (1902) 18 TLR 273���������������������������������������  6.15 Houghton & Co v Nothard, Lowe & Wills Ltd [1927] 1 KB 246��������������������������������������������������   10.12 Howard v Earl of Shrewsbury (1867) LR 3 Eq 218, 36 LJ Ch 283, 15 WR 301; on appeal (1867) 2 Ch App 760, 36 LJ Ch 908, 15 WR 1213, 17 LT 358����������������������������������������������������������  8.84 Howard v Hudson (1853) 17 JP 630, 2 E & B 1, 22 LJQB 341, 17 Jur 855, 1 WR 325, 1 CLR 267, 21 LTOS 88����������������������������������������������������������������������������������������������������������������  1.65, 5.42 Howard v Tucker (1831) 1 B & Ad 712, 9 LJOS 108����������������������������������������������   11.87, 11.88, 11.102 Howarth v Pioneer Life Assurance Co Ltd [1911–13] All ER Rep 587, 107 LT 155, DC�������������  2.33 Howatson v Webb [1908] 1 Ch 1, 77 LJ Ch 32, 52 Sol Jo 11, 97 LT 730, CA�������������������������������  5.31 Howe v Kingsbury UDC [1912] 2 Ch 452�������������������������������������������������������������������������������������  7.23 Howe v Motor Insurers’ Bureau [2016] EWHC 640 (QB), [2016] 1 WLR 2707, [2016] Ll Rep IR 359��������������������������������������������������������������������������������������������������������������������������������������  1.63 Howell v Falmouth Boat Construction Ltd [1951] AC 837, [1951] 2 All ER 278, [1951] 2 Ll Rep 45, 95 Sol Jo 413, [1951] 2 TLR 151, HL����������������������������������������������������������������  6.16, 7.36, 7.38 Hoyl Group Ltd v Cromer Town Council [2016] 1 P & CR 3, [2015] HLR 43, CA����������������  1.71, 1.96, 1.97, 4.16, 5.7, 7.48, 12.24, 12.66, 12.70, 12.85, 12.92 Hubbersty v Ward (1853) 22 LJ Ex 113, 8 Exch 330, 20 LTOS 279����������������������������������������������   11.88 Huber (JJ) (Investments) Ltd v Real DIY Co Ltd (1995) 70 P & CR 33���������������������������������������  8.73 Huddersfield Fine Worsteds Ltd v Todd [1925] All ER Rep 475, 134 LT 82, 42 TLR 52����������������  6.20, 7.42, 8.87 Hudgell Yeates & Co v Watson [1978] QB 451, [1978] 2 All ER 363, [1978] 2 WLR 661, 121 Sol Jo 831, CA��������������������������������������������������������������������������������������������������������  5.10, 9.2, 11.107 Hudson v Harrison (1821) 3 Brod & Bing 97, 6 Moore CP 288����������������������������������������������������  5.45 Hudson v Hudson [1948] P 292, [1948] 1 All ER 773, [1948] LJR 907, 64 TLR 258������������������  7.41 Hughes v Liverpool Victoria Legal Friendly Society [1916] 2 KB 482, 85 LJKB 1643, [1916–17] All ER Rep 918, 115 LT 40, 32 TLR 525, CA������������������������������������������������������  2.33 Hughes v Metropolitan Rly Co (1877) 2 App Cas 439, 42 JP 421, 46 LJQB 583, 25 WR 680, [1874–80] All ER Rep 187, 36 LT 932, HL�������������������������������������������  1.40, 5.25, 5.42, 5.54, 14.3, 14.4, 14.5, 14.6, 14.11, 14.23, 14.26, 14.28, 14.32 Hulm & Lewis, Re [1892] 2 QB 261����������������������������������������������������������������������������������������������  7.46 Hummingbird Motors Ltd v Hobbs [1986] RTR 276, [1986] BTLC 245, CA�������������������������������  2.20 Humphries v Humphries [1910] 2 KB 531, 79 LJKB 919, [1908–10] All ER Rep 733, 103 LT 14, CA�������������������������������������������������������������������������������������������������������������������������  7.14 Huning v Ferrers (1711) Gilb Rep 85����������������������������������������������������������������������������������  12.13, 12.132 Hunsden v Cheyney (1690) 2 Vern 150������������������������������������������������������������������������������������������  1.36 Hunt v Carew (1649) Nels 46�������������������������������������������������������������������������������������  1.36, 12.13, 12.189 Hunt v Hunt (1862) 26 JP 243, 4 De GF & J 221, 31 LJ Ch 161, 8 Jur NS 85, 10 W 215, 45 ER 1168, 5 LT 778������������������������������������������������������������������������������������������������������������������������  7.29 Hunt v Luck [1902] 1 Ch 428, CA��������������������������������������������������������������������������������������������������   12.77 Hunt (Charles) Ltd v Palmer [1931] 2 Ch 287, 100 LJ Ch 356, 75 Sol Jo 525, 145 LT 630���������  5.12 Hunt v Soady [2007] EWCA Civ 366���������������������������������������������������������������������������������������������  5.42 Hunter v Chief Constable of West Midlands Police. See Mcllkenny v Chief Constable of West Midlands Huntington v Imagine Group Holdings Ltd [2007] EWHC 1603 (Comm)������������������������������������  4.44 Hurst and Middleton Ltd, Re, Middleton v The Company [1912] 2 Ch 520, 82 LJ Ch 114, 56 Sol Jo 652, 107 LT 502, 28 TLR 500, CA�������������������������������������������������������������������������  6.6, 7.43, 7.46 Hussein and Asim (t/a Pressing Dry Cleaners) v Customs & Excise Commissioners [2003] V & DR 439������������������������������������������������������������������������������������������������������������������������������������   11.111 Hutchison v B & DF Ltd [2008] EWHC 2286 (Ch)��������������������������������������������������������������  7.16, 12.149 Hutchison v Colorado United Mining Co and Hamill (1886) 3 TLR 265��������������������������������������  3.44 Hyett v Stanley [2003] EWCA Civ 942������������������������������������������������������������������������������������������  12.203

lviii

Table of cases I Icarus (Hertford) Ltd v Driscoll [1990] Pen LR 1���������������������������������������������������������������������  9.78, 9.81 Iceland Foods Plc v Dangoor [2002] EWHC 107 (Ch), [2002] 21 EG 146, [2002] 08 EG 161 (CS)����������������������������������������������������������������������������������������������������������������������������������  5.10 Ida, The (1875) 2 Asp MLC 551, 32 LT 541, PC���������������������������������������������������������������������������  11.102 IDC Group Ltd v Clark [1992] 1 EGLR 187, [1992] 08 EG 108; affd (1992) 65 P & CR 179, [1992] NPC 88, [1992] 2 EGLR 184, [1992] 30 LS Gaz R 33, [1992] 49 EG 103, CA��������  6.45 Idemitsu Kosan Co Ltd v Sumitomo Corp [2016] EWHC 1909 (Comm)�������������������������������������  8.88 Iesini v Westrip Holdings Ltd [2009] EWHC 2526 (Ch)����������������������������������������������������������  7.36, 7.37 IFE Fund SA v Goldman Sachs International [2007] 1 Ll R 264����������������������������������������������  4.45, 8.76 IHC v Amtrust Europe Ltd [2015] EWHC 257 (QB)�������������������������������������������������  10.31, 10.35, 14.20 IMG Pension Plan, re, HR Trustees Ltd v German [2009] EWHC 2785 (Ch)�����������������  4.28, 6.51, 9.84 Imperial Mercantile Credit Association, Re, Payne’s Case (1869) LR 9 Eq 223���������������������������  5.13 IMT Shipping & Chartering GmbH v Chansung Shipping Co Ltd, The Zenovia [2009] 2 Ll Rep 139����������������������������������������������������������������������������������������������������������������������������  4.52 India (Republic) v India Steamship Co Ltd (No 2) [1998] AC 878, [1997] 3 WLR 818, [1997] 43 LS Gaz R 29, 141 Sol Jo LB 230, sub nom Indian Endurance (No 2), The, Republic of India v India Steamship Co Ltd [1997] 4 All ER 380, [1997] NLJR 1581, sub nom India (Republic) v India Steamship Co Ltd (Indian Endurance and Indian Grace) (No 2) [1998] 1 Ll Rep 1, HL��������������������������������������������������������������  1.48, 1.91, 1.92, 1.101, 2.8, 2.28, 2.31, 3.5, 3.12, 3.14, 3.16, 3.21, 4.4, 8.4, 8.10, 8.11, 8.14, 8.22, 8.35, 8.41, 8.45, 8.46, 14.19 Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580, [1977] 2 All ER 293, [1977] 2 WLR 726, 34 P & CR 329, 121 Sol Jo 155, 242 Estates Gazette 955, CA��������������������������������������������������  1.29, 5.62, 8.36, 8.90, 9.19, 9.25, 9.32, 9.33, 9.34 ING Bank NV v Ros Roca SA [2011] EWCA Civ 353, [2012] 1 WLR 472���������������������  1.5, 1.28, 1.88, 1.92, 3.12, 5.42, 5.61, 8.4, 8.11, 8.15, 8.19, 8.38, 8.39, 8.48, 8.57, 12.109 ING Re (UK) Ltd v R & V Versicherung AG [2006] EWHC 1544 (Comm)�������������������������������������  2.12 Ingham v Primrose (1859) 7 CBNS 82, 28 LJCP 294, 5 Jur NS 710����������������������������������������  3.34, 3.48 Ingram v IRC [2000] 1 AC 293, [1999] 1 All ER 297, [1999] 2 WLR 90, [1999] STC 37, [1999] 03 LS Gaz R 32, [1998] EGCS 181, 143 Sol Jo LB 52, HL����������������������������������������������  6.25, 9.51 Ingram v Little [1961] 1 QB 31������������������������������������������������������������������������������������������������������   11.40 Inner City Businessmen’s Club v James Kirkpatrick Ltd [1975] 2 NZLR 636������������������������������  4.61 Inntrepreneur Pub Co (GL) v East Crown Ltd [2000] 2 Ll Rep 611����������������������������������������������  4.53 Insurance Corp of Channel Islands Ltd v McHugh [1997] LRLR 94��������������������������������������������   13.16 Insurance Corp of Channel Islands Ltd v Royal Hotel Ltd [1997] Ll Rep IR 94���������������������������   13.23 Insurance Corp of Channel Islands, Royal Insurance (UK) Ltd v Royal Hotel Ltd (No 2) [1998] Ll Rep IR 151������������������������������������������������������������������������  10.30, 10.31, 13.1, 13.9, 13.13, 13.16, 13.18, 13.20, 13.23, 13.24, 13.26 Intense Investments Ltd v Development Ventures Ltd [2006] EWHC 1586 (TCC)����������������  1.43, 1.49, 8.26, 8.59 International Credit and Investment Co (Overseas) Ltd v Adham [1994] 1 BCLC 66������������������  10.9 Invertec Ltd v De Mol Holding BV [2009] EWHC 2471 (Ch)������������������������������������������������������  8.88 Investment Executive Trust, Re [1937] NZLR 815������������������������������������������������������������������������  7.12 Investors Compensation Scheme Ltd v West Bromwich BS [1998] 1 WLR 896��������������������������  4.45 Involnert Management Inc v Aprilgrange Ltd [2015] EWHC 2225 (Comm), [2015] 2 Ll Rep 289�����������������������������������������������������������������������������������  10.31, 10.42, 13.1, 13.15, 13.16, 13.17, 13.19, 13.23, 13.24, 13.25 Inwards v Baker [1965] 2 QB 29, [1965] 1 All ER 446, [1965] 2 WLR 212, 109 Sol Jo 75, CA��������������������������������������������������������������������  4.11, 6.34, 12.19, 12.20, 12.22, 12.24, 12.47, 12.66, 12.78, 12.93, 12.172, 12.175, 12.181, 12.189 Ion, The. See Nippon Yusen Kaisha v Pacifica Navegacion SA, The Ion Ireland v Livingston (1872) LR 5 HL 395, 41 LJQB 201, 1 Asp MLC 389, [1861–73] All ER Rep 585, 27 LT 79������������������������������������������������������������������������������������������������������������  3.20, 4.35, 4.37 Irving v Cuthbertson. See Cuthbertson v Irving Ismail v Polish Ocean Lines, The Ciechocinek [1976] QB 893, [1976] 1 All ER 902, [1976] 2 WLR 477, [1976] 1 Ll Rep 489, 120 Sol Jo 168, CA���������������������������������  2.11, 2.31, 6.15, 15.10 ITN v Ward [1997] PLR 131�����������������������������������������������������������������������������������������������������  4.51, 9.83 Ives and Barker v Willans [1894] 2 Ch 478, 63 LJ Ch 521, 7 R 243, 42 WR 483, [1891–4] All ER Rep 1135, 38 Sol Jo 417, 70 LT 674, 10 TLR 439, CA��������������������������������������������������  13.3 Ives (ER) Investment Ltd v High [1967] 2 QB 379, [1967] 1 All ER 504, [1967] 2 WLR 789, 110 Sol Jo 963, 201 Estates Gazette 199, CA������������������  6.34, 6.41, 6.42, 7.13, 12.1, 12.13, 12.22, 12.24, 12.87, 12.93, 12.165, 12.172, 12.177, 12.186

lix

Table of cases J Jackson v Cator (1800) 5 Ves 688, [1775–1802] All ER Rep 592�������������������������  12.13, 12.132, 12.190 Jacobs v LCC [1950] AC 361, [1950] 1 All ER 737, 48 LGR 323, [1950] WN 170, 114 JP 204, 94 Sol Jo 318, 66 (pt 1) TLR 659, HL������������������������������������������������������������������������������������  2.14 Jacobs v Morris [1902] 1 Ch 816, 71 LJ Ch 363, 50 WR 371, 46 Sol Jo 315, 86 LT 275, 18 TLR 384, CA������������������������������������������������������������������������������������������������������������������������������  3.16, 3.50 Jafari-Fini v Skillglass Ltd [2006] EWHC 77 (Ch)������������������������������������������������������������������������  8.11 James v CGU Insurance Plc, Supreme and St Albans Insurance Brokers [2002] Ll Rep IR 206�����������������������������������������������������������������������������������������������������������������������������  10.26, 10.29 James v Evans [2000] 3 EGLR 1, [2000] 42 EG 173, [2000] EGCS 95, 80 P & CR D39, CA�����������������������������������������������������������������������������������������������������������������������������  4.51, 5.27 James v Heim Gallery (London) Ltd (1980) 41 P & CR 269, [1980] 2 EGLR 119, 256 Estates Gazette 819, CA���������������������������������������������������������������������  1.5, 1.62, 5.10, 5.24, 5.30, 5.42, 5.49, 14.2, 14.10, 14.17, 14.21, 14.22, 14.23, 14.27, 14.36, 15.1, 15.2 James v Landon (1585) Cro Eliz 36�����������������������������������������������������������������������������������������������  9.33 James v Thomas [2007] EWCA Civ 1212, [2008] 1 FLR 1598����������������������������������������������  4.40, 12.47 James Miller & Partners Ltd v Whitworth Street Estates [1975] AC 583��������������������������������������  1.80 Janesich v Attenborough & Son (1910) 102 LT 605��������������������������������������������������������������  11.23, 11.43 Janred Properties Ltd v Ente Nazionale Italiano per il Turismo [1989] 2 All ER 444, CA�������  1.63, 2.30 Jawaby Property Investment Ltd v Interiors Group Ltd [2016] EWHC 557 (TCC), [2016] BLR 328��������������������������������������������������������������������������������������������������������������������  4.41, 4.43, 4.44 Je Maintiendrai Pty Ltd v Quaglia and Quaglia (1980) 26 SASR 101�������������������������  5.62, 14.29, 14.31 JEB Fasteners Ltd v Marks Bloom & Co (a firm) [1983] 1 All ER 583, [1982] Com LR 226, CA���������������������������������������������������������������������������������������������������������������������  5.10, 5.13, 5.14 Jennings v Broughton (1854) 5 De GM & G 126, 23 LJ Ch 999���������������������������������������������������  5.10 Jennings v Rice [2002] EWCA Civ 159, [2003] 1 P & CR 100, [2003] 1 FCR 501, [2002] All ER (D) 324 (Feb)������������������������������������������������������������������������������������������������������������  1.38, 5.48, 6.36 Jennings v Rice [2003] 1 P & CR 8, CA�����������������������������������  12.4, 12.10, 12.44, 12.60, 12.66, 12.112, 12.113, 12.181, 12.182, 12.183, 12.184, 12.185, 12.186, 12.187, 12.188, 12.189 Jerome v Bentley & Co [1952] 2 All ER 114, [1952] WN 357, 96 Sol Jo 463, [1952] 2 TLR 58����������������������������������������������������������������������������������������������������������������������������  3.41, 3.45 Jessel v Bath (1867) LR 2 Exch 267, 36 LJ Ex 149, 15 WR 1041��������������������������������������  11.93, 11.102 Jester-Barnes v Licenses and General Insurance Co Ltd (1934) 49 Ll L Rep 231�������������������������   10.29 Jet2.com Ltd v Blackpool Airport Ltd [2012] EWCA Civ 417����������������������������������������  4.43, 4.44, 8.21 Jew v Wood (1841) Cr & Ph 185, 10 LJ Ch 261, 5 Jur 954�����������������������������������������������������������  9.23 Jiggins v Brisley [2003] WTLR 1141�����������������������������������������������������������������������  7.17, 12.183, 12.189 Joel v Law Union and Crown Insurance Co [1908] 2 KB 863, 77 LJKB 1108, 52 Sol Jo 740, 99 LT 712, 24 TLR 898, CA��������������������������������������������������������������������������������������������������������   10.29 John v George (1995) 71 P & CR 375, [1996] 1 EGLR 7, [1996] 08 EG 140, CA������������������  1.66, 1.73, 5.10, 8.3, 8.10, 8.12, 8.35, 8.45 Johnson v Agnew [1980] AC 367, [1979] 1 All ER 883, [1979] 2 WLR 487, 39 P & CR 424, 123 Sol Jo 217, 251 Estates Gazette 1167, HL�����������������������������������������������������������������������   13.38 Johnson v Credit Lyonnais Co (1877) 3 CPD 32, 42 JP 548, 47 LJQB 241, 26 WR 195, 37 LT 657, CA����������������������������������������������������������������������   3.13, 3.28, 3.31, 3.41, 3.43, 11.6, 11.8, 11.26 Johnson v Gore Wood & Co [2002] 2 AC 1, [2001] 1 All ER 481, [2001] 2 WLR 72, [2001] 1 BCLC 313, [2001] 01 LS Gaz R 24, [2000] NLJR 1889, 145 Sol Jo LB 29, HL��������������  1.73, 1.100, 1.102, 2.36, 2.39, 8.5, 8.58, 14.2 Johnson v Moreton [1980] AC 37, [1978] 3 All ER 37, [1978] 3 WLR 538, 37 P & CR 243, 122 Sol Jo 697, 241 Estates Gazette 759, HL��������������������������������������������������������������������  2.32, 7.29 Jolly v Arbuthnot (1859) 23 JP 677, 4 De G & J 224, 28 LJ Ch 547, 5 Jur NS 689, 7 WR 532, 33 LTOS 263���������������������������������������������������������������������������������������������������������������������������  6.20, 8.88 Jones, Re, ex p Jones (1881) 18 Ch D 109, 50 LJ Ch 673, 29 WR 747, [1881–5] All ER Rep 831, 45 LT 193, CA�������������������������������������������������������������������������������������������������������������������������  7.39 Jones v Associated Tunnelling Co Ltd [1981] IRLR 477 ��������������������������������������������������������������  3.21 Jones v Bangor Mutual Shipping Insurance Society Ltd (1889) 6 Asp MLC 450, 61 LT 727�������  10.35 Jones v Gordon (1877) 2 App Cas 616�������������������������������������������������������������������������������������������  11.43 Jones v James (1850) 1 LM & P 65, 19 LJQB 257, Cox M & H 290, Rob L & W 197, 14 LTOS 424���������������������������������������������������������������������������������������������������������������������������  7.44 Jones (AE) v Jones (F W) [1977] 2 All ER 231, [1977] 1 WLR 438, 33 P & CR 147, 120 Sol Jo 802, CA����������������������������������������������������������������������������������������������������  6.17, 12.22, 12.93, 12.189 Jones v Kernott [2012] 1 AC 776, SC���������������������������������������������������������������������������������������������  12.200

lx

Table of cases Jones v Lipman [1962] 1 WLR 832������������������������������������������������������������������������������������������������  12.189 Jones v North Vancouver Land and Improvement Co [1910] AC 317, 79 LJPC 89, 17 Mans 349, 102 LT 377, PC������������������������������������������������������������������������������������������������������������������  3.14, 9.14 Jones v Owen (1848) 5 Dow & L 669, 18 LJQB 8, 1 Cox M & H 176, 13 Jur 261, 2 Saund & C 348, 12 LTOS 153���������������������������������������������������������������������������������������������������������������  7.43 Jones v Stones [1999] 1 WLR 1739 ����������������������������������������������������������������������������������������������  5.41 Jones v Watkins (26 November 1987, unreported) CA�����������������  1.6, 1.74, 4.11, 5.43, 5.48, 5.49, 5.51, 12.44, 12.47, 12.87, 12.181, 12.191 Jones v Williams (1817) 2 Stark 52���������������������������������������������������������������������������������������������  1.29, 8.1 Jones v Yates (1829) 9 B & C 532, 7 LJOSKB 217, 4 Man & Ry KB 613�������������������������������  6.20, 6.21 Jones (RE) Ltd v Waring and Gillow Ltd [1926] AC 670, 95 LJKB 913, 32 Com Cas 8, [1926] All ER Rep 36, 70 Sol Jo 736, 135 LT 548, 42 TLR 644, HL�������������������  3.7, 3.9, 3.28, 3.32, 3.51, 11.70, 11.78 Jones Bros, Re, ex p Associated Newspapers Ltd [1912] 3 KB 234, 81 LJKB 1178, 19 Mans 349, [1911–13] All ER Rep 787, DC�����������������������������������������������������������������������������������������  9.17, 13.3 Jones Bros (Holloway) Ltd v Woodhouse [1923] 2 KB 117, 92 LJKB 638, 67 Sol Jo 518, 129 LT 317���������������������������������������������������������������������������������������������������������  1.90, 3.9, 3.13, 3.21 Jorden v Money (1854) 5 HL Cas 185, 23 LJ Ch 865, 101 RR 116, 10 ER 868, [1843–60] All ER Rep 350, 24 LTOS 160�������������������������������������������������  1.8, 1.18, 1.36, 1.65, 1.99, 2.12, 2.14, 2.15, 2.16, 2.25, 5.23, 5.25, 12.12, 12.69, 14.3, 14.4 Joyce v Epsom and Ewell Borough Council [2012] EWCA Civ 1398, [2013] 1 EGLR 21 ��������������������������������������������������  5.32, 6.13, 7.48, 12.92, 12.93, 12.139, 12.187, 12.188 JT Developments Ltd v Quinn (1990) 62 P & CR 33, [1991] 2 EGLR 257, CA�����������������������  4.2, 5.23, 5.24, 6.31, 8.24, 12.189 JT Sydenham & Co Ltd v Enrichem Elastometers Ltd [1989] 1 EGLR 257���������������������������������   14.30 Jules v Robertson [2011] EWCA Civ 1322������������������������������������������������������������������������������������  12.188 Junior K, The. See Star Steamship Society v Beogradska Plovidba, The Junior K Just (J and H) Holdings (Pty) Ltd v Bank of New South Wales (1971) 45 ALJR 625�������������������  3.26 K Kai Nam (a firm) v Ma Kam Chan [1956] AC 358, [1956] 1 All ER 783n, [1956] 2 WLR 767, 100 Sol Jo 222, PC�������������������������������������������������������������������������������������������������������������  2.28, 2.32 Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850, [1970] 2 All ER 871, [1970] 3 WLR 287, 22 P & CR 74, 114 Sol Jo 590, 216 Estates Gazette 31, HL���������������������������������������������������������������������  2.14, 2.15, 2.16, 2.17, 7.12, 7.28, 7.29, 7.44, 12.24, 13.1, 13.7, 13.10, 13.11, 13.23, 13.24, 13.30, 13.33 Kanchenjunga, The. See Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India, The Kanchenjunga Kaprow (S) & Co Ltd v Maclelland & Co Ltd [1948] 1 KB 618, [1948] 1 All ER 264, CA���������   13.42 Karen Oltmann, The. See Partenreederei MS Karen Oltmann v Scarsdale Shipping Co Ltd, The Karen Oltmann Karflex Ltd v Poole [1933] 2 KB 251, 102 LJKB 475, [1933] All ER Rep 46, 149 LT 140, 49 TLR 418������������������������������������������������������������������������������������������������������������������������  8.90, 9.52 Kaupthing Singer & Friedlander Ltd v UBS AG [2014] EWHC 2450 (Comm); [2016] EWCA Civ 319����������������������������������������������������������������������������������������  1.17, 1.57, 1.73, 1.76, 1.92, 1.100, 1.109, 5.41, 8.9, 12.195, 15.9 Keate v Phillips (1881) 18 Ch D 560����������������������������������������������������������������������������������������������  1.36 Keeley v Fosroc International Ltd [2006] EWCA Civ 1277����������������������������������������������������������  15.3 Keeling v Pearl Assurance Co Ltd [1923] All ER Rep 307, 129 LT 573���������������������������������������   10.29 Keelwalk Properties Ltd v Waller [2002] EWCA Civ 1076, [2002] 48 EG 142, [2002] 33 EG 95 (CS), [2003] 1 P & CR D6������������������������������������������������������������������������������������������  3.5, 12.115 Keen v Holland [1984] 1 All ER 75, [1984] 1 WLR 251, 47 P & CR 639, 127 Sol Jo 764, 269 Estates Gazette 1043, CA��������������������������������������  1.66, 1.73, 2.32, 7.29, 8.25, 8.38, 8.39, 8.66 Keith v R Gancia & Co Ltd [1904] 1 Ch 774, 73 LJ Ch 411, 52 WR 530, 48 Sol Jo 329, 90 LT 395, 20 TLR 330, CA�������������������������������������������������������������������������������������  5.47, 5.48, 5.64, 15.10 Kelly v Fraser [2013] 1 AC 450������������������������������������������������������������  1.17, 1.73, 1.109, 5.9, 5.41, 5.45, 5.46, 7.8, 9.7, 12.8, 12.89, 12.90, 12.91, 12.195 Kelsen v Imperial Tobacco Co (of Great Britain and Ireland) Ltd [1957] 2 QB 334, [1957] 2 All ER 343, [1957] 2 WLR 1007, 101 Sol Jo 446, 169 Estates Gazette 593�������������������������������  2.14 Kemp v Neptune Concrete (1988) 57 P & CR 369, [1988] 2 EGLR 87, [1988] 48 EG 71, CA������������������������������������������������������������������������������������������������������������������������������  3.16

lxi

Table of cases Kemp (MP) Ltd v Bullen Developments Ltd [2014] EWHC 2009 (Ch)�������������������������  7.14, 7.16, 7.18, 12.149, 14.40 Kendall v Hamilton (1879) 4 App Cas 504, 48 LJQB 705, 28 WR 97, [1874–80] All ER Rep 932, 41 LT 418, HL�������������������������������������������������������������������������������������������������������������������������   13.48 Kepitigalla Rubber Estates Ltd v National Bank of India Ltd [1909] 2 KB 1010, 78 LJKB 964, 14 Com Cas 116, 16 Mans 234, 53 Sol Jo 377, 100 LT 516, 25 TLR 402������������������������  3.20, 9.73 Ker v Wauchope (1819) 1 Bligh 1, pre-SCJA 1873������������������������������������������������������������������������   13.51 Khan (Ahmad Yar) v Secretary for State for India [1901] UKPC 19����������������������������������  12.20, 12.172 Khan v Tyne and Wear Passenger Transport Executive [2015] UKUT 43, LC������������������������������  8.14 Kibble. ex p. See Onslow, Re, ex p Kibble Kim v Chasewood Park Residents Ltd [2013] EWCA Civ 239, [2013] HLR 24; [2013] 2 P & CR DG4������������������������������������������������������������������������������������  4.11, 12.117, 14.12, 14.21, 14.26, 14.32 Kinane v Mackie-Conteh [2005] EWCA Civ 45����������������������  7.16, 7.18, 12.66, 12.76, 12.120, 12.151, 12.152, 12.161, 12.189, 12.193 King, Re, ex p Unity Joint Stock Mutual Banking Association (1858) 3 De G & J 63, 27 LJ Bcy 33, 4 Jur NS 1257, 6 WR 640, 31 LTOS 242��������������������������������������������������������������������������  6.18 King’s Settlement, Re, King v King [1931] 2 Ch 294, 100 LJ Ch 359, [1931] All ER Rep 692, 145 LT 517������������������������������������������������������������������������������������������������  3.42, 6.3, 6.55, 8.84, 9.14 Kingsland v Lowndes 28 JP 519, 17 CBNS 514, 33 LJCP 337, 10 Jur NS 850, 4 New Rep 409, 12 WR 1010, Ex Ch����������������������������������������������������������������������������������������������������������������  13.3 Kirkaldy & Sons Ltd v Walker [1999] Ll Rep IR 410, [1999] 1 All ER (Comm) 334������������  10.35, 13.9 Kirkpatrick v South Australia Insurance Co (1886) 11 App Cas 177���������������������������������������������   10.24 Kitcher v Fordham [1955] 2 Ll Rep 705����������������������������������������������������������������������������������������  5.24 Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349, [1998] 4 All ER 513, [1998] 3 WLR 1095, [1998] NLJR 1674, [1998] RVR 315, 142 Sol Jo LB 279, HL���������������������  2.8, 2.28 Kleinwort Benson Ltd v Malaysia Mining Corp Bhd [1989] 1 All ER 785, [1989] 1 WLR 379, [1989] 1 Ll Rep 556, 5 BCC 337, 133 Sol Jo 262, [1989] 16 LS Gaz R 35, [1989] NLJR 221, CA�����������������������������������������������������������������������������������������������������������������������������������  2.17 Knight v Cox (1856) 20 JP 744, 18 CB 645, 27 LTOS 187, sub nom Cox v Knight 25 LJCP 314���������������������������������������������������������������������������������������������������������������������������������  9.21 Knight v Matson & Co (1902) 22 NZLR 293, NZCA��������������������������������������������������������������������    9.5 Knighton Estates Ltd v Gallic Management Co Ltd (1998) 78 P & CR 52, CA����������������������������  4.49 Knights v Wiffen (1870) LR 5 QB 660, 40 LJQB 51, 19 WR 244, 23 LT 610���������������  1.65, 5.45, 5.46, 5.62, 6.6, 9.53, 9.54, 10.11, 11.3 Knowles v Knowles [2008] UKPC 32��������������������������������������������������������������������������������������������  4.43 Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993, [1964] 1 All ER 300, [1964] 2 WLR 150, 107 Sol Jo 1037, PC���������������������������������������������������������������������������  7.5, 7.6, 7.14, 7.42 Koshy v DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH [2008] EWCA Civ 27���������������������������������������������������������������������������������������������������������������������������  13.43 Kosmar Villa Holidays Plc v Trustees of Syndicate 1243 [2008] EWCA Civ 147, [2008] 2 All ER (Comm) 14�������������������������������������������������������������������������  1.5, 1.32, 8.9, 10.32, 10.34, 13.1, 13.10, 13.17, 13.18, 13.20, 13.21, 13.23, 13.27 Kostas K, The. See Hanno (Heinrich) & Co BV v Fairlight Shipping Co Ltd, The Kostas K Kyle Bay Ltd v Underwriters of policy 019057/08/01 [2006] EWHC 607 (Comm)�������  2.21, 2.35, 8.25 L L (AC) (an infant), Re [1971] 3 All ER 743, 136 JP 19�����������������������������������������������������������������  7.51 Labracon Pty Ltd v Cuturich [2013] NSWSC 97���������������������������������������������������������������������������  8.80 Laconia, The. See Mardorf Peach & Co Ltd v Attica Sea Carriers Corp of Liberia, The Laconia Ladup Ltd v Shaikh [1983] QB 225, [1982] 3 WLR 172, 126 Sol Jo 327�������������������������������������   11.75 Laird v Birkenhead Rly Co (1859) John 500, 29 LJ Ch 218, 6 Jur NS 140, 8 WR 58, 1 LT 159����������������������������������������������������������������������������������������������������������������������������������   12.13 Laker Airways Ltd v Department of Trade [1977] QB 643, [1976] 3 WLR 537, 120 Sol Jo 646; affd [1977] QB 643, [1977] 2 All ER 182, [1977] 2 WLR 234, 121 Sol Jo 52, CA���������������  7.50 Lakshmijit v Sherani [1974] AC 605, [1973] 3 All ER 737, [1974] 2 WLR 32, 118 Sol Jo 35, PC  13.28 Lala Beni Ram v Kundan Lal [1899] UKPC 17�����������������������������������������������������������������������������   12.21 Lam Chi Kin David v Deutsche Bank AG [2010] SGCA 42�����������������������������������������������������  1.73, 5.61 Lamb v Attenborough (1862) 1 B & S 831�������������������������������������������������������������������������������������   11.16 Lambson Fine Chemicals Ltd v Merlion Capital Housing Ltd [2008] EWHC 168 (TCC)������������  8.68 Lamine v Dorrell (1705) 2 Ld Raym 1216�������������������������������������������������������������������������������������   13.35 Lampon v Corke (1822) 5 B & Ald 606, sub nom Lambourne v Cork 1 Dow & Ry KB 211�������������������������������������������������������������������������������������������������������������������������������  1.65, 4.50

lxii

Table of cases Lancashire and Yorkshire Rly Co, London and North Western Rly Co and Graeser Ltd v MacNicoll (1918) 88 LJKB 601, [1918–19] All ER Rep 537, 62 Sol Jo 365, 118 LT 596, 34 TLR 280, DC�����������������������������������������������������������������������������  5.11, 5.23, 5.25, 5.26, 5.35 Lancashire Insurance Co Ltd v MS Frontier Reinsurance Ltd [2012] UKPC 42��������������������  3.10, 13.15 Langdon v Richards (1917) 33 TLR 325�����������������������������������������������������������������������������������  6.16, 7.43 Langford v Selmes (1875) 3 K & J 143������������������������������������������������������������������������������������������  9.33 Langford Property Co Ltd v Goldrich [1948] 2 KB 423, [1948] 2 All ER 439, 92 Sol Jo 433; on appeal [1949] 1 KB 511, [1949] 1 All ER 402, [1949] LJR 663, 93 Sol Jo 133, CA��������  7.43 Langridge v Levy (1837) 6 LJ Ex 137, 2 M & W 519, [1835–42] All ER Rep 586; affd sub nom Levy v Langridge (1838) 7 LJ Ex 387, 1 Horn & H 325, 4 M & W 337, sub nom Langridge v Levy [1835–42] All ER Rep 586, Ex Ch�����������������������������������������������������������������������������  5.28 Langsam v Beachcroft LLP [2011] EWHC 1451 (Ch)�������������������������������������������������������������������   14.18 Lankester v Rennie [2014] EWCA Civ 1515���������������������������������������������������������������������������������    6.3 Lansdowne Tutors Ltd v Younger [2000] 04 LS Gaz R 34, 79 P & CR D36, CA��������������������������  9.43 Lansing Linde Ltd v Alber [2000] PLR 15��������������������������������������������������������������������������������  4.51, 9.83 Lapin v Abigail. See Abigail v Lapin Lark v Outhwaite [1991] 2 Ll Rep 132���������������������������������������������������������������������������  1.25, 5.10, 14.26 Larner v London CC [1949] 2 KB 683�������������������������������������������������������������������������������������������  5.31 Laroche v Spirit of Adventure (UK) Ltd [2008] EWHC 788 (QB)������������������������������������������������    7.9 Latifi v Colherne Court Freehold Ltd [2002] EWHC 2873 (QB), [2003] 12 EG 130�������������  7.30, 13.10 Laura, The. See Dionissis v R, The Laura Laurence v Lexcourt Holdings Ltd [1978] 2 All ER 810, [1978] 1 WLR 1128, 122 Sol Jo 681���������������������������������������������������������������������������������������������������������������������������������  2.30, 5.12 Laurie and Morewood v John Dudin & Sons [1926] 1 KB 223, 95 LJKB 191, 31 Com Cas 96, [1925] All ER Rep 414, 134 LT 309, 42 TLR 149, CA�����������������������������������������������������  3.22, 9.54 Law Debenture Trust Corp Plc v Elektrim SA [2009] EWHC 1801 (Ch)������������������������������������������  4.44 Law Society v Sephton [2005] QB 1013������������������������������������������������������������������������  4.44, 8.14, 14.21 Law Society v Shah [2015] 1 WLR 209�����������������������������������������������������������������������������������������  7.46 Lawes v Purser (1856) 6 E & B 930, 26 LJQB 25, 3 Jur NS 182, 5 WR 43, 28 LTOS 84�������  9.66, 9.69 Lawrence v Wilcock (1840) 11 Ad & El 941, 8 Dowl 681, 9 LJQB 284, 4 Jur 651, 3 Per & Dav 536�����������������������������������������������������������������������������������������������������������������������������������  7.43 Layton v Martin [1986] 2 FLR 227, [1986] Fam Law 212������������������������������������������  4.40, 12.43, 12.44 Lea Bridge District Gas Co v Malvern [1917] 1 KB 803, 15 LGR 412, 81 JP 141, 86 LJKB 553, 116 LT 311������������������������������������������������������������������������������������������������������������������������������  9.17 Lebeau v General Steam Navigation Co (1872) LR 8 CP 88, 42 LJCP 1, 1 Asp MLC 435, 21 WR 146, 27 LT 447�����������������������������������������������������������������������������������������������������������������  5.5, 11.102 Lee v Butler [1893] 2 QB 318, 62 LJQB 591, 4 R 563, 42 WR 88, 69 LT 370, 9 TLR 631, CA����������������������������������������������������������������������������������������������������������������������������  9.52, 11.36 Lee v Jones (1864) 17 CBNS 482, 34 LJCP 131, 11 Jur NS 81, 13 WR 318, 12 LT 122��������������    3.9 Leeds CC v Waco Ltd [2015] EWHC 1400 (TCC), [2015] TCLR 5, 160 Con LR 58, [2015] CILL 3682�����������������������������������������������������������������������������������������������������������������  4.41, 4.43, 4.44 Leeds (Duke of) v Earl of Amherst (1846) 2 Ph 117, 16 LJ Ch 5, 10 Jur 956�������������������������  1.88, 7.39, 12.13, 12.49 Lee-Parker v Izzet (No 2) [1972] 2 All ER 800, [1972] 1 WLR 775, 23 P & CR 301, 116 Sol Jo 446��������������������������������������������������������������������������������������������������������������������  5.48, 6.34, 12.191 Leese v Martin LR 17 Eq 224, 43 LJ Ch 193, 22 WR 230, [1861–73] All ER Rep 912, 29 LT 742, VC Ct��������������������������������������������������������������������������������������������������������������������  8.90 Legione v Hateley (1983) 57 CLR 292������������������������������������������������������������������������������������������  1.5, 4.7 Legione v Hateley (1983) 152 CLR 406, 46 ALR 1���������������������������������������������������������  2.14, 2.23, 4.51 Lehman Bros International (Europe) (In Administration), Re. See Pearson v Lehman Bros Finance SA Leigh & Sillivan Ltd v Aliakmon Shipping Co Ltd, The Aliakmon [1986] AC 785, [1986] 2 All ER 145, [1986] 2 WLR 902, [1986] 2 Ll Rep 1, 130 Sol Jo 357, [1986] LS Gaz R 1810, [1986] NLJ Rep 415, HL������������������������������������������������������������������������������������  9.54, 11.94 Leila, The. See Government of Swaziland Central Transport Administration and Alfico Aussenhandels GmbH v Leila Maritime Co Ltd and Mediterranean Shipping Co SA, The Leila Lemmerbell Ltd v Britannia LAS Direct Ltd [1998] 3 EGLR 67, [1998] 48 EG 188, [1998] EGCS 138, CA�������������������������������������������������������������������������������������������������������������������  3.24, 3.25 Leonard v Ielasi (1987) 46 SASR 495��������������������������������������������������������������������������������������������  3.41 Leonidas D, The. See Allied Marine Transport Ltd v Vale do Rio Doce Navegacao SA, The Leonidas D Les Laboratoires Servier v Apotex Inc [2014] UKSC 55, [2015] AC 430�������������������������������������  5.44

lxiii

Table of cases Leslie, In re (1883) 23 Ch D 552����������������������������������������������������������������������������������������������������   12.13 Leslie (R) Ltd v Sheill (or Shiell) [1914] 3 KB 607, 83 LJKB 1145, [1914–15] All ER Rep 511, 58 Sol Jo 453, 111 LT 106, 30 TLR 460, CA���������������������������������������������������������������������  6.18, 7.39 Lester v Woodgate [2010] EWCA Civ 199����������������������������������������  1.92, 3.12, 5.41, 6.13, 12.4, 12.13, 12.24, 12.63, 12.106, 12.109, 14.22 L’Estrange v Graucob [1934] 2 KB 394�����������������������������������������������������������������������������������������  4.55 Levene v Brougham (1909) 53 Sol Jo 243, 25 TLR 265, CA������������������������������������������  6.18, 7.39, 8.66 Lever Finance Ltd v Trustee of Property of L N and H M Needleman (Bankrupts) and Kreutzer [1956] Ch 375, [1956] 2 All ER 378, [1956] 3 WLR 72, 100 Sol Jo 400������������������������������    6.4 Lever Finance Ltd v Westminster (City) London Borough Council [1971] 1 QB 222, [1970] 3 All ER 496, [1970] 3 WLR 732, 68 LGR 757, 21 P & CR 778, 134 JP 692, 114 Sol Jo 651, 216 Estates Gazette 721, CA����������������������������������������������������������������������������������������������  7.38, 7.51 Levett v Barclays Bank Plc [1995] 2 All ER 615, [1995] 1 WLR 1260�����������������������������������������    3.9 Levett-Dunn v NHS Property Services Ltd [2016] 3 WLR 773�����������������������������������������������������  4.44 Levey & Co v Goldberg [1922] 1 KB 688, 91 LJKB 551, 28 Com Cas 244, 127 LT 298, 38 TLR 446�����������������������������������������������������������������������������������������������������������������������������  1.51 Levy v Langridge. See Langridge v Levy Lewes Sanitary Steam Laundry Co Ltd v Barclay & Co Ltd (1906) 11 Com Cas 255, 95 LT 444, 22 TLR 737������������������������������������������������������������������������������������������������������  3.20, 3.28, 3.34, 3.51 Lewis, Re, Lewis v Lewis [1904] 2 Ch 656, 73 LJ Ch 748, 53 WR 393, 91 LT 242, CA���������������������������������������������������������������������������������������������������������������  3.21, 4.7, 5.8 Lewis v Mid Glamorgan County Council. See Mid Glamorgan County Council v Ogwr Borough Council Lewis (Jenkin R) & Son Ltd v Kerman [1971] Ch 477, [1970] 1 All ER 833, [1970] 2 WLR 378, 21 P & CR 210, 114 Sol Jo 88; on appeal [1971] Ch 477, [1970] 3 All ER 414, [1970] 3 WLR 673, 21 P & CR 941, 114 Sol Jo 769, 215 Estates Gazette 817, CA��������������������������  9.43 Lewis (Edward H) & Son Ltd v Morelli [1948] 2 All ER 1021, 92 Sol Jo 674, 65 TLR 56, CA ����������������������������������������������������������������������������������������������������������������������������������  8.90, 9.18, 9.35 Lexington Insurance Co Multinacional de Seguros SA [2008] EWHC 1170 (Comm)������������������   13.21 Libertarian Investments Ltd v Hall (2013) 17 ITELR 1, [2015] WTLR 241, HKCFA������������������   13.41 Liberty Insurance Pte Ltd v Argo Systems FZE [2011] EWCA Civ 1572, [2012] 1 CLC 81���������������������������������������������������������  1.9, 1.94, 3.24, 4.42, 4.44, 4.48, 14.14, 14.17, 14.18 Liberty Mercian Ltd v Cuddy Civil Engineering Ltd [2013] EWHC 2688 (TCC), [2014] 1 All ER (Comm) 761, [2014] BLR 179, [2013] TCLR 9, 150 Con LR 124�����������  5.42, 8.26, 8.39, 8.59 Lickbarrow v Mason (1787) 2 Term Rep 63, 6 East 20n; revsd sub nom Mason v Lickbarrow (1790) 1 Hy BI 357, Ex Ch; restored sub nom Lickbarrow v Mason (1793) 4 Bro Parl Cas 57, 6 East 22n, 2 Hy Bl 211, HL����������������������������������������������������������������������������������������  3.50, 5.31 Lickiss v Milestone Motor Policies at Lloyds [1966] 2 All ER 972, sub nom Barratt Bros (Taxis) Ltd v Davies (Lickiss and Milestone Motor Policies at Lloyds, third parties) [1966] 1 WLR 1334, [1966] 2 Ll Rep 1, 110 Sol Jo 600, CA�����������������������������������������������������  10.32, 10.36, 10.39 Liden v Burton [2016] EWCA Civ 275, [2016] Fam Law 687������������������������������������������������������  12.4 Liggins v Inge (1831) 7 Bing 682���������������������������������������������������������������������������������������������������  12.12 Lillie v Leigh (1858) 3 De G & J 204�������������������������������������������������������������������������������������������������  1.38 Lim Teng Huan v Ang Swee Chuan [1992] 1 WLR 113, 64 P & CR 233, [1992] 1 LS Gaz R 33, 135 Sol Jo LB 212, PC������������������������  4.11, 4.40, 5.7, 12.10, 12.47, 12.91, 12.133, 12.189, 12.190 Limpgrange Ltd v Bank of Credit and Commerce International SA [1986] FLR 36���������������������  9.74 Lipkin Gorman (a firm) v Karpnale Ltd [1991] 2 AC 548, [1992] 4 All ER 512, [1991] 3 WLR 10, [1991] NLJR 815, 135 Sol Jo LB 36, HL����������������������������������������������������  1.57, 3.7, 5.49, 5.66 Lishman v Christie (1887) 19 QBD 333, 56 LJQB 538, 6 Asp MLC 186, 35 WR 744, 57 LT 552, 3 TLR 710, CA������������������������������������������������������������������������������������������������������  1.42, 8.67, 11.102 Lissenden v CAV Bosch Ltd [1940] AC 412, [1940] 1 All ER 425, 109 LJKB 350, 84 Sol Jo 357, 162 LT 195, 56 TLR 347, 33 BWCC 21, HL����������������������������������������������������������  13.4, 13.5, 13.42 Lissimore v Downing [2003] 2 FLR 308�������������������������������������������������������������  4.40, 5.18, 12.43, 12.47 Little v Maclellan Ltd 1900 2 F 387�����������������������������������������������������������������������������������������������    3.6 Liverpool & North Wales SS Co v Mersey Trading Co Ltd [1909] 1 Ch 109��������������������������������  6.14 Livesey (formerly Jenkins) v Jenkins [1985] AC 424, [1985] 1 All ER 106, [1985] 2 WLR 47, [1985] FLR 813, [1985] Fam Law 310, 129 Sol Jo 17, [1985] NLJ Rep 55, HL��������������  2.16, 3.16 Llanec Precision Engineering Ltd v Neath Port Talbot CBC (17 July 2000, unreported)���������  4.44, 8.14 Lloyd v Dugdale [2002] WTLR 863��������������������������  6.44, 6.45, 12.89, 12.119, 12.172, 12.176, 12.178 Lloyd v GW Dairies [1987] 2 KB 727��������������������������������������������������������������������������������������������  7.44 Lloyd v John Lewis Partnership [2001] EWCA Civ 1529�������������������������������������������������������������   13.54 Lloyd v Popely [2000] 1 BCLC 19, [2000] BCC 338��������������������������������������������������������������������   10.18 Lloyd v Sutcliffe [2007] EWCA Civ 153����������������������������������������������������������������������������������  1.87, 6.15

lxiv

Table of cases Lloyds and Scottish Finance Ltd v Williamson [1965] 1 All ER 641, [1965] 1 WLR 404, 109 Sol Jo 10, CA�����������������������������������������������������������������������������������������������  3.39, 3.41, 3.45, 11.3, 11.23 Lloyds Bank Ltd v Bank of America National Trust and Savings Association [1938] 2 KB 147, CA�����������������������������������������������������������������������������������������������������������������������   11.15, 11.16, 11.17 Lloyds Bank Ltd v Brooks (1950) 6 Legal Decisions Affecting Bankers 161, 72 Journal of the Institute of Bankers 114����������������������������������������������������������������������������������������������������������    3.7 Lloyds Bank Ltd v Bullock [1896] 2 Ch 192, 65 LJ Ch 680, 44 WR 633, 40 Sol Jo 545, 74 LT 687, 12 TLR 435����������������������������������������������������������������������������������������������  3.42, 5.39, 6.55, 9.14 Lloyds Bank Ltd v Chartered Bank of India, Australia and China [1929] 1 KB 40, 97 LJKB 609, 33 Com Cas 306, [1928] All ER Rep 285, 139 LT 126, 44 TLR 534, CA������������������������  3.28, 9.73 Lloyds Bank Ltd v Cooke [1907] 1 KB 794, 76 LJKB 666, 96 LT 715, 23 TLR 429, CA���������������  1.42, 1.65, 3.45, 3.48, 9.2, 9.7, 9.17, 11.67, 11.78 Lloyds Bank Plc v Carrick [1996] 4 All ER 630, 73 P & CR 314, [1996] 2 FCR 771, [1996] 2 FLR 600, [1997] Fam Law 94, [1996] 14 LS Gaz R 30, [1996] NLJR 405, 140 Sol Jo LB 101, CA����������������������������������������������������������������������������������  4.4, 5.68, 6.34, 6.39, 6.41, 6.42, 7.13, 12.25, 12.39, 12.165, 12.172, 12.191 Lloyds Bank Plc v Independent Insurance Co Ltd [2000] QB 110, [1999] 2 WLR 986, [1999] 03 LS Gaz R 31, [1999] 1 All ER (Comm) 8, CA�����������������������������������������  6.15, 7.51, 9.2, 9.4, 11.51 Lloyds Bank Plc v Rosset [1991] 1 AC 107, [1990] 1 All ER 1111, [1990] 2 WLR 867, 60 P & CR 311, [1990] 2 FLR 155, [1990] Fam Law 395, 22 HLR 349, [1990] 16 LS Gaz R 41, [1990] NLJR 478, HL�������������������������������������������������������������������������������������������  6.37, 6.39, 12.201 Lloyds Bank Plc v Waterhouse (1991) 10 Tr LR 161, CA�������������������������������������������������������������  5.31 Lloyds TSB v Hayward [2004] EWHC 1798 (Ch)�������������������������������������������������������������������������  15.9 Lloyds TSB Bank Plc v Crowborough Properties Ltd [2012] EWHC 2233 (Ch)�������������������  8.39, 15.11 LNOC Ltd v Watford Association Football Club Ltd [2013] EWHC 3615 (Comm)���������������������  5.26 Lobden (J) & Co v Calder & Co (1898) 14 TLR 311���������������������������������������������������������������������  4.57 Locabail (UK) Ltd v Bayfield Properties Ltd (1999) Times, 31 March������������������������������������  6.34, 6.44 Local Government Superannuation Acts 1937 and 1939, Re, Algar v Middlesex County Council [1945] 2 All ER 243, 43 LGR 155, 109 JP 213, 89 Sol Jo 371, 173 LT 143, DC�����������������  2.18, 2.31, 3.16, 3.25 L’Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Co Ltd, The Boucraa [1994] 1 AC 486, [1994] 1 All ER 20, [1994] 2 WLR 39, [1994] 1 Ll Rep 251, [1994] NLJR 51, 138 Sol Jo LB 19, HL���������������������������������������������������������������������������������������������  4.42 Lohden (J) & Co v Charles Calder & Co (1898) 14 TLR 311�����������������������������������������������  1.42, 11.102 Lokumal (K) & Sons (London) Ltd v Lotte Shipping Co Pte Ltd, The August Leonhardt [1985] 2 Ll Rep 28, CA������������������������������������������������������������������������������  1.7, 3.15, 3.19, 3.22, 4.51, 5.10, 8.2, 8.3, 8.9, 8.12, 8.45 London & Clydesbank Properties Ltd v HM Investment Co Ltd [1993] EGCS 63�����������������������   14.11 London and Lancashire Life Assurance Co v Fleming [1897] AC 499, PC�����������������������������������   10.23 London and Leeds Bank Ltd, Re, ex p Carling, Carling v London and Leeds Bank [1887] WN 31, 56 LJ Ch 321, 35 WR 344, 56 LT 115, 3 TLR 349��������������������������������������������������������  5.7, 5.13 London and North Western Rly Co v West (1867) LR 2 CP 553, 36 LJCP 245�����������������������  9.31, 9.33 London & Regional Investments Ltd v TBI Plc [2002] EWCA Civ 355������������������������������  5.27, 12.123 London and South Western Bank v Wentworth (1880) 5 Ex D 96, 49 LJQB 657, 28 WR 516, 42 LT 188�������������������������������������������������������������������������������������������������������������������������  3.50, 11.77 London and Westminster Bank v Button (1907) 51 Sol Jo 466�������������������������������������������������  6.20, 6.21 London Celluloid Co, Re (1888) 39 Ch D 190, 57 LJ Ch 843, 1 Meg 45, 36 WR 673, 59 LT 109, 4 TLR 572, CA���������������������������������������������������������������������������������������  6.5, 6.20, 10.15 London Chatham and Dover Rly Co v South Eastern Rly Co (1888) 40 ChD 100�����������������������  7.44 London Corp v Cox (1867) LR 2 HL 239, 36 LJ Ex 225, 16 WR 44���������������������������������������������  7.43 London County Territorial and Auxiliary Forces Association v Nichols [1949] 1 KB 35, [1948] 2 All ER 432, [1948] LJR 1600, 92 Sol Jo 455, 64 TLR 438, CA�����������  2.28, 2.32, 4.7, 4.57, 5.13 London General Omnibus Co Ltd v Holloway [1912] 2 KB 72, 81 LJKB 603, [1911–13] All ER Rep 518, 106 LT 502, CA�������������������������������������������������������������������������������������������������������    3.9 London Joint Stock Bank v Macmillan and Arthur. See Macmillan v London Joint Stock Bank Ltd London Joint Stock Bank v Simmons [1892] AC 201, 56 JP 644, 61 LJ Ch 723, 41 WR 108, [1891–4] All ER Rep 415, 36 Sol Jo 394, 66 LT 625, 8 TLR 478, HL�����������������  3.44, 5.12, 9.7, 9.12, 10.20 London Wine Co (Shippers) Ltd, Re [1986] PCC 121��������������������������������������������������������������  6.32, 9.54 Longman v Bath Electric Tramways Ltd [1905] 1 Ch 646, 74 LJ Ch 424, 12 Mans 147, 53 WR 480, 92 LT 743, 21 TLR 373, CA����������������������������������������������������������  3.28, 6.3, 10.8, 10.9 Longman v Viscount Chelsea (1989) 58 P & CR 189, [1989] 2 EGLR 242, CA�������������������������������  4.51 Lonrho Plc v Fayed (No 2) [1991] 4 All ER 961, [1992] 1 WLR 1�����������������������������������������������  5.34

lxv

Table of cases Lordsvale Finance Plc v Bank of Zambia [1996] QB 752, [1996] 3 All ER 156, [1996] 3 WLR 688������������������������������������������������������������������������������������������������������������������������������   13.41 Lovett v Carson Country Homes Ltd [2009] EWHC 1143 (Ch), [2011] BCC 789������������������  3.11, 3.20, 5.45, 5.46, 5.62, 10.13, 10.16 Lovett v Fairclough (1990) 61 P & CR 385���������������������������������������������������������  5.48, 8.61, 12.10, 12.77 Lovett v Lovett [1898] 1 Ch 82, 67 LJ Ch 20, 46 WR 105, [1895–9] All ER Rep 474, 42 Sol Jo 81, 77 LT 650��������������������������������������������������������������������������������������������������������������������������  8.88 Low v Bouverie [1891] 3 Ch 82, 60 LJ Ch 594, 40 WR 50, [1891–4] All ER Rep 348, 65 LT 533, 7 TLR 582, CA ��������������������������������������������������������������������������������������  1.29, 1.42, 1.45, 1.46, 1.65, 2.18, 3.25, 3.40, 4.2, 4.7, 4.9, 4.33, 4.34, 8.1, 12.3 Lowe v Lombank Ltd [1960] 1 All ER 611, [1960] 1 WLR 196, 104 Sol Jo 210, CA����������������  4.7, 5.5, 5.10, 5.23, 5.25, 5.38 Lowther v Harris [1927] 1 KB 393����������������������������������������������������������������������������������������  11.16, 11.40 Lowther v Kelly (1723) 8 Mod Rep 115�����������������������������������������������������������������������������������������  8.81 LSREF III Wight Ltd v Millvalley Ltd [2016] EWHC 466 (Comm), 165 Con LR 58������������������  8.73 Lucas v Smith (1926) 32 ALR 319, [1926] VLR 400, 48 ALT 66�������������������������������������������������  1.34 Lucking v Denning (1701) 1 Salk 201, KBD���������������������������������������������������������������������������������  13.3 Lucy, The. See Atlantic Lines & Navigation Co Inc v Hallam Ltd, The Lucy Lundbert v Royal Exchange Corp [1933] NZLR 605��������������������������������������������������������������������  5.45 Luo v Hui [2008] HKEC 996����������������������������������������������������������������������������������������������������������   14.24 Lutetian, The. See Tradax Export SA v Dorada Compania Naviera SA, The Lutetian Lyle-Meller v A Lewis & Co (Westminster) Ltd [1956] 1 All ER 247, [1956] 1 WLR 29, [1956] RPC 14, 100 Sol Jo 13, CA���������������������������������������������������������������������������������������  1.46, 2.28, 2.31 Lynch v Stiff (1943) 68 CLR 428���������������������������������������������������������������������������������������������������  5.13 Lyon v Reed (1844) 13 LJ Ex 377, 8 Jur 762, 13 M & W 285, [1843–60] All ER Rep 178, 3 LTOS 302���������������������������������������������������������������������������������������������������������  1.35, 8.90, 9.38, 9.43 Lyus v Prowsa Developments Ltd [1982] 2 All ER 953, [1982] 1 WLR 1044, 44 P & CR 213, 126 Sol Jo 102�������������������������������������������������������������������������������������������������������������������������  6.45 M Mabanga v Ophir Energy Plc [2012] EWHC 1589 (QB)�������������������������������������������������  2.13, 2.20, 2.21 Maddick v Marshall (1864) 17 CBNS 829, 10 Jur NS 1201, 5 New Rep 250, 13 WR 205, 11 LT 611, Ex Ch ������������������������������������������������������������������������������������������������������������������������������  9.17 Maddison v Alderson (1883) 8 App Cas 467, 47 JP 821, 52 LJQB 737, 31 WR 820, [1881–5] All ER Rep 742, 49 LT 303, HL����������������������������������������������������������������  1.42, 2.14, 2.15, 6.17, 12.12, 12.21, 12.147, 12.182 Madell v Thomas & Co [1891] 1 QB 230, 60 LJQB 227, 39 WR 280, 64 LT 9, 7 TLR 170, CA��������������������������������������������������������������������������������������������������������������������������������������  6.20, 7.42 Maersk Oil UK Ltd v Dresser-Rand (UK) Ltd [2007] EWHC 752 (TCC)������������������������������������    8.3 Magrath v Parkside Hotels Ltd [2011] EWHC 143 (Ch)�����������������������������������������������������������  15.3, 15.7 Mahakam, The. See Parbulk II A/S v Heritage Maritime Ltd SA Maharaj v Chand [1986] AC 898, [1986] 3 All ER 107, [1986] 3 WLR 440, 130 Sol Jo 633, [1986] LS Gaz R 2568, PC�������������������������������������������������������������������������  7.9, 7.13, 12.93, 12.165, 12.189, 12.201, 14.2, 14.24 Mahesan S/O Thambiah v Malaysia Government Officers’ Co-operative Housing Society Ltd [1979] AC 374, [1978] 2 All ER 405, [1978] 2 WLR 444, 122 Sol Jo 31, PC�����������������������   13.40 Mainland v Upjohn (1889) 41 Ch D 126����������������������������������������������������������������������������������������  8.77 Manchester and Oldham Bank Ltd v WA Cook & Co (1883) 49 LT 674, DC�����������������  1.42, 2.23, 5.45 Mangles v Dixon (1852) 3 HL Cas 702, 88 RR 296, [1843–60] All ER Rep 770, 19 LTOS 260 ����������������������������������������������������������������������������������������������������������������������������������  3.16, 3.21, 6.24 Manila, The. See Procter & Gamble Philippine Manufacturing Corp v Peter Cremer GmbH & Co, The Manila Mann v Shelfside Holdings Ltd [2015] EWHC 2583 (QB)�����������������������������������  1.14, 1.31, 1.39, 1.93, 1.114, 3.11, 3.45, 13.39 Mann Macneal and Steeves Ltd v Capital and Counties Insurance Co Ltd [1921] 2 KB 300, 90 LJKB 846, 15 Asp MLC 225, 26 Com Cas 132, 124 LT 778, 37 TLR 247, (1920) 4 Ll L Rep 57, 5 Ll L Rep 424, CA�����������������������������������������������������������������������������������������  13.3 Manton v Cantwell [1920] AC 781, HL����������������������������������������������������������������������������������������  6.2, 6.8 March Cabaret Club and Casino Ltd v London Assurance Ltd [1975] 1 Ll Rep 169��������������������   10.29 Marcovitch v Liverpool Victoria Friendly Society (1912) 28 TLR 188, CA���������������������������������   10.29

lxvi

Table of cases Mardorf Peach & Co Ltd v Attica Sea Carriers Corp of Liberia, The Laconia [1977] AC 850, [1977] 1 All ER 545, [1977] 2 WLR 286, [1977] 1 Ll Rep 315, 121 Sol Jo 134, HL���������������������������������������������������������������������������������������������������������������  13.16, 13.28, 14.16 Marine Trade SA v Pioneer Freight Futures Co Ltd BVI [2010] 1 Ll Rep 631�����������������������������  4.44 Maritime Electric Co Ltd v General Dairies Ltd [1937] AC 610, [1937] 1 All ER 748, 106 LJPC 81, 81 Sol Jo 156, 156 LT 444, 53 TLR 391, PC���������������������������������������������  1.42, 5.32, 5.40, 7.49 Maritime Winner, The. See Thai-Europe Tapioca Service Ltd v Seine Navigation Co Inc, The Maritime Winner Marks & Spencer Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72, [2016] AC 742, [2015] 3 WLR 1843, [2016] 4 All ER 441, 163 Con LR 1, [2016] 1 P & CR 13, [2016] L & TR 8, [2016] CILL 3779��������������������������������������������������������������������������������  8.88 Marlow Inns v HMRC [2012] EWCA Civ 1498����������������������������������������������������������������������������  7.29 Marnham v Weaver (1899) 80 LT 412���������������������������������������������������������������������������������������  3.12, 3,19 Marsden v Marsden [1973] 2 All ER 851, [1973] 1 WLR 641, 117 Sol Jo 393�����������������������������  3.16 Marseille Fret SA v D Oltmann Schiffahrts GmbH & Co KG, The Trado [1982] 1 Ll Rep 157, [1981] Com LR 277��������������������������������������������������������������������������������������������  13.11, 14.21, 14.35 Marshall v National Provincial Bank of England (1892) 61 LJ Ch 465, 40 WR 328, 36 Sol Jo 294, 66 LT 525�������������������������������������������������������������������������������������������������������������������  3.44, 9.14 Marten v Whale [1917] 2 KB 480, 86 LJKB 1305, 117 LT 137, 33 TLR 330, CA������������������������   11.32 Martin v Douglas (1867) 16 WR 268���������������������������������������������������������������������������������������������  2.22 Martineaus Ltd v Royal Steam Packet Co Ltd (1912) 12 Asp MLC 190, 17 Com Cas 176, 56 Sol Jo 445, 106 LT 638, 28 TLR 364�����������������������������������������������������������������������������������  5.45, 11.102 Martyn v Gray (1863) 14 CBNS 824���������������������������������������������������������  3.19, 5.42, 5.71, 6.6, 9.8, 9.17 Marussia Communications Ireland Ltd v Manor Grand Prix Racing Ltd [2016] EWHC 809 (Ch), [2016] Bus LR 808, [2016] ETMR 32, [2016] RPC 20�����������������������������������  1.51, 1.55, 4.16, 7.13 Mason v Lickbarrow. See Lickbarrow v Mason Master, Fellows and Scholars of Clare Hall v Harding (1848) 6 Hare 273������������������������������������  12.104 Mata K, The. See Agrosin Pte Ltd v Highway Shipping Co Ltd, The Mata K Matchbet Ltd v Openbet Retail Ltd [2013] EWHC 3067 (Ch)������������������������������������������������������  8.74 Matharu v Matharu (1994) 68 P & CR 93, [1994] 3 FCR 216, [1994] 2 FLR 597, [1994] Fam Law 624, 26 HLR 648, CA���������������������������������  6.4, 12.24, 12.47, 12.113, 12.188, 12.189, 12.190 Mathias v Yetts (1882) 46 LJ 497, CA��������������������������������������������������������������������������������������������  2.23 Mattey Securities Ltd v Ervin [1998] 2 EGLR 66��������������������������������������������������������������������������  8.90 Matthews v Smallwood [1910] 1 Ch 777, 79 LJ Ch 322, [1908–10] All ER Rep 536, 102 LT 228���������������������������������������������������������������������������������������������������������������������  13.23, 13.30 Mayer v Claretie (1890) 7 TLR 40, DC������������������������������������������������������������������������������������������  4.57 McBlain v Dolan [2003] Ll Rep IR 309�����������������������������������������������������������������������������������������   10.38 McCance v London and North Western Rly Co (1864) 29 JP 148, 3 H & C 343, 34 LJ Ex 39, 10 Jur NS 1058, 4 New Rep 467, 12 WR 1086, 11 LT 426���������������������������������������������  8.1, 8.64, 8.70 McCathie v McCathie [1971] NZLR 58���������������������������������������������������������������������������  8.10, 8.31, 8.36 McCausland v Duncan Lawrie Ltd [1997] 1 WLR 38, CA������������������������������������������  7.16, 7.26, 12.153 MacClure v Schemeil (1871) 20 WR 168���������������������������������������������������������������������������������������   13.47 McCormick v National Motor and Accident Insurance Union Ltd (1934) 40 Com Cas 76, 78 Sol Jo 633, 50 TLR 528, 49 Ll L Rep 361, CA��������������������������������������������������������������������  10.29, 10.32 McCullagh v Lane Fox & Partners Ltd (1994) 38 Con LR 24, [1994] 1 EGLR 48, [1994] 13 LS Gaz R 38, [1994] 08 EG 118, 138 Sol Jo LB 54, [1994] Conv 299; affd (1995) 49 Con LR 124, [1996] 1 EGLR 35, [1996] 18 EG 104, [1995] EGCS 195, [1996] PNLR 205, CA������������������������������������������������������������������������������������������������������������������������  5.13 Macdonald v Frost [2009] EWHC 2276 (Ch), [2009] WTLR 1815�����������  1.70, 4.26, 4.40, 12.41, 12.45 McDowell v Fraser (1779) 1 Dougl 247�����������������������������������������������������������������������������������������  5.34 McEwan (William) & Sons v Smith (1849) 2 HL Cas 309, 13 Jur 265����������������������������������  5.40, 11.86 MacFisheries Ltd v Harrison (1924) 88 JP 154, 93 LJKB 811, 69 Sol Jo 89, 132 LT 22, 40 TLR 709������������������������������������������������������������������������������������������������������������������������  5.10, 5.42 McGeachie v North American Life Insurance Co (1893) 23 SCR 148������������������������������������������   10.24 McGrath v Shah (1987) 57 P & CR 452�����������������������������������������������������������������������������������������  4.53 McGuane v Welch [2008] EWCA Civ 785, [2008] 2 P & CR 24 �������������������������  5.31, 7.16, 7.21, 7.26, 12.139, 12.154, 12.158, 12.186, 12.189 McGuinness v Preece [2016] EWHC 1518 (Ch)����������������������������������������������������������������������������  12.117 McHenry v Davies (1890) LR 10 Eq 88�����������������������������������������������������������������������������������������  1.63 McIlkenny v Chief Constable of West Midlands [1980] QB 283, [1980] 2 All ER 227, [1980] 2 WLR 689, 144 JP 291, 124 Sol Jo 83, CA; affd sub nom Hunter v Chief Constable of West Midlands Police [1982] AC 529, [1981] 3 All ER 727, [1981] 3 WLR 906, 125 Sol Jo 829, HL����������������������������������������������������������������������������������������������������  1.1, 1.102

lxvii

Table of cases M’Iver v Humble (1812) 16 East 169���������������������������������������������������������������������������������������������  9.17 McKenzie v British Linen Co (1881) 6 App Cas 82, 29 WR 477, 44 LT 431, HL�������������  3.9, 5.13, 5.45 MacKenzie v Royal Bank of Canada [1934] AC 468, 103 LJPC 81, 78 Sol Jo 471, 151 LT 486, PC������������������������������������������������������������������������������������������������������������������������������  2.31 Mackley v Nutting [1949] 2 KB 55, [1949] 1 All ER 413, [1949] LJR 803, 93 Sol Jo 197, 65 TLR 255, CA�������������������������������������������������������������������������������  6.8, 6.34, 8.84, 9.18, 9.31, 9.47 Maclaine v Gatty [1921] 1 AC 376, 90 LJPC 73, 26 Com Cas 148, [1920] All ER Rep 70, 124 LT 385, 37 TLR 139, HL��������������������������������������������������������������������������������������������  1.18, 5.51 McLaughlin v Duffill [2010] Ch 1, CA������������������������������������������������������������������������������������������  12.161 McManus v Cooke (1887) 35 Ch D 681�������������������������������������������������������������������  12.13, 12.78, 12.190 McMaster University v Wilcher Construction Ltd (1971) 22 DLR (3d) 9�������������������������������������  3.16 Macmillan v London Joint Stock Bank Ltd [1917] 2 KB 439, 86 LJKB 1499, 22 Com Cas 364, 61 Sol Jo 523, 117 LT 292, 33 TLR 398, CA; revsd sub nom London Joint Stock Bank v Macmillan and Arthur [1918] AC 777, 88 LJKB 55, [1918–19] All ER Rep 30, 62 Sol Jo 650, 119 LT 387, 34 TLR 509, HL������������������������  1.42, 1.65, 3.20, 3.27, 3.28, 3.34, 3.51 Macmillan Inc v Bishopsgate Investment Trust Plc (No 3) [1995] 3 All ER 747, [1995] 1 WLR 978; on appeal [1996] 1 All ER 585, [1996] 1 WLR 387, [1995] 43 LS Gaz R 25, [1995] TLR 573, 139 Sol Jo LB 225, CA������������������������������������������������������������������������������������  3.45, 10.20 McMullen Group Holdings Ltd v Harwood [2011] CSOH 132�����������������������������������������������������   13.11 Macnaghten v Paterson [1907] AC 483, 76 LJPC 94, 97 LT 442, 25 TLR 727, PC�����������������  5.42, 5.45 McNaughton (James) Paper Group Ltd v Hicks Anderson & Co [1991] 2 QB 113, [1991] 1 All ER 134, [1991] 2 WLR 641, [1991] BCLC 163, [1990] NLJR 1311, CA������������������������  5.12, 5.26 McNicholas Construction (Holdings) Ltd v Endemol UK Plc [2003] EWHC 2472 (Ch)�������������  8.59 McPherson v Watt (1877) 3 App Cas 254, HL�������������������������������������������������������������������������������  2.22 McTear v Engelhard [2014] EWHC 1056 (Ch)������������������������������������������������������������������������������    8.9 MCI Worldcom Intl Inc v Primus Telecommunications Inc [2004] EWCA Civ 957���������������������  2.13 Mears Ltd v Shoreline Housing Partnership Ltd [2013] EWCA Civ 639, [2013] CP Rep 39, [2013] BLR 393, 148 Con LR 221, [2013] CILL 3388�����������������������������������������������������  1.49, 8.59 Mears Ltd v Shoreline Housing Partnership Ltd [2015] EWHC 1396 (TCC), 160 Con LR 157 ������������������������������������������������������������������������������������������������  1.19, 1.48, 2.28, 2.35, 8.6, 8.44, 8.57 Mediterranean and New York Steamship Co v Mackay [1903] 1 KB 297, 12 LJKB 147, CA�����������������������������������������������������������������������������������������������������������������������������������  8.67 Meghraj Bank Ltd v Arsiwalle (10 February 1994, unreported) CA������������������������������  5.10, 5.13, 12.91 Mehta v Sutton (1913) 58 Sol Jo 29, 109 LT 529, 30 TLR 17, CA������������������������������������������������   11.23 Melbourne Banking Corp v Brougham (1882) 7 App Cas 307, 51 LJPC 65, 30 WR 925, 46 LT 603��������������������������������������������������������������������������������������������������������������������������������  8.84 Melik (Victor) & Co Ltd v Norwich Union Fire Insurance Society Ltd and Kemp [1980] 1 Ll Rep 523����������������������������������������������������������������������������������������������������������������������������   10.35 Meng Leong Development Pte Ltd v Jip Hong Trading Co Pte Ltd [1985] AC 511, [1985] 1 All ER 120, [1984] 3 WLR 1263, 128 Sol Jo 852, [1984] LS Gaz R 3336, PC�����������������    1.5, 5.45, 13.2, 13.42, 13.43 Mengel’s WT, Re [1962] Ch 791����������������������������������������������������������������������������������������������������   13.50 Menolly Investments 3 Sarl v Cerep Sarl [2009] EWHC 516 (Ch), (2009) 125 Con LR 75 ����������������������������������������������������������������������������������������������������������������  1.111, 2.6, 2.14, 2.24, 2.36 Mercantile Bank of India Ltd v Central Bank of India Ltd [1938] AC 287, [1938] 1 All ER 52, 107 LJPC 25, 81 Sol Jo 1020, 158 LT 269, 54 TLR 208, PC������������������  3.9, 3.28, 3.31, 3.32, 3.44, 3.51, 5.40, 10.21, 11.6 Mercantile Credit Co Ltd v Hamblin [1965] 2 QB 242, [1964] 3 All ER 592, [1964] 3 WLR 798, 108 Sol Jo 674, CA������������������������������������  3.28, 3.31, 3.32, 3.35, 3.40, 3.47, 5.31, 9.4, 11.3, 11.51 Merck Canada Inc v Sigma Pharmaceuticals Plc [2013] EWCA Civ 326, [2013] 3 CMLR 17, [2013] RPC 35�����������������������������������������������������������������������������������������������������������������  1.87, 12.34 Merrill Lynch International v Amorim Partners Ltd [2014] EWHC 74 (QB)��������������������������������  3.16 Metall Market OOO v Vitorio Shipping Co Ltd [2012] EWHC 844 (Comm), [2012] 2 All ER (Comm) 577, [2012] 2 Ll Rep 73�������������������������������������������������������������������������������������������    4.8 Metcalfe v Boyce [1927] 1 KB 758, 91 JP 55, 96 LJKB 376, 136 LT 606, 43 TLR 149, DC �������������������������������������������������������������������������������������������������������������������������  9.40, 9.42, 9.45, 9.46 Metropolitan Coal Consumers’ Association, Re, Karberg’s Case [1892] 3 Ch 1, 61 LJ Ch 741, 66 LT 700, 8 TLR 608, 637, CA��������������������������������������������������������������������������������������������������  2.19 Metropolitan Properties Co Ltd v Cordery (1980) 39 P & CR 10��������������������������������������������������   13.31 Meyer (or Mayer) v Dresser (1864) 16 CBNS 646, 33 LJCP 289, 2 Mar LC 27, 12 WR 983, 143 ER 1280, 10 LT 612��������������������������������������������������������������������������������������������������  1.42, 11.93 Meyer & Co Ltd v Sze Hal Tong Banking and Insurance Co Ltd [1913] AC 847, 83 LJPC 103, 57 Sol Jo 700, 109 LT 691, PC�����������������������������������������������������������������������������������������������  3.50

lxviii

Table of cases Michaels v Harley House (Marylebone) Ltd [1997] 3 All ER 446, [1997] 1 WLR 967, [1997] 2 BCLC 166, [1997] 13 LS Gaz R 29, [1997] 37 EG 161, 141 Sol Jo LB 83; affd [2000] Ch 104, [1999] 1 All ER 356, [1999] 3 WLR 229, 31 HLR 990, [1999] 1 BCLC 670, [1998] EGCS 159, CA������������������������������������������������������������������������  1.96, 3.15, 5.62, 12.35, 12.57 Michaud v City of Montreal [1923] UKPC 31��������������������������������������������������������������������  12.13, 12.132 Mid Glamorgan County Council v Ogwr Borough Council (1993) 68 P & CR 1, CA; varied sub nom Lewis v Mid Glamorgan County Council [1995] 1 All ER 760, [1995] 1 WLR 313, 93 LGR 179, 159 LG Rev 509, HL�����������������������������������������������������������������������������������������  6.39 Middleton v Pollock, ex p Wetherall (1876) 4 Ch D 49, 46 LJ Ch 39, 25 WR 94, 35 LT 608���������������������������������������������������������������������������������������������������������������������������  4.58, 6.17 Midgulf International Ltd v Groupe Chimiche Tunisien [2009] 2 Ll Rep 411�������������������������������  4.44 Midland Bank Ltd v Farmpride Hatcheries Ltd [1981] 2 EGLR 147, 260 Estates Gazette 493, CA�����������������������������������������������������������������������������������������������������������������������������������  3.13 Midland Bank Ltd v Reckitt [1933] AC 1, 102 LJKB 297, 37 Com Cas 202, [1932] All ER Rep 90, 76 Sol Jo 165, 148 LT 374, 48 TLR 271, HL�������������������������������������������������������������������  5.11 Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp (a firm) [1979] Ch 384, [1978] 3 All ER 571, [1978] 3 WLR 167, 121 Sol Jo 830����������������������������������������������������������������������������������������  3.18 Mihalios Xilas, The. See China National Foreign Trade Transportation Corp v Evlogia Shipping Co SA of Panama, The Mihalios Xilas Milasan, The. See Brownsville Holdings Ltd v Adamjee Insurance Co Ltd, The Milasan Mileform Ltd v Interserve Security Ltd [2013] EWHC 3386 (QB)�����������������������������������������������  8.74 Miles v Furber (1873) LR 8 QB 77, 37 JP 516, 42 LJQB 41, 21 WR 262, [1861–73] All ER Rep 834, 27 LT 756���������������������������������������������������������������������������������������������������������������������  9.7, 9.17 Millar v Dickson (Procurator Fiscal, Elgin) [2001] UKPC D4, [2002] 3 All ER 1041, [2002] 1 WLR 1615, 2001 SLT 988, 2002 SC (PC) 30������������������������������������������������������������������������   13.11 Miller (t/a Waterloo Plant) v Cawley [2002] EWCA Civ 1100, [2002] All ER (D) 452 (Jul), Times, 6 September�����������������������������������������������������������������������������������������������������������������   13.54 Mills v Fox (1887) 37 Ch D 153, 57 LJ Ch 56, 36 WR 219, 57 LT 792����������������������������������������  6.18 Millwall Football Club and Athletic Co (1985) Plc (in administration) [1998] 2 BCLC 272, [1999] BCC 455����������������������������������������������������������������������������������������������������������������������    8.3 Milne-Berry and Madden v Tower Hamlets London Borough Council (1997) 30 HLR 229, CA�����������������������������������������������������������������������������������������������������������������������������������  7.54 Milnes v Gery (1807) 14 Ves Jun 400��������������������������������������������������������������������������������������������   12.21 Minister for Immigration v Kurtovic (1990) 21 FCR 193��������������������������������������������������������������  7.51 Minister of Agriculture and Fisheries v Matthews [1950] 1 KB 148, [1949] 2 All ER 724, 65 TLR 655���������������������������������������������������������������������������������������������������������������  6.16, 7.32, 8.66 Mint Security Ltd v Blair, Thos R Miler & Son (Home) Ltd and E C Darwin Clayton & Co Ltd [1982] 1 Ll Rep 188����������������������������������������������������������������������������������������������������������������   10.35 MIOM 1 Ltd v Sea Echo ENE (No 2) [2011] EWHC 2715 (Admlty), [2012] 1 Ll Rep 140�����������������������������������������������������������������������������������������������������������������������  3.24, 8.14 Mitchel v Reynolds (1711) 1 P Wms 181���������������������������������������������������������������������������������������  8.87 Mitchell v Watkinson [2014] EWCA Civ 1472, [2015] L & TR 22�����������������  1.29, 5.10, 6.26, 8.7, 8.90 Mitsui Babcock Energy Ltd v J Brown Engineering Ltd (1996) 51 Con LR 129, [1997] 6 CL 120�����������������������������������������������������������������������������������������������������������������������������  5.11, 8.58 Mobil Oil Australia Ltd v Wellcome International Pty Ltd (1998) 81 FCR 475����������������������������  5.27 Mocatta v Murgatroyd (1717) 1 P Wms 393����������������������������������������������������������������������������������  1.36 Mogridge v Clapp [1892] 3 Ch D 383��������������������������������������������������������������������������������������������   11.43 Mold v Wheatcroft (1859) 27 Beav 510, 29 LJ Ch 11, 6 Jur NS 2, 1 LT 226��������  12.13, 12.132, 12.190 Mollwo, March & Co v Court of Wards (1872) LR 4 PC 419, 9 Moo PCCNS 214����������������������    9.8 Molton Street Capital LLP v Shooters Hill Capital Partners LLP [2015] EWHC 3419 (Comm)�������������������������������������������������������������������������������������������������������������������  1.70, 14.29 Monarch Motor Car Co v Pease (1903) 19 TLR 148���������������������������������������������������  5.62, 10.11, 10.15 Moncure v Cahusac [2006] UKPC 54����������������������������������������������������������  3.7, 9.21, 15.3, 15.10, 15.13 Montalto v Popat [2016] EWHC 810 (Ch)�������������������������������������������������������������������������������������   12.34 Montefiori v Montefiori (1762) 1 Wm BI 363������������������������������������������������������������������  1.36, 5.39, 8.87 Moody v Pall Mall Deposit and Forwarding Co Ltd (1917) 33 TLR 306��������������������������������������   11.43 Moon, Re, ex p Dawes (1886) 17 QBD 275, 3 Morr 105, 34 WR 752, [1886–90] All ER Rep 479, 55 LT 114, 2 TLR 506, CA�����������������������������������������������������������������������������������������������������  4.50 Moore v Cahusac [2006] UKPC 54������������������������������������������������������������������������������������������������  4.41 Moore v Flanagan [1920] 1 KB 919, 89 LJKB 417, [1920] All ER Rep 254, 122 LT 739, CA��������������������������������������������������������������������������������������������������������������������������  13.45, 13.48 Moore v Gamgee (1890) 25 QBD 244, 59 LJQB 505, 38 WR 669�����������������������������������������������  7.44 Moore v Moore (19 August 2016, unreported)������������������������������������������������������������������  12.164, 12.183

lxix

Table of cases Moore v Peachey (1891) 7 TLR 748��������������������������������������������������������������������������������������������������  9.15 Moore Large & Co Ltd v Hermes Credit and Guarantee Plc [2003] EWHC 26 (Comm), [2003] 1 Ll Rep 163, [2003] All ER (D) 116 (Jan), [2003] Ll Rep IR 315��������������������  10.29, 10.31, 13.25 Moorgate Mercantile Co Ltd v Twitchings [1976] QB 225, [1975] 3 All ER 314, [1975] 3 WLR 286, [1975] RTR 528, 119 Sol Jo 559, CA; revsd [1977] AC 890, [1976] 2 All ER 641, [1976] 3 WLR 66, [1976] RTR 437, 120 Sol Jo 470, HL������������������������  1.7, 1.21, 1.53, 1.87, 1.88, 1.91, 1.92, 1.103, 2.11, 3.9, 3.12, 3.14, 3.16, 3.28, 3.32, 3.40, 6.15, 9.4, 11.3, 11.51, 12.34, 12.56, 12.85, 12.109 Morel Bros & Co Ltd v Earl of Westmoreland [1904] AC 11, 73 LJKB 93, 52 WR 353, [1900–3] All ER Rep 397, 89 LT 702, 20 TLR 38, HL��������������������������������������������������������  9.17, 13.42, 13.48 Morgan v Griffith (1870–71) LR 6 Ex 70���������������������������������������������������������������������������������������   12.20 Morgan v Lifetime Building Supplies Ltd (1967) 61 DLR (2d) 178, 59 WWR 414, Alta HC������  9.13 Morison v London County and Westminster Bank Ltd (1913) 18 Com Cas 137, 57 Sol Jo 427, 108 LT 379, 29 TLR 342; revsd [1914] 3 KB 356, 83 LJKB 1202, 19 Com Cas 273, [1914– 15] All ER Rep 853, 58 Sol Jo 453, 111 LT 114, 30 TLR 481, CA�����������������������������������  3.16, 3.20 Mornington Permanent Building Society v Kenway [1953] Ch 382, [1953] 1 All ER 951, [1953] 2 WLR 859, 97 Sol Jo 300������������������������������������������������������������������������������������������������������  9.51 Morris v Bethell (1869) LR 5 CP 47, 18 WR 137, 21 LT 330��������������������������������������������������������  5.70 Morris v Kanssen [1946] AC 459 ��������������������������������������������������������������������������������������������������   10.12 Morris v Morris [1982] 1 NSWLR 61��������������������������������������������������������������������������������������������  12.189 Morris v Morris [2008] EWCA Civ 257�����������������������������������������������������������������������������������������   12.60 Morris v Robinson (1824) 3 B & C 196, 5 Dow & Ry KB 34, [1824–34] All ER Rep 347����������   13.42 Morris v Tarrant [1971] 2 QB 143, [1971] 2 All ER 920, [1971] 2 WLR 630, 115 Sol Jo 204�������������������������������������������������������������������������������������������������������������������������   14.24 Morrison v Universal Marine Insurance Co (1873) LR 8 Exch 197, 42 LJ Ex 115, 21 WR 774, Ex Ch������������������������������������������������������������������������������������������������������  3.13, 5.6, 5.10, 5.45, 10.31 Morrow v Carty [1957] NI 174�������������������������������������������������������������������������������������������������������   14.21 Morrow v Nadeem [1987] 1 All ER 237, [1986] 1 WLR 1381, 53 P & CR 203, 130 Sol Jo 822, [1986] 2 EGLR 73, [1986] NLJ Rep 965, 279 Estates Gazette 1083, CA�������������������������  3.24, 5.31 Morton v Woods (1869) LR 4 QB 293, 9 B & S 632, 38 LJQB 81, 17 WR 414, Ex Ch������������������  6.20, 8.88, 8.90, 9.18, 9.23 Moss v London and North Western Rly Co (1874) 22 WR 532�����������������������������������������������������    3.7 Motivate Publishing FZ LLC v Hello Ltd [2015] EWHC 1554 (Ch)��������������������������������������  1.87, 12.34 Motor Credits (Hire Finance Ltd) v Pacific Motor Auctions Pty Ltd (1963) 109 CLR 87, HC of A; revsd sub nom Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd [1965] AC 867, [1965] 2 All ER 105, [1965] 2 WLR 881, 109 Sol Jo 210, PC�����������������  3.40, 3.44, 11.27 Motor Oil Hellas (Corinth) Refineries SA v Shipping Corp of India, The Kanchenjunga [1990] 1 Ll Rep 391, HL�������������������������������������������������������  2.15, 4.7, 11.63, 13.1, 13.2, 13.7, 13.14, 13.15, 13.16, 13.19, 13.24, 13.27, 14.2, 14.10, 14.20, 14.27, 14.33, 14.35 Mount Eden Land Ltd v Prudential Assurance Co Ltd (1996) 74 P & CR 377, sub nom Prudential Assurance Co Ltd v Mount Eden Land Ltd [1997] 1 EGLR 37, [1997] 14 EG 130, CA������������������������������������������������������������������������������������������������������������������������������  4.51, 5.29 Mountnoy v Collier (1853) 1 E & B 630����������������������������������������������������������������������������������������  9.36 Mowatt v Castle Steel and Iron Works Co (1886) 34 Ch D 58, 55 LT 645, CA������������������������  6.32, 8.84 Mucklow (A & J) (Birmingham) Ltd v Metro-Cammell Weymann Ltd [1994] EGCS 64������������  3.25 Muhammad v ARY Properties Ltd [2016] EWHC 1698 (Ch)�����������������������  7.16, 12.11, 12.152, 12.156 Muir’s Executors v Craig’s Trustees (1913) 50 SLR 284, 1913 SC 349, 1913 1 SLT 2����������������  6.17 Mulcahy v Hoyne (1925) 36 CL 41 �����������������������������������������������������������������������������������������������  4.46 Multitank Holsatia, The. See Tankrederei Ahrenkeil GmbH v Frahuil SA, The Multitank Holsatia Mundy v Jolliffe (1839) 5 My & Cr 167, 9 LJ Ch 95, 3 Jur 1045, 4 Jur 621���������������������������������  1.38 Mungalsingh v Juman [2015] UKPC 38, [2016] 1 P & CR 7, [2016] 1 P & CR DG3�������������  7.17, 7.20 Munt v Beasley [2006] EWCA Civ 370������������������������������������  1.96, 6.13, 12.24, 12.83, 12.108, 12.183 Murphy v Burrows [2004] EWHC 1900 (Ch)��������������������������������������������������������������������������������  5.43 Murphy v Rayner [2011] EWHC 1 (Ch)����������������������������������������������������������������������������������������   12.34 Murphy (J) & Sons Ltd v ABB Daimler-Benz Transportation (Signal) Ltd (2 December 1998, unreported)������������������������������������������������������������������������������������������������������������������������������  8.59 Muschinski v Dodds (1985) 160 CLR 583�������������������������������������������������������������������������������������  12.186 Museprime Properties Ltd v Adhill Properties Ltd (1990) 61 P & CR 111, [1990] 2 EGLR 196, [1990] 36 EG 114��������������������������������������������������������������������������������������������������������������������  5.34

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Table of cases Muskham Finance Ltd v Howard [1963] 1 QB 904�����������������������������������������������������������������������   15.12 Mutual Reserve Fund Life Association v Cleveland Woollen Mills 82 Fed Rep 508 (1897)������  10.25 MW Trustees Ltd v Telular Corp [2011] EWHC 104 (Ch), [2011] L & TR 19������������������������������  3.24 MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] EWCA Civ 553, [2016] 2 Ll Rep 391��������������������������������������������������������������������������������  1.26, 8.75, 14.8, 14.30, 14.33, 14.34 N Nai Genova and Nai Superba, The. See Agip SpA v Navigazione Alta Italia SpA, The Nai Genova and Nai Superba Nash v De Freville [1900] 2 QB 72, 69 LJQB 484, 48 WR 434, 82 LT 642, 16 TLR 268, CA��������������������������������������������������������������������������������������������������������������������������������  3.50, 9.7 Nata Lee Ltd v Abid [2015] 2 P & CR 3, CA���������������������������������������������������������������������������������  12.147 National Employers’ Mutual General Insurance Association Ltd v Jones [1990] 1 AC 24, [1987] 3 All ER 385, [1987] 3 WLR 901, [1987] BTLC 125, 131 Sol Jo 1154, [1987] LS Gaz R 2458, CA; affd [1990] 1 AC 24, [1988] 2 All ER 425, [1988] 2 WLR 952, [1988] RTR 289, 132 Sol Jo 658, [1988] NLJR 118, HL������������������������   11.11, 11.24, 11.28, 11.31 National Insurance and Guarantee Corp Plc v Imperio Reinsurance Co (UK) Ltd [1999] Ll Rep IR 249��������������������������������������������������������������������������������������������������������������������������������������  5.31 National Pari-Mutuel Association Ltd v R (1930) 47 TLR 110, CA����������������������������������������������  2.28 National Provincial Bank Ltd v Ainsworth [1965] AC 1175, [1965] 2 All ER 472, [1965] 3 WLR 1, 109 Sol Jo 415, HL����������������������������������������������������  6.34, 6.39, 12.168, 12.170, 12.171, 12.175 National Provincial Bank Ltd v Hastings Car Mart Ltd [1965] AC 1175�����������������������������  6.38, 12.175 National Provincial Bank of England v Glanusk [1913] 3 KB 335������������������������������������������������    3.9 National Westminster Bank Ltd v Barclays Bank International Ltd [1975] QB 654, [1974] 3 All ER 834, [1975] 2 WLR 12, [1974] 2 Ll Rep 506, 118 Sol Jo 627����������������������������  2.18, 5.31, 9.72 National Westminster Bank Ltd v Hart [1983] QB 773, [1983] 2 All ER 177, [1983] 2 WLR 693, 47 P & CR 102, 8 HLR 91, 127 Sol Jo 273, 267 Estates Gazette 252, CA�����������������������  9.18, 9.33 National Westminster Bank Plc v Somer International (UK) Ltd [2001] EWCA Civ 970, [2002] QB 1286, [2002] 1 All ER 198, [2002] 3 WLR 64, [2001] Ll Rep Bank 263����������������������  1.6, 1.8, 1.51, 1.57, 1.59, 1.61, 1.84, 1.99, 1.103, 1.104, 1.105, 1.106, 1.109, 2.8, 5.49, 5.50, 5.66, 5.68, 12.2, 12.3, 12.195, 12.196 Nationwide Anglia Building Society v Lewis [1998] Ch 482, [1998] 3 All ER 143, [1998] 2 WLR 915, CA������������������������������������������������������������������������������  5.7, 5.13, 5.72, 9.8, 11.107, 13.49 Nea Tyhi, The [1982] 1 Ll Rep 606, [1982] Com LR 9�����������������������������������������������������������������   11.93 Neale v Electric and Ordnance Accessories Co Ltd [1906] 2 KB 558, 75 LJKB 974, 8 WCC 6, 95 LT 592, 22 TLR 732, CA����������������������������������������������������������������������������������������������  6.18, 13.3 Neesom v Clarkson (1845) 4 Hare 97����������������������������������������������������������������������������������  12.13, 12.189 Nerano, The. See Daval Aciers d’Usinor et de Sacilor v Armare Srl, The Nerano Netglory Pty Ltd v Caratti [2013] WASC 364�����������������������������������������������������������������������������  7.7, 7.23 Neumann Contractors Ltd v Traspunt No 5 Pty Ltd [2011] 2 Qd R 114����������������������������������������    7.7 Neville v Wilkinson (1782) 1 Bro CC 543�������������������������������������������������������������������������������������  1.36 New Brunswick and Canada Rly and Land Co v Conybeare (1862) 9 HL Cas 711, 31 LJ Ch 297, 8 Jur NS 575, 10 WR 305, 6 LT 109, HL�������������������������������������������������������������������������������  2.18 New Hampshire Insurance Co v Oil Refineries Ltd [2003] Ll Rep IR 386������������������������������������   10.28 New South Wales Trotting Club Ltd v Council of Municipality of the Glebe (1937) 37 SR (NSW) 288������������������������������������������������������������������������������������������������������������������������������   12.21 New Zealand Meat Board v Paramount Export Ltd [2004] UKPC 45�������������������������������������������  4.44 New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd, The Eurymedon [1975] AC 154, HL�������������������������������������������������������������������������������������������������������������������������������������������   12.70 Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 732��������������������������������������  5.72 Newcastle International Airport Ltd (NIAL) v Eversheds LLP [2012] EWHC 2648 (Ch), [2013] PNLR 5�����������������������������������������������������������������������������������������������������������������������������������  5.26 Newis v General Accident Fire and Life Assurance Corp (1910) 11 CLR 620������������������������������  8.64 Newport CC v Charles [2009] 1 WLR 184���������������������������������������������������  1.21, 1.43, 1.46, 1.50, 1.87, 7.6, 7.7, 7.21, 12.35 Newtons of Wembley Ltd v Williams [1965] 1 QB 560, [1964] 3 All ER 532, [1964] 3 WLR 888, 108 Sol Jo 619, CA���������������������������������������������������������������������������������������������   11.23, 11.33, 11.36 Nexus Communications Group Ltd v Lambert [2005] EWHC 345 (Ch)����������  13.5, 13.54, 13.55, 13.58 Nichimen Corp v Gatoil Oversea Inc [1987] 2 Ll R 46������������������������������������������������������������������  4.61 Nile Rhapsody, The. See El Chiaty (Hamed) & Co (t/a Travco Nile Cruise Lines) v Thomas Cook Group Ltd, The Nile Rhapsody

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Table of cases Nilon Ltd v Royal Westminster Investments SA [2015] UKPC 2, [2015] 3 All ER 372, [2015] BCC 521, [2015] 2 BCLC 1���������������������������������������������������������������������������������������������������  10.1 Nippon Menkwa Kabushiki Kaisha (Japan Cotton Trading Co Ltd) v Dawson’s Bank Ltd (1935) 51 Ll L Rep 143, PC���������������������������������������������������������������������������������  1.18, 1.44, 2.14, 4.46, 5.6 Nippon Yusen Kaisha v Pacifica Navegacion SA, The Ion [1980] 2 Ll Rep 245�������������������  5.45, 14.26, 14.33, 14.35, 14.40 Nisbet v Shepherd [1994] 1 BCLC 300����������������������������������������������������������������������������������������������  10.2 No 1 India Quay (Residential) Ltd v East Power Apartments Ltd [2016] EWHC 2438 (Ch)�����������������������������������������������������������������������������������������������������������������������������  4.44, 7.7 Noblebright Ltd v Sirius International Corp [2007] EWHC 868 (QB), [2007] Ll Rep IR 584�����������������������������������������������������������������������������������������������������������������������������  10.28, 10.29 Norfolk County Council v Secretary of State for the Environment [1973] 3 All ER 673, [1973] 1 WLR 1400, 72 LGR 44, 26 P & CR 273, 137 JP 832, 117 Sol Jo 650���������������������  5.10, 5.42, 7.38 Norfolk’s Case (1667) Hard 464�����������������������������������������������������������������������������������������������������  8.87 North British Insurance Co v Lloyd (1854) 24 LJ Ex 14, 10 Exch 523, 1 Jur NS 45, 3 CLR 264, 24 LTOS 157���������������������������������������������������������������������������������������������������������������������������  3.19 North Eastern Properties Ltd v Coleman [2010] 1 WLR 2715����������������������������������������  7.14, 7.22, 8.68 North Staffs Railway Co v Edge [1920] AC 254����������������������������������������������������������������������������   15.13 North Western Gas Board v Manchester Corp [1963] 3 All ER 442, [1964] 1 WLR 64, 62 LGR 18, 10 RRC 140, 107 Sol Jo 593, [1963] RVR 552, 188 Estates Gazette 17, CA���������������  7.9, 7.48 Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146, 93 ALR 385, 64 ALJR 427, HC of A��������������������������������������������������������������������������������������������  9.2, 10.12, 10.13 Northstar Land Ltd v Brooks [2006] 2 EGLR 67������������������������������������������������������������������������  3.5, 4.51 Northumberland and Durham District Banking Co, Re, ex p Bigge (1858) 28 LJ Ch 50, 5 Jur NS 7, 7 WR 30, 32 LTOS 116�������������������������������������������������������������������������������������������������������    5.9 Norton v Charles Deane Productions (1969) 214 EG 559��������������������������������������������������������������  3.24 Norwegian American Cruises A/S v Paul Munday Ltd, The Vistafjord [1988] 2 Ll Rep 343, CA������������������������������������������������������������������������������������  1.19, 1.66, 1.73, 2.28, 2.35, 8.3, 8.5, 8.10, 8.11, 8.35, 8.54, 8.55, 8.63 Norwich and Peterborough Building Society v Steed [1993] Ch 116, [1993] 1 All ER 330, [1992] 3 WLR 669, CA�����������������������������������������������������������������������������������������������������������������  8.84, 8.87 Norwich Corp v Norwich Electric Tramways Co Ltd [1906] 2 KB 119, 70 JP 401, 75 LJKB 636, 54 WR 572, 50 Sol Jo 499, 95 LT 12, 22 TLR 553, 4 LGR 1114, CA�����������������������  7.1, 13.3, 15.6 Norwich Union Fire Insurance Society Ltd v William H Price Ltd [1934] AC 455, 103 LJPC 115, 40 Com Cas 132, [1934] All ER Rep 352, 78 Sol Jo 412, 151 LT 309, 50 TLR 454, 49 Ll L Rep 55, PC������������������������������������������������������������������������������������������������������������������������������  2.31 Noton v Brooks (1861) 7 H & N 499, 8 Jur NS 155, 10 WR 111��������������������������������������������������  9.62 Nottingham Patent Brick and Tile Co v Butler (1886) 16 QBD 778, 55 LJQB 280, 34 WR 405, [1886–90] All ER Rep 1075, 54 LT 444, 2 TLR 391, CA������������������������������������������������������  3.19 Noys v Mordaunt (1706) 2 Vern 581, 23 ER 978������������������������������������������������������������������  13.50, 13.51 NRAM Plc v McAdam [2014] EWHC 4174 (Comm); [2015] EWCA Civ 751����������������������  1.19, 2.28, 2.35, 7.11, 7.24, 7.31, 7.32, 7.33, 7.34, 7.35, 7.36, 7.46, 7.47, 8.66, 8.68, 8.73 Nunn v Fabian (1865–66) LR 1 Ch App 35���������������������������������������������������������������������������  12.18, 12.21 Nurcombe v Nurcombe [1985] 1 All ER 65, [1985] 1 WLR 370, [1984] BCLC 557, 128 Sol Jo 766, CA����������������������������������������������������������������������������������������������������������������������������  13.2, 13.56 NW Salt Co Ltd v Electrolytic Alkali Co Ltd [1914] AC 461�����������������������������������������������������  7.1, 15.6 O Oak Investment Partners XII LLP v Boughtwood [2009] EWHC 641 (Ch)����������������������������������  8.78 Oastler v Henderson (1877) 2 QBD 575, 46 LJQB 607, 37 LT 22, CA���������������������������  4.46, 4.53, 9.39 Oates v Stimson [2006] EWCA Civ 548���������������������������������������������������������������������������  12.151, 12.201 Occidental Worldwide Investment Corp v Skibs A/S Avanti, Skibs A/S Glarona, Skibs A/S Navalis, The Siboen and The Sibotre [1976] 1 Ll Rep 293����������������������������������������������������  5.13 Ocean Frost, The. See Armagas Ltd v Mundogas SA, The Ocean Frost Ocean Pride Maritime Ltd Partnership v Qingdao Ocean Shipping Co (The Northgate) [2007] EWHC 2796 (Comm), [2008] 2 All ER (Comm) 330������������������������������������������  6.15, 13.16, 13.17 Oceanbulk Shipping & Trading SA v TMT Asia Ltd [2011] 1 AC 662�����������������������������������������  4.52 Oceanografia SA DE CV v DSND Subsea AS [2006] EWHC 1360 (Comm)��������������������������  1.47, 8.57 Odenfeld, The. See Gator Shipping Corp v Trans-Asiatic Oil Ltd SA and Occidental Shipping Establishment, The Odenfeld Official Custodian of Charities v Parway Estates Developments Ltd [1985] Ch 151��������������������   13.31

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Table of cases Official Trustee of Charity Lands v Ferriman Trust Ltd [1937] 3 All ER 85�������������������  5.23, 5.62, 9.24 Offshore Oil NL v Southern Cross Exploration NL (1985) 3 NSWLR 337, NSWSC�������������������  8.80 Ogilvie v West Australian Mortgage and Agency Corp Ltd [1896] AC 257, 65 LJPC 46, 74 LT 201, 12 TLR 281, PC���������������������������������������������������������������������������������������  1.51, 3.20, 5.11, 5.65 Ogilvy v Hope-Davies [1976] 1 All ER 683, 31 P & CR 268, 119 Sol Jo 826������������������������������   14.35 Ogle v Atkinson (1814) 5 Taunt 759, 1 Marsh 323�������������������������������������������������������������������  9.52, 9.58 Ogle v Earl Vane (1868) LR 3 QB 272, 9 B & S 182, 37 LJQB 77, 16 WR 463, Ex Ch������������������������������������������������������������������������������������������������������������������������  1.41, 1.51, 13.6 Ohrloff v Briscall, The Helene (1866) LR 1 PC 231, Brown & Lush 429, 4 Moo PCCNS 70, 35 LJPC 63, 12 Jur NS 675, 2 Mar LC 390, 15 WR 202, 14 LT 873�������������������������������������  11.102 Oliver v Nautilus Steam Shipping Co [1903] 2 KB 639, 72 LJKB 857, 9 Asp MLC 436, 52 WR 200, 5 WCC 65, 47 Sol Jo 671, 89 LT 318, 19 TLR 607, CA�������������  4.57, 4.62, 5.38, 5.39 Olsson v Dyson (1969) 120 CLR 36, HCA���������������������������������������������������������������������������  12.21, 12.83 Olubayo v Seahive Investments Ltd [2008] EWCA Civ 1282, [2009] 1 EGLR 32�����������������������   13.32 Olympia Sauna Shipping Co SA v Shinwa Kaiun Kaisha Ltd, The Ypatia Halcoussi [1985] 2 Ll Rep 364����������������������������������������������������������������������������������������������������������������������������  3.16 Omega Trust Co Ltd v Wright Son & Pepper (1996) 75 P & CR 57, [1996] NPC 189, [1997] 1 EGLR 120, [1997] 18 EG 120, [1997] PNLR 424, CA�������������������������������������������  5.25, 5.26, 6.3 OMG Holdings Pte Ltd v Pos Ad Sdn Bhd [2011] SGHC 246������������������������������������������������������  8.79 O’Neill v Phillips [1999] AC 1092�������������������������������������������������������������������������������������������������  1.68 Onslow, Re, ex p Kibble (1875) 10 Ch App 373, 44 LJ Bcy 63, 23 WR 433, 32 LT 138��������������  6.20 Onward Building Society v Smithson [1893] 1 Ch 1, 62 LJ Ch 138, 2 R 106, 41 WR 53, 37 Sol Jo 9, 68 LT 125, CA��������������������������������������������������������������������������������������������������  4.7, 8.88 Oppenheimer v Attenborough & Son [1908] 1 KB 221, 77 LJKB 209, 13 Com Cas 125, [1904–7] All ER Rep 1016, 52 Sol Jo 76, 98 LT 94, 24 TLR 115, CA����������������������������������   11.23 Oppenheimer v Frazer and Wyatt [1907] 2 KB 50, 76 LJKB 806, 12 Com Cas 280, [1904–7] All ER Rep 143, 51 Sol Jo 373, 97 LT 3, 23 TLR 410, CA����������������������������������������������������   11.40 Ord v Ord [1923] 2 KB 432, 92 LJKB 859, [1923] All ER Rep 206, 129 LT 605, 39 TLR 437�����������������������������������������������������������������������������������������������������������������������������  2.31 Ord v White (1840) 3 Beav 357������������������������������������������������������������������������������������������������������  6.24 Orgee v Orgee [1997] EWCA C4 2650, CA�����������������������������������������������������������������  4.40, 12.24, 12.47 Orient Steam Navigation Co v R (1925) 21 Ll Rep 301�����������������������������������������������������������������  6.16 Orion Finance Ltd v JD Williams & Co Ltd [1997] EWCA Civ 1��������������������������������������������  1.88, 4.42 OT Africa Line Ltd v Vickers Plc [1996] 1 Ll Rep 700�����������������������������������������������������������������  3.16 Otago Farm Co-op Association of New Zealand v McGowan [1925] NZLR 482�������������������������  3.13 Otago Harbour Board v Spedding (1886) 4 NZLR 272�����������������������������������������������������������������  9.18 Ottey v Grundy [2003] EWCA Civ 1176, [2003] WTLR 1253������������������������  5.10, 12.66, 12.78, 12.93, 12.100, 12.188, 12.189 Ottos Kopje Diamond Mines Ltd, Re [1893] 1 Ch 618, 62 LJ Ch 166, 2 R 257, 41 WR 258, 37 Sol Jo 115, 68 LT 138, CA���������������������������������������������������������������������������������  1.42, 10.8, 10.17 OTV Birwelco Ltd v Technical & General Guarantee Co Ltd [2002] EWHC 2240 (TCC), [2002] 4 All ER 668 ���������������������������������������������������������������������������������������������������  6.12, 7.23, 8.84, 8.88 Oulton v Radcliffe (1874) LR 9 CP 189, 43 LJCP 87, 22 WR 372, 30 LT 22�������������������������������  7.44 Ovendale Pty v Anthony (1966) 117 CLR 639�������������������������������������������������������������������������������  4.61 Oxley v Hiscock [2005] Fam 211, CA��������������������������������������������������������������������������������������������  12.201 P Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd. See Motor Credits (Hire Finance Ltd) v Pacific Motor Auctions Pty Ltd Pacol Ltd v Trade Lines Ltd and R/I Sif IV, The Henrik Sif [1982] 1 Ll Rep 456, [1982] Com LR 92, 126 Sol Jo 312��������������������������  1.92, 3.14, 3.16, 5.45, 14.18, 14.19, 14.23, 14.29, 14.36, 14.41 Pain v Coombs (1857) 21 JP 677, 1 De G & J 34, 3 Jur NS 847, 30 LTOS 47������������������������������  1.38 Paine v Bevan and Bevan [1914] WN 147, [1914–15] All ER Rep 569, 110 LT 933, 30 TLR 395 �����������������������������������������������������������������������������������������������������������������������������������������  3.40, 11.78 Pallant v Morgan [1953] Ch 43, [1952] 2 All ER 951, [1952] 2 TLR 813�������������������������������������  5.61 Palmer v Ekins (1728) 1 Barn KB 103, 2 Ld Raym 1550, 11 Mod Rep 407, 2 Stra 817���������������  6.12 Palmer v Metropolitan Rly Co (1862) 31 LJQB 259, 10 WR 714��������������������������������������������  7.44, 13.3 Palmer v Moore [1900] AC 293, 69 LJPC 64, 82 LT 166, PC��������������������������������������������������  3.14, 9.14 Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1992] 1 Ll Rep 101; affd [1993] 1 Ll Rep 496, CA; affd [1995] 1 AC 501, [1994] 3 All ER 581, [1994] 3 WLR 677, [1994] 2 Ll Rep 427, [1994] 36 LS Gaz R 36, [1994] NLJR 1203, 138 Sol Jo LB 182, [1994] 3 LRLR 101, HL�����������������������������������������������������������������������������������������������������  5.7, 10.28, 13.16

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Table of cases Pan-Electric Industries Ltd v Sim Lim Finance Ltd [1993] 3 Sing LR 242����������������������������  3.44, 10.21 Panchaud Frères SA v Etablissements General Grain Co [1970] 1 Ll Rep 53, CA������  5.11, 11.63, 13.27 Pankhania v Hackney London Borough Council [2002] NPC 123, [2002] All ER (D) 22 (Aug)����������������������������������������������������������������������������������������������������������������������������������  2.28 Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd [1971] 2 QB 71��������   10.16 Panoutsos v Raymond Hadley Corp of New York [1917] 2 KB 473, 86 LJKB 1325, 22 Com Cas 308, [1916–17] All ER Rep 448, 61 Sol Jo 590, 117 LT 330, 33 TLR 436, CA�����������������������  2.25, 13.6, 13.16, 14.33 Panton v Jones (1813) 3 Camp 372�������������������������������������������������������������������������������������������  9.22, 9.28 Paquin Ltd v Beauclerk [1906] AC 148, 75 LJKB 395, 54 WR 521, [1904–7] All ER Rep 729, 50 Sol Jo 358, 94 LT 350, 22 TLR 395, HL���������������������������������������������������������������������������  9.17 Parabola Investments Ltd v Browallia CAL Ltd [2009] EWHC 901 (Comm)������������������������������  1.43 Paragon Mortgages Ltd v McEwan-Peters [2011] EWHC 2491 (Comm)�������������������������������������  4.44 Parbulk II A/S v Heritage Maritime Ltd SA, The Mahakam [2011] EWHC 2917 (Comm)��������������������������������������������������������������������������������������������������������������������������  13.15, 13.32 Pargeter v Harris (1845) 7 QB 708, 15 LJQB 113, 10 Jur 260, 5 LTOS 346���������������������������������  8.88 Parker v Manning (1798) 7 Term Rep 537����������������������������������������������������������������  6.9, 6.31, 9.18, 9.35 Parker v Parker [2003] EWHC 1846 (Ch)�����������������������������������������  4.40, 12.47, 12.93, 12.115, 12.121, 12.175, 12.183, 12.188, 12.189 Parkgate Iron Co Ltd v Coates (1870) LR 5 CP 634, 39 LJCP 317, 18 WR 928, 22 LT 685, [1861–73] All ER Rep Ext 1802���������������������������������������������������������������������������������������������  7.44 Parkin v Alba Proteins Ltd [2013] EWHC 2036 (QB)������������������������������������  14.18, 14.19, 14.24, 14.25 Parry v Edwards Geldard [2001] PNLR 44 �����������������������������������������������������������������������������������  8.57 Parsons v New Zealand Shipping Co [1901] 1 KB 548, 70 LJKB 404, 9 Asp MLC 170, 6 Com Cas 41, 49 WR 355, 84 LT 218, 17 TLR 274, CA����������������������������������������������  5.34, 11.93, 11.102 Partenreederei MS Karen Oltmann v Scarsdale Shipping Co Ltd, The Karen Oltmann [1976] 2 Ll Rep 708����������������������������������������������������������������������������������������������������������������������������  2.31 Pascoe v Turner [1979] 2 All ER 945, [1979] 1 WLR 431, 123 Sol Jo 164, CA�������������������  6.41, 12.11, 12.18, 12.66, 12.87, 12.93, 12.112, 12.159, 12.175, 12.188, 12.189 Patel v Mirza [2016] 3 WLR 399���������������������������������������������������������������������������������������������������    7.1 Patel v Peel Investments (South) Ltd [1992] 2 EGLR 116, [1992] 30 EG 88��������������������������������  8.14 Patel v Standard Chartered Bank [2001] Ll Rep Bank 229�������������������������������������������������������  3.16, 3.21 Patent Safety Gun Cotton Co v Wilson (1880) 49 LJQB 713, CA�������������������������������������������������  3.34 Paterson v Gandasequi (1812) 15 East 62, pre-SCJA 1873������������������������������������������������������������  13.3 Pathfinder Minerals Plc v Veloso [2012] EWHC 2856 (Comm)�����������������������������������������������  1.48, 8.57 Pazpana de Vire v Pazpana de Vire [2001] 1 FLR 460�������������������������������������������������������������������  7.41 PCE Investors Ltd v Cancer Research UK [2012] EWHC 884 (Ch), [2012] 2 P & CR 5�������������  3.24 Pearce v Boulton; Boulton v R (1902) 21 NZLR 464, CA�������������������������������������������������������������  9.23 Pearl Carriers Inc v Japan Line Ltd, The Chemical Venture [1993] 1 Ll Rep 508����������������  13.16, 14.14 Pearson v Lehman Bros Finance SA [2012] BCLC 151�����������������  4.53, 5.10, 7.19, 8.7, 8.54, 8.74, 8.75 Pearson v Rose & Young Ltd [1951] 1 KB 275, CA���������������������������������������   11.23, 11.24, 11.40, 11.41 Pearson & Son Ltd v Dublin Corp [1907] AC 351�������������������������������������������������������������������������  8.73 Peart Stevenson Associates Ltd v Holland [2008] EWHC 1868 (QB)�������������������������������������������  8.76 Peek v Gurney (1873) LR 6 HL 377, 43 LJ Ch 19, 22 WR 29, [1861–73] All ER Rep 116����������    6.3 Peekay Intermark Ltd v ANZ Banking Corp [2006] 2 Ll R 511�������������  4.53, 4.54, 4.55, 5.5, 8.67, 8.72 Penn v Lord Baltimore (1750) 1 Ves Sen 444, [1558–1774] All ER Rep 99���������������������������������  7.43 Pennine Raceway Ltd v Kirklees Metropolitan Borough Council [1983] QB 382, [1982] 3 All ER 628, [1982] 3 WLR 987, 81 LGR 89, 45 P & CR 313, 126 Sol Jo 449, [1982] LS Gaz R 921, [1984] NLJ Rep 969, [1982] RVR 214, 263 Estates Gazette 721, [1982] JPL 780, CA����������������������������������������������������������������������������������������������������������������������������  6.34 Pennington v Waine [2002] EWCA Civ 227, [2002] 1 WLR 2075�����������������������������������������  10.2, 10.19 Perlman v Rayden [2004] EWHC 2192 (Ch)������������������������������������������������������������������������  12.12, 12.24 Perry Herrick v Attwood (1857) 2 De G & J 21, 27 LJ Ch 121, 4 Jur NS 101, 6 WR 204, 30 LTOS 267���������������������������������������������������������������������������������������������������������������������������  3.45 Persimmon Homes (South Coast) Ltd v Hall Aggregates (South Coast) Ltd [2009] EWCA Civ 1108���������������������������������������������������������������������������������������������������������������������������  4.44, 14.11 Personal Management Solutions Ltd v Brakes Bros Ltd [2014] EWHC 3495 (QB)���������������������   14.18 Peter v Kendal (1827) 6 B & C 703, 5 LJOSKB 282���������������������������������������������������������������������  9.44 Peters (Allan) (Jewellers) Ltd v Brocks Alarms Ltd [1968] 1 Ll Rep 387�������������������������������������   10.35 Petersen v Moloney (1957) 84 CLR 91������������������������������������������������������������������������������������������   13.47 Peterson v Hickman�����������������������������������������������������������������������������������������������������������������  1.38, 12.13 Petromec Inc v Petroleo Brasileiro SA Petrobras [2004] EWHC 127 (Comm)�����������������������������  1.43

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Table of cases Peyman v Lanjani [1985] Ch 457, [1984] 3 All ER 703, [1985] 2 WLR 154, 48 P & CR 398, 128 Sol Jo 853, CA����������������������������������������������������������������������  5.11, 13.9, 13.14, 13.16, 13.18, 13.23, 13.24, 13.25, 13.27, 14.16, 14.20 P4 Ltd v Unite Integrated Solutions Plc [2006] BLR 150�������������������������������   11.27, 11.28, 11.30, 11.31 PEC Ltd v Asia Golden Rice Co Ltd [2014] EWHC 1583 (Comm)����������������������������������������������    9.9 Phene v Popplewell (1862) 12 CBNS 334, 31 LJCP 235, 8 Jur NS 1104, 10 WR 523, 6 LT 247��������������������������������������������������������������������������������������������������������������������  4.46, 4.53, 9.38 Phillips v Foxall (1872) LR 7 QB 666, 37 JP 37, 41 LJQB 293, 20 WR 900, 27 LT 231��������������    3.9 Phillips v Phillips (1862) 4 De GF & J 208, 31 LJ Ch 321, 8 Jur NS 145, 135 RR 97, 10 WR 236, 5 LT 655����������������������������������������������������������������������������������������������������������������������������������  6.39 Phillips v Royal London Mutual Insurance Co Ltd (1911) 105 LT 136, DC���������������������������������  2.33 Phillpotts v Phillpotts (1850) 10 CB 85, 20 LJCP 11���������������������������������������������������������������������  6.17 Phoenix Mutual Life v Raddin 120 US 183 (1886)���������������������������������������������������������������  10.29, 10.31 Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, [1980] 1 All ER 556, [1980] 2 WLR 283, [1980] 1 Ll Rep 545, 124 Sol Jo 147, 130 NLJ 188, HL�����������������������������������   11.60 Pickard v Sears (1837) 6 Ad & El 469, 2 Nev & PKB 488, Will Woll & Dav 678������������������  1.18, 1.36, 1.39, 1.88, 1.93, 1.114, 3.4, 3.11, 3.13, 3.21, 5.23, 9.5, 11.3, 15.12 Pickering v Busk (1812) 15 East 38, [1803–13] All ER Rep 657�������������  3.43, 3.44, 9.4, 9.5, 9.7, 11.48 Pierson v Altrincham Urban Council (1917) 15 LGR 228, 81 JP 149, 86 LJKB 969, 116 LT 314�������������������������������������������������������������������������������������������������������������������������  5.23, 5.25 Piggott v Stratton (1859) 24 JP 69, 1 De GF & J 33, 29 LJ Ch 1, 6 Jur NS 129, 8 WR 13, 1 LT 111��������������������������������������������������������������������������������������������������������������������  2.25, 2.31, 4.39 Pilet, Re [1915] 3 KB 519���������������������������������������������������������������������������������������������������������������  6.20 Piling v Armitage (1805) 12 Ves 78������������������������������������������������������������������������������������������������  12.104 Pilmore v Hood (1838) 5 Bing NC 97, 7 Dowl 136, 8 LJCP 11, 1 Am 390, 2 Jur 991, 6 Scott 827�������������������������������������������������������������������������������������������������������������������������  3.19, 5.28 Pindell v Airasia Berhad [2011] 1 All ER (Comm) 396�����������������������������������������������������������������    8.9 Pinfield v Eagles [2005] EWHC 477 (Ch)�������������������������������������������������������������������������������  1.87, 12.34 Pinnel’s Case (1602) 5 Co Rep 117a����������������������������������������������������������������������������������������������  14.4 Pintorex Ltd v Keyvanfar [2013] EWPCC 36��������������������������������������������������������������������������������  5.43 Pitt v Holt [2013] UKSC 26, [2013] 2 AC 108, [2013] 2 WLR 1200, [2013] 3 All ER 429, [2013] STC 1148, [2013] Pens LR 195, 81 TC 912, [2013] BTC 126, [2013] WTLR 977, 15 ITELR 976, [2013] STI 1805, [2013] 2 P & CR DG14�����������������������������������������������������  1.75 Platt v Rowe (Trading as Chapman and Rowe) and CM Mitchell & Co (1909) 26 TLR 49���������   10.11 Plevins v Downing (1876) 1 CPD 220, 40 JP 791, 45 LJQB 695, 35 LT 263���������������������������  1.41, 13.6 Plimmer v City of Wellington Corp (1884) 9 App Cas 699, 53 LJPC 105, 51 LT 475, PC������������������������������������������������������������������������������������������������������������������������������  1.38, 1.59, 1.87, 6.13, 6.16, 6.34, 12.12, 12.18, 12.19, 12.20, 12.21, 12.24, 12.47, 12.50, 12.66, 12.78, 12.93, 12.111, 12.117, 12.132, 12.172, 12.173, 12.175, 12.186, 12.189, 12.200 Plumbly v Beatthatquote.Com Ltd [2009] EWHC 321 (QB)���������������������������������������������������������   13.38 PM Project Services Ltd v Dairy Crest Ltd [2016] EWHC 1235 (TCC), [2016] 4 Costs LR 735, [2016] CILL 3855����������������������������������������������������������������������������������������������������������  14.29, 14.32 Polak v Everett (1876) 1 QBD 6699 46 LJQB 218, 24 WR 689, 35 LT 350, CA�����������������������  3.9, 3.21 Pole v Leask (1862) 33 LJ Ch 155, 9 Jur NS 829, [1861–73] All ER Rep 535, 8 LT 645, HL�����������������������������������������������������������������������������������������������������������������������������������    9.2 Police and Crime Commissioner for Greater Manchester v Butterworth (10 November 2016, unreported) ChD��������������������������������������������������������������������������������������������������������������������  7.8, 8.73 Polish Steamship Co v A J Williams Fuels (Overseas Sales) Ltd, The Suwalki [1989] 1 Ll Rep 511���������������������������������������������������������������������������������������������������������������������������������  5.47, 9.7, 9.9 Polly Peck (No 2), In re [1998] 3 All ER 812, CA�������������������������������������������������������������������������  12.200 Polsky v S and A Services Ltd [1951] 1 All ER 185, [1951] WN 136; affd [1951] 1 All ER 1062n, [1951] WN 256, 95 Sol Jo 414, CA����������������������������������������������������������������������������������������  7.42 Porter v Moore [1904] 2 Ch 367, 73 LJ Ch 729, 52 WR 619, 48 Sol Jo 573, 91 LT 484��������������  5.31 Porter (William) & Co Ltd, Re [1937] 2 All ER 361���������������������������������������������  6.20, 6.21, 12.12, 14.4 Possfund Custodian Trustee Ltd v Diamond (McGrigor Donald (a firm), third party) [1996] 2 All ER 774, [1996] 1 WLR 1351, [1996] 2 BCLC 665�����������������������������������������  5.24, 5.25, 5.35 Post Chaser, The. See Société Italo-Belge pour le Commerce et l’Industrie SA v Palm and Vegetable Oils (Malaysia) Sdn Bhd, The Post Chaser Poster v Slough Estates Ltd [1969] 1 Ch 495, [1968] 3 All ER 257, [1968] 1 WLR 1515, 19 P & CR 841, 112 Sol Jo 705, 207 Estates Gazette 629������������������������������������������������������������������  6.44

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Table of cases Postermobile Plc v Brent London Borough Council (1997) Times, 8 December��������������������������  7.38 Poulton v Moore [1915] 1 KB 400, 84 LJKB 462, 112 LT 202, 31 TLR 43, CA���������������������  2.31, 8.88 Powell v Benney [2007] EWCA Civ 1283������������������������������  5.7, 5.60, 12.182, 12.188, 12.189, 12.201 Powell v Browne (1907) 52 Sol Jo 42, 97 LT 854, 24 TLR 71, CA������������������������������������������  5.39, 9.14 Powell v Thomas (1848) 6 Hare 300�����������������������������������������������������������������������������������  12.13, 12.190 Preedy v Dunne [2015] EWHC 2713 (Ch), [2015] WTLR 1795������������������  6.15, 6.48, 6.53, 6.54, 6.56, 6.59, 6.61, 12.52, 12.54, 12.55, 12.175, 15.10 Prendergast v Turton (1843) 13 LJ Ch 268, 8 Jur 205, 2 LTOS 165�����������������������������������������  3.14, 9.14 Presentaciones Musicales SA v Secunda [1994] Ch 271����������������������������������������������������������������  1.63 Price Meats Ltd v Barclays Bank Plc [2000] 2 All ER (Comm) 346�������������������������������  3.16, 3.21, 5.11 Pridean Ltd v Forest Taverns Ltd (1998) 75 P & CR 447, CA���������������������  4.40, 12.47, 12.121, 12.122, 12.123, 12.139 Prime Sight Ltd v Lavarello [2014] AC 436����������������  1.7, 1.29, 7.36, 8.64, 8.66, 8.69, 8.70, 8.77, 8.78, 8.79, 8.82, 8.87, 8.89, 10.23, 15.13 Primera Maritime (Hellas) Ltd v Jiangsu Eastern Heavy Industry Co Ltd [2013] EWHC 3066 (Comm), [2014] 1 All ER (Comm) 813, [2014] 1 Ll Rep 255, [2013] 2 CLC 901����������������   13.14 Primus Telecommunications Plc v MCI WorldCom International Inc [2004] 2 All ER (Comm) 833������������������������������������������������������������������������������������������������������������������������������������������  4.45 Prince of Wales Life Assurance Co v Harding (1858) EB & E 183�����������������������������������������������   10.23 Proactive Sports Management Ltd v Rooney [2010] EWHC 1807 (QB)������������������������������������  7.5, 8.68 Process Components Ltd v Kason Kek-Gardner Ltd [2016] EWHC 2198 (Ch)������������������������������������������������������������������������������������������������������������������  1.73, 1.92, 8.39, 8.44 Procter & Gamble Co v Svenska Cellulosa Aktiebolaget SCA [2012] EWHC 498 (Ch)��������������  8.73 Procter & Gamble Philippine Manufacturing Corp v Peter Cremer GmbH & Co, The Manila [1988] 3 All ER 843 ������������������������������������������������������������������������������������������������������  13.27, 14.20 Proctor v Bennis (1887) 36 Ch D 740, 57 LJ Ch 11, 4 RPC 333, 36 WR 456, 57 LT 662, 3 TLR 820, CA������������������������������������������������������������������������������������������������������  3.13, 3.21, 12.13, 12.105 Prole v Wiggins (1836) 3 Bing NC 230, 6 LJCP 2, 2 Hodg 204, 3 Scott 601��������������������������������  8.87 Proodos C, The. See Syros Shipping Co SA v Elaghill Trading Co, The Proodos C Prophet v Roberts (1918) 88 LJKB 975, 11 BWCC 301, 120 LT 239, CA������������������������������������  2.28 Proudreed Ltd v Microgen Holdings Plc (1995) 72 P & CR 388, [1996] 1 EGLR 89, [1996] 12 EG 127, CA������������������������������������������������������������������������������������������������������������������������  4.53, 9.38 Provincial Insurance Co of Canada v Leduc (1874) LR 6 PC 224, 43 LJPC 49, 2 Asp MLC 538, 22 WR 929, 31 LT 142, PC���������������������������������������������������������������������������������������  3.22, 4.53, 6.15 Prudential Assurance Co Ltd v Exel UK Ltd [2009] EWHC 1350 (Ch)��������  1.96, 3.13, 3.15, 8.9, 14.20 Prudential Assurance Co Ltd v Mount Eden Land Ltd. See Mount Eden Land Ltd v Prudential Assurance Co Ltd Prudential Staff Pensions Ltd v Prudential Assurance Co Ltd [2011] PLR 239������  2.23, 9.83, 9.84, 9.85 Public Trustee v Wadley (1997) 7 Tas LR 35��������������������������������������������������������������������  12.181, 12.182 Pulsford, Re, ex p Hayman (1878) 8 Ch D 11, 47 LJ Bcy 54, 26 WR 597, 38 LT 238, CA�����������    9.8 Puplampu v Pathfinder Mental Health Service NHS Trust, EAT, 20 September 2001������������������  9.13 PW & Co v Milton Gate Investments Ltd [2004] Ch 142���������������  1.74, 2.31, 5.50, 5.51, 6.29, 7.2, 8.5, 8.38, 8.39, 8.55, 8.80, 8.85, 8.88 Pyman v Burt (1884) Cab & El 207�����������������������������������������������������������������������������������  11.102, 11.104 Q Queens Moat Houses Plc v Capita IRG Trustees Ltd [2005] 2 BCLC 199�������������������������������  4.59, 8.10 Quennell v Maltby [1979] 1 All ER 568, [1979] 1 WLR 318, 122 Sol Jo 812, CA�����������������������  9.31 Quinn v CC Automotive Group Ltd (t/a Carcraft) [2010] EWCA Civ 1412, [2011] 2 All ER (Comm) 584��������������������������������������������������������������������������������������������������������������  5.12, 5.25, 5.26 R R v Blenkinsop [1892] 1 QB 43, 56 JP 246, 61 LJMC 45, 40 WR 272, 66 LT 187�����������  3.7, 5.49, 7.28 R v Charles [1977] AC 177, 68 Cr App Rep 334n, [1977] Crim LR 615, HL������������������������������  9.2, 9.7 R v East Sussex County Council, ex p Reprotech (Pebsham) Ltd [2002] UKHL 8, [2002] 4 All ER 58, [2003] 1 WLR 348, [2003] 1 P & CR 63, [2002] 10 EG 158 (CS)������������������  2.18, 7.48, 7.51, 7.52 R v Essex Justices [1895] 1 QB 38, 59 JP 68, 64 LJMC 39, 14 R 90, 43 WR 183, 39 Sol Jo 57, 71 LT 832, 11 TLR 43, CA; affd sub nom West Ham Union v Essex Justices and LCC [1896] AC 443, 60 JP 756, 65 LJMC 231, 75 LT 1, HL���������������������������������������������������������  7.43 R v Inhabitants of Butterton (1796) 6 Term Rep 554���������������������������������������������������������������������   12.13 R v Paulson [1921] 1 AC 271, 90 LJPC 1, 124 LT 449����������������������������������������������������  4.61, 6.16, 7.48

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Table of cases R v Rowe (1894) 15 R 119, 71 LT 578, 11 TLR 29, DC����������������������������������������������������������������  13.3 R v Secretary of State for the Environment, ex p Hammersmith and Fulham London Borough Council (1985) Times, 18 May�����������������������������������������������������������������������������������������������  7.50 R v Somerset CC, ex p Morris & Perry (2000) 79 P & CR 238�����������������������������������������������������  7.52 R v Shropshire County Court Judge (1887) 20 QBD 242, 36 WR 476, 4 TLR 144, sub nom R v Rogers 57 LJQB 143, 58 LT 86, DC��������������������������������������������������������������������������������  7.43 R v Swifte [1913] 2 Ir R 113�����������������������������������������������������������������������������������������������������������  9.19 R (on the application of Bloggs 61) v Secretary of State for the Home Department [2003] EWCA Civ 686�����������������������������������������������������������������������������������������������������������������������  7.52 R (on the application of Green) v Secretary of State for Communities and Local Government [2011] EWHC 305 (Admin)���������������������������������������������������������������������������������������������������  7.52 R (on the application of Grimsby Institute of Further and Higher Education) v Learning and Skills Council [2010] EWHC 2134 (Admin)�������������������������������������������������������������������  7.52 R (on the application of Hely-Hutchinson) v HMRC [2015] EWHC 3261 (Admin), [2016] STC 962, [2015] BTC 37, [2016] ACD 15�����������������������������������������������������������������������������  7.48 R (on the applicaton of Wandsworth) v Secretary of State for Transport, Local Government and the Regions [2003] EWHC 622 (Admin)�������������������������������������������������������������������������  7.52 R (on the application of Welwyn Hatfield Council) v Beesley [2011] AC 304�������������������������  1.43, 1.70 R & H Electric Ltd v Haden Bill Electrical Ltd [1995] 2 BCLC 280, [1995] BCC 958����������������   14.13 R & R Developments Ltd v AXA Insurance UK Plc [2009] EWHC 2429 (Ch)����������������������������   10.29 Raffaella, The. See Egyptian International Foreign Trade Co v Soplex Wholesale Supplies Ltd and PS Refson & Co Ltd, The Raffaella Raiffeisen Hauptgenossenschaft v Louis Dreyfus & Co Ltd [1981] 1 Ll Rep 345������������������������  5.10 Raiffeisen ZentralBank Osterreich AG v Royal Bank of Scotland Plc [2011] 1 Ll Rep 123�����������������������������������������������������������������������������������  2.13, 4.45, 5.5, 5.13, 5.14, 8.68, 8.76 Railway Time Tables Publishing Co, Re, ex p Sandys (1889) 42 Ch D 98, 58 LJ Ch 504, 1 Meg 208, 37 WR 531, 61 LT 94, 5 TLR 397, [1886–90] All ER Rep Ext 1375, CA����������������  6.5, 10.15 Rainford v Keith and Blackman Co Ltd [1905] 1 Ch 296, 74 LJ Ch 156, 12 Mans 162, 92 LT 49, 21 TLR 160; revsd [1905] 2 Ch 147, 74 LJ Ch 531, 12 Mans 278, 54 WR 189, 49 Sol Jo 551, 92 LT 786, 21 TLR 582, CA������������������������������������������������������������������  2.14, 2.28, 10.9, 10.11 Rainsford v Smith (1560) 2 Dyer 196a����������������������������������������������������������������������������������������  1.29, 8.1 Rajapakse v Fernando [1920] AC 892, 89 LJPC 159, 123 LT 482, PC�������������������������������������  1.34, 9.47 Rama Corp v Proved Tin & General Investments Ltd v Reckitt [1933] AC 1�������������������������������    9.2 Ramsay v Love [2015] EWHC 65 (Ch)����������������������������������������������������������������������������  3.28, 3.34, 3.35 Ramsden v Dyson (1865) 1 App Cas 129����������������������������������������������������������������������������������  1.38, 5.24 Ramsden v Dyson and Thornton (1866) LR 1 HL 129, 12 Jur NS 506, 14 WR 926��������������������  12.6, 12.12, 12.13, 12.14, 12.18, 12.21, 12.26, 12.28, 12.47, 12.66, 12.70, 12.73, 12.81, 12.103, 12.104, 12.106, 12.109, 12.115, 12.118, 12.123, 12.181, 12.190, 12.197 Ramzan v Brookwide Ltd [2011] EWCA Civ 985, [2012] 1 All ER 903������������������������������  13.37, 13.40 Rashdall v Ford (1866) LR 2 Eq 750, 35 LJ Ch 769, 14 WR 950, 14 LT 790��������������������������  2.28, 2.30 Rasnoimport V/O v Guthrie & Co Ltd [1966] 1 Ll Rep 1�������������������������������������������������������  5.39, 11.93 Ravennavi SpA v New Century Shipbuilding Co Ltd [2007] 2 Ll R 24����������������������������������������  8.68 Ravenocean v Gardner [2001] All ER (D) 116�������������������������������������������������������������������������������  7.17 Rawlings v Chapman [2015] EWHC 3160 (Ch)����������������������������������������������������������������������������   12.63 Rawlyns’ Case (1587) 4 Co Rep 52a, Gouldsb 89, 93, 4 Leon 116, Jenk 254�������������������������������  9.47 Rayner v Grote (1846) 16 LJ Ex 79, 15 M & W 359, 8 LTOS 474������������������������������������������������  9.15 Rebecca Elaine, The. See Hamble Fisheries Ltd v L Gardner & Sons Ltd, The Rebecca Elaine Reckitt and Coleman (New Zealand) Ltd v Taxation Board of Review [1966] NZLR 1032���������  7.28 Redbridge London Borough Council v Jacques [1971] 1 All ER 260, [1970] 1 WLR 1604, 69 LGR 228, [1971] RTR 56, 135 JP 98, 114 Sol Jo 847��������������������������������������������������  7.28, 7.49 Redcar and Cleveland BC v Bainbridge [2008] EWCA Civ 885, [2009] ICR 133 13.37, 13.40 Redgrave v Hurd (1881) 20 Ch D 1, 57 LJ Ch 113, 30 W 251, [1881–5] All ER Rep 77, 45 LT 185, CA��������������������������������������������������������������������������������������������������������������������  5.10, 5.12 Redrow Plc v Pedley [2002] PLR 339���������������������������������������������������  4.51, 6.51, 6.52, 8.10, 9.83, 9.84 Reese River Silver Mining Co v Smith (1869) LR 4 HL 64, 39 LJ Ch 849, 17 WR 1042������������  2.20 Reeves v Bryner [1801] 6 Ves 516�������������������������������������������������������������������������������������������������  2.25 Regalian Properties Plc v London Dockland Development Corp [1995] 1 All ER 1005, [1995] 1 WLR 212, 45 Con LR 37, [1994] NPC 139, [1995] Conv 135����������������������������������������������  5.27 Reid v Campbell Wallis Moule [1990] VR 859������������������������������������������������������������������������������   10.32 Rein v Stein [1892] 1 QB 753, 61 LJQB 401, 66 LT 469, CA�������������������������������������������������������  4.41 REL (otherwise R) v EL [1949] P 211, sub nom L v L [1949] 1 All ER 141, [1949] LJR 275, 93 Sol Jo 42, 65 TLR 88���������������������������������������������������������������������������������������������������������  5.59

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Table of cases Reliance Finance Corp Ltd v Heid [1982] 1 NSWLR 466�������������������������������������������������������������  8.77 Relvok Properties Ltd v Dixon (1972) 25 P & CR 1, CA���������������������������������������������������������������  9.42 Renaissance Capital Ltd v African Minerals Ltd [2014] EWHC 2004 (Comm)����������������������������  4.59 Rendall v Hill’s Dry Docks and Engineering Co [1900] 2 QB 245������������������������������������������������    3.6 Rennie v Robinson (1823) 1 Bing 147, 1 LJOSCP 30, 7 Moore CP 539���������������������������������������  9.23 Reynell v Sprye (1852) 1 De GM & G 660, 21 LJ Ch 633, 91 RR 228�����������������������������������������  5.13 Rhone v Stephens [1994] 2 AC 310, [1994] 2 All ER 65, [1994] 2 WLR 429, [1994] 2 EGLR 181, [1994] NLJR 460, [1994] 37 EG 151, 138 Sol Jo LB 77, HL����������������������������������������  6.42 Rhyl UDC v Rhyl Amusements Ltd [1959] 1 All ER 257, [1959] 1 WLR 465, 57 LGR 19, 103 Sol Jo 327�������������������������������������������������������������������������������������������������������  4.62, 7.36, 8.66, 12.51 Rice v Rice (1854) 2 Drew 73, 23 LJ Ch 289, 2 Eq Rep 341, 2 WR 139, 22 LTOS 208������������������������������������������������������������������������������������������������������������������  3.42, 5.39, 9.14 Rich (Marc) & Co AG v Portman [1996] 1 Ll Rep 430; affd [1997] 1 Ll Rep 225, CA�������  10.27, 10.28 Richards v Gellatly (1872) LR 7 CP 127, 1 Asp MLC 277, 20 WR 630, 26 LT 435���������������������  3.16 Richards v Jenkins (1887) 18 QBD 451, 56 LJQB 293, 35 WR 355, 56 LT 591, 3 TLR 425, CA ���������������������������������������������������������������������������������������������������������������������������������������������  6.20, 9.4 Richards v Johnston (1859) 4 H & N 660, 28 LJ Ex 322, 5 Jur NS 520, 33 LTOS 206��������������  6.20, 9.4 Richards v Wood [2014] EWCA Civ 327�������������������������������������������������������������������������  1.29, 8.70, 8.79 Richardson v Silvester (1873) LR 9 QB 34, 38 JP 628, 43 LJQB 1, 22 WR 74, 29 LT 395, DC��������������������������������������������������������������������������������������������������������������������������  5.28, 6.4 Richmond Pharmacology Ltd v Chester Overseas Ltd [2014] EWHC 2692 (Ch), [2014] Bus LR 1110����������������������������������������������������������������������������������������������������������������������  1.74, 8.17 Rickards (Charles) Ltd v Oppenhaim (or Oppenheim) [1950] 1 KB 616, [1950] 1 All ER 420, 94 Sol Jo 161, 66 (pt 1) TLR 435, CA�������������������������������������������������������  1.51, 2.25, 13.6, 13.14, 14.9 Right d Jefferys v Bucknell (1831) 2 B & Ad 278, 9 LJOSKB 304������������������������������������������  8.88, 8.93 Rimmer v Webster [1902] 2 Ch 163, 71 LJ Ch 561, 50 WR 517, 86 LT 491, 18 TLR 548������������������������������������������������������������������������������  3.28, 3.31, 3.42, 3.45, 5.39, 9.14, 10.21 Rimpacific Navigation Inc v Daehan Shipbuilding Co Ltd (Rev 1) [2009] EWHC 2941 (Comm)��������������������������������������������������������������������������������������������������������������������������  1.63 Riverlate Properties Ltd v Paul [1975] Ch 133, [1974] 2 All ER 656, [1974] 3 WLR 564, 28 P & CR 220, 118 Sol Jo 644, 231 Estates Gazette 1287, CA���������������������������������������������������������  3.16 Riverside Housing Association v White [2005] EWCA Civ 1385, [2006] 1 EGLR 45�����������������   14.39 Riverside Housing Association v White [2008] 1 P & CR 13���������������������������������������������������  1.59, 8.58 Rivertrade Ltd v EMG Finance Ltd [2013] EWHC 3745 (Ch); [2015] EWCA Civ 1295, [2016] 2 BCLC 226�����������������������������������������������������������������������������������������������������  1.15, 1.48, 8.57, 8.61 Robarts v Tucker (1851) 16 QB 560, 20 LJQB 270, 15 Jur 987, Ex Ch����������������������������������������  2.12 Roberts v Avon Insurance Co Ltd [1956] 2 Ll Rep 240�����������������������������������������������������������������  10.29 Roberts v Plaisted [1989] 2 Ll Rep 341, CA����������������������������������������������������������������������������������   10.29 Roberts v Security Co Ltd [1897] 1 QB 111, 66 LJQB 119, 45 WR 214, [1895–9] All ER Rep 1177, 41 Sol Jo 95, 75 LT 531, 13 TLR 79, CA���������������������������������������������������������������������   10.23 Roberts (A) & Co Ltd v Leicestershire County Council [1961] Ch 555, [1961] 2 All ER 545, [1961] 2 WLR 1000, 59 LGR 349, 105 Sol Jo 425�����������������������������������������������������������  6.15, 7.48 Robertson v Minister of Pensions [1949] 1 KB 227, [1948] 2 All ER 767, [1949] LJR 323, 92 Sol Jo 603, 64 TLR 526����������������������������������������������������������  2.25, 2.31, 6.16, 7.38, 7.48, 14.24 Robinson v Montgomeryshire Brewery Co [1896] 2 Ch 841, 65 LJ Ch 915, 3 Mans 279������������  10.8 Rochdale Canal Co v King (1853) 16 Beav 630, 22 LJ Ch 604, 17 Jur 1001, 1 WR 278, 22 LTOS 73�������������������������������������������������������������������������������������������������������  12.13, 12.93, 12.132 Rochefoucauld v Boustead [1897] 1 Ch 196����������������������������������������������������������������������������������  1.70 Rockland Industries Inc v American Mineral Corp of Canada Ltd (1980) 108 DLR (3d) 513�����������������������������������������������������������������������������������������������������������������������������������  9.13 Rodenhurst Estates Ltd v Barnes Ltd [1936] 2 All ER 3, 80 Sol Jo 405, CA����������������������������  2.31, 9.24 Roe v Mutual Loan Fund Ltd (1887) 19 QBD 347, 56 LJQB 541, 35 WR 723, 3 TLR 755, CA�������������������������������������������������������������������������������������������������������������������������������������������  7.42 Roebuck v Mungovin [1994] 2 AC 224, [1994] 1 All ER 568, [1994] 2 WLR 290, [1994] 1 Ll Rep 481, [1994] 13 LS Gaz R 369 [1994] NLJR 197, HL��������������������������������������������������  1.8, 2.14 Rogers v Ingham (1876) 3 Ch D 351, 25 WR 338, [1874–80] All ER Rep 209, 35 LT 677, CA�������������������������������������������������������������������������������������������������������������������������������������������  2.31 Rogers v Jones (1877) 7 Ch D 345�������������������������������������������������������������������������������������������������   13.50 Rogers v Pitcher (1815) 6 Taunt 202, 1 Marsh 541�������������������������������������������������  1.42, 9.21, 9.23, 9.36 Rogers, Sons & Co v Lambert & Co [1891] 1 QB 318, 55 JP 452, 60 LJQB 187, 39 WR 114, 64 LT 406, 7 TLR 69, CA������������������������������������������������������������������������������������������������������������  9.59 Rolled Steel Products (Holdings) Ltd v British Steel Corp [1986] Ch 246, CA����������������������������  6.55 Rolt v White (1862) 3 De GJ & Sm 360, 9 Jur NS 343, 1 New Rep 171, 7 LT 586�����������������  1.65, 3.21

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Table of cases Rootkin v Kent County Council [1981] 2 All ER 227, [1981] 1 WLR 1186, 80 LGR 201, 125 Sol Jo 496, CA�������������������������������������������������������������������������������������������������������������������������������  7.50 Rose v Stavrou [1999] 25 LS Gaz R 29, [2000] L & TR 133����������������������������  6.11, 14.14, 14.17, 14.40 Ross v Edwards & Co (1895) 11 R 574, 73 LT 100, PC��������������������������������������������������  9.54, 9.55, 9.58 Ross River Ltd v Cambridge City FC Ltd [2007] EWHC 2115 (Ch), [2008] 1 All ER 1004����������������������������������������������������������������������������������������������������������������������������������  5.13 Rother District Investments Ltd v Corke [2004] 2 P & CR 17��������������������������������������������������  9.29, 9.48 Rotherwick (Lord) (Executors of) v Oxford County Council (3 February 2000, unreported) ����������������������������������������������������������������������������������������������������������������������������������  4.44, 7.48, 8.14 Round Imports v Rexam Glass Barnsley Ltd (5 October 2000, unreported)����������������������������������   13.13 Rover International Ltd v Cannon Film Sales Ltd (No 3) [1989] 3 All ER 423, [1989] 1 WLR 912, [1988] BCLC 710n, CA��������������������������������������������������������������������������������������������������  5.42 Rowland v Environment Agency [2003] EWCA Civ 1885������������������������������������������������������������  7.52 Rowland and Crankshaw, Re (1866) 1 Ch App 421�����������������������������������������������������������������������    9.8 Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44, [2002] 2 AC 773, [2001] 4 All ER 449, [2001] 3 WLR 1021, [2002] 1 Ll Rep 343, [2001] 3 FCR 481, [2001] 2 FLR 1364, [2001] Fam Law 880, [2001] NLJR 1538, [2001] 43 EG 184 (CS), [2002] 1 P & CR D25, [2001] 2 All ER (Comm) 1061�����������������������������������������������������������������������������������������������  5.31 Royal Bank of Scotland Plc v Luwum [2008] EWCA Civ 648������������������������������������������������������  5.42 Royal Bank of Scotland Plc v Sandstone Properties Ltd [1998] 2 BCLC 429����������������  3.28, 10.8, 10.9, 10.10, 10.17 Royal British Bank, The v Turquand. See Turquand’s Case Ruben v Great Fingall Consolidated [1906] AC 439, 75 LJKB 843, 13 Mans 248, [1904–7] All ER Rep 460, 95 LT 214, 22 TLR 712, HL������������������������������������������������������  8.87, 10.12, 10.13 Rudd v Bowles [1912] 2 Ch 60�������������������������������������������������������������������������������������������������������  1.46 Rule v Jewell (1881) 18 Ch D 660, 29 WR 755������������������������������������������������������������������������  3.14, 9.14 Russel v Langstaffe (1780) 2 Doug KB 514�����������������������������������������������������������������������������������   11.77 Russell v Thornton (1859) 4 H & N 788����������������������������������������������������������������������������������������    3.9 Russell v Watts (1883) 25 Ch D 559, 32 WR 621, 50 LT 673, CA; revsd (1885) 10 App Cas 590, 50 JP 68, 55 LJ Ch 158, 34 WR 277, 53 LT 876, HL�������������������������������������������������������������   12.13 Russell Bros (Paddington) Ltd v John Lelliott Management Ltd (1995) 1 Con LJ 377 ����������������  8.58 Russian Commercial and Industrial Bank v Comptoir d’Escompte de Mulhouse [1925] AC 112, 93 LJKB 1098, [1924] All ER Rep 381, 68 Sol Jo 841, 132 LT 99, 40 TLR 837, HL�����������  9.54 Russo-Chinese Bank v Li Yau Sam [1910] AC 174, 79 LJPC 60, 101 LT 689, 26 TLR 203, PC������������������������������������������������������������������������������������������������������������������������������������  9.17 Rust v Abbey Life Assurance Co Ltd [1979] 2 Ll Rep 334, CA����������������������������������������������������  3.23 Ryanair Ltd v SR Technics Inc Ltd [2007] EWHC 3089 (QB)�������������������������������������������������  4.53, 8.74 S S & E Promotions v Tobin Bros (1994) 122 ALR 637�������������������������������������������������������������������  5.46 Sadler, Re, ex p Davies (1881) 19 Ch D 86, 30 WR 237, 45 LT 632, CA���������������������������������  8.90, 9.59 Saetta, The. See Forsythe International (UK) Ltd v Silver Shipping Co Ltd and Petroglobe International Ltd, The Saetta Safehaven Investments Inc v Springbok Ltd (1995) 71 P & CR 59, [1995] EGCS 96������������������   13.14 Safety Explosives Ltd, Re [1904] 1 Ch 226, 73 LJ Ch 184, 11 Mans 76, 52 WR 470, 90 LT 331, CA�������������������������������������������������������������������������������������������������������������������������������������������  3.14 St Etienne v Headley [1991] Ch 425����������������������������������������������������������������������������������������������  6.39 St George’s Steam Packet Co, Re, Maguire’s Case (1849) 3 De G & Sm 31, 18 LJ Ch 256, 13 Jur 673, 13 LTOS 342�������������������������������������������������������������������������������������������������������������������  5.42 St Mary, Islington, Vestry v Hornsey UDC [1900] 1 Ch 695, 69 LJ Ch 324, 48 WR 401, 44 Sol Jo 327, 82 LT 580, 16 TLR 286, CA���������������������������������������������������������������������������������������  7.36 St Maximus Shipping Co Ltd v AP Moller-Maersk A/S [2014] EWHC 1643 (Comm), [2014] 2 Ll Rep 377�������������������������������������������������������������������������������������������������������������������������������  3.18 St Pancras & Humanist HA Ltd v Leonard [2009] EWCA Civ 1442����������������������������������������  3.13, 3.15 St Paul Fire and Marine Insurance Co (UK) Ltd v McConnell Dowell Constructors Ltd [1993] 2 Ll Rep 503; affd [1996] 1 All ER 96, [1995] 2 Ll Rep 116, 45 Con LR 89, 74 BLR 112, CA����������������������������������������������������������������������������������������������������������������������  2.17 Saleh v Romanous [2010] NSWCA 274�����������������������������������������������������������������������������������������  4.53 Salisbury (Marquess) v Gilmore [1942] 2 KB 38, [1942] 1 All ER 457, 111 LJKB 593, 86 Sol Jo 251, 166 LT 329, 58 TLR 226, CA���������������������������������������������������������������������������  2.17, 2.23, 14.4 Salisbury District Council v Le Roi [2002] 1 P & CR 501�������������������������������������������������������������  7.51 Salmon v Webb and Franklin. See Webb v Spicer

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Table of cases Salomon v Akiens. See Akiens v Salomon Salter v Kidley (1688) 1 Show 58, Carth 76, Holt KB 210������������������������������������������������������������  8.88 Salvation Army Trustee Co Ltd v West Yorkshire Metropolitan County Council (1980) 41 P & CR 179, [1983] Conv 85������������������������������������������  1.21, 1.87, 5.27, 6.15, 6.34, 7.48, 12.35, 12.93 SAM Business Systems Ltd v Hedley & Co [2003] 1 All ER (Comm) 465����������������������������������  8.75 Samsung Electronics (UK) Ltd v Apple Inc [2012] EWHC 889 (Ch), [2013] FSR 7��������������������    1.2 Sangster v Biddulph [2005] PNLR 33 �������������������������������������������������������������������������������  5.7, 9.8, 13.49 Santa Clara, The. See Vitol SA v Norelf Ltd, The Santa Clara Sarat Chunder Dey v Gopal Chunder Lala (1892) 19 LR Ind App 203, ILR 20 Calc 296; revsd (1892) 56 JP 741, 8 TLR 732, PC���������������������������  1.18, 1.68, 2.31, 5.25, 8.57, 12.12, 12.82 Sargent v ASL Developments Ltd (1974) 131 CLR 634, 4 ALR 257, 48 ALJR 410���������������������  13.2 Sargent (J) (Garages) Ltd v Motor Auctions (West Bromwich) Ltd [1977] RTR 121, CA���������������  3.28, 3.32, 3.41 Saudi Crown, The [1986] 1 Ll Rep 261, 136 NLJ 508�������������������������������������������������������������������   11.93 Saunders (Executrix of Will of Gallie) v Anglia Building Society [1971] AC 1004, [1970] 3 All ER 961, [1970] 3 WLR 1078, 22 P & CR 300, 114 Sol Jo 885, HL���������������  3.27, 3.32, 3.49, 5.31 Saunders v Merryweather (1865) 30 JP 265, 3 H & C 902, 35 LJ Ex 115, 11 Jur NS 655, 13 W 814���������������������������������������������������������������������������������������������������������������������������������  8.88 Savage v Foster (1723) 9 Mod Rep 35�������������������������������������  1.38, 1.39, 1.114, 3.13, 6.18, 7.39, 12.13 Savoy Estate Ltd, Re, Remnant v Savoy Estate Ltd [1949] Ch 622, [1949] 2 All ER 286, [1949] LJR 1549, CA�������������������������������������������������������������������������������������������������������������������������  9.58 Savva v Costa (9 October 1980, unreported) CA���������������������������������������������������������������������������  12.189 Scandinavian Trading Tanker Co AB v Rota Petrolera Ecuatoriana, The Scaptrade [1981] 2 Ll Rep 425; on appeal [1983] QB 529, [1983] 1 All ER 301, [1983] 2 WLR 248, [1983] 1 Ll Rep 146, 126 Sol Jo 853, 133 NLJ 133, CA; affd [1983] 2 AC 694, [1983] 2 All ER 763, [1983] 3 WLR 203, [1983] 2 Ll Rep 253, 127 Sol Jo 476, HL���������������  4.9, 4.43, 5.10, 5.13, 5.54, 10.23, 10.24, 13.27, 14.11, 14.16 Scaptrade, The. See Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana, The Scaptrade Scarborough (Earl of) v Doe d Savile. See Doe d Lumley v Earl of Scarborough Scarf v Jardine (1882) 7 App Cas 345, 51 LJQB 612, 30 WR 893, [1881–5] All ER Rep 651, 47 LT 258, HL�������������������������������������������������������������������������������������  3.5, 9.2, 9.8, 9.13, 11.2, 13.3, 13.46, 13.47, 13.48, 13.49 Scarfe v Matthews [2012] EWHC 3071 (Ch), [2012] STC 2487�������������������������������  13.50, 13.51, 13.52 Schaefer v Schuhmann [1972] AC 572, PC������������������������������������������������������������  12.43, 12.164, 12.173 Scheibler, Re, ex p Holthausen (1874) 9 Ch App 722, 44 LJ Bcy 26, 31 LT 13����������������������������  6.20 Schmaltz (or Schmalz) v Avery (1851) 16 QB 655, 20 LJQB 228, 15 Jur 291, 17 LTOS 27������������������������������������������������������������������������������������������������������������������������  9.15, 9.17 Schneideman Bros Ltd [1917] NZLR 48����������������������������������������������������������������������������������������   10.15 Schneider v Heath (1813) 3 Camp 506�������������������������������������������������������������������������������������������    3.8 Scholefield v Lockwood (No 2) (1863) 32 Beav 436, 33 LJ Ch 106, 9 Jur NS 738, 1 New Rep 559, 11 WR 555, 8 LT 409; on appeal 4 De GJ & Sm 22�������������������������������������������������������  8.87 Scholfield v Earl of Londesborough [1896] AC 514, 65 LJQB 593, 45 WR 124, [1895–9] All ER Rep 282, 40 Sol Jo 700, 75 LT 254, 12 TLR 604, HL�������������������������������������  3.16, 3.28, 3.34, 3.51 Schoolman v Hall [1951] 1 Ll Rep 139, CA�����������������������������������������������������������������������������������   10.29 Schultz v Astley (1836) 2 Bing NC 544, 5 LJCP 130, 1 Hodg 425, 2 Scott 815���������������������������   11.77 Scott v Dixon (1859) 29 LJ Ex 62��������������������������������������������������������������������������������������������������    6.3 Scottish & Newcastle Plc v Lancashire Mortgage Corp Ltd [2007] EWCA Civ 684����������������  7.7, 7.17, 8.5, 12.70, 12.114, 12.151, 12.183 Scottish Coal Co Ltd v Royal and Sun Alliance Insurance Plc [2008] EWHC 880 (Comm), [2008] Ll Rep IR 718��������������������������������������������������������������������������������������������������������������   10.31 Scottish Equitable Plc v Derby [2000] 3 All ER 793, [1999] All ER (D) 1042, [2001] 2 All ER (Comm) 119; affd sub nom Derby v Scottish Equitable Plc [2001] EWCA Civ 369, [2001] 3 All ER 818, [2001] NLJR 418, sub nom Scottish Equitable Plc v Derby [2001] 2 All ER (Comm) 274��������������������������������������������������������������������  1.6, 1.51, 1.57, 1.61, 1.105, 3.7, 5.9, 5.46, 5.49, 5.50, 5.62, 5.66, 5.68, 12.195 Scout Association Trust Corp v Secretary of State for the Environment [2005] EWCA Civ 980������������������������������������������������������������������������������������������������������������������������������������  7.48 Scriven Bros & Co v Hindley & Co [1913] 3 KB 564, 83 LJKB 40, 109 LT 526�����������  3.21, 3.28, 5.31 Scudamore v Vanderstene (1587) 2 Co Inst 673�����������������������������������������������������������������������������  8.81 Seakom Ltd v Knowledgepool Group Ltd [2013] EWHC 4007 (Ch)�����������������������������������������  8.9, 8.75 Sears v Minco Plc [2016] EWHC 433 (Ch)������������������������������������������������������������������������������������  8.76 SEB Trygg Liv Holding AB v Manches [2005] EWCA Civ 1237, [2006] 1 WLR 2276����������  9.2, 13.45

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Table of cases Secretary of State for Employment v Globe Elastic Thread Co Ltd [1980] AC 506, [1979] 2 All ER 1077, [1979] 3 WLR 143, [1979] ICR 706, [1979] IRLR 327, 123 Sol Jo 504, HL�����������������������������������������������������������������������������������������������������������������  7.43, 14.2,14.22, 14.36 Secretary of State for Transport v Christos [2003] EWCA C4 1073����������������������������������������������  4.51 Seddon v North Eastern Salt Co Ltd [1905] 1 Ch 326, 74 LJ Ch 199, 53 WR 232, [1904–7] All ER Rep 817, 49 Sol Jo 119, 91 LT 793, 21 TLR 118��������������������������������������������������������  3.12, 3.19 Seechurn v Ace Insurance SA-NV [2002] EWCA Civ 67, [2002] 2 Ll Rep 390, [2002] Ll Rep IR 489������������������������������������������������������������������������������  4.7, 4.42, 4.44, 8.14, 13.11, 14.11, 14.14, 14.21, 14.26, 14.29 Selectmove Ltd, Re [1995] 2 All ER 531, [1995] 1 WLR 474, [1995] STC 406, 66 TC 552, CA���������������������������������������������������������������������������������������������������������������  14.31, 14.35 Semenza v Brinsley (1865) 18 CBNS 467, 34 LJCP 161, 11 Jur NS 409, 13 WR 634, 12 LT 265���������������������������������������������������������������������������������������������������������������������������  9.14, 9.17 Sen v Headley [1991] Ch 425, [1991] 2 All ER 636, [1991] 2 WLR 1308, 62 P & CR 277, [1996] 1 FCR 692, [1991] 2 FLR 449, [1991] Fam Law 373, 135 Sol Jo 384, [1991] NLJR 384, CA�����������������������������������������������������������������������������������������������  12.197, 12.200, 12.201 Serbia, Republic of v Imagesat International NV [2010] 1 Ll Rep 324������������������������  4.2, 8.3, 8.8, 8.20 SERE Holdings Ltd v Volkswagen Group United Kingdom Ltd [2004] EWHC 1551 (Ch)�����������������������������������������������������������������������������������������������������������������������������������������  8.74 Serjeant v Nash, Field & Co [1903] 2 KB 304, 72 LJKB 630, [1900–3] All ER Rep 525, 89 LT 112, 19 TLR 510, CA����������������������������������������������������������������������������������������������  9.21, 9.33 Servicepower Asia Pacific Property Ltd v Servicepower Business Solutions Ltd [2010] 1 All ER (Comm) 238����������������������������������������������������������������������������������������������������������������������������  4.44 Seton, Laing & Co v Lafone (1887) 19 QBD 68, 56 LJQB 415, 35 WR 749, 57 LT 547, 3 TLR 624, CA�������������������������������������������������������������������������������������������  1.42, 3.28, 3.30, 5.5, 5.25, 5.33, 5.42, 5.71, 9.53, 9.54, 11.3 Severn Trent Water v Barnes [2004] EWCA Civ 570, [2004] EGLR 95�����������������������������������������  13.37 Shackleford, The. See Surrey Shipping Co Ltd v Compagnie Continentale (France) SA, The Shackleford Shackleton, Re (1875) 10 Ch App 446�������������������������������������������������������������������������������������������  2.23 Shaftsbury House (Developments) Ltd v Lee [2010] EWHC 1484 (Ch)���������������������������������������  2.22 Shah v Shah [2001] EWCA Civ 527, [2002] QB 35, [2001] 4 All ER 138, [2001] 3 WLR 31���������������������������������������������������������������������������������  7.7, 7.23, 7.24, 8.57, 12.145, 12.146 Shaker v Vistajet Group Holding SA [2012] EWHC 1329 (Comm), [2012] 2 All ER (Comm) 1010, [2012] 2 Ll Rep 93�����������������������������������������������������������������������������������������  8.68 Sharp Bros and Knight v Chant [1917] 1 KB 771, 86 LJKB 608, 61 Sol Jo 352, 116 LT 185, 33 TLR 235, CA����������������������������������������������������������������������������������������������������������������������  2.28, 2.32 Sharpe, Re [1981] 1 WLR 219��������������������������������������������������������������������������������  6.20, 6.21, 6.23, 6.43 Sharpe (a bankrupt), Re, Trustee of the Bankrupt v Sharpe [1980] 1 All ER 198, [1980] 1 WLR 219, 39 P & CR 459, 124 Sol Jo 147������������������������������������  12.22, 12.172, 12.175, 12.189, 12.201 Shaw v Applegate [1978] 1 All ER 123, [1977] 1 WLR 970, 35 P & CR 181, 120 Sol Jo 424, CA����������������������������������������������������������������������������  1.66, 12.5, 12.13, 12.24, 12.26, 12.189 Shaw v Metropolitan Police Comr (Natalegawa, claimant) [1987] 3 All ER 405, [1987] 1 WLR 1332, [1987] BTLC 150, 131 Sol Jo 1357, [1987] LS Gaz R 3011, CA���������  3.39, 3.40, 3.42, 11.4 Shaw v Picton (1825) 4 B & C 715, 4 LJOS KB 29, 7 Dow & Ry KB 201�����������������������  3.7, 6.20, 6.21 Shaw v Port Philip Colonial Gold Mining Co Ltd (1884) 13 QBD 103, 53 LJQB 369, 32 WR 771, 50 LT 685, DC����������������������������������������������������������������������������������������������������������������  9.17 Shearson Lehman Bros Inc v Maclaine Watson & Co Ltd (International Tin Council intervening) (No 2) [1988] 1 All ER 116, [1988] 1 WLR 16, 131 Sol Jo 1658, [1988] 2 LS Gaz R 35, HL����������������������������������������������������������������������������������������������������������������������������������������  3.34, 8.5 Shearson Lehman Hutton Inc v JH Rayner (Mincing Lane) Ltd [1989] 2 Ll Rep 570������������������  5.62 Shearson Lehman Hutton Inc v Maclaine Watson & Co Ltd [1989] 1 All ER 1056, [1988] 1 WLR 946, [1989] 2 Ll Rep 570, 132 Sol Jo 1035, [1988] NLJR 185��������������������������������  3.14, 5.42, 5.54 Sheffield (Earl) v London Joint Stock Bank (1888) 13 App Cas 333, 57 LJ Ch 986, 37 WR 33, 58 LT 735, 4 TLR 389, HL��������������������������������������������������������������������������  3.37, 5.12, 10.20, 10.21 Sheffield, Ashton-under-Lyne and Manchester Rly Co v Woodcock (1841) 2 Ry & Can Cas 522, 11 LJ Ex 26, 7 M & W 574������������������������������������������������������������������������������������������������  5.42, 7.29 Sheffield Corp v Barclay [1905] AC 392, 3 LGR 992, 69 JP 385, 74 LJKB 747, 10 Com Cas 287, 12 Mans 248, 54 WR 49, [1904–7] All ER Rep 747, 49 Sol Jo 617, 93 LT 83, 21 TLR 642, HL����������������������������������������������������������������������������������������������������������������������   10.10 Sheffield Permanent Building Society, Re, ex p Watson. See Companies Acts, Re, ex p Watson Shelbury v Scotsford (1602) Yelv 23����������������������������������������������������������������������������������������������  9.58 Shell International Trading & Shipping Co Ltd v Tikhonov [2010] EWHC 1399 (QB)����������������   13.40

lxxxi

Table of cases Shelley v United Artists Corp Ltd (1990) 60 P & CR 241, [1990] 1 EGLR 103, [1990] 16 EG 73, CA���������������������������������������������������������������������������������������������������������������������  3.19, 6.34 Shelly v Wright (1737) Willes 9�����������������������������������������������������������������������������������������������������  8.82 Shenstone & Co v Hilton [1894] 2 QB 452������������������������������������������������������������������������������������   11.29 Sheridan v New Quay Co (1858) 4 CBNS 618, 28 LJCP 58, 5 Jur NS 248, 140 ER 1234, 33 LTOS 238����������������������������������������������������������������������������������������������������������������������  5.30, 9.55 Shield v Shield [2014] EWCA Civ 1136������������������������������������������������������������������������  6.36, 12.6, 12.10 Shillibear v Jarvis (1856) 8 De GM & G 79�����������������������������������������������������������������������������������  1.38 Shiloh Spinners Ltd v Harding [1973] AC 691, [1973] 1 All ER 90, [1973] 2 WLR 28, 25 P & CR 48, 117 Sol Jo 34, HL�����������������������������������������������������������������������������������������  6.34, 6.41, 14.6 Shogun Finance Ltd v Hudson [2004] 1 AC 919, HL��������������������������������������������������������������������   11.33 Short v Taylor�����������������������������������������������������������������������������������������������������������������������  12.13, 12.189 Shrager v Basil Dighton Ltd [1924] 1 KB 274, 93 LJKB 348, 68 Sol Jo 166, 130 LT 642, 39 TLR 705, CA�����������������������������������������������������������������������������������������������������������������������������������  7.44 Shropshire Union Railways and Canal Co v Robson (1875) LR 7 HL 496, 45 LJQB 31, 23 WR 709, 32 LT 283, HL�����������������������������������������������������������������  3.34, 3.42, 6.3, 6.55, 9.14, 10.8, 10.9 Siboen and The Sibotre, The. See Occidental Worldwide Investment Corp v Skibs A/S Avanti, Skibs A/S Glarona, Skibs A/S Navalis, The Siboen and The Sibotre Sidaway v Board of Governors of Bethlem Royal Hospital and the Maudsley Hospital [1985] AC 871, [1985] 1 All ER 643, [1985] 2 WLR 480, 129 Sol Jo 154, 1 BMLR 132, [1985] LS Gaz R 1256, HL����������������������������������������������������������������������������������������������������������������������  3.18 Sidhu v Van Dyke (2014) 251 CLR 505�������������������������������������������������������������������������  1.8, 5.14, 12.182 Siew Soon Wah v Yong Tong Hong [1973] AC 836, [1973] 2 WLR 713, 117 Sol Jo 341, PC�������������������������������������������������������������������������������������������������������������������������������  6.34 Silver v Ocean Steamship Co Ltd [1930] 1 KB 416, 99 LJKB 104, 18 Asp MLC 74, 35 Com Cas 140, [1929] All ER Rep 611, 73 Sol Jo 849, 142 LT 244, 46 TLR 78, 35 Ll L Rep 49, CA ���������������������������������������������������������������������������������������������������  5.7, 5.39, 5.62, 5.72, 11.86, 11.102 Simm v Anglo-American Telegraph Co (1879) 5 QBD 188, 44 JP 280, 49 LJQB 392, 28 WR 290, 42 LT 37, CA����������������������������������������������������������������������������������  1.18, 1.29, 1.33, 1.42, 1.65, 5.10, 5.23, 5.41, 5.45, 5.50, 6.6, 6.32, 8.1, 8.80, 9.4, 9.5, 10.8, 10.9, 10.10, 10.11, 10.18 Simms, Re, ex p Trustee [1934] Ch 1, 103 LJ Ch 67, [1933] P & CR 176, [1933] All ER Rep 302, 149 LT 463, CA�����������������������������������������������������������������������������������������������������������������������   13.40 Simner v New India Assurance Co Ltd [1995] LRLR 240�������������������������������������������������������������   13.17 Simpson, Re, ex p Morgan (1876) 2 Ch D 72, 45 LJ Bcy 36, 24 WR 414, 34 LT 329, CA��������������������������������������������������������������������������������������������������������������������  8.36, 8.82, 8.86, 8.87 Simpson v Crowle [1921] 3 KB 243, 90 LJKB 878, [1921] All ER Rep 715, 125 LT 607, 37 TLR 658�����������������������������������������������������������������������������������������������������������������������������  7.43 Sinclair v Sinclair [2009] EWHC 926 (Ch)������������������������������������������������������������������������������������  1.96 Sinclair Gardens Investments (Kensington) Ltd v Poets Chase Freehold Co Ltd [2007] EWHC 1776 (Ch), [2008] 1 WLR 768 ������������������������������������������������������������������������������������������  5.42, 5.43 Sindall (William) Plc v Cambridgeshire County Council [1994] 3 All ER 932, [1994] 1 WLR 1016, 92 LGR 121, [1993] NPC 82, CA���������������������������������������������������������������������������������  2.20 Singh v Beggs (1996) 71 P & CR 120, CA�������������������������������������������������������������������������������������  12.147 Singh v Sandhu (4 May 1995, unreported)��������������������������������������������������������������������������������  6.34, 6.44 Skaife v Jackson (1824) 3 B & C 421, 5 Dow & Ry KB 290���������������������������������������������������������  5.38 Skarp, The [1935] P 134, 104 LJP 63, 18 Asp MLC 576, 41 Com Cas 1, [1935] All ER Rep 560, 154 LT 309, 51 TLR 541���������������������������������������������������������������������������������������������������������  11.103 Skipton Building Society v Clayton (1993) 25 HLR 596���������������������������������������������������������������  3.45 Skipworth v Green (1724) 8 Mod Rep 311, 11 Mod Rep 388, 1 Stra 610��������������������������������  8.87, 8.88 Skyring v Greenwood (1825) 4 B & C 281, 6 Dow & Ry KB 401, [1824–34] All ER Rep 104 ��������������������������������������������������������������������������������������������������������������������  1.42, 3.7, 5.49, 5.62, 6.8 Sledmore v Dalby (1996) 72 P & CR 196, CA���������������������������������������  1.4, 1.71, 5.48, 5.60, 6.34, 12.3, 12.89, 12.173, 12.186, 12.188, 12.191 Sleebush v Gordon [2004] EWHC 2287 (Ch)��������������������������������������������������������������������������������  12.183 Slingsby v District Bank Ltd [1931] 2 KB 588, 100 LJKB 665, 36 Com Cas 339, 75 Sol Jo 629, 145 LT 644, 47 TLR 587; affd [1932] 1 KB 544, 101 LJKB 281, 37 Com Cas 39, [1931] All ER Rep 143, 146 LT 377, 48 TLR 114, CA�����������������������������������������������������������������������  3.20, 9.73 Slocom Trading Ltd v Tatik Inc [2012] EWHC 3464 (Ch)������������������������������������������������������������  8.78 Sly, Spink & Co, Re [1911] 2 Ch 430, 81 LJ Ch 55, 19 Mans 65, 105 LT 364������������������������������  7.36 Smethurst v Mitchell (1859) 1 B & B 622, 28 LJQB 241, 5 Jur NS 978, 7 WR 226, 33 LTOS 9���������������������������������������������������������������������������������������������������������������������������������  13.47

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Table of cases Smith v Baker (1873) LR 8 CP 350, 37 JP 567, 42 LJCP 155, 28 LT 637���������������������  7.42, 13.3, 13.35 Smith v Eric S Bush [1990] 1 AC 831, [1989] 2 All ER 514, [1989] 2 WLR 790, 87 LGR 685, 21 HLR 424, 17 Con LR 1, 133 Sol Jo 597, [1989] 1 EGLR 169, [1989] NLJR 576, [1989] 17 EG 68, 18 EG 99, HL������������������������������������������������������������������  3.32, 5.25, 5.26, 5.29, 6.3, 8.76 Smith v Chadwick (1882) 20 Ch D 27, 51 LJ Ch 597, 30 WR 661, 46 LT 702, CA; affd (1884) 9 App Cas 187, 48 JP 644, 53 LJ Ch 873, 32 WR 687, [1881–5] All ER Rep 242, 50 LT 697, HL�������������������������������������������������������������������������������������������������������������  5.7, 5.10, 5.34 Smith v Cropper. See Cropper v Smith Smith v Draper (1990) 60 P & CR 252, [1990] 2 EGLR 69, [1990] 27 EG 69, CA����������������������  2.35 Smith v Hughes (1871) LR 6 QB 597, 40 LJQB 221, 19 WR 1059, [1861–73] All ER Rep 632, 25 LT 329�����������������������������������������������������������������������������������������������������������������������������  3.8, 3.12 Smith v Kay (1859) 7 HL Cas 750, 30 LJ Ch 45�����������������������������������������������������������������������  5.13, 5.35 Smith v Land and House Property Corp (1884) 28 Ch D 7, 49 JP 182, 51 LT 718, CA�������������  2.20, 5.7 Smith v Lawson (1997) 75 P & CR 466, [1997] NPC 87, 74 P & CR D34, CA������������  5.7, 14.26, 14.40 Smith v Littlewoods Organisation Ltd [1987] AC 241, [1987] 1 All ER 710, [1987] 2 WLR 480, 131 Sol Jo 226, HL�����������������������������������������������������������������������������������������������������������������  3.33 Smith v Low (1739) 1 Atk 489, West temp Hard 669���������������������������������������������������������������  7.39, 8.66 Smith v Morrison [1974] 1 WLR 659���������������������������������������������������������������������������������������������   11.43 Smith v New England Mutual Life Assurance Co 63 Fed Rep 769 (1894)������������������������������������   10.24 Smith v Prosser [1907] 2 KB 735, 77 LJKB 71, 51 Sol Jo 551, 97 LT 155, 23 TLR 597, CA�������������������������������������������������������������������������������������������������������������������  3.28, 3.45, 3.47, 3.48, 3.51, 11.77, 11.78 Smith & Co v Bedouin Steam Navigation Co [1896] AC 70, 65 LJPC 8, 12 TLR 65, HL������������   11.93 SmithKline Beecham Plc v Apotex Europe Ltd [2007] Ch 71 ����������������  1.2, 1.43, 1.46, 1.47, 1.50, 4.2, 4.5, 4.44, 7.31, 8.21 Smith Kline & French Laboratories Ltd v Long [1988] 3 All ER 887, [1989] 1 WLR 1, CA�������  2.17 Smith New Court Securities Ltd v Citibank NA [1997] AC 254, [1996] 3 WLR 1051, [1997] 1 BCLC 350, [1996] 46 LS Gaz R 28, [1996] NLJR 1722, 141 Sol Jo LB 5, sub nom Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd [1996] 4 All ER 769, HL�����������������������������������������������������������������������������������������������������������������������������������  5.14 Smyth (Ross T) & Co Ltd v T D Bailey, Son & Co [1940] 3 All ER 60, 45 Com Cas 292, 84 Sol Jo 572, 164 LT 102, 56 TLR 825, 67 Ll L Rep 147, HL���������������������������������������������������������  13.7 Smythe v Wiles [1921] 2 KB 66, 90 LJKB 1278, 65 Sol Jo 258, 124 LT 688, 37 TLR 256, CA�����������������������������������������������������������������������������������������������������������������������������������  7.44 Snook v London and West Riding Investments Ltd [1967] 2 QB 786, [1967] 1 All ER 518, [1967] 2 WLR 1020, 111 Sol Jo 71, CA����������������������������������������������������������  1.34, 3.42, 9.4, 11.51 Société Anonyme D’Intermédiaires Luxembourgeois v Farex Gie [1995] LRLR 116, CA����������������������������������������������������������������������������������������������������������������������������������  10.28, 10.33 Société Générale v Metropolitan Bank Ltd (1873) 21 WR 335, 27 LT 849���������������������  3.34, 3.51, 9.17 Société Italo-Belge pour le Commerce et I’Industrie SA v Palm and Vegetable Oils (Malaysia) Sdn Bhd, The Post Chaser [1982] 1 All ER 19, [1981] 2 Ll Rep 695, [1981] Com LR 249��������������������������������������������������������������������������������  1.5, 3.24, 5.54, 13.9, 14.11, 14.16, 14.27, 14.29, 14.33, 14.35 Solle v Butcher [1950] 1 KB 671, [1949] 2 AIl ER 1107, 66 (pt 1) TLR 448, CA������������������  2.28, 2.31, 2.32, 7.29, 7.43 Somerset Coal Canal Co v Harcourt (1857) 24 Beav 571, 27 LJ Ch 139, 4 Jur NS 1, 6 WR 96, 30 LTOS 194; on appeal (1858) 2 De G & J 596, 27 LJ Ch 625, 4 Jur NS 671, 6 WR 670, 31 LTOS 259�������������������������������������������������������������������������������������������������������  6.34, 12.13, 12.190 Sonenco (No 77) Pty Ltd v Silvia (1981) 24 FCR 105�������������������������������������������������������������������  6.20 Sony/ATV Music Publishing LLC v WPMC Ltd [2015] EWHC 1853 (Ch), [2015] RPC 28�����������������������������������������������������������������������������������������������������������������������������  4.51, 12.34 Soole v Royal Insurance Co Ltd [1971] 2 Ll Rep 332���������������������������������������������������  2.28, 2.31, 10.32 South Buckinghamshire District Council v Flanagan [2002] EWCA Civ 690, [2002] 1 WLR 2601, [2002] 25 LS Gaz R 34, 146 Sol Jo LB 136�����������������������������������������������������������������  7.52 South Eastern Rly Co v Warton (1861) 6 H & N 520, 31 LJ Ex 515����������������������  4.50, 8.20, 8.86, 8.88 South London Greyhound Racecourses Ltd v Wake [1931] 1 Ch 496, 100 LJ Ch 169, [1930] All ER Rep 496, 74 Sol Jo 820, 144 LT 607�������������������������������������������������������������������  2.11, 10.12 South Tyneside Metropolitan Borough Council v Svenska International Plc [1995] 1 All ER 545 ����������������������������������������������������������������������������������������������������������������������������������  7.36, 7.54, 9.72 South West Trains v Wightman [1998] Pens LR 113���������������������������������������������������������������������  9.82 Southampton Dock Co v Southampton Harbour and Pier Board (1872) LR 14 Eq 595����������������   12.20 Southend-on-Sea Corp v Hodgson (Wickford) Ltd [1962] 1 QB 416, [1961] 2 All ER 46, [1961] 2 WLR 806, 59 LGR 193, 12 P & CR 165, 125 JP 348, 105 Sol Jo 181��������������������������������  7.50

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Table of cases Southern Pacific Mortgages v Scott [2014] UKSC 52, [2015] AC 385������  6.37, 6.38, 6.44, 9.50, 12.168 Southwark London Borough Council v Logan (1995) 29 HLR 40, 8 Admin LR 315, CA�����������������������������������������������������������������������������������������������������������������������  14.26, 14.29, 14.35 Southwell v Blackburn [2014] EWCA Civ 1347, [2014] HLR 47������������������������������������  4.2, 4.40, 5.51, 12.93, 12.117, 12.189 Spence v Shell UK Ltd [1980] 2 EGLR 68, 256 Estates Gazette 55, CA������  4.7, 4.51, 8.30, 14.2, 14.11 Sphere Drake Insurance Plc and another v Orion Insurance Co Plc [1999] All ER (D) 133�����������������������������������������������������������������������������������������������������������������������������  13.1, 13.24 Spice Girls Ltd v Aprilia World Service BV [2002] EMLR 27������������������������������������������������������  8.83 Spiro v Lintern [1973] 3 All ER 319, [1973] 1 WLR 1002, 117 Sol Jo 584, CA������������  1.47, 1.90, 1.93, 2.25, 2.31, 3.13, 3.16, 5.49, 8.57 Splendid Sun, The. See André et Cie SA v Marine Transocean Ltd, The Splendid Sun Spliethoff’s Bevrachtingskantoor BV v Bank of China Ltd [2015] EWHC 999 (Comm), [2016] 1 All ER (Comm) 1034, [2015] 2 Ll Rep 123, [2015] 1 CLC 651��������������������  1.18, 4.44, 8.9, 8.12 Spree Engineering & Testing Ltd v O’Rourke Civil & Structural Engineering Ltd (18 May 1999, unreported)�����������������������������������������������������������������������������������������������������������������������������  9.8, 9.9 Spring Finance Ltd v HS Real Co LLC [2011] EWHC 57 (Comm)����������������������������������������������  4.51 Springwell Navigation Corp v J P Morgan Chase Bank [2010] EWCA Civ 1221�������������������  1.27, 4.53, 4.54, 4.55, 5.5, 5.46, 8.68, 8.69, 8.72, 8.76 Square v Square (otherwise Bewicke) [1935] P 120, 104 LJP 46, [1935] All ER Rep 781, 79 Sol Jo 403, 153 LT 79������������������������������������������������������������������������������������������  5.61, 7.41, 8.30 Stack v Dowden [2007] UKHL 17, [2007] 2 AC 432���������������  6.36, 6.39, 7.15, 12.171, 12.200, 12.201 Stadium Finance Ltd v Robbins [1962] 2 QB 604, CA��������������������������������������������������������������������  11.41 Stancliffe Stone Co Ltd v Peak District National Park Authority [2004] EWHC 1475 (Admin)�����������������������������������������������������������������������������������������������������������������������������������  7.52 Standard Bank Plc v Bin Issa Al Jaber [2011] EWHC 2866 (Comm)��������������������������������������������   14.33 Standard Chartered Bank v Ceylon Petroleum Corp [2011] EWHC 1785 (Comm)��������  4.55, 8.72, 8.75 Standard Chartered Bank v Pakistan National Shipping Corp (No 2) [2002] UKHL 43, [2003] 1 AC 959 �����������������������������������������������������������������������������������������������������������������������������������  5.13 Standing v Eastwood & Co (1912) 106 LT 477, CA����������������������������������������������������������������������  7.43 Stanelco Fibre Optics Ltd v Bioprogress Technology Ltd [2005] RPC 15�������������������������������  4.50, 5.31 Stanton Iron Co, In re (1855) 21 Beav 164�������������������������������������������������������������������������������������    9.8 Staffs Motor Guarantee v British Wagon Co [1934] 2 KB 305���������������������������������������������  11.23, 11.27 Stait v Fenner [1912] 2 Ch 504, 81 LJ Ch 710, [1911–13] All ER Rep 232, 56 Sol Jo 669, 107 LT 120������������������������������������������������������������������������������������������������������������������������������  9.27 Stallion v Albert Stallion Holdings (Great Britain) [2009] EWHC 1950 (Ch)����������������  1.70, 5.45, 5.48, 12.183, 12.188, 12.189 Staple of England (Mayor, Constables & Co of Merchants of the) v Governor & Co of Bank of England (1887) 21 QBD 160, 57 LJQB 418, 56 LT 665, DC; affd (1887) 21 QBD 160, 52 JP 580, 57 LJQB 418, 36 WR 880, 4 TLR 46, CA��������������������������������������  3.28, 3.34, 5.70 Stapleford Colliery Co, Re, Barrow’s Case (1879) 14 Ch D 432, 49 LJ Ch 498, 28 WR 270, 41 LT 755; on appeal (1880) 14 Ch D 432, 49 LJ Ch 498, 42 LT 891, CA��������������������  1.33, 5.10, 6.5, 6.20, 6.32, 10.15 Star Steamship Society v Beogradska Plovidba, The Junior K [1988] 2 Ll Rep 583���������������������  4.51 Starbev GP Ltd v Interbrew Central European Holdings BV [2014] EWHC 1311 (Comm)�����������������������������������������������������������������������������������������  1.88, 1.90, 1.92, 1.94, 1.96, 3.12, 3.16, 3.17, 3.18, 8.15, 8.16, 12.109 Startwell Ltd v Energie Global Brand Management Ltd [2015] EWHC 421 (QB)�����������������������  8.68 State Bank of India v Sood [1997] Ch 276, CA������������������������������������������������������������������������������  6.55 Statoil ASA v Louis Dreyfus Energy Services LP, The Harriette N [2008] EWHC 2257 (Comm), [2009] 1 All ER (Comm) 1035��������������������������������������������������������������������������������  3.16 Steed v Whitaker (1740) Barn Ch 220���������������������������������������������������������������������������������  12.13, 12.189 Stena Line Ltd v Merchant Navy Ratings Pension Fund Trustees Ltd [2010] EWHC 1805 (Ch)����������������������������������������������������������������������������������������  7.8, 8.3, 8.6, 8.7, 8.8, 9.81, 9.82 Steria Ltd v Hutchison [2005] EWHC 2993 (Ch); [2006] EWCA Civ 1551 �������������������  1.70, 1.74, 5.7, 5.41, 5.56, 5.62, 6.52, 9.78, 9.79, 9.84, 9.85, 12.89, 12.91, 12.95, 12.98, 14.26, 14.29 Stevens & Cutting Ltd v Anderson [1990] 1 EGLR 95, [1990] 11 EG 70, CA�����������������  5.7, 5.11, 5.45, 5.49, 5.62, 12.91, 13.24, 13.25, 13.26, 13.30 Stevensdrake Ltd v Hunt [2016] EWHC 342 (Ch), [2016] BCC 515, [2016] 2 Costs LO 187, [2016] BPIR 773����������������������������������������������������������������������������������������������������������������  8.9, 14.34 Stiles v Cowper (1748) 3 Atk 692�������������������������������������������������������������������������������  1.38, 12.13, 12.190 Stilk v Myrick (1809) 2 Camp 317, 6 Esp 129, 170 ER 851����������������������������������������������������������   14.30

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Table of cases Stirling v Bibby. See Bibby v Stirling Stocks v Wilson [1913] 2 KB 235, 82 LJKB 598, 20 Mans 129, 108 LT 834, 29 TLR 352, [1911–13] All ER Rep Ext 1512����������������������������������������������������������������������������������������  6.18, 7.39 Stockwell v Southgate Corp [1936] 2 All ER 1343; on appeal [1937] 3 All ER 627, 34 LGR 527, 155 LT 437, CA�����������������������������������������������������������������������������������������������������������������������  7.49 Stocznia Gdanska SA v Latvian Shipping Co Latreefer Inc (No 3) [2002] EWCA Civ 889, [2002] 2 Ll Rep 436, [2002] 2 All ER (Comm) 768������������������������������������������������������  13.14, 13.16 Stoddart v Union Trust Ltd [1912] 1 KB 181, 81 LJKB 140, 105 LT 806, CA������������������������������  6.24 Stokes v Anderson [1991] FCR 539, [1991] 1 FLR 391, [1991] Fam Law 310, CA��������  12.201, 12.203 Stolt Loyalty, The [1993] 2 Ll Rep 281; affd [1995] 1 Ll Rep 598, CA������������������  1.92, 3.8, 3.16, 3.21, 4.39, 5.10, 14.18, 14.19, 14.35 Stonard v Dunkin (1809) 2 Camp 344��������������������������������������������������������������������������������  6.9, 9.53, 9.54 Stone v Fleet Mobile Tyres Ltd [2006] EWCA Civ 1209���������������������������������������������������������������  15.3 Stone (J & F) Lighting and Radio Ltd v Levitt [1947] AC 209, [1946] 2 All ER 653, [1947] LJR 65, 176 LT 1, 62 TLR 737, HL�����������������������������������������������������������������������������������������������  7.43 Stoneleigh Finance Ltd v Phillips [1965] 2 QB 537, [1965] 1 All ER 513, [1965] 2 WLR 508, 109 Sol Jo 68, CA��������������������������������������������������������������������������������������������  1.34, 3.42, 9.4, 11.51 Stowers v GA Bonus plc, Helm Insurance Brokers Ltd [2003] Ll Rep IR 402������������������������������   10.29 Stratford and Moreton Rly Co v Stratton (1831) 2 B & Ad 518, 9 LJOSKB 268��������������������������  8.87 Stratulatos v Stratulatos [1988] 2 NZLR 424���������������������������������������������������������������������������������  12.189 Stray, Re, ex p Stray (1867) 2 Ch App 374, 36 LJ Bcy 7, 15 WR 600, 16 LT 250, CA in Ch�������  13.3 Street v Mountford [1985] AC 809�������������������������������������������������������������������������������������������������    7.5 Strive Shipping Corp v Hellenic Mutual War Risks Association (Bermuda) Ltd, The Grecia Express [2002] EWHC 203 (Comm), [2002] 2 Ll Rep 88, [2002] 2 All ER (Comm) 213, [2002] Ll Rep IR 669������������������������������������������������������������������������������������������  10.30, 13.16, 14.16 Strong v Stringer (1889) 61 LT 470, 5 TLR 638�����������������������������������������������������������������������  4.61, 9.26 Stroughill v Buck (1850) 14 QB 781, 19 LJQB 209, 14 Jur 741, 15 LTOS 22���������������  8.31, 8.70, 8.79, 8.80, 8.88 Strover v Harrington [1988] Ch 390, [1988] 1 All ER 769, [1988] 2 WLR 572, 56 P & CR 302, 132 Sol Jo 416, [1988] 1 EGLR 173, [1988] 09 EG 61����������������������������������������������  5.11, 5.12, 9.7 Strover v Strover [2005] EWHC 860 (Ch)����������������������������������������������������������  1.87, 5.42, 12.34, 15.11 Suarez, Re, Suarez v Suarez [1918] 1 Ch 176, 87 LJ Ch 173, [1916–17] All ER Rep 641, 62 Sol Jo 158, 118 LT 279, 34 TLR 127, CA�������������������������������������������������������������������������������������  13.3 Sugar Hut Group Ltd and others v Great Lakes Reinsurance (UK) Plc [2010] EWHC 2636 (Comm), [2011] Ll Rep IR 198����������������������������������������������������������������������������������������������   10.29 Suggitt v Suggitt [2011] EWHC 903 (Ch); [2012] EWCA Civ 1140����������������������  12.42, 12.87, 12.112, 12.181, 12.183, 12.185, 12.187, 12.188, 12.189, 12.204 Sulphite Pulp Co Ltd v Faber (1895) 1 Comm Cas 143�����������������������������������������������������������������   10.35 Sumner v Schofield (1880) 43 LT 763������������������������������������������������������������������������������  6.31, 6.43, 8.84 Sunderland Corp v Priestman [1927] 2 Ch 107, 26 LGR 64, 96 LJ Ch 441, [1927] All ER Rep 460, 137 LT 688�����������������������������������������������������������������������������������������������������������������  7.49, 7.50 Sunderland Marine Insurance Co v Kearney (1851) 16 QB 925����������������������������������������������������  8.81 Super Chem Products Ltd v American Life and General Insurance Co Ltd (Trinidad and Tobago) [2004] UKPC 2������������������������������������������������������������������������������������������������������������������  4.44, 8.14 Superhulls Cover Case (No 2). See Youell v Bland Welch & Co Ltd Surrey Shipping Co Ltd v Compagnie Continentale (France) SA, The Shackleford [1978] 1 Ll Rep 191; [1978] 2 Ll Rep 154, CA������������������������������������������������������������������  4.2, 4.9, 14.13, 14.14 Sutcliffe v Lloyd [2008] EWHC 1329 (Ch)������������������������������������������  1.21, 12.2, 12.34, 12.66, 12.116, 12.172, 12.187, 12.188, 12.189 Suwalki, The. See Polish Steamship Co v A J Williams Fuels (Overseas Sales) Ltd, The Suwalki Svenska Handelsbanken v Sun Alliance and London Insurance Plc [1996] 1 Ll Rep 519������������   10.31 Svenson v Payne (1945) 71 CLR 531, 19 ALJ 375�����������������������������������������  3.13, 12.13, 12.24, 12.190 Swallow and Pearson (a firm) v Middlesex County Council [1953] 1 All ER 580, [1953] 1 WLR 422, 51 LGR 253, 3 P & CR 314, 117 JP 179, 97 Sol Jo 155�������������������������������  7.28, 7.51 Swan v North British Australasian Co (1863) 2 H & C 175, 32 LJ Ex 273, 10 Jur NS 102, 2 New Rep 521, 11 WR 862, Ex Ch��������������������������������������������������������������������  1.18, 1.65, 3.9, 3.27, 3.28, 3.32, 3.34, 3.37, 3.44, 3.46 Sweet v Sommer [2005] EWCA Civ 227���������������������������������������������������������������������  6.34, 6.45, 12.183 Swift v Winterbotham (1873) LR 8 QB 244; varied sub nom Swift v Jewsbury (1874) LR 9 QB 301, 43 LJQB 56, 22 WR 319, 30 LT 31, Ex Ch����������������������������������������������������  5.28 Swindle v Harrison [1997] 4 All ER 705, [1997] PNLR 641, CA��������������������������������������������������  5.10 Swinton Reds 20 Ltd v McCrory [2014] EWHC 2152 (Ch)����������������������������������������������������������    8.9

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Table of cases Sybron Corp v Rochem Ltd [1984] Ch 112, [1983] 2 All ER 707, [1983] 3 WLR 713, [1983] ICR 801, [1983] IRLR 253, [1983] BCLC 43, 127 Sol Jo 391, CA����������������������������������������������  3.17 Sycamore Bidco Ltd v Breslin [2012] EWHC 3443 (Ch)��������������������������������������������������������������  8.88 Sydenhams (Timber Engineering) Ltd v CHG Holdings Ltd [2007] EWHC 1129 (TCC)�������  8.79, 8.86 Synergy Health (UK) Ltd v CGU Insurance Plc [2010] EWHC 2583 (Comm), [2011] Ll Rep IR 500������������������������������������������������������������������������������������������������������  10.27, 10.28, 10.29 Syros Shipping Co SA v Elaghill Trading Co, The Proodos C [1981] 3 All ER 189, [1980] 2 Ll Rep 390 ����������������������������������������������������������������������������������������������������������������������������������   14.36 Sze To Chun Keung v Kung Kwok Wai David [1997] 1 WLR 1232����������������������������������������  1.29, 8.90 T T v B [2010] Fam 193���������������������������������������������������������������������������������������������������������������������  7.41 T & N Ltd (in administration) v Royal & Sun Alliance Plc [2003] EWHC 1016 (Ch), [2003] 2 All ER (Comm) 939�����������������������������������������������������������������������������������������������������������  4.59, 8.10 Tadman v Henman [1893] 2 QB 168, 57 JP 664, 5 R 479, 37 Sol Jo 478, 9 TLR 509�����������������������������������������������������������������������������������������������������������������  9.19, 9.31, 9.34 Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80, [1985] 2 All ER 947, [1985] 3 WLR 317, [1985] 2 Ll Rep 313, 129 Sol Jo 503, [1985] LS Gaz R 2995, [1985] NLJ Rep 680, PC���������������������������������������������������������  1.70, 3.9, 3.20, 3.27, 3.34, 9.73, 9.74 Take Harvest Ltd v Liu [1993] AC 552, [1993] 2 All ER 459, [1993] 2 WLR 785, 67 P & CR 150, [1993] 15 LS Gaz R 40, [1993] NLJR 617, 137 Sol Jo LB 92, PC����������������������������������������  9.46 Talisman Property Co (UK) Ltd v Norton Rose [2005] EWHC 2793 (Ch)�����������������������������������  5.43 Tameside Metropolitan Borough Council v Barlow Securities Group Services Ltd [2001] EWCA Civ 1, (2001) 75 Con LR 112, [2001] BLR 113��������������������������������������������������������������  4.10, 14.13 Tamil Nadu Electricity Bd v ST-CMS Electricity Co Private Ltd [2008] 1 Ll R 93����������  8.9, 8.32, 8.54 Tang Man Sit (Personal Representatives) v Capacious Investments Ltd [1996] AC 514, [1996] 1 All ER 193, [1996] 2 WLR 192, [1996] 05 LS Gaz R 32, 140 Sol Jo LB 29, PC��������������   13.35, 13.36, 13.37, 13.38, 13.40, 13.42 Tankrederei Ahrenkeil GmbH v Frahuil SA, The Multitank Holsatia [1988] 2 Ll Rep 486�����������������������������������������������������������������������������������������������������������������������  4.42, 5.42 Tanning Research Laboratories Inc v O’Brien (1990) 169 CLR 332, 91 ALR 180, HC of A�����������������������������������������������������������������������������������������������������������������������������������  6.22 Taranaki Electric Power Board v Proprietors of Puketapu No 3 Block [1958] NZLR 297�������������������������������������������������������������������������������������������������������������������������������������  5.40, 7.49 Tarjomani v Panther Securities Ltd (1982) 46 P & CR 32�����������������������������������������������  8.90, 9.38, 9.39 Tasker (W) & Sons Ltd, Re, Hoare v W Tasker & Sons Ltd [1905] 2 Ch 587, 74 LJ Ch 643, 12 Mans 302, 54 WR 65, 49 Sol Jo 700, 93 LT 195, 21 TLR 736, CA����������������������������������  6.32 Tatra, The. See Arctic Shipping Co Ltd v Mobilia AB, The Tatra Tayler v Great Indian Peninsula Rly Co (1859) 4 De G & J 559, 28 LJ Ch 709, 5 Jur NS 1087, 7 WR 637, 33 LTOS 361���������������������������������������������������������������������������������������������������������  3.44 Tayler v Waters (1816) 7 Taunt 374������������������������������������������������������������������������������������������������   12.12 Taylor v Dickens [1998] 3 FCR 455, [1998] 1 FLR 806, [1998] Fam Law 191����������������������  1.24, 5.27, 12.129, 12.204 Taylor v Inntrepreneur Estates (CPC) Ltd (2001) 82 P & CR D9��������������������������������������������������  5.27 Taylor v Johnson (1983) 151 CLR 422, 45 ALR 265, 57 ALJR 197, HC of A������������������������������  3.16 Taylor v Knapman (1884) 2 NZLR 265������������������������������������������������������������������������������������  2.10, 8.31 Taylor v Lancashire County Council (2001) 82 P & CR D10, CA�������������������������������������������������    3.5 Taylor v Needham (1810) 2 Taunt 278������������������������������������������������������������������  6.26, 6.31, 8.84, 12.72 Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1981] 2 WLR 576n, [1981] Com LR 34, 251 Estates Gazette 159, [1982] QB 133n, [1981] 1 All ER 897�������������������������������  1.20, 1.59, 1.66, 1.67, 1.78, 1.90, 1.96, 2.25, 2.28, 2.31, 2.35, 3.9, 3.15, 5.7, 5.10, 5.13, 6.42, 8.17, 8.61, 8.83, 8.88, 12.4, 12.7, 12.10, 12.13, 12.14, 12.18, 12.19, 12.20, 12.22, 12.24, 12.25, 12.26, 12.27, 12.59, 12.64, 12.66, 12.73, 12.74, 12.78, 12.81, 12.83, 12.84, 12.104, 12.111, 12.133, 14.9 TCB Ltd v Gray [1986] Ch 621, [1986] 1 All ER 587, [1986] 2 WLR 517, [1986] BCLC 113, 2 BCC 99, 044, 130 Sol Jo 224, [1986] LS Gaz R 520, [1986] NLJ Rep 93; affd [1987] Ch 458n, [1988] 1 All ER 108, [1987] 3 WLR 1144n, [1988] BCLC 281n, 3 BCC 503, CA��������������������������������������������������������������������������������������������  1.46, 2.31, 7.23, 12.143 Tchenguiz v Grant Thornton UK LLP [2015] EWHC 405 (Comm), [2015] 1 All ER (Comm) 961����������������������������������������������������������������������������������������������������������������������������  15.4

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Table of cases Teasdale v Teasdale (1726) Sel Cas Temp King 59������������������������������������������������������������������������  1.39 Ted Baker Plc v Axa Insurance UK Plc [2014] EWHC 3548 (Comm), [2015] Ll Rep IR 325���������������������������������������������������������������������������������������������������������������  1.90, 4.41, 8.9, 10.35 Tele2 International Card Co SA v Post Office Ltd [2009] EWCA Civ 9������������������������������  13.13, 13.16 Telfair Shipping Corp v Athos Shipping Co SA, Solidor Shipping Co Ltd, Horizon Finance Corp and AN Cominos, The Athos [1983] 1 Ll Rep 127, CA���������������������  3.24, 4.43, 5.10, 14.11, 14.17 Tenax Steamship Co Ltd v Reinante Transoceania Navegacion SA, The Brimnes. See Brimnes, The, Tenax Steamship Co Ltd v The Brimnes (Owners) Tennant v LCC (1957) 55 LGR 421, 121 JP 428, 169 Estates Gazette 689, CA����������������������������  3.24 Territory Insurance Office v Adlington (1992) 109 FLR 124���������������������������������������������������������  5.62 Terunnanse (Meeruppe Sumanatissa) v Terunnanse Warakapitiye (Pangnananda) [1968] AC 1086, [1968] 1 All ER 651, [1968] 2 WLR 1125, 112 Sol Jo 134, PC�����������������������������������  9.20 Tesco Stores Ltd v Costain Construction Ltd [2003] EWHC 1487 (TCC)�������������  1.43, 1.49, 8.26, 8.59 Test Claimants in FII Group Litigation v HMRC [2008] EWHC 2893 (Ch), [2009] STC 254����������������������������������������������������������������������������������������������������������������������������������  5.49 Thai-Europe Tapioca Service Ltd v Seine Navigation Co Inc, The Maritime Winner [1989] 2 Ll Rep 506����������������������������������������������������������������������������������������������������������������������������  4.42 Thames Trains Ltd v Adams [2006] EWHC 3291 (QB)����������������������������������������������������������  3.21, 14.18 Thamesmead Town Ltd v Allotey (1998) 79 P & CR 557, 30 HLR 1052, [1998] 3 EGLR 97, [1998] 03 LS Gaz R 26, [1998] 37 EG 161, 76 P & CR D20, CA�����������������������������������������  6.42 Thanakharn Kasikorn Thai Chamkat (Mahachon) v Akai Holdings Ltd [2010] HKCFA 64����������������������������������������������������������������������������������������������������������������  5.26, 9.2, 10.16 Thaxton v Goodman (A Child) (Rev 1) [2010] EWHC 90182 (Costs)������������������������������������������  2.18 Thomas v Brown (1876) 1 QBD 714, 45 LJQB 811, 24 WR 821, 35 LT 237�������������������������������  7.14 Thomas v Ken Thomas Ltd [2006] EWCA Civ 1504, [2007] 1 EGLR 31���������������������������  13.31, 13.32 Thomas v Lulham [1895] 2 QB 400, 59 JP 709, 64 LJQB 720, 14 R 692, 43 WR 689, [1895–9] All ER Rep 945, 39 Sol Jo 687, 73 LT 146, 11 TLR 558, CA������������������������������������������������  5.30 Thomas v Thomas [1956] NZLR 785���������������������������������������������������������������������������������������������  12.189 Thomas v University of Bradford (No 2) [1992] 1 All ER 964������������������������������������������������������  7.44 Thomas Australia Wholesale Vehicle Trading Co Pty Ltd v Marac Finance Australia Ltd (1985) 3 NSWLR 452�������������������������������������������������������������������������������������������������������������������������  3.39 Thompson v Arnold [2007] EWHC 1875 (QB), [2008] PIQR P1��������������������������������������������������  3.21 Thompson v Foy [2009] EWHC 1076 (Ch), [2010] 1 P & CR 16������������������������  3.45, 4.2, 6.44, 12.183 Thompson v Palmer (1933) 49 CLR 507���������������������������������  1.5, 1.7, 1.18, 1.22, 1.68, 3.51, 5.46, 8.17 Thomson v Davenport (1829) 9 B & C 78, 7 LJOSKB 134, 4 Man & Ry KB 110, Dan & Ll 278, pre-SCJA 1873������������������������������������������������������������������������������������������������������������������������  13.3 Thor Navigation Inc v Ingosstrakh Insurance [2005] 1 Ll R 547���������������������������������������������������    8.9 Thornbridge Ltd v Barclays Bank Plc [2015] EWHC 3430 (QB)��������������������������������������������������  8.76 Thorne v Tilbury (1858) 3 H & N 534, 27 LJ Ex 407, 31 LTOS 206����������������������������������������  9.57, 9.58 Thorner v Major [2007] EWHC 2422 (Ch); [2008] EWCA Civ 732, [2008] WTLR 1289, CA; [2009] 1 WLR 776, HL�������������������������������������������������������������������  1.2, 1.21, 1.24, 1.70, 1.79, 1.89, 1.99, 1.117, 2.8, 2.13, 2.14, 2.15, 2.22, 3.4, 4.2, 4.9, 4.11, 4.13, 4.14, 4.20, 4.23, 4.24, 4.25, 4.26, 4.31, 4.36, 4.37, 4.38, 4.40, 4.44, 4.45, 4.46, 4.47, 5.24, 5.25, 5.27, 5.32, 6.39, 7.22, 7.26, 7.40, 12.4, 12.6, 12.12, 12.19, 12.31, 12.33, 12.34, 12.42, 12.44, 12.45, 12.59, 12.60, 12.66, 12.78, 12.92, 12.93, 12.100, 12.108, 12.112, 12.113, 12.117, 12.123, 12.126, 12.129, 12.131, 12.150, 12.156, 12.164, 12.173, 12.174, 12.181, 12.183, 12.189, 12.190, 12.191, 12.197, 12.198, 12.201, 14.22, 14.39 Thornton v Ramsden (1864) 4 Giff 519�����������������������������������������������������������������������������������������   12.18 Thornton Springer v NEM Insurance Co Ltd [2000] 2 All ER 489, [2000] 13 LS Gaz R 42, 144 Sol Jo LB 148, [2000] 1 All ER (Comm) 486, [2000] Ll Rep IR 590���������������������  5.32, 5.62, 8.28, 8.57, 14.17, 14.26, 14.29, 14.41 Tickner v Buzzacott [1965] Ch 426, [1965] 1 All ER 131, [1965] 2 WLR 154, 109 Sol Jo 74�������������������������������������������������������������������������������������������������������������������������������  9.26 Tidebrook Maritime Corp v Vitol SA of Geneva, The Front Commander [2006] EWCA Civ 944���������������������������������������������������������������������������������������������������������������������������  13.16, 13.17 Tidman v Reading Borough Council [1994] PLR 72���������������������������������������������������������������������  7.38 Tigris International NV v China Southern Airlines Co Ltd [2014] EWCA Civ 1649��������������������  4.61 Tindall v Tindall [1953] P 63, [1953] 1 All ER 139, [1953] 2 WLR 158, 97 Sol Jo 47, CA����������  7.41 Tinsley v Milligan [1994] 1 AC 340�����������������������������������������������������������������������������������������������  5.44 Titan Steel Wheels Ltd v Royal Bank of Scotland Plc [2010] EWHC 211 (Comm)����������������  8.68, 8.76

lxxxvii

Table of cases Tobin v Broadbent (1947) 75 CLR 378������������������������������������������������������������������������������������������  3.44 Toepfer v Warinco AG [1978] 2 Ll Rep 569�����������������������������������������������������������������������������������  6.15 Tofts v Pearl Life Assurance Co Ltd [1915] 1 KB 189, 84 LJKB 286, 59 Sol Jo 73, 112 LT 140, 31 TLR 29, CA������������������������������������������������������������������������������������������������������������������������  2.33 Tolputt (H) & Co Ltd v Mole [1911] 1 KB 836, 80 LJKB 686, 55 Sol Jo 293, 104 LT 148, CA������������������������������������������������������������������������������������������������������������������������������  5.42, 7.43 Tonks v UK Insurance Ltd [2006] EWHC 1120 (TCC)�����������������������������������������������������������������   13.20 Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd [1955] 2 All ER 657, [1955] 1 WLR 761, 72 RPC 209, 99 Sol Jo 470, HL���������������������������������������������������  2.8, 2.15, 14.4, 14.8, 14.10, 14.21, 14.26, 14.34, 15.2 Topham v Charles Topham Group Ltd [2002] EWHC 1096 (Ch), [2003] 1 BCLC 123����������������  8.58 Toronto Railway Co v National British and Irish Millers Insurance Co Ltd (1914) 20 Com Cas 1, 111 LT 555, CA�������������������������������������������������������������������������������������������������������������������   10.39 Torre Asset Funding Ltd v Royal Bank of Scotland Plc [2013] EWHC 2670 (Ch), (2013) 157(35) SJLB 41�����������������������������������������������������������������������������������������������������������������������������������  8.68 Tower Cabinet Co Ltd v Ingram [1949] 2 KB 397, [1949] 1 All ER 1033, [1949] LJR 1419, 93 Sol Jo 404, 65 TLR 407, DC���������������������������������������������������������������������������������������������������    9.8 Townsend v Persistence Homes Ltd [2013] UKPC 12�������������������������������������������������������������������  8.15 Tradax Export SA v Dorada Compania Naviera SA, The Lutetian [1982] 2 Ll Rep 140, [1982] Com LR 130����������������������������������������������������������������������  1.88, 1.92, 3.10, 3.12, 3.16, 8.15, 12.109 Trado, The. See Marseille Fret SA v D Oltmann Schiffahrts GmbH & Co KG, The Trado Traill v Baring (1864) 4 De GJ & Sm 318, 33 LJ Ch 521, 10 Jur NS 377, 3 New Rep 681, 12 WR 678, 10 LT 215�������������������������������������������������������������������������������������������������������������������  3.19, 5.13 Trane (UK) Ltd v Provident Mutual Life Assurance [1995] 1 EGLR 33, [1995] 03 EG 122 ����������������������������������������������������������������������������������������������������������������������������������  2.31, 5.12, 5.25 Transcatalana de Commercio SA v Incobras Industrial e Commercial Brazileira SA [1995] 1 Ll Rep 215�����������������������������������������������������������������������������������������������������������������������������������   13.26 Transgrain Shipping BV v Deiulemar Shipping SpA [2014] EWHC 4202 (Comm), [2015] 1 Ll R 461�������������������������������������������������������������������������������������������������������������������������  1.43, 1.49, 8.59 Transvaal and Delagoa Bay Investment Co Ltd v Atkinson [1944] 1 All ER 579�������������������������    3.7 Transview Properties Ltd v City Site Properties Ltd [2009] EWCA Civ 1255�������������������������  1.90, 3.16 Trenorden v Martin [1934] SASR 340�������������������������������������������������������������������������������������������  5.46 Treport’s Case (1594) 6 Co Rep 14b����������������������������������������������������������������������������������������������  9.47 Trident Turboprop (Dublin) Ltd v First Flight Couriers Ltd [2008] EWHC 1686 (Comm)����������  8.76 Trinidad Asphalte Co v Coryat [1896] AC 587, 65 LJPC 100, 45 WR 225, 75 LT 108, PC����������  8.84 Triodos Bank NV v Dobbs [2005] 2 Ll R 479��������������������������������������������������������������������������������    8.9 Tromp, The [1921] P 337����������������������������������������������������������������������������������������������������������������  11.102 Troop v Gibson [1986] 1 EGLR 1, 277 Estates Gazette 1134, CA�����������������  1.96, 4.2, 4.11, 8.19, 8.20, 8.27, 8.54, 14.11, 14.13 Trueman v Loder (1840) 11 Ad & El 589, 9 LJQB 165, 4 Jur 934, 3 Per & Dav 267�������������������  9.13 Truex v Toll [2009] EWHC 396 (Ch), [2009] 1 WLR 2121�����������������������������������������������������������  5.43 Trustee Solutions Ltd v Dubery [2006] EWHC 1426 (Ch), [2007] 1 All ER 308; [2008] ICR 101, CA����������������������������������������������������������������������������������  6.51, 6.52, 9.78, 9.81, 9.83, 9.84 Tsang Chuen v Li Po Kwai [1932] AC 715, 101 LJPC 193, 148 LT 44, PC�����������������������������  3.42, 5.39 Tudor Developments Pty Ltd v Makeig [2007] NSWSC 1116������������������������������������������������������    7.7 Tungsten Electric Co Ltd v Tool Metal Manufacturing Co Ltd (1950) 69 RPC 108, 112, CA �����������������������������������������������������������������������������������������������������������������������������������������  5.49, 14.34 Turner v Sampson (1911) 27 TLR 200���������������������������������������������������������������������������  9.7, 11.23, 11.43 Turquand’s Case, Royal British Bank v Turquand (1856) 6 El & Bl 327������������������  10.12, 10.13, 10.14 Tyerman v Smith 6 E & B 719, 25 LJQB 359, 2 Jur NS 860, 27 LTOS 172, pre-SCJA 1873����������������������������������������������������������������������������������������������������������������������������������������  13.3 U UBS AG (London Branch) v Kommunale Wasserwerke Leipzig GmbH [2014] EWHC 3615 (Comm)������������������������������������������������������������������������������������������������������������  8.31, 8.72, 8.73, 8.74 UCB Home Loans Corp Ltd v Soni [2013] EWCA Civ 62������������������������������������������������������������    9.8 Uglow v Uglow [2004] EWCA Civ 987, [2004] WTLR 1183����������������������������  4.13, 5.24, 12.2, 12.188 Ullises Shipping Corp v FAL Shipping Co Ltd [2006] EWHC 1729 (Comm)������������������������������    7.5 Ulster Bank Ltd v Lambe [2012] NIQB 31������������������������������������������������������������������������������������  3.16 Ulysses Compania Naviera SA v Huntingdon Petroleum Services Ltd, The Ermoupolis [1990] 1 Ll Rep 160�������������������������������������������������������������������������������������������������������������������������������  4.42 Unilever Plc v Procter & Gamble Co [2001] 1 All ER 763������������������������������������������������������������  4.52

lxxxviii

Table of cases Union Credit Bank Ltd v Mersey Docks and Harbour Board [1899] 2 QB 205, 68 LJQB 842, 4 Com Cas 227, 81 LT 44���������������������������������������������������������������������������������������  3.28, 3.45, 11.86 Union Music Ltd v Watson [2003] 1 BCLC 453���������������������������������������������������������������������  13.5, 13.57 Unisys International Services Ltd (formerly Sperry Rand Ltd) v Eastern Counties Newspapers Ltd and Eastern Counties Newspapers Group Ltd [1991] 1 Ll Rep 538, CA�������������������������  4.42 United Arab Emirates v Allen [2012] EWHC 1712 (Admin), [2012] 1 WLR 3419, [2013] Ll Rep FC 254�������������������������������������������������������������������������������������������������������������������������������������  2.17 United Australia Ltd v Barclays Bank Ltd [1941] AC 1, [1940] 4 All ER 20, 109 LJKB 919, 46 Com Cas 1, 164 LT 139, 57 TLR 13, HL���������������������������������  13.35, 13.36, 13.42, 13.45, 13.48 United Bank of Kuwait Plc v Sahib [1997] Ch 107, [1995] 2 All ER 973, [1995] 2 WLR 94, [1996] 1 FLR 379, [1996] 1 Fam Law 87; affd [1997] Ch 107, [1996] 3 All ER 215, [1996] 3 WLR 372, 73 P & CR 177, [1996] 2 FLR 666, [1997] Fam Law 17, [1996] NPC 12, CA��������������������������������������������������������������������������������������������������������  6.33, 12.152 United Dominions Trust Ltd v Western [1976] QB 513, [1975] 3 All ER 1017, [1976] 2 WLR 64, 119 Sol Jo 792, CA����������������������������������������������  3.16, 3.35, 3.41, 3.47, 3.49, 5.31, 11.80 United Overseas Bank v Jiwani [1977] 1 All ER 733, [1976] 1 WLR 964, 120 Sol Jo 329������������������������������������������������������������������������������������������������������  5.10, 5.49, 5.52, 5.59, 9.71 United States v Braunstein 168 F 2d 749 (1948)����������������������������������������������������������������������������  3.16 Unity Joint Stock Mutual Banking Association v King (1858) 25 Beav 72, 27 LJ Ch 585, 4 Jur NS 470, 6 WR 264, 31 LTOS 128�������������������������������������������������������������������������������  12.13, 12.189 Universal Permanent Building Society v Cooke [1952] Ch 95, [1951] 2 All ER 893, [1951] 2 TLR 962, CA���������������������������������������������������������������������������������������������������������������������������  9.47 University of London v Prag [2014] EWHC 3564 (Ch), [2015] WTLR 705���������������������������������  1.20 Uppal v Uppal [2006] EWCA Civ 1595������������������������������������������������������������������������������������  15.3, 15.9 V Vagliano Bros v Governor & Co of Bank of England (1889) 23 QBD 243, 53 JP 564, 58 LJQB 357, 37 WR 640, 61 LT 419, 5 TLR 489, CA; revsd sub nom Bank of England v Vagliano Bros [1891] AC 107, 55 JP 676, 60 LJQB 145, 39 WR 657, [1891–4] All ER Rep 93, 64 LT 353, 7 TLR 333, HL����������������������������������������������������������������������������  3.20, 3.34, 3.51, 11.67, 11.72 Valentine v Allen [2003] EWCA Civ 915���������������������������������������������������  1.59, 6.34, 8.61, 12.77, 15.10 Valieri v Boyland (1866) LR 1 CP 382, 35 LJCP 215, 12 Jur NS 566, 2 Mar LC 336, 14 WR 637, 14 LT 362���������������������������������������������������������������������������������������������������������������������  11.93, 11.104 Vandervell’s Trusts (No 2), Re, White v Vandervell Trustees Ltd [1974] Ch 269, [1974] 1 All ER 47, [1973] 3 WLR 744, 117 Sol Jo 856; revsd [1974] Ch 269, [1974] 3 All ER 205, [1974] 3 WLR 256, 118 Sol Jo 566, CA�������������������������������������������������������  1.87, 6.34, 12.13, 12.34, 15.10 Van Haarlam v Kasner Charitable Trust (1992) 64 P & CR 214����������������������������������������������������   13.31 Van Laethem v Brooker [2005] EWHC 1478 (Ch)������������������������������������������������������������������������  12.183 Van Laun, Re, ex p Pattullo [1907] 1 KB 155, sub nom Re Van Laun, ex p Chatterton 76 LJKB 142, 14 Mans 11, 51 Sol Jo 83, 95 LT 840, 23 TLR 97; affd sub nom Van Laun, Re, ex p Chatterton [1907] 2 KB 23, 76 LJKB 644, 14 Mans 91, [1904–7] All ER Rep 157, 51 Sol Jo 344, 97 LT 69, 23 TLR 384, CA���������������������������������������������������������������������������  6.20, 6.21, 6.22 Veljkovic v Vrybergen [1985] VR 419�������������������������������������������������������������������������������������������  4.37 Venetian Glass Gallery Ltd v Next Properties Ltd [1989] 2 EGLR 42, [1989] 30 EG 92�������������  4.51 Vernon v Keys (1810) 12 East 632; affd (1812) 4 Taunt 488, Ex Ch���������������������������������������������  2.22 Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] UKSC 31, [2013] 1 WLR 1556�������������  6.15 Veuve Monnier et ses Fils Ltd, Re, ex p Bloomenthal [1896] 2 Ch 525, CA; revsd sub nom Bloomenthal v Ford [1897] AC 156, 66 LJ Ch 253, 4 Mans 156, 45 WR 449, 76 LT 205, 13 TLR 240, [1895–9] All ER Rep Ext 1845, HL�����  4.7, 5.10, 5.25, 5.35, 6.20, 6.21, 10.11, 10.15 Vick v Edwards (1735) 3 P Wms 371���������������������������������������������������������������������������������������������  1.35 Victoria Permanent Benefit Building Investment and Freehold Land Society, Re, Empson’s Case (1870) LR 9 Eq 597, 18 WR 565, 22 LT 855�������������������������������������������������������������������������  8.87 Virulite LLC v Virulite Distribution Ltd [2014] EWHC 366 (QB), [2015] 1 All ER (Comm) 204������������������������������������������������������������������������������������  14.2, 14.29, 14.32, 14.34, 14.35 Vistafjord, The. See Norwegian American Cruises A/S v Paul Munday Ltd, The Vistafjord Vitol SA v Esso Australia Ltd, The Wise [1989] 2 Ll Rep 451, CA��������������������������������  3.24, 5.46, 13.9, 14.16, 14.17, 14.26 Vitol SA v Norelf Ltd, The Santa Clara [1996] AC 800, [1996] 3 All ER 193, [1996] 3 WLR 105, [1996] 2 Ll Rep 225, [1996] 26 LS Gaz R 19, [1996] NLJR 957, HL�������������������  3.17, 3.23, 13.28 VLM Holdings Ltd v Ravensworth Digital Services Ltd [2013] EWHC 228 (Ch), [2014] FSR 9����������������������������������������������������������������������������������������������������  1.39, 1.93, 3.11, 3.13 Voyce v Voyce (1991) 62 P & CR 290, CA��������������������������������������������������������������  6.34, 12.172, 12.189 Vulcan Ironworks Co, Re [1885] WN 120�������������������������������������������������������������������  5.31, 10.11, 10.15

lxxxix

Table of cases W W v W [1952] P 152, [1952] 1 All ER 858, [1952] 1 TLR 879, CA����������������������������������������������  7.41 W Australia Ins Co Ltd v Dayton (1924) 35 CLR 355�������������������������������������������������������������������  6.15 Wade v Grimwood [2004] EWCA Civ 999���������������������������������������������������������������������������  15.10, 15.11 Walbrook Trustees (Jersey) Ltd v Fattal [2009] EWCA Civ 297���������������������������������������������������   13.13 Walden v Atkins [2013] EWHC 1387 (Ch), [2013] BPIR 943�������������������  6.9, 6.36, 6.38, 12.10, 12.172 Wales v Wadham [1977] 2 All ER 125, [1977] 1 WLR 199, 7 Fam Law 19, 121 Sol Jo 154���������������������������������������������������������������������������������������������������������������������������  2.16, 3.16 Walker v Manchester and Liverpool District Banking Co Ltd (1913) 57 Sol Jo 478, 108 LT 728, 29 TLR 492�������������������������������������������������������������������������������������������  5.15, 9.73, 9.75 Waller v Drakeford (1853) 17 JP 663, 1 E & B 749, 22 LJQB 274, 17 Jur 853, sub nom Drakeford v Waller Saund & M 114, 21 LTOS 87�����������������������������������������������������������������������������������  9.17 Wallis v Hands [1893] 2 Ch 75, 62 LJ Ch 586, 3 R 351, 41 WR 471, [1891–4] All ER Rep 719, 37 Sol Jo 284, 68 LT 428, 9 TLR 288��������������������������������������������������������������������������������  8.90, 9.39 Wallis’s Cayton Bay Holiday Camp Ltd v Shell-Mex and BP Ltd [1975] QB 94, [1974] 3 All ER 575, [1974] 3 WLR 387, 29 P & CR 214, 118 Sol Jo 680, CA����������������������  14.18, 14.24 Walmsley v Acid Jazz Ltd [2001] ECDR 4������������������������������������������������������������������������������������  4.53 Walrond v Hawkins (1875) LR 10 CP 342, 39 JP 248, 44 LJCP 116, sub nom Waldron v Hawkins 23 W 390, 32 LT 119���������������������������������������������������������������������������������������������������������������  9.28 Walsh v Needleman Treon [2014] EWHC 2554 (Ch)���������������������������������������������������������������  5.7, 13.49 Walter v Everard [1891] 2 QB 369, 55 JP 693, 60 LJQB 738, 39 WR 676, 65 LT 443, 7 TLR 469, CA�������������������������������������������������������������������������������������������������������������������������������������������  7.39 Walters v Morgan (1861) 3 De GF & J 718, 4 LT 758�������������������������������������������������������������������    3.2 Walters v Smee [2008] EWHC 2029 (Ch), [2009] WTLR 521������������������������������������������������������  5.42 Waltham Forest LBC v Oakmesh Ltd [2010] JPL 249���������������������������������������  2.31, 7.1, 8.9, 8.26, 15.6 Walton v Walton [1994] CAT No 479���������������������������  4.2, 4.13, 4.19, 5.25, 12.59, 12.60, 12.89, 12.97, 12.100, 12.103, 12.112, 12.123, 12.125, 12.133, 12.182, 12.183, 12.197 Waltons Stores (Interstate) v Maher (1988) 164 CLR 387, 76 ALR 513, 62 ALJR 110, HC of A������������������������������������������������������������������������������  1.25, 1.38, 1.61, 1.87, 1.105, 2.14, 2.15, 2.17, 2.23, 2.25, 3.12, 3.13, 5.11, 5.24, 5.27, 5.68, 12.3, 12.33, 12.123, 14.23, 14.26, 14.29, 14.37, 14.38, 14.40 Ward v Kirkland [1967] Ch 194, [1966] 1 All ER 609, [1966] 1 WLR 601, 110 Sol Jo 289���������������������������������������������������������������������������������������������  6.34, 12.19, 12.22, 12.66, 12.78, 12.83, 12.93, 12.104, 12.132, 12.159, 12.172, 12.181, 12.189 Ward v Ryan (1875) IR 10 CL 17, Ex Ch�������������������������������������������������������������������������  9.25, 9.32, 9.34 Waring v Favenck (1807) 1 Camp 85���������������������������������������������������������������������������������������������  9.14 Warren v Burns [2014] EWHC 3671 (QB)���������������������������������������������������������������������  4.42, 4.44, 14.16 Waterhouse v London and South-Western Rly Co (1879) 44 JP 154, 41 LT 553���������������������������   10.11 Watkin v Watson-Smith [1986] CLY 424, Times, 3 July����������������������������������������������������������������  3.16 Watkins v Emslie [1982] 1 EGLR 81, 261 Estates Gazette 1192, CA��������������  3.24, 5.7, 5.8, 5.10, 12.97 Watson v Goldsbrough [1986] 1 EGLR 265�����������������  6.37, 9.50, 12.12, 12.40, 12.181, 12.188, 12.189 Watson v Lane (1856) 25 LJ Ex 101, 11 Exch 769, 2 Jur NS 119, 4 WR 293, 26 LTOS 260����������������������������������������������������������������������������������������������������������������������  9.33, 9.36 Watt v Ahsan [2007] UKHL 51����������������������������������������������������������������������������������������  1.12, 1.51, 7.43 Watts v Cresswell (1714) SC 2 Eq Abr 515�������������������������������������������������������������������������������  6.18, 7.39 Watts and Ready v Storey (1983) 134 NLJ 631, [1983] CA Transcript 319, CA���������������������  5.48, 5.58, 12.63, 12.89, 12.97, 12.186, 12.191 Waugh v Carver (1793) 2 Hy Bl 235����������������������������������������������������������������������������������������������������  9.8 Waugh v HB Clifford & Sons Ltd [1982] Ch 374, [1982] 1 All ER 1095, [1982] 2 WLR 679, 126 Sol Jo 66, CA��������������������������������������������������������������������������������������������������������������������������  9.10 Wauton v Coppard [1899] 1 Ch 92, 68 LJ Ch 8, 47 WR 72, 43 Sol Jo 28, 79 LT 467�������������������  2.31 Way v Great Eastern Rly Co (1876) 1 QBD 692, 45 LJQB 874, 35 LT 253�������������������������������  9.9, 9.17 Wayling v Jones (1993) 69 P & CR 170, [1996] 2 FCR 41, [1995] 2 FLR 1029, [1996] Fam Law 88, [1995] Conv 409, CA�������������������������������������������������������  1.20, 5.7, 5.10, 5.13, 5.17, 5.42, 12.2, 12.42, 12.44, 12.89, 12.93, 12.97, 12.99, 12.100, 12.101, 12.102, 12.103, 12.189 Weale v Lower (1672) Pollexfen 54���������������������������������������������������������������������������������������������������  6.29 Webb v Austin (1844) 13 LJCP 203, 7 Man & G 701, 8 Scott NR 419, 3 LTOS 282�����������������������  6.26, 6.29, 6.34, 9.47 Webb v Borroughs (1676) Ld Nott Ch Cas 1 249��������������������������������������������������������������������������  1.36 Webb v Paternoster (1619) Palm 71 �����������������������������������������������������������������������������������  12.12, 12.175

xc

Table of cases Webb v Spicer 13 QB 886, 18 LJQB 142, 14 Jur 33, 13 LTOS 6, pre-SCJA 1873; revsd 13 QB 894, 19 LJQB 34, 14 Jur 33, 14 LTOS 86, Ex Ch; affd sub nom Salmon v Webb and Franklin 3 HL Cas 510, pre-SCJA 1873�������������������������������������������������������������������������������������  8.84 Webster v Ashcroft [2011] EWHC 3848 (Ch), [2012] 1 WLR 1309�������������������������������  6.9, 6.38, 12.10, 12.11, 12.172 Webster v General Accident Fire and Life Assurance Corp Ltd [1953] 1 QB 520, [1953] 1 All ER 663, [1953] 2 WLR 491, [1953] 1 Ll Rep 123, 97 Sol Jo 155�����������������������������������������������   10.39 Weeks v Birch (1893) 69 LT 759, 10 TLR 28, DC��������������������������������������������������������������������  9.19, 9.21 Weiner v Gill [1905] 2 KB 172, 74 LJKB 845, 10 Com Cas 213, 53 WR 553, 92 LT 843, 21 TLR 478; on appeal [1906] 2 KB 574, 75 LJKB 916, 11 Com Cas 240, [1904–07] All ER Rep 773, 50 Sol Jo 632, 95 LT 438, 22 TLR 699, CA�������������������������������������������������������������������  3.41 Weiner v Harris [1910] 1 KB 285, 79 LJKB 342, 15 Com Cas 39, [1908–10] All ER Rep 405, 54 Sol Jo 81, 101 LT 647, 26 TLR 96, CA��������������������������������������������������������������������  4.61, 9.7, 11.16 Welch v Bank of England [1955] Ch 508, [1955] 1 All ER 811, 99 Sol Jo 236����������������������  3.20, 10.10 Welch v Nagy [1950] 1 KB 455, [1949] 2 All ER 868, 94 Sol Jo 64, 66 (pt 1) TLR 278, CA �������������������������������������������������������������������������������������������������������������������������  2.32, 7.29, 7.43, 8.66 Weld-Blundell v Synott [1940] 2 KB 107, [1940] 2 All ER 580, 109 LJKB 684, 45 Com Cas 218, 84 Sol Jo 502, 163 LT 39, 56 TLR 677�����������������������������������������������������������������������������������    3.7 Welford v Transport for London [2011] EWCA Civ 129�����������������������������������������������  8.83, 8.88, 15.10 Weller v Spiers (1872) 20 W 772, 26 LT 866���������������������������������������������������������������������������������  9.33 Wellesley (Lord) v Withers (1855) 4 E & B 750, 24 LJQB 134, 1 Jur NS 706, 99 RR 727, 3 CLR 1187, 25 LTOS 79�������������������������������������������������������������������������������������������������������������������  7.43 Wells v Minister of Housing and Local Government [1967] 2 All ER 1041, [1967] 1 WLR 1000, 65 LGR 408, 18 P & CR 401, 131 JP 431, 111 Sol Jo 519, 202 Estates Gazette 1123, CA �������������������������������������������������������������������������������������������������������������������������������������������  7.38, 7.51 Wembley National Stadium Ltd v Wembley (London) Ltd [2007] EWHC 756 (Ch)��������������������    8.3 West v Commercial Bank of Australia Ltd (1936) 55 CLR 315������������������������������������������������  3.16, 9.74 West v Jones (1851) 1 Sim NS 205, 20 LJ Ch 362�������������������������������������������������������������������������  1.18 West Country Cleaners (Falmouth) Ltd v Saly [1966] 3 All ER 210, [1966] 1 WLR 1485, 110 Sol Jo 634, CA����������������������������������������������������������������������������������������������������������������������������  3.9, 3.21 West Ham Union v Essex Justices and LCC. See R v Essex Justices West London Commercial Bank Ltd v Kitson (1884) 13 QBD 360, 53 LJQB 345, 32 WR 757, 50 LT 656, CA�����������������������������������������������������������������������������������������������������������  2.28, 2.30, 2.35 West Middlesex Golf Club Ltd v Ealing London Borough Council (1993) 68 P & CR 461��  7.54, 12.51 West Yorkshire Metropolitan County Council v MFI Furniture Centre Ltd [1983] 3 All ER 234, [1983] 1 WLR 1175, 82 LGR 214, 148 JP 144, [1983] Crim LR 631, 127 Sol Jo 389����������  2.22 Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, HL������������������������������  12.200 Western Bulk Carriers K/S Li Hai Maritime Inc [2005] 2 Ll Rep 389�������������������������������������������  4.44 Western Fish Products Ltd v Penwith District Council [1981] 2 All ER 204, 77 LGR 185, 38 P & CR 7, 122 Sol Jo 471, [1978] JPL 623, CA���������������������������������������  1.87, 5.10, 5.13, 6.16, 7.38, 7.50, 7.51, 12.34, 12.36, 12.51 Westminster City Council v Porter (No 2) [2002] EWHC 2179 (Ch), [2003] 2 WLR 420�����������   13.41 White v Greenish (1861) 11 CBNS 209, 8 Jur NS 563, sub nom Greenish v White 31 LJCP 93�����������������������������������������������������������������������������������������������������������������������������������  1.56 White v Jones [1995] 2 AC 207, [1995] 2 WLR 187, [1995] 1 All ER 691, [1995] 3 FCR 51, (1995) 145 NLJ 251, (1995)139 SJLB 83, [1995] NPC 31����������������������������������������������������   13.52 White Rosebay Shipping SA v Hong Kong Chain Glory Shipping Ltd [2013] EWHC 1355 (Comm), [2013] 2 All ER (Comm) 449,[2013] 2 Ll Rep 618, [2013] 2 CLC 884�����������������   13.14 Whitechurch (George) Ltd v Cavanagh [1902] AC 117, 71 LJKB 400, 9 Mans 351, 50 WR 218, 85 LT 349, 17 TLR 746, [1900–3] All ER Rep Ext 1488, HL������������������������  1.18, 1.65, 2.14, 2.18, 4.7, 5.11, 5.31, 5.42, 9.17, 10.16, 15.12, 15.13 Whitehead, Re [1948] NZLR 1066�������������������������������������������������������������������������������������������������  12.189 Whitehead Mann Ltd v Cheverny Consulting Ltd [2006] EWCA Civ 1303�����������������������������  1.47, 15.3 Whitehorn Bros v Davison [1911] 1 KB 463, 80 LJKB 425, [1908–10] All ER Rep 885, 104 LT 234, CA�����������������������������������������������������������������������������������������������������������������������������������  1.34 Whitmore v Lambert [1955] 2 All ER 147, [1955] 1 WLR 495, 99 Sol Jo 316, CA������������������  6.8, 9.31 Whittaker v Bean [2011] EWHC 1479 (QB)����������������������������������������������������������������������������������  12.123 Whittaker v Kinnear [2011] EWHC 1479 (QB)�����������������������������������������������������������  7.16, 7.22, 12.155 Whyfe v Michael Cullen & Partners [1993] EGCS 193, (1993) Times, 15 November, CA����������    3.8 Wiberg v Swansea City and County Council [2002] RVR 143, [2001] EWLA 8���������������������  4.44, 8.14 Wickham, Re [1917] HBR 272, 34 TLR 158���������������������������������������������������������������������������������  14.4 Wiedemann v Walpole [1891] 2 QB 534, 60 LJQB 762, 40 WR 114, 7 TLR 722, CA�����������������  3.16

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Table of cases Wiles v Woodward (1850) 20 LJ Ex 261, 5 Exch 557, sub nom Wills v Woodward 15 LTOS 395 �������������������������������������������������������������������������������������������������������������������������������������������  8.86, 8.88 Wilkes v Leuson (1558) 2 Dyer 1690���������������������������������������������������������������������������������������������  6.17 Wilkes v Spooner [1911] 2 KB 473, 80 LJKB 1107, 55 Sol Jo 479, 104 LT 911, 27 TLR 426, CA�����������������������������������������������������������������������������������������������������������������������������������    6.5 Wilkinson v Barking Corp [1948] 1 KB 721, [1948] 1 All ER 564, 46 LGR 169, 112 JP 215, [1948] LJR 1164, 92 Sol Jo 205, 64 TLR 230, CA�����������������������������������������������������������������  7.43 Willesden Corp v Gloss (1962) 185 Estates Gazette 377���������������������������������������������������  5.8, 5.13, 5.62 William Hill (Southern) Ltd v Waller [1990] EGCS 126���������������������������������������������������������������  8.12 Williams v Colonial Bank (1888) 38 Ch D 388, CA; affd sub nom Colonial Bank v Cady and Williams (1890) 15 App Cas 267, 60 LJ Ch 131, 39 WR 17, 63 LT 27, 6 TLR 329, HL�������������������������������������������������������������������������������������������������  1.63, 3.37, 3.44, 5.12, 10.21 Williams v Earl of Jersey (1841) Cr & Ph 91, 10 LJ Ch 149, 5 Jur 426, 41 ER 424���������������������  12.189 Williams v Greatrex [1957] 1 WLR 31, CA�����������������������������������������������������������������������������������  12.139 Williams v Heales (1874) LR 9 CP 177, 43 LJCP 80, 22 WR 317, [1874–80] All ER Rep 364, 30 LT 20���������������������������������������������������������������������������������������������������������������������������������������  9.19 Williams v Keats (1817) 2 Stark 290����������������������������������������������������������������������������������������������  9.13 Williams v Natural Life Health Foods Ltd [1996] 1 BCLC 288, [1996] BCC 376; affd [1997] 1 BCLC 131, [1997] BCC 605, CA; affd [1998] 2 All ER 577, [1998] 1 WLR 830, [1998] 1 BCLC 689, [1998] BCC 428, [1998] 21 LS Gaz R 37, [1998] NLJR 657, 142 Sol Jo LB 166, HL�����������������������������������������������������������������������������������������������������������������������������������  2.20 Williams v Pinckney (1897) 67 LJ Ch 34, 77 LT 700, CA�����������������������������������������������  8.80, 8.88, 12.3 Williams v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1, [1990] 1 All ER 512, [1990] 2 WLR 1153, [1990] 12 LS Gaz R 36, [1989] NLJR 1712, 48 BLR 75, CA�������������   14.30 Williams v Staite [1979] Ch 291, [1978] 2 All ER 928, [1978] 2 WLR 825, 36 P & CR 103, 122 Sol Jo 333, CA���������������������������������������������������������������  1.84, 6.37, 12.139, 12.141, 12.175, 12.189 Williams v Stern (1879) 5 QBD 409, 49 LJQB 663, 28 WR 901, 42 LT 719, CA�������������������������  5.31 Williams and Glyns Bank Plc v Astro Dinamico Cia Naviera SA and Georgian Shipping Enterprises SA [1984] 1 All ER 760, [1984] 1 WLR 438, [1984] 1 Ll Rep 453, 128 Sol Jo 189, HL�����������������������������������������������������������������������������������������������������������������������������������  4.41 Willis v Hoare (3 December 1998, unreported) CA����������������������������������������������������������������  4.40, 12.47 Willis (J) & Son v Willis [1986] 1 EGLR 62, 277 Estates Gazette 1133, [1986] Conv 406, CA ����������������������������������������������������������������������������������������������������  1.84, 1.99, 12.139, 12.186, 12.188 Willis Ltd v Jardine Lloyd Thompson Group Plc (12 February 2016, unreported)��������������  13.12, 13.40 Willis, Faber & Co Ltd v Joyce (1911) 11 Asp MLC 601, 16 Com Cas 190, 55 Sol Jo 443, 104 LT 576, 27 TLR 388����������������������������������������������������������������������������������������������������������������  9.13 Willmott v Barber (1880) 15 Ch D 96, 49 LJ Ch 792, 28 WR 911, 43 LT 95; on appeal (1881) 17 Ch D 772, 45 LT 229, CA����������������������������������������������������������������  1.67, 1.95, 12.13, 12.20, 12.23, 12.59, 12.65, 12.66, 12.81, 12.108, 12.111 Wilson, Re [1916] 1 KB 382, [1916] HBR 17, 60 Sol Jo 90, 32 TLR 75, sub nom Re Wilson’s Deed 85 LJKB 329, KBD; revsd sub nom Wilson, Re [1916] 1 KB 382, [1914–15] All ER Rep 944, 60 Sol Jo 90, 114 LT 32, 32 TLR 86, sub nom Re Wilson’s Deed 85 LJKB 329, CA��������������������������������������������������������������������������������������������������������������������  13.3 Wilson v Anderton (1830) 1 B & Ad 450, 9 LJOSKB 48������������������������������������������������  9.17, 9.58, 9.59 Wilson v Kingsgate Mining Ind Pty Ltd (1973) 2 NSWLR 713����������������������������������������������������   1.102 Wilson v Sewell (1766) 4 Burr 1975, 1 Wm BI 617����������������������������������������������������������������������  9.44 Wilson v Thornbury (1875) 10 Ch App 239, CA����������������������������������������������������������������������������   13.53 Wilson v Truelove [2003] EWHC 750 (Ch), [2003] 10 LS Gaz R 31, [2003] 14 LS Gaz R 28, [2003] 23 EG 136, [2003] 10 EG 164 (CS)�������������������������������������������������������  7.7, 8.25, 8.38, 8.39 Wilson v Wilson [1969] 3 All ER 945, [1969] 1 WLR 1470, 20 P & CR 780, 113 Sol Jo 625���������������������������������������������������������������������������������������������������������������������������  8.31, 8.87 Wilson (FG) (Engineering) Ltd v John Holt & Co (Liverpool) Ltd [2012] EWHC 2477 (Comm), [2013] 1 All ER (Comm) 223, [2012] 2 Ll Rep 479, [2012] BLR 468; 146 Con LR 94������������������������������������������������������������������������������������������������������������������������    8.9 Wilson (Paal) & Co A/S v Partenreederei Hannah Blumenthal, The Hannah Blumenthal [1983] 1 AC 854, [1982] 1 All ER 197, [1981] 3 WLR 823, [1981] 2 Ll Rep 438, 125 Sol Jo 724; affd [1983] 1 AC 854, [1982] 3 All ER 394, [1982] 3 WLR 49, [1982] 1 Ll Rep 582, 126 Sol Jo 292, CA; varied [1983] 1 AC 854, [1983] 1 All ER 34, [1982] 3 WLR 1149, [1983] 1 Ll Rep 103, 126 Sol Jo 835, HL�������������������������������������������������������������������  2.13, 3.17, 4.42, 8.21 Wilson and Meeson v Pickering [1946] KB 422, [1946] 1 All ER 394, [1947] LJR 18, 175 LT 65, 62 TLR 223, CA�������������������������������������������������������������������������������������  3.28, 3.31, 3.40, 3.46, 3.47, 3.48, 3.51, 9.7, 9.11, 11.78 Wilson Bowden Properties Ltd v Milner & Barden 22 Ltd [1995] NPC 182������������������������������������  8.58

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Table of cases Wilson’s Deed, Re. See Wilson, Re Wimpey (George) UK Ltd v VI Construction Ltd [2005] EWCA Civ 77������������������������  1.90, 1.93, 3.16 Windmill Investments (London) Ltd v Milano Restaurant Ltd [1962] 2 QB 373, [1962] 2 All ER 680, [1962] 3 WLR 651, 106 Sol Jo 689��������������������������������������������������������������������������������  4.61 Wing v Harvey (1854) 5 De GM & G 265, 23 LJ Ch 511, 2 Eq Rep 533, 18 Jur 394, 2 WR 370, 23 LTOS 120���������������������������������������������������������������������������������������������������������  5.45, 10.23, 10.31 Winkler v Shamoon [2016] EWHC 217 (Ch), 18 ITELR 818�������������������������������������������������������  1.63 Winson, The. See China-Pacific SA v Food Corp of India, The Winson Winter v Brockwell (1807) 8 East 308�������������������������������������������������������������������������������������������   12.12 Wise, The. See Vitol SA v Esso Australia Ltd, The Wise WISE Ltd v Grupo Nacional Provincial SA [2003] EWHC 3038 (Comm); [2004] EWCA Civ 962, [2004] 2 Ll Rep 483������������������������������������������������������������������������������������  10.27, 13.23, 13.24 Wishart v Credit & Mercantile Plc [2015] EWCA Civ 655, [2015] 2 P & CR 15�������������������������  3.45 With v O’Flanagan [1936] Ch 575, [1936] 1 All ER 727, 105 LJ Ch 247, 80 Sol Jo 285, 154 LT 634, CA������������������������������������������������������������������������������������������������������������������  3.12, 3.19 Wogan v Doyle (1883) 12 LR Ir 69������������������������������������������������������������������������������������������������  9.33 Wolsey Securities Ltd v Abbeygate Management Services Ltd [2006] EWHC 1493 (QB)�����������  15.3 Wood v Capital Bridging Finance Ltd [2015] EWCA Civ 451, [2015] ECC 17, [2015] CTLC 155��������������������������������������������������������������������������������������������������������������������������  8.68, 8.69 Wood v Clydesdale Bank Ltd (1914) 51 SLR 364, 1914 SC 397��������������������������������������������������  3.51 Wood v Leadbitter (1845) 13 M & W 838��������������������������������������������������������������������������������������   12.12 Wood v Manley (1839) 11 Ad & El 34�������������������������������������������������������������������������������������������   12.12 Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1971] 2 QB 23, [1970] 2 All ER 124, [1971] 2 WLR 272, [1970] 1 Ll Rep 295; revsd [1971] 2 QB 23, [1971] 1 All ER 665, [1971] 2 WLR 272, [1971] 1 Ll Rep 25, 115 Sol Jo 56, CA; affd [1972] AC 741, [1972] 2 All ER 271, [1972] 2 WLR 1090, [1972] 1 Ll Rep 439, 116 Sol Jo 392, HL�����������������������������������������������������������  2.15, 3.6, 4.2, 4.7, 4.10, 4.11, 4.33, 4.34, 4.37, 4.39, 4.46, 4.47, 14.2, 14.10, 14.11, 14.12, 14.13 Wooding v Monmouthshire Indemnity Society [1939] 4 All ER 570 ���������������������������������������������  10.23 Woodward v Battersea Borough Council 9 LGR 248, 75 JP 193, 104 LT 51, 27 TLR 196, Ch D��������������������������������������������������������������������������������������������������������������������������������������������  8.84 Woolwich Building Society v Dickman [1996] 3 All ER 204, 72 P & CR 470, 28 HLR 661, CA���������������������������������������������������������������������������������������������������������������������������������������  7.29 Woolwich Equitable Building Society v IRC [1993] AC 70, [1991] 4 All ER 577, [1991] 3 WLR 790, [1991] STC 364, 65 TC 265, 135 Sol Jo LB 46, CA; affd [1993] AC 70, [1992] 3 WLR 366, [1992] STC 657, 65 TC 265, [1992] 32 LS Gaz R 38, 136 Sol Jo LB 230, sub nom Woolwich Building Society v IRC (No 2) [1992] 3 All ER 737, HL����������������������  2.28 Woolwich Equitable Building Society v Marshall [1952] Ch 1, [1951] 2 All ER 769, [1951] 2 TLR 783�����������������������������������������������������������������������������������������������������������������������������  8.31, 9.51 Worboys v Carter [1987] 2 EGLR 1, 283 Estates Gazette 307, CA�����������������������������������������������  3.14 Worcester Works Finance Ltd v Cooden Engineering Co Ltd [1972] 1 QB 210, CA�����������  11.27, 11.48 Worcestershire CC v Askew [2006] EWLandRA 2005 0261���������������������������������������������������������  7.49 Wormall v Wormall [2004] EWCA Civ 1643���������������������������������������������������������������������������������  12.183 Wright v John Bagnall & Sons Ltd [1900] 2 QB 240, 64 JP 420, 69 LJQB 551, 48 WR 533, 2 WCC 36, 44 Sol Jo 376, 82 LT 346, 16 TLR 327, CA�����������������������������������������������������  2.33, 3.6 Wright v Snowe (1848) 2 De G & Sm 321, 79 RR 220�����������������������������������������������������������������  6.18 Wright v Vanderplank (1856) 8 De GM & G 133, 25 LJ Ch 753, 2 Jur NS 599, 114 RR 6, 4 WR 410, 27 LTOS 91���������������������������������������������������������������������������������������������������������������������   13.29 Wroe (t/a Telepower) v Exmos Cover Ltd [2000] 1 EGLR 66, [2000] 08 LS Gaz R 36, [2000] 15 EG 155, [2000] EGCS 22, 80 P & CR D1, CA�������������������������������������������������������  5.10, 7.31, 11.14 Wroth v Tyler [1974] Ch 30, [1973] 1 All ER 897, [1973] 2 WLR 405, 25 P & CR 138, 117 Sol Jo 90����������������������������������������������������������������������������������������������������������������������������������������  3.13 WS Tankship II BV v Kwangju Bank Ltd [2011] EWHC 3103 (Comm)��������������������������  1.28, 8.9, 8.48 Wyvern Developments Ltd, Re [1974] 2 All ER 535, [1974] 1 WLR 1097, 118 Sol Jo 531���������   14.36 X Xtralite (Rooflights) Ltd v Hartingdon Conway Ltd [2003] EWHC 1872 (Ch)�����������������������������  9.62 Y Yabbicom v King [1899] 1 QB 444, 63 JP 149, 68 LJQB 560, 47 WR 318, 43 Sol Jo 190, 80 LT 159��������������������������������������������������������������������������������������������������������������������������������  7.28

xciii

Table of cases Yaxley v Gotts [2000] Ch 162, [2000] 1 All ER 711, [1999] 3 WLR 1217, 79 P & CR 91, [1999] 2 FLR 941, [1999] Fam Law 700, 32 HLR 547, [1999] NPC 76, [1999] 2 EGLR 181, [1999] EGCS 92, 143 Sol Jo LB 198, 78 P & CR D33, CA��������������������  6.39, 7.7, 7.15, 7.16, 7.17, 7.23, 7.25, 7.26, 10.19, 12.151, 12.152, 12.153, 12.154, 12.187, 12.189, 12.190 Yeda Research and Devt Co Ltd v Rhone-Poulenc Rorer Intl Hldgs Inc [2007] UKHL 43��������������������������������������������������������������������������������������������������������������������������  1.87, 12.34 Yeo v Wilson (27 July 1998, unreported)����������������������������������������������������������������������������  12.64, 12.139 Yeomans v Williams (1865) LR 1 Eq 184, 35 Beav 130, 35 LJ Ch 283����������������������������������������  6.17 Yeung Kei Yung v Hong Kong and Shanghai Banking Corp [1981] AC 787, [1980] 3 WLR 950, 124 Sol Jo 591, sub nom Yeung v Hong Kong and Shanghai Banking Corp [1980] 2 All ER 599, PC���������������������������������������������������������������������������������������������������������������������   10.10 Yona International Ltd and Heftsiba Overseas Works Ltd v La Reunion Française Société Anonyme d’Assurances et de Réassurances [1996] 2 Ll Rep 84�������������������������������������������  9.11 York Corp v Henry Leetham & Sons Ltd [1924] 1 Ch 557, 22 LGR 371, 94 LJ Ch 159, [1924] All ER Rep 477, 68 Sol Jo 459, 131 LT 127, 40 TLR 371�����������������������������������������������������  7.36 York Tramways Co v Willows (1882) 8 QBD 685, 51 LJQB 257, 30 WR 624, 46 LT 296, CA�����������������������������������������������������������������������������������������������������������������������������������  7.12 Yorkshire Bank Plc v Hall [1999] 1 All ER 879, [1999] 1 WLR 1713, 78 P & CR 136, [1998] All ER (D) 778, CA�������������������������������������������������������������������������������������������������������������  6.6, 7.43 Yorkshire Insurance Co Ltd v Craine. See Craine v Colonial Mutual Fire Insurance Co Ltd Youell v Bland Welch & Co Ltd (Superhulls Cover Case) (No 2) [1990] 2 Ll Rep 431������������  1.5, 1.90, 3.13, 3.16, 3.24, 5.10, 5.11, 10.35, 13.9, 13.24, 14.2, 14.15, 14.16, 14.18, 14.20, 14.29 Young v Bristol Aeroplane Co Ltd [1946] AC 163, [1946] 1 All ER 98, 115 LJKB 63, 174 LT 39, 62 TLR 99, 38 BWCC 50, 79 Ll L Rep 35, HL�����������������������������������������������������������������  13.4, 13.9 Young v Lalic [2006] NSWSC 18��������������������������������������������������������������������������������������������������  12.189 Young v Raincock (1849) 7 CB 310, 18 LJCP 193, 13 Jur 539, 13 LTOS 401����������������  6.17, 8.31, 8.82 Ypatia Halcoussi, The. See Olympia Sauna Shipping Co SA v Shinwa Kaiun Kaisha Ltd, The Ypatia Halcoussi Yukong Line Ltd of Korea v Rendsburg Investments Corp of Liberia [1996] 2 Ll Rep 604, CA��������������������������������������������������������������������������������������������������������������������������  13.15, 13.24 Yule (AC) & Son Ltd v Speedwell Roofing & Cladding Ltd [2007] EWHC 1360 (TCC), [2007] BLR 499��������������������������������������������������������������������������������������������������������  1.92, 3.5, 14.19 Z Zamir v Secretary of State for the Home Department [1980] AC 730 ������������������������������������������  3.19 Zanzibar, Government of v British Aerospace (Lancaster House) Ltd [2000] 1 WLR 2333���������  8.76 Zeital v Kaye [2010] EWCA Civ 159, [2010] 2 BCLC 1���������������������������������������������������������������   10.19 Zenovia, The. See IMT Shipping & Chartering GmbH v Chansung Shipping Co Ltd, The Zenovia Zhi Jiang Kou, The. See Chellaram (PS) & Co Ltd v China Ocean Shipping Co, The Zhi Jiang Kou Zouch d Abbot and Hallet v Parsons (1765) 3 Burr 1794, 1 Wm BI 575, 97 ER 1103, [1558–1774] All ER Rep 161�������������������������������������������������������������������������������������������������  9.44

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PA RT I

General Principles Fifth edition Chapters 1, 2, 4, 7 and 8 by Piers Feltham Chapters 3, 5 and 6 by Joshua Winfield

2

CH A P T E R 1

Introduction: definition and treatment

Estoppel  1.1 Reliance-based estoppel  1.5 The modern doctrines: overlapping categories  1.11 Historical development  1.35 Estoppel by representation of fact deployable offensively and as a rule of law  1.42 Theoretical basis and justification: unfair change of position  1.64 Classifications rejected  1.86 Unified doctrine  1.101

ESTOPPEL A bar that disables one party and thereby enables another 1.1 ‘Estop’ is an old English variant of the word ‘stop’. Sir Edward Coke wrote in 1628 that ‘“estop” cometh of the French word estoupe, from whence the English word stopped: and it is called an estoppel or conclusion, because a man’s own act or acceptance stoppeth or closeth up his mouth to allege or plead’,1 and

1

Coke on Littleton vol II at s 667, 352a. Spencer Bower believed, however, that the English forms had a common and more or less contemporaneous origin with those used in other countries, and noted also that Dr Murray (New English Dictionary, 1897) gave as equivalents of the English ‘estop’ the following: Old French, ‘estoper, estoupper’; Anglo-French, ‘estopper’; Provencal and Spanish, ‘estopa’; Modern French, ‘etoupe’ with a first meaning: ‘to stop with a dam, plug or bar – to fill up (a pool)‘, and a second: ‘to stop, bar, hinder, prevent or preclude.’; see also Rastell, Termes de la Ley (1629 edn) at 142–43 with its parallel entries in law-French and in English: ‘Estoppell is when one is concluded, and forbidden in lawe to speake against his owne act, or déede, yea, al∣though it bée to say the truith’.

3

1.1  Introduction: definition and treatment

350 years later Lord Denning MR2 repeated that ‘… the word “estoppel” only means stopped … It was brought over by the Normans. They used the old French “estoupail”. That meant a bung or cork by which you stopped something from coming out. It was in common use in our courts when they carried on all their proceedings in Norman-French’. While ‘stop’ and ‘stoppage’ have survived in general use, ‘estop’ and its substantive ‘estoppel’ are employed exclusively in the law, for a prohibition on asserting facts, rights or freedom from obligation. 1.2 An estoppel is, however, Janus-faced: by precluding3 the party estopped, 4 ‘B’, from denying a fact, right, or freedom from obligation, the estoppel allows the estoppel raiser, ‘A’, to assert that fact, right or freedom from obligation, and thereby affects the rights and obligations between them. It is important, moreover, to note from the outset that a claim to a right in or over property by proprietary estoppel is a claim to the very equity to which A’s detrimental reliance on B’s representation or silence gives rise, that is, the right created by the estoppel itself, whose substance is in the discretion of the court.5 Its result is not, therefore, a simple preclusion from denying other rights, but a positive remedy to satisfy the equity. 1.3 An estoppel by representation or convention may also, provided that it does not thereby unacceptably subvert the policy of a rule of law, create, as well as extinguish, a right and corresponding cause of action,6 but these doctrines do so by supplying or denying constituent elements of rights (and corresponding causes of action) under the law dehors the estoppel itself, whose content is determined by that law, as adjusted, or as applied to facts adjusted, by the absolute or limited preclusion imposed by the estoppel. A proprietary estoppel, however, creates its own equity with its own discretionary content that is its own cause of action. 2 In Hunter v Chief Constable of West Midlands [1980] QB 283 at 316–317: ‘Littleton writes in the law-French of his day (15th century) using the words “pur ceo que le baron est estoppe a dire,” meaning simply that the husband is stopped from saying something’. 3 See Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752, at [14] per Lord Scott, with concurrence at [1], [94], [95] in a definition that has been criticised (see further 12.29) for not clearly encompassing all the qualities of proprietary estoppel identified at 1.2 and 1.3: ‘An “estoppel” bars the object of it from asserting some fact or facts, or, sometimes, something that is a mixture of fact and law, that stands in the way of some right claimed by the person entitled to the benefit of the estoppel.’; and in SmithKline Beecham Plc v Apotex Europe Ltd [2007] Ch 71 at [110] Jacob LJ identified with concurrence: ‘… the fundamental nature of an estoppel. An estopped party is precluded from asserting that a particular fact or set of facts or state of affairs is so’. In Samsung Electronics (UK) Ltd v Apple Inc [2013] FSR 7, at [11], Mann J also observed: ‘An estoppel makes sense only in relation to something that the other party wishes to assert (or deny)’. 4 ‘A’ and ‘B’ are used throughout this book to denote respectively the party raising the estoppel and the party to be estopped thereby. 5 The decision of the House of Lords in Thorner v Major [2009] 1 WLR 776 has made clear that, in Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752, the House did not deny the operation of proprietary estoppel as an independent cause of action based on a right created by the constituent elements of the estoppel itself: see McFarlane and Robertson (2009) 125 LQR 535. 6 See 1.42 onwards.

4

Reliance-based estoppel 1.5

1.4 For this reason it might be said that proprietary estoppel, as a cause of action in itself, substantially differs from the other estoppels, in not being, in spite of its name, primarily prohibitive, but A’s positive right in proprietary estoppel derives from his right to preclude B from unfairly changing his ­position,7 and proprietary estoppel is nonetheless a reliance-based estoppel, affecting the rights between the parties for this same fundamental reason8 as do the other overlapping reliance-based doctrines; it accordingly requires satisfaction of the same three heads of responsibility,9 causation10 and prejudice11 as they require. We submit that differences, such as this, in operation of these reliance-based doctrines of estoppel reflect, or should reflect,12 not a difference in their animating principle, but, first, the differences in subject matter to which that principle is applied, and, secondly, the impact of the law’s concern that an estoppel should not unacceptably subvert the policy of a statute or rule of law.13

RELIANCE-BASED ESTOPPEL 1.5 For, the common object of the overlapping doctrines that are the central subject of this work14 – estoppel by representation of law or fact, estoppel by silence, estoppel by negligence, estoppel by convention, proprietary estoppel and promissory estoppel – is to protect one party from an unfair change of position by another.15 The reason that the change is unfair is that B is responsible to A for A relying on B’s original position in such a way that A would suffer by reason of B’s change: the estoppel is founded on ‘detrimental’16 reliance. A unanimous Court of Appeal recently and uncontroversially so confirmed in ­relation

7 See 1.9, 1.14 and, for the reason why we suggest proprietary estoppel gives a cause of action, 1.21. 8 See 1.5 onwards. 9 Of B for A’s understanding that he can rely on the relevant proposition. 10 Of A’s conduct or omission by his reliance on the proposition for which B is responsible. 11 To A by B resiling from the proposition in that A will then be worse off than he would be but for reliance on the proposition. 12 See Sledmore v Dalby (1996) 72 P & CR 196, CA, at 208 per Hobhouse LJ: ‘However, in so far as such terms are valid as a source of distinction, the differences probably reflect no more than the difference of subject matter’. Indeed, if and insofar as such differences in operation do not appear to be the just result of differences in subject matter of the estoppels, they must be an accident of the historical development of these doctrines. In that case the justification for, and the continued observance and application of, such distinctions bears reconsideration. 13 Addressed in Ch 7. One example of significance in this context prevents a cause of action being constituted by means of a promissory estoppel so as not to undermine the doctrine of consideration: see 1.47 onwards, 2.14 onwards, 2.23 onwards, 7.5, 8.56–8.60, 14.22, 14.25. 14 Which also covers, in addition to the doctrine of election, the following further estoppels: estoppel as to title, contractual estoppel and estoppel by deed, whereunder the change of position is prohibited by binding agreement; and statutory estoppel whereunder the change of position is prohibited by statute. 15 Proprietary estoppel is accordingly considered by Knowles and Balen [2011] Conv 176 to be animated by the restitutionary trigger of failure of basis. For a study of corresponding doctrines abroad, see Fauvarque-Cosson (ed): La Confiance Legitime et L’Estoppel (2007). 16 See 5.41 onwards.

5

1.5  Introduction: definition and treatment

to ­estoppel by representation of fact, estoppel by convention and proprietary estoppel in Dixon v Blindley Heath Investments Ltd,17 by approving the following dictum of Dixon J in the High Court of Australia:18 ‘The object of estoppel in pais19 is to prevent an unjust departure by one person from an assumption by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other’s detriment.’

1.6 In the ‘classic’ authority20 Grundt v Great Boulder Pty Gold Mines 21 Ltd, Dixon J reaffirmed, in another passage22 repeatedly adopted as representing the law of England and Wales by the Court of Appeal,23 that: ‘… the basal purpose of the doctrine … is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption24 upon which the former acted or abstained from acting. This means

17 18 19

20 21 22 23

24

[2016] 4 All ER 490 at [80]. Thompson v Palmer (1933) 49 CLR 507 at 547; followed in Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 by Latham CJ (at 657) and Dixon J (at 676). Dixon J used the ancient term ‘estoppel in pais’ (see 1.20, 1.21) as a compendium for these three doctrines (as identified in Legione v Hateley [1983] CLR 406 at 430, per Mason and Deane JJ at [2], which identification was also cited with approval in Dixon v Blindley Heath Investments Ltd at [72]). Reliance by A such that denial by B would be inequitable is also well established (subject to definition of detriment as reliance such that it would be inequitable for B to resile) as the foundation of promissory estoppel: there is an issue as to whether the requirement of detriment is the same for promissory estoppel as for the other reliance-based doctrines, but we submit (at 5.55–5.60) that it is: see eg Fontana NV v Mautner (1979) 254 Est Gaz LR 199; The ‘Post Chaser’ [1981] 2 Ll R 695 at 701; Meng Leong Development Pte Ltd v Jip Hong Trading Co Pte Ltd [1985] AC 511 at 524; James v Heim Gallery (1980) 256 EG 819 at 825; The ‘Superhulls Cover’ Case (No 2) [1990] 2 Ll R 431 at 454; Fortisbank SA v Trenwick International Ltd [2005] 2 Lloyd’s Rep IR 464 at [13]; Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] 2 All ER (Comm) 14 at [38]; see further 14.28–14.31. So described by Carnwath LJ with unanimous concurrence in ING Bank NV v Ros Roca SA [2012] 1 WLR 472 at [61]. (1938) 59 CLR 641, at 674–675. Also and more fully cited at 5.52. Per Slade LJ with unanimous concurrence in Jones v Watkins [1987] CAT No 1200; per ­Robert Walker LJ with unanimous concurrence in Gillett v Holt [2001] Ch 210 at page 232D–F: ‘This passage was not directed specifically to proprietary estoppel, but Slade LJ was right, in my respectful view, to treat it as applicable to proprietary estoppel as well as to other forms of estoppel. The point made in the passage may be thought obvious, but sometimes it is useful to spell out even basic points.’; (and again in Scottish Equitable plc v Derby [2001] 3 All ER 818 at 831) and per Potter LJ with unanimous concurrence in National Westminster Bank Plc v Somer International (UK) Ltd [2002] QB 1286 at [28]; also recently reaffirmed by a unanimous High Court of Australia in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14, at [23], [84], [149]. Although, as already noted, this is not the only result of an estoppel: if founded on an assumption that the estoppel raiser has or will have rights in property for which the party estopped is responsible, the result is in the discretion of the court (see 12.179 onwards) and, if founded on a promise or representation concerning a promise, the estoppel will compel only temporary adherence to the assumption unless it need be permanent to do justice (14.32 onwards): even in the case of a representation of fact, it has been recognised that the court may mitigate the result to avoid injustice: see National Westminster Bank Plc v Somer International (UK) Ltd [2002] QB 1286 and 1.57, 5.66.

6

Reliance-based estoppel 1.8

that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it.’

1.7 Dixon J went on to explain, again with the subsequent approval of the English courts,25 that: ‘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 … “… He26 may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations …;27 or because he has exercised against the other party rights which would exist only if the assumption were correct28 … or because knowing the mistake the other laboured under, he refrained from correcting him when it was his duty to do so,29 or because his imprudence, where care was required of him, was a proximate cause of the other party’s adopting and acting upon the faith of the assumption,30 or because he directly made representations31 upon which the other party founded the assumption.’”

1.8 We therefore espouse ‘the view that a single purpose underlies all forms of [reliance-based] estoppel on the basis that all aspects of the rules developed are examples of general principle applied so as to prevent [B] from refusing to recognise, or seeking unjustly to deny or avoid, an assumption or belief which he has induced, permitted or encouraged in [A] and on the basis of which [A] has

25

26 27 28 29 30 31

Cited with approval by: Denning LJ (dissenting) in Central Newbury Car Auctions Ltd v Unity Finance Ltd [1957] 1 KB 371 at 380: ‘His formulation of the principle is the most satisfactory that I know.’; and in Moorgate Mercantile Co Ltd v Twitchings [1976] QB 225 at 241–2 and Amalgamated Inv & Pty Co Ltd v Texas Commerce Intl Bank Ltd [1982] QB 84, at 121; Kerr J in The ‘Odenfeld’ [1978] 2 Ll R 357, at 376 and, as Kerr LJ, giving the judgment of the CA in The ‘August Leonhardt’ [1985] 2 Ll R 28, at 35: ‘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.’; Brooke J in Barclays Bank plc v Wright [1990] BCC 663, at 677–8; Briggs J in HMRC v Benchdollar [2010] 1 All ER 174, at [44]; Lord Toulson giving the judgment of the PC in Prime Sight Ltd v Lavarello [2014] AC 436, at [41], [44]; Hildyard J giving the judgment of the CA in Dixon v Blindley Heath Investments Ltd [2016] 4 All ER 490, at [90]. Quoting, at 675–6, from this point on, his judgment in Thompson v Palmer, at 547. An estoppel by convention. A representation, or assent to a convention, by conduct. An estoppel by silence. An estoppel by negligence. An estoppel by representation of fact or law, or if its subject matter is the ownership of property, a proprietary estoppel, or, if the representation is as to future performance, a promissory estoppel.

7

1.8  Introduction: definition and treatment

acted or regulated his affairs’,32 submitting that these doctrines are applications of a rule of law which operates if B is responsible for A so acting on the basis of a proposition that A will suffer if B denies it. For this we use Professor Cooke’s33 compendious term ‘reliance-based estoppel’, in preference to the use, in the last edition, of the umbrella ‘estoppel by representation’,34 by reason of the former’s quality of identifying their common35 animating principle,36 its greater aptitude than the latter to include estoppel by convention and all estoppels by silence,37 and its avoidance of semantic debate over whether the term ‘representation’ only refers to a representation of fact.38 With due diffidence we have in this edition

32 Suggested by Potter LJ in National Westminster Bank plc v Somer International (UK) Ltd [2002] QB 1286 at [38], and adapted here to confine it to the reliance-based estoppels, so as to exclude estoppels that bind other than by reason of detrimental reliance (estoppel by contract, estoppel by deed, statutory estoppel and issue estoppel) and avoid the objection of Millett LJ in First National Bank plc v Thompson [1996] Ch 231 at 236F (see 1.17), by reference to which Potter LJ held that such purpose does not underlie all estoppels. 33 Now Tribunal Judge Cooke, in The Modern Law of Estoppel (2000) at 14; see also Bant and Bryan (2015) 35 OJLS 427. 34 In this edition, as in the last, the word ‘representation’ is no longer used as connoting exclusively a representation of present fact but as including representations as to the future (ie promises), and the representation that a party to a convention makes as to his assent to the convention (see further n 38; 8.8 onwards). 35 There is, as noted at n 19, a debate as to whether the requirement for promissory estoppel of reliance on the relevant proposition such that denial would be inequitable is the same as, or different from, that of detrimental reliance for the other three doctrines. We submit (at 5.55– 5.60) that it is the same, thereby avoiding the incoherence of a convention as to rights to future performance under a contract having different requirements to bind, according to whether it is analysed as a promissory estoppel or an estoppel by convention. 36 Although ‘estoppel by representation’ has this quality too, emphasising the common feature that B has made himself responsible for the proposition on which A has relied, as identified by Dixon J in the passage cited. 37 In particular, where A was unaware of the silent B and his position, so although the silence is regarded as causing the adoption or continuation of his mistaken belief because it was in breach of a duty to speak, it was not by means of a communication or representation: see further 1.88 onwards. 38 Etymological objection may be taken, and has been in Handley Estoppel by Conduct and Election (2nd edn, 2016) at [2-12], that representation means a re-presentation by language or conduct of something that has occurred, but the word has long been used also for representations as to the future, as, for instance, by Lord Cranworth LC and Lord St Leonards in Jorden v Money (1854) 5 HLC 185 at 214–215 and 251, which was the very case that defined the doctrine of estoppel by representation of fact (see also eg Roebuck v Mungovin [1994] 2 AC 224 at 235 per Lord Browne-Wilkinson: ‘a representation as to future conduct’; Sidhu v Van Dyke (2014) 251 CLR 505 at [2], [23], [35], [58]). No more violence to language is done by allowing the term ‘representation’ to include representations as to the future than by adopting an umbrella term such as the Australian usage ‘estoppel by conduct’, which entails the confusion of including estoppels founded on spoken or written representations within the term ‘estoppel by conduct’, although an estoppel founded on conduct is more naturally understood as being an estoppel founded on a representation by means of communication other than language. The inclusion of a representation as to the future within the term also underlines the important point, identified by Lord St Leonards in his dissenting judgment in Jorden v Money at 251, that there is no significant distinction in substance between a statement that the representee has a right to, or does not have an obligation of, future performance (regarded in the authorities as present fact – see 2.31) on the one hand, and a representation that the representor will undertake the corresponding obligation, or not exercise the corresponding right

8

Reliance-based estoppel 1.9

therefore also altered Spencer Bower’s title accordingly, whilst continuing his project of identifying the unifying characteristics of these doctrines that has been recently vindicated in the above respect39 by the Court of Appeal.

Requirements for reliance-based estoppel 1.9 The unifying characteristics of these overlapping reliance-based doctrines are submitted to be their common requirements, addressed as follows in this book: (1) A must have faith in a proposition,40 for A’s reliance on which B is responsible because B has represented41 it to A, or by breach of a duty to speak allowed A to believe it. In the case of estoppel by representation of fact or law, the proposition is a matter of past or present fact, legal relationship or proposition of law, and B’s responsibility for A’s reliance derives from B’s having represented it to A; in the case of a promissory estoppel, it is as to the future; in the case of proprietary estoppel, B’s representation, or A’s belief which B culpably fails to correct, is that A has acquired or will acquire an interest in or right over B’s property, or have enhanced enjoyment of A’s own property; in the case of estoppel by convention, the proposition is B’s assent to a convention with A; in the case of an estoppel by silence, B’s responsibility was to contradict the proposition and, by failing in this, B has allowed its adoption or continuation; in the case of estoppel by negligence, B is responsible for A being misled by C. The means by which a representation may be made, and the circumstances that will impose a duty to speak, or responsibility for C’s representation, such as to found an estoppel, are examined in Chapter 3. (2) In addition to the making of a representation or giving of assent, for B to be responsible for A’s reliance on A’s understanding of that representation, the representation or assent must be unequivocally to the effect understood by A. This requirement, as considered in Chapter 4, is inherent in the requirement that a representation has been made at all, whether it is a representation of fact or law, a representation of assent to a convention, a representation as to the future, or a representation as to the ownership of property. Correspondingly, in the absence of a representation, unless B has a duty to correct the belief A has formed, B’s silence is equivocal and will not found an estoppel.42

(a promise) on the other, notwithstanding that one is in the form of a statement of fact and the other in that of a promise. It is true that one is descriptive and therefore true or false, and the other is transformative and predictive, but there is no justification for that to affect whether detrimental reliance on it affords relief and what relief it affords: see 2.23–2.27. 39 See n 17. 40 Relating to the present or future, facts, rights or law. 41 By words or, where carrying an implication which is so understood, by conduct or silence. 42 See Liberty Insurance Pte Ltd v Argo Systems FZE [2012] 1 Ll R 129 at [46] and cases at 4.9; but see 1.97–1.98 as to the possibility of estoppel based on common mistake when silence is combined with mutual dealings to which the mistake is crucial.

9

1.9  Introduction: definition and treatment

(3) It is further necessary, as discussed in Chapter 5, that B actually, or as reasonably understood43 by A, intended A to rely on the proposition as he did,44 and B’s responsibility to A for that reliance was not reserved45 by B; correspondingly, in the case of an estoppel founded on silence,46 it must have been B’s responsibility to make a statement that would correct the proposition. (4) A must also have actually been induced by the proposition to act as he did, or, put another way, A must have acted as he did in reliance on the ­proposition.47 This is also discussed in Chapter 5. (5) Finally, A must have so acted in reliance on the proposition that it would be unfair for B to resile from it because A would then be worse off (or B would be better off relative to A) than if A had not thus relied on it, as also discussed in Chapter 5. 1.10 The different consequences of estoppels are considered: in Chapter 5 as to estoppel by representation of fact or law, and in the individual chapters on estoppel by convention (Chapter 8), proprietary estoppel (Chapter 12) and promissory estoppel (Chapter 14). Chapter 2 considers the requirement of an estoppel by representation of fact that it be as to a matter of fact, and recognises that an estoppel by representation may (subject to the defence considered in Chapter 7) be founded on a representation as to law or rights. Chapter 6 identifies who may raise and will be bound by an estoppel, and Chapter 7 examines the defence to an estoppel that it would unacceptably subvert a statute or rule of law. In addition to estoppel by convention, Chapter 8 examines the doctrines of estoppel by contract and by deed, which are not reliance-based. Part II then considers applications of the doctrines of estoppel to particular relationships, and statutory estoppels; and Part III addresses the doctrines of proprietary estoppel, promissory estoppel and election, concluding with Chapter 15 on procedure. It will be noted that Spencer Bower’s prioritisation of estoppel by representation of fact therefore continues to dictate the structure of this work, but the chapters of Part I, which in its first three editions treated their subject matter only in relation to estoppel by representation of fact, now do so with respect to all the reliance-based doctrines.

43 44

45 46 47

By reason of the relative difficulty of establishing B’s actual intention, a reasonable understanding as to such intention is, in almost all cases, what A seeks to establish. Although it is arguable that, having made a representation that was equivocal as to the assumption of such responsibility for A’s reliance, B might become responsible to A by reason of his knowing acquiescence in the reliance of A on the expectation created by the representation, imposing a duty on him to speak if he is to deny such responsibility: see 4.16, 4.27, 4.32. As it was in the circumstances of Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752: see further 5.19 onwards. Which includes estoppels founded on acquiescence in a mistake and the overlapping category of estoppels founded on a breach of a duty of care, or negligence. In the case of silence in the sense that A acted as he did in reliance on the proposition, and B’s silence, in breach of a duty to correct the proposition, induced or allowed the adoption or continuation of A’s belief and was therefore a cause of his so acting.

10

The modern doctrines: overlapping categories 1.13

THE MODERN DOCTRINES: OVERLAPPING CATEGORIES 1.11 Criteria have been separately established48 by discrete lines of ­precedent49 for the application of each of the doctrines of reliance-based­ estoppel – estoppel by representation of fact or law, proprietary estoppel, promissory estoppel, estoppel by convention, estoppel by acquiescence and estoppel by negligence – but, notwithstanding their separate evolution, the principal aim of this monograph remains that of providing, in the interest of consistency and coherence, a vantage from which it can be seen that they are neither all discrete categories, nor all categories of the same order, but overlapping categories of application of a single principle whose differences are the result of its engagement with their different subject matter. 1.12 In addition to the reliance-based doctrines, also here considered are: the doctrine of election that binds a party to a choice between mutually exclusive alternatives; estoppels by deed and contractual estoppels, which bind by agreement, respectively under seal and for consideration; and statutory estoppels, which bind by statutory fiat. The application and effect of these last three – estoppel­by deed, contractual estoppel and statutory estoppel – are determined simply by construction of the terms of the relevant deed,50 contract51 or statute.52 The doctrine of estoppel per rem judicatam, which prevents parties from re-litigating issues already the subject of a judicial decision between them, is the subject of a separate work53 in the current editions of Spencer Bower’s series of studies.54 As Lord Hoffmann said in Watt v Ahsan,55 ‘Although estoppel in pais and estoppel per rem judicatam share the word estoppel, they share very little else.’56 1.13 The different categories of reliance-based estoppel have independent historical origins57 and in some respects different criteria and effects, but are nonetheless submitted to be different applications of a single doctrine of reliancebased estoppel that wholly or partly precludes assertion by B, a party responsible to A for his reliance on a proposition, of facts or rights contrary to that propo­ sition, if A has so relied that their assertion would be unfair. Consideration of

48 See Chs 2 to 5, 8, 12, 14. 49 See 1.35 onwards. 50 See 8.79 onwards. 51 See 8.67 onwards. 52 See Ch 11. 53 Spencer Bower, Turner and Handley, Res Judicata (4th edn, 2009) Handley. 54 Containing also Spencer Bower, Turner and Sutton, Actionable Non-disclosure (2nd edn, 1990), Turner & Sutton, and Spencer Bower, Turner and Handley, Actionable Misrepresentation (5th edn, 2014) Handley. 55 [2007] UKHL 51 at [30]. Cf Prichard (1964) 80 LQR 370, at 372, n 8, identifying the latter as the origin of the former, with common ground as rules as to what may not be pleaded: see 1.35. 56 Although res judicata is historically the original estoppel in English law and a root for the subsequent evolution of estoppel in pais: see 1.35. 57 See 1.35 onwards.

11

1.13  Introduction: definition and treatment

these categories of estoppel as applications of a single doctrine of reliance-based estoppel is not only supported but demanded by the degree of overlap between them, as they are not all even categories of the same order. An estoppel by representation of fact58 (or now law) is a categorisation of two different orders, being defined both by reference to how responsibility for the relevant proposition arises (representation by B to A) and by its subject matter. Estoppel by representation of fact and promissory estoppel are definitions of the same order, in being defined by reference to whether the representation in question is factual or promissory, but even they overlap, since B’s representation as to A’s present freedom from an obligation to B to perform a duty in the future may be said to be both factual (as to A’s present freedom from obligation)59 and promissory (in that its subject matter is A’s promise or undertaking to perform the obligation in the future).60 1.14 Categorisation of an estoppel as proprietary is of a different order, not by the tense of the representation or assumption on which it is founded, but by the representation or assumption being that A has or will have rights in or over property. Thus, if A tells B that the tree shown as marking the boundary between their properties on a plan is this tree rather than that one, an estoppel based on this representation may be said to be both an estoppel by representation of fact and a proprietary estoppel.61 Indeed, there is a more substantial overlap, as the authorities indicate that an estoppel by representation of fact may be founded on a representation as to the private rights of the parties,62 and estoppels based on representations as to the ownership of an interest in land or as to the existence of a present right to its future ownership can, in that sense, therefore be called estoppels by representation of fact as well as proprietary estoppels. So also, if the estoppel is based on A’s promise that he will transfer land to B, it may be said to be both promissory and proprietary,63 and even then, if it may also be characterised as based on a representation as to the existence of a present right to the future transfer,64 to be an estoppel by representation of the fact of an existing private right also. 1.15 Estoppel by convention is a definition by reference to how B is responsible to A for the relevant proposition (by their agreeing it, rather than B stating it to A), rather than by the subject matter of the relevant proposition (fact, promise or property) and is a definition of the same order as that which defines estoppel by representation as based on a representation. A convention, and an estoppel based

58

Even if described simply as an estoppel by representation on the basis that a representation can only be of fact; see n 38. 59 See 2.31. 60 See 2.23–2.27. The same may be said of a representation by B that A has a present right to future performance by B. 61 See eg Hopgood v Brown [1955] 1 WLR 213, CA; and Mann v Shelfside Holdings Ltd [2015] EWHC 2583 (QB) for a recent claim argued and rejected in terms of estoppel by representation of fact which might have been argued as a proprietary estoppel. 62 See 2.31. 63 See 1.22 onwards. 64 See 2.31.

12

The modern doctrines: overlapping categories 1.16

on it, may therefore also be one or more of factual, promissory or proprietary as to its subject matter, and all estoppels by convention will also either be estoppels as to a fact, or in substance promissory estoppels relating to future performance, and/or proprietary estoppels as to a right in property.65 This is because estoppel by convention is a category of a different order from those defined by reference to the subject matter of the proposition. Although, however, the ground for one party’s responsibility to the other for the relevant proposition differs66 (mutual assent and unilateral communication),67 the estoppel is, no less than in the case of a representation of fact or promise as to the future, based on detrimental reliance on a proposition for which one party is responsible to the other,68 and all are therefore different applications of the same principle of reliance-based estoppel. Estoppel by silence,69 estoppel by acquiescence (the principal form of estoppel by silence) and estoppel by negligence are also categories defined by reference to the manner in which responsibility for the relevant proposition arises rather than its subject matter. Responsibility is founded, not on communication70 of the proposition by B to A, but, in the case of estoppel by silence or acquiescence, on B’s failure to contradict it when under a duty to A to do so, and, in the case of estoppel by negligence, on B causing reliance on the proposition by breach of a duty of care. These overlapping71 doctrines, being founded on A’s reliance on a proposition for which B is responsible, are also therefore applications of the principle of reliance-based estoppel. 1.16 Since the different doctrines have from separate origins by different lines of authority developed criteria differing in various particulars for their application and effect, in practice, as the law stands, it might be said that, where they overlap, the doctrine whose criteria A can satisfy which affords A the greatest benefit will be that whose application A will be entitled to claim, in effect, trumping the others. If, however, A were to argue that B is absolutely precluded from denying his ownership or right to future ownership of land, by reason of A’s detrimental reliance on B’s representation, by words, conduct or silence, as to his ownership, or present right to future ownership, of the land, as being the result of an estoppel by representation as to the fact of his rights,72 as opposed to the result being in the discretion of the court73 as the result of a proprietary

65

See eg Rivertrade Ltd v EMG Finance Ltd [2013] EWHC 3745 (Ch) at [203]–[211] and, on appeal, [2016] BCLC 226 at [46]–[51]. 66 And in Donegal International Ltd v Zambia [2007] 1 Ll R 397 at [495], Andrew Smith J rejected a submission that ‘estoppel by convention is a form of estoppel by representation and there is no relevant distinction between the two concepts’. 67 See Ch 3 and 8.8. 68 See Ch 5 and 8.23. 69 Although previous editions of this work have attempted, with judicial approval, to incorporate estoppels by silence in the category of estoppels by representation, it is recognised that they differ for the reasons stated. 70 See 1.88 onwards. 71 In that they are both based on a breach of duty. 72 See 2.31. 73 See 12.179 onwards.

13

1.16  Introduction: definition and treatment

estoppel, we suggest that the court would nonetheless exercise that discretion, recognising that estoppel by representation of fact and proprietary estoppel are different applications of the same fundamental principle, whose application to a representation or belief as to the ownership of property has the discretionary result of a proprietary estoppel.73a 1.17 In his preface to the first edition of this work, Spencer Bower conceived of estoppel by representation of fact ‘as embracing every form of estoppel known to the law of England other than estoppel per rem judicatam’. His ‘valiant attempt’74 to demonstrate this was abandoned in subsequent editions by Sir Alexander Turner (who treated the doctrines of proprietary estoppel and promissory estoppel as distinct), and has been criticised by Millett LJ75 with specific reference to the classification of estoppels by deed as forms of estoppel by representation of fact. It is right that estoppel by deed is a distinct doctrine from estoppel by representation of fact and the other reliance-based estoppels, but, accepting a distinct doctrine of estoppel by deed, Spencer Bower’s endeavour may, we submit, nonetheless be recognised as having established the common characteristics76 of the reliance-based estoppels:77 that rights between parties are affected because B is responsible to A for A acting on a proposition78 such that it would be unfair to allow B to resile from it. B is also ‘estopped’79 from assert­ ing a right or fact when he has bound himself to A by contract or deed not to do so, but such an estoppel derives its force from the contract or deed, and not from detrimental reliance,80 just as statutory estoppels are dictated and bind by force

73a There is authority for this in the dictum of Lord Scott in Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752, at [14], with majority concurrence, that an estoppel which bars B from asserting a fact or matter of law and fact against a claim by A to a proprietary right is a proprietary estoppel. Lord Scott’s analysis is open to the criticisms identified at 1.2 n 3, 1.22 onwards and 12.28–12.29 but may still be good authority for the proposition that such an estoppel is a proprietary estoppel and therefore has the result of a proprietary estoppel. Otherwise, A might claim such absolute preclusion in every case in which B has, by words, represented A to have a particular proprietary right or, by silence, endorsed B’s belief that he has a particular proprietary right; see 1.59, 12.75 onwards and 12.192 onwards. 74 Per Millett LJ in First National Bank plc v Thompson [1996] Ch 231 at 236F. 75 ‘Historically unsound, it has been repudiated by academic writers and is unsupported by authority’: First National Bank plc v Thompson [1996] Ch 231 at 236F; see eg Ewart (1924) 37 Harv LR 170; Prichard (1964) 80 LQR 370, at 392–4. 76 See further 1.116 onwards. 77 Ie estoppel by representation of fact or law, proprietary estoppel, promissory estoppel, estoppel by convention. 78 Or an undertaking. 79 See 8.67 onwards, 8.79 onwards. 80 This expression is used in this work as shorthand for reliance on a proposition such that it would be unfair (unjust, inequitable or unconscionable) for the proponent to resile from it. The requirement, for such unfairness to be in prospect, that detriment will be suffered if the proponent resiles, is considered in Ch 5; others use the cognate expression ‘injurious reliance’: see Spence, Protecting Reliance (1999). In Baynes Clarke v Corless [2009] EWHC 1636 (Ch) at [21], [24], Proudman J recognised that the reliance may found an estoppel if it confers an advantage on B as well as where A would otherwise suffer detriment; the CA also so held ([2010] WTLR 751 at [37(4)]), framing the point, however, solely in terms of a constructive trust: see 5.61.

14

The modern doctrines: overlapping categories 1.18

of statute. The reliance-based estoppels which are the central focus of this work are to be distinguished as having, on the common foundation of responsibility for detrimental reliance, an independent place in the law of obligations and property: ‘The gist of the claim’ to all these estoppels, as has been rightly observed in respect of proprietary estoppel,81 ‘… is prejudice’. We now turn briefly to introduce these doctrines.

Estoppel by representation of fact 1.18 Under the doctrine of estoppel by representation of fact:82 where one person (‘the representor’) has made a representation of fact to another person (‘the representee’) in words or by conduct, or (being under a duty to the representee to speak or act) by silence or inaction, with the intention (actual or presumptive)82a and with the result of inducing the representee on the faith of such representation to alter his position to his relative83 detriment, the representor, in any litigation which may afterwards take place between him and the representee, is estopped, as against the representee, from making any averment substantially at variance with his former representation, if the representee objects thereto, save to the extent that the court mitigates that result to avoid injustice,84 and unless that estoppel would unjustifiably subvert the policy of a rule of law.85

81

Again by P.J. Millett QC: 92 LQR 342 at 346. Lord Sumption made the same point in giving the advice of the Privy Council in Kelly v Fraser [2013] 1 AC 450 at [17] (followed in Kaupthing Singer & Friedlander Ltd v UBS AG [2014] EWHC 2450 (Comm) at [102]); see 1.73. 82 This paragraph in the first edition at [15] was approved by Evershed MR in Hopgood v Brown [1955] 1 WLR 213 at 224; by Harman J in Re Exchange Securities Ltd [1988] Ch 46 at 54C; and cited as authoritative by Akenhead J in ADS Aerospace Ltd v EMS Global Tracking Ltd (2012) 145 Con LR 29 at [140]. The third edition notes the following authorities from the first edition: Pickard v Sears (1837) 6 Ad & El 469 per Lord Denman CJ; Freeman v Cooke (1848) 2 Exch 654 at 663 per Parke B; Jorden v Money (1854) 5 HL Cas 185, at 213 per Lord Cranworth LC; Swan v North British Australasian Co (1863) 2 H & C 175 at 181 per Blackburn J; Citizens’ Bank of Louisiana v First National Bank of New Orleans (1873) LR 6 HL 352, at 360 per Lord Selborne LC; Carr v London and North-Western Rly Co (1875) LR 10 CP 307, at 316 per Brett J; Geo Whitechurch Ltd v Cavanagh [1902] AC 117, at 130 per Lord Macnaghten; Simm v Anglo-American Telegraph Co (1879) 5 QBD 188 at 202 per Bramwell LJ; to which West v Jones (1851) 1 Sim (NS) 205, at 207 should be added. The third edition adds the following: Maclaine v Gatty [1921] 1 AC 376, at 386 per Lord Birkenhead; De Tchihatchef v Salerni Coupling Ltd [1932] 1 Ch 330, at 342 per Luxmoore J; Greenwood v Martins Bank Ltd [1933] AC 51, at 57 per Lord Tomlin; Nippon Menkwa Kabushiki Kaisha v Dawson’s Bank Ltd (1935) 51 Ll LR 143, PC, at 151 per Lord Russell of Killowen; and Thompson v Palmer (1933) 49 CLR 507, at 547 per Dixon J. 82a And see now n 88. 83 The addition of this adjective allows now for the case of B’s position relative to A being unfairly improved without A’s being worsened: see n 82, 5.61. 84 See now Avon CC v Howlett etc at 1.57, 5.66 for this addition. 85 See Ch 7 for this addition.

15

1.18  Introduction: definition and treatment

The following elements must therefore be established in order to constitute a valid estoppel by representation of fact:86 (1) the alleged representation of the party sought to be estopped was a representation of fact; (2) the precise representation relied upon was in fact made;87 (3) the case which the party is to be estopped from making contradicts in substance his original representation; (4) the representation was made with the intention (actual or as reasonably understood) and the result of inducing the estoppel raiser to alter his position on the faith88 thereof to his detriment; and (5) the representation was made by the party to be estopped, or by some person for whose representations he is deemed in law responsible, and was made to the estoppel raiser, or to some person in right of whom he claims.

Estoppel by representation of law 1.19 In Briggs v Gleeds,89 Newey J held on compelling reasoning that a representation as to law may found an estoppel by representation, provided that it does not unacceptably subvert the public policy underlying the relevant law. The principles of the doctrine of estoppel by representation of fact have thereby now been recognised as extending also to representations of law such that an estoppel may be founded on a representation of law if, mutatis mutandis, the elements analysed above of such an estoppel are established.90 The criteria governing the result of an estoppel by representation of law have yet to be addressed by the courts, but must be affected by the subject matter of the representation so as to be consistent with the criteria governing the result of estoppels based on

86 This analysis in the fourth edition was recently adopted (obiter) by Carr J in Spliethoff’s ­Bevrachtingskantoor BV v Bank of China Limited [2015] 1 CLC 651 at [156]. 87 If a representation is made, there need not be intention to mislead, nor knowledge of the true position: see eg Sarat Chunder Dey v Gopal Chunder Laha (1892) LR Ind App 203 at 215–6 per Lord Shand, although both become relevant as to whether a representation has been made by silence. 88 Following Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 whose reasoning, there applied to a proprietary estoppel, is submitted to be equally applicable to any reliancebased estoppel, including estoppel by representation of fact, this requirement will not be satisfied where A knows or ought to know that B does not intend to be responsible for A’s reliance; see further 5.19 onwards. 89 [2015] Ch 212; followed by Burton J in NRAM plc v McAdam [2015] 2 All ER 340, at [20(i)] and [30] and accepted on appeal as common ground [2016] 3 All ER 665, at [43] citing as authority The ‘Vistafjord’ [1988] 2 Ll R 343; in Mears Ltd v Shoreline Housing Partnership Ltd (2015) 160 Con LR 157, at [51], Akenhead J reached the same conclusion independently without citation of either precedent, as did Popplewell J in Emirates Trading Agency Llc v Sociedade De Fomento Industrial Private Ltd [2015] 1 CLC 963, at [51]. 90 See further Ch 2.

16

The modern doctrines: overlapping categories 1.20

r­ epresentations of fact, promises, and representations as to the present or future ownership of property, as well as avoiding unacceptable subversion of the statute or rule of law in question.91 The following obstacles will render the establishment of an estoppel by representation of law more difficult than one of fact: (1) The court’s caution towards finding that a representation as to the law was made by B as a representation of certainty rather than opinion, with the intention (actual or as reasonably understood) to be responsible for, and the result of, inducing A to alter his position, rather than as B’s opinion, argument or stance, on an issue on which A was intended to keep his own counsel or seek his own advice.92 (2) The increased likelihood that the estoppel, because it is by definition deployed to contradict the law that would otherwise apply, is invalidated because it would unjustifiably subvert the policy of the relevant rule of law;93 or, that its result is mitigated for that reason, or otherwise to avoid injustice.94

Proprietary estoppel 1.20 ‘Proprietary estoppel is a branch of estoppel by representation …’,95 or as it is here termed, reliance-based estoppel,96 whose criteria have been stated as follows: ‘Where one person, A, has acted to his detriment on the faith of a belief, which was known to and encouraged by another person, B, that he either has or is going to be given a right over B’s property, B cannot insist on his strict legal rights if to do so would be inconsistent with A’s belief’.97 In substance, the doctrine has the same requirements as for an estoppel by representation of fact or law that B has made a representation to A, or been under a duty to correct A’s belief, and that A has been induced by the representation or belief so to act that it would be unfair for B to deny it. The principles considered at Chapter 3 as to how a representation may be made and Chapter 5 as to inducement98 and detriment are, therefore, equally applicable to this doctrine. The r­epresentation on

91 See 1.47 onwards, 2.14 onwards, 2.23 onwards, 7.5, 8.56–8.60, 14.22, 14.25. 92 See 2.18–2.21, 2.28–2.35. 93 See Ch 7. 94 See n 91, 2.36, 2.37, Ch 7. 95 University of London v Prag [2015] WTLR 705 at [95] per Proudman J; Oliver J also held proprietary estoppel to be a branch of estoppel by representation in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133n, at 150B. 96 See 1.5–1.8. 97 Re Basham [1986] 1 WLR 1498 at 1503 per Edward Nugee QC: cited as agreed by the parties in Wayling v Jones (1993) 69 P & CR 170 per Balcombe LJ and, with approval, in Gillett v Holt [2001] Ch 210 at 226E–F per Robert Walker LJ. 98 It is submitted that, strictly, a proprietary estoppel should not lie where a representee unreasonably relies on a representation the representor did not intend him to rely on, even if the representor knows of the reliance unless (as may be the case) the representor is under a duty to correct the mistaken reliance: in such a case the proper analysis is that the estoppel is founded on the silence or acquiescence of the party estopped, not the original representation: see 5.25.

17

1.20  Introduction: definition and treatment

which a proprietary estoppel is founded may, however, be factual or promissory, provided that it is to the effect that A has or will acquire an interest in, or rights over, property.99 Further, proprietary estoppel is a cause of action whose remedy is in the discretion of the court, whereas an estoppel by representation of fact establishes a fact on which a cause of action, or a defence to a cause of action, may be based.100 1.21 For the doctrine of proprietary estoppel to operate, the Court of Appeal held in Newport CC v Charles,101 A must be claiming an interest in property. It is submitted that the authorities show that it may also operate in respect of a claim to rights over property,102 and, although the Court of Appeal in that case referred to land, the doctrine’s application to other forms of property has been sanctioned by the dictum below of Lord Scott in Cobbe v Yeoman’s Row ­Management Ltd,103 and by application by the House of Lords to the copyright case of Fisher v Brooker.104 The restriction of the doctrine’s operation to a claim to rights in or over property, outlawing its application in a case such as S­ alvation Army Trustee Co v West Yorks MCC,105 is welcome and derives authority also from the s­ tatement of Lord Scott106 in Cobbe v Yeoman’s Row Management Ltd that: ‘The estoppel becomes a “proprietary” estoppel – a sub-species of a “promissory” estoppel – if the right claimed is a proprietary right, usually a right to or over land but, in principle, equally available in relation to chattels or choses in action.’

The most distinctive advantage of proprietary over other forms of estoppel is that establishment of its elements gives a cause of action. That its operation is restricted to the assertion of an interest in or right over property may be argued to give a corresponding reason, based on the relative nature of title107 and the avoidance of a vacuum108 in the ownership of property, why it has developed into a cause of action: by deploying an estoppel to bar B’s claim to ownership or rights against A, a vacancy in ownership of or rights over the property is created which leaves the field open for A to assert a claim to rights in or over the property to the extent that B is barred.109

99 While the representation or assumption may be equivocal as to the nature of the rights or interest, it must be unequivocally to the effect that A has acquired or will acquire an interest or some rights in or over property: see 4.40; see also 1.87. 100 See further 1.43–1.50. 101 [2009] 1 WLR 184, at [27]. 102 See 12.38. 103 [2008] 1 WLR 1752 at [14]. 104 [2009] 1 WLR 1764, and see cases at 1.87. 105 (1981) 41 P & CR 179. 106 With concurrence of the majority. 107 Asher v Whitlock [1865] LR 1 QB 1; see eg Megarry and Wade, The Law of Real Property (8th edn, 2012) Ch 4. 108 Ie avoidance of the property becoming, to the extent B is barred, bona vacantia. 109 Lord Walker in Thorner v Major [2009] 1 WLR 776 at [61] cited, for the reason why proprietary estoppel is a cause of action, Lord Denning MR in Crabb v Arun DC [1976] Ch 179 at

18

The modern doctrines: overlapping categories 1.23

1.22 It will be noted that Lord Scott, with the same authority, defined proprietary estoppel above as a ‘sub-species’ of promissory estoppel. Lord Walker has not been alone in expressing ‘some difficulty’110 with that proposition, and there are a number of grounds of possible dispute with it.111 First, the doctrines of promissory and proprietary estoppel have different origins112 and different consequences (restraint of exercise of a contractual right in promissory estoppel, and satisfaction of an equity by conferral of rights in proprietary estoppel). To this it may be answered that Lord Scott was describing their respective places in the modern law of estoppel rather than their origins, and was not suggesting that the outcomes of the doctrines are the same, but rather that both arise from promises which have induced detrimental reliance: proprietary estoppels arising from the subset of promises as to the ownership or acquisition of property. 1.23 Objection may secondly then be made that not all proprietary estoppels are promissory estoppels, in that a representation of fact, as well as a promise, may found a claim to a proprietary right.113 Lord Scott appears to suggest that a claim to a proprietary right by estoppel is necessarily a claim to the benefit of a promise. His view appears to be that a representation that A has, as well as will have, a right in B’s property is in substance indistinguishable from a promise to transfer those rights.114 Regarding a representation that A has rights which he does not have as a form of promise to confer those rights, seems inaccurate,

187, in turn citing his own statement in Moorgate Mercantile Co Ltd v Twitchings [1976] QB 225 at 242 ‘that the effects of estoppel on the true owner may be that “… his own title to the property, be it land or goods, has been held to be limited or extinguished, and new rights and interests have been created therein”’; see also Sutcliffe v Lloyd [2008] EWHC 1329 (Ch) at [4] per Norris J; cf the reasons canvassed by Cooke, The Modern Law of Estoppel (2000) at 127–8, the focus on allowing informality by Moriarty (1984) 100 LQR 376, and the distinction from promissory estoppel by Halson [1999] LMCLQ 257. 110 In Thorner v Major [2009] 1 WLR 776 at [67]. 111 A case might even be made for the opposite proposition to Lord Scott’s in Cobbe: that ­promissory estoppel is a sub-species of proprietary estoppel as opposed to vice versa; since it must have as its subject rights under a contract or other legal relationship which, as a chose in action, are a form of incorporeal property: see 1.87. This is why, the argument would continue, promissory estoppel may be used as a shield, so as to reduce B’s rights and A’s obligations under an existing contract, but not as a sword to create rights where none existed before: there must be pre-existing rights and obligations, constituting a chose in action, on which the promissory estoppel can operate. We do not subscribe to this view, for the reasons set out in 12.37. 112 See 1.35 onwards. 113 It might also be said in answer that such an estoppel is an estoppel by representation of fact (rather than a proprietary estoppel) as A will claim such an estoppel because that will afford him greater relief: B is estopped from denying the fact and is granted relief on that basis (subject to equitable mitigation), whereas under a proprietary estoppel the relief granted is at the discretion of the court and may therefore be reduced (but see 1.16). 114 Otherwise, a proprietary estoppel could not be said to be a form of promissory estoppel. This would be a controversial way of addressing the issue as to the threshold between a representation of fact and a promise, where the representation is that A has rights against B. As already submitted, no just distinction may be made as to the outcome of an estoppel based on a representation by B that A has the right to future performance by B or is free from an obligation to B of future performance (regarded by the law as factual: see 2.31), and an estoppel based on

19

1.23  Introduction: definition and treatment

however, in ignoring that the representation is descriptive, whereas a promise is transformative and predictive in purport. It does not, however, follow that that distinction should give detrimental reliance on each form of representation a different outcome. Indeed, it is submitted that detrimental reliance on a representation that A has a proprietary right should have the same discretionary outcome as a promise to confer that right: but it is nonetheless respectfully submitted to be wrong to say that all proprietary estoppels are based on promises. Lord Scott’s view may, however, be supported in the limited respect of its implicit recognition that the constituent elements of representation – unequivocality, inducement and detrimental reliance – are the same for both proprietary and promissory estoppel (as, it is submitted, they are also in relation to estoppel by representation of fact, and, save in that the relevant proposition is established by mutual assent rather than representation, estoppel by convention), and that an estoppel based on a representation that A has a proprietary right, or endorsement by silence of A’s belief that he has such a right, is a proprietary estoppel with a discretionary result rather than an estoppel by representation as to the fact of that right.115 1.24 That promissory estoppel cannot itself create such rights in the absence of a form of property on which to operate raises another question provoked by Lord Scott’s categorisation of one doctrine as a form of the other: namely, why the doctrine of consideration is so carefully protected in the context of promissory estoppel while, in the context of proprietary estoppel, it is ignored, and a bare promise as to the acquisition of property upon which detrimental reliance has been placed will found a cause of action.116

Promissory estoppel 1.25 If the subject matter of a representation is not factual but ­promissory117 – that is, a promise or undertaking as to the future – then it will not found an

a promise by B to perform in the future or a release of A from the obligation to perform in the future: whether and with what result such estoppels may lie should therefore be determined consistently, and both are open to the same answer as that which prevents a promise without consideration from founding a cause of action by estoppel, that it will not be allowed unacceptably to subvert a rule of law, in this case the doctrine of consideration. See further 1.47 onwards, 2.14 onwards, 2.23 onwards, 7.5, 8.56–8.60, 14.22, 14.25. 115 See 1.16, 1.114. 116 This concern is shared by McFarlane as editor of Snell’s Equity (33rd edn) Ch 12 at 12.015, citing Cooke, The Modern Law of Estoppel at 127–35 for historical, and Halson [1999] LMCLQ 257 for theoretical, explanation; see also Knowles and Balen (2013) 24 KLJ 111; McFarlane and Sales (2015) 131 LQR 610; cf Taylor v Dickens [1998] 1 FLR 806 (dismissing a promise-based claim in proprietary estoppel: since overruled eg by Thorner v Major n 110) per HHJ Weeks QC: ‘In my judgment there is no equitable jurisdiction to hold a person to a promise simply because the court thinks it unfair, unconscionable or morally objectionable for him to go back on it. If there were such a jurisdiction, one might as well forget the law of contract and issue every civil judge with a portable palm tree. The days of justice varying with the size of the Lord Chancellor’s foot would have returned’. 117 See 2.23–2.27 as to how fine this distinction may be.

20

The modern doctrines: overlapping categories 1.26

estoppel by representation of fact (unless it is as to the present existence of a right), but will, if the remaining requirements of unequivocality, inducement and detrimental reliance are satisfied,118 found a promissory estoppel. In the law of England and Wales119 it is not a cause of action and is not an independent source of ­obligations.120 Further, its effect is in the discretion of the court, and is suspensory of the right B is estopped from enforcing for so long only as is necessary to avoid the injustice that A would suffer by reason of his reliance on the promise. There is an overlap between a promise and a representation or convention as to the law, or as to the existence of a right, if the representation or convention is as to the existence of (or the law conferring or negating) a right to future performance, and in such cases, for consistency, the same limitations as to the operation of the estoppel should, it is submitted, apply as apply to a promissory estoppel. It is submitted that these limitations apply where they are necessary to prevent the subversion of the doctrine of consideration by such an estoppel.121 1.26 It is further submitted122 that the requirement of detriment for promissory estoppel is the same as for the other reliance-based estoppels, namely reliance by A such that it would be unfair for B to resile from the relevant proposition, because B has caused A to act or omit to act in such a way that he will be worse off123 as a result of such reliance if B were to resile: consideration of the decision in Central London Property Trust Ltd v High Trees House Ltd124 should, we suggest, lead to the conclusion, not that the requirement of detriment is different or absent for a promissory estoppel, but that the requirement was there sufficiently satisfied for a limited suspensory estoppel by the inference that detriment would be caused by allowing an immediate reassertion by B of the suspended liability, by reason of A having ordered its affairs on the basis that it was not liable.125

118 Chs 4 and 5 dealing with which are, therefore, applicable to this doctrine also. 119 Contrast the law in Australia since Waltons Stores (Interstate) v Maher (1988) 164 CLR 387. 120 Combe v Combe [1951] 2 KB 215 at 224; Lark v Outhwaite [1991] 2 Ll R 132 at 142; Hiscox v Outhwaite (No 3) [1991] 2 Ll R 524 at 535; Baird Textile Holdings v Mark & Spencer Plc [2002] 1 All ER (Comm) 757; see 14.36–14.41. 121 See further 1.47 onwards, 2.14 onwards, 2.23 onwards, 7.5, 8.56–8.60, 14.22, 14.25. 122 See 5.55–5.60; 14.28–14.31. 123 Which may include being worse off relative to the party estopped because, although the estoppel raiser’s position has not been or would not be worsened, the party estopped has secured or would secure an unfair benefit from the reliance; see 5.61. 124 [1947] KB 130. 125 See 14.28–14.29; see also MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] 3 WLR 1519: Kitchin LJ at [61] holding it to be an example of rights suspended by reason of reliance such that it would be inequitable to enforce them having regard to all the circumstances, but that it cannot be said that, in every case where a creditor agrees to accept payment of a debt by instalments and the debtor pays one, it will necessarily be inequitable for the creditor to go back on the agreement. Kitchin LJ at [49] and Arden LJ at [87] also held, with McCombe LJ concurring, that binding consideration for an agreement to pay less than was due under a previous contract may be found in the practical benefit of that to the creditor that it has sought by that agreement.

21

1.27  Introduction: definition and treatment

Estoppel by convention 1.27 An estoppel by convention is a reliance-based estoppel whose subject matter – that is, the proposition from which B is estopped from departing – is communicated, not by a representation or promise by B to A, but by mutual assent. It may therefore also be an estoppel as to a fact, a proposition of law, a proprietary right or a promise. By reason of their consensual foundation, it is arguable that some estoppels by convention, properly analysed, are not reliancebased estoppels, but estoppels that bind by contract, the parties to the convention having expressly or impliedly agreed that their relations are to be governed in accordance with a particular proposition, and consideration for the agreement of each lying in the agreement of the other thereto: if consideration is given, then there is no need for detrimental reliance to found the estoppel.126 1.28 It is submitted that an estoppel by a convention that is short of a contract and not under seal is not, in the modern law, a wholly separate doctrine from proprietary estoppel, promissory estoppel and estoppel by representation of fact, but rather one form of reliance-based estoppel of which these three are others.127 It has been separately treated by reason of its origin in the doctrine of estoppel by deed, but as a doctrine now recognised as distinct from estoppel by deed or contract (which bind by agreement under seal or for consideration) in being founded on detrimental reliance, it is correspondingly only distinct from the other reliance-based estoppels as to the means by which responsibility is assumed for the relevant proposition, namely mutual assent rather than unilateral representation. For estoppel by convention is defined by the means by which responsibility is assumed for the proposition on which the estoppel is founded, but these other three categories of reliance-based estoppel are defined by reference to the subject matter of that proposition. An estoppel by convention may, therefore, according to the substance of the proposition to which the parties mutually assent, also be considered an instance of either proprietary estoppel (where it concerns rights in or over property), promissory estoppel (where it concerns a promise) or estoppel as to a fact or law (where it concerns a fact or law).

Estoppel by contract; estoppel by deed; estoppel as to title 1.29 An estoppel by contract is simply a term of a contract which precludes a party from making an assertion: it does so by force of contract and does not

126 As submitted in the fourth edition of this work and now established by the Court of Appeal in Springwell Navigation Corp v J P Morgan Chase Bank [2010] 2 CLC 705 at [144] and cases following it; see further 8.67 onwards. 127 In ING Bank NV v Ros Roca SA [2012] 1 WLR 472 at [59], Carnwath LJ noted this submission in the fourth edition of this work and that ‘Others have expressed doubts about the desirability of sub-division of this “most flexible” of doctrines (see e.g. per Judge LJ in Baird Textile Holdings v Marks & Spencer plc [2002] 1 All ER (Comm) 757, citing Robert Goff J in the Amalgamated Investment case)’, and was cited by Blair J in WS Tankship II BV v Kwangju Bank Ltd [2012] CILL 3155 at [180].

22

The modern doctrines: overlapping categories 1.30

therefore require detrimental reliance.128 The original basis of an estoppel by deed was that the formal solemnity of the deed was conclusive as to the facts declared by the parties therein.129 In Prime Sight Ltd v Lavarello,130 this was recognised131 by the Privy Council to be an estoppel by binding agreement, since the parties to the deed must be found to have intended to agree to admit the relevant fact in order to be estopped from denying it,132 and the formal solemnity removes the necessity for consideration: detrimental reliance is not, therefore, necessary to found an estoppel by deed.133 Indeed, in Richards v Wood,134 Lewison LJ, citing Prime Sight Ltd v Lavarello, gave the Court of Appeal’s authority to the proposition that estoppels based on recitals to binding agreements such as deeds ‘… are part of a sub-species of estoppel known as contractual estoppel’. In First National Bank plc v Thompson,135 Millett LJ also identified as distinct from estoppel by representation an estoppel by deed as to title that is ‘the product of the fundamental principle of the common law which precludes a grantor from denying the validity or effect of his own grant’. Thus formulated, such an estoppel depends on a grant rather than a deed, so execution of the grant as a deed is not essential, as where it arises from a tenancy agreement that is not under seal136 or between a licensor and licensee,137 but such an estoppel nonetheless binds as an incident of the grant, either under seal or contract, rather than by reason of detrimental reliance.

Estoppel by silence or acquiescence; estoppel by negligence 1.30 An estoppel may be based on silence or acquiescence if B was under a duty to speak to A, and by not doing so caused the adoption or continuation of A’s mistaken belief on which A has so relied that it would be unfair for B to assert the contrary. This describes a means by which B may become responsible to A for A’s reliance on a proposition so as to found an estoppel, and is therefore a categorisation of a similar order to estoppel by convention,138 but of a different 128 See 8.67 onwards. 129 Coke on Litt. 352b; Rainsford v Smith (1560) 2 Dyer 196a; Jones v Williams (1817) Stark 52; Harding v Ambler (1838) M & W 279; Simm v Anglo-American Telegraph Co (1879) 5 QBD 188 at 206 per Brett LJ; Low v Bouverie [1891] 3 Ch 82 at 101. 130 [2014] AC 436; followed domestically in Destine Estates Ltd v Muir [2014] EWHC 4191 (Ch). 131 As suggested in the fourth edition. 132 Greer v Kettle [1938] AC 156 at 167. 133 See 8.79 onwards. 134 [2014] EWCA Civ 327, at [16] with unanimous concurrence. 135 [1996] Ch 231 at 237A; but see further 8.90 onwards, 9.18 onwards. 136 Mitchell v Watkinson [2014] EWCA Civ 1472 at [33]–[37]; Cuthbertson v Irving (1859) 4 H&N 742 (Martin B) affirmed (1860) 6 H&N 135; Bruton v Quadrant Housing Trust [2000] 1 AC 406, at 415A to 416F; Bell v General Accident Fire and Life Assurance Company Limited [1998] 1 L & TR 1; Industrial Properties (Barton Hill) Limited v Associated Electrical Industries Limited [1977] QB 580, at 596C–597B; Pawlowski (2015) 19 L & TR 79. 137 Sze To Chun Keung v Kung Kwok Wai David [1997] 1 WLR 1232; Couper v Albion Properties Ltd [2013] EWHC 2993 (Ch). 138 Although B may assent to a convention by silence and therefore be estopped by both silence and convention.

23

1.30  Introduction: definition and treatment

order from those defined by subject matter, so an estoppel by silence may also be an estoppel as to a matter of fact or law, a promissory estoppel, and/or a proprietary estoppel. It has been rightly observed139 that not all estoppels by silence are estoppels by representation, as in some cases B’s silence does not communicate the subscription of B to the relevant proposition to A, and A is simply unaware of B’s position or even existence; but, because B was under a duty to speak, by his silence he was responsible for A’s mistaken belief and reliance thereon, and may therefore be estopped without having made a representation to A. 1.31 By an estoppel by negligence,140 B is held responsible to A for the relevant proposition, because A’s reliance on it was caused by a breach of duty of care owed by B to him. This doctrine has been developed and applied in cases in which a representation was made by a third party, C, to A, but its communication and A’s reliance were allowed by a breach of duty owed to A by B. This category therefore overlaps with estoppel by silence or acquiescence insofar as the duty of care is a duty to speak, or vice versa. It is even arguable that the doctrine has been effectively supplanted by the tort of negligence and the doctrine of agency by ostensible authority or ostensible ownership, as providing the criteria for determining whether B is answerable for a representation made by C to A.141

Election 1.32 The common law doctrine of election142 applies where B is faced with inconsistent courses of action which affect the rights or obligations of A, and makes a choice between them in the knowledge that they are inconsistent and that he has the right to choose between them. Once this choice is unequivocally communicated by B to A, B is prevented from afterwards resorting to the course of action which he has deliberately143 rejected. A claim that B has made an election will often arise in the same context as a claim by A to a promissory estoppel, and the common law doctrine of election shares with the doctrines of estoppel the requirement of unequivocality. The former doctrine is, however, distinguishable in that it is not founded on detrimental reliance.144 Moreover, a party will only be held to have made a binding election where he or she has full knowledge both of the facts giving rise to the election and of the right to elect. In Kosmar Villa Holidays Plc v Trustees of Syndicate 1243,145 Rix LJ (with 139 By Macfarlane, The Law of Proprietary Estoppel; see further 1.88 onwards. 140 See 3.27 onwards. 141 But see 3.29; see also Bowstead & Reynolds on Agency (20th edn, 2014) [2-102] and Watts (2005) 26 Aust Bar Rev 185; and cf Mann v Shelfside Holdings Ltd [2015] EWHC 2583 (QB), at [74], where application of the doctrine of apparent ownership was considered to add ­nothing to estoppel by representation. 142 See 13.50 onwards as to election in equity. 143 Although the element of conscious choice need not be established where B was under a duty to elect and failed to make an election: see 13.27. 144 See eg Oliver Ashworth Ltd v Ballard Ltd [2000] Ch 12 at 27D–G per Robert Walker LJ; cf 1.5 onwards. 145 [2008] 2 All ER (Comm) 14.

24

The modern doctrines: overlapping categories 1.33

u­ nanimous ­concurrence) regarded the authorities on election cited to the court to have been confined in operation to contracts in the course of execution,146 and held that the doctrine does not operate so as to waive a condition precedent to liability under an insurance contract, for which the protection of estoppel, if the requirements therefor are satisfied, is sufficient to do justice to the insured.147 A similar review may in future be undertaken, seeking to identify why consistency becomes a legal obligation, in other areas: as to whether and why the circumstances are such as to constitute a dilemma in respect of which a binding election has to be made, or, on the other hand, no bar should arise unless the requirements for an estoppel are satisfied.

Whether title, relation or status can be established by estoppel 1.33 As estoppel is a relationship between the parties to the estoppel which affects the rights and duties between those parties, it has been said that the title or right it establishes is not ‘real’,148 but it is not true that an estoppel never binds third parties,149 nor even that in no case can it bind a bona fide purchaser for value without notice.150 Further, that the interest in property which the estoppel creates against B does not bind a bona fide purchaser for value without notice does not mean that it is not real interest, as title in English law may be real and yet relative.151 It is respectfully submitted that description of the title, relation or status created by estoppel as unreal, or ‘metaphorical’,152 because the estoppel binds only B, is misleading, in that the right in property established between A and B is real but relative; whether it binds C depends on the justice of the case as between A and C, and whether estoppel against C would unacceptably subvert the policy of a statute or rule of law.153 Thus, estoppel as to authority to sell

146 At [66]. 147 At [70]. 148 Eg Bank of England v Cutler [1908] 2 KB 208 at 234 per Farwell LJ: ‘it is true that a title by estoppel is only good against the person estopped, and imports from its very existence the idea of no real title at all.’; Balkis Consolidated Co v Tomkinson [1893] AC 396; thus, also, holding out the existence of a partnership to third parties will not estop one party from denying the partnership to the other if, as between them, the former has not agreed or represented to the other that they are partners: Greville v Venables (2007) 104 (37) LSG 36 at [41]; see further 6.32, n 120; contrast Re Stapleford Colliery Co (1879) 14 Ch D 432 (sed quaere, as to which see further 6.5, Ch 10). 149 See 6.17 onwards. 150 See n 154, 1.34, 6.24 onwards, 9.4 onwards 11.46 onwards. 151 See Asher v Whitlock [1865] LR 1 QB 1; Megarry and Wade, The Law of Real Property (8th edn, 2012) Ch 4. 152 Eastern Distributors Ltd v Goldring [1957] 2 QB 600, CA, at 611 per Devlin J, an expression derived from the first edition of this work from which Sir Alexander Turner partially withdrew in the third edition, at Ch 1, [13]. See also Simm v Anglo-American Telegraph Co (1879) 5 QBD 188 at 206 per Brett LJ: ‘It seems to me that an estoppel gives no title to that which is the subject-matter of estoppel. The estoppel assumes that the reality is contrary to that which the person is estopped from denying, and the estoppel has no effect at all upon the reality of the circumstances’. 153 See Ch 7.

25

1.33  Introduction: definition and treatment

by apparent authority or apparent ownership binds third parties by reasons of ­mercantile convenience,154 and proprietary estoppels may bind third parties other than bona fide purchasers for value without notice.155 This approach is an aspect of our submission below that estoppel by representation of fact is a substantive rule of law155a that affects the rights of A, B and, where just, C. It is inapt to describe a right of A, established by estoppel, which is as real as it can be in binding B, as an unreal or metaphorical right created by a rule of evidence. The estoppel is counterfactual, but the right founded on it is real. 1.34 For these reasons, it is now statutorily recognised ‘for the avoidance of doubt’ that, in relation to registered land, an equity by estoppel ‘has effect from the time the equity arises as an interest capable of binding successors in title’.156 It is thereby recognised that the relationship between B, the property owner, and A, confers rights on A which may bind not only the then owner but third parties also, since A, by virtue of the estoppel, acquires a proprietary interest from B, if the equity is such as the court will satisfy by grant of a proprietary interest: this subject is considered further in Chapters 6 and 12. The statutory estoppel under s 21(1) of the Sale of Goods Act 1979 has also been held to create a title that is good contra mundum.157 Further, where an estoppel is ‘fed’ by a purported grantor subsequently acquiring an estate sufficient to enable him to make the grant, the estate is granted.158

HISTORICAL DEVELOPMENT 1.35 There are a number of sources for the modern doctrines of estoppel. The first is the source for the doctrines of estoppel by representation of fact and estoppel by deed. The earliest doctrine of estoppel in English law was the doctrine of estoppel by record, or res judicata, which prevents parties from re-litigating a previous determination of the court between them. The policy of

154 See 9.4 onwards, 11.46 onwards. 155 See 6.30 onwards 155a See 1.51 onwards. 156 ‘Subject to the rules about the effect of dispositions on priority’: s 116 of the Land Registration Act 2002. 157 Eastern Distributors Ltd v Goldring [1957] 2 QB 600 at 611; Stoneleigh Finance Ltd v ­Phillips [1965] 2 QB 537, at 577–8 per Russell LJ; cf per Davies LJ at 571; Snook v L ­ ondon and West Riding Investments Ltd [1967] 2 QB 786, at 803–4 per Russell LJ. See 11.47 onwards. 158 A doctrine not confined to landlord and tenant cases in Rajapakse v Fernando [1920] AC 892, PC at 897: ‘The English doctrine applies that where a grantor has purported to grant an interest in land which he did not at the time possess, but subsequently acquires, the benefit of his subsequent acquisition goes automatically to the earlier grantee, or, as it is usually expressed, “feeds the estoppel”’; see Cumberland Court (Brighton) Ltd v Taylor [1964] Ch 29 (a conveyance); Whitehorn Bros v Davison [1911] 1 KB 463, at 475, 481; Lucas v Smith [1926] VLR 400 (sale of chattels), but see Williams, Vendor and Purchaser (4th edn) at 1096; see further 9.47.

26

Historical development 1.36

this original estoppel was extended to the prevention of pleading of facts contrary to a previous judicial determination under the old pleading system.159 Emphasis on the record of the previous judgment as establishing the estoppel then opened up the avenue of extension of the doctrine to solemn formal declarations, giving rise to the doctrine of estoppel by deed. The formality of the deed was accorded by the common law the same consequence as the formality of a judgment: final determination of the issue between the parties,160 and this mode of development reflects the law’s earlier preoccupation with form, embodied in the old pleading system and the forms of action. As a result, however, the justification for the estoppel could lie in the solemn accord between the parties rather than the determination of the court, and this opened up the line of further analogical extension that other acts of parties of sufficient formality might bind by estoppel. By this extrapolation, it was held that a party might bind himself by an estoppel in pais:161 that is, by act of notoriety, recognised as having the same solemnity and formality as a deed, ‘as by livery,162 by entry,163 by acceptance of rent, by ­partition,164 or acceptance165 of an estate’. 1.36 These three doctrines of estoppel – by record, by deed and in pais – under which a party is bound by a solemn formal act were established by the courts of the common law.166 The latter two doctrines of estoppel by deed and in pais, under both of which a party is bound by a representation made by a solemn formal act, then provided the foundations for the development of the doctrine of

159 See Prichard (1964) 80 LQR 370, at 372. 160 See 8.1; as noted by Millett LJ in First National Bank plc v Thompson [1996] Ch 231, estoppel by deed (along with estoppel by record and in pais) was ‘The creature of the common law’ (at 236): ‘the principle which precludes a grantor from disputing the validity or effect of his own grant’ was ‘… exclusively the creation of the common law, not equity.’ (at 237) citing, as 18th-century examples, Vick v Edwards (1735) 3 P Wms 371 per Lord Talbot LC and ­Goodtitle v Bailey (1777) 2 Cowp 597 at 600–1 per Lord Mansfield CJ. 161 The third type of estoppel, after estoppel by record and by deed, recognised by Coke on Littleton (1628) at 352b: ‘Whereof Littleton maketh a speciall observation, that a man shall be estopped by a matter in the countrey, without any writing’. See also Rastell, Termes de la Ley (1629 edn) at 142–43: ‘Estoppell is when one is concluded, and forbidden in lawe to speake against his owne act, or déede, yea, al∣though it bée to say the truith.’ identifying the underlying requirement of consistency, and citing as examples: estoppel from denying the name under which an obligation was undertaken, ‘… for otherwise he might take aduauntage of hys owne wronge, which the lawe wyl not suffer a man to doe.’; estoppel by livery (see n 162): ‘Also if the daughter yt is onely heire to her fa∣ther, wil sue liuery with her Sister that is a bas∣tard: she shal not after∣ward be receiued to say yt her Sister is bastard: insomuche that if her bastard sister take halfe y• lā d wt her, there is noe remedy by law.’; and estoppel by taking a lease of one’s own land from denying, during its term, the lessor’s title: ‘and it was his folly, to take a lease of hys owne landes, & therefore shall thus bée punished for his folly’. 162 A delivery of feudal possession: part of the ceremony called a feoffment. 163 Taking possession of land. 164 Dividing land held in joint tenancy. 165 See Lyon v Reed (1844) 1 M & W 285. 166 ‘The creature of the common law, estoppel was originally of three kinds: estoppel by record, by deed and in pais.’: First National Bank plc v Thompson [1996] Ch 231 at 236 per Millett LJ; Prichard (1964) 80 LQR 370, at 393.

27

1.36  Introduction: definition and treatment

estoppel by representation of fact, whereunder B is prevented from denying the truth of an informal representation to A, because B has induced A to rely on it such that A will suffer detriment if B resiles from it. This development was made by courts of equity, being traced by Holdsworth167 to decisions in Chancery168 from which Lord North169 fashioned an equitable doctrine of ‘making representations good’170 that was imported into the common law by Lord Mansfield,171 but then lay dormant until, following the recognition of estoppels as between parties to bills of exchange,172 it was, in Pickard v Sears173 and Freeman v Cooke,174 enunciated as a doctrine by Lord Denman and Lord Parke in courts of common law, and shortly thereafter restricted in its application to statements of fact by the House of Lords in the Chancery case of Jorden v Money.175 1.37 By then, estoppel had, from its original underlying policy, developed two new underlying policies and formed two new corresponding species of estoppel: first, it developed, from the rationale that the court should not have to decide the same issue twice between the same parties, the rationale that a party may not resile from a proposition to which he has solemnly and formally assented; and then, from that, it developed the modern rationale that it is unfair for a party to resile from a representation upon which he has induced another to rely if the other will thereby suffer. Underlying the modern doctrine of estoppel

167 A History of the English Law, vol 9, pp 161–162; in an account derived in part from ­Ashburner’s Principles of Equity (2nd edn) pp 445–6. 168 Hunt v Carew (1649) Nels 46: ordering that a remainderman son make good his fraudulent representation that he had transferred his life tenant father a fee simple, in reliance upon which a lessee paid £300, by joining in the grant of a lease; Webb v Borroughs (1676) Ld Nott Ch Cas 1 249; Bishop of Oxford v Wise (1678) Ld Nott Ch Cas 2 849; cf also recognition in Chancery of a principle of proprietary estoppel (albeit without use of the word ‘estoppel’) in The Earl of Oxford’s Case (1615) 1 Ch Rep 1 and Dyer v Dyer (1682) 2 Cas in Ch 108. 169 In Hobbs v Norton (1682) 1 Vern 136; Hunsden v Cheyney (1690) 2 Vern 150; Mocatta v Murgatroyd (1717) 1 P Wms 393 at 394. 170 For an account of whose demise, see Spencer Bower and Turner, Actionable Misrepresentation (2nd edn) Appendix 1, pp 757–65; and 12.12, n 44. 171 In Montefiori v Montefiori (1762) 1 Wm Bl 363, approved by Lord Thurlow in Neville v Wilkinson (1782) 1 Bro CC 543. 172 In Collis v Emmet (1790) 1 HBL 316–9; Ex p Clarke (1791) 3 Bro CC 238; Cooper v Meyer (1830) 10 B & C 468. 173 (1837) 6 Ad & El 469 at 472: ‘But the rule of law is clear, that, where one by his words or conduct wilfully causes another to believe the existence of a certain state of things, and induces him to act on that belief, so as to alter his own previous position, the former is concluded from averring against the latter a different state of things as existing at the same time’. 174 (1848) 2 Exch 654 at 663 per Parke B: ‘If whatever a man’s real intention may be, he so conducts himself that a reasonable man would take the representation to be true, and believed that it was meant that he should act upon it, and did act upon it as true, the party making the representation would be equally precluded from contesting its truth’. By 1881, Bacon V-C regarded estoppel as a doctrine solely of the common law rather than equity, in Keate v Phillips (1881) 18 Ch D 560 at 577; but in Canadian Pacific Railway v R [1931] AC 414 the Privy Council, per Lord Russell of Killowen, remained doubtful: ‘Whether there can be any estoppel which is equitable as distinct from legal and whether “equitable estoppel” is an accurate phrase, their Lordships do not pause to inquire’. 175 (1854) 5 HL Cas 185; 2.14, 2.15.

28

Historical development 1.38

by representation, there is a principle of fairness requiring consistency, or, as it is often put, a principle that prevents unconscionable behaviour. As in the last edition of this work, the concept of unfairness is here preferred, for its greater transparency, to that of unconscionability:176 first, because, outside of the duty to keep promises and not to lie,177 the reason that a party cannot resile from a representation or promise in good conscience is that it would be unfair to another, who would suffer because he was induced to act on it; and, secondly, since the latter term identifies that for which a court of equity will give a remedy, its use can encourage the misconception that there are different categories of ‘common law’ and ‘equitable’ estoppel which prevent different forms of injustice.178 However, all the reliance-based estoppels, including, as noted above, estoppel by representation of fact, owe their development to courts of equity, and all respond to the same unfairness, of resiling from a representation on which there has been detrimental reliance. 1.38 This rationale is to be found also at the source of the doctrines of promissory and proprietary estoppel. The origin of the modern doctrine of proprietary estoppel,179 whose development is more fully traced in Chapter 12,180 appears to lie in the confluence181 of, first, the principle of unjust enrichment that it is unfair for an owner to retain a benefit to property that he has induced another to confer by inducing or acquiescing in the latter’s misapprehension that he has an interest in the property182 and, secondly, the doctrine of part performance (itself 176 See 1.64 onwards. 177 Respectively reflected (see Spence, Protecting Reliance, Ch 1) in the law of contract and the tort of deceit. 178 See further 1.99, 1.100. 179 It is notable, however, that all Coke’s examples of ‘estoppel in pais’, which means estoppel ‘in the countrey’, concern land (see 1.30), so a doctrine of estoppel relating to property in land, albeit based on formal acts, dates back to his day; see also Savage v Foster (1723) 9 Mod Rep 35. 180 At 12.12 onwards. 181 In the statement of the law by Lord Kingsdown in Ramsden v Dyson (1866) LR 1 HL 129 at 170, in which all the authorities at nn 182, 183 below were cited in argument; Dillwyn v Llewellyn (1862) 4 De GF & J 517, where Lord Westbury invoked an equity to perfect a gift analogous with the doctrine of part performance, as noted by Allan (1963) 79 LQR 238, was oddly not cited, although Lord Westbury gave an opinion in Ramsden also. Both cases were cited as examples of the same principle in Plimmer v Mayor of Wellington (1884) 9 App Cas 699, PC, at 710; see further 12.12 onwards. 182 See Peterson v Hickman, noted in The Earl of Oxford’s Case (1615) 1 Ch Rep 1 at 5; Dyer v Dyer (1682) 2 Cas in Ch 108; East India Co v Vincent (1740) 2 Atk 83, per Lord Hardwicke LC: ‘there are several instances, where a man has suffered another to go on with building upon his ground, and not set up a right till afterwards, when he was all the time conusant of his right, and the person building had no notice of the other’s right, in which the court would oblige the owner of the ground to permit the person building to enjoy it quietly and without disturbance’; Stiles v Cowper (1748) 3 Atk 692; Dann v Spurrier (1802) 7 Ves 230 at 235−6 per Lord Eldon: ‘this court will not permit a man knowingly, though but passively, to encourage another to lay out money under an erroneous opinion of title; and the circumstance of looking on is in many cases as strong as using terms of encouragement; [for instance] a lessor knowing and permitting those acts, which the lessee would not have done, and the other must conceive he would not have done, but upon an expectation, that the lessor would not throw an objection in the way of his enjoyment’.

29

1.38  Introduction: definition and treatment

an application of the principle that equity will not allow a statute to be used as an instrument of fraud), whereunder a party was bound by an agreement for the disposition of an interest in land if the other party had partly performed his duty under it, although the agreement was not enforceable for failure to comply with statutory requirements of formality.183 This confluence has been mirrored by the recent divergence of opinion over whether a proprietary estoppel should be satisfied by reference to reliance or expectation.184 1.39 The adoption of an equitable approach at common law may also be seen in the application of the common law rule identified in Pickard v Sears185 to the facts of that case, so as to preclude B, the owner of property, whether land186 or goods,187 who has knowingly allowed a disposition of it or them by a third party, C, so as to cause A to believe C to be the owner, from denying that C was the owner. The formulation of the doctrine of estoppel at common law in Pickard v Sears188 was in terms of wilful causation of a belief, and only, shortly afterwards, in Freeman v Cooke,189 in terms of representation. Indeed, on the facts of Pickard v Sears, B made no representation, but was responsible for A’s mistaken belief in C’s representation by failing to correct it when he should have. Lord Denman, in relation to property other than land, there adopted at common law the reasoning applied in the original Chancery proprietary estoppel cases190 to found the estoppel as to ownership of land on silence. Estoppels by silence and by negligence founded on breach of a duty to correct a proposition, rather than on a representation of it, may therefore be traced to these early stages of development. Moreover, as an application of estoppel in a court of common law to the ownership of property,191 Pickard v Sears demonstrates the overlap of estoppel as there

183 Cited in argument: Allan v Bower (1790) 3 Bro CC 149 at 153; Gregory v Mighell (1811) 18 Ves 328 (see 12.21 n 74); Mundy v Jolliffe (1839) 5 My & Cr 167; Shillibear v Jarvis (1856) 8 De GM & G 79; Pain v Coombs (1857) 1 De G & J 34; Lillie v Leigh (1858) 3 De G & J 204; Farrall v Davenport (1861) 3 Giff 363. 184 See eg Jennings v Rice [2003] 1 P & CR 100; Waltons Stores (Inter State) Ltd v Maher (1988) 164 CLR 387; Commonwealth of Australia v Verwayen (1990) 170 CLR 394; Davis [1996] Conv 193; Smith in Rose ed Consensus ad idem (1996); Cooke (1997) 17 LS 258; ­Robertson [1998] LS 360; Gardner (1999) 115 LQR 438; Spence Protecting Reliance (1999) at pp 66–71; and academic writing canvassed in Davies v Davies [2016] 2 P & CR 10 at [39]; see further 12.179 onwards. 185 See n 173. 186 See Savage v Foster (1723) 9 Mod 35 at 37: ‘when anything in order to a purchase is publicly transacted, and a third person, knowing thereof, and of his own rights to the land is intended to be purchased, does not give the purchaser notice of that right, he shall never afterwards be admitted to set up such right to avoid the purchase’; Teasdale v Teasdale (1726) Sel Cas Temp King 59. 187 As in Pickard v Sears n 173 and recently applied in VLM Holdings Limited v Ravensworth Digital Services Ltd [2014] FSR 9 and Mann v Shelfside Holdings Ltd [2015] EWHC 2583 (QB), a claim argued and rejected in terms of estoppel by representation of fact which might have been argued as a proprietary estoppel. 188 See n 173. 189 See n 174. 190 See n 168. 191 See 2.31.

30

Estoppel by representation of fact deployable offensively and as a rule of law 1.42

applied with proprietary estoppel, and the demand, for coherence, of r­ ecognition that estoppel by representation and proprietary estoppel are both applications of the same principle of reliance-based estoppel, now governed in its application to the ownership of property by the rules of proprietary estoppel.192 1.40 In Chancery, the doctrine of promissory estoppel appeared to spring like Athena, fully formed from the mind of Lord Cairns LC193 who, in Hughes v ­Metropolitan Rly Co,194 had no need of authority to declare: ‘… the first principle upon which all Courts of Equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results – ­certain penalties or legal forfeiture – afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties.’

1.41 This formulation roots the doctrine in the ancient jurisdiction of the Lord Chancellor and his Court to mitigate the rigour of the common law.195 The common law had also, however, developed a corresponding doctrine under which contractual rights might be suspended by reason of reliance on an assurance that they would not be enforced,196 which should also be recognised as a source of this doctrine.

ESTOPPEL BY REPRESENTATION OF FACT DEPLOYABLE OFFENSIVELY AND AS A RULE OF LAW Rule of evidence: the previous view 1.42 The doctrines of promissory estoppel (whose result is in the discretion of the court), proprietary estoppel (a cause of action), election and estoppel by convention (at least, where the subject matter of the convention is law rather

192 See 1.59. 193 A Lord Chancellor who had not sat as a puisne judge but had been ranked with Palmer and Rolt as a leader of the equity bar. 194 (1877) 2 App Cas 439 at 448: the authority relied on by Denning J in Central London Property Trusts Ltd v High Trees House [1947] 1 KB 130, which case gave life to the modern doctrine of promissory estoppel: the term ‘promissory estoppel’, derived from Williston on Contracts (1st edn, 1920), was first used by Denning LJ in Dean v Bruce [1952] 1 KB 11 at 14; see further Cheshire and Fifoot (1947) 63 LQR 283. 195 See further Ch 14. 196 Ogle v Earl Vane (1868) LR 3 QB 272; Hickman v Haynes (1875) LR 10 CP 598; Plevins v Downing (1876) 1 CPD 220; Birmingham and District Land Co v London and North Western Rlwy Co (1888) 40 Ch D 268 at 286 per Bowen LJ: ‘I will not say it is not a principle that was recognised by Courts of Law as well as of Equity’.

31

1.42  Introduction: definition and treatment

than fact) are rules of substantive law. However, the view197 expressed by previous editors of this work,198 and supported by dicta which, whilst not binding, carry considerable weight,199 was that estoppel by representation of fact is a rule of evidence. Mr Spencer Bower’s justification for this view, adopted by Sir ­Alexander Turner, was that: ‘such an estoppel, except as a bar to a testimony, has no operation, its sole office being to place an obstacle in the way of a case which might otherwise succeed, or to remove an impediment out of the way of a case which might otherwise fail.200 It is not a cause of action,201 though its application, as of any other rule of evidence in the course of litigation, may result in a total or partial establishment, or disestablishment, of the case made by one or other of the parties.202 To use the language of naval warfare, estoppel by representation must always be either a mine-layer or a mine-sweeper: it can never be a capital unit.’ 197 Most recently and thoroughly argued by Hudson [2015] JCL 275. 198 From which we departed in the fourth edition at [I.4.1] onwards. 199 Eg London Joint Stock Bank Ltd v MacMillan [1918] AC 777 at 818 per Viscount Haldane: ‘It is hardly a rule of what is called substantive law in the sense of declaring an immediate right or claim. It is rather a rule of evidence, capable nonetheless on that account of affecting gravely substantive rights’; Greenwood v Martins Bank [1933] AC 51 at 59 per Lord Tomlin: ‘… estoppel, which is a procedural matter …’ (in this case with unanimous concurrence, but in relation to an issue to which the procedural or substantive nature of the estoppel was not relevant, and not therefore forming part of the ratio decidendi); Evans v Bartlam [1937] AC 473 at 484 per Lord Wright: ‘Estoppel is a rule of evidence that prevents the person estopped from denying the existence of a fact’; Maritime Electric Co v General Dairies Ltd [1937] AC 610, PC at 620 per Lord Maugham: ‘… This conclusion must follow from the circumstance that an estoppel is only a rule of evidence which under certain circumstances can be invoked by a party to an action’. 200 Rogers v Pitcher (1815) 6 Taunt 202 (affirmative plea); Skyring v Greenwood (1825) 4 B & C 281 (set-off); Colonial Bank v Hepworth (1887) 36 Ch D 36 (counterclaim); Cooper v Blandy (1834) 1 Bing NC 45 (avowry by defendant in replevin action); Meyer v Dresser (1864) 16 CB (NS) 646 (set-off); Maddison v Alderson (1883) 8 App Cas 467, (counterclaim); Manchester and Oldham Bank v WA Cook & Co (1884) 49 LT 674, DC (counterclaim); Lishman v Christie & Co (1887) 19 QBD 333, CA (counterclaim); Fisher, Renwick & Co v Calder & Co (1896) 1 Com Cas 456 (counterclaim); Lohden & Co v Calder & Co (1898) 14 TLR 311 (counterclaim); Compania Naviera Vasconzada v Churchill and Sim [1906] 1 KB 237 (counterclaim). 201 ‘… it is elementary that estoppels do not found causes of action.’ per Longmore LJ with unanimous concurrence in Berezovsky v Abramovich [2011] 1 WLR 2290, at [71]. 202 Seton, Laing & Co v Lafone (1887) 19 QBD 68, at 70 per Lord Esher MR: ‘An estoppel does not in itself give a cause of action; it prevents a person from denying a state of facts’; Low v Bouverie [1891] 3 Ch 82, at 101 per Lindley LJ: ‘estoppel is not a cause of action – it is a rule of evidence which precludes a person from denying the truth of some statement previously made by himself’; Re Ottos Kopje Diamond Mines Ltd [1893] 1 Ch 618, at 628 per Bowen LJ: ‘No cause of action arises upon an estoppel itself. The court must look for the cause of action elsewhere’; Henderson v Williams [1895] 1 QB 521, at 535 per AL Smith LJ: ‘The action is founded on trover and nothing else. The plaintiffs succeed in that action, it is true, upon an estoppel by misrepresentation; but the action in which they succeed is none the less an action of trover’; Bell v Marsh [1903] 1 Ch 528 at 540, per Collins MR: ‘estoppel  … is part of the law of evidence’; Compania Naviera Vasconzada v Churchill [1906] 1 KB 237, at 251 per Channell J: Lloyds Bank Ltd v Cooke [1907] 1 KB 794, at 804 per Cozens-Hardy LJ: ‘only a branch of the law of evidence’; cf Simm v Anglo-American Telegraph Co (1879) 5 QBD 188, at 207 per Brett LJ: estoppel ‘only creates a cause of action between the person in whose favour the estoppel exists and the person who is so estopped’.

32

Estoppel by representation of fact deployable offensively and as a rule of law 1.45

Deployable offensively as well as defensively 1.43 Before addressing the issue as to the procedural or substantive nature of estoppel by representation of fact, a different aspect of this account, with which we agree, should be noted: that an estoppel by representation of fact may supply a fact on which a claimant’s cause of action depends and without which it would fail has long been established.203 It may therefore operate so as to confer rights on a claimant that would not otherwise exist, as well as immunity on a defendant, and the recent rulings of the Court of Appeal in SmithKline Beecham Plc v Apotex Europe Ltd204 and Newport CC v Charles,205 that an estoppel by representation may operate only as a shield, must respectfully be submitted to be per incuriam,206 as the court was in neither case referred to the authorities to the contrary. 1.44 So to hold was, first, contrary to the persuasive authority of Lord ­Russell of Killowen in the Privy Council in Nippon Menkwa Kabushiki Kaisha v ­Dawson’s Bank Ltd:207 ‘Estoppel is not a cause of action. It may (if established) assist a plaintiff in enforcing a cause of action by preventing a defendant from denying the existence of some fact essential to establish the cause of action, or (to put it another way) by preventing a defendant from asserting the existence of some fact the existence of which would destroy the cause of action.’

1.45 It also ran contrary to previous dicta of the Court of Appeal in Low v Bouverie.208 The court found that the representation, on which the claimant sought to base an estoppel so as to found his cause of action, was not in fact made, but made it clear that an estoppel could be so deployed. Bowen LJ said: ‘Estoppel is only important as being one step in the progress towards relief on the hypothesis that the defendant is estopped from denying the truth of something which he has said. An illustration of a case of that kind of estoppel filling up the gap in the evidence which, when so filled up, would produce this right to relief, is found in the case of In re Bahia and San Francisco Railway Company’; and Kay

203 See authorities at 1.45. 204 [2007] Ch 71, at [103], [107], [112], [126]–[127] followed in Haden Young Ltd v Laing O’Rourke Midlands Ltd [2008] EWHC 1016 (TCC) at [182]; Transgrain Shipping BV v Deiulemar Shipping SpA [2015] 1 Ll R 461; see also Tesco Stores Ltd v Costain Construction Ltd [2003] EWHC 1487; Petromec Inc v Petroleo Brasileiro SA Petrobras [2004] EWHC 127 (Comm), at [165]; Intense Investments Ltd v Development Ventures Ltd [2006] EWHC 1586 (TCC); Parabola Investments Ltd v Browallia Cal Ltd [2009] 2 All ER (Comm) 589 (unaffected on appeal [2011] QB 477) at [198]; see also cases at 8.56 onwards. 205 [2009] 1 WLR 184 at [14] and [27]; see also n 201; the contrary was not argued and the CA was also without the benefit of citation of R (Welwyn Hatfield Council) v Beesley [2011] AC 304 on whose authority the claimant might have been given relief independently of any estoppel. 206 See further argument, for the view that the CA was in error in this respect, by Barnes [2011] LMCLQ 372 (counsel in Newport CC v Charles). 207 [1935] 51 Ll L Rep 143, PC, at 150. 208 [1891] 3 Ch 82, at 105, 112.

33

1.45  Introduction: definition and treatment

LJ said: ‘Estoppel is effective where an action must succeed or fail if the defendant or plaintiff is prevented from disputing a particular fact alleged: for example, if an assign of A sues A’s trustee to recover the fund assigned, and the trustee is prevented from denying its existence in his hands; or at law, if the assign of a debt should sue the alleged debtor and he was prevented from denying that the debt was due’. 1.46 Also in direct conflict with SmithKline Beecham Plc v Apotex Europe Ltd and Newport CC v Charles on this issue is the holding of the Court of Appeal in Farrow v Orttewell209 that the claimant’s cause of action for compensation under the Agricultural Holdings Act was made good by estopping the defendant from denying the validity of a notice to quit, Romer LJ considering it to be ‘the clearest case of estoppel which has come before the Courts for a very long time’. So too is the estoppel found by the Court of Appeal in the claimant’s favour in Lyle-Meller v A Lewis & Co,210 against the defendant maintaining that its goods did not embody the claimant’s invention. As Kay LJ observed in Low v Bouverie, Re Bahia and San Francisco Railway Company211 provides a further example, at first instance, of a defendant being estopped by representation from denying a fact necessary to make good the claimant’s cause of action, as does TCB Ltd v Gray.212 These authorities, which were not cited in SmithKline Beecham Plc v Apotex Europe Ltd and Newport CC v Charles, establish that an estoppel by representation may supply a fact necessary for a claimant to establish a cause of action. 1.47 The true principle, it is submitted, that operates in a case such as ­SmithKline Beecham Plc v Apotex Europe Ltd is not that an estoppel may not supply a fact necessary to establish a cause of action and the legal relationship on which it is founded, but that an estoppel will not lie where it would unacceptably subvert the policy of a rule of law, in this case the rule of law which lays down the requirements for the legal relationship in question to be established. The formulation of this limitation in terms that ‘an estoppel cannot create an agreement’ in SmithKline Beecham Plc v Apotex Europe Ltd213 is respectfully submitted to be too wide, given that a cause of action in contract, which otherwise would have failed, can succeed as a result of deployment of an estoppel. To take a straightforward example, if B has held out C as his agent, he will be estopped from denying that agency and bound by a contract with A which C purports to make on his behalf. The estoppel has served to create the contractual relationship between B and A, and A may sue him on that contract, deploying the estoppel to establish a cause of action he would not otherwise have.214 B may also be estopped, by

209 210 211 212 213 214

[1933] Ch 480. [1956] 1 WLR 29. (1867–8) LR 3 QB 584. [1986] Ch 621; see also Rudd v Bowles [1912] 2 Ch 60 (estoppel by deed). [2007] Ch 71 at [107]. As in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 or Spiro v Lintern [1973] 1 WLR 1002.

34

Estoppel by representation of fact deployable offensively and as a rule of law 1.48

A’s reliance on a convention or representation to that effect, from denying that a formality required for B to be contractually bound has been performed, notwithstanding that it has not (provided the policy of no rule of law or statute is thereby unacceptably undermined). Aikens J so held obiter in The ‘Botnica’215 and, in Destra Software Ltd v Comada (UK) LLP,216 Norris J said ‘Counsel for Comada analysed the same facts applying the principles of estoppel – that Mr Hughes was estopped from denying that he was bound by the contract. In my judgment that is an entirely orthodox alternative: see Whitehead Mann Limited v Cheverny Consulting Ltd217 (“subsequent events have occurred whereby the non-executing party is estopped from relying on his non-execution”)’. 1.48 In Amalgamated Investment & Pty Co Ltd v Texas Commerce Intl Bank218 a bank’s right to recover from a company was also made good by an estoppel based on its conventional treatment of the company’s guarantee of its subsidiary’s indebtedness to the bank as extending to the subsidiary’s indebtedness to the bank’s subsidiary: the legal relationship of guarantee in respect of that indebtedness was established between them by estoppel. This decision remains authority, as recently recognised, for instance, by Field J in Pathfinder Minerals Plc v Veloso219 that: ‘Whilst a party cannot in terms found a cause of action on an estoppel, he may, as a result of being able to rely on an estoppel succeed on a cause of action on which, without being able to rely on that estoppel, would necessarily have failed220 … As Mance LJ said in Baird Textile Holdings Ltd v Marks & Spencer Plc,221 an estoppel ‘may enlarge the effect of an agreement, by binding parties to an interpretation which would not otherwise be correct’. Indeed, that ‘estoppel by convention may enlarge the effect of an agreement’ is now regarded by the Court of Appeal as ‘well established’,222 and in The ‘Indian ­Endurance’,223 which contains the most authoritative modern statement of the doctrine of estoppel by convention by Lord Steyn, although no estoppel lay because no convention was held to have been established, there was no suggestion by the House of Lords that the estoppel by convention as to a matter of law would not lie because the claimant was seeking to deploy it to enable it to make its claim.

215 216 217 218

219 220 221 222 223

[2013] 2 Ll R 359 at [109]–[11]; see further examples at 2.31. [2013] Info TLR 294 at [43]. [2007] 1 All ER (Comm) 124 at [46]. [1982] QB 84; both Robert Goff J at first instance (105C–D) and Brandon LJ in the CA (131H–132A) in terms, and Lord Denning MR (121G–122D) and Eveleigh LJ (126D) effectively holding that an estoppel may make good a cause of action that would not otherwise lie: for claims made good by estoppel by convention, see also The ‘Amazonia’ [1990] 1 Ll R 238; Azov Shipping Co v Baltic Shipping Co [1999] 2 Ll R 159 at 175–6; Mears Ltd v Shoreline Housing Partnership Ltd [2015] 160 Con L R 157; see further 8.56 onwards. [2012] EWHC 2856 (Comm). Referring to Amalgamated Property at 131–2 per Brandon LJ and Goff J at 105–6 (at first instance). [2001] CLC 999 at [88]. Rivertrade Ltd v EMG Finance Ltd [2016] 2 BCLC 226 at [48] per Kitchin LJ with unanimous concurrence. [1998] AC 878.

35

1.49  Introduction: definition and treatment

1.49 In relation to contract, for instance, it is true that, if the parties have not made a contract, because there has been no offer and acceptance of sufficiently certain terms, or consideration, or intention to contract, then an assertion that they should be deemed to have made a contract because they have behaved as if they had will fail.224 A defendant will not be estopped from denying that a promise for no consideration is not contractually binding, even if the claimant has relied to his detriment on a representation by the defendant or convention­ established between them that it is.225 To prevent subversion of the law of ­contract, if the parties have not made a contract because one of the requirements for a contract is lacking, such as consideration or certainty of terms, A cannot base a cause of action in contract on detrimental reliance on a representation made or convention assented to by B that they have. Here the estoppel will not create the legal relationship that does not otherwise exist, because it would thereby unacceptably subvert the rules of law defining the essentials of that relationship.226 1.50 Nonetheless it is wrong to say that estoppel can only operate as a shield, and it is wrong to say that estoppel cannot operate to create a legal relationship that would not otherwise exist. Even in the context of contract, as shown above,227 a missing element required for a contract to bind, such as authority of an agent, or due execution, may be supplied by estoppel, or the effect of a contract may be varied or extended by estoppel, if the rules of law setting the requirements for a binding contract are not thereby unacceptably subverted. Thus, while, to preserve the doctrine of consideration, it has been said that promissory estoppel may operate only as a shield and not a sword, until SmithKline Beecham Plc v Apotex Europe Ltd and Newport CC v Charles, such a limitation on estoppel by representation of fact had never been suggested nor, it is respectfully submitted, should it have been there, as it is contrary to the principle and authority set out above.

A rule of law 1.51 Estoppel by representation of fact may, then, establish a fact necessary to complete a cause of action228 as well as removing a defence thereto.229 Indeed, 224 See 8.56. 225 See eg Baird Textile Holdings v Mark & Spencer Plc [2002] 1 All ER (Comm) 757 at [91], [94]; Tesco Stores Ltd v Costain Construction Ltd and Others [2003] EWHC 1487 (TCC) at [191]; Intense Investments Ltd v Development Ventures Ltd [2006] EWHC 1586 (TCC); Haden Young Ltd v Laing O’Rourke Midlands Ltd [2008] EWHC 1016 (TCC); Mears Ltd v Shoreline Housing Partnership Ltd [2013] CP Rep 39 at [23]; Transgrain Shipping BV v ­Deiulemar Shipping Ltd [2015] 1 Ll R 461 at [39]; see also cases at 8.56 onwards. 226 See 7.5 onwards, 8.56 onwards; nn 204, 225. 227 See 1.47, 8.56 onwards. 228 See 1.43 onwards. 229 See eg Ogle v Earl Vane (1868) LR 3 QB 272; Hickman v Haynes (1875) LR 10 CP 598; Levey & Co v Goldberg [1922] 1 KB 688; Charles Rickards Ltd v Oppenheim [1950] 1 KB 616, CA: all cases of promissory estoppel (although not explicitly so) in which the claimant,

36

Estoppel by representation of fact deployable offensively and as a rule of law 1.52

these are the sole purposes, other than to affect a remedy, for which it is deployed. It has consequently been said230 to be a rule of evidence by reference to two undeniable and complementary qualities it has in English law: that its effect is to estop a party from denying the relevant fact, and that it is not a cause of action. The Court of Appeal in National Westminster Bank plc v Somer International (UK) Ltd231 has held itself bound by precedent to accept the status of estoppel by representation of fact as a rule of evidence,232 and it is a quality worth emphasis that it is not a cause of action, but affects causes of action and their remedies by preventing the assertion of facts in litigation. It has been ­suggested,233 however, that the House of Lords in Watt v Ahsan234 has now implicitly recognised the substantive character of the doctrine, as common to estoppels based on representations of fact as well as promises, in the description of estoppel in pais235 by Lord Hoffmann236 as ‘based on a policy of giving a limited effect to noncontractual representations and promises’. 1.52 It is its ancillary, preparatory operation, so as to affect the facts to which other substantive rules of law are then applied, that has led to characterisation of estoppel by representation of fact as a rule of evidence. It thereby, however, nonetheless affects the rights between the parties as being the just result of a representation by B to A as to a fact relevant to the subject matter of their dispute and detrimental reliance on it by A. Thus to determine or adjust the parties’ rights by reason of their conduct in relation to the subject matter of their dispute is to do substantive justice. The doctrine therefore has as substantive an operation as, say, the law giving A the right to compensation from B for A’s broken leg because B carelessly ran him over, since it is concerned, not with establishing what happened, but with the just outcome of the interaction between the parties.

suing on a contract for the sale of goods, estopped the defendant from defeating the claim by the defence that the claimant was not ready and willing to deliver on the due date, by his reliance on a previous relaxation of that requirement. 230 See 1.42. 231 [2002] QB 1286. 232 At [37], [50], [69], referring to the statement by Slade LJ in Avon CC v Howlett [1983] 1 WLR 605 at 622C with concurrence of Cumming-Bruce LJ at 609G. Slade LJ relied on the third edition of this work and the dicta mentioned there and at 1.42, also the (as Eveleigh LJ pointed out at 611D) obiter dicta of Lord Watson in the Privy Council case Ogilvie v West Australian Mortgage and Agency Corp Ltd [1896] AC 207 at 270 and the dicta of Scrutton LJ in Greenwood v Martins Bank Ltd [1932] 1 KB 371 at 384 (unaffected on appeal [1933] AC 51), that the effect of an estoppel is to preclude denial of the fact which may afford greater relief than the detriment on which it is based. It is not, however, this latter effect (the court’s power to mitigate which to avoid injustice was also recognised in Avon CC v Howlett, Scottish Equitable plc v Derby and National Westminster Bank plc v Somer International UK Ltd (see 1.57 and 5.66) that is in issue here, but whether the estoppel is properly characterised as having the effect it does as a rule of evidence or substantive law. 233 By Handley, Estoppel by Conduct and Election (2nd edn, 2016). 234 [2008] 1 AC 696. 235 Which is used to include estoppel by representation of fact; see 1.5, n 19. 236 At [30] with unanimous concurrence. Estoppel by acquiescence was also recently held not to be a ‘rule of procedure’ in Marussia Communications Ireland Ltd v Manor Grand Prix Racing Ltd [2016] Bus LR 808 at [95].

37

1.52  Introduction: definition and treatment

We therefore maintain our submission237 that the following views expressed by Lord Wright and Lord Hoffmann in the Privy Council are preferable for the reasons set out further below. 1.53 In Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steam Ships Ltd,238 Lord Wright said: ‘Estoppel is a complex legal notion, involving a combination of several essential elements, the statement to be acted on, action on the face of it, resulting detriment to the actor. Estoppel is often described as a rule of evidence, as, indeed, it may be so described. But the whole concept is more correctly viewed as a substantive rule of law.’

1.54 Thirty years later, in Berridge v Benjies Business Centre,239 Lord ­Hoffmann said: ‘It is true that estoppel is sometimes called a rule of evidence, but this is not the case. It is a rule of substantive law, by which the facts which a party is estopped from proving, which would otherwise be material to the issue of liability, are assumed to be otherwise. Evidence to the contrary is inadmissible not on account of some technical exclusionary rule like hearsay, but because the substantive law makes it irrelevant.’

1.55 Judges have never in practice240 treated the doctrine as evidential, ruling evidence as inadmissible and refusing to hear it, but have applied it substantively, determining the legal consequences of the evidence heard. It has been described as a rule of evidence because it alters the rights between the parties by altering the facts to which the law is applied, but a rule of evidence, properly so-called, determines how the facts of the matter are actually found. Thus, for instance, the facts are found on the balance of probability, and the law of privilege, as a matter of policy, prevents disclosure of information that might otherwise affect the court’s determination of what actually happened. A court does not, on the other hand, actually find the facts as prescribed by an estoppel, and for an estoppel to control the evidence that is admitted such that the court made findings of fact it knew to be untrue would be an unseemly charade.241 Rather, the doctrine

237 Previously set out in the fourth edition at [I.4.1] onwards. 238 [1947] AC 46, PC, at 56; see also ‘Estoppel is not a rule of evidence. It is not a cause of action. It is a principle of justice and of equity.’ per Denning MR in Moorgate Mercantile Co Ltd v Twitchings [1976] QB 225 at 241–242; reversed on appeal without comment on this point: [1977] AC 890. 239 [1997] 1 WLR 53, PC, at 57. 240 As observed by Atiyah Essays on Contract (1986), at 310. 241 Even if the doctrine were properly regarded as procedural rather than substantive, it should be characterised as a rule of pleading and not a rule of evidence, since its operation is to preclude assertion of a fact at all, or to establish it conclusively, not to affect the proof of the fact in evidence (see Prichard (1964) 80 LQR 370 at 372–3); but, while the estoppel may have its roots in the old system of pleading, the modern reliance-based doctrine operates as a principle of substantive justice: see n 236.

38

Estoppel by representation of fact deployable offensively and as a rule of law 1.57

is applied substantively: the court determines the parties’ rights as if the facts were as prescribed by the estoppel, and does so for reasons of substantive justice between the parties arising out of their conduct in relation to the subject matter of the substantive issue between them: the representation by B of a relevant fact on which A has detrimentally relied. 1.56 Secondly, it is respectfully submitted that the case242 that has been made for an estoppel by representation of fact being a rule of evidence by asserting that its purpose is to maintain a state of affairs adopted by the parties for the conduct of their legal relationship, which adoption is demonstrated by one party’s representation and the other’s reliance, elides the reason for the estoppel into its result. The reason for the estoppel is that B is responsible to A for his detrimental reliance on the representation. The purpose of the estoppel is to avoid the injustice to which that would otherwise give rise.243 That the law has done so by precluding B from denying the fact represented should not obscure the purpose of the law,244 which is that the estoppel should do justice, nor deny the court substantive jurisdiction to achieve justice by refining the result where simply holding B to the representation would not. 1.57 Thus, in both the case in which245 and the case by which246 the Court of Appeal held itself bound to accept the status of the doctrine as a rule of evidence, the court (ironically) held itself able, in the exercise of an equitable discretion, to mitigate the effect of an estoppel by representation of fact (namely that B is simply estopped from denying the relevant fact) so as to avoid injustice,247 242 Hudson [2015] JCL 275, at 275, 278, 280–1. 243 As Dixon J explained in his classic statement in Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674, most recently reaffirmed by a unanimous High Court of Australia in Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd [2014] HCA 14 at [23], [84], [149]: ‘… the basal purpose of the doctrine … is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it’. See further 1.5 onwards, 1.64 onwards, 5.41 onwards. 244 For which the result may be tempered, as in Dunston v Paterson (1857) 2 CBNS 495, where the sheriff had a writ to arrest X, and Y said that she was the person named in the writ, and Y was estopped from suing the sheriff for the original taking but not in respect of her detention after the sheriff had notice that she was not X; White v Greenish (1861) 11 CBNS 209 at 232, where a representation that another party was entitled to rent, in reliance upon which the tenant paid rent to that party, did not prevent the true landlord from withdrawing the representation and recovering rent that had not been paid to the other party; see also Re a Debtor (No 23 of 1939) [1939] 2 All ER 338 at 343G per Greene MR: ‘… estoppel cannot operate beyond the particular matter to which the words or conduct which give rise to it relate’; and see 1.57. 245 National Westminster Bank plc v Somer International (UK) Ltd [2002] QB 1286. 246 Avon CC v Howlett [1983] 1 WLR 605. 247 Avon CC v Howlett [1983] 1 WLR 605 at 608G, 609C–D, 612A, 624H–625A, Slade LJ leaving the issue open; National Westminster Bank plc v Somer International UK Ltd at [46], [57]– [58], [67]; so also, Scottish Equitable plc v Derby [2001] 3 All ER 818 at [44], [46]–[51]; and see n 244. In Kaupthing Singer & Friedlander Ltd v UBS AG [2014] EWHC 2450 (Comm) at [106]–[110], Andrew Smith J indicated the obiter view that this exception was confined to estoppel against the restitution of money, but it is submitted that it would be inconsistent,

39

1.57  Introduction: definition and treatment

and in Somer,248 so held on the basis that estoppel by representation of fact is a doctrine of equity.249 As suggested above, however, a rule of evidence properly so-called determines the evidence upon which and the method by which, upon that evidence, the court finds the facts to which it applies the substantive law.250 The notion of an equitable rule of evidence, however (as estoppel by representation of fact was, in effect, held to be), or even of a substantive principle of equity (as opposed to another rule of evidence) mitigating a rule of evidence, involves an error of categorisation.251 The application of rules of evidence to a civil case is not affected by the substantive law at issue in the case, and it is not coherent to classify the Court of Appeal’s determinations in Howlett, Somer and Scottish Equitable as rulings on the admissibility of evidence. The courts did not determine those cases according to what evidence could be heard, or what it proved, but by considering all the facts found and applying the doctrine of estoppel thereto as a substantive rule of law, whose effect was mitigated in order to achieve justice between the parties.252 1.58 Thirdly, it has now been held that an estoppel by representation may be founded on a representation of law as well as a representation of fact.253 An issue of law cannot be determined by a rule of evidence. Further, even before the recent and logical extension to representations of law, representations as to the rights of the parties had long been treated as factual by the courts254 and

in principle, for unfairness in the absolute result of an estoppel to attract the intervention of equity in that context but no other, provided that it is clear that the result of an absolute estoppel would be unfair, since this discretion is inherent in the equitable nature of the doctrine: see Somer at [41]–[43]. Further, Andrew Smith J held at [95], [98] that the estoppel in question could be regarded as an estoppel either by convention or by representation of fact, but relied for his obiter view above on authorities which are authorities only as to the result of an estoppel by representation of fact (cf 8.45–8.61 as to the result of estoppel by convention). 248 Note 245. 249 At [41]–[43] per Potter LJ, with concurrence at [50], [69]. 250 And, for a further argument arising out of this to the effect that estoppel by representation of fact cannot be a rule of evidence, see 5.50 n 243, 5.68. 251 And this point is accepted by Hudson [2015] JCL 275, at 287–91, but so as to conclude that there should be no discretion to mitigate the result of the estoppel to achieve justice: contrary to our submission that the purpose of the rule is to achieve justice which should not be frustrated by such denial of discretion. 252 In the same restitutionary context, of a rule he regarded as a rule of evidence, rather than a doctrine of substantive law, Lord Goff, in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at 579E, would not have said: ‘Considerations such as these provide a strong indication that, in many cases, estoppel is not an appropriate concept to deal with the problem of change of position following an overpayment’, nor Jonathan Parker J, in Philip Collins Ltd v Davis [2000] 3 All ER 808 at 826a, that ‘The defence of estoppel by representation is no longer apt in restitutionary claims’. A rule of evidence would simply apply to the evidence regardless of the restitutionary context. These views as to the application of the doctrine were, of course, rejected in Somer and Derby (n 239), and the defence may still be available in cases of overpayment, but the dicta nonetheless provide examples of judges treating the doctrine as a rule of substantive law. 253 See 1.19; 2.8. 254 See 2.31.

40

Estoppel by representation of fact deployable offensively and as a rule of law 1.59

allowed as such to found estoppels by representation, revealing the impossibility of consistently confining the operation of the doctrine to the admission of evidence. This is clear also from the susceptibility of an estoppel to preclusion by a rule of substantive law whose policy would be unacceptably undermined by the ­estoppel:255 the sphere of operation of the doctrine is substantive, affecting the rights of the parties in order to do justice between them. 1.59 Indeed, since the authorities establish that estoppel by representation may be founded on a representation of law or as to the private rights of the parties, including ownership, or the effect of a contract,256 if it were right that the estoppel determines as a matter of fact that the rights are as they were represented, given that an estoppel by representation of fact may supply a fact necessary to establish a cause of action,257 this would in part supplant the substantive doctrines of proprietary and promissory estoppel, since a representation by B’s words, conduct or silence that A has a right in or over property, on which A has detrimentally relied, would simply give rise258 to an absolute ‘evidential’ bar on denying that right,259 and a representation that A has a present right to future performance of an obligation by B would also simply preclude denial of that right.260 That that is not the case261 may be said to reflect the nature of the

255 See Ch 7. 256 See 2.31 (but see 8.56), as accepted by Hudson [2015] JCL 275, at 281–2, nn 31–36. 257 See 1.43. 258 Subject to the answer that estoppel may not unacceptably subvert a rule of law (see Ch 7), the potential availability of which also confirms the substantive nature of the doctrine. 259 Crabb v Arun DC [1976] 1 Ch 179, a leading case on the court’s discretion as to how to satisfy A’s equity in which, at 197G, Scarman LJ found that A acted ‘in the belief that he had or could enforce a right of way and access’ (see also Lord Denning MR at 189C, Lawton LJ at 191B, 192C): the estoppel did not simply preclude B from denying A the right B led A to believe he had (12.75). See also the discretionary result of proprietary estoppel cases founded on promises or assurances that could have been characterised as representations as to the present existence of a proprietary right with future operation, eg the right to occupy a house for life in Campbell v Griffin [2001] WTLR 981 and Baker v Baker [1993] 2 FLR 247, CA; and Plimmer v Mayor, etc of Wellington (1884) 9 App Cas 699, where, per Lord Walker in Cobbe v Y ­ eoman’s Row Management Ltd [2008] 1 WLR 1752 at [69], the Government gave Mr Plimmer to believe that he had ‘a right to security of tenure’ but the Privy Council, at 714, exercised discretion as to the result (but see further 12.20 n 67); in Valentine v Allen [2003] EWCA Civ 915, in the context of estoppel as to the existence of rights of way, the CA at [55], [63] applied the dictum of Lord Denning MR in Amalgamated Investment v Texas Commerce [1982] QB 84 at 122C–D, to the effect that the court has a discretion to give ‘such remedy as the equity of the case demands’ (although there was no argument over the result of the estoppel being simply to preclude denial of the rights of way); cf Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133n at 158A per Oliver J: ‘I do not think that it really matters whether the case is put as one of estoppel by acquiescence [meaning proprietary estoppel: see 151G–H] or of estoppel by representation’; and Lord Scott in Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 at [14], as considered at 1.23 n 115, 12.196 n 560. 260 See, on the inability of a representation as to the existence of a right to future performance to found a cause of action: Baird Textiles Holdings Ltd v Marks and Spencer plc [2002] 1 All ER (Comm) 737 at [34], [38] per Morritt VC (second reason), at [55] per Judge LJ, and at [57], [91]–[92] per Mance LJ; Riverside Housing Association v White [2008] 1 P & CR 13 at [59]–[67] (unaffected on appeal [2007] 4 All ER 97) and cases at 1.47, 8.56 onwards. 261 See nn 259, 260.

41

1.59  Introduction: definition and treatment

d­ octrine of estoppel by representation as, not a rule of evidence, but a substantive rule whose purpose is to achieve a just result, which, in a proprietary or promissory context, for the reasons reflected in the development of those doctrines, is the result of the applicable substantive doctrine. Characterisation as a rule of evidence also ignores the evolution of estoppel by representation of fact from a substantive equitable doctrine262 of making good.263 1.60 It is wrong, therefore, to conclude that estoppel by representation of fact is a rule of evidence because it precludes assertion of a fact, as the preclusion is not concerned with fair procedure for ascertainment of the facts of the matter, but with a fair substantive disposition by reference to the parties’ conduct towards one another, and, for these reasons, it is submitted that the modern doctrine is a reliance-based rule of substantive law, which accords with the recognition that its absolute bar on denying the relevant fact may be mitigated by the court if and insofar as the party estopped establishes that such an absolute bar would be unjust,264 and is also subject to the answer that it would unacceptably subvert a rule of law.265 1.61 The possibility has been canvassed by Robert Walker LJ266 that the Supreme Court may rule, by way of assimilation with the doctrine of proprietary estoppel, that the outcome of an estoppel by representation of fact is that required to do justice rather than an absolute bar (subject to exceptional mitigation). The authorities mentioned above267 recognise that the application of the doctrine as an absolute bar can result in injustice, and, on those authorities,268 the absolute bar may already be said to be subject to mitigation to the extent that B establishes that that would be unjust.269 It certainly seems unsatisfactory that the courts should have to rehearse the adamantine proposition that estoppel by representation of fact cannot operate pro tanto, but then allow it to do exactly that, by means of an ‘exception’270 under which it will so operate if the result

262 As recognised in National Westminster Bank plc v Somer International (UK) Ltd [2002] QB 1286 at [41]–[43]. 263 See 1.36, 12.12. 264 See 1.57. 265 See Ch 7. 266 In Scottish Equitable plc v Derby [2001] 3 All ER 818 above at [48] (citing Key [1995] CLJ 525 at 533 and his reference to Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 and Commonwealth of Australia v Verwayen (1990) 170 CLR 394; see also Fung and Ho (2001) 117 LQR 14, [2002] RLR 52). 267 See 1.57. 268 See 1.57. 269 And Clarke LJ in National Westminster Bank plc v Somer International (UK) Ltd at [54] considered the position thereby achieved to be ‘much the same’ as allowing estoppel by representation of fact to operate pro tanto, although it remains to be established what the criterion is of injustice that is such as to affect the result. 270 See eg per Potter LJ in National Westminster Bank plc v Somer International (UK) Ltd at 1300C.

42

Estoppel by representation of fact deployable offensively and as a rule of law 1.63

would otherwise be unjust: such a potentially wide-ranging exception,271 it is submitted, modifies rather than proves the rule.272 1.62 A further corollary of the view that the modern doctrines of estoppel, including estoppel by representation of fact, are rules of substantive law, is that all the facts relied on as establishing the requirements of the relevant estoppel should be set out in the statement of case273 of the party raising it, and, as a matter of good pleading, reliance on the relevant doctrine should be stated, in order that the other party may know the case that he has to meet.274 That the detrimental reliance on which the estoppel is said to be based should be specifically pleaded and proved was, for instance, underlined by the House of Lords in Fisher v Brooker.275

Conflict of laws 1.63 It follows from the submission above that reliance-based estoppels, as well as estoppel by deed and contract, are doctrines of substantive rather than procedural law, that whether such an estoppel (or any corresponding claim in foreign law)276 may be claimed should be a question, not for the lex fori, as would be the case if it were a rule of evidence, but for the law that governs the transaction or relationship in question, according to the conflict of law rules which determine the law applicable to issues of substantive law.277 This is supported by decisions of the courts dealing with this question as concerning the law

271 A potential recognised in Scottish Equitable plc v Derby [2001] 3 All ER 818 above at [48] by Robert Walker LJ. 272 A view shared by Burrows, The Law of Restitution (3rd edn) p 551 and Goff & Jones, The Law of Unjust Enrichment (9th edn) [30-15]; Clarke LJ in Somer at [54] also considered that there is ‘much to be said’ for the view of Fung and Ho (n 266) that estoppel by representation of fact should be regarded as substantive and capable of operating pro tanto. 273 Or witness statements, in the case of a Part 8 claim, but Part 7 procedure should be preferred in cases of estoppel: see n 274. 274 See James v Heim Gallery (London) Ltd (1981) 41 P & CR 269 at 274 per Buckley LJ; see further Ch 15. 275 [2009] 1 WLR 1764 at [65]–[66]. 276 As to which, see Fauvarque-Cosson (ed), La Confiance Legitime et L’Estoppel (2007). 277 Allen v Hay (1922) 69 DLR 193 (Sup Ct Can); in Dornoch Ltd v Westminster International BV [2009] 2 Ll R 420 at [21] (unaffected on appeal [2009] EWCA Civ 1323), Tomlinson J adopted Dicey, Morris & Collins, The Conflict of Laws (14th edn), at [7-031] in regarding the question as open and depending on the type of estoppel in issue, and treated the law governing the issue whether an estoppel by convention arose as the law governing the transaction or relationship of the parties said to be affected by the estoppel (obiter, since English law was also the lex fori), in that case a contract of insurance governed by English law, and suggested also that the lex situs of the relevant land would govern a proprietary estoppel relating to land (cf Winkler v Shamoon (2016) 18 ITELR 818 at [74]–[76] on forum conveniens for trial of a proprietary estoppel claim). Estoppel by convention was held to be governed by the law governing the transaction or relationship of the parties said to be affected by the estoppel by Lord Collins with unanimous concurrence of the Hong Kong Court of Final Appeal in First Laser Ltd v Fujian Enterprises (Holdings) Co Ltd [2012] HKCFA 52 at [105].

43

1.63  Introduction: definition and treatment

g­ overning a rule of substantive law in relation to: agency by estoppel,278 estoppel relating to a contract,279 estoppel by convention,280 estoppel by representation281 and estoppel as to title.282 For the reasons submitted above, we suggest that it would be wrong, in the conflict of laws, to regard an estoppel by representation or convention as to a fact as any more a part of the procedural law than are proprietary estoppel, promissory estoppel, or estoppel by representation or convention as to the law. While the existence of an issue estoppel is determined by the lex fori, the application of any of these estoppels should be a matter for the lex causae as rules of substantive law.

THEORETICAL BASIS AND JUSTIFICATION: UNFAIR CHANGE OF POSITION 1.64

Lord Wright described different attitudes towards estoppels as follows:283 ‘There was, perhaps, a time when estoppels were described as odious and as such were viewed with suspicion and reluctance … But in more modern times the law of estoppel has developed and has become recognised as a beneficial branch of law. That great lawyer Sir Frederick Pollock has described the doctrine of estoppel as “a simple and wholly untechnical conception, perhaps the most powerful and flexible instrument to be found in any system of court jurisprudence”.’

1.65 Estoppels attracted odium284 because their function was perceived as preventing a party from adducing evidence of the truth. The change from this attitude, therefore, reflects tacit recognition that estoppel by representation of

278 Britannia Steamship Inv Ass Ltd v Ausonia Ass SpA [1984] 2 Ll R 98, CA, at 100,102; ­Presentaciones Musicales SA v Secunda [1994] Ch 271 at 285 (left open in Janred Pties Ltd v ENIT [1989] 2 All ER 444); Rimpacific Navigation Inc v Daehan Shipbuilding Co Ltd (Rev 1) [2010] 2 Ll R 236; Dicey, Morris & Collins, The Conflict of Laws at [33-431]. 279 Cood v Cood (1863) 33 Beav 314. 280 The ‘Amazonia’ [1990] 1 Ll R 236, CA, followed in Hong Kong in First Laser Ltd v Fujian Enterprises (Holdings) Co Ltd [2012] HKCU 1397; Howe v Motor Insurers’ Bureau n 281. 281 Howe v Motor Insurers’ Bureau [2016] 1 WLR 2707, at [59]–[70] as to estoppel from asserting a limitation bar; see also n 236 as to estoppel by acquiescence. 282 Colonial Bank v Cady (1890) 15 App Cas 267; see also McHenry v Davies (1890) LR 10 Eq 88 analysed by Yeo, Choice of Law for Equitable Doctrines (2004), at 136, as tacitly applying English law to a married woman in coverture as an English domiciliary to disable her from charging property to a foreign creditor. 283 In Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steam Ships Ltd [1947] AC 46, PC, at 55. 284 See Coke on Littleton 365b: ‘Estoppels are odious’; repeated in Lampon v Corke (1822) 5 B & Ald 606 at 611 per Holroyd J; Howard v Hudson (1853) 2 E & B 1 at 10 per Lord Campbell CJ; General Finance, Mortgage and Discount Co v Liberator Permanent Benefit Building Society (1878) 10 Ch D 15 at 25 per Jessel MR; Baxendale v Bennett (1878) 3 QBD 525 at 529 per Bramwell LJ; Batten Poole v Kennedy [1907] 1 Ch 256 at 269 per Warrington J. This attitude may also be reflected in the refusal of the courts to find the requisite intention to induce reliance in Carr v L & NW Rwy (1875) LR 10 CP 310, and to find the requisite unequivocality in Low v Bouverie [1891] 3 Ch 82.

44

Theoretical basis and justification: unfair change of position  1.67

fact operates as a principle of substantive law rather than a rule of evidence. In many cases, judges have since stated the underlying justice of the principle,285 its utility,286 and the unfairness287 against which it is directed. We support the view of Dixon J as to the justification for reliance-based estoppel stated at the beginning of this work: it protects A against a change of position by B that is unfair by reason of B’s responsibility for A’s reliance on B’s position such that A would suffer by the change.288 1.66 In Taylors Fashions Ltd v Liverpool Victoria Trustees Co,289 Oliver J, in the light of then recent cases, took a similar view, often since followed,290 that proprietary estoppel: ‘… requires a very much broader approach which is directed rather at ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly, or unknowingly, he has allowed or encouraged another to assume to his detriment than to enquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour.’

1.67 This prompts a number of questions concerning unconscionability as a foundation for reliance-based estoppel: (1) what it means, (2) whether it is the best term for that which it seeks to describe, and (3) whether it is a supervening requirement for such an estoppel, or is an alternative, replacing the previously established requirements. It is submitted, for the reasons set out below,

285 Examples from early cases are: Jorden v Money (1854) 5 HL Cas 185, at 210, 214 per Lord Cranworth; Foster v Mentor Life Assurance Co (1854) 3 E & B 48, at 76 per Coleridge J; Cuthbertson v Irving (1859) 4 H & N 742, at 758 per Cur; Cave v Mills (1862) 7 H & N 913 per Wilde B at 927, 928; Rolt v White (1862) 3 De G J & Sm 360, at 363, 364, 365 per Lord Westbury; Burkinshaw v Nicholls (1878) 3 App Cas 1004, at 1026 per Lord Blackburn. 286 Swan v North British Australasia Co (1863) 2 H & C 175, at 177 per Mellor J; Knights v Wiffen (1870) LR 5 QB 660, at 666 per Mellor J; Simm v Anglo-American Telegraph Co (1879) 5 QBD 188 per Bramwell LJ at 202; Geo Whitechurch Ltd v Cavanagh & Co [1902] AC 117, at 130 per Lord Macnaghten; London Joint Stock Bank v Macmillan [1918] AC 777, at 818 per Lord Haldane. 287 See Board v Board (1873) LR 9 QB 48, at 63 per Blackburn J; Gandy v Gandy (1885) 30 Ch D 57, at 82 per Bowen LJ; Lloyds Bank Ltd v Cooke [1907] KB 794 at 804, per Cozens-Hardy LJ; London Joint Stock Bank v Macmillan [1918] AC 777, at 818 per Lord Haldane. 288 At 1.5 onwards. 289 [1982] 1 QB 133n at 151–2; approved by the Court of Appeal in Habib Bank Ltd v Habib Bank AG Zurich [1981] 1 WLR 1265, 1285, 1287; also cited with approval by Lord Walker in Cobbe v Yeoman’s Row Management Limited [2008] 1 WLR 1752, at [59] with concurrence of Lord Brown at [94], and by the Privy Council in Blue Haven Enterprises Ltd v Tully [2006] UKPC 17, at [23] per Lord Scott, noting implicit Privy Council approval also in A-G of Hong Kong v Humphrey’s Estate (Queen’s Gardens) Ltd [1987] AC 114, at 123 per Lord Templeman; it was pre-dated by the similar views of Buckley and Goff LJJ in Shaw v Applegate [1977] 1 WLR 970, CA, at 978, 980. 290 As, for instance, in Keen v Holland [1984] 1 WLR 251; The ‘Vistafjord’ [1988] 2 Ll R 343, at 352; Hiscox v Outhwaite [1992] 1 AC 562, at 577; John v George (1996) 71 P & CR 375, at 396.

45

1.67  Introduction: definition and treatment

that it should not be understood as any loosening of, or addition to, the requirements for a reliance-based estoppel: of responsibility, inducement and detriment. ­Taylors Fashions involved a specific reconsideration only of the third of the five probanda for an estoppel by silence laid down by Fry J in Willmott v Barber:291 as to whether B need know the true position in order to have represented the contrary by his silence in the face of an assumption to that effect by A.292 That a circumstance has shown the previous formulation of a particular rule to be in need of adjustment should, however, result in adjustment, not abandonment to generality of the law’s project of reduction of the general norm of fair behaviour to criteria for its particular application.

Meaning of unconscionability 1.68 The requirement of unconscionability is that B cannot in good conscience assert that which he is estopped from asserting. Its use derives from equitable jurisprudence, ‘… reflecting in the word “conscience” the ecclesiastical origins of the long-departed Court of Chancery’293 sitting as a court of conscience. Honesty and innocence of intention will not, however, excuse B from liability to estoppel: what is material is not the state of B’s morals, but the effect of his representation or silence on the mind and will of A.294 B’s conduct need not, moreover, be shocking in any particular degree,295 beyond that, absent an estoppel, it would give rise to an unfair result. Lord Walker in Cobbe v Yeoman’s Row Management Ltd296 referred to the need for the result, without an estoppel, to ‘shock the conscience of the court’ but should not, it is submitted, be understood as requiring the court to find more than that B has by his representation caused A so to act (or omit to act) that the result would otherwise be unfair. The ­caution of Lord Radcliffe in Bridge v Campbell Discount297 as to its use in the ­context of equitable mitigation of the common law must also be e­ xercised

291 (1880) 15 Ch D 96, at 105. 292 See further 12.104 onwards. 293 Per Lord Hoffmann, analysing how unfairness may restrain the exercise of legal rights in the context of unfair prejudice in company law, in O’Neill v Phillips [1999] AC 1092 at 1101E. Conscience, as used in the mediaeval Court of Chancery may have had a specific technical meaning, referring to the judge or defendant’s knowledge of facts that could not be proved by reason of the procedural rules of the common law: see MacNair (2007) 27 OJLS 659; see also Klinck, Conscience, Equity and the Court of Chancery in Early Modern England (2010). 294 See Sarat Chunder Dey v Gopal Chunder Lala (1892) 8 TLR 732; Balkis Consolidated Co v Tomkinson [1893] AC 396; Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 (affd on other grounds [1922] 2 AC 541); see Ch 5. The focus is not, however, solely on A, as the first issue is as to B’s responsibility for A’s reliance on the relevant proposition. 295 As in emphatic expressions such as ‘an unconscionable delay’: Mason (2000) 116 LQR 66 at 89–90, 92; see also Banforth [1995] LMCLQ 538. 296 [2008] 1 WLR 1752 at [92]; followed on this by the Privy Council in Capron v Govt of Turks and Caicos Islands [2010] UKPC 2 at [40]. 297 [1962] AC 600 at 626; see also Jacob LJ (with unanimous concurrence) on stealing a march in a dispute in Budejovicky Budvar Narodni Podnik v Anheuser-Busch Inc [2010] RPC 7, at [32]:

46

Theoretical basis and justification: unfair change of position  1.70

here:298 ‘“Unconscionable” must not be taken to be a panacea for adjusting any contract between competent persons when it shows a rough edge to one side or the other …’. A flexible definition has been provided by Deane J in Commonwealth of Australia v Verwayen:299 ‘The doctrine of estoppel by conduct is founded upon good conscience … The most that can be said is that “unconscionable” should be understood in the sense of referring to what one party “ought not, in conscience, as between [the parties] to be allowed” to do (see Storey, Commentaries on Equity Jurisprudence, 2nd Eng Ed (1892) para 1219; Thompson v Palmer).’300

Unconscionability objective and equivalent to unfairness 1.69 On the second question, in an age which seeks to render the operation of the law as transparent as possible to the layman, it may be objected that the use of such a sesquipedalian term as ‘unconscionability’ should be avoided unless it is necessary in the service of precision. The term seeks to capture the nature of and reason for B’s responsibility for a proposition by which A has been induced so to act that A will suffer if B does not stand by it: B should stand by it because he could not, in good conscience, resile from it. However, if one then asks why B could not resile in good conscience, the answer is that it is because it would be unfair to A, to whom B is answerable because B induced A so to act that A would then suffer. The term is used, as Lord Walker said in Cobbe v Yeoman’s Row Management Ltd,301 ‘… as an objective value judgment on behaviour302 (regardless of the state of mind of the individual in question)’. It may, therefore, be suggested that ‘unfairness’ is as serviceable a term for that which an estoppel is designed to prevent as ‘unconscionability’, and no precision of meaning is lost by its use.

Unconscionability not an alternative to the requirements for an estoppel 1.70 Accordingly, in answer to the third question, we maintain our view303 that there is no alternative or (save in one limited respect) additional requirement of unconscionability for an estoppel to arise.304 First, unconscionability

‘I can see nothing unconscionable about merely using the rules of law and procedure without having done anything to suggest to one’s commercial adversary that one would not’. 298 299 300 301 302 303 304

As in Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752. (1990) 170 CLR 394 at 440–1. (1933) 49 CLR 507; see 1.5 onwards. At [92]. Original emphasis. Previously set out in the fourth edition (2004) at [I.6]. And this conclusion has also been reached and more trenchantly stated by Handley, Estoppel by Conduct (2006, 2016) and in (2008) Conv 382; cf Dixon (2010) 30 LS 408; see also McFarlane, The Law of Proprietary Estoppel Ch 5.

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1.70  Introduction: definition and treatment

is not an alternative basis for an estoppel to foundation on the pre-requisites of responsibility, reliance and detriment. The doctrine of estoppel exists to remedy, not all unfairness, but only the particular unfairness of A suffering because he was induced to act on a proposition by B and B resiled from it.305 The doctrine would lack the certainty of application a rule of law must have if the court were simply to ask whether it is unfair or unconscionable in a particular case for B to resile from the proposition, ignoring the constituent requirements for an estoppel that have been identified and refined by precedent. The House of Lords has in Cobbe v Yeoman’s Row Management Ltd306 therefore held that a proprietary estoppel may not simply be founded on unconscionability, but only by establishment of its elements, which it has subsequently identified in terms of responsibility, reliance and detriment;307 and, in the same terms, Neuberger LJ has identified the elements of estoppel by representation of fact and promissory estoppel, and their correspondence with unconscionability in this context.308 305 There is a discrete fascicle of rules under which a party may not take advantage of his own wrong without any representation or detrimental reliance thereon. These operate, often under the guise of construction, by preventing an agreement or statute from allowing wrongful advantage to be taken, such that a party may not: (1) gain a benefit under a contract by relying on his own breach of contract: Alghussein Establishment v Eton College [1988] 1 WLR 587; (2) use a statute as an instrument of fraud: Rochefoucauld v Boustead [1897] 1 Ch 196; or (3) gain the benefit of a statute by fraud: R (Welwyn Hatfield Council) v Beesley [2011] AC 304, or by other unconscionable conduct: Chagos Islanders v Attorney General [2004] EWCA Civ 997 at [46]. Although these rules operate so as to prevent gain from wrongdoing, to refer to their effect as an estoppel would only serve to confuse. 306 At [2008] 1 WLR 1752 at [16], Lord Scott said with majority concurrence: ‘My Lords, unconscionability of conduct may well lead to a remedy but, in my opinion, proprietary estoppel cannot be the route to it unless the ingredients for a proprietary estoppel are present’. Lord Scott considered in Blue Haven Enterprises Ltd v Tully [2006] UKPC 17 at [24] ‘that the key that unlocks the door to the equitable remedy is unconscionable behaviour and although it might be difficult to fashion the key without a representation by the defendant it would not, in principle, necessarily be impossible to do so’. Absent a representation, however, it is submitted that B could only be responsible for A’s detrimental reliance on a belief if under a duty to contradict it. The necessity for the ingredients of representation (or duty to correct a belief), reliance and detriment for a proprietary estoppel has consequently been recognised, eg, in ­Herbert v Doyle [2009] WTLR 589, at [16]–[17] (unaffected on appeal [2010] EWCA Civ 1095); Stallion v Albert Stallion Holdings (Great Britain) [2010] 2 FLR 78, at [87] onwards; Macdonald v Frost [2009] WTLR 1815, at [9]; Capron v Government of Turks & Caicos Islands [2010] UKPC 2, at [35]; and Davies v Davies [2016] 2 P & CR 10, at [38](ii). 307 Per Lord Neuberger with unanimous concurrence in Fisher v Brooker [2009] 1 WLR 1764, at [63]: ‘Given that their case at each of the three stages is based on the fact that Mr Fisher did not raise his entitlement to such a share, one would expect the respondents to succeed in estoppel only, if they could show that they reasonably relied on his having no such claim, that they acted on that reliance, and that it would be unfairly to their detriment if he was now permitted to raise or to enforce such a claim.’; and per Lord Walker with majority concurrence in Thorner v Major [2009] 1 WLR 776, at [29]: ‘There is no definition of proprietary estoppel that is both comprehensive and uncontroversial (and many attempts at one have been neither). Nevertheless most scholars agree that the doctrine is based on three main elements, although they express them in slightly different terms: a representation or assurance made to the claimant; reliance on it by the claimant; and detriment to the claimant in consequence of his (reasonable) reliance’. 308 In Steria Ltd v Hutchison [2007] ICR 445 at [93]–[95]: ‘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.

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Theoretical basis and justification: unfair change of position  1.71

Unconscionability not an additional requirement 1.71 Nor, it is submitted, although it often appears to be treated as such by the courts in proprietary estoppel cases,309 is unconscionability, save in one respect, an additional requirement for a reliance-based estoppel additional to those of representation, inducement and detriment. If those three elements are established, absent misconduct by A,310 the requisite unfairness or unconscionability is thereby established, and a supervening requirement of unconscionability is otiose, since the constituent requirements have been identified and refined by precedent precisely in order to determine whether or not it is unfair for B to resile from the proposition.311 If they are satisfied, then it is unfair or unconscionable; if they are not, then it is not; and if that is not the result produced, then the answer must be further to refine or adjust the requirements themselves so that it is,312 rather than to resort to generality. Reliance-based estoppel was developed under the equitable jurisdiction313 to protect against unconscionable conduct, but its elements have now been more particularly identified, in the same way as have, say, the requirements for a presumption of undue influence. The conduct of A, insofar as he must come to equity with ‘clean hands’, may, however, affect, reduce or deny A’s relief,314 and in this limited sense, unfairness or u­ nconscionability in addition to responsibility, reliance and detriment may be said to be required, because the court is concerned to achieve fairness in the relationship between A and B. 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. 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 Ltd [1986] AC 80, 110, in the following terms: “the 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”. I can see no reason, in theory or in practice, why this should not be equally true of promissory estoppel.’; followed by Popplewell J in Molton Street Capital LLP v Shooters Hill Capital Partners LLP [2015] EWHC 3419 (Comm) at [123]–[126]; Neuberger LJ also identified unconscionability with establishing these elements in placing the onus at [129] ‘…on the person alleging the estoppel to establish unconscionability, or, to put it another way, to establish, in the case of estoppel by representation, the three essential ingredients of representation, reliance and detriment’. 309 See eg Hoyl Group Ltd v Cromer TC [2015] HLR 43, CA, at [86]–[94]. 310 See 1.84–1.85. 311 The decision in Gabrin v Universal Music Operations Ltd [2003] EWHC 1335, at [37]–[39], for instance, although made in broad terms of unconscionability, might have been made by reference to the constituent elements of estoppel, that is, by limited interpretation of what the claimant represented by his silence, or on grounds of the lack of actual or presumptive intention to induce the representee to act as it did. 312 See Sledmore v Dalby (1996) 72 P & CR 196, at 204 per Hobhouse LJ: ‘The doctrine of estoppel exists for the purpose of enabling courts to do justice, modifying what otherwise might be the strict legal rights of the parties. If the supposed application of such a doctrine produces injustice and not justice, something has gone wrong’. 313 See 1.36, 1.99. 314 See 1.84.

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1.72  Introduction: definition and treatment

1.72 It would be wrong, however, to regard unfairness or unconscionability as a separate requirement for a reliance-based estoppel of the same order as its other constituent elements. Rather, avoidance of a particular type of unfairness is the purpose of the doctrine, whether the constituent requirements of an estoppel are satisfied is considered in the light of that overall purpose, and the result is determined as the fair dispensation between A and B, given their relationship and conduct. As Lord Walker said of the role of unconscionability in equitable estoppel315 in Cobbe v Yeoman’s Row Management Ltd:316 ‘… it does in my opinion play a very important part in the doctrine of equitable estoppel, in unifying and confirming, as it were, the other elements. If the other elements appear to be present but the result does not shock the conscience of the court, the analysis needs to be looked at again.’

Correspondence of unconscionability with responsibility for reliance and detriment 1.73 The purpose of the doctrines of reliance-based estoppel is, then, to prevent or remedy the unfairness of B changing a position when he is responsible to A for A’s reliance on it in such a way as to make it unfair for B to change.317 The dicta in the English authorities referring to unconscionability318 should therefore be understood as reflecting that, and not as adding a supervening pre-requisite for an estoppel to those of responsibility for reliance and detriment.319 This correspondence between unconscionability and A’s detrimental reliance on a proposition for which B is responsible was concisely summarised by Lord Sumption, giving the advice of the Privy Council in Kelly v Fraser:320 ‘The relevance of detrimental reliance in the law of estoppel by representation is that it is generally321 what makes it unjust for the representor to resile from his

315 As to which usage, see 1.99, 1.100. We suggest that all reliance-based estoppels are essentially equitable, including estoppel by representation of fact. 316 At [92]. 317 See 1.5 onwards, Chs 2–5. 318 As, for instance, in Keen v Holland [1984] 1 WLR 251; The ‘Vistafjord’ [1988] 2 Ll R 345 at 352; Hiscox v Outhwaite [1992] 1 AC 562 at 577; John v George (1996) 71 P & CR 375 at 396. 319 In the sense of being induced so to act (or omit to act) that it would be unconscionable for the representor to resile. 320 [2013] 1 AC 450 at [17]; followed by Andrew Smith J in Kaupthing Singer & Friedlander Ltd v UBS AG [2014] EWHC 2450 (Comm) at [98]; reference to unconscionability should also therefore be understood in that sense in Andrew Smith J’s rejection of ‘any suggestion that, estoppel by representation being a common law doctrine and part of the law of evidence, this analysis by-passes the need to prove that it would be unconscionable or unjust for KSF to resile from the representation. The link between the circumstances capable of giving rise to the various species of estoppel is unconscionability: see Johnson v Gore Wood & Co [2002] 2 AC 1, 41C per Lord Goff …’ (see 1.103). In Process Components Ltd v Kason Kek-Gardner Ltd [2016] EWHC 2198 (Ch) at [135], also, Proudman J held unconscionability for estoppel by convention to be the same as detriment for estoppel by representation. 321 It is submitted that the qualification ‘generally’ and Neuberger J’s ‘In almost all cases’ at n 245 above may be omitted if detrimental reliance is understood as including relative detriment by

50

Theoretical basis and justification: unfair change of position  1.74

previously stated position. Indeed, the detriment need not be financially quantifiable, let alone quantified, provided that it is substantial and such as to make it unjust for the representor to resile.’

1.74 Reference has also been made to this correspondence between responsibility for detrimental reliance on a proposition, and unconscionability in the context of estoppel, in a number of recent first-instance decisions,322 and it was described in the Court of Appeal323 by Robert Walker LJ in Gillett v Holt324 as follows: ‘The overwhelming weight of authority shows that detriment is required. But the authorities also show that it is not a narrow or technical concept. The detriment need not consist of the expenditure of money or other quantifiable financial detriment, so long as it is something substantial. The requirement must be approached as part of a broad inquiry as to whether repudiation of an assurance is or is not unconscionable in all the circumstances. There are some helpful observations about the requirement for detriment in the judgment of Slade LJ in Jones v Watkins 26 November 1987. There must be sufficient causal link between the assurance relied on and the detriment asserted. The issue of detriment must be judged at the moment when the person who has given the assurance seeks to go back on it. Whether the detriment is sufficiently substantial is to be tested by whether it would be unjust or inequitable to allow the assurance to be disregarded – that is, again, the essential test of unconscionability. The detriment alleged must be pleaded and proved.’

B’s position being improved by A’s reliance without that of A being worsened: in Baynes Clarke v Corless [2009] EWHC 1636 (Ch) at [24], Proudman J recognised that the reliance may found an estoppel if it confers an advantage on B as well as where A would otherwise suffer detriment, as did Briggs J in HMRC v Benchdollar [2010] 1 All ER 174 at [52] and HHJ Havery QC in Aker Oil & Gas Technology UK Plc v Sovereign Corporate Ltd [2002] CLC 557 in relation to estoppel by convention; see also the Singapore CA in Lam Chi Kin David v Deutsche Bank AG [2010] SGCA 42 relying on para [V.5.17] of the fourth edition (see now 5.61). 322 Neuberger J in PW & Co v Milton Gate Investments Ltd [2004] Ch 142 at [222], that ‘In almost all cases, such unconscionability must be based on the prejudice which would be caused to the claimant if the strict legal position applied’; and as Neuberger LJ in Steria Ltd v Hutchison [2007] ICR 445 at [93]–[95], n 308; also by Stephen Jourdan QC in relation to an estoppel founded on a representation by silence or acquiescence in Richmond Pharmacology Ltd v Chester Overseas Ltd [2014] Bus LR 1110 at [210]: ‘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.’; by Bernard Livesey QC in Harris v WilliamsWynne [2005] EWHC 151 (Ch): ‘It seems to me that a person’s behaviour will not usually be regarded as having been unconscionable unless it has had also an effect on the other person and caused him to act to his detriment.’; and by Sir William Blackburne in Fielden v ChristieMiller [2015] EWHC 87 (Ch), at [26] with reference to the requirement that B be responsible for the detrimental reliance of A: ‘In the language of estoppel, there is nothing unconscionable in a person denying what another has come to believe and acted upon to his detriment if that person has not, either himself or through his agents, allowed the other to reach that belief’. 323 And by Neuberger LJ in Steria Ltd v Hutchison [2007] ICR 445 at [93]–[95], n 308. 324 [2001] Ch 210 at 232. These dicta, spoken in the context of proprietary estoppel, were held by Morritt C to apply to all reliance-based estoppels in Capcon Holdings Plc v Edwards [2007] EWHC 2662 (Ch) at [40].

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1.75  Introduction: definition and treatment

Whether requirements for estoppel may be relaxed by reference to unconscionability 1.75 Robert Walker LJ continued in Gillett v Holt,325 in a passage, since approved by the House of Lords in Fisher v Brooker,326 that might (but we submit should not) be read as relaxing the need to satisfy each requirement of responsibility for reliance and detriment for an estoppel by reference to overall unconscionability, as follows: ‘But although this judgment is, for convenience, divided into several sections with headings which give a rough indication of the subject matter, it is important to note at the outset that the doctrine of proprietary estoppel cannot be treated as subdivided into three or four watertight compartments. Both sides are agreed on that, and in the course of the oral argument in this court it repeatedly became apparent that the quality of the relevant assurances may influence the issue of reliance, that reliance and detriment are often intertwined, and that whether there is a distinct need for a “mutual understanding” may depend on how the other elements are formulated and understood. Moreover the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end the court must look at the matter in the round.’

1.76 The first point that Robert Walker LJ should not there be read as contradicting is that, in the concern of the reliance-based doctrines to prevent unconscionable conduct, there is no distinction between proprietary and promissory estoppel on the one hand, and estoppel by representation or convention as to fact or law on the other. All reliance-based estoppels are concerned to provide a remedy for the unconscionable conduct of resiling from a proposition for another’s detrimental reliance on which the party estopped has made himself ­responsible.327 Proprietary and promissory estoppel were developed in C ­ hancery, but so also328 was estoppel by representation of fact (and now law), and an estoppel by convention which derives its force from detrimental reliance (as opposed to an agreement binding by contract or deed) must consequentially also have the same requirements of reliance by A on a convention that would be detrimental if B resiles from it.329 1.77 Nor, secondly, does Robert Walker LJ give licence to find a reliancebased estoppel from which one of the elements of representation (or silence with

325 [2001] Ch 210 at 225: spoken in relation to a proprietary estoppel, but concerning the prerequisites for any reliance-based estoppel of representation, inducement and detriment, and therefore also applicable to any reliance-based estoppel. 326 [2009] 1 WLR 1764 at [63] per Lord Neuberger with unanimous concurrence; also ­acknowledged by Lord Walker with unanimous concurrence in Pitt v Holt [2013] 2 AC 108 at [128]. 327 See 1.5 onwards; Kaupthing Singer & Friedlander Ltd v UBS AG [2014] EWHC 2450 (Comm) at [98], n 320. 328 See 1.36. 329 See 8.22 onwards, 8.32 onwards, 8.41 onwards: the doctrine was developed from the common law doctrine of estoppel by deed into an equitable reliance-based doctrine: see also 1.99, 1.100.

52

Theoretical basis and justification: unfair change of position  1.80

responsibility),330 reliance or detriment is missing: the estoppel in Gillett v Holt was based on findings that each of these pre-requisites was established. Proof of each is required precisely to satisfy the requirements of responsibility, causation and harm necessary to constitute a consistent principled basis on which to affect the rights between parties. 1.78 These elements are connected as different facets of the same narrative. Thus, for instance: the clearer a representation is, the easier it will be to establish actual and reasonable reliance; the materiality of the representation to the detriment will raise a presumption of actual reliance; and detriment will raise no estoppel unless incurred in actual and reasonable reliance on the relevant representation or convention.331 There is no reason, however, why the elements of a reliance-based estoppel, as a legal doctrine which affects rights and obligations, should be addressed with any less precision, or their requirements satisfied with less certainty, than the interlocking elements of any other equitable doctrine. The requirements must be addressed and satisfied precisely in order to determine whether the unfairness necessary for an estoppel would arise if B changes his position, and Lord Walker later said in Cobbe v Yeoman’s Row Management Ltd332 of Oliver J’s dictum in Taylors Fashions333 that ‘it is emphatically not a licence for abandoning careful analysis for unprincipled and subjective judicial opinion’. 1.79 While Robert Walker LJ did not, therefore, give licence for relaxing the requirements of responsibility, causation and harm, his point as to their interaction corresponds to that made in striking terms by Lord Hoffmann in Thorner v Major:334 ‘Past events provide context and background for the interpretation of subsequent events and subsequent events throw retrospective light upon the meaning of past events. The owl of Minerva spreads its wings only with the falling of the dusk. The finding was that David reasonably relied upon the assurance from 1990, even if it required later events to confirm that it was reasonable for him to have done so.’

1.80 Whereas a contract and its terms are agreed or not at the time,335 the question whether an estoppel bites, although it will bind from when there was sufficient detrimental reliance by A,336 will be determined by the court looking back. B’s potentially equivocal representation may be combined with his silence in the face of A’s apparent subsequent reliance on it in a particular sense such as to place a responsibility on B to clarify it if he is not to be committed. In this sense,

330 See 1.88 onwards. 331 Or B was under a duty to speak: see 1.80 onwards. 332 [2008] 1 WLR 1752 at [59]. 333 See 1.66. 334 [2009] 1 WLR 776. 335 James Miller v Whitworth St Estates [1975] AC 583, subject to rectification (or estoppel), on which evidence of subsequent conduct is admissible. 336 See 6.9.

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1.80  Introduction: definition and treatment

because the assessment is made looking back, silence in the face of conduct which the representation would be likely to influence will affect the determination of whether there has been a reliable commitment, as the original statement may be interpreted, in combination with the subsequent acquiescence in such conduct, to constitute together a sufficiently unequivocal ­representation.337 Whether language was in the circumstances unequivocal, whether conduct amounted to a representation or assent to a convention, and whether B had a duty to speak, may all thus be influenced by B gaining a benefit, or A (to B’s knowledge) incurring a detriment, by A’s reliance on the relevant assumption. Detrimental reliance may therefore influence the determination of whether there has been a representation or assent to a convention. 1.81 It is possible that, in practice, the nature of a representation or assumption may also influence consideration of whether the requirement of detrimental reliance is satisfied because it may seem easier, given the different consequences of a promissory estoppel (prima facie, temporarily suspensory) and an estoppel by representation of fact (prima facie, absolute), to find that A has so acted that it would be unfair for B to change his position with the result that B’s rights are temporarily suspended, than if they are to be denied for all time. In principle, however, whether A’s reliance makes it unfair for B to change his position should not be affected by the relief that follows, particularly as a discretion to mitigate the absolute effect of an estoppel by representation of fact where it would cause injustice has been recognised.338 1.82 Beyond recognising the interaction of the elements of an estoppel identified above, however, insofar as reference to the concept of unconscionability reflects a concern that the criteria of representation,339 inducement and detriment may not serve to determine in all circumstances whether there is an unfairness which demands a remedy, it is submitted that, save in that A’s own conduct may affect his remedy,340 this concern is misplaced, and that, if doctrinal coherence is not to be abandoned to untethered discretion, these elements should be no less strictly analysed and required than the requirements of other equitable doctrines, because each of these elements has a principled purpose of establishing, respectively, the responsibility, causation and harm required to make it just for the parties’ rights to be affected by an estoppel. If the particular circumstances of a case demand flexibility, that should, it is submitted, be found in principled flexibility as to the result of the estoppel, that is, the effect it has on the parties’ rights, rather than abandoning reasoned reduction of the unfairness that founds an estoppel to its constituent elements.

337 See further 4.16. 338 See 1.57, 5.66. 339 Alternatively, breach of duty to speak in the case of estoppel by silence, or breach of duty of care in the case of estoppel by negligence; see 1.30, 3.27 onwards. 340 See 1.84.

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Theoretical basis and justification: unfair change of position  1.85

Fairness and the result of an estoppel 1.83 For considerations of fairness may influence the result of an estoppel: if the constituent elements of responsibility, reliance and detriment are established, the result of a proprietary or promissory estoppel lies in the principled discretion of the court; consideration of what is fair, having regard to the nature and terms of the representation, and the circumstances and conduct of the parties, will determine the remedy given.341 It has even been recognised that there is an element of discretion, to secure a just outcome, as to the result of an estoppel by representation of fact342 (and now law). The discretion as to the result of an estoppel by convention has yet to be comprehensively considered – in some cases it is treated as suspensory, and in others as absolutely preclusive343 – but it is submitted that the criteria for the result of an estoppel by convention as to a particular proposition should be the same as they would be for any other reliance based-estoppel as to that proposition, whether founded on a representation, silence or negligence, and therefore involve discretion in relation to conventions as to property rights, future undertakings, and even, to the extent that has been allowed in relation to representations of fact, in relation to conventions as to matters of fact. 1.84 Considerations of fairness may even lead the court not only to reduce but to refuse altogether the relief to which satisfaction of the pre-requisites for a proprietary estoppel would otherwise entitle A, if A has behaved unfairly towards B, and does not therefore come with ‘clean hands’.344 Further, since estoppel by representation of fact or law345 and estoppel by convention346 have been recognised as essentially equitable doctrines, as is, we submit, any reliance-based estoppel,347 such a defence or mitigation, because A does not come with clean hands, may also be argued to be available against them. 1.85 In this limited respect – because fairness in the relationship between A and B as a whole determines the result of the estoppel, and, even if B is responsible for A’s detrimental reliance, it may not be unfair for B to resile, having regard to A’s conduct – it may be said that overall unfairness or unconscionability is an extra requirement (as for any equitable relief) as, without that, responsibility, reliance and detriment will not result in an estoppel. It is doubtful, however, whether it is apt to characterise this as a matter of conscionability rather than

341 See, as to promissory estoppel, 14.32 onwards and, as to proprietary estoppel, 12.179 onwards. 342 See 1.57, 5.66. 343 See 8.45. 344 See Williams v Staite [1979] Ch 291, CA; J Willis & Sons v J Willis [1986] 1 EGLR 62, CA; Gonthier v Orange Contract Scaffolding Ltd [2003] EWCA Civ 873; 12.139. 345 National Westminster Bank plc v Somer International (UK) Ltd [2002] QB 1286 at [41]–[43] per Potter LJ, with concurrence at [50], [69]. 346 Dixon v Blindley Heath Investments Ltd [2016] 4 All ER 490 at [72], having developed from common law estoppel by deed into an instance of ‘equitable estoppel’ (see 8.1). 347 See 1.99.

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1.85  Introduction: definition and treatment

fairness, as two wrongs do not make a right, and A’s wrong does not salve B’s conscience, as opposed to affecting the just result between two parties who are both in the wrong in different ways; and unconscionability is not a requirement for an estoppel of the same order as responsibility, reliance and detriment.

CLASSIFICATIONS REJECTED Acquiescence and encouragement as terms peculiar to proprietary estoppel 1.86 In the first three editions of this work, ‘estoppel by acquiescence’ and ‘estoppel by encouragement’ were accepted as terms distinctively to describe proprietary estoppels, but since the fourth they have not been, because they do not describe characteristics that distinguish the doctrine of proprietary estoppel from other estoppels. A representation of fact unrelated to property may be made by B’s encouragement of, or acquiescence in, A’s belief in the relevant fact, and therefore such an estoppel need not be proprietary.348 Moreover, encouragement and acquiescence do not seem to describe significantly different concepts from those of representation and silence when under a duty to speak, so their use obscures the community of elements between proprietary estoppel and the other reliance-based estoppels: namely, that in relation to all these doctrines the following identical questions arise: whether B is responsible to A for a proposition by representation, assent to a convention, or silence when under a duty to contradict A’s assumption; and, whether A was induced349 by B so to act in reliance on the proposition that it would be unfair for B to resile from it.350 Estoppel by acquiescence is therefore here used to describe the principal instance of estoppel by silence, whereunder a party is held responsible for the adoption or continuation of another’s mistaken belief, whether or not it relates to property, and not as a distinct doctrine which applies only in a proprietary context. 1.87 The true distinguishing feature351 of proprietary estoppel is here recognised to be that the subject matter of A’s belief is that he has acquired or will

348 See 12.13. 349 Actual or presumptive intention that the representor should act on the representation being a pre-requisite for inducement: see 5.19 onwards. 350 In this context, it is worth noting that it is not necessary that B know of A’s reliance on the belief his representation has caused for a proprietary estoppel to arise, provided that he induced it (in the sense described at n 349): see Gillett v Holt [2001] Ch 210 at 230A–231A, 232A–F; 5.32. Knowledge of the detrimental reliance may affect the construction of a representation in language, or whether a representation has been made by conduct or silence, but it is not an independent pre-requisite for proprietary estoppel. 351 That is, in terms of pre-requisites as opposed to consequences: there is also the distinction as to remedy from estoppel by representation of fact, namely that the satisfaction of the equity raised by a proprietary estoppel is in the discretion of the court.

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acquire a right in or over property.352 B’s representation to that effect need not be unequivocal as to the nature of the interest or right acquired, but must be unequivocally to the effect that some such interest or right will be, or has been, acquired.353 This distinction – that the subject matter of the estoppel is property – is, however, not entirely straightforward. A proprietary estoppel may not result in the conferral of any interest in property: compensation, or a licence over property, may be awarded, and the only representation may be that A has a licence to use property, as in Plimmer v Mayor of Wellington354 to use land, or in Motivate Publishing FZ LLC v Hello Ltd355 to use intellectual property, although a licence to use property is not a proprietary interest. Further, there was in Fisher v Brooker356 acceptance (without contrary argument) by the House of Lords that the property need not be land357 and, in Cobbe v Yeoman’s Row Management Ltd,358 Lord Scott said obiter with majority approval that a proprietary estoppel is equally available to claim a right to or over chattels or choses in action as to or over land: any property may be the subject of a constructive trust, and so also, it seems, a proprietary estoppel. A statement that refers in any way to any form of property will not, however, necessarily found a proprietary estoppel.359 Contractual rights, for instance, are themselves, as choses in action, a form of property, yet promissory estoppels have not been treated as proprietary estoppels: although a promisor may represent that the promisee has a form of property, viz the chose in action of a contractual right,

352 Baker v Baker [1993] 25 HLR 408, CA; Newport CC v Charles [2009] 1 WLR 184, CA, at [27]; Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 at [14], HL. 353 See 4.40; Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752. 354 (1884) 9 App Cas 669. 355 [2015] EWHC 1554 (Ch). 356 [2009] 1 WLR 1764 (copyright). 357 See also Re Foster [1938] 3 All ER 610 (insurance policies); Re Vandervell’s Trusts (No 2) [1974] Ch 269 at 321, 325 (beneficial interest in shares); Moorgate Mercantile Co Ltd v Twitchings [1976] QB 225 at 242 per Lord Denning (chattels and land); Western Fish ­Products Ltd v Penwith DC [1981] 2 All ER 204, CA at 218h–j; Re Basham [1987] 1 All ER 405, [1986] 1 WLR 1498 (residuary estate consisting of personalty); Godfrey v John Lees [1995] EMLR 307 (intellectual property); in Ali v Rahman (14 February 1996, unreported) the CA struck out an appeal, one of whose grounds was that proprietary estoppel could not apply to shares; Pinfield v Eagles [2005] EWHC 477 (Ch) (shares); Film Investors Overseas Services SA v Home Video Channel [1997] EMLR 347 (intellectual property); Strover v Strover [2005] WTLR 425 (benefit of insurance policy); Harris v Kent [2007] EWHC 463 (Ch) (shares); Lloyd v Sutcliffe [2007] 2 EGLR 13 (after acquired property); Yeda Research and Devt Co Ltd v Rhone-Poulenc Rorer Intl Hldgs Inc [2008] 1 All ER 425 at [22] (patent); Merck Canada Inc v Sigma Pharmaceuticals Plc [2013] 3 CMLR 17 (patent). The third edition of this work (at Ch 12, paras 301–2) even considered estoppels arising from the payment of money or assurances as to entitlement thereto (see cases at 1.57 and 3.7, 5.49 as examples of proprietary estoppel; cf Baird Textile Holdings v Marks & Spencer, n 360. 358 [2008] 1 WLR 1752 at [14]. 359 See cases at 4.40 n 141, 12.35 onwards, n 360; contrast Salvation Army Ltd v West Yorkshire MCC (1980) 41 P & CR 179, 189–192 where the principle was held ‘capable of extending to the disposal of an interest in land where the disposal is closely linked by an arrangement that also involves the acquiring of an interest in land’ (emphasis added) such that the party estopped became bound to purchase property from the estoppel raiser, sed quaere: see 12.35.

57

1.87  Introduction: definition and treatment

that has been held not to found a cause of action in proprietary estoppel,360 and a promissory estoppel may only be deployed defensively to reduce rather than establish contractual rights lest it subvert the doctrine of consideration, unless, it seems the promise is of rights in or over other property. The principles and policy underlying these distinctions, in particular that detrimental reliance on a promise of rights over property but not any other promise gives a cause of action, and whether principled analysis requires some adjustment of them,361 have yet to be definitively addressed by the courts.

Silence as a representation 1.88 Having classified estoppel by acquiescence as a principal instance of estoppel based on silence which is not limited to a proprietary context, it must also be acknowledged that not every case of estoppel based on silence is an instance of estoppel by representation. Spencer Bower classified all estoppels by silence as instances of estoppel by representation, because A is entitled to proceed on the basis that B’s duty of disclosure to him has been performed and to treat the silence as an implicit denial by B of that which he has failed to disclose.362 His formulation was approved by Bingham J in The ‘Lutetian’,363 but it has more recently been academically criticised as an unnecessary and confusing fiction.364 Against this criticism it may be said that, where B’s silence reasonably causes A to form a belief as to B’s subscription to the relevant proposition, the silence clearly operates as a form of communication or representation.365

360 In Baird Textile Holdings v Marks and Spencer [2002] 1 All ER (Comm) 737 at [34], [35], [54], [97], the application of proprietary estoppel to establish a right to renewal of a contract for the supply of goods was denied but the possibility of its application to property other than land was allowed. See 12.37. 361 As held in Australia in Waltons Stores and Commonwealth of Australia v Verwayen, canvassed in the fourth edition of this work, and proposed by McFarlane and Sales (2015) 131 LQR 610. 362 See 3.9. 363 [1982] 2 Ll R 140; Bingham J’s approach was adopted in other respects by Rix LJ in ING Bank NV v Ros Roca SA [2012] 1 WLR 472 (CA) at [91]–[95]; Carnwath LJ at [71] disavowed analysis in terms of a duty to speak but nonetheless adopted the approach in The ‘Lutetian’, which, it is submitted, in effect imposes a duty to speak as it affects B’s rights if B does not speak: see, per Blair J in Starbev GP Limited v Interbrew Central European Holdings BV [2014] EWHC 1311 (Comm) at [123]–[133], ‘In such a case, the duty to speak arises because “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”’; see also Orion Finance Ltd v JD Williams & Co Ltd [1997] EWCA Civ 1 at 8 (n 366 and further 3.9). 364 McFarlane, The Law of Proprietary Estoppel [1.12], [2.68]; also, in Avocet Industrial Estates LLP v Merol Ltd [2012] L & TR 13, Morgan J addresses estoppel by representation and by acquiescence as different doctrines. 365 See the unanimous Court of Appeal in De Bussche v Alt (1878) 8 Ch D 286 at 314 per Thesiger LJ: ‘If a person having a right, and seeing another person about to commit, or in the course of committing an act infringing upon that right, stands by in such a manner as really to induce the person committing the act, and who might otherwise have abstained from it, to believe that he assents to its being committed, he cannot afterwards be heard to complain of the act. This, as Lord Cottenham said in the case already cited [Duke of Leeds v Earl Amherst (1846) 2 Ph

58

Classifications rejected 1.89

After all, it is uncontroversial that a representation may be made by conduct, and silence is passive conduct.366 The criticism is made good, however, by the fact that an estoppel may be founded on silence or acquiescence, because B should have made his position clear, in a case where the position, or even existence, of B was not present to the mind of A at all:367 and the notion of a communication or representation being made to A of which he is not conscious is unsatisfactory. 1.89 In that context, by not disabusing A when he should, B has made himself answerable for A’s understanding simply because B has caused A to continue to hold his mistaken belief and act on it: the duty to speak dictates the test of what has caused the mistaken belief, and makes the failure to speak an operative cause of the continuing belief.368 The representation in one case and the silence in another form the same part of the foundation of the estoppel, in making B responsible to A for his belief.369 Dicta of Lord Scott in Blue Haven Enterprises Ltd v Tully370 also suggest that, if B takes reasonable steps to disabuse A of his mistaken belief, and B reasonably believes that he has done so (discharging his duty to speak), but his communication fails to reach A through no fault of B’s, B will not be estopped. This corresponds with the view that the fundamental issue, in the case of silence, is one of responsibility rather than implicit representation.

117 at 123] is the proper sense of the term “acquiescence”, and in that sense may be defined as quiescence under such circumstances as that assent may be reasonably inferred from it, and is no more than an instance of the law of estoppel by words or conduct’. See also the unanimous Court of Appeal in Orion Finance Ltd v JD Williams & Co Ltd [1997] EWCA Civ 1 at 8 per Evans LJ: ‘The legal analysis is carried further by speaking of a requirement that silence may amount to a representation when there was a legal, not merely a moral, duty to speak. There may be, for example, and for extraneous reasons, a legal duty of care (compare Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890). But in the absence of such duty, the inquiry whether there was a duty to speak merely restates the problem: were the circumstances such that silence had legal effects? That is, in my judgment, essentially a question of fact. Were the circumstances such that silence was equivalent to a positive statement? If so, then a representation was made, because there was a duty to speak if the impression otherwise given was to be contradicted’. 366 See eg Orion Finance Ltd v JD Williams & Co Ltd [1997] EWCA Civ 1 at 8 per Evans LJ with unanimous concurrence: ‘There can be occasions, however, when silence is more eloquent than words. Silence never stands alone, or in a vacuum. There must always be surrounding circumstances – what is called in another context the matrix of facts – which gives the silence its meaning. A person’s failure to speak in certain circumstances can give a clear impression of what he intends to say, clearer perhaps than his words might do. In these rare circumstances, it is possible for the necessary representation to be made’. 367 See eg Pickard v Sears n 185 and n 370. 368 If, as is usually clear, the estoppel raiser would have listened had he spoken. 369 As Lord Walker put it in Thorner v Major [2009] 1 WLR 776 at [55]: ‘… if all proprietary estoppel cases (including cases of acquiescence or standing-by) are to be analysed in terms of assurance, reliance and detriment, then the landowner’s conduct in standing by in silence serves as the element of assurance’. See also Blue Haven Enterprises Ltd v Tully, n 370. 370 Giving the advice of the Privy Council [2006] UKPC 17, at [26]: ‘[B] did his best to draw his prior interest to [A’s] attention … so far as [B] was concerned, he had issued an appropriate warning’. The dicta are obiter as, at [13], the Board upheld the finding that B’s communication did reach A in addition to holding that B did not need to reassert his claim when he saw A’s work continuing.

59

1.90  Introduction: definition and treatment

Duty to speak 1.90 There is a substantial body of judicial authority for the proposition that an estoppel by silence or acquiescence requires a failure to discharge a responsibility to speak.371 Indeed, we suggest that the requirement is axiomatic: for an estoppel, there must be a proposition which B is estopped from denying; to be estopped against A, B must be responsible for A’s detrimental reliance on it;372 if, by his silence, B has made himself responsible for A’s detrimental reliance on the proposition, B must have failed in a responsibility to contradict it. In Hohfeldian terms, the estoppel is a remedy to enforce the right of A to be informed, to which right the duty of B to speak corresponds. 1.91 A unanimous House of Lords in The ‘Indian Endurance’373 accordingly adopted without argument the test for an estoppel by acquiescence formulated in

371 Greenwood v Martins Bank [1933] AC 51 at 57, n 380 below; Chadwick v Manning [1896] AC 231 (PC) at 238 per Lord Macnaghten: ‘Mr. Chadwick was forgetful and silent, or silent, it may be, without the excuse of forgetfulness. But silence is innocent and safe where there is no duty to speak’. See also Jones Bros (Holloway) v Woodhouse Ltd [1923] 2 KB 117, DC, at 124, 128; Spiro v Lintern [1973] 1 WLR 1002, CA, at 1010F; HIH Casualty & General Insurance Ltd v Axa Corporate Solutions [2002] 2 All ER (Comm) 1053, CA, at [26]; The ‘Nai Genova’ [1984] 1 Ll R 353, at 363; Oliver J in Taylors Fashions Ltd v Liverpool Victoria Trustees [1982] QB 133n at [147C]–[147D]: ‘… in a case of mere passivity, it is readily intelligible that there must be shown a duty to speak, protest or interfere which cannot normally arise in the absence of knowledge or at least a suspicion of the true position’; Phillips J in Youell v Bland Welch & Co (No 2) aka The Superhulls cover case [1990] 2 Ll R 431 at 452: ‘In the context of estoppel silence differs from a positive representation in that its effect will not normally be to induce a misunderstanding but to permit a misunderstanding that has already been induced to persist. In such circumstances a party who has remained silent may be estopped from asserting that the facts are other than those which they were mistakenly assumed to be. But such an estoppel will only arise if the party estopped was under a legal duty to dispel the other party’s misunderstanding.’; Lewison J in Hodgson v Toray Textiles Europe Ltd [2006] Pens LR 129 at [98]: ‘As a general rule, silence is taken to amount to assent only when there is a duty to speak.’; Etherton C with unanimous concurrence in Bethell Construction Ltd v Deloitte and Touche [2011] EWCA Civ 1321 at [20]: ‘Generally silence will not ground an estoppel. But if there is a duty to act or speak then a failure to do so may give rise to an estoppel.’; Eder J in Ted Baker Plc v Axa Insurance UK Plc [2015] Lloyd’s Rep IR 325 at [124]: ‘As to estoppel by acquiescence, … what is however clear is that this species of estoppel depends on there being a duty to act or speak.’; Blair J in Starbev GP Limited v Interbrew Central European Holdings BV [2014] EWHC 1311 (Comm) at [127]: ‘… for the purposes of estoppel by acquiescence it is common ground that silence on the part of a party to a contract can only amount to acquiescence where there is a duty to speak’; knowledge of a mistake which imposes a duty to speak is also the foundation of the ‘exceptional jurisdiction to rectify for unilateral mistake’ (George Wimpey UK Ltd v VI Construction Ltd [2005] BLR 135 per Peter Gibson LJ at [51]) which ‘precludes a person, who knows that the other party is mistaken about the document in question or its contents, from taking unfair advantage of the other’s mistake’ and was recognised as ‘a species of equitable estoppel’ at [11] by Mummery LJ in Transview Properties Ltd v City Site Properties Ltd [2009] EWCA Civ 1255. For sociological jurisprudential analysis of the duty in relation to proprietary estoppel, see Samrit (2015) 78 MLR 85. 372 Unless the estoppel from denying the proposition binds by contract or deed; see 1.29. 373 [1998] AC 878; further, in Fisher v Brooker [2009] 1 WLR 1764 at [62], Lord Neuberger, with unanimous concurrence of the House of Lords, said that ‘at least in a case such as this, I am not convinced that acquiescence adds anything to estoppel and laches’.

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a proprietary context by Lord Wilberforce in a dissenting judgment in Moorgate Mercantile v Twitchings:374 ‘In order that silence or inaction may acquire a positive content it is usually said that there must be a duty to speak or to act in a particular way, owed to the person prejudiced, or to the public or to a class of the public of which he in the event turns out to be one … My Lords, I think that the test of duty is one which can safely be applied so long as it is understood what we mean … What I think we are looking for here is an answer to the question whether, having regard to the situation in which the relevant transaction occurred, as known to both parties, a reasonable man, in the position of the “acquirer” of the property, would expect the “owner” acting honestly and responsibly, if he claimed any title in the property, to take steps to make that claim known to, and discoverable by, the “acquirer” and whether, in the face of an omission to do so, the “acquirer” could reasonably assume that no such title was claimed.’

1.92 In Lester v Woodgate,375 Patten LJ identified the development from ‘the relatively conservative approach of the common law as to the circumstances in which a party in the position of the landowner was under a duty to speak’ such that ‘… it is now clear that an obligation to make one’s position known is not limited to cases where silence would amount to some form of deception. The commonly accepted test is that set out by Lord Wilberforce in Moorgate Mercantile Co Ltd v Twitchings’; and Lord Wilberforce’s test has frequently since been applied.376 While the silence need not amount to deception, the duty is submitted, in a case of pure silence and passivity, to be one of honesty377 (being a duty to do what one would expect of someone acting ‘honestly and responsibly’) and the question whether B’s silence was honest is essentially a ‘jury question’; whereas, when silence is combined with conduct implying to A that his belief is shared, a silent B may be responsible for A’s belief without dishonesty.

374 [1977] AC 890 at 903. 375 [2010] EWCA Civ 199 at [39] (with unanimous concurrence). 376 In The ‘Lutetian’ [1982] 2 Ll R 140 itself; The ‘Henrik Sif’ [1982] 1 Ll R 456; The ‘Stolt Loyalty’ [1993] 2 Ll R 281; adopted by the CA with agreement of the parties in The ‘Indian Endurance’ [1998] AC 878 at 892 (unaffected on appeal); AC Yule & Son Ltd v Speedwell Roofing & Cladding Ltd [2007] BLR 499 at [19]–[20]; Avocet Industrial Estates LLP v Merol Ltd [2012] L & TR 13 at [111]–[124] (Morgan J considering the authorities as to whether silence will found an estoppel by representation of fact, a proprietary estoppel, and an estoppel by convention and reaching the same conclusion for the same reasons in relation to each, because, it is submitted, the essential question is the same); ING Bank NV v Ros Roca SA [2012] 1 WLR 472, at [92]–[94] by Rix LJ; Starbev GP Limited v Interbrew Central European Holdings BV [2014] EWHC 1311 (Comm) at [123]–[138] by Blair J; Kaupthing Singer & Friedlander Ltd v UBS AG [2014] EWHC 2450 (Comm) by Andrew Smith J at [98]: ‘As with estoppel by acquiescence, this argument [that the case can properly be seen as one of estoppel by representation, the representation being made by silence] would largely depend, I think, on KSF being under a duty to speak because of circumstances such as Lord Wilberforce described in Moorgate Mercantile Co Ltd v Twitchings …’; Process Components Ltd v Kason Kek-Gardner Ltd [2016] EWHC 2198 (Ch) at [132] by Proudman J. 377 See 3.15; Starbev GP Ltd v Interbrew Central European Holdings BV [2014] EWHC 1311 (Comm) at [133]; cf n 366.

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1.93  Introduction: definition and treatment

Silence as a cause but not a representation: summary 1.93 For the silent B to be responsible for A’s mistaken belief, his silence must not only have been a breach of duty but a cause of A’s adoption or continuation of the mistaken belief and his subsequent conduct.378 Because the silence is a breach of duty, its causative effect is assessed by comparison with performance of the duty. Such cause and effect is correctly characterised as implicit affirmation and reliance where there is actual communication. Where, however, A is unaware of B or his position (as opposed to the silence engendering a specific understanding of A that B endorses his mistaken belief), there is no communication between the parties, so the silence does not operate as a representation,379 but is simply an operative cause of the belief, given the duty to speak. It therefore remains right to say that silence can operate as a representation in a case in which A understands B (who is in breach of a duty to speak) by silence to endorse A’s mistaken belief, and there is high authority for this.380 It must be recognised, however, that where B is under a duty to A to speak, but A is not aware of B or does not specifically understand B to endorse A’s mistaken belief, the silence may yet, by reason of the breach of duty, operate as a cause of that mistaken belief so as to found an estoppel. Moreover, analysis of estoppel by silence in terms of B’s responsibility for allowing A’s belief to continue, rather than in terms of a representation, is supported by consideration that the duty to speak is not one of strict

378 Which it was not if A would have maintained the belief or acted as he did, even if B had spoken: see 5.17. 379 A point made by Mann J in VLM Holdings Limited v Ravensworth Digital Services Ltd [2013] EWHC 228 (Ch) and adopted in Mann v Shelfside Holdings Ltd [2015] EWHC 2583 (QB) at [42]: ‘The effect was that the claim of the true owner failed. While Lord Denman refers to conduct which led another to believe that (in that case) the sale was proper, it does not appear from the facts that there were any dealings between the owner and the defendant which would of themselves have led the defendant to that belief. The defendant had his belief as a result of uncommunicated conduct on the part of the plaintiff’, with reference to Pickard v Sears (1837) 6 Ad & El 469 at 472 in which the original formulation of the doctrine of estoppel was in terms of wilful causation: see 1.39. 380 Lord Tomlin with unanimous concurrence of the House of Lords in Greenwood v Martins Bank [1933] AC 51 at 57: ‘Mere silence cannot amount to a representation, but when there is a duty to disclose deliberate silence may become significant and amount to a representation’; Buckley LJ giving the judgment of the Court of Appeal in Spiro v Lintern [1973] 1 WLR 1002 at 1010F (CA): ‘Where a man is under a duty – that is, a legal duty – to disclose some fact to another and he does not do so, the other is entitled to assume the non-existence of the fact. In such circumstances the conduct of the first man amounts to a representation by conduct to the second that the fact does not exist.’; Slade LJ in The ‘Nai Genova’, [1984] 1 Ll R 353 at 363; followed in George Wimpey UK Ltd v VI Construction Ltd [2005] BLR 135 by Peter Gibson LJ at [66] (with unanimous concurrence): ‘… in the absence of a duty to speak, mere silence or inaction is not such conduct as amounts to representation which will give rise to an estoppel.’; Tuckey LJ in a unanimous Court of Appeal in HIH Casualty & General Insurance Ltd v Axa Corporate Solutions [2002] 2 All ER (Comm) 1053, at [26]: ‘As Chitty (para. 3 - 087) says: “Although a promise or representation may be made by conduct, mere inactivity will not normally suffice for the present purpose” … The only exception to this rule is where the law imposes a duty to speak or act …’; and David Richards J in Bradmount Investments Ltd v Williams De Broe Plc [2005] EWHC 2449 (Ch), at [104]: ‘… acquiescence is an aspect of estoppel by representation’.

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Classifications rejected 1.95

liability. If B takes reasonable steps to disabuse A, and believes that he has, but, through no fault of his, his communication did not reach or was not understood by A, the obiter dicta in Blue Haven Enterprises Ltd v Tully381 suggest that B will not be estopped from denying A’s mistaken belief, even though A has understood B to have agreed, by his silence, with A’s belief.

Reliance-based estoppel by silence: foundation of the duty to speak 1.94 Estoppel based on silence in breach of duty to speak382 may therefore be incorporated as an aspect of a general principle of reliance-based estoppel: the silence can operate as a representation, but more fundamentally operates as a cause of the reliance of A on his mistaken belief. More difficult is to formulate a general rule as to when a duty to speak may be founded on the knowledge of B and the mistake of A. The question formulated by Lord Wilberforce, as to whether a reasonable person in the position of B would expect A, acting honestly and responsibly, to speak, may be said, strictly speaking, to involve an element of circularity, since the question whether B can remain silent in honesty depends on whether B is under a responsibility to A to speak, and whether B has a responsibility to speak depends on whether the law imposes such a duty. It may be said that the duty to speak arises if the silence was reasonably understood by A as communicating confirmation of his mistaken understanding,383 but this raises the question of when such understanding is reasonable, and does not address the case in which there is no actual communication because A is unaware of B, but B knows the true position and is aware of A’s mistake. We have mentioned above our view that the duty, in a case of pure silence and passivity, is essentially one of honesty384 and a ‘jury question’; but, where B’s silence is combined with conduct implying that A’s belief is shared, B may be responsible for A’s mistaken belief without dishonesty. 1.95 In this context, there is much to be said for Fry J’s five probanda in Willmott v Barber:385 ‘In the first place the plaintiff must have made a mistake as to his legal rights. Secondly, the plaintiff must have expended some money or must have done some act (not necessarily upon the defendant’s land) on the faith of his mistaken belief. Thirdly, the defendant, the possessor of the legal right, must know of the existence of his own right which is inconsistent with the right claimed by the plaintiff. If he does not know of it he is in the same position as the plaintiff, and the

381 [2006] UKPC 17 at [26] (see main finding of fact at [13]). 382 In the absence of which the silence is at least equivocal: see Liberty Insurance Pte Ltd v Argo Systems FZE [2012] 1 Ll R 129, at [46] and cases at 4.42–4.43. 383 See 3.9 onwards. 384 So there is no beach of the duty without impropriety: see Starbev GP Ltd v Interbrew Central European Holdings BV [2014] EWHC 1311 at [133] per Blair J; and further 12.104 onwards. 385 (1880) 15 Ch D 96.

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1.95  Introduction: definition and treatment

d­ octrine of acquiescence is founded upon conduct with a knowledge of your legal rights. Fourthly, the defendant, the possessor of the legal right, must know of the plaintiff’s mistaken belief of his rights. If he does not, there is nothing which calls upon him to assert his own rights. Lastly, the defendant, the possessor of the legal right, must have encouraged the plaintiff in his expenditure of money or in the other acts which he has done, either directly or by abstaining from asserting his legal right.’

1.96 The possibility of relaxation of the third probandum, of knowledge of the correct position, was allowed by Oliver J in Taylors Fashions Ltd v ­Liverpool Victoria Trustees,386 and Shaw LJ in Bremer Handelsgesellschaft mbH v C Mackprang Jr387 also could see ‘no reason, however, to limit the effect of waiver to rights known to exist. It may be embracing enough, and so intended, as to forgo rights which might exist in regard to a particular contract or in a particular context’. Proudman J in Sinclair v Sinclair388 also acknowledged that ‘While a beneficiary might acquiesce without being aware of his legal rights, ignorance is one of the factors which should be taken into account: in many such cases it will be the critical factor in precluding an estoppel’. In HIH Casualty and ­General Insurance Limited v Axa Corporate Solutions,389 however, Tuckey LJ indicated the difficulty of establishing a waiver of a right of which the silent party is ignorant: ‘As the judge put it “the essence of the plea must go to the willingness of the representor to forego its rights”. Unless the representation carries with it some apparent awareness of rights it goes nowhere: the representee will not understand the representation to mean that the representor is not going to insist upon his rights because he has said or done nothing to suggest that he has any. What I have said illustrates the difficulty in establishing this type of estoppel when neither party is aware of the right which is to be foregone. A representor who is unaware that he has rights is unlikely to make a representation which carries with it some apparent awareness that he has rights. Conversely a representee who is not aware that the representor has a particular right is unlikely to ­understand the

386 [1982] QB 133n, at 147; approved as noted at nn 289, 290, and on this issue in Munt v Beasley [2006] EWCA Civ 370 at [43]–[44]; also recently analysed and followed in Hoyl Group Ltd v Cromer TC [2015] HLR 43 (CA) at [38]–[44]. This suggests that estoppel may be based on common mistake, where, on the test adopted in Blindley at 1.97–1.98, B has benefitted to the detriment of A by mutual conduct based on a common mistake on an issue of such importance to that conduct that the issue must have been in mind when the conduct was undertaken and the relative benefit conferred and detriment incurred. See also 12.83. 387 [1979] 1 Ll R 221 at 230; cited with approval in Troop v Gibson [1986] 1 EGLR 1, at 5 by Purchas LJ and adopted in Bridgestart Properties Ltd v London Underground Ltd [2005] 1 P & CR 15, at [14]; see also Michaels v Harley House Ltd [1997] 1 WLR 967, at 990 and Starbev GP Limited v Interbrew Central European Holdings BV [2014] EWHC 1311 (Comm), at [138]. 388 [2009] EWHC 926 (Ch) at [71] citing Oliver J in Taylors Fashions as approved by Lord Walker in Cobbe v Yeoman’s Row Management Limited [2008] 1 WLR 1752 at [58]–[59] (see also cases at nn 289, 290). 389 [2002] 2 All ER (Comm) 1053, at [21]–[22] (with unanimous concurrence); followed in Prudential Assurance Co Ltd v Exel UK Ltd [2010] 1 P & CR 7, at [196] and DRL Ltd v Wincanton Group Ltd [2010] EWHC 2896 (QB).

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Classifications rejected 1.98

representation to mean that the representor is not going to insist on that right or abandon any rights he might have unless he expressly says so.’

1.97 In Dixon v Blindley Heath Investments Ltd,390 on the other hand, the Court of Appeal, having considered those dicta, recently confirmed, in the context of other active mutual conduct,391 that B may be responsible to A for A’s mistaken assumption, although both have forgotten the true position:392 ‘It may be that most cases of estoppel by convention arise from a mistake made by the parties or a mistake made by one party and acquiesced in by the other. But the authorities do not suggest that the principle is confined to cases of mistake. Moreover, a mistaken recollection is not, to our minds, legally different from a state of forgetfulness. 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. Whether the true state of things has been misappreciated, misremembered or forgotten should make no difference to whether the parties have in the event mutually adopted a common assumption … We consider that the real difficulty confronting a party seeking to establish an estoppel on the basis of an assumption contrary to, and in circumstances where the parties have forgotten, the true state of things is not a legal one but an evidential one: it is the problem of showing that something other than forgetfulness played a part in the adoption of the assumption, and that the person sought to be estopped assumed some responsibility for it.’

1.98 The court went on to hold393 that, if B has benefitted to the detriment of A by mutual conduct based on a mistaken assumption on an issue of such importance to that conduct that the issue must have been in mind394 when the conduct was undertaken, and the relative benefit conferred and detriment incurred, then the importance of the relevant issue to the mutual conduct will be sufficient, in terms of estoppel by convention, to constitute conduct ‘across the line’,395 constituting assent to and assumption of responsibility for the convention. The importance of the issue to the mutual conduct imposes a duty to speak if responsibility is not to be taken for the incorrect assumption, or, put another way, its importance makes subscription to the incorrect proposition implicit in the conduct. Active mutual conduct to which the mistake as to a right was sufficiently important may therefore estop B from denying the common mistaken assumption as to that right without B being aware of it.

390 [2015] EWCA Civ 1023. 391 For this combination, see also Hoyl Group Ltd v Cromer TC [2015] HLR 43 (CA) at [65]–[75]. 392 At [79], [89]. The case was strengthened by evidence that the party estopped was turning a blind eye to the true position at [53]–[57] but the CA did not base its decision at [92]–[95] on that. 393 At [92]–[95]. 394 At [94]: ‘… we consider that in the particular circumstances all parties shared responsibility … there is every reason for the parties to be thinking of [the issue] and [the] assumption … was an assumption that operated on the parties' minds throughout, and was relied on in connection with their subsequent mutual dealings’. 395 See 8.8.

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1.99  Introduction: definition and treatment

Equitable estoppel and common law estoppel: a false distinction 1.99 In Thorner v Major,396 Lord Walker noted, while reserving his own view, the description in the first edition of this work by Spencer Bower of the term ‘equitable estoppel’ as ‘a meaningless expression’. The term is used of promissory and proprietary estoppel, to distinguish them from estoppel by representation of fact, of which the term ‘common law estoppel’ has been used. This may be seen to be a false distinction by reference to the history of the contributions of the courts of both the common law and equity to the development of the law of estoppel set out above.397 While promissory398 and proprietary estoppel are, in origin, equitable doctrines, and this is significant in giving flexibility as to their result,399 the distinction is procedurally unimportant since the fusion of the courts of equity and the common law by the Judicature Act, and false in that it denies estoppel by representation of fact its own roots in Chancery: the doctrine was imported into the common law from the courts of equity400 and its restriction to statements of fact was made, in Jorden v Money,401 on a Chancery appeal. It is also, therefore, as was recognised and affirmed as a ratio decidendi by Potter LJ with unanimous concurrence in National Westminster Bank Plc v Somer International (UK) Ltd,402 an equitable doctrine. Estoppel by deed was developed by the courts of the common law,403 but it is not a reliance-based estoppel,404 and the development from it of the distinct doctrine of reliance-based estoppel by convention is the result of the influence of the doctrines developed by the courts of equity.405 1.100 Further, the distinction is potentially misleading by carrying the suggestion that different considerations apply to the questions of whether one party is responsible to another for his reliance on a proposition and whether it has induced the latter so to act that it would be unfair for the former to contradict it, according to whether the doctrine of estoppel under consideration is a doctrine of equity or the common law.406 It is submitted that, as the reliance-based doctrines

396 [2009] 1 WLR 776, at [67]. 397 At 1.35. 398 But see also 1.41. 399 See eg as to proprietary estoppel, 12.179 onwards, Crabb v Arun DC [1976] Ch 179; Willis v Willis [1986] 1 EGLR 62; and as to promissory estoppel, 14.32. 400 See 1.35; although estoppel in pais was common law, its development into reliance-based estoppel by representation was in Chancery. 401 (1854) 5 HL Cas 185. 402 [2002] QB 1286 at [41]–[43]; also by the Privy Council per Lord Macnaghten in Chadwick v Manning [1896] AC 231 at 238 calling it ‘the doctrine of equitable estoppel by representation’ and reciting the headnote to the report of Jorden v Money describing it as concerning the operation of an equitable doctrine. 403 See 1.35 n 160, 1.36, 8.1. 404 See 1.29. 405 The Court of Appeal recognised in Dixon v Blindley Heath Investments Ltd [2016] 4 All ER 490 at [72] that estoppel by convention has developed from common law estoppel by deed into an instance of ‘equitable estoppel’, or, as we term it, reliance-based estoppel (see 8.1). 406 See the rejection by Andrew Smith J in Kaupthing Singer & Friedlander Ltd v UBS AG [2014] EWHC 2450 (Comm) at [99] of ‘any suggestion that, estoppel by representation being

66

Unified doctrine 1.102

of estoppel are founded on the same general principle,407 the same general tests as to whether a representation has been made (or, in the case of silence, whether there was a duty to speak), whether B is responsible to A for his reliance, and whether that reliance would be detrimental if no relief is afforded, should be applied in relation to all of them, notwithstanding that the general rule is attuned to its particular application, and whether it is satisfied may therefore be affected by whether the subject matter of the estoppel is proprietary, promissory, factual, legal and/or conventional.

UNIFIED DOCTRINE 1.101 In The ‘Indian Endurance’,408 Lord Steyn said with unanimous concurrence: ‘The question was debated whether estoppel by convention and estoppel by acquiescence are but aspects of one overarching principle. I do not underestimate the importance in the continuing development of the law of the search for simplicity. I, also, accept that at a high level of abstraction such an overarching principle could be formulated. But Mr Rokison, for the defendants, persuaded me that to restate the law in terms of an overarching principle tends to blur the necessarily separate requirements, and distinct terrain of application, of the two kinds of estoppel [that is, by convention and by acquiescence].’

1.102 On the other hand, Lord Bingham in Johnson v Gore Wood & Co,409 speaking for the majority of their Lordships,410 was content to proceed upon the parties’ acceptance in principle of Lord Denning MR’s statement in ­Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd411 in the following terms: ‘The doctrine of estoppel is one of the most flexible and useful in the armoury of the law. But it has become overloaded with cases. That is why I have not gone through them all in this judgment. It has evolved during the last 150 years in a sequence of separate developments: proprietary estoppel, estoppel by representation of fact, estoppel by acquiescence, and promissory estoppel. At the same time it has been sought to be limited by a series of maxims: estoppel is only a rule of evidence, estoppel cannot give rise to a cause of action, estoppel cannot do away

a ­common law doctrine and part of the law of evidence, this analysis by-passes the need to prove that it would be unconscionable or unjust for KSF to resile from the representation. The link between the circumstances capable of giving rise to the various species of estoppel is unconscionability: see Johnson v Gore Wood & Co [2002] 2 AC 1, 41C per Lord Goff [1.103] …’; and, as to ‘unconscionability’, 1.64 onwards. 407 See 1.5 onwards. 408 [1998] AC 878 at 914B–C. 409 [2002] 2 AC 1 at 33C–G. 410 See Lord Cooke at 42D and Lord Hutton at 50H. 411 [1982] QB 84 at 122; see also McIlkenny v Chief Constable of West Midlands [1980] QB 283 at 316–7 per Lord Denning MR; Wilson v Kingsgate Mining Ind Pty Ltd (1973) 2 NSWLR 713 at 730–1.

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1.102  Introduction: definition and treatment

with the need for consideration, and so forth. All these can now be seen to merge into one general principle shorn of limitations. When the parties to a transaction proceed on the basis of an underlying assumption – either of fact or of law – whether due to misrepresentation or mistake makes no difference – on which they have conducted the dealings between them – neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so. If one of them does seek to go back on it, the courts will give the other such remedy as the equity of the case demands.’

1.103 The statement was not, however, adopted by Lord Millett,412 and was expressly rejected by Lord Goff,413 who concluded, ‘In the end, I am inclined to think that the many circumstances capable of giving rise to an estoppel cannot be accommodated within a single formula, and that it is unconscionability which provides the link between them’.414 In the same year, in National Westminster Bank plc v Somer International (UK) Ltd,414a Potter LJ considered ‘various dicta415 in terms which support the view that a single purpose underlies all forms of estoppel on the basis that all aspects of the rules developed are examples of general principle applied so as to prevent [B] from refusing to recognise, or seeking unjustly to deny or avoid, an assumption or belief which he has induced, permitted or encouraged in [A] and on the basis of which [A] has acted or regulated his affairs’, referred to the dismissal by Millett LJ in First National Bank plc v Thompson416 of ‘Spencer Bower’s valiant attempt to demonstrate that all estoppels other than estoppel by record are now subsumed in the single and allembracing estoppel by representation and that they are all governed by the same requirements’ as ‘Historically unsound … repudiated by academic writers and … unsupported by authority’, and concluded that, ‘Despite some advances in this direction made in Commonwealth jurisdictions, it seems to me that the position remains unchanged in this country to date’. 1.104 Nonetheless, we respectfully submit, the reliance-based doctrines of estoppel may be described in terms of just such a common principle as that identified by Potter LJ, whereunder A is afforded relief417 against B because B, by making himself responsible for A’s belief in a proposition by affirming it, or culpably failing to correct it, has so induced A to act that it would be unfair to allow B to deny that proposition.418 This principle is manifest in the overlapping doctrines

412 At 61A–F; see also 1.17. 413 At 38H–41C. 414 At 41B–C. 414a [2002] QB 1286 at [38] onwards. 415 Giving as examples Moorgate Mercantile Co Ltd v Twitchings [1976] QB 225, at 241–242 per Lord Denning MR, and Crabb v Arun DC [1976] 179, at 193 per Scarman LJ. 416 [1996] Ch 231 at 236F; but see 1.17 and 1.104. 417 Although promissory estoppel and estoppel by representation of fact are not, in English law, causes of action, both directly affect the relief one party may be granted against another (by creating or precluding a cause of action, or enlarging or reducing the relief available thereunder). 418 See n 414a as adapted at 1.8.

68

Unified doctrine 1.106

of estoppel by representation of fact or law, promissory estoppel and proprietary estoppel, which have the common foundation of detrimental reliance on an unequivocal representation, and in the doctrines of estoppel by silence and estoppel by negligence, whereunder B is responsible for A’s detrimental reliance because his breach of duty to A has caused or allowed it. It is submitted that the justified objection of Millett LJ419 was made with reference to estoppel by deed,420 and may be avoided by recognition that that is not a reliance-based estoppel, identifying the principle as common only to those estoppels that are so based. 1.105 Moreover, as considered further below, common identification of these doctrines in terms of ‘overarching principle’421 is supported422 by the recognition of a power of the court to mitigate the absolute effect of an estoppel by representation of fact where it would work injustice,423 and by the arguments for allowing that promissory estoppels (and estoppels by convention in respect of promises)424 may be a source of new rights425 save where they would unacceptably subvert the doctrine of consideration as a rule of law. The Court of Appeal in Baird Textiles Ltd v Marks and Spencer plc426 recognised both the present existence of such doctrinal distinctions and the possibility of a further drawing together of the doctrines by the Supreme Court.427 1.106 As to the other categories of estoppel, it is submitted that the terms ‘estoppel by convention’, ‘estoppel by silence or acquiescence’, and ‘estoppel by negligence’ describe particular ways in which a party may affirm, or become responsible for, a particular proposition to another party, and therefore become estopped against the other in respect of that proposition by reason of the other’s detrimental reliance thereon. Although estoppel by convention evolved as a ­doctrine of its own from estoppel by deed, its modern form has been recognised as based on reliance rather than binding agreement by contract or deed. It is therefore a variant of reliance-based estoppel defined by reference to the manner

419 At 1.103 n 416. 420 See 1.17, 8.79. 421 Steps in that direction, without completing the journey, were taken in Australia in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 411–3, 441–3, 445–6; but the High Court declined an invitation to decide the issue in Giumelli v Giumelli (1999) 196 CLR 101 at 112. 422 See further Scottish Equitable plc v Derby [2001] 3 All ER 818 at [48], 1.51–1.62, 2.23–2.39, 5.63 onwards, 8.2–8.6, 8.22, 8.32, 8.41, 8.45 onwards; Bant and Bryan (2015) 35 OJLS 427. 423 National Westminster Bank Ltd v Somer (UK) International Ltd [2002] QB 1286; 1.57. 424 See 2.23 onwards, 8.56 onwards; these being, it is submitted, as to their substance rather than form, in principle indistinguishable from promissory estoppels in conferring or denying a right to future performance; see 2.24–2.27. 425 As advocated by McFarlane and Sales (2015) 131 LQR 610. 426 [2002] 1 All ER (Comm) 737. 427 See further Evans [1988] Conv 346; Lunney [1992] Conv 239; Halliwell [1994] 14 LS 15; Cooke, The Modern Law of Estoppel (2000) at pp 60–63; Bant and Bryan (2015) 35 OJLS 427; McFarlane and Sales (2015) 131 LQR 610.

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1.106  Introduction: definition and treatment

in which responsibility is assumed for the relevant estoppel, which may have as its subject the existence of a fact, entitlement to a right in property, and/or the undertaking, release or variation of a promise.428 An estoppel by contract, on the other hand, binds by force of contract429 and an estoppel by deed binds, not by reason of reliance, but by implication of a term into an agreement under seal;430 election, also, is a distinct doctrine which is based not on reliance but on commitment.431

Reliance-based estoppel: no bright lines 1.107 We have identified, above, the different origins of the doctrines of estoppel by representation of fact, promissory estoppel, proprietary estoppel and estoppel by convention.432 We recognise also that authority establishes that the different subject matter of the estoppel, whether it be a fact, a promise or a proprietary right, affects the determination of its fair result: as to whether the facts represented should be incontrovertible,433 or the detriment caused by reliance on the promise made remedied or avoided, or the equity raised by the belief as to acquisition of a proprietary interest proportionately satisfied. Exposition of the doctrine of estoppel in terms of over-arching principle should not obscure the differences in result of estoppels based on different types of representation or responsibility in different circumstances as to different subject matter (although the questions of what differences there should be, and why, are deserving of further consideration). 1.108 Nevertheless, we consider that the recognition of the common principle founding those doctrines of estoppel that are based on reliance, namely estoppel by representation of fact or law, promissory estoppel, proprietary estoppel, estoppel by convention (outside contract or deed), estoppel by silence and estoppel by negligence, will not only preserve but enhance doctrinal coherence, clarity and principled flexibility.434 First, as set out below, distinctions supposed to preclude any underlying doctrinal unity have proved false. Secondly, as also set out below, examination of liminal cases reveals that the boundaries that have been supposed between the doctrines – of fact, property, promise and convention – cannot be maintained, and the doctrines in these liminal cases fuse into one

428 See 1.15, 1.27–1.28. 429 See 8.67. 430 See 8.79; 1.17, 1.29; the objection of Millett LJ at n 416, by reference to which Potter LJ held, at n 414a, that the same foundation could not be identified for all estoppels, was that estoppel by deed is a discrete doctrine from estoppel by representation. 431 See Ch 13. 432 See 1.35 onwards. 433 Subject to mitigation to avoid injustice: see 1.57, 5.66. 434 See also Bant and Bryan (2015) 35 OJLS 427.

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Unified doctrine 1.110

another, necessitating recognition that these are different aspects of the same principle and not separate doctrines. Thirdly, the doctrines have the common foundations of representation (or wrongful silence), reliance and detriment, or, put another way, responsibility, causation and prejudice. Estoppel by representation not distinct as a rule of evidence 1.109 The Court of Appeal has claimed an equitable power to adjust the result of an estoppel by representation of fact to avoid injustice on the basis that estoppel by representation of fact is an equitable doctrine.435 The result of an estoppel by representation of fact, therefore, appears now, to this limited extent, to be recognised as being in the discretion of the court, as, more broadly, is that of a promissory or proprietary estoppel, allowing the court to adjust the result to fit the justice of the case, albeit, in the case of estoppel by representation of fact, from the starting point that the estoppel operates to prevent denial of the relevant fact save to the extent that it would work a demonstrable injustice. It remains the case, as the Privy Council have recently rehearsed,436 that ‘… the ordinary rule is that the detriment is not the measure of the representee’s relief’, but it seems that the substance of the representation may be the starting point rather than the automatic conclusion as to the result of the estoppel if the latter would work an injustice.437 A discretion of the court, even so limited, as to the result of an estoppel by representation of fact reveals a common footing with the other reliancebased doctrines in the modern law. This is refinement of the estoppel from a more blunt instrument to one attuned to do justice both specifically and consistently as a principle, and is submitted to be a welcome development of principle by precedent. 1.110 It has also been recognised at first instance, on the basis of compelling reasoning, that a representation of law may found an estoppel by ­representation,438 demonstrating that the doctrine is not a rule of evidence439 of a different nature to the substantive doctrines of promissory, proprietary and conventional estoppel. Since the doctrine of estoppel by representation will found an estoppel on a representation of law, and the result of such an estoppel by representation of law must, it is submitted, at least in some,440 if not in all, cases be subject to the discretion of the court, acceptance must follow that the result of an estoppel

435 See n 434. 436 Kelly v Fraser [2013] 1 AC 450 at [17] per Lord Sumption; followed in Kaupthing Singer & Friedlander Ltd v UBS AG [2014] EWHC 2450 (Comm) at [102]. 437 National Westminster Bank Ltd v Somer (UK) International Ltd [2002] QB 1286 at [40]–[48], [55]–[62], [67]–[68]. 438 See 1.19. 439 See 1.51–1.62. 440 Where, say, the representation of law is as to the ownership or acquisition of property, or the existence of an obligation of future performance, so as to be consistent with the doctrines of proprietary and promissory estoppel.

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1.110  Introduction: definition and treatment

by representation may be subject to the discretion of the court to achieve a just result, and may be so because it is now recognised not to be a blunt evidential instrument. It is wrong also to categorise it as a doctrine of the common law in contrast to the equitable doctrines of promissory and proprietary estoppel, since all have their origin in Chancery.441 Estoppel by representation as to a present right to future performance and promissory estoppel 1.111 As to the distinction between a promise and a representation of fact, including private rights,442 or of law, it is neither practical nor sensible to distinguish between the effect of a representation (when the underlying facts are known to A) that A has a right to future performance by B, made with the intention that A should act on it, and a promise of future performance. They are in principle distinguishable, in that the former is descriptive and is therefore true or false, while the latter does not have that quality because it is transformative and predictive, but that is not a good reason for estoppels based thereon to produce different results,443 still less the results that, if the intention was to create new rights rather than describe existing rights, then no new right may be created (promissory estoppel), whereas if the intention was to describe existing rights rather than create new rights, then new rights may be created thereby (estoppel by representation of fact or law).444 Since there is no coherent reason for distinguishing the result of a representation or convention that A has the right to future performance by B from a promise by B to perform, nor a representation or convention that A is not obliged to B to perform in the future from a release of A by B from such an obligation, there is no bright line boundary445 here between the operation of the doctrines of estoppel by representation of fact and promissory estoppel, and they should be understood as different applications of the same principle, which prevents an unfair change of position, but is precluded from subverting the doctrine of consideration.

441 See 1.36, 1.99. 442 There is a long-established body of authority that a representation as to private rights is a representation of fact: see 2.31. 443 This is an unjustified distinction, particularly as it is necessary, for an estoppel by representation of fact, that B actually or presumptively intend that A should act on the descriptive representation (although (see 5.19 onwards), on the reasoning in Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752, B may even then withhold responsibility for A so acting). The descriptive representation must, therefore, be intended to make a difference and, in that sense, is not only descriptive but also transformative in purport. 444 See 2.23–2.39. 445 For instance, in Menolly Investments 3 Sarl v Cerep Sarl (2009) 125 Con LR 75 at [147], Warren J regarded an estoppel from denying that a builder was not obliged under a contract to provide ‘level access’, and had therefore practically completed a section of works, as a promissory estoppel, because it was as to the promise to build the level access, although it could be said to be as to a matter of fact, ie the completion of the works.

72

Unified doctrine 1.114

Promissory estoppel and proprietary estoppel 1.112 At present, a gratuitous promisee of an interest in property who has ­detrimentally relied on that promise has a claim446 in proprietary estoppel that other such detrimentally reliant gratuitous promisees do not447 in promissory estoppel. It does not follow that they are fundamentally different. All reliancebased estoppels are susceptible to the answer that the estoppel would unacceptably subvert the public policy underlying a rule of law. This should, it is submitted, be recognised as the reason for limiting the deployment of a promissory ­estoppel448 so as not to subvert the doctrine of consideration, and attention should be given to identifying the reasons of principle and policy why it is only on a promise to confer an interest in property that detrimental reliance will found a cause of action, and examining whether that may be extended in any cases to other promises449 without unacceptably subverting the doctrine of consideration.450 1.113 Further, the boundary between proprietary estoppel and promissory estoppel is not entirely clear. An estoppel based on detrimental reliance on a licence to use land has been treated as proprietary, when it is in substance only promissory, since a contractual licence confers no proprietary interest in land.451 Further, proprietary estoppel is not limited in its application to representations as to an interest in land, but may apply to a representation as to ownership or acquisition of any form of property.452 Proprietary estoppel may therefore apply to a contract, as a chose in action, but, insofar as the subject matter of the estoppel is a contract between A and B, the estoppel is promissory as concerning in personam rights under it between A and B.453 Estoppel by representation of fact or law and proprietary estoppel 1.114 No clearer, when examined, is the distinction between an estoppel by representation of fact or law and a proprietary estoppel. A representation by words, conduct or silence that a party has an interest in property is, on l­ong-established

446 The claim is weaker than in contract, since the result is not enforcement of the promise, but is in the discretion of the court, having regard to the detrimental reliance thereon as well as the substance of the representation. 447 See 14.22 onwards, 14.36 onwards. In Australia, it has been allowed that detrimental reliance on a gratuitous promise upon which such reliance is intended can, by an estoppel, be the source of new rights without subverting the doctrine of consideration to any greater extent than has already been allowed in the case of proprietary estoppel. 448 As suggested in the fourth edition of this work and, independently and more fully, by Barnes [2011] LMCLQ 372. 449 See McFarlane and Sales (2015) 131 LQR 610. 450 As it has been in Australia: see Ch 14; n 447. 451 See 12.38. 452 See 1.87. 453 See 12.37.

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1.114  Introduction: definition and treatment

authority,454 a representation of fact,455 and may also be said to be a representation as to the legal position.456 Indeed, in Pickard v Sears,457 the case in which estoppel by representation was first formulated as a doctrine at common law, it was applied to estop a party from claiming title to property.458 Since proprietary estoppel is now recognised as applying to property other than land, cases relating to such property – for instance, shares459 – which were decided as cases of estoppel by representation of fact are cases to which the doctrine of proprietary estoppel is now also applicable, and the authorities establishing the doctrine of proprietary estoppel suggest, we submit, that, notwithstanding that the estoppel might also be characterised as an estoppel by representation as to the factual existence of the relevant rights of ownership, the result should be in the discretion of the court, rather than absolute preclusion460 from denying the fact of ownership, as is classically understood to be the result of an estoppel by representation of fact.461 If a distinct doctrine of estoppel by representation of fact (notwithstanding that the authorities hold that rights are facts, and facts established by such an estoppel may make good a cause of action) cannot be independently deployed to confer automatically absolute ownership in accordance with the representation, then the doctrines must be different applications of the same principle, which in this context is recognised as having a result that is in the discretion of the court. Estoppel by convention, estoppel by negligence and estoppel by silence 1.115 These descriptions462 identify means by which B may become responsible to A for his faith in the relevant proposition and consequent reliance thereon, other than by A believing the truth of a representation made to him by B.463 Since they do not, however, any the less require reliance on that proposition for their

454 See 2.31, eg Cooper v Phibbs (1877) LR 2 HL 149 at 170 per Lord Westbury: ‘A private right of ownership is a matter of fact’. 455 See Mann v Shelfside Holdings Ltd [2015] EWHC 2583 (QB) for a recent claim argued and rejected in terms of estoppel by representation of fact which might have been argued as a proprietary estoppel. 456 And, while a proprietary estoppel is a cause of action (see 12.3), an estoppel by representation of fact may supply a fact necessary to complete a cause of action: 1.43 onwards. 457 (1837) 6 Ad & El 469 at 472; see 1.36, 1.39. 458 In that case goods, just as it had been previously applied in relation to land: Savage v Foster (1723) 9 Mod 35. 459 See eg Burkinshaw v Nicolls (1878) 3 App Cas 1004; Ch 10. 460 See further 12.75 onwards,12.192 onwards. 461 See 1.16, 1.59, 12.192 onwards and, as to the result of estoppel by representation of fact, 1.42, 5.63 onwards; subject to equitable mitigation: see 1.57, 5.66. 462 See 1.7, 1.27, 1.30. 463 Although, in the case of estoppel by convention, the estoppel raiser may believe the truth of the convention, and although, in the case of estoppel by silence, the silent as passive conduct may actually communicate subscription to the proposition, in neither case is it essential, provided that, in the former, the convention is nonetheless agreed as the basis for relations (see 8.64), and in the latter the silent party was under a duty to speak (see 1.90, 3.9 onwards).

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Unified doctrine 1.117

operation, all give rise to a reliance-based estoppel, which may also be described as an estoppel as to a fact or proposition of law, a promise and/or an interest in property.

Common requirements 1.116 The requirements of unequivocality, inducement and detrimental reliance are submitted to be, in principle, the same for all the doctrines of reliancebased estoppel.464 First, the same quality of unequivocality of meaning of the communication of the relevant proposition,465 where B’s responsibility to A for a proposition is based on communication (rather than wrongful silence), has been recognised as necessary for it to found any estoppel, whether it be by representation of fact or law,466 proprietary,467 promissory468 or conventional.469 The common basis of these doctrines in the modern law dictates this common criterion and, although the ease or difficulty of its satisfaction will be significantly affected by the form, subject matter and context of the communication, the criterion embodies the same point in relation to all these doctrines: that there is no communication of a proposition by a communication consistent also with its negation. 1.117 Secondly, if B’s responsibility to A is based on communication (rather than wrongful silence), B must have intended that A, or have been reasonably understood by A as having intended that A, could rely on the relevant communication. The requirement for estoppel by representation of fact or law has been stated as one that the representor actually, or as reasonably understood, intended the representation to be acted on.470 The contrasting decisions in the recent House of Lords proprietary estoppel cases,471 we suggest, adumbrate this criterion for when and why an otherwise legally inconsequential assurance may found an estoppel: that it is an assurance which B actually, or as reasonably understood by A, intended A to be able to rely on. This same requirement is expressed for promissory estoppel as being that the promise must be intended to be binding,472

464 See 1.9. 465 Absent a finding (of what might be termed ‘subjective unequivocality’) that the estoppel raiser understood the party estopped precisely as he intended: see 4.3, 4.14. 466 See 4.2. 467 See 4.2, 4.40: while the nature of the proprietary interest need not be unequivocally specified, the representation must be unequivocally to the effect that the representee has acquired or will acquire rights in or over the property. 468 See 4.2. 469 See 4.2, 8.19 onwards. 470 See 5.19 onwards; the reasoning in Cobbe v Yeoman’s Row Management Ltd that this requirement for a proprietary estoppel will not be satisfied if A knows or ought to know that B did not intend to be responsible for A’s reliance is applicable to estoppel by representation of fact or law also. 471 Cobbe and Thorner v Major [2009] 1 WLR 776: see 12.112. 472 See eg Baird Textile Holdings Ltd v Marks and Spencer plc [2002] 1 All ER (Comm) 727 at 764e per Mance LJ; 14.21.

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1.117  Introduction: definition and treatment

and for conventional estoppel that the party estopped by the convention must have assumed responsibility for it.473 The requirement is essentially the same test of responsibility. 1.118 So also, for each reliance-based estoppel, A’s form of reliance on the relevant proposition must have been reasonable or intended,474 and B’s communication (or wrongful silence) must have caused A to act in such a way that it would be unfair for B to resile.475 The common foundation of all these estoppels is on detrimental reliance on a proposition for which B is responsible to A.476 Recognition of that is not at such a level of abstraction as to be unimportant, but, on the contrary, provides a coherent structure, in place of a taxonomical ragbag, for understanding the reason for the operation of these doctrines and addressing the issues that remain as to their application. Conclusion 1.119 With the qualifications above as to the difference that the subject ­matter of the estoppel will make to the operation of these different applications of the same underlying principle, such as susceptibility to the defence of illegality,477 and the extent of discretion as to the estoppel’s result, we therefore support the identification of the reliance-based estoppels – the overlapping doctrines of estoppel by representation of fact or law, promissory estoppel, proprietary estoppel, estoppel by silence, estoppel by negligence and estoppel by convention478 – as different applications of the same legal principle.

473 HMRC v Benchdollar [2010] 1 All ER 174, at [52]; 8.23 onwards. 474 See 5.33 onwards. 475 See 5.41 onwards. 476 See Neuberger [2009] CLJ 537, at 547–8. 477 Promissory estoppel being limited in deployment and result so as not unacceptably to subvert the doctrine of consideration. 478 As distinct from contractual estoppel and estoppel by deed, whose effect is a matter of the construction of the relevant binding agreement: see 8.67, 8.79.

76

CH A P T E R 2

Representations of fact; promises; representations of law; representations as to rights

Introduction  2.1 Significance  2.4 Representation of law  2.8 Constituent elements of a representation of fact  2.10 Representation of fact distinguished  2.16 Statements of law and as to rights  2.28

INTRODUCTION Responsibility and representation 2.1 For B1 to be prevented by a reliance-based estoppel from denying a proposition to A, B must be responsible for both A’s faith in, and A’s reliance on, the proposition.2 We are, in this and the following two chapters, concerned with the first requirement: of B’s responsibility for A’s faith in, or ‘reliance in mind’3 on, the proposition. It is satisfied if B has caused A to regard the proposition as reliable by a breach of a duty to contradict it, or by a breach of another duty of care, or by assenting to it as the basis of their relations. These forms of

1 2

3

As throughout, the party to be estopped, and ‘A’ the estoppel raiser. These two stages, of having faith in a proposition and acting or omitting to act on that faith, were identified by Professor Cooke in The Modern Law of Estoppel (2000) at 89–96 and termed by her ‘reliance in mind’ and ‘reliance in action’. See 12.111, however, as to how B’s responsibility for one may constitute sufficient responsibility for the other. See n 2.

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2.1  Representations of fact; promises; representations of law; representations as to rights

responsibility found an estoppel by silence,4 negligence5 and convention6 respectively. Otherwise, a representation is the necessary foundation of any reliance-based estoppel, as, without a mutual convention or a breach of duty, it is axiomatic that B must have communicated the relevant proposition to A for B to be responsible for A’s reliance on it. Indeed, an estoppel by convention, as it is founded on consensus, also requires communication of assent7 to the convention; and estoppels by contract8 and by deed,9 although not reliance-based, have the same prerequisite of an express or implicit statement of subscription to the relevant proposition, since the former requires a contract made by offer and acceptance, and the latter a statement in a deed intended to bind its author. 2.2 Consideration is therefore first here given to issues that may arise as to whether B has made a representation to A. The constituent elements of a representation (which are requirements not only for an estoppel by representation of fact or law, but also for a promissory10 or proprietary11 estoppel based on a representation and – in that there must be a representation of assent to the convention – a conventional estoppel)12 are considered in further detail in subsequent chapters, as follows: in Chapter 3 (where we consider also the breach of duty that founds an estoppel by silence or negligence), as to the means by which a representation may be made; in Chapter 4, as to the necessity of unequivocality and the interpretation of the representation; in Chapter 5, as to whether the representation was (or was reasonably understood as) intended to be acted on, and did actually induce the representee to act in reasonable or intended reliance thereon; and, in Chapter 6, as to who is a representor and who is a representee of a given representation.

Representation of fact or law 2.3 The rest of this chapter is concerned with the requirement of an estoppel by representation of fact that the representation be factual, and the recent acceptance that an estoppel by representation may be founded also on a representation of law.13 A representation of fact capable of estopping denial of the fact represented is here distinguished from (1) representations of opinion14 or

4 See 1.30, 1.31, 1.86 onwards, 3.9 onwards. 5 See 1.30, 1.31, 3.27 onwards. 6 See 1.27, 1.28, 8.2. 7 See 8.8 onwards. 8 See 8.67 onwards. 9 See 8.79 onwards. 10 See 1.9, 1.25, 14.10 onwards; the term ‘representation’ is used here to include representations as to the future: see 1.8, nn 34, 38. 11 See 1.9, 5.24, 12.7(3), 12.110 onwards. 12 See 8.8 onwards. 13 See 1.19, 2.8, 2.9, 2.28, 2.35. 14 See 2.18–2.21.

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Significance 2.5

belief,15 ‘mere puffs’16 and negotiating stances,17 which do not constitute reliable assertions of fact; (2) representations as to the future, which are promises18 (which will estop only subject to restrictions on their deployment and effect so as not to undermine the doctrine of consideration) and statements of intention19 (which estop only as to the fact of having the intention); and (3) representations of law,20 which have now also been held capable of founding estoppels, resolving the previous incoherent position that they were not, while representations as to mutual rights were (the latter being regarded as factual): these must, however, be restricted in deployment and effect so as not unacceptably to undermine the policy of the relevant rules of law,21 just as representations as to rights must also.

SIGNIFICANCE 2.4 Although a proprietary22 or promissory estoppel23 may be founded on a promise, and both conventional estoppels and now estoppels by representation may be founded on a convention or representation as to law24 as well as fact, the question whether the representation founding the estoppel is factual or not remains significant, because, as the authorities stand, it continues critically to affect the availability and result of the estoppel. First, as to availability, an estoppel as to fact may be deployed, not only defensively, but also to establish a fact necessary to complete a cause of action.25 Secondly, as to result, the party estopped is simply estopped from denying the fact represented, subject to the court’s equitable jurisdiction to ameliorate this result if it would otherwise work an injustice.26 2.5 By contrast, the result of a proprietary estoppel is in the discretion of the court,27 having regard to the terms of the representation or mistaken belief, its closeness in form to a contract, and the measure of detrimental reliance on it. We suggest that the courts will treat an estoppel based on a representation as to the existence of proprietary rights between the parties, notwithstanding the authorities that representations as to rights are factual,28 as a proprietary estoppel to be

15 See 2.18–2.21. 16 See 2.22. 17 See 2.22. 18 See 2.23–2.27. 19 See 2.16–2.17. 20 See n 11. 21 See 1.19, Ch 7, 8.56 onwards. 22 See Ch 12. 23 See Ch 14. 24 See 1.19, 8.4, 8.5. 25 See 1.43 onwards. 26 See 1.57, 5.66. 27 See 12.179 onwards. 28 See 2.31.

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2.5  Representations of fact; promises; representations of law; representations as to rights

satisfied as a matter of discretion rather than an absolute estoppel by representation of the fact of the rights as between the parties;29 although it might be argued that, if the requirements of an estoppel by representation of fact are satisfied, the absolute result (subject to equitable mitigation) of an estoppel by representation of fact should follow. In other words, although the court may simply preclude B from denying a fact affecting an independent cause of action by which A or B claims property under the doctrine of estoppel by representation of fact, if the representation is that A has a particular proprietary right, in our view, the doctrine of proprietary estoppel is applicable as governing such representations, and the court will grant discretionary relief in accordance with the principles of proprietary estoppel, rather than A being entitled to claim an absolute bar against denying the right that B has represented him to have, as would be the case if they were discrete doctrines, because the former would trump the latter on the basis that A can claim the greatest relief to which the facts entitle him. In our view, the doctrines of estoppel by representation of fact and proprietary estoppel are applications of the same reliance-based principle and the latter applies to representations as to the existence of rights in property (notwithstanding that such representations have been held factual and a fact established by estoppel may make good a cause of action or defence). 2.6 A promissory estoppel will not be allowed to subvert the requirement of consideration for a promise to bind, and may therefore be deployed only defensively,30 and to suspend rights only for so long as will prevent injustice.31 In this case, it might be argued that a representation by B that A has a right to future performance by B is a representation as to private rights, and therefore factual,32 so that B is absolutely barred from denying A’s right as represented. That is not the case33 again, in our view, because estoppel by representation of fact and promissory estoppel are different applications of the same principle of reliance-based estoppel. In the context of representations as to the future, all reliance-based estoppels are subject to the limitations on deployment and effect that apply to an estoppel based on a promise, save where it is of a right in or over property,34 in order to prevent unacceptable subversion of the doctrine of consideration. 2.7 In summary, while the court now appears to have some element of discretion as to the outcome of all reliance-based estoppels, the result of each starts

29 See 1.16, 1.59, 1.114, 12.75, 12.192 onwards. 30 See 14.22 onwards, 14.36 onwards. 31 See 14.32 onwards. 32 See 2.31. 33 Indeed, in Menolly Invs 3 SARL v Cerep SARL (2009) 125 Con LR 75 at [147], a yet stronger case for treatment of an estoppel as factual, Warren J regarded an estoppel from denying that a builder was not obliged under a contract to provide ‘level access’, and had therefore practically completed a section of works, as a promissory estoppel, because it qualified the builder’s promise to build the level access, although it could have been construed as a representation of fact, ie that the works has been completed. 34 Since the restrictions on founding an estoppel on a promise for this reason have not been considered to preclude promise-based proprietary estoppel (see further 1.24).

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Representation of law 2.8

from a different point on the spectrum of outcomes. Factual estoppel starts from the point of absolute preclusion from denial of the fact, unless justice demands discretionary mitigation of that result; while, starting from the other end of the spectrum, a promise will give rise to no estoppel if it would thereby subvert the doctrine of consideration, and will estop only for so long as, and to the extent, necessary to avoid injustice. The result of a proprietary estoppel begins between these opposite ends of the spectrum, and is subject to opposing gravities, on the one hand, towards preclusion from denying the terms of the promise or representation of fact, and on the other, towards a result limited to avoidance of detriment. These differences are the historical result of piecemeal development of these doctrines. It is another question, that would bear further examination by the courts, whether, as a matter of principle and policy, their different remedial starting positions are the logically justified consequence of the different subject matter of the representations involved.

REPRESENTATION OF LAW 2.8 As mentioned above, application of the rationale for the House of Lords’ abolition of the rule that a mistake of law will not found a remedy,35 including the difficulty, discussed below,36 of making a principled distinction between liminal cases of representations of fact and law, has now led Newey J in Briggs v Gleeds37 to recognise that, subject to the defence of illegality,38 a representation of law may found an estoppel by representation, just as a convention as to law39 may found an estoppel by convention. The argument that this is inconsistent with the view of the Court of Appeal in National Westminster Bank v Somer International Ltd40 that it was bound to hold that estoppel by representation of fact is a rule of evidence, and cannot therefore extend to a representation of law, was not advanced to Newey J, but such an argument is, on examination, unsustainable. First, the modern doctrine of estoppel is a rule of law rather than evidence, as is demonstrated by the Court of Appeal’s equitable mitigation of its effect in Somer41 itself. Secondly, even if it is treated as a rule of evidence in relation to facts, that does not mean it may not operate as a rule of law in relation

35 Kleinwort Benson v Lincoln CC [1999] 2 AC 349. 36 See 2.23–2.39. 37 [2015] Ch 212; followed by Burton J in NRAM plc v McAdam [2015] 2 All ER 340 at [20(i)] and [30] and accepted on appeal as common ground [2016] 3 All ER 665 at [43] citing as authority The ‘Vistafjord’ [1988] 2 Ll R 343. In Mears Ltd v Shoreline Housing Partnership Ltd (2015) 160 Con LR 157 at [51], Akenhead J reached the same conclusion independently without citation of either precedent, as did Popplewell J in Emirates Trading Agency Llc v Sociedade De Fomento Industrial Private Ltd [2015] 2 Ll R 487 at [51]. 38 That an estoppel may not unacceptably subvert the public policy embodied in a rule of law: see Ch 7. 39 See 8.4, 8.5. 40 [2002] QB 1286; see further 1.57. 41 See 1.51–1.62.

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2.8  Representations of fact; promises; representations of law; representations as to rights

to ­propositions of law. Thirdly, reliance-based estoppel is not confined to matters of fact: an estoppel by convention may be as to the law,42 and both proprietary43 and (subject to its limitations as to deployment and effect) promissory44 estoppels may be based on promises or representations as to the existence of a present right to future performance. Fourthly, even if estoppel by representation is to be treated as a conceptually discrete doctrine from those which apply to matters other than of fact, it is not coherent to allow that it may, as the authorities establish, apply to a proposition as to the rights between the parties,45 but not as to the law determining those rights. 2.9 The principles determining the result of an estoppel by representation of law are not yet the subject of authority. Consistency, however, demands that the result of a representation that, in law, the representee owns property is determined on the principles applicable to a proprietary estoppel and that a representation that, in law, the representee is bound by his promise has the same availability and effect as a promissory estoppel. Otherwise, it is possible that a representation of law will be held, as for a representation of fact,46 to estop the representor from denying the truth of his representation as to the law, subject to the court’s equitable discretion to mitigate that result.47 It is also possible that consideration of the result of an estoppel by representation of law will provide an occasion for taking steps towards the establishment of a single coherent set of principles to determine the just result of a reliance-based estoppel, whether f­actual, legal, proprietary or promissory, considering both the proper effect on the outcome of those qualities,47a and whether the doctrine should fulfil expectations or avoid detriment in each case.

CONSTITUENT ELEMENTS OF A REPRESENTATION OF FACT 2.10 The quality of representation that will found an estoppel as to a fact is the same as is required to found an action for misrepresentation in tort. In the latter case, however, it is necessary to establish a discrepancy between the representation and the truth, whereas in the case of estoppel the relevant discrepancy is that between the representation and what B subsequently alleges, and it is not therefore necessary to prove its falsity. The difference in the use made of the representation of fact does not, however, make any difference to its criteria. Accordingly, as in previous editions, the definition of ‘representation’ which introduces the current edition of the work in this series dealing with the law of

42 The ‘Indian Endurance’ [1998] AC 878. 43 Thorner v Major [2009] 1 WLR 1752, HL. 44 Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd [1955] 1 WLR 761, HL. 45 See 2.31. 46 See 5.63. 47 See 1.57, 5.66. 47a Eg that a factual estoppel establishes a fact as the basis for a cause of action or defence under the law dehors the estoppel, and a promissory estoppel may not subvert the doctrine of consideration.

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Constituent elements of a representation of fact 2.12

misrepresentation48 is adopted here as a proper definition of a representation of fact for the purposes of estoppel by representation of fact: ‘a statement made by, or on behalf of, a person (the representor) to, or with the intention that it should come to the notice of, another person (the representee) which relates, by way of affirmation, denial, description, or otherwise, to a matter of fact. It may be a past or present fact.’

The definition indicates two distinguishing marks of a representation of fact: first, communication between two (or more) people; and, secondly, relation to a fact.49

Communication 2.11 It takes two to make a representation, and that which is uncommunicated between them, absent a duty to speak, is innocuous.50 A representation is a communication made by B (or his agent)51 to A, which must be brought to A’s notice as a prerequisite of B’s responsibility to him for it. A provision in the articles of association of a company, for instance, that the signature of an attesting director shall, in favour of any person dealing bona fide with the company, be conclusive evidence of the fact that the company’s seal has been properly affixed to a certificate, did not estop the company from denying the validity of the certificate because the plaintiff did not actually know of, and rely upon, the provision in the articles.52 The first issue in relation to any estoppel founded on communication is naturally as to what has been communicated by B to A.53 2.12 A statement by B in the course of a soliloquy which is overheard by A or contained in a private document which is surreptitiously overlooked by A

48 49

50 51

52 53

Spencer Bower, Turner and Handley, Actionable Misrepresentation (5th edn, 2014, Handley) [2.02]. Taylor v Knapman (1884) 2 NZLR 265 was cited, in previous editions of this work, as an interesting example of how the distinction between representations as to past and future matters of fact has been made. A recital in a deed, that mortgage advances were made out of a fund jointly held, estopped as to the advances already made, but failed to estop the parties as to advances made after the execution of the deed. It is submitted, however, that under the current law (see 8.79 onwards) there would first be an issue as to whether the recital was intended to bind as an agreement, and, if it was, it would bind as an agreement on its terms for past and future, unless grounds were established that justify departing from an otherwise binding agreement (such as mistake or misrepresentation, or that the new circumstances are beyond the scope of the agreement). In the absence of a duty to correct a mistaken belief: for the reasons set out at 1.88 onwards, we consider McFarlane to be right in saying (The Law of Proprietary Estoppel (2014)) that not all estoppels by silence (or negligence) are based on a form of representation. See eg De Tchihatchef v Salerni Coupling Ltd [1932] 1 Ch 330; Moorgate Mercantile Co Ltd v Twitchings [1976] QB 225 at 243 (reversed on other grounds [1977] AC 890); Ismail v Polish Ocean Lines [1976] QB 893; Re Exchange Securities & Commodities [1988] Ch 46 at 54; Re Gleeds Retirement Benefits Scheme [2015] Ch 212 at [23], [45]–[51]. South London Greyhound Racecourses Ltd v Wake [1931] 1 Ch 496. See further, as to construction, Ch 4.

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2.12  Representations of fact; promises; representations of law; representations as to rights

is not deemed to have been made to A, or to anyone, and is, therefore, no representation.54 In order to distinguish communications for which B is responsible from overheard soliloquies and overlooked private documents, it is necessary to consider B’s apparent intention (even before the stage of addressing the separate requirement55 that B intend A to act on it). Thus, in ING Re (UK) Ltd v R & V Versicherung AG,56 Toulson J could not see in principle how a successful plea of estoppel ‘can be based on a document which the recipient believes that the supposed representor did not want the recipient to see. It is like listening to an eavesdropped conversation. The eavesdropper would not be entitled to treat what he heard, unintended by the speaker, as though it were a representation made to him by the speaker’. 2.13 The question here (as at that later stage)57 is not simply one of B’s actual or subjective intention: a representation is made to A not only if B actually intends to communicate it to A but also if, without actually so intending, B conducts himself in such a way that a reasonable man in A’s position would understand that the statement was intended to come to his notice. This is an application, to the question whether conduct or a statement constitutes a representation at all, of the objective rule of construction,58 and therefore a question of law as to whether A’s understanding and reliance was reasonable. It does not, however, follow that the question of subjective intention can be eliminated altogether, by asking whether one in the position and with the knowledge of A would reasonably understand the statement or conduct to be intended to come to his notice, since special circumstances and limited knowledge may affect A’s judgement on that question, and it is submitted that only such circumstances and limitations as B contemplated or should have contemplated may be taken into account,59 as the question is whether B is responsible, without intending, for the communication

54 See Robarts v Tucker (1851) 16 QB 560 at 577: ‘There is no evidence that the practice of the company, or the opinion that the endorsement was genuine, had ever been communicated to the bankers. It is no more than if the acceptor of the bill were to write in his private memorandum book that he was quite satisfied that the endorsement on the bill was genuine’ per Maule J; Jorden v Money (1854) 5 HL Cas 185 at 212: ‘It will not do if he merely said something … and then, that some stranger, having heard and acted upon it, should afterwards come to him to make it good’ per Lord Cranworth LC; Baxendale v Bennett (1878) 3 QBD 525 at 531, where Brett LJ points out that the bill of exchange which the defendant had accepted in blank, having been stolen from his desk, could not be regarded as a representation by him to anyone, so as to raise a case of estoppel against him; Akrokerri (Atlantic) Mines Ltd v Economic Bank [1904] 2 KB 465 at 470, where Bigham J points out the distinction between entries in a bank’s ledger and entries in a passbook; see further 6.3 onwards. 55 See 1.9, 1.18, 5.19 onwards. 56 [2006] EWHC 1544 (Comm). 57 See 5.19 onwards. 58 Described by Lord Diplock, in The ‘Hannah Blumenthal’ [1983] 1 AC 854 at 915E–916C, in its application to contractual offer and acceptance, as ‘an example of a general principle of English Law that injurious reliance on what another person did may be a source of legal rights against him’. In the present context the principle, therefore, operates as an estoppel within an estoppel. 59 See Mance LJ in MCI Worldcom Intl Inc v Primus Telecommunications Inc [2004] 2 All ER (Comm) 833 at [30]: ‘… whether there is a representation and what its nature is must be judged

84

Constituent elements of a representation of fact 2.14

being made.60 Further, for the reasons explored in Chapter 4, ambivalence may not be taken as commitment, and the line between the two is drawn according to the circumstances as well as the terms of the communication.

Relation to matter of fact 2.14 Any communicated statement which purports to affirm, deny, describe, or which otherwise relates to, any existing fact, circumstance, or thing, or any past event, amounts in law to a representation of fact; but any statement de futuro which constitutes a promise is not a representation of fact and has been held incapable of founding an estoppel,61 other than a promissory or p­ roprietary

o­ bjectively according to the impact that whatever is said may be expected to have on a reasonable representee in the position and with the known characteristics of the actual representee. … It must also be read … in the context of the contemporary circumstances known to both parties …’ (emphasis added); Raiffeisen ZentralBank Osterreich AG v Royal Bank of Scotland Plc [2011] 1 Ll R 123, at [81] per Christopher Clarke J; Mabanga v Ophir Energy plc [2012] EWHC 1589 (QB) at [25]–[28] per Popplewell J. 60

61

Thorner v Major [2009] 1 WLR 776, at [78] per Lord Neuberger: ‘It may be that there could be exceptional cases where, even though a person reasonably relied on a statement, it might be wrong to conclude that the statement-maker was estopped, because he could not reasonably have expected the person so to rely. However, such cases would be rare’. Jorden v Money (1854) 5 HL Cas 185 at 214–216 (a promise to cancel a bond) per Lord Cranworth LC; Finn, Essays in Equity (1985) at 60–65; Jackson (1965) 81 LQR 84; ­Treitel (1976) 50 ALJ 439 at 446–9, answering Atiyah, Essays on Contract, at 233–240; Spencer Bower and Turner on Actionable Misrepresentation (2nd edn) Appendix 1 at 757–765); Citizens’ Bank of Louisiana v First National Bank of New Orleans (1873) LR 6 HL 352 at 360 (where, of a statement that certain bills ‘would certainly be paid’, Lord Selborne said: ‘Estoppel by representation is a wholly different thing from contract or promise’ and ‘The representations must be statements of existing facts’); Maddison v Alderson (1883) 8 App Cas 467 at 473 (where, of an oral promise by the defendant to make a will in the plaintiff’s favour, Lord Selborne said: ‘The doctrine of estoppel by representation is applicable only to representations as to some state of facts alleged to be at the time actually in existence, and not to promises de futuro which, if binding at all, must be binding as contracts’ (but see now Thorner v Major [2009] 1 WLR 776); Chadwick v Manning [1896] AC 231; George Whitechurch Ltd v Cavanagh [1902] AC 117 at 130 per Lord Macnaghten, of a statement by a managing director of a company that he would act on certain transfers without requiring anything more; Yorkshire Insurance Co Ltd v Craine [1922] 2 AC 541, PC at 553; Nippon Menkwa Kabushiki Kaisha v Dawson’s Bank Ltd (1935) 51 Ll L Rep 147, PC at 151 per Lord Russell of Killowen: ‘It would be impossible to hold that they (the words used) constitute a representation which would ground an estoppel; for the meaning so attributed is not a representation of an existing fact, but a representation of future intention …’; Kelsen v Imperial Tobacco Co [1957] 2 QB 334 at 343–4; Bank of Baroda Ltd v Punjab National Bank Ltd [1944] AC 176 at 192; Jacobs v LCC [1950] AC 361; Kammins Co v Zenith Investments per Lord Diplock n 81 below; Roebuck v Mungovin [1994] 2 AC 224 at 235B; Ferrier v Stewart (1912) 15 CLR 32 at 44; Legione v Hateley (1983) 152 CLR 406 at 432; Waltons Stores (Interstate) Ltd v Maher (1987) 164 CLR 387 at 398–9, 415, 459, cf 448–451; see also Rainford v James Keith and Blackman Co [1905] 1 Ch 296, reversed on another point [1905] 2 Ch 147; Guy v Waterlow Bros and Layton Ltd (1909) 25 TLR 515; Cresswell v Jeffreys (1912) 28 TLR 413, reversed on another point, (1912) 29 TLR 90; and see the first edition of this work for further authorities.

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2.14  Representations of fact; promises; representations of law; representations as to rights

­estoppel.62 Following Jorden v Money,63 relation to present or past fact, as opposed to future conduct, has routinely64 been stated to be a necessary element in formulations of the doctrine of estoppel by representation.65 It has, however, also been held66 that a representation as to the rights between the parties is a representation of fact which may found an estoppel by representation of fact, and has further been accepted67 that an estoppel by representation, as well as by convention,68 may be founded on a representation as to the law. It follows that a representation that A has a present legal right to future performance (ie that B is bound by a promise) may found an estoppel, and such an estoppel has been upheld, for instance, in European Asian Bank AG v Punjab & Sind Bank (No 2).69 Assertion of such an estoppel may, however, meet the defence of illegality that an estoppel may not subvert the public policy embodied in a rule of law,70 in this case the requirement of consideration or a deed under seal for a promise to bind, with the result that the estoppel is subject to the same restrictions on deployment and effect as a promissory estoppel.71 2.15 It has rightly been pointed out72 that the decision in Jorden v Money,73 the leading authority for the proposition that a statement as to future intention will not found an estoppel, whereby the majority of the House of Lords dismissed a claim to cancel a bond based on detrimental reliance on a promise not to enforce it, is inconsistent with the doctrine of promissory estoppel74 and with the expectation-based form of proprietary estoppel.75 Money was plaintiff in the

62 63 64 65

See Chs 12 and 14; Thorner v Major [2009] 1 WLR 776. Note 61. Note 61. See, in addition to cases at n 61 above, eg Carr v L&NW Rwy (1875) LR 10 CP 307 at 317; Farquharson Bros & Co v C King & Co [1902] AC 325 at 330; Evans v Bartlam [1937] AC 473 at 483 and 1.18. 66 See 2.31. 67 See 1.19, 2.8; see also cases at 2.28 onwards. 68 See 8.6. 69 [1983] 1 WLR 642 CA at 661A, where an estoppel was upheld on the basis that ‘the defendants did indeed unequivocally represent to the plaintiffs … that there was, on the face of the documents, a liability upon the defendants to pay the plaintiffs the sums due under the letter of credit on the due date’; and see cases at 2.31 and 1.48. 70 See Ch 7. 71 See 1.47, 2.26–2.27, 2.36 onwards, 7.5, 8.56 onwards; cf also Menolly Invs 3 SARL v Cerep SARL (2009) 125 Con LR 75 at [147], n 33. 72 Originally by Meagher Gummow and Lehane’s Equity (4th edn) at [17–060], rejecting the distinction of Jorden v Money by Lord Denning in Central London Property Trust Ltd v High Trees House Ltd [1947] 1 KB 130 at 134, on the ground that Mrs Jorden ‘made it clear that she did not intend to be legally bound’ because that was only one of the grounds for the decision. The other ratio was that no representation as to future intention could found an estoppel (as to which see the further authorities at n 61). 73 See n 61, a decision on appeal from Chancery and, therefore, governing estoppel in equity. For a summary of the facts, procedural history and decision itself, see Meagher Gummow and Lehane’s Equity (4th edn) at [17–035]. 74 Just as Maddison v Alderson (1883) 8 App Cas 467 (see n 61) is inconsistent with the promisebased proprietary estoppel recognised in Thorner v Major [2009] 1 WLR 776. 75 See 12.12, 12.21.

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Representation of fact distinguished 2.16

Chancery proceedings, basing an action to cancel the bond on estoppel, but the action was brought in response to proceedings at law to enforce the bond: he claimed to deploy the estoppel defensively, and not so as to create new rights. A defensive promissory estoppel was denied. The courts have yet expressly to recognise and address this inconsistency, but the validity of both Jorden v Money76 and the doctrine of promissory estoppel77 has repeatedly been confirmed. The authority of Jorden v Money that a representation as to the future will not found an estoppel is also undermined by the courts’ well-established allowance that a representation as to a present right will do so,78 since the right will bind the representor in the future. This incoherence, we suggest, calls for recognition of reliance-based estoppel as a single multifaceted doctrine which affords just relief where it can do so, without unacceptably subverting the principles on which the law of property and obligations would otherwise deny such relief. It is submitted that it is right that an estoppel may be founded on a representation as to law as well as fact, therefore on a representation as to a present legal right to future performance, and on a promise, but that the law limits the deployment and effect of an estoppel founded on a promise, or a right to future performance, so as not to subvert the policy of the doctrine of consideration.79

REPRESENTATION OF FACT DISTINGUISHED Statements as to intention 2.16 A statement of B’s or of a third person’s intention, readiness or capacity to do or abstain from doing anything, or of his expectation as to any matter in futuro, is a representation of the existence at the specified time of such intention, readiness, capacity or expectation,80 and such a representation of present 76 See n 61. 77 In the House of Lords, see Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd [1955] 1 WLR 761; Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd, n 81; Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1972] AC 741; The ‘Kanchenjunga’ [1990] 1 Lloyd’s Rep 391 at 399, col 2; cf how, in Waltons Stores (Interstate) Ltd v Maher, n 61, the majority of the High Court of Australia, in upholding a cause of action based on promissory estoppel, purported to circumvent Jorden v Money via the doctrine of promissory estoppel, leaving it intact (at 398–9, 415, 459), only Deane J (at 448– 451) addressing the inconsistency, and declaring Jorden v Money no longer to be the law in Australia. 78 See 2.31; and now also that a representation as to law may do so (see 2.28) if the law binds the representor as to future conduct. 79 See n 71. 80 Edgington v Fitzmaurice (1885) 29 Ch D 459, CA, at 483: ‘The state of a man’s mind is as much a fact as the state of his digestion. It is true that it is very difficult to prove what the state of a man’s mind at any particular time is, but, if it can be substantiated, it is as much fact as anything else’ per Bowen LJ; Angus v Clifford [1891] 2 Ch 449, CA: ‘A man may tell a lie about the state of his own mind, just as much as he can tell a lie about the state of the weather, or the state of his own digestion’ per Bowen LJ; ADS Aerospace Ltd v EMS Global Tracking Ltd (2012) 145 Con LR 29 at [142], per Akenhead J: ‘A representation that in fact a party’s current intention is a certain one, however, may be effectively a statement of fact, that fact being what at the current time the intention actually is’.

87

2.16  Representations of fact; promises; representations of law; representations as to rights

i­ntention must be implicit in any promise. B may, therefore, be estopped from denying that he had the intention which he represented that he had, but a representation which estops B from denying a past intention will be of no effect81 if he is not also estopped from changing or departing from his intention. Insofar as the statement purports to bind B as to the future, however, it is in nature a promise and will not, therefore, found an estoppel by representation of fact. As a result, B is estopped (leaving aside promissory estoppel) only from denying that he had a particular intention at a particular time, not from changing or departing from it. Goff v Gauthier82 provides an example of rescission founded on a misrepresentation as to the fact of a party’s intention to sell to a higher bidder if the buyer did not contract immediately, but it is hard to see how an estoppel that is merely as to a state of mind at a particular time can be of any consequence. 2.17 It might be argued that a distinction should be drawn between a representation as to intention pro tempore and a representation that a final decision83 has been made, but it is submitted that, if A seeks to bind B to his statement of intention in his future conduct, he is in either case seeking to give it promissory effect.84 It might also be argued that B was under a duty to correct the continuing representation as to his intention, if it changed, breach of which duty gave rise to a representation by silence which may estop him from denying his continuing

81

82 83

84

Thus, in Jorden v Money (1854) 5 HL Cas 185, Lord Brougham pointed out that, even if the defendant’s promise in that case to cancel the bond could be regarded as a statement of existing intention, the defendant’s refusal to do so did not necessarily conflict with that statement; in Guy v Waterlow Bros and Layton Ltd (1909) 25 TLR 515, Channell J expressed a similar view; as did Lord Diplock in Kammins Co v Zenith Investments [1971] AC 850; in Wales v Wadham [1977] 1 WLR 199 at 211 (reversed on other grounds in Livesey v Jenkins [1985] AC 424), a statement of intention was held not to carry a duty to notify a change of that intention; see also A-G of Hong Kong v Humphreys Estate [1987] AC 114, PC at 124F–125A, 128A. See, however, Goff v Gauthier n 82, for a case in which misrepresentation as to intention founded relief. (1991) 62 P & CR 388; see also Feret v Hill (1854) 15 CB 207 (fraudulent statement of intention to use premises as a perfumery with intention to use as a brothel). St Paul Fire and Marine Insurance v McConnell Dowell Constructors Ltd [1993] 2 Lloyd’s Rep 503 at 516 provides an example of liability founded on such a decision, but it does not follow from decisions establishing liability in tort or under the Misrepresentation Act 1967 that such a representation will found an estoppel from changing intention. See also Smith Kline and French Laboratories Ltd v Long [1989] 1 WLR 1 at 5D; East v Maurer [1991] 1 WLR 461 at 463 for misrepresentations of fact as to intention. Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd n 81 above at 884A per Lord Diplock, of a statement of intention: ‘But no inference can be drawn from this that they would not change their minds before the hearing and even if it could this would only operate as a promise which might possibly give rise to a promissory estoppel but not to an estoppel in the strict sense’. Argy Trading Development Co Ltd v Lapid Devts Ltd [1977] 1 Lloyd’s Rep 67 at 76, col 1; Kleinwort Benson Ltd v Malaysian Mining Corpn [1989] 1 WLR 379 at 386A–C, 390D–H.; Waltons Stores (Interstate) Ltd v Maher, n 61 at 450; United Arab Emirates v Allen [2012] 1 WLR 3419 at [42]–[50]; contrast Salisbury (Marquess) v Gilmore [1942] 2 KB 38 in which MacKinnon LJ at 51–52 construed: ‘It is the intention of [the plaintiffs] to demolish the building’ as a representation of fact that ‘This house is ripe for re-erection; it is destined to demolition’. See further 2.23 onwards.

88

Representation of fact distinguished 2.18

intention.85 Again, however, it is of no use to estop him from denying a continuing intention (ie a state of mind) if he is not also estopped from acting otherwise than in accordance with that continuing intention, which would require a promissory estoppel. On this analysis, a representation as to intention might therefore found a promissory estoppel but not one as to fact (other than the usually86 inconsequential fact of having the intention at a particular time). Further, if the representation is of current intention only, and does not express, or is not reasonably to be understood in the circumstances as expressing, commitment to maintain that intention, it will not found a promissory estoppel: the authoritative reasoning of Cobbe v Yeoman’s Row Management Ltd87 in relation to proprietary estoppel applies with equal logic to all reliance-based estoppels, including promissory estoppel, that the requirement of intentional inducement will not be satisfied if A knows or ought to know that B did not intend to be responsible for A’s reliance, and for a promissory estoppel this requirement has been stated in terms that B must actually or apparently intend to bind himself.88 A mere statement of current intention, without commitment to maintain that present intention, will not satisfy this requirement.

Statements of opinion or belief 2.18 A statement of B’s, or of a third person’s, opinion, belief or information, as such, is a statement of the fact that B, or such third person, entertains such opinion or belief, or is in possession of such information, as the case may be. It is not a representation that the facts to which it relates are actually as B believes them to be, or is informed that they are;89 and there is no estoppel, therefore, against denying the correctness of the opinion, belief or information.90 So, where 85 See 3.19. 86 See nn 80–82. 87 [2008] 1 WLR 1752. 88 See 14.21. 89 New Brunswick and Canada Rly Co v Conybeare (1862) 9 HL Cas 711 at 729. 90 See Low v Bouverie [1891] 3 Ch 82, where a trustee, in answer to an enquiry by a stranger, stated that the trust fund was subject to certain encumbrances, without mentioning, because he had forgotten them, certain other encumbrances to which also the fund was subject, and it was held (charitably, it is submitted, towards the trustee; see 4.9) that this statement created no estoppel, because (per Bowen LJ at 106) the trustee’s ‘language would be reasonably understood as conveying an intimation of the state of his belief without an assertion that the fact was so apart from the limitation of his own knowledge’; George Whitechurch Ltd v Cavanagh [1902] AC 117 where Lord James, at 113, expressed the view that one of the representations there relied upon as the foundation of an estoppel ‘was no representation of a non-existent fact’, and ‘at most only an opinion was expressed’, whilst Lord Brampton, at 145, adopted and applied the passage above cited from the judgment of Bowen LJ in the earlier case; see also Algar v Middlesex CC [1945] 2 All ER 243, DC, at 251; R v East Sussex CC, ex p Reprotech [2003] 1 WLR 348, at [32] per Lord Hoffmann: ‘The opinion of the county planning officer could not reasonably have been taken as a binding representation that no planning permission was required. Planning officers are generally helpful in offering opinions in such matters but everyone knows that if a binding determination is required, a formal application must be made …’; Thaxton v Goodman (A Child) (Rev 1) [2010] EWHC 90182 (Costs) at [38]; Foran v Wight (1989) 168 CLR 385 at 436.

89

2.18  Representations of fact; promises; representations of law; representations as to rights

a bank paid a cheque presented to it in the ordinary course of business, and it was later discovered that the cheque was a forgery, it was held (in a case where the forgery was, on the evidence, not detectable by the use of proper care) that the fact of payment could not estop the bank from relying on the forgery in an action against the payee for moneys had and received; for the bank’s action in paying could not be said to represent more than that the bank believed the signature to be genuine.91 2.19 Even so, a statement of opinion or information is still a declaration of an existing condition of mind,92 and, for what it is worth, which is unlikely to be much,93 it may estop the representor from afterwards disputing the existence of his mental condition at the time at which it is said to have existed. As Newey J held in Briggs v Gleeds:94 ‘It is, I think, clear law that a statement of opinion can give rise to an estoppel, but proving such an estoppel may not help the representee much: the representor would, on the face of it, be estopped from denying that he had held the opinion …’. 2.20 If, however, a party, having a genuine opinion on a matter, chooses nevertheless to state it as a fact, or, having information, expresses the subject of it as within his own personal knowledge, and not as mere hearsay, his statement is a representation of fact95 which he may be estopped from denying. Further, if B’s statement of opinion or belief is understood by A, and is, or should be, understood by B, to concern matters within B’s but not A’s knowledge or expertise, such that A cannot rely on his own judgement,96 the statement carries an implied representation of fact that there are reasonable grounds for B’s opinion, provided that the circumstances do not otherwise preclude reliance by A on the statement as being to that effect.97 As the authorities

91 92

National Westminster Bank v Barclays Bank [1975] QB 654 at 674D. Karberg’s Case [1892] 3 Ch 1 at 11; Brown v Raphael [1958] Ch 636 at 641; Commercial Banking Co of Sydney Ltd v RH Brown & Co [1972] 2 Lloyd’s Rep 360 (HC of Australia). 93 See 2.16. 94 [2015] Ch 212 at [31]. 95 Reese River Silver Mining Co Ltd v Smith (1869) LR 4 HL 64. 96 Bisset v Wilkinson [1927] AC 177, PC, at 183–4. 97 Smith v Land and House Property Corpn (1884) 28 Ch D 7; Brown v Raphael [1958] Ch 636; Esso Petroleum v Mardon [1976] QB 801; Box v Midland Bank [1979] 2 Lloyd’s Rep 391 at 399; Highland Insurance v Continental Insurance [1987] 1 Lloyd’s Rep 109n at 112–3; William Sindall Plc v Cambridgeshire CC [1994] 1 WLR 1016 at 1025, 1029; Credit Lyonnais Bank Nederland v Export Credits Guarantee Department [1996] 1 Lloyd’s Rep 200 at 216; Williams v Natural Life Health Foods Ltd [1996] BCLC 288 (approved without argument on the point [1998] 1 WLR 830, HL); Economides v Commercial Union Ass Co Plc [1998] QB 587 at 598, 608–9; Barings Plc v Coopers & Lybrand [2002] 2 BCLC 410 at [50]–[51]; B G plc v Nelson Group Services (Maintenance) Ltd [2002] EWCA Civ 547; Connolly v Bellway Homes Ltd [2007] EWHC 895; Mabanga v Ophir Energy plc [2012] EWHC 1589 (QB) at [30]; cf Hummingbird Motors Ltd v Hobbs [1986] RTR 276.

90

Representation of fact distinguished 2.22

for this latter proposition are cases of m ­ isrepresentation rather than estoppel, it is not established how the courts will determine the facts which B is estopped from denying by reason of such a statement of opinion or belief: it is submitted, though, that they should be only those facts which A may reasonably infer as being necessary for the formulation of the opinion or belief by one having the knowledge or expertise which A understands B to have. The result may, nonetheless, be that B is, in effect, estopped from denying the correctness of the opinion. 2.21 On the other hand, if the parties are professionals in the relevant area, or advised by professionals, seeking to resolve an issue between them and both having access to the relevant material, an assertion as to their mutual rights and obligations, if it is regarded as a representation at all rather than assertion of a position or argument, is likely to be regarded as a representation of opinion, as in Kyle Bay Ltd v Underwriters of policy 019057/08/01.98

Exaggeration, puffing and negotiating stances 2.22 Mere general vaunting, puffing or commendation of the merits or value of any person or thing, or mere exaggeration, unaccompanied by any particular or definite statement, is not a representation of fact.99 Where, however, the exaggeration or puffing is, say, punctuated by ‘detail, intended to give artistic verisimilitude to an otherwise bald and unconvincing narrative’, or is quantified by figures, it may assume the aspect of a statement of fact. The test is whether a reasonable representee would, in the circumstances, understand the statement as being intended to be taken seriously or not.100 A negotiating stance, if it should have been understood as such in the context, may, therefore, be held not to found an action in misrepresentation,101 nor, by the same logic, an estoppel. On the other hand, in Goff v Gauthier102 a vendor’s misrepresentation of intention to withdraw and offer to a higher bidder, unless the purchaser contracted immediately, founded relief.

98

[2006] EWHC 607 (Comm) at [50]–[54]; followed in Mabanga v Ophir Energy plc [2012] EWHC 1589 (QB) at [29]; and see cases at n 101. 99 Dimmock v Hallett (1866) LR 2 Ch App 21 at 27 (land described as ‘fertile and improvable’); Central Rly Co of Venezuela v Kisch (1867) LR 2 HL 99 at 113; Martin v Douglas (1867) 16 WR 268; West Yorkshire MCC v MFI Furniture Centre [1983] 1 WLR 1175; Chartered Trust v Davies [1997] 2 EGLR 83 at 86. 100 De Beers v International Co Ltd [1975] 1 WLR 972; Shaftsbury House (Developments) Ltd v Lee [2010] EWHC 1484 (Ch) at [35]; see also Freeman v Cooke (1848) 2 Ex Ch 654 at 663; see also Thorner v Major [2009] 1 WLR 776 at [77]. 101 Vernon v Keys (1810) 12 East 632; affd (1812) 4 Taunt 488 at 493; Haygarth v Wearing (1871) LR 12 Eq 320; McPherson v Watt (1877) 3 App Cas 254 at 275–6; Armstrong v Strain (1951) 1 TLR 856 at 860; affirmed [1952] 1 KB 232; and see n 173. 102 (1991) 62 P & CR 388.

91

2.23  Representations of fact; promises; representations of law; representations as to rights

Statements of facts and promises 2.23 It can be difficult to distinguish a representation of fact from a promise. For a fact is only important if it affects the rights and obligations between the parties, and an existing fact, such as a quality or potential, may be expressed in terms of its future demonstration or fulfilment:103 a present fact described by reference to future conduct. So also, there may be, implicit in a promise as to the future, a representation of a fact necessary for the promise to be made honestly.104 For this reason, ordering represents present intention to pay,105 and a warranty may imply a representation that there are reasonable grounds for believing the facts warranted.106 On the other hand, signing an agreement or undertaking, such as a guarantee, is no representation as to its validity,107 as there is no dishonesty in ignorance of its invalidity. 2.24 It is particularly difficult108 to discern a practical distinction between a statement of fact as to the rights109 between the parties and, not only a representation of law, but also a promise as to the future exercise or relaxation of

103 Eg Goodwin v Robarts (1876) 1 App Cas 476 at 490 per Lord Cairns LC, who held that ‘a person who has made a representation on the face of his scrip that it would pass with a good title to anyone on his taking it in good faith and for value’ is estopped as against anyone so taking it from denying its negotiability; Salisbury (Marquess) v Gilmore [1942] 2 KB 38, n 84 above: ‘It is the intention of [the plaintiffs] to demolish the building’ construed as a representation of fact that ‘This house is ripe for re-erection; it is destined to demolition’ (criticised as ‘forced reconciliation’ of a promise into a ‘strait jacket of present descriptive fact’ by Mason, Deane JJ in Legione v Hately (1983) 152 CLR 406 at 449 and by Deane J in Waltons Stores (Interstate) Ltd v Maher, n 61 at 448–51; Mathias v Yetts (1882) 46 LJ 497, CA, at 503. 104 This proposition was cited with approval by Newey J in Prudential Staff Pensions Ltd v The Prudential Assurance Company Ltd [2011] PLR 239, at [200]; see eg Cleverley v Gas Light and Coke Co (1907) 24 TLR 93 at 94: Lord Loreburn LC, whilst denying that an agreement for compensation under the Workmen’s Compensation Act 1897 involved the particular representation alleged, acknowledged that it might involve a representation of another kind, viz as to the fact of an accident having happened within the meaning of the Act; such an implication may not, however, include a representation of fact as to present ability to fulfil the promise; so the covenants in a deed have been said to be incapable of founding, per se, an estoppel by representation of fact: Doe d Chandler v Ford (1835) 3 Ad & El 649 at 652–3, 655; Manchester & Oldham Bank v WT Cook & Co (1884) 49 LT 674 (bank manager’s statement that a loan would be made implied prior approval of directors), and there are authorities that no representation of fact is involved in a mere grant, or in a lease and release, or even in a covenant for title: Heath v Crealock (1874) 10 Ch App 22 at 30; General Finance Mortgage and Discount Co v Liberator Permanent Benefit Building Society (1878) 10 Ch D 15 at 21; but see further 8.88(5) querying this. 105 Re Shackleton (1875) 10 Ch App 446; Re Eastgate [1905] 1 KB 465 at 466–7; DPP v Ray [1974] AC 370 at 382. 106 As in Avrora Fine Arts Investment Ltd v Christie, Manson & Woods Ltd [2012] PNLR 35 at [133]. 107 Fairstate Ltd v General Enterprise & Management Ltd [2010] EWHC 3072 (QB). 108 As recognised in Yorkshire Insurance Co v Craine [1922] 2 AC 541 at 553 per Lord Atkinson, and exemplified in British Airways Board v Taylor [1976] 1 WLR 13. 109 As opposed to a statement of a fact which affects the rights between the parties; an example of a statement of rights is Fairfield Shipbuilding and Engineering Co Ltd v Gardner

92

Representation of fact distinguished 2.25

the parties’ legal rights: for instance, a waiver, in form, has the appearance of dealing with the present rights between the parties,110 and an election is between alternative rights, yet, in substance, both restrict or extinguish the future exercise of those present rights. What, then, if any, is the significant difference between a statement as to the present existence of these rights, and one as to their future exercise, such as to justify the different restrictions on and effect of an estoppel by representation of fact and a promissory estoppel? 2.25 There is a long-standing line of authority that a statement as to the rights between the parties is a statement of fact.111 The difficulty of distinguishing, as a matter of interpretation, such a statement of fact as to the rights between the parties from a promise as to the future exercise or relaxation of the parties’ legal rights is that of distinguishing, in substance as opposed to form, the proposition ‘I have this right but I will not exercise it’ (promise) from the proposition ‘I do not have this right’ (fact).112 The distinction may be yet more blurred between the proposition ‘I am under this obligation’ (fact)113 and the proposition ‘I submit to this obligation’ (promise).114 Although a line may be drawn in principle between facts and promises,115 the potential interpretative difficulty of making this distinction is exemplified by a waiver116 of contractual rights, whether it be, for instance, a waiver of the right to terminate a contract for breach of ­condition,117

Mountain & Co Ltd (1911) 104 LT 288 at 290 per Scrutton J, with reference to an undertaking by the defendants to hold two marine policies to the order of the plaintiff: ‘This undertaking does not seem to me to be a contract, for I see no consideration for it; but I think it is a statement of the Defendants’ position, which they are estopped from contradicting’ (emphasis added); other examples are at 2.31. 110 See eg Menolly Invs 3 SARL v Cerep SARL (2009) 125 Con LR 75, at [147], n 33. 111 See 2.31. 112 In Jorden v Money (1854) 5 HL Cas 185 at 219, Mrs Jorden’s statement that she ‘had abandoned’ a debt was interpreted as a statement of intention never to enforce it; contrast Eden v Smith [1800] 5 Ves 341 and Reeves v Bryner [1801] 6 Ves 516, where representations that a debt had been released founded estoppels. 113 Treated as a representation of fact in cases such as Piggott v Stratton (1859) 1 De G & J 33 (obligation to third party); Ayrey v British Legal and United Provident Assurance Co [1918] 1 KB 136, DC (Statement by words and acts that the company would pay the policy moneys and would treat the policy as subsisting); Spiro v Lintern [1973] 1 WLR 1002; cases at 2.31. 114 In Robertson v Minister of Pensions [1949] 1 KB 227, Denning J held ‘Your disability has been accepted as attributable to military service’ to be an acceptance of liability and therefore promissory rather than factual (and then went on to allow its deployment to make good a claim); see also Birch v Peese and Partners [1941] 1 KB 615; The ‘Winson’ [1981] QB 403 at 429 (reversed on other grounds [1982] AC 939). Compare also the finding of Gaudron J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 463–4 of an estoppel by representation of fact that an agreement had been concluded (but see 8.59), with the finding by the remainder of the High Court of a promissory estoppel. 115 See 2.26. 116 See 14.2. 117 See eg Bentsen v Taylor & Sons Co Ltd (No 2) [1893] 2 QB 274 CA at 283–4; Panoutsos v Raymond Hadley Corp of NY [1917] 2 KB 473 CA; Ayrey v British Legal and United Provident Assurance Co n 113 above; Hartley v Hymans [1920] 3 KB 475 at 495; Charles Rickards Ltd v Oppenheim [1950] 1 KB 616 CA at 623.

93

2.25  Representations of fact; promises; representations of law; representations as to rights

or a waiver of defects in a notice.118 Such waivers, if effective, alter or suspend the rights and obligations between the parties, and even though their effect may be limited to past breaches, they alter the rights and obligations that would otherwise obtain. The waiver may be seen either as a representation as to the fact of the new rights and obligations existing between the parties, or an offer, expression of willingness, or promise to act in accordance with those rights and obligations.119 2.26 The distinction, as a matter of language, is between a statement intended to describe the rights of the parties without itself affecting them (a representation of fact) and a statement that is intended itself to affect those rights (a promise). A representation of fact is therefore true or false, and has that quality at the time it is made, whereas a promise, being an undertaking to do something, is not true or false, but is either fulfilled or not fulfilled. It would, however, be perverse if, because of that very intention to affect rights, the law allowed the former to achieve, but precluded the latter from achieving, the intention of the latter – to affect the rights between the parties – by an estoppel by representation of fact, on the basis that the latter only is subject to the restriction to defensive deployment, and has the suspensory rather than absolute consequences, of a promissory estoppel. 2.27 On this analysis of the distinction between a statement (where the underlying facts are known) as to present rights and obligations between the parties, and a promise, it is difficult to see why, in principle, if a promise cannot be the source of new rights by estoppel,120 a representation as to existing rights or obligations (where all the facts are known) should be a source of such rights by estoppel;121 similarly, if the effect of the former is in the discretion122 of the court, having regard to the reliance thereon, and operating only so far as necessary to avoid detriment, it is difficult to see why, in principle, the latter should not also be. The distinction may be made that a representation of fact is true or false and a promise is not;123 but, if the representation is as to the present fact of A having a right to future performance by B, this distinction does not provide a sound justification for a difference, in the result of A’s detrimental reliance on that representation by B, from A’s detrimental reliance on a promise of future performance by B. In either case the estoppel meets the answer that A must give consideration to bind B as to future performance: the estoppel may not ­unacceptably subvert the rule of law embodied in that doctrine, and that answer

118 See eg 7.30. 119 As by Lord Denning in Charles Rickards Ltd v Oppenheim [1950] 1 KB 616 CA at 623; and Robert Goff J in Amalgamated Investment and Property Co v Texas Commerce International Bank Ltd n 128 below; cf Oliver J in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133 at 151A being prepared to treat most representations of law as proposed conventional bases for a transaction: ie offers to proceed on the relevant basis. 120 See 14.22 onwards, 14.36 onwards. 121 See 1.43 onwards, 8.56 onwards. 122 See n 120. 123 See 2.26.

94

Statements of law and as to rights 2.28

or bar should apply consistently to claims to estoppel based on representations as to rights as well as promises. Estoppel by representation or convention as to a fact are as susceptible to it in principle as promissory estoppel, and a body of authority124 now establishes, by reasoning equally applicable to an estoppel by representation, that an estoppel by convention as to the fact of a right to future performance is subject to the same restrictions against subverting the rules of law governing the existence of a contract as a promissory estoppel.

STATEMENTS OF LAW AND AS TO RIGHTS 2.28 It used to be said that neither a misrepresentation125 nor a mistake126 of law would found relief, whether by way of estoppel127 or otherwise. The rationale was that a statement of law is a statement of opinion on a matter which is taken to be equally within the knowledge of both parties, and upon which each party should be responsible for his own view.128 It was suggested in the fourth edition of this book that the change in the law made by the House of Lords129 to allow recovery of money paid under a mistake of law suggests that an ­estoppel

124 See n 121 above; see further 2.35 onwards; Barnes [2011] LMCLQ 372. 125 Rashdall v Ford (1866) LR 2 Eq 750 at 784; Beattie v Lord Ebury (1872) 7 Ch App 777, at 802; Eaglesfield v Marquis of Londonderry (1876) 4 Ch D 693, CA, at 702–3, 709, 716; Harse v Pearl Life Assurance Co [1904] 1 KB 558, CA; Rainford v James Keith and Blackman Co [1905] 1 Ch 296, at 302; Guy v Waterlow Bros and Layton Ltd (1909) 25 TLR 515, at 516; Cresswell v Jeffreys (1912) 28 TLR 413 (reversed on another point: (1912) 29 TLR 90); Solle v Butcher [1950] 1 KB 671, at 703, 705 per Jenkins LJ dissenting. 126 Bilbie v Lumley (1802) 2 East 469; Sharp Bros v Chant [1917] 1 KB 771; National PariMutuel Assn v R (1930) 47 TLR 110; Beesly v Hallwood Estates Ltd [1960] 1 WLR 549; Avon CC v Howlett [1983] 1 WLR 605 at 620; Woolwich Equitable Building Society v IRC (No 2) [1993] AC 70 at 154, 164. 127 Re a Bankruptcy Notice [1924] 2 Ch 76; London County Territorial and Auxiliary Forces Association v Nichols [1949] 1 KB 35 at 50; Kai Nam v Ma Kam Chan [1956] AC 358, PC; Lyle-Meller v A Lewis & Co (Westminster) Ltd [1956] 1 WLR 29; Soole v Royal Insurance Co [1971] 2 Lloyd’s Rep 332 at 340, col 1. 128 Beattie v Lord Ebury (1872) 7 Ch App 777 at 803: ‘It was as much the business of the Plaintiff as of the directors to know what the law was,’ per Sir G Mellish LJ commenting on Rashdall v Ford; Earl Beauchamp v Winn (1873) LR 6 HL 223 at 250; West London Commercial Bank v Kitson (1884) 13 QBD 360, at 362, CA: ‘Where there is a representation made as to a mere matter of law, it is, in nineteen cases out of twenty, made by a person who does not know the law better than the person to whom it is made, and at whose risk it is taken and acted on’ per Bowen LJ; Harse v Pearl Life Assurance Co [1904] 1 KB 558, CA; The ‘Amazonia’ [1990] 1 Lloyd’s Rep 236 at 245–6, 250, CA; see also Prophet v Roberts (1919) 88 LJKB 975, CA. Cf Oliver J, being prepared in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133 at 151A to treat most representations of law as proposed conventional bases for a transaction; Foran v Wight (1989) 168 CLR 385 at 435: ‘the distinction between a representation of fact and a representation of law is, in the context of the principles constituting the doctrine of estoppel by conduct, essentially illusory unless one subscribes – and I do not – to the view that the law has no factual existence at all’ per Deane J; cf cases at 5.10 n 39, 5.27, 7.25, 8.25. 129 Kleinwort Benson Ltd v Lincoln CC [1999] 2 AC 349; cf the abolition of the rule in Australia: David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at 370–376; and proposals for reform in Law Com No 227 (1994).

95

2.28  Representations of fact; promises; representations of law; representations as to rights

by representation of law may now be raised,130 and this view was upheld by Newey J in Briggs v Gleeds.131 Both in order to demonstrate the progress that this development represents from the difficulties created by the previous distinction between law and fact in liminal cases, and because it has not yet been determined whether the principles governing the result of an estoppel by representation of law differ from those governing the result of an estoppel by representation of fact, it nonetheless remains relevant to explain, as we now do, how the distinction between representations of law and fact has been addressed by the authorities in different contexts.

Statements of law and fact 2.29 Even under the old rule, a representation of law mixed with fact which was not within the knowledge of the representee was regarded as a representation of fact, which would found an estoppel: in Eaglesfield v Marquis of Londonderry,132 Jessel MR drew a distinction between a statement of matters of both fact and law in one proposition (such as ‘she is a single woman’) and a statement of the relevant facts followed by a discrete statement as to the applicable law or its consequence. In the former case, it was held, B may be estopped from denying his proposition as a whole, whilst, in the latter, he may be estopped only from denying the facts, and not the law.

Warranty of authority 2.30 An agent’s representation as to his authority to act is ordinarily regarded as a statement of fact, and directors and a company secretary who accepted a bill were held to have made a representation of fact as to their authority to do so, even where their actual authority was defined by a Private Act of Parliament;133 so also directors who borrowed without obtaining the consent required for borrowing by the Act incorporating their company were held to have

130 It had been so held in Azov Shipping Co v Baltic Shipping Co [1999] 2 Lloyd’s Rep 159 at 173–6; see also Brikom Investments Ltd v Seaford [1981] 1 WLR 863 CA at 868G–869D, and this was supported by the authorities at 2.31 and the argument at 2.35 onwards; so also, an estoppel by convention may be founded on an assumed state of law: The ‘Indian Endurance’ [1998] AC 878 at 913D–F; and it had been held that a claim might be founded on a pre-contractual misrepresentation of law in Pankhania v Hackney LBC [2002] NPC 123. 131 [2015] Ch 212 at [26]–[35], followed by Burton J in NRAM plc v McAdam [2014] EWHC 4174 (Comm) at [20(i)] and [30] and accepted on appeal as common ground [2015] EWCA Civ 751 at [43] citing as authority The ‘Vistafjord’ [1988] 2 Ll R 343. In Mears Ltd v Shoreline Housing Partnership Ltd [2015] EWHC 1396 (TCC) at [51], Akenhead J reached the same conclusion independently without citation of either authority, as did Popplewell J in Emirates Trading Agency Llc v Sociedade De Fomento Industrial Private Ltd [2015] EWHC 1452 (Comm) at [51]. 132 (1876) 4 Ch D 693 at 702–3 (reversed on other grounds). 133 West London and Commercial Bank v Kitson (1884) 13 QBD 360, CA.

96

Statements of law and as to rights 2.31

made an implied representation of fact that they had obtained such consent, rather than one of law that it was not required.134 A statement that premises were legally suitable for use as offices because planning permission had been granted,135 and a statement that the Jamieson raid was legal because its projectors held a licence from Her Majesty136 were also both held to found liability as representations of fact. By contrast, however, an implied representation by directors that a company (incorporated by a Private Act of Parliament) could bind itself by a Lloyd’s bond was held to be a representation of law,137 even though the validity of a Lloyd’s bond might be characterised as a matter of private right.138

Private rights 2.31 A statement or mistake as to private rights has long been said not to be a statement or mistake of law.139 This may be supported in terms of Jessel MR’s distinction,140 if interpreted as applying only to cases where the facts creating or otherwise affecting the relevant rights are private from – in the sense of not known to – the representee.141 However, statements and mistakes as to ‘private rights’ have repeatedly been held to be, or treated as, statements and mistakes of fact, even where the rights are the rights between the parties and the relevant facts are known to both parties,142 or the representation is as to the meaning or effect

134 Cherry v Colonial Bank of Australasia (1869) LR 3 PC 24; cf Janred Properties Ltd v Ente Nazionale Italiano per il Turismo [1989] 2 All ER 444, CA. 135 Laurence v Lexcourt Holdings Ltd [1978] 1 WLR 1128. 136 Burrows v Rhodes [1899] 1 QB 816. 137 Rashdall v Ford (1866) LR 2 Eq 750. 138 As to which, see 2.31. 139 Cooper v Phibbs (1877) LR 2 HL 149 at 170, where Lord Westbury said of the maxim ignorantia iuris haud excusat that ‘… The word “ius” is used in the sense of denoting general law, the ordinary law of the country. But when the word “ius” is used in the sense of denoting a private right, that maxim has no application. A private right of ownership is a matter of fact; it may be the result also of a matter of law; but if parties contract under a mutual mistake and misapprehension as to their relative and respective rights, the result is that the agreement is liable to be set aside as having proceeded upon a common mistake’. See also Norwich Union Fire Insurance Society Ltd v Price [1934] AC 455, PC at 654 and cases at nn 141–143. Cf Neuberger J in PW & Co v Milton Gate Invs Ltd at n 145. 140 See 2.29. 141 Such as the contents of a document in Wauton v Coppard [1899] 1 Ch 92; or the failure to complete the relevant transfer in Farrow v Orttewell [1933] Ch 480, CA and Rodenhurst Estates Ltd v WH Barnes Ltd [1936] 2 All ER 3, CA; but contrast The ‘Winson’ [1981] QB 403 at 429 (reversed on other grounds [1982] AC 939), where a statement that B was liable to A was held to be a representation of law. 142 MacKenzie v Royal Bank of Canada [1934] AC 468, PC; in Algar v Middlesex CC [1945] 2 All ER 243, a representation by an employer to an employee that, on a change of employment, his superannuation rights would be protected, was held to be a statement of fact which would support an estoppel (a result regarded by Wade and Forsyth, Administrative Law (11th edn) at 196, n 194, as possibly better explained as a consequence of the irrevocability of the decision; cf Robertson v Minister of Pensions [1949] 1 KB 227, where Denning J held ‘Your disability has been accepted as attributable to military service’ to be an acceptance of

97

2.31  Representations of fact; promises; representations of law; representations as to rights

of documents whose contents are known to both.143 Indeed, in Amalgamated Investment and Property Co v Texas Commerce International Bank,144 Robert Goff J recognised that estoppels as to rights under a transaction (including the estoppel which he and, subsequently, the Court of Appeal upheld in that case) in substance give effect to promises that would not otherwise bind. If a statement as to the rights and obligations between the parties is a statement of fact, then the only distinction being made must be between a statement as to the legal rights and obligations between the parties (which may found an estoppel by representation of fact) and a statement as to the law defining the rights and obligations between the parties (which was previously held not to found an estoppel by

liability and therefore promissory rather than factual, but allowed its deployment to make good a claim); Poulton v Moore [1915] 1 KB 400 at 413, 415 as interpreted in PW & Co v Milton Gate Investments Ltd [2004] Ch 142 at [154]; Yorkshire Insurance v Craine [1922] 2 AC 541 at 546–7; Solle v Butcher [1950] 1 KB 671 at 685, 695, per Bucknill, Denning LJJ; Lyle-Meller v A Lewis & Co (Westminster) Ltd [1956] 1 WLR 29, CA, where the defendant was estopped, by payment of royalties over previous two years, from denying that the lighters which it manufactured under contract to pay royalties to, on an exclusive licence from, the plaintiff, embodied the plaintiff’s invention; H Clark (Doncaster) Ltd v Wilkinson [1965] Ch 694, CA, at 702, 704; Grist v Bailey [1967] Ch 532; Spiro v Lintern [1973] 1 WLR 1002 at 1010F, 1012E–F; Andre & Cie SA v Ets Michel Blanc & Fils [1979] 2 Lloyd’s Rep 427 at 431, col 1, 432 col 2 per Lord Denning MR, Lawton LJ; Ismail v Polish Ocean Lines [1976] QB 893 CA; Brikom Inv v Seaford [1981] 1 WLR 863 CA; Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133n at 158A–B; The ‘Amazonia’ [1990] 1 Lloyd’s Rep 236 at 250, col 2 per Dillon LJ (foreign law); Eslea Holdings Ltd v Butts (1986) 6 NSWLR 175 at 188 per Samuels JA. Cf Dextra Bank and Trust Co Ltd v Bank of Jamaica [2002] 1 All ER (Comm) 193, PC, where the mistaken belief as to the parties’ rights was not caused by a representation by the defendant, but by the claimant’s own agent acting against his instructions, and so the operative mistake was a ‘misprediction’ as to how the agent would act rather than a mistake of fact, although a mistake as to rights (and therefore, on the above authorities, fact) was the result. 143 Piggott v Stratton (1859) 1 De GF&J 33; Earl Beauchamp v Winn (1873) LR 6 HL 223; Hirschfeld v London Brighton and South Coast Rly Co (1876) 2 QBD 1; Sarat Chunder Dey v Gopal Chunder Lala (1892) 19 LR Ind App 203, PC; Calgary Milling Co Ltd v American Surety Co of New York [1919] 3 WWR 98, PC; De Tchihatchef v The Salerni Coupling Ltd [1932] 1 Ch 330, cited with approval in Sidney Bolsom Investment Trust Ltd v E Karmios & Co (London) Ltd [1956] 1 QB 529 at 540; Algar v Middlesex CC [1945] 2 All ER 243; Lyle-Meller v A Lewis & Co (Westminster) Ltd n 141; Covell v Sweetland [1968] 1 WLR 1466; The ‘Karen Oltmann’ [1976] 2 Ll R 708; Trane (UK) Ltd v Provident Mutual Life Association [1995] EGLR 33, at 38–9; Dun and Bradstreet Software Services (England) Ltd v Provident Mutual Life Association [1998] 2 EGLR 175 at 179D; see also Horry v Tate and Lyle Refineries Ltd [1982] 2 Lloyd’s Rep 417; European Asian Bank AG v Punjab & Sind Bank [1983] 1 WLR 642 at 660–1; Cornish v Midland Bank plc [1985] 3 All ER 513; TCB Ltd v Gray [1986] Ch 621; Waltham Forest LBC v Oakmesh Ltd [2010] JPL 249 at [45]–[48]; but contrast Rogers v Ingham [1876] 3 Ch D 351; Re Arbn between Hooley Hill and Chemical Rubber Co and Royal Insurance Co [1920] 1 KB 257 at 262–4; Ord v Ord [1923] 2 KB 432; Re A Bankruptcy Notice [1924] 2 Ch 76, at 96; Soole v Royal Insurance Co Ltd [1971] 2 Lloyd’s Rep 332 at 340. 144 [1982] QB 85 at 106G: ‘The third group concerns cases where one party has represented to the other that a transaction between them has an effect which in law it does not have. In such a case, it may, in the circumstances, be unconscionable for the representor to go back on his representation, despite the fact that the effect is to reduce his rights or to enlarge his obligations and so give effect to what is in fact a gratuitous promise’.

98

Statements of law and as to rights 2.32

representation of fact). It is as difficult to justify such a distinction in principle as to apply it in practice, for instance, where the representation is made by conduct; and in PW & Co v Milton Gate Investments Ltd,145 Neuberger J recognised ‘that some misapprehensions can be characterised, according to one’s viewpoint, either as mistakes as to general law or as to mistakes as to interpretation of private rights’.

Rent Acts 2.32 This problem was also reflected in the difficulty of reconciling the authorities as to whether the applicability of the Rent Acts to a set of facts known146 to both parties147 is a question of law or fact. Payment of an increased rent in ignorance of a Rent Restriction Act making such increase irrecoverable has been held to be a mistake of law,148 and a statement that the Rent Acts applied to a house in the occupation of the Crown has also been held to be a misrepresentation of law.149 Indeed, the Privy Council has held that, if a landlord’s notice increasing rent pursuant to a Rent Restriction Ordinance amounted to a representation that the Ordinance applied, it was a representation of law.150 Yet the Privy Council has also held, inconsistently, that a tenant’s statement that he would remain in occupation as a statutory tenant, and payment of increased rent, under such an Ordinance, estopped him from denying that status, as a representation of fact.151 Further, a mistake as to whether a flat’s identity had been so changed by work done to it that it was a new flat for the purpose of the Rent Acts, the tenancy of which did not, therefore, attract their protection, has been held by a majority in the Court of Appeal to be a mistake of fact.152 The difficulty of reconciling these cases and making a clear distinction is such that, in Brikom Investments Ltd v Seaford,153 the Court of Appeal, holding a landlord estopped by acceptance of a higher rent determined by a Rent Assessment Officer on the express (but incorrect, as contrary to statute) footing that the landlord was liable for repairs, from denying that liability, simply declined to apply London County Territorial and Auxiliary Forces Association v Nichols154 and Kai Nam v Ma Kam Chan155 so as to distinguish between representations of fact and law.

145 [2004] Ch 142 at [174], reinforcing the view that a convention as to law might found an estoppel by convention, as the House of Lords had held in The ‘Indian Endurance’ [1998] AC 878. 146 Cf Farrow v Orttewell [1933] Ch 480. 147 See further 7.29 on a different aspect: a tenant will not be bound in contract (Johnson v Moreton [1980] AC 37) or by estoppel (Welch v Nagy [1950] 1 KB 455; Keen v Holland [1984] 1 WLR 251 at 261–2) by an agreement to oust the protection of the Act. 148 Sharp Bros v Chant [1917] 1 KB 771. 149 London County Territorial and Auxiliary Forces Association v Nichols [1949] 1 KB 35 at 50. 150 Kai Nam v Ma Kam Chan [1956] AC 358. 151 Harnam Singh v Jamal Pirbhai [1951] AC 688. 152 Solle v Butcher [1950] 1 KB 671 at 685, 695 per Bucknill, Denning LJJ; cf 703, 705 per Jenkins LJ. 153 [1981] 1 WLR 863 at 868G–869D. 154 See n 149. 155 See n 150.

99

2.33  Representations of fact; promises; representations of law; representations as to rights

Insurance 2.33 A line of authorities holds that an insured under a policy void for illegality is unable to recover premiums paid,156 notwithstanding that the insurance agent represented to him that the policy was valid. The misrepresentation was held to be a statement of opinion as to the law, or the parties’ common mistake as to the law, precluding recovery unless the representation was fraudulent157 or the agent purported to have special knowledge and expertise158 which, ordinarily, they are not taken to have.159 However, such a representation as to the validity of a policy or liability to compensate has also been held to found relief160 without fraud, and seems as eligible to be characterised as a representation of private rights between the parties as the examples mentioned above.161 It is submitted that the legal nature of the representation in itself will not now preclude recovery, and whether the illegality162 of the contract precludes restitution of such premiums as money paid under an ineffective transaction will depend on whether the court regards the parties as being in pari delicto, each responsible for its own understanding of the law, or the insurer as responsible for misleading the claimant into paying the premiums by the agent’s representation.

Foreign law 2.34 A representation of foreign law is a representation of fact,163 even where the representation is as to the law of the representee’s country of residence.164 This does not accord with the rationale165 for the previous distinction

156 Harse v Pearl Life Assurance Co [1904] 1 KB 558, CA; Phillips v Royal London Mutual Insurance Co (1911) 105 LT 136, DC; Tofts v Pearl Life Assurance Co [1915] 1 KB 189, CA; Re an Arbn between Hooley Hill and Chemical Rubber Co and Royal Insurance Co [1920] 1 KB 257 at 262–4. 157 Harse v Pearl Life Assurance Co n 156 at 563, 566; Phillips v Royal London Mutual Insurance Co n 156; Tofts v Pearl Life Assurance Co n 156 at 193, 194; Hughes v Liverpool Victoria Legal Friendly Society [1916] 2 KB 482, CA; cf Howarth v Pioneer Life Assurance Co Ltd (1912) 107 LT 155, DC, where the insured failed to prove that she was not a party to the fraud. 158 British Workman’s and General Assurance Co v Cunliffe (1902) 18 TLR 425, DC, 502, CA. 159 Evanson v Crooks (1912) 106 LT 264 at 268. 160 Wright v John Bagnall [1900] 2 QB 240 (representation as to liability to compensate founded an estoppel); Hughes v Liverpool Victoria Legal Friendly Society (n 156), at 488, 494 (representation as to validity of insurance policy was a representation of fact and law); Ayrey v British Legal and United Provident Assurance Co [1918] 1 KB 136, DC: waiver of defect in the form of the insured’s disclosure by representation that the insurance policy remained valid. 161 See 2.31. 162 Goff & Jones, Law of Unjust Enrichment (9th edn) Ch 35; contrast Evanson v Crooks n 159. 163 Andre & Cie SA v Ets Michelle Blanc & Fils [1979] 2 Ll R 427, CA, at 431, 432; The ‘Amazonia’ [1990] 1 Ll R 236, CA. 164 The ‘Amazonia’ n 163 at 246, 247–8. 165 See 2.28.

100

Statements of law and as to rights 2.36

between representations of fact and law,166 under which statements as to the law governing the relations between the parties were regarded as unreliable statements of opinion on a matter on which each party is responsible for its own view, and therefore provides further justification for the departure from that position in Briggs v Gleeds.167

Statements of law and as to rights: conclusion 2.35 Since a representation as to private legal rights and obligations between the parties has been held capable of founding an estoppel, it was hard both to justify and to apply a rule that no representation of law could found one. In Briggs v Gleeds,168 it has now been accepted at first instance that a representation of law may found an estoppel, subject to the rule that the courts will not allow an estoppel to subvert the policy of a statute or rule of law.169 The legal subject matter of the statement may nonetheless weigh against an estoppel,170 both on whether the statement was made as a matter of opinion171 or fact, and on the issues of inducement and reliance:172 on the grounds that it should have been understood to have been an opinion, argument or stance on which A was intended to keep his own counsel or seek his own advice,173 as opposed to a statement of the basis for the parties’ relations on which A might reasonably rely.174 2.36 Further, as submitted above,175 a statement (as to private rights) that B is under an obligation to A, or that A is not under an obligation to B, on which

166 Per Dillon LJ at 250, col 2. 167 See n 168. 168 See n 37; and, in Australia, Foran v Wight (1989) 168 CLR 385 at 435; Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 413. 169 See Briggs v Gleeds at [36]–[44]; Ch 7. 170 As both Newey J and the last edition recognise: see Briggs v Gleeds at [31], quoting ‘Bowen LJ’s observation in West London Commercial Bank Ltd v Kitson (1883) 13 QBD 360 (at 362) that “[w]here there is a representation made as to a mere matter of law, it is, in nineteen cases out of twenty, made by a person who does not know the law better than the person to whom it is made and at whose risk it is taken and acted upon’’ ’. 171 Even if not automatically so construed, a statement of law is more likely than one of fact to be construed as advanced as a matter of opinion, or as an argument that will be deployed if the relevant issue is taken to law; as in Sidney Bolsom Investment Trust Ltd v E Karmios & Co (London) Ltd [1956] 1 QB 529; Smith v Draper [1990] 2 EGLR 69. 172 See 5.19 onwards. 173 As, again, Newey J recognised in Briggs v Gleeds at [31]: ‘Similar issues could also arise in relation to representations made by someone else’s lawyer: potentially, the circumstances could, for instance, be such that it would not be reasonable for a representee to act on the strength of a statement as to the law made by a solicitor acting for an opposing party’; and as in Kyle Bay Ltd v Underwriters of policy 019057/08/01 [2006] Lloyd’s Rep IR 460 at [50]–[54]. 174 In Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133, Oliver J said at 151A that, in a sense, most representations of law could be treated as proposed conventional bases for a transaction. 175 See 2.23–2.27.

101

2.36  Representations of fact; promises; representations of law; representations as to rights

reliance is intended, where the facts are known to both, should be treated in the same way as a promise that B will discharge the liability, or will not enforce the obligation.176 On that analysis, if representations of law will found estoppels, their treatment should not be allowed to circumvent the restrictions on deployment and effect of promissory estoppels that preserve the doctrine of consideration. In Amalgamated Inv and Pty Co v Texas Commerce International Bank Ltd,177 Robert Goff J recognised at first instance that an estoppel based on an incorrect statement as to the rights under a contract between the parties is, in substance, indistinguishable from a promissory estoppel.178 2.37 Estoppels based on statements purely as to mutual rights and obligations of the parties,179 including those in the form of statements of law, should not therefore be regarded as falling on the factual side of a doctrinal divide between estoppel by representation of fact and promissory estoppel, so as to give them absolute and unqualified effect to create rights according to their terms. Rather, such estoppels are, as much as promissory estoppels, subject to the defence of illegality180 that they will not be allowed to subvert the public policy embodied in a rule of law. In this case the doctrine of consideration has been held to prevent promissory estoppels being deployed offensively and having an effect beyond suspension of rights only so far as necessary to do justice between the parties. For the same reason, estoppels as to law or rights should be subject to the same limitations. Whether a representation or convention as to rights181 is precluded from making good a cause of action by estoppel, because it would subvert the doctrine of consideration, is in substance a matter of policy: the judgment of Robert Goff J in Amalgamated Investment and Property Co v Texas Commerce International Bank Ltd182 sets out categories of case in which it is not regarded as so doing. 2.38 On the above analysis, both the theoretical difficulty of justifying a doctrinal distinction between the consequences of representations as to the existence of rights (where A knows the underlying facts), on the one hand, and offers or promises to act in accordance with those rights, on the other, and the practical difficulty that may arise in discerning whether a representation, particularly by conduct, is a representation describing the fact that A has a particular right against B, or is a promise conferring that right, also provide grounds for closing that doctrinal divide.183 It is submitted that this should be done by recognition

176 See ‘The Winson’ [1981] QB 403 at 429; 2.25; but cf Azov Shipping Co v Baltic Shipping Co [1999] 2 Lloyd’s Rep 159 at 173–6. See also Menolly Invs 3 SARL v Cerep SARL (2009) 125 Con LR 75 at [147], n 33. 177 [1982] QB 84. 178 And yet allowed (see n 144) that it would, in effect, found a cause of action; Lord Goff remained of the same view in Johnson v Gore Wood & Co [2002] 2 AC 1 at 38H–41C. 179 See 2.29 as to statements of mixed fact and law. 180 See 1.47 onwards, 2.23 onwards, 7.5, 8.56 onwards. 181 Including, therefore, the reliability of a gratuitous promise. 182 [1982] QB 84 at 105C–106A; n 180. 183 See 1.111; 8.54 onwards; 14.36 onwards.

102

Statements of law and as to rights 2.39

that, despite their different origins, both promissory estoppel and estoppel by representation of fact or law are species of reliance-based estoppel under which relief is given for detrimental reliance on a representation as to a matter affecting the rights between the parties, which representation may be legal or factual, or as to past, present or future. 2.39 The nature of the representation will, however, affect the relief which is given,184 and all such estoppels are subject to the defence of illegality,185 viz that none are allowed to subvert the public policy embodied in a rule of law. Thus a representation as to the law, rights between the parties, or the future will not found a cause of action in such a way as to subvert the doctrine of consideration.186 In Johnson v Gore Wood & Co,187 Lord Goff both retained the views he expressed in Amalgamated Investment and Property Co v Texas Commerce International Bank Ltd188 and, while being ‘inclined to think that the many circumstances capable of giving rise to an estoppel cannot be accommodated within a single formula, and that it is unconscionability which provides the link between them’, nonetheless regarded promissory estoppel as one form of, rather than a distinct doctrine from, the doctrine of estoppel by representation, describing the claim as ‘appropriate subject matter for an estoppel by representation, whether in the form of promissory estoppel or of acquiescence’.

184 See 2.4–2.7. 185 See Ch 7. 186 See n 180. 187 [2002] 2 AC 1 at 38H–41C. 188 [1982] QB 84 at 105–7.

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104

CH A P T E R 3

Responsibility

Introduction  3.1 Representations  3.2 Breach of duty to speak  3.11 Estoppel by negligence  3.27

INTRODUCTION 3.1 There are four ways in which B1 may become responsible to A for his faith in a proposition so as to estop B from denying it if A detrimentally relies on it. First, B may make a representation of the proposition to A. This can be done by any of the means available for the communication of thought. Any physical symbol which, being used by B, reproduces an idea in the mind of A is a representation. A representation may be expressed in language; it may be implied by conduct; or, under certain conditions, it may be inferred by A from B’s silence or inaction (that is, passive conduct), where this amounts to a communication by B to A. Secondly, and far more rarely, responsibility may lie in B’s duty to correct A’s mistaken belief in the proposition, under similar conditions as would constitute the silence a representation by B to A if A was aware of B, but where A is unaware of B’s position or his existence, so that the silence does not amount to a communication received by A from B.2 Thirdly, under the doctrine that has been called ‘estoppel by negligence’, B may, again rarely, be responsible for and estopped by a representation made by C, a third party, if, by a breach of a duty of care owed by B to A, he enabled C to make the representation and allowed A to rely on it. The fourth means is by a convention between A and B. In this chapter we deal with the first three of these circumstances and their sub-categories in the above order, leaving consideration of estoppel by convention to Chapter 8.

1 As throughout, denoting the party to be estopped, and ‘A’ the estoppel raiser. 2 See 1.88–1.93.

105

3.2  Responsibility

REPRESENTATIONS Representations in language 3.2 Representations in language may be spoken, written, or by gesture; they may be conveyed to the eye or ear, or through touch: their conveyance may be by any system of signs that serves for the transmission of thought. The signs may be recorded with greater or lesser permanence: in stone or sand, on a computer drive or screen. If they are written, the writing may consist of words or figures, or it may be a plan, map, diagram, drawing, flag or picture.3 Similarly, it is not only the spoken word which conveys a statement. ‘A nod or a wink, or a shake of the head, or a smile’ may equally well serve the purpose.4 Gestures and demeanour have, in some circumstances, been held to be as effectual as language to convey thought for the purpose of either defaming or deceiving; and there is no reason why they should not equally operate as representations for the purpose of estoppel, and, if symbolic, be characterised as being by a form of language. If the gestures or demeanour are not symbolic (not conveying meaning by a code), they may yet convey a representation, but by conduct rather than language. 3.3 It makes no difference whether the language relied upon as creating the estoppel is (as in the case of most representations) unilateral – that is to say, the language of only one of the parties – or bilateral, as may be in the case of recitals or other statements contained in, or implied from, agreements, where the language may be addressed by each of the parties to the other.5

Representation by conduct 3.4 The second class of representations comprises those which are implied by the acts or conduct of the representor. Since at least 1837, ‘words’ and ‘conduct’ have been continually asserted in judicial expositions as two separate forms in which, with equal effect as an estoppel, a representation may be made.6

3 Eg Carpenter v Buller (1841) M & W 209 (map or plan); Dionissis v R (1865) 3 Moo PCCNS 181 (flag); Espley v Wilkes (1872) LR 7 Exch 298 (plan); Dabbs v Seaman (1925) 36 CLR 538 (plan). 4 Walters v Morgan (1861) 3 De GF & J 718 at 724, per Lord Campbell LC. 5 See Ch 8. 6 Eg Pickard v Sears (1837) 6 Ad & El 469 at 474: ‘where one by his words or conduct wilfully causes …’ per Lord Denman CJ; Heald v Kenworthy (1855) 10 Exch 739 at 746: ‘if any ­representation to that effect has been made by the seller, either by words or conduct’ per Parke B; Cairncross v Lorimer (1860) 3 Macq 827 at 829: ‘if a man either by words or conduct …’ per Lord Campbell LC; De Bussche v Alt (1878) 8 Ch D 286 at 314: ‘the law of estoppel by words or conduct’ per Thesiger LJ; Bell v Marsh [1903] 1 Ch 528 at 541: ‘The representation was made not merely by language used, but by conduct’ per Collins MR; Thorner v Major [2009] 1 WLR 776 at [17]: ‘the representations are repeated or confirmed by conduct and remarks …’ per Lord Scott of Foscote.

106

Representations 3.6

Proving representation by conduct 3.5 The onus is on A of establishing the precise acts and conduct alleged, and, further, of showing that the acts and conduct so proved were of such an unequivocal nature as to involve the particular representation relied upon as the foundation of the estoppel.7 For conduct to amount to a representation of fact, promise or waiver, it must suggest the fact, promise or waiver to A and be reasonably so understood by A. For A’s understanding to be reasonable, the conduct must be unequivocal: that is, it must be consistent only (taking it at face value and leaving aside any alternative hypothesis unless it should have occurred to A as a reasonable possibility) with the fact, promise or waiver represented and must, further, be conduct in which a reasonable man would not (again, taking it at face value) expect the representor to engage were the fact not so, or the promise not given or waiver not made.8 The representation must, in short, be implicit in the conduct, just as a representation may be implicitly, rather than expressly, made in a representation by language.9 The ‘Indian Endurance’10 is an example of a case turning on the careful construction of the precise representation that was made by the relevant words and conduct. 3.6 It is a question of fact, where there is evidence both ways, whether the particular conduct alleged took place or not. It is a question of law, however, whether proved or admitted conduct does or does not amount to an unequivocal and conclusive representation of the precise character alleged.11 Two types of conduct are mentioned here, and other examples of representation by conduct will be considered in the context of the particular classes of case covered in Part 2 of this work.12 7 See 4.5–4.44. 8 See 8.19–8.21; 14.14; see also eg Scarf v Jardine (1882) 7 App Cas 345 at 361 per Lord Blackburn: an ‘unequivocal act’ is one ‘which would be justifiable if he had elected one way and not justifiable if he had elected the other way.’; Taylor v Lancashire CC (2001) 82 P & CR DG5 per Dyson LJ: ‘… The conduct must be such as to leave the one of the parties to suppose that the strict legal rights arising under the contract will not be enforced or will be kept in suspension or abeyance. It is clear that the principle does not apply if the conduct is merely such as to lead one party to suppose that the other party’s strict rights may not be enforced or may be suspended.’; thus, in Keelwalk Properties Ltd v Waller [2002] 3 EGLR 79, CA a landlord’s past practice of renewing leases at a ground rent did not amount to a promise as to the future; and in Northstar Land Ltd v Brooks [2006] 2 EGLR 67 the vendors’ solicitor’s statement on the day fixed for completion that he would take instructions on the purchaser’s suggestion of a postponement followed by his failure to respond on that day did not amount to a representation that postponement was agreed; contrast AC Yule & Son Ltd v Speedwell Roofing & Cladding Ltd [2007] BLR 499 where a party’s failure to respond to the request of an adjudicator under a statutory Scheme for Construction Contracts to agree an extension of time to provide his decision was a breach of duty giving rise to an estoppel; cf, as to waiver by conduct, Bremer Handelsgesellschaft mbH v Westzucker GmbH [1981] 1 Lloyd’s Rep 207 at 213, col 2. 9 As to which see Equitable Life Ass Soc v Hyman [2002] 1 AC 408 at 458G–459D. 10 [1998] AC 878 at 914E–915F per Lord Steyn. 11 Eg Rendall v Hill’s Dry Docks and Engineering Co [1900] 2 QB 245 at 248, 249; Wright v John Bagnall & Sons Ltd [1900] 2 QB 240 at 243–244; Little v Maclellan Ltd 1900 2 F 387; see also Woodhouse Ltd v Nigerian Produce Ltd [1972] AC 741. 12 Further examples of representation by conduct are to be found in Spencer Bower and Handley, Actionable Misrepresentation (5th edn) [3-05] to [3-18].

107

3.7  Responsibility

Payment 3.7 Prior to the recognition of the independent defence of change of ­position13 to a claim to recover money paid under a mistake, such a defence could be raised only as an estoppel, of which it was said that ‘in cases where the Plaintiff has paid money directly to the Defendant, it has been argued (though with difficulty) that the Plaintiff has represented to the Defendant that he is entitled to the money’.14 The act of payment does not necessarily of itself constitute a representation that the amount paid is due.15 The payment will carry such a representation only where the relationship between the parties is such that the payer is responsible to the payee for the correctness of the payment, or where the payment, in its context, amounts to an assumption of such responsibility.16

Concealment 3.8 Deliberate concealment of a defect or other matter amounts to a representation that it does not exist: ‘aliud est celare; aliud, tacere’.17 The representation might be regarded as by conduct rather than silence on the basis that there is no representation unless the representee is deceived by the act of concealment.18 It would follow that the representation is made by the communication effected by the act of concealment, rather than by breach of a duty to correct that impression. Contrary to that proposition, however, it may be argued that fraudulent concealment, regardless of whether it is causatively effective to deceive, also gives rise to a duty to correct

13 14 15 16

17

18

Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548. Lipkin Gorman v Karpnale Ltd n 13 above per Lord Goff at 579C. R.E. Jones Ltd v Waring and Gillow Ltd [1926] AC 670; Transvaal and Delagoa Bay Investment Co v Atkinson [1944] 1 All ER 579 at 585A; Philip Collins Ltd v Davis [2000] 3 All ER 808; cf Actionstrength Ltd v International Glass Eng SpA [2003] 2 WLR 1060 at [53]. See eg Skyring v Greenwood and Cox (1825) 4 B & C 281; Shaw v Picton (1825) 4 B & C 715 at 724; Cave v Mills (1862) 7 H & N 913 at 927; Moss v London and North Western Rly Co (1873) 22 WLR 532; R v Blenkinsop [1892] 1 QB 43 at 46, 7; Deutsche Bank (London Agency) v Beriro (1895) 73 LT 669; Holt v Markham [1923] 1 KB 504; Lloyds Bank v Brooks (1950) 6 Legal Decisions affecting Bankers 161; Avon CC v Howlett [1983] 1 WLR 605; the test has been strictly stated as a breach of duty by the payer to the payee in Weld-Blundell v Synott [1940] 2 KB 107, obiter per Asquith J at 114–115; and in R.E. Jones Ltd v Waring and Gillow Ltd n 15 above per Lord Sumner; cf Derby v Scottish Equitable plc [2001] 3 All ER 818; Moncure v Cahusac [2006] UKPC 54 at [35], where acceptance and retention of rent for nearly four years constituted a representation by the landlord that the lease had been validly renewed at the start of that period. ‘It is one thing to conceal; another to be silent’; Carter v Boehm (1766) 3 Burr 1905 at 1909–11 per Lord Mansfield; Baglehole v Walters (1811) 3 Camp 154; Schneider v Heath (1813) 3 Camp 506 (nailing down planks and closing seams of a rotten ship); Horsfall v Thomas (1862) 1 H & C 90 (plugging a hole in a gun with soft metal); Whyfe v Cullen (1993) Times, 15 January, CA (liability under lease concealed by obscure drafting); The ‘Stolt Loyalty’ [1993] 2 Lloyd’s Rep 281 at 289 (letter drafted so as not to alert recipient to its mistake); ­Gordon v Selico (1996) Times, 26 February, CA (dry rot in flat concealed); Commission for the New Towns v Cooper (GB) Ltd [1995] 2 All ER 929, CA at 944j–946e, 948a–e. Horsfall v Thomas n 17 above (the buyer did not examine the gun so the concealment did not operate on his mind); cf Smith v Hughes (1871) LR 6 QB 597 at 605, and contrast n 19 below.

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Representations 3.9

the misrepresentation (albeit ineffective),19 for which reason also the concealment amounts to a representation that matters are as they appear to be, which will found an estoppel based on culpable failure to speak,20 in which case the question of causation is whether A has relied on the belief which B has failed to correct.21

Representation by silence or inaction 3.9 It is well established that, under certain conditions, silence or inaction may constitute a representation, as much as positive language or conduct, for the purpose of an estoppel.22 Silence or inaction gives rise to responsibility if B has a legal (not a mere moral or social) duty to A to make a disclosure, or take steps, the omission of which is relied upon as creating the estoppel.23 The theory is this. The parties to a transaction are entitled to assume, as against one another omnia rite esse acta; each of them is entitled to suppose that the other has fully discharged all such obligations (if any) of disclosure or action towards himself as may have been created by the circumstances. If, therefore, he receives from that other no intimation, by language or conduct, of the existence of any fact which, if existing, it would have been the latter’s duty, having regard to the relationship between them, the nature of the transaction or the circumstances of the case, to reveal, he has legitimate ground for believing that no such fact exists, or that there is nothing so abnormal or peculiar in the nature of the transaction, or in the circumstances of the case as to give rise to any duty of disclosure, and to shape his course of action on that assumption.24 In other words, he is entitled

19 See 3.19 and, in the context of rectification, obiter dicta of Stuart Smith LJ in ­Commission for the New Towns v Cooper (GB) Ltd n 17 above at 946c–e. 20 As to which, see 3.11–3.26. 21 As to which, see 5.17. 22 Freeman v Cooke (1848) 2 Exch 654 at 663: ‘conduct by negligence or omission, where there is a duty cast upon a person, by custom of trade or otherwise, to disclose the truth, may often have the same effect [sc as express representation]’ per Parke B; Russell v Thornton (1859) 4 H&N 788 at 798: ‘Where there is a duty to speak, and the party does not, an assent may be inferred from his silence’ per Bramwell B; Polak v Everett (1876) 1 QBD 669 at 673: ‘If a man stands by and allows another to act without objecting when, from the usage of trade or otherwise, there is a duty to speak, his silence would preclude him as much as if he proposed the act himself’ per Blackburn J; Greenwood v Martins Bank Ltd [1933] AC 51 at 57: ‘Mere silence cannot amount to representation but when there is a duty to disclose, deliberate silence may become significant and amount to a representation’ per Lord Tomlin; AIB Group (UK) plc v Turner [2015] EWHC 3994 (Ch) at [47]: ‘In my view such silence may in a given case amount to a representation’. See also 1.88, n 365. 23 Swan v North British Australasian Co (1863) 2 H & C 175 at 182; McKenzie v British Linen Co (1881) 6 App Cas 82 at 100, 101; Jones Bros (Holloway) Ltd v Woodhouse [1923] 2 KB 117; R.E. Jones Ltd v Waring and Gillow Ltd n 15 above at 692–3; Mercantile Bank of India Ltd v Central Bank of India Ltd [1938] AC 287 at 297–300; West Country Cleaners ­(Falmouth) Ltd v Saly [1966] 3 All ER 210; Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890; Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133n at 147C; Tai Hing Ltd v Liu Chong Hing Bank (no 1) [1986] AC 80 at 110D–E; The ‘Tatra’ [1990] 2 Lloyd’s Rep 51 at 58, col 2. 24 As in the non-disclosure suretyship cases of Hamilton v Watson (1845) 1 Cl & Fin 109 at 119; Lee v Jones (1864) 17 CBNS 482 at 500, 503, 504; Phillips v Foxall (1872) LR 7 QB 666 at 679;

109

3.9  Responsibility

to treat B’s silence or inaction as an implied representation of the non-existence of anything which would impose, or give rise to, such a duty, and, if he alters his position to his detriment on the faith of that representation, the representor is estopped from afterwards setting up the existence of such suppressed or undisclosed fact.25 3.10 The above paragraph (in the third edition) was approved26 in The ­‘Lutetian’,27 and, it is submitted,28 remains a proper analysis of reliance-based estoppels based on silence which amounts to a communication to A of B’s assent to A’s belief by B’s passive conduct. It is submitted, however, that the previous classification of all silences giving rise to reliance-based estoppels as representations can no longer be supported,29 and the foundation of a reliance-based estoppel on silence is therefore discussed below.30 This encompasses all such estoppels, including both those founded on culpable silence which effects a communication by B to A, and those founded on culpable silence by B of which A was unaware.

BREACH OF DUTY TO SPEAK 3.11 While, we submit, the analysis of representation by silence set out above31 remains correct for cases in which A is aware of B, we agree with the point recently made32 that it is problematic to classify as instances of estoppel by representation cases in which estoppel is founded on silence or acquiescence because B should have made his position clear, where the position, or even

London General Omnibus Co v Holloway [1912] 2 KB 72 at 79: ‘A creditor must reveal to the surety every fact which under the circumstances the surety would expect not to exist, for the omission not to mention that such a fact does exist is an implied representation that it does not’ per Vaughan-Williams LJ; National Provincial Bank of England v Glanusk [1913] 3 KB 335 at 338; Levett v Barclays Bank plc [1995] 1 WLR 1260; Geest v Fyffes plc [1999] 1 All ER (Comm) 672. The paragraphs in the fourth edition corresponding to this one and 3.10, 3.12 and 3.13 were cited with approval in Avocet Industrial Estates LLP v Merol Ltd [2012] L & TR 13 at [111], 218. 26 Save perhaps for the reference to the Latin tag. 27 [1982] 2 Lloyd’s Rep 141 at 157; and see Lancashire Insurance Company Ltd v MS Frontier Reinsurance Ltd [2012] UKPC 42 at [24]. 28 Notwithstanding (1) the view of the Court of Appeal in Banque Keyser SA v Skandia (UK) Insurance [1990] QB 573 at 756 having considered The ‘Lutetian’ and the above paragraph, that a breach of the duty of disclosure in the case of contracts uberrimae fidei is not always, as a matter of law, to be treated as constituting a misrepresentation for the purpose of an action for damages, and (2) the criticism by Spence (in Protecting Reliance at pp 53–4) and proposal of an alternative test of whether the silence ‘can be taken to have indicated endorsement of a particular assumption’. 29 See 3.11 and 1.88; cf Blue Haven Enterprises Ltd v Tully [2006] UKPC 17 at [24]. 30 See 3.12–3.26. 31 See 3.9–3.10. 32 By McFarlane: see 1.88, n 364. 25

110

Breach of duty to speak 3.12

e­ xistence, of B was not present to the mind of A at all.33 We submit, however, that the circumstances in which B will be held to be under a duty to speak and therefore responsible for A’s belief if he breaches it (and A acts to his detriment in reliance on the uncorrected belief)34 are, in principle, the same whether or not A is aware of B and his silence. The classes of case in which B has been held to owe such a duty are considered below.

Duty to speak Knowledge of mistake: introduction 3.12 The general rule (to which there is the significant exception described below) is that a party to a negotiation or transaction, provided that he has not induced the mistake by his own misrepresentation by words or conduct, owes no duty of disclosure to another party whom he knows to be labouring under a mistake material to the transaction35, even, on one authority, if the former knows the latter to be a victim of fraud.36 On the other hand, Bingham J in The ­‘Lutetian’37 regarded Lord Wilberforce in Moorgate Mercantile Co Ltd v Twitchings38 as providing ‘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’, and this has been approved by the House of Lords as ‘the general principle underlying

33 See 1.88; Pickard v Sears n 6 above; Greenwood v Martins Bank Ltd [1932] 1 KB 371, CA (affirmed n 22 above) at 380 per Scrutton LJ; VLM Holdings Ltd v Ravensworth Digital Services Ltd [2014] FSR 9 at [67]–[70] (this decision was analysed (it is submitted, wrongly) as one relating to representation by silence in Mann v Shelfside Holdings [2015] EWHC 2583 (QB) at [42]–[46] and [52]–[53]); and see the discussion of acquiescence as it applies to ­proprietary estoppel at 12.13 onwards. 34 See Lovett v Carson Country Homes Ltd [2011] BCC 789 at [107]. 35 Smith v Hughes (1871) LR 6 QB 597 at 607; Arkwright v Newbold (1881) 17 Ch D 301; Coaks v Boswell (1886) 11 App Cas 232 at 235–6; Marnham v Weaver (1899) 80 LT 412; Seddon v North Eastern Salt Co [1905] 1 Ch 326 at 334–5; Bell v Lever Bros [1932] AC 161 at 199, 227–8, 230–2, 235; With v O’Flanagan [1936] Ch 575 at 585; Williams on Vendor and Purchaser (4th edn), vol II, at 758–61, 764–6; Banque Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd n 28 above at 798F–799H, affirmed on other grounds [1991] 2 AC 249; Australian Steel and Mining Corpn Pty Ltd v Corben [1974] 2 NSWLR 202 at 209, approved in Barton v County NatWest [1999] Lloyd’s Rep Bank 408; BCCI v Ali [2000] 3 All ER 51 at 79d–g per Buxton LJ (contrast, at 61e–g per Scott VC, at 76e–g per Chadwick LJ) and [2002] 1 AC 251 at 279E per Lord Hoffmann: ‘There is obviously room in the dealings of the market for legitimately taking advantage of the known ignorance of the other party’ (but not in relation to a release of rights); Daventry DC v Daventry and District Housing Ltd [2010] EWHC 1935 (Ch) at [161]–[163]; rev’d on other grounds [2011] 1 WLR 1333 (mistake); BP Oil International Ltd v Target Shipping Ltd [2012] 2 Lloyd’s Rep 245 at [206], 282; rev’d on other grounds [2013] 1 Lloyd’s Rep 561. 36 The ‘Good Luck’ [1990] 1 QB 818 at 901E–F; rev’d on another ground [1992] 1 AC 233. 37 Note 27 above at 157; and see 3.13. 38 Note 23 above at 903.

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estoppel by acquiescence’.39 There is an element of circularity in the reference to honesty and responsibility, since the question whether the silent party can honestly remain silent depends on whether he is responsible to the mistaken party, or, put another way, whether he is under a duty to speak.40 The issue remains one of determining the ambit and onus of responsibility, by reference to whether a mistaken party could reasonably have expected to be corrected: that is, whether the court decides that the silent party should have spoken. Whether the case is one in which that reasonable expectation arises so as to displace the general rule will depend on factors such as whether A had available means of protecting himself, or was dependent solely on information from B,41 and whether the court regards the relationship of A and B as one in which A should know that, if he does not ask or stipulate, he will not be told.42 The duty can be seen from Lord Wilberforce’s formulation to be one of honesty, and the question whether B’s silence was honest is essentially what is called a ‘jury question’. Although breach of it need not involve fraud or deceit43 by B, it must involve impropriety on his part.44 Knowledge of mistake: mistake as to proprietary rights 3.13 A duty to speak, such as to found an estoppel on silence (which duty, it is submitted, is a duty to take such steps as are reasonable in the circumstances

39 In The ‘Indian Endurance’ n 10 above, at 913H–914B, albeit without argument and ‘making due allowance for the proprietary context …’; ING Bank NV v Ros Roca SA [2012] 1 WLR 472 at [60], 489E per Carnwath LJ and at [92]–[94], 497E–498G per Rix LJ; Starbev GP Ltd v Interbrew Central European Holdings BV [2014] EWHC 1311 (Comm) at [128]–[129] ; see also Dann v Spurrier (1802) 7 Ves 231 at 235–6 per Eldon LC quoted at 1.38, n 182. 40 See, eg, ING Bank NV v Ros Roca SA n 39 above at [71], 492D-E per Carnwath LJ, where the fact that the parties ‘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’ was not characterised as giving rise to a duty to speak although silence could found an estoppel and at [87], 496A per Rix LJ, where it was so characterised, although a duty to speak was ‘relevant, though not necessarily vital’ to the estoppel claim; Starbev GP Ltd v Interbrew Central European Holdings BV n 39 above at [126], [133]: ‘The question is what is meant by “acting honestly” for these purposes. It does not in my view necessarily imply that the party against whom the estoppel is raised must be guilty of actual dishonesty, in the sense of acting fraudulently … [A]bsent a relationship of good faith or partnership or something akin to a joint enterprise, the courts will not impose a duty to speak in the absence of impropriety of some description by the person who is alleged to be estopped … [T]he impropriety may come from the act of staying silent itself, as where a reasonable person would expect the person who is alleged to be estopped, 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’. 41 The ‘Good Luck’ n 36 above, CA at 902E–F. 42 Cf eg A-G for Hong Kong v Humphrey Estates Ltd [1987] AC 114 with Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; and cases at nn 35–36 above with those at n 22 above. 43 Lester v Woodgate [2010] EWCA Civ 199 at [39]. 44 Starbev GP Ltd v Interbrew Central European Holdings BV n 39 above at [133]; see further 1.89 onwards.

112

Breach of duty to speak 3.14

to communicate the truth to the mistaken party) has been held to arise from knowledge of A’s mistake where B, having a title or right to property of any kind, perceives45 that A is innocently, and in ignorance, conducting himself with reference to the property in a manner inconsistent with such title or right.46 3.14 There is the same duty in relation to any encumbrance, charge or lien which B may have on the property;47 and so also, if B has a right to assert his status as a shareholder in a company, or a right to a share in any business or concern, and proceedings are being taken by the company, or other persons interested in the business or concern, to forfeit his share or deal with the property as if he had no part or lot therein, and if, knowing of those proceedings, he makes no protest or complaint, and takes no step to prevent or defeat the proceedings.48 Lord Wilberforce in Moorgate Mercantile Co Ltd v Twitchings49 formulated the duty to speak of a title holder to property as an instance of the duty to correct

45

46

47 48 49

It must be brought sufficiently to his notice: Johnson v Credit Lyonnais Co (1877) 3 CPD 32, 40; Otago Farm Co-op Association of New Zealand v McGowan [1925] NZLR 482; and he must know of his title: Armstrong v Sheppard and Short Ltd [1959] 2 QB 384; Svenson v Payne (1945) 71 CLR 531; St Pancras & Humanist HA Ltd v Leonard [2009] EWCA Civ 1442; there must be a mistake which is apparent to him: Proctor v Bennis (1887) 36 Ch D 740; Eaton v Lake (1888) 20 QBD 378; cf The ‘Superhulls Cover’ Case (No 2) [1990] 2 Lloyd’s Rep 431 at 450–4; Prudential Assurance Co Ltd v Exel UK Ltd [2010] 1 P & CR 7 at [195], [201]–[203], 145–148. See Ch 12 and, as to land, Savage v Foster (1723) 9 Mod Rep 35 at 37: ‘when anything in order to a purchase is publicly transacted, and a third person, knowing thereof, and of his own right to the lands intended to be purchased, doth not give the purchaser notice of that right, he shall never afterwards be admitted to set up such right to avoid the purchase’; Spiro v Lintern [1973] 1 WLR 1002 at 1010H; Wroth v Tyler [1974] Ch 30 at 47; Midland Bank Ltd v Farmpride Hatcheries Ltd [1981] 2 EGLR 147, CA; as to chattels, see Pickard v Sears n 6 above; Gregg v Wells (1839) 10 Ad & El 90 at 96: ‘A party who culpably and negligently stands by, and allows another to contract on the faith or understanding of a fact which he can contradict, cannot afterwards dispute that fact in an action against the person whom he has himself assisted in deceiving’ per Littledale J; Freeman v Cooke n 22 above; as to intellectual property, Godfrey v Lees [1995] EMLR 307; VLM Holdings Ltd v Ravensworth Digital Services Ltd n 33 above; (cf Gabrin v Universal Music Operations Ltd [2003] EWHC 1335, [37]–[39]), but contrast Jones Bros (Holloway) Ltd v Woodhouse n 23 above as to chattels and Eaton v Lake (1888) 20 QBD 378 as to intellectual property; as to the right to avoid a contract of insurance, see Morrison v Universal Marine Ins Co (1873) LR 8 Exch 197 at 205: ‘If it had appeared that in consequence of the delay and the absence of protest by the Defendants, the Plaintiff’s position had been altered, and he had thereby been induced to believe that the Defendants intended to waive their right and to avoid the contract of insurance’ there would have been an estoppel, per Honyman J; see also Re LG Clarke [1967] Ch 1121; Australasian Temperance and General Mutual Life Ass Socy Ltd v Johnson [1933] NZLR 408; Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 406–7, 427–8, 443–4, 462–3. Brown v Thorpe (1841) 11 LJ Ch 73 at 76–77; Re Caughey, ex p Ford (1876) 1 Ch D 521 at 528; Re Safety Explosives Ltd [1904] 1 Ch 226; The ‘Indian Endurance’ n 10 above. Prendergast v Turton (1843) 13 LJ Ch 268; Rule v Jewell (1881) 18 Ch D 660 at 666–7; Palmer v Moore [1900] AC 293 at 297–8; Jones v North Vancouver Land and Improvement Co Ltd [1910] AC 317 at 328–9; Clarke v Hart (1858) 6 HL Cas 633. Note 23 above at 903; as interpreted in The ‘Henrik Sif’ [1982] 1 Lloyd’s Rep 456 at 465, and followed in: Shearson v MacLaine [1989] 2 Lloyd’s Rep 570 at 604; The ‘Tatra’ [1990]

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3.14  Responsibility

a mistake, subjecting it to the preconditions, first, that, in the situation as known to both parties,50 a reasonable man in the position of A would expect a man in the position of B, acting honestly and responsibly, if he claimed title, to take steps to make the claim known to A and, secondly, that, on the faith of an omission to do so, A could reasonably assume that no title was claimed. 3.15 Perception of the mistake is, therefore, a pre-requisite for this duty to speak and, thus, for estoppel of the silent B from denying the title which A mistakenly believed he had. Actual knowledge, however, includes Nelsonian ­knowledge.51 Further, in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd,52 Oliver J identified the doctrine of estoppel by acquiescence in relation to property (viz proprietary estoppel) as established by authorities distinct from those establishing the principle of estoppel by representation of fact. Under the former, he held, relief may be granted against a title holder who has encouraged another to believe he has rights over the former’s property, even if the title holder did not at the time know that the belief was wrong; nor, further, is such knowledge a pre-requisite for an estoppel by convention.53 It is submitted, however, that, where the encouragement of a mistaken belief has been by no more than the silence and passivity of B, who neither knew nor should have known that the belief of A was or might be mistaken, B is not responsible for the mistaken belief so as to render it unfair for him to contradict it.54 It is, therefore, further submitted that, for any estoppel to be founded on silence and passivity alone, it is necessary that B knew or should have known the true position, or at least that there is a lack of certainty that the true position is that which A takes it to be.55 2 Lloyd’s Rep 51 at 58, col 2; The ‘Stolt Loyalty’ n 17 above at 289; The ‘Indian Endurance’ n 10 above; see also Worboys v Carter [1987] 2 EGLR 1; in Chatfields-Martin Walter Ltd v Lombard North Central Plc [2014] EWHC 1222 (QB) at [30], the alteration of a register by B to remove records of finance agreements relating to vehicles was held to be a ‘clear and unequivocal representation’ that the agreements had been redeemed but, it is submitted, this should be properly characterised as breach of duty to speak giving rise to responsibility. See 1.88 onwards. 50 51 52 53 54

55

Suggesting that, if the requisite knowledge by either party is lacking, the duty will not arise. See n 54 below. [1982] QB 133n, 143G–152A; see Ch 12. Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84; see 8.64. See eg Chadwick v Manning [1896] AC 231, PC at 237: ‘and it can hardly be suggested that Mr Chadwick [the silent party] was in duty bound to remind Sir William [the estoppel raiser] of an obligation which he had at least as much reason to remember as Mr Chadwick himself.’; The ‘August P Leonhardt’ [1985] 2 Lloyd’s Rep 28 at 35, col 2: ‘since [the silent party’s] conduct is not open to any criticism, but was merely due to a misunderstanding of the position for which he was no more to blame than [the estoppel raiser], there can also be no question of unconscionability as an ingredient of any form of estoppel’; Bridgewater v Griffiths [2000] 1 WLR 524 at 531G; HIH Casualty and Gen Instructing Solicitor Ltd v Axa Corporate Solutions [2002] EWCA Civ 1253; St Pancras & Humanist HA Ltd v Leonard [2009] EWCA Civ 1442; Prudential Assurance Co Ltd v Exel UK Ltd n 45 above at [196], [203], 145–148; see also cases at n 35 above. As where the silent party fails to assert his rights over which, as he is aware, there is legal doubt, but knowing that the other party is prejudicially altering his position in the belief that the silent party does not have, or will not exercise, those rights: see eg Michaels v Harley House Ltd [1997] 1 WLR 967 at 985H–990F. See further 1.86–1.98.

114

Breach of duty to speak 3.16

Knowledge of mistake: Mistake as to contractual and other rights 3.16 A duty to speak, similar to that which applies in cases of mistake as to property rights,56 has also been held to arise in the following circumstances: 1) Where the mistake is as to a term of a contract to be entered into between the parties.57 It has been held that the silent party must actually know of the mistake rather than ought to know of the mistake,58 but actual knowledge includes Nelsonian knowledge;59 and mere silence must be distinguished from active concealment.60 Nothing of substance, it is submitted, is added to these criteria by requiring that the term be to the benefit of B or detriment of A.61 It has been said that reliance on the term must ‘be inequitable’62 or the silence unconscionable:63 the issue identified in Moorgate Mercantile Co Ltd v Twitchings64 is whether the silence is dishonest.65 2)

If an employee negotiating a contractual variation with his employer, a public body, asks for an assurance as to the preservation of rights. The public body must warn him if it is not giving that assurance.66

56 See 3.13. 57 Riverlate Pties Ltd v Paul [1975] Ch 133; Thomas Bates & Son v Wyndhams Ltd [1981] 1 WLR 505; Hartog v Colin and Shields [1939] 3 All ER 566; Watkin v Watson-Smith (1986) Times, 3 July; Statoil ASA v Louis Dreyfus Energy Services LP (The Harriette N) [2009] 1 All ER (Comm) 1035 at [87]; Taylor v Johnson (1983) 45 ALR 265; Deputy Commissioner of Taxation (NSW) v Chamberlain (1990) 93 ALR 729; Belle River Community Arena Inc v Kaufmann Co Ltd (1978) 87 DLR (3d) 761; US v Braunstein (1948) 168F 2d 749; Ulster Bank Ltd v Lambe [2012] NIQB 31; cf George Wimpey UK Ltd v VI Construction Ltd [2005] BLR 135 at [51] per Peter Gibson LJ, where similar principles were held to apply to the ‘exceptional jurisdiction to rectify for unilateral mistake’, which was characterised as ‘a species of equitable estoppel’ by Mummery LJ in Transview Properties Ltd v City Site Properties Ltd [2009] EWCA Civ 1255 at [11]; and BDW Trading Ltd v JM Rowe (Investments) Ltd [2010] EWHC 1987 (Ch) (aff’d on other grounds [2011] EWCA Civ 548) at [34] and [64]–[65] where Peter Smith J deprecated the conduct of a party to contractual negotiations who failed to point out a drafting error because it would ‘create an ambiguity in the understanding of the parties which ultimately, if it became important, would have led to more litigation and claims for rectification’ (rectification was not pleaded). 58 The ‘Nai Genova’ [1984] 1 Lloyd’s Rep 353 at 365; The ‘Ypatia Halcoussi’ [1985] 2 Lloyd’s Rep 364 at 371; Merrill Lynch International v Amorim Partners Ltd [2014] EWHC 74 (QB) at [54]; contrast Centrovincial Estates plc v Merchant Investors Assurance Co Ltd [1983] Com LR 158; O.T. Africa Line Ltd v Vickers Plc [1996] 1 Lloyd’s Rep 700 at 703; McMaster University v Wilcher Construction Ltd (1971) 22 DLR (3d) 9. 59 Commission for New Towns v Cooper (GB) Ltd n 17 above at 946f–947e; Brown v W ­ estminster Bank Ltd [1964] 2 Lloyd’s Rep 187. 60 Commission for New Towns v Cooper (GB) Ltd n 17 above at 944j–946e, 948a–e; see 3.8. 61 As in Thomas Bates & Son v Wyndhams Ltd n 57 above at 516B, 521A. 62 As in Thomas Bates & Son v Wyndhams Ltd n 57 above at 516B. 63 As in Kemp v Neptune Concrete (1989) 57 P & C R 369 at 377. 64 Note 23 above; see 3.12. 65 See also Commission for New Towns v Cooper (GB) Ltd n 17 above at 944j–946e; 957d–e; 1.64–1.85. 66 Algar v Middlesex CC [1945] 2 All ER 243 at 251A–B; sed quaere: see 2.34, n 142; contrast Richards v Gellatly (1872) LR 7 CP 127 at 131; Wiedemann v Walpole [1891] 2 QB 534.

115

3.16  Responsibility

3) Where a Notice of Assignment of a chose in action or security discloses on its face to the debtor that the assignee has purchased and will advance money under a mistaken belief as to the absence of equities.67 4) Where A mistakenly believes that he has complied with a contractual term.68 5) Where A mistakenly believes that a term is agreed but B knows it is disputed.69 6)

Where the mistake is as to the identity of B, which B knows to be material to A. Presumptive knowledge as to the mistake (because B should have realised the mistake) here, it seems, is sufficient.70

7) Where B discovers that his signature to a security has been forged. He is under a duty to inform the holder of the security.71 Similarly, where B receives a copy of a contract into which his agent has purported to enter with the mistaken party on behalf of B in terms beyond the agent’s authority, B is under a duty to inform the mistaken party.72 As, however, between principal and an agent who submits a contract containing a term outside his authority for approval, such approval will protect the agent only if the principal noticed the term or if, in the circumstances, the agent is entitled to assume that the term came to the attention of the principal and was approved.73 8)

Where B knows that A has failed to seek an extension of time under a contract either at all or from the right party. B is obliged to speak, whether he is the right party from whom an extension has not been sought,74 or the wrong party from whom an extension was sought.75

67

Mangles v Dixon (1852) 3 HL Cas 702 at 732–5; Re Hercules Insurance Co [1874] LR 19 Eq 302. 68 The ‘Lutetian’ n 27 above. 69 Starbev GP Ltd v Interbrew Central European Holdings BV n 39 above at [138] (it was held that no estoppel arose on the facts). 70 Eg Boulton v Jones (1857) 2 H & N 564; Hardman v Booth (1863) 1 H & C 803; Cundy v Lindsay (1878) 3 App Cas 459 at 465. 71 Fung Kai Sun v Chan Fui Hing [1951] AC 489; Greenwood v Martins Bank Ltd n 33 above (CA); constructive knowledge is insufficient: Price Meats v Barclays Bank plc [2000] 2 All ER (Comm) 346; Patel v Standard Chartered Bank [2001] Lloyd’s Rep Bank 229; but contrast McKenzie v British Linen Co (1881) 6 App Cas 82 at 92 per Lord Selborne ‘reasonable grounds to believe’; Scholfield v Earl of Londesborough [1896] AC 514 at 543; Jacobs v ­Morris [1902] 1 Ch 816; Morison v London County and Westminster Bank [1914] 3 KB 356 at 385. 72 General and Finance Facilities Ltd v Hughes (1966) 110 Sol Jo 847; United Dominions Trust Ltd v Western [1976] QB 513; West v Commercial Bank of Australia (1936) 55 CLR 315; Spiro v Lintern n 46 above; see further 3.19. 73 In The ‘Superhulls Cover’ Case (No 2) n 45 above at 450–454, the term outside the agent’s authority was unclear, unlikely to be acceptable, and unnoticed by the principal; the agent presented the contract as being in accordance with his instructions and failed to point out the term: the agent could not, therefore, rely on the principal’s purported approval of the document. 74 As in The ‘Stolt Loyalty’ n 17 above at 290. 75 As in The ‘Henrik Sif’ n 49 above at 465.

116

Breach of duty to speak 3.18

9) After the conclusion of divorce proceedings in which there was no ­intimation of the husband’s intention to seek further relief, and the wife has agreed to pay the costs on that footing. The husband was estopped by his non-disclosure from seeking leave to apply out of time for transfer of the wife’s share of their home.76 10) Where B is to be released by agreement from all claims A has against him and is aware of a claim of which he knows A is unaware.77 Knowledge of mistake: Contractual, fiduciary, tortious and statutory duty to speak 3.17 A party may be under an express or implied contractual duty of ­disclosure.78 Further, silence and inactivity may amount to a representation by one under a contractual duty to act, when put to his election whether to accept a repudiation of the contract, that the repudiation is accepted.79 Whilst failure to perform a contractual duty by silence and inactivity may, in exceptional ­circumstances, give rise to a reasonable inference, and therefore constitute a representation, that B proposes abandonment of the contract,80 for the inference to be reasonable (and a representation, therefore, made) the silent inactivity must, in the circumstances, be unequivocal, and it will be rare that there is no other possible reasonable inference than a proposal to abandon, in the absence of some form of affirmative conduct.81 3.18 The relationship of parties to a contract of insurance, a contract of suretyship, a contract of release or compromise, or a contract of partnership imposes a duty of disclosure,82 as does a fiduciary relationship or relationship of influence. Such a duty may also be imposed by statute, as upon directors promoting share and debenture issues by the Companies Act 2006 and the Financial Services and Markets Act 2000. A duty to speak, such as the duty of a solicitor83 or a doctor84 to advise or warn, may arise in the tort of negligence, if the law 76

Marsden v Marsden [1973] 1 WLR 641 with express reliance on [59] of the second edition of this work; cf Wales v Wadham [1977] 1 WLR 199 at 211; Livesey v Jenkins [1985] AC 424; The ‘Indian Endurance’ n 10 above. 77 BCCI v Ali [2000] 3 All ER 51, CA at 61e–g, 76e–g, [2002] 1 AC 251, HL at 267E–F, per Lord Nicholls and 278H–280B per Lord Hoffmann. 78 Starbev GP Ltd v Interbrew Central European Holdings BV n 39 above at [128]; see, eg, Sybron Corpn v Rochem Ltd [1984] Ch 112. 79 Vitol SA v Norelf Ltd [1996] AC 800: see 13.15–13.17. 80 The ‘Hannah Blumenthal’ [1983] 1 AC 854 at 914–917, 923–924 explaining The ‘Splendid Sun’ [1981] QB 699. 81 The ‘Leonidas D’ [1985] 1 WLR 925; The ‘Antclizo’ [1987] 2 Lloyd’s Rep 130; affd [1988] 1 WLR 603; see further 4.42, n 155. 82 See Starbev GP Ltd v Interbrew Central European Holdings BV n 39 above at [128]; for fuller treatment of this area, reference should be made to Spencer Bower, Turner and Sutton on Actionable Non-Disclosure (2nd edn). 83 Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp [1979] Ch 384; cf St Maximus Shipping Co Ltd v AP Moller-Maersk A/S [2014] 2 Lloyd’s Rep 377 at [51]–[53], where on the facts no duty arose because the solicitor was unaware of the mistake. 84 Sidaway v Board of Governors of the Bethlem Royal Hospital [1985] AC 871.

117

3.18  Responsibility

regards the silent party as having assumed the responsibility of speaking to the representee.85 Duty to correct misrepresentation 3.19 Where the duty to speak is a duty to correct B’s own previous misrepresentation by words or conduct, in most, and arguably all, cases, it is not necessary to found the estoppel on his silence, as it may be founded on the continuing uncorrected misrepresentation.86 There is such a duty of correction: to disclose a previous fraud by the silent party in relation to the subject matter of the contemplated transaction with the representee,87 not to be economical with the truth so as to mislead,88 and to correct a continuing representation subsequently revealed to B to be untrue89 or rendered untrue by supervening events.90 There is, further, a duty to correct another’s misrepresentation, where the misrepresentation concerns B and is made by a third party, C, in the presence of the silent party,91 or in such other circumstances that silence is reasonably understood by A as an endorsement by B of C’s, or, indeed, A’s own statement.92 B may also be bound by a representation concerning him, simply by reason of his knowledge that C will make the representation to others for the purpose of it being acted upon, regardless of whether the representees understand him to have endorsed it, if, as between B and C, B’s knowledge and acquiescence amounts to authorisation to make the representation.93

85

Caparo Industries plc v Dickman [1990] 2 AC 605; reference should be made to text books on the law of tort for a full treatment of the subject; see also 3.32 onwards. 86 For a possible exception, see 3.8. 87 See Spencer Bower, Turner and Sutton on Actionable Non-Disclosure (2nd edn) [12.03], [12.04]. 88 Op cit [12.05]. 89 Op cit [12.08]. 90 Op cit [12.09]; With v O’Flanagan [1936] Ch 575; Traill v Baring (1864) 4 De GJ & Sm 318; British Equitable Insurance Co v Great Western Rly (1869) 38 LJ Ch 132; Davies v London and Provincial Marine Ins Co (1878) 8 Ch D 469; Zamir v SS for the Home Dept [1980] AC 730 at 750; Shelley v United Artists Corpn Ltd [1990] 1 EGLR 103 at 106J; Cramaso LLP v Viscount Reidhaven’s Trustees [2014] AC 1093 at [22]; cf 2.16–2.17. 91 Martyn v Gray (1863) 14 CBNS 824 at 839; Pilmore v Hood (1838) 5 Bing NC 97 at 107; Nottingham Patent Brick and Tile Co v Butler (1886) 16 QBD 778; Marnham v Weaver (1899) 80 LT 412; North British Insurance Co v Lloyd (1854) 10 Exch 523; Seddon v North Eastern Salt Co Ltd [1905] 1 Ch 326 at 334–335; Geniki Investments International Ltd v Ellis Stockbrokers Ltd [2008] 1 BCLC 662 at [45]. 92 The ‘August P Leonhardt’ n 54 above at 34 per Kerr LJ: A representation ‘may be an express statement or it may be implied from conduct, for instance a failure 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 an estoppel by silence or acquiescence’; see also Bradford Building Society v Borders [1941] 2 All ER 205, HL at 271 per Viscount Maugham; and the cases at n 91 above. 93 De Tchihatchef v Salerni Coupling Ltd [1932] 1 Ch 330 at 341−342 (mis-statement in company prospectus, submitted in advance to silent party, as to effect of contract between company and silent party).

118

Breach of duty to speak 3.21

Duty of customer to banker 3.20 A customer owes to a banker two duties in relation to his cheques, breach of which may found an estoppel.94 The first is ‘… a duty to refrain from drawing a cheque in such a manner as may facilitate fraud or forgery …’.95 The second is ‘… a duty to inform the bank of any forgery of a cheque purportedly drawn on the account as soon as he, the customer, becomes aware of it’.96 Breach of the former will found an estoppel by negligence,97 while breach of the latter will found an estoppel by silence: in both cases the customer will be held to assume responsibility for the bank proceeding on the basis that the cheque is valid.98 There is no wider duty ‘… to take reasonable precautions in the management of the customer’s business with the bank to prevent forged cheques being presented to it for payment’ nor ‘to take such steps to check his periodic bank statements as a reasonable customer in his position would take to enable him to notify the bank of any debit items in the account which he has not authorised’.99

No duty to speak No duty to correct mistake 3.21 There can be no duty to correct a mistake100 unless the mistake is proved101 and, further, B knew or ought to have known of the mistake.102 Constructive knowledge is insufficient unless B is under a duty to A to ascertain the

94

Tai Hing Ltd v Liu Chong Hing Bank (no 1) n 23 above, from which the following quotations are taken at 101C–D. 95 London Joint Stock Bank Ltd v MacMillan [1918] AC 777; Bank of England v Vagliano Bros [1891] AC 107; Ireland v Livingston (1872) LR 5 HL 395 at 416, cf Slingsby v District Bank Ltd [1931] 2 KB 588; aff’d [1932] 1 KB 544 (no duty to line through space after payee’s name); one executor is not answerable for another’s forgery of his signature: Brewer v Westminster Bank [1952] 2 All ER 650 at 656 (obiter); Welch v Bank of England [1955] Ch 508 at 537. 96 Greenwood v Martins Bank Ltd n 33 above (CA) at 381; aff’d n 22 above; Ogilvie v West Australian Mortgage and Agency Corpn [1896] AC 257; Fung Kai Sun v Chan Fui Hing n 71 above; these principles were held to apply to the customer of a stockbroker who became aware of fraudulent trades being made on his account in Geniki Investments International Ltd v Ellis Stockbrokers Ltd n 91 above at [44]–[45], 678–679. 97 The representation that binds the facilitator is the representation of the fraudster; see 3.27. 98 Provided that the bank can show the appropriate detrimental reliance: see Lovett v Carson Country Homes Ltd n 34 above at [107]. 99 Tai Hing Ltd v Liu Chong Hing Bank (no 1) n 23 above; Arnold v Cheque Bank (1876) 1 CPD 578; Lewes Sanitary Steam Laundry Co v Barclay, Bevan & Co (1896) 95 LT 444; Kepitigalla Rubber Estates Ltd v National Bank of India [1909] 2 KB 1010; Morison v London County and Westminster Bank (1913) 18 Com Cas 137 at 145, revsd on other grounds [1914] 3 KB 356. 100 See 3.12 onwards. 101 Eg Proctor v Bennis (1887) 36 Ch D 740; Brinnand v Ewens (1987) 19 HLR 415. 102 See 3.12 onwards; eg Scriven Bros v Hindley & Co [1913] 3 KB 564; Brinnand v Ewens (1987) 19 HLR 415; EDF Energy Networks (EPN) Plc v BOH Ltd [2010] 2 P & CR 3 at [55], 47 (a business tenant who had no knowledge of a latent defect in

119

3.21  Responsibility

truth and inform him.103 A debtor is, therefore, under no duty to disclose equities affecting a security to an assignee of its benefit upon receipt of a notice of assignment unless the notice discloses on its face that the assignee is being deceived by the assignor in that respect.104 It is not enough to show only B’s knowledge of an impending infringement of his rights,105 nor is it enough that B perceives that A is about to act against A’s own interest and to the benefit of B: B need not speculate as to whether A is mistaken nor point the matter out to him, unless their circumstances and relationship are such that A is entitled to expect this. Thus: (1) A surety, when the creditor is doing something which may have the legal effect of discharging the suretyship, is under no duty to warn him of the false step which he is taking.106 (2) A lessor who had omitted to draw the attention of his lessee to the latter’s failure to paint premises in the final year of the term, and to the fact that such failure would amount to a breach of covenant disentitling the lessee to a further term, was held not estopped by his silence from setting up the breach of covenant against the lessee accordingly.107 (3) In Australia a lessor was held to be under no duty to warn an intended mortgagee of his lessee as to the liability of the lease to forfeiture.108 (4) B is under no duty to point out to A a right of which A has as much reason to know as B if the ignorance of B is not made known to A.109 (5) An executor is under no duty to inform a legatee of a condition attaching to his legacy, even though he is a beneficiary under the gift over in the event of breach of the condition.110 (6) A bankrupt is under no duty to disclose a right of set-off in his examination if such disclosure need not form part of his answer to any question asked of him.111

the ­landlord’s notice terminating the tenancy was not estopped by service of a counternotice from disputing its validity); Avocet Industrial Estates LLP v Merol Ltd n 25 above; cf Deutsche Bank (Suisse) SA v Khan [2013] EWHC 482 (Comm) at [265]–[268], where it was doubted that the non-mistaken party would be responsible if he induced the mistake, in the absence of the requisite knowledge. 103 Price Meats Ltd v Barclays Bank plc n 71 above, Patel v Standard Chartered Bank n 71 above, and cf other cases at n 71 above (and 5.11, n 51). 104 Mangles v Dixon (1852) 3 HL Cas 702 at 732–5, 741; cf Re Hercules Insurance Co (1874) LR 19 Eq 302; Bibby Factors Northwest Ltd v HFD Ltd [2015] EWCA Civ 1908 at [54]. 105 Proctor v Bennis n 101 above; Eaton v Lake n 46 above. 106 Polak v Everett (1876) 1 QBD 669 at 673. 107 West Country Cleaners (Falmouth) Ltd v Saly [1966] 1 WLR 1485. 108 Cairns v Burgess (1905) 2 CLR 298. 109 Chadwick v Manning [1896] AC 231. 110 Re Lewis [1904] 2 Ch 656; Cancer Research Campaign v Ernest Brown & Co [1997] STC 1425 at 1440–1. 111 Rolt v White (1862) 3 De G J & Sm 360 at 364–365.

120

Breach of duty to speak 3.22

(7) The owner of goods who knows they have been mistakenly seized by the Sheriff as the goods of another is under no duty to notify the Sheriff, or the creditor whose debt the Sheriff is enforcing, of his ownership, such as to estop the owner from claiming the net proceeds of their sale.112 (8) Although ‘a party to litigation is not obliged to be the nursemaid of his opponent, at any rate if the opponent is not an untutored individual but as well acquainted with commercial litigation as the government of India’113 and ‘there can be no general duty upon one party to litigation to point out to the other the mistakes of that other party or his legal advisors’114 this does not preclude such a duty arising from circumstances in which it would be dishonest not to point out the mistake.115 (9) An employee will rarely be taken to be estopped as against his employer from disputing a variation in his terms of service merely by continuing to work.116 By the same reasoning, a pension scheme member will not normally be estopped as against the trustees from disputing the validity of documents setting out a false basis for benefits by reason only of his failure to object on receipt of those documents.117 No duty to dispute assertion 3.22 Receipt of a notice asserting a fact or right does not, without more, oblige B to signify that he disputes the fact or right of which he is notified. Thus: (1) A wharfinger owes no duty, on receipt of a delivery order directing delivery of part of the grain he holds in bulk for another, to acknowledge receipt of or object to the order, or point out that it does not pass title, so delivery of the goods might still be stopped.118 (2) Underwriters of a marine insurance policy to whom the assured has given notice of abandonment are not precluded from denying the total constructive loss of the vessel or goods insured, merely because they said and did nothing on receiving the notice.119

112 Jones Bros (Holloway) Ltd v Woodhouse n 23 above; sed quaere if there were further detrimental reliance; cf also Pickard v Sears n 6 above. 113 The ‘Indian Endurance’ n 10 above at 893C–D per Staughton LJ, affd at 915H–916A. 114 The ‘Stolt Loyalty’ n 17 above at 290 per Clarke J; cited with approval in The ‘Indian Endurance’ n 10 above at 893B–C, CA; Thompson v Arnold [2008] PIQR P1 at [105], P23; Bethell Construction Ltd v Deloitte and Touche [2011] EWCA Civ 1321 at [17], [22]; cf Ernst and Young v Butte Mining plc [1996] 1 WLR 1605 at 1622D per Robert Walker J: ‘Nevertheless, even in the most hostile litigation (indeed especially in the most hostile litigation) solicitors must be scrupulously fair and not take unfair advantage of obvious mistakes’; Thames Trains Limited v Adams [2006] EWHC 3291 (QB) at [34]–[40]. 115 See nn 74–75 above. 116 Jones v Associated Tunnelling Co Ltd [1981] IRLR 477 at [22], 481. 117 Hodgson v Toray Textiles Europe Ltd [2006] Pens LR 253 at [98]–[99], 268–269. 118 Laurie and Morewood v Dudin & Sons [1926] 1 KB 223. 119 Provincial Insurance Co of Canada v Leduc (1874) LR 6 PC 224.

121

3.22  Responsibility

(3) A ship-owner’s P&I club agreed with B, the assignee of cargo, to a threemonth extension of time for the plaintiff to bring its claim, provided that the charterer also agreed. B subsequently wrote to the club noting the club’s agreement to the extension of time for three months without reference to the proviso. The club was entitled to assume that B had obtained the charterer’s consent and was under no duty to re-emphasise the proviso or seek the charterer’s consent: the club was not, therefore, estopped from denying any extension by agreement, because the proviso was not satisfied.120 (4) Buyers were not estopped from disputing the validity of their sellers’ notice claiming an extension of the shipment period in arbitration six years later without having previously raised an objection to the notice or required proof of its validity.121 (5) The absence of complaint by an employee, who continued working under a revised profit sharing scheme, which stated that it now did ‘not create a legal relationship’, did not amount to acceptance122 that the scheme would cease to be legally binding thenceforth.123 3.23 In the context of his prior affirmative conduct or present obligation to act, the silence and inactivity of the receiver of a notice may, however, communicate his acceptance of an assertion. Thus, if notice is received of repudiation of a contract, silence and non-performance of a contractual obligation may amount to acceptance of the repudiation.124 So also, whilst silence and inactivity will not, of themselves, amount to the acceptance of a contractual offer,125 they may do so when combined with prior affirmative conduct: an investor who had the terms of a proposed policy explained to her and paid over her investment was held to have accepted the written terms subsequently sent to her by not objecting to them within a reasonable time.126 3.24 Failure to object to a defect in a contractual or statutory notice, when combined with other conduct of the receiver of the notice from which acceptance of it may be inferred, may amount to a waiver of the defect.127 The estoppel is, however, in substance an estoppel by conduct rather than by silence, as the absence of objection will not of itself, without more, amount to such an

120 121 122 123 124 125 126 127

The ‘August P Leonhardt’ n 54 above at 33, col 1, 35. Cook Industries Inc v Tradax Export SA [1985] 2 Lloyd’s Rep 454 at 462. Financial Techniques Ltd v Hughes [1981] IRLR 32 at 35(17). This paragraph was cited in Barbados Trust Company Ltd v Bank of Zambia [2006] 1 Lloyd’s Rep 723 at [53], 731 (rev’d on other grounds). Vitol SA v Norelf Ltd n 79 above. Felthouse v Bindley (1862) 11 CBNS 869; Miller 35 MLR 489; cf 3.17; 4.42, n 155. Rust v Abbey Life Assurance [1979] 2 Lloyd’s Rep 334. Bremer Hgs mbH v Vanden Avenne Izegem PVBA [1978] 2 Lloyd’s Rep 109; Bremer Hgs mbH v Finagrain SA [1981] 1 Lloyd’s Rep 224; Tennant v LCC (1957) 121 JP 428; Norton v Charles Deane Prods (1969) 214 EG 559; Bristol Cars v RKH Hotels (1979) 38 P & CR 411;

122

Breach of duty to speak 3.24

unequivocal abandonment of rights.128 Further, the absence of objection, even when combined with other conduct, does not amount to an unequivocal abandonment if consistent also with a reservation by the receiver of his response to the notice.129 It must be reasonable for the notice giver to conclude that the receiver is unequivocally abandoning the right to object to the defect.130 To raise an estoppel as to the defect, the notice giver must, therefore, be entitled to conclude that the defect is apparent to the receiver131 or that the receiver is prepared to give up his rights in respect of any defects there may be in the notice whether he knows of them or not.132 Thus, whether explicit objection to one defect and absence of objection to another amounts to a waiver of the other depends on the circumstances and, in particular, the receiver’s knowledge or apparent knowledge of the other defect.133

British Railways Board v AJA Smith Transport [1981] 2 EGLR 69; Watkins v Emslie [1982] 1 EGLR 81; Morrow v Nadeem [1986] 1 WLR 1381 at 1390H; Free Grammar School of John Lyon v Mayhew [1997] 1 EGLR 88. 128 Bunge Corpn v Compagnie Europeenne de Cereales [1981] 1 Lloyd’s Rep 306 at 308; The ‘Post Chaser’ [1981] 2 Lloyd’s Rep 695 at 700, col 2; The ‘Wise’ [1989] 2 Lloyd’s Rep 451 at 460, col 2; MW Trustees Ltd v Telular Corp [2011] L & TR 19 (positive acceptance by managing agents of break notice sent to previous rather than current lessor) at [49], 290: ‘if the Landlords had simply acknowledged receipt of the Notice and said nothing more it would have been open to them to challenge the validity of the Notice. There is no duty in my view on a Landlord served with a document to inform the server that he believes that it has not been validly served. However a Landlord receiving such a Notice must not give any indication that the notice is accepted despite its defects.’; cf PCE Investors Ltd v Cancer Research UK [2012] 2 P & CR 5, where a landlord was not estopped from denying that the tenant had complied with its obligations under a break clause, when it had demanded a full quarter’s rent and had not responded to the tenant’s subsequent requests for confirmation that tender of a lesser sum was correct (contrast Avocet Industrial Estates LLP v Merol Ltd n 25 above at [114], where Morgan J held obiter (and, it is submitted, wrongly) that, if a landlord had known of the tenant’s mistake, it would have been estopped from denying that the tenant had complied with its obligations under a break clause when the tenant had failed to pay all the sums required, without any finding of other relevant conduct by the landlord); and see 4.42, n 155. 129 Bremer Hgs mbH v Westzucker GmbH [1981] 1 Lloyd’s Rep 207 at 212–213; the receiver is entitled to a reasonable time to check the position and consider its response before making it: The ‘Mihalios Xilas’ [1979] 1 WLR 1018; Lemmerbell Ltd v Britannia LAS Direct Ltd [1998] 3 EGLR 67; see also Bremer Hgs mbH v Deutsche Conti-Hgs mbH [1983] 1 Lloyd’s Rep 689 at 692–3. 130 See 3.5; 4.43; 14.14. 131 See eg Bremer Hgs mbH v C Mackprang Jr (no 1) [1979] 1 Lloyd’s Rep 221 at 228–9, col 1; The ‘Athos’ [1983] 1 Lloyd’s Rep 127 at 134, col 2; The ‘Superhulls Cover’ Case (No 2) n 45 above at 450–454; EDF Energy Networks (EPN) Plc v BOH Ltd n 102 above at [55], 47; MW Trustees Ltd v Telular Corp n 128 above. 132 Bremer Hgs mbH v C Mackprang Jr (No 1) n 131 above at 226, 228–9, 230, col 2; cf cases at 4.42, n 155, where the possibility of an oversight or forgetfulness rendered silence and ­inactivity equivocal. 133 Cf The ‘Wise’ n 128 above at 460, col 2, per Mustill LJ ‘… explicit reliance on one contention, and the absence of reliance on another, which could then have been advanced on facts already known, is capable of being a tacit representation that the latter would not be relied upon.’; and

123

3.25  Responsibility

No duty to answer question 3.25 The asking of a question does not of itself create a duty to answer such that the questioner can make an assumption as to the answer if he does not receive one.134 No duty to register 3.26 While a caveat will give notice of an interest claimed in registered land, failure to lodge a caveat is not, of itself, an active representation that no such interest is claimed.135

ESTOPPEL BY NEGLIGENCE 3.27 An ‘estoppel by negligence’ is defined by reference to another way in which B may be responsible for A’s faith in a proposition on which A detrimentally relies without B having himself represented it to B, namely by causing A to be misled by a breach of duty of care owed by B to A. To establish such breach of duty does not, however, dispense with the requirement of detrimental reliance. The breach has no effect as an estoppel unless it induces or allows in the mind of A belief in the existence or non-existence of some state of things or rights, in which belief A adopts a course of action, to his detriment, which he would not otherwise have adopted,136 since the estoppel to which this label has been

MIOM 1 Ltd v Sea Echo ENE (No 2) [2012] 1 Lloyd’s Rep 140 at [49]–[50], 146 with Bremer Hgs mbH v Deutsche Conti-Hgs mbH n 129 above at 693, col 2 per Lloyd J ‘the fact that the buyers only accepted the tender subject to proof of force majeure was a natural precaution … It could not possibly be said that the buyers have thereby waived all other objections’; The ‘Athos’ n 131 above at 136, col 1, per Kerr LJ ‘emphatic reliance upon some important disputed point does not by itself, in my view, imply an unequivocal representation to the effect that compliance with other parts of the bargain is thereby waived’; and Argo Systems FZE v Liberty Insurance (Pte) [2012] 2 All ER (Comm) 126 at [44]–[50], 139c–140f per Aikens LJ; see also Hanning v Top Deck Travel Group Ltd (1994) 68 P & CR 14, CA where opposition on every planning ground available to the commercial use of a farm apart from the passage of buses to and from the farm did not constitute a representation that there was no objection to such passage. 134 Barton v London and North Western Rly Co (1889) 24 QBD 77; British Linen Co v Cowan (1906) 8 F 704; Lemmerbell Ltd v Britannia LAS Direct Ltd n 129 above; A & J Mucklow (Birmingham) Ltd v Metro-Cammell Weymann Ltd [1994] EGCS 64; contrast Algar v ­Middlesex CC n 66 above; see also Low v Bouverie [1891] 3 Ch 82. 135 J & H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 45 ALJR 625; Barclays Bank Ltd v Taylor [1974] Ch 137; Smith (1977) 93 LQR 541 at 552–6; contrast Abigail v Lapin [1934] AC 491. 136 See Freeman v Cooke n 22 above per Parke B; Swan v North British Australasian Co n 23 above at 181 per Blackburn J and at 188 per Cockburn CJ; Halifax Union v Wheelwright (1875) LR 10 Exch 183 at 192: ‘A man cannot complain of the consequences of his own

124

Estoppel by negligence 3.28

attached is a species of reliance-based estoppel.137 As will be seen, this form of estoppel has been invoked where B’s breach of duty of care to A has enabled a third party, C, to make a representation to A and allowed A to rely on that representation to his detriment, whereas estoppel by silence or acquiescence, considered above, has been founded on a responsibility of B to contradict A’s mistaken belief without reference to its source.

Elements of the doctrine 3.28 An estoppel by negligence has been said to have three elements: (i) a breach of a duty of care owed by B to A;138 (ii) the breach is the proximate cause of

default against the person who was misled by that default’; Carr v London and North Western Rly Co (1875) LR 10 CP 307 at 318: ‘If in the transaction itself which is in dispute, one has led another into the belief of a certain state of facts by conduct of culpable negligence calculated to have that result and such culpable negligence has been the proximate cause of leading, and has led, the other to act by mistake upon such belief, to his prejudice, the second cannot be heard afterwards, as against the first, to show that the state of facts referred to did not exist’; Bell v Marsh n 6 above at 541 per Collins MR: ‘He is entitled to say that the representation was made … by conduct, and conduct may include negligence. A man may act so negligently that he must be deemed to have made a representation which in fact he did not make’; MacMillan v London Joint Stock Bank [1917] 2 KB 439, CA at 459 per Scrutton LJ: ‘As to estoppel by negligence, I do not understand what is meant by this phrase unless it gives rise to some statement or conduct which in fact misleads’; n 95 above, HL at 817 per Lord Haldane; Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd n 23 above, at 110D–E: ‘And their Lordships would reiterate that unless conduct can be interpreted as amounting to an implied representation, it cannot constitute an estoppel: for the 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: Greenwood v Martins Bank Ltd [n 22 above] per Lord Tomlin, at 57’. 137 This paragraph in the second edition received the approval of Lord Pearson in Saunders v Anglia Building Society [1971] AC 1004 at 1038. 138 Swan v North British Australasian Co Ltd n 23 above at 182 per Blackburn J; Fine Art Society Ltd v Union Bank of London Ltd (1886) 17 QBD 705, CA; Arnold v Cheque Bank n 99 above at 587; Johnson v Credit Lyonnais Co n 45 above at 42; Scholfield v Earl of Londesborough n 71 above; Union Credit Bank v Mersey Docks and Harbour Board No 2 [1899] 2 QB 205 at 213–4; Farquharson Bros & Co v King & Co [1902] AC 325 at 332; Rimmer v Webster [1902] 2 Ch 163; Bell v Marsh n 6 above at 541, CA; Smith v Prosser [1907] 2 KB 735 at 746; Scriven Bros v Hindley & Co n 102 above at 569; Heap v Motorists’ Advisory Agency Ltd [1923] 1 KB 577 at 587; R.E. Jones Ltd v Waring and Gillow Ltd n 15 above at 693; Mercantile Bank of India Ltd v Central Bank of India Ltd n 23 above; Wilson and Meeson v Pickering [1946] KB 422 at 425, CA; Central Newbury Car Auctions Ltd v Unity Finance Ltd [1957] 1 QB 371, CA; Mercantile Credit Co Ltd v Hamblin [1965] 2 QB 242; J Sargent (Garages) Ltd v. Motor Auctions (West Bromwich) Ltd [1977] RTR 121; Moorgate Mercantile Co Ltd v Twitchings n 23 above at 919C–D per Lord Edmund-Davies; The ‘Odenfeld’ [1978] 2 Lloyd’s Rep 357 at 375–378; Cadogan Finance Ltd v Lavery [1982] Com LR 248; Beverley Acceptances Ltd v Oakley [1982] RTR 417 at 439; and see Ramsay v Love [2015] EWHC 65 (Ch) at [116].

125

3.28  Responsibility

A being misled;139 and (iii) the duty is breached in the same transaction140 as A is misled.141

Limited scope of the doctrine 3.29 To raise an estoppel, it is necessary to formulate the proposition which B is estopped from denying, and to prove that B was responsible for A believing or subscribing to it (or continuing to do so). Estoppel by negligence has been invoked in cases in which the inducement on which A has relied arose from the actions not of B, but of C142 such as, for instance, filling out the blanks left in a document signed by B,143 or selling goods of which, or of whose indicia of title, B has given C possession:144 the principle sets the limits of accountability of B for such actions of C. 3.30 For, if A relied on a representation made to him by B himself or the failure of B to speak when he had a duty to do so,145 there is no need to deploy

139 Swan v North British Australasian Co Ltd n 23 above at 177, 182, 186, 191–2; Carr v London and North Western Rly Co n 136 above; Baxendale v Bennett (1878) 3 QBD 525, CA; Seton v Lafone (1887) 19 QBD 68, CA viz ‘real cause’ per Esher MR, Lopes LJ; Coventry, S­ heppard & Co v Great Eastern Rly Co (1883) 11 QBD 776 at 780, CA viz ‘direct and immediate cause’ per Brett MR; Staple of England v Bank of England (1887) 21 QBD 160 at 176, CA viz ‘natural or necessary, or direct consequence’ per Bowen LJ; Union Credit Bank v Mersey Docks and Harbour Board (No 2) n 138 above at 214 viz ‘Causa Causans’ per Bigham J; Bell v Marsh n 6 above; Longman v Bath Electric Tramways Ltd [1905] 1 Ch 646 at 662, CA; Lewes Sanitary Steam Laundry Co Ltd v Barclay, Bevan & Co Ltd n 99 above at 266: ‘Has flowed in natural and uninterrupted sequence from the negligent act’ per Kennedy J; London Joint Stock Bank v MacMillan n 95 above at 815 ‘has resulted immediately from it and not from some intervening cause which … was not itself brought into existence as an immediate and natural outcome of his action.’ per Viscount Haldane; Lloyds Bank v Chartered Bank of India, ­Australia and China [1929] 1 KB 40 at 60: ‘In order to act as an estoppel negligence must be the proximate cause of the loss. If my butler for a year has been selling my vintage wines cheap to a small wine merchant, I do not understand how my negligence in not periodically checking my wine book will be an answer to my action against the wine merchant for conversion.’ per Scrutton LJ; Wilson and Meeson v Pickering n 138 above at 425: ‘real cause’ per Lord Greene MR; Campbell Discount Co Ltd v Gall [1961] 1 QB 431 at 443; Mercantile Credit Co Ltd v Hamblin n 138 above at 275: ‘proximate or real cause’ per Pearson LJ; Royal Bank of Scotland plc v Sandstone Pties Ltd [1998] 2 BCLC 429 at 434f. 140 Bank of Ireland v Evans’ Charities Trustees (1855) 5 HL Cas 389; Swan v North British ­Australasian Co n 23 above; Carr v London and North Western Rail Co n 136 above; Arnold v Cheque Bank n 99 above; Staple of England v Bank of England n 139 above; Longman v Bath Electric Tramways Ltd n 139 above at 663; Lewes Sanitary Steam Laundry Co v Barclay, Bevan & Co n 99 above at 267–269; London Joint Stock Bank v MacMillan n 95 above at 795, 834–835; Royal Bank of Scotland plc v Sandstone Pties Ltd n 139 above. 141 This paragraph was cited with approval in Cadbury Schweppes Plc v Halifax Share Dealing Ltd [2006] BCC 707 at [49], 722. 142 Abigail v Lapin n 135 above at 507; Ewart: Principles of Estoppel (1900) at p 18 classifies it as ‘Assisted Misrepresentation’. 143 See 3.46 onwards. 144 See 3.40 onwards. 145 See 3.12–3.26.

126

Estoppel by negligence 3.32

a principle of estoppel by negligence, as the criteria of estoppel by representation or breach of duty to speak will apply. In such cases, the requirements for an estoppel by negligence, as to breach of duty of care and causation,146 will not be satisfied in any case in which the alternative147 requirements of responsibility, reliance and inducement148 for an estoppel by representation or breach of duty to speak are not also satisfied. There is, therefore, neither room nor need for the principle of estoppel by negligence to operate if there is a material representation made by B, or if B breaches a duty to speak arising from B’s knowledge and the relationship between the parties. 3.31 If the representation on which A relied was made by C, but C had actual or apparent authority from B to make the representation, the representation is the principal’s and, again, B will be estopped by it or not on the ordinary criteria applicable to an estoppel by representation. Thus, if C has apparent authority to make the representation, there is no need to apply a principle of estoppel by negligence.149 Many of the cases in which the doctrine of estoppel by negligence has been invoked have been determined according to whether C had apparent authority to make the representation,150 and it is open to question whether B may be estopped by negligence by the representation of C where C does not have his apparent authority to make the representation; that is, whether there is any scope for a doctrine of estoppel by negligence at all.

The duty of care 3.32 It has not been authoritatively determined whether an estoppel by negligence is founded upon the same duty of care as the tort of negligence;151 both duties identify those to whom a party is responsible for his words and actions,

146 See 3.28. 147 Carr v London and North West Railway n 136 above; Seton v Lafone n 139 above. 148 See 5.4–5.18. 149 Apparent authority itself, according to the traditional view, binds a principal by reason of an estoppel, the party estopped having held out the third party to the estoppel raiser as having authority to make the representation: see 9.2–9.17; Bowstead and Reynolds on Agency (20th edn) Arts 72, 83–85 and [8-028]. On this analysis the question is one of double estoppel: whether the principal is estopped from denying that the agent had authority to make a representation that he is estopped from denying. 150 Johnson v Credit Lyonnais Co n 45 above; Mercantile Bank of India Ltd v Central Bank of India Ltd n 23 above at 297; Farquharson Bros & Co v King & Co, Rimmer v Webster, Wilson and Meeson v Pickering at 427, Central Newbury Car Auctions v Unity Finance Ltd, Mercantile Credit Co Ltd v Hamblin at 268F, 271A, 275G, 281C, Cadogan Finance Ltd v Lavery, all at n 138 above; Eastern Distributors Ltd v Goldring [1957] 2 QB 600 at 606, 611; Campbell Discount Co Ltd v Gall n 139 above at 438, 442, 444. 151 In The ‘Good Luck’ [1988] 1 Lloyd’s Rep 514 at 547–8, Hobhouse J held that the breach of a duty to speak which founds an estoppel by silence may also, in the absence of special circumstances, found a tortious liability in damages, a point not directly discussed in the appellate courts (n 36 above); this was assumed but not decided in Banque Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd n 28 above at 804A–B, CA (aff’d on other grounds [1991] 2 AC 249); cf Moorgate Mercantile Ltd v Twitchings n 23 above at 903E per Lord Wilberforce.

127

3.32  Responsibility

but breach of one gives rise to an estoppel (raised in order to create or preclude liability) and breach of the other gives rise to direct liability to compensate for loss caused. It is submitted that this difference in consequence is not such as to make a difference in ambit or onus between the two duties of care: the modern restrictions on the duty of care in tort should, therefore, be applied to the doctrine of estoppel by negligence. Many authorities on estoppel by negligence, however, speak of a duty that may be owed to the general public,152 whereas it now seems that no duty of care will be owed (in tort), even in respect of a party’s own representation, unless the party knows or ought to know that the representation will be communicated to the complainant specifically, or as a member of an identifiable class, for a particular purpose, or in a particular transaction, and it is likely that the complainant will act on it without independent verification.153 These two positions may, however, be reconciled if, as it seems, a member of the public may qualify ex post facto as a member of the identifiable class154 by reason of the very conduct, induced by the representor’s negligence, that gives rise to his loss.155 3.33 It has also been said that B will not be liable for the actions of C unless they are highly probable results, as opposed to merely possible consequences, of his own conduct:156 and that, to be liable for C’s actions, B must cause C’s actions by his own conduct rather than allowing them by pure omission.157 In The ‘Odenfeld’,158 Kerr J held B estopped by negligence on the basis that there was a serious risk, or it was more likely than not, as was obvious to and, in fact, foreseen by B, that C, actively enabled by B, would mislead A in a specific manner in a specific transaction. This indicates, in answer to the question above,159 a sphere of operation of estoppel by negligence which does not fit comfortably into a framing as a question of apparent authority, where A is not misled into believing that C’s representation had B’s authority or was specifically binding on B, but, because B’s negligence enabled or allowed C to mislead A in a way B should have foreseen, it is unjust for B to deny what C has represented. In Saunders v Anglia Building Society n 137 above, only negligence precluding reliance on the doctrine of non est factum, not the negligence that would found an estoppel, was distinguished from the tort of negligence. 152 Swan v The North British Australasian Co Ltd n 23 above at 182; R.E. Jones Ltd v Waring and Gillow Ltd n 15 above at 693; Mercantile Bank of India Ltd v Central Bank of India Ltd n 23 above at 309; and Fine Art Society Ltd v Union Bank of London Ltd; Mercantile Credit Co Ltd v Hamblin at 278; contrast Heap v Motorists’ Advisory Agency Ltd at 587; J Sargent (Garages) Ltd v Motor Auctions (West Bromwich) Ltd, all at n 138 above. 153 Hedley Byrne & Co Ltd v Heller and Partners Ltd [1964] AC 465; Smith v Eric S Bush [1990] 1 AC 831 at 865 per Lord Griffiths; Caparo Industries plc v Dickman n 85 above at 621E, 624D–F, 628B–E, 641F, 658B, 661C–D. 154 Viz the class of people who so conduct themselves, eg the class of people who enter the relevant transaction in reliance on a negligent misrepresentation addressed to the world at large in a newspaper advertisement. 155 See 6.3–6.4. 156 Smith v Littlewoods Ltd [1987] AC 241 at 261E per Lord Mackay. 157 Smith v Littlewoods Ltd n 156 above at 270 ff per Lord Goff. 158 Note 138 above at 375–378. 159 At 3.31.

128

Estoppel by negligence 3.34

No breach of duty 3.34 The following conduct, in the absence of special knowledge as to the particular consequences that would ensue for the estoppel raiser, has been held not to constitute a breach of duty of care such as to found an estoppel by negligence: (1) B carelessly loses his goods or allows them to be stolen;160 or B carelessly allows a signed but uncompleted bill of exchange to be stolen.161 (2) A company entrusts its secretary with the company seal,162 or the key to a safe containing bearer debentures;163 or B trusts his cheque book to a clerk,164 or trusts his clerk to pay his bills.165 (3) A company entrusts its clerk to pay postal orders into its account knowing the clerk has an account at the same branch,166 or employs a clerk167 or a company secretary,168 with knowledge of his previous conviction for forgery, or with knowledge of his previous conviction for embezzlement, failing to lock up cheques payable to its order;169 or beneficiaries allow a trustee to retain share certificates in his name with knowledge of a prior conversion, subsequently corrected, by the trustee.170 (4) A drawer of a bill of exchange also breaches no duty of care to subsequent holders by filling and signing the bill in such a manner as to render alterations easy171 (as opposed to signing in blank, which confers authority on future holders to fill in the blank).172

160 Swan v North British Australasian Co n 23 above at 181; Farquharson Bros & Co v King & Co n 138 above at 335–6; Central Newbury Car Auctions Ltd v Unity Finance Ltd n 138 above. 161 Baxendale v Bennett n 139 above (but contrast Ingham v Primrose (1859) 7 CBNS 82 at 85 where a completed instrument was stolen); Arnold v Cheque Bank n 99 above; Tai Hing Ltd v Liu Chong Hing Bank n 23 above. 162 Bank of Ireland v Trustees of Evans’ Charities n 140 above; Staple of England v Bank of England n 139 above. 163 Bechuanaland Exploration Co v London Trading Bank [1898] 2 QBD 658. 164 London Joint Stock Bank v MacMillan n 95 above at 815. In the cases at nn 162–169, companies were not held accountable for representations by fraudulent employees. Contrast the ­dictum that ‘business would come to a standstill if persons who received documents from clerks and secretaries, acting in the course of their employment, were not entitled to assume that these documents were sent with the authority of the employer’: Shearson Lehman Bros Inc v Maclaine Watson & Co Ltd (No 2) [1988] 1 WLR 16 at 28 per Lord Bridge. 165 Bailey and Whites Ltd v House (1915) 31 TLR 583. 166 Fine Art Society Ltd v Union Bank of London Ltd n 138 above. 167 Lewes Sanitary Steam Laundry Co Ltd v Barclay, Bevan & Co Ltd n 99 above. 168 Vagliano Bros v Bank of England (1889) 23 QBD 243, CA. 169 Patent Safety Gun Cotton Co v Wilson (1880) 49 LJQB 713, CA. 170 Shropshire Union Rlys and Canal Co v Robson (1875) LR 7 HL 496. 171 Société Générale v Metropolitan Bank (1873) 27 LT 849; Scholfield v Earl of Londesborough n 71 above. 172 Swan v North British Australasian Co n 23 above at 185; s 20 of the Bills of Exchange Act 1882.

129

3.34  Responsibility

(5) The guarantor of a lease who provides his business manager (who has extensive authority to bind him contractually in a wide range of contractual matters) with a signature writing machine which the business manager uses to execute the guarantee does not breach a duty to the lessor to take care as to the circumstances in which the machine might be used.173 Breach of duty 3.35

By contrast with 3.34(4) above, however:

(1) A customer who draws a cheque in such a manner as to facilitate fraud or forgery breaches the duty of care owed to his bank and may be estopped by such negligence.174 (2) A person who signs a document in blank and entrusts it to another has a duty of care to the class of persons with whom he contemplates or ought to contemplate the document will be used by the intermediary to form the basis of a transaction of the type he has or ought to have in mind.175 Whether the duty is breached depends on whether, in the circumstances, it was reasonable for the signatory to trust the intermediary, or the signatory could reasonably foresee the fraud.176 The signing and entrustment of the blank document creates a presumption of negligence, placing the onus on the signatory to show that reliance on the intermediary was reasonable.177 Duty of care: conclusion 3.36 There is uncertainty as to the degree of foresight B must have that a representation may or will be made by C to A as a consequence of his conduct for B to be under a duty of care whose breach may estop him from denying the representation: whether the consequence must be reasonably foreseeable, more likely than not, probable, obvious, or certain.178 Nor is foreseeability the sole criterion for the existence of a duty of care, but it has not yet proved possible to formulate complementary criteria of universal application: so, it is necessary to proceed by tentative analogy with existing decisions.

173 Ramsay v Love n 138 above at [116]–[117]. 174 See 3.20. 175 Mercantile Credit Co Ltd v Hamblin n 138 above at 265E–G per Sellers LJ and at 274F–275D per Pearson LJ; cf Salmon LJ at 278G–279A who speaks of a duty owed to the whole world, but see 3.32. 176 Mercantile Credit Co Ltd v Hamblin n 138 above at 265G, 275F, 279B–E: there was no breach of duty of care as the signatory was ‘well acquainted with the dealer, who was apparently respectable, solvent and prosperous, and the blank cheque which he gave her would naturally give her confidence that she could rely on his due performance of the arrangement which they had made.’ per Pearson LJ at 275D–E (followed in Ramsay v Love n 138 above at [117]). 177 United Dominions Trust Ltd v Western n 72 above; cf Campbell Discount v Gall n 139 above. 178 See 3.32.

130

Estoppel by negligence 3.39

Negligence in the transaction – proximate cause 3.37 It is similarly difficult to define a line between negligence which is and negligence which is not ‘in the transaction’,179 and a cause which is and a cause which is not ‘proximate’,180 other than by way of paraphrase181 or the provision of examples. Any carelessness there is in employing C as a clerk or secretary with knowledge of his previous conviction for fraud has been said not to be negligence in the transaction in which C subsequently defrauds his employer and A;182 it has also been said (where the requisite degree of foreseeability of the fraud was lacking) that it is C’s fraud which is the proximate cause of A’s loss rather than the negligence of B, who enabled C to carry out the fraud by allowing him possession of goods183 or a document signed in blank.184 If, however, the duty of care necessary for an estoppel by negligence is the duty of care in the tort of negligence, it is doubtful whether these two requirements for an estoppel by negligence (that the negligence be in the transaction and the proximate cause of A being misled) add to, rather than explicate, the requirement that a breach by B of a duty of care owed to A caused or allowed A’s belief.185 That chain of causation will be broken if A was put on inquiry as to the truth, and through his own carelessness failed to discover it.186

Parting with property, indicia of title or documents signed in blank 3.38 Appeal has most often been made to the doctrine of estoppel by negligence when B has allowed C possession of property, indicia of title, or a document signed in blank; C completes the document, or sells or encumbers the property, without, or in excess of his, authority from B; A seeks to estop B from denying either C’s authority to complete the document or that C had the right (by virtue of agency or ownership) to deal with the property as he did. Examination of the authorities demonstrates the limited ambit of the doctrine suggested above. Statute 3.39 A may be assisted by statute. If the case is within s 2(1) of the F ­ actors Act 1889,187 he will not need to raise an estoppel. If the owner of goods is 179 See n 140 above. 180 See n 139 above. 181 See n 139 above. 182 See 3.33. 183 Cadogan Finance Ltd v Lavery n 138 above. 184 Swan v North British Australasian Co n 23 above at 177; Baxendale v Bennett; Campbell Discount Co Ltd v Gall, both n 139 above. 185 Cf Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1997] AC 191. 186 Williams v Colonial Bank (1888) 38 Ch D 388; Sheffield v London Joint Stock Bank (1888) 13 App Cas 333, cf 5.12. 187 ‘Where a mercantile agent is, with the consent of the owner, in possession of goods or of the documents of title to goods, any sale, pledge, or other disposition of the goods, made by him

131

3.39  Responsibility

estopped from denying a vendor’s authority to sell to the estoppel raiser, the estoppel raiser acquires good title, even against a bona fide purchase for value from the owner, as recognised by s 21(1) of the Sale of Goods Act 1979.188 As against a signatory of a blank bill of exchange subsequently completed, he may be assisted by s 20 of the Bills of Exchange Act 1882,189 and in a transaction to which s 56 of the Consumer Credit Act 1974 applies the representations of the intermediary with whom he negotiates will be deemed to be those of the creditor or owner with whom he contracts. Possession of property or indicia of title 3.40 As suggested above, the first190 (and, on one view, the only)191 issue is whether B has made a voluntary192 unequivocal representation193 that C is the owner or has authority to dispose of the relevant property (and the other criteria applicable to a reliance-based estoppel are satisfied, including that of detrimental

when acting in the ordinary course of business of a mercantile agent, shall, subject to the provisions of this Act, be as valid as if he were expressly authorised by the owner of the goods to make the same; provided that the person taking under the disposition acts in good faith, and does not, at the time of the disposition, notice that the person making the disposition has not authority to make the same’; see Bowstead and Reynolds on Agency (20th edn) Art 87. 188 ‘Subject to this Act, where goods are sold by a person who is not their owner, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell’, see 11.2–11.10; and at common law Eastern Distributors Ltd v Goldring n 150 above at 611; Lloyds and Scottish Finance v Williamson [1965] 1 WLR 404; but not against those claiming by title paramount to that of the vendor or against rather than under the interest of the owner: see 9.35; cf 6.46; the section applies only to the completed sale, not to a contract for sale: Shaw v Metropolitan Police Comr [1987] 1 WLR 1332. 189 See 3.48; 11.67–11.80; the statute does not alter the criteria for an estoppel: Thomas Australia Wholesale Vehicle Trading Co Pty Ltd v Marac Finance Australia Ltd (1985) 3 NSWLR 452. 190 Eg Goodwin v Robarts (1876) 1 App Cas 476 at 489; Low v Bouverie n 134 above at 103–6; Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steamships Ltd [1947] AC 46 at 55–6; Moorgate Mercantile Co Ltd v Twitchings n 23 above at Headnote (1), 902, 917–18, 922–3; Mercantile Credit Co Ltd v Hamblin n 138 above at 268F per Pearson LJ. 191 See the first three editions of this work, in which estoppels successfully raised in the absence of any apparent representation are explained as cases of representation by silence (see also The ‘Odenfeld’ n 138 above at 376), but it seems unnecessarily artificial to base the estoppel upon a duty to speak owed to the estoppel raiser, arising by reason of a breach by the party estopped of a duty of care owed to the estoppel raiser which caused the latter’s belief, when the authorities (see nn 138–139 above) base the estoppel directly on the breach of the duty of care causing the belief. 192 Debs v Sibec Developments Ltd [1990] RTR 91 at 97K–L. 193 For instance, in Farquharson Bros & Co v King & Co n 138 above, the question was whether the party to be estopped had represented its fraudulent clerk to the innocent purchaser as having authority to dispose of its timber: it was held, although it had instructed the warehousing dock company to accept all transfer and delivery orders signed by the clerk, that no such representation had been made to the purchaser.

132

Estoppel by negligence 3.42

reliance on the representation).194 If so, then there is no need to deploy the doctrine of estoppel by negligence. 3.41 To allow C possession of property or its indicia of title does not, however, of itself, constitute a representation that C owns or has authority to deal with the property on which an estoppel by direct representation may be founded,195 nor a breach of duty of care to A such as to found an estoppel by negligence precluding denial of that proposition.196 If, on the other hand, B foresaw or should have foreseen197 that C would deal with B’s property beyond his authority when he allowed C possession and A (or someone from the identifiable class of which he is a member) would be likely to deal with him without verifying his authority, then on the approach adumbrated above,198 B may be estopped, by his negligence in enabling C to mislead A, from denying C’s authority.199 Most of the authorities in this area, however, as considered below, are concerned with whether B’s conduct as a whole, in all the circumstances, constitutes a representation that the possessor of the property or indicia of title has ownership, or authority to dispose, of the property. 3.42 B may, however, represent that C owns his property by the execution of an absolute transfer of the property to C acknowledging receipt of payment for it200 or by authorising C to represent himself to be the owner of the 194 Wilson and Meeson v Pickering n 138 above; Shaw v Metropolitan Police Comr n 188 above; Motor Credits (Hire Finance) Ltd v Pacific Motor Auctions Pty Ltd (1963) 109 CLR 87 (rev’d on other grounds [1965] AC 867); see also Paine v Bevan and Bevan (1914) 110 LT 933; Cohen v Freedman (1921) 20 AWN 55. 195 Cole v North Western Bank (1875) LR 10 CP 354 at 362 (possession of goods to warehouseman and broker); Johnson v Credit Lyonnais Co n 45 above (goods purchased but dock warrants left with vendor and no steps taken to change dock company books); Weiner v Gill [1905] 2 KB 172 at 182 (possession of jewellery with instructions to sell for cash only; cf Lloyds and Scottish Finance v Williamson n 188 above); Jerome v Bentley & Co [1952] 2 All ER 114 (possession of jewellery with authority to sell limited in time); Central Newbury Car Auction Ltd v Unity Finance Ltd n 138 above (possession of car and log book to stranger); J Sargent (Garages) Ltd v Motor Auctions (West Bromwich) Ltd n 138 above (possession of car to friend); Cadogan Finance Ltd v Lavery n 138 above (giving possession of car is no representation of authority); Beverley Acceptances Ltd v Oakley n 138 above (possession of car and registration document with no grounds for suspicion); cf Re Brass Mist Ltd (1986) 2 BCC 99, 104 (possession of headed notepaper). 196 See 3.34. 197 Whichever is the proper test: see 3.32–3.33 and 3.36. 198 See 3.32–3.33 and 3.35 in relation to documents signed in blank. 199 In Leonard v Ielasi (1987) 46 SASR 495 the owner was bound because he received notice that the third party who had borrowed his car had changed its registration into his own name and took no action; but contrast Debs v Sibec Developments Ltd n 192 above: no estoppel by failure to report both the theft of car and that the owner was forced to sign a receipt of payment for it; cf also, General Finance and Facilities Ltd v Hughes (1966) 110 Sol Jo 847; United Dominions Trust Ltd v Western n 72 above in which a party notified by receipt of a copy of the completed agreement he had signed in blank, that his intermediary had filled it out in excess of authority, was estopped by failure to notify the finance company within a reasonable time. 200 Rice v Rice (1854) 2 Drew 73; Rimmer v Webster n 138 above, 173–4; Re King’s Settlement [1931] 2 Ch 294; Tsang Chuen v Li Po Kwai [1932] AC 715, PC; Abigail v Lapin n 135 above; see also Shaw v Metropolitan Police Comr n 188 above.

133

3.42  Responsibility

property;201 but a beneficiary who merely allows his trustee to hold the legal title to the trust property makes no such representation and will not be estopped from asserting his prior interest against those who acquired an equitable interest in the property from the trustee in breach of trust202 (although a disposition of the legal estate to a bona fide purchaser for value without notice will, of course, bind the beneficiary). 3.43 The difficulty of reconciling the authorities in this area reflects the nicety of balancing the interests of owner and innocent purchaser, and of determining whether the owner has made a representation as to authority or ownership of the intermediary by the particular manner in which he has allowed the particular intermediary control of his property. For instance, transfer of goods into the name of another (procured by the other’s fraud) has been held to constitute a representation to an innocent purchaser as to the other’s ownership of the property, such as to bind the true owner, where the bailee of the goods also attorned to the innocent purchaser,203 and to constitute a representation of authority to sell where C was a broker whose ordinary business was to buy and sell;204 but to leave property in the name of a vendor who is not a broker does not constitute such a representation and will not found an estoppel.205 3.44 The circumstances may be such that entrustment of the property or its indicia of title amounts to an unequivocal representation that the holder is the owner206 of the property or has authority (not actually given) to dispose of the property. The inference of such a representation as to authority to make the relevant disposal of the property has been assisted in some cases by the fact that it is the intermediary’s business to make such a disposal;207 but, for the representation to be unequivocal,208 it must be reasonable for A to conclude that C has the 201 Eastern Distributors Ltd v Goldring n 150 above; Stoneleigh Finance Ltd v Phillips [1965] 2 QB 537; Snook v London and West Riding Investments Ltd [1967] 2 QB 786. 202 Shropshire Union Railways and Canal Co v R (1875) LR 7 HL 496; Burgis v Constantine [1908] 2 KB 484; cf Re King [1931] 2 Ch 294 where the beneficiaries were estopped because the settlor’s conveyance by deed of gift to the trustees misleadingly represented them to be absolute owners, and Lloyds Bank v Bullock [1896] 2 Ch 192 where the beneficiary gave the trustee authority to sell. 203 Henderson v Williams [1895] 1 QB 521, but as to the limits of this authority, see Lindley LJ at 531 and Farquharson Bros & Co v King & Co n 138 above. 204 Pickering v Busk (1812) 15 East 38; but see 3.44–3.45. 205 Johnston v Credit Lyonnais (1877) 3 CPD 32. 206 Marshall v National Provincial Bank (1892) 61 LJ Ch 465; Bentinck v London Joint Stock Bank [1893] 2 Ch 120. 207 Pickering v Busk n 204 above; Colonial Bank v Cady (1890) 15 App Cas 267, as explained in Mercantile Bank of India Ltd v Central Bank of India Ltd n 23 above at 302–303; London Joint Stock Bank v Simmons [1892] AC 201 at 213; Fuller v Glyn, Mills, Currie & Co [1914] 2 KB 168 (doubted in Tobin v Broadbent (1947) 75 CLR 378 at 393 per Latham CJ and not followed in Pan-Electric Industries Ltd v Sim Lim Finance Ltd [1993] 3 Sing LR 242); Motor Credits (Hire Finance) Ltd v Pacific Motor Auctions Pty Ltd n 194 above, obiter, at 99. 208 Colonial Bank v Cady n 207 above at 274, 280; Mercantile Bank of India Ltd v Central Bank of India Ltd n 23 above, where a railway receipt carried authority to take delivery, but not to dispose, and possession was allowed for that limited purpose in accordance with prevailing commercial practice; Tobin v Broadbent n 207 above at 393, 403–6 per Latham CJ, Dixon J; see 4.5–4.44.

134

Estoppel by negligence 3.45

necessary power of disposal (by virtue of ownership or authority) rather than that is one (albeit a strong) possibility only. Whether a disposal in excess of authority by a broker to whom the owner has entrusted Share Certificates and a Transfer signed in blank binds the owner because the disponee reasonably concludes that the intermediary has power to make the disposal will, therefore, depend on the nature of the disposal and the prevailing practice:209 one line of authority holds that such a conclusion may not be drawn,210 and another that it may.211 3.45 There is, further, a line of authority212 that, if an agent is entrusted with the means to dispose of property and given limited authority213 to dispose, the principal will be bound by a disposal outside that limit against a disponee for value acting in good faith without notice of the limit. These cases focus on the conferral of limited authority to dispose as obliging the owner to make known the limits of that authority, rather than on the objective impression that the owner’s conduct makes on the disponee.214 The owner would, therefore, appear to be bound, in terms of estoppel, by negligence rather than direct representation. These authorities have been said to form part of the law of priority, rather than

209 Tobin v Broadbent n 207 above, 403–6 per Dixon J. 210 Tayler v Great Indian Peninsular Rail Co (1859) 4 De G & J 559; France v Clark (1884) 26 Ch D 257; Hutchison v Colorado Mining Co (1886) 3 TLR 265; Fox v Martin (1895) 64 LJ Ch 473; Tobin v Broadbent n 207 above at 393; Pan-Electric Industries Ltd v Sim Lim Finance Ltd n 207 above. See also Swan v North British Australasian Co Ltd n 23 above (broker given transfer signed in blank stole certificates) and cases at n 186 above: a purchaser put on inquiry as to the truth may not raise an estoppel by negligence. 211 Colonial Bank v Cady n 207 above at 280, 286 per Lord Watson and Lord Herschell; Fuller v Glyn, Mills, Currie & Co n 207 above; Tobin v Broadbent n 207 above at 396 per Starke J. 212 Perry Herrick v Attwood (1857) 2 De G & J 21; Brocklesby v Temperance Building Society [1895] AC 173; Union Credit Bank v Mersey Docks and Harbour Board n 138 above at 210; Rimmer v Webster n 138 above; Fry v Smellie [1912] 3 KB 282; Lloyds Bank v Cooke [1907] 1 KB 794; Lloyds and Scottish Finance v Williamson n 188 above; Abbey National Building Society v Cann [1989] 2 FLR 265 at 276, CA, [1991] 1 AC 56 at 94B–F; Skipton Building Society v Clayton (1993) 25 HLR 596 at 602–603 per Slade LJ; Thompson v Foy [2010] 1 P & CR 16 at [142]–[143], 354–355; Bank of Scotland v Hussain [2010] EWHC 2812 (Ch) at [101]–[105]; Wishart v Credit & Mercantile Plc [2015] 2 P & CR 15; see also Re Henry Bentley & Co and Yorkshire Brewers Ltd (1893) 69 LT 204, CA. 213 It is not always easy to determine whether the agent has limited authority or no authority. If the agent has received the indicia of title for the property for the purpose of making a disposal but has not yet received authority to dispose (Smith v Prosser n 138 above) or his authority to dispose has been terminated (Jerome v Bentley n 195 above), then he has no authority rather than authority limited in time: the case then falls outside this line of authority and the disposal will not bind the owner; see Allcock (1982) 45 MLR 18 at 19–20. 214 The issue addressed does not, therefore, seem to be whether his conduct, as perceived by the disponee, amounts to an unequivocal representation that the third party has unlimited authority to dispose of the property (so as to oblige the owner to bring any qualification on that representation to the disponee’s notice); rather, the conferral of limited authority carries the responsibility of safeguarding against the intermediary exceeding the authority, perhaps because the owner is pursuing gain by the intermediary’s disposal under limited authority and must accept the attendant risk.

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the law of agency,215 and have been doubted for their inconsistency with the latter.216 It is not clear how these authorities can be reconciled with those in which employers were not bound by their employees’ fraudulent abuse of their authority.217 Documents signed in blank 3.46 The difficulties identified above also run through the authorities as to whether a party is bound by a document signed in blank as filled out by an intermediary to whom he has given it.218 In Wilson and Meeson v Pickering,219 Lord Greene MR said: ‘The view, which so far as my researches go, appears to me to have the weight of judicial opinion behind it is that, apart, of course, from some specific representation of authority or some holding out or some special character of the agent from which his authority would naturally be inferred, the rule that a person who signs an instrument in blank cannot be heard as against a person who changes position on the face of it, to allege that the instrument as filled in is a forgery or that it was filled in in excess of the agent’s authority, is confined to the case of negotiable instruments.’

3.47 If the document signed in blank is given to the intermediary for custody only, with no authority to use it or fill it in, the signatory will not be bound,220 unless the criteria for an estoppel by negligence are satisfied;221 but, if the intermediary is given limited authority to use the document and (expressly or implicitly) to fill it out, the signatory may be bound by failure to give notice of the limitation on such authority.222 The more recent authorities have expressly not followed Wilson and Meeson v Pickering on this point and have determined the issue in terms of estoppel by negligence: by whether the signatory caused A to rely on the completed document in breach of a duty of care owed to him.223 3.48 If a document signed in blank is a negotiable instrument, the signatory will not be bound if it is stolen from him.224 If he entrusts it to C to hold with 215 McMillan Inc v Bishopsgate Trust (No 3) [1995] 1 WLR 978 at 1012E–1013B; and see Mann v Shelfside Holdings n 33 above at [52]. 216 Bowstead and Reynolds on Agency (20th edn) Art 85. 217 See 3.34(2), (3). 218 See Allcock (1982) 45 MLR 18. 219 Note 138 above at 427; see Swan v North British Australasia Co Ltd n 23 above at 184–5, 189; Campbell Discount Co Ltd v Gall n 139 above at 443. 220 Smith v Prosser n 138 above. 221 Mercantile Credit Co Ltd v Hamblin n 138 above (as to which, see 3.35(2)); the dealer in that case had custody only of the documents, being under instruction to make enquiries only, and then report back before using the document (see at 268E). The CA considered that an estoppel by negligence might arise in such circumstances, albeit not on the facts of that case. 222 See 3.45. 223 Mercantile Credit Co v Hamblin n 138 above; United Dominions Trust Ltd v Western n 72 above; see also The ‘Odenfeld’ n 138 above; and Gallie v Lee [1969] 2 Ch 17 (rev’d on other grounds, sub nom Saunders v Anglia Building Society, n 137 above). 224 Baxendale v Bennett n 139 above; otherwise if it was stolen after completion: Ingham v ­Primrose (1859) 7 CBNS 82, 85.

136

Estoppel by negligence 3.50

no authority to use it or complete it, he will not be bound if it is completed and used.225 If B delivers the negotiable instrument with limited authority to fill it out, he will be bound by the instrument as filled out in excess of authority against a holder in due course under the proviso to s 20(2) of the Bills of Exchange Act 1882, unless the holder was put on inquiry by receiving the instrument still in blank.226 Although the payee is not a holder in due course, he may bind the signatory to an instrument filled out by an intermediary in excess of limited authority by reason of a failure to notify him of the limitation on such authority.227

Non est factum 3.49 To avail himself of the defence of non est factum, a signatory of a document, whether in blank228 or not, must prove not only that he intended to sign a document of a radically different nature, but also that his mistake was not caused by his own carelessness: he need be under no duty of care to the parties relying on the document for his carelessness to deprive him of the defence, as he does not do so by way of estoppel, but under the principle ‘that no man may take advantage of his own wrong’.229

The ‘facilitation’ theory 3.50 This theory has been put forward as the equivalent of, and as an alternative to, the theory on which estoppel by negligence is usually justified. It originated with the proposition of a rule enunciated by Ashurst J, towards the close of the eighteenth century, in the following terms: ‘Whenever one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it.’230

This, like other general formulae, presents superficial attractions, and some apparent plausibility. It has seemed to many minds not unfair that he who, however innocently, put the means before the eyes of a potential wrongdoer whereby a wrong is done should be compelled to make good to another, as innocent as himself, the loss which the latter has suffered from the commission of the ill deeds. Accordingly, when dealing with cases of estoppel by representation, some judges have grounded their decision on the formula in question, as well as on the

225 226 227 228 229

Smith v Prosser n 138 above; but see n 221 above. France v Clark n 210 above at 262. Lloyds Bank Ltd v Cooke n 212 above; but see Wilson and Meeson v Pickering n 138 above. United Dominions Trust Ltd v Western n 72 above. Saunders v Anglia Building Society n 137 above at 1019F per Lord Hodson, 1038 per Lord Pearson. 230 Lickbarrow v Mason (1787) 2 Term Rep 63 at 70.

137

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estoppel rule, in the view, apparently, that the two are equivalent, though alternative, methods of arriving at the same result.231

Criticism of the theory 3.51 The dangerous vagueness and seductive generality of a maxim which fixes with responsibility the mere ‘facilitation’ or ‘enabling of’ or the mere giving of ‘opportunity’, ‘occasion’ or ‘scope’ for a wrongful act seems to have escaped notice for a time. It gradually became accepted, however, that the doctrine as enunciated above is much too wide to merit unqualified acceptance; for, in its plain and primary meaning, it could result in throwing the entire loss arising from the wrongful act of the third person upon one who has been guilty of nothing more than unbusinesslike conduct and deprive him of his legal rights for no other reason than that he has carelessly conducted his own affairs, as, for instance, by losing his cheque book, not locking up his goods, allowing a handkerchief to hang out of his pocket, not chaining up his dog, leaving ‘a watch or ring on a seat in the park or on a table in the café’, trusting a servant with goods or authority, lending a book to a second hand bookseller, ‘selling a pistol or a dagger to some person who comes to buy in his shop’ or, in short, doing or delivering anything which carries with it ‘the physical possibility of deception’, all of which acts and omissions may, in one sense, be taken to ‘enable’ or ‘facilitate’ or ‘give opportunity for’ crime and wrong; yet, it is wrong to suggest (though it has been so argued in a number of the authorities) that any of them have an effect on the title of the party, or his right to assert that title. Accordingly, the courts have declined to extend the ordinary principles governing the establishment of an estoppel by allowing the plea of facilitation to oust the essential principles of causation or, in the case of an estoppel by negligence, the necessity for breach of a duty of care, and there are numerous authoritative decisions emphasising the deceptive possibilities of too ready an acceptance of the formula.232

231 As in London and SW Bank v Wentworth (1880) 5 Ex D 96 at 105; Nash v De Freville [1900] 2 QB 72 at 83; Jacobs v Morris [1902] 1 Ch 816 at 830; Fry v Smellie n 212 above; Meyer & Co Ltd v Sze Hai Tong Banking and Insurance Co [1913] AC 847 at 852. 232 Société Générale v Metropolitan Bank (1873) 27 LT 849 at 853; Arnold v Cheque Bank n 99 above at 586–590; Hall v West End Advance Co (1883) Cab & El 161 at 164; Bank of England v Vagliano Bros n 95 above at 135; Biggs v Evans [1894] 1 QB 88 at 90; Scholfield v Earl of Londesborough n 71 above; Farquharson Bros & Co v King & Co n 138 above; Lewes Sanitary Steam Laundry Co Ltd v Barclay, Bevan & Co Ltd n 99 above at 267–269; Smith v Prosser n 138 above at 753; Wood v Clydesdale Bank 1914 SC 397 at 401; MacMillan v­ London Joint Stock Bank Ltd n 136 above at 459; rev’d n 95 above at 836; R.E. Jones Ltd v Waring and Gillow Ltd n 15 above at 692; Mercantile Bank of India Ltd v Central Bank of India n 23 above at 298; Commonwealth Trust Ltd v Akotey [1926] AC 72, PC in which the facilitation theory had been applied; Wilson and Meeson v Pickering n 138 above at 425; Thompson v Palmer (1933) 49 CLR 507 at 546.

138

Estoppel by negligence 3.52

3.52 The ‘facilitation’ theory, therefore, represents not a set of substitute criteria for those of the doctrine of estoppel, but a useful guide and important reminder that the task of the law in this area is the allocation of risk as between the owner or signatory and the purchaser or contractor with whom the intermediary deals: the authorities reflect a policy that the risk is that of the purchaser or contractor, unless the owner or signatory is responsible to him for his being misled as to the existence or extent of that risk.

139

140

CH A P T E R 4

Unequivocality and construction

Introduction  4.1 The representation must be unambiguous  4.5 Thorner v Major  4.13 Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd  4.34 Unequivocality and reasonable understanding: conclusion  4.37 Other issues: fraud, proprietary estoppel, conduct, silence  4.39 Recent examples  4.44 Construction  4.45 Meaning of the representation: law or fact?   4.46 Complex or qualified representations  4.49

INTRODUCTION Unequivocality 4.1 In this chapter we consider, first, the requirement for any reliance-based estoppel founded on a representation,1 including an estoppel by representation of fact or law,2 a promissory estoppel,3 a proprietary estoppel4 and an estoppel

1

2 3 4

Representation is used here, as throughout this and the previous edition of this work (see 1.8 n 38), to include not only representations of present fact, but also representations as to the future (ie promises) and the representation that a party to a convention makes as to his assent to the convention: see 8.8 onwards. See nn 13–15. See n 13. See nn 16–20 and 4.40.

141

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by convention,5 that the language or conduct upon which A6 relied must have represented to him unequivocally the proposition (or, in the case of estoppel by convention, assent to the proposition) which he seeks to estop B from denying. We suggest the following: (1) The requirement of unequivocality is a test of whether a representation of the relevant proposition has been made at all.7 If a representation is equivocal as to the relevant proposition, it has not represented that proposition. (2) If the evidence establishes that A understood the representation as B intended, the requirement is satisfied without further need to consider its clarity.8 (3) Otherwise, a representation of a proposition has not been made if what B has said or done is also consistent with its negation.9 (4) Whether this requirement is satisfied may be addressed by asking if it was reasonable for A to interpret what was said or done by B as A did without seeking clarification.10 (5) It is not reasonable for A to understand B as representing a proposition without seeking clarification, if what B said or did is consistent also with the negation of that proposition:11 the requirement is not, therefore, diluted by casting it as a question of whether A has reasonably understood B to represent the proposition. (6) If the circumstances are such as to place B also under a duty to speak, as may be the case where he is aware that A is relying to A’s detriment and/ or B’s benefit on one reasonable interpretation of what he has said or done, responsibility for clarification may shift to B such that B may be estopped by what would otherwise be an equivocal representation.12 4.2 That a representation must be unequivocal to found any reliancebased estoppel has been established by modern authority at the highest level: in Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd,13

5 See nn 15, 21–23 and 8.19–8.21. 6 Denoting, as throughout, the estoppel raiser, and ‘B’ the party to be estopped. 7 See 4.5, 4.6. 8 See 4.8, 4.14. 9 See 4.6, 4.10. 10 See 4.12, 4.37, 4.38. 11 See 4.31. 12 See 4.16, 4.27, 4.32, 4.36. 13 [1972] AC 741 at 755F, 758D, 761D–E, 768B, 771D; in Bolkiah v The State of Brunei [2007] UKPC 63 the Privy Council agreed in general terms that ‘in order for a representation to give rise to an estoppel it must be clear and unequivocal’.

142

Introduction 4.2

a ­promissory estoppel case, the House of Lords held, by reference to the Court of Appeal authority of Low v Bouverie14 on estoppel by representation of fact, that it is necessary, for any representation to found an estoppel from denying a proposition, that it represent the proposition unequivocally. In SmithKline Beecham Plc v Apotex Europe Ltd15 the Court of Appeal, considering estoppels by representation and by convention, stated the requirement of unequivocality to be ‘inherent in the very nature of an estoppel’. So also, in Thorner v Major, the Court of Appeal16 held that a representation must be unequivocal to found a proprietary estoppel, and the House of Lords17 upheld this ruling,18 approving the dictum of Hoffmann LJ in Walton v Walton19 that, for a promise to found a proprietary estoppel, ‘The promise must be unambiguous …’. Indeed, following this confirmation it has swiftly, per Tomlinson LJ in Southwell v Blackburn,20 become ‘trite law’ that a representation must be unequivocal to found a proprietary estoppel. As to estoppel by convention, if an agreement is established or conceded, the court may construe that agreement without requiring unequivocality, but the certainty of terms necessary for an agreement is still required, which ‘seldom’ falls below unequivocality;21 moreover, if assent to the convention is denied, A must, as a matter of principle,22 prove unequivocal assent to it by B.23

14

[1891] 3 Ch 82; see also The ‘Shackleford’ [1978] 2 Ll R 155 at 159; Channel Island Ferries Ltd Sealink UK Ltd [1987] 1 Ll R 559 at 580 (unaffected on appeal [1988] 1 Ll R 323). 15 [2007] Ch 71 at 103E per Jacob LJ, with the agreement of Moore-Bick LJ and Morritt C. The requirement, for estoppels by both representation and convention, was not disputed and the court so stated in approving the concession. 16 [2008] WTLR 1289 at [54], relying on statements as to its necessity for any estoppel by representation in JT Developments Ltd v Quinn [1991] 2 EGLR 257 (‘The law requires that a representation, if it is to provide the basis of an estoppel, be clear and unequivocal and that it be intended to be relied upon’ per Ralph Gibson LJ at 261) and Sidney Bolsom Inv Trust Ltd v E Karmios & Co (London) Ltd [1956] 1 QB 529 (‘But in order to work as an estoppel, the representation must be clear and unequivocal’ per Lord Denning MR at 540–1). 17 [2009] 1 WLR 776 per Lord Walker at [56], with the concurrence of Lord Scott at [11] and Lord Rodger at [22], and per Lord Neuberger at [84], Lord Hoffmann assuming the requirement at [7]–[8]; it is respectfully submitted that the reading of Thorner v Major in Thompson v Foy [2010] 1 P & CR 16 that an unequivocal representation is not required is wrong, as the Supreme Court approved the dictum of Hoffmann LJ that unambiguity is required, and it does not, contrary to the view in Thompson v Foy, follow from Lord Walker’s observation that silence may found a proprietary estoppel that unequivocality is not a requirement of a representation for it to found such an estoppel, for the reasons set out in 4.5 onwards and 4.13–4.33. 18 While reversing the decision on the facts and stressing the importance of context to the ­question as to whether the requirement is satisfied, as discussed at 4.13–4.33. 19 [1994] CAT No 479. 20 [2014] EWCA Civ 1347, [2014] HLR 47, per Tomlinson LJ at [6]. 21 Troop v Gibson [1986] 1 EGLR 1; Commercial Union Assurance plc v Sun Alliance Group plc [1992] 1 Ll R 474 at 481; Baird Textile Holdings Ltd v Marks & Spencer plc [2001] per Mance LJ at [9]; Durham v BAI (Run Off) Ltd [2009] 2 AER 26 at [273]; Republic of Serbia v Images at International NV [2010] 1 Ll R 324. 22 See 8.19 onwards. 23 In Blindley Heath Investments Limited v Bass [2016] 4 All ER 490 at [88], the Court of Appeal held that there must be ‘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’;

143

4.3  Unequivocality and construction

4.3 There are, nonetheless, for the reasons given below,24 exceptions to the requirement of objective unequivocality for the foundation of an estoppel on a representation. First, if it is found as a fact that A understood the representation as was intended by B,25 this may be regarded as satisfying the requirement of unequivocality in the form of subjective, as opposed to objective, unequivocality. Secondly, as to representation of assent to a convention, if an agreement is conceded or established, the court can construe it so as to determine the terms of the convention thereby agreed as foundation for an estoppel. It is thirdly, for the reasons given below,26 unnecessary to satisfy the criterion of unequivocality as an independent requirement for an estoppel by silence, as the estoppel is not founded on communication, but on a duty to contradict A’s belief:27 A may therefore bypass the requirement for unequivocality, but only by ­successfully negotiating the more difficult route of establishing that B was under that duty.28

Construction 4.4 We also briefly consider in this chapter the related question of the construction of the representation in question, with particular reference to whether it is a legal or factual issue, and how conflicting representations interact. In an estoppel claim, since A must establish that B’s representation, or their convention, is inconsistent29 with the fact, right or freedom from obligation that B now asserts, a crucial issue, particularly in cases of representation by conduct (as evidenced by the requirement of unequivocality itself), will often be the interpretation of the representation or convention, in order to determine

and in SmithKline Beecham Plc v Apotex Europe Ltd n 15, the Court of Appeal endorsed the agreement of the parties that the [sc assent to the] ‘common assumption … must be unambiguous and unequivocal’; see also Commercial Union Assurance plc v Sun Alliance Group plc [1992] 1 Ll R 474, at 481; BP plc v Aon Ltd [2006] 1 All ER (Comm) 789, at [270] per Colman J: ‘what “crossed the line” by way of manifestation … fell short of the unequivocal assent to the common understanding required for an operative estoppel by convention’ and Durham v BAI (Run Off) Ltd [2009] 2 All ER 26 at [273] per Burton J: ‘in order to create an estoppel, an assumption, just like a statement must be “clear and unambiguous”’ (unaffected on appeal [2012] 1 WLR 867). 24 At 4.8, 4.14, 4.42, 4.43. 25 See 4.8, 4.14. 26 See 4.42, 4.43. 27 See 1.86 onwards, 3.9 onwards. 28 Indeed, if A can establish that B was under a duty to correct A’s mistaken belief, it is p­ ossible that an ambiguous correction by B, by reason of the ambiguity, is understood by A as ­consistent with the understanding which B was under a duty to correct, and thereby fails to correct (see 4.8). That estoppel is, however, based on the silence by reason of the obligation to correct A’s misunderstanding, and not on the ambiguous representation that fails to make that correction. 29 See eg Fung Kai Sun v Chan Fui Hing [1951] AC 489, PC at 507 per Lord Reid, considered in further detail in Ch 4 of the third edition.

144

The representation must be unambiguous 4.6

whether, properly construed, it is inconsistent with that fact, right or freedom from obligation.30

THE REPRESENTATION MUST BE UNAMBIGUOUS Principle 4.5 The requirement of unequivocality is often coupled in dicta with the additional qualification that the representation must be ‘clear’, but the latter adds nothing but emphasis to the former. As is true of any legal rule, understanding the rationale of the requirement of unequivocality, rather than adding surplusage, is the key to its meaning and operation. That rationale may be discerned from its inherence31 in an estoppel by representation: without unequivocality, there is no representation of the relevant proposition. The central issue in any reliance-based estoppel claim is whether B is responsible to A for his reliance on a proposition such that it would be unfair for B to resile from it. As a matter of logic, where the responsibility is based on communication, responsibility is limited to that which has been unequivocally represented for the reason that, if the words or conduct in question are equivocal as to the relevant proposition, it simply has not been represented: the communication between B and A necessary for such responsibility has not been made. 4.6 Thus, in the ancient paradigm,32 when the Delphic oracle told Croesus that, if he attacked Persia, he would destroy a great empire, and he understood it to mean that he would destroy the Persian rather than his own Lydian Empire, although that was one possible meaning of what was said, it was not what was said, as the statement was equivocal as to which empire he would destroy. If the words or conduct of B are at such a level of generality as not to supply a crucial particular, A may not do so himself, since, while they are consistent with the sense in which A has relied on them, they are also consistent with its negation, so they are equivocal as to the relevant particular and no representation in the former sense has therefore been made. It is with this issue that the requirement of unequivocality is concerned: whether a representation in the sense understood by A has been made by B so as to make him responsible for A’s understanding.33 Addressing it as such is the key to determining whether it has been satisfied, and

30

As in The ‘Indian Endurance’ [1998] AC 878, at 891H–893F and Lloyds Bank plc v Carrick [1996] 4 All ER 630, at 641e–g. Recent examples of careful construction of the representation may be found in, eg, Airways Aero Assocs Ltd v Wycombe DC [2010] EWHC 1654 (Ch) at [27]–[33], and Edwin Coe LLP v Aidiniantz [2014] EWHC 3994 (QB), in which a client’s assurance that he would pay his solicitors’ bills was not an assurance that he would not thereafter seek their assessment and reduction with consequent repayment. 31 See SmithKline Beecham Plc v Apotex Europe Ltd [2007] Ch 71 at 103E, n 15. 32 Herodotus: Histories I 53. 33 For further consideration, see ‘Ambiguity’ in the Stanford Encyclopaedia of Philosophy at http://plato.stanford.edu/entries/ambiguity/#toc.

145

4.6  Unequivocality and construction

the criterion is therefore here suggested to be whether A is justified in having no doubt as to his interpretation and acting on it without seeking confirmation or clarification from B.34 4.7 It has, accordingly, long been established that, to found both estoppel by representation of fact35 and promissory estoppel,36 a representation must be ­unequivocal: the requirement is the same under each doctrine.37 As noted above, this same requirement has also recently been confirmed for a representation to found a proprietary estoppel,38 or assent to found an estoppel by convention,39 and there is no reason why the requirement should have a different meaning in relation to these estoppels, although, in relation to all, the context will affect whether it is satisfied.40 A representation need not be express41 to found an e­ stoppel,

34

Eg, when Croesus subsequently complained of being misled, the Priestess pointed out, and he accepted, that he should have sought clarification: see n 128. 35 Low v Bouverie [1891] 3 Ch 82 at 106 per Bowen LJ: ‘Now, an estoppel, that is to say the language upon which the estoppel is founded, must be precise and unambiguous. That does not necessarily mean that the language must be such that it cannot possibly be open to different constructions, but that it must be such as will be reasonably understood in a particular sense by the person to whom it is addressed’; at 113 per Kay LJ: ‘But in order to create an estoppel, the statement by which the Defendant is held bound must be clear and unambiguous’ and ‘… where no fraud is alleged, it is essential to show that the statement was of such nature that it would have misled any reasonable man and that the Plaintiff was in fact misled by it’; Bloomenthal v Ford [1897] AC 156 at 166; Geo Whitechurch Ltd v Cavanagh & Co [1902] AC 117 at 145; Re Lewis [1904] 2 Ch 656, CA; Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steam Ships Ltd [1947] AC 46, PC, at 46–7; London County Territorial and Auxiliary Forces Assoc v Nichols [1949] 1 KB 35; Bute (Marquess) v Barclays Bank Ltd [1955] 1 QB 202; Lowe v Lombank Ltd [1960] 1 WLR 196 at 205; Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd [1972] AC 741; Channel Island Ferries Ltd v Sealink UK Ltd [1987] 1 Lloyd’s Rep 559 at 580 (affirmed on other grounds [1988] 1 Lloyd’s Rep 323); Dun and Bradstreet v Provident Mutual [1998] 2 EGLR 175 at 180; and see cases at 4.2 and recent cases at 4.44. 36 See eg The ‘Kanchenjunga’ [1990] 1 Lloyd’s Rep 391, HL at 399; Seechurn v ACE Insurance SA-NV [2002] 2 Lloyd’s Rep 390, CA. 37 Woodhouse AC Israel Cocoa Ltd State Aid v Nigerian Produce Marketing Ltd, n 35 above; Legione v Hateley (1983) 57 CLR 292 at 303, col 1E–F per Mason, Deane JJ. 38 See 4.2 nn 16–20 and 4.40. 39 See nn 21–23 above, 8.19 onwards. 40 See 4.29, 4.45. 41 Bremer Hgs mbH v Vanden Avenne-Izegem PVBA [1978] 2 Lloyd’s Rep 109 at 126 per Lord Salmon; Spence v Shell (1980) 256 EG 55, CA, at 63; this represents a relaxation of the view of Coke on Littleton at 352b: ‘Every estoppel, because it concludeth a man to allege the truth, must be certain to every intent, and not to be taken by argument or inference’; and, in Onward BS v Smithson [1893] of Bowen LJ at 14: ‘An estoppel can only be effected by what is express and clear … It would be very dangerous to extract a proposition by inference from the statements of a deed, and hold the party estopped from denying it; estoppel can only arise from a clear, definite statement’; and of AL Smith LJ at 15: ‘But inference is not enough to create an estoppel; there must be a distinct positive statement of the fact which is relied on as creating it’; (cf Lindley LJ at 14: estoppel should not be extended ‘by drawing inferences from language which is not clear’); this view – that the representation must be express – was adopted by Walton J in Re Distributors and Warehousing Ltd [1986] BCLC 129 at 139g–140b in relation to estoppel by deed, sed quaere see 8.88(4).

146

The representation must be unambiguous 4.8

but the ordinary meaning of the word ‘unequivocal’ suggests a requirement that the relevant language or conduct,42 to a reasonable representee, must, rather than might, impart the representation: and if the language or conduct has not committed B to one of two alternatives, but has left them open, it is ambiguous or equivocal in that respect, and will not found an estoppel from denying the alternative most favourable to A, rather than the other.43

Strictness 4.8 It is submitted, for the reasons considered below,44 that the requirement of unequivocality only arises if A understood the representation in a sense different from that intended by B; if the representation is understood as intended, cadit quaestio. Where, however, as in most cases, it is not established that B intended A to understand B’s language or conduct as A did, then the question arises as to how strict the requirement of unequivocality is. It is clear that A must establish that his interpretation is a reasonable interpretation;45 in the ordinary case it cannot, however, be reasonable to interpret a representation in one sense if it is open to another reasonable interpretation which is contradictory in the relevant respect, without seeking clarification so as to exclude the alternative. It is submitted, therefore, that, in most cases where a representation is open to more than one reasonable interpretation, it will not be reasonable for A to choose between them rather than seeking clarification.46 ‘In such circumstances’, as Popplewell J has put it,47 ‘the no man’s land of doubt belongs to the [representor]’.48

42 See 4.41, 3.4 onwards. 43 As in Dubai Islamic Bank PJSC v PSI Energy Holding Company BSC (Rev 2) [2011] CLC 595 at [54]–[60], [66]; but see also 4.21. 44 At 4.8, 4.14. 45 See 4.20 onwards, 4.31 onwards. 46 Closegate Hotel Development (Durham) Ltd v McLean [2013] EWHC 3237 (Ch) at [57] per Richard Snowden QC: ‘… the weight of authority is to the effect 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’. 47 In Metall Market OOO v Vitorio Shipping Company Ltd [2012] EWHC 844 (Comm) at [23]: ‘Waiver in this context, whether it be treated as waiver by estoppel or waiver by election, requires an unequivocal act of the lienee; anything less could not amount to a waiver. In some cases the inconsistency may be a matter of doubt depending on the construction of documents against the background of complex or disputed facts. In such circumstances the no man’s land of doubt belongs to the lienee. He is not to be taken to have waived his lien unless what he has done is unequivocally inconsistent with its continued existence’. 48 If, however (see 4.3 n 27 above), the circumstances are such that B is under a duty to speak (see 3.12–3.26, 4.42), and speak clearly (where, therefore, the requirements for a representation by silence would be satisfied if he does not), the representor may be responsible (by reason of failure to fulfil that duty) to the representor for his understanding, because he did not speak as clearly as obliged by the circumstances, and the risk was therefore his if he was misunderstood. Cf also, the case of fraudulent representations (see 4.39).

147

4.9  Unequivocality and construction

4.9 The strictness with which the criterion of unequivocality has been applied is evidenced by the decision in Low v Bouverie.49 A trustee gave an unqualified answer to an unqualified inquiry as to whether a beneficiary had encumbered his interest in the trust fund, yet the Court of Appeal held that a ­possible50 interpretation of the answer was as a statement only of the encumbrances that the trustee could remember at the time: the court was not prepared to hold the answer, although unqualified, to be an unequivocal representation as to the absence of any other encumbrances, nor even, in spite of the significance of notice in relation to priority, to be an unequivocal representation as to the encumbrances of which the trustee had been notified. In the last edition of this work, we respectfully doubted whether a modern court would apply the criterion so strictly in those circumstances. That doubt has been reinforced by the approach of the House of Lords to the issue of unequivocality in the context of proprietary estoppel in Thorner v Major,51 holding, by contrast with the stringency of Low v Bouverie, but in line with a number of authorities52 on waiver by estoppel, that the requirement of unequivocality is satisfied if it was reasonable for A to have interpreted B’s language, conduct or silence as he did.53

49 50

51 52

53

[1891] 3 Ch 82. Per Lindley MR at 103 and Bowen LJ at 105–6; the only possible interpretation per Kay LJ at 115. Contrast the dicta, cited in argument in Low v Bouverie, of Lord Selborne in Brownlie v Campbell (1880) 5 App Cas 925 at 936: ‘There also the whole value of the intended security depended upon the answer to the question, to be given by a person within whose knowledge the fact ought to have been, and in point of fact at one time or another necessarily was. If his memory had failed, still it was the case of a man who once had certain knowledge of the fact, and who could have no right to assert one way or the other a fact as of his own knowledge upon such a subject unless he possessed that knowledge; and if he did assert it, he was bound to make the assertion good. The mere fact of forgetfulness by a man who has known a certain fact, who is asked whether that fact has happened or not, and says positively that it did or did not, cannot possibly be an excuse; because if he had spoken the simple truth he would have said, “I do not recollect whether it is so or not”. If the fact be that he does not recollect, then by saying that the fact was so, or by saying that the fact was not so, he takes upon himself the responsibility of a positive statement, upon the faith of which he knows that the other man is going to deal for valuable consideration. The principle of the law in all such cases is perfectly clear’. [2009] 1 WLR 776; see 4.13 onwards. Bremer Hgs mbH v Vanden Avenne-Izegem PVBA [1978] 2 Ll R 109; Bremer Hgs mbH v C Mackprang Jr (No 1) [1979] 1 Ll R 221 at 226, col 1, 229, col 1, per ­Denning, Stephenson LJJ, and at 230, col 2, per Shaw LJ: ‘If in the prevailing conditions affecting the position of the parties to a contract the conduct of one of them affords a reasonable foundation for the inference that he is prepared to forgo any right or rights he may have in a certain regard and the other contracting party does draw that inference and persists in the residual contractual relationship upon that basis then, whether it be regarded as waiver or estoppel, the foregoing of those rights cannot thereafter be gainsaid’; Bremer Hgs mbH v Westzucker GmbH [1981] 1 Ll R 207; The ‘Scaptrade’ [1983] QB 529 at 535B (affd on other grounds [1983] 2 AC 694); Bremer Hgs mbH v Bunge Corpn [1983] 1 Ll R 476 at 483, col 1; see also The ‘Shackleford’ [1978] 2 Ll R 155 at 159 per Sir David Cairns: ‘… reasonable clarity is sufficient’. Thorner v Major [2009] 1 WLR 776: see 4.13–4.33. Moreover, in Dixon v Blindley Heath Investments Ltd [2016] 4 All ER 490 at [79], [87]–[89], [96]–[98] the Court of Appeal recently

148

The representation must be unambiguous 4.11

4.10 It is submitted, however, that this gloss should be qualified, in the first place, because it may be reasonable for A to interpret a representation as he does because of his special circumstances or limited knowledge, but only such circumstances or limitations as were reasonably foreseeable by B, or of which B is taken to have accepted the risk, should be taken into account.54 Secondly and more importantly, the gloss does not explicitly address the question whether, and on what criteria, A’s interpretation may be reasonable if there is another possible interpretation of the representation which negates it.55 If, as in some formulations,56 the gloss requires that the notional reasonable person would rather than could have understood the representation as A did, then such a finding is not possible, if the representation bears more than one reasonable interpretation, not all of which are consistent with A’s understanding. Even if the issue is put simply as whether A’s interpretation was reasonable, the question still arises as to how it can be if B’s words or conduct were consistent also with its negation. As Nourse LJ said in Goldsworthy v Brickell:57 ‘It cannot in my view have been enough that the Defendant might reasonably have arrived at that conclusion. There could only have been a clear and unequivocal representation if he could not reasonably have arrived at any other conclusion’. 4.11 This issue as to the strictness of the requirement of unequivocality has also arisen in relation to promissory estoppel, and there are differing dicta as to whether the requirement of unequivocality in relation to promissory estoppel is the same as,58 or stricter than, that of certainty of terms in a contract; since, on the

held that the parties had unequivocally assented by conduct to a convention that rights of preemption did not exist, even though they had forgotten them. 54 See 4.45, 2.13. 55 Bremer Hgs mbH v C Mackprang Jr (No 1) [1979] 1 Ll R 221; The ‘Antclizo’ [1986] 1 Ll R 181 at 187 per Evans J: ‘… the mere possibility of other explanations, such as forgetfulness or negligence, does not mean that there cannot be an unequivocal message when in all the circumstances it is reasonable for the respondent to infer that the claimant has formed the intention of abandoning the reference or is representing that he no longer intends to proceed with it’; the requirement of unequivocality was mentioned without any such gloss in the Court of Appeal and the House of Lords. 56 See Bremer Hgs mbH v Vanden Avenne-Izegem PVBA [1978] 2 Ll R 109 at 126 per Lord Salmon: ‘To make an unequivocal representation it is not necessary to say “We hereby waive it”. It is quite enough if they behave or write in such a way that reasonable sellers would be led to believe that the buyers were waiving any defects there might be in the notice …’; Bremer Hgs mbH v Westzucker GmbH [1981] 1 Ll R 207 at 212, col 2, per Robert Goff J: ‘… such a representation will be established if the Court is satisfied that a reasonable trader in the shoes of the sellers would have inferred from the buyers’ conduct that the buyers had waived their right …’ (emphases added). 57 [1987] Ch 378 at 411D. See, to similar effect, Lord Hailsham with majority concurrence in Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd at 4.34 onwards; and Tameside MBC v Barlow Securities Group Services Ltd [2001] BLR 113, at [33] per Henry LJ: ‘It is not the function of the court to resolve ambiguities and unless it can find a reasonably clear and definite meaning then it is not able to make the finding that the representation was indeed clear and unequivocal’. 58 The passage in the third edition, to the effect that it is the same, was cited with approval in The ‘Winson’ [1981] QB 403, CA at 429D–430E (revsd on other grounds [1982] AC 939) and

149

4.11  Unequivocality and construction

latter view, the court will rule as to the true construction of a contract which bears more than one reasonably arguable interpretation, but will not choose between alternative reasonable interpretations of a representation, on one of which A seeks to found an estoppel, rather than rejecting the estoppel by reason of the equivocality of the representation.59 A vagueness as to consideration will not, however, prevent an estoppel arising, as consideration is not required,60 and, in proprietary estoppel, the requirement of certainty as to the interest in property owned or to be granted is not as strict as that required for a contract.61 4.12 We submit that a way to resolve this issue as to the strictness of the requirement of unequivocality is to ask whether A is justified in having no doubt as to his interpretation and acting on it without seeking confirmation from B.62 We now try to illuminate its potential difficulty by comparison of the two modern occasions on which it has been addressed by the House of Lords.

Drexel Burnham Lambert Intl MV v El Nasr [1986] 1 Ll R 356 at 376; see also The ‘Antclizo’ [1987] 2 Ll R 130 at 132 per Bingham LJ (affd without reference [1988] 1 WLR 607). It must be at least as clear as a contractual variation: Hodgson v Lipson [2009] EWHC 3111 (QB) at [26], Kenneth Parker J following Lord Pearson in Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd [1972] AC 741: ‘If, therefore, the alleged undertaking in this case were not sufficiently precise or certain to found a contractual variation, it would not be sufficiently precise or certain to found a promissory estoppel’. See further 14.11–14.19. See also Baird Textiles, n 59. 59

60 61

62

Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1971] 2 QB 23, CA at 60A–E per Lord Denning MR; in the House of Lords, Lord Hailsham LC agreed that certainty for an estoppel must be as strict as that for a contract, without commenting on whether it is stricter [1972] AC 741 at 757E–F (see also Lord Cross at 767G–H); in Troop v Gibson [1986] 1 EGLR 1, CA, at 3K–L, Sir John Arnold P also drew Lord Denning’s ­distinction (and went on to conclude that the requirement of unequivocality is inappropriate to an estoppel by convention, as the court will construe the convention; but, in Baird Textiles Holding Ltd v Marks and Spencer plc [2002] 1 All ER (Comm) 737 at 761h–762c, Mance LJ cited with approval Ralph Gibson LJ in Troop v Gibson at 6D–E to the effect that ‘the extent to which the importance of clear and unequivocal statements is reduced in cases of estoppel by convention is probably small’: see 4.3 n 21, 8.19 onwards). Patten LJ in Kim v Chasewood Park Residents Ltd [2013] HLR 24 at [23] regarded Lord Denning and Sir John Arnold’s point as ‘arguable’. Although, in some circumstances, it may help demonstrate a lack of intention by A to bind himself. Hiscox v Outhwaite (No 3) [1991] 2 Lloyd’s Rep 524 at 534 col 1 (language whose lack of precision indicated an absence of contractual intention could found a promissory estoppel); Lim Teng Huan v Ang Swee Chuan [1992] 1 WLR 113, PC: an assurance, the consideration for which was not stated with sufficient certainty to found a contract, may found an estoppel; in Jones v Watkins (26 November 1987, unreported) CA, an assurance that was equivocal as to the interest that would be granted such that it could not have founded a contract was held capable of founding a proprietary estoppel, Slade LJ citing Inwards v Baker [1965] 2 QB 29 and Crabb v Arun DC [1976] Ch 179: cited in Gillett v Holt [2001] Ch 210 at 226B–D and Baird Textile Holdings Ltd v Marks and Spencer Plc n 2 above at 762c–e per Mance LJ; Cobbe v Yeoman’s Row Property Management Ltd [2008] 1 WLR 1752 at [18]–[20]; Thorner v Major [2009] 1 WLR 776 at [64]; and see further 4.40 and 12.41 onwards. See eg n 128.

150

Thorner v Major 4.14

THORNER V MAJOR 4.13 In Thorner v Major,63 the House of Lords was asked to decide whether an unequivocal representation is a prerequisite for proprietary estoppel, and to consider the content of that requirement. The Court of Appeal had held64 that a representation must be unequivocal to found a proprietary estoppel, just as it must to found an estoppel by representation of fact (or now law) or a promissory estoppel. The Court of Appeal also held that intentional (either subjective actual intention of B, or objective intention, that is, as reasonably understood by A) inducement of A by B to act is also as necessary for a proprietary estoppel as it is for a representation of fact.65 These requirements for a proprietary estoppel were accepted66 by the House of Lords:67 implicitly as to the requirement of (at least objective) intention to induce; and, as to the requirement of unequivocality, expressly, dismissing a direct challenge,68 in a step towards recognising the common elements of the reliance-based doctrines of estoppel.

Lord Hoffmann; subjective unequivocality; subsequent acquiescence 4.14 Lord Hoffmann did not dispute that unequivocality is required,69 but, in finding the representee’s reliance on the representations reasonable, observed that later events may shed light on earlier, saying ‘The owl of Minerva spreads its wings only with the falling of the dusk’.70 A representation that is objectively equivocal (or not such as may reasonably be relied on) at the time of its making cannot, however, be rendered objectively unequivocal (or reasonable to rely on)

63 64 65 66

67 68 69 70

[2009] 1 WLR 776. [2008] WTLR 1289, at [54]. At [37]–[39] and [54], upholding the suggestion at [V.3.2] of the fourth edition of this book; see now 5.24. See also Uglow v Uglow [2004] WTLR 1183 at [9] per Mummery LJ, on which the Court of Appeal in Thorner v Major relied at [39]. And both were found, contrary to the view of the Court of Appeal, to be satisfied on the facts: see, as to B’s intention, as reasonably understood by A, that A could rely on his assurance, Lord Hoffmann at [5]: ‘It was enough that the meaning he conveyed would reasonably have been understood as intended to be taken seriously as an assurance which could be relied upon’; Lord Walker’s approval at [56] (with concurrence of Lord Scott, Lord Rodger and Lord Neuberger) of Hoffmann LJ in Walton v Walton: ‘Taken in its context, it must have been a promise which one might reasonably expect to be relied upon by the person to whom it was made’; and Lord Neuberger (with concurrence of Lord Scott) at [77]: ‘In my judgment, those findings clearly indicate that the deputy judge was of the opinion, contrary to the view expressed by the Court of Appeal, that the statements he found to have been made by Peter were reasonably understood by David to indicate that Peter was committing himself to leaving the farm to David, and were reasonably relied on by David as having that effect’. See [7]–[8], [15]–[18], [22], [50], [56], [60], [78], [84]. At [52]. At [7]–[8]. Hegel: Preface to Philosophy of Right.

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4.14  Unequivocality and construction

as a representation made at that time by an event or explanation subsequent to it.71 We suggest that Lord Hoffmann’s proposition should not, therefore, be understood in that sense.72 To understand Lord Hoffmann’s point it must first be noted that in Thorner v Major the intended and understood meaning, as between the parties, of B’s words and conduct, as being an assurance of inheritance, was established at first instance as a matter of fact: B intended to communicate what A understood, namely that A would inherit the farm. Where such a finding of what might be called subjective unequivocality is made – that A understood B in the sense that B intended – the requirement is submitted to be satisfied regardless of whether, objectively viewed, B’s words and conduct might equally well not bear that meaning. Put another way, where the evidence establishes that A correctly understood B, there is no requirement of objective unequivocality,73 as the representation is established to have been made, and a further requirement of unequivocality serves no principled purpose. The purpose of the requirement of unequivocality, as noted above,74 is to prevent an estoppel being founded on a representation that has not been made, because B’s words and conduct do not necessarily (and therefore sufficiently) carry the meaning A ascribes to them: where A has correctly understood the meaning that B intended to convey, a representation has, of course, been made. The requirement presupposes that the evidence either does not establish what B intended to convey, or establishes that he intended to convey a meaning other than that which A has understood. Its proper function cannot be to prevent an estoppel arising where the evidence establishes that B’s message has been fully and accurately conveyed. 4.15 Given this finding of fact, it was only as to intention that the representation should be acted on that the representation could therefore be argued to have been equivocal:75 the Court of Appeal decided the appeal on this narrow point, that the representation that A would inherit the farm was equivocal as to whether B was stating a current intention only, rather than making a commitment on which he intended A to act. B submitted in the House of Lords that, for A reasonably so to understand B, B must have unequivocally conveyed such a reliable

71

‘As he put it, the context and meaning of an assurance can evolve with time. I do not accept that submission. How an assurance is reasonably to be understood must depend upon how, at the time that it was made, the assurance was understood. Its meaning cannot change with the passage of time’: Century (UK) Limited SA v Clibbery [2004] EWHC 1870 (Ch), at [50] per Blackburne J; but see 4.16, 4.27, 4.32, 4.36 as to subsequent silence in the face of reliance on apparent reliance on one interpretation, and cf cases at 4.63 n 263. 72 And if the contrary were Lord Hoffmann’s meaning, the response to his Hegel might be Jacques Derrida’s to Plato’s Phaedrus: ‘Metaphoricity is the logic of contamination and the contamination of logic’ (Dissemination at 149); see generally Lewison ‘Metaphors and Legal Reasoning’ (Chancery Bar Association Annual Lecture 2015). 73 By the same logic as that on which a court will rectify a contract which, objectively construed, does not accord with the intention of the parties. See also 4.39. 74 At 4.5, 4.6. 75 This was a novel application of the requirement of unequivocality. The latter requirement has been hitherto regarded as satisfied by a finding either of actual intention on the part of the representor, or that the representee reasonably so understood him.

152

Thorner v Major 4.17

i­ntention, and the House of Lords accepted the requirement of ­unequivocality as to such intention. Commitment is an aspect of meaning, so commitment must also require unequivocality. But, as well as accepting that a reasonable ­understanding as to such intention requires unequivocality, the House completed the circle by holding that unequivocality is established if the understanding was reasonable. This nonetheless leaves unanswered the question whether and when a representation which bears more than one interpretation (in this case, as to commitment) may reasonably be understood in one of those alternative senses. 4.16 If Lord Hoffmann’s point as to retrospectivity is understood in relation to unequivocality of intention to induce reliance, it may be seen to be that, looking back, a representation whose terms were initially equivocal as to whether it was intended to bind and be relied on as fixed may be combined with subsequent silence in the face of acts of such reliance, so as to render the combination of the initial statement and subsequent silence unequivocal as to that intention. An express representation, which is equivocal as to commitment, may thus become unequivocal as to commitment when combined with subsequent silence while it is apparent to B that A is acting on the representation as a commitment and is acting to A’s detriment or B’s benefit. If B fails, when he ought, to clarify that he has not committed himself, it is then reasonable for A to continue to act on the basis that he has. For this to be the case, however, the court must have concluded, on the specific facts, that responsibility for clarifying the ambiguity has for that reason shifted from A to B.76 4.17 A second way in which the retrospective perspective may answer a question of unequivocality is by providing evidence of coincidence of B’s intention and A’s understanding: if, in Croesus’s case,77 subsequent to the Delphic oracle’s prophecy, the priestess had admitted, or events had demonstrated, that, in predicting the destruction of a great empire, it had, as Croesus understood, been referring to the Persian Empire specifically, then, notwithstanding the objective ambiguity of the prophecy as between the Persians and the Lydians, the evidence of the subsequent admission or events would establish that what the oracle intended to convey was correctly understood by Croesus, and a representation in that sense was accurately communicated. Although, objectively, the r­epresentation was equivocal, in subjective terms, as between those particular parties, the subsequent evidence would establish that Croesus understood the oracle in the one sense in which it spoke, and the requirement of unequivocality would therefore be satisfied. Otherwise, however, a question as to the equivocality of a ­representation must be judged on the material known to the parties at the relevant time.

76

See also Hoyl Group Ltd v Cromer TC [2015] HLR 43 at [72] for the interaction of silence and conduct; applied in Marussia Communications Ireland Ltd v Manor Grand Prix Racing Ltd [2016] Bus LR 808 at [84]–[87]. 77 See 4.6.

153

4.18  Unequivocality and construction

Lord Scott and Lord Rodger 4.18 Lord Scott held that a representation must be clear and unequivocal to found a proprietary estoppel.78 He said, furthermore, that, in the case of a representation as to acquisition in the future of a right in property (in this case, upon death), the inherent uncertainty as to what a representor intended, or was reasonably understood as intending, if circumstances changed in the meantime, means that such a representation will not in general found a remedy in estoppel rather than under a remedial constructive trust. The majority, however, held that representation will found an estoppel if it was objectively reasonable for A to understand B to intend to make a binding commitment on which A should rely.79 Lord Rodger80 accepted the requirement of unequivocality, agreed with Lord Walker that it was satisfied if the representation was ‘clear enough’,81 and held that, although the representations made might have been equivocal to an outsider, as between the particular parties in the particular circumstances, they were clear enough for A reasonably to understand that he was to inherit and could rely on that assurance.

Lord Walker and Lord Neuberger 4.19 Lord Walker, with whom Lord Scott, Lord Rodger and Lord Neuberger agreed, approved the dictum of Hoffmann LJ in Walton v Walton82 that a promise must be unambiguous83 to found a proprietary estoppel.84 To satisfy this requirement, Lord Walker said, the representation must be ‘clear enough’, acknowledging that this is a ‘thoroughly question-begging’ formulation, but, with due caution, not answering the question begged as to the criteria by which to test what is and what is not ‘clear enough’, beyond observing that it is ‘hugely dependent on context’. Lord Walker recited the factual findings of the first instance judge,85 that A correctly understood B to be telling him that A would inherit the farm, and upheld the first instance judge’s finding that A reasonably understood himself to be intended to act on that.86 4.20 Lord Neuberger agreed with Lord Walker87 and went on to say88 that the intention of B was irrelevant if his statements were reasonably understood as

78 79 80 81 82 83 84 85 86 87 88

At [15], [18]. And it is submitted that it will suffice also if the evidence establishes that the representor actually intended to make a binding commitment on which the representee should rely: see 5.19 onwards. At [26]. As to whose meaning, see below. [1994] CA Transcript 479. Ie unequivocal. At [56]. Quoted at [42]–[43]. At [60], disagreeing with the Court of Appeal’s view that the first instance judge did not make the latter finding. At [69]. At [78].

154

Thorner v Major 4.23

an assurance of inheritance and it was reasonable for A to act on them: it is well established in relation to the requirement for an estoppel of intention to induce reliance89 that, if A reasonably understands himself to be intended to rely on the representation (objective intention to induce), it is not necessary to establish that B actually so intended. It is nonetheless submitted that B’s actual intention may, in other cases, be relevant to the establishment of the requirements for an estoppel of unequivocality and intentional inducement by establishing subjective unequivocality between the parties90 or actual intention to induce reliance. The first instance judge’s finding of fact in Thorner v Major, that a representation had been intended by B and understood by A that A would inherit the farm, put beyond appeal what had been unequivocally represented save as to intention to induce action, and was highly influential on the question of whether it was reasonable for A to understand himself to be intended to act on it. 4.21 Accepting the requirement of unequivocality, Lord Neuberger said91 that whether words or actions are unequivocal must be assessed in their context practically and sensibly rather than searching for ambiguity,92 and that normally it would be sufficient to establish that A reasonably understood them to be an assurance on which he could rely. Lord Neuberger added93 that, even though a statement was ambiguous, A might obtain relief on the basis of the least beneficial interpretation. The latter proposition is uncontroversial since, as to that meaning, the representation will have been unequivocal. A representation that is equivocal in some particulars may found an estoppel from denying a proposition of greater generality as to which it is unequivocal: a representation that a rose is pink or red is equivocal as between pink and red, but unequivocal as between those two and any other colour. 4.22 To answer the question whether words or actions were equivocal by examining whether it was reasonable for A to understand them as he did must nonetheless beg the question how it can be reasonable so to interpret them, pinning B to one meaning, when, looking at the statements objectively, they might have carried either of two contradictory meanings.94 It may even be said that such a finding, and the consequent founding of an estoppel on an ambiguous statement, is what the requirement of unequivocality is designed to prevent. The central question therefore remains as to when it will be reasonable to interpret such a statement in one of these senses rather than realising the ambiguity.

Thorner v Major: summary 4.23 It is possible to state the import of the decision in Thorner v Major broadly as being that: unequivocality is a requirement for a representation to

89 See 5.25 onwards. 90 See 4.8, 4.14. 91 At [84]. 92 At [85]. 93 At [86]. 94 See 4.10.

155

4.23  Unequivocality and construction

found a proprietary estoppel;95 to satisfy that requirement, the representation must be ‘clear enough’;96 what is ‘clear enough’ will vary according to context;97 and a representation is clear enough to be unequivocal as to a proposition if it is reasonably understood by A as having that meaning.98 The question is nonetheless begged as to how the last issue is determined. Thorner v Major: representee understands representor’s meaning 4.24 The following points should, therefore, also be made. First, a finding that A understood the representations in precisely the sense they were intended by B renders further enquiry into whether the representations were unequivocal unnecessary: the requirement is satisfied because the evidence establishes that the representation was understood in the one sense it was intended to be understood. Without appealing the judge’s factual findings, the only arguable equivocality in Thorner v Major was, for that reason, not as to the meaning of the representation itself, but as to B’s intention that A act on it. Thorner v Major: strictness 4.25 Secondly, the holdings that a representation must be clear enough, and will unequivocally represent a proposition if reasonably so understood by A, beg the question as to whether (absent a factual finding of congruence of B’s intention and A’s understanding), and on what criteria, a representation which bears more than one construction, not all of which entail the relevant proposition or undertaking, will be held to have represented that proposition or u­ ndertaking.99 On this question the task of the court must be to try to distinguish between genuine equivocation, by which the representation is at such a level of generality as not to have committed B in the sense claimed by A, and a representation by which, in the circumstances, B has given the impression of making that commitment, since, notwithstanding that his representation is capable of bearing an alternative non-committal construction, the commitment is sufficiently clear that it was reasonable for A so to understand it without seeking clarification or confirmation so as to exclude the alternative. 4.26 In relation to this distinction, the following points, it is submitted, were determinative on the facts of Thorner v Major:100

95 See 4.2 n 17, 4.13, 4.19. 96 See 4.19. 97 See 4.19, 4.21. 98 See 4.19, 4.21. 99 See 4.8–4.12. 100 Cf Macdonald v Frost [2009] WTLR 1815, in whose narrative earlier statements as to inheritance, unlike those made later, and unlike those in Thorner v Major, were found to have been

156

Thorner v Major 4.27

(1) The words and conduct were found as a fact to have been correctly understood as an assurance of inheritance. (2) By contrast with its decision in Cobbe v Yeoman’s Row Property Management Ltd,101 that an oral assurance between experienced legally advised commercial parties intending to make a formal contract for the disposition of land should be understood not to be intended to be binding,102 in the context of promises as to inheritance, although the formal documents themselves (unlike contracts) are inherently revocable, the House of Lords appears to have been of the view that assurances given as to inheritance are not ordinarily to be understood as not intended to be binding.103 It may be thought paradoxical that an informal assurance as to an irrevocable commitment (a contract) does not ordinarily bind, while one as to a revocable commitment (a will) does, but the decisions themselves are nonetheless submitted to be justified by reference to the experience and understanding of the representee in question: whether A reasonably understood a binding commitment to be made. While Thorner v Major may be argued to ­indicate104 that representations as to inheritance are prima facie reliable, and it will be for the representor who has chosen to assure someone of inheritance to establish that the representee in question knew, or should have known, better than to regard that as a binding commitment, it is submitted that the real key was the consideration at (3) below: that, having made a representation likely to influence A, B then stood by while A acted on it to A’s detriment and B’s benefit; in that circumstance, the responsibility for clarification as to whether B had committed himself shifted from A to B. (3) A was working unpaid for more than half of a seven-day week of 18-hour days on the farm, at the beck and call of B. Obviously an assurance by B that A would inherit it was an inducement material to such devotion. The finding that it was reasonably understood as a reliable commitment was therefore unsurprising. A party who chooses to give such an assurance to one who is conferring or about to confer such a benefit (to his own detriment), particularly in relation to the subject matter of the assurance, should expect the assurance to be relied on by the representee in conferring the benefit and incurring the detriment. Given these circumstances and the parties involved in the case, it was reasonable that A did not seek clarification. 4.27 While, therefore, a representation which is non-committal cannot reasonably be understood as a commitment, nevertheless, if B, by his words and

no more than statements of ‘present testamentary intentions … capable of being changed in future, particularly if circumstances changed’. 101 [2008] 1 WLR 1752. 102 See 5.19 onwards, 12.118 onwards. 103 See eg as to inheritance Bradbury v Taylor [2013] WTLR 29 (CA) at [13], [25], [37]–[47]: ‘As it is there will be no contract, as this is a friendly arrangement’, but an arrangement that was nonetheless intended to bind. 104 Notwithstanding that a will is itself revocable.

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conduct, provides the basis for a reasonable understanding on the part of A, the court may hold him to it, notwithstanding that the words or conduct might bear another meaning, unless the doubt as to their meaning is such that A could not reasonably rely on them without seeking clarification or confirmation. Moreover, if B stands by while A acts on his own interpretation of the representation to his detriment and/or B’s benefit, that may then render A’s continued understanding reasonable, since the requirement of unequivocality may be satisfied by a combination of the original representation and subsequent silence. B must, however, know of what A is doing and the likelihood of A being influenced by what B said for B to become responsible for clarifying his meaning. 4.28 The question105 remains a question of whether B is responsible – both for A’s understanding of the content of the representation, and for the action he has taken as a result. The knowledge and experience of the parties, the subject matter of the representation, and the circumstances in which it was made may all influence the court in determining whether the relevant communication was made and the reliance on it was reasonable. Since it is a question of communication, the issue of unequivocality may, for instance, be affected by the relative positions of parties, as in IMG Pension Plan HR Trustees Ltd v German,106 where employee pension members signing application forms under proposed new rules were held not thereby to have unequivocally represented their acceptance of rule change which had been presented to them as a fait accompli. 4.29 The capacities, circumstances, knowledge and experience of the parties may in particular affect whether the representation is one for reliance on which A can reasonably understand B to intend to be responsible: the decision in Fielden v Christie-Miller,107 upholding an estoppel based on a representation by trustees of land to a beneficiary that the latter would in the future own the land, for instance, entails the view that a beneficiary may reasonably understand the trustees to intend to be responsible for his reliance on such a representation, notwithstanding the rule that prevents them fettering future exercise of their ­discretion, and that the representation, if in unqualified terms, is not necessarily to be understood as an indication only, subject to the future exercise of a free ­discretion. On the other hand, the commitment to a future contract by the prospective buyer in Cobbe v Yeoman’s Row Property Management Ltd108 was, between experienced commercial parties, to be understood as binding in honour only and, correspondingly, not reliable in law.

105 As also in relation to the requirement of inducement discussed in Ch 5. For this reason, it is not right to say that the focus in estoppel is wholly on the representee. 106 [2009] EWHC 2785 (Ch); so also, in Capita ATL Pension Trustees Ltd v Gellately [2011] Pens LR 153, employee members signing forms acknowledging changes to the scheme presented by pension trustees as a fait accompli did not thereby agree to their validity. 107 [2015] WTLR 1165. 108 [2008] 1 WLR 1752; cf in the context of inheritance Bradbury v Taylor, n 103.

158

Thorner v Major 4.32

Thorner v Major: unequivocality of intention to induce reliance 4.30 Thirdly, it is worth noting that the two separate requirements for an estoppel, of unequivocality and objective intention to induce,109 in the context of a promise as to future inheritance, fell to be considered as a single requirement. The question whether the words and conduct used amounted to an unequivocal promise as to future inheritance, when they might have been a statement of current intention only, was, in substance, the same question as whether the representee reasonably understood the representor to intend him to rely on the words and conduct as a binding assurance as to inheritance; it cannot be said that the two are separate questions, because one is a question of meaning, and the other a question of commitment, since commitment is an aspect of meaning. Since the criteria applicable to satisfaction of both requirements, unequivocality and objective intention to induce, therefore had to be the same, the authorities as to the satisfaction of the latter were applied to the former, in accordance with the following syllogism: (1) A representation must be unequivocal to found an estoppel. (2) A representation may found an estoppel if A reasonably understands it to be intended to be acted on by him. (3) The requirement of unequivocality as to intention that the representation be acted on is therefore satisfied if A reasonably understands the representation in that sense. Thorner v Major: unequivocality and reasonable understanding 4.31 The result should not, however, be that the requirement of unequivocality simply collapses into a question of whether A was reasonable in understanding B as he did. On the contrary, it should be maintained as a criterion that it is not reasonable for A to pin B to one of two contradictory meanings of his words or conduct if the words and conduct are at such a level of generality as not to commit B to either of those two contradictory alternatives. If the representation was genuinely equivocal, it will not have been reasonable for A to understand it in one sense rather than in its other possible contradictory sense. 4.32 As the House of Lords held, context will influence whether, on the one hand, B’s words and conduct carry the relevant meaning, such that they may be reasonably so understood, notwithstanding the possibility of another interpretation, without further particulars being sought, or, on the other hand, they simply do not carry that meaning without A himself supplying additional particulars that had not been given by B. As noted above, the case exemplifies an important way in which context may be influential on the issue of unequivocality: whether B is responsible for A’s understanding will be influenced by whether the ­circumstances are such that, by speaking or acting, rather than holding his peace, and by subsequent silence in the face of apparent reliance by A on the representation in the sense understood by him, B has made the risk his rather than A’s that A understands him as he has. Thus, in relation to intention that the

109 See 5.25 onwards.

159

4.32  Unequivocality and construction

representation be acted on, the fact that a representation has been made which is reasonably likely in the circumstances to cause someone to act on it as A has,110 and B has not clarified his meaning while knowing of and benefitting from A’s action, may render B responsible for A’s understanding, and satisfy the requirement of unequivocality as to intention. 4.33 In relation also to unequivocality as to the meaning of a statement other than as to the intention that it be acted on, context may determine whether, in effect, responsibility lies on B to express himself with greater clarity if he is to avoid responsibility for being reasonably misunderstood, or on A to seek clarification before he may reasonably adopt an interpretation that is doubtful by reason of the possible contradictory alternative. The authorities111 favour B on this issue in that, unless there is something in the circumstances, or in the nature of his words or conduct, or a combination of both, that makes B responsible for the understanding of A, if the representation bears more than one alternative reasonable interpretation, only one of which carries the meaning understood by A, it will not be reasonable for A so to understand it without excluding the alternative by seeking clarification, as the ‘no man’s land of doubt belongs’ to B.112 B will simply not have made the representation upon which A purports to have relied.113

WOODHOUSE AC ISRAEL COCOA LTD SA V NIGERIAN PRODUCE MARKETING LTD 4.34 When the House of Lords previously addressed the issue of what the requirement of unequivocality entails, in Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd,114 Lord Hailsham LC quoted the following ‘well known passage of Bowen LJ in Low v Bouverie’:115 ‘… an estoppel, that is to say, the language upon which the estoppel is founded, must be precise and unambiguous. That does not necessarily mean that the ­language must be such that it cannot possibly be open to different constructions,

110 So it has not, therefore, been made in a context in which A should know that B is not binding himself, and A therefore acts at his own risk (eg in oral pre-contractual negotiations for the sale of land between experienced property developers, as in Cobbe [2008] 1 WLR 1752; see 4.26). 111 See Low v Bouverie 4.9; Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd, 4.34 onwards. 112 See 4.8 n 47. 113 See 4.5–4.7; absent, that is, a finding of fact that B intended the representation to be ­understood in the sense A understood it (4.8, 4.14). 114 [1972] AC 741; holding that a representation in respect of a contract providing for payment for cocoa in Nigerian pounds in Lagos that ‘payment can be made in sterling and in Lagos’, although made when the two currencies had equal value (sterling being shortly thereafter devalued), was not unequivocally to the effect that the same number of pounds sterling as the Nigerian pounds due under the contract could be paid, as opposed to the equivalent amount at current values. 115 [1891] 3 Ch 82 at 106; see 4.8.

160

Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd 4.36

but that it must be such as will be reasonably understood in a particular sense by the person to whom it is addressed.’

and interpreted it116 with majority concurrence117 as follows: ‘I am satisfied that, in the second sentence of the above quotation, the meaning is to exclude far-fetched or strained, but still possible, interpretations, while still insisting on a sufficient precision and freedom from ambiguity to ensure that the representation will (not may) be reasonably understood in the particular sense required. I do not regard the second sentence as any authority for general qualification of the first. On the contrary, the first sentence governs the second and contains the very proposition for which Low v Bouverie is rightly cited as an authority.’

4.35 This suggests that, excluding ‘far-fetched or strained’ interpretations, if language, conduct or silence is to represent a fact or give an undertaking unequivocally, it must represent that fact or give that undertaking on any reasonable interpretation.118 Lord Hailsham conceded, however, that ‘there may be also cases where the originator of a document intended it to be acted on and may in appropriate instances have to bear the consequences of an ambiguity for which he is himself responsible’;119 and Lord Cross120 assumed, for the purposes of argument, without holding: ‘that a man who makes a representation of fact which he reasonably interprets in one way but which the representee reasonably interprets in another may in some circumstances be bound by the interpretation placed on it by the representee …’121

and went on to interpret Bowen LJ as saying: ‘that the question to ask was whether the representee was justified in having no doubt that the words meant what he took them to mean. But one cannot decide questions of this sort without regard to the relationship of the parties, for that may be such that the representor ought to be saddled with the risk of the representee putting the best interpretation which he can on language which is undoubtedly equivocal.’122

4.36 This accords with the submission that a statement by B which would otherwise be ambiguous may be rendered unequivocal if the circumstances are such as to place on B a duty to speak, as where A, to B’s knowledge and ­benefit,

116 117 118 119

At 756E–F. Lord Pearson agreed (761E) and Viscount Dilhorne agreed with his ‘conclusions’ (758C–D). See also Lord Salmon at 771D–F. At 757A, citing cases of companies’ prospectuses: Arkwright v Newbold (1881) 17 Ch D 301, at 322, 323 and Capel & Co v Sim’s Ships Composition Co (1888) 58 LT 807, 809; and a principal’s mandate to his agent: Ireland v Livingstone (1872) LR 5 HL 395. 120 With whose ‘conclusions’ Viscount Dilhorne also agreed (758C–D). 121 At 767F–G. 122 At 768F.

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4.36  Unequivocality and construction

is clearly relying on B’s representation in one sense but B does not correct him.123 The equivocal representation and the duty to speak make B responsible to A for his understanding and reliance. For B to have a duty to make himself unambiguous, he must, however, be under a form of duty to speak such as will found an estoppel on silence.124 Otherwise, if such a duty to be unambiguous arose just because B made a representation and actually or apparently intended to induce A to act, B would be estopped in all cases in which A acted on one possible reasonable interpretation of his representation, although not that which B intended. To say that B must bear the consequence of his failure in a duty to be unambiguous, in a representation on which he actually or apparently intended A to rely, is not consistent with the dicta cited above125 and would render the requirement of unequivocality nugatory.

UNEQUIVOCALITY AND REASONABLE UNDERSTANDING: CONCLUSION 4.37 On the authority of Thorner v Major and Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd the requirement of unequivocality is to be viewed from the perspective of A, as a question of whether, in the circumstances, it is reasonable for him to draw the conclusion he does as to the meaning of the representation rather than seeking clarification:126 was he ‘justified in having no doubt that the words meant what he took them to mean’?127 It is submitted that he will not be justified in the case of an equivocation where it is evident from the representation itself that a critical fact is missing, which A supplies, as Croesus did in assuming that the oracle was referring to destruction of the Persian Empire rather than his own.128 Here the representation is at such a level of generality as not to have committed B in the sense claimed by A, because the relevant information was not given. Of this kind is a case in which B’s words or conduct did not directly state the relevant proposition,129 and were not only consistent with it, but also consistent with its antithesis. 4.38 More difficult are cases in which there is no immediately apparent lacuna in the facts represented, yet the words or conduct bear more than one

123 See the consideration of Thorner v Major at 4.16, 4.27, 4.32, 4.36. 124 See 1.88 onwards, 3.9 onwards. 125 At 4.2. 126 The analysis of Ireland v Livingstone (1872) LR 5 HL 395 by Lord Salmon in Woodhouse at 771G–772C; see also European Asian Bank AG v Punjab and Sind Bank (No 2) [1983] 1 WLR 642 at 656E–F; Veljkovic v Vrybergen [1985] VR 419. But, as to the possible relevance of B’s perspective, see 4.10 n 54, 4.45 n 198. 127 See n 122. 128 See 4.6. Croesus later accepted that the error was his (Herodotus Histories 1 93) after the Priestess pointed out that ‘After an answer like that, the wise thing would have been to send again to enquire which empire was meant, Cyrus’ or his own’ (Herodotus 1 92). An argument that his understanding was reasonable in the circumstances would founder on the likelihood of prophecies being open in order to cover possibilities, that is to say, being Delphic. 129 From denying which A seeks to estop him.

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Other issues: fraud, proprietary estoppel, conduct, silence  4.39

interpretation between which they are insufficiently particular to distinguish.130 ‘A horse! A horse! My kingdom for a horse!’ might be a lament or a plea,131 and one reasonable interpretation of it is as a plea, but the question is whether A132 is justified in having no doubt as to that interpretation and acting on it without seeking confirmation. In Thorner v Major, given the work that A was doing on the farm for nothing, B, by representing that he would inherit the farm, appeared to make a commitment, and, although his representation could be construed as stating present intention only, the work that A was doing made it B’s responsibility to qualify what he said if that was his meaning: unqualified, it was sufficiently clear for A to understand it as a commitment without seeking confirmation so as to exclude the alternative. In most cases, however, where a representation bears more than one reasonable interpretation (as opposed to having one clear meaning and other theoretically arguable but ‘far-fetched or strained’ constructions),133 the reasonable response is not to choose an interpretation upon which to rely, but to seek clarification of the representation or not to rely on it;134 and, unless the particular circumstances are such as to make it reasonable for A to interpret such a representation as he does without seeking clarification, the representation is equivocal. In each case the issue is whether a representation in the relevant sense has been made at all,135 that is to say whether it was reasonable for A so to understand it without seeking clarification,136 and that cannot be so if what was said or done by B did not commit him in the sense alleged.

OTHER ISSUES: FRAUD, PROPRIETARY ESTOPPEL, CONDUCT, SILENCE Fraud 4.39 Since the requirement of unequivocality may be satisfied by evidence that A understood B as B intended,137 B will be estopped, even though

130 This type of equivocality is not therefore different in quality from the type (considered above) arising from missing facts, since both consist in a lack of particularity, but this type may be less evident. For further consideration, see ‘Ambiguity’ in the Stanford Encyclopaedia of Philosophy at http://plato.stanford.edu/entries/ambiguity/#toc. 131 King Richard the Third, Act V, scene IV; Nicholls, ‘My kingdom for a horse: the meaning of words’ (2005) 121 LQR 577. 132 As Lord Nicholls points out, Sir William Catesby may have thought it was a plea when he urged the king to withdraw, saying he would help him to a horse. But that was not Richard’s meaning: ‘Slave, I have set my life upon a cast, and I will stand the hazard of the die’. 133 See 4.34, 4.35. 134 Closegate Hotel Development (Durham) Ltd v McLean [2014] Bus LR 405 (at [57] per Richard Snowden QC: ‘… the weight of authority is to the effect 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’. 135 See 4.5. 136 See eg n 127. 137 See 4.8, 4.14.

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4.39  Unequivocality and construction

his ­ representation is ambiguous, if the evidence shows that he resorted to ­ambiguous language to enable himself to fall back afterwards, in case of need, on the literal – it may even be the plain and primary – acceptation of his words, though he knew that A would, or intended that A should, take them in another and less natural sense. Not only, for the purposes of estoppel,138 as for those of ­misrepresentation,139 is every presumption made against a party who uses dubious phraseology as an instrument of fraud, but also, more fundamentally, in such a case A has understood the words or conduct of B in the sense B intended A to understand them, and a representation to that effect has therefore been made in spite of the objective ambiguity of expression.

Proprietary estoppel 4.40 In relation to proprietary estoppel, provided that a representation is unequivocally to the effect that A has, or will acquire, a right in or over property, it may be equivocal as to the nature or extent of the right.140 This makes sense in the context that, whether the representation is equivocal or unequivocal as to the nature or extent of the right, the court in either event has a discretion as to the right to award to satisfy the equity raised. This is not to dispense with the requirement of unequivocality: the representation must still be unequivocally to the effect that A has or will acquire a right in or over property if it is to found the court’s jurisdiction to exercise its discretion,141 and the property in question

138 Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [1972] AC 741 at 756F–757A per Lord Hailsham LC; Piggott v Stratton (1859) De GF & J 33; The ‘Stolt ­Loyalty’ [1993] 2 Lloyd’s Rep 281. 139 See Spencer Bower, Turner and Handley, Actionable Misrepresentation (5th edn) at 4-15. 140 Lim Teng Huen v Ang Swee Chuen [1992] 1 WLR 113, PC; Jones v Watkins [1987] CAT No 1200; Gillett v Holt [2001] Ch 210 at 226B–D; Thorner v Major [2009] 1 WLR 776, eg Lord Neuberger at [98]: ‘It would represent a regrettable and substantial emasculation of the beneficial principle of proprietary estoppel if it were artificially fettered so as to require the precise extent of the property the subject of the alleged estoppel to be strictly defined in every case’; other cases at 4.11 n 61; Flowermix Ltd v Site Devt (Ferndown) Ltd (11 April 2000, unreported); Southwell v Blackburn [2015] 2 FLR 1240, where reassurance that ‘she would always have a home and be secure in this one’ founded a proprietary estoppel; cf cases at n 141. 141 Lissimore v Downing [2003] 2 FLR 308, where statements that A ‘would never want for anything’ and that B would ‘take care of’ her and look after her, as he had his other girlfriends, would not found a proprietary estoppel; nor, in James v Thomas [2008] 1 FLR 1598 at [33]–[35], would statements by B that improvements ‘will benefit us both’ and that in the event of his death ‘you will be well provided for’; in Layton v Martin [1986] 2 FLR 227 a promise of ‘financial security during my life and … after my death’ and, in Bostock v Bryant (1990) 61 P & CR 23, ‘don’t worry about the future, you’ll be all right’ were both too vague: and in Bennett v Bennett (18 May 1990, CA, unreported) a statement that B ‘didn’t want [A] out’ was for the time being only; see also Orgee v Orgee [1997] EWCA C4 2650, CA and Willis v Hoare (1999) 77 P & CR D42, CA, where the number of unresolved issues as to the terms of a tenancy meant that a prospective tenant had not been encouraged in his belief that he would be granted a tenancy, followed in Parker v Parker [2003] EWHC 1846 (Ch) at [222]–[237]; Pridean Ltd v Forest Taverns Ltd (1998) 75 P & CR 447; Cobbe v Yeoman’s Row Property Management Ltd [2008] 1 WLR 1752.

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Other issues: fraud, proprietary estoppel, conduct, silence  4.41

must be sufficiently certain.142 As in any form of estoppel, a representation that is equivocal in some particulars may found an estoppel from denying a proposition of greater generality as to which it is unequivocal,143 and to assess whether there was a representation that A had or would have a right in or over property: ‘The assurances must be evaluated in the specific context in which they are given, bearing in mind that members of a family are less likely to be precise and legalistic when discussing such matters than people in a commercial relationship’.144

Conduct 4.41 For conduct to found an estoppel from denying a proposition, it must, given the requirement of unequivocality, amount to an unequivocal representation of that proposition, and many attempts to base an estoppel on a course of conduct founder on the rock of this requirement.145 For the conduct to be unequivocal, it must be consistent only with the proposition, and inconsistent with its negation.146 Lord Bridge, accordingly, in relation to waiver of the right to object to jurisdiction, in Williams & Glyn’s Bank Plc v Astro Dinamico Cia Naviera SA147 approved, with unanimous concurrence, the dictum of Cave J in Rein v Stein:148 ‘It seems to me that, in order to establish a waiver, you must show that the party alleged to have waived his objection has taken some step which is only necessary or only useful if the objection has been actually waived, or if the objection has never been entertained at all’. Thus, for instance, the Privy Council in Yorks Ins Co v Craine149 held B to be estopped, by exercising a power under its contract with A, from denying the facts that were a precondition for its exercise, and, more recently, in Moore v Cahusac,150 held that the retention, of a tenant’s

142 Thorner v Major [2009] 1 WLR 776; Crossco No 4 Unlimited v Jolan Ltd [2011] EWCA Civ 1619 at [114]; see further 12.41 onwards. 143 See 4.21 n 93. 144 MacDonald v Frost [2009] WTLR 1815 at [20]; Thorner v Major [2009] 1 WLR 776 at [56], [58]–[59], [84]. 145 As recently, for instance, in Ted Baker Plc v Axa Insurance UK Plc [2015] LR IR 345 at [128]–[131], and see further recent examples at 4.44. Blindley Heath Investments Limited v Bass [2016] 4 All ER 490 at [79], [87]–[89], [96]–[98], on the other hand, is a recent example of silent assent to a convention by mutual conduct. As to whether there has been a sufficient course of dealing in which a contractual requirement has been relaxed for it to be waived until warning is given of its reinstatement, contrast Leeds CC v Waco Ltd [2015] TCLR 5 at [29], [43], [53] with Jawaby Pty Inv Ltd v The Interiors Group Ltd [2016] BLR 328 at [44]–[46], [54]. 146 See eg Artworld Financial Corp v Safaryan [2009] 2 EGLR 27 at [15] per Jacob LJ: ‘If the landlord has done something significantly beyond anything consistent with the continued existence of the tenancy, he will have done something which is unequivocal’. 147 [1984] 1 WLR 438, at 444A. 148 (1892) 66 LT 469, at 471. 149 [1922] 2 AC 541. 150 [2006] UKPC 54, at [35]; in fact, the tenant tendered the rent expressly as due pursuant to a five-year renewal and the landlord initially rejected it, saying that the tenancy had not been renewed and was terminated, but the rent cheques were then sent back by the tenant with

165

4.41  Unequivocality and construction

payment of the increased rent due on service of notice of a five-yearly renewal of the tenancy, by a landlord ‘who must have known151 that [the tenant]’s payments were being made as rent calculated … and due under the lease for the new term of five years’, although the necessary notice to renew the tenancy had not been served, ‘constituted a representation that [the tenant]’s status as lessee under the lease for that five year term was accepted’ and could not be subsequently asserted to be accepted as mesne profits nor as paid under a statutory continuation of the terminated tenancy under which the previous lower rent would have been payable.

Silence 4.42 In the case of silence, as opposed to a representation by language or conduct, the requirement of unequivocality is not usually152 addressed in the authorities. This is for the reason that the court will find B to be responsible in his silence153 for A’s reliance on the relevant proposition only where it finds that B was under a duty to speak. Accordingly, the proposition has already been formulated by A. The court does not have to find that the silence unequivocally endorsed that proposition because the silent party has placed himself in such a position that he was under a duty to inform A if he did not endorse the relevant proposition. Otherwise ‘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’.154 The courts have therefore, for instance, refused to infer consensual abandonment of an agreement to arbitrate from silence, on the basis that the silence is just as consistent with forgetfulness or sloth as with intention to abandon.155

repeated assertions that the tenancy had been validly renewed for five years, and the landlord then accepted and retained that rent and further rent paid by the tenant over the five years before asserting that it was accepted as mesne profits. 151 Indeed, was expressly told by the tenant: see n 150 above. 152 Save as in nn 154, 155 below. 153 See 1.88 onwards, 3.9 onwards. 154 Liberty Insurance Pte Ltd & Anor v Argo Systems FZE [2012] 1 Ll R 129 per Aikens LJ at [46] (with unanimous concurrence) adopting the dicta of Robert Goff LJ in The ‘Leonidas D’ [1985] 1 WLR 925 at 936H–937E; in turn followed in Warren v Burns [2014] EWHC 3671 (QB); see also Orion Finance Ltd v JD Williams & Co Ltd [1997] EWCA Civ 1, at 8; Seechurn v Ace Insurance SA NV [2002] 2 Ll R 390; HIH Casualty & ­General Insurance v AXA Corporate Solutions [2003] 1 Lloyd’s Rep IR 1 at [19]–[32] and further 1.88 onwards, 3.9 onwards; but cf Dixon v Blindley Heath Investments Ltd [2016] 4 All ER 490 at [79], [87]–[89], [96]–[98], where there is active mutual conduct rather than only silence on which to found the estoppel. 155 Pre s 13A of the Arbitration Act 1950 (in force as of 1 January 1992): The ‘Splendid Sun’ [1981] QB 694, CA; The ‘Hannah Blumenthal’ [1983] 1 AC 854; The ‘Leonidas D’ [1985] 1 WLR 925, CA at 937 per Goff LJ: ‘In the absence of special circumstances, silence and inaction by a party to a reference are, objectively considered, just as consistent with his having inadvertently forgotten about the matter; or with his simply hoping that the matter will die a

166

Other issues: fraud, proprietary estoppel, conduct, silence  4.43

4.43 Issues may arise as to whether a B’s failure to assert a right or title inconsistent with A’s conduct amounts only to permission limited to the ­particular ­conduct, or to a wider representation that B does not have that inconsistent title, and, similarly, as to whether a course of not insisting on a contractual requirement amounts to a waiver of the requirement until further notice.156 These might be points on which B’s silence or conduct alone could be said always to be equivocal, but the courts have taken a more finely tuned approach,157 and it is submitted that this issue too is best addressed by asking whether A should have

natural death if he does not stir up the other party; or with his office staff, or his agents, or his insurers, or his solicitors, being appallingly slow … it is difficult to imagine how silence and inaction can be anything but equivocal’ (contrast: The ‘Antclizo’ [1986] 1 Lloyd’s Rep 181 at 187 per Evans J: ‘… the mere possibility of other explanations, such as forgetfulness or negligence, does not mean that there cannot be an unequivocal message when in all the circumstances it is reasonable for the respondent to infer that the claimant has formed the intention of abandoning the reference or is representing that he no longer intends to proceed with it’; the requirement of unequivocality was mentioned without any such gloss in the Court of Appeal and the House of Lords); The ‘Golden Bear’ [1987] 1 Ll R 330; The ‘Antclizo’ [1987] 2 Ll R 130, affd [1988] 1 WLR 603; The ‘Multitank Holsatia’ [1988] 2 Ll R 486; The ‘Maritime Winner’ [1989] 2 Ll R 506; The ‘Ermoupolis’ [1990] 1 Ll R 160; Unisys Intl Services Ltd v Eastern Counties Newspaper Group Ltd [1991] 1 Ll R 538, CA, at 553, col 2, per Parker LJ: ‘Unless prevented from doing so by subsequent decisions of this Court, I would regard The “Leonidas D” as deciding that, save in cases where the period of silence was so long that all other possibilities than an inferred agreement were plainly excluded or at the least that an agreement to abandon was the most probable inference, mere silence could never amount to such an agreement. We are in my view bound to admit of the exception of the decision in The “Splendid Sun” and its approval in The “Hannah Blumenthal”’. See also The ‘Boucraa’ [1994] 1 All ER 20 at 26 per Lord Mustill: ‘Consensual abandonment is sound in theory but legally useless in practice given the difficulty of extracting a consensual termination of the agreement to arbitrate from a situation in which ex hypothesi neither party has done anything’; and see now s 13A of the Arbitration Act 1950. 156 See eg on the facts of Beckingham v Hodgers (2 July 2002, unreported); Gabrin v Universal Music Operations Ltd [2003] EWHC 1335 at [37]–[39]; and compare, on the one hand, cases in which not asserting a right estopped a party from asserting it later: Bremer Handels GmbH v Vanden-Avenne Izegem PVBA [1978] 2 Ll R 109; Hazel v Akhtar [2002] 2 P & CR 17 ­(allowing later payment of rent); Dixon v Blindley Heath Investments Ltd [2016] 4 All ER 490, at [96]–[98]; with, on the other, cases in which not enforcing a right did not amount to a representation that it was waived other than in the particular instance: Cape Asbestos Ltd v Lloyds Bank Ltd [1921] WN 274, at 276; The ‘Scaptrade’ [1981] 2 Ll R 425, at 431 (unaffected on appeal [1983] 2 AC 694); Bunge SA v Compagnie Europeenne de Cereales [1982] 1 Ll R 306; Bremer Handels GmbH v Raiffeisen Hauptgenossenschaft eG (No 1) [1982] 2 Ll R 599; The ‘Athos’ [1983] 1 Ll R 127, at 135; Bremer Handels GmbH v Bunge Corp [1983] 1 Ll R 476; Knowles v Knowles [2008] UKPC 32, where acquiescence in the claimant and his wife making their home in the house during the defendant’s mother’s lifetime could not be interpreted as evincing any intention on his part to give it to them after his mother’s death; Jet2. com Ltd v Blackpool Airport Ltd [2012] 2 All ER (Comm) 1053 at [34]–[36], n 184. Contrast also, as to whether there has been a sufficient course of dealing in which a contractual requirement has been relaxed for it to be waived until warning is given of its reinstatement, Leeds CC v Waco Ltd [2015] TCLR 5 at [29], [43], [53] with Jawaby Pty Inv Ltd v The Interiors Group Ltd [2016] BLR 328 at [44]–[46], [54]; see further 14.16. 157 See n 156.

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sought clarification or was justified in taking the title to be conceded or contractual requirement to be relaxed until further notice, and, if the latter, awarding a remedy that is just in all the circumstances.

RECENT EXAMPLES 4.44 Recent examples of success and failure in satisfying the requirement of unequivocality may provide some guidance as to the approach of the courts to it: (1) Continuing to negotiate the settlement of a claim, after the limitation period for bringing it has expired, is not an unequivocal waiver of the limitation bar.158 (2) Assurances given to a party, telling him ‘not to squeal before he was hurt and that the system would take care of him’, were not unambiguous representations that an existing quota would be preserved.159 (3) A request that the claimant await the outcome of a landmark case going to appeal was not an unequivocal implicit waiver of limitation,160 nor was a statement that the defendant ‘would be prepared to concede liability’ as it was followed by a statement as to what would be required ‘before our clients would be prepared to make such a concession’ and the context made clear that it was a statement of present intention and expectation only.161 (4) Use of the expression ‘the ditch or watercourse on the south side of the property’ is not an unambiguous indication that the ditch or watercourse is part of the property.162 (5) Silence and inaction are, absent circumstances imposing a duty to speak, by their nature equivocal ‘for the simple reason that there can be more than one reason why the person concerned has been silent or inactive’.163 Thus, ‘… 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

158 LB Hillingdon v ARC Ltd [2000] 3 EGLR 97; Llanec Precision Engineering Ltd v Neath Port Talbot CBC (17 July 2000, unrep) (Lands Tribunal); Executors of Lord Rotherwick v Oxfordshire CC (3 February 2000, unrep, Lands Tribunal); Seechurn v ACE Ins SA-NV [2002] 2 Ll R 390 (CA); Bridgestart Pties Ltd v London Underground Ltd [2005] 1 P & CR 15; Wiberg v CC Swansea [2001] EWLA 8; Holding & Management (Solitaire) Ltd v Ideal Homes North West Ltd (2004) 96 Com LR 114, at [83]; Super Chem Products Ltd v American Life and General Insurance Co Ltd (Trinidad and Tobago) [2004] 2 All ER 358; Fortisbank SA v Trenwick International Ltd [2005] Lloyd’s Rep IR 464; Law Society v Sephton [2005] QB 1013, at [126]–[131], [133], [150] (unaffected on appeal [2006] 2 AC 543). 159 New Zealand Meat Board v Paramount Export Ltd [2004] UKPC 45 at [51]–[52]. 160 Although it might have been if sharp practice, in the form of intention to run down the limitation period, had been established in evidence. 161 Law Society v Sephton [2005] QB 1013 at [126]–[131], [133], [150] (unaffected on appeal [2006] 2 AC 543). 162 Herbert v Pegrum [2005] EWCA Civ 120. 163 Seechurn v ACE Ins SA-NV [2002] 2 Ll R 390, CA.

168

Recent examples 4.44

representation are likely to be limited’,164 and failure to dispute, in a short response focusing on other matters, one interpretation of an ambiguous proposition in a nine-page document containing a number of points did not amount to unequivocal assent to that interpretation of the proposition. (6) ‘Stay as long as you like’ may be no more than a polite courtesy, in truth meaning ‘so long as I am willing to have you and you wish to remain’.165 (7) An insurer’s repudiation of liability under a policy is not a waiver of the conditions of the policy for pursuit of a claim if one is nonetheless pursued.166 (8) A party not taking an available point, when asked what its case was, nor for seven years after, was not an unequivocal representation that the point would not in the future be advanced where it added that it ‘reserves the right to alter its position in light of discovery of previously undisclosed information which would materially alter the facts and circumstances known … The foregoing is without prejudice to all the remaining terms and conditions of the policy, along with any other defences which may be discovered after further investigation’, although the point required no further information, when it was apparent that the party wished to take every point that it could see.167 (9) A settled practice, of dealing with small unapproved deductions from hire payments by their being refunded if disputed, did not amount to an unequivocal representation that the owner would not withdraw the vessel under a term entitling it to do so, by giving 72 hours’ notice to pay a $500 unapproved deduction.168 (10) A representation ‘I hereby confirm that the above property is leased by us. As previously explained, Wyko bought Lewis DMR as an acquisition’ was not an unequivocal representation that the tenancy had been assigned to Wyko by Lewis DMR, but, in the context that the lease permitted occupation by an associated company, was an assertion of law by a non-lawyer reflecting only the acquisition of Lewis by Wyko. (11) Issuing an application notice in an action seeking procedural orders against Canadian companies affiliated to the defendants to the action (which ­Canadian companies were not themselves defendants or named as parties to be served with the notice), and agreeing a consent order which required compliance by the Canadian companies, did not amount to unequivocal assent to a convention that the Canadian companies were parties to the action.169

164 Huntington v Imagine Group Holdings Ltd [2007] EWHC 1603 (Comm) at [165] (unaffected on appeal [2008] EWCA Civ 159). 165 Century (UK) Limited SA v Clibbery [2004] EWHC 1870 (Ch) at [48] per Blackburne J. 166 Diab v Regent Insurance Ltd [2007] 1 WLR 797, PC. 167 Liberty Insurance PTE Ltd v Argo Systems FZE [2012] 2 All ER (Comm) 126. 168 Western Bulk Carriers K/S Li Hai Maritime Inc [2005] 2 Ll R 389: an amount equivalent to under two hours’ hire, after over four and a half years’ more or less continuous hire. 169 SmithKline Beecham Plc v Apotex Europe Ltd [2007] Ch 71.

169

4.44  Unequivocality and construction

(12) A landlord taking up occupation of a former demise for three months was unequivocal acceptance of a surrender of a tenancy because it went ‘significantly beyond anything consistent with [its] continued existence’.170 (13) ‘In return for the $4 million payment (payable now) he agrees not to pursue legal channels’ was not an unequivocal representation that the client would forgo the $9.4 million owed for the previous contract month, as opposed to not taking legal action to recover the sum of $4 million.171 (14) A lender’s alleged emphasis that ‘going over three months default would be a trigger point for enforcement’ was not an unequivocal assurance that payment under guarantees and mortgage loans would not be demanded on less than three months’ default by the borrower.172 (15) One party to a contract carrying out the remediation work which the other party was obliged to do under the contract was not an unequivocal waiver of the other party’s obligation to do it, particularly where the representative of the other party accepted in cross-examination that, at the time, he thought there were two possible reasons why the first party was doing the work: either because it had decided to do the work and not to charge the other party, or because it was under a misapprehension as to who was to do the work under the contract.173 (16) A statement that ‘the contingent payment would technically be repayable even if the issuer defaulted on the principal repayment’ was unequivocal and not rendered ambiguous by the qualification ‘technically’.174 (17) The statement ‘it will be quite natural that Midgulf appoint its lawyers to defend its position before the Tunisian Court. Such an attitude will not be considered by us as contradictory with its own claim’ was held not to be an unequivocal representation that the representor would not say, in response to an application for an anti-suit injunction, that Midgulf had submitted to the jurisdiction of the Tunisian court, and could not pursue its claim for an arbitrator to be appointed by the English court.175 (18) It was unarguable that wishing a franchisee good luck with possible opportunities it had described, including selling to a particular customer, and saying that the opportunity to deal with that customer looked interesting,

170 Artworld Financial Corp v Safaryan [2009] 2 EGLR 27, at [15] per Jacob LJ and at [17]: ‘The other findings, about redecoration, car parking, return of some furniture, rehanging of curtains and garden sheds, to my mind might well on their own not be unequivocal. Their importance is not that they are each freestanding individual acts of surrender; it is that they cast a clear evidential light on the nature of the key act of taking possession, namely that of occupation for private use for a period of effectively three months’. 171 Marine Trade SA v Pioneer Freight Futures Co Ltd BVI [2010] 1 Ll R 631. 172 Paragon Mortgages Ltd v McEwan-Peters [2011] EWHC 2491 (Comm). 173 Persimmon Homes (South Coast) Ltd v Hall Aggregates (South Coast) Ltd [2009] EWCA Civ 1108. 174 The Law Debenture Trust Corporation Plc v Elektrim SA [2009] EWHC 1801 (Ch). 175 Midgulf International Ltd v Groupe Chimiche Tunisien [2009] 2 Ll R 411.

170

Recent examples 4.44

amounted to unequivocal conferral of the authority required to sell to that customer under the franchise agreement.176 (19) Sir Malcolm Arnold’s daughter not querying use of the phrase ‘all the loose music held by you on behalf of your father’, in relation to authorisation by the Court of Protection of expenditure from his estate on binding the music, was not an unequivocal confirmation that the loose music had not been given to her by him.177 (20) There was no unequivocal waiver of a boxing manager’s contractual entitlement to 25% commission by provision of statements of account deducting 15% and deduction of only that 15%, failure to demand the balance for six years, and reference in correspondence to not having yet claimed management commission as showing his commitment and goodwill, because these constituted, or at least were consistent with, postponement of enforcement rather than waiver of the right.178 A statement that a partner would ‘take’ only half his salary was also equivocal as to whether he would only draw half or give up the right to the balance.179 (21) While reliance on one ground for rejecting a demand without asserting another will not necessarily constitute a waiver of the other ground,180 it may provide one part of the evidence of a shared assumption that the demand is otherwise valid.181 (22) A discretionary beneficiary may reasonably understand trustees to intend to be responsible for his reliance on a representation that he would become owner of trust land, if it is in unqualified terms, notwithstanding the rule that prevents them fettering future exercise of their discretion, and the representation is not necessarily to be understood as an indication of current intention only, subject to the future exercise of a free discretion.182 (23) Institution of proceedings in Bahrain in breach of a jurisdiction agreement was not an unequivocal representation of intention to repudiate the agreement because there was another explanation for it as the only means quickly to freeze assets there.183

176 Servicepower Asia Pacific Property Ltd v Servicepower Business Solutions Ltd [2010] 1 All ER (Comm) 238. 177 Day v Harris [2014] Ch 211, CA at [93], [123], [124]. 178 Warren v Burns [2014] EWHC 3671 (QB). 179 Golstein v Bishop [2014] Ch 131 at [97]–[98]. 180 See cases at 3.24. 181 Spliethoff’s Bevrachtingskantoor BV v Bank of China Ltd [2016] 1 All ER (Comm) 1034 at [168]–[169]. 182 Fielden v Christie-Miller [2015] WTLR 1165; as was held of a representation as to future inheritance in Thorner v Major [2009] 1 WLR 776, but not of a pre-contractual assurance between experienced commercial vendor and purchaser, necessarily to be understood as ­binding in honour only and not therefore reliable in law, as in Cobbe v Yeoman’s Row Property Management Ltd [2008] 1 WLR 1752. 183 Dubai Islamic Bank PJSC v PSI Energy Holding Company BSC [2011] 1 CLC 595 at [164]–[166].

171

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(24) No estoppel by convention against asserting the right to refuse flight schedules outside permitted hours could be founded on four years of accepting them.184 (25) A continuing failure to perform a contractual duty that commenced before the other party’s repudiatory breach of contract cannot be an unequivocal acceptance of repudiation.185 (26) No estoppel could be founded on taking delivery by submitting pincodes from denying that delivery to anyone who submitted a valid pincode was good delivery.186 (27) A developer issuing payment certificates was equivocal as to its builder’s entitlement to receive interim payments under a building contract since it was consistent also with the developer going along with the builder issuing applications because the developer did not wish to alienate a contractor who was already in delay.187 (28) Dealing with shares on seven occasions without reference to pre-emption rights (because the parties had forgotten them) was unequivocal assent to a convention that there were no such rights of pre-emption.188 (29) As to whether there has been a sufficient course of dealing in which a contractual requirement has been relaxed for it to be waived until warning is given of its reinstatement, contrast Leeds CC v Waco Ltd189 with Jawaby Pty Inv Ltd v The Interiors Group Ltd.190 (30) A representation that applications for a landlord’s written consent to assign should be sent to a specified address was to be understood as referring to informal preliminary requests and not as waiving the requirement for service of formal application under s 5(2) of the Landlord and Tenant Act 1988 as provided in the lease, at its registered office,190a but stating an address in a lease amounts to nominating that address as a place of abode or business at which service may be made.190b

184 185

Jet2.com Ltd v Blackpool Airport Ltd [2012] 2 All ER (Comm) 1053 at [34]–[36]. Dubai Islamic Bank PJSC v PSI Energy Holding Company BSC [2013] EWHC 3781 (Comm). 186 Glencore International AG v MSC Mediterranean Shipping Company SA [2015] 2 Ll R 508. 187 Grove Developments Ltd v Balfour Beatty Regional Construction Ltd [2016] Bus LR 480. 188 Blindley Heath Investments Limited v Bass [2016] 4 All ER 490 at [79], [87]–[89], [96]–[98]. 189 [2015] TCLR 5 at [29], [43], [53]. 190 [2016] BLR 328 at [44]–[46], [54]. 190a No 1 India Quay (Residential) Ltd v East Power Apartments Ltd [2016] EWHC 2438 (Ch) at [66]–[74]. 190b Levett-Dunn v NHS Property Services Ltd [2016] Ch 637.

172

Construction 4.45

CONSTRUCTION 4.45 Beyond the examination above of unequivocality, a requirement ­specific to estoppel, and the discussion below of, first, whether construction is a legal or factual issue, and, secondly, as to the interaction of conflicting representations, we do not here attempt a taxonomy of the principles of construction of communications which the law has developed in the context of contracts,191 ­misrepresentations,192 deeds193 and wills194 which might be cited as relevant to an issue as to the interpretation of a unilateral representation or bilateral convention claimed to found an estoppel. For, while these may yet be of assistance by virtue of their underlying reason, in general, the courts now apply to questions of construction ‘the common sense principles by which any serious utterance would be interpreted in ordinary life’195 and, accordingly ‘whether there is a representation and what its nature is must be judged objectively according to the impact that whatever is said may be expected to have on a reasonable representee in the position and with the known characteristics of the actual representee’.196 As to ‘known’ characteristics, it is submitted that, since the issue is as to the responsibility197 of B to A, only such of the circumstances or characteristics of A affecting his reasonable understanding of the representation as B knows or ought to know, or of which he has taken the risk in making the representation, should be taken into account.198

191 See eg Chitty on Contracts (31st edn) Chs 12–13; Lewison, The Interpretation of Contracts (6th edn). 192 See eg Cartwright, Misrepresentation, Mistake and Non-disclosure (3rd edn); Spencer Bower and Handley, Actionable Misrepresentation (5th edn). 193 See eg Norton on Deeds (1906); Halsbury’s Laws of England (5th edn) vol 32 at [364]–[474]. 194 See eg Williams on Wills (10th edn), Theobald on Wills (18th edn), Hawkins and Ryder, The Construction of Wills (2002). 195 Investors Compensation Scheme Ltd v West Bromwich BS [1998] 1 WLR 896 at 912G per Lord Hoffmann; also: ‘The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean’. 196 Primus Telecommunications Plc v MCI WorldCom International Inc. [2004] 2 All ER (Comm) 833, at [30] per Mance LJ; Raiffeisen ZentralBank Osterreich AG v Royal Bank of Scotland Plc [2011] 1 Ll R 123, at [81] per Christopher Clarke J; IFE Fund SA v Goldman Sachs ­International [2007] 1 Ll R 264, at [50] per Toulson J (upheld [2007] 2 Ll R 449). 197 See 4.28. 198 Cf 2.13 and Thorner v Major [2009] 1 WLR 776, at [78] per Lord Neuberger: ‘It may be that there could be exceptional cases where, even though a person reasonably relied on a statement, it might be wrong to conclude that the statement-maker was estopped, because he could not reasonably have expected the person so to rely. However, such cases would be rare’.

173

4.46  Unequivocality and construction

MEANING OF THE REPRESENTATION: LAW OR FACT? 4.46 If the representation relied on to found an estoppel is contained in a document, then the question of the sense to be assigned to it is one of law.199 In practice, however, questions of fact often arise as to surrounding circumstances which are relevant to, and even decisive of, the construction to be placed upon the document, and on these factual aspects of what is then a mixed question of fact and law, evidence is received.200 As Lord Walker said in Thorner v Major,201 ‘The commercial, social or family background against which a document or spoken words have to be interpreted depends on findings of fact. When a judge, sitting alone, hears a case of this sort, his conclusion as to the meaning of spoken words will be inextricably entangled with his factual findings about the surrounding circumstances’. 4.47 Allowing that matters of fact may affect the meaning of a representation, whether in written or oral form, it is nonetheless settled that, on such findings of fact, the construction of a written representation is a question of law. It might be thought that, if the terms of an oral representation are admitted without any proof of circumstances known to the parties suggesting a special or artificial meaning, or the possibility of several meanings, or if the representation is to be extracted from B’s conduct (whether or not combined with statements in language) and the evidence as to such conduct and/or language is undisputed,202 or those matters of fact relevant to the issue of construction have been determined, the issue of construction of an oral representation or a representation by conduct is also one of law, as the form of the representation should not affect the substance of the

199 Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd [1972] AC 741 p­ assim: a promissory estoppel case containing also analysis of cases of estoppel by representation of fact. See also Lord Russell of Killowen in Nippon Menkwa Kabushiki Kaisha v ­Dawson’s Bank Ltd (1935) 51 Ll L Rep 143, P at 151: ‘The question is not what Ba Maw intended to represent by placing the letters (OK) on the delivery orders, but what the letters meant when placed there’; the meaning of a contract governed by foreign law is therefore determined by that law’s rules of construction, although the application of that law to determine the meaning is a task for the court, not the expert witness as to foreign law: Alhamrani v Alhamrani [2014] UKPC 37. 200 See Phene v Popplewell (1862) 12 CBNS 334, as to which Brett LJ said in Oastler v ­Henderson (1877) 2 QBD 575, CA, at 580 that the proper view of the decision was that the court drew an inference of fact from the conduct of the lessee: see n 261. See, in this connection, Mulcahy v Hoyne (1925) 3 CL 41 (H Ct of Australia); at 50, Knox CJ, dealing on appeal with a submission of estoppel by mixed words and conduct, said: ‘The respondent in order to succeed must establish that he might reasonably have inferred from the conduct of the appellant that she consented …’, and then proceeded to reverse the conclusion of the trial judge, treating the matter apparently as one of law. 201 [2009] 1 WLR 776 at [58], with concurrence of the majority at [11], [22], [68]. 202 As (eg) in Davenport v R (1877) 3 App Cas 115, PC at 132. See also Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd n 201 passim; there, the accompanying ­conduct and surrounding circumstances were the subject of specific findings of fact by the referee, from whom there was no appeal on fact. The conduct and surrounding circumstances being therefore beyond dispute, the question of construction which remained was one of pure law.

174

Meaning of the representation: law or fact? 4.48

issue. Current authority appears to hold, however, that the construction of an oral representation is a question of fact. In Thorner v Major,203 Lord Walker did not reject the submission that, once the facts are found, the construction of an oral as well as a written submission is a question of law, but felt ‘a degree of unreality about the distinction’ in the circumstances of the case. Lord Neuberger,204 however, held that the construction of an oral representation is a question of fact on the authority of the opinion of Lord Hoffmann,205 in Carmichael v National Power plc,206 and that a crucial consequence of the distinction was whether evidence of the parties’ understanding is admissible. 4.48 It is nonetheless respectfully submitted that, as a matter of principle, there is no good reason why the form of a representation (written or oral) should alter the nature of the issue as to its meaning, such that the meaning of an oral representation is a question of fact while that of a written representation is a question of law, and that both, on the relevant findings of fact as to the background and course of events, are questions of law. What was said or written against what background are questions of fact, but their meaning is submitted to be a question of law, on which the parties’ respective understandings (a matter of fact) as to the meaning of the representation are relevant only at the threshold, since the legal question of construction will only arise if their understandings differ: if the representation was understood as intended, whether written or oral, that is the meaning of the representation as between those parties.207 If, however, they differ, then it is submitted that the issue as to the meaning of the representation, on the relevant findings of fact, is a matter of reasoned interpretation, and therefore a question of law.208

203 At [58]. 204 Although he agreed with Lord Walker at [68], and Lord Scott and Lord Rodger both agreed with both Lord Walker and Lord Neuberger: [11], [22], [28]. 205 With concurrence of the majority. 206 [1999] 1 WLR 2042, at 2048E–2051C. 207 See 4.8, 4.14. 208 See Liberty Insurance PTE Ltd v Argo Systems FZE [2012] 2 All ER (Comm) 126 at [41] per Aikens LJ: ‘I accept that when a judge … has to decide whether the insurer has made an unequivocal representation … the judge is making a finding of fact on whether an unequivocal representation has been made. The judge has to place his assessment of the evidence against the legal concept of what constitutes an “unequivocal representation by words or conduct”. That is an objective legal concept; either there has been such an unequivocal representation or there has not. It does not depend on whether the “representee” subjectively believed that a representation was being made to him or how he, subjectively, understood any particular words, action or inaction. Where the judge’s assessment is made on the basis of oral evidence, expert evidence and other matters, the Court of Appeal will take particular care before deciding that it can safely interfere with the judge’s assessment’. It is submitted nonetheless, for the reasons given at 4.14, that subjective understanding is relevant where, and an unequivocal representation is established if, the evidence establishes that the relevant representation was understood precisely as intended.

175

4.49  Unequivocality and construction

COMPLEX OR QUALIFIED REPRESENTATIONS 4.49 It frequently happens that, out of several statements relating to the same subject matter, contained in a document or series of connected documents, or made in the course of a conversation or series of connected conversations, there is one statement on which, if it could be isolated from the others, A could properly found an estoppel. But this isolation is not permissible. The primary canon of construction, in the case of a complex representation of this character, is that all the statements or documents, if connected by express reference, or by identity of subject matter, must be considered in their bearing upon one another, in order to ascertain whether, from the whole of them, the particular representation that B is alleged to be contradicting can reasonably be inferred.209

Statements in a single document 4.50 There are numerous illustrations of the defeat of an estoppel by the application of the above principles to a number of statements in a document not under seal, such as an agreement to pay rent,210 a prospectus,211 an underwriting letter,212 a written acknowledgment of the holding of property to the order of another,213 a bill of lading,214 an entry of appearance in an action,215 and a letter concerning a patent application216 and, equally, to instruments under seal.217 As regards the latter class, it is ordinarily in the recitals of the deed that the representation on which the estoppel is founded must be sought, and not in the covenants, which, as a rule, have no effect as representations of fact; although, as considered later, we suggest that there may be cases where it is legitimate to infer a representation from the operative part of the instrument.218 Where, however, a representation expressed in a recital is inconsistent with, or even contradictory of, one which otherwise might properly be implied from a covenant, the general rule is that the representation so implied will not modify, either by way of limitation or expansion, the representation so expressed, but will itself be controlled or qualified by the latter, at all events when the covenant is ambiguous, and the recital clear. This general canon of construction of deeds219 is one which has been particularly invoked in determining questions of estoppel.220 209 210 211 212 213 214

See eg Knighton Estates Ltd v Gallic Mgt Co Ltd (1998) 78 P & CR 52, CA. Cornish v Searell (1828) 8 B & C 471. Bourne v Freeth (1829) 9 B & C 632. Re Consort Deep Level Gold Mines Ltd [1897] 1 Ch 575. Fairfield Shipbuilding and Engineering Co Ltd v Gardner Mountain & Co (1911) 104 LT 288. Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steamships Ltd [1947] AC 46, at [54]–[55]. 215 Firth & Sons v de las Rivas [1893] 1 QB 768. 216 Stanelco Fibre Optics Ltd v Bioprogress Technology Ltd [2005] RPC 15 at [105]. 217 See 8.88(3). 218 See 8.88(5). 219 This is the first of the three rules enunciated by Lord Esher MR in Re Moon, ex p Dawes (1886) 17 QBD 275 at 286. 220 For illustrations, see Lampon v Corke (1822), 5 B & Ald 606: South Eastern Rly Co v Warton (1861) 6 H & N 520; Re Ghost’s Trusts (1883) 49 LT 588.

176

Complex or qualified representations 4.52

Qualified and conditional representations 4.51 A party may also subject his representation to a pre-condition221 for it to become effective by using a formula such as ‘subject to details’222 or ‘subject to contract’,223 or a complete disclaimer224 which prevents another statement in the same document becoming effective as a representation. Thus, neither ‘I will take instructions’225 nor ‘I think that’ll be alright, but I’ll have to get instructions’226 is a representation of agreement, and so to say is not even to undertake a duty to inform the other party if his proposal is not then agreed. On the other hand, appending the expression ‘all rights reserved’ to a statement will not prevent a reliable representation from being made, because the expression does not mean that no representation has been made.227 4.52 A is not prevented by the law of privilege from founding an estoppel on a representation of fact, promise or assent to a convention made in a ‘without prejudice’ communication,228 but A will have to establish that, notwithstanding that B’s representation was made ‘without prejudice’, it was actually intended, or reasonably understood as intended, to be acted on as a binding commitment: claims in promissory estoppel failed for this reason in The ‘Zenovia’229 and in

221 See eg Close Brothers Ltd v Ridsdale [2012] EWHC 3090 (QB) at [129]–[135] for conditional representations without the use of the ‘subject to’ formula. See also 12.125 onwards on analysis of promises of inheritance as implicitly conditional. 222 The ‘Junior K’ [1988] 2 Ll R 583, at 589; The ‘CPC Gallia’ [1994] 1 Ll R 68, at 73; see also ITN v Ward [1997] PLR 131, at [31]; Lansing Linde Ltd v Alber [2000] PLR 15, at [201]; Hoover Ltd v Hetherington [2002] PLR 297, at [51]; Redrow plc v Pedley [2002] PLR 339, at [65] and more recent cases at 9.83 where explanatory booklets were stated not to, and therefore did not, override pension scheme rules. 223 Cobbe v Yeoman’s Row Property Management Ltd [2008] 1 WLR 1752 at [25]–[27]; Derby & Co Ltd v ITC Pension Trust Ltd [1977] 2 All ER 890; A-G of Hong Kong v Humphreys Estate [1987] 1 AC 114; Longman v Viscount Chelsea (1989) 58 P & CR 189, at 193–4; Akiens v Salomon (1992) 65 P & CR 364, at 369; James v Evans [2000] 3 EGLR 1; Venetian Glass Galleries Ltd v Next Properties Ltd [1989] 2 EGLR 42; Secretary of State for Transport v Christos [2003] EWCA C4 1073; Haq v Island Homes HA [2011] 2 P & CR 12; Crossco No 4 Unlimited v Jolan Ltd [2011] EWCA Civ 1619 at [133]; Sony/ATV Music Publishing LLC v WPMC Ltd [2015] EWHC 1853 (Ch) at [95]: ‘subject to signed contract’; see also The ‘August P Leonhardt’ [1985] 2 Lloyd’s Rep 28, CA: waiver subject to an express and effective proviso; Spence v Shell UK Ltd [1980] 2 EGLR 68; Gonthier v Orange Contract Scaffolding Ltd [2002] EWCA Civ 873, at [54]; Spring Finance Ltd v HS Real Company LLC [2011] EWHC 57 (Comm) at [69]–[71]; contrast Prudential Assurance Co Ltd v Mount Eden Land Ltd [1997] 1 EGLR 37, CA; Aubergine Enterprises Ltd v Lakewood International Ltd [2002] 1 WLR 2149, where consent ‘in principle’ and ‘subject to licence’ was held sufficient ‘prior written consent’; see also 5.27, 12.118 onwards. 224 As in Hammersmith and Fulham BC v Top Shop Centres Ltd [1990] Ch 237, at 257c–d; but see 4.53 onwards. 225 Northstar Land Ltd v Brooks [2006] 2 EGLR 67. 226 Legione v Hateley (1982–1983) 152 CLR 406. 227 See n 255. 228 Oceanbulk Shipping & Trading SA v TMT Asia Ltd [2011] 1 AC 662 at [31]–[32]; see also Hodgkinson & Corby Ltd v Wards Mobility Services Ltd [1997] FSR 178 at 191; Unilever plc v The Procter & Gamble Co [2001] 1 All ER 763 at 792b. 229 [2009] 2 Ll R 139 at [18].

177

4.52  Unequivocality and construction

AAG Investments Ltd v BAA Airports Ltd (Rev 1).230 A statement made ‘without prejudice’ may therefore be pleaded to found an estoppel as an exception to the privilege, but will do so only if B’s actual, or reasonably understood, intention to be responsible to A for A’s reliance on it can be established, notwithstanding that it was made under the express rubric that the making of the statement was not to prejudice B’s position. 4.53 An ‘entire agreement’ clause in a written contract – that the document contains all the terms of the contract and no other representations or promises are made or to be relied on – will not necessarily preclude an estoppel:231 ‘The application of normal principles of estoppel by convention232 cannot be excluded by the use in the contractual documents of a provision that the document will prevail whatever may be done in practice. Such a provision may be relevant to a consideration of the issue, but it cannot be conclusive’.233 Although it will not necessarily preclude an estoppel, it may well do so, as it is on its face a binding contractual provision234 (or cross-estoppel by contract). The issue is whether the contractual agreement precludes the representee from reasonably relying on the representation as a binding commitment, or the representee’s reasonable reliance on the representation precludes representor from enforcing the contractual preclusion. 4.54 The initial question is whether the contractual provision in question precludes reliance on a representation, or assent to a convention that does not form part of the contract. Thus, a clause which states that a contract is the entire agreement and understanding between the parties, but does not expressly preclude reliance on collateral representations, will not preclude reliance on them, as opposed to denying them the status of contractual warranties.235 In Cassa di Risparmio della Repubblica di San Marino v Barclays Bank Ltd,236 Hamblen J summarised the law as follows: ‘(1) It is possible for parties to agree that one party has not made any pre-­ contract representations to the other about a particular matter, or that any such representations have not been relied on by the other party, even if they both know that such representations have in fact been made or relied on, and that such an agreement may give rise to a contractual estoppel.

230 [2011] 2 All ER (Comm) 1171 at [78]–[79]. 231 Pearson v Lehman Bros Finance SA [2012] BCLC 151; Brikom Investments v Carr [1979] QB 467 at 485, 490; Ryanair Ltd v SR Technics Inc Ltd [2007] EWHC 3089 (QB) at [143]; Walmsley v Acid Jazz Ltd [2001] ECDR 4; Maclauchlan [2012] LQR 521; Trukhtanov [2009] LQR 648; Saleh v Romanous [2010] NSWCA 274; cf re misrepresentation: McGrath v Shah (1987) 57 P & CR 482; Inntrepreneur Pub Co (GL) v East Crown Ltd [2000] 2 L R 611; see further 8.67 onwards. 232 Being the type of estoppel at issue in the case. 233 Per Lloyd LJ in Pearson v Lehman Bros Finance SA [2012] BCLC 151, at [125]. 234 Peekay Intermark Ltd v ANZ Banking Corp [2006] 2 Ll R 511; Springwell Navigation Corp v JP Morgan Chase Bank [2010] 2 CLC 705 at [141]–[169]. 235 Alman and Benson v Associated Newspapers Group Ltd (unreported) per Browne-Wilkinson J, cited in Deepak v ICI [1998] 2 Ll R 139, at 168. 236 [2011] 1 CLC 701.

178

Complex or qualified representations 4.55

(2) If a term is to be construed as having this effect (and thereby prevent from arising the ordinary consequences which would otherwise follow as a ­matter of law) clear words are necessary – see Peekay para 57; Board of Trade v Steel Bros & Co Ltd [1952] 1 Ll Rep 87 at p 95. (3)

Whether or not a clause or collection of clauses has this effect is a matter of construction of the contract.

(4)

The principle may not apply where there has been a misrepresentation as to the effect of the contractual documents which give rise to the estoppel – see Peekay para 60; Springwell para 166.’

4.55 If the clause is construed as so providing, then it will be difficult to maintain an estoppel based on a representation or assent to a convention before the contract is made in the face of it.237 If all the elements of an estoppel are made out, however, as Hamblen J held at (4) above, one of its effects may be to preclude B from relying on the clause: for instance, if it is established that, in spite of the clause, B nonetheless intended (or was reasonably understood as intending) to bind himself by the relevant representation and knew that A so understood him.238 A, however, faces the substantial obstacle – to his establishing that B made a representation or assented to a convention which B actually intended, or was reasonably understood as intending, A to act on as a binding commitment – that they agreed the contrary.239 The estoppel would have to be such as to deprive the ‘non-reliance’ provision of its validity as a term of the contract (as is possible also by rescission for misrepresentation, or by rectification).240 The knowledge and experience of the parties, the prominence and terms of the clause, and the nature and clarity of the representation or convention may all be relevant, but Peekay and Springwell indicate that it is not possible reasonably to rely on a representation in contracting on terms which preclude reliance on that representation, unless the representation is, in the circumstances, such as to relieve A of his own responsibility to read the clause and understand from it that he is not entitled to rely on the representation. Such circumstances may be difficult to establish before a court which holds that ‘… a person who signs a document knowing that it is intended to have legal effect is generally bound by its terms, whether he has actually read them or not. … It is an important principle of English law which underpins the whole of commercial life; any erosion of it would have serious repercussions far beyond the business community’.241

237 See 8.72; the clause will be less of an obstacle to an estoppel based on a representation or assent by post-contract words or conduct. 238 See Peekay at [43]–[44], n 241 below. 239 Cf Cobbe v Yeoman’s Row Property Management Ltd [2008] 1 WLR 1752; 5.19 onwards. 240 See Peekay at [43]–[44]. 241 Peekay at [43] above; and see the difficulties considered in Standard Chartered Bank v Ceylon Petroleum Corp [2011] EWHC 1785 (Comm), at [544]; although Moore-Bick LJ continued in Peekay at [44]: ‘Nonetheless, it is a rule which is concerned with the content of the agreement rather than its validity. Accordingly, as both Scrutton LJ and Maugham LJ recognised in [L’Estrange v Graucob [1934] 2 KB 394] the contract may be rescinded if one party has been induced to enter into it by fraud or misrepresentation. From time to time one party to a

179

4.55  Unequivocality and construction

It may, however, be that A can pray in aid a statutory provision242 which limits the parties’ freedom to contract out of responsibility for pre-contractual representations and invalidates the exclusionary effect of the ‘entire agreement’ clause so far as its effect would be unreasonable.

Oral representations 4.56 The same principles of construction are applied to statements made by word of mouth on the same occasion as to statements in a single document. The second of the two early leading cases on the doctrine of estoppel by representation of fact furnishes an illustration of an oral representation being neutralised by others of an inconsistent character made immediately afterwards at the same interview, so as to negative the estoppel which might otherwise have arisen on the first statement.243

Series of documents 4.57 In a case, not of several representations in one document, but of a number of documents, one of which contains a representation which is relied upon as giving rise to the estoppel, and another of which contains a representation which is said to negative it, the burden is on the party so contending to establish that the documents are so intimately associated with one another, either by express words of incorporation, or by necessary implication and identity of subject matter, as to justify a conclusion that statements in one must be read in conjunction with statements in the other, and not independently of them.244 This, so far as it depends on an examination of the documents themselves, is a question of law. If this question is determined in the affirmative, it then becomes necessary to determine the question (which, again, so far as it depends on the construction of the documents alone, is one of law) as to how far, if at all, the instrument containing the representation relied upon as creating the estoppel is controlled, qualified or neutralised by any other or others of the related

contract misrepresents to the other the content or effect of the document which is intended to embody their agreement. In such cases it has been held that the party making the misrepresentation is prevented from enforcing the contract in accordance with its terms’. 242 Eg Unfair Contract Terms Act 1977; Misrepresentation Act 1963: see further 8.76 and the standard works on the law of contract. 243 Freeman v Cooke (1848) 2 Exch 654. 244 In Hogarth Shipping Co Ltd v Blyth, Green, Jourdain & Co Ltd [1917] 2 KB 534, it was held that a charterparty containing a provision that the bills of lading were ‘to be deemed conclusive proof of the cargo shipped’ was not in sufficiently clear and definite terms incorporated in a bill of lading specifying a quantity of goods shipped, by the clause ‘freight and all other conditions and exceptions as per charter-party’, so as to override another term in the bill of lading as to the cargo: ‘weight, measure, quality, contents and value unknown’ per Swinfen Eady LJ at 547–9, Scrutton LJ at 551–2 and Bray J at 557–8.

180

Complex or qualified representations 4.59

i­ nstruments, so as to defeat any estoppel which might otherwise result from the isolated instrument.245

Written and oral statements 4.58 Sometimes, a written statement is accompanied or immediately preceded by an oral statement. In such cases, the latter cannot be wholly ignored; both must be considered in their bearing on one another, in order to ascertain whether the particular representation said to found the estoppel was conveyed. Where the document merely repeats and confirms, without substantial variation, a previous oral statement to the like effect,246 there is no difficulty, but, where there is a conflict between the two, the question arises which is to prevail over the other. According to the usual habit of jural thinking, and the common understanding and practice of the mercantile community, more importance is usually attached to the written than to the spoken word; but there is no presumption to this effect,247 and it may be reasonable for A to understand the oral to override the written statement.248 4.59 In cases in which the effect of a documented transaction is said to be altered by a convention or representation made orally, the court will, however, approach the evidence with the same caution as Cooke J in Renaissance Capital Ltd v African Minerals Ltd:249 ‘I deal first with Renaissance’s estoppel case and I begin with some general observations. First, given that the conversations relied on occurred several years ago

245 The estoppel was defeated in (eg) Mayer v Claretie (1890) 7 TLR 40; J Lobden & Co v Calder & Co (1898) 14 TLR 311; Oliver v Nautilus Steam Shipping Co [1903] 2 KB 639, CA; and, where a landlord had handed to a tenant a rent book whose text gave rise to the inference that the tenancy was one to which the Rent Restriction Acts applied, but at the same time delivered a letter especially stating that the tenancy was ‘a weekly one subject to one week’s notice at any time’, it was held that the alleged representation in the rent book could not be isolated from the information conveyed to the tenant in the letter, and that, if the two were read together, such a measure of ambiguity was introduced into the representation as must be fatal to a submission of estoppel: London County Territorial and Auxiliary Forces Association v Nichols [1949] 1 KB 35, per Scott LJ at [49]–[50]. 246 As in Middleton v Pollock, ex p Wetherall (1876) 4 Ch D 49. 247 Cf Law Com 154 Cmnd 9700 (1986) [4.2.16]; a conflict between oral and written terms in contract presents an issue ‘no different in principle from that in which the parties agree to inconsistent terms both of which are set out in the same document. The court will have to decide which of the inconsistent terms more nearly represents the intention of the parties’. 248 Eg Brook v Hook (1871) LR 6 Exch 89; Brikom Investments Ltd v Carr [1979] QB 467; cf 5.19–5.32. 249 [2014] EWHC 2004 (Comm) at [80] (unaffected on appeal [2015] EWCA Civ 448); Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm) at [15]–[22]; see also, as to the onus of establishing that the parties did not mean their agreement to be that which was recorded being the same as for rectification, T & N Ltd v Royal & Sun Alliance Plc [2003] 2 All ER (Comm) 939, at [193], followed in Queens Moat Houses Plc v Capita IRG Trustees Ltd [2005] 2 BCLC 199, at [35].

181

4.59  Unequivocality and construction

and none is evidenced by a contemporaneous note, it is well to have in mind Popham CJ’s observation in Countess of Rutland’s Case:250 “it would be inconvenient if matters in writing, made by advice and upon consideration, and which finally import the certain truth of the agreement of the parties should be controlled by averment of the parties to be provided by the uncertain testimony of ­slippery memory.” Lord Goff’s words in Grace Shipping v Sharp & Co251 are also ­apposite: “… it is not to be forgotten that, in the present case, the Judge was faced with the task of assessing the evidence of witnesses about telephone conversations which had taken place over five years before. In such a case, memories may very well be unreliable; and it is of crucial importance for the Judge to have regard to the contemporary documents and to the overall probabilities”.’

Language and conduct 4.60 Where a statement inferred from B’s conduct252 is contradicted or qualified by a statement in language (whether oral or written) made by him at or about the same date on the same subject matter, the implied and the express statements must, on the same principle, be examined in their entirety and inter-relation. On such examination and comparison, there is a tendency, grounded on, and justified by, the general course of human experience, and reflected in the literature and proverbial philosophy of all ages, to regard conduct as a more sincere expression of the mind and will than language, and to attach greater reality and value to the silent testimony of acts than to the declarations of pen or voice. 4.61 Accordingly, in the context of promissory estoppel or waiver, it has been said that a representor cannot have his cake and eat it: if his conduct is inconsistent with the preservation of a right, he cannot avoid thereby waiving the right by the use of a formula such as ‘all rights reserved’.253 So also, in the context of election by a landlord, the actual conduct of the landlord in receiving rent, distraining on the demised premises, and the like, with knowledge of forfeiture, has generally been considered to involve a representation of an intention to waive the forfeiture, and a recognition of the continued existence of the tenancy, unaffected by any express reservation of rights made at the time, or the use of such expressions as ‘without prejudice’, ‘under protest’, and the like.254 The law is prone

250 251 252 253

(1604) 5 Co Rep 25b, at 26a. [1987] 1 Ll R 207, at 215–6. As to which inference, see 3.4 onwards. Bremer Hgs mbH v C Mackprang Jr [1979] 1 Ll R 221, at 225, col 2 per Lord Denning MR, at 231 per Shaw LJ; cf on the facts, at 229, col 2 per Stephenson LJ; followed in Bremer Hgs mbH v Deutsche-Conti Hgs mbH [1983] 1 Ll R 689, at 693, col 2; Nichimen Corp v Gatoil Oversea Inc [1987] 2 Ll R 46, at 51; Tigris International NV v China Southern Airlines Co Ltd [2014] EWCA Civ 1649, at [195]; cf 5.27, n 113. 254 See Davenport v R (1877) 3 App Cas 115; Strong v Stringer (1889) 61 LT 470; Hartell v Blackler [1920] 2 KB 161; Windmill Investments (London) v Milano Restaurants [1962] 2 QB 373; Central Estates (Belgravia) v Woolgar (No 2) [1972] 1 WLR 1048; David Blackstone v Burnetts (West End) [1973] 1 WLR 1487; Expert Clothing Service and Sales Ltd v Hillgate House Ltd [1986] Ch 340; cf Creery v Summersell [1949] Ch 751.

182

Complex or qualified representations 4.63

to view the course adopted in such circumstances as a case of saying he would ‘“ne’er consent”, consented’. Similarly, where it is a question of whether a person has been ‘held out’ by the representor as his agent, evidence of the actual conduct of the parties prevails over even express terms put down on paper for the very purpose of serving as a prophylactic against the operation of the Factors Acts,255 and, in a landlord and tenant case, it has been held that a clause in the lease, providing that no waiver shall be effective which is not in writing, does not prevent the positive act of receiving rent from operating as a waiver.256 4.62 Here again, however, there is submitted to be no presumption that acts prevail over words. If B’s conduct is logically consistent only with a particular proposition, it may be that contradiction of that proposition in words does not prevent a representation of it being made by such conduct. On the other hand, an express reservation of rights, for instance by a statement that action is taken ‘without prejudice’257 to such rights, may prevent258 conduct otherwise open to interpretation as a waiver of them from being reasonably so understood.259 4.63 As to conduct, where there is a conflict between acts of an equivocal nature and unequivocal conduct from which one, and only one, representation can be reasonably inferred, it is needless to say that the latter will prevail, and, in ascertaining whether the precise representation on which the estoppel is founded was or was not made, the court will either wholly ignore the former,260 or at all events construe the ambiguous conduct by the light of the unambiguous. Where there is no such conflict, conduct ambiguous on its own may assist in establishing related conduct as unequivocal.261 It is submitted that it is not, however,

255 Weiner v Harris [1910] 1 KB 285, CA at 290, 292–3. 256 R v Paulson [1921] 1 AC 271, at 283; but cf Ovendale Pty v Anthony (1966) 117 CLR 639 at 581; Inner City Businessmen’s Club v James Kirkpatrick [1975] 2 NZLR 636. 257 Oliver v Nautilus Steam Shipping Co [1903] 2 KB 639, CA; The ‘Winson’ [1980] 2 Lloyd’s Rep 213 (CA reversed on other grounds [1982] AC 399); see also the disclaimer in Hammersmith and Fulham BC v Top Shop Centres Ltd [1990] Ch 237 at 257c–d. 258 If not conclusively of itself, at least as one factor amongst others. 259 Finagrain SA Geneva v P Kruse Hamburg [1976] 2 Ll R 508; Cook Industries Inc v Meunerie Liegeois SA [1981] 1 Ll R 359, at 368, col 2; Peter Cremer v Granaria BV [1981] 2 Ll R 583; Bremer Hgs mbH v Deutsche Conti-Hgs mbH [1983] 2 Ll R 45, at 49, col 1: although it is not clear in these cases that the conduct would have been sufficiently unequivocal to give rise to a waiver, even absent a reservation of rights. Rights to affirm and to deny the validity of a s 25 Landlord and Tenant Act 1954 notice were effectively reserved, respectively in Keith Bayley Rogers & Co v Cubes (1975) 31 P & CR 412 and Rhyl UDC v Rhyl Amusements [1959] 1 WLR 465, but not in British Railways Board v AJA Smith Transport Ltd [1981] 2 EGLR 69, where an application for a new tenancy was pursued to trial and appeal. 260 Provincial Insurance Co of Canada v Leduc (1874) LR 6 PC 224, at 238. 261 See eg Artworld Financial Corp v Safaryan [2009] 2 EGLR 27, at [17] per Jacob LJ: ‘The other findings, about redecoration, car parking, return of some furniture, rehanging of curtains and garden sheds, to my mind might well on their own not be unequivocal. Their importance is not that they are each freestanding individual acts of surrender; it is that they cast a clear evidential light on the nature of the key act of taking possession, namely that of occupation for private use for a period of effectively three months’; cf Phene v Popplewell (1862), 12 CBNS

183

4.63  Unequivocality and construction

until the later unambiguous conduct clarifies the earlier ambiguous conduct that the latter becomes unequivocal,262 unless the later conduct proves that A’s actual understanding of B’s intention by his earlier conduct was correct, in which case the later conduct is evidence that there was at the earlier stage an accurate ­communication of that intention.263

334, which may have proceeded on the theory, put forward by Byles J at 343, that the later unequivocal acts of the party (giving formal notice, painting out the old name, etc) might be regarded as giving shape and meaning to his indeterminate and neutral earlier acts (such as leaving the key, etc). It is only on this theory that the decision can be supported, according to Brett LJ, in Oastler v Henderson (1877) 2 QBD 575 at 580 sed quaere, as to timing, for the reason given in the text, unless the later acts show A’s understanding of B’s earlier act to have been correct; see also Proudreed Ltd v Microgen Holdings plc [1996] 1 EGLR 89. 262 See Century (UK) Limited SA v Clibbery [2004] EWHC 1870 (Ch), at [50] per Blackburne J: ‘As he put it, the context and meaning of an assurance can evolve with time. I do not accept that submission. How an assurance is reasonably to be understood must depend upon how, at the time that it was made, the assurance was understood. Its meaning cannot change with the passage of time’; see 4.14 n 71. 263 See 4.17.

184

CH A P T E R 5

Inducement and reliance; the effect of estoppel as to a fact

Introduction  5.1 Inducement  5.4 Intention of B to be responsible for reliance  5.19 Materiality  5.33 Change of position  5.41 The consequences of estoppel as to a fact  5.63 Questions of law and fact  5.70

INTRODUCTION 5.1 If an estoppel is to be based on reliance, then having established the fact that the representation relied upon was made to him by B1 or that B breached his duty to correct A’s belief, A must show that B’s representation or A’s uncorrected belief produced a certain effect upon A’s mind, his will, and his temporal interests. A representation or uncorrected belief that has not caused A to act to his prejudice or detriment2 is a mere brutum fulmen.3 It can no more be made the foundation of an estoppel than of proceedings for misrepresentation. A must prove that he was (either intentionally or reasonably) induced by the representation or (where B was under a duty to speak) caused by his uncorrected belief so to act or omit to act that he will suffer detriment if B does not stand by his representation or A’s belief. This proposition will be examined by reference, in turn,

1 2 3

As throughout, denoting the party to be estopped, and ‘A’ the estoppel raiser. But see 5.61. Damp squib (literally ‘unwieldable thunderbolt’).

185

5.1  Inducement and reliance; the effect of estoppel as to a fact

to its requirements: first (in both cases), of actual inducement; second (in the case of representation only),4 of actual or apparent intention to induce; and third (in both cases), of detriment. 5.2 The first requirement – that of actual inducement – is that the representation or uncorrected belief caused the relevant change of position by A. The second, for any estoppel based on a representation5 – that of intention to induce – is that B intended, or was reasonably understood by A to intend, that A act on his representation, and B’s responsibility for such reliance was not reserved.6 The materiality of the representation or breach of duty to the conduct (that is, whether a reasonable person would be induced by the representation or breach of duty to act as A did) will, therefore, assist in establishing both these requirements. The final constituent element of a reliance-based estoppel that we consider here is that of detriment – that A has so changed his position that it would be unfair for B to deny the proposition he has represented or failed to correct. 5.3 In substance, the questions that these criteria address are whether B is responsible to A for the latter having acted as he did, and whether, if B is responsible, B has so acted that it would be unfair for B now to deny that which he represented or escape the consequences of his breach of duty. There is, however, a danger in reaching decisions as to whether an estoppel is made out simply on broad criteria of ‘responsibility’ and ‘unfairness’ that those decisions might be arbitrary or circular in their justification: whether B is responsible or answerable to A depends on whether the court makes him answer or respond, and whether it would be unfair of B to deny the relevant proposition will depend, in the absence of more specific criteria, on whether the court regards it as unfair. While, therefore, the need for flexibility and the difficulty of formulating universal criteria must be recognised, and reflected by consideration of the more detailed criteria always in the light of their underlying general purpose of determining responsibility and unfairness,7 further analysis is necessary as to when and why B will be responsible to A for his having acted as he did, and when and why it will be unfair for B to deny the relevant proposition or avoid the consequences of his breach of duty, in order to make out the structure necessary for the doctrine of estoppel to operate as a rule of law rather than a broad disposition towards justice.

4

5 6 7

If it is found that B is under a duty to speak to A then it has been found that he is responsible to A for the belief he allowed by not speaking, so the responsibility has been established ­without, as in the case of a representation, foundation of such responsibility on actual or apparent intention to induce. See n 4 above. As it was in Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752. As submitted in the fourth edition at V.1.3 and stated by Lord Walker in Cobbe v Yeoman’s Row Management Ltd n 6 above; see 1.66, n 290.

186

Inducement 5.5

INDUCEMENT Inducement and reliance 5.4 Implicit in the requirement that B induce A by the representation, or allow A to be induced by the belief he culpably failed to contradict, is a requirement that A rely on the representation or belief. Inducement and reliance may be different concepts,8 but each tests whether the representation or breach of duty to speak caused the relevant conduct, from the point of view of B and A respectively, and B cannot induce A to act by a representation or breach of duty unless A relies on the representation or, in the latter case, his uncontradicted belief. 5.5 Except in the case of estoppels by convention or promises, this reliance necessarily involves belief by A in the truth of the representation by B or the proposition which B has failed in his duty to contradict.9 If A does not believe this representation or culpably undenied proposition of fact or law10 to be true, he cannot be said to have been induced by the representation,11 nor for B’s silence to have had a causative effect on his conduct, unless either (i) A understands B to be assuming liability to (or giving up rights he may have against) A if the facts are not as stated, or (ii) if B’s belief or acquiescence in the representation influences A’s conduct towards him, although A does not believe it himself. In the former case, an estoppel by convention, or a promissory (or, if otherwise appropriate,

8

Bristol and West Building Society v Mothew [1998] Ch 1 at 11A per Millett LJ; for instance, the Pied Piper induced the rats to leave Hamlyn but they did not rely on anything he said or did; further, inducement, unlike reliance, requires actual or constructive intention on the part of B that the representation should be acted on: see 5.19–5.32. 9 See Lowe v Lombank Ltd [1960] 1 WLR 196 at 207, CA: a statement in a delivery receipt for a car purchased under a hire-purchase (H-P) agreement, that the purchaser had examined the car and found it satisfactory, did not estop her, although the H-P company’s practice was not to execute the agreement until the receipt was forwarded to it, because the H-P company put forward no evidence that it signed the agreement because it believed the statement in the receipt to be true, rather than requiring it to avoid liability. An estoppel by convention or contract was not argued, and the CA in Peekay Intermark Ltd v Australia & New Zealand Banking Group Ltd [2006] 2 Lloyd’s Rep 511 at [56]–[57] (in which Lowe v Lombank was not cited) and Springwell Navigation Corp v JP Morgan Chase Bank (formerly Chase Manhattan Bank) [2010] 2 CLC 705 at [141]–[169] (in which Lowe v Lombank was not followed) (see also Raiffeisen Zentralbank Osterreich AG v Royal Bank of Scotland Plc [2011] 1 Lloyd’s Rep 123 at [250]–[256]) has now established that parties can bind themselves by contract that their relations should be governed on the basis that facts are deemed to be true: see 8.67 onwards on estoppel by contract. 10 See 2.8. 11 Carr v London and North Western Rly Co (1875) LR 10 CP 307 (Brett J); Seton Laing & Co v Lafone (1887) 19 QBD 68, CA at 72: ‘the next question is whether the plaintiff believed it …’; Lebeau v General Steam Navigation Co (1872) LR 8 CP 88 at 94 per Bovill CJ and at 96–97 per Brett J; Bell v Marsh [1903] 1 Ch 528 at 540–543 per Collins MR, at 544–545 per Romer LJ and at 545 per Cozens-Hardy LJ; Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steamships Ltd [1947] AC 46, PC at 56 per Lord Wright: ‘It is also true that he cannot be said to rely on the statement if he knew that it was false: he must reasonably believe it to be true and therefore act on it’.

187

5.5  Inducement and reliance; the effect of estoppel as to a fact

a proprietary) estoppel, might be raised. In the latter, B would only be estopped from denying his state of mind at the time.

Actual inducement in result 5.6 Inducement is distinct from materiality, which is defined by whether a reasonable man in A’s position would have acted as A did on B’s representation, or (in the case of estoppel by culpable silence) would have altered his conduct had B spoken. Inducement concerns itself with (a) the actual effect of the representation or culpable silence on A and (b) in the case of representation,12 the intention, actual or imputed, of B to bring about this result. In representation cases, it is clear that for the purposes of estoppel, no less than for those of an action for misrepresentation, inducement is established by proof that the representation was made both with the object, and with the result, of inducing A to alter his position (save where B has reserved responsibility for A so acting).13 Neither element suffices without the other. To prove B’s intention to produce an effect comes to nothing, unless the effect itself be proved; and it is equally idle to establish the result, unless it be also shown that B, actually or presumptively, intended to bring it about. To support an estoppel it is, therefore, necessary for A to prove that he was in fact induced by the representation or culpably uncontradicted belief to act upon it. Even in cases where B is shown to have intended that his representation or silence should induce that result, it will not avail A, in setting up an estoppel, to prove such an intention on the part of B, unless he can show that he was in fact induced to act upon the faith of the representation or uncontradicted belief.14

Inference of inducement from materiality 5.7 Given proof of communication of the representation to A or of the breach of duty to speak, the court may, however, infer from the materiality15 of the representation or culpably uncontradicted belief to the conduct of A16 that A was induced by the representation or belief so to act without direct evidence from A to that effect.17 This has come to be regarded as an automatic but 12 13 14

As to silence in breach of duty to speak, see n 4 above. As in Cobbe v Yeoman’s Row Management Ltd n 6 above: see 5.21. Morrison v Universal Marine Insurance Co (1873) LR 8 Exch 197 at 205–206; Cooke v Eshelby (1887) 12 App Cas 271 at 275, 278; Hewlett v London County Council (1908) 24 TLR 331 at 332–333. So too Lord Russell of Killowen in Nippon Menkwa Kabushiki Kaisha v Dawson’s Bank Ltd (1935) 51 Ll L Rep 147, PC at 151: ‘there is a complete absence of any evidence that P, when he paid the money to Sew Kai, relied on the presence of the letters “OK” on the delivery orders or bills, and this is an essential element in establishing the Plaintiff’s plea of estoppel’. 15 See 5.33–5.40. 16 Viz that it would induce a reasonable man so to act: see 5.33. 17 By analogy with the authorities on misrepresentation: Smith v Chadwick (1884) 9 App Cas 187 at 196 per Lord Blackburn: ‘I think that if it is proved that the defendants with a view to

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r­ ebuttable presumption, placing the onus on B to prove that A was not induced by the representation or breach of duty if it was material.18 However, the language of some authorities suggests, to the contrary, that where, although the representation or breach of duty was material to the relevant conduct of A, a reasonable man in the position of A might as easily have acted as he did for reasons wholly independent of the representation or breach of duty, the burden of establishing reliance remains on A.19 It is submitted that the resolution of the

induce the plaintiff to enter into a contract made a statement to the plaintiff of such a nature as would be likely to induce a person to enter into a contract, and it is proved that the plaintiff did enter into the contract, it is a fair inference of fact that he was induced to do so by the statement … Its weight as evidence must greatly depend on the degree to which the action of the plaintiff was likely, and on the absence of all other grounds on which the plaintiff might act … the plaintiff can be called as a witness on his own behalf, and … if he is not so called, or being so called does not swear that he was induced, it adds much weight to the doubts whether the inference was a true one.’; Re London and Leeds Bank Ltd 56 LJ Ch 321; Smith v Land and House Pty Corpn (1887) 28 Ch D 7 at 16; Spencer Bower, Turner and Handley on Actionable Misrepresentation (5th edn) [6-15]; Silver v Ocean SS Co Ltd [1930] 1 KB 416 at 428, 434–5, 441; discussed in Cremer v General Carriers [1974] 1 WLR 341 at 351D–353B; Nationwide Anglia Building Society v Lewis [1998] Ch 482 where the Court of Appeal refused to presume reliance on the holding out of a solicitor on a letterhead as a partner (followed in Sangster v Biddulph [2005] PNLR 33 and Walsh v Needleman Treon [2014] EWHC 2554 (Ch)); see also Bremer v Vanden Avenne Izegem [1978] 2 Lloyd’s Rep 109, HL at 127, col 2 (waiver) and Lim v Ang [1992] 1 WLR 113, PC at 118C–D (proprietary estoppel) for an ‘irresistible’ and an ‘inevitable’ inference of reliance; Smith v Lawson (1997) 75 P & CR 466 at 469–70 (promissory estoppel); Hoyl Group Ltd v Cromer Town Council [2015] HLR 43 at [81]–[82], 846 per Floyd LJ (proprietary estoppel). 18

19

Brikom Investments v Carr [1979] QB 467, CA at 483; Greasley v Cooke [1980] 1 WLR 1306, CA (proprietary estoppel) in which dicta of Jessel MR in Smith v Chadwick (1882) 20 Ch D 27, CA at 44–45 to this effect were cited, but not those of Lord Blackburn, in the House of Lords (n 17 above); followed in Habib Bank Ltd v Habib Bank AG Zurich [1981] 1 WLR 1265, CA at 1287; Grant v Edwards [1986] Ch 638, CA at 657C per Browne-Wilkinson VC, whose approach is, it is submitted, to be preferred to Nourse LJ’s objective test of reliance at 648G (see n 19 below and further Lawson [1996] LS 218 at 219–220); Coombes v Smith [1986] 1 WLR 808 at 821; Wayling v Jones (1993) 69 P & CR 170, CA at 173; Stevens and Cutting Ltd v Anderson [1990] 1 EGLR 95, CA at 97K–M, 99E–F; Hammersmith & Fulham LBC v Top Shop Centres Ltd [1990] Ch 237 at 262C–D; Durrant v Heritage [1994] EGCS 134; Century (UK) Ltd SA v Clibbery [2004] EWHC 1870 (Ch) at [73] (all proprietary estoppel cases, but, as the issue is evidential, the same rule must apply to all estoppels); cf Steria v Hutchinson [2007] ICR 445, CA at [75] per Mummery LJ, [130] per Neuberger LJ; in Pan Atlantic Insurance Ltd v Pine Top Ltd [1995] 1 AC 501 at 542A, 549C Lord Mustill, in relation to misrepresentation, referred to materiality raising a presumption of inducement, after citation (at 505F–G) of Lord Blackburn’s dicta (n 17 above); contrast Powell v Benney [2007] EWCA Civ 1283, where the Court of Appeal refused to interfere with a finding by the judge below that A’s conduct was motivated not by a promise by B that they would inherit his properties on his death but by ‘their wish to help a man for whom they first had sympathy and then grew to like’ (criticised in Pawlowski, Conv. 2008, 3, 253–261). Taylors Fashions Ltd v Liverpool Trustees Co [1982] QB 133n at 156B–157B per Oliver J, where a proprietary estoppel raiser failed to establish that he would not have spent what he did on a property had he not believed that he had a larger interest in it than he actually had: ‘But what is there to indicate that the work was undertaken “on the faith of” that belief, rather than merely “in” that belief? … But what Mr Taylor was unable to say was that they would not have done the work if they had not thought that option was available, much less that the

189

5.7  Inducement and reliance; the effect of estoppel as to a fact

difference in these approaches lies in the court taking a practical view as to whether the ­representation or breach of duty, in the particular context, is such that the court would expect it to induce the relevant conduct, and if it is not, requiring proof20 of reliance.21

Inducement to inactivity 5.8 If the detrimental conduct is inactivity, that is, failure by A to take positive steps to protect or improve his position which he would have taken had he known the truth, then he must prove that his inactivity, or failure to take such steps, was induced by the representation or culpably uncontradicted belief.22 It is submitted that in such a case an inference or rebuttable presumption of reliance, from the materiality of the representation or breach of duty to the inactivity, may still be made, albeit a less attractive inference, the presumption being of less weight, than if A had altered his conduct following a material representation or breach of duty, rather than simply continuing on the same course of conduct as before.23 It will be easier in such a case for B to rebut the presumption and disprove inducement by proving that the inactivity would have resulted even had the truth been told.24 5.9 Moreover, even if reliance by inaction is presumed, the onus nonetheless remains on A to show detriment, viz that his position (if B resiles from the

Defendants were or must have been aware that they would not have done it.’; cases at n 17 above; Grant v Edwards n 18 above at 648G per Nourse LJ: the conduct must be ‘conduct on which the woman could not reasonably have been expected to embark unless she was to have an interest in the house’. In Austin v Keele (1987) 10 NSWLR 283, PC at 290F, 291G–292B, Lord Oliver said that the authorities only justified the inference of reliance upon a common intention where there was proof of contemplation at the time of formation of the common intention that acts of the relevant quality would be carried out in reliance on the relevant understanding; and see Steria v Hutchinson n 18 above, at [75] per Mummery LJ, [128]–[130] per Neuberger LJ. 20

See eg Cropper v Smith (1884) 26 Ch D 700, CA in which no evidence of reliance by the purchaser of a patent on a statement in the petition for the patent as to the novelty of the invention was adduced: ‘The Plaintiffs gave a very small sum for this patent, and as a rule people do not rely on any statement made by the patentee, but they buy the patent, forming their own opinion as to its worth, taking their chance (unless it has been established) of their being able to establish its validity if the question comes before a Court of law.’ per Cotton LJ at 706; Watkins v Emslie [1982] 1 EGLR 81, CA, where the court would not infer reliance by a landlord on a notice that was only valid if his tenant had a tenancy for a term of more than one year, as the landlord knew the tenancy was not for such a term, and had retained solicitors; Nationwide Anglia Building Society v Lewis n 17 above; see further 5.33–5.40. 21 This paragraph was cited with approval in BRB (Residuary) Ltd v Connex South Eastern Ltd [2008] 1 WLR 2867 at [24], 2879H. See also 5.72. 22 Re Lewis [1904] 2 Ch 656 at 662, 664; see also Willesden Corpn v Gloss (1962) 185 EG 377; Fontana NV v Mautner [1980] 1 EGLR 68. 23 See Watkins v Emslie n 20 above. 24 See 5.10(ii), 5.16–5.17.

190

Inducement 5.10

representation or relies on facts he culpably failed to communicate)25 will be worse as a result of his reliance than it would otherwise be;26 this may, however, be proved, and often is, by establishing facts from which it can be inferred.27 The issue here is whether the representation or breach of duty has been a cause of suppressing action that A would otherwise have taken: A may benefit from the presumption that a material representation or breach of duty has been such a cause, but he must still identify the action suppressed and the benefit thereby lost.

No actual inducement 5.10 Of course, in a case of estoppel by representation, if the representation had not come to the attention of A when he acted, no representation was made to him, so no question of inducement can arise.28 Further, a claim of inducement may be defeated, and any presumption rebutted, by proof of the following: (i) A knew the truth, or did not believe the representation to be true,29 or did not form any belief as a result of the conduct alleged to constitute a representation,30 or did not understand the representation in the sense in which

25 See 5.51–5.53. 26 Scottish Equitable plc v Derby [2000] 3 All ER 793, ChD at 804g (aff’d [2001] 3 All ER 818, CA); 5.58–5.61. 27 Kelly v Fraser [2013] 1 AC 450, PC at [18]. 28 Re Northumberland and Durham District Banking Co, ex p Bigge (1858) 28 LJ Ch 50 (misrepresentation); Edmundson v Thompson and Blakey (1861) 31 LJ Ex 207 at 210 (misrepresentation); in Carr v London and North West Rly Co n 11 above, Brett J said, at 317, that ‘… the plaintiff did not, in re-selling, act upon any representation of the defendants, for he re-sold before they made any communication to him.’; this seems odd on the facts as reported, as the advice-notes were received on the 7th and 9th of July, and the goods (according to the headnote) were not re-sold until the 21st of August; MacFisheries Ltd v Harrison (1924) 93 LJKB 811; Farquharson Bros & Co v King & Co [1902] AC 325 at 341 per Lindley LJ (citing Dickinson v Valpy (1829) 10 B & C 128 at 140): ‘the “holding out” must be to the particular individual who says he relied on it, or under such circumstances of publicity as would justify the inference that he knew of it and acted upon it’; Hudgell Yeates & Co v Watson [1978] QB 451 at 470A–D); Lark v Outhwaite [1991] 2 Lloyd’s Rep 132 at 142, col 2; The ‘Brimnes’ [1975] QB 929 at 959E per Megaw LJ. 29 In Jennings v Broughton (1853) 5 De GM & G 126: A knew from his own inspection that the vein to be mined had not been opened so representations as to quantity, although presented as fact, had to be speculative; Eaglesfield v Marquis of Londonderry (1876) 4 Ch D 693; (aff’d (1878) LT 303, HL); Re Ambrose Lake Tin and Copper Mining Co (1880) 14 Ch D 390; Bellairs v Tucker (1884) 13 QBD 562 at 576–8; Bloomenthal v Ford [1897] AC 156 at 168, PC; Re African Gold Concessions and Devt Co [1899] 1 Ch 414 at 430; Evans v James Webster & Bros Ltd (1928) 34 Com Cas 172; Bell v Marsh [1903] 1 Ch 528; Lowe v Lombank n 9 above at 207; Bremer Hg EG v Raiffeisen [1982] 1 Lloyd’s Rep 599 at 605 (the representation was withdrawn before any reliance); see further 5.12; see also Eurocopy v Teesdale [1992] BCLC 1067; contrast Re Stapleford Colliery Co (1880) 14 Ch D 432. 30 Morrison v Universal Marine Insurance Co (1873) LR 8 Exch 197 at 205–6; Cooke v Eshelby (1887) 12 App Cas 271 at 275, 278; Raiffeisen v Dreyfus [1981] 1 Lloyd’s Rep 345 at 352.

191

5.10  Inducement and reliance; the effect of estoppel as to a fact

he now claims to have relied on it31 or did not act on it before its correction or withdrawal was communicated to him.32 (ii) A would have acted the same way had he been told the truth at the time33 unless the misrepresentation and the other reason (or combination of reasons) for the relevant conduct would each, independently, have caused the conduct of A (that is, each was a sufficient cause of the conduct): in such a case, it is submitted, the representation may still be said to have induced the conduct.34 (iii) A checked the subject matter of the representation for himself and relied exclusively on his own check.35 For instance, in relation to the construction of a written transaction, the courts have considered the issue whether an estoppel raiser relied on (or was ‘influenced’ by)36 the express or implied agreement of the other party as to the interpretation of their transaction, or formed and maintained his own incorrect view independently of any such reliance.37 In such a case, however, an estoppel by convention may yet

31 32

Bellairs v Tucker (1884) 13 QBD 562; Smith v Chadwick n 17 above. See eg H Clark (Doncaster) Ltd v Wilkinson [1965] Ch 694 at 703 (withdrawal of admission in legal proceedings); Norfolk CC v Secretary of State for the Environment [1973] 1 WLR 1400; United Overseas Bank Ltd v Jiwani [1976] 1 WLR 964. 33 JEB Fasteners v Marks, Bloom & Co [1983] 1 All ER 583 at 588d–f, 589d–e (misrepresentation); Cooper v Tamms [1988] 1 EGLR 257 at 261G (misrepresentation); cf also Lark v Outhwaite n 28 above at 142, col 2 (promissory estoppel); Wayling v Jones n 18 above (proprietary estoppel) at 175, 176, where the issue whether a representation induced conduct was tested by asking whether A would have acted in the same way if the representation made had then been corrected or withdrawn (followed in Ottey v Grundy [2003] EWCA Civ 1176 at [56]); but this introduces an additional causative factor – the breakdown in trust as a result of the admission of the misrepresentation – as an inducement to respond differently, and does not, therefore, test accurately whether the representation itself was an operative cause of the relevant conduct; see criticism by Cooke: (1995) 111 LQR 389; and Meghraj Bank Ltd v Arsiwalle (10 February 1994, unreported), CA. 34 If I buy a cottage because I am told it has a thatched roof and because I am told it has four bedrooms (when it has three); and, I would have bought it because it is thatched, even if I knew it had only three bedrooms; but, I would also have bought it because I believed it had four bedrooms (but not if I knew it had three) even if it was not thatched; then the misrepresentation has induced the purchase, even though I would have made the purchase knowing the truth about the bedrooms; see 5.13 onwards; see also comments of Hobhouse LJ in Swindle v Harrison [1997] 4 All ER 705 at 728g–j that Downs v Chappell [1997] 1 WLR 426 was misunderstood in Bristol and West Building Society v Mothew n 8 above at 11. 35 Attwood v Small (1838) Cl & Fin 232, discussed in Redgrave v Hurd (1881) 20 Ch D 1 at 14–17 (he may still be induced if he made a limited or careless check which did not reveal the falsity of the representation: see 5.12); Clarke v Mackintosh (1862) 4 Giff 134; Hartlelid v Sawyer and McClockin Real Estate Ltd [1977] 5 WWR 481; see also Jennings v Broughton n 29 above; Cooper v Tamms n 33 above. 36 Amalgamated Investment and Property Co Ltd (in liquidation) v Texas Commerce International Bank Ltd [1982] QB 84 at 105A. 37 Contrast, on the one hand, Amalgamated Investment and Property Co Ltd (in liquidation) v Texas Commerce International Bank Ltd n 36 above at 100H–101A, 107G–108C: ‘… although the Bank’s erroneous belief that the Plaintiffs’ guarantee was so binding and effec-

192

Inducement 5.10

arise, although A’s initial mistaken understanding of the transaction was neither created nor encouraged by B, provided that B has communicated to A that he shared that mistaken understanding;38 but the element of inducement necessary to make it unfair for B to resile from the undertaking will be established only if B was ‘responsible’39 for A acting to his prejudice under the mistaken assumption,40 for instance, because B induced A to enter the transaction in respect of which they shared the mistaken assumption.

tive ­originated in their own office, I am satisfied that the Plaintiffs’ course of conduct influenced the Bank, and in particular Mr Oldfield, in the sense that it operated to confirm and reinforce his mistaken belief.’ per Robert Goff J ‘(see also at 120D–G per Lord Denning MR, 125G–126A per Eveleigh LJ, 131C per Brandon LJ); and The ‘Stolt Loyalty’ [1993] 2 Lloyd’s Rep 280 at 290–1, where a deliberate omission to refer in a letter to the apparent mistake of the recipients (the solicitors of an opponent in impending litigation) was held to induce the recipients ‘… to continue in their mistaken belief that they had asked for all relevant extensions of time’ per Clarke J; with, on the other, James v Heim Gallery Ltd (1981) 41 P & CR 269 at 280, 282–3; Taylors Fashions Ltd v Liverpool Trustees Co n 19 above at 155D–156A: ‘… whilst … all parties shared the common belief that there was a valid and enforceable option, it is difficult to see how that belief had been in any way created or encouraged by the Defendants … I can find nothing in the Defendants’ conduct which can properly be said to have encouraged Taylors to believe in the validity of the option to any greater extent than they had already been encouraged to do so by what they had previously been told by their legal advisers.’ per Oliver J; Ets Soules v International Trade Development Co [1980] 1 Lloyd’s Rep 129 at 138; Western Fish Products Ltd v Penwith DC [1981] 2 All ER 204; and Bank of Scotland v Wright [1990] BCC 663 at 679A–B, 681E–G, where, although the guarantor represented to the Bank his acceptance that his guarantee covered the subsequently disputed liability, Brooke J, emphasising the importance ‘… of the personalities and attributes of the two parties between whom the alleged estoppel was alleged to have arisen’ (as to which, see also Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 at 586 per Kirby P), could ‘find nothing in [the guarantor’s] conduct throughout this affair which could properly be described as the act of encouragement or influencing of the Bank in its mistaken belief …’; and cases in which the estoppel raiser was held to have relied on his own misunderstanding rather than any express or implied representation of the other party: Cropper v Smith n 20 above; BP Exploration Co v Hunt [1979] 1 WLR 783 at 813G–H (aff’d without ref [1983] 2 AC 352); Watkins v Emslie n 20 above; The ‘Athos’ [1983] 1 Lloyd’s Rep 127 at 136; The ‘Scaptrade’ [1983] QB 529 at 536E–537A (aff’d without ref [1983] 2 AC 694); The ‘August Leonhardt’ [1985] 2 Lloyd’s Rep 28 at 35; The ‘Superhulls Cover’ case [1990] 2 Lloyd’s Rep 431 at 452–5; Wroe v Exmos Cover Ltd [2000] 1 EGLR 66; Iceland Foods v Dangoor [2002] EWHC 107; see also 8.25; cf n 113 below. 38 39

40

John v George (1996) 71 P&CR 375 at 386 per Morritt LJ, 392 per Evans LJ, 395–396 per Simon Brown LJ. A term imparting notions of duty and causation; contrast where the estoppel raiser himself is responsible for the error: Cox, Patterson & Co v Bruce & Co (1886) 18 QBD 147, CA at 151–2; Holding v Elliott (1860) 5 H & N 117; Bank of Hindustan, China and Japan v Alison (1871) LR 6 CP 222; Simm v Anglo-American Telegraph Co (1879) 5 QBD 188, CA; Foster v Tyne Pontoon and Dry Docks Co (1893) 63 LJQB 50. See further 8.19 onwards. John v George n 38 above at 394, 396 per Simon Brown LJ; cf 390–391 per Morritt LJ; HMRC v Benchdollar Ltd [2010] 1 All ER 174 at [52], 191a (approved in Re Lehman ­Brothers ­International (Europe) (In Administration) [2012] 2 BCLC 151 at [106]–[107], 182d–i; Mitchell v Watkinson [2015] L & TR 22 at [49]–[52], 405–407; and Dixon v Blindley Health Investments Ltd [2016] 4 All ER 490 at [91], [94], 501h–511h); see 5.19–5.22.

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5.10  Inducement and reliance; the effect of estoppel as to a fact

(iv) A embarked on a course of conduct which was consciously designed to ­create an acquiescence or estoppel defence.41

Constructive notice or knowledge of the truth 5.11 A’s claim to have been induced to act on the faith of a misrepresentation or of a breach of duty to speak will fail not only if he has actual knowledge42 (which includes Nelsonian knowledge),43 but also if he has constructive knowledge,44 of the representation’s falsity or the uncommunicated facts. He will be held to have such constructive knowledge in the following circumstances: (1) Where notice given to, or knowledge held by, his agent is to be imputed to him. He will be deemed to receive such notice or have such knowledge of the truth if his (non-fraudulent) agent, acting within his authority,45 receives it or acquires it. A will not, however, necessarily be ascribed knowledge of the correct legal analysis of a transaction because he retains a solicitor to act on it: it may be proved, against a presumption of such knowledge, that the solicitor was ignorant of the relevant law,46 or that the solicitor was also misled as to the position by the representation,47 or that A was induced by the representation to believe that inquiry of the solicitor was unnecessary, shutting him out from the contrary knowledge of the solicitor.48 (2) Where the law deems A to have notice of a fact as a matter of policy, placing the responsibility on A to acquire such knowledge, as where constructive notice of a company’s public documents was held to defeat an estoppel;49

41

Dyson Ltd v Qualtex (UK) Ltd [2004] EWHC 2981 (Ch) at [334] (a case of inducement by silence; Mann J described the claim as ‘an attempt to establish a new mutation which could not unfairly be described as estoppel by entrapment’). 42 Save in the case of an estoppel by convention where the parties have knowingly agreed to be bound by a counter-factual convention: see 8.64–8.65. 43 Commission for New Towns v Cooper (GB) Ltd [1995] 2 All ER 929, CA at 946f–947e, 957e–f; see further 13.25. 44 As to the distinction between ‘constructive knowledge’ and ‘constructive notice’ see Lewin on Trusts (19th edn) [42–64]. 45 See eg Bawden v London Assurance [1892] 2 QB 534; Dixon v Winch [1900] 1 Ch 736; Strover v Harrington [1988] Ch 390; see further Bowstead and Reynolds on Agency (20th edn), Arts 94, 95 and Ogilvie v West Australian Mortgage and Agency Corpn [1896] AC 257, PC at 268–9 (customer not put on notice of fraud by bank’s agent). 46 Stevens and Cutting Ltd v Anderson n 18 above at 97D; cf Peyman v Lanjani [1985] 1 Ch 457; Mitsui Babcock Energy Ltd v John Brown Engineering Ltd (1996) 51 Con LR 129 at 185. See further 13.26. 47 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 444 per Deane J. 48 Waltons Stores (Interstate) Ltd v Maher n 47 above at 463 per Gaudron J. 49 George Whitechurch Ltd v Cavanagh [1902] AC 117 at 131–2: now overridden by ss 35–36 of the Companies Act 1985; cf Midland Bank Ltd v Reckitt [1933] AC 1 (constructive notice of agent exceeding ostensible authority would have defeated a claim based on ostensible authority).

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Inducement 5.12

publication of a partnership’s dissolution also gives constructive notice thereof to all who have not previously dealt with the firm.50 (3) Where B is entitled to believe that A has received notice of the true position, so as to correct his misrepresentation or breach of duty. If, for instance, B, having made a misrepresentation, gives notice to A of the true position by a means which A has held out, expressly or impliedly, as a means by which communication may be made to him, yet A by reason of his own or his agent’s negligence fails to receive such notice, then B, if he acts on the assumption that notice was received, may raise a counter-estoppel against A’s denial that he has been notified of the true position.51 5.12 On the other hand, A will not be fixed with constructive notice or knowledge of the falsity of a representation if he negligently fails to avail himself of an opportunity to make a check of the accuracy of the representation, which would have revealed its falsity, provided that B, actually or presumptively, intended him to act on the representation.52 If, however, A was negligent in his failure to discover the truth, in the absence of proof that B actually intended him to rely on the representation, he may not be able to establish the alternative of presumptive intention, namely that he reasonably understood B to intend such reliance. Similarly, if it is only by reason of the negligence of A that he understands B’s

50 51

52

Section 36 of the Partnership Act 1890. Strover v Harrington n 45 above at 407E–408A; cf the constructive notice of the contents of documents received in Panchaud Freres SA v Ets Gen Grain Co [1970] 1 Lloyd’s Rep 53 at 57–9, 61, founding an implied waiver of a defect apparent but unnoticed on the documents (as to which, see further 13.27, n 110); and The ‘Superhulls Cover’ Case n 37 above where an insurer, although careless in not noticing a limitation on cover in the proposed cover note sent by its brokers (which limitation did not accord with the insurer’s instructions to the broker) was not, having accepted the proposal, estopped from denying against the brokers that the limitation did not accord with its instructions, because it was under no duty to the brokers to check the policy, and the broker (who represented the cover note to accord with the insurer’s instructions) was not entitled to assume that the insurer had noticed the obscure limitation clause (p 451); see also Lancashire and Yorkshire Rly Co v MacNicoll (1918) 88 LJKB 601, DC (discussed at n 90 below). Cf also, as to constructive knowledge in the context of estoppel, Brown v Westminster Bank Ltd [1964] 2 Lloyd’s Rep 187 where Nelsonian knowledge gave rise to a duty to speak founding an estoppel; and Price Meats v Barclays Bank plc [2000] 2 All ER (Comm) 346, where constructive notice was insufficient to found a duty to speak; cf also the authorities at 9.73: that a customer is under no duty to a bank to read his bank statements. Borries v Imperial Ottoman Bank (1873) LR 9 CP 38; Redgrave v Hurd n 35 above (misrepresentation); Gresham Life Assurance Society v Crowther [1914] 2 Ch 219 at 228; Charles Hunt Ltd v Palmer [1931] 2 Ch 287 (misrepresentation); Greenwood v Martins Bank Ltd [1932] 1 KB 371 (CA) at 391 per Romer LJ; [1933] AC 51 (HL) at 59 per Lord Tomlin;­ Laurence v Lexcourt Holdings Ltd [1978] 1 WLR 1128 at 1137D (misrepresentation); Strover v­ Harrington n 45 above at 410D–E (misrepresentation); Trane (UK) Ltd v Provident Mutual Life Assurance [1995] 1 EGLR 33 at 39B–C; Quinn v CC Automotive Group Ltd (t/a Carcraft) [2011] 2 All ER (Comm) 584 at [23], 592j–593f (deceit); see further n 104 below; cf James McNaughton Paper Group Ltd v Hicks Anderson & Co [1991] 2 QB 113 where no duty of care was owed in negligence, chiefly because it was not reasonable for A to rely on the representation without checking it.

195

5.12  Inducement and reliance; the effect of estoppel as to a fact

silence, language or conduct to amount to a representation to the relevant effect, then a representation to that effect has not been made to him and he may not raise an estoppel based on it.53 In the case of estoppel by negligence, also, where a fraudulent intermediary makes a representation as to his authority to pass title, the principal will not be estopped, notwithstanding that he has enabled the intermediary to make the representation, if the purchaser is put on enquiry as to the truth:54 the purchaser’s own neglect prevents him from ascribing responsibility for his reliance on the intermediary’s representation to the principal who enabled it to be made.

Causation 5.13 It is not enough to defeat a claim of inducement to show that there were other inducements,55 nor that, even had the representation not been made or the breach of duty not occurred, A would still have acted as he did.56 A number of

53 54 55 56

See eg Carr v London and North Western Rly Co n 11 above at 318; 2.12; 3.5; 4.5–4.43. Williams v Colonial Bank (1888) 38 Ch D 388; Sheffield v London Joint Stock Bank (1888) 13 App Cas 333; London Joint Stock Bank v Simmons [1892] AC 201. Edgington v Fitzmaurice (1885) 29 Ch D 459 (misrepresentation); Wayling v Jones n 18 above at 173; McCullagh v Lane Fox & Partners Ltd [1994] 1 EGLR 48 at 51, aff’d without ref n 9 above; Century (UK) Ltd SA v Clibbery n 18 above at [73]. Re London & Leeds Bank Ltd (1887) 56 LJ Ch 321 at 324; The ‘Siboen’ and The ‘Sibotre’ [1976] 1 Lloyd’s Rep 293 at 324, col 1 (both the cases of misrepresentation establishing no onus on A to prove that he would not have acted as he did if the misrepresentation had not been made); Brikom Investments Ltd v Carr n 18 above at 482H–483A per Lord Denning MR: ‘It is no answer for the [representor] to say: “You would have gone on with the transaction anyway”. That must be mere speculation. No-one can be sure what he would or would not have done in a hypothetical state of affairs which never took place … Once it is shown that a representation was calculated to influence the judgment of a reasonable man, the presumption is that he was so influenced.’; at 490D per Cumming-Bruce LJ: ‘Looking back on the transaction she said in evidence that she would have entered into the lease anyway. Nonetheless on her evidence the inducement of the landlord’s promise was one of the factors that she relied upon. That is enough without giving rise to the necessity of assessing the weight or quantum of each of the factors that between them induced her to agree to enter into the lease.’; JEB Fasteners v Marks, Bloom & Co n 33 above at 589a per Stephenson LJ: ‘But, as long as a misrepresentation plays a real and substantial part, though not by itself a decisive part, in inducing a plaintiff to act, it is a cause of his loss and he relies upon it, no matter how strong or how many are the other matters which play their part in inducing him to act.’; Nationwide Anglia Building Society v Lewis n 17 above at 488 per Peter Gibson LJ (citing the Australian case of Lynch v Stiff (1943) 68 CLR 428 at 435): ‘“The doctrine of ‘holding out’ is a branch of the law of estoppel. So far as the element of action by the party relying upon an estoppel is concerned, it is sufficient if that party acts to his prejudice upon a representation made with the intention that it should be so acted upon, though it is not proved that in the absence of the representation he would not have so acted.”’; Ross River Ltd v Cambridge City FC Ltd [2008] 1 All ER 1004 at [202], 1048d–e: ‘It is not enough for the representor to show that the representee would, even if the representation had not been made, still have entered the contract. It is sufficient for the representee to show that the misrepresentation “was actively present to his mind”’; contrast the following cases: London County Territorial and Auxiliary Forces Association v Nichols [1949] 1 KB 35 at 49 and Assicurazioni Generali SpA v Arab

196

Inducement 5.13

judges have declared themselves wary of such speculation.57 Yet such hypotheses are no more tenuous than those upon which a court determines any claim to compensatory damages;58 and, in order to find that A did not act to his detriment

Insurance Group (BSC) [2002] 2 CLC 242 (misrepresentation) at [59], [62] and [80] per Clarke LJ and at [187] per Sir Christopher Staughton where the test of reliance was whether A would have acted as he did ‘but for’ a representation; Horry v Tate & Lyle Refineries Ltd [1982] 2 Lloyd’s Rep 416 at 422, col 2: ‘… [The misrepresentation] only has to be one of the inducing factors. It has to be a factor without which the Plaintiff would not have entered into the settlement, and there may be other factors.’; Taylors Fashions Ltd v Liverpool Trustees Co n 19 above; The ‘Lucy’ [1983] 1 Lloyd’s Rep 188 (rescission refused because the court was not satisfied that the plaintiff would have refused to enter the charter party but for the misrepresentation or would have done so only at a lower rate of hire); Raiffeisen Zentralbank Osterreich AG v Royal Bank of Scotland Plc n 9 above at 180. 57

58

Cranworth LJ in Reynell v Sprye (1852) 1 De GM & G 660 at 708 (deceit): ‘It is impossible so to analyse the operations of the human mind as to be able to say how far any particular representation may have led to the formation of any particular resolution, or the adoption of any particular line of conduct. No-one can do this with certainty, even as to himself, still less as to another. Where certain statements have been made, all in their nature capable, more or less, of leading the party to whom they are addressed to adopt a particular line of conduct, it is impossible to say of any one representation so made, that even if it had not been made, the same resolution would have been taken, or the same conduct followed.’; Lord Chelmsford in Smith v Kay (1859) 7 HLC 750 at 759 (deceit): ‘Can it be permitted to a party has practised a deception with a view to a particular and which has been attained by it, to speculate on what might have been the result if there had been a full communication of the facts?’; Turner LJ in Traill v Baring (1864) 4 De GJ & Sm 318 at 330 (deceit): ‘Had this representation of what has occurred and of the change of intention on the part of the Defendants been communicated to the Plaintiffs, it is impossible to say what course the Plaintiffs would have pursued – whether they would or would not have accepted the policy. They might have done so: but it is equally clear that they might not; and we cannot say whether they would or would not: but it was to them that the communication should have been made, in order that they might exercise their option upon the subject.’; James VC in Re Imperial Mercantile Credit Association (1869) LR 9 Eq 223 at 226n: ‘I do not think a court of equity is in the habit of considering that a falsehood is not to be looked at because, if the truth had been told, the same thing might have resulted’; Edgington v Fitzmaurice (1885) 29 Ch D 459 at 483 (deceit) per Bowen LJ: ‘if his mind was disturbed by the misstatement … and if such disturbance was in part because of what he did the mere fact of his also making a mistake himself would make no difference.’; Barton v Armstrong [1976] AC 104, PC at 118H–119A (duress) per Lord Cross: ‘… for in this field the Court does not allow an examination into the relative importance of contributing causes …’; Lord Denning MR in Brikom Investments Ltd v Carr n 18 above; Peter Gibson LJ in Meghraj Bank Ltd v Arsiwalla n 33 above: ‘In my judgment, the Court can only decide a question of promissory estoppel on the evidence put before it of what the promisee did in reliance on the promise rather than on speculation as to what the promisee might have done’; Hobhouse LJ in Downs v Chappell n 35 above at 433D, 441B; Lord Millett in the Scottish case of BP Exploration Operating Co Ltd v Chevron Shipping Co [2003] 1 AC 197 at [103]–[105]; Lord Hoffmann in Standard Chartered Bank v Pakistan National Shipping Corp (No 2) [2003] 1 AC 959 at [16]: ‘… if a fraudulent representation is relied upon, in the sense that the ­claimant would not have parted with his money if he had known it was false, it does not matter that he also held some other negligent or irrational belief about another matter and, but for that belief, would not have parted with his money either. The law simply ignores the other reasons why he paid’. Cf also 5.46.

197

5.13  Inducement and reliance; the effect of estoppel as to a fact

in reliance upon a representation made to him or a belief he held, it is necessary to consider how A would have acted had the representation not been made or the belief not held. Some such speculation is, therefore, submitted to be legitimate in order properly to address the question of causation if it is in issue.59 5.14 That a representation or culpably uncontradicted belief may induce conduct, notwithstanding that A would have so acted even had the representation not been made or the belief had not been held,60 raises the question as to what the test is of whether a representation or belief had or did not have sufficient causative impact on the relevant conduct for it to be characterised as having induced it.61

59

60 61

Eg so as to dismiss the claim in McKenzie v British Linen Co (1881) 6 App Cas 82 at 91 per Lord Selborne LC because the party to be estopped ‘has done nothing from first to last by which the [estoppel raisers] can have been led to act in any way in which they would not otherwise have acted or to omit to take any step for their own security, or in any sense for their benefit, which they would otherwise have taken’; and Heilbut, Symons & Co v Buckleton [1913] AC 30 (misrepresentation) because the representation that the defendants were bringing out a rubber company induced the plaintiffs to invest not because they believed it was a rubber company (which they did and which it was not) but because the defendants were bringing it out (which they were); or to find against a plea of (promissory) estoppel in Fontana NV v Mautner [1980] 1 EGLR 68 because the tenant did nothing in response to being told ‘It is quite all right: you can stay here as long as you wish’ that he would not have done anyway; so also in Western Fish Products Ltd v Penwith DC n 37 above at 217a–d because the absence of confirmation from the Planning Officer would not have affected the plaintiff’s course of action, given its absolute conviction as to the incontrovertible status of its user rights; and in Willesden Corpn v Gloss (1962) 185 EG 377 because (inter alia) there was no evidence that the landlord acted other than he would have in any event, because of his belief as to the defendant’s status as legal assignee of a tenancy; and in The ‘Scaptrade’ n 37 above (CA; not appealed on this point) at 536E–537A because there was no causal connection between the alleged representation and the conduct alleged to constitute detrimental reliance; and in Doneghan v Ghadami [2007] EWCA Civ 944 at [15]–[18], [20] where the court refused permission to appeal from a decision that a defence of proprietary estoppel had no real prospect of success because the matters relied upon as demonstrating detrimental reliance were all acts that would be expected of a party who was in the process of negotiating a joint venture; see also Ets Soules & Co v International Trade Development Co Ltd n 37 above at 138; ­Taylors Fashions Ltd v Liverpool Trustees Co n 19 above; Dadourian Group International Inc v Simms [2009] 1 Lloyd’s Rep 601 at [99], [107]; Raiffeisen Zentralbank Osterreich AG v Royal Bank of Scotland Plc n 9 above at [180] (although we submit that proof that A would have so acted ‘even if the representation had not been made’ will not necessarily be sufficient to negative causation: see n 55 above, 5.15). See n 56 above. Thus, in JEB Fasteners Ltd v Marks, Bloom & Co n 33 above at 589a, Stephenson LJ required the representation to play ‘a real and substantial part, though not by itself a decisive part, in inducing the Plaintiff to act …’ (this test was approved in Avon Insurance Plc v Swire Fraser Ltd [2000] 1 All ER (Comm) 573 at [18], 579h; Dadourian Group International Inc v Simms n 59 above at [99]–[100]; and Raiffeisen Zentralbank Osterreich AG v Royal Bank of Scotland Plc n 9 above at [153]), and in Chase Manhattan Equities Ltd v Goodman [1991] BCLC 897 at 929h, Knox J held that ‘the critical point is whether the representation affects the judgment of the person to whom it was made to a material degree’, respectively leaving uncalibrated the measure of ‘a real and substantial part’ and ‘a material degree’; see also Smith New Court Ltd v Scrimgeour Vickers [1997] AC 254 at 285A per Lord Steyn: ‘But it is settled that at any rate in the law of obligations causation is to be categorised as an issue of fact. What has further been established is that the “but for” test, although it often yields the right answer, does not

198

Inducement 5.15

There is some conflict between the authorities that the representation must be a ‘real and substantial’ cause of the conduct, affecting the judgement of A ‘to a material degree’,62 and those which indicate that it will suffice if the representation was a cause by affecting the judgement of A in any degree, and the court will not enquire into the different weight to be attributed to that and other causes.63 It is submitted, however, that they can be reconciled on the basis that the test is whether B’s representation affected A’s judgement,64 and to describe its effect as immaterial, unreal or lacking any substance means in practice that it did not affect A’s judgement.65 Nonetheless, it is submitted that some counterfactual or hypothetical enquiry is permissible, as, if B can establish that A would have acted as he did, even if B had corrected his misrepresentation or A’s mistaken belief, then B will have established that his representation or silence did not affect A’s judgement.66 5.15 To hold that a representation or belief induced conduct, although A would have acted in the same way even had the representation not been made or the belief had not been held,67 is justified if the conduct had more than one s­ ufficient

always do so. That has led judges to apply the pragmatic test whether the condition in question was a substantial factor in producing the result.’; and JEB Fasteners Ltd v Marks, Bloom & Co at 588c–d per Donaldson LJ: ‘In real life decisions are made on the basis of a complex of assumptions of fact. Some of these may be fundamental to the validity of the decision. “But for” that assumption, the decision would not be made. Others may be important factors in reaching the decision and collectively, but not individually, fundamental to its validity. Yet others may be subsidiary factors which support or encourage the taking of the decision. If these latter assumptions are falsified in the event, whether individually or collectively, this will be a cause for disappointment to the decision-taker, but will not affect the validity of his decision in the sense that if the truth had been known or suspected before the decision was taken, the same decision would still have been made’. 62 63 64 65

See n 61 above. See nn 56, 58 above. See cases at nn 56 and 57 above; Sidhu v Van Dyke (2014) 251 CLR 505. But cf Dadourian Group International Inc v Simms n 59 above at [99], which suggests a distinction. 66 See 5.17. It is submitted that cases which suggest that no such enquiry at all is permissible (see n 57 above) are based on authorities concerning fraudulent representations and should be restricted to that context, (and even then may be questioned unless an irrebuttable presumption is to be made against a fraudster), since it would be wrong to shut out B from establishing that A did not rely on his representation by proving that A would have acted as he did even had he been told the contrary: see 5.13, Raiffeisen Zentralbank Osterreich AG v Royal Bank of Scotland Plc n 9 above at [153]–[199]. Cf Actavis UK Ltd v Eli Lilly & Co (Rev 1) [2016] EWHC 234 (Pat) at [221] (promissory estoppel), where lack of reliance was held to be ‘plainly’ demonstrated by A’s failure to act when the promise was withdrawn. 67 Contrast the approach in estoppel by representation cases, viz that the necessary causal link may be established even if the representation was not a causa sine qua non of the resultant conduct (and the representation may, therefore, paradoxically, be a causa causans, although it is not a causa sine qua non), with that in breach of duty to speak cases, such as Walker v Manchester and Liverpool District Banking Co Ltd (1913) 108 LT 728: the customer of a bank failed to examine his passbook and notice that three forged cheques were drawn on his account. Had he noticed the first, he and the bank would have stopped the others being drawn. It was held that, regardless of whether he had a duty to examine the book, he did not cause the

199

5.15  Inducement and reliance; the effect of estoppel as to a fact

cause, one of which is the representation or belief, but none of which is necessary for the conduct to ensue.68 If each of Jack and Jill separately offers me £5 to fetch a pail of water and I do so, both have induced me to do so, although I would have fetched it even if only one of them made such an offer. If, however, there is another causative factor, or combination of factors, other than the representation or belief, which was both necessary69 and sufficient70 to cause the conduct, then it may be argued that the representation or belief did not cause the conduct and was not an operative inducement to A so to act. On that argument, if B can show that A would have acted as he did for a reason or reasons causatively necessary and sufficient for that action, even had the representation not been made, then the claim of inducement by the representation should be defeated.71 5.16

There is, however, authority that: ‘… a person who knows that an erroneous belief is entertained does not, unless a fiduciary relationship exists, have any obligation to dissipate such a belief or to correct the position reached upon such a belief, but when asked after the decision has been reached a question which touches the belief upon which it has been reached, and he answers falsely he … has induced all those acts which flow from that continuing belief’72 (emphasis added).

It is to be noted that, in the circumstances supposed, A, before the representation is made, has formed the belief upon which he acts. By the representation, B merely fails to disabuse A of the mistaken belief on which he is acting anyway. B is held to have induced all subsequent action flowing from that continuing mistaken belief, notwithstanding that the pre-existing belief would have caused A so to act, even had the representation not been made (sufficient cause). F ­ urthermore,

loss as his failure was only a causa sine qua non of the loss, whose real cause was the fraud of the forger: a causa sine qua non was not sufficient to raise the estoppel (see also 3.37). It is submitted that, if there is to be a consistency of approach to the question of causation in relation to estoppel, the absence of a duty to examine the passbook is a better ground for the decision: see 3.20. 68 69 70 71 72

As suggested by Hart and Honoré: Causation in the Law (2nd edn) p 193. In the sense that the representation would not be sufficient to cause the conduct in the absence of that other factor or combination of factors. In the sense that the factor or combination of factors would have caused the conduct even if the representation had not been made. See eg cases at n 59 above. Per Hutley JA in Australian Steel and Mining Corpn Pty Ltd v Corben [1974] 2 NSWLR 202 at 209 approved as representing the law of England in Barton v County NatWest Ltd [1999] Lloyd’s Rep Bank 408, CA; Hutley JA concluded that ‘The fact that the representations were without effect can rarely be established’; but cf eg cases at n 59 above and Gabrin v Universal Music Operations Ltd [2003] EWHC 1335 at [37]–[39], where a plea of estoppel by silence (by not asserting inconsistent title: see 3.13–3.15) appears to have failed for want of inducement, although the decision can be justified on the grounds either that a representation as to title could not be inferred in the circumstances, or that the silent party did not intend and could not be reasonably understood by the estoppel raiser as intending that the latter should act on his silence beyond the immediate transaction.

200

Intention of B to be responsible for reliance 5.19

it may be that, without the pre-existing belief, the representation or breach would not have induced A to act as he did (necessary cause). 5.17 This suggests that a representation may induce conduct, even if the conduct has another necessary and sufficient cause (ie, in this case, the decision already reached). On this analysis, a misrepresentation or breach of duty induces conduct, although A would have acted as he did even had the representation not been made or the breach not been committed, provided that, had B told the truth or communicated the relevant facts, A would not so have acted. The comparison to be made in considering whether the representation or breach of duty caused the conduct is not with what would have happened had no representation been made or no breach committed, but with what would have happened if the truth73 had been told or the concealed facts communicated.74 It follows, therefore, from this authority that, for the purposes of an estoppel (leaving aside the requirement as to B’s intention, considered immediately below), a representation or belief induces conduct if A would not have so acted had B represented to him that which by his previous representation he denied or by his culpable silence failed to assert.75 It must also follow that B may undertake counterfactual crossexamination or speculation to negate causation by establishing that A would have acted as he did even if B had expressly withdrawn the representation. 5.18 The difficulties, evidenced in the preceding paragraphs, of formulating precise universal criteria for determining whether a representation or breach of duty to speak has sufficient causative impact on A’s conduct to be regarded as having induced it may well, notwithstanding the arguments canvassed above, lead the courts to continue to apply a rule of thumb to this issue.76

INTENTION OF B TO BE RESPONSIBLE FOR RELIANCE 5.19 In the preceding paragraphs we have dealt with the result of the inducement. In this paragraph we are to see that the intention of B, actual or presumed, is an equally essential element for a reliance-based estoppel based on

73

That is, the position which B now wishes to espouse, as opposed to that from which A seeks to estop him from departing. 74 See Wayling v Jones n 18 above, where the Court of Appeal held that A’s evidence that he would have not stayed to work in B’s hotel if B had told A that he had decided not to leave the hotel to him after promising that he would do so demonstrated the requisite causation, even though A also stated that he would have stayed with B if no promise had been made in the first place; cf Actavis UK Ltd v Eli Lilly & Co (Rev 1) n 66 above at [221] (promissory estoppel), where lack of reliance was held to be ‘plainly’ demonstrated by A’s failure to act when the promise was withdrawn. 75 And see n 34 above for a case where a misrepresentation may be said to have caused conduct, notwithstanding that A would have so acted even if told the truth, because both the representation and another factor, or set of factors, were sufficient alternative causes of the conduct. 76 See n 61 above; see eg Lissimore v Downing [2003] 2 FLR 308 at [53], 330.

201

5.19  Inducement and reliance; the effect of estoppel as to a fact

a ­representation of fact, promise or convention. In previous editions, this was characterised as a requirement for an intention, actual or presumed, on the part of B to induce A himself, or a class to which he belongs, to act upon the representation or breach of duty to speak, as well as the fact that A did act upon it. The effect, however, of the decision in Cobbe v Yeoman’s Row Management Ltd77 is that this analysis must be qualified. 5.20 In Cobbe,78 the House of Lords accepted the finding at first instance that A believed B ‘was, and regarded herself as, bound in honour to enter into a formal written contract embodying the terms of’ an oral agreement relating to the purchase and development of property.79 Their Lordships held, however, that A was not entitled to a remedy based on proprietary estoppel. In the words of Lord Scott:80 ‘[A] was an experienced property developer and [B] gives every impression of knowing her way around the negotiating table. [A] did not spend his money and time on the planning application in the mistaken belief that the agreement was legally enforceable. He spent his money and time well aware that it was not. [B] did not encourage in him a belief that the second agreement was enforceable. She encouraged in him a belief that she would abide by it although it was not. [A’s] belief, or expectation, was always speculative. He knew she was not legally bound. He regarded her as bound ‘in honour’ but that is an acknowledgement that she was not legally bound.’

Lord Walker summarised the position concisely:81 ‘[A’s] case seems to me to fail on the simple but fundamental point that, as persons experienced in the property world, both parties knew that there was no legally binding contract, and that either was therefore free to discontinue the negotiations without legal liability – that is, liability in equity as well as at law …’

The effect of this decision is that there are some cases in which B did intend A to act on his representation82 but an estoppel is not created. 5.21 The House of Lords in Cobbe83 did not go on to consider whether the formulation should be amended in light of its findings. There is, however, a line of authority on estoppel by convention that has laid down a modified test consistent with that decision. In HMRC v Benchdollar Ltd,84 Briggs J included in his list of principles applicable to the assertion of an estoppel by convention arising out of non-contractual dealings the following:

77 78 79 80 81 82 83 84

Note 6 above. Note 6 above. Per Lord Walker at [70], 1783B; see also [12], 1759G per Lord Scott. At [27], 1768B–E. At [91], 1788C. See eg Ch I, [I.2.2] to [I.2.3] of the fourth edition of this work. Note 6 above. Note 40 above.

202

Intention of B to be responsible for reliance 5.23

‘(ii) 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 upon it.’

This list has been approved by the Court of Appeal in other cases of estoppel by convention,85 and this element identifies what may be said to apply to all reliancebased estoppels, that the underlying issue is whether B has made himself responsible to A for A’s reliance. He will ordinarily do this by intending, or being reasonably understood as intending, that reliance, but not where A understands or should understand that B has reserved or withheld such responsibility for A’s reliance, as in Cobbe, where B’s undertaking was binding only in honour even though B wished A to act on it.86 5.22 It is submitted, therefore, that, under the law as it stands following Cobbe,87 in order to found a reliance-based estoppel on a representation of fact, promise or convention, A must demonstrate the actual or presumptive intention of B to induce A himself, or a class to which A belongs, to act upon the representation of fact, promise or convention, as well as the fact that A did act upon it, but that this requirement will not be satisfied if, whatever his intention, B has reserved or withheld responsibility for A’s reliance such that A knows or ought to know that it is not a commitment on which he is entitled to rely. 5.23 Intention to induce as a condition precedent to a successful estoppel has been stated and emphasised in several judgments as the criterion by which, under this doctrine, the law delimits B’s responsibility for reliance on his representation.88

85 See eg cases listed at n 40 above. 86 See 1.101–1.119. 87 Note 6 above. 88 Pickard v Sears (1837) 6 Ad & El 469 at 474: ‘where one, by his words or conduct, wilfully causes another to believe in the existence of a certain state of things, and induces him to act on that belief, or to alter his own predisposition, the former is concluded from averring against the latter a different state of things as existing at the same time.’ (emphasis added); interpreted in Freeman v Cooke (1848) 2 Exch 654 at 663; followed in Jorden v Money 5 HL Cas 185 at 212–3 by Lord Cranworth, and in Citizens’ Bank of Louisiana v First National Bank of New Orleans (1873) LR 6 HL 352 at 360–1, PC; see also Simm v Anglo-American Telegraph Co n 39 above at 210 per Brett LJ: ‘Neither of them made any representation in order that it might be acted upon by the other party’; De Tchihatchef v Salerni Coupling Ltd [1932] 1 Ch 330 at 342; in Greenwood v Martins Bank (HL), n 52 above at 57 Lord Tomlin listed, as an essential element of an estoppel, a representation ‘intended to induce a course of conduct on the part of the person to whom the representation is made’; Official Trustee v Ferriman Trust [1937] 3 All ER 85 at 89C; Sidney Bolsom Investment Trust Ltd v E Karmios & Co (London) Ltd [1956] 1 QB 529 at 540–1 per Denning LJ: ‘but in order to work as an estoppel, the representation must be clear and unequivocal, it must be intended to be acted on, and in fact acted on. And when I say it must be “intended to be acted upon”, I would add that a man must be taken to intend what a reasonable person would understand him to intend. In short, the representation must be made in such circumstances as to convey an invitation to act on it.’; Lowe v Lombank Ltd n 9 above at 205; Re Exchange Securities Ltd [1988] Ch 46 at 54; Gillett v Holt [2001] Ch 210 at 227A–230A esp 228E (proprietary estoppel) per Robert

203

5.23  Inducement and reliance; the effect of estoppel as to a fact

In Pierson v Altrincham UDC,89 an inducement having been expressly found as a fact by magistrates, it was held by the Divisional Court that they were nevertheless not justified in law in concluding in favour of the suggested estoppel, because, and only because, there had been no intent, actual or presumptive, to induce, or rather (which makes the decision all the more striking as an illustration of the onus on A in respect of this particular element), because there had been no finding in the case as to such intention, actual or presumed, one way or the other.90 5.24 There is the same requirement in the tort of deceit91 and in the tort of negligent misrepresentation,92 and it is required of a promissory estoppel that

Walker LJ: ‘Plainly the assurances given on this occasion were intended to be relied on, and were in fact relied on.’; see also Cornish v Abington (1859) 4 H & N 549 where this requirement was interpreted as precluding an estoppel save where the representation amounts to an agreement or licence (cf Freeman v Cooke above at 604); Brownlie v Campbell (1880) 5 App Cas 925 at 952–3 where Lord Blackburne found it difficult to see a difference between a warranty (requiring an intention to contract) and a representation that would found an estoppel; in Carr v London and North Western Rly Co n 11 above at 316–8 an intention on the part of B that the representation be acted on by A in a certain way was required by Brett J to found an estoppel, unless he made the representation knowing it to be false or with culpable negligence (but these exceptions seem doubtful as they are not made in the authorities cited above, and such actual or presumptive intention to induce is required to render a representation actionable in the torts of deceit or negligence). 89 90

(1917) 86 LJKB 969. See also Sidney Bolsom Investment Trust Ltd v E Karmios & Co (London) Ltd n 88 above at 540–1, 544, 545, where a landlord’s notice that it would oppose an application for a new tenancy under the Landlord and Tenant Act 1954 because the tenant’s request for a new tenancy was not valid was held not to estop the landlord from asserting that the request was valid because the notice was not intended to be acted on; in JT Developments Ltd v Quinn [1991] 2 EGLR 257, CA, a landlord assured its tenant that he could obtain a new lease, in reliance on which he carried out works to the property, but failed to serve the necessary counter-notice to obtain a new tenancy, and the dissent of Glidewell LJ from the majority finding for proprietary estoppel turned on precisely the issue whether the court could infer that the landlord knew that the tenant intended to carry out the relevant works when the assurance was given; in Lancashire and Yorkshire Rly v MacNicoll n 51 above the plaintiff told the defendant that its consignment of 25 wooden casks of creosote had arrived when it in fact held 14 iron drums of carbolic acid; the defendant took delivery and used 6 drums before discovering the mistake; the Divisional Court held that the plaintiff was not estopped by the representation because the defendant had not acted in reliance on a representation intended to be acted on in the manner he acted, saying that the relevant advice note was not intended to be acted on by the defendant taking delivery of 14 iron drums as being 25 wooden casks; on seeing the goods the defendant could form his own judgement. Sed quaere whether the advice note was not intended to be acted on by the defendant taking receipt of the goods that had arrived: otherwise, why send it? The ratio might seem more clearly expressed as being that the misrepresentation was corrected when the defendant saw the goods, but these were not the terms used by the court; and see further 5.25, 5.35. 91 Bradford Building Society v Borders [1941] 2 All ER 205 at 211; Kitcher v Fordham [1955] 2 Lloyd’s Rep 705 at 707; which requirement is thereby imported into s 2(1) of the Misrepresentation Act 1967: Banque Keyser Ullman SA v Skandia (UK) Ins Co Ltd [1990] 1 QB 665 at 790B (rev’d on other grounds [1991] 2 AC 249). 92 See Possfund Custodian Trustee Ltd v Diamond [1996] 1 WLR 1351 at 1364B–G.

204

Intention of B to be responsible for reliance 5.25

the promisor intend to make a binding promise93 and ‘that the representation was made with the knowledge or intention that it would be acted upon by the [promisee] in the manner in which it was acted upon’.94 It has been confirmed that, for a representation to found a proprietary estoppel, B must also, actually or presumptively, intend that it be acted on.95 5.25 The intention need not necessarily be established directly: it may – indeed, it generally must – be presumed or inferred from other facts; and, particularly, from voluntary use of language, or conduct, on the part of B which was of a nature to induce a normal person in the circumstances of the particular case to act as A did, and which was ‘calculated’ in this, the lawyer’s, sense, to have that effect, though not in the sense of a personal design.96 In such cases, it is not necessary to show that B actually set before himself as an object the influencing of A;97

93

94 95

96

97

Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 at 134: ‘They are cases in which a promise was made which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made, and which was in fact so acted on.’ per Denning J; James v Heim Gallery (London) Ltd n 37 above. Goldsworthy v Brickell [1987] Ch 378 at 411A per Nourse LJ, 412C, 417C; Central London Property Trust Ltd v High Trees House Ltd n 93 above; James v Heim Gallery (London) Ltd n 37 above at 277–8. Thorner v Major [2008] EWCA Civ 732 at [39]: ‘the requirement of intended reliance … is an essential ingredient of these cases, even if one which is sometimes taken for granted, or not mentioned because it is obvious on the facts.’ per Lloyd LJ (decision reversed on other grounds by the House of Lords ([2009] 1 WLR 776); Uglow v Uglow [2004] WTLR 1183 at [9] per Mummery LJ, [34], [35]. See also JT Developments Ltd v Quinn n 90 above at 261M per Ralph Gibson LJ; Crabb v Arun DC [1976] Ch 179 at 188C per Lord Denning MR; and Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 421 per Brennan J; on the other hand, it is submitted that (notwithstanding that Lord Kingsdown includes knowledge of such reliance as a requirement of the doctrine in Ramsden v Dyson (1865) 1 App Cas 129 at 170), it is not necessary that the party estopped actually know of the detrimental reliance, provided that he actually or presumptively intended it; this, it is submitted, is the ‘sufficient link’ between promise and detriment referred to in Gillett v Holt n 88 above, at 230D per Robert Walker LJ. Jorden v Money n 88 above per Lord Cranworth LC at 212: ‘But if the party has unwittingly misled another, you must add that he has misled another under such circumstances that he had reasonable ground for supposing that the person whom he was misleading was to act upon what he was saying’. Freeman v Cooke n 88 above per Parke B, delivering the judgment of the Court of Exchequer, at 663: ‘if, whatever a man’s real intention may be, he so conducts himself that a reasonable man would take the representation to be true, and believe that it was meant that he should act upon it, and did act upon it as true, the party making the representation will be equally precluded from contesting its truth’; De Bussche v Alt (1878) 8 Ch D 286 per Thesiger LJ, delivering the judgment of the court, at 315, where ‘the principal element of an estoppel by conduct’ is described as being ‘that it should have been pursued with the intention, or so as to induce the person relying upon the estoppel to act in a particular manner’; Seton Laing & Co v Lafone n 11 above per Lord Esher MR, at 72: ‘I do not think it is necessary that the person making the statement should have intended the person to whom he made the statement to act in any particular way upon it’: it was enough that it was reasonable ‘as a matter of business, for the plaintiff to do what he did as a result of his belief in the defendant’s statement’; Carr v London and North Western Rly Co n 11 above at 317; Pierson v Altrincham UDC

205

5.25  Inducement and reliance; the effect of estoppel as to a fact

still less that he proposed to mislead or deceive him.98 Indeed, in relation to both the tort of negligent misrepresentation99 and the doctrine of estoppel,100 the test of intention to induce has been said to be objective, and this has also been confirmed in relation to proprietary estoppel.101 On this view, the only test is whether it was reasonable for A to infer an intention on the part of B that A should act on the representation, which test will be satisfied if such intention is expressly communicated,102 but not necessarily if B actually had but did not communicate such intention. It is submitted, however, that, if B actually intends that A should act on the representation or breach of duty, and A does in fact act upon it, although a

n 89 above, where it is recognised by Lord Reading CJ, at 972, and Lush J, at 973, that, if the representation was such as would reasonably have the effect of inducing A to believe and act upon it as true, the intention so to induce may be inferred as a fact; but (see 5.33–5.40 and 5.70–5.72) there is no rule of law that it must be so inferred; Sidney Bolsom Investment Trust Ltd v E Karmios & Co (London) Ltd n 88 above, Lowe v Lombank Ltd n 9 above; The ‘Nai Genova’ [1984] 1 Lloyd’s Rep 353 at 365, per Slade LJ: ‘It must be intended, or at least be reasonably foreseeable, by B that the representation will be relied on’; in Re a Company (No 001946 of 1991), ex parte Fin Soft Holding SA [1991] BCLC 737 at 747g–748b, Harman J applied a test of whether B knew or ought to know that A was likely to act; cf for liability for negligent misrepresentation the test (put broadly) of knowledge (actual or imputed) of probable reliance for a particular purpose by an identifiable representee: Smith v Eric S Bush [1990] 1 AC 831 at 843C–D, 865B–D, 872C, Caparo Industries plc v Dickman [1990] 2 AC 605 at 620H–621F, 638C–E, 661C–E and other cases cited; Omega Trust Co Ltd v Wright Son and Pepper [1997] 1 EGLR 120 at 122C–D; see also Cullen v Thomson (1862) 6 LT 870 at 874: in deceit a representation must be made ‘with the real intent to cause the [representee] to act on that representation, or under such circumstances as they must have supposed would probably induce a person in the situation of the [representee] to act upon it’. 98

Doe d Knight v Rowe (1826) Ry & M 343 at 347 per Abbott CJ; Cornish v Abington (1859) 4 H & N 549 at 556 per Bramwell B, 558 per Martin B: ‘in other cases the party estopped has intended to produce the false impression. Here, however, I believe that the defendant did not intend to produce any false impression on the mind of the plaintiff’; Sarat Chunder Dey v Gopal Chunder Lala (1892) 8 TLR 732; Balkis Consolidated Co v Tomkinson [1893] AC 396; Craine v Colonial Mutual Fire Ins Co Ltd (1920) 28 CLR 305 (aff’d on other grounds [1922] 2 AC 541). 99 Possfund Custodian Trustee Ltd v Diamond n 92 above at 1364E–F per Lightman J: ‘… if the subjective intention of B is not expressly communicated to A, the existence of a subjective intention alone is insufficient to found an action unless the existence of such an intention on the part of B was reasonably to be inferred by A’. 100 Trane (UK) Ltd v Provident Mutual Life Assce n 52 above at 38M–39C per HHJ Roger Cooke, citing Hughes v Metropolitan Rly Co (1877) 2 App Cas 439 at 451 per Lord Selborne and Sidney Bolsom Inv v E Karmios n 88 above. 101 Thorner v Major (HL) n 95 above at [56] per Lord Walker of Gestingthorpe (approving Walton v Walton [1994] CA Transcript No 479 at [16] per Hoffmann LJ), [11] and [17] per Lord Scott of Foscote, [5] per Lord Hoffmann, [68] and [78] per Lord Neuberger of Abbotsbury, [22]. The House accepted that B’s expression of intention to make a commitment on which A could act must be unequivocal, but held this requirement satisfied if B’s expression of such attention was ‘clear enough’ for A reasonably so to understand it (see further 4.13 onwards, 4.30 onwards). The issue, we suggest, is whether it was reasonable for A so to take it without seeking clarification of any ambiguity, and A’s case will be helped if B knowingly stands by while A acts in a way that such a commitment would be likely to induce (4.16, 4.32). 102 This will obviously not apply to cases of representation by silence or breach of duty to speak.

206

Intention of B to be responsible for reliance 5.26

reasonable man would not have, the requirement of intentional inducement must be satisfied;103 and so, also, if B intends, actually or presumptively, that A should act on the representation, the latter may estop the former from denying its truth, notwithstanding that the latter negligently fails to avail himself of an opportunity to check its truth.104 Against this submission it may be said that, if B, actually intending reliance on it, makes a representation which is accidentally incorrect, but whose incorrectness should be absolutely plain to A, yet the latter relies on it, it seems harsh105 that B should be estopped.106 5.26 On the objective test,107 reliance must be reasonable in the sense that A’s inference that B intended him to act on the representation or breach of duty must be reasonable; but it may be unreasonable in the sense that it was unreasonable not to check the truth of the representation, and yet found an estoppel.108 Whilst, however, A will not, therefore, have constructive notice of the falsity of a representation by careless neglect of an opportunity to discover it, the existence of such an opportunity will, nonetheless, be a factor to be weighed with others in determining whether it was reasonable for him to understand himself to be intended, and thus entitled, to act in reliance on the representation, and may render such understanding unreasonable,109 which will be the case if A’s

103 Downderry Construction Ltd v Secretary of State for Transport [2002] EWHC 2 (Admin) at [31]; see also n 104 below; not, however, where B’s intention was itself induced by A’s misrepresentation or concealment from him of a material fact: see 5.31. 104 Bloomenthal v Ford n 29 above at 162 per Lord Halsbury LC: ‘But once the conclusion is arrived at that the belief was induced, and intentionally induced, by a mis-statement of fact intended to operate upon the mind of another, upon which the man has acted, then I do not think any case can be found in the books in which it has been suggested that the legal consequence does not follow, namely that there is estoppel, and that it is open to the person who has made the representation to say, “I told you so and so; but you ought not to have believed me. You were too great a fool. I had a right to mislead you because you were too great a fool”.’; and at 168 per Lord Herschell: ‘My Lords, I cannot myself think that, where an unequivocal statement is made by one party to another of a particular fact, the party who made that statement can get rid of the estoppel which arises from another man acting upon it by saying that if the person to whom he made the statement had reflected and thought all about it he would have come to see that it could not be true’; Gresham Life Assurance Society v Crowther n 52 above at 227; and Quinn v CC Automotive Group Ltd (t/a Carcraft) n 52 above at [23], 592j–593f; see also 5.12. 105 For which reason, B was not estopped on the facts of Lancs and Yorks Railway v MacNicoll n 51 above. 106 This paragraph in the fourth edition was cited with approval in Bank of Scotland v Hussain [2010] EWHC 2812 (Ch) at [107]. 107 Which, on the submission above, is applicable only where actual intention has not been proved; see also, as to the objective test, n 101 above. 108 See 5.12, 5.25. 109 Lancs and Yorks Railway v MacNicoll n 51 above; cf negligence cases: Smith v Eric S Bush n 97 above at 854, 859, 872; Omega Trust Co Ltd v Wright Son and Pepper [1997] 1 EGLR 120; Bank of Nova Scotia v Hellenic Mutual [1990] 1 QB 818 at 902E–F; James McNaughton Paper Group Ltd v Hicks Anderson & Co n 52 above at 127; Treitel on Contract (13th edn) [9–024].

207

5.26  Inducement and reliance; the effect of estoppel as to a fact

u­ nderstanding is ‘dishonest or irrational (which includes turning a blind eye and being reckless)’.110 5.27 The potential difficulty of determining whether such an inference by A was reasonable is exemplified by the question when A may reasonably rely on an assurance that is not (without estoppel) binding in law by reason of its informality or gratuity. On the one hand, for example, Robert Goff J in Amalgamated Investment and Property Co Ltd (in liquidation) v Texas Commerce International Bank Ltd111 said: ‘Such cases [of representation as to the legal effect of a transaction] are very different from, for example, a mere promise by a party to make a gift or to increase his obligations under an existing contract; such promise will not generally give rise to an estoppel, even if acted on by the promisee, for the promisee may reasonably be expected to appreciate that, to render it binding, it must be incorporated in a binding contract or contractual variation, and that he cannot therefore safely rely upon it as a legally binding promise without first taking the necessary contractual steps.’

This was exemplified in Cobbe v Yeoman’s Row Mgt Ltd.112 Similarly, a promise made ‘subject to contract’ will not found an estoppel113 because the representation has not actually been made unless and until the limitation is lifted, and A  hould understand that. Yet, on the other hand, the courts are ready to countenance reliance by A on a promise, notwithstanding that it lacks the necessary

110 Thanakharn Kasikorn Thai Chamkat (Mahachon) v Akai Holdings Ltd [2010] HKCFA 64 at [62] per Lord Neuberger NPJ; approved in Quinn v CC Automotive Group Ltd (t/a Carcraft) n 52 above at [23], 592j–593f; Newcastle International Airport Ltd (NIAL) v Eversheds LLP [2013] PNLR 5 at [106]–[108], 87 (rev’d on other grounds); LNOC Ltd v Watford Association Football Club Ltd [2013] EWHC 3615 (Comm) at [89]; and see Gaydamak v Leviev [2012] EWHC 1740 (Ch) at [249]. 111 Note 36 above at 107A–B; quoted with approval in Baird Textiles Ltd v Marks & Spencer plc [2002] 1 All ER (Comm) 737 at 764e–h per Mance LJ. 112 Note 6 above; see 5.20. 113 A-G of Hong Kong v Humphreys Estates (Queen’s Gardens) Ltd [1987] AC 114: the Privy Council regarded it as possible (127G–128A), although unlikely, that ‘subject to contract’ negotiations might become enforceable not only by making a contract but also by estoppel: if, however, the expression is, as it should be, effective to allocate risk pending a contract, it is hard to see how an estoppel might arise while the negotiations remain subject thereto, that is, unless and until the parties by words or conduct agree to lift the proviso (as in Confetti Records v Warner Music UK Ltd [2003] EWHC 1274 (Ch), where the contract was unenforceable, but the conduct amounted to grant of an independent bare licence); Salomon v Akiens [1993] 1 EGLR 101; Enfield LBC v Arajah [1995] EGCS 164; James v Evans [2000] 3 EGLR 1, CA; Edwin Shirley Productions Ltd v Workspace Management Ltd [2001] 2 EGLR 16; Taylor v Inntrepreneur Estates (CPC) Ltd (2001) 82 P & CR D9; London and Regional Inv Ltd v TBI plc [2002] EWCA Civ 355; Business Environment Bow Lane Ltd v Deanwater Estates Ltd [2007] L & TR 26; Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582; Mobil Oil (Australia) v Wellcome Intl Pty Ltd (1998) 81 FCR 475; see also cases at 4.51, 4.62, n 261; cf cases at 4.40, n 141; see further Regalian Properties plc v London Docklands Development Corpn [1995] 1 WLR 212; Goff & Jones, Law of Unjust Enrichment (9th edn), Ch 16; contrast 4.61; cf also cases at n 37 above, and 8.25.

208

Intention of B to be responsible for reliance 5.28

formality or consideration of itself to bind B in law,114 and, if it were otherwise, there would be no doctrine of promissory estoppel. Indeed, in Crabb v Arun DC,115 which the House of Lords in Cobbe regarded as consistent with its decision,116 the Court of Appeal upheld a proprietary estoppel founded on detrimental reliance on a non-binding ‘agreement in principle’ by council officers with no authority to bind the council to a contract. The question is whether B intended, or alternatively, it was reasonable for A to understand, B’s representation of fact or promise to be a commitment by B on which A was to act and could rely. 5.28 It is submitted that this requirement, that B intend A to act, or A reasonably understand B to intend him to act, also provides the answer to the question whether A qualifies as a ‘representee’ where B has not made the representation directly to him.117 It is debatable whether the class of persons to whom B is answerable as ‘representees’, other than persons to whom the representation was directly made, and against whom he may, therefore, be estopped in respect of a representation, is the same as those to whom he owes a duty of care, and may,

114 See eg Mason CJ and Wilson J in Walton Stores (Interstate) Ltd v Maher n 95 above at 115, col 2 D–G, 117, col 1G–col 2F; and, in the context of promises to leave property, Taylor v Dickens [1998] 1 FLR 866, Gillett v Holt n 88 above and Thorner v Major n 95 above; cf 4.61; but see Cobbe v Yeoman’s Row Management Ltd n 6 above. 115 Note 95 above: as explained by Millett (1976) 92 LQR 342 in answer to the suggestion of Atiyah (1976) 92 LQR 174 that a contractual claim was available; see also Salvation Army Trustee Co Ltd v West Yorks MCC (1980) 41 P & CR 179; Central St Pties Ltd v Mansbrook Rudd & Co Ltd [1986] 2 EGLR 33; cf n 113 above. 116 See Cobbe n 6 above at [22] per Lord Scott and [79] and [81] per Lord Walker. 117 As to which, see: 2.12; Pilmore v Hood (1838) 5 Bing NC 97 where A made a representation to B to induce a purchase, B could not make the purchase but introduced C as a purchaser to A and passed the representation on to C. A failed to disabuse C, who made the purchase, and against whom A was estopped from denying the truth of the representation; cf Langridge v Levy (1837) M & W 519; Swift v Winterbotham (1873) LR 8 QB 244 at 253 per Quain J, Cockburn CJ: ‘… it is not necessary that the representation should be made to the plaintiff directly; it is sufficient if the representation is made to a third person to be communicated to the plaintiff, or to be communicated to a class of persons of whom the plaintiff is one, or even if it is made to the public generally with a view to its being acted on and the Plaintiff, as one of the public, acts on it and suffers damage thereby.’; followed in Richardson v Silvester (1873) LR 9 QB 34 (deceitful advertisement in a newspaper). It is interesting to compare Gross v Lewis Hillman [1970] Ch 445, where vendors of a reversion misrepresented the status of the lessee to property dealers who contracted to buy the reversion; and the dealers, who had been instructed by the plaintiff to find such a property, in reliance on the representation, recommended the reversion to the plaintiff and assigned to it the benefit of the contract, which the plaintiff completed, but the plaintiff could not rescind the contract, because the misrepresentation was ‘spent’ when the dealer entered the contract to purchase the reversion which it subsequently assigned, with Brikom Investments Ltd v Carr n 18 above, where the assignee of a lessee could raise waiver or equitable estoppel against the lessor in respect of an assurance given to the original lessee that the lessor would not enforce a repairing covenant because, per Lord Denning MR (at 484C–485A): ‘The burden and benefit runs down the line of assignor and assignee on each side’; per Roskill LJ at 488F–489A because what was assigned was a lease from which the obligation had been waived; and per Cumming-Bruce LJ (at 490F–491C) because the lessor’s assurance was expected and intended to be passed on, and was passed on; see further 6.10.

209

5.28  Inducement and reliance; the effect of estoppel as to a fact

therefore, be liable in damages in respect of the representation, in the tort of negligence.118 5.29 An express limitation would seem the surest method of preventing A from reasonably understanding that B intended him to rely on a representation, or passing it on to a third party who might reasonably understand himself to be intended to rely on it;119 but, even then, circumstances may render an inference of such intention reasonable, notwithstanding that B has expressly disclaimed it.120 5.30 No intention to induce will be presumed from any representation by words or conduct which was forced upon B by a statute (in the sense that it amounted to no more than the performance of a prescribed condition of the statutory protection or benefit),121 or which resulted from compulsory compliance with a rule of the common law.122 5.31 Further, if the representation was induced by A’s duress on, or misrepresentation or breach of duty to, or concealment of a material fact from, B, then A may not reasonably understand B to undertake responsibility to him for (the truth of, or performance in accordance with) the representation, even if B actually so intends123 and it will not be unfair for B, as against A, to

118 Viz those to whom B knows or ought to know the representation will be communicated, either specifically or as member of an identifiable class to be used for a known purpose, and upon which representation it is likely that A will act for the purpose without independent inquiry: see Caparo Industries plc v Dickman n 97 above at 623; see also 3.32–3.34; it may be argued that the test should vary according to whether the representation was made with intent to deceive someone, carelessly, or without fault. 119 Eg Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465; A-G of Hong Kong v Humphreys Estates (Queen’s Gardens) Ltd [1987] AC 114; Hemmens v Wilson Browne [1995] Ch 223 at 239; see 4.51, 4.62, n 260; n 113 above. 120 See cases at 4.61, 4.62; Yorkshire Insurance Co v Craine [1922] 2 AC 541; Commercial Banking Co of Sidney Ltd v RH Brown & Co (1971) 126 CLR 337; Brikom Investments Ltd v Carr n 18 above at 480A–D; Smith v Eric S Bush n 97 above (disclaimer invalidated by s 2(2) of the Unfair Contract Terms Act 1977 because unreasonable); Prudential Assurance Co Ltd v Mount Eden Land Ltd [1997] 1 EGLR 37. 121 Brewer D Lord Onslow v Eaton (1783) 3 Doug KB 230 per Lord Mansfield CJ at 230–231; Thomas v Lulham [1895] 2 QB 400. 122 Sheridan v New Quay Co (1858) 4 CBNS 618 at 649–650; James v Heim Gallery Ltd n 37 above (promissory estoppel) at 277 per Buckley LJ: ‘To bow to the inevitable or the near inevitable is quite different from agreeing to forgo a right’. 123 De Mesnil v Dakin (1867) LR 3 QB 18; Coates v London and South Western Rly Co (1879) 41 LT 553; Re Vulcan Ironworks Co [1885] WN 120; George Whitechurch Ltd v Cavanagh [1902] AC 117 at 145 per Lord Brampton: ‘… No representations can be relied on as estoppels if they have been induced by the concealment of any material fact on the part of those who seek to use them as such.’; Porter v Moore [1904] 2 Ch 367; Scriven Bros v Hindley [1913] 3 KB 564 at 569: ‘[A] contract [by estoppel] cannot arise when the person seeking to enforce it has by his own negligence or by that of those for whom he is responsible caused, or contributed to cause, the mistake’; Doey v London and North Western Rly Co [1919] 1 KB 623; Greer v Kettle [1938] AC 145 at 171 per Lord Maugham; Larner v London CC [1949] 2 KB 683; Customs & Excise Commissioners v Hebson Ltd [1953] 2 Lloyd’s Rep 382 at

210

Intention of B to be responsible for reliance 5.32

recant.124 The position is less straightforward if the representation is induced by the fraud, duress or misrepresentation125 of a third party. If B is so induced, without negligence on his own part, to sign a document126 essentially different from any which he intended to sign127 ‘such that the mind of the signor did not accompany the signature’,128 B may shelter behind the doctrine of ‘non est factum’;129 and notwithstanding that A reasonably inferred an intention on the part of B that he should act on the document, no estoppel may be founded on it,130 as it is a nullity. So also, for the same reason, if the transaction upon which the estoppel is founded was rendered void by fraud or duress. Otherwise, however, it seems that A may found an estoppel on a representation induced by the undue influence or misrepresentation of a third party if it was reasonable for him to infer that he was intended by B to act on the representation as the word of B131 and he did not have actual or constructive notice of such undue influence or representation at the material time.132 If, however, B, without negligence on his part, is induced by the undue influence or misrepresentation of a third party to make a misrepresentation to A who relies on it, negligently failing to avail himself of an opportunity to discover the truth, then it may be argued that application of the rule in Lickbarrow v Mason133 should prevent A from raising an estoppel, but, as the authorities presently stand, it would be necessary to show that A’s negligence constituted a breach of a duty of care towards B.134 5.32 Lord Hoffmann has observed that the action which A actually took to his detriment need not be action which B intended that he take, but it is sufficient to show B intended that A should act in some way on the representation or breach

396, 397; National Westminster Bank v Barclays Bank [1975] QB 654; Morrow v Nadeem [1986] 1 WLR 1381; National Insurance and Guarantee Corporation Plc v Imperio Reinsurance Company (UK) Limited [1999] Lloyd’s Rep IR 249 at 259–260; Abraham v Commissioner of Police for the Metropolis [2001] 1 WLR 1257 at 1262F–H; Stanelco Fibre Optics Ltd v Bioprogress Technology Ltd [2005] RPC 15 at [24], 329, [108]–[111], 343–344 (failure to correct a misapprehension). 124 Williams v Stern (1879) 5 QBD 409; D & C Builders v Rees [1966] 2 QB 617 at 625 (CA; promissory estoppel); cf McGuane v Welch [2008] 2 P & CR 24 at [46], 541. 125 As to misrepresentation see Foster v MacKinnon (1869) LR 4 CP 704; Hasham v Zenab [1960] AC 316, PC; Mercantile Credit Co Ltd v Hamblin [1965] 2 QB 242, CA at 268, 280. 126 If B was forced to make an oral representation to A by the duress of a third party, B would seem equally deserving of protection, yet he may be denied it by the necessity of keeping the doctrine of ‘non est factum’ within tight bounds. 127 Or he may not have intended to sign a document at all. 128 Foster v MacKinnon n 125 above at 711 per Byles J. 129 Saunders v Anglia Building Society [1971] AC 1004; United Dominion Trust Ltd v Western [1976] QB 513; Lloyds Bank v Waterhouse (1991) 10 Tr LR 161, PC. 130 Debs v Sibec Ltd [1990] RTR 91 at 97K–98C. 131 Howatson v Webb [1908] 1 Ch 1, CA; In Re Bahia and San Francisco Rly Co (1868) LR 3 QB 584; Balkis Consolidated Co v Tomkinson n 98 above. 132 By analogy with Royal Bank of Scotland plc v Etridge (No 2) [2002] 2 AC 773. 133 See 3.50 onwards. 134 See 3.51, n 232.

211

5.32  Inducement and reliance; the effect of estoppel as to a fact

of duty to speak – which question was argued before but not answered by the House in Maritime Electric Co Ltd v General Dairies Ltd.135 It is not necessary that B should have known or foreseen the particular act of reliance and it does not matter whether B knew of any specific alternatives which A might be contemplating, provided that B’s representation was reasonably understood as intended to be taken seriously as an assurance which could be relied upon.136 It is submitted, nonetheless, that the representation or culpably uncontradicted belief must be material137 to the action taken. If actual intention (by B that A should act as he did) is not proved, it will be sufficient to prove that A reasonably understood himself to be intended to act on the representation or breach of duty, and that the manner in which he acted in reliance on the representation or breach of duty was reasonable.138 In the case of an estoppel based on silence in breach of a duty to speak, although A need not show that B actually, or as reasonably understood by A, intended A to act on his silence, it is submitted that, for B to be responsible to A for A’s conduct, it must have been conduct which it was reasonable to base on the belief which B failed to contradict.

MATERIALITY 5.33 A representation or belief has the quality of materiality if it is reasonably capable of inducing the alteration of position which A sets up as its actual consequence. It must have been ‘of a nature’, and in that sense ‘calculated’, or of which the tendency or natural and probable result is, to induce A in particular, in the circumstances of the individual case, to alter his position in the manner alleged.139 5.34 There are not many cases in which B, whilst admitting, or failing to negative, actual inducement, has challenged the materiality of the representation or breach of duty, but, whenever there has been such a challenge, A has (in the absence of evidence as to B’s actual intention that A should act) succeeded or failed in making out the estoppel according to whether he has, or has not, established such materiality in the sense indicated.140 In relation to pre-contractual

135 [1937] AC 610. 136 Thorner v Major (HL) n 95 above at [5], 779E per Lord Hoffmann; and see Crabb v Arun District Council n 95 above at 189D-E per Lord Denning MR and at 197H-198E per Scarman LJ; Gillett v Holt n 88 above at 230B–231A, 232A–F; and Joyce v Epsom and Ewell Borough Council [2013] 1 EGLR 21 at [39], 24. 137 As to which, see 5.33 onwards. 138 For an instance of a court considering whether reliance was reasonable (in relation to an estoppel by convention), see Thornton Springer v NEM Ins Co Ltd [2000] 2 All ER 489 at 518. 139 Seton Laing & Co v Lafone n 11 above at 72, 73. 140 See Freeman v Cooke n 88 above, where, inducement having been found by the jury, the estoppel set up was nevertheless not made out, because (amongst other reasons) it could not be said that any reasonable man would have seized the goods on the faith of the bankrupt’s representation (at 664 per Parke B); Blanchet v Powell’s Llantivit Collieries Co (1874) LR 9 Exch 74 statement of weight of goods shipped in bill of lading held not material here, and,

212

Materiality 5.36

misrepresentation, there is a conflict of authority141 as to whether the materiality of the representation to the contract is an independent pre-condition for liability (as opposed to being merely grounds for a finding of actual inducement).142 In relation to the doctrine of estoppel, it is submitted, materiality is not a universal independent requirement for an estoppel; rather, it is both evidence (arguably raising a presumption) of actual inducement, and an alternative pre-condition to that of actual intention to induce.143 5.35 In a case based on a representation of fact, promise or convention, if B communicates his actual intention that A should act on the representation of fact, promise or convention in the precise manner in which A is in fact induced to act, then there is no further requirement that the representation be ‘material’ to – that is, objectively viewed, reasonably capable of inducing – the action.144 If, on the other hand, the requirement of intention to induce is satisfied by a finding that it was reasonable for A to infer that he was intended to act on the representation of fact, promise or convention, then the criterion of materiality delimits the range of actions that are within that reasonably inferred intention.145 5.36 Thus, it is submitted that, as a pre-condition for an estoppel, the requirement of materiality adds to the requirement, in cases based on a representation of fact, promise or convention, that either B intend that A act on it or it be reasonable for A to infer such an intention, a requirement that either A act on the representation of fact, promise, convention or culpably uncontradicted belief in the manner B intended, or it be reasonable for A to act on the representation in the manner that he does.146 therefore, no estoppel: at 77 per Bramwell B; Parsons v New Zealand Shipping Co [1901] 1 KB 548 another bill of lading case, at 564 per Collins LJ: ‘it is the identity of the goods shipped with those represented as shipped which is the pith of the matter; nothing which could not be material to such identity would be embraced in the estoppel. It is obvious that where marks have no market meaning, and indicate nothing whatever to a buyer as to the nature, quality, or quantity of the goods which he is buying, it is absolutely immaterial to him whether the goods bear one mark or another’. 141 Materiality is necessary per: Lord Mansfield in McDowell v Fraser (1779) 1 Dougl 247 at 248; Lord Selborne in Smith v Chadwick n 17 above at 190; Millett J in Lonhro plc v Fayed (No 2) [1992] 1 WLR 1 at 6A. Materiality is not necessary per Scott LJ in Museprime Properties Ltd v Adhill Properties Ltd (1991) 61 P & CR 111 at 124; the necessity is doubted per Harman J in Re a Company (No 001946 of 1991), ex parte Fin Soft Holding SA n 97 above at 747g–748b; see further Goff & Jones, The Law of Unjust Enrichment (9th edn) [9–92]. 142 See 5.7. 143 See 5.25. 144 Smith v Kay (1859) 7 HL Cas 750; Carr v London and North Western Rly Co n 11 above at 317; Bloomenthal v Ford n 29 above; cf Possfund Custodian Trustee Ltd v Diamond n 92 above. 145 Thus, a representation that it is raining outside is ‘material’ to a decision to put on a raincoat but not a swimsuit; cf Lancs and Yorks Railway Co v MacNicoll n 51 above; so also the auditors in Caparo Industries plc v Dickman n 97 above were not answerable for their audit to shareholders for their buying more shares in reliance on the audit, as opposed to exercising the powers conferred by their existing shares. 146 For a formulation requiring that reliance be reasonable, without the alternative of unreasonable reliance in accordance with B’s actual, but unreasonable, intention, see Amalgamated

213

5.37  Inducement and reliance; the effect of estoppel as to a fact

5.37 It is submitted, however, that, if the representation was deliberately deceitful, the court may, as in tort,147 hold B responsible for (and, therefore, estopped by) A’s reliance, regardless of materiality, provided that the causative link between representation and reliance is established.

Receipts for money and goods; bills of lading 5.38 As in previous editions of this work, we consider here148 certain classes of documentary representation, such as those contained in receipts for money or goods, and in invoices, delivery orders, and the like, as to the materiality of which difficult questions have sometimes arisen. It has often been said that a receipt, being a mere admission, is not an estoppel.149 Since an admission or acknowledgment is undoubtedly a statement, the meaning of this proposition must be that, though a representation, a receipt is not capable of inducing the person to whom it is given to alter his position. But this is not necessarily so. The question depends upon the nature and terms of the document, and all the circumstances.150 Ordinarily, no doubt, a receipt is not of a nature to induce A to act on the faith of it, because its sole function usually is to record the conclusion of the transaction in which the parties are engaged, or the execution of the consideration, or part of the consideration stipulated for, and therefore, as between the immediate parties, it cannot influence either of them to enter into the transaction, or to take any fresh step in relation thereto, whether the receipt be for money, either in the form of a separate document, or contained in, or indorsed upon, an instrument under seal,151 or for goods,152 as in the case of a bill of lading, which has been described as ‘merely a receipt liable to be opened by the evidence of the real facts’.153 5.39 But though a receipt, merely as such, is not of a nature to induce the person to whom it is given to make the payment, or delivery, which is thereby recorded, and, in that sense, can never be material as between those parties, it by no means follows that the other circumstances of the case may not be such as to

Investment and Property Co Ltd (in liquidation) v Texas Commerce International Bank Ltd n 36 above; The ‘Nerano’ [1996] 1 Lloyd’s Rep 1 at 6, col 2, per Saville LJ: ‘In this context, of course, waiver and estoppel are really one and the same thing and depend upon the same requirement of an unequivocal representation reasonably relied upon by and to the detriment of A’. 147 See Clerk and Lindsell on Torts (21st edn) [18–38]. 148 See also 8.77 and 8.78. 149 See 8.77. 150 The New Zealand case of Clark v Sheehan [1967] NZLR 1038 furnishes an excellent example of the kind of special circumstances under which a receipt in a deed will estop the parties. 151 See Skaife v Jackson (1824) 3 B & C 421; Graves v Key (1832) 3 B & Ad 313 at 318; Gaden v Newfoundland Savings Bank [1899] AC 281 at 286; Ellen v Great Northern Rly Co (1901) 17 TLR 453, CA; Oliver v Nautilus Steam Shipping Co [1903] 2 KB 639 at 648, CA. 152 Eg Lowe v Lombank Ltd n 9 above at 206. 153 Per Tindal CJ at 107 of Bates v Todd (1831) 1 Mood & R 106 at 107.

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Materiality 5.39

indicate the possibility at least of its influencing a third person, or even A himself, to enter into a fresh transaction altogether, or otherwise to alter his position to his prejudice.154 Thus, where X has obtained a receipt from Y for the payment of a sum of money, that receipt may be made use of by X in a transaction with Z, in such a way as to induce Z to alter his position on the faith of the statement impliedly made by X, in so using the receipt, that he has satisfied Y’s claim.155 And acknowledgments of the receipt of purchase or other consideration money contained in, or indorsed upon, deeds are clearly material as inducements to subsequent purchasers (which, indeed, is their main purpose), in whose favour therefore, if not as between the immediate parties, there is always an estoppel if the receipt is contained in a deed.156 If not in a deed, the receipt may estop Y as well as X against Z, if X has Y’s actual or ostensible authority to use the receipt in the transaction with Z, or Y acts in breach of a duty of care owed to Z (or class of which he is a member) by giving the receipt to X.157 So also, with reference to statements in bills of lading, of the quantity or condition of goods received on board the vessel, it has been well observed, that: ‘the object of the shipper in asking for the insertion of the statement … is clearly rather to have evidence to offer to his transferee than for his own direct benefit. The advantage of what is known as a clean bill of lading is obvious, and I think it would be idle for the master of a ship to say that he did not contemplate a purchaser of the goods acting on the statement.’158

Again, in Brandt v Liverpool Brazil and River Plate Steam Navigation Co Ltd,159 Atkin LJ said at 600: ‘This is a representation which, as the learned judge says, the shipowner must contemplate will be made and repeated to and acted upon by every successive 154 Oliver v Nautilus Steam Shipping Co n 151 above. 155 In Bowes v Foster (1858) 2 H & N 779, Pollock CB at 784 observed: ‘in the course of the argument, Mr Brett suggested the case of a person who gives a receipt to another, to enable him to show that no claim can be made by the person giving the receipt, and in that way obtaining money. Such a receipt in that way would no doubt have all the effect it was intended to have; as between the person to whom it was given and the person to whom it was shown, it would be conclusive evidence of payment, though no money was paid; but as between the former and the person giving the receipt, it might be shown that no money passed’. At 788, Martin B expressed the same view, and remarked that Montefiori v Montefiori (1762) 1 Wm Bl 363 may be regarded as an illustration of an estoppel by a receipt of this character. It is submitted that whether the person to whom the receipt is shown can raise an estoppel against the person who gave the receipt to the intermediary will depend on whether the receipt giver actually intended the person shown to rely on the receipt as he did, or it was reasonable for the person shown the receipt to infer such an intention on the part of the receipt giver (see 5.19– 5.32; 6.3–6.5, 6.10–6.11). 156 Section 68 of the Law of Property Act 1925; Rice v Rice (1854) 2 Drew 73 at 83; Bickerton v Walker (1885) 31 Ch D 151, CA; Lloyds Bank Ltd v Bullock [1896] 2 Ch 192; Rimmer v Webster [1902] 2 Ch 163 at 173, 174; Bateman v Hunt [1904] 2 KB 530, CA; Powell v Browne (1907) 97 LT 854, CA; Capell v Winter [1907] 2 Ch 376 at 381; De Lisle v Union Bank of Scotland [1914] 1 Ch 22; Tsang Chuen v Li Po Kwai [1932] AC 715, PC. 157 See 3.27–3.52; 6.3–6.7. 158 At 247 of Compania Naviera Vasconzada v Churchill and Sim [1906] 1 KB 237; see now s 4 of the Carriage of Goods by Sea Act 1992; 11.81–11.104. 159 [1924] 1 KB 575, CA.

215

5.39  Inducement and reliance; the effect of estoppel as to a fact

holder of the bill of lading, and each indorsee who takes delivery under the bill of lading.’

In the same case, Scrutton LJ said at 593: ‘The result was that the shipowners put into circulation a document which they knew might be passed on to other persons for value, and on the statements in which other persons might act, which contained the untrue and material statement that the goods had been shipped “in apparent good order and condition”.’160

5.40 An invoice would not, ordinarily, induce the recipient to alter his position in any way,161 but it may conceivably be so framed, or delivered under such circumstances, as to create an estoppel.162 So, also, delivery notes and orders, not being documents which pass the property in the goods, like bills of lading, cannot be said to carry with them, per se, the possibility of influencing the mind or action of third parties163 (though such documents may form part of the ­foundation of an estoppel when combined with other conduct of the owner

160 See also Silver v Ocean Steam Shipping Co Ltd [1930] 1 KB 416 at 428 per Scrutton LJ: ‘The mercantile importance of clean bills of lading is so obvious and important that I think the fact that (the consignee of the goods) took the bill of lading, which is in fact clean, without objection, is quite sufficient evidence that he relied on it’ (cf V-O Rasnoimport v Guthrie [1966] Lloyd’s Rep 1 at 14); unless rebutted by evidence establishing that the consignee knew the bill to be inaccurate: Evans v James Webster & Bros Ltd (1928) 34 Com Cas 172 at 175–176 per Wright J; Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steam Shipping Ltd [1947] AC 46, PC; the presumption will not arise against the carrier if the consignee contracted with the seller to accept the bill even if claused, subject to a price reduction, yet the buyer may still prove against the carrier that he would have breached his contract with the seller and rejected the bill: Cremer v General Carriers SA [1974] 1 WLR 341 at 350E–353C. 161 Bowes v Foster n 155 above (at 783 per Pollock CB); Holding v Elliott n 39 above, where Pollock CB, at 120, 121, observed: ‘I think that this is a case in which the invoice does not estop the defendant from showing what the real transaction was. Indeed, I doubt whether in any case an invoice can with propriety be called an estoppel’. To the like effect, Martin B at 121. 162 At 120 (during the argument) and 122 (in his judgment) in Holding v Elliott n 39 above, ­Martin B seems to have expressed a view that circumstances are conceivable in which an invoice might be something more than an invoice, and might have effect as an estoppel, or even constitute the contract itself between the parties. In New Zealand, the monthly account rendered to its customer by a statutory Electric Power Board has been held to be a statement (as to the quantum of power consumed) giving rise to an estoppel, since ‘the notices sent by the Board are not merely invoices for goods or services supplied. The recording meter is the property of the Board and is under its exclusive control. The information must come from the Board, and apart from the meter readings, the defendant had no means of learning the quantity of electricity which had been supplied to it’: Taranaki Electric Power Board v Proprietors of Puketapu No 3 Block [1958] NZLR 297 at 306 per North J. See also the discussion on the same topic in Maritime Electric Co Ltd v General Dairies Ltd [1937] AC 610. 163 McEwan v Smith (1849) 2 HL Cas 309 at 325, 326. The ‘advice note’ in Carr v London and North Western Rly Co n 11 above was considered not to be of a nature to induce the plaintiff to alter his position in any way to his prejudice (at 317, 318 per Brett J) nor was a railway receipt in Mercantile Bank of India Ltd v Central Bank of India Ltd [1938] AC 287 at 303; see also, 6.3–6.5, 6.10–6.11.

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the totality of which is such as to amount to representation); and it has been said that such an instrument, ‘unless there is something very peculiar about it’, cannot be supposed in itself to be capable of affecting the conduct of an immediate party as a representation of fact, being rather in the nature of an undertaking or promise than a representation of any kind,164 but a delivery order does constitute a representation by the warehouseman that he holds the goods described.165

CHANGE OF POSITION 5.41 As identified in Chapter 1, it is of the essence of a true estoppel that B’s representation of fact, promise, assent to a convention or breach of duty must result in A changing his position on the faith of it166 to his detriment:167 A, in reliance on B’s representation of fact, promise, or assent to a convention or the belief which B has failed to correct, must act upon it in a manner prejudicially affecting his temporal interests.168 To establish inducement, without proving resultant change of position, will be of no more use than to prove the latter without the former,169 since this is what makes it unjust for B to resile from his previously stated position or rely on matters he culpably failed to communicate.170

164 Gillman Spencer & Co v Carbutt & Co (1889) 61 LT 281, CA at 282 per Lord Esher MR, 283 per Fry and Lopes LJJ; it was not argued, although the warehouseman was also the seller, that, by issuing the delivery order, he impliedly represented that he had been paid for the goods; see also Alicia Hosiery Ltd v Brown Shipley & Co Ltd [1970] 1 QB 195 at 205D–206C. 165 Coventry, Sheppard & Co v Great Eastern Rly (1883) 11 QBD 776. 166 In the case of a breach of duty, on the faith of the belief which B should have corrected. 167 See 1.5–1.9; cf Jones v Stones [1999] 1 WLR 1739 at 1745 per Aldous LJ: ‘At the heart of estoppel or acquiescence lies an encouragement or allowance of a party to believe something to his detriment’. 168 See Steria v Hutchison n 18 above at [79], 457 per Mummery LJ: ‘… the presence of reliance [and] the existence of detriment … are distinct concepts, both of which are relevant to and need to be separately addressed in determining whether an estoppel has been established’. 169 Eg Carr v London and North Western Rly Co n 11 above – no change of position induced, and, assuming that there had been, no damage resulting therefrom: at 317 per Brett J; Simm v Anglo-American Telegraph Co n 39 above – no change of position on the faith of the representation, unless possibly by ‘putting to rest’, and, even so, the putting to rest resulted in no loss: per Brett LJ at 211; Horsfall v Halifax and Huddersfield Union Banking Co (1883) 52 LJ Ch 599; Donaldson v Freeson (1934) 51 CLR 598; Jones v Stones n 167 above; Lester v Woodgate [2010] 2 P & CR 21 at [39]–[40], 371: ‘in [a] case in which estoppel by acquiescence is relied upon … a deliberate act of trespass or nuisance is unlikely to have been influenced by the position taken up by the claimant to the invasion of his legal rights or therefore to have given rise to any detriment on the part of the defendant in terms of the work or expenditure which he carried out’. 170 Kelly v Fraser n 27 above, at [17] (followed in Kaupthing Singer & Friedlander Ltd (in administration) v UBS AG [2014] EWHC 2450 (Comm) at [101]).

217

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What amounts to change of position? 5.42 Detriment of any character which the law recognises as sounding in damages may found an estoppel; indeed, the detriment need not be of a character sounding in damages if it amounts to an unfairness171 that equity would recognise and remedy.172 On the other hand, if B’s volte face will not be to the disadvantage of A, an estoppel will not arise.173 It may assume a wide variety

171 Gillett v Holt n 88 above. 172 In Commonwealth of Australia v Verwayen (1990) 170 CLR 540 at 568, Deane J considered the ‘stress, anxiety, inconvenience and effort’ (disregarding the cost) of litigation to be sufficient detriment, although not compensable in damages, citing authorities that equity recognises loss that is not compensable in damages when awarding specific performance; the other judges who considered the question of detriment (Mason CJ at 548, Brennan J at 553, and McHugh J at 587) found such detriment unproven, refusing to infer it from the fact that the litigation had been proceeding; however, they did not reject it on qualitative grounds. In Commonwealth of Australia v Clark (1994) 2 VR 333, the psychological harm that would be caused to the estoppel raiser if the State were allowed to withdraw its previous waiver of its defences was held sufficient to found the estoppel. In Shearson Lehman Hutton Inc v Maclaine Watson & Co Ltd [1989] 2 Lloyd’s Rep 570 at 598, Webster J appears to find detriment in the difference between taxed costs and the costs actually incurred sed quaere: the balance was, by definition, unreasonably incurred, so it may be doubted whether B actually or presumptively intended it to be incurred; see also Walters v Smee [2009] WTLR 521 at [139], 547, where Purle J held, obiter, that ‘the care and commitment’ B gave A to allow her to remain in her property despite her ill health would have constituted sufficient detriment if B had had capacity to make a representation. 173 Howard v Hudson (1853) 2 E & B 1; Ex p Adamson (1878) 8 Ch D 807 at 817 per James, Baggallay LJJ: ‘Nobody ought to be estopped from averring the truth or asserting a just demand unless by his acts or words or neglect his now averring the truth or asserting that the demand would “work some wrong” to some other person who has been induced to do something or to abstain from doing something by reason of what he has said or done or omitted to do.’; George Whitechurch Ltd v Cavanagh [1902] AC 117 at 135–6 per Lord Robertson; MacFisheries Ltd v Harrison n 28 above; Norfolk CC v Secretary of State for the Environment n 32 above at 1405F per Lord Widgery CJ: ‘As I understand it, the mere fact that my agent has made a representation within his ostensible authority upon which you act is not enough to stop me from denying his actual authority unless you have acted to your detriment. The whole point of estoppel in this situation, as I understand it, is that if a man has been induced to act to his detriment he ought to be protected …’; James v Heim Gallery Ltd n 37 above at 275 per Buckley LJ as to promissory estoppel: ‘It must be a promise capable of inducing the promisee to alter his position, and to alter it in a way which would be to his disadvantage if his legal obligations to the promisor were to remain unqualified by the promise.’; Goldsworthy v Brickell n 94 above at 411: the tenant did not act to his disadvantage or in another material way in reliance on the representation that the landlord would not exercise a right to rescind the tenancy – the payment of rent was not a detriment as it was the price of occupation; The ‘Multitank Holsatia’ [1988] 2 Lloyd’s Rep 486 at 493: payment of arbitrator’s fees in the belief that the arbitration was abandoned was not detriment because, if the arbitration continued and the payer succeeded on the merits, he would recover the payment under an order for costs, and if he failed on the merits he would have to pay the costs in any event; Hunt v Soady [2007] EWCA Civ 366 at [29], [35] per Mummery LJ: payment by A of arrears under a mortgage for which A and B were jointly and severally liable did not amount to detriment; see also Rover International Ltd v Cannon Film Ltd (No 3) [1989] 1 WLR 912 at 925E–H per Kerr LJ: the defence of change of position to a claim in restitution requires a change of position to the disadvantage of the payee.

218

Change of position 5.42

of forms, such as: coming under a contractual liability to deliver property to a third person at a future date;174 registration by a corporation of a person as a member thereof;175 supply of goods on credit which otherwise would not have been given;176 incurring responsibilities as a member of a mutual society to other members;177 buying back goods already sold;178 drawing cheques on the faith of a supposed balance which, there being no such balance, are dishonoured, to the damage of the customer’s commercial credit;179 a partner allowing life insurance premiums to be debited to his capital account in the mistaken belief that his estate would be entitled to the proceeds of the policy;180 executing works and incurring expense upon, or in relation to, another’s land;181 failure to fulfil an obligation to B or a third party;182 working for low wages;183 the spending of time and money by a seller making arrangements to give notice to a buyer of the appropriation of goods to their contract;184 expenditure or borrowing of money;185 and incurring trouble and expense.186 There are also those cases in which B has secured for himself an advantage,187 involving a corresponding and

174 Fenner v Blake [1900] 1 QB 426, DC at 428, 429 per Channell J; Balkis Consolidated Co v Tomkinson n 98 above at 405 per Lord Herschell LC: contract to deliver shares. 175 See Sheffield, Ashton-under-Lyne and Manchester Rail Co v Woodcock (1841) M & W 574 (at 582, 583 per Parke B); Cheltenham and Great Western Union Rly Co v Daniel (1841) 2 QB 281, at 292; Re St George’s Steam Packet Co, Maguire’s Case (1849) 3 De G & Sm 31, at 35; Re Henry Bentley & Co & Yorkshire Breweries Ltd (1893) 69 LT 204 at 207 per Lindley LJ: ‘the company are expected to act upon it to their damage by allotting shares to him instead of to somebody else’. 176 As in Cornish v Abington (1859) 4 H & N 549; Martyn v Gray (1863) 14 CB NS 824. 177 Barrow Mutual Ship Insurance Co Ltd v Ashburner (1885) 54 LJ QB 377 where Brett MR at 378, pointed out that, by his conduct, the defendant had ‘induced the other members to belong to the Society on the faith that he would pay their losses’, and had ‘misled both those who paid calls, and those who received the losses, as well as the Society representing the members’. 178 Seton, Laing & Co v Lafone n 11 above at 71, 72 per Lord Esher MR. 179 As in Holland v Manchester and Liverpool District Banking Co (1909) 25 TLR 386. As to the effect of entries in banking books generally, see 9.70–9.76. 180 Strover v Strover [2005] WTLR 1245. 181 See Ch 12. 182 Hughes v Metropolitan Rly Co n 100 above (promissory estoppel): a landlord, by negotiating for the purchase of the lease, induced the tenant to ignore a prior notice to repair, whose expiry, but for the estoppel, would have entitled the landlord to forfeit. 183 Wayling v Jones n 18 above; Gillett v Holt n 88 above, at 231–5 (both proprietary estoppel). 184 In reliance on a waiver of lateness of such notices: Bremer v Vanden Avenne Izegem n 17 above at 127, col 2 (NB this case did not decide any question of principle: see at p 116, col 2 per Lord Wilberforce and Sinclair Gardens Investments (Kensington) Ltd v Poets Chase Freehold Company Ltd [2008] 1 WLR 768H at [74], 787H); cf Cook v Meunerie [1981] 1 Lloyd’s Rep 359 at 368 where there had been no such appropriation made and no detrimental reliance. 185 See 5.49; and Royal Bank of Scotland plc v Luwum [2008] EWCA Civ 648 (promissory estoppel), where borrowing from third parties to pay B was a sufficient detriment for B to be estopped from commencing possession proceedings until an agreed period had expired. 186 Eg Hartley v Hymans [1920] 3 KB 475 (promissory estoppel): the buyer pressed for better deliveries of cotton yarn after late deliveries by the seller and, relying on the implicit waiver of the right to terminate for lateness, the seller incurred expense in preparing and making further deliveries. 187 Arguably, sufficient even without a corresponding disadvantage: see 5.61.

219

5.42  Inducement and reliance; the effect of estoppel as to a fact

p­ roportionate d­ isadvantage to A, by asserting (whether in words, or by acts) the validity, or (as the case may be) the invalidity of, or putting a particular construction188 upon, an instrument or transaction, such as a deed of separation,189 a will,190 a provision of a statute,191 a preceding step in the course or conduct of litigation192 and other transactions. It has now been confirmed that, in estoppel by convention cases, entry into the contract itself can be sufficient detriment to found an estoppel as to the meaning of a contractual term.193 However, the discharge of a clearly enforceable contractual obligation should not be accepted as a change of position in reliance on a representation so as to enable a promissory estoppel to be established unless there is clear evidence that, but for the representation, the person concerned would not have complied with his contractual obligation.194 5.43 Trivial detriment will not found an estoppel.195 ‘Whether the detriment is sufficiently substantial is to be tested by whether it would be unjust or

188 Cf 2.31, n 142. 189 As in Gandy v Gandy (1885) 30 Ch D 57, CA (at 80 per Cotton LJ, 82 per Bowen LJ); ­Macnaghten v Paterson [1907] AC 483, PC at 493. 190 See Board v Board (1873) LR 9 QB 48 at 54 per Mellor J. 191 Cromford Rly Co v Lacey (1829) 3 Y & J 80, where the defendant in an action for calls was held estopped from denying that he was a member of the plaintiff company, which was a parliamentary one, by his acts and conduct in paying previous calls as a ‘proprietor’, and otherwise. In this way, said Alexander CB, at 86, he ‘claims the benefit and takes advantage of the Act, and by so doing gives colour to it’; so Garrow B, at 87, who there also points out that other persons besides the company had altered their position for the worse by reason of the defendant’s representation, namely, ‘the individuals through whose property the railway passed’, and ‘those who have been induced to subscribe by the influence of his example’; see 2.8–2.9 and 2.28–2.35 as to whether a representation of law may give rise to an estoppel. 192 See Corrigal v London and Blackwall Rail Co (1843) M & G 219, where, having in the words of the plea, ‘taken the benefit of’ an inquisition by a sheriff’s jury to assess compensation under their special Act, the railway company was held estopped from afterwards setting up the tribunal’s want of jurisdiction against the landowner (at 247 per Tindal CJ); H Tolputt & Co Ltd v Mole [1911] 1 KB 836, where the plaintiffs had attended the proceedings on taxation which they now asserted to be a nullity, and had obtained an advantage by so doing in the shape of a disallowance of certain items, and were accordingly held precluded from objecting to the validity of the taxation; cf now, however, CPR 1998, Rule 11 as to disputing jurisdiction after acknowledgment of service; and contrast 7.43–7.47, to the effect that jurisdiction may not be conferred by estoppel. 193 ING Bank NV v Ros Roca SA [2012] 1 WLR 472 at [72], 492H per Carnwath LJ, [76], 493E, [79], 494B; Liberty Mercian Ltd v Cuddy Civil Engineering Ltd [2013] EWHC 2688 (TCC) at [164]; and see 8.39. 194 Bolkiah v State of Brunei Darussalam [2007] UKPC 63 at [21]. Contrast Collier v P & M J Wright (Holdings) Ltd [2008] 1 WLR 643 at [38]–[40] per Arden LJ, who held that one of three joint and several debtors who had agreed with the creditor to pay one-third of the total debt and had done so could raise a triable issue as to whether the creditor was permanently estopped from presenting a statutory demand for the balance (following the obiter dictum of Lord Denning MR in D & C Builders v Rees n 124 above at 625); we submit that this is contrary to the Foakes v Beer 9 App Cas 605 line of authority and we note that Longmore LJ at [46] doubted whether a true accord would be found on the facts. 195 Bremer Hgs mbH v Deutsche Conti Hgs mbH [1983] 1 Lloyd’s Rep 689 at 692, col 2: the furnishing of some documents in proof of force majeure was held de minimis (cf Bremer v

220

Change of position 5.44

i­ nequitable to allow the assurance to be disregarded – that is, again, the essential test of unconscionability’.196 It has accordingly been held that being deprived of the opportunity of leaving the parties’ rights surrounded by some sort of obscurity or uncertainty is nothing like the sort of detriment for which the law looks.197 5.44 There are some dicta to the effect that, where the conduct constituting the detriment is unlawful, this will bar A’s claim to relief in equity.198 Although there is no binding English authority, it is submitted that, where the conduct is criminal or quasi-criminal, this must be correct as an application of the rule of

Vanden Avenne Izegem n 9 above: time and money spent on giving notices of appropriation was sufficient detriment); Jones v Watkins (26 November 1987, unreported), CA: expenditure on small items of equipment ‘trivial in amount’; Banner Industrial and Commercial Properties Ltd v Clark Paterson Ltd [1990] 2 EGLR 139: to spend time considering how to spend an increase in profits anticipated from the low rent demanded by a landlord in accordance with an arbitration award, and to abandon consideration of moving premises and putting up prices (there being no evidence that the tenant would have done either had the award been appealed immediately), is reliance ‘far too trivial’ to make it unjust for the landlord to appeal against the award; Brown and Root Ltd v Sun Alliance Ltd [2001] Ch 733, CA: a landlord’s changing records and collecting rent from the unregistered assignee of the tenant is not detriment such as to estop the tenant from denying a legal assignment; Century (UK) Ltd SA v Clibbery n 18 above at [64]–[71]; Sinclair Gardens Investments (Kensington) Ltd v Poets Chase Freehold Company Ltd n 184 above: even if it were assumed that the landlord would have become liable for a fee for its solicitor’s work in considering an invalid notice by tenants claiming the right to collective enfranchisement in reliance on a representation by the tenants as to the validity of the notice, any element of detriment involved in that reliance was not sufficiently substantial to make it unjust or inequitable or unconscionable for the tenants to point out that the notice did not comply with the statutory requirements; Truex v Toll [2009] 1 WLR 2121 at [41], 2130H–2131A: seeking to enforce the debt itself (in this case, by incurring the cost of a statutory demand and bankruptcy petition based on an unassessed and undetermined solicitor’s bill) could not constitute a sufficient alteration of position to found an estoppel binding the debtor to her admission of the invoices; Talisman Property Co (UK) Ltd v ­Norton Rose [2005] EWHC 2793 (Ch) at [136]: A sending out rent demands and recording B in insurance details as being the tenant was not sufficient detriment to estop B from denying the tenancy; see also Gan v Wood [1998] EGCS 77; HMRC v Pal [2008] STC 2442 at [34], 2454; Pintorex Ltd v Keyvanfar [2013] EWPCC 36 at [60]–[61]; Burton v Liden [2016] EWCA Civ 275 at [21(iv)] and [32]. 196 Gillett v Holt n 88 above, at 232E per Robert Walker LJ; and see Murphy v Burrows [2004] EWHC 1900 (Ch) at [112], where the court ‘accept[ed] that the detriment was substantial’ but not ‘in all the circumstances sufficiently substantial … to find that it was unjust or inequitable to allow the assurances made by [B] to be disregarded’. 197 Dyson Ltd v Qualtex (UK) Ltd n 41 above at [335]: ‘the right to remain ignorant is no part of the law of estoppel’. 198 Chalmers v Pardoe [1963] 1 WLR 677, PC at 683–685: A relied on building a property on B’s land without consent required by statute and was denied relief in circumstances where, but for the illegality, an estoppel would have arisen; Hanning v Top Deck Travel Group Ltd (1994) 68 P & CR 14, CA at 21 per Dillon LJ: ‘That is founding the estoppel claimed on the illegal user. In my judgment that cannot be done.’; Brightlingsea Haven Ltd v Morris [2009] 2 P & CR 11 at [62], 196: ‘I accept that there is no illegality in the present case which stands as an absolute bar to the defendants’ claims to relief in equity’.

221

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law,199 that no court will lend its aid to a man who founds his cause of action on an illegal act,200 and where it breaches a civil rule of law or statute, the question is whether the public policy it embodies would be unacceptably undermined by foundation of the estoppel on that conduct.201 5.45 A changes his position,202 in the sense that his conduct is affected, not only when the representation or breach of duty has caused him to adopt a positive course of action, but also when it has caused him to abstain from taking measures for his protection, security or advantage;203 or when it has caused him to persist in, rather than abandon, a line of conduct. Thus, A has been held to have changed his position where he has, on the faith of a representation, omitted to protect himself from the consequences of a void or frustrated transaction by effecting the object of that transaction elsewhere, or by other means, as he would have done but for his belief in its validity and efficacy;204 or where he has refrained from taking active measures to enforce payment against a person from whom there

199 Les Laboratoires Servier v Apotex Inc [2015] AC 430 at [13], 440D per Lord Sumption JSC. 200 Holman v Johnson (1775) 1 Cowp 341 at 343 per Lord Mansfield CJ; see Tinsley v M ­ illigan [1994] 1 AC 340; Les Laboratoires Servier v Apotex Inc n 199 above; Ch 7. 201 See 7.6–7.11. 202 Farwell J at 838 of Dixon v Kennaway & Co Ltd [1900] 1 Ch 833, referring to Knights v Wiffen (1870) LR 5 QB 660 at 665, observes: ‘it is plain that when Blackburn J uses the phrase “alter his position”, he does not mean that an active alteration is necessary but that it is sufficient that the person to whom the statement is made rests satisfied with the position taken up by him in reliance on the statement, so that he suffers loss’. Cf the observations of Lord Selborne LC at 91 of McKenzie v British Linen Co (1881) 6 App Cas 82, HL, where he points out as the ground for negativing the estoppel that the respondents had not been ‘led’, either ‘to act in any way in which they would not otherwise have acted’, or ‘to omit to take any step for their own security, or in any sense for their benefit which they otherwise would have taken’. In Lundbert v Royal Exchange Corpn [1933] NZLR 605 an insured was led to rest satisfied in the belief that his policy had been renewed; the company was later held estopped from contending to the contrary. 203 Fung Kai Sun v Chang Fui Hing [1951] AC 489 (a case in which the appellant failed to show, as a matter of fact, such detriment as would support an estoppel; in Australasian Temperance and General Mutual Life Assurance Society v Johnson [1933] NZLR 408, CA, on not very different facts, sufficient detriment was established and held to support an estoppel); Stallion v Albert Stallion Holdings (Great Britain) Ltd [2010] 2 FLR 78 (a wife’s failure to pursue ancillary relief) at [132], 104–105: ‘forgoing the certainty of an order of the court is in itself a substantial detriment’; Kelly v Fraser n 27 above, at [17]: ‘A common form of detriment, possibly the commonest of all, is that as a result of his reliance on the representation, A has lost an opportunity to protect his interests by taking some alternative course of action.’; Catchpole v Trustees of the Alitalia Airlines Pension Scheme [2010] ICR 1405 at [42] (a couple choosing to remain unmarried in reliance on a representation that the man would still qualify for a spouse’s pension); and ACG Acquisition XX LLC v Olympic Airlines SA (In Liquidation) [2012] 2 CLC 48 at [156], 92–93 (lessor g­ iving up the right to refuse ­redelivery of aircraft to previous lessee in reliance on new lessee’s certification that it was in proper condition). 204 Hudson v Harrison (1821) 3 Brod & Bing 97; Wing v Harvey (1854) 5 De GM & G 265; Morrison v Universal Marine Insurance Co (1873), LR 8 Exch 197; Manchester and Oldham Bank v AW Cook & Co (1884) 49 LT 674.

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was some prospect of recovering the money, and has rested content with the liability of one from whom recovery is commercially and practically impossible, by reason of his insolvency, escape from the jurisdiction, or otherwise,205 or against whom the remedies available are imperilled,206 or where, even though there is no such impossibility or improbability of recovering the money ultimately, trouble, expense, loss of interest, and delay, in the meantime, are involved,207 as must generally happen where property in possession, or money in hand, or easily and certainly available, is converted into a mere chose in action;208 so also where he

205 Deutsche Bank (London Agency) v Beriro & Co (1895) 73 LT 669, CA: handing over the money to an insolvent foreigner; Dixon v Kennaway & Co Ltd n 202 above: plaintiff let time go by in which she could have hoped to recover from her debtor, who had become bankrupt at the date of the writ; Greenwood v Martins Bank Ltd n 52 above: plaintiff’s failure for eight months to disclose the forgery of cheques had resulted in the bank losing its right of action against the forger, who had committed suicide, was sufficient ‘alteration of position’. In Fung Kai Sun v Chan Fui Hing n 203 above, the delay in imparting the information was only three weeks and, in the circumstances, the necessary alteration in position had not been demonstrated; but it is plain that, if the bank had been ‘materially prejudiced’ by the forger’s disappearance, an estoppel would have arisen. However, it was apparent that such assets as the forger possessed were available to the bank after, as before, the disclosure of the forgery, and it was impossible to show that the disappearance of the guilty party had materially prejudiced the bank’s opportunities of recovery; cf Lovett v Carson Country Homes Ltd [2011] BCC 789 at [104]–[106], 811, where it was held (obiter) that no estoppel arose since B, although never expressly disclaiming its validity, had raised a query about whether he had signed a guarantee. In New Zealand: Re Alexander Eccles Ltd [1935] NZLR 86. 206 As in Fell v Parkin (1882) 52 LJ QB 99 (at 101 per Matthew J: ‘where … the remedy against the person who ought to pay is likely to be imperilled by delay’). 207 It is true that, at 317, 318 of Carr v London and North Western Rly Co n 11 above, Brett J used expressions seeming to indicate that damage which can be ‘rectified’ by legal process against the person liable is not damage sufficient to support an estoppel – a view to which he apparently adhered, when Brett LJ, in Simm v Anglo-American Telegraph Co n 39 above at 211: ‘if between the time when they were put to rest and the time when they resolved to act the broker had become insolvent, they would have suffered damage’. But, as has been pointed out by Channell J at 250 of Compania Naviera Vasconzada v Churchill and Sim n 158 above, these expressions (which were not necessary to the decision in either case) should not be accepted literally, for ‘it cannot be truly said as a general proposition, that a person cannot be prejudiced by having made a payment which he has a legal right to get back from the person to whom he paid it unless it is shown that such person is insolvent. It appears to me that the parting with the money, and consequently the being out of it for a certain period of time, coupled with the trouble and possible legal expense of establishing the legal right to get it back may amount to an acting to the payer’s prejudice sufficient to establish an estoppel against the person in reliance upon whose statement he made the payment’; followed in Martineaus Ltd v Royal Mail Steam Packet Co (1912) 17 Comm Cas 176 at 179, 180 per Scrutton J; see also Meng Leong Ltd v Jip Hong Ltd [1985] AC 511 at 524B–525C, where the Privy Council would not order an inquiry as to damages suffered pursuant to an election and allow the plaintiff to resile from the election on payment of such damages because ‘It is impossible to put the clock back; the damages would be imponderable and any inquiry would inflict on the vendor uncertainty, delay and expense …’; see further 5.50. 208 Similarly, the contention, that X suffers no actionable damages as against Y by reason of Y’s having procured Z to break his contract with, or to commit a wrong against, X, because X has his legal remedy against Z, was disposed of by Brett LJ at 338 of Bowen v Hall (1881) 6 QBD 333.

223

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has been lulled into neglecting the steps necessary for his protection which were provided for in the instrument constituting the agreement between the parties;209 where he has not issued proceedings within a limitation period or applied for an extension of time;210 or where he has not availed himself of a remedy from another source which has become barred.211 It will be noticed that, in all the authorities from which the above illustrations have been taken, the ‘laying to rest’ was of a nature to, and did, result in damage or detriment to A; mere proof of inducement to quietude, without establishing detriment also, is not sufficient.212 5.46 There are, however, authorities to the effect that, if A proves failure to enter negotiations to protect his position or to demand a payment because of the representation or breach of duty, the court will regard the loss of a chance213 of protecting or improving his position as sufficient to establish detriment, without direct evidence that he would thereby have succeeded in protecting or improving his position.214

209 As in Macnaghten v Paterson n 189 above at 493, where it was said to be ‘contrary to equity that the wife, having misled her husband, and induced him to alter his position, and to refrain from taking the steps pointed out by the deed, can now turn round and claim payment of money under an obligation from which, if he had not been put off his guard, he could have relieved himself without trouble or expense, or at the worst at the expense of sending a registered letter to the trustee’; Fairfield Shipbuilding and Engineering Co Ltd v Gardner, Mountain & Co Ltd (1911) 104 LT 288 at 289 per Scrutton J: ‘they undertook to hold the two policies to the order of the plaintiffs, who acted upon their undertaking by abstaining from taking action against the charterers’. 210 The ‘Ion’ [1980] 2 Lloyd’s Rep 245 and cases at 8.14; or has not issued proceedings within the limitation period against the right party: The ‘Henrik Sif’ [1982] 1 Lloyd’s Rep 456 at 463. 211 As in English v English [2010] EWHC 2058 (Ch) at [60], where the failure to seek an indemnity from the Land Registry before releasing a charge over registered land was held to amount to ‘an omission in … reliance [on the claimant’s representations]’. 212 This was insisted upon by Brett LJ at 211 of Simm v Anglo-American Telegraph Co n 39 above: ‘it has been further argued that Burge & Co have been put to rest … Possibly they have been put to rest, but it seems to me that is not sufficient: it must be shown not only that they have been put to rest, but also that they have been damaged by being put to rest’; Stevens and Cutting Ltd v Anderson n 18 above at 97k–m, 99e–f: A must show that he is worse off by his inactivity; see also 5.8. 213 Cf the quantification of damages: Allied Maples Group Ltd v Simmons and Simmons [1995] 1 WLR 1602, CA, in which context the court will not consider loss of a chance in relation to a matter that was within the claimant’s own control (Clerk and Lindsell on Torts (21st edn) [2–71]ff): the same approach should, it is submitted, apply here, so that the court requires proof, on the balance of probability, as to how the estoppel raiser would have acted, but not necessarily as to the result of such action, if affected by factors outside his control, such as the response of third parties. 214 Knights v Wiffen (1870) LR 5 QB 660 at 665 per Blackburn J: ‘If the Plaintiff had been met by a refusal on the part of the defendant, he could have gone to Maris and have demanded back his money, very likely he might not have derived much benefit if he had done so; but he had a right to do it.’; applied in Hammersmith & Fulham LBC v Tops Shop Centres Ltd n 18 above at 260H–261C; Greenwood v Martins Bank Ltd n 52 above, as explained in Fung Kai Sun v Chan Fui Hing n 203 above at 505: ‘If the husband had told the bank sooner [of his wife’s forgery of his name on cheques] the wife might have committed suicide then [as she did when he subsequently told the bank], and if she had done so the bank would have been no better off than they were later. But there could be no certainty that the wife would have committed suicide if circumstances had been different, and as the bank would have been able to avoid loss

224

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Although the legal burden215 lies on A of proving that he has been disadvantaged,216 the court is necessarily speculating on the balance of probabilities,217 and if A establishes that he would have had a real chance218 of protecting or improving his position, and (it is submitted)219 that he would have taken it, the evidential burden may then, it seems, shift onto B of proving (again on the balance of probabilities) that A would not have succeeded. The first task of the court is to determine whether the representation or breach of duty caused the inactivity;220 the second task is, nonetheless, to assess on the evidence available whether, on the balance of probabilities, had the inactivity not been caused, A would be in a better position.221 It should, therefore, be at least necessary to identify what A would have done and prove that he would have done it.222 5.47 It is necessary also to reconcile, on the one hand, the principle that the onus is on A to prove that he will be disadvantaged by his reliance on a representation if B resiles from it, and, on the other, the authorities that A sufficiently changes his position to found an estoppel if he assumes liabilities under an agreement, notwithstanding that he derives countervailing rights under the same agreement as the consideration for his assumption of those liabilities.223 So also, the reliance on a holding out of an intermediary as having authority to contract on B’s behalf, necessary to establish authority by estoppel, is entry into a contract with the intermediary as agent of B:224 the courts have not been invited

if she had not, they lost by the delay a chance of defeating the husband’s claim. This was held sufficient detriment to enable them to plead estoppel.’; Thompson v Palmer (1933) 49 CLR 507; Trenorden v Martin [1934] SASR 340; Foran v Wight (1989) 168 CLR 385 at 436–7 per Deane J; Commonwealth of Australia v Verwayen n 172 above at 422 per Deane J; S & E Promotions v Tobin Bros (1994) 122 ALR 637; loss of a chance to negotiate for a surrender or assignment has been suggested to be the detriment suffered in Central London Property Trusts Ltd v High Trees House Ltd n 93 above by Wilson 67 LQR 330 at 344; Kelly v Fraser n 27 above, at [17]: ‘It is well established that the loss of such an opportunity may be a sufficient detriment if there were alternative courses available which offered a real prospect of benefit, notwithstanding that the prospect was contingent and uncertain.’; cf Lovett v Carson Country Homes Ltd n 205 above at [107], 811–812. 215 See 5.62. 216 See 5.41 onwards. 217 See eg The ‘Wise’ [1989] 2 Lloyd’s Rep 451 at 461 per Mustill LJ; cf Foran v Wright n 214 above at 436–7 per Deane J (contrast Mason CJ at 412–3). 218 Which he did not in the cases at n 281 below. 219 See n 213 above. 220 As to which, see 5.8. 221 See eg Cremer v General Carriers [1974] 1 WLR 341 at 350E–353B especially 352C; 5.51 onwards. 222 Scottish Equitable plc v Derby n 26 above, ChD at 804g; see JP Morgan Chase Bank v Springwell Navigation Corporation [2008] EWHC 1793 (Comm) at [177] (unaffected on appeal); Foran v Wright, n 214 above at 412–3 per Mason CJ. 223 Keith v R Gancia & Co Ltd [1904] 1 Ch 774 at 790; Hammersmith & Fulham LBC v Tops Shop Centres Ltd n 18 above at 261F–262B. 224 Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 at 503; The ‘Suwalki’ [1989] 1 Lloyd’s Rep 511 at 514; The ‘Tatra’ [1990] 2 Lloyd’s Rep 51 at 59.

225

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to e­ xamine whether A will in fact be no worse off if B now denies such authority than it would be if the intermediary had never been held out as an agent. It is submitted, however, that these are examples of proof by A that he has been caused to alter his position in reliance on a representation by undertaking obligations that shift the evidential burden onto B.225 5.48 For it is well established that it is open to B to avoid an estoppel if he can prove that the benefits which have been and will be derived by A from reliance on the representation outweigh the detriment that has been and will be suffered by A if B is allowed to resile.226 If, therefore, B were able to establish that, although they entered into an agreement in reliance on B’s representation, A will still be better off for reliance on that representation than he would be had he not relied on it, even if B is now allowed to deny its truth, then B may say that the detriment required to found an estoppel against that denial is lacking.

Expenditure after receipt of money 5.49 The authorities in which the defence of estoppel has been raised by a recipient of money paid under a mistake to a claim for its recovery by reference to his subsequent dealings remain pertinent to consideration of the requirement of detrimental reliance notwithstanding the development of the alternative defence to such a claim of change of position, governed by the law of restitution.227 The detriment may lie in expenditure: the recipient must, however, have

225 See 5.62. 226 If and to the extent that Hammersmith & Fulham LBC v Tops Shop Centres Ltd n 18 above at 262B suggests that Keith v R Gancia & Co Ltd n 223 above was authority for the proposition that proof by A of assumption of liabilities by (in those cases, granting leases) determined the question of detriment rather than shifted the burden to B in circumstances in which on the facts he could not discharge it, we respectfully submit that it is wrong; and see eg Goldsworthy v Brickell n 94 above, where the rent paid was counterbalanced by the enjoyment of occupation in return therefor; Lee Parker v Izzet [1972] 1 WLR 775 at 781E (benefit of occupation); E & L Berg Homes Ltd v Grey [1980] 1 EGLR 103, CA at 107J, 108E (rent-free occupation); Appleby v Cowley (1982) Times, 14 April; Watts and Ready v Storey (1984) 134 NLJ 631 (rent-free occupation and testamentary gift); Jones v Watkins n 195 above (occupation of agricultural tenancy); Bostock v Bryant (1990) 61 P & CR 23, CA at 32 (rent-free occupation); Lovett v Fairclough (1991) 61 P & CR 385 (free fishing); Baker v Baker (1993) 25 HLR 408, CA at 413–414; Sledmore v Dalby (1996) 72 P & CR 196, CA; Campbell v Griffin [2001] WTLR 981; Jennings v Rice [2003] 1 FCR 501; Clarke v Swaby [2007] 2 P & CR 2 at [18]; Stallion v Albert Stallion Holdings (Great Britain) Ltd n 203 above; Henry v Henry [2010] 1 All ER 988; Fisher v Brooker [2009] 1 WLR 1764 at [11] per Lord Walker of Gestingthorpe; Beaton v McDivitt (1987) 13 NSWLR 162; see further 5.58–5.60; cf Stirling v Bibby (1998) 76 P & CR D36. 227 Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548; Philip Collins Ltd v Davis [2000] 3 All ER 808; Scottish Equitable plc v Derby, CA, n 26 above at [45]–[47], 830g–831c; an estoppel may still arise if a representation as to entitlement to the payment was made: see National

226

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spent in a way he would not have had the money not been received.228 A causal connection must be shown, on at least a ‘but for’ basis, between the receipt and any change of position upon which the recipient wishes to rely, although he need not prove a link to specific identifiable items of expenditure.229 In Skyring v Greenwood230 the connection was presumed.231 In Holt v Markham232 the recipient had invested a substantial sum in a company which had since gone into liquidation, and he could not refund the overpayment: he was not required to give evidence that he would not have invested in the company in any event. However, although reliance may, in appropriate circumstances, be presumed,233 detriment may not,234 so A must show that his position is worse, having received the money and now having to repay it, than it would be had he never received it. He may, nonetheless, establish such detriment simply by showing that he does not have enough money to repay it235 and invoking, if appropriate, the presumption that that is because he relied on the representation that he was entitled to the money. Further, a submission by B that the detriment of expenditure is counterbalanced by the benefit that has been derived by A from the expenditure would be unlikely to find favour, since A should not be deprived of his right to choose whether to spend his money knowing his true financial position, unless the expenditure has simply paid off a debt which could be incurred again or translated A’s money into an equally valuable asset which may be realised without any prejudice to A.236

Damage repaired 5.50 In the previous edition we considered whether – based on the authorities to the effect that A has not suffered the detriment necessary to found an e­ stoppel

Westminster Bank plc v Somer International (UK) Ltd [2002] QB 1286; and see Fung and Ho [2001] RLR 52. 228 United Overseas Bank v Jiwani n 32 above at 968G–969C; Avon CC v Howlett [1983] 1 WLR 605. 229 Scottish Equitable plc v Derby, CA, n 26 above at 827c–828a, [30]–[33] (cited with approval in Test Claimants in the FII Group Litigation v Commissioners for HMRC [2009] STC 254 at [325]–[326], 370 (rev’d on other grounds)); Bloomsbury International Ltd v Sea Fish Industry Authority [2010] 1 CMLR 12 at [135]–[137], 379–382 (rev’d on other grounds). 230 (1825) 4 B & C 281; see also R v Blenkinsop [1892] 1 QB 43. 231 ‘Every prudent man accommodates his mode of living to what he supposes to be his income; it therefore works a great prejudice to any man if, after having had credit given him in account for certain sums … he may be called upon to pay them back.’ per Abbot CJ, as in Tungsten Electric v Tool Metal Mf Co Ltd (1950) 69 RPC 108 at 115 per Somervell LJ (cf [1955] 2 All ER 657, HL); Gordon [1963] CLJ 222 at 253; contrast Stevens and Cutting Ltd v Anderson n 18 above; James v Heim Gallery Ltd n 37 above at 277–8. 232 [1923] 1 KB 504. 233 See n 17 above. 234 See 5.62; Scottish Equitable plc v Derby, ChD, n 26 above at 804g (aff’d by CA). 235 As in Holt v Markham n 232 above. 236 As in Spiro v Lintern [1973] 1 WLR 1002, CA at 1013a–d; United Overseas Bank v Jiwani n 32 above at 968E–F; A’s purchase of a tractor which ‘maintained, if not increased, its value’ in

227

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if the detriment has already been repaired237 or if he can recover his loss from a third party238 ‘without the slightest difficulty’239 – it may be argued that, if B were completely to redress the detriment incurred by A, B might thereby avoid the imposition of an estoppel by removing the prejudice necessary to found it.240 For, in Ex p Adamson241 a creditor of a bankrupt partnership, with the choice of proving against either the joint or separate estates of the partners, proved against the joint estate and received a dividend, but was not estopped from proving against the separate estates provided that he repaid it with interest. Moreover, this argument is also supported by some more recent obiter dicta,242 such as those in Scottish Equitable plc v Derby,243 to the effect that an estoppel will

Jones v Watkins n 195 above; and Scottish Equitable plc v Derby, CA, n 26 above at [35]–[36], 828e–j, where money had been invested in a pension which could be unwound, and in partrepayment of a mortgage debt which could be increased again. 237 Simm v Anglo American Telegraph Co n 39 above at 207 per Brett LJ: ‘… but so soon as Burge & Co had paid off the advance made to them by the National Bank, the Bank was no longer in a position to suffer damage … and no action upon the ground of estoppel could be maintained for its benefit’. 238 Carr v London and North Western Rly Co n 11 above at 317–8 per Brett J: ‘Neither the payment of the warehouse-rent nor of the invoice price can be relied upon as damage resulting from the conduct relied upon to support an estoppel to deny the possession of the goods, because either damage can be rectified without the intervention of such an estoppel: there is no consideration for either payment: both were made under a mistake of facts.’; and other cases cited at n 207 above; cf also Scottish Equitable plc v Derby, CA, n 26 above at [45]–[47], 830g–831c: it is not detrimental to spend another’s money believing it to be one’s own if the other has no right to reclaim it. 239 Per Channell J above in Compania Naviera Vasconzada v Churchill and Sim n 158 above, explaining the limited ambit of Brett J’s dictum: for there to be no detriment, the representation must have brought A a benefit in the form of the right of redress (or otherwise) that is clear, available and of such value as to cancel out the detriment. In the ordinary case, any representee would prefer never to have paid money away than to have a right to sue for its recovery against a solvent defendant; but the distinction may disappear if the third party has already paid or offered to pay satisfactory compensation for a purely financial loss. 240 See Commonwealth of Australia v Verwayen n 172 above at 548, where Mason CJ would not found an estoppel against the other party to litigation on detriment represented by the costs of the litigation, as it might be redressed by an order for costs against the other party; but contrast Free Grammar School of John Lyon v Mayhew (1997) 29 HLR 717, CA at 724. 241 (1878) Ch D 807. 242 See eg Eid v Al-Kazemi (No 3) [2004] EWCA Civ 1811 at [20], where Neuberger LJ accepted that, if B had received a relatively small amount of money under the contract, it could not be right that the court would be completely debarred from saying that, while she should account for the money she had received, she should be entitled to go back on her apparent affirmation; PW & Co v Milton Gate Investments Ltd [2004] Ch 142 at [270], 208A–C. 243 Note 26 above at [45]–[47]; sed quaere, for the reasons set out in Goff & Jones, The Law of Unjust Enrichment (9th edn), at [30–14] to [30–16]. A is entitled to claim the maximum, not the minimum, relief which the law affords him on the facts. The Scottish Equitable argument is diametrically opposed to treating estoppel by representation as a rule of evidence that determines the facts to which the substantive law is then applied, in that it provides that determination of whether an estoppel is available is to take place only after the prior application of a substantive rule of law to allow repair of the detriment. The correct position is submitted to lie between the two, that estoppel is a substantive rule to be applied at the same time as the

228

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not lie if the detriment may be remedied by a remedy in restitution. Such an argument is, however, inconsistent with, and answered by, the authorities establishing that the detriment is not the measure of A’s claim, and an estoppel by representation of fact does not operate pro tanto but bars denial of the relevant fact, save to the extent that B establishes that such absolute preclusion would work an injustice.244 The remedy in proprietary estoppel is also well established not to be limited to the avoidance of detriment.245 By a promissory estoppel, B’s rights are only suspended as far as necessary to protect, so the argument does not affect this result.246 The result of an estoppel by convention is also established not to be necessarily limited to the avoidance of detriment to A by his reliance.247 It is submitted that it would be inconsistent with these authorities establishing that the result of an estoppel is not necessarily limited to the repair of detriment to A for B to be able to avoid an estoppel by offering to repair the detriment to A, and so B may not do so, as opposed to arguing that the result of the estoppel should be affected by the limited nature of A’s detrimental reliance, in order to avoid the estoppel working an injustice between the parties.

The standard against which the detriment is measured 5.51 Whether A has ‘changed his position’ by way of positive change, or merely by refraining from some action which otherwise he would have been at liberty to take, he must be able to show ‘detriment’,248 which is some prejudicial effect upon his temporal interests.249 But it is important to notice that the ‘detriment’ which A must be shown to have suffered is judged only at the moment when B proposes to resile from his representation or rely on facts he failed to communicate in breach of duty.250 It has been pointed out by Dixon J in Grundt

other substantive rules, that A may claim the maximum relief which the law affords him on the facts, but that the result of an estoppel by representation of fact may be moderated from absolute preclusion in order to achieve a just result between the parties: see 1.51. 244 See Greenwood v Martins Bank Ltd (CA) n 52 above at 383–384 per Scrutton LJ; Avon CC v Howlett n 228 above at 611C–G per Eveleigh LJ, 621G–624E per Slade LJ; Scottish Equitable plc v Derby, CA n 26 above at [40]–[44], 829d–830f per Robert Walker LJ; National Westminster Bank plc v Somer International (UK) Ltd n 227 above at [40], 1304B–C per Potter LJ, [53], 1307C–D and [60], 1309B per Clarke LJ and [67]–[68], 1310G–1311D per Peter Gibson LJ; and 5.60–5.66. 245 See 12.181–12.184. 246 See 14.32. 247 See 8.2. 248 Maclaine v Gatty [1921] 1 AC 376 at 386; Greenwood v Martin’s Bank (HL) n 52 above at 57; cases at 5.41–5.42. 249 See 5.42; cf 5.61. 250 Jones v Watkins n 195 above, citing this passage in the third edition; Gillett v Holt n 88 above at 232F per Robert Walker LJ; Southwell v Blackburn [2014] HLR 47 at [12]–[13], 743 per Tomlinson LJ; cf PW & Co v Milton Gate Investments Ltd n 242 above at [238], 200H–201B: ‘… when considering the question of unconscionability in con­ nection with an estoppel by convention, the court must ultimately carry out its assessment by reference to facts and matters known to it at the date of the hearing …’ and [240], 201E–G: ‘… the

229

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v Great Boulder Pty Gold Mines Ltd251 that, in measuring the detriment or demonstrating its existence, one does not compare the position of A, before and after acting upon the representation, upon the assumption that the representation is to be regarded as true. So long as the assumption continues to be regarded by the parties as true, the question of estoppel does not arise, although an equity by proprietary estoppel will arise as soon as A has so relied on B’s representation that it would be unfair for B to change his position.252 The question of detriment is nonetheless generally considered, looking back from when B wishes to disavow his representation or rely on facts he was under a duty to disclose, in the light of the position which A would be in if B were allowed to disavow the truth of the representation or rely on the undisclosed facts.253 5.52 As Denning LJ observed,254 the principles governing this branch of the subject cannot be better put than in the following words of this great Australian jurist:255 ‘The principle upon which estoppel in pais is founded is that the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations. This is, of course, a very general statement. But it is the basis of the rules governing estoppel. Those rules work out the more precise grounds upon which the law holds a party disentitled to depart from an assumption in the assertion of rights against another. One condition appears always to be indispensable. That other must have so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption. In stating this essential condition, particularly where the estoppel flows from representation it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the alteration of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other

correct date on which to assess unconscionability is either the date upon which the penalty would fall due, or the date of the hearing.’; and see further 14.26 onwards. 251 (1938) 59 CLR 641, H Ct of Australia. 252 See 6.9 and 12.172, n 424. 253 This paragraph in the fourth edition was cited with approval in Cadbury Schweppes Plc v Halifax Share Dealing Ltd [2006] BCC 707 at [30], 718. 254 In Central Newbury Car Auctions Ltd v Unity Finance Ltd [1957] 1 QB 371 at 379–380; in Fontana NV v Mautner [1980] 1 EGLR 68 at 72C–73E, Balcombe J, approving the preceding and following paragraphs of this work in its third edition, noted the irony in this citation, and refused to adopt Lord Denning’s other dicta to the effect that detriment is not necessary to found a promissory estoppel. 255 Dixon J in Grundt v Great Boulder Proprietary Gold Mines Ltd n 251 above at 674–675.

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party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original alteration of position will operate as a detriment. His action or inaction must be such that, if the assumption upon which he proceeded were shown to be wrong, and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act a source of prejudice. Thus, when, in Holt v Markham256 the fact that the defendant had spent the money sued for, believing it to be his own to spend, was treated as a sufficient alteration of his position to estop the plaintiff from departing from the assumption which he had induced, the harm or detriment giving rise to the estoppel was that which would be done by requiring the defendant to repay moneys which he no longer had. When a bailee is estopped from denying his bailor’s title to the goods, the detriment on which the estoppel is based is that which would ensue from placing goods in the possession of a person if he were permitted to set up a title to retain the goods or a right to hand them over to a stranger.’

5.53 It is submitted, therefore, that the test of detriment is whether it appears unjust or inequitable that B should now be allowed to deny his representation or assert what he culpably failed to assert, having regard to what A has done, or refrained from doing, in reliance on B’s representation or his own uncorrected belief. This proposition answers the question of which is the true criterion – detrimental reliance by A or change of position by A rendering B’s denial or assertion inequitable – by equating the two. The issue of whether B’s denial or assertion is inequitable is addressed by identifying the effects257 caused by his representation or breach of duty, for which B is answerable, and then asking whether, if B now makes his denial or assertion, the position of A (position 1) will be worse than his position would be had those effects not been caused (position 2).258 5.54 Against this approach, there are authorities and dicta, in the context of promissory estoppel, to the effect that detrimental reliance, as opposed to change of position, is not necessary.259 They suggest that, to found a promissory

256 Note 232 above; but, for a case in which such moneys as were expended, following upon the banker’s misstatement, would have been expended in any case, and consequently it was impossible for the customer to allege detriment, see United Overseas Bank v Jiwani n 32 above. 257 As to which, see 5.4–5.18 and 5.19–5.32. 258 ‘Position’ is here and below used to describe A’s history and future as well as the present: it does not refer only to the specific time at which the court makes its decision. 259 Central London Pty Trust Ltd v High Trees House Ltd n 93 above; WJ Alan & Co Ltd v El Nasr Import and Export Co [1972] 2 QB 189 at 213 per Lord Denning, but not Megaw and Stephenson LJJ; Bremer v Vanden Avenne Izegem [1977] 1 Lloyd’s Rep 133 at 164, col 1, per Mocatta J; in the House of Lords (n 9 above), Lord Salmon, at 127, expressly left this question open; the CA and the rest of their Lordships did not comment on it; Brikom Inv Ltd v Carr n 18 above at 482E–483A per Lord Denning, but not Roskill, Cumming-Bruce LJJ; The ‘Post Chaser’ [1981] 2 Lloyd’s Rep 695 at 701 per Robert Goff J: ‘The fundamental principle is that stated by Lord Cairns [in Hughes v Metropolitan Rly Co n 100 above at 448], viz that the representor will not be allowed to enforce his rights “where it would be inequitable having regard to the dealing which have thus taken place between the parties”. To establish such inequity, it is not necessary to show detriment; indeed, the representee may have benefited

231

5.54  Inducement and reliance; the effect of estoppel as to a fact

e­ stoppel, position 1 need not be worse or more onerous for A than position 2, but need only differ from it such that B’s denial or assertion would be inequitable. It is submitted below, however, first, that the same test of detriment applies to promissory estoppel as to estoppel by representation of fact or by breach of duty to speak, and, secondly, that (if detriment is understood as including relative detriment, where B’s position relative to A has been improved without A’s being worsened) B’s denial or assertion is not inequitable unless there has been detrimental reliance.

A different test for promissory estoppel? 5.55 A difference in treatment, in the authorities mentioned, of the requirement of change of position in relation to estoppel by representation and promissory estoppel might be ascribed to the difference in the gravity of the consequence: whereas the change of position will absolutely bar B from denying to A the truth of the representation,260 the consequence of a promissory estoppel will be moderated in proportion to the inequity against which it is deployed; indeed, unless A cannot resume position 2 for the future, ‘The promisor can resile from his promise on giving reasonable notice … giving the promisee a reasonable opportunity of resuming his position’;261 the estoppel only allows A a reasonable time to resume position B. Nonetheless, it remains difficult to see why it would be unfair or inequitable to resile or rely if the promisee would not thereby be caused detriment.262 5.56 Another inducement towards a different treatment of change of position is the inclination, in the context of promissory estoppel, to disregard the benefit promised in measuring whether the promisee has changed his position so as to render it inequitable to withdraw the promise.263 On this approach, the promisor

from the representation, and yet it may be inequitable, at least without reasonable notice, for the representor to enforce his legal rights’; The ‘Scaptrade’ n 37 above CA (aff’d without ref) at 535B–C per Robert Goff LJ: ‘… since equitable estoppel is founded upon a representation it can only be unconscionable for the representor … to enforce his strict legal right if the conduct of the representee … has been so influenced by the representation as to call for the intervention of equity.’; Shearson v Maclaine [1989] 2 Lloyd’s Rep 570 at 596, 604; Collier v P & M J Wright (Holdings) Ltd n 194 above at [32]–[40], 656C–658H per Arden LJ. 260 This difference perhaps demands a re-examination of the consequence of estoppel by representation of fact or breach of duty rather than different formulations of the requirement of change of position: see 5.63–5.69. 261 Emmanuel Ajayi v R T Briscoe (Nigeria) Ltd [1964] 1 WLR 1326, PC at 1330 per Lord Hodson. 262 The decision in Collier v P & M J Wright (Holdings) Ltd n 194 above is difficult to reconcile with this; the answer may be that the detriment must be sufficient to make resiling inequitable, but we submit that part-payment of a debt on its own should never satisfy this test – see the discussion at n 194 above and 14.28–14.31. 263 See eg WJ Alan & Co Ltd v El Nasr Import and Export Co n 259 above at 213: ‘In none of these cases does the party who acts on the belief suffer any detriment. It is not a detriment,

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Change of position 5.58

has purported to grant or release a right, the benefit already received from which grant or release may outweigh the detriment that will be suffered if the promisor resiles without notice, yet A will still be estopped from resiling without giving reasonable notice to allow the promisee to re-order his affairs. As the promisor intended to confer a benefit, the equilibrium against which detriment is measured allows the promisee to retain so much of that benefit as has so far accrued, and the relief granted does not assure the continuance of the benefit in the future but avoids the loss caused by change of position in the belief that the benefit would continue. However, if the evidence establishes that position 1 is, overall, better than position 2, to refuse to allow the promisor to withdraw the benefit, in effect, because he has purported to confer such a benefit, appears to subvert the doctrine of consideration: relief is granted not because of reliance, but because the purchaser intended to confer a benefit.264 5.57 It is therefore submitted that the approach above should not be followed and that the test of detrimental reliance is the same in the context of estoppel by representation of fact or breach of duty, promissory estoppel, and, indeed, proprietary estoppel. It is to be noted, however, that the relief granted to satisfy a promissory or proprietary estoppel is in the discretion of the court. Other considerations than the pure question of whether there has been detrimental reliance may bear on the exercise of the court’s discretion to determine what relief it is fair to grant in respect of the relevant estoppel, and, indeed, whether any relief should be granted at all.265

Inequity without detriment? 5.58 Since, we submit, it is not inequitable for B to resile or rely if position 1 is different from, but no worse than, position 2,266 then only by ignoring benefits derived by A from acting on a representation or breach of duty, as a

but a benefit to him, to have an extension of time or to pay less, or as the case may be. Nevertheless, he has conducted his affairs on the basis that he has that benefit and it would not be equitable now to deprive him of it.’; for analysis of the detriment to be found in the cases cited by Lord Denning, see Clarke [1974] CLJ 260 at 284–287. 264 In accordance with the view of Lord Denning that the mere fact of making a promise raises an equity against its withdrawal ((1952) 15 MLR 1 at 5); see also Steria Ltd v Hutchison n 18 above at [125], per Neuberger LJ: ‘[Counsel] said that the fact that [A] would not obtain the [expected] benefit … was itself a detriment upon which he could rely for the purpose of establishing his claim in estoppel. In my opinion, that point plainly will not do. If it were correct, the requirement for detriment in a claim for estoppel would be nugatory, because in every case where [A] advances a claim based on estoppel, he will, virtually by definition, be better off if the estoppel is established than if it is not: otherwise he would not be raising an estoppel. The essential point of principle is that [A] must establish relevant detriment’; and Edelman (1999) 15 J Con Law 179 at 189, 195, seeking (in the context of the remedy for an estoppel) to redefine detriment as loss of expectation. 265 See 12.179 onwards and 14.32 onwards. 266 Watts and Ready v Storey (1984) 134 NLJ 631 (proprietary estoppel); provided that this is understood as including relative detriment: see 5.54 and 5.61.

233

5.58  Inducement and reliance; the effect of estoppel as to a fact

c­ ounterbalance against the detriment that will have been and will be suffered if B makes his denial or assertion, would it be possible for a court to regard B’s denial or assertion as inequitable although, overall, there has been no detrimental reliance (viz position 1 is not worse than position 2). That cannot be correct, as such countervailing benefits should not, as a matter of both principle267 and authority,268 be ignored even if B intended to confer them. 5.59 There may be cases in which A has changed his position such that he will, in some respect, be worse off if B resiles or relies than he would be had he not changed his position, although he has derived other countervailing benefits from the representation or breach of duty, but B (onto whom the provisional or ‘evidential’ burden of proof has shifted)269 cannot establish a common measure by which benefits of one order may be set against detriment of another, to determine whether detriment has been suffered overall; if A can then credibly say that he would rather not have had the detriment and countervailing benefits altogether, then the court will found an estoppel upon the detriment without attempting to weigh the benefits against it.270 5.60 Subject to this evidential gloss, however, it is nonetheless submitted that detrimental reliance (viz that position 1 is worse than position 2) is, in general, required to found any estoppel, and account is taken of countervailing benefits.271 As Robert Walker LJ said in Gillett v Holt:272 ‘The overwhelming weight of authority shows that a detriment is required. But the authorities also show that it is not a narrow or a technical concept. The detriment need not consist of the expenditure of money or other quantifiable financial detriment, so long as it is something substantial. The requirement must be approached as part of a broad enquiry as to whether repudiation of an assurance is or is not unconscionable in all the circumstances.’

267 See 5.56. 268 See 5.48. 269 See 5.46–5.47, 5.62. 270 Thus, in United Overseas Bank v Jiwani n 32 above, to establish detrimental reliance, the recipient of a mistaken payment had to prove not just that he had spent the payment, but that he had altered his mode of living in a way he would not have but for a belief that he was richer than he was; conversely, however, the mistaken payer could not argue that the benefits of such high living which the payee had enjoyed would match the detriment of spending the money; contrast REL v EL [1949] P 211 at 217–218 where the court, having regard to the benefits and detriments caused, would not accept that the alleged representee would rather have avoided both. 271 Sledmore v Dalby n 226 above at 204 per Roch LJ, at 209 per Hobhouse LJ; Powell v Benney n 18 above at [30] per Sir Peter Gibson: ‘In my judgment it would offend common sense to leave out of account a benefit received in connection with a detriment when considering the detriment for the purpose of proprietary estoppel’; Fisher v Brooker n 226 above at [11], 1769C–D per Lord Hope of Craighead; Henry v Henry n 226 above at [51]–[53], 999f–1000f; and see Campbell v Griffin n 226 above. See also 14.26 onwards. 272 Note 88 above, at 232D; approved in Fisher v Brooker n 226 above at [63], 1780H per Lord Neuberger of Abbotsbury and Henry v Henry n 226 above at [38]; 996e; this principle was

234

Change of position 5.62

5.61 It is accordingly submitted that the term ‘detriment’ should be broadly construed so as to include what may be termed ‘relative detriment’. In other words, B may be estopped from denying a representation because it is inequitable for B to resile from it, since, although A has suffered no detriment in the strict sense, A is worse off relative to B because B has obtained an advantage273 by the reliance of A on the representation.274

Onus of proof 5.62 The onus of proving detrimental reliance remains throughout on A.275 However, the point may be reached at which, unless further evidence is called by B, A will be found to have discharged the burden of proof276 at which point the

held to apply to estoppels in all categories in Capcon Holdings Plc v Edwards [2007] EWHC 2662 (Ch) at [40]. 273 See HMRC v Benchdollar Ltd n 40 above at [52(v)], [58]–[59] (estoppel by convention); Baynes Clarke v Corless [2009] EWHC 1636 (Ch) at [21] and [24] (aff’d re constructive trusts [2010] EWCA Civ 338 at [37(iv)]); see also constructive trust cases (based on reasoning equally applicable to the doctrine of estoppel) such as Banner Homes plc v Luff Developments Ltd [2000] Ch 372 at 398G–399A per Chadwick LJ: ‘But there may be advantage to the one without corresponding detriment to the other. Again Pallant v Morgan [1953] Ch 43 provides an illustration. The Plaintiff’s agreement (through his agent) to keep out of the bidding gave an advantage to the Defendant – in that he was able to obtain the property for a lower price than would otherwise have been possible; but the failure of the Plaintiff’s agent to bid did not, in fact, cause detriment to the Plaintiff – because, on the facts, the agent’s instructions would not have permitted him to outbid the Defendant. Nevertheless the equity was invoked.’; and see Aker Oil and Gas Technology UK plc v Sovereign Corporate Ltd (5 January 2002, unreported) at [53]; cf Square v Square [1935] P 120, where both parties gained an advantage by their common representation. 274 This paragraph in the fourth edition was adopted by the CA of Singapore in so holding in Lam Chi Kin v Deutsche Bank AG [2010] SGCA 42 (CA Singapore) at [40]; and this and the preceding paragraph were noted without disapproval in ING Bank NV v Ros Roca SA n 193 above at [64], 491D per Carnwath LJ. In Dixon v Blindley Heath Investments Ltd n 40 above at [101], the Court of Appeal also considered the effect of estoppel by convention (see 8.55) in terms of benefit: ‘it will seldom if ever be fair to allow a party who has benefited from the assumption to repudiate it in order to prevent the other party obtaining a like benefit’. 275 Fung Kai Sun v Chan Fui Hung n 203 above at 504–6; Thornton Springer v NEM Ins Co Ltd [2000] 2 All ER 489 at 518i; Eastaugh v Crisp [2006] EWHC 2298 (Ch) at [128] (unaffected on appeal). 276 As in Dixon v Kennaway & Co n 202 above at 839 (following Knights v Wiffen (1870) LR 5 QB 660 at 665 and Foster v Tyne Pontoon and Dry Docks Co and Renwick n 39 above at 55); see also Monarch Motor Car Co v Pease (1903) 19 TLR 148, where the estoppel raiser was issued an inaccurate share certificate after paying for the shares (so payment was made not made in reliance on the certificate) and proved the detrimental reliance that, having rested content in reliance on the certificate, he now had no remedy against his broker as the latter had become bankrupt; it was for the company to show, if it could, that the broker could not or would not, in any event, have given him a remedy between the dates of the certificate and the bankruptcy (rather than for the estoppel raiser to aver that the broker could have); as it did not, detrimental reliance was proved. There was evidence (absent in Fung Kai Sun v Chan Fui Hung n 203 above) of a worsening of the position in that the broker had become bankrupt; that evidence carried the day because the party to be estopped could not show that it did not

235

5.62  Inducement and reliance; the effect of estoppel as to a fact

provisional or evidential burden of proof has been said to shift to B.277 No presumption of detriment arises from proof that a reasonable man would have acted on the representation to his detriment.278 A court will only infer that detriment was suffered without direct evidence279 if that is the only reasonable conclusion on the evidence presented;280 otherwise, A will fail to discharge his burden of proof. The courts are often to be found refusing invitations to infer or assume detriment,281 and will do so if the evidence does not establish at least the loss of a real opportunity by which the estoppel raiser could have improved his position282 which the court accepts, on the balance of probability, the estoppel raiser would have taken. The line between failing to prove detriment283 and proving the loss of such an opportunity284 (as to shift the burden to the other party to show that it would not have had a successful outcome) is often not easy to draw in practice,285 and it has been held that, save in the most exceptional case, the represent a worsening of the position: Greenwood v Martins Bank Ltd n 52 above, explained in Fung Kai Sun v Chan Fui Hung n 203 above at 505; Michaels v Harley House Ltd [1997] 1 WLR 967 at 989F–990C. 277 See Cross and Tapper on Evidence (12th edn) pp 124–127. 278 Stevens and Cutting Ltd v Anderson n 18 above at 97k–m, 99e–f; Steria v Hutchinson n 18 above, at [131] per Neuberger LJ (explaining Lord Denning’s observation in Greasley v Cooke n 18 above, at 1311–1312): the ‘presumption’ is as to the causal link between a material representation and proved detriment, see n 17 above. 279 As opposed to inferring a causal link between proved detriment and a material representation. 280 As in Skyring v Greenwood n 230 above at 289, sed quaere as to the inference made in that case: see 5.49; Silver v Ocean Steamship Ltd [1930] 1 KB 416 at 428, 434–5, 441, as ­discussed in Cremer v General Carriers Ltd [1974] 1 WLR 341 at 350E–353B; Bremer v Vanden Avenne Izegem n 9 above at 127; n 281 below; Shearson Lehman Hutton Inc v JH Rayner (Mincing Lane) Ltd [1989] 2 Lloyd’s Rep 570 at 598, col 1; Je Maintiendrai Pty Ltd v Quaglia (1980) 26 SASR 101. 281 As in Fung Kai Sun v Chan Fui Hung n 203 above at 506: ‘The appellant took no action when he was told of the forgery, and he did not give evidence in this case. In the absence of any explanation from him, and the whole trend of evidence being to show that he would not have taken any action even if he had been told of the forgery earlier, their Lordships are not prepared to assume that he might have done so, and it is only on that assumption that he can have suffered any possible prejudice by the delay.’; Willesden Corpn v Gloss (1962) 185 EG 377 where a landlord failed to estop the defendant from denying that he was the legal assignee of a lease in an action to enforce its repairing covenants although licence to assign had been sought (but never completed), and the defendant had gone into possession, done repairs and paid rent, because the landlord gave no evidence of his belief as to the defendant’s status nor as to what action he might have taken had he known the true state of affairs (cf Official Trustee of Charity Lands v Ferriman Trust Ltd [1937] 3 All ER 85); Finagrain v Kruse [1976] 2 Lloyd’s Rep 508 at 535–6, 542, 546; Industrial Properties Ltd v AEI [1977] QB 580, CA at 597G–H, 601G; The ‘Tatra’ [1990] 2 Lloyd’s Rep 51, where the only detriment was keeping the ship off the market for sale for two weeks and there was not sufficient evidence that the market was weakening to support an estoppel; The ‘Zhi Jiang Kou’ [1991] 1 Lloyd’s Rep 493 (High Ct of Australia); Territory Insurance Office v Adlington (1992) 109 FLR 124 at 131; Chin v Miller (1981) 56 FLR 359; Lovett v Carson Country Homes Ltd n 205 above at [107], 811–812. 282 See 5.45. 283 See 5.42–5.44. 284 See 5.45. 285 In Bristol Cars Ltd v RKH (Hotels) Ltd (1979) 38 P & CR 411 a landlord led its tenant to believe that it would not oppose the grant of a new business tenancy, but 14 months later

236

The consequences of estoppel as to a fact 5.64

inquiry into detrimental reliance is not suitable for summary judgment or strike out.286

THE CONSEQUENCES OF ESTOPPEL AS TO A FACT 5.63 A corollary of the view that estoppel by representation of fact is a rule of evidence287 is that its consequence is simply to preclude B from averring facts contrary to his representation.288 We submit that estoppel by representation of fact is a rule of law, whose result may, accordingly, be mitigated to avoid injustice, but is otherwise such preclusion. By contrast, the relief granted on a promissory or proprietary estoppel is tailored, in the discretion of the court, with respect both to the terms of the representation and to the detriment the estoppel raiser has suffered or would otherwise suffer by his reliance on the representation. The result of an estoppel by convention is accordingly submitted to depend on whether the subject matter of the convention is a fact or a promise, and on whether it is an interest in property.289 5.64 On the traditional view, the damages recoverable by a party who succeeds, supported by an estoppel by representation of fact, may be more than the actual damage suffered by him as a consequence of the representation giving rise to it. This is illustrated by an action290 in which the silence of a customer (in breach of his duty to notify a bank) as to the forgery of cheques led to an estoppel precluding him from denying that they bore a genuine signature; the ultimate result was to recoup to the bank the whole of the moneys which it had

sought to do so, relying on a defect in the tenant’s request for a new tenancy. The landlord was estopped from relying on the defect although, it seems, no direct evidence of detriment was called. Templeman LJ at 420 seems to find detriment in the possibility of the property market, or the tenant’s position as to alternative accommodation, having changed (sed quaere). However, there was also more concrete detriment in that by reason of the delay the landlord had gained a ground for opposing the new tenancy, that it had not previously had, of its intention to rebuild. By contrast, in Stevens and Cutting Ltd v Anderson n 18 above, a landlord had always opposed the grant of a new tenancy but failed to take the point that the tenants’ application was out of time for over two years, leading the tenants to believe that they might be able to negotiate a new lease or succeed in their application if negotiations failed; as the landlord always opposed a new tenancy, the tenants could not, having called no evidence of detriment, ask the court to infer it from the possibility that they might have sought alternative accommodation earlier had they known of the conclusive defect. See also Scottish Equitable plc v Derby, ChD, n 26 above at 808g for a case where loss of an opportunity was insufficient to establish detriment. 286 Clarke v Meadus [2013] WTLR 199 at [87], 219. 287 As to which, see 1.42 and 1.51–1.60. 288 The substance of this proposition and the view that forms its premise were approved, as expounded in the third edition of this work, per Slade LJ in Avon CC v Howlett n 228 above at 622C, with the concurrence of Cumming-Bruce and Eveleigh LJJ. 289 See 8.48–8.49. 290 Greenwood v Martins Bank Ltd (CA) n 52 above; see also Holland v Manchester and Liverpool District Banking Co Ltd (1909) 25 TLR 386; Keith v R Gancia n 223 above at 790.

237

5.64  Inducement and reliance; the effect of estoppel as to a fact

paid out. The only detriment induced by his silence, which rendered it unjust that the customer should correct the bank’s assumption as to the genuineness of the signature, was that the bank, having already paid the cheques, was by its customer’s silence deprived of an opportunity of proceeding against the forger while alive. It is clear that such a proceeding, though it might have yielded some financial result, would probably not have recouped to the bank anything like the whole of its loss; yet by estoppel the bank was able to regain the whole. Scrutton LJ said:291 ‘If the claim of the bank were for damages for failure to disclose, it might be that the improbabilities of recovering anything in the action might be taken into account; but the authorities show that in a question of estoppel, where the question is whether the customer is estopped from alleging that certain bills are forgeries, if the bank has lost something, the value of that something is not the measure of its claim, but, the customer being estopped from proving the bills forgeries, the bank gains by the amount of the bills.’

5.65 So, too, in the earlier judgment of Ogilvie v West Australian Mortgage and Agency Corpn292 it was said: ‘If the true import of the previous findings had been that, by keeping silence and allowing the forger to escape from the colony and the jurisdiction of its courts, the appellant had violated his duty to the bank, their Lordships are of opinion that these circumstances would in themselves have been sufficient to show prejudice entitling the bank to have their plea of estoppel sustained to its full extent, notwithstanding the answer given by the jury to the seventh question. It was argued for the appellant that, under the seventh question, it was open to the jury to find the amount which the forger could have paid under compulsion of law, and to assess the damage sustained by the bank at that sum; and also that the appellant would not have been estopped from alleging forgery of the cheques except to the extent of the damage so found. Their Lordships can only say that, in their opinion, no such finding could have been of the least benefit to the appellant if there had been facts sufficient to raise an estoppel. There are some obiter dicta favouring the suggestion that, in a case like the present, where the amount of the forged cheques is about £1,500, the estoppel against the customer ought to be restricted to the actual sum which the bank could have recovered from the forger. But these dicta seem to refer, not to the law as it was, but as it ought to be; and, in any view of them, they are contrary to all authority and practice.’

5.66 The affirmation of this view by the Court of Appeal in Avon CC v Howlett293 was, however, qualified by their recognition of the possibility that, where an absolute bar would go further than protection of A against injustice, so

291 At 383–384. The decision was later affirmed without reference to the point by the House of Lords, n 52 above. 292 Note 45 above per Lord Watson at 270. 293 Note 228 above at 609G, 611C–F, 622C–624D; noted without disapproval in Lipkin Gorman v Karpnale n 227 above; followed in National Westminster Bank plc v Somer International (UK) Ltd n 227 above; Key [1995] CLJ 525; see also Re Exchange Securities Ltd n 88 above at 56E–G.

238

The consequences of estoppel as to a fact 5.68

as (therefore) to cause injustice to B, the relief may be moderated,294 the burden being on B to prove the injustice so as to moderate the relief afforded to A. In two subsequent cases the Court of Appeal has availed itself of this equitable jurisdiction,295 and is submitted296 to be a welcome development that these authorities recognise a jurisdiction in the court to mitigate the result of an estoppel by representation of fact to avoid injustice. In National Westminster Bank plc v Somer International (UK) Ltd297 this discretion was recognised as inherent in the equitable nature of the doctrine of estoppel by representation of fact.298 We suggest that, on appropriate facts, the equitable defence that A does not come to equity with ‘clean hands’299 may also therefore be available to mitigate or even avoid the effect of an estoppel by representation of fact or an estoppel by convention as well as a proprietary or promissory estoppel. 5.67 The argument for a discretion in the court to moderate the relief granted on an estoppel by representation of fact derives further support from cases in which the effect of an estoppel by representation has been limited by reference to the detrimental reliance thereon. For instance, where a misrepresentation is corrected after A has changed his position in reliance upon it, but before a further change of position by A, and B is suing A in respect of the latter change of position, B will not be estopped from denying the truth of the representation, provided that no injustice is thereby worked in relation to the former alteration.300 5.68 Further, if estoppel by representation of fact were an absolute bar against evidence to contradict the representation, it would follow, as it does not,301 that such an estoppel may be deployed so as to raise such an absolute bar, notwithstanding the availability of an alternative remedy in proprietary estoppel or, in

294 Avon CC v Howlett n 228 above at 609C–D, 611H–612A, 624D–625A. 295 Scottish Equitable plc v Derby, CA, n 26 above at 830f, 831h–j; National Westminster Bank plc v Somer International (UK) Ltd n 227 above; see 1.51 and 1.57; Fung and Ho [2001] RLR 52. 296 See 1.57. 297 Note 227 above at [41]–[43]. 298 See 1.57, 1.83–1.87, 1.99. 299 See 12.139–12.141. 300 Dunston v Paterson (1857) 2 CBNS 495: where the sheriff had a writ to arrest X, and Y said that she was the person named in the writ, Y was estopped from suing the sheriff for the original taking but not in respect of her detention after the sheriff had notice that she was not X; White v Greenish (1861) 11 CBNS 209 at 232, where a representation that another party was entitled to rent, in reliance upon which the tenant paid rent to that party, did not prevent the true landlord from withdrawing the representation and recovering rent that had not been paid to the other party; see also Re a Debtor (No 23 of 1939) [1939] 2 All ER 338 at 343G per Greene MR: ‘… estoppel cannot operate beyond the particular matter to which the words or conduct which give rise to it relate.’; and Dean v Bruce [1952] 1 KB 11 at 14, where a landlord’s representation as to the statutory rent under the Rent Restriction Acts governed the contractual tenancy only but not the supervening statutory tenancy, the statute limiting the effect of the estoppel. 301 See 1.59.

239

5.68  Inducement and reliance; the effect of estoppel as to a fact

another context, of an alternative restitutionary defence of change of position,302 the extent of which alternative remedy or defence is moderated, in the discretion of the court, by reference to A’s injurious reliance.303 Indeed, since a representation as to the existence of rights has been held to be a representation of fact,304 it would follow that A’s detrimental reliance on B’s representation that A has proprietary rights would simply estop B from denying that A has precisely those rights. That is not the case, as the result is in the discretion of the court;305 that response, modulated to do justice, has supplanted the absolute bar. 5.69 These points may also be made in support of identification of the common elements of the reliance-based doctrines of estoppel,306 as to whose result there is in each case an element of discretion,307 albeit, in the case of estoppel by representation of fact, limited to mitigating the result of absolute preclusion of denial of the fact where B establishes that it would otherwise cause injustice. Estoppel, in any form, is a principle of fairness which should be attuned as finely as possible towards achieving fairness, which it is not if it can only preclude B from contradicting his representation.

QUESTIONS OF LAW AND FACT 5.70 In respect of the several probanda discussed in this chapter, the following are questions of law: as regards both materiality and inducement, whether the proved circumstances of the individual case constitute evidence to support these respective allegations; as regards alterations of position and detriment, all questions as to whether there is any evidence of any alteration having been effected, or of any detriment having been sustained of the nature, and in the manner, alleged; as to whether the alleged detriment amounts to what the law regards as detriment; and as to whether there is any evidence of a causal relation between the change of position and A’s belief in the truth of the representation (or A’s belief that B culpably failed to correct).308

302 As to which, see Key [1995] CLJ 525 and articles noted at 528; in Scottish Equitable plc v Derby, CA, n 26 above at 830g–831c, it was considered (obiter) that the change of position defence pre-empts the application of estoppel; see also Lloyds Bank plc v Carrick [1996] 4 All ER 630 at 641c–d where the contract pre-empted the application of a proprietary estoppel. 303 See 1.59 and compare, eg, the findings of Gaudron J in Walton Stores (Interstate) Ltd v Maher n 95 above at 463–4 of an estoppel by representation of fact that an agreement had been concluded, with the finding by the remainder of the High Court of a promissory estoppel. 304 See 2.31. 305 As in Scottish Equitable plc v Derby, CA, n 26 above; National Westminster Bank plc v Somer International (UK) Ltd n 227 above; and see 1.59; Ch 12. 306 See 1.9. Cf Commonwealth of Australia v Verwayen n 172 above per Mason CJ at 411–413, Deane J at 441–443, 445. 307 See 2.5 onwards. 308 See many of the cases cited in the notes to this chapter and, perhaps particularly, Morris v Bethell (1869) LR 5 CP 47; Staple of England v Bank of England (1887) 21 QBD 160 at 173.

240

Questions of law and fact 5.72

5.71 Subject to the above, and subject also to the principle of law that a man is presumed to intend the natural consequences of his statements and acts, all matters connected with inducement, intention to induce, materiality, change of position, and damage, are issues of fact.309 5.72 Though on questions of fact the onus will be upon A, it may happen that the probability of inducement from a given set of facts is so great, or in other words the materiality is so plain and palpable, as to justify a finding of the inducement itself merely from the circumstantial context;310 but it must be remembered that the inference so made is one of fact and not of law.311

309 Cornish v Abingdon (1859) 4 H & N 549; Martyn v Gray (1863) 14 CBNS 824; Seton Laing & Co v Lafone n 11 above; Foster v Tyne Pontoon and Dry Docks Co n 39 above; Ellen v Great Northern Rly Co (1901) 17 TLR 453, CA. 310 Eg Evans v James Webster & Bros Ltd (1928) 34 Com Cas 172 at 178; Silver v Ocean Steam Ship Co [1930] 1 KB 416 at 428; Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723 at 735 (H Ct of Australia); see 5.7. 311 This paragraph was cited with approval in Nationwide Building Society v Lewis n 17 above at 491C per Peter Gibson LJ.

241

242

CH A P T E R 6

Parties to the estoppel

Introduction  6.1 Persons who may raise the estoppel  6.2 The representee or person to whom a duty is owed  6.2 Persons entitled to the benefit of an estoppel on the death or disability of A  6.8 Successors in title of A  6.10 Persons bound by the estoppel  6.14 The person responsible  6.15 Death or disability of the person responsible  6.17 Insolvency of the person responsible  6.20 Successors in title of the person responsible  6.24 Trustees  6.47

INTRODUCTION 6.1 Estoppel being a relationship between two people in which it is unfair that B1 should rely on his rights because A has relied either on B’s representation to the effect2 that he will not exercise those rights, does not have those rights, or will confer inconsistent rights on A, or on B’s culpable failure to disclose the facts or rights he now wishes to assert, the parties to an estoppel are B, the representor (or party owing a duty to speak) and A, the representee (or party to whom the duty is owed). The first task of this chapter is identification of those parties;3

1 2 3

As throughout, denoting the party to be estopped, and ‘A’ the estoppel raiser. In the case of estoppel by representation of fact, the representation is that the facts are such that B does not have the relevant rights. And their agents and representatives who may raise and be bound by an estoppel.

243

6.1  Parties to the estoppel

the second is to address the issue whether the successors in title of the parties to property in which rights are the subject of an estoppel between the parties may raise and be bound by the estoppel.

PERSONS WHO MAY RAISE THE ESTOPPEL The representee or person to whom a duty is owed 6.2 For A to estop by a representation, the onus is on him to show that the representation was made to him, or else that he is entitled to raise the estoppel as representative of the original representee, where, at the date when the estoppel is raised, he has died, or has come under any disability.4 A may, of course, receive a representation by an agent, or a partner, but the principal must still (if he is to raise an estoppel) show that he was, by himself or his agent, actually or presumptively intended to act on it.5 Furthermore, to be a representee, A may be not only any person to whom, or to whose agent, a representation was directly and immediately made, but also any person to whose notice a representation was intended to, and did in fact, come. Such intention may be shown to have been expressed by B, when making the representation, in the form of a request or authority to pass it on; or such intention may be inferred from B’s proved or presumed knowledge that the representation was of such character that, in the ordinary course of business, it would naturally and properly be transmitted to A. 6.3 Determination of whether A, to whose notice a representation has indirectly come, is a representee is, therefore, necessarily subsumed in the application of the further criterion for an estoppel that B must, actually or presumptively, have intended that A should act on the representation.6 This independent criterion for an estoppel – of intentional inducement – may be suggested, therefore, as the criterion also for whether A, to whom a representation has been indirectly communicated, qualifies as a representee: he qualifies if he was intended to act on the representation, or reasonably7 understood himself so to be intended, by B.8 Thus, the test is satisfied in respect of negotiable instruments9 and documents which B should understand will be passed on to subsequent purchasers, such as share certificates,10 4

This onus was not sustained in Doe d Brune v Martyn (1828) 8 B & C 497; Heane v Rogers (1829) 9 B & C 577; Re Moore Bros & Co, Bartholomew’s Case (1898) 67 LJ Ch 677 at 680; Re Foster, Barnato v Foster [1920] 3 KB 306 at 315–316 (non-party to a deed); Manton v Cantwell [1920] AC 781 at 788, 791 (see 6.8). 5 And that B actually or presumptively intended to be responsible for A or his agent so acting: see 5.19–5.32. 6 See n 5 above. 7 In addressing which question, as submitted at 2.12, only such circumstances or limitations as were or should have been in the reasonable contemplation of B should be taken into account. 8 See 5.25; cf 3.19 n 93 and 3.29; see also, Clerk & Lindsell on Torts (21st edn) at [8–93] to [8–129]. 9 See 3.48; 9.52–9.61. 10 Re Bahia & San Francisco Rail Co Ltd (1868) LR 3 QB 584 at 595 per Cockburn CJ: a certificate ‘is a declaration by the company to all the world that the person in whose name the certificate is made out, and to whom it is given, is a shareholder in the company, and it is given

244

Persons who may raise the estoppel 6.4

bills of lading,11 title deeds,12 and delivery orders.13 So also, an original subscriber, but not a subsequent purchaser from such a subscriber,14 who reads a company prospectus or a mini prospectus advertised in a newspaper, is a representee of its contents;15 a domestic householder purchasing his house,16 but not a commercial buyer purchasing expensive property,17 is a representee of his mortgagee’s valuer’s report bearing an express disclaimer; and a purported assignor of a lease cannot rely on a representation that was made by conduct to his purported assignee that the assignment was valid.18 6.4 A representation may be addressed to the public at large or a section of the community. Just as a man, although he cannot ‘contract with the world’, can nevertheless make an offer to the public at large, which, on acceptance by another, becomes a contract between them,19 and just as tortious liability may be founded on a deceitful advertisement in a newspaper,20 so also, B, although not capable of raising an estoppel against himself in favour of the public, or a class, in its entirety,21 can address a representation to the public, or a class, which, if acted upon by a member of that body of undesignated persons to his prejudice, may operate as an estoppel against B in favour of that individual.22 It is submitted that the test whether an effective representation was made should be the same for an estoppel as that in tort. For liability in the tort of negligence on a by the company with the intention that it shall be so used by the person to whom it is given, and acted upon in the sale and transfer of shares.’; Shropshire Union Rlys and Canal Co v R (1875) LR 7 HL 496 at 509; Burkinshaw v Nicolls (1878) 3 App Cas 1004 at 1017; Balkis Consolidated Co v Tomkinson [1893] AC 396 at 403 per Lord Herschell: certificates are intended ‘to be acted upon by the purchasers of shares in the market’; Cadbury Schweppes Plc v Halifax Share Dealing Ltd [2006] EWHC 1184 (Ch); [2006] BCC 707; contrast Longman v Bath Electric Tramways Ltd [1905] 1 Ch 646, CA, where a certificate was said to be prima facie evidence only of the title of the named holder and to found no estoppel against the company: a certificate ‘is only prima facie evidence, and a person who deals with another on the face of only a prima facie title is always liable to find that another and better title may be put forward …’ at 667 per Stirling LJ and at 665–6 per Romer LJ: ‘I do not think that merely because the Plaintiffs found the certificates in the hands of Bennett they were entitled to assume, as against the company, without inquiry of the company, that there had been no dealings by Bennett with the shares, or that the company held out that the owner could give a good title to the shares.’; the certificate certifies ownership only at the date of its issue; see further 9.2–9.17. 11 See 5.38 onwards; 11.81–11.104. 12 See 5.39, Re King [1931] 2 Ch 294; 8.84. 13 Coventry v Great Eastern Rly (1883) 11 QBD 776. 14 Although a purchaser was held to be the representee of a company report in Scott v Dixon (1859) 29 LJ Ex 62n per Campbell CJ: ‘Reports of joint-stock companies, though addressed to the shareholders, are generally meant for the information of all who are likely to have dealings with the company’. 15 Peek v Gurney (1873) LR 6 HL 377 at 411; Andrews v Mockford [1896] 1 QB 372, CA. 16 Smith v Eric S Bush [1990] 1 AC 831. 17 Smith v Eric S Bush n 16 above at 859; Omega Trust Co Ltd v Wright Son & Pepper [1997] 1 EGLR 120 at 122H–J. 18 See Lankester v Rennie [2014] EWCA Civ 1515 at [30] per Kitchin LJ. 19 Eg Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256. 20 Richardson v Silvester (1873) LR 9 QB 34. 21 CIN Properties Ltd v Rawlins [1995] 2 EGLR 130 at 134B (proprietary estoppel). 22 Eg Cropper v Smith (1884) 26 Ch D 700, CA at 705, 713: a deed poll filed for public record; Goode & Bennion v Harrison (1821) 5 B & Ald 147 at 157: ‘holding out’ in partnership cases

245

6.4  Parties to the estoppel

representation, there is a requirement that A be a member of a specific i­ dentifiable class to whom it was addressed. From being a member of the public at large, however, A qualifies himself ex post facto23 as a member of the specific identifiable class to whom the representation was addressed, since the specific identifiable class is defined by entry into the relevant transaction: these are the persons whom, in relation to the relevant transaction, B actually or presumptively intended to influence by his representation. It is submitted that, in case of both tort and estoppel, the true test, in broad terms, is simply whether B actually intended, or was reasonably understood by A as intending, that A should rely on the representation as he did. Of course, A must also prove that the representation came to his attention24 and that he was induced by it.25 6.5 Where a representation is deemed to have been made, not only to the immediate representee, but impliedly to the class of possible transferees from him of the property or rights which are the subject of the representation, any such transferee can enforce the estoppel, even though his transferor (for reasons personal to himself, such as knowledge of the truth sufficient to preclude him from saying that he was induced by the representation to act as he did) could not do so.26 The transferor’s incapacity will not be visited upon the transferee as a presumption of law: the onus is on B to establish the transferee’s incapacity, as a fact, independently of, and in addition to, the transferor’s personal incapacity.27 If this onus is not discharged, the transferee is entitled to the benefit of the estoppel; if it is, he is not.28 It is submitted, notwithstanding authority to the contrary,29 that the converse case of a transferee whose transferor, not being subject to any such disability, could have availed himself of estoppel, but who is himself so (cf Greville v Venables [2007] EWCA Civ 878 at [41]: the estoppel cannot arise between the two parties to the partnership); Lever Finance Ltd v Needleman’s Trustee [1956] Ch 375: a mortgage stating that lessees need not ask if consent to a lease of the property has been given precluded the mortgagee from contending that a lease was void for lack of consent; 3.32; in Commonwealth of Australia v Verwayen (1990) 170 CLR 394, the representations were applicable to all litigating survivors: see Commonwealth of Australia v Clark [1994] 2 VR 333 at 363; cf Matharu v Matharu (1994) 68 P & CR 93: estoppel raised by wife on representation to husband – criticised by Milne (1995) 58 MLR 412. 23

Cf how, in tort, apparently paradoxically, it may not be possible to ascertain whether one owes someone a duty to do something carefully until after the event according to whether he suffers economic or physical loss, because one is responsible to him only for physical loss, as in The ‘Rebecca Elaine’ [1999] 2 Lloyd’s Rep 1 at 9, col 1. If one asks whether one owes a duty to another to act carefully, it may not be possible to answer until one knows how the other is harmed by breach of that duty, since one owes the other a duty to take reasonable care not to cause him physical loss, but no such duty in respect of economic loss. 24 See 5.10 n 28. 25 See 5.4–5.18. 26 As in Burkinshaw v Nicolls (1878) 3 App Cas 1004. 27 Burkinshaw v Nicolls, n 26 above, at 1017, 1018 per Lord Cairns LC, 1020 per Lord Hatherley. 28 As in Re London Celluloid Co (1888) 39 Ch D 190. 29 Re Stapleford Colliery Co, Barrow’s case (1880) 14 Ch D 432; on the basis that the transferor has obtained and therefore could ‘give a good title, not only to people who had no notice but to people who had notice.’ per Jessel MR; doubted in Re London Celluloid Co n 28 above at 197; but followed in Re Railway Timetables Publishing Co (1889) 42 Ch D 98 at 110, and Wilkes v Spooner [1911] 2 KB 473; see 10.15.

246

Persons who may raise the estoppel 6.8

disabled, should be regulated by the same principle: that is to say, the transferee may not use to his own advantage the transferor’s freedom from the objection.30 6.6 In the result, there are two classes of actual representees, viz (i) any person31 to whom, whether by himself, his agent or partner32 the representation was directly made; and (ii) any person, not being a direct representee, whom, specifically,33 or as a member of a class or the public, the representor, actually or presumptively,34 intended the representation to reach and affect and whom it did in fact reach and affect. 6.7 An estoppel may also be raised by (i) any person to whom B breaches a duty to speak,35 and (ii) any person whom B causes to be misled by a breach of duty of care owed by B to him, under the doctrine known as ‘estoppel by negligence’.36 There is, further, in Catchpole v Trustees of the Alitalia Airlines Pension Scheme,37 novel authority for the ability of C, a party who would have benefited from action that A would have taken but for reliance on B’s representation, to estop B from denying it, which may be seen as salutary, for instance, in the case of parents detrimentally relying on a representation that a godparent will leave property to their children.

Persons entitled to the benefit of an estoppel on the death or disability of A Personal representatives 6.8 Speaking generally, on the death or disability of A, the persons who in right of him or his estate would be entitled to enforce any contract made with him may take advantage of any estoppel which would be available to A if alive or free from disability. Thus, on A’s death, his executor or administrator38

30 See 6.10 onwards. 31 Natural or artificial, including the Crown or an Officer of the Crown – Cropper v Smith n 22 above at 712; 7.48 n 211; cf Re Hurst & Middleton Ltd [1912] 2 Ch 520, CA where it was held open to question whether the holding out of someone as a solicitor might confer disciplinary jurisdiction over him on the court; (but see Yorkshire Bank Plc v Hall [1999] 1 All ER 879 at 889e ‘… jurisdiction cannot be conferred by estoppel, any more than by consent.’ per Robert Walker LJ (and cases at 7.43 n 194)). 32 Including such substituted parties as a trustee for a beneficiary: Burkinshaw v Nicholls (1878) 3 App Cas 1004; Simm v Anglo-American Telegraph Co (1879) 5 QBD 188. 33 Eg Martyn v Gray (1863) 14 CB NS 824; Knights v Wiffen (1870) LR 5 QB 660; Re Henry Bentley & Co and Yorkshire Breweries Ltd, ex p Harrison (1893) 69 LT 204, CA. 34 Presumptively because he was reasonably so understood by A: see 5.25. 35 See 3.11–3.26. 36 See 3.27–3.52. 37 [2010] ICR 1405 at [45](ii)–[46]. 38 The approved (see n 39 below) text of the 1923 edition of this work referred also to the ‘heir, or devisee’ which is, it is submitted, no longer appropriate as, since 1926, real property no longer passes to the heir of an intestate, and a devisee, since 1897, takes via the executors,

247

6.8  Parties to the estoppel

succeeds, in this as in any other respect, to the rights that A had at the moment of his death.39 Disability and insolvency 6.9 If A is of unsound mind, or was an infant when the representation was made to him (or when B was under a duty to correct his mistaken belief), his litigation friend may raise any estoppel founded thereon, while A remains of unsound mind, or under age. In cases of insolvency, the trustee in bankruptcy,40 or the liquidator of a company41 may take the benefit of any estoppel created by a representation made to the bankrupt or to the company before the bankruptcy or winding-up order.42 The estoppel arises once A relies on B’s representation or silence in such a way that the court would grant relief, and if B thereafter becomes insolvent the rights thereunder will vest in A’s trustee or liquidator.43

Successors in title of A 6.10 It is submitted that whether a successor to or assignee of property or a contract, in respect of which his predecessor or assignor benefited from an estoppel, may benefit from that estoppel should be determined on the analysis set out in sub-paragraphs 6.11(1)–(4) below, namely, according to (1) the objective construction of the ambit of the intended benefit of a representation upon which the estoppel is based, (2) communication of the representation to the successor or assignee, or (3) creation (by a representation or breach of a duty to speak) of circumstances such that the successor or assignor will make an assumption to the same effect as the representation. rather than directly from the testator: he is not a representative of the testator and cannot enforce the testator’s contracts, but is simply a volunteer successor in title, as to whom see 6.10 onwards. 39

40

41 42 43

These two sentences in the first edition, which then included a reference to estoppel as a rule of evidence, were approved in Mackley v Nutting [1949] 2 KB 55 at 62–3 where the daughter and personal representative of a tenant sustained her deceased mother’s tenancy by estoppel; which was followed in Whitmore v Lambert [1955] 1 WLR 495, CA; see also Skyring v Greenwood (1825) 4 B & C 281; cf Manton v Cantwell [1920] AC 781 at 788, 791, where the widow and executrix could not raise an estoppel as she did not claim under the Workmen’s Compensation Act qua executrix. Parker v Manning (1798) 7 Term Rep 537 at 539 per Ashhurst J: ‘The assignees [in bankruptcy] of the lessor are to all intents and purposes considered in the same situation as the lessor was before his bankruptcy: they succeed to all his rights and are subject to all his equities. There is no reason why the estoppel, that operates as between the lessor and the lessee, should not equally operate between these parties.’; and per Kenyon CJ: ‘… the estoppel must continue as long as the privity of estate continues …’; Stonard v Dunkin (1810) 2 Camp 344; Bensley v Burdon (1830) 8 LJOS Ch 85; Webster v Ashcroft [2012] 1 WLR 1309 at [27], 1314H; Walden v Atkins [2013] BPIR 943. Re Central Klondyke Gold Mining and Trading Co (1899) 5 Mans 336. Cf below at 6.20–6.23 the more difficult question of when they will be bound by an estoppel that would bind the insolvent representor. Webster v Ashcroft n 40 above at [27], 1314H; Walden v Atkins n 40 above.

248

Persons who may raise the estoppel 6.11

6.11 It is submitted that the contrary view of Sir Edward Coke, namely that privies in blood, estate or law of A may take advantage of any estoppel he may raise,44 should now be confined to estoppels by deed and by contract. It is one side of the view that entails that any successor of A as a party to a deed (or contract) may raise the estoppel against other parties and their successors as parties to it. In the only reported modern authority directly in point,45 the majority46 of the Court of Appeal purported to disapprove of Coke’s view and disavowed reliance on the doctrine of estoppel altogether47 but then, in substance, appeared to adopt it, holding B bound against assignees, under the banner of the doctrine of waiver (which, it is submitted, is precisely the same doctrine as promissory estoppel in this context),48 by a representation to the assignor that a right over the property was extinguished, which representation was intended (actually or presumptively) to be passed on to, and to benefit, assignees,49 although it was not actually communicated to one of the assignees.50 No express assignment of the benefit of the waiver or estoppel was necessary. However, in Brikom the representation was not ‘personal’ to A, but was intended to be passed on;51 further, the repairs (for which the landlord sought to charge, having told the original tenants

44

2 Coke on Littleton at 352a–b: ‘To make the reader more capable of the learning of estoppels these few rules, amongst others, are to be knowne. First, that every estoppel ought to be reciprocall, that is, to binde both parties; and this is the reason, that regularly a stranger shall neither take advantage, nor be bound by the estoppel: privies in bloud, as the heire; privies in estate, as their feoffee lessee, etc; privies in law, as the Lords by escheat; tenant by the curtesie, tenant in dower, the encumbent of a benefice, and others that come under by act in law, or in the post, shall be bound and take advantage of estoppels’. 45 Brikom Investments Ltd v Carr [1979] QB 467 where assignees of leases (being, therefore, both the successors in title to property and assignees of the benefit of a contract) took the benefit of an estoppel, against the enforcement by the landlord of a covenant in a lease to pay for repairs, between the landlord and the original tenants; see also Rose v Stavrou [2000] L & TR 133 at 141; Business Environment Bow Lane Ltd v Deanwater Estates Ltd [2007] L & TR 26 at [51], 409. 46 Lord Denning MR alone expressly approved Coke, also describing the estoppel as an equity whose benefit ‘avails the assignees of the tenants also’ (at 485B) and finding that the landlord intended that the representation should be passed on to assignees (at 484G–485A). 47 Roskill LJ at 486G–H and Cumming-Bruce LJ at 490G: ‘I do not see how an assignee can claim the benefit of an estoppel founded on a promise made to somebody else, even though that other person is the assignor who is assigning the unexpired term of the lease’. 48 See 13.6 onwards; 14.2. 49 Roskill LJ held that the waiver extinguished the obligation in the lease before its assignment, shorn of the obligation, to the assignee (at 489A), and Cumming-Bruce LJ held that ‘the landlords’ waiver operated so that the lessees’ obligation to which it related came to an end once and for all’. 50 One assignee, Miss Hickey, had no notice of the representation when she took the assignment, the repairs to her flat having been completed by then (at 477B–C, 484B); the same result might have been achieved in the case by holding that the assignees who received notice of the representation were representees, and Miss Hickey could raise an estoppel by silence or by negligence, the landlord being under a duty to point out to her a liability whose existence it knew her assignor would deny to her, because of the landlord’s representation to the assignor. 51 See 6.2–6.7.

249

6.11  Parties to the estoppel

it would not) to the flat of the only assignee to whom the representation was not communicated had been completed when she took the assignment, so she had no reason to suspect that there was any outstanding liability.52 Had the landlord told the original tenant that it would not enforce the right to charge for repairs to the roof throughout the term of the lease, and the assignee taken the assignment in ignorance of the promise not to enforce a covenant in the lease to pay for such repairs, and the landlord then sought to charge for repairs to dilapidations to the roof occurring after the assignment, although the landlord would be reneging on a promise to the original tenant, there would have been no unfairness between the landlord and the assignee. It is submitted that the landlord would not then have been estopped or bound by a waiver against the assignee. The following analysis may, therefore, be suggested: (1) If a representation, being a representation (whether by promise or representation of fact) to the effect that a right relating to property or under a contract is extinguished or granted, is not construed as being confined in its benefit to A alone, then successors in title to the property or assignees of the benefit of the contract will be within the intention of B, as representees to whom the representation should be passed on. (2) If the representation is passed on to a successor or assignee who relies on it,53 he may then enforce the estoppel as an indirect representee. (3) If there is a representation (including a representation by silence) that is not actually passed on to the successor or assignee, but the making of the representation to the assignor (as B knew or should have expected would happen) causes the assignee to make and rely on a reasonable assumption to the same effect as the representation, then B may be estopped as against the assignee by his failure to prevent or correct the assumption, under an estoppel by silence54 or negligence.55 (4) If, however, B makes a representation to the assignor that is not communicated to the assignee, and either the assignee makes no such assumption, or B is not responsible for the assignee making the assumption, then there is not the necessary unfairness in B relying on his rights as against the assignee to found an estoppel.

52

Had she been liable to the landlord, she might have recovered that liability from the assignor under his implied covenant that all such liability was discharged: s 76(1)(B) of and Sch 2, Pt II to the Law of Property Act 1925; the assignor, in turn, could recover his liability to the assignee from the landlord, thereby completing the circle and defeating the landlord’s claim. 53 Cf EDF Energy Networks (EPN) Plc v BOH Ltd [2010] 2 P & CR 3 at [61], 48–49, in which Edward Bartley Jones QC considered that a tenant of a business lease which had acquired part of the freehold could prevent the holders of the other parts of the freehold from raising an estoppel barring the tenant from denying the validity of a notice served under s 25 of the Landlord and Tenant Act 1954, by evincing an intention not to rely on the estoppel and indicating that it was at an end. 54 See 3.11–3.26. 55 See 3.27–3.52.

250

Persons who may raise the estoppel 6.13

Estoppel by deed 6.12 Estoppels by deed have been held simply to be enforceable by successors in title56 in accordance with Sir Edward Coke’s view,57 founded on the requirement of mutuality. A modern statement of this rationale is that an estoppel by deed has the binding force of an agreement under seal,58 and a successor may enforce the estoppel as a successor to rights under a binding agreement. This reasoning has been held to extend to persons who, by virtue of a deed, take the benefit of a condition or agreement in respect of property under s 56 of the Law of Property Act 1925.59 Proprietary estoppel 6.13 If the representation on which the estoppel is founded was to the effect that A had or would have rights in or over property,60 then the estoppel is a proprietary estoppel, and, as considered below, is itself a proprietary right where it requires for its satisfaction the grant of a proprietary interest.61 If it is a proprietary rather than a personal right (which is to say that it is capable of binding at least some third parties) then one might expect that its benefit should be alienable.62 It has been so held in Australia,63 and the Privy Council has allowed the enforcement of a proprietary estoppel by both an assignee64 and a personal representative65 of the party in whose favour the estoppel originally arose. The question, it is submitted, is whether there is anything in the nature or circumstances of

56

Palmer v Ekins (1728) 2 Stra 817: ‘… though the Plaintiff was an assignee, he might take advantage of the estoppel, for it runs with the land …’ per Lord Raymond; Goldsworth v Knights (1843) 1 M & W 337; Cuthbertson v Irving (1859) 4 H & N 742; aff’d (1860) 6 H & N 135. 57 See n 44 above. 58 See 8.70 and 8.71. 59 OTV Birwelco Ltd v Technical & General Guarantee Co Ltd [2002] 4 All ER 668 at [45]; this was the case even though the other party to the deed, C, would not have been able to raise the estoppel against B, since it related to a statement for which C was responsible: see Greer v Kettle [1938] AC 156 and 8.69 onwards. 60 As opposed to, for instance, a waiver of the benefit of a covenant relating to the property, such as to pay for repairs as in Brikom Investments Ltd v Carr n 45 above, or to pay rent, as in Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130. 61 See 6.35–6.39. 62 The case of a non-assignable tenancy (or, in history, feudal property rights) may be said to show that property is not necessarily and inherently alienable, but such a tenancy is inalienable only by contractual or statutory restriction, and in the absence of such restriction, a tenancy is inherently alienable. 63 Hamilton v Geraghty (1901) 1 SRNSW Eq 81. 64 Plimmer v Wellington Corpn (1884) 9 App Cas 699; see also Munt v Beasley [2006] EWCA Civ 370 and Lester v Woodgate [2010] 2 P & CR 21, in which it appears to have been conceded that an assignee could assert an estoppel by acquiescence to building works; and Joyce v Epsom and Ewell Borough Council [2013] 1 EGLR 21 at [28], 23H, in which the point was conceded at first instance and the Court of Appeal did not allow it to be reopened. 65 Cameron v Murdoch (1986) 63 ALR 575 at 595, affirming [1983] WLR 321 at 360.

251

6.13  Parties to the estoppel

the relevant estoppel that confines its benefit to the original party. Accordingly, whether the benefit of a proprietary estoppel is transmissible may depend on the circumstances of the case, rather than following automatically from analysis of it as an equity that may be satisfied by the grant of a proprietary interest. If the benefit is transmissible, then it seems highly arguable that not only may it be transferred expressly,66 but also a conveyance of an interest in land will carry the benefit of a proprietary estoppel under which the court will enhance or augment that interest, under s 62 or 63 of the Law of Property Act 1925.67

PERSONS BOUND BY THE ESTOPPEL 6.14 It is incumbent on A to establish that B either (i) is the person responsible, having made the representation or breached the duty to speak, or (ii) if that person has died or is under a disability, must, as the representative of that person, stand in his place and be bound by the estoppel, or (iii) is a successor in title of that person against whom fairness demands that the estoppel should lie. Otherwise, there is no estoppel.68

The person responsible 6.15 The person responsible is in law any person69 who personally made a representation or breached a duty to speak, and also any person by whose express, implied or ostensible authority a representation was made70 or, it is submitted, information that should have been was not communicated.

66

Battersby (1995) 7 CFLQ 59 at 63 argues that a transfer of the benefit of a proprietary estoppel requires signed writing under s 53 of the Law of Property Act 1925. 67 Cf Boots the Chemist Ltd v Street [1983] 2 EGLR 51 at 52C–D (transfer of an equity to rectify); the requirement of writing would be satisfied by the conveyance into which the transfer is implied by statute. 68 As in Edmundson v Thompson and Blakey (1861) 31 LJ Ex 207 at 209 per Pollock CB; Heugh v Chamberlain (1877) 25 WR 742 at 743 per Jessel MR; Liverpool & North Wales SS Co v Mersey Trading Co Ltd [1909] 1 Ch 109 at 217 per Farwell LJ. 69 The term ‘person’ for this purpose comprises not only natural but also artificial persons, such as a corporation: see eg Roberts & Co v Leicestershire CC [1961] Ch 555; Crabb v Arun DC [1976] Ch 179, CA; Salvation Army Trustee Co v West Yorkshire CC (1980) 41 P & CR 179. 70 So, the principal, master or partner may be estopped by representation made within the authority of his agent, servant or partner respectively: see eg Provincial Insurance Co of Canada v Leduc (1874) LR 6 PC 224; Horsfall v Halifax & Huddersfield Union Banking Co (1883) 52 LJ Ch 599 at 602; Hough v Guardian Fire & Life Assurance Co (1902) 18 TLR 273 at 274; Cresswell v Jeffreys (1912) 28 TLR 413 where a landlord would have been estopped by his bailiff’s statement had it been a representation of fact; Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890: agency to make representation was not proved; Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2002] 2 All ER (Comm) 896 at [68] (waiver); Ocean Pride Maritime Ltd Partnership v Qingdao Ocean Shipping Co (The Northgate) [2008] 2 All ER (Comm) 330 at [108] (waiver); Lloyd v Sutcliffe [2007] 2 EGLR 13 at 18; Briggs v Gleeds [2015] Ch 212, where this passage in the fourth edition was cited with approval at [50], 234E and a representation of law made by an administration

252

Persons bound by the estoppel 6.17

6.16 The Crown, regarded simply as a corporation sole, is amenable to the law of reliance-based estoppel in the same way as any other corporation sole,71 but the rule than an estoppel may not result in illegality72 prevents an estoppel both legitimising action that is ultra vires the relevant governmental body or person73 and depriving that person or body of a discretion which it is under a statutory or constitutional duty to exercise in the public interest.74 For this reason, it is submitted, the Crown is not estopped by the representation of a civil servant, even acting within the scope of express authority from his own department, if that department lacks the necessary authority to deal with the particular subject matter involved.75

Death or disability of the person responsible 6.17 If B has died, his executor or administrator is estopped by the representation to the same extent as he would have been.76 company to the employer was held not to estop pension fund trustees because the company, which also provided services to the employer, was not acting on the trustees’ behalf in making the representation; Fielden v Christie-Miller [2015] WTLR 1165 where it was held that a representation made by one trustee of a (non-charitable) trust without authority from the others could not give rise to an estoppel (followed in Preedy v Dunne [2015] WTLR 1795 (upheld on a different point [2016] EWCA Civ 805)); also cf Ismail v Polish Ocean Lines [1976] QB 893, CA, where an agent of a charterer at the ship’s side had no actual authority to waive a contractual condition, with Toepfer v Warinco AG [1978] 2 Lloyd’s Rep 569, where the buyers’ agents did not; Boliden Ore and Metals Co v Dawn Maritime Corpn [2000] 1 Lloyd’s Rep 237; Vestergaard Frandsen A/S v Bestnet Europe Ltd [2013] 1 WLR 1556 at [34], where Lord Neuberger sets out the features required for a common design; Hoare v McCarthy (1916) 22 CLR 296; W Australia Ins Co Ltd v Dayton (1924) 35 CLR 355; see further 3.27–3.52, especially 3.29–3.31, on estoppel by negligence, for the limits of accountability for representations of another; cf also Lloyds Bank plc v Independent Insurance Co Ltd [1998] 1 All ER (Comm) 8 where, although the principal might be bound by an estoppel, having held the bank out as authorised to make a payment, that did not mean that the bank was so bound. 71

A-G of Victoria v Ettershank (1875) LR 6 PC 354; Davenport v R (1877) 3 App Cas 115, PC; Plimmer v Wellington Corpn (1884) 9 App Cas 699, PC; A-G to the Prince of Wales v Collom [1916] 2 KB 193 (per Atkin J at 204); Langdon v Richards (1917) 33 TLR 325, DC; R v Paulson [1921] 1 AC 271, PC; Orient Steam Navigation Co v R Crown (1925) 21 Lloyd’s Rep 301; Canadian Pacific Rly Co v R [1931] AC 414; see also 7.36 n 155; and cf Spencer Bower & Handley on Res Judicata (4th edn) [9–24] to [9–26]. 72 See Ch 7. 73 Eg Minister of Agriculture & Fisheries v Matthews [1950] 1 KB 148; see 7.48–7.55. 74 Eg Western Fish Products Ltd v Penwith DC [1981] 2 All ER 204; see 7.48–7.55. 75 Thus, when in Robertson v Minister of Pensions [1949] 1 KB 227, KBD, Denning J held the Ministry of Pensions estopped by a letter – certainly very specific in its terms – written by a high official in the War Office, conceding that the claimant’s injury was attributable to military service, the dicta on this point in his decision were criticised in the House of Lords in Howell v Falmouth Boat Construction Ltd [1951] 2 All ER 278 at 280 per Lord Simonds, 284–5 per Lord Normand, on the ground that the Department employing the officer writing the letter had no statutory authority to deal with the grant of a pension at all; see further Ch 7. 76 The following representatives (and see n 38 above as to heirs and devisees) of deceased persons were, or would (but for want of some other element necessary for an estoppel) have been, estopped from disputing a representation of the deceased: the heir, in Wilkes v Leuson (1558)

253

6.18  Parties to the estoppel

6.18 The position of a minor, as regards contracts made by him during his minority, is strongly entrenched behind both common law and statutory rules for his protection.77 It is a corollary of these rules that a representation of a minor may not estop him, where such estoppel would deprive him of this protection against liability on his contracts.78 Where, however, the representation was made on behalf of the minor by his guardian, or litigation friend, or other person legally competent to bind him by such representation, the minor, on attaining his majority, or the person making the representation on his behalf until then, as the case may be, is liable to be estopped thereby.79 6.19 Similarly, the position of a person of unsound mind, as regards estoppel, is regulated by his position in reference to contracts. Just as a contract made by a person when insane is binding upon him as against a party who had no knowledge of his insanity, but not against one who had such knowledge at the time of the contract, so a representor of unsound mind at the date of the representation, though not estopped thereby as against a representee who had notice of his insanity, is estopped as against one who had none; and, in the case of a continuing representation, where B, though sane in the first instance, becomes insane during the continuance of the representation, he is equally estopped by any subsequent representation during such continuance if, and so long as, A remains ignorant of such supervening insanity.80

2 Dyer 1690; Doe d Williams v Lloyd (1839) 5 Bing NC 741; devisees, and other real representatives, in Beaufort (Duke of) v Patrick (1853) 17 Beav 60 at 78, 79 per Romilly MR; Re Anderson, Pegler v Gillatt [1905] 2 Ch 70; executors, in Young v Raincock (1849) 7 CB 310; Phillpotts v Phillpotts (1850) 10 CB 85; Yeomans v Williams (1865) LR 1 Eq 184; Maddison v Alderson (1883) 8 App Cas 467; Bentinck v London Joint Stock Bank [1893] 2 Ch 120; Bell v Marsh [1903] 1 Ch 528, CA; Coughbrough v Craig (or Muir’s Executors v Craig’s Trustees) 1913 SC 349; Re Tchihatchef v The Salerni Coupling Ltd [1932] 1 Ch 330 at 345; Jones v Jones [1977] 1 WLR 438; and administrators in Allen v Wood (1834) 1 Bing NC 8; Middleton v Pollock, ex p Wetherall (1876) 4 Ch D 49. 77

See the Minors’ Contracts Act 1987; Chitty on Contracts (31st edn) Ch 8; and Häcker, Minority and Unjust Enrichment Defences in Dyson et al ed, Defences in Unjust Enrichment (2016) at 195ff. 78 So, he cannot be estopped from denying his fraudulent representation as to his age, although it induced the other party to make the contract: Levene v Brougham (1909) 25 TLR 265; Leslie v Sheill [1914] 3 KB 607 (contrast Savage v Foster (1723) 9 Mod Rep 35 at 37: estoppel by silence amounting to ‘an apparent fraud’ in which case ‘infancy and coverture shall be no excuse’; and Wright v Snowe (1848) 2 De G & Sm 321, both cases pre-dating statutory protection for minors); if, however, the representation was fraudulent, it is arguable that A may have a remedy in restitution provided that he does not thereby enforce the contract: see Chitty on Contracts (31st edn) [8–050], Goff & Jones: Law of Unjust Enrichment (9th edn) Ch 24; Watts v Cresswell (1714) SC 2 Eq Abr 515; Cory v Gertcken (1816) 2 Madd 40 at 51; Re King ex p Unity Joint Stock Mutual Banking Association (1858) 3 De G & J 63; Stocks v Wilson [1913] 2 KB 235. Here, as in relation to a change of position after payment of money, the law of restitution provides a more responsive instrument for addressing the issue than the doctrine of estoppel. 79 See Mills v Fox (1887) Ch D 153 at 167; Neale v Electric and Ordnance Accessories Co [1906] 2 KB 558; Cribb v Kynoch Ltd [1908] 2 KB 551. 80 See Drew v Nunn (1879) 4 QBD 661 at 668.

254

Persons bound by the estoppel 6.20

Insolvency of the person responsible 6.20 The conflict in the authorities as to the enforceability of an estoppel against a liquidator or trustee in bankruptcy arises from the difference in perspective of viewing him as representative of the bankrupt or company on the one hand, and as representative of his or its creditors on the other. Insofar as he stands in place of the bankrupt or company, the trustee81 or liquidator82 will be estopped by any representation made by the bankrupt or company prior to the insolvency. The trustee or liquidator’s title to the property of the bankrupt or company is no better than that of the bankrupt or company, and he takes the property of the bankrupt or company subject to equities.83 On the other hand, insofar as he represents the creditors, who would not be estopped by any representation made by the bankrupt or company to a third person without their privity or knowledge, the trustee or liquidator is not estopped. So, the court will not bind the trustee or liquidator to a representation made by the bankrupt or company with a view to seeing one creditor paid in unfair priority to the others;84 nor may the trustee or liquidator be estopped from performing his statutory duty to consider the bankrupt’s or company’s ‘true liabilities’ (which is contrasted with those fictitiously established by estoppel), and to distribute the estate accordingly.85

81

82

83

84

85

Shaw v Picton (1825) 4 B & C 715; Freeman v Cooke (1848) 2 Exch 654 (the contrary was not argued); Jolly v Arbuthnot (1859) 4 De G & J 224 (tenancy by estoppel binds trustee in bankruptcy of tenant); Edmonds v Best (1862) 7 LT 279; Morton v Woods (1869) LR 4 QB 293 (tenancy by estoppel binds trustee); Harris v Truman (1882) 9 QBD 264 at 274 per Brett LJ: ‘and, as he would have been estopped, his Trustee in Bankruptcy, who is suing upon the relation between him and the defendants, is just as much estopped as he was.’; Madell v Thomas & Co [1891] 1 QB 230 at 238 per Kay LJ: ‘but, assuming that there is an estoppel between the original parties, nothing is clearer than that on general principles a Trustee in Bankruptcy or an execution creditor would be bound by it just as much as the bankrupt or execution debtor himself.’; Re Central Klondyke Goldmining and Trading Co n 41 above; Re Ashwell [1912] 1 KB 390 at 392 per Phillmore J: ‘No doubt when a bankrupt is estopped by some representation of his made in the course of carrying on his business his trustee who takes his estate would be, just as much as an executor, bound, quo ad the estate, by the representation and be estopped.’; Re William Porter & Co [1937] 2 All ER 361; Re Sharpe [1981] 1 WLR 219 (proprietary estoppel); see also election cases at 7.42 n 191. Re Hercules Insurance Co, Brunton’s Claim (1874) LR 19 Eq 302; Burkinshaw v Nicholls (1878) 3 App Cas 1004 at 1021–2 per Lord Hatherley, 1026–7 per Lord Blackburn; Re ­Stapleford Colliery Co (Barrow’s case) n 29 above; Re London Celluloid Co n 28 above at 205 per Bowen LJ (had there been an estoppel against the company); Bloomenthal v Ford [1897] AC 156. Re Scheibler (1874) 9 Ch App 722 at 726 per James LJ; Re Clark [1894] 2 QB 393 at 410 per Davey LJ; Williams & Muir Hunter on Bankruptcy (19th edn) (1979) passim; Sonenco (No 77) Pty Ltd v Silvia (1981) 24 FCR 105; Re Goldcorp Exchange Ltd [1995] 1 AC 74, PC at 94E–F per Lord Mustill: ‘… the Trustee in Bankruptcy or Personal Representative … is as much subject to the personal claims of third parties against the insolvent as he is entitled to the benefit of personal claims of which the insolvent is the obligee’. Battersbee v Farrington (1818) 1 Swan 106 at 113; Jones v Yates (1829) 9 B & C 532 at 540 per Tenterden CJ: ‘the Court will not allow a “fraud” on the bankrupt laws’; Heilbutt v Nevill (1870) LR 5 CP 478; Ex p Kibble (1875) 10 Ch App 373; Re Holland [1901] 2 Ch 145 at 158–9; Re Ashwell [1912] 1 KB 390; Re Evans [1916] HBR 111. Re Van Laun [1907] 2 KB 23, CA; London and Westminster Bank v Button (1907) 51 Sol Jo 466; Re Pilet [1915] 3 KB 519; Re A Bankruptcy Notice [1924] 2 Ch 76 at 97; Huddersfield

255

6.21  Parties to the estoppel

6.21 The difficulty is that any estoppel is raised against the trustee or liquidator in both capacities: it bars a claim by him or advances a claim against him, thereby reducing the amount in the insolvent estate available for distribution between the creditors. On one view,86 the liquidator or trustee is bound by estoppels that lay against the bankrupt or company when seeking to recover assets or money for the statutory estate,87 but a creditor may not raise an estoppel against the liquidator or trustee to increase or establish a claim against the statutory estate, because the liquidator or trustee may not be estopped from performing his statutory duty to distribute the estate having regard to the true liabilities of the debtor.88 This distinction between defeating a claim by the insolvent estate and establishing a claim against the insolvent estate by estoppel is, however, open to criticism, in that the trustee or liquidator is as much under a duty to get in the estate as to distribute it, and both estoppels have an equal effect on the ultimate size of the estate available for distribution between creditors: for instance, a claim against the estate may enure because a claim that might be set off against it by the liquidator or trustee is barred by estoppel. Further, if the bankrupt or company was estopped from denying that a third party was its agent to order goods or services, it would seem harsh if the liquidator or trustee was not also estopped from denying liability for the price of the goods or services ordered by the third party for the bankrupt or company;89 yet the creditor would thereby have established by estoppel a claim against the statutory estate, reducing the amount available for the other creditors; so also, if the claimant takes advantage of a waiver or promissory estoppel in enforcing a contractual liability against the insolvent estate. 6.22 It is, however, well established that a liquidator or a trustee in bankruptcy may go behind not only estoppels but also judgments, covenants and agreed accounts to establish whether a claim against the insolvent estate is a ‘true liability’:90 so, the trustee or liquidator will reject proofs of debts fabricated by

Fine Worsteds Ltd v Todd (1926) 134 LT 82; Re Exchange Securities Ltd [1988] 1 Ch 46; Re Harvard Securities Ltd [1997] 2 BCLC 369 at 385b–386c; cf Richards v Johnston (1859) 4 H & N 660, Richards v Jenkins (1887) 18 QBD 451, CA (execution creditor not bound by representation of execution debtor). 86

Re Exchange Securities Ltd n 85 above at 59F–60A and compare that case (distribution) with Shaw v Picton n 81 above (recovery). 87 As in eg Jones v Yates (1829) 9 B & C 532; Harris v Truman n 81 above; Bloomenthal v Ford n 82 above; Edmunds v Best (1862) 1 New Rep 30; Re Ashwell [1912] 1 KB 390; Re William Porter & Co [1937] 2 All ER 361; Re Sharpe n 81 above. 88 London & Westminster Bank v Button n 85 above; In Re Van Laun [1907] 2 KB 23, CA; Re Exchange Securities Ltd n 85 above; Re Harvard Securities Ltd n 85 above at 386a–c; 7.49. 89 In Cooke & Sons v Eshelby (1887) 12 App Cas 271 the trustee in bankruptcy would have been bound by estoppel if it had been established against the bankrupt that he allowed the agent to hold himself out as a principal. 90 ‘The trustee’s right and duty when examining a proof for the purpose of admitting or rejecting it is to require some satisfactory evidence that the debt on which the proof is founded is a real debt. No judgment recovered against the bankrupt, no covenant given by or account stated with him, can deprive the trustee of this right: he is entitled to go behind such forms to get at the truth, and the estoppel to which the bankrupt may have subjected himself will not prevail

256

Persons bound by the estoppel 6.24

collusion of the debtor.91 Yet, it may be argued, liability consequent on an estoppel which a creditor seeks to found on substantial detriment incurred in reliance on the bankrupt’s or company’s misrepresentation is qualitatively indistinguishable from any other ‘true liability’; this argument entails recognition of estoppel as a substantive rule of law based on fairness, as opposed to an evidential rule that precludes ascertainment of the truth.92 6.23 It is submitted, therefore, that the trustee or liquidator, although not bound to adhere to the fiction imposed93 on the bankrupt or company by an estoppel by representation of fact,94 should have to accept liability for the detriment incurred by the creditor on which the estoppel would be founded,95 if not also the value of such discretionary relief as the court would grant in respect of that detriment96 having regard to all the circumstances, including the insolvency; the discretionary measure of the relief does not, it is submitted, render the liability to an award of such relief any less a genuine liability than, for instance, tortious liability in damages. It may be argued that, in the case of an insolvency, the court would, in any event, limit the value of the relief to that of the detriment suffered; but, on the other hand, where, for instance, as against the bankrupt or company, an agency is established, or a contractual liability extinguished, by estoppel, it may be that the court would simply hold the agency or extinction binding on the trustee or liquidator.

Successors in title of the person responsible Contractual assignees 6.24 It is submitted that an assignee of the benefit of a contract is bound by any estoppel binding on his assignor as to his rights under the contract. An assignee, under a valid assignment of contractual rights, clothes himself in the rights of his assignor against the other contracting party. Those rights are obligations against [the trustee].’: Re Van Laun [1907] 1 KB 155 per Bigham J, approved [1907] 2 KB 23 at 30, 31; ‘A liquidator may properly reject a proof of debt if the liability, though enforceable against the company, is not a true liability of the company, but is founded merely on some act or omission on the part of the company which unjustly prejudices the interests of the creditors or contributories in the assets available for distribution’: Tanning Research Laboratories Inc v O’Brien (1990) 169 CLR 332 at 339 per Brennan, Dawson JJ. 91 See n 84 above. 92 See 1.51 onwards. 93 See 5.63–5.69. 94 So, in Re Exchange Securities Ltd n 85 above, the liquidator was not estopped from denying the truth of the insolvent company’s representation, upon which the creditor had detrimentally relied, as to the amount of the debt owed to the creditor by the company. 95 In respect of which it should, in any event, be possible to formulate a tortious or restitutionary claim. 96 Under the doctrines of promissory or proprietary estoppel; although the creditor may not thereby establish proprietary rights against the insolvent estate binding on other creditors without notice of the estoppel: Re Sharpe n 81 above at 223, 224; Re Harvard Securities Ltd n 85 above at 385b–386a.

257

6.24  Parties to the estoppel

undertaken by the other party towards the assignor; they exist as incidents of a specific relationship between the original contracting parties. To assume those rights, the assignee must, therefore, step into the shoes of the assignor in that contractual relationship. Since what he takes exists only in that relationship, he can take no more than his assignor had. Accordingly, he takes ‘subject to the equities’97 as between the original parties, including, it is submitted, any estoppel that affects that contractual relationship. Although contractual rights, as choses in action, are themselves a form of property, the position of a contractual assignee may be distinguished from that of the purchaser of other forms of property, as he deliberately steps into the shoes of a party to a particular contractual relationship. He assumes the identity of his assignor in that relationship, and is subject to the estoppels against him unless, of course, the other party is estopped by his own language, silence, conduct or negligence98 from denying the proposition that there are no such adverse equities.99 This argument throws on the purchaser the risk that the rights between the original contracting parties are not as they appear on the face of the contract, if he does not check with the other party to the contract. Landlord and tenant 6.25 If, as suggested above, the position of an assignee of contractual rights, being in personam rights against another specific contracting party, is distinct from that of the transferee of an interest in real or personal property, being a bundle of rights in rem, then the position of an assignee of a tenancy, or the reversion on a tenancy, bears examination, since he is both an assignee of a contract, and a transferee of property.100 Representations or conventions as to title 6.26 The position is well established on authority as to conventions or representations of the original landlord and tenant as to title. An estoppel by convention or representation101 as to a landlord’s title to grant a lease is binding on all successors to the tenancy102 and the reversion,103 including bona fide purchasers 97

Ord v White (1840) 3 Beav 357; Mangles v Dixon (1852) 3 HL Cas 702 at 731; Bay of Plenty Electricity Ltd v Natural Gas Corporation Energy Ltd [2002] 1 NZLR at [45]–[48]; Chitty on Contracts (31st edn) [19-070]; but cf Stoddart v Union Trust Ltd [1912] 1 KB 181 (criticised in Treitel on Contract (13th edn) at [15–041]). 98 ‘The Odenfeld’ [1978] 2 Lloyd’s Rep 357; see 3.34. 99 See Mangles v Dixon n 97 above; Re Hercules Insurance Co (1874) LR 19 Eq 302; Bibby Factors Northwest Ltd v HFD Ltd [2015] EWCA Civ 1908; 3.16 n 67 and 3.21 n 104. 100 See eg Ingram v IRC [2000] 1 AC 293 at 304B; Bruton v London and Quadrant Housing Trust [2000] 1 AC 406 at 413D–F, 415A–B. 101 See First National Bank plc v Thompson [1996] Ch 231 and Prichard (1964) 80 LQR 370 as to the differences between the two forms of estoppel as to title; and further 8.92–8.94. 102 Taylor v Needham (1810) 2 Taunt 278; Doe d Bullen v Mills (1834) 2 Ad & El 17; Cooper v Blandy (1834) 1 Bing NC 45. 103 Webb v Austin (1844) 7 Man & Gr 701 at 726–8; Doe d Gaisford v Stone (1846) 3 CB 176; Cuthbertson v Irving n 56 above, where the tenancy by estoppel was held enforceable by the

258

Persons bound by the estoppel 6.28

for value without notice of the transaction.104 This is consistent with their position as contractual assignees105 (and, as such, applies equally to licensors and licensees)106 but as a lease or a reversion is a proprietary right, it is necessary to examine whether this position can be reconciled with the general proposition, advanced below in relation to successors to property, that an estoppel will not bind a successor to property who is a bona fide purchaser for value without notice. 6.27 At first sight the assignees appear to be treated as assignees of the benefit of a contract, rather than as successors to a proprietary interest, in relation to title as well as the covenants in the lease (which latter must be governed by the contractual rule), in that even a bona fide purchaser for value without notice is automatically bound. However, it is submitted that one may allow that an estoppel by representation as to title made in a purported grant of a lease will bind a successor without notice, without violation of the general proposition advanced below107 in relation to successors to property that an estoppel will not bind a successor who is a bona fide purchaser for value without notice, by reason of the following considerations particular to the case of an estoppel by representation as to title. 6.28 In the first place, the successors of the purported lessee will always have notice of the purported grant, since the tenancy purportedly granted is that to which they succeed, and without it there would be nothing to which they could have succeeded. The lessee’s assignee will never, therefore, be ‘without notice’. Secondly, as against the landlord’s successor, if the estoppel has not been fed prior to the assignment to the successor,108 the issue of whether the successor is bound is inevitably determined against the successor under the ordinary law of priorities. For an estoppel to arise, the landlord must have purported to grant more than he had. If he had no title whatsoever, and acquires none so as to feed the estoppel, then there is nothing to which a successor could succeed. If he had title, but inadequate to support the grant, then he will have actually granted something: not all that he purported to grant, but such an interest as his inadequate title could support. It follows that, if there has been no subsequent feeding of the estoppel, the interest he has actually granted must be of at least the same order, in terms of priority, as any he can pass to a successor. The interest actually granted to the grantee will always, therefore, bind the successor by virtue of its priority in time under the ordinary rules of priority.

lessor’s assignee – but, if enforceable by him, it must also have bound him; Mackley v Nutting n 39 above at 62; Hammersmith London Borough Council v Tops Shop Centres Ltd [1990] Ch 237 at 258H; Mitchell v Watkinson [2013] EWHC 2266 (Ch) at [43]. 104 First National Bank v Thompson [1996] Ch 231 at 239D–E. 105 As set out at 6.24. 106 See Couper v Albion Properties Ltd [2013] EWHC 2993 (Ch) at [497], [502]. 107 See 6.35–6.39. 108 If the estoppel has been fed, then the title acquired on the feeding of the estoppel binds the successor: see 9.47 onwards.

259

6.29  Parties to the estoppel

6.29 On this analysis, it would be anomalous if the prior interest of a tenant under a grant from a landlord with inadequate title were pregnant with the possibility that it will be fed by acquisition by the successor to the grantor of an interest sufficient to support the purported grant, such that the landlord’s successor will be bound by the full interest purportedly granted by his predecessor, although he purchased in good faith without notice of it. If that is the law, however, then it is an incident of the doctrine of feeding the estoppel peculiar to estoppels as to title, and it does not, therefore, register on the wider issue as to whether an estoppel binds a successor in title without notice. In any event, it is submitted that the authorities are not conclusive as to whether an estoppel may be fed by acquisition by the successor (who has purchased in good faith without notice) of sufficient title to support the original grant.109 Successors in title to property: introduction110 6.30 It is submitted that, where an interest in property is the subject of an estoppel, A is the holder of a floating equity which, if it will be satisfied by the grant of a proprietary interest, is an inchoate equitable interest in that property.111 It is further submitted that successors in title to a legal or equitable interest in the

109 Doe d Downe v Thompson (1847) 9 QB 1037: a mortgagor made a lease after a mortgage which was binding only by estoppel. A purchaser who bought the equity of redemption from him and the legal estate from the mortgagee (the mortgagor also joining in the conveyance of the latter) was not bound by the lease as he took the equity of redemption only from the mortgagor, and the legal estate from the mortgagee, who had title paramount and was not estopped. The significance for present purposes is that the estoppel was not fed against him as successor in title to the equity of redemption, although he acquired sufficient title to support the grant of the lease from the mortgagee. In Webb v Austin n 103 above at 726–8, reference was made with approval to the feeding of an estoppel against a reversioner’s heir in Weale v Lower (1672) Pollexfen 54, but the successor was there a mere volunteer rather than a purchaser. In Cuthbertson v Irving n 56 above, the issue was whether an assignee of the reversion, to whom the tenant had paid rent following the assignment, could claim the benefit of an estoppel against the tenant. In PW & Co v Milton Gate Investments Ltd [2004] Ch 142 at [196], Neuberger J held that ‘once an estoppel (perhaps other than estoppel by representation) is established as between a landlord and a tenant, then it would normally bind their respective successors in title. As a matter of logic the same conclusion must apply to a convention which in due course may give rise to an estoppel. If that is correct, then it appears to support the conclusion that a subtenant is also bound, at least provided his subtenancy does not predate the coming into being of the convention’. This view (derived from authorities on estoppel by deed, which doctrine Neuberger J had held not to apply (at [153]–[154]), and which has critically different characteristics from reliance-based estoppels such as the estoppel by convention he held to apply – see 8.70, 8.74, 8.76, and Wilken & Ghaly, The Law of Waiver, Variation and Estoppel (3rd edn) at [12.11] and [12.60]–[12.61]) is consistent with the one rejected in 6.31–6.32 and contrary to the view that we advance in 6.35–6.39, that only a proprietary estoppel satisfied by the grant of a proprietary right will bind persons deriving title from the original representor, though it will bind all such persons other than bona fide purchasers for value without notice. 110 On this issue, see generally Battersby [1991] Conv 36, (1995) 58 MLR 637, [1995] CFLQ 59; Baughen (1994) 14 LS 147; Davis [1996] Conv 193; Hayton (1990) 106 LQR 87 at 97. 111 See 12.166 onwards. We suggest that the equity is more than a ‘mere equity’, as it is a freestanding right, rather than ancillary to some other estate or interest: see n 130 below.

260

Persons bound by the estoppel 6.32

property are, therefore, bound by the estoppel112 (absent any counter-estoppel) if it entitles A to the grant of a proprietary interest, unless those successors are bona fide purchasers for value of a legal estate without notice113 of the equity. Successors in title to property: first alternative rejected 6.31 This proposition involves the rejection of two alternative theses, both supported by authority, of which the first is that estoppels are binding on all successors in title. This rejected view reflects the historical origins of the modern doctrine of estoppel by representation in the doctrine of estoppel by record.114 Sir Edward Coke regarded the same rule as applicable to both,115 and, clearly, an estoppel by record, such as a judgment, must bind all successors in title.116 The application of this view to all forms of estoppel was subsequently rationalised by reference to the principle ‘nemo dat quod non habet’:117 if a party’s proprietary rights are cut back by an estoppel as against another, he has only those curtailed rights to pass to his successor. There is a solid line from ancient to modern authority to support this approach.118 6.32 It conflicts,119 however, with the equally solid line of authority that an estoppel does not affect the reality of underlying property rights, but merely prevents the holder of the rights from asserting them against one particular party 112 Although their succession may affect the result of (that is, how the court satisfies the equity raised by) the estoppel, as the estoppel is, it is submitted, a proprietary estoppel, even if it also satisfies the requirements for an estoppel by representation of fact: see 5.68. 113 Actual or constructive; see 6.35–6.43. 114 See 1.35–1.41. 115 See n 44 above; quoted and followed by Lord Denning MR in Brikom Investments Ltd v Carr n 45 above at 484G; see also Parker v Manning (1798) 7 Term Rep 537 per Lord Kenyon: ‘The estoppel must continue as long as the privity of estate continues’. 116 See Spencer Bower & Handley on Res Judicata (4th edn) [9–38]. 117 See Taylor v Needham (1810) 2 Taunt 278 at 282 per Lord Mansfield: ‘He who takes an estate under a deed is privy in estate, and therefore never can be in a better situation than he from whom he takes it … It would be a very odd thing in the law of any country, if A could take by any form of conveyance, a greater or better right than he had who conveys it to him’: quoted and followed in Hopgood v Brown [1955] 1 WLR 213, CA at 225, 229, 231; in Brikom Investments Ltd v Carr n 45 above, Lord Denning quoted Coke, while Roskill LJ, speaking in terms of waiver, applied the principle ‘nemo dat quod non habet’ at 488H–489A (see further 6.11). 118 See cases at nn 102 and 103 and n 117 above; Board v Board (1873) LR 9 QB 48 at 53 per Blackburn J: ‘… He, being privy in estate to her, is subject to all the estoppels that would have estopped her.’; Bristol Cars Ltd v RKH (Hotels) Ltd (1971) 38 P & CR 411 (without argument); Hammersmith and Fulham London Borough Council v Tops Shop Centres Ltd n 103 above at 258H (without argument); JT Development Ltd v Quinn [1991] 2 EGLR 257 (without argument); most recently an estoppel by representation as to title was said to bind a bona fide purchaser for value without notice in First National Bank plc v Thompson [1996] Ch 231 at 239D–E per Millett LJ, citing (at 238G) Cuthbertson v Irving n 56 above for rejection of the proposition that a tenancy by estoppel binds assignees only if the estoppel has been fed; see also Sumner v Schofield (1880) 43 LT 763 at 767 per Kelly CB (obiter): a tenancy by estoppel is binding on the lessor’s successor even without notice. 119 Notwithstanding that, in Eastern Distributors Ltd v Goldring [1957] 2 QB 600, Devlin J ignored the conflict, stating that reality is not affected, but ‘privies’ are bound.

261

6.32  Parties to the estoppel

(the estoppel raiser) in court,120 not to speak of the authorities that support both the thesis advanced and the second alternative thesis rejected below. Further, it is rejected as contrary to the underlying policy of the doctrine that an estoppel, whose purpose is to achieve fairness between the parties, should automatically bind a bona fide purchaser of property that is the subject of the estoppel for value without notice of the facts giving rise to the estoppel. Successors in title to property: second alternative rejected 6.33 The second rejected thesis is that an estoppel is binding on a successor in title only if it is unconscionable for the successor to enforce his rights against the estoppel raiser.121 The thesis is that, estoppel being a relationship between two parties, succession to property that is the subject of the original estoppel between a predecessor in title and the estoppel raiser does not entail automatic assumption of the burden of the estoppel: rather, it is no more than a circumstance of which account is to be taken in determining whether the constituent elements of an estoppel are made out as between the successor and the estoppel raiser. ‘Only if the third party’s conduct is such as to raise an estoppel against the third party individually will the third party be affected’.122 This proposition emphasises that an estoppel prevents the unfair assertion of rights by asking when it will be unfair for the successor to rely on his rights because of a representation by his predecessor and detrimental reliance thereon by the estoppel raiser. Once a court has made an order granting or extinguishing rights in property by reason of the estoppel, of course, successors will be bound according to the rights granted or extinguished.123 Until then, however, the effect of estoppel as against a successor

120 Simm v Anglo American Telegraph Co (1879) 5 QBD 188 at 206–7 per Brett LJ: ‘It seems to me that an estoppel gives no title to that which is the subject matter of the estoppel. The estoppel assumes that the reality is contrary to that which the person is estopped from denying, and the estoppel has no effect at all on the reality of the circumstances …’; Bank of England v Cutler [1908] 2 KB 208 at 234 per Farwell LJ: ‘It is true that title by estoppel is only good against the person estopped and imports from its very existence the idea of no real title at all, yet as against the person estopped it has all the elements of a real title’; Re London Wine Co (Shippers) Ltd [1986] PCC 121 at 159–60 per Oliver J: ‘The essence of an estoppel is that the truth is not allowed to be told, and when one talks of a ‘title by estoppel’ one is not, in truth, talking about a title at all. It is indeed inherent in the concept that there is no title but the representor is not allowed to say so.’; Re Goldcorp Exchange Ltd n 83 above at 94G: ‘The most that the [estoppel] line of authority can give to the purchaser is the pretence of title where no title exists … This cannot avail the purchaser in a contest with a third party creditor possessing a real proprietary interest in a real subject matter …’; cf Mowatt v Castle (1886) 34 Ch D 58 at 63; Re W Tasker & Sons Ltd [1905] 2 Ch 587 at 601: estoppel not binding on prior debenture holders; contrast Re Stapleford Colliery Co n 29 above. 121 United Bank of Kuwait v Sahib [1997] Ch 137 at 142A–G per Peter Gibson LJ: ‘As [the successor’s] conscience was in no way affected by the actions of [the predecessor], it seems to me impossible to say that [the successor] was estopped in equity …’. (A bona fide purchaser for value without notice was not bound by an estoppel against his predecessor); see Critchley [1998] Conv 502. 122 Lord Browne-Wilkinson (1996) 10 TLI 98 at 100. 123 See Battersby [1991] Conv 36 at 38, (1995) 58 MLR 637 at 641, [1995] CFLQ 59 at 63; Baughen (1994) 14 LS 147.

262

Persons bound by the estoppel 6.34

is determined by the nature of the estoppel itself: a relationship between the estoppel raiser and the party to be estopped, namely the successor. 6.34 Nonetheless, it is submitted that the court’s task, in determining whether an estoppel binds a successor in title, is to prioritise the competing claims of the estoppel raiser and the successor in title, rather than to ask whether the conscience of the successor, who has made no representation nor breached any duty to speak, is affected. Estoppels have been held, in a substantial number of cases, to bind volunteer successors124 and purchasers for value with notice,125 without examination of their consciences (and it is worth noting that the logic of these cases is also inconsistent with the view that an estoppel confers no real title,126 as to hold that an estoppel may bind a successor without independent establishment of the pre-requisites for an estoppel as directly against the successor is to hold that it creates a proprietary right in the relevant property).127

124 Voyce v Voyce (1991) 62 P & CR 290; Sledmore v Dalby (1996) 72 P & CR 196 at 201 per Roch LJ; Dalton v Fitzgerald [1897] 2 Ch 86 (devisee); Mackley v Nutting n 39 above; Webb v Austin n 103 above; The Duke of Beaufort v Patrick n 76 above (devisees of purchaser with notice); Eastern Distributors Ltd v Goldring n 119 above at 607; Re Vandervell’s Trusts (No 2) [1974] Ch 269; Salvation Army Ltd v West Yorkshire MCC (1980) 41 P & CR 179 at 193; see also nn 117–118 above. 125 Duke of Beaufort v Patrick n 76 above (devisees of a purchaser with notice); Gresham Life Assurance Society v Crowther [1914] 2 Ch 219 aff’d without ref [1915] 1 Ch 214; Somerset Coal Canal Co v Harcourt (1857) 24 Beav 571; Inwards v Baker [1965] 2 QB 29 at 37 per Denning LJ (obiter); National Provincial Bank Ltd v Ainsworth [1965] AC 1175 at 1123 per Lord Hodson (obiter); Ward v Kirkland [1967] Ch 194 (without argument); Lee-Parker v Izzet (No 2) [1972] 1 WLR 775 at 780G (without argument); Siew Soon Wah v Yong Tong Hong [1973] AC 836, PC (without argument); Shelley v United Artists Corpn Ltd [1990] 1 EGLR 103 at 106L; see also nn 117–118 above. 126 See n 120 above. 127 And proprietary estoppel has been held to create a proprietary interest in the relevant property prior to judgment in: Plimmer v Mayor Etc of Wellington (1884) 9 App Cas 699, PC at 714– 715 (within the meaning of the relevant statute); E R Ives Inv Ltd v High [1967] 2 QB 379 at 394G, 400A, 405C; Singh v Sandhu (4 May 1995, unreported) CA (capable of being an overriding interest); Pennine Raceway Ltd v Kirklees MBC [1983] QB 382 (within the meaning of the relevant statute); Voyce v Voyce n 124 above at 294. In Lloyds Bank v Carrick [1996] 4 All ER 630 at 642b–c, Morritt LJ said: ‘In the circumstances it is unnecessary to consider further the submission … that a proprietary estoppel cannot give rise to an interest in land capable of binding successors in title. This interesting argument will have to await another day, though it is hard to see how in this Court it can surmount the hurdle constituted by the decision of this Court in E R Ives Inv Ltd v High’, and the hurdle may be yet higher as Ives was cited with unanimous approval in Shiloh Spinners v Harding [1973] AC 691 (at 721c–d, per Lord Wilberforce, with whom all others agreed): ‘I am impressed by the decision in E R Ives Inv Ltd v High in which the Court of Appeal held that a right by estoppel – producing an effect similar to an easement – was not registrable under Class D(III). Lord Denning MR referred to the right as subsisting only in equity. Dankwerts LJ thought it was an equity created by estoppel or a proprietary estoppel: plainly this was not an equitable interest capable of being overreached, yet no member of the court considered that the right – so like an easement – could be brought within class D(III). The conclusion followed, and the court accepted it, that whether it was binding on a purchaser depended on notice. All this seems to show that there may well be rights, of an equitable character, outside the provisions as to registration and which are incapable of being overreached.’; Locabail (UK) Ltd v Bayfield Pties Ltd (No 1) (The Times, 31 March 1999) (capable of being an overriding interest); Birmingham Midshires v Sabherwall (1999)

263

6.35  Parties to the estoppel

Successors in title to property: thesis supported 6.35 It is submitted that an estoppel will bind a successor to property (other than by establishment of the constituent elements of an estoppel directly against the successor) only if it is an estoppel which the court will satisfy by the grant of a right in the property; and, if it is, it will bind all successors, save bona fide purchasers for value of a legal estate without notice. 6.36 If A has been to court against the predecessor and been awarded an interest in the property or personal relief such as compensation, then the subsequent successor will be bound or not on the application of ordinary principles, having regard to the nature of the award. If, however, A comes to court for the first time against the successor, then the court will determine at the same time what, if any, interest A should be granted,128 and whether the antecedent equity, that arose on satisfaction of the requirements for an estoppel prior to the succession, is binding on the successor. Before the court makes its order on his claim, A has, if he satisfies the requirements for a proprietary estoppel,129 an equity, that is to say, a claim to discretionary equitable relief.130 The court might satisfy the equity by ordering the payment of compensation only, and a right to compensation is not an equitable interest in property unless it is charged on it; if the court orders that A’s equity should be satisfied by payment of a sum of money by the predecessor in title to the property, then, absent a charge, A’s rights are not, at any stage, proprietary rights binding even on volunteer successors to the property and purchasers of the property with notice. So also, if the estoppel is an estoppel

80 P & CR 256 at [24], 262 (without argument); Valentine v Allen [2003] EWCA Civ 915 (estoppel by convention as to easement binding on successors (arguably obiter) at 72–4 per Hale, Peter Gibson LJJ); Sweet v Sommer [2005] EWCA Civ 227 at [26]; contrast Ward v Kirkland [1967] Ch 194 at 241–2; see also Giumelli v Giumelli (1999) 196 CLR 101. 128 Which could be affected by the change of ownership: see Henry v Henry [2010] 1 All ER 988 at [56], 1000j–1001a: ‘the Board does not rule out the possibility that cases may arise in which the particular circumstances surrounding a third party purchase may, notwithstanding the claimant’s overriding interest, require the court to reassess the extent of the claimant’s equity in the property’. 129 These do not include a requirement that B has sought to resile from his representation or rely on facts he failed to communicate in breach of duty: see Jennings v Rice [2003] 1 P & CR 8 at [36], 111 per Aldous LJ; Clarke v Meadus [2013] WTLR 199 at [75]; Walden v Atkins n 40 above at [45]–[48]; it is submitted that, to the extent that Patten LJ’s dictum in Shield v Shield [2014] EWCA Civ 1136 at [19] is inconsistent with these authorities, it was per incuriam. 130 The courts and some commentators have described the equity as a ‘mere equity’ (see eg Stack v Dowden [2007] 2 AC 432 at [37], 448H per Lord Walker; Meagher G ­ ummow & Lehane’s Equity: Doctrines & Remedies (5th edn) [4–165] to [4–210]; Everton (1976) 40 Conv 209; cf Snell’s Equity (33rd edn) [2–006] to [2–008]). So also the fourth e­ dition of this work at VI.3.2. This was on the basis that, if satisfied by grant of a proprietary interest, it would bind successors as ancillary to that future proprietary interest. But this was different from the sense in which ‘ancillary’ had been used in the authorities as describing an existing proprietary interest held by A to which the mere equity was ancillary, allowing it to bind successors. We therefore prefer to describe the equity as a form of floating equity which, if it would be satisfied by a proprietary right, is an equitable interest: see n 111 above and 12.172 onwards.

264

Persons bound by the estoppel 6.37

by representation of fact or a promissory estoppel which would not result in the creation or augmentation of A’s proprietary rights. 6.37 If, then, the court determines that A should have a personal remedy only against the predecessor, it will award compensation only against the predecessor. So, also, if the court determines that A was entitled to no more than a non-exclusive licence to use the property (which is not a proprietary interest)131 against the predecessor; then, unless the successor has so acted as to become estopped himself from determining the licence,132 it may be said that, even though the predecessor was estopped from terminating the licence and the successor took with notice, the successor should not be bound by the estoppel any more than he would be bound by a contractual licence. If the antecedent equity is not satisfied by the grant of a proprietary interest, then the equity was purely personal and will not bind successors, even with notice, unless their consciences are affected. Not all rights which a property owner is estopped from denying A in relation to his property are proprietary in nature and, therefore, bind a third party, and the view that a proprietary estoppel which will not be satisfied by a proprietary right is not itself an equitable interest that may bind successors accords with the decision of the Supreme Court in Southern Pacific Mortgages v Scott133 that the effect of the declaration in s 116 of the Land Registration Act 2002, that the equity under an estoppel is capable of binding successors, is that only equities under an estoppel which have ‘a proprietary element’ bind successors, but equities by estoppel which lack a ‘proprietary element’ do not.134 131 Ashburn Anstalt v Arnold [1989] Ch 1, CA at 24D; see Moriarty (1984) 100 LQR 376 for the arguments in favour of regarding a licence as creating a proprietary interest; and cf Williams v Staite [1979] Ch 291, in which it was assumed, wrongly, in our submission, that a licence arising through estoppel bound a third party. 132 Or to subject himself to a constructive trust to give effect to it, for either of which the successor’s conscience must be affected. 133 [2015] AC 385. 134 See the leading judgment of Lord Collins of Mapesbury at [56] and [58]–[59]. The Supreme Court went on to hold (at [60], [79], [95], [123]) that a purchaser cannot create any proprietary interest in the land before completion. We respectfully submit that this is a more controversial, but nonetheless binding, decision: since (1) the dictum of Stamp LJ in Berkley v Poulett [1997] 1 EGLR 86 at 93, on which Lord Collins relied at [66], 414D–E, was not supported by Scarman LJ, who did not deal with the point, and Goff LJ dissented at 90–92; (2) the subpurchaser’s right to specific performance of the head contract against the vendor recognised by Stamp LJ at 94 suggests an equitable interest in the head contract and therefore the land; (3) the cases cited by Lord Collins as authority that ‘where the proprietary right is claimed to be derived from the rights of a person who does not have the legal estate, then the right needs to be fed by the acquisition of the legal estate before it can be asserted otherwise than personally’ (at [71], 415E), namely Cuthbertson v Irving (1859) 4 H & N 742, 754–755 and Watson v Goldsbrough [1986] 1 EGLR 265 (where the party bound was only a licensee), do not address this specific issue; (4) Lord Collins does not explain in [73], 416B why the analysis of Nicholls LJ in Lloyds Bank plc v Rosset [1989] Ch 350, CA at 386, which we submit is correct, that the wife of a purchaser in actual occupation following exchange had some equitable interest in the property before completion, carved out of the husband’s interest, is wrong; and (5) the proposition of law stated above seems to go well beyond what the House of Lords decided in Abbey National Building Society v Cann [1991] 1 AC 56. The actual decision in Scott can be readily justified by Cann, or on its particular facts, the contract, transfer and charge all taking place simultaneously.

265

6.38  Parties to the estoppel

6.38 If, however, A’s proprietary estoppel will be satisfied by the grant of a proprietary right, it differs from a ‘mere equity’ in that there is high authority that it is not ‘possible for a “mere equity” to bind a purchaser unless such an equity is ancillary to or dependent upon an equitable estate or interest in the land … [and] a mere “equity” naked and alone is … incapable of binding successors in title even with notice; it is personal to the parties’.135 By contrast, if and so long as the court would satisfy the equity by the recognition or award of some proprietary interest at the expense of B’s property, or the recognition of A’s freedom from some proprietary or other claim by B over A’s property, then A’s equity is an equitable interest,136 albeit an inchoate and ‘floating’ interest pending its crystallisation.137 The equity and the proprietary interest (if there be one) come into existence simultaneously, as soon as the circumstances are such that: (i) A has changed his position on the faith of a belief or expectation concerning property or property rights; (ii) B is responsible for A’s change of position; and (iii) it is or would be unconscionable for B not to give effect to A’s belief or expectation.138 This may occur, of course, a considerable period of time before any promise made by B falls to be performed.139 Thereafter the inchoate, floating interest (if any) is binding on B and capable of binding B’s successors in title save, we suggest, for bona fide purchasers of a legal estate without notice.140 Accordingly, as noted

135 Per Lord Upjohn in National Provincial Bank Ltd v Hastings Car Mart Ltd [1965] AC 1175 at 1238. 136 In much the same way that a purchaser, pending completion of a contract of which the court would order specific performance, has an equitable interest in the subject matter of the contract. This interest is wholly dependent on the ability and willingness of the court to decree specific performance. If, for any reason, equity would not enforce performance, or if the right to a decree is lost, the vendor either never was, or ceases to be, a trustee of the subject matter for the purchaser. Thus the equitable interest of a purchaser pending completion is ‘in every case commensurate only with what would be decreed to him by a Court of Equity in specifically performing the contract, and [can] only be defined by reference to the relief which the Court would give by way of specific performance’. See Central Trust and Safe Deposit Co v Snider [1916] 1 AC 266, PC, at 272 per Lord Parker of Waddington. Whether a purchaser ever had, or still retains, an equitable interest, and if so on what terms, or if he had an interest but lost it, when he lost it, can only be answered by determining whether the court, if asked, would or would not have made a decree. See further Snell’s Equity (33rd edn), [5–015], discussing the maxim ‘Equity looks on as done that which ought to be done’. 137 It crystallises on the making of the court’s order following B’s repudiation of, or his refusal or failure to give effect to, A’s belief or expectation. See Habermann v Koehler (No 2) [2000] EGCS 125, CA at [23] per Robert Walker LJ: ‘… it is only by the judge’s order, made years after Dr Habermann became registered proprietor, that the inchoate rights created by proprietary estoppel have crystallised into a defined proprietary interest’. 138 See Walden v Atkins n 40 above at [48] per HHJ Simon Barker QC: ‘The equity comes into existence, if at all, as the result of a promise being made to and relied upon by and a detriment being suffered by a promisee. It is at that point that the promise becomes irrevocable, the equity is recognised, and it is this equity to which the definition of property at s 436 [Insolvency Act] 1986 is to be applied.’ See also Webster v Ashcroft n 40 above. Both cases held that a proprietary estoppel equity fell within the definition of ‘property’ in s 436(1) of the Insolvency Act 1986 and so vested in A’s trustee in bankruptcy. See 12.9. 139 See 12.9 onwards. 140 See 12.170–12.176 and the authorities at nn 124, 125 and 127 above. The court, in determining the priority of the claims between estoppel raiser and successor, will also determine how the equity is to be satisfied.

266

Persons bound by the estoppel 6.40

above, in relation to proprietary estoppels over registered land, s 116 of the Land Registration Act 2002 declares that equities by estoppel are interests capable of binding successors.141 6.39 A further question arises, given recognition that an equity under a proprietary estoppel which will be satisfied by grant of a proprietary right will bind successors, save, on ordinary principles, a bona fide purchaser for value of a legal estate without notice of it, as to whether it will bind a bona fide purchaser for value of an equitable interest or will have priority as an equitable interest, albeit an inchoate equitable interest by virtue of its priority in time.142 Since, in many cases the same facts that give rise to a proprietary estoppel would also give A an interest in the property in question under a constructive trust,143 and in such cases, the equitable interest under a constructive trust would bind a subsequent purchaser of an equitable interest even without notice, it is suggested, for consistency with a constructive trust, that, provided that the estoppel is one which the court will satisfy by grant of a proprietary interest, and absent any counterestoppel affecting priorities (for instance, by A’s failure to assert the claim with knowledge that the subsequent purchase is being made), the inchoate equitable interest which the estoppel creates is one which binds a subsequent purchaser of an equitable interest as being prior in time. 6.40 In summary, first, the view that reliance-based estoppel must bind all successors as privies is rejected as properly relating (other than in relation to res judicata) to an estoppel by deed or in relation to a contract which binds successors as parties to the deed or contract: insofar as it has been applied to reliancebased estoppel, we respectfully suggest that it was wrongly transplanted from such estoppels at an earlier stage in the development of reliance-based doctrine. Secondly, the cases144 containing dicta to the effect that estoppel does not create an interest in property because it does not affect the underlying reality must be

141 See 6.44 onwards. Section 116 declares the same in respect of ‘mere equities’, which on the authority at n 135 above could bind successors only if ‘ancillary to or dependent on’ an equitable interest: following Southern Pacific Mortgages v Scott, n 133 above, it would appear that they too bind in relation to registered land but only if they have ‘a proprietary element’; see further n 142 below. 142 See also, as to whether an equity may bind a purchaser of a subsequent equitable interest: Phillips v Phillips (1862) 4 De GF & J 208 at 215–218; O’Sullivan (2002) 118 LQR 296; Cave v Cave (1880) 15 Ch D 639; National Provincial Bank Ltd v Ainsworth n 125 above; Mid-Glamorgan CC v Ogwr BC (1994) 68 P & CR 1 at 9. 143 See Grant v Edwards [1986] Ch 638 at 656G–H; Austin v Keele (1987) 61 ALJR 605, PC at 609: ‘In essence the doctrine [of common intention constructive trust] is an application of ­proprietary estoppel’; St Etienne v Headley [1991] Ch 425 at 439H–440A; Lloyds Bank v Rosset [1991] 1 AC 107 at 132; Lloyds Bank v Carrick n 127 above at 640a–b; Yaxley v Gotts [2000] Ch 162 at 176B–177G, 180C; Birmingham Midshires v Sabherwal n 127 above at [24], 262; Stack v Dowden n 130 above at [37], 448G–449A per Lord Walker of Gestingthorpe, at [128], 73C per Lord Neuberger of Abbotsbury; Thorner v Major [2009] 1 WLR 776 at [14], 781B, [20], 784B–785C per Lord Scott of Foscote; Hayton [1990] Conv 370 at 372, [1993] 109 LQR 405; Ferguson [1993] 109 LQR 114 at 121–3. 144 See n 120 above.

267

6.40  Parties to the estoppel

explained as cases where either the estoppel did not bind a bona fide purchaser for value without notice, or the estoppel would not be satisfied by the grant or augmentation of proprietary rights (for instance, because the property in which the interest was claimed could not be identified). If an estoppel may bind a successor with notice, it has created a proprietary right and thereby affected the underlying ownership of the property. Thirdly, it is submitted that an estoppel that will be satisfied by the grant of a proprietary right creates, even before that grant, a proprietary right that will bind a purchaser with notice or volunteer successor to property. We suggest that the right to a proprietary estoppel is a form of floating equity which, if it will be satisfied by the grant of a proprietary right (but not otherwise), is an inchoate equitable interest, and will bind successors in title to the property, save for a bona fide purchaser of a legal estate without notice. The effect of statute on the raising of estoppels against successors to different types of property will now be considered. Successors in title to property: unregistered land 6.41 The equity raised on satisfaction of the requirements for a proprietary estoppel is not capable of protection by registration under the Land Charges Act 1972.145 The question of notice is not, therefore, determined by registration. If, however, the facts establishing the estoppel also establish a registrable land charge, such as an estate contract, which has not been registered, then the estoppel will not bind even a successor with actual notice;146 otherwise, contrary to public policy, the estoppel would negate the operation of a statute.147 Further, if an action is commenced claiming satisfaction of the equity by the grant of an interest in unregistered land, it is submitted that the action is registrable as a pending land action, and will not bind a purchaser without express notice of it unless registered.148 6.42 Although failure to register a land charge might, therefore, prevent a proprietary estoppel binding a successor, if the successor so acted that it would be unfair for him to rely on the want of registration, he may nonetheless be bound by the estoppel, being estopped also from relying on the want of ­registration,149 or subject to a constructive trust to give effect to the interest of the estoppel raiser.150 In these cases the estoppel or constructive trust arises directly between the successor and the estoppel raiser, rather than because the ­successor is bound 145 E R Ives Inv Ltd v High n 127 above at 395B–396C, 400B, 405G; Shiloh Spinners v Harding n 127 above at 71C–D; Pascoe v Turner [1979] 1 WLR 431 at 439A (conceded); Bristol and West Building Society v Henning [1985] 1 WLR 778 at 781F. 146 Lloyds Bank v Carrick n 127 above at 641j–642a. 147 See Beesly v Hallwood Estates Ltd [1960] 1 WLR 549 at 561; 7.5, n 19. 148 Sections 5(7), 17(1) of the Land Charges Act 1972; Haslemere Estates Ltd v Baker [1982] 1 WLR 1109 at 1119H–1120N; JEM [1983] Conv 69 at 70. 149 This was the effect of Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133n, although undermining of the statute (see n 147 above) was not addressed in the judgment or, seemingly, argued. 150 As to when it would be unfair, as in the case of registered land, see 6.43; Morritt LJ, in Lloyds Bank v Carrick n 127 above at 641j, points out that, in the circumstances of that case, ‘it cannot be unconscionable for the Bank to rely on the non-registration of the contract’.

268

Persons bound by the estoppel 6.44

by an estoppel established against a predecessor in title. It is now doubtful whether a doctrine of ‘benefit and burden’, as opposed to estoppel or constructive trust, could be deployed to this effect.151 6.43 Otherwise, as submitted above, the estoppel will bind successors, save for bona fide purchasers, for value without actual or constructive notice.152 Whether the equity raised by satisfaction of the requirements for a proprietary estoppel is capable of being overreached will depend on whether it would have been satisfied by the grant of an interest that can or ‘cannot sensibly shift from the land affected by it to the proceeds of sale’.153 Successors in title to property: registered land 6.44 Having advanced the thesis that, disregarding statute, the equity raised by satisfaction of the requirements of proprietary estoppel will bind successors in title save for purchasers for value without notice, it is necessary to refocus, consigning the thesis to the background in relation to that form of property over which such estoppels are now most often claimed, namely registered land, as the question whether an interest in land binds a successor to a registered title is governed by statute:154 to bind a successor for value, the equity must be protected either by registration or as an overriding interest, unless an estoppel or constructive trust can be established directly against the successor, in which case he is bound, not by reason of succession to a property subject to the interest, but by reason of the estoppel or constructive trust established directly against him.155 The Land Registry will enter a notice in the register in respect of the equity raised by satisfaction of the requirements for proprietary estoppel as an interest affecting an estate. Such an equity, if its holder is in actual occupation of the property, will also bind a purchaser for value as an overriding interest under s 29(2)(a)(ii) of the Land Registration Act 2002.156 Section 116 of the Land Registration Act 2002 provides ‘for the avoidance of doubt’ that, in relation to registered land, 151 Although it was so deployed in E R Ives Inv Ltd v High n 127 above at 394B–E per Lord Denning MR, 399G–400A per Dankwerts LJ; see now Rhone v Stephens [1994] AC 310: there is no ‘pure principle’ of benefit and burden that ‘any party deriving any benefit from a conveyance must accept any burden in the same conveyance’ at 322E per Lord Templeman; Thamesmead Town Ltd v Allotey [1998] 3 EGLR 97: the successor in title must have a choice whether to take the benefit. 152 Duke of Beaufort v Patrick n 76 above at 78; Sumner v Schofield (1881) 43 LT 763 at 767 per Huddleston B; contrast the reference to ‘express notice’ in Re Sharpe n 81 above at 226G; as to constructive notice, see s 199 of the Law of Property Act 1925. 153 Birmingham Midshires v Sabherwal n 127 above at [28], 263, per Robert Walker LJ; Harpum (2000) 116 LQR 341 at 344–5; Megarry & Wade on The Law of Real Property (8th edn) [6–055]ff; an example of the former is the equitable interest of a tenant in common, and an example of the latter is an easement. 154 Sections 28–31 of, and para 2 of Schedule 3 to, the Land Registration Act 2002. 155 See 6.45. 156 Lloyd v Dugdale [2002] 2 P & CR 13, CA; Halifax plc v Curry Popeck [2008] EWHC 1692 (Ch) at [26]; Chaudhary v Yavuz [2013] Ch 249, CA at [26], [72], [73], 257G, 270E; see also Singh v Sadhu (4 May 1995, unreported), CA; Locabail (UK) Ltd v B ­ ayfield Properties Ltd (No 1) n 127 above; Bhullar v McCardle (10 April 2001, unreported),

269

6.44  Parties to the estoppel

an equity by estoppel ‘has effect from the time the equity arises as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority)’. However, in this context also, there is authority that a distinction must be drawn between an equity arising from detrimental reliance on an encouraged belief as to the acquisition of (1) an interest in the land, and (2) personal rights only against the owner of the property: the latter will not qualify as an overriding interest.157 It now appears that, if the equity does not have ‘a proprietary element’, the equity may not be protected as an overriding interest because it is not proprietary in nature.158 6.45 Regardless of registration, an estoppel may be directly enforceable against a successor, including a purchaser for value, if the successor has so conducted himself that it would be unfair for him to rely on the want of registration and deny the estoppel raiser relief.159 Actual notice of the facts giving rise to the estoppel is not, of itself, sufficient to affect the conscience of the successor.160 More is required to bind the successor, such as a specific agreement to take subject to the estoppel raiser’s interest as part of the bargain whereunder he succeeded to the property.161 Successors in title to property: personal property 6.46 In accordance with the above analysis, it is submitted that an estoppel which would otherwise entitle a party to recover a legal or equitable interest in personalty should bind successors in title to the personalty save for a bona fide

CA; contrast Poster v Slough Estates [1969] 1 Ch 495 at 505; in Habermann v Koehler (No 1) (1996) 73 P & CR 515, CA the issue was said to be still open; cf Blacklocks v JB Developments (Godalming) Ltd [1982] Ch 183: the right to rectify can be an overriding interest. 157 Canadian Imperial Bank of Commerce v Bello (1991) 64 P & CR 48 at 51–52. 158 Southern Pacific Mortgages v Scott n 133 above at [59] per Lord Collins of Mapesbury, [95], [123]; contrast Thompson v Foy [2010] 1 P & CR 16 at [134]. 159 Lloyd v Dugdale n 156 above; see also Lyus v Prowsa Developments Ltd [1982] 1 WLR 1044; Harpum [1983] CLJ 54; Jackson [1983] Conv 64; Kenny [1983] 46 MLR 96; Bennett (1984) MLR 476; Ashburn Anstalt v Arnold n 131 above at 24–26; IDC Group Ltd v Clark [1992] 1 EGLR 187 at 190 per Browne-Wilkinson VC: ‘in my judgment, the decision in Ashburn Anstalt v Arnold does not warrant the creation of a constructive trust unless there are very special circumstances showing that the transferee of property undertook a new liability to give effect to provisions for the benefit of third parties. It is the conscience of a transferee which has to be affected and has to be affected in a way which gives rise to an obligation to meet the legitimate expectations of the third party’; Chattey v Farndale Holdings Inc [1997] 1 EGLR 153, CA; Sweet v Sommer [2004] EWHC 1504 (Ch) at [44]–[46] (decided under the pre-Land Registration Act 2002 regime). 160 Ashburn Anstalt v Arnold n 131 above; IDC Group Ltd v Clark n 159 above; Chattey v Farndale Holdings Inc n 159 above at 160 per Morritt LJ: ‘the fact that [the purchasers] have notice of a prior contract or obligations was insufficient to impose an obligation on them and unless there was such an obligation it could not be a fraud on their part to rely on the provisions of the Land Registration Act 1925 as conferring on them an unencumbered title’. 161 As in Lyus v Prowsa Developments Ltd n 159 above.

270

Persons bound by the estoppel 6.49

purchaser for value without notice.162 However, under the proviso to s 21(1) of the Sale of Goods Act 1979, which has been held to embody the position outside statute,163 where the true owner of goods is estopped from denying a purported seller’s authority to sell those goods, that estoppel binds all successors from the true owner including purchasers without notice, and the buyer takes good title against the world.164

Trustees 6.47 The relationship between trustees and their beneficiaries raises issues as to whether a representation, convention or assurance by one or some, but not all, of the trustees can estop all of them; whether an estoppel against the trustees binds innocent current beneficiaries and future beneficiaries and trustees; whether an estoppel may vary the trusts; and, in the case of proprietary estoppel, whether the equity generated by the estoppel binds the trust property. The law on some of these issues is uncertain and developing.165 There are few decided cases and they do not all sit well together. 6.48 On the first issue, it was argued in Fielden v Christie-Miller166 that the trustees of a settlement were bound by representations or assurances in which not all of them participated. The argument failed. Sir William Blackburne said:167 ‘Elementary fairness requires that before a person can be bound by the acts of another purporting to act on his behalf, that other must have his authority to bind him in the matter. Whether he has will depend on the usual principles of agency. This applies, in my judgment, as much in the field of estoppel as it does in other contexts. In the language of estoppel, there is nothing unconscionable in a person denying what another has come to believe and acted upon to his detriment if that person has not, either himself or through his agents, allowed the other to reach that belief.’

These words are not confined to trustees. In Preedy v Dunne,168 it was said, obiter, that they are applicable to beneficial co-owners. 6.49 On the position of future trustees, it is submitted that they are in the same position as contractual assignees169 and successors in title to property170 (when they are not purchasers for value without notice), as ‘privies’ of their

162 Eastern Distributors v Goldring n 119 above at 606–7. 163 Eastern Distributors v Goldring n 119 above at 607. 164 See eg Eastern Distributors v Goldring n 119 above. 165 See Fielden v Christie-Miller n 70 above at [40]. 166 Note 70 above. 167 At [26]. 168 Note 70 above, at [41], a dictum with which we agree. 169 See 6.24. 170 See 6.35.

271

6.49  Parties to the estoppel

predecessors,171 and are accordingly bound by an estoppel binding on their predecessors unless, by its terms or subject matter, its effects are limited. 6.50 Thus, trustees, both current and future, may be personally liable on any kind of estoppel, whether in favour of a stranger to the trusts or in favour of a beneficiary.172 Whether they can defend themselves against a claim by a beneficiary to surcharge them on the taking of an account depends on whether, in creating or continuing the estoppel, they exercised due care and diligence. So, also, trustees as parties to a contract may incur an increased contractual liability as a consequence of an estoppel by representation or convention as to a fact. They will be personally liable to the obligee, with a right to recoup themselves out of the trust fund, but only for ‘expenses properly incurred by [them] when acting on behalf of the trust’.173 6.51 Of course, an estoppel will bind the current beneficiaries if they are sui juris and participate in its creation. In Redrow Plc v Pedley,174 Morritt V-C entertained the possibility, obiter, that an estoppel by convention might arise, binding on the employer, the trustees and all the current members of an occupational pension scheme,175 but held that, for the current members to be bound, it must be proved ‘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”’.176 Such a ‘group estoppel’ binds the members in their contractual relations with the employer and the trustees: it affects the rules of the scheme in contract as between those bound by the estoppel; but, although the trusts of the scheme are to be found in the rules, ‘such trusts cannot be altered because there can be no such estoppel binding future members’.177

171 See Eastern Distributors Ltd v Goldring n 119 above at 607: ‘It would … appear that anyone whose title is obtained from the representor as a volunteer is a privy [for the purposes of an estoppel]’. In the same case, it was said that it is very doubtful whether a purchaser of goods for value without notice is bound by an estoppel by representation. For another case of a volunteer regarded as a privy, see Ashburn Anstalt v Arnold n 131 above at 19, where the Court of Appeal considered, obiter, that B’s devisee was his privy for the purposes of a proprietary estoppel. The concept of privity in the law of reliance-based estoppel is, however, obscure and there are few modern authorities outside the field of issue estoppel or res judicata: in examining above who the parties to a reliance-based estoppel are, we have generally avoided the term, both to avoid confusion with the different considerations applicable to res judicata, and because in the present context it often appears to be used as if providing an unstated rationale, when in truth it only describes a result. 172 See 6.24. 173 See s 31(1) of the Trustee Act 2000. If an increased liability resulting from an estoppel is not ‘properly incurred’, the right of recoupment will be pro tanto excluded. 174 [2002] Pens LR 339, CA. 175 Note 174 above at [63]. An estoppel binding all of the current members of a pension scheme is commonly referred to as a ‘group estoppel’. 176 Note 174 above at [64]; cited with approval in Trustee Solutions Ltd v Dubery [2007] ICR 412 at [50]; Re IMG Pension Plan, HR Trustees Ltd v German [2010] Pens LR 23 at [185]; and Briggs v Gleeds n 70 above at [181]. 177 Note 174 above at [62]. It is submitted, however, that the estoppel would bind future trustees: see 6.49.

272

Persons bound by the estoppel 6.52

6.52 The views expressed by the Vice-Chancellor in Redrow conflict with those of Warren J in Catchpole v Trustees of the Alitalia Airlines Pension Scheme,178 a case of estoppel by representation of fact in which pension fund trustees misrepresented that A, the unmarried partner of a member of the scheme, would be entitled to a spouse’s pension on her death. None of the beneficiaries participated in creating the estoppel, but the court held the estoppel binding on the trustees and their successors, and on all current and future beneficiaries. An argument that trustees cannot estop themselves from denying a liability to pay benefit to a stranger to the detriment of their beneficiaries, when the rules of the scheme do not authorise its payment, was rejected.179 Instead, the court held that ‘it is conceptually perfectly straightforward to see a misrepresentation by a trustee of a pension scheme as to the existence or level of a benefit at a particular time as becoming institutionalised, as it were, within the trust’,180 and that the current beneficiaries of the scheme ‘can no more deny that [A] is a beneficiary than can the trustees; and the same goes for their successors’.181 For the estoppel to bind current and future beneficiaries (denying them the right that they would otherwise have to require the trustees personally to make good consequential losses), as Warren J held, must involve, in substance, a variation of the trusts of the scheme and conflicts with Redrow. In our respectful submission, the view of the Vice-Chancellor is to be preferred.182 178 Note 37 above. The court did not have the benefit of full argument, since neither the trustees nor the employer appeared at the hearing of the appeal. 179 Note 37 above at [48]–[50], 1418–9. The judge went on to hold, at [53], 1420, that, in such cases, there is a further element that must be established, namely whether the prima facie claim which A has, based on estoppel by representation of fact, is excluded or qualified, given the impact which the estoppel alleged has on the benefits of the members and other beneficiaries under the scheme: see eg Redrow Plc v Pedley n 174 above at [61]–[62], 349; Steria Ltd v Hutchison, [2007] ICR 445, CA, at [109], 463; Trustee Solutions Ltd v Dubery n 176 above at [51], 320h–321b; and 7.8, 9.84. 180 The ‘institutionalising’ of the trustees’ misrepresentation was held ‘conceptually perfectly straightforward’, despite the citation of Redrow plc v Pedley, n 174 above, [60]–[64]: see n 37 above at [47], and despite the court’s referring to a surviving spouse’s pension being provided to A ‘outside the rules of the scheme’. Also, at [56] the court distinguished a case requiring the exercise of a discretion or a power of amendment to produce the benefit claimed by way of estoppel where, it was said, it might be more difficult to say that it would be unconscionable for the trustees to deny the claim ‘since that would be to impute to them a decision (which they had not in fact made) to exercise their discretion or to amend the scheme in favour of [A]’. Both suggest, confusingly, that the court did not consider the granting of relief to A to involve variation of the trusts of the scheme. 181 Note 37 above at [52]. In Shannan v Viavi Solutions UK Ltd [2016] Pens LR 193, at [103], it was pointed out: ‘Although in some circumstances beneficiaries can be treated as privies of their trustees, eg where trustees have been litigating to protect their beneficiaries’ rights and an estoppel per rem judicatam arises, in other circumstances there is no privity, because the beneficiaries have rights and interests that do not necessarily coincide with those of the trustees. In the case of a pension scheme, the beneficiaries are not volunteers and do have independent rights, and … pension trustees have to take decisions … that do not necessarily favour some or even all of the beneficiaries’. It was held that this precluded a finding of an estoppel by deed, binding all scheme members. 182 In a case where the subject matter of an estoppel is a right or interest in or over trust property, the question is whether the trust property is bound, to which the answer should depend on the criteria examined below in relation to proprietary estoppel, this being a corollary of our view

273

6.53  Parties to the estoppel

6.53 Turning to proprietary estoppel, this generates an equity and an equitable cause of action.183 B may satisfy the equity out of court, failing which A may sue for its satisfaction, when the court may award him a right or interest in or over B’s property. The law as to whether a proprietary estoppel concerning trust property binds the property, with priority over the equitable interests of beneficiaries, is not straightforward.184 There appear to be only two decisions addressing the issue, namely Fielden and Preedy,185 of which the latter has been described as addressing ‘without doubt, one of the trickiest problems to reach the Chancery Division in recent times’.186 6.54 Broadly speaking, there are two different types of proprietary estoppel claim against trustees: in one, A is a stranger to the trusts and claims to have a benefit out of or over the trust property (eg a conveyance of trust land, or a lease, licence or easement of or over trust land);187 and in the other, A is a beneficiary of the trusts and claims some enhancement, enlargement or acceleration of his beneficial interest.188 The issue is best identified, in our submission, not as whether trustees have the ability to create a proprietary estoppel,189 but rather whether they can satisfy it with priority over the equitable interests of beneficiaries; since, if they can satisfy it, they must have been able to create it. 6.55 Dealing first with the case of claims by strangers to the trust to a right in or over the trust property by estoppel, the question is not whether the trustees have the vires to satisfy A’s equity by a disposition of trust property in his favour, since trustees have all the powers of an absolute owner with respect to the legal

that, insofar as such estoppels affect rights in property, they have the same consequences as proprietary estoppel: see 12.196. 183 For proprietary estoppel, see Ch 12. 184 There is a risk of conflating what are arguably two issues, as the court may have done in Preedy v Dunne n 70 above at [7] and [34]: one issue is whether trustees can create a proprietary estoppel equity which has priority over the interests of the beneficiaries; the other is whether such an estoppel is ‘binding on the beneficiaries’. Although these formulations may be regarded for some purposes as equivalent, read literally they arguably address distinct matters: thus, if a disposition satisfying a proprietary estoppel equity confers priority over the interests of the beneficiaries, then the latter are obviously affected; but this is different from saying that the estoppel binds them personally, when they may have a personal liability to pay compensation. (The objection disappears, of course, if the court meant to say the same thing with each formulation, and was not concerned with whether the estoppel bound beneficiaries personally.) 185 See n 70 above. 186 Dixon [2015] Conv 469, at p 473. 187 It is also possible for a beneficiary to claim that by estoppel he should be awarded a right over or an interest in trust property, as if he were a stranger to the trusts. The claim in Preedy v Dunne n 70 above at [53] to ‘an enforceable contractual licence against the trustees’ and ‘an equity being a right of occupation … until the loans are repaid …’ is an example. 188 See Fielden n 70 above. It is also possible for a stranger to the trusts to claim that by an estoppel he should be treated as a beneficiary or should have benefits out of the trust fund as if he were a beneficiary. Catchpole v Trustees of the Alitalia Airlines Pension Scheme n 37 above is an example. 189 As the court in Preedy n 70 above framed it, at [48].

274

Persons bound by the estoppel 6.56

estate in or title to any form of property.190 Thus, a conveyance, transfer, assignment or grant of a legal estate or interest in land, chattels, shares or other choses in action is effective at law to vest title to the estate or interest in the grantee. As between themselves and their beneficiaries, however, the authority of trustees to effect particular dispositions may be limited.191 Accordingly, a disposition of trust property may be intra vires the trustees but nevertheless beyond their authority or an abuse of it. In either of these cases, as well as where the disposition is ultra vires the trustees, a beneficiary can insist, as against A, on the trust being restored to its previous position, unless the disposition was effective to vest in A the legal estate or interest and A’s acquisition was protected by the doctrine of purchaser for value without notice or by statute.192 Alternatively, A may claim that the disposition has overreached equitable interests.193 If trustees who have acted so as to generate an equity in A’s favour attempt to satisfy it out of court by a disposition of a legal estate or interest in trust property, the interests of beneficiaries (if prior in time to A’s equity) will nevertheless have priority over A’s interest under the disposition, unless it is protected in one of the ways just mentioned. 6.56 For the purpose of exercising their functions, section 6(1) of the Trusts of Land and Appointment of Trustees Act 1996 confers on trustees of land ‘all

190 Bowes v East London Waters Works Co (1820) Jac 324. If this were not so, there would be no room for the doctrine of a purchaser for value without notice: see de Vigier v IRC [1964] 1 WLR 1073, HL, at 1083 (Lord Upjohn). Trustees possess these powers simply as human beings, because at law they are the absolute owners: see Rolled Steel Products (Holdings) Ltd v British Steel Corpn [1986] Ch 246, CA, at 303 (Browne-Wilkinson LJ). 191 The holding of title to property by a trustee does not of itself (in terms of agency) confer, outside the terms of the trust and general law, apparent authority to act as an absolute owner so as to bind the beneficiaries nor, in terms of estoppel by negligence, constitute negligence or risk-taking by the beneficiaries such as to saddle them with the risk of the trustees breaching their duty to the beneficiaries in their relations with a third party: Shropshire Union Railways and Canal Co v R (1875) LR 7 HL at 507–8, 510–11, 511–12, 514–5; Burgis v Constantine [1908] KB 484 at 496, 500, 501–2. If, however, the settlor has so conveyed the property to trustees as to misrepresent that the trustees are absolute owners, the settlor and beneficiaries will be estopped from denying this against subsequent equitable encumbrancers: Re King’s ST [1931] Ch 294. So also, if the trustees have authority to enter into the dealing with the trust property in relation to which the estoppel arises, the beneficiaries will be bound as against A, notwithstanding that the specific assent, representation or silence that gives rise to the estoppel was a breach of duty by the trustees towards the beneficiaries: Lloyds Bank v Bullock [1896] Ch 192. 192 Cf Rolled Steel Products (Holdings) Ltd v British Steel Corpn n 190 above at 303. The principal example of statutory protection is to be found in the case of registered land, as to which see 6.57. 193 See generally State Bank of India v Sood [1997] Ch 276, CA. At 281, Peter Gibson LJ described the limits of overreaching in terms of ‘the exercise intra vires of a power of disposition’. For present purposes, the limits can be restated in terms of administrative transactions that are within the authority of the trustees. An administrative transaction which exceeds the trustees’ authority or is an abuse of it cannot overreach, although the disponee may still take free of prior equitable interests if he is a purchaser for value without notice: see Rolled Steel Products (Holdings) Ltd v British Steel Corpn n 190 above at 303.

275

6.56  Parties to the estoppel

the powers of an absolute owner’.194 Section 6(1) may accordingly be said to authorise trustees of land to make a disposition of the land with a view to satisfying a proprietary estoppel equity.195 The issue that s 6(1) does not resolve, however, and to which we now turn, is whether such a disposition by trustees confers priority on the estate or interest with which it deals.196 6.57 In the case of registered land, the registration of a ‘registrable disposition’,197 if ‘made for valuable consideration’, has the effect of postponing to the interest under the disposition any interest affecting the estate immediately before the disposition whose priority is not protected at the time of its registration. Since interests under a trust of land cannot be protected by notice,198 the only interest with protection against the registration of a registrable disposition in A’s favour is one within Schedule 3 to the Land Registration Act 2002, of which the most prominent is an interest belonging at the time of the disposition to a person in actual occupation. A preliminary issue, however, is whether the disposition in A’s favour is ‘made for valuable consideration’: if not, the basic rule in section 28 applies (ie the priority of an interest in the registered estate is not affected by a disposition), so that the beneficial interests under the trusts would continue to bind the property in A’s hands.199 Authority is lacking on the question whether detriment that is suffered by A, but does not move to the trustees or the trust, is valuable consideration for this purpose. It is clearly arguable that it is not.200 6.58 In the case of unregistered land, A would only have priority over the beneficial interests under the trusts if he were to establish that either he was a bona fide purchaser for value without notice or the interests were overreached by the disposition. In relation to a trust of land, overreaching depends on section 2(1)(ii) of the Law of Property Act 1925, which only applies to a ‘purchaser’. For this purpose, ‘purchaser’ means ‘a person who acquires an interest in or charge

194 It should be borne in mind that s 6(1) may be excluded by the disposition which created the trust: see s 8(1). Although s 6(1) refers to powers, it is clear that it is not concerned with vires but with the authority of trustees of land in relation to their beneficiaries. 195 It has been held, however, that the authorities conferred by s 6(1) are confined to ‘formally and substantively complete transactions’: see Preedy n 70 above at [48]. This aspect of the decision has been criticised on the basis that it takes too narrow a view of s 6(1): see Dixon [2015] Conv 469, pp 471–2. We are inclined to agree with the criticism. Nevertheless, Dixon implicitly supports the court’s approach in searching for a wide enough trustee authority. 196 The fact that A’s equity may be satisfied by the trustees, with priority over the equitable interests of beneficiaries, does not itself provide the trustees with a defence to a claim by beneficiaries that its creation was a breach of trust. 197 That is, the transfer of the registered estate, a lease of more than seven years or the grant of a legal easement, rentcharge or legal charge: see s 27 of the Land Registration Act 2002. 198 See s 33 of the 2002 Act. 199 The basic rule also applies to dispositions that are not ‘registrable’. 200 In Delaforce v Simpson-Cook (2010) 78 NSWLR 483 (NSWCA), at [56], Handley JA observed that ‘The detrimental reliance that supports [a proprietary estoppel] need not constitute, in any sense, a consideration moving to the party bound. It is a unilateral element of the estoppel and not the price paid for it’.

276

Persons bound by the estoppel 6.61

on property for money or money’s worth’.201 It is clearly arguable that detriment suffered by A is neither value nor money’s worth. 6.59 In the case of land, whether registered or unregistered, the satisfaction of A’s equity may be the grant of a non-proprietary right, such as a licence.202 Trustees of land with the powers conferred by section 6(1) of the 1996 Act clearly have authority to grant a licence.203 No question arises of a licence ‘overreaching’ the interests of the beneficiaries, precisely because it does not create a proprietary interest. The grant of a licence to satisfy a proprietary estoppel equity might nevertheless be voidable by beneficiaries unless A established that he had no notice of any abuse of authority by the trustees.204 6.60 In the case of assets other than land, such as chattels and choses in action, the position would appear to be as for unregistered land,205 save that any overreaching of beneficial interests would take place under the general law.206 6.61 Where A is a beneficiary, or claims to be entitled to be treated as one, he may claim that his equity is to be satisfied by the enlargement, enhancement or acceleration of his subsisting interest, or by the conferring of a new beneficial interest. In such a case, the trustees can only satisfy A’s equity if there is an available dispositive power or authority capable of conferring a beneficial interest with priority over the other beneficial interests. Section 6(1) of the 1996 Act is irrelevant, since the authority thereby conferred relates to administrative, not dispositive, transactions.207 In Fielden,208 a dispositive power existed in the form of a power of appointment. A was an object of the power and claimed against the trustees that, by reason of a proprietary estoppel arising out of representations concerning the trustees’ intentions as to the future exercise of the power, he was entitled to a house comprised in the trust fund, alternatively the right to live there rent-free until his death. The court rejected the trustees’ argument that the future exercise of the power could not be fettered by an estoppel. Nothing was said about the trustees’ ability to satisfy A’s equity, but they could have made an irrevocable appointment in A’s favour which, unless impeachable by beneficiaries, would have postponed all interests in default of appointment to A’s appointed interest.

201 See s 205(1)(xxi) of the Law of Property Act 1925. 202 See, in the case of a licence, Ashburn Anstalt v Arnold n 131 above. 203 See Preedy, n 70 above at [53]. 204 Cf 6.55, text to n 192 above. 205 See Snell’s Equity n 130 above, [4–019]. 206 See also n 193 above. Trustees do not generally have authority to sell chattels settled upon persons in succession (see Snell’s Equity n 130 above at [28-004]), but such an authority may be implicit where the trust fund is held on trust for sale. Trustees generally have authority to sell shares etc, either because the trust fund is held on a trust for sale or as ancillary to an express or implied authority to invest. It is, however, doubtful whether a disposition made in order to satisfy a proprietary estoppel equity is within an authority to sell. If it is not, there is no overreaching. See also 6.55 and n 193 above. 207 See Preedy, n 70 above at [47]. 208 Note 70 above at [1].

277

6.62  Parties to the estoppel

6.62 Finally, in a case where the trustees have not satisfied A’s equity out of court, the question is whether the court has power to satisfy it, or to order the trustees to satisfy it, with priority over the interests of beneficiaries.209 It is submitted that the powers of the court are co-extensive with the ability of the trustees to satisfy the equity out of court.210

209 In the case of registered land, a disposition ordered by the court will only take priority over beneficial interests under the trusts if it is ‘registrable’ and ‘made for valuable consideration’: see 6.57. In the case of unregistered land, the doctrine of purchaser for value without notice will have no application to a disposition ordered by the court, since, by then, if not before, A will have notice of the trusts. Thus, he will be wholly reliant on the doctrine of overreaching in order to obtain priority. Where a conveyance etc of a legal estate or interest in land is ordered by the court, overreaching takes place under s 2(1)(iv) of the Law of Property Act 1925, and is thus subject to the requirement that A’s acquisition under the disposition be ‘for money or money’s worth’: see 6.58. Similar considerations indicate that a licence may not be an effective way of satisfying a proprietary estoppel equity as against trustees of land, whether registered or not, since (i) a licence is not a ‘registrable disposition’ (indeed, it is not a disposition at all); (ii) it cannot overreach beneficial interests; and (iii) A will have acquired notice of the trusts in the course of the proceedings, if not before: cf 6.59. In the case of chattels, shares etc, the purchaser for value doctrine will not apply (see above) and overreaching is doubtful: see 6.60 and n 206 above. Where the claim concerns a beneficial interest under the trusts, the court’s powers depend on the width of the trustees’ dispositive powers. In Fielden n 70 above, the possibility of an out-of-court appointment in A’s favour justified the judge’s conclusion that, in principle, such an estoppel can bind the trust property: see 6.61. 210 The fact that A’s equity is satisfied by the court, with priority, does not itself provide the trustees with a defence to a claim by beneficiaries that its creation was a breach of trust.

278

CH A P T E R 7

The defence of illegality

Introduction  7.1 General principles  7.5 Formality  7.14 Waiving the protection of a statute  7.27 Ultra vires  7.36 Other applications  7.39 No estoppel as to jurisdiction  7.43 Statutory duty and discretion  7.48 Foreign law  7.56

INTRODUCTION The defence 7.1 If A1 establishes all the requisite elements of an estoppel, an affirmative answer may remain open to B that the estoppel would deprive B of rights protected by public policy, would prevent B performing a public duty, would give to B a power which the law denies him, or would give to the court a jurisdiction it lacks. The court will refuse an estoppel on these grounds, as they are matters of public policy, even if unpleaded.2 This defence, that the estoppel would unacceptably subvert the public policy of a rule of law, has been called the

1 2

As throughout, ‘A’ denotes the estoppel raiser, and ‘B’ the party estopped. Fairtitle d Mytton v Gilbert (1787) 2 Term Rep 169 at 171; Norwich Corp v Norwich ­Electrical Tramways Co [1906] 2 KB 119; NW Salt Co Ltd v Electrolytic Alkali Co Ltd [1914] AC 461 at 469; Awwad v Geraghty [2001] QB 570 at 596; the same is the case for the general defence of illegality: Bilta (UK) Ltd (In Liquidation) v Nazir [2016] AC 1 at [62]; contrast Waltham Forest LBC v Oakmesh Ltd [2010] JPL 249 at [47] sed quaere.

279

7.1  The defence of illegality

defence of ‘illegality’, although it might more clearly be named the defence of ‘subversion’, to distinguish it from the defence of illegality to any claim based on a criminal or ‘quasi-criminal’3 act that is embodied in the maxim ‘ex turpi causa non oritur actio’.4 The latter defence will also provide an affirmative answer5 to a claim to an estoppel,6 just as it will to other civil claims, but is of more restricted application, requiring at least quasi-criminality, rather than protecting the public policy of civil laws, as does the defence with which we are now concerned.

Summary 7.2 The considerations relevant to whether an estoppel is precluded by a statute or other rule of law are suggested below to be as follows: (1) the policy which the rule furthers or embodies;7 (2) whether the rule is solely for the protection or benefit of B or is also in the public interest;8 (3) whether the benefit or protection conferred includes the paternalistic element that it may not be waived.9 If the rule is solely for the protection or benefit of B and does not have that paternalistic element, it will not preclude estoppel. Otherwise, consideration of the following is necessary: (1) whether the policy of the rule will be subverted by the estoppel and, if so, the degree to which it will be subverted by it: if, for instance, the estoppel, if available in the instant case, would be available in any case to which the rule applies, thereby nullifying the rule,10 the rule will preclude the estoppel; 3 See Patel v Mirza [2016] 3 WLR 399. 4 As to which, see n 3 above. 5 See n 3 above. If it would ‘… be harmful to the integrity of the legal system (or, possibly, certain aspects of public morality …) … In assessing whether the public interest would be harmed in that way, it is necessary (a) to consider the underlying purpose of the prohibition which has been transgressed and whether that purpose will be enhanced by denial of the claim, (b) to consider any other relevant public policy on which the denial of the claim may have an impact and (c) to consider whether denial of the claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for the criminal courts’: Patel v Mirza n 3 above at [120] per Lord Toulson JSC. This approach is similar to the approach of the courts to the present defence to estoppel, as considered at 7.6 onwards. 6 See n 3 above; Barrett v Barrett [2008] 2 P & CR 17 at [25]–[27]; in Horton v Westminster Improvement Commrs (1852) 7 Exch 780 at 79, Martin B said of a plea of estoppel by deed: ‘The meaning of estoppel is this – that the parties agree, for the purpose of a particular transaction, to state certain facts as true; and that, so far as regards that transaction, there shall be no question about them. But the whole matter is opened where the statement is made for the purpose of concealing an illegal contract; for persons cannot be allowed to escape from the law by making a false statement’. 7 See 7.6, 7.7. 8 See 7.28. 9 See 7.29. 10 See 7.25.

280

Introduction 7.3

(2) the importance of the policy the rule embodies or furthers;11 (3) the gravity of the injustice that will result in the instant case if unremedied by the estoppel;12 (4) whether preservation from erosion by an estoppel of the rule, and thereby both the public interest the rule furthers and the certainty of legal relations it dictates, requires that in the instant case such injustice as the estoppel would remedy go unremedied by it. Similar issues are engaged, in asking whether the application of a statute or rule of law may be altered by (otherwise) binding agreement, as in asking whether it may be altered by responsibility for detrimental reliance; as a result, whether the parties may contract or be estopped out of the application of a statute or rule of law has been treated, in many cases,13 as in substance the same question.14

Defences considered elsewhere 7.3 The third edition of this work also considered in this chapter the defences or answers to a claim to an estoppel that: (i) A knew of the inaccuracy of the representation; (ii) B revoked the representation before reliance was placed on it; (iii) B was induced to make the representation by A’s fraud or coercion; and (iv) B was induced to make the representation by a misrepresentation by A, so as to cross-estop A from raising the estoppel. In subsequent editions, these are considered in Chapter 5 as grounds upon which B may deny that A has established that B is responsible for A acting on the representation, in particular that A was intentionally induced by B so to act such that it would be unfair for B now to recant, as opposed to being affirmative answers to an estoppel raised by A establishing all its necessary elements. In cases (i) and (ii) above, there is no actual inducement by the representation, and in cases (iii) and (iv), although B may as a result have actually intended A to act on his representation, A himself is responsible for B so intending, and so B’s intention is not such as to make B responsible to A, who remains responsible, and at risk, for his own conduct.15 In our view, the requirement for an estoppel of B’s responsibility for A’s reliance on 11 See 7.7. 12 See 7.9, 7.10. 13 In the case of the limitation on the doctrine of promissory estoppel to defensive suspensory application, however, this principle operates to protect the doctrine of consideration itself from subversion by estoppel. 14 See, for instance, cases on protective statutes at 7.29 onwards and on jurisdiction at 7.43 onwards. In the thorough judgment of Neuberger J in PW & Co v Milton Gate Investments Ltd [2004] Ch 142, however, a landlord, head tenant and sub-tenant could not contract, but could be estopped by convention, out of the application of the principle that a sub-tenancy cannot survive the determination of a head tenancy: the point that estoppel may not unacceptably subvert a rule of law does not, however, appear to have been argued. 15 Cf another instance in which, although B may have intended to induce A to act on a representation, there is no estoppel, because B is not responsible to A: ie where A knew or should have known that he acted at his own risk, because B was not making himself responsible to A, eg because B’s representation was or should have been understood to be binding in honour only: Cobbe v Yeoman’s Row Property Management Ltd [2008] 1 WLR 1752.

281

7.3  The defence of illegality

the relevant proposition is an essential element of the estoppel itself, and these defences are therefore reasons why the estoppel itself is not established, rather than affirmative answers to an otherwise established estoppel.16 7.4 Also considered elsewhere is the defence to equitable estoppel that A does not come to equity with ‘clean hands’.17 Since it is submitted that all reliance-based estoppels are essentially equitable,18 it is submitted that this defence should, on appropriate facts, be available to an estoppel by representation of fact or law and to a reliance-based estoppel by convention, as well as to a proprietary estoppel or promissory estoppel.

GENERAL PRINCIPLES Protection of statutory and common law rules 7.5 It is, for the most part, the conferral of a right, the imposition of a duty, the limitation of a power, or the requirement of a formality for validity by statute that has been considered by the courts to carry the implicit intent, as a matter of public policy, that it should not be susceptible to reversal by estoppel. This is not a matter of doctrinal necessity, but is rather because it is rare that such public policy survives only as common law rather than being embodied in statute. As a result, however, this principle has been identified as being that estoppel ‘cannot be invoked to negative the operation of a statute’.19 This is misleading for two reasons: first, because it suggests that only statute will defeat an estoppel, whereas the public policy embodied in a rule of common law may also do so.20 Thus, for instance, an infant cannot estop himself from claiming the protection the common law affords him,21 and estoppel will not lie against invoking the common law doctrine that prevents restraint of trade,22 nor against asserting the frustration of a contract23 or the holding of a tenancy that has been agreed to be

16 For treatment of some of them as affirmative answers, see Handley Estoppel by Conduct (2016). 17 See 12.139. 18 See 1.99, 1.100. 19 Beesly v Hallwood Estates Ltd [1960] 1 WLR 549 at 561 per Buckley J; affd [1961] Ch 105 (but see further 7.13). 20 See Kok Hoong v Leong Cheong Kweng Mines Ltd, n 27 below at 1015: ‘It does not appear to their Lordships that the principle invoked is confined to transactions that have been made the subject of legislation …’. 21 See 7.39. 22 Proactive Sports Mgt Ltd v Rooney [2010] EWHC 1807 (QB) at [664]–[671] unaffected on appeal [2012] 2 All ER (Comm) 815; Dinsdale Moorland Services Ltd v Evans [2014] 2 Cons LR 217; First Subsea Ltd v Balltec Ltd [2014] 2 Cons LR 217(Ch) at [280]. 23 BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 810A–B per Robert Goff J (unaffected on appeal: [1981] 1 WLR 232, [1983] 2 AC 352), although a party may estop itself from claiming rights that it would otherwise have by reason of such frustration (810C); followed in The ‘Greek Fighter’ [2006] 2 CLC 497 at [38].

282

General principles 7.7

a licence,24 nor may promissory estoppel create a cause of action, so as to avoid subversion of the doctrine of consideration.25

Public policy 7.6 The formulation is misleading, secondly, because it suggests that any statute will defeat an estoppel, as opposed to only those which are held by the court to establish, as a matter of public policy, a right, duty or limitation of power that is not susceptible to waiver by contract or estoppel. Before it so holds, the court will consider whether the public policy embodied in the statute outweighs the demands of justice in the instant case, requiring, for furtherance of that public policy, that the unfairness founding the estoppel should go unremedied.26 Thus, in what has proved to be the leading, albeit only persuasive, authority of Kok Hoong v Leong Cheong Kweng Mines Ltd,27 a decision of the Privy Council concerning estoppel per rem judicatam, Viscount Radcliffe spoke of: ‘… a principle that appears in our law in many forms, that a party cannot set up an estoppel in the face of a statute.’

but went on28 to state that: ‘It does not appear to their Lordships that the principle invoked is confined to transactions that have been made the subject of legislation or that, where legislation is in question, the bare prescription that a transaction is to be void or unenforceable is sufficient by itself to justify the principle’s application’

and adumbrated a test of: ‘Whether the law that confronts the estoppel can be seen to represent social policy to which the Court must give effect in the interests of the public generally or some section of the public, despite any rules of evidence as between themselves that the parties may have created by their conduct or otherwise.’

7.7 Viscount Radcliffe applied this refinement of the test laid down by Atkin LJ in In Re A Bankruptcy Notice29 of whether the ‘law relied upon is imposed in the public interest or on grounds of general public policy’ only to a case ‘where the laws of money lending or monetary security are involved’,30 but it has been adopted 24 25

26 27 28 29 30

Street v Mountford [1985] AC 809; Bruton v London & Quadrant Housing Trust [2000] 1 AC 406. Combe v Combe [1951] 2 KB 215; Azov Shipping Co v Baltic Shipping Co [1999] 2 All ER (Comm) 453 at 473j–476g; see 1.47–1.50; 8.56–8.60; 14.22, 14.25. The view advanced here and in the fourth edition (at VII.2.1), that the preclusion of promissory estoppel founding a cause of action may be seen as an instance of the rule that prevents an estoppel from unacceptably subverting the policy of a rule of law, in this case the doctrine of consideration, has been independently adopted by Barnes [2011] LMCLQ 372. See eg Newport CC v Charles [2009] 1 WLR 1884 (CA) at [14]–[21]. [1964] AC 993, PC, at 1015; Andrews (1966) 29 MLR 1. Also at 1015. [1924] AC 993 at 1016, [1924] 2 Ch 76 at 97. As to which, see also Binder v Alachouzos [1972] 2 QB 151.

283

7.7  The defence of illegality

as a criterion of general application, for instance, by Beldam LJ in Yaxley v Gotts,31 saying ‘The general principle that a party cannot rely on an estoppel in the face of a statute depends upon the nature of the enactment, the purpose of the provision and the social policy behind it’; and in Scottish & N ­ ewcastle Plc v Lancashire Mortgage Corporation Ltd,32 Mummery LJ reaffirmed that ‘… the application of this principle depends on the nature of the statute, the purpose of the particular provision and its social policy. It is a general principle not an absolute rule’.

Application to rules of equity 7.8 By the same approach to a non-statutory rule of equity, Sir William Blackburne held in Fielden v Christie-Miller33 that an estoppel, based on a representation by trustees of land to a discretionary beneficiary that the beneficiary would become the owner of the land, was not precluded by the rule that trustees cannot, even by contract with a beneficiary, fetter the future exercise of their discretion. The injustice of denying the beneficiary a remedy in estoppel for his detrimental reliance on the trustee’s representation appeared to the court to outweigh that of thereby denying the other beneficiaries the protection which the rule against fettering future discretion provides, such that the subversion of that rule by the estoppel was held acceptable. The argument that pension trustees may not be estopped from fettering the future exercise of their discretion has not yet been conclusively addressed. In Stena Line Ltd v Merchant Navy Ratings Pension Fund Trustees Ltd,34 Briggs J did not need to rule on the submission, but observed that ‘Where the persons claiming the benefit of such an estoppel are, as here, cognisant of the trustee’s powers, that submission has very real force, but it is not without its difficulties’. In Catchpole v Trustees of the Alitalia Airlines Pension Scheme,35 however, Warren J held pension trustees estopped from denying that the claimant was a surviving spouse so as to be entitled to a spouse’s pension on the death in service of his partner, concluding that, ‘Although the provision of 31

32

33 34 35

[2000] Ch 162 at 191A, with the concurrence of Clarke LJ at 182D and Robert Walker LJ at 174H–175A; followed in Shah v Shah [2002] QB 35, at 44B–C; Henderson J, following Shah v Shah, in No 1 India Quay (Residential) Ltd v East Power Apartments Ltd [2016] EWHC 2438 (Ch) at [69], [75] held (obiter) that estoppel from denying valid formal service at an address represented as acceptable, although not the address specified by the statute, would further, not thwart, the statutory purpose of the Landlord and Tenant Act 1988 of preventing landlords from unreasonably withholding or delaying consent to assignment; see also Tudor Devts Pty Ltd v Makeig [2007] NSWSC 1116 affd (2008) 72 NSWLR 72; Neumann Contractors Ltd v Traspunt No 5 Pty Ltd [2011] 2 Qd R 114, at [67]–[68]; contrast Netglory Pty Ltd v Caratti [2013] WASC 364, at [187]–[201]. [2007] EWCA Civ 684 at [50]; see also Newport CC v Charles [2009] 1 WLR 1884 (CA) at [14]–[21]; in Wilson v Truelove [2003] 23 EG 136, for instance, the court would have had to decide whether s 9(4) of the Perpetuities and Accumulations Act 1964 precluded an estoppel by which an option otherwise void for perpetuity might have been enforced, but did not by reason of other findings. [2015] EWHC 87 (Ch); but see further 6.47 onwards, 12.53 n 155; note that the power could have been exercised when the estoppel would have been created. [2010] Pens LR 223. [2010] ICR 1405 at [54]; but see further 6.47 onwards; and cf Police and Crime Commr for Greater Manchester v Butterworth (unrep Ch Div 10 November 2016) obiter at [33].

284

General principles 7.10

this benefit outside the rules of the Scheme may impact adversely on the interests of other beneficiaries, those interests do not, in all the circumstances, justify a departure from the prima facie conclusion that it would be unconscionable for the Trustees to deny Mr Catchpole’s claim’; and in Kelly v Fraser36 the trustees of a pension scheme were estopped from denying that they had approved the transfer in of funds from another scheme, by acknowledgment by an employee held out as having authority to communicate it, and by the issue of subsequent benefit statements. This issue bears comparison with the question whether a local authority may bind itself by encouraging detrimental reliance, notwithstanding its duty to the public.37 Although that is now, in the sphere of government, addressed as a question of legitimate expectation in public law,38 a local authority may yet be bound by estoppel in dealings governed by private law.39

Weighing public policy and the justice of the case 7.9 A statute or rule of law may, therefore, preclude one estoppel but not another, according to whether it conflicts with its policy.40 The court must determine whether the statute or rule embodies a public policy, the importance of avoiding whose subversion outweighs the justice of allowing the estoppel, as, for instance, the interests of certainty and international uniformity were recently held to preclude an estoppel against invoking the application of the Warsaw ­Convention by the Carriage by Air Act 1961.41 7.10 This raises the question whether the court is required to weigh the injustice to be avoided by the particular estoppel in each case. In the ordinary case, it may be said that, if a statute precludes an estoppel of a particular type, then it should preclude all such estoppels, regardless of how great is the detrimental reliance by the estoppel raiser, and regardless of whether the relevant representation was made innocently or carelessly. Moreover, any estoppel which would further a criminal or ‘quasi-criminal’42 purpose, would reward such conduct, or is based on such a transaction,43 will be absolutely44 precluded. On the other hand, correspondingly, it may be argued that, in the particular case in hand, the 36 [2013] 1 AC 450, PC. 37 See 7.48 onwards. 38 See 7.52. 39 See 7.53; but see further, as to trustees, 6.47 onwards. 40 See eg Balkis Consolidated Co v Tomkinson [1893] AC 396; NW Gas Board v Manchester Corpn [1963] 3 All ER 442; Actionstrength Ltd v International Glass Engineering SpA [2003] 2 AC 541. As McFarlane, The Law of Proprietary Estoppel (2014) at [6.172] notes, the relief sought by means of the estoppel may prevent conflict with a statute as in Balkis, where A did not seek, by estopping B from denying his ownership of shares, to compel B to issue shares to it beyond its authorised limit, and therefore ultra vires, but rather to pay damages for a wrong done to A by failure to register him; see also Maharaj v Chand [1986] AC 898, PC (n 55 below); Brightlingsea Haven Ltd v Morris [2009] 2 P & CR 11; and cases at 7.23. 41 Laroche v Spirit of Adventure (UK) Ltd [2008] EWHC 788 (QB). 42 See 7.1. 43 See 7.1. 44 See 7.1.

285

7.10  The defence of illegality

injustice which an estoppel is to remedy is so grave that the statute whose policy would be subverted by it should not preclude the estoppel, as it ordinarily would, because, in this case, its subversion is acceptable to prevent an injustice of such gravity, as where a statute may not be used as an instrument of fraud.45 This suggests that consideration of the degree of injustice to be remedied by the estoppel may be relevant to whether it is precluded by public policy. 7.11 A representation or agreement that statutory protection applies, of which a substantial part cannot be made thereby to apply because it would confer on the court a jurisdiction that it does not have, will not, however, found, by ‘reading down’, an estoppel from denying such protection as the statute might afford without conferring that jurisdiction.46 From this, a wider proposition may be argued to follow that, if a representation or convention is precluded by conflict with a statute or rule of law from founding an estoppel according to its terms, it will not be read down to a representation or convention that has effect save insofar as it would conflict with the statute or rule of law, and will not therefore found an estoppel from denying even that qualified proposition.

Statutory construction 7.12 The first task where, as is usual, the alleged illegality is statutory, is to construe the relevant statute. The affirmative answer fails, and the estoppel is not defeated, for instance, where the transaction in controversy is one which legislature has not rendered absolutely illegal or void, but only voidable;47 or where, although A may have infringed a statute as regards his status or qualification, any transaction into which he enters is not thereby absolutely annulled;48 or where the instrument propounded is not prohibited or rendered void, but only made subject to penalty, for instance, by a revenue statute;49 or where the proceedings of a company constitute a breach, not of any statute relating to the company or companies generally, or of its memorandum of association, but only of the company’s articles of association, and are therefore only in this sense ultra vires the company;50 or where the result of allowing the estoppel will be, not to sanction the issue by a company of shares in contravention of the Companies Act, but only to compel payment of damages by the company for breach of contract to issue the shares, which payment is not rendered illegal by the statute.51

45 See Snell’s Equity (33rd edn) at [7–14]; and cf also cases at 1.70 n 305. 46 NRAM v McAdam [2016] 3 All ER 665 at [55]; see further 7.31–7.35, 7.47. 47 A-G of Victoria v Ettershank (1875) LR 6 PC 354 at 368; Davenport v R (1877) 3 App Cas 115 at 128–130. In Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850, the House of Lords held a plea of waiver tenable in the face of a statutory direction that, if a specified time were exceeded, the claim ‘should not be entertained’. 48 Cooke v Loxley (1792) 5 Term Rep 4. 49 Barrow Mutual Ship Insurance Co v Ashburner (1885) 54 LJQB 377, at 378–9 per Brett MR. 50 York Tramways Co v Willows (1882) 8 QBD 685, CA, at 699; Faure Electric Accumulator Co v Phillipart (1888) 58 LT 525 at 528; Re Investment Executive Trust [1937] NZLR 815 at 842. 51 See Balkis Consolidated Co v Tomkinson n 40 above.

286

Formality 7.14

7.13 By such an exercise in construction, an easement by estoppel has also been held not to be barred by non-registration under s 13 of the Land Charges Act 1925.52 A contract which lacks priority for failure to register it in accordance with s 4(6) of the Land Charges Act 1972 cannot, however, be enforced by means of an estoppel.53 Also in the context of land, the Privy Council has held that an estoppel both is54 and is not55 precluded by a Fijian Land Ordinance according to whether it purports to establish a proprietary right or a personal licence only, a difference in outcome that has been ascribed to whether the detrimental reliance founding the estoppel was itself an unlawful course of conduct.56 While, however, application of the ex turpi causa rule57 must prevent criminal or quasi-criminal conduct constituting the detrimental reliance founding an estoppel, where the conduct breaches a civil statute or rule of law the issue is submitted to remain that identified above:58 as to whether upholding the estoppel would unacceptably subvert the public policy underlying that rule. Conversely, the provisions of a statute may, construed in the light of their purpose, not be capable of satisfaction by means of an estoppel, for which reason an estoppel (based on the parties holding themselves out as partners in their application for VAT registration) was held, in the interests of fair taxation, not to satisfy statutory conditions as to liability to VAT.59 An estoppel available in UK national law, based on the acquiescence of a trade mark holder, was also recently held not to amount to consent to use of the trade mark, as exclusively defined by the European Community Trade Mark Regulation.60

FORMALITY 7.14 The necessity for this exercise of construction, to ascertain the statutory purpose and whether its promotion precludes an estoppel, is borne out by consideration of the effect on estoppel of those statutes under which, in the interests of certainty, the law requires that a valid transaction may only be effected in a certain form, as in the cases of contracts for the disposition of an i­nterest in land61 and contracts of guarantee.62 To allow reliance on such a ­transaction, 52 53

ER Ives (Investments) Ltd v High [1967] 2 QB 379 at 395. Lloyds Bank v Carrick [1996] 4 All ER 630; Beesly v Hallwood Estates Ltd [1960] 1 WLR 549 at 561. 54 Chalmers v Pardoe [1963] 1 WLR 677, PC; see also n 40 above. 55 Maharaj v Chand [1986] AC 898, PC; and see Brightlingsea Haven Ltd v Morris [2009] 2 P & CR 11, also distinguishing Chalmers v Pardoe, n 54. 56 By McFarlane, The Law of Proprietary Estoppel (2014) at [3.56]–[3.58], [6.173]–[6.177]. 57 See 7.1. 58 At 7.6 onwards. 59 HMRC v Pal [2006] EWHC 2016 (Ch); see further, as to statute looking through any estoppel as a matter of fair application in promotion of underlying policy, preclusion of loss of the statutory protection by estoppel at 7.5. 60 Marussia Communications Ireland Ltd v Manor Grand Prix Racing Ltd [2016] Bus LR 808. 61 Section 2 Law of Property (Miscellaneous Provisions) Act 1989. 62 Section 4 Statute of Frauds 1677; for a full account of the policy behind which, see Actionstrength Ltd v International Glass Engineering SpA [2003] 2 AC 541, at [1]–[6] per Lord Bingham.

287

7.14  The defence of illegality

which is invalid for want of formality, to found an estoppel, is contrary to the policy of these statutes. As Nugee J observed in MP Kemp Ltd v Bullen Developments Ltd:63 ‘The policy behind section 264 is pretty plainly the same as that given by Lord Hoffmann in relation to section 465 in the Actionstrength case at [19], namely that: “… the purpose of the statute was precisely to avoid the need to decide which side was telling the truth about whether or not an oral promise had been made and exactly what had been promised”’. Yet, in Kok Hoong v Leong Cheong Kweng Mines Ltd,66 Viscount Radcliffe described them as statutes ‘which, though declaring transactions to be unenforceable or void, are nevertheless not essentially prohibitory, and so do not preclude estoppel’. Such a statute will, however, preclude an estoppel which, if valid in the instant case, could then be raised in any case to which the statute applies, as it would thereby render the statute nugatory.67

Detrimental reliance on an informal contract for the sale of land 7.15 In the case of a contract to dispose of an interest in land, s 2(5) of the Law of Property (Miscellaneous Provisions) Act 1989 provides that failure to comply with the formal requirements of s 2(1) does not affect the creation or operation of a constructive trust. Notwithstanding the conceptual differences between constructive trusts and proprietary estoppels identified by Lord Walker in Stack v Dowden,68 such is the common ground between the doctrines of constructive trust and proprietary estoppel69 that, wherever a party contracting to acquire an interest in land under a contract invalid for failure to comply with s 2 might deploy the doctrine of proprietary estoppel, he may also enforce his

63

[2014] EWHC 2009 (Ch) at [123]. See also Herbert v Doyle [2011] 1 EGLR 119 at [10] per Arden LJ (see 7.18). 64 Law of Property (Miscellaneous Provisions) Act 1989; see further, as to the underlying policy, North Eastern Properties Ltd v Coleman [2010] 1 WLR 2715, at [38]–[57] per Briggs J. 65 Statute of Frauds 1677. 66 See n 27 above at 1015, citing as an example Humphries v Humphries [1910] 2 KB 531, which was a case of res judicata. In Decouvrer v Jordan (1987) Times, 25 May, Nourse LJ, after the first instance judge had held the guarantor estopped from denying signature of a memorandum, expressed, obiter, grave doubt whether an agreement which cannot be enforced directly for lack of a sufficient note or memorandum can be indirectly enforced through the medium of an estoppel. However, in Bank of Scotland v Wright [1991] BCLC 244 at 266d–e, Brooke J, and in Credit Suisse v Allerdale BC [1995] 1 Ll R 315 at 371–2, Colman J, held that a guarantor might be estopped from relying on the Statute of Frauds, but not on the facts of either case; the possibility is preserved by the decision of the House of Lords in Actionstrength Ltd v International Glass Engineering SpA, n 62 above, in the case of an unequivocal representation as to the enforceability of the guarantee notwithstanding its informality; see 7.25. See also cases of part-performance that, before abolition of the doctrine, validated contracts in spite of want of formality, eg Thomas v Brown (1876) 1 QBD 714. 67 Actionstrength Ltd v International Glass Engineering SpA n 62 above; followed in Fairstate Ltd v General Enterprise & Mgt Ltd [2011] 2 All ER (Comm) 497. 68 [2007] 2 AC 432 at [37]. 69 See Yaxley v Gotts [2000] Ch 162 at 176B–177G.

288

Formality 7.16

claim under a constructive trust,70 and a party contracting to purchase an interest in land under a contract void for want of formality who has detrimentally relied on the belief, encouraged by the vendor, that he has acquired an interest in the land under the agreement may, therefore, enforce a constructive trust under the s 2(5) exception.71 7.16 Section 2 expressly preserves constructive trusts, but does not, therefore, as a matter of statutory construction, appear to preserve proprietary estoppels, from its effect: Lord Scott considered, obiter, in Cobbe v Yeoman’s Row Property Management Ltd72 that s 2 therefore precludes a proprietary estoppel based on detrimental reliance on an oral contract to buy land, and was followed by Peter Smith J in Hutchison v B & DF Ltd.73 On the other hand, Lewison LJ considered, obiter, in Dudley Muslim Association v Dudley MBC,74 that a proprietary estoppel might lie in spite of s 2 because it gave rise to a constructive trust, but a non-proprietary promissory or conventional estoppel, which would not give rise to such a trust, was precluded by the statute; Arden LJ held in Kinane v Mackie-Conteh75 that a claim in proprietary estoppel would lie if a constructive trust claim also lay; and Bean J held in Whittaker v Kinnear76 that proprietary estoppel may be based on an informal agreement for the sale of land in spite of the

70

Since, there being an agreement which is invalid only for want of formality, the interest which he is to acquire will be sufficiently defined for a constructive trust. McFarlane (The Law of Proprietary Estoppel (2014) at [6.79–80]) argues that there can be no constructive trust at all in this case (from which it would follow that the statutory exception at clause 2(5) is misguided and otiose), but, with respect, it is an orthodox application of the doctrine that a constructive trust may be founded on A’s detrimental reliance on the common intention of himself and B, the owner of land, that A should be its beneficial owner under an agreement for its sale: see Yaxley v Gotts [2000] Ch 162, at 177F–180F, 181E–F, 193D–F; Herbert v Doyle [2011] 1 EGLR 119 (see n 78 below). 71 Yaxley v Gotts, n 69 above. On the other hand, it has been held that a vendor cannot raise an estoppel based on detrimental reliance on a conventional understanding with the purchaser that their contract for the disposition of land was valid in spite of its want of formality: Godden v Merthyr Tydfil HA [1997] CAT No 370, considered with apparent approval in Yaxley v Gotts, at 174G, 175H, 182C. Oddly, the statutory exception appears to reflect an intention that the public policy requiring certainty should apply with greater rigour towards vendors than purchasers, in that a purchaser can enforce a constructive trust of the land based on detrimental reliance on the informal agreement, but the vendor may not be able to enforce the agreement by such means unless the purchase price is a specifically identified fund that may be subject to the constructive trust: see 7.22. Godden v Merthyr Tydfil HA was doubted in Bankers Trust Co v Namdar [1997] EGCS 20. 72 [2008] 1 WLR 1752 at [29]. 73 [2009] L & TR 12 at [85]. 74 [2016] 1 P & CR 10 at [33], with unanimous concurrence; citing Nugee J in MP Kemp Ltd v Bullen Developments Ltd [2014] EWHC 2009 (Ch) at [123]. 75 [2005] WTLR 345, CA, at [25]–[26], following Yaxley v Gotts n 79 below, while Neuberger LJ at [46] assumed, for the purpose of argument, that proprietary estoppel would not lie and Thorpe LJ agreed with both; see also HHJ Behrens in Ghazaani v Rowshan [2015] EWHC 1922 (Ch) at [187]–[197]. 76 [2011] EWHC 1479 (QB) at [30]; and Master Matthews has espoused the same view in Muhammad v ARY Properties Ltd [2016] EWHC 1698 (Ch).

289

7.16  The defence of illegality

statute. McGuane v Welch77 is also Court of Appeal authority that a proprietary estoppel may be so founded in spite of s 2. 7.17 As to constructive trusts, in Herbert v Doyle,78 Arden LJ (with unanimous concurrence) interpreted Cobbe v Yeoman’s Row Property Management Ltd as deciding that ‘if the parties intend to make a formal agreement setting out the terms on which one or more of the parties is to acquire an interest in property, or, if further terms for that acquisition remain to be agreed between them so that the interest in property is not clearly identified, or if the parties did not expect their agreement to be immediately binding, neither party can rely on constructive trust as a means of enforcing their original agreement. In other words, at least in those situations, if their agreement (which does not comply with section 2(1)) is incomplete, they cannot utilise the doctrine of proprietary estoppel or the doctrine of constructive trust to make their agreement binding on the other party by virtue of section 2(5) of the 1989 Act’; but held that, if the agreement was complete but not compliant with s 2(1) and subsequently relied on so as to make its denial unconscionable, it could give rise to a constructive trust under the exception at s 2(5).79 7.18 The Court of Appeal so held, notwithstanding Arden LJ’s reassertion80 of her analysis in Kinane v Mackie-Conteh81 that the policy of s 2(1) is ‘to protect the public by preventing parties from being bound by a contract for the disposition of an interest in land unless it has been fully documented in writing’ and consequent conclusion that ‘It needs to be repeated loud and clear that that is the rule which Parliament had laid down in section 2 of the 1989 Act, and that that is a rule admitting of few exceptions under section 2’, for which reason Briggs J expressed grave reservations on the issue in Anderson Antiques (UK) Ltd v Anderson Wharf (Hull) Ltd,82 out of concern that the statute would be subverted if, as the Court of Appeal has now held, reliance on an oral contract for the sale of land gives the purchaser an interest in the land under a constructive trust.

77

[2008] 2 P & CR 24 at [37], [48], [55]; see also McCausland v Duncan Lawrie Ltd [1997] 1 WLR 38, CA, at 50 per Morritt LJ, Tucker J concurring. 78 [2011] 1 EGLR 119 at [57]; also, at [6] and [46], as noted at 12.154, apparently treating Lord Scott’s obiter view that s 2 precludes proprietary estoppel as binding, but see the reference to proprietary estoppel at [57] quoted at 7.17, which suggests that they did not regard it as conclusive. Herbert v Doyle was followed in Ely v Robson [2016] WTLR 1383. 79 See also Yaxley v Gotts [2000] Ch 162, CA; Ravenocean v Gardner [2001] All ER (D) 116, Jiggins v Brisley [2003] WTLR 1141; and the Court of Appeal so held also in ­Scottish & Newcastle Plc v Lancashire Mortgage Corporation Ltd [2007] EWCA Civ 684 and Matchmove Ltd v Dowding [2016] EWCA Civ 684; and see Mungalsingh v Juman [2016] 1 P & CR 7 at [26]–[27], where the Privy Council considered obiter that an estoppel collateral to a contract for sale of land might lie. 80 At [10]. 81 [2005] WTLR 345. 82 [2007] EWHC 2086 (Ch) at [34]; see also Business Environment Bow Lane Ltd v ­Deanwater Estates Ltd [2007] L & TR 26 at [51], Morritt C considering (obiter) that s 2 would

290

Formality 7.21

7.19 The practical position following Herbert v Doyle nonetheless appears to be that a remedy will lie where there is detrimental reliance on an agreement to dispose of land that is invalid for want of formality by a claim to the benefit of a constructive trust under the exception at s 2(5), rendering academic the issue as to whether a corresponding claim in proprietary estoppel will lie, save in respect of the question of discretion as to the consequent remedy. Similarly, in Pearson v Lehman Bros Finance SA,83 Briggs J recognised that s 53(1)(c) of the Law of Property Act 1925 arguably precludes an estoppel that would otherwise transfer an equitable interest in contravention of the statute’s requirement for signed writing (albeit finding it inapplicable in the case before him), but that in this case also a constructive trust is excepted from the statutory requirement of formality by s 53(2). 7.20 Whether a claim in proprietary estoppel or only to a constructive trust is available does, however, affect the result of the claim, as to whether the court has a discretion as to how to satisfy the equity raised by a proprietary estoppel, or will simply declare that the property is subject to a constructive trust. The question of whether the statute precludes a proprietary estoppel may therefore require an answer.83a On this issue it must be recognised that allowing detrimental ­reliance on an oral agreement to buy land to found a claim to an interest in the land does subvert the policy of avoiding ‘the need to decide which side was telling the truth about whether or not an oral promise had been made and exactly what had been promised’.84 As a matter of construction, the express exception of constructive trusts also appears to exclude85 from that exception proprietary estoppel,86 allowing that a constructive trust may be established by detrimental reliance on an agreement to dispose of land that is invalid for want of formality, but not a proprietary estoppel. 7.21 The issue, however, is whether the proprietary estoppel would unacceptably subvert the policy of the statute. The policy of the statute is expressly to promote the avoidance of uncertainty, but not to such an extent as to preclude constructive trusts. It is submitted that a corresponding proprietary estoppel would not defeat a policy defined as allowing constructive trusts, given the similarity of the operation of the two doctrines in this context, and it has been so held by the Court of Appeal in McGuane v Welch.87 p­ reclude a promissory estoppel so as to vary a lease by collateral agreement; and Nugee J in MP Kemp Ltd v Bullen Developments Ltd [2014] EWHC 2009 (Ch) at [123]. 83

At [413]–[414] (a point not considered in the Court of Appeal [2011] EWCA Civ 1544); see further, as to ss 52, 53 of the Law of Property Act 1925, 12.159 onwards. 83a But see further 12.197 onwards. 84 See n 63 above; contrast McFarlane, The Law of Proprietary Estoppel (2014) [6–38]–[6–41], [6–67], [6–89]–[6–97]. 85 Expressio unius exclusio alterius suggests this to be the correct construction of the statute, notwithstanding the history and error explained by Crozier (2015) 79 Conv 240 and Owen and Rees (2011) 75 Conv 495. 86 But see Mungalsingh v Juman [2016] 1 P & CR 7 at [26]–[27], where the Privy Council ­considered obiter that an estoppel collateral to a contract for sale of land might lie. 87 [2008] 2 P & CR 24 at [37], [48], [55]; see further n 113 below; cf Newport CC v Charles [2009] 1 WLR 1884 at [14]–[21], although it may be argued to the contrary that that policy is fully achieved by the exception for constructive trusts itself; and see also McFarlane [2005] Conv 501.

291

7.22  The defence of illegality

7.22 That a remedy, under the exception for constructive trusts, or, on the submission above, in proprietary estoppel, lies for detrimental reliance on an agreement to dispose of land that is invalid for want of formality is salutary, as otherwise detrimental reliance on an informal promise to dispose of land would afford a remedy if the promise was not supported by consideration,88 but not if it was, when the latter case should make for the stronger claim. It is, however, odd that the allowance of such a claim in constructive trust (or, indeed, proprietary estoppel), by contrast with the abolished doctrine of part-performance, promotes an uneven policy of affording a remedy for detrimental reliance on a formally invalid contract for the sale of land by a purchaser, but not a vendor (unless the vendor can somehow claim the benefit of a constructive trust of the purchase price), particularly given that the ‘lack of mutuality’ of s 40 of the Law of Property Act 1925 was one of the reasons for replacing it with s 2.89

Deeds 7.23 As the Court of Appeal held in this context in Yaxley v Gotts,90 it is necessary to identify the public policy behind a statute in order to determine both whether it will be subverted by the estoppel in question, and whether the general interest of advancing that policy outweighs the specific interest of avoiding injustice in the instant case. The statute may, therefore, override one estoppel but not another, according to whether its underlying policy is subverted thereby.91 Thus, a rule of law requiring formality will not preclude an estoppel against denying that, as a matter of fact, the requisite formalities, such as those required for due execution of a deed, have been completed, as in TCB Ltd v Gray92 or Shah v Shah,93 or that the person who completed the requisite formalities had B’s authority so to do, provided, in each case, that there is a document establishing the terms of the transaction with the certainty that the rule requiring formality promotes. A party may, therefore, be estopped from denying that his signature to a deed was not duly witnessed in accordance with the requirements of s 1 of the Law of Property (Miscellaneous Provisions) Act 1989 if the non-compliance is not apparent on the face of the deed. For, in this case, precluding such an estoppel would increase rather than reduce the certainty which the statute promotes: since, if, as is often the case, the parties executed the deed separately, it would, in 88 See Thorner v Major [2009] 1 WLR 776, at [99] per Lord Neuberger; Whittaker v Kinnear [2011] EWHC 1479 (QB) at [25]. 89 North Eastern Properties Ltd v Coleman [2010] 1 WLR 2715, at [39] per Briggs J. 90 [2000] Ch 162 at 175C, 182A, 191A; see 7.7. 91 See 7.10. 92 [1986] Ch 621: a document stated that it had been signed, sealed and delivered although it had not been sealed (cf Howe v Kingsbury UDC [1912] 2 Ch 452). A seal is no longer required: s 1 of the Law of Property (Miscellaneous Provisions) Act 1989. 93 [2002] QB 35 where an attesting witness signed, but not in the presence of the signatory he witnessed, contrary to s 1(3)(a) of the 1989 Act; Campbell v Redstone Mortgages Ltd [2014] EWHC 3081 (Ch); Lindgren (1974) 9 MULR 411 at 439–44; Butt (2001) 75 ALJ 530; contrast Netglory Pty Ltd v Caratti [2013] WASC 364 at [187]–[201]; Virgo, Harpum [1991] LMCLQ 209 at 215–6.

292

Formality 7.25

effect, render the deed valid or invalid at the option of the party who knew that the witness who purportedly attested was not in fact present when he signed. If, on the other hand, non-compliance with the statute is apparent on the face of the deed, then an estoppel from denying non-compliance is precluded as subverting the certainty promoted by the statutory requirements.94 7.24 It may be noted here in passing, as an example of the need to evaluate the effect of the estoppel on the policy of the rule of relevant law, that, in NRAM Plc v McAdam95 at first instance, Burton J held that the decision of Newey J in Briggs v Gleeds96 – that an estoppel against denial that a signature of a deed was duly witnessed would unacceptably subvert that statutory requirement where the failure was apparent on the face of the deed (but not, in accordance with Shah v Shah,97 if it was not) – does not mean that an estoppel against denying statutory consumer credit protection could not be based on a convention between the parties that the consumer has it where the failure to qualify for it is apparent on the face of the credit agreement. Because different statutes and rules of law have different policies, different considerations apply to the determination of whether their policies would be unacceptably subverted by an estoppel.

Actionstrength and informal guarantees 7.25 An estoppel by convention, based on the fact that the parties did not realise that formalities were required by statute, thought that their informal agreement was valid, and relied on it, may be overridden as directly conflicting with the policy of the statute;98 and, in such a case, A may also have difficulty in establishing that he was induced99 by B to believe, or (for estoppel by convention)100 to rely on their shared understanding, that the transaction was binding in spite of the want of formality.101 On the ground of direct conflict with policy, the claim of a creditor under an alleged oral guarantee to estop the alleged guarantor from pleading the Statute of Frauds 1677, because the creditor had acted to his detriment in reliance on the alleged oral guarantee, was dismissed by the

94

Bank of Scotland Plc v Waugh & others [2014] EWHC 2117 (Ch); Briggs v Gleeds [2015] Ch 212 at [43]; in OTV Birwelco Ltd v Technical & General Guarantee Co Ltd [2002] 4 All ER 668 at [45], B, another party to a deed, was estopped against A, a beneficiary entitled to enforce the deed under s 56 of the Law of Property Act 1925, by the statement in the deed that C had executed it by affixing its common seal (although, if C had sought to raise the estoppel against B, it might be answered that this was a statement for which B, not A, was responsible, as in Greer v Kettle [1938] AC 156; see 8.69 onwards). 95 [2015] 2 All ER 340; reversed on other grounds [2016] 3 All ER 665. 96 [2015] Ch 212 at [43]. 97 Note 93 above. 98 See also n 71 above. 99 See Ch 5. 100 See 8.23 onwards, 8.32 onwards. 101 Cf 4.51, 5.27.

293

7.25  The defence of illegality

House of Lords in Actionstrength Ltd v International Glass Engineering SpA,102 as the allowance of such an estoppel would render the statute nugatory. The possibility of such an estoppel succeeding, where there was an express representation that the promise was enforceable in spite of the want of formality, was preserved.103 It might therefore be argued that the House of Lords considered that the creditor could not be said to have been induced by an implicit representation or convention as to the enforceability of the guarantee, in spite of its informality. This, however, would be an inconsistent approach with those cases in which proprietary estoppels104 have been upheld where the parties assumed an informal contract for the sale of land to be binding, in reliance upon which the purchaser acted to his detriment. In such cases, no express representation that the contract is binding, notwithstanding its informality, is required. If an estoppel could not be founded upon such an implicit common understanding as to the efficacy of a transaction, giving rise to a belief as to the rights acquired thereunder, claims to such proprietary estoppels would fail. It is submitted, therefore, that the true distinctions between such cases and that of the claimant under an oral guarantee (leaving aside the bar on deployment of a promissory rather than a proprietary estoppel to establish a cause of action)105 lie, first, in the statutory exception for constructive trusts from the requirement of formality for dispositions of land,106 and, secondly, in the fact that not all purchasers of land under oral agreements act to their detriment in reliance thereon, so the statute is not rendered nugatory by such estoppels. In Actionstrength, the mutual exclusivity of the statute having any sphere of operation and the allowance of the estoppel in question provided a defence of illegality to the estoppel. If there had been an express representation as to the enforceability of the guarantee, in spite of its informality, this might have reduced the degree to which the statute was subverted by allowing the estoppel, and tipped the scales in favour of allowing the estoppel. However, it should be recognised that, whether or not an express assurance was given, the creditor in that case acted in reliance on a belief engendered and intended by the oral guarantor that the creditor acquired rights under the oral guarantee.

Formality: summary 7.26 Following Viscount Radcliffe’s view107 of statutes requiring formalities for particular transactions that they do not preclude estoppel, even though their policy of promoting certainty is thereby undermined, the courts have seen no difficulty, for instance, in founding a proprietary estoppel108 on a promise as to the devolution of property on death, notwithstanding that such a promise lacks both the formal requirements for a testamentary disposition laid down 102 [2003] 2 AC 541. 103 See Actionstrength Ltd v International Glass Engineering SpA, n 102 above at [9]–[12], [29], [35], [51]–[52]. 104 See Yaxley v Gotts [2000] Ch 162, CA. 105 As to which, see 14.22 onwards, 14.36 onwards. 106 See 7.14–7.21. 107 See 7.14. 108 See Thorner v Major [2009] 1 WLR 776.

294

Waiving the protection of a statute 7.27

by the Wills Act 1837 and (in addition to being unsupported by consideration) those for an agreement to dispose of an interest in land under the Law of Property (Miscellaneous Provisions) Act 1989. Indeed, the origins of the doctrine of proprietary estoppel lie partly in the doctrine of part-performance,109 which enabled the court to give effect to transactions that would otherwise fail for want of formality. On this reasoning, the damage to the policy of promoting certainty is regarded as a lesser evil than allowing the unfairness on which an estoppel is founded to go unremedied.110 Thus also, it seems that a successor to land may estop himself from taking advantage of another’s failure to comply with statutory provisions as to registration designed to promote certainty in conveyancing111 although the estoppel conflicts with the promotion of such certainty. It is, further, respectfully submitted that the Court of Appeal was right to hold in McGuane v Welch112 that s 2 of the 1989 Act does not preclude proprietary estoppel based on detrimental reliance on an informal contract to dispose of land, as such an estoppel does not unacceptably subvert the policy of a statute which allows a constructive trust in spite of informality. On the other hand, as the House of Lords held in Actionstrength,113 the defence of illegality precludes an estoppel of a type which would render a statute requiring formality nugatory: thus, parties cannot estop themselves from asserting the invalidity of a transaction for want of formality on the sole ground that they entered into it under a common mistake that it was valid.

WAIVING THE PROTECTION OF A STATUTE Common issue 7.27 Since the question whether a particular statute precludes an estoppel is essentially the same question as whether a party may be estopped from relying on the statute, statutory construction provides the answer to this latter form of the question also, and the deliberations of the courts on it provide guidance as to the criteria on which the question will be answered in either form. The question arises in this latter form where a statute requires something to be done by B as a party to a transaction as a condition of its validity, or otherwise confers protection on B, and it is argued that B, as the party entitled to insist on fulfilment of 109 See 1.38, n 183; 12.12 onwards. 110 But contrast n 71 above and 7.25. 111 See 6.42; contrast, however, the decision of Beesley v Hallwood Estates Ltd [1960] 1 WLR 549 above, that a party cannot be estopped from denying the enforceability of an interest in unregistered land for want of registration, then under s 13 of the Land Charges Act 1925. 112 [2008] 2 P & CR 24 at [37], [48], [55]; see also McCausland v Duncan Lawrie Ltd [1997] 1 WLR 38, CA, at 50 per Morritt LJ, Tucker J concurring; contrast Godden v Merthyr Tydfil HA (1997) CAT No 370, considered with apparent approval in Yaxley v Gotts [2001] Ch 162 at 174G, 175H, 182C, but seriously doubted in Bankers Trust Co v Namdar [1997] EGCS 20. 113 See 7.25. Thus, signing a guarantee form is no representation as to its validity and such an estoppel cannot operate since, as in Actionstrength, it would in every case, and it would thereby neutralise the statute: Fairstate Ltd v General Enterprise & Management Ltd [2010] EWHC 3072 (QB) at [96]–[97].

295

7.27  The defence of illegality

the statutory condition, or on the protection, has waived his right so to insist, either by contract or estoppel. If the requirements for such a contract or estoppel are satisfied, to determine whether B is nonetheless precluded from waiving his rights, it is necessary to consider two issues.

Benefit 7.28 The first question is whether the right or protection was intended by the legislature for B’s benefit only.114 If the public, or a class or section of the community, are interested, as well as B, in the general observance of the conditions prescribed by the statute, then waiver may, on the ground of public policy, be precluded. In Evans v Amicus Healthcare,115 Arden LJ applied this criterion, asking whether the relevant right was conferred by statute for the benefit of B only, in which case he might estop himself from invoking it, or its enforcement was not only for B’s benefit but as a matter of wider public policy.116 For this reason also, public authorities may not waive compliance (save, arguably, in respect of form and procedure)117 with the laws118 and bye-laws of which they are guardians.119 It is therefore necessary to consider120 here whether, on the one hand, the promotion of the public interest requires that the relevant party should not be allowed to waive the protection of the statute, or, on the other hand, the effect on the public interest is not so damaging as to preclude waiver. For instance, statutory time limits may be waived121 by contract or estoppel, although there is a public interest in their enforcement ut finis sit litium.122 On

114 ‘There is no doubt that a man is entitled to waive or to agree to waive the advantage of a law or rule made solely for his benefit and protection. It is equally clear that no person can waive a provision or requirement of the law which is not solely for his benefit, but is for the public benefit’: per Parker J in Swallow & Pearson v Middlesex CC [1953] 1 All ER 580 at 582B–C. 115 [2005] Fam 1 at [120]. 116 To which must be added the case, considered at 7.29, where the benefit to the individual is conferred for his benefit only, but as a matter of paternalistic public policy, and therefore protected against waiver by the individual, as in the case of statutory security of tenure or consumer protection. 117 See 7.38, and 7.51. 118 Griffith v Evans (1882) 46 LT 417; Follit v Koetzow (1860) 2 E & E 730 (in both cases, no waiver of rights under a bastardy order); Harris v Harris [1952] 1 All ER 401 (no estoppel against asserting statutory discharge of maintenance order by co-residents); R v Blenkinsop [1892] 1 QB 43; Hewlett v London CC (1908) 24 TLR 331 at 332 per Bray J arguendo; ­Chalmers v Pardoe [1963] 1 WLR 677, PC (protection of land); Reckitt & Coleman (New Zealand) Ltd v Taxation Board of Review [1966] NZLR 1032. 119 Yabbicom v King [1899] 1 QB 444; Bean (William) & Sons v Flaxton RDC [1929] 1 KB 450; Redbridge LBC v Jacques [1970] 1 WLR 1604; Cambridgeshire CC v Rust [1972] 2 QB 426; Hampshire CC v Gillingham [2000] EWCA Civ 105; Herrick v Kidner [2010] 3 All ER 771. 120 As at 7.6–7.9 and 7.37. 121 See 4.44(1); 8.14. 122 For the containment of litigation; contrast Lord Diplock in Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 at 881D–H, to the effect that limitation periods may be waived because they are solely for the benefit of the defendant (and see further 4.44(1); 8.14).

296

Waiving the protection of a statute 7.30

the other hand, in the interests of fair taxation, parties could not estop themselves into liability to VAT as partners by holding themselves out as partners in their application for VAT registration.123

Paternalism 7.29 If no interests other than those of the immediate parties will be affected by waiver of the protection of the statute (or none will be so damaged as to preclude an estoppel) then, subject to the second issue, an estoppel may lie.124 The second issue is whether the statutory protection is paternalistic. If the court regards it as part of the protection that the party is afforded by the statute that he should not be able to waive it, then he may not: as, for instance, in the cases of the statutory protection afforded to agricultural, business and residential tenants,125 to employees in respect of their right to a minimum wage126 and to consumers,127 all of whom are protected from the pressures that might drive them to waive such rights by the inalienability of those rights; and in the case of infants, who are protected because they are not of an age to be responsible, and will not, therefore, be held responsible for a representation that might otherwise estop them from claiming that very protection. 7.30 Whereas a tenant may, then, not be estopped, any more than he may contract, out of statutory protection when he takes his tenancy128 (unless the statute expressly permits), he may, however, subsequently waive a technical or procedural defect so as adversely to affect his statutory protection: thus, while a 123 HMRC v Pal [2008] STC 2442. 124 As in Sheffield, Ashton-under-Lyme & Manchester Rly Co v Woodcock (1841) M & W 574; Cheltenham and Great Western Rly Co v Daniel (1841) 2 QB 281 at 292 (formalities attending upon the making of a call by a parliamentary company); see also Hall v Batley Corpn (1877) 47 LJQB 148; Bristol Corpn v Sinnott [1917] 2 Ch 340 at 347 per Neville J: ‘When a provision like this is put in a statute for the protection of the public, a member of the public who has no desire to rely on the protection given him has a perfect right to waive the giving of the notice altogether.’ (Affd without reference [1918] 1 Ch 63); Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd, n 122 above; and see cases of contractual waiver: Graham v Ingleby (1848) 1 Exch 651; Hunt v Hunt (1862) 31 LJ Ch 161; Baddeley v Earl Granville (1887) 19 QBD 423. 125 See eg Dean v Bruce [1952] 1 KB 11; Welch v Nagy [1950] 1 KB 455; Solle v Butcher [1950] 1 KB 671; Johnson v Moreton [1980] AC 37; Aristocrat Property Investments v H ­ arounoff [1981–2] 2 HLR 102; Keen v Holland [1984] 1 WLR 251; Woolwich Building Society v ­Dickman [1996] 3 All ER 204, CA; EDF Energy Networks (EPN) Plc v BOH Ltd [2010] 2 P & CR 3. 126 Marlow Inns v HMRC [2012] EWCA Civ 1498. 127 For instance, under the Consumer Credit Act 1974 (cf Campbell Discount Co v Gall [1961] 1 QB 431 at 443 per Holroyd Pearce LJ: ‘I doubt whether … an agreement unenforceable under the Hire-Purchase Act can by estoppel be rendered valid and enforceable …’; Chapman v Michaelson [1908] 2 Ch 612, at 621–2, on the Moneylenders’ Act 1900) and the Unfair Contract Terms Act 1977. 128 See 7.29. A more fundamental rule may also be operating, namely that B cannot be estopped from holding a tenancy by agreeing that it is a licence if his rights have the characteristics of a tenancy: n 24 above.

297

7.30  The defence of illegality

business tenant may not, without the approval of the court or compliance by the landlord with the requirements of s 38A of the Landlord and Tenant Act 1954, waive his security of tenure at the outset, or estop himself from denying that a party who is not entitled to serve a notice under s 25 of the Act as landlord is so entitled,129 he may waive a defect in a s 25 notice, such that the notice is effective to terminate his tenancy, notwithstanding that the defect would otherwise prevent it having that effect.130 So also, the recipient of a notice (including a counter-notice) under the Leasehold Reform, Housing and Urban Development Act 1993 as well as the 1954 Act131 may estop himself from asserting defects in the notice. Indeed, just as a protected tenant may consensually surrender his tenancy, he may also prevent himself from asserting his rights by operation of the doctrine of proprietary estoppel without necessarily subverting the policy underlying such statutory protection.132 It appears that not all defects in the form of notices, however, are defects which may be waived without undermining the policy of the statute to afford protection which the protected party cannot waive: a statutory tenant under the Rent Act 1977 cannot waive a defect in the form of a landlord’s notice of increase of recoverable rent.133

Estoppel into protection 7.31 To determine whether statutory protection may be waived, it is therefore necessary to identify the social policy underlying the protection and consider whether it would be unacceptably subverted by allowing an estoppel. Conversely, whereas parties may not contract into actual statutory protection,134 if the requirements for its application are not satisfied, there is no social policy against their contracting that their rights and duties, as between themselves, shall be as if the statutory protection applied. So also, it is conceptually possible for parties to be estopped from denying a representation or convention that their rights and duties are to be determined as if the statutory protection applied, as the Court of Appeal has held in Daejan Properties Ltd v Mahoney,135 followed in the same context of Rent Act protection in Wroe v Exmos Cover Ltd136 and acknowledged in NRAM Plc v McAdam,137 but has also rendered unlikely in practice, by holding in NRAM that a representation or convention that statutory protection applies as a whole will not, if a substantial part of it cannot be made thereby to apply, 129 EDF Energy Networks (EPN) Plc v BOH Ltd [2010] 2 P & CR 3. 130 See eg Keepers and Governors of the Possession Revenues and Goods of the Free Grammar School of John Lyon v Mayhew [1997] 1 EGLR 88, CA. 131 Latifi v Colherne Court Freehold Limited [2003] 1 EGLR 78 at [23]–[31]; Lay v Ackerman [2004] HLR 40 at [53]. 132 As in JS Bloor (Measham) Ltd v Calcott (No 2) [2002] 1 EGLR 1 at 5. 133 Aristocrat Property Investments v Harounoff [1981–2] 2 HLR 102. 134 Daejan Properties Ltd v Mahoney [1995] 2 EGLR 75, at 77B–F, 79K–L. 135 [1995] 2 EGLR 75 at 77F–78B, 79M; see also Bell v General Accident Fire and Life ­Assurance Co Ltd [1998] 1 EGLR 69; SmithKline Beecham Plc v Apotex Europe Ltd [2007] Ch 71 at [106]–[107]; Daejan Properties Ltd v Mahoney, n 134 above. 136 [2000] 1 EGLR 66, CA, at 69–70, although, for want of detrimental reliance, no estoppel lay. 137 [2015] EWCA Civ 751.

298

Waiving the protection of a statute 7.33

found an estoppel against denying the application of such part of it as can. For such agreements and representations operate between the parties, and the parties cannot, by estoppel or contract, impose on the State the burden of regulating their relationship on the false premise that statutory protection applies by, for instance, the assessment of rent138 or the restriction of enforcement of loan agreements.139 By a different application of this principle, an estoppel between the parties could not affect the court’s operation of its process, and B could not be estopped from denying the true construction of a court order so as to render a crossundertaking in damages enforceable by A, a non-party for whose benefit the undertaking was not given; for that, it would have been necessary to establish that B was bound to vary the order.140 7.32 In NRAM v McAdam141 the Court of Appeal held that a lender had contractually warranted that the borrower had the benefit of all the rights and protections contained in the Consumer Credit Act 1974,142 but critical provisions of the Act, conferring jurisdiction on the court to restrict enforcement of the debt,143 could not be applied by agreement or estoppel.144 Given, for this reason, that the warranty could not estop in accordance with its terms, the court would not read it down to a different representation or agreement,145 which neither party had contemplated, that such rights under the Act as could be conferred by contract or estoppel were conferred. Because the rule of law precluded estoppel in accordance with the terms of the representation, any estoppel was precluded, in particular one that could have taken effect only so far as would not infringe that rule of law, since that was not the representation or agreement made. 7.33 By contrast, in Daejan Properties v Mahoney,146 Bingham and Savile LJJ had held that a representation by B, the landlord, that A and her mother were joint tenants, which they could only be if they were statutory joint tenants, amounted to a representation that they would be treated by B as if they were joint statutory tenants, even though they were not and the court’s jurisdiction in respect of a statutory tenancy could not be conferred by agreement or ­estoppel.147 The Court of Appeal in NRAM distinguished this as an estoppel based on a ­representation as to a particular fact, namely the joint tenancy,148 rather than a 138 Daejan Properties Ltd v Mahoney at 79L–M per Hoffmann LJ; cf 77M–78A per Bingham MR; see further 7.43 onwards; but contrast Bell v General Accident Fire and Life Assurance Co Ltd, n 135 above. 139 Under s 127 of the Consumer Credit Act 1974: see NRAM Plc v McAdam at [55]. 140 SmithKline Beecham Plc v Apotex Europe Ltd [2007] Ch 71 at [106]–[112]. 141 [2016] 3 All ER 665 at [29]. 142 At [29], [53]. Time for a damages claim had expired: see [12]. 143 See [15], [55] inter alia to enforce ‘obligations of the lender to ensure proper execution of the original agreement’ ‘far more important’ than the right to receive post-contract information and in default not pay interest which the debtor claimed. 144 See 7.43 onwards. 145 Cf the exercise of construction considered in 4.43 and undertaken eg in Airways Aero Assocs Ltd v Wycombe DC [2010] EWHC 1654 (Ch) at [27]–[33]. 146 (1996) 28 HLR 498. 147 See its consideration in NRAM at [36]–[39]. 148 At [39]; see also 7.43 onwards.

299

7.33  The defence of illegality

representation or agreement that the statute conferring jurisdiction applied. This may be a reference to the proposition discussed below that, whereas parties may not confer jurisdiction on the court by agreeing or representing that it exists, they may be estopped from denying a fact necessary for such jurisdiction where that does not amount to usurpation of the Royal Prerogative,149 but it is not a comfortable distinction, as, if having the legal rights of a joint tenant is a matter of fact, then so also is having the legal rights of a Consumer Credit Act protected borrower,150 and it is not clear why the ‘factual’ nature of the representation would make it more susceptible to construction as a representation that the parties’ rights should be regulated ‘as if’ the statute applied. The difference is therefore perhaps better explained as resulting because the argument to the Court of Appeal in NRAM was not advanced in Daejan, that stripping out those elements of statutory protection which lay in the jurisdiction of the court, and could not, therefore, be conferred by contract or estoppel, would result in conferral of ­significantly different rights from those which had been represented or agreed to be held, and there had not been a representation or agreement as to those reduced rights on which to found an estoppel. 7.34 The Court of Appeal in NRAM also regarded as preferable151 to the ratio of the majority in Daejan Hoffmann LJ’s reasoning that the particular statutory formality, failure to satisfy which precluded a statutory joint tenancy, of a written agreement between incoming and outgoing tenants, was one which the parties could deem satisfied by agreement or estoppel without subverting the Act or unacceptably conferring jurisdiction by agreement or estoppel, because it was made for their benefit rather than in the public interest. This suggests that statutory protection may be gained by virtue of an estoppel, notwithstanding that the court thereby acquires a statutory jurisdiction, if the particular provision whose satisfaction is precluded by the estoppel is one made for the benefit of the representor or the parties to the convention rather than in the public interest, and that benefit is not unwaivable on paternalistic grounds.152 7.35 In summary, following NRAM v McAdam, a representation or agreement that statutory protection applies, of which a substantial part cannot be made thereby to apply because it would confer on the court a jurisdiction that it does not have, will not found an estoppel from denying such protection as the statute might afford without conferring that jurisdiction. It remains possible, however, for a party to be estopped from denying a particular fact, or satisfaction of a particular requirement, necessary to confer actual statutory protection and jurisdiction, if the jurisdiction is itself regarded as encompassing such a case of estoppel153 as where the particular requirement waived is made in the interest of the party estopped rather than the public interest.

149 See 7.43 onwards. 150 See further 2.31. 151 At [39]. 152 See further 7.47. 153 See 7.46.

300

Ultra vires 7.36

ULTRA VIRES 7.36 No assumption of powers which are ultra vires any person, officer or corporation can be validated by raising an estoppel against the party who assumes them.154 A contract beyond the powers conferred on a public body by a statute, for example, cannot be validated by the application of an estoppel.155 A building society cannot be deemed by virtue of an estoppel to have greater powers than are given to it by its governing statute or constitution.156 A company, as most recently held by Andrew Smith J in Credit Suisse International v Stichting Vestia Groep,157 cannot become entitled by estoppel to exceed its statutory powers or those given to it by its memorandum of association;158 nor, for instance, be estopped from denying the legality of a payment out of capital for redemption of

154 Fairtitle d Mytton v Gilbert (1787) 2 Term Rep 169; Canterbury Corpn v Cooper (1909) 100 LT 597; Ministry of Agriculture and Fisheries v Matthews [1950] 1 KB 148 (lease ultra vires of minister); Howell v Falmouth Boat Construction Co [1951] AC 837 at 845, 849; Rhyl UDC v Rhyl Amusement Ltd [1959] 1 All ER 257 at 266 (UDC purporting to lease without necessary ministerial consent); Brown v AUEW [1976] ICR 147 at 168. 155 St Mary Islington Vestry v Hornsey UDC [1900] 1 Ch 695 at 705–6; York Corpn v Henry Leetham & Sons Ltd [1924] 1 Ch 557 at 573; Cottrell-Dormer v Bristol Corpn (1950) 2 P & CR 230; Rhyl UDC v Rhyl Amusement Ltd, n 154 above; Hazell v Hammersmith & Fulham LBC [1992] 2 AC 1; South Tyneside MBC v Svenska International plc [1995] 1 All ER 545 at 565; Credit Suisse v Allerdale BC [1995] 1 Ll R 315 (affd [1997] QB 306); Citypark Properties. Ltd v Bolton MBC (1 March 2001, unreported) (Lands Tribunal); Haugesund Kommune v Depfa ACS Bank [2010] PNLR 21 at [170]–[172] unaffected on appeal [2012] QB 549. 156 Re Companies Act, ex p Watson (1888) 21 QBD 301 at 302 per Cave J: ‘It is well established that a corporate body cannot be estopped by deed or otherwise from showing that it had no power to do what it purported to have done’. 157 [2014] EWHC 3103 (Comm) at [303]–[305] citing, inter alia, this paragraph in the fourth edition. Andrew Smith J held that a body may not be estopped, by a non-contractual representation or contractual undertaking or agreement (since, as Lord Toulson JSC said in Prime Sight v Lavarello [2014] AC 246 at [47]: ‘… contractual estoppels are subject to the same limits as other contractual provisions …’), from denying that it had capacity to do that which exceeded its powers, but went on to hold, at [319], that warranties in a valid master agreement as to a party’s capacity to enter subsequent transactions prevented it from relying on its own breach of those warranties in defence to the other party’s enforcement of the master agreement (cf Alghussein Establishment v Eton College [1988] 1 WLR 587 at 591D–E); contrast NRAM v McAdam [2015] EWCA Civ 751, where a party which had contractually represented that statutory consumer protection applied to the contract was not precluded from denying that in enforcing the contract. 158 A company or association may not exceed its powers by virtue of a contract into which it enters: Ashbury Rly Carriage and Iron Co v Riche (1875) LR 7 HL 653 at 673; Great NorthWest Central Ry v Charlebois [1899] AC 114; Hazell v Hammersmith and Fulham LBC [1992] 2 AC 1 at 36F–G; nor can it do by estoppel what it cannot do by contract: British Mutual Banking Co v Charnwood Forest Rly Co (1887) 18 QBD 714 at 718–9; Re Companies Act ex p Watson (1888) 21 QBD 310 at 302; York Corp v Henry Leetham & Sons [1924] 1 Ch 557 at 573; Credit Suisse v Allerdale BC [1997] QB 306; Haugesund Kommune v Depfa ACS Bank, n 155 above; cf Re Sly, Spink & Co [1911] 2 Ch 430. Such limitations on a company’s capacity to act are to be distinguished from limitations on the authority of its directors, which the company may be estopped from asserting, for instance, under s 35A of the Companies Act 1985: see further Gore-Browne on Companies, Ch 3, and the other standard works on company law.

301

7.36  The defence of illegality

its own shares;159 nor can a tribunal acquire, by estoppel, wider jurisdiction than it possesses.160 7.37 Thus cast, the proposition appears to be a matter of legal principle akin to an observable physical fact. It is important, however, to note that, ultimately, this limitation is a matter of policy: in particular, the policy of the limiting statute, instrument or rule of law. The parties may determine, whether by contract or estoppel, their rights and liabilities as between themselves, even if this involves the conferral of power on one over the other which, absent the estoppel or contract, he would not have, unless it is the policy of the limiting rule, in the public interest (for instance, to protect shareholders and creditors),161 that the powers conferred and limited by the relevant statute or instrument should not be capable of augmentation by agreement or estoppel.162 7.38 It follows from this rule that, if a person relies on a public authority having held out its officer as having powers which, in fact, statute denies him, the public authority will, nonetheless, not be estopped from denying that the officer had such powers by virtue of his ostensible authority, and decisions of Lord Denning to the contrary have been disapproved and not followed.163 If, however, a person’s authority is lacking only by reason of failure to comply with a statutory procedural or formal requirement for its conferral,164 then that person and his principal may, it seems, be estopped from denying his possession of the relevant authority.165

159 Iesini v Westrip Holdings Ltd [2009] EWHC 2526 (Ch) at [97]. 160 See 7.43. 161 Thus, in Iesini v Westrip Holdings Ltd, n 158 above, Lewison J necessarily determined at [97] that: ‘… the statutory prohibition must be aimed at protecting the members of a company and its creditors. In my judgment these considerations of public policy mean that the statutory prohibition cannot be overridden by an estoppel by convention alleged to arise between the company and only one or two of its members’. 162 Cf 7.8, 7.36, 7.42. 163 See Howell v Falmouth Boat Construction Co Ltd [1951] AC 837 at 845, 849, disapproving Robertson v Minister of Pensions [1949] 1 KB 227 (assumption of authority by the officer himself will not estop the public body from denying it); and Co-operative Retail Services Ltd v Taff Ely BC (1979) 39 P & CR 223 at 243 per Ormrod LJ and at 251 per Browne LJ (approved by HL (1981) 42 P & CR 1), not following Lever Finance Ltd v Westminster (City) LBC [1971] 1 QB 222 (ostensible authority, being a variety of estoppel, cannot validate a planning permission which an officer did not have power to give); see also Norfolk CC v Secretary of State for the Environment [1973] 1 WLR 1400, DC; A-G for Ceylon v de Silva [1953] AC 461 at 479–80; Tidman v Reading BC [1994] 3 PLR 72 (but see Western Fish Products Ltd v Penwith DC [1981] 2 All ER 204 at 220f–221a; Postermobile plc v LB Brent (1997) Times, 8 December, CA). 164 In accordance with the view noted at 7.14, that the policy underlying such requirements of formality is generally outweighed by the justice of allowing an estoppel. 165 Wells v Minister of Housing and Local Government [1967] 1 WLR 1000, CA (but cf the ­powerful dissent of Russell LJ and 7.51) as explained in Western Fish Products Ltd v Penwith DC [1981] 2 All ER 204 at 221b–c.

302

Other applications 7.40

OTHER APPLICATIONS Infants 7.39 Infants are a particular object of protection, originally by the common law, and latterly by statute.166 The policy of the law would be defeated if an infant might be estopped from asserting the invalidity of his contract: the courts have accordingly disallowed any such estoppel.167 On the other hand, if allowance of an estoppel does not involve any collision with this policy, then an estoppel may be available against an infant.168 It is not, however, reasonable to rely on the representation or silence of a known minor, and such knowledge will therefore prevent an estoppel, and even if A reasonably believes B to be of age it seems that B may be protected from responsibility for A’s reliance by reason of his age,169 save to the extent that the estoppel allows recovery of money or property transferred by reason of B’s fraud170 or a restoration of property that corresponds to the discretion to allow such restoration under statute.171 In general, it is submitted that the same policy considerations govern the enforcement of contracts172 with, as the upholding of estoppels against, minors, and the rules governing the former should therefore be reflected in the approach of the courts to the latter.

Mental incapacity 7.40 This approach was taken by Newey J in Bank of Scotland v Hussain173 to the question whether B’s mental incapacity174 is a defence to an estoppel whose constituent elements would otherwise be established by A, holding: ‘It seems to me, however, that [A] will be unaffected by a want of capacity of which he has no notice. With estoppel, as in contract law, an objective principle applies

166 Minors’ Contracts Act 1987; see also 6.18. See generally Häcker, ‘Minority and Unjust Enrichment Defences’ in Dyson et al (ed), Defences in Unjust Enrichment (2016) at 195 onwards. 167 Smith v Low (1739) 1 Atk 489 at 490; Duke of Leeds v Earl of Amherst (1846) 2 Ph 117 at 123 (a nine-year-old cannot acquiesce); Re Jones, ex p Jones (1881) 18 Ch D 109 at 125; Levene v Broughan (1909) 25 TLR 265. 168 As where a minor is not protected against liability for fraud: see Savage v Forster (1723) 9 Mod Rep 35, allowing estoppel against a married woman by interpreting and applying the principle applicable to a minor in Watts v Cresswell (1714) 9 Vin Abr 415 as being that estoppel will lie against a minor to prevent fraud, including knowing failure to assert an adverse interest to a purchaser; Cooper v Simmons (1862) 7 H & N 707 at 719; Walter v Everard [1891] 2 QB 369, CA. 169 See n 166 above. 170 Relief corresponding to that in Stocks v Wilson [1913] 2 KB 235, which was doubted in R Leslie Ltd v Sheill [1914] 3 KB 607, at 618, but see Chitty on Contracts (32nd edn) [9–058]. 171 The law’s policy now allows property acquired by a minor under a contract to be restored: s 3(1) of the Minors’ Contracts Act 1987. 172 As to which, see Chitty on Contracts (32nd edn) Ch 9, s 2. 173 [2010] EWHC 2812 (Ch) at [107]; see also 6.18. 174 It should be noted that, such capacity being, under the Mental Capacity Act 2005, issue ­specific, the question of whether B has capacity in relation to the estoppel will be whether

303

7.40  The defence of illegality

(see e.g. Spencer Bower, ‘The Law Relating to Estoppel by Representation’175 and Thorner v Major).176 In a contractual context, the objective principle will be displaced if a person knows that another party lacks capacity. In contrast, a person with no notice of another contracting party’s lack of capacity will be unaffected by it (see Chitty on Contracts,177 and Hart v O’Connor).178 I can see no reason why the position should be different with estoppel.’

It will be noted that, and may be questioned why, the law affords to those lacking capacity by reason of mental disorder179 less protection180 than those lacking capacity by reason of infancy.

Marriage, divorce and parenthood 7.41 No representation can estop a litigant from asserting the validity or invalidity of a marriage or of a divorce,181 and the authorities hold that, because the court is under a statutory duty to inquire into the truth of charges made in a petition, neither party may be estopped against the other in relation to them.182 There are, arguably, some limits to this proposition, for example, in the application of the principles of approbation and reprobation to nullity suits such that A is estopped from denying the invalidity of a marriage on a ground that renders it voidable rather than void,183 but an estoppel by representation may not be deployed to render a void marriage valid where the alleged marriage is wanting in a fundamental respect184 as opposed to a mere formality.185 So also, a person who would not otherwise have the status, with its powers and responsibilities, of a parent cannot acquire that status by estoppel or be estopped from denying it,186 and a person cannot be estopped from preventing their future parenthood, in that

B is capable of understanding the responsibility he undertakes by his representation or the responsibility he has to correct A’s mistaken understanding. 175 Fourth edition, at [V.3.3]. 176 [2009] 1 WLR 776 at [5], [17], [26], [60], [78]. 177 32nd edn, at [8–068]. 178 [1985] AC 1000. 179 See Chitty on Contracts (32nd edn) Ch 9, s 3. 180 See Chitty on Contracts (32nd edn) [9–072]; 7.39. 181 Cf the emphatic assertion in the first edition of this work at [223]. 182 Hudson v Hudson [1948] P 292; Bright v Bright [1954] P 270; Square v Square [1935] P 120 at 127; cf Harris v Harris [1952] 1 All ER 401; see also Hayward v Hayward [1961] P 152 at 159; Corbett v Corbett [1970] 3 All ER 33 at 50. 183 See eg G v M (1885) 10 App Cas 171; W v W [1952] P 152; Tindall v Tindall [1953] P 63. It has even been suggested that the principle may be applicable on the hearing of petitions for divorce so as (inter partes) to approbate a bigamous marriage: Bullock v Bullock [1960] 2 All ER 307; but this suggestion was not followed in Hayward v Hayward [1961] P 152; and Corbett v Corbett [1970] 2 All ER 33, at 50. 184 Pazpana de Vire v Pazpana de Vire [2001] 1 FLR 460. 185 Pazpana de Vire v Pazpana de Vire n 184 above at [70], where the possibility of an estoppel as to a formality was left open. 186 T v B [2010] Fam 193 at [64].

304

No estoppel as to jurisdiction 7.43

no estoppel can lie against the exercise of the statutory right to withdraw consent to the use and storage of embryos containing his or her genetic material.187

Creditors 7.42 It has been held that, because an estoppel against a trustee in bankruptcy in favour of a creditor would affect, contrary to their statutory rights, the position of all other creditors, it will not, therefore, lie;188 and, similarly, that no estoppel could preclude a party to a deed of assignment from showing the deed to be a nullity by reason of the provisions of the Deeds of Arrangement Act 1914.189 So also, the grantor of a bill of sale could not be estopped from denying its validity by reason of the failure to comply with the requisite statutory formalities, so as to affect the rights of the general body of his creditors.190 On the other hand, under the doctrine of election, if a party has elected to approbate a bill of sale by setting it up in legal proceedings or comparable transactions and obtaining payment on the basis that it was good, then he may not reprobate it.191 Further, as has been submitted in Chapter 6,192 if an estoppel may be regarded as a flexible rule of substantive law, rather than an inflexible rule of evidence,193 then it should be capable, insofar as is just, of binding liquidators and trustees in bankruptcy.

NO ESTOPPEL AS TO JURISDICTION Royal prerogative 7.43 No contract, consent, conduct or acquiescence of a party to litigation can confer jurisdiction on any person not already vested with it by the law, nor add to the jurisdiction lawfully exercised by any judicial tribunal. In the words of Lord Reid: ‘… 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’.194 This is one aspect

187 Evans v Amicus Healthcare Ltd [2004] EWCA Civ 727. 188 But see further 6.20 onwards. 189 Re A Bankruptcy Notice [1924] 2 Ch 76 at 97 per Atkin LJ (Pollock MR and Warrington LJ held that estoppel was not made out); Huddersfield Fine Worsteds Ltd v Todd (1926) 134 LT 82 (but, again, see 6.20 onwards and cf now the trust and pension cases at 6.47 onwards). 190 Madell v Thomas & Co [1891] 1 QB 230; Polsky v S and A Services [1951] 1 All ER 185, affd [1951] 1 All ER 1062n; Re Burton [1938] NZLR 637 at 643. 191 Re A Bankruptcy Notice [1924] 2 Ch 76 at 89, 96–99; Smith v Baker (1873) LR 8 CP 350; Roe v Mutual Loan Fund (1887) 19 QBD 347; O Comitti v Maher (1905) 94 LT 158; Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993, PC, at 1017–8. 192 See 6.20 onwards; cf 6.47 onwards. 193 See 1.49 onwards. 194 Essex CC v Essex Incorporated Congregational Church Union [1963] AC 808 at 820–1; Watt v Ahsan [2008] 1 AC 696 at [29]–[30]; see also Green v Rutherford (1750) 1 Ves Sen 462 at

305

7.43  The defence of illegality

of the general rule that parties cannot, by contract or estoppel, legitimate action which is ultra vires: indeed, in this case, thus to create or enlarge jurisdiction would in effect amount to the appointment of a judicial officer by a subject, and, therefore, usurpation of the Royal Prerogative. While this logic prevents jurisdiction being based on the agreement or understanding of the parties, the principle is not so fundamental that a question of jurisdiction cannot be the subject of a final ruling of a court which binds the parties as to the existence of jurisdiction by issue estoppel,195 even if subsequently shown to be erroneous.

Waiver of procedural irregularity 7.44 It may also be that nothing more is involved than an irregularity of procedure or non-compliance with statutory conditions precedent (such as time limits) for the validity of a step in the litigation, of such a character that, if one of the parties be allowed to waive the defect, or is estopped by conduct from setting it up, no new jurisdiction will thereby be created, nor existing jurisdiction extended beyond its boundaries. If that is the case, then the estoppel will be maintained, and the affirmative answer of illegality will fail.196 Some s­ tatutory

471; Penn v Lord Baltimore (1750) 1 Ves Sen 444 at 446; Jones v Owen (1848) 5 Dow & L 669; Lawrence v Wilcock (1840) 11 Ad & El 941; Lord Wellesley v Withers (1855) 4 E & B 750; London Corpn v Cox (1867) LR 2 HL 239 at 283; Foster v Usherwood (1877) 3 Ex D 1, CA; Re Aylmer (1887) 20 QBD 258 at 262; R v Shropshire County Court Judge (1887) 20 QBD 242 at 248; R v Essex Justices [1895] 1 QB 38, CA; British Wagon Co Ltd v Gray [1896] 1 QB 35, CA; Standing v Eastwood & Co (1912) 106 LT 477; Dutton v Sneyd Bycars Co Ltd. [1920] 1 KB 414, CA; Simpson v Crowle [1921] 3 KB 243; J & F Stone Lighting & Radio Ltd v Levitt [1947] AC 209; Wilkinson v Barking Corpn [1948] 1 KB 721 at 725; Welch v Nagy [1950] 1 KB 455 at 464, 465; Solle v Butcher [1950] 1 KB 671 at 690; Harris v Harris [1952] 1 All ER 401; Hinde v Hinde [1953] 1 WLR 175, CA; Heyting v Dupont [1964] 1 WLR 843, CA; Re C & M Ashberg (The Times, 17 July 1990); Yorkshire Bank plc v Hall [1999] 1 All ER 879 at 889e, CA; Secretary of State for Employment v Globe Elastic Thread Co Ltd [1980] AC 506; Contour Homes v Rowan [2007] EWCA Civ 842; Crowther v Rayment [2015] EWHC 427 (Ch) at [45]; cf Langford Property Ltd v Goldrich [1948] 2 KB 423 (on appeal [1949] 1 KB 511, CA); contrast Corrigal v London & Blackwell Rly Co (1843) M & G 219; Langdon v Richards (1917) 33 TLR 325, DC; H Tolputt & Co v Mole [1911] 1 KB 836; Re Hurst and Middleton Ltd [1912] 2 Ch 520, CA; Hiscox v Outhwaite [1992] 1 AC 562 at 576F–577A; Benedictus v Jalaram Ltd [1989] 1 EGLR 251; EDO Corp v Ultra Electronics Ltd [2009] 2 Ll R 349 at [33]. 195 Watt v Ahsan [2008] 1 AC 696 at [29]–[33]. 196 Palmer v Metropolitan Rly Co (1862) 31 LJ QB 259; Park Gate Iron Co Ltd v Coates (1870) LR 5 CP 634 (waiver of time limit on appeal); Broad v Perkins (1888) 21 QBD 533; London Chatham and Dover Rly Co v South Eastern Rail Co (1888) 40 Ch D 100; Lloyd v G W Dairies [1987] 2 KB 727; Smythe v Wiles [1921] 2 KB 66, CA; Essex Incorporated Congregational Church Union v Essex CC [1963] AC 808 at 828 per Lord Hodson: ‘Had the question been procedural only no difficulty would have arisen, for the parties had consented to the course taken before the Lands Tribunal’; Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 (procedural time limit); Thomas v University of Bradford (No 2) [1992] 1 All ER 964.

306

No estoppel as to jurisdiction 7.46

conditions have even been held to go to jurisdiction only if a timely objection is based on them.197

Estoppel from denying facts 7.45 Furthermore, as held in Benedictus v Jalaram Ltd,198 only estoppels against impugning the very jurisdiction of the court or tribunal to determine the issues before it are precluded. If a claimant seeks relief under a statute and the court has jurisdiction to determine claims under that statute, a defendant may be estopped from denying a fact necessary for the claimant to succeed: here the estoppel ‘operates within the ambit of the Act’199 or ‘within the ambit of the court’s jurisdiction’.200 The estoppel goes, not to jurisdiction to determine the claim at all, but to the claim’s success. Accordingly, the case is considered to be outside the mischief of imposing on the court or tribunal a burden of arbitration which is beyond its remit.

Principled distinction 7.46 It may nonetheless be asked how it can consistently be true both that jurisdiction may not be conferred by estoppel and that a party may be estopped, as in Benedictus v Jalaram Ltd,201 from denying a fact, or satisfaction of a procedural precondition, without which the court would not have jurisdiction. In Re Hurst & Middleton Ltd202 the Court of Appeal did not overrule Re Hulm & Lewis,203 which allowed extension of jurisdiction by an estoppel from denying a fact (having gained privileges by pretending to be a solicitor, the respondent was estopped into the supervisory jurisdiction over him as a solicitor); and, in Assaubayev v Michael Wilson & Partners Ltd,204 as noted in Law Society v Shah,205 Christopher Clarke LJ approved Re Hulm & Lewis, holding obiter that the jurisdiction in question itself extended to those who estopped themselves from denying a status subject to that jurisdiction. The answer may therefore be that, if the jurisdiction itself, properly understood, encompasses a case in which a party is estopped from denying a status within that jurisdiction, then the Royal Prerogative has not been usurped. Here too, as is the case generally in ­determining 197 Jones v James (1850) 19 LJ QB 257; Moore v Gamgee (1890) 25 QBD 244; Oulton v Radcliffe (1874) LR 9 CP 189; Fry v Moore (1889) 23 QBD 395, CA; Shrager v Basil Dighton Ltd [1924] 1 KB 274, CA. 198 [1989] 1 EGLR 251. 199 At 255B per Bingham LJ. 200 At 254L per Stocker LJ. 201 Note 198 above; and see below the Court of Appeal’s analysis of and support for the view of Hoffmann LJ in Daejan Properties Ltd v Mahoney [1995] 2 EGLR 75 in NRAM Plc v McAdam [2016] 3 All ER 665. 202 [1912] 2 Ch 520. 203 [1892] 2 QB 261. 204 [2015] PNLR 8 at [61]–[62]. 205 [2015] 1 WLR 209.

307

7.46  The defence of illegality

whether an estoppel is precluded on the ground of illegality, the issue is whether the principle of the jurisdictional limitation has been subverted by the estoppel. 7.47 The comparison above206 of the decisions of the Court of Appeal in Daejan Properties v Mahoney207 and NRAM v McAdam208 may also be instructive in this context, as the Court of Appeal in the latter regarded as preferable,209 to the reasoning of the majority in the former,210 Hoffmann LJ’s view that the statutory formality in question was one which the parties could deem satisfied by agreement or estoppel without subverting the Act or unacceptably conferring jurisdiction by agreement or estoppel, because it was for their benefit rather than in the public interest. As noted above, this suggests that statutory protection may be gained by virtue of an estoppel, notwithstanding that the court thereby acquires a statutory jurisdiction, if the particular requirement whose satisfaction is deemed by estoppel is one for the benefit of the representor or the parties to the convention, rather than one made in the public interest.

STATUTORY DUTY AND DISCRETION No estoppel against performing public duty 7.48 There is no general rule that estoppels do not bind the Crown.211 While any binding commitment restricts a public authority’s scope for action and may, therefore, be said to fetter its discretion, this does not mean that public authorities cannot bind themselves: the test developed for the validity of contractual ­commitments, applicable by analogy to estoppels, is whether it is compatible with the statutory purposes of the public authority’s undertaking that it should

206 At 7.31–7.35. Cf also that estoppel may lie because the statute provides that jurisdiction may be conferred by consent: Champion Concord Ltd v Leu (No 2) (2011) 14 HKCFAR 837 at 855–6. 207 (1996) 28 HLR 498. 208 [2015] EWCA Civ 751 at [29]. 209 At [39]. 210 They also distinguished the estoppel upheld by the majority in the former, as based on a representation as to a particular fact, namely the joint tenancy (at [39]), as opposed to a representation or agreement that the statute conferring jurisdiction applied (sed quaere: see 7.31–7.35). 211 Gould v Bacup Local Board (1881) 50 LJ MC 44 (election); Davenport v R (1887) 3 App Cas 115; R v Paulson [1921] 1 AC 271 (waiver of forfeiture); Robertson v Minister of Pensions [1949] 1 KB 227 per Denning J (‘That doctrine has long been exploded’); Roberts & Co Ltd v Leicestershire CC [1961] Ch 555 (estoppel from denying contractual terms); North Western Gas Board v Manchester Corporation [1964] 1 WLR 64 (estoppel from denying payments made were rates levied); Crabb v Arun DC [1976] Ch 179; Salvation Army Trustee Co v West Yorkshire CC (1980) 41 P & CR 179 (proprietary estoppel); see also 6.16; notwithstanding that, in Scout Association Trust Corp v Secretary of State for the Environment [2005] STC 1808 at [1], Sir Peter Gibson referred to ‘the common law rule that estoppel does not bind the Crown’.

308

Statutory duty and discretion 7.49

be able so to bind itself.212 If so, then the authority may confer rights against itself on others, both by contract and estoppel.213 It should, further, be noted at the outset that, although, under the following rules, a public authority cannot, as a matter of private law, be bound by an estoppel that would fetter its discretion or impede the performance of its duty, it may be that the same facts will found a claim in public law that the authority’s abrogation of its previous assurance is an abuse of its discretion contrary to the legitimate expectation of the claimant.214 7.49 A party may not be estopped from performing a statutory duty imposed in the public interest; so, a public utility company, charged by statute with the duty of supplying electric power at fixed charges, by mistake rendered bills at one tenth of the current rate, and the customer altered its position for the worse in failing to collect from its shareholders the amount of the proper charge, yet the corporation was not estopped from claiming the current charge, since it was under a statutory duty to collect charges in full.215 Similarly, in Herrick v Kidner,216 Cranston J recently held that ‘a highway authority cannot deprive itself of the power to act against an unlawful obstruction by refraining from exercising its statutory powers against it, or by purporting to give its consent’, citing Hampshire CC v Gillingham,217 where ‘Brooke LJ agreed with the judge: mere consent of a highway authority to an obstruction on the highway was ineffectual for the purposes of legalising it, and where a statute, like section 130 of the 1980 Act, enacted for the benefit of a section of the public, imposed a duty of a positive kind, the person charged with the performance of the duty could not by estoppel be prevented from exercising statutory powers’; and, in Re Heather,218 Lord Neuberger MR held that the SRA adjudicator could not be precluded from

212 Birkdale District Electrical Supply Co v Southport Corpn [1926] AC 355; and see Wade & Forsyth, Administrative Law (11th edn) at [196]–[201], [281]–[285]. 213 See eg cases at n 211 above and the proprietary estoppel cases of Crabb v Arun DC [1976] Ch 179 (and commentary by Millett (1976) 92 LQR 342 at 345–6) and Salvation Army Trustee Co v W Yorks CC (1980) 41 P & CR 179; AG of Hong Kong v Humphreys Estate (Queens Gardens) Ltd [1987] AC 114; Airways Aero Assocs Ltd v Wycombe DC [2010] EWHC 1654 (Ch); Joyce v Epsom and Ewell BC [2013] 1 EGLR 21; Hoyl Group Ltd v Cromer TC [2015] HLR 43. See also Executors of Lord Rotherwick v Oxford CC (3 February 2000, unreported) (Lands Tribunal). 214 Wade & Forsyth, Administrative Law (11th edn) at 450–62; R v East Sussex CC, ex p Reprotech [2003] 1 WLR 348. To found which, given the responsibility of fair government, an unfair difference in treatment from others may suffice in place of detrimental reliance: R (on the application of Hely-Hutchinson) v HMRC [2015] EWHC 3261 (Admin). 215 Maritime Electric Co Ltd v General Dairies Ltd [1937] AC 610 at 619–20; cf Taranaki Electric Power Board v Proprietors of Puketapu 3A Block Inc [1958] NZLR 297 (no duty as sale of electricity authorised ‘on such terms and conditions as it deems fit’); Sunderland Corpn v Priestman [1927] 2 Ch 107; Stockwell v Southport Corpn [1936] 2 All ER 1343 at 1353; Hampshire CC v Gillingham [2000] EWCA Civ 105; Herrick v Kidner [2010] 3 All ER 771. 216 [2010] EWHC 269 (Admin) at [33]. 217 [2000] EWCA Civ 105; see also Harvey v Truro Rural District Council [1903] 2 Ch 638; Redbridge LBC v Jaques [1970] 1 WLR 1604; Worcestershire CC v Askew [2006] EWLandRA 2005 0261. 218 [2010] EWCA Civ 196 at [14].

309

7.49  The defence of illegality

assessing whether it was necessary to impose practising certificate conditions by a conciliation agreement, because ‘there cannot be an estoppel which prevents somebody from carrying out his public duty when that duty is imposed for the public interest’.

Discretion 7.50 Further, there is no logical distinction, in this regard, between a duty imposed and a discretion conferred by statute in the public interest: an estoppel, no more than a contract, may fetter a discretion that must be exercised in the public interest.219 An example of the hardship this can cause was the refusal to estop a government department which had encouraged an airline to invest in aircraft, in the belief that its licence would be continued, from withdrawing the licence pursuant to a change in policy consequent on a change in government, as ‘estoppel cannot be allowed to hinder the formation of government policy’,220 but it may be said that, in that context, A should have realised the risk of such a change. These rules also are aspects of the rule that the assumption of powers which are ultra vires may not be validated by estoppel221 and, as explained in Western Fish Products Ltd v Penwith DC,222 are, therefore, equally subject to the arguable exceptions to that rule considered above.223

Possible exceptions 7.51 The arguable exceptions, in this context, are, first, that a public authority may have held out its officer as having power to bind it which he does not have, such that his assurance will bind it, by virtue of his ostensible authority.224 To this exception, objection may be made that ‘ostensible authority is merely one variety of estoppel’,225 and, therefore, no more capable than any other variety of 219 Southend on Sea Corpn v Hodgson (Wickford) Ltd [1962] 1 QB 416, DC; Western Fish Products Ltd v Penrith DC [1981] 2 All ER 204; Sunderland Corpn v Priestman, n 215 above; Brooks & Burton Ltd v Secretary of State for the Environment (1978) 35 P & CR 27, DC, at 40 per Lord Widgery CJ (local government officers should be able to give informal advice without estoppel) (reversed on other grounds [1977] 1 WLR 1294); Rootkin v Kent CC [1981] 1 WLR 1186 at 1195G, 1197A, 1200D; R v Secretary of State for the Environment, ex p Hammersmith and Fulham LBC (1985) Times, 18 May; as to social security law: R (SB) 14/88 and R (SB) 14/89; Food Convertors Ltd v Wiltshire Council [2016] EWHC 136 (Admin) at [16]; but cf cases on estoppel and the rule against fettering trustees’ discretion at 7.8. 220 Laker Airways Ltd v Department of Trade [1977] QB 643 per Lawton LJ at 728E. 221 See 7.36; Craig (1977) 93 LQR 398. 222 [1981] 2 All ER 204; see 7.38, at 219j–222b. 223 See 7.38, 7.51. 224 Lever (Finance) Ltd v Westminster Corpn [1971] 1 QB 222, as explained in Western Fish Products v Penwith DC, n 222 above; Camden LBC v Secretary of State for the Environment [1993] EGCS 83; Salisbury DC v Le Roi [2002] 1 P & CR 39 at 505–6; cf Minister for Immigration v Curtovic (1990) 21 FCR 193. 225 Co-operative Retail Services Ltd v Taff-Ely BC (1979) 39 P & CR 223 at 243 per Ormerod LJ (approved by HL (1981) 42 P & CR 1); see also A-G for Ceylon v de Silva [1983] AC 461 at

310

Statutory duty and discretion 7.52

conferring ultra vires powers. Secondly, it has been said that a public authority may estop itself from denying the valid exercise of a power by disregarding formal or technical defects in the procedure necessary for the valid exercise of the power.226 To this exception also an objection may be taken that the procedural and formal requirements are made in the public interest as much as a ‘substantive’ statutory requirement.227 It is submitted that a more principled test, than asking whether a statutory requirement is formal or procedural on the one hand or substantive on the other, or than automatically allowing an estoppel if the official in question has ostensible authority, is again to ask whether the estoppel raised conflicts with the policy underlying the statutory framework and whether its importance is such that it is more desirable to avoid the interference with its promotion that allowance of the estoppel would entail than to avoid injustice to A by allowing the estoppel.228

Legitimate expectation displaces estoppel in the sphere of government 7.52 The respective merits of such tests need not, however, be debated in relation to public law, since the House of Lords has held, specifically in relation to planning law, but in terms applicable by analogy to the field of public law in general,229 that ‘It is unhelpful to introduce private law concepts of estoppel into planning law’230 and that ‘in this area, public law has already

480; see 7.38; and as to categorisation of ostensible authority as based on estoppel, see Lloyds Bank plc v Independent Insurance Ltd [1999] 1 All ER (Comm) 8. 226 Wells v Minister of Housing & Local Government [1967] 1 WLR 1000, as explained in Western Fish Products Ltd v Penrith DC, n 222 above; Re L (AC) (An Infant) [1971] 3 All ER 743. 227 As it was in the powerful dissenting judgment of Russell LJ in Wells v Minister of Housing & Local Government n 226 above; especially at 1015C, to which due respect was accorded by Megaw LJ in Western Fish, n 222 above, at 223 and Lord Hoffmann in Reprotech [2003] 1 WLR 348 at 65g–h; cf Swallow & Pearson v Middlesex CC [1953] 1 All ER 580, at 582C–D, where a requirement as to ‘the particular form’ of a planning enforcement notice could not be waived by the recipient. 228 See A-G (NSW) v Quin (1990) 170 CLR 1 at 18 per Mason CJ. 229 And so applied, eg, in R (on the application of Bloggs 61) v Secretary of State for the Home Department [2003] EWCA Civ 686, following dicta in South Bucks DC v Flanagan [2002] 1 WLR 2601 at para 16 per Keene LJ. 230 R v East Sussex CC, ex p Reprotech n 227 above, at 66d per Lord Hoffmann; followed in, eg, Flanagan v South Bucks DC [2002] 1 WLR 2601, at [16]; R (Wandsworth) v Secretary of State for Transport, Local Government and the Regions [2004] 1 P & CR 32, at [22]; Rowland v Environment Agency [2005] Ch 1, noting at [66]–[67], [115]–[120] the hardship caused; R (on the application of Bloggs 61) v Secretary of State for the Home Department [2003] 1 WLR 2724 at [29]–[46]; Flattery v Secretary of State for Communities and Local Government [2010] EWHC 2868 (Admin); R (on the application of Grimsby Institute of Further and Higher Education) v Learning and Skills Council [2010] 3 EGLR 125; R (Green) v Secretary of State for Communities and Local Government [2011] EWHC 305 (Admin); in Stancliffe Stone Co Ltd v Peak District National Park Authority [2005] Env LR 4, Moore-Bick J held obiter that this rule prevented estoppel in favour of, as well as against, a planning authority.

311

7.52  The defence of illegality

absorbed ­whatever is useful from the moral values which underlie the private law concept of estoppel and the time has come for it to stand upon its own two feet’.231 A may not, therefore, raise an estoppel, but is left to his remedy in public law.232

Estoppel in private dealings of public authorities 7.53 As submitted in the fourth edition of this work and confirmed by Lewison J in LB of Bexley v Maison Maurice Ltd233 and Lewison LJ in Dudley Muslim Association v Dudley MBC,234 it does not, however, follow from the proposition that a public authority exists to promote the interests of the general public, and the public law concepts of legitimate expectation and abuse of power are better attuned to take account of this consideration, that an estoppel may never lie against a public authority. A public authority may bind itself by contract and may commit torts: it is not immune to the private law of obligations and property; so also, therefore, is it liable to estoppels.235 The public law doctrines of abuse of power and legitimate expectation operate, displacing any role for estoppel, in the sphere of government. Where, however, a public authority is engaged in private dealings (albeit ultimately in the service of the purposes of government) in which any individual has the power to engage, rather than in the activity of government which is its peculiar province, for instance, encouraging a person to believe that he has an interest in land that it owns, or waiving a provision of a contract, then, it is submitted, an estoppel may lie. Outside the sphere of government, the public authority, provided that it is acting within its statutory powers, has no more claim to exemption from the application of the doctrine of estoppel by reason of its accountability to the tax payer than has any fiduciary by reference to the interests of his or her beneficiary. Insofar as the public authority is operating in the sphere of private law, it has correspondingly been held that public law defences such as legitimate expectation are not available unless its decision making is in bad faith.236

231 At 66j per Lord Hoffmann; see also R v Somerset CC, ex p Morris & Perry (2000) 79 P & CR 238 at 243–5; Flanagan v South Bucks DC, n 230 above. 232 See n 214 above. 233 [2007] 1 EGLR 19. 234 [2015] EWCA Civ 1123, with unanimous concurrence. 235 See eg cases at n 213 above. 236 See Hampshire CC v Supportway Community Services Ltd [2006] LGR 836 at [31] per ­Neuberger LJ: ‘Thus, the mere fact that the party alleged to be in breach of contract is a public body plainly cannot, on its own, transform what would otherwise be a private law claim into a public law claim. There are, of course, circumstances where, in a contractual context, a public body is susceptible to public law remedies. However, where the claim is fundamentally contractual in nature, and involves no allegation of fraud or improper motive or the like against the public body, it would, at least in the absence of very unusual circumstances, be right, as a matter of principle, to limit a claimant to private law remedies’. And see also Dudley Muslim Association v Dudley MBC [2016] 1 P & CR 10 at [29]–[30] per Lewison LJ.

312

Foreign law 7.56

7.54 In LB of Bexley v Maison Maurice Ltd,237 Lewison J held a local authority estopped from denying the claimant’s right of access to the highway over the local authority’s land by representations that the claimant had such a right on which the claimant had detrimentally relied, notwithstanding that the local authority had not duly exercised its statutory power to grant such a right and maintained that an estoppel was not therefore available. The estoppel was upheld on the basis that the local authority had a power which it could have exercised to grant the right. While a public authority may not be estopped from denying the validity of a transaction beyond its powers,238 if the authority, acting within its powers,239 makes a representation inducing detrimental reliance by A, A may, therefore, acquire rights against it under an estoppel, provided that their conferral is compatible with the statutory purpose of the authority.240 Lewison J said ‘Ex hypothesi the power has not been exercised; because if it had been there would be no need for an estoppel. What matters is that it could have been. If it could have been, then the doctrine of ultra vires does not provide a defence’.241 7.55 This point, based on the authorities that an authority may bind itself by contract or estoppel if to do so is compatible with its statutory purpose,242 may, however, require some refinement, since the doctrine of ultra vires prevents a local authority from committing itself by contract or estoppel to the exercise of a power which it is obliged to exercise in the public interest, if the commitment would impinge unacceptably on its free exercise in the public interest.243 The issue must, once again, be whether, on the particular facts, the estoppel would unacceptably fetter a discretion that should be exercised otherwise in the public interest. Here too, therefore, the remedy244 granted may avoid infringement of public policy, by not compelling the authority to exercise its discretion other than in the best interests of the public, but compensating a misled member of it.245

FOREIGN LAW 7.56 If what may be termed the ‘proper law’ of a non-proprietary estoppel,246 that is, the law of the country with which the facts giving rise to the estoppel have the closest connection, is a foreign law under which the estoppel would 237 [2007] 1 EGLR 19 at [55]–[64]; by contrast, however, estoppel was held not to lie against a local authority in favour of an employee in respect of his pension rights by Patten J in Chapman v South Holland DC [2006] BLGR 437 at [33], sed quaere. 238 South Tyneside MBC v Svenska International plc [1995] 1 All ER 545 at 565. 239 See Millett (1976) 92 LQR 342 at 345–6; West Middlesex Golf Club v LB Ealing (1994) 68 P & CR 461 at 485; Milne-Berry v Tower Hamlets LBC [1997] EGCS 37. 240 As to which, see the distinction between the House of Lords and the New Zealand Electricity cases noted at n 215 above. 241 [2007] 1 EGLR 19 at [56]. 242 See 7.48. 243 See 7.50. 244 See n 40 above. 245 As suggested by Wade & Forsyth, Administrative Law (11th edn) at 281–5. 246 See 1.60, including an estoppel by representation of fact, which is there submitted to be a rule of substantive law rather than a rule of evidence applicable under the lex fori.

313

7.56  The defence of illegality

be defeated by reason of illegality, then the estoppel should, it is submitted, be defeated also in an English court.247 Similarly, it is submitted, no proprietary estoppel would be recognised by an English court in respect of land whose lex situs did not allow such a claim.

247 The ‘Amazonia’ [1990] 1 Ll R 236 at 247 per Staughton LJ.

314

CH A P T E R 8

Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

Estoppel by convention  8.1 Introduction  8.1 General statement of requirements  8.6 Communication of the shared assumption  8.8 Inducement  8.22 Actual or presumptive intention to induce  8.23 Actual inducement  8.32 Mutual dealings  8.35 Unjust benefit or detriment  8.41 The effect of an estoppel by convention  8.45 The ‘Indian Endurance’  8.45 Effect of convention as to fact  8.52 Effect of convention as to (non-proprietary) rights: suspensory  8.54 Effect of convention as to (non-proprietary) rights: illegality  8.56 Convention as to proprietary rights  8.61 Clean hands  8.62 Effect of estoppel by convention: conclusion  8.63 Further aspects of estoppel by convention  8.64 Belief in the assumed state of facts irrelevant  8.64 Illegality/public policy  8.66

315

8.1  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

Estoppel by contract  8.67 Principle  8.67 Construction and effect  8.72 Cross-estoppel by contract  8.74 Statutory control  8.76 Receipt in a contract or deed  8.77 Estoppel by deed  8.79 Definition and foundation  8.79 History  8.82 Operation  8.84 Defences  8.87 Construction of the deed  8.88 Development  8.89 Estoppel as to title  8.90 Binding by agreement  8.90 Two historical doctrines of estoppel by deed as to title  8.92

ESTOPPEL BY CONVENTION Introduction Origin and evolution of the doctrine 8.1 The doctrine of estoppel by convention developed from estoppel by deed, an estoppel originally based on the formal solemnity of the deed,1 reflecting the concern of ancient jurisprudence with form as opposed to substance,2 whose validity came to be recognised as that of an agreement under seal to admit

1 See 1.35; 2 Coke on Littleton at 352b: Coke confines his examples of estoppel by ‘matter in writing’ to documents under seal – ‘As by deed indented, by making of an acquittance by deed indented, or by deed poll, by defeasance by deed indented, or by deed poll’; see also Goodtitle d Edwards v Bailey (1777) 2 Cowp 597 at 601: ‘No man shall be allowed to dispute his own solemn deed’; Bowman v Taylor (1834) 2 Ad & El 278 at 291 per Taunton J: ‘The principle is, that where man has entered into a solemn engagement by deed under his hand and seal as to certain facts, he shall not be permitted to deny any matter which he has so asserted’; see also Rainsford v Smith (1560) 2 Dyer 196a; Jones v Williams (1817) Stark 52; Harding v Ambler (1838) 3 M & W 279; Simm v Anglo-American Telegraph Co (1879) 5 QBD 188, CA, at 206; Low v Bouverie [1891] 3 Ch 82, CA, at 101. 2 See 1.35, 8.79 onwards.

316

Estoppel by convention 8.2

the relevant proposition for the purpose of the transaction effected by the deed.3 The evolution of estoppel by deed into a doctrine that applies other than to deeds was neither recent nor sudden. 175 years ago, Parke B said: ‘If a distinct statement of a particular fact is made in the recital of a bond, or other instrument under seal, and a contract is made with reference to that recital, it is unquestionably true that, as between the parties to that instrument, and in an action upon it, it is not competent for the party bound to deny the recital, notwithstanding what Lord Coke says on the matter of recital in Coke on Littleton 352b; and a recital in instruments not under seal may be such as to be conclusive to the same extent’.4 The evolution5 continued and, as will be seen below, the modern ­doctrine is not, as Baron Parke envisaged, an application of the doctrine of estoppel by deed to instruments that are not under seal (which is an estoppel by contract, binding by the contractual force of agreement to the convention),6 but an estoppel founded on detrimental reliance on a convention, and, therefore, a form of reliance-based estoppel. Definition 8.2 An estoppel by convention is an estoppel from denying a proposition established, not by representation or promise by B to A, but by mutual, express or implicit, assent.7 The estoppel is not founded on A believing a representation by B, but on a common assumption of facts or law as a basis of their relationship, to which B has so assented as to make B responsible for A’s reliance on it. When the parties have so acted in their relationship upon that shared assumption that it would be unfair on A for B to resile from it, then A will be entitled

3 In Greer v Kettle [1938] AC 156 above; see 8.79. 4 (Emphasis added) Carpenter v Buller (1841) M & W 209, at 212. See also Ashpitel v Bryan (1864) 5 B & S 723 at 727 per Pollock CB: ‘So here, for the purpose of the transaction in question, the parties agree that certain facts should be admitted to be facts on the basis of which they should contract, and they cannot recede from that’; McCance v London and North Western Rly Co (1846) 3 H & C at 343 per Williams J, citing Blackburn’s Contract of Sale, see 8.71; Ferrier v Stewart (1912) 15 CLR 32. 5 Traced by Dawson (1989) 9 LS 16 at 31–41; Derham (1997) 71 ALJ 860, 977. As the Court of Appeal recognised in Dixon v Blindley Heath Investments Ltd [2015] EWCA Civ 1023 at [72], it has developed from a common law estoppel by deed into an instance of what the Court of Appeal now identifies as an ‘equitable estoppel’ and we call reliance-based estoppel. 6 As to which, see 8.67. 7 ‘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, eg a failure by the alleged representor to react to something said or done by the alleged representee so as to imply manifestation of assent which leads to an estoppel by silence or acquiescence. Similarly, in cases 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 upon by the representee as a basis for this form of estoppel’ per Kerr LJ, giving the judgment of the Court of Appeal in The ‘August Leonhardt’ [1985] 2 Ll R 28 at 34–5. See also 8.8, 1.27.

317

8.2  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

to relief against B. As to the relief, it is submitted that, for consistency with the related doctrines of estoppel by representation of fact, promissory estoppel and ­proprietary estoppel, it should be determined according to whether the estoppel relates to a matter of fact, a promise, and/or property.8 8.3 The formulation of the propositions in the preceding paragraph that appeared in the third edition of this work confined the doctrine to conventions as to matters of fact between parties entering into a transaction, and made no reference to unfairness. Although that formulation was approved by the Court of Appeal,9 it was amended in the fourth edition, first, because the House of Lords has held that an estoppel may be founded on a convention as to law;10 secondly, because it is now recognised that reliance, to found an estoppel, must be such that it would be unfair11 to resile; and, thirdly, because it is not necessary that the parties be about to enter into a transaction.12 The reformulation in the fourth edition to take account of these points has been adopted with approval at first instance on a number of occasions,13 and the only amendment of substance to that formulation in the present edition is to provide that the foundation of the

8 See 8.45 onwards. 9 Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84 at 126A, 130G–131A, per Eveleigh (second sentence only), Brandon LJJ; The ‘August Leonhardt’ n 7 above at 34 col 1; John v George [1996] 1 EGLR 7, CA at 11C, 14G; and at first instance in ‘The Leila’ [1985] 2 Ll R 172 at 178, col 1 and ‘The Kostas K’ [1985] 1 Ll R 231 at 237, col 2; and in the House of Lords (first sentence only, recognising the extension of the doctrine to matters of law) per Lord Goff in Kenneth Allison Ltd v AE Limehouse & Co [1992] 2 AC 105 at 127E; contrast Peter Gibson J in Hamel-Smith v Pycroft & Jetsave Ltd (5 February 1987, unreported) (approved in ‘The Vistafjord’ [1988] 2 Ll R 343 at 351, col 2 per Bingham LJ): ‘the sentences are better understood as illustrations of estoppel by convention rather than a definition of that category of estoppel’ because, as is demonstrated below, the assumption may be of law, the parties need not be about to enter a transaction, and the previous definition should be qualified by considerations of justice and equity: followed in Re Millwall Football Club [1998] 2 BCLC 272 at 280C–I and many subsequent cases. 10 See 8.4. 11 Or ‘unjust’, ‘inequitable’ or ‘unconscionable’; see 1.5 onwards, 1.64 onwards, 5.41 onwards, 8.41; in Credit Suisse v Allerdale BC [1995] 1 Ll R 315 at 367–70 (affd on other grounds [1997] QB 362), a plea of estoppel by convention failed on this ground; Hamel-Smith v Pycroft & Jetsave Ltd, n 9 above (approved in The ‘Vistafjord’, n 9 above at 351, col 2). 12 Hamel-Smith v Pycroft & Jetsave Ltd, n 9 above (approved in The ‘Vistafjord’, n 9 above at 351, col 2); see 8.32 onwards and Dawson (1989) 9 LS 16; Derham (1997) 71 ALJ 860, 977. 13 Maersk Oil UK Ltd v Dresser-Rand (UK) Ltd [2007] EWHC 752 (TCC) at [227]; Republic of Serbia v Imagesat International NV [2010] 1 Ll R 324 at [68]; Stena Line Ltd v Merchant Navy Ratings Pension Fund Trustees Ltd [2010] Pens LR 411 at [136]–[137]; and the chapter more generally in Wembley National Stadium Ltd v Wembley (London) Ltd [2008] 1 P & CR 3 at [33].

318

Estoppel by convention 8.5

estoppel is a common assumption to which B has so assented to A as to make B responsible to A,14 rather than only an ‘agreed statement’. Convention as to fact or law 8.4 As Carnwath LJ said in ING Bank NV v Ros Roca SA:15 ‘We have the (relatively unusual) advantage of a succinct statement of the modern law, adopted without dissent or qualification by the full House of Lords’, referring to that of Lord Steyn in The ‘Indian Endurance’:16 ‘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 fact or law if it would be unjust to allow him to go back on the assumption.’

8.5 Carnwath LJ went on to recognise,17 on the basis of that authority, that an estoppel by convention need not be as to fact, but ‘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’.18 Where it does, however, it must be noted that a defence may be available that the doctrine cannot render a promise enforceable that would otherwise fail for want of consideration, since it must operate, as does promissory estoppel,

14 See 8.8 onwards. 15 [2012] 1 WLR 472 at [55]. 16 [1998] AC 878 at 913E. 17 At [64(i)], with the concurrence of Stanley Burnton and Rix LJJ at [76], [79]. 18 See also Lord Denning MR in Amalgamated Investment v Texas Commerce n 1 above at 122; ‘first, the agreed assumption need not be of facts, but may be of law’; Bingham LJ, with the agreement of Taylor, O’Connor LJJ in The ‘Vistafjord’, n 9 above (followed in Shearson ­Lehman Hutton Inc v McLaine Watson & Co Ltd [1989] 2 Ll R 570 at 596 col 2); Kenneth Allison Ltd v A E Limehouse Ltd, n 9 above at 127E–F; and Neuberger J in PW & Co v Milton Gate Investments Ltd [2004] Ch 142 at [174] as a matter of principle without reliance on the preceding authorities: ‘I can see no reason in principle or practice why a misapprehension as to the general law cannot, in an appropriate case, found an estoppel by convention’; in Johnson v Gore Wood & Co [2002] 2 AC 1, the parties accepted Lord Denning’s statement above and it was adopted on that basis and quoted by Lord Bingham at 33C–F with whom their Lordships, save Lord Goff and Lord Millett, agreed, Lord Goff (at 38H–40E) refusing to express the doctrine of estoppel by convention as to matters of law in such terms as to allow it to circumvent the doctrine of consideration, as to which see 8.56 onwards. It is, with respect, hard to follow the provisional obiter concern of the Court of Appeal in Scottish & Newcastle plc v Lancashire Mortgage Corp Ltd [2007] EWCA Civ 684 at [59]–[64] that no estoppel by convention would lie because the convention concerned future conduct, as the convention was a continuing convention as to the rights of the parties under the transaction: see further 2.31.

319

8.5  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

within such constraints as are necessary to prevent it undermining the doctrine of consideration.19

General statement of requirements 8.6 The requirements for a convention as to a matter of fact or law to found an estoppel were recently distilled from a review of the authorities in HMRC v Benchdollar Ltd20 by Briggs J as follows: ‘i)

It is not enough that the common assumption upon which the estoppel is based is merely understood by the parties in the same way. It must be expressly, [or implicitly by words or conduct from which the necessary sharing can properly be inferred,]21 shared between them.

ii)

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 upon it.

19 See Lord Goff in Johnson v Gore Wood & Co, n 18 above, and 8.56 onwards. 20 [2010] 1 All ER 174 at [52]; the authorities were also recently reviewed in Mears Ltd v ­Shoreline Housing Partnership Ltd (2015) 160 Con LR 157 by Akenhead J, who summarised his view of their effect in a contractual context at [49]: ‘(a) An estoppel by convention can arise when parties to a contract act on an assumed state of facts or law. A concluded agreement is not required but a concluded agreement can be a “convention”. (b) The assumption must be shared by them or at least it must be an assumption made by one party and acquiesced in by the other. The assumption must be communicated between the parties in question. (c) At least the party claiming the benefit of the convention must have relied upon the common assumption, albeit it will almost invariably the case that both parties will have relied upon it. There is nothing prescriptive in the use of “reliance” in this context: acting upon or being influenced by would do equally well. (d) A key element of an effective estoppel by convention will be unconscionability or unjustness on the part of the person said to be estopped to assert the true legal or factual position. I am not convinced that “detrimental reliance” represents an exhaustive or limiting requirement of estoppel by convention although it will almost invariably be the case that where there is detrimental reliance by the party claiming the benefit of the convention it will be unconscionable and unjust on the other party to seek to go behind the convention. In my view, it is enough that the party claiming benefit of the convention has been materially influenced by the convention; in that context, Goff J at first instance in the Texas Bank case described that this is what is needed and Lord Denning talks in these terms. (e) Whilst estoppel cannot be used as a sword as opposed to a shield, analysis is required to ascertain whether it is being used as a sword. In this context, the position of the party claiming the benefit of the estoppel as claimant or indeed as defendant is not determinative or does not even raise some sort of presumption one way or the other. While a party cannot in terms found a cause of action on an estoppel, it may, as a result of being able to rely on an estoppel, succeed on a cause of action on which, without being able to rely on the estoppel, it would necessarily have failed. (f) The estoppel by convention can come to an end and will not apply to future dealings once the common assumption is revealed to be erroneous’. 21 Briggs J amended his formulation to this effect in Stena Line Ltd v Merchant Navy Ratings Pension Trustees Ltd [2010] Pens LR 411 at [137] by reference of the fourth edition of this work at [VIII.2] (unaffected on appeal [2011] Pens LR 233).

320

Estoppel by convention 8.8

iii)

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.

iv) That reliance must have occurred in connection with some subsequent mutual dealing between the parties. v)

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.’

8.7 This formulation has been adopted at first instance and by the Court of Appeal in a number of subsequent cases,22 and is respectfully supported here with the glosses set out below.23 Although Briggs J applied his analysis to estoppel by convention in a non-contractual context, that is, where the convention is other than as to the meaning of a contract between the parties, in Mitchell v Watkinson24 the Court of Appeal held the ‘differences of formulation’ between Briggs J’s and one applied in a contractual context25 to be ‘more apparent than real, and that in practice there is likely to be little if any material difference in the outcome whichever version of these principles is applied’, and in Pearson v Lehman Bros26 and Dixon v Blindley Heath Investments Ltd,27 Briggs J’s formulation was applied by the Court of Appeal to rights under contracts.28 On these authorities, and because there is submitted to be no reason in principle for the criteria for an estoppel by convention (as opposed to the result of their application) to differ according to whether the context is or is not contractual, Briggs J’s analysis is here considered and adopted as applicable in both contexts.

Communication of the shared assumption 8.8 ‘It is not enough that the common assumption upon which the estoppel is based is merely understood by the parties in the same way. It must be expressly

22

Stena Line Ltd v Merchant Navy Ratings Pension Trustees n 21 above (as amended thereby); Catchpole v Trustees of the Alitalia Airlines Pension Scheme [2010] ICR 1405; EDF Energy Networks (EPN) Plc v BOH Ltd [2010] 2 P & CR 3; Pearson v Lehman Bros [2010] EWHC 2914 (Ch) and on appeal [2012] 2 BCLC 151; Mitchell v Watkinson [2015] L & TR 22; Dixon v Blindley Heath Investments Ltd [2016] 4 All ER 490 at [91]. 23 See 8.8 onwards, 8.23 onwards, 8.32 onwards, 8.35 onwards, 8.41 onwards. 24 Note 22 above at [52]. 25 In Chitty on Contracts: see now 32nd edn [4-108]. 26 Note 22 above. 27 Note 22 above at [91]. 28 Security repurchase agreements and a company’s articles of association respectively.

321

8.8  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

[or implicitly by words or conduct from which the necessary sharing can properly be inferred]29 shared between them.’30

Estoppel by convention is defined by the manner in which B assumes responsibility to A for the relevant proposition,31 namely by mutual assent rather than representation. A critical element32 therefore remains that of communication: the assumption of the relevant fact or proposition as to the parties’ rights must be expressly or impliedly communicated between the parties.33 Without such communication,34 B could not be responsible to A for his acting on the relevant assumption so as to render it unfair for B to depart from it. 8.9 Accordingly, Kerr LJ in The ‘August Leonhardt’ identified this r­ equirement for a convention as an aspect of the common requirement for any reliance-based estoppel: ‘There cannot be any estoppel unless the alleged representor has said or done something, or failed to do something, with the 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 the alleged representor to resile by challenging the belief or expectation which he has engendered. To that extent at least, therefore, the alleged representor must be open to criticism.’35

29

Briggs J amended his formulation to this effect in Stena Line Ltd v Navy Ratings Pension Trustees Ltd [2010] Pens LR 411 at [137] by reference to the fourth edition of this work at [VIII.2] (unaffected on appeal [2011] Pens LR 233). In Bank Leumi v Akrill [2014] EWCA Civ 909 the Court of Appeal accepted that it must be express, but that is respectfully submitted to have been per incuriam, as the cases at 8.10 onwards were not cited to it. 30 HMRC v Benchdollar, n 20 above. 31 See 8.2. 32 The corresponding passage to this in the fourth edition was cited with approval by Picken J in Cape Distribution Ltd v Cape Intermediate Holdings Plc [2016] Lloyd’s Rep IR 499, at [154]. 33 This proposition in the fourth edition was cited with approval by Beatson J in Republic of Serbia v Imagesat International NV [2010] 1 Ll R 324 at [69]. 34 Cases considered in 1.88 onwards, of reliance-based estoppel founded by A on B’s silence in breach of a duty to speak where A was unaware of B’s position or even existence, will not arise in estoppel by convention because it is based on mutual assent. 35 Giving the judgment of the Court of Appeal [1985] 2 Ll R 28 at 34–5. Recent examples of interaction by the party estopped with the estoppel raiser in a manner consistent only with subscription to the relevant convention, which therefore ‘crossed the line’, communicating assent to it, may be found in: Harper v Interchange Group Ltd (2007) 104 (36) LSG 28; Dornoch Ltd v Westminster International BV [2009] 2 Ll R 420 at [22]–[23]; Waltham Forest LBC v Oakmesh Ltd [2010] JPL 249 at [45]–[48] (although there called ‘estoppel by representation’); Deutsche Bank AG v Sebastian Holdings Inc (Rev 1) [2013] EWHC 3463 (Comm) at [995]; Bank of India v Svizera Holdings BV [2013] EWHC 4097 (Comm) at [87]–[88]; Kaupthing Singer & Friedlander Ltd v UBS AG [2014] EWHC 2450 (Comm) at [94]–[98]; Swinton Reds 20 Ltd v McCrory [2014] EWHC 2152 (Ch) at [37]; Spliethoff’s Bevrachtingskantoor BV v Bank of China Ltd [2015] 2 Ll R 123 at [160]–[170]; Dixon v Blindley Heath Investments Ltd [2016] 4 All ER 490; Stevensdrake Ltd v Hunt [2016] BPIR 773 at [104]–[107]. The necessary assumption and communication was found wanting, however, in Thor Navigation Inc v Ingosstrakh Insurance, [2005] 1 Ll R 547 at [66]–[68]; Triodos Bank NV v Dobbs [2005] 2 Ll R 479 at [22]–[27] (summary application dismissed); Canmer International Insurance v UK Mutual

322

Estoppel by convention 8.10

8.10 For this reason the House of Lords has unanimously held in The ‘Indian Endurance’ that ‘It is not enough that each of the two parties acts on an assumption not communicated to the other’.36 In John v George,37 also, Morritt LJ held that the assumption must ‘be shared in the sense that each is aware of the assumption of the other’38 and Simon Brown LJ that ‘the party to be estopped [must have] at the very least communicated to the other that he is indeed sharing his (ex hypothesi) mistaken assumption’.39 Communication of the shared assumption between the parties is essential, but, as Morritt LJ also held,40 it does not follow that, in every case, B must have ‘created or encouraged’ A’s assumption. If the circumstances place B under a duty to correct A’s false assumption,41 responsibility for it may then derive from allowing it to continue rather than encouraging it; but it nonetheless remains essential for an estoppel that B’s conduct makes him responsible for A’s reliance on the assumption.42

Assurance [2005] 2 Ll R 479 at [41]; Tamil Nadu Electricity Bd v ST-CMS Electricity Co Private Ltd [2008] 1 Ll R 93 at [103]–[133]; Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2007] 2 All ER (Comm) 215 at [53], this aspect affirmed [2008] 2 All ER (Comm) 14 at [85]; Haden Young Ltd v Laing O’Rourke Midlands Ltd [2008] EWHC 1016 (TCC) at [187]–[192]; Prudential Assurance Co Ltd v Exel Co Ltd [2010] 1 P & CR 7 at [203]; WS Tankship II BV v Kwangju Bank Ltd [2012] CILL 3155; Pindell v Airasia Berhad [2011] 1 All ER (Comm) 396 at [55]; Crossco No 4 Unlimited v Jolan Ltd [2011] EWHC 803 (Ch) at [333]– [361] affirmed on appeal [2012] 2 All ER 754 at [115]; F G Wilson (Engineering) Ltd v John Holt & Co (Liverpool) Ltd [2012] 2 Ll R 479 at [73] (unaffected on appeal [2014] 1 All ER 785); Barclays Bank Plc v Unicredit Bank AG [2013] 2 Ll R 1; Seakom Ltd v Knowledgepool Group Ltd [2013] EWHC 4007 (Ch); McTear v Engelhard [2014] EWHC 1056 (Ch); GSP Fortuna Ltd v Dean International Trading SA [2014] EWHC 2208 (Comm); Ted Baker Plc v Axa Insurance UK Plc [2015] 2 Lloyd’s Rep IR 325; Globe Motors, Inc v TRW Lucas Varity Electric Steering Ltd (Rev 1) [2014] EWHC 3718 (Comm); Crabbe v Townsend [2016] EWHC 2450 (Ch) at [18]; General Motors UK Ltd v Manchester Ship Canal Co Ltd [2016] EWHC 2960 (Ch). 36

Per Lord Steyn, n 16 above at 913F and (in identical terms) per Bingham LJ in The ‘Captain Gregos’ [1990] 2 Ll R 395, at 405, col 2; The ‘Vistafjord’ [1988] 2 Ll R 343 at 351; Hillingdon LBC v ARC Ltd [2000] 3 EGLR 97 at [62]; T & N Ltd (in administration) v Royal & Sun ­Alliance plc [2003] 2 All ER (Comm) 939; see also McCathie v McCathie [1971] NZLR 58. 37 [1996] 1 EGLR 7; see also cases at 5.10 n 37. In both John v George at 12H–J and The ‘Indian Endurance’, n 16 at 914E–915F, the appellate court reversed the court below on this issue. 38 At 11D. 39 At 14K–L; see eg Redrow plc v Pedley [2002] PLR 339 (pension schemes); see also, as to the onus of establishing that the parties did not mean their agreement to be that which was recorded being the same as for rectification, T & N Ltd v Royal & Sun Alliance Plc [2003] 2 All ER (Comm) 939 at [193], followed in Queens Moat Houses Plc v Capita IRG Trustees Ltd [2005] 2 BCLC 199 at [35]. 40 At 11D; see also ‘The Leila’ [1985] 2 Ll R 173 at 179 per Mustill J: ‘In my judgment, these authorities lend no support to the argument that the party who asserts an estoppel by convention must show that the other party has made some representation as to the legal position, or that the other party must at least have been the source of a mistake, if any equity is to arise. Indeed the whole tenor of the judgment in the Amalgamated Property case is to the effect that that estoppel is not so confined’. 41 See 1.88 onwards, 3.11 onwards, 8.15 onwards. 42 See 8.15.

323

8.11  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

Assent by silence or conduct 8.11 Assent to the convention may be communicated by the parties’ conduct. It may also be sufficient that A communicates his assumption to B and B acquiesces in it.43 Whether A or B has by his conduct assented, or whether B has by his silence communicated that he shares A’s assumption, must fall to be determined on the same principles as whether B has made a representation to A by conduct or silence.44 Assent by conduct 8.12 If conduct is relied on, the question is whether the assent to the relevant proposition is implicit in the relevant conduct.45 This requires examination of whether it is reasonable for A to infer, without seeking clarification,46 that B would not be acting as he is if he did not assent to the proposition. Thus, for instance, reliance on one ground for rejecting a demand without asserting another will not necessarily constitute a waiver of the other ground,47 but it may provide one part of the evidence of a shared assumption that the demand is otherwise valid.48 John v George49 may be analysed as an example of implicit assent: a landlord proposed that an application be made for planning permission to develop his tenant’s buildings and to build new buildings, so that the old buildings could be sold to pay for the construction of the new, to which the tenant would move. The landlord’s encouragement to the tenant to support the application for planning permission, rather than enforce his right against the landlord to repairs to the old buildings, was construed as impliedly communicating the landlord’s assent to the proposition that a grant of planning permission to develop the old buildings, but refusal for the new buildings, would not entitle the landlord to recover possession50 of the old buildings. It was so interpreted although neither party had applied his mind to that question, because the planning permission was to be obtained, with the tenant’s support, as part of the scheme. This implied that it was only to be used in furtherance of that purpose, and not otherwise, against the tenant’s interest and wishes, if the scheme could not proceed.

See Lord Steyn in ‘The Indian Endurance’ quoted at 8.4; and, for a recent example, JafariFini v Skillglass Ltd [2006] EWHC 77 (Ch) at [89], where Stuart Isaacs QC held that estoppel by convention ‘can arise even where the assumption is based on a mistake made by the party relying on it and acquiesced in by the other party’. 44 ING Bank NV v Ros Roca SA [2012] 1 WLR 47, CA, at [91]–[95]; The ‘Vistafjord’ [1988] 2 Ll R 343 at 351, col 1; 1.88 onwards, 3.9 onwards. 45 In ‘The August Leonhardt’ [1985] 2 Ll R 28 at 33–34, it was determined on these principles that there was no such communication by silence (cf William Hill (Southern) Ltd v Waller [1990] EGCS 126). See 3.4 onwards, 4.41. 46 See 8.19 onwards, 4.1, 4.12, 4.27, 4.37, 4.38. 47 See cases at 3.24, 4.44(8), 14.16. 48 As in Spliethoff’s Bevrachtingskantoor BV v Bank of China Ltd [2015] 2 Ll R 123, at [168]–[169]. 49 [1996] 1 EGLR 7, at 15C–D. 50 Which right he would otherwise obtain (on severance of the holding) under Case B of Sch 3 to the Agricultural Holdings Act 1986. 43

324

Estoppel by convention 8.14

8.13 The Court of Appeal held in Dixon v Blindley Heath Investments Ltd51 that conduct may constitute assent to a convention although the parties are mistaken, ignorant or oblivious as to the true position,52 but ‘the real difficulty confronting a party seeking to establish an estoppel on the basis of an assumption contrary to, and in circumstances where the parties have forgotten, the true state of things … is … an evidential one … of showing that something other than forgetfulness played a part in the adoption of the assumption, and that the person sought to be estopped assumed some responsibility for it’.53 If, however, as the court went on to hold, one party has benefited to the relative detriment of the other by mutual conduct based on a mistaken assumption on an issue of such importance to that conduct that the issue must have been in mind54 when they so conducted themselves, then the importance of the relevant issue to the mutual conduct will mean the conduct, albeit unwitting, amounts to assent ‘across the line’55 to, and an assumption of responsibility for, the mistaken convention. 8.14 The nicety of the issue addressed in Dixon v Blindley Heath Investments Ltd is illustrated56 by comparison with cases in which claimants sought to raise estoppels by convention against defendants asserting a jurisdictional or limitation bar to proceedings, on the basis of discussions between their legal representatives when the possible existence of such a bar had not occurred to either: the question57 is whether the parties evinced their contentment to proceed on the basis that there was no such bar. In The ‘Indian Endurance’,58 a statement by the claimant to the defendant that there would be English proceedings as well as those in Cochin did not impose a duty on the defendant to raise the objection that proceeding to judgment in Cochin would bar any English proceedings. There was, therefore, no representation or promise by silence,59 nor was there implicit communication of a shared assumption that the Cochin judgment would not bar English proceedings. By contrast, in Hiscox v Outhwaite60 the majority of the Court of Appeal held that an exchange of letters, by which solicitors confirmed their common understanding as to the time limit for bringing an appeal from an arbitrator’s award in England, carried implied assent to the proposition that

51 52

[2016] 4 All ER 490. At [79]. This may be seen as amounting to an estoppel based on common mistake for which B has become responsible to A by reason of their mutual conduct in reliance on it and the importance of the issue on which they were mistaken to that conduct. 53 At [89] and, as to which, see n 54 below. 54 At [94]: ‘… we consider that in the particular circumstances all parties shared responsibility … there is every reason for the parties to be thinking of [the issue] and [the] assumption … was an assumption that operated on the parties’ minds throughout, and was relied on in ­connection with their subsequent mutual dealings’. 55 See n 7 above, 1.97, 1.98. 56 See also n 35 above. 57 See ‘The Indian Endurance’ [1998] AC 878 at 914F–G per Lord Steyn. 58 At 914E–916A. 59 Referred to as ‘estoppel by acquiescence’ by Lord Steyn. 60 [1992] 1 AC 562 at 575A–577C, 579G; contrast Leggatt LJ’s dissent at 584E–585B; see also Co-op Wholesale Society v Chester-le-Street DC (1996) 73 P & CR 111, CA; Cotterrell v Leeds Day (16 June 2000, unreported), CA.

325

8.14  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

such an appeal ‘could and would be heard and determined on [its] merits’,61 thereby establishing a convention that the appeal lay in England. So also, in The ­‘Amazonia’,62 ‘months of discussions and correspondence … on the basis that the answer was arbitration if agreement was not reached’ established a convention that an arbitration clause was valid, but in LB Hillingdon v ARC Ltd63 a willingness to negotiate and to pay the claimant’s surveyor’s fee (which would not be payable unless the claim succeeded) did not imply assent to a convention that the claimant had a valid claim that was not limitation barred (as was then commonly, but as it turned out, wrongly, thought to be the law); and the courts have consistently refused to infer that a limitation period is waived by continuing settlement negotiations after its expiry in the cases that have followed.64 Assent by silence 8.15 If mere silence is relied on, the question is whether B, the silent party, was under a duty to tell A, the mistaken party, that B did not assent to the relevant proposition.65 Thus, in ING Bank NV v Ros Roca SA,66 Rix LJ expressly adopted the analysis of Bingham J in The ‘Lutetian’ as to whether a representation has been made by silence,67 in determining whether a party had assented to a convention by silence. In both cases, B, as a party to a contract with A, was estopped 61 62 63

At 577C, per Lord Donaldson MR. [1990] 1 Ll R 236 at 251, col 2. [2000] 3 EGLR 97; followed in Llanec Precision Engineering Ltd v Neath Port Talbot CBC (17 July 2000, unreported) (Lands Tribunal); see also Hewlett v London CC (1908) 72 JP 136; The ‘Zhi Jiang Kou’ [1991] 1 Ll R 493 (High Court of Australia); Patel v Peel Investments (South) Ltd [1992] 2 EGLR 116 at 118–9; Executors of Lord Rotherwick v Oxfordshire CC (3 February 2000, unreported, Lands Tribunal). 64 Seechurn v ACE Ins SA-NV [2002] 2 Ll R 390 (CA); Bridgestart Properties Ltd v London Underground Ltd [2004] EWCA Civ 793; Wiberg v CC Swansea [2001] EWLA 8; Super Chem Products Ltd v American Life and General Insurance Co Ltd (Trinidad and Tobago) [2004] 2 All ER 358; Fortisbank SA v Trenwick International Ltd [2005] Lloyd’s Rep IR 464; Law Society v Sephton [2005] QB 1013 at [126]–[131], [133], [150] (unaffected on appeal [2006] 2 AC 543); Khan v Tyne and Wear Passenger Transport Executive [2015] RVR 165, LC; cf MIOM 1 Ltd v Sea Echo ENE [2012] Ll R 140 at [48]–[52], where failure to plead or include a time bar on an agreed list of issues was a an unequivocal representation that the point was not being taken; and Commonwealth of Australia v Verwayen (1990) 170 CLR 394, in which specific assurances that a limitation defence would not be taken founded an estoppel against doing so. 65 There was no such duty, for instance, in Townsend v Persistence Homes Ltd [2013] UKPC 12 at [39]. 66 [2012] 1 WLR 472 (CA) at [91]–[95]; Carnwath LJ at [71] disavowed analysis in terms of a duty to speak but nonetheless adopted the approach in The ‘Lutetian’ which, it is submitted, in effect imposes a duty to speak as it affects B’s rights if B does not speak: see Blair J in Starbev GP Ltd v Interbrew Central European Holdings BV [2014] EWHC 1311 (Comm) at [123]–[133]: ‘In such a case, the duty to speak arises because “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”’; and further 1.90 onwards, 3.11 onwards. 67 See 3.9. The analysis in The ‘Lutetian’ cannot account for all instances of estoppel based on silence as based on an implicit representation rather than breach of a duty to speak (see 1.88 onwards) but, in the case of a convention, because it must be based on mutual assent, A must be aware of B and the relevant facts of B’s relationship with him (see 1.88 onwards), and all

326

Estoppel by convention 8.17

from later disputing A’s calculation of the amount of a contractual liability, by failure to express its dissent from the view expressed by A at an earlier critical juncture, when B was aware both of the difference between them on the issue, and that A was about to rely on the understanding that A had expressed and believed B to accept. 8.16 B therefore makes a representation or assents to a convention by not speaking when a reasonable man would expect him, ‘acting honestly68 and responsibly’,69 to do so if he dissents from the understanding expressed to him by A. How such a duty to speak sits with the general rule that tacit acquiescence in another’s self-deception does not amount to misrepresentation70 has yet to be fully explained. There is some circularity71 in the foundation of the duty to speak on honesty and responsibility. For, B is responsible, or answerable, to A if the law determines him to be so. Thus framed, whether B is under a duty to speak depends on whether he is responsible to A, which depends on whether B is under a duty to speak. So also, whether the silence is dishonest or deceitful depends on whether A is entitled to expect B to speak (as opposed to being able to take legitimate advantage of the self-deception). On this analysis, again, whether B is under a duty to speak therefore depends on whether B can honestly remain silent, which depends on whether B is under a duty to speak. In spite of this circularity, we suggest that the formulation is nonetheless helpful, and that it is essentially a ‘jury question’ whether B can honestly and responsibly remain silent. 8.17 As held by Tuckey LJ in HIH Casualty & General Insurance Ltd v Axa Corporate Solutions,72 it is rare that an estoppel can be founded simply on silence because A should have spoken when both parties were unaware of the right alleged to have thereby been waived, but it is not when the silence is combined with conduct crucially based on the non-existence of the right, as held in Taylors Fashions73 and Dixon v Blindley Heath Investments Ltd.74 The additional requirement of inducement for an estoppel by convention, identified by Stephen Jourdan QC (and considered below) in Richmond Pharmacology Ltd v Chester Overseas Ltd,75 as applying to assent to a convention by silence, must, however, also be satisfied: ‘First, I think that, in order to create an estoppel by acquiescence, the circumstances in which B acquiesces in the assumption which A has

cases of a breach by B of a duty to correct A’s belief amounting to assent to a convention are therefore properly categorised as implicit endorsement of it on the analysis in The ‘Lutetian’. 68 See the analysis of Blair J in Starbev GP Ltd v Interbrew Central European Holdings BV [2014] EWHC 1311 (Comm) at [123]–[133]. 69 See 1.88 onwards, 3.11 onwards. 70 See 3.12, 3.21 onwards. 71 As noted in 1.94, 3.12. 72 [2002] EWCA Civ 1253 (with concurrence); followed, on this, in eg DRL Ltd v Wincanton Group Ltd [2010] EWHC 2896 (QB); see further 1.96, 4.42, 3.22. 73 See 1.96, 3.15, 12.83. 74 See 8.13, 1.97, 3.23. 75 [2014] EWHC 2692 (Ch) at [209]–[210]. See also n 67 above.

327

8.17  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

made, must be such that B’s silence can reasonably76 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. 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’.77 8.18 Where an estoppel is based on B’s acquiescence in A’s mistake, A is aware of B and the relevant facts of his relationship with him,78 and B’s silence amounts to an endorsement of A’s mistaken belief, there may often be little difference in practice between an estoppel by representation and an estoppel by convention, but there is a difference in substance as, in the one case, the silence amounts to a unilateral representation of the relevant proposition and, in the other, to subscription to a bilateral assumption as to the relevant proposition; in the latter, there need not be a belief by A in the truth of the proposition as opposed to an understanding that it is agreed as the basis (whether or not true) of the transaction or relationship.79 Unequivocality 8.19 There is, in the formulation at the commencement of this chapter and that of Briggs J in Benchdollar,80 no explicit requirement of unequivocality in the mutual assent required to found an estoppel by convention. As Sir John Arnold P pointed out in Troop v Gibson,81 unequivocality82 may be unnecessary for an estoppel by convention: ‘… since [an estoppel by convention] 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.’83

8.20 If consensual language or conduct is established or conceded, as where the court is construing a recital,84 the court may construe it without requiring It is, however, submitted (see 5.19 onwards, 5.25) that the requirement of inducement would also be satisfied and an estoppel therefore also founded on silence if it were established that B actually intended A to rely on the relevant assumption without consideration of whether that was a reasonable understanding on the part of A. 77 See also the dicta of Dixon J in Grundt v Great Boulder Pty Goldmine Ltd and Thompson v Palmer at 1.5 onwards. 78 See 1.88. 79 See 8.64. 80 See 8.2, 8.6. 81 [1986] 1 EGLR 1. 82 See 4.2, 4.11. 83 At 3K–L: adopted by Carnwath LJ in ING Bank NV v Ros Roca SA [2012] 1 WLR 472 at [64] with unanimous concurrence. 84 See eg Bowman v Taylor (1834) 2 Ad & El 278; South Eastern Rly Co v Warton (1861) 6 H & N 520 at 527–8; Dabbs v Seaman (1925) 36 CLR 538 at 548–552. 76

328

Estoppel by convention 8.21

unequivocality. The certainty of terms necessary for a consensus is, nonetheless, required,85 and this was said in the same case ‘seldom’86 to fall below unequivocality. 8.21 In practice, the court will either construe the convention or find that the necessary consensus is lacking. If, however, assent to the convention is denied, A must prove unequivocal assent to it by B, that is, that it was reasonable for A so to understand B without seeking clarification.87 It is submitted that it is in this sense that it has been held by the Court of Appeal in SmithKline Beecham Plc v Apotex Europe Ltd that the convention or common assumption founding an estoppel by convention must be unequivocal88 and, in Blindley Heath Investments Ltd v Bass,89 that there must be ‘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’: if A is to succeed in establishing that B’s language or conduct communicated to A B’s assent to a proposition, then the language or conduct must be reasonably so understood by A, and A will not be able to establish that to be the case if B’s language or conduct was ambiguous in that respect, and it was therefore unreasonable that A did not seek clarification.90 Thus also, where the assent of either or both parties to the relevant convention is to be inferred from conduct or language implying such assent, the conduct or language must unequivocally convey the consent.91 While a consensus will be established in accordance with an acceptor’s reasonable interpretation of the offer made to

85

See eg Baird Textiles Ltd v Marks & Spencer plc [2002] 1 All ER (Comm) 737 at 715e–f. see further 4.11. 86 See Troop v Gibson [1986] 1 EGLR 1 per Ralph Gibson LJ; Baird Textile Holdings Ltd v Marks & Spencer plc [2001] per Mance LJ at [84], [91]–[92]; Durham v BAI (Run Off) Ltd [2009] 2 All ER 26 at [273]; Republic of Serbia v Imagesat International NV [2010] 1 Ll R 324 at [71]. 87 See 8.2, 4.2, 4.5–4.6, 4.11–4.12, 4.27, 4.37–4.38. 88 [2007] Ch 71 (CA) at [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’. See also Commercial Union Assurance plc v Sun Alliance Group plc [1992] 1 Ll R 474 at 481; BP plc v Aon Ltd [2006] 1 All ER (Comm) 789 at [270] per Colman J: ‘what “crossed the line” by way of manifestation … fell short of the unequivocal assent to the common understanding required for an operative estoppel by convention’; Durham v BAI (Run Off) Ltd [2009] 2 All ER 26 at [273]: ‘in order to create an estoppel, an assumption, just like a statement must be “clear and unambiguous”’ (unaffected on appeal [2012] 1 WLR 867). 89 [2015] EWCA Civ 1023 at [88]. 90 See n 87. Assent to a convention by silence will be found only where there is a responsibility expressly to deny such assent if it is not given (see 8.15 onwards). If the court has found there to be such a duty, the question of unequivocality will not arise (see 4.3, 4.42–4.43). The question of unequivocality does not, therefore, arise in terms in relation to assent by silence. 91 See 4.41. Thus, for instance, in Jet2.com Ltd v Blackpool Airport Ltd [2012] 2 All ER (Comm) 1053 at [34]–[36], no estoppel by convention against asserting the right to refuse flight schedules outside permitted hours could be founded on four years of accepting them.

329

8.21  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

him,92 the question is whether acceptance without seeking clarification of any ambiguity was reasonable.93

Inducement 8.22 If the convention does not bind by contract, since the estoppel must then be a form of reliance-based estoppel,94 B must have induced A so to act that it would be unjust to allow95 B to resile from the convention, as particularised in Briggs J’s second to fifth requirements in Benchdollar.

Actual or presumptive intention to induce 8.23 Briggs J’s second requirement therefore reflects the status of estoppel by convention as a form of reliance-based estoppel: ‘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 upon it.’

8.24 B’s actual and apparent intention, by making a promise, to induce action by A was held by the House of Lords in Cobbe v Yeoman’s Row Property Management Ltd96 to be insufficient to found a proprietary estoppel because the promise was understood to be binding in honour only. It is submitted that, by parity of reasoning, the requirement of intention to induce, for any reliance-based estoppel, must be understood not to be satisfied if A knows or ought to know that B does not intend to be responsible for A’s reliance.97 In the context of estoppel by convention, the requirement will not therefore be satisfied if A knows that the expression of assent by B is not legally binding, because, say, as in Cobbe, the assent is binding ‘in honour’ only:98 although B intends A to act on the understanding, A understands, or ought to understand, that B is not taking responsibility for A’s reliance on it, and the reliance is at A’s own risk. On the other hand, for consistency with general principle,99 it is submitted that, subject to this requirement of responsibility, Briggs J’s second requirement should be slightly recast to allow 92 Per Lord Diplock in The ‘Hannah Blumenthal’ [1983] 1 AC 854 at 915E–916B: as Lord Diplock’s analysis was based on estoppel, it may nonetheless be said that such an estoppel requires unequivocality. 93 See eg Dixon v Blindley Heath Investments Ltd [2016] 4 All ER 490 at [96]–[98]. 94 See 1.5 onwards. 95 See Lord Steyn in ‘The Indian Endurance’ at 8.4. 96 [2008] 1 WLR 1752; see 5.19 onwards. 97 See 5.19 onwards. 98 Cf JT Developments v Quinn (1990) 62 P & CR 33 CA, cited and not overruled in Cobbe, where an offer in negotiations prior to contract in sufficiently clear terms did make the offeror responsible for the offeree’s reliance on it; and Bradbury v Taylor [2013] WTLR 29, CA, at [13], [25], [37]–[47]: ‘As it is there will be no contract, as this is a friendly arrangement’, but an arrangement that was nonetheless intended to bind. 99 See 5.19 onwards, 5.25.

330

Estoppel by convention 8.26

for its satisfaction by evidence establishing the actual (alternatively to apparent) intention of B to be responsible for A’s reliance, as correctly understood by A. 8.25 It is failure to satisfy this second of Briggs J’s criteria which is submitted to have led the courts100 to dismiss claims to an estoppel by convention on the following basis: A and B entered into an agreement thinking (and aware of each other’s understanding) that it had an effect it did not, by reason of their ignorance of the applicable law; they would not have entered into the same agreement had they known its true effect, and, by entering into the agreement and conducting himself on the basis of the shared understanding as to its effect, A has altered his position. At first sight, it would appear that all the elements of an estoppel by convention as to the law are made out, but the plea of estoppel fails, not only where public policy will not allow it because the estoppel would undermine a rule of law as to which the parties are mistaken,101 but also because, in some cases, the courts do not regard it as unfair for A (once enlightened) to assert the correct law against B. The reason for this is submitted to be that, in the circumstances of these cases, the courts did not regard B as having rendered himself answerable to A for the correctness of the shared view of the law: the assumption of responsibility necessary for a convention was not made out.102 For this reason a party who fails to establish the necessary intention to contract to found a claim in contract (leaving aside the defence of illegality considered below)103 is unlikely to be able to make good that defect by claiming an estoppel based on a convention as to the existence of such a contract, as the want of contractual ­intention imports also a want of the actual or apparent intention to assume responsibility to the other party that would be necessary to found an estoppel.104 8.26 Viewed as an application of the general requirement for a reliance-based estoppel – that B (actually or as reasonably understood by A) intended to induce A to act in reliance on the relevant proposition other than at A’s own risk – the question raised by this second of Briggs J’s requirements is whether B actually (or as reasonably understood by A) intended that A could rely on the subscription of B to their common view (as opposed to each, keeping his own counsel, being responsible for his own view).105 It is by reference to their subsequent dealings 100 See Keen v Holland [1984] 1 WLR 251; and cases noted at nn 105, 213 below, and at 5.10 n 37; Wilson v Truelove [2003] WTLR 609; this passage was cited with approval by Burton J in Durham v BAI (Run Off) Ltd [2008] EWHC 2692 (QB) at [267] (unaffected on appeal) in following Wilson v Truelove; cf also Actionstrength v International Glass Engineering SpA [2003] 2 AC 541. 101 See 8.56 onwards, 8.66. 102 See also 5.10 n 37. 103 See 8.56 onwards. 104 See nn 105, 213 below. Cf where the parties are professionals, or advised by professionals, seeking to resolve an issue between them and both having access to the relevant material, an assertion as to their mutual rights and obligations, if it is regarded as a representation at all rather than assertion of a position or argument, is likely to be regarded as a representation of opinion, as in Kyle Bay Ltd v Underwriters of Policy 019057/08/01 [2006] EWHC 607 (Comm) at [50]–[54]; and cases at 2.22 n 98. 105 See eg Tesco v Costain [2003] EWHC 1487 (TCC); Intense Investments Ltd v Development Ventures Ltd [2006] EWHC 1586 (TCC); CIFAL Groupe SA Grontmij Investment Management

331

8.26  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

on that basis that B will be answerable to A:106 for B will be taken to assume responsibility for A’s reliance on the understanding to which B has assented if B knew or ought to have known that A was relying or would rely on it, unless A knew, or in the circumstances should have known, that B was not making himself responsible for A’s understanding or action,107 which remained A’s own risk and responsibility. 8.27 Whether there is, for an estoppel by convention, the same requirement that B actually or presumptively intended to induce A to act on the convention has, however, been questioned,108 by reference to the case of Troop v Gibson,109 in which the convention (as to the absence of a written lease and, hence, of a covenant against assignment) was established, in relation to a rent arbitration, in 1974 (benefiting the landlord by increasing the rent awarded) but the assignment was made, without consent, in 1980. It may be said that the landlord did not, in that case, actually intend to induce the tenant to act on the conventional understanding by making the assignment without seeking consent. An alternative to actual intention to induce is, however, presumptive intention to induce, which is established where the estoppel raiser reasonably understood himself to be intended to act on the representation or convention. In Troop v Gibson the tenant understood from the landlord that the latter’s position was that there was no written tenancy and, therefore, no covenant against assignment. It was reasonable for him (until disabused) to understand that to be the landlord’s position in relation to all dealings with the tenancy, rather than just in relation to the arbitration, and, therefore, to understand himself to be intended or entitled to act on it: the convention was material110 to the assignment. 8.28 It is submitted, therefore, that in relation to estoppel by convention, as in relation to the other reliance-based estoppels, the requirements of actual causative inducement, and actual or presumptive intention to induce A to act on the representation (other than at his own risk), provide the proper test of whether there is sufficient nexus between the relevant detrimental conduct and the proposition established by convention to give rise to the unfairness whose avoidance requires the remedy of an estoppel. Some such limitation is necessary, given that SAS v Meridian Securities (UK) Ltd [2013] EWHC 3553 (Comm); Liberty Mercian Ltd v Cuddy Civil Engineering Ltd [2014] 1 All ER (Comm) 761 at [166]–[167]; cf Waltham Forest LBC v Oakmesh Ltd [2010] JPL 249 at [45]–[48]. 106 As eg in Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84; Waltham Forest LBC v Oakmesh Ltd [2010] JPL 249 at [45]–[48]; see also 8.32 onwards. 107 So, to take a straightforward recent example, there could be no estoppel, from denying the authority of solicitors by reason of dealing with them on their implicit warranty that they had such authority, as the authority warranted was their responsibility: Blankley v Central ­Manchester and MCUH NHS Trust [2014] 1 WLR 2683 at [58]–[60] (unaffected on appeal [2015] 1 WLR 4307); see also eg Cobbe and cases at nn 35, 105, 213 where no convention was found. 108 See Derham (1997) 71 ALJ 860, 977 at 874–5. 109 [1986] 1 EGLR 1. 110 See 5.33 onwards.

332

Estoppel by convention 8.30

the application of a convention is no longer held to be necessarily limited to a particular transaction,111 and the rationale for the application of these criteria for whether B is responsible to A for his detrimental reliance applies with equal force to estoppels by convention as to the other reliance-based estoppels. Here also these requirements are satisfied if A was caused to act as he did by the convention, he reasonably believed B to intend him to be able to rely on it, and the manner in which A acted on it was reasonable.112 8.29 In Baird Textiles Holdings Ltd v Marks & Spencer plc,113 Mance LJ, in the context of a plea of conventional estoppel as to the existence of rights, put this requirement as follows: ‘It is also, on authority, an established feature of both promissory and conventional estoppel that the parties should have had the objective intention to make, affect or confirm a legal relationship.’

8.30 The authorities that Mance LJ then cited in support refer to the requirement that the relevant assurance be ‘intended to be binding’,114 stating that, where the estoppel raiser can ‘… reasonably be expected to appreciate that …’ the relevant assurance is not binding, ‘… and that he cannot therefore safely rely on it as a legally binding promise …’, then it will not found an estoppel,115 distinguishing such a binding assurance from ‘… a mere statement of present (revocable) intention …’.116 These dicta address the present issue in the context of assurances or conventions as to the existence of rights where the facts are known. In the wider context of conventions as to law or fact, they are, we suggest, instances of the court addressing the question of whether B actually, or as reasonably understood by A, intended A to be able to rely on the convention.117 In Dixon v Blindley Heath Investments Ltd,118 the Court of Appeal identified the touchstone for assumption of responsibility in the case of parties proceeding on the basis of a mutual mistake as to their rights as being the importance of the issue on which they are mistaken to the relevant conduct, and held119 that if one party has benefited to the detriment of the other by mutual conduct based on a mistaken assumption on an issue of such importance to that conduct that the

111 See 8.2, 8.35, 8.43. 112 See 5.4 onwards, 5.19 onwards, 5.33 onwards; and, for an example of a court considering whether it was reasonable for an estoppel raiser to act in reliance on a convention, Thornton Springer v NEM Ins Co Ltd [2000] 2 All ER 489 at 518 per Colman J. 113 [2002] 1 All ER (Comm) 737 at 764e. 114 Combe v Combe [1951] 2 KB 215 at 220, 224, 225; see also Spence v Shell UK Ltd [1980] 2 EGLR 68 at 73. 115 Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84 at 107 at first instance per Robert Goff J. 116 Gillett v Holt [2001] Ch 210 at 228. 117 Cf Square v Square [1935] P 120. 118 [2016] 4 All ER 490; see 8.13, 1.97–1.98. 119 At [92]–[95].

333

8.30  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

issue must have been in mind120 when the conduct was undertaken and the relative benefit conferred and detriment incurred, then the importance of the relevant issue to the mutual conduct will be sufficient to render the conduct an implicit assumption of responsibility for the convention, notwithstanding ignorance or forgetfulness of the true position. 8.31 In the context of estoppel by contract or deed, for which detrimental reliance is not required, the issue of whether the parties should be inferred to have intended to be bound by their convention has recently arisen in relation to a receipt or recital of debt and is considered below.121 Even in the case of estoppel by deed, although it is often beyond argument that a recital of fact placed by the parties at the forefront of their instrument must estop both from averring to the contrary,122 the question may arise as to whether the alleged assumption was adopted by the parties as the conventional basis of their dealings.123 The recital may not be one whose validity both parties have agreed to accept as against the other,124 being intended to be a statement for which one party only is responsible; if so, it is in substance a representation rather than a convention, and that party only will be estopped.125 The recital may also, by mistake, inaccurately record what the parties intended to recite; and, in such a case, no estoppel will arise, as a court would order rectification;126 or it may contain a fundamental mistake of fact, common to both parties, which may give a right to rescind the contract if restitutio in integrum remains possible, or render it void for mistake.127 120 At [94]: ‘… we consider that in the particular circumstances all parties shared responsibility … there is every reason for the parties to be thinking of [the issue] and [the] assumption … was an assumption that operated on the parties’ minds throughout, and was relied on in connection with their subsequent mutual dealings’. 121 At 8.77–8.78; see also 5.38 onwards. 122 Bowman v Taylor (1834) 2 Ad & El 278; Stroughill v Buck (1850) 14 QB 781; Horton v Westminster Improvement Commissioners (1852) 7 Exch 780; Young v Raincock (1849) 7 CB 310, 338; Taylor v Knapman (1884) 2 NZLR 265; Woolwich Equitable Building Society v Marshall [1952] Ch 1; Church of England Building Society v Piskor [1954] Ch 553; Abbey National Building Society v Cann [1991] 1 AC 56. 123 Greer v Kettle [1938] AC 156 per Lord Russell of Killowen, at 167: ‘Where a recital is intended to be an agreement of both parties to admit a fact, it estops both parties, but it is a question of construction whether the recital is so intended’; Dabbs v Seaman (1925) 36 CLR 538 at 549, where the express proposition (albeit referring to a transaction rather than ­‘dealings’) set out in the text may be found. 124 See Greer v Kettle n 123 above, and 5.38 onwards, and 8.77–8.78 as to receipts. 125 Per Patteson J in Stroughill v Buck, n 122 above at 787: ‘but when it is intended to be the statement of one party only, the estoppel is confined to that party, and the intention is to be gathered from construing the instrument’. This statement of the law was directly approved by the House of Lords in Greer v Kettle n 123 above, where recitals in a deed of guarantee were in the circumstances held to be the statement of one party only; see further, in relation to estoppel by deed, 8.88(1). 126 Brook v Haymes (1868) LR 6 Eq 25; approved and followed in Greer v Kettle n 123 above, per Lord Maugham at 171; Wilson v Wilson [1969] 3 All ER 945 at 949; Buckland v Commissioner of Stamp Duties [1954] NZLR 1194 at 1203; McCathie v McCathie [1971] NZLR 58, CA. 127 See 8.87(3). Similarly, in UBS AG (London Branch) v Kommunale Wasserwerke ­Leipzig GmbH [2014] EWHC 3615 (Comm) at [693], a contractual estoppel was undone by rescission of the contract for bribery and conflict of interest.

334

Estoppel by convention 8.34

Actual inducement 8.32 While Briggs J’s second requirement is of (actual or presumptive) intention to induce reliance, the third is of actual inducement,128 which is a question of causation: ‘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.’

8.33 It is submitted that this, too, is an application of the general requirements for reliance-based estoppel, in this case of actual inducement, and the reasoning in the authorities in relation to reliance on a representation,129 as to the test for a sufficient causal connection between the representation and the relevant conduct, is of equal force in relation to reliance on a convention. A may therefore be assisted by the materiality of the convention to his subsequent conduct raising a presumption that he relied on the convention.130 On the other hand, if the parties have entered into a transaction under a common misunderstanding as to its legal effect, but at arm’s length, each relying on his own or his advisers’ judgement, rather than the view of the other party, a plea of estoppel by convention will fail.131 8.34 Robert Goff J therefore noted at first instance in Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd132 that the understanding on which A relies need not be created by B, but B’s assent must have influenced A: it must have had some causative effect. If it were established that A would have behaved the same way even had B expressly dissented from, or withdrawn his assent to, the convention, the plea of estoppel must fail for want of reliance.133 There is, a distinction between estoppel by convention and by representation of fact that whereas, for A to rely on a unilateral representation of fact, he must believe the representation to be true, to rely on a convention as to fact or law A need not believe the truth or accuracy of it, but only that he and B are proceeding on the basis that it is true or accurate.134 The underlying issue of causation is, however, the same, whether in relation to a representation of fact, an undertaking or a convention, namely whether A believes the representation, undertaking or convention to be reliable and is thereby induced to act or omit to act. 128 Recent examples of cases for an estoppel by convention failing for want of reliance on a common assumption may be found in Fortisbank SA v Trenwick International [2005] 1 Lloyd’s Rep IR 464 at [43]; Ease Faith Ltd v Leonis Marine Management [2006] 1 Ll R 673 at [165]; Tamil Nadu Electricity Board v ST-CMS Electricity Co Private Ltd [2007] 2 All ER (Comm) 701 at [125]; Bear Stearns Bank plc v Forum Global Equity Ltd [2007] EWHC 1576 (Comm) at [192]; AXA Versicherung AG v Arab Insurance Group (BSC) [2016] Lloyd’s Rep IR 1 at [206]–[207]; Crabbe v Townsend [2016] EWHC 2450 (Ch) at [19]. 129 See 5.4 onwards. 130 See 5.33 onwards. 131 See 8.25. 132 [1982] QB 84 at 104–5. 133 See 5.17. 134 See 8.64.

335

8.35  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

Mutual dealings 8.35 ‘That reliance must have occurred in connection with some subsequent mutual dealing between the parties’ is the fourth of Briggs J’s requirements. Since the estoppel is founded on the responsibility of B as party to the convention for A’s reliance on it, only detrimental reliance by A on the relevant assumption after communication by B of his assent to it will constitute the necessary unfairness to estop the other from resiling from the assumption.135 The approval of HamelSmith v Pycroft & Jetsave Ltd136 by the Court of Appeal in The ‘Vistafjord’137 established, at that level, that the parties to an estoppel by convention need not be about to enter into a particular transaction, but, rather, it must simply be unfair for B to resile from the convention, and Lord Steyn’s authoritative dictum in The ‘Indian Endurance’138 requires only that ‘it would be unjust to allow [the party estopped] to go back on the assumption’. It is not (necessarily) entry into a transaction that establishes the estoppel, but rather the unfairness that would result if B is allowed to resile from the convention. The doctrine was applied accordingly by Briggs J in Benchdollar139 to estop taxpayers from raising a limitation defence to tax claims by HMRC. 8.36 Where, as is usually the case, on the true construction of the convention, its application is limited to providing the basis on which the parties enter into a particular transaction, then the estoppel founded thereon will extend no further than to disputes arising out of that transaction.140 In practice, rather than of theoretical necessity, estoppels that bind by contract or deed are invariably of this nature and thus limited in effect to the contract or transaction effected by the deed. Even if, however, the convention is not construed as limited to supplying an agreed basis for a particular transaction, then the convention will nonetheless be as to the factual or legal basis of relations between the parties, so in practice unfairness will only result from B denying its truth if A has relied on it in connection with their mutual dealings, as otherwise B’s denial will not unfairly affect A’s position. 8.37 It is worth examining whether it is a matter of logical necessity or inherence in the nature of a convention that it should be intended to apply, and therefore be reliable, only in relation to the dealings between the parties. Take

135 The ‘Captain Gregos’ [1990] 2 Ll R 395 at 405, col 2; John v George [1996] 1 EGLR 7 at 14D; LB Hillingdon v ARC Ltd [2000] 3 EGLR 97 at 104K, 105G; Ease Faith Ltd v Leonis Marine Management [2006] 1 Ll R 673 at [163]–[171]. 136 (5 February 1987, unreported). 137 [1988] 2 Ll R 343 at 351, col 2 per Bingham LJ. 138 See 8.4. 139 [2010] 1 All ER 174. 140 Carpenter v Buller (1841) M & W 209 at 212–3; Horton v Westminster Improvement Commrs (1852) 7 Ex 780 at 791; Re Simpson (1876) 2 Ch D 72, CA; McCathie v McCathie [1971] NZLR 58, CA; Amalgamated Investment v Texas Commerce International Bank Ltd [1982] Ch 84 at 126E–G; cf Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580, CA, where estoppel from denying a landlord’s title continued after the end of the lease; see further 8.86 on estoppel by deed.

336

Estoppel by convention 8.38

the example that A and B agree the interpretation of a provision of a contract between them after it is made, but do not rely on that convention in any way in their dealings between themselves. B then encourages A to enter into a contract with C containing the same provision on the basis of their agreed interpretation. It makes no difference to the rights between A and C if B then denies the truth of the convention: although A may possibly have a claim for damages for misrepresentation against B, estopping B from denying the truth of the convention will not assist him against C. B now denies the truth of the convention in relation to the contract between A and B, which is to A’s disadvantage. Although A’s only reliance on the convention occurred in a dealing between A and C rather than A and B, it is submitted that B should nonetheless be estopped by the convention so far as necessary to do justice between A and B, having regard to B’s responsibility for A’s reliance on the convention in his dealing with C. It may be said that B’s volte-face does not make A’s reliance detrimental, since it does not affect his relations with C, nor, for that reason, does estopping B protect A against the detriment he has incurred in reliance on the convention. Nonetheless, there is detriment in that A is worse off for relying on the convention, and B is responsible to A for that detrimental reliance, so B should be estopped against A so far as necessary to do justice between them in respect of A’s detrimental reliance in the dealing with C for which B is responsible. In this case, however, in addition to the original convention as to their own relationship, for B to be responsible to A there must be the additional encouragement by B for A to act on it in his dealing with C, so the estoppel may be said to be founded on that encouragement, a form of representation, rather than on the convention, which is limited in ambit to the relations between the parties themselves, and without more can therefore found an estoppel only on reliance in subsequent mutual dealings between A and B. Reliance by entry into the transaction itself 8.38 Briggs J formulated his principles after consideration of the following dicta of Oliver LJ, giving the judgment of the Court of Appeal in Keen v Holland,141 which had been understood by a number of other judges at first instance142 to express the view that entry into the agreement, as to whose meaning and effect the parties have shared an incorrect assumption, cannot of itself constitute the necessary unfairness to give rise to a non-contractual estoppel by convention: ‘This is not strictly a case of the parties having established, by their construction of their agreement or their apprehension of its legal effect, a conventional basis upon which they have regulated their subsequent dealings, as in the Amalgamated 141 [1984] 1 WLR 251 at 261F–H; followed in Wilson v Truelove [2003] WTLR 609. 142 They were so understood by Ferris J in Colchester DC v Smith [1991] Ch 448 at 496, by Hirst J in The ‘Nile Rhapsody’ [1992] 2 Ll R 399 at 407–9, by Park J in CP Holdings Ltd v Dugdale (22 May 1998, unreported), and by Neuberger J in PW & Co v Milton Gate Investments Ltd [2004] Ch 142 at [162]–[167] (distinguishing it, however, at [185] on, with respect, doubtful grounds); see, to the contrary, the view in the fourth edition repeated below and now upheld in ING Bank NV v Ros Roca SA (n 147 below), also considered by Briggs J in Benchdollar n 20 above at [51].

337

8.38  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

Investment case [1982] QB 84. The dealing alleged to give rise to the estoppel is the entry into the agreement itself in the belief that it would produce a particular legal result. In fact, for reasons which have nothing to do with the defendant, the plaintiffs got it wrong, and what Miss Williamson appears to us to be contending for is a much wider conventional estoppel than has yet been established by any authority, namely, that where parties are shown to have had a common view about the legal effect of a contract into which they have entered and it is established that one of them would not, to the other’s knowledge, have entered into it if he had appreciated its true legal effect, they are, without more, estopped from asserting that the effect is otherwise than they originally supposed.’

8.39 The elements of an estoppel by convention (given the authorities which establish that such an estoppel may be as to law or as to rights)143 that are lacking in that example, however, are only (1) communication by B to A that he shares the relevant view,144 and (2) that A will be worse off, by reason of his reliance on B and B then resiling, than A otherwise would be, so as to render B accountable to A for A’s reliance.145 Notwithstanding the first instance decisions in which the Court of Appeal has been understood to have held otherwise in Keen v ­Holland,146 we maintain the submission that there is no reason, in principle, why entry into the agreement itself (whose effect is the subject of the convention) should not constitute the alteration of position on which the estoppel is founded, if it is the case that A would be worse off if B resiles from the convention than A would be had A not relied on the convention. This is now supported by the decision of the Court of Appeal in ING Bank NV v Ros Roca SA147 to found an estoppel as to the meaning of a contractual term on detrimental reliance by entry into the contract itself, including that term, because the term would have been renegotiated but for reliance on the convention.148 Briggs J’s fourth requirement should not therefore be understood in a contrary sense. Parties 8.40 Whether the successors and assignees of the original parties to the convention are bound by their reliance-based estoppel by convention is to be determined, 143 See 8.3. 144 As identified in Wilson v Truelove [2003] 2 EGLR 63 at [22]–[23]. 145 See 8.41 onwards. 146 [1984] 1 WLR 251. 147 [2012] 1 WLR 472 at [72], [76], [103]. Although Keen v Holland was not cited, Carnwath LJ considered at [59] the chapter of the fourth edition of this work in which it was addressed, and the decision in ING Bank is nonetheless submitted to be right in principle. 148 See also Helden v Strathmore Ltd [2011] HLR 41 at [24], and Lloyds TSB Bank Plc v Crowborough Properties Ltd [2012] EWHC 2233 (Ch) (unaffected on appeal [2013] EWCA Civ 107); Process Components Ltd v Kason Kek-Gardner Ltd [2016] EWHC 2198 (Ch) at [124] for other examples of entry into the transaction itself rendering it unjust to allow the party estopped to resile from the convention, and the rejection of a submission that it could not in Liberty Mercian Ltd v Cuddy Civil Engineering Ltd [2014] 1 All ER (Comm) 761 at [164]. If, on the facts of PW & Co v Milton Gate Investments Ltd [2004] Ch 142, such detriment were argued and proved, it seems the estoppel claim would now be upheld rather than dismissed as it was on that ground (although see 7.2 n 14 for another unargued point that might lead to its dismissal nonetheless) but this was considered then to be precluded by Keen v Holland.

338

Estoppel by convention 8.44

it is submitted, on the principles examined in Chapter 6.149 An estoppel by contract or deed will bind only those who become bound by the contract or deed by succession or assignment.

Unjust benefit or detriment 8.41 As the House of Lords held in The ‘Indian Endurance’, B will only be estopped from resiling from a mutual assumption ‘… if it would be unjust to allow him to go back on the assumption’.150 The fifth and final of Briggs J’s requirements is therefore that: ‘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.’

8.42 Under the modern formulation, the necessity for unfairness has supplanted that of entry into a transaction151 because an estoppel by convention is founded on the unfairness of B resiling by reason of A’s reliance. This is in contrast with estoppels by contract or deed,152 for which unfairness by reason of reliance is not a prerequisite, but entry into a transaction (a contract or deed) is, since the estoppel binds B by force of agreement with A by contract or under seal. 8.43 As to the requirement of unfairness, whether unfairness would result depends (as in relation to the other reliance-based estoppels) on whether A has been induced by the conventional understanding so to act that A will be, relative to B, worse off if B is allowed to resile from the convention,153 than A would be if he had not been induced by the convention so to act or refrain from acting. The test whether the relevant conduct of A was induced by the convention is, as submitted above, the same test of causation as applies to the other reliance-based e­ stoppels.154 Thus, for instance, in Credit Suisse v Allerdale BC,155 Colman J rejected a plea of estoppel by convention on the ground (inter alia) that he was not satisfied that the estoppel raiser had been induced to act to its detriment by the convention. 8.44 In Emirates Trading Agency LLC v Sociedade De Fomento Industrial Private Ltd,156 Popplewell J was ‘not convinced that “detrimental reliance” 149 At 6.14 onwards. 150 See 8.4. 151 See 8.2, 8.3. 152 See 8.67 onwards, 8.79 onwards. 153 See Ch 5 for consideration both of inducement and the alteration of position necessary to found an estoppel, including, at 5.61, relative detriment, where the position of the party to be estopped would be improved in relation to that of the estoppel raiser without the latter’s being otherwise worsened. 154 Promissory, proprietary estoppel and by representation of fact or law. 155 [1995] 1 Ll R 315 at 369–70 (affd on other grounds [1997] QB 362); see also recently Crabbe v Townsend [2016] EWHC 2450 (Ch) at [20]. 156 [2015] 2 Ll R 487 at [49]; see also Akenhead J in Mears Ltd v Shoreline Housing Partnership Ltd (2015) 160 Con LR 157 at [49]: ‘A key element of an effective ­estoppel by convention

339

8.44  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

represents an exhaustive or limiting requirement of estoppel by convention although it will almost invariably be the case that where there is detrimental reliance by the party claiming the benefit of the convention it will be unconscionable and unjust on the other party to seek to go behind the convention’. It is submitted, nonetheless, that ‘detrimental’ is an apt term to describe the quality of reliance by the estoppel raiser required to make it unjust for the party estopped to resile from the convention if it is understood to include, as a form of relative detriment, the case where, although the resiling would not be to the detriment of A, it would be to the unfair benefit of B, as Briggs J’s formulation above provides. To correspond with general principle,157 Briggs J’s formulation should not, however, be understood as requiring that the detriment be suffered or benefit conferred before B seeks to deny the conventional assumption. It is the detriment that A would suffer if B resiled, as compared with the position in which he would be had he not acted on the assumption, that founds the estoppel.158

THE EFFECT OF AN ESTOPPEL BY CONVENTION The ‘Indian Endurance’ 8.45 On the face of Lord Steyn’s authoritative encapsulation,159 an estoppel by convention simply binds the party estopped to the convention: ‘The effect of an estoppel by convention is to preclude a party from denying the assumed fact or law if it would be unjust to allow him to go back on the assumption’; and this is supported by authorities approving the formulation of the doctrine in the third edition of this work as having a simple conclusive effect. In Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd,160 while Lord Denning favoured flexibility,161 the majority, Brandon162 and Eveleigh163 LJJ, cited and applied that definition, under which ‘… as regards that transaction each will be estopped against the other from questioning the truth will be unconscionability or unjustness on the part of the person said to be estopped to assert the true legal or factual position. I am not convinced that “detrimental ­reliance” represents an exhaustive or limiting requirement of estoppel by convention although it will almost invariably be the case that where there is detrimental reliance by the party claiming the benefit of the convention it will be unconscionable and unjust on the other party to seek to go behind the convention. In my view, it is enough that the party claiming benefit of the convention has been materially influenced by the convention; in that context, Goff J at first instance in the Texas Bank case described that this is what is needed and Lord Denning talks in these term’. In Process Components Ltd v Kason Kek-Gardner Ltd [2016] EWHC 2198 (Ch) at [135], however, Proudman J, rightly in our respectful view, regarded the unfairness or unconscionability necessary to found an estoppel by convention as the same in substance as the ‘detriment’ required to found an estoppel by representation. 157 See 5.51 onwards. 158 See 1.70 onwards, 5.51 onwards. 159 See 8.4. 160 [1982] QB 84. 161 At 126A. 162 At 122; see further 8.52 onwards. 163 At 130G–131A.

340

The effect of an estoppel by convention 8.47

of the statement of facts so assumed’. So also did the Court of Appeal in The ‘August Leonhardt’,164 and John v George.165 It is submitted, however, that this is a fossil preserved from the origin of the doctrine in estoppel by deed, which operates by force of a binding agreement under seal, and whose result is therefore dictated by that agreement, but it is not necessarily the result of a reliancebased estoppel by convention. Modulated effect not precluded 8.46 For, Lord Steyn’s encapsulation of the doctrine is not to be construed as a statute (particularly in relation to an issue that was not debated in The ‘Indian Endurance’) and does not, it is submitted, preclude a modulated estoppel by convention from denying the fact or law if and insofar as it would be unjust to permit disavowal. Lord Denning, for instance, in A ­ malgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd166 immediately followed a similar formulation to that of Lord Steyn – ‘When the parties to a transaction proceed on the basis of an underlying ­assumption – whether due to misrepresentation or mistake makes no difference – on which they have conducted the dealings between them – neither of them will be allowed to go back on that assumption when it would be unfair or unjust to allow him to do so’ – with a conclusion, which he regarded as consistent with it, that the response of the court may be modulated: ‘if one of them does seek to go back on it, the courts will give the other such remedy as the equity of the case demands’. 8.47 There is an inclination to hold that the result of an estoppel by convention is simply to bind the parties to their convention (as is the case also in relation to proprietary estoppels arising out of bargains that are unenforceable as contracts for want of formality). It is based on an understanding that the doctrine of estoppel is operating here to enforce the obligation of B to keep his word (because the estoppel arises out of an agreement or convention) rather than to hold B accountable for A’s detrimental reliance on a proposition for A’s faith in which B is responsible to A. It is submitted, however, that the foundation of a reliance-based estoppel (as opposed to a contract) is not the obligation to keep one’s word, but responsibility for another’s reliance on one’s representation,167 and this is so even in relation to an estoppel by convention, where the making of the convention does not amount to a contract. The foundation of the estoppel is detrimental reliance rather than bargain, and this affects the consequence of the estoppel.

164 [1985] 2 Ll R 28 at 34 col 1. 165 [1996] 1 EGLR 7, CA at 11C, 13G 14G; and the third edition formulation was also adopted at first instance by Mustill J in The ‘Leila’ [1985] 2 Ll R 172 at 178, col 1 and Hobhouse J in ‘The Kostas K’ [1985] 1 Ll R 231 at 237, col 2. 166 n 160 above. 167 See Spence, Protecting Reliance (1999).

341

8.48  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

Consistency with other reliance-based estoppels 8.48 Since estoppel by convention is a form of reliance-based estoppel defined by reference to how responsibility is assumed for the relevant proposition (mutual assent), whereas the other forms of reliance-based estoppel – by representation of fact, promissory and proprietary – are defined by reference to the subject matter of the proposition, estoppel by convention is not a wholly discrete category from these,168 and an estoppel by convention may also be a factual estoppel based on mutual representations, an estoppel as to the making, waiver or effect of a promise, or an estoppel as to proprietary rights. Indeed, only estoppel by representation of fact and promissory estoppel are mutually exclusive categories, and the line between them169 is particularly difficult both to draw and to justify (in terms of the difference in consequences) in relation to a representation as to the mutual rights of the parties between themselves, since such a representation has been held to be a representation of fact170 if it purports to describe those rights, but must be promissory in nature if it purports to create or affect them. 8.49 On the face of it, if the representation (or convention) describes the private rights of the parties, as between themselves, and has therefore been classified as factual,171 the estoppel absolutely precludes denial of those rights, whereas if it purports to create or affect rights, being promissory, it is suspensory in effect only (so far as necessary to avoid inequity), and will not found a cause of action. It is submitted, however, that such a distinction is not only unworkable in practice (for instance, in relation to an estoppel founded on a representation or convention implicit in conduct), but also so unjustified as to be paradoxical, having the effect that the representation which purports only to describe rights will create them, whereas that which purports to create them will not. In this context, it is submitted, therefore, that nothing should turn on whether the representation or convention as to the rights between the parties, or the effect of their transaction, is regarded as factual or promissory, but in both cases the estoppel should afford such remedy, by precluding assertion of inconsistent rights, as the justice of the case demands, subject to the defence to the estoppel that it would impermissibly subvert the policy of a rule of law,172 in this case the doctrine of consideration, the general importance of whose maintenance outweighs that of addressing the particular injustice that would be met by the estoppel.

168 In ING Bank NV v Ros Roca SA [2012] 1 WLR 472 at [59], Carnwath LJ noted both the proposition at [VIII.2.3] of the fourth edition – that ‘the only distinction between an estoppel by convention and other forms of estoppel now lies in the manner in which the party to be estopped assumes responsibility for the proposition from which he is to be estopped from departing, namely by mutual assent rather than unilateral assertion’ – and the doubts expressed by others ‘about the desirability of sub-division of this “most flexible” of doctrines (see e.g. per Judge LJ in Baird Textile Holdings v Marks & Spencer plc [2001] CLC 999, citing Robert Goff J in the Amalgamated Investment case)’; and Blair J cited Carnwath LJ’s observations in WS Tankship II BV v Kwangju Bank Ltd [2012] CILL 3155 at [180]. 169 As noted at 1.13, 1.111, 2.23–2.27. 170 See 2.31. 171 See 2.31. 172 See Ch 7; and 8.54–8.60.

342

The effect of an estoppel by convention 8.52

8.50 Since any estoppel by convention will also be an estoppel as to a matter of fact or an estoppel as to the rights of the parties in relation to their future conduct (that is, promissory in nature), and may also relate to rights in property (and, therefore, be proprietary as well as conventional), estoppels by convention may also be described as estoppels as to fact, promissory estoppels, or proprietary estoppels in which responsibility for the relevant proposition is communicated by mutual assent. The result of the estoppel should, we suggest, therefore be the same as under the corresponding reliance-based doctrines, depending on whether the estoppel by convention is as to a matter of fact, a promise as to the future, and/or rights in property. When the same facts (where a representation has been made and a common understanding reached to the same effect) give rise to an estoppel by convention on the one hand, and, on the other, an estoppel by representation of fact, a promissory estoppel, or a proprietary estoppel, there can only be a single outcome as the result in law of those facts, regardless of whether the estoppel is classed as conventional on the one hand, or factual, promissory and/ or proprietary, on the other. 8.51 It is submitted that it would, moreover, be beneficial to state a broad general formula for the effect of all reliance-based estoppels,173 that the estoppel precludes the party estopped from resiling from the relevant proposition to such extent and with such result as will do justice between the parties, having regard to the substance of the representation, acknowledging that on the authorities different considerations are engaged in measuring the just response to the different forms of estoppel.174 It would follow that the result of an estoppel by convention is not simply an absolute preclusion from denial of the relevant factual or legal proposition, but may be modulated as the justice of the case demands, having regard to the substance of the convention.175

Effect of convention as to fact 8.52 The origin of estoppel by convention lies in estoppel by deed,176 and estoppel by deed,177 like estoppel by contract, is a form of estoppel by binding agreement, under which parties to a deed are bound to the basis they have agreed for their deed in any action founded on the deed. Authorities may therefore be found for estoppel by convention simply binding the parties to the convention for the purposes of the transaction to which it relates, that is, as a contractual estoppel or estoppel by deed simply binds the parties to their agreement, as was stated to be the effect of an estoppel by convention in the third edition of this work. The approval by the Court of Appeal in those authorities178 of that formulation 173 See 5.63 onwards. 174 See Chs 5, 12, 14. 175 Illegality may also provide a defence to the estoppel, as to any reliance-based estoppel, if the estoppel would subvert the public policy of a statute or rule of law: see 8.66. 176 See 8.1. 177 See 8.79 onwards; or, in the case of deed poll, binding declaration. 178 See the dicta cited at n 9 above, 8.45, but see 8.2 onwards.

343

8.52  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

s­ upports the proposition that the consequence of an estoppel by convention as to a matter of fact (save the fact179 of ownership or rights in or over property) is the same as the consequence of an estoppel by representation of fact: the parties are estopped from denying the relevant matter of fact, and their rights and obligations are determined on the counterfactual basis thereby established. 8.53 A convention, however, (outside a deed) will only be contractually binding if consideration is given and the parties had the intention to contract. If both are established, the parties will be contractually bound to the convention, and the effect of the estoppel may not be modulated. Within the scope of their agreement, the parties are bound to what they have agreed. Short of a contract or deed, however, the estoppel must be reliance-based, and so founded, the result may, it is submitted, be modulated, as has been established by the Court of Appeal in relation to estoppel by representation of fact, on reasoning which applies with equal force to an estoppel by convention: that where an absolute preclusion from denial of the relevant fact would work an injustice, equity will temper that response so as to avoid the injustice.180 The starting point of the response is, therefore, preclusion from denial of the relevant fact if the requisite elements of the estoppel by convention as to the fact are established, but that response may be modulated if and insofar as B establishes that it would otherwise work an injustice.181

Effect of convention as to (non-proprietary) rights: suspensory 8.54 In the context of a convention as to the rights and obligations between the parties (which may be said to be a form of promissory estoppel), there are Court of Appeal authorities in Troop v Gibson,182 The ‘Vistafjord’183 and Dixon v Blindley Heath Investments Ltd184 that an estoppel by convention is not an ­absolute bar: rather, it will not operate after the mistaken assumption has been corrected further than is necessary to avoid the injustice that would otherwise arise by reason of commitment made before the assumption was corrected.185 The logic of these authorities is that the estoppel by convention, at least where its subject matter is the meaning, effect or existence of a promise (and not property) 179 Matters of private rights between the parties are held to be matters of fact, blurring into extinction the distinction between fact and law: see 2.31. 180 See 1.57, 1.83–1.85, 1.99–1.100, 1.109; 5.66. 181 See also 8.62 as to the defence that ‘A’ does not come with clean hands. 182 Troop v Gibson [1986] 1 EGLR 1 at 6B–C per Purchas LJ: ‘the equitable relief afforded [by the estoppel by convention as to contractual rights] will persist only so long as it is necessary to protect the tenant who has altered his position on the basis of the common mistake or common misrepresentation – however it may be put’; and the estoppel will only apply ‘for the period of time and to the extent required by the equity which the estoppel has raised’ per Ralph Gibson LJ. 183 [1988] 2 Ll R 343 at 352 per Bingham LJ, adopting the dicta of Ralph Gibson LJ at n 182 above. 184 [2015] EWCA Civ 1023 at [101], following the precedents at nn 182, 183 above. 185 See also Hiscox v Outhwaite (No 1) [1992] AC 562 at 575 per Donaldson MR, not considered on appeal at 585; Philip Collins Ltd v Davis [2000] 3 All ER 808 at 823; Gloyne v Richardson [2001] BCLC 69 at [41]; Centrica Plc v Premier Power Ltd [2006] EWHC 3068 (Comm) at

344

The effect of an estoppel by convention 8.55

or right to future performance, operates in the manner of a promissory estoppel, with only suspensory effect so far as necessary to avoid injustice, rather than as the traditionally understood absolute bar of an estoppel by representation of fact, or in the manner of the discretionary remedy for a proprietary estoppel, that has regard both to detriment, without being limited to compensation, and expectation, without being bound to give satisfaction. 8.55 The dicta in these Court of Appeal authorities may be deployed to support the proposition that an estoppel by convention will not operate prospectively once the error in the common assumption is revealed,186 but, as Briggs J observed in Benchdollar,187 this does not ‘kill the estoppel stone dead there and then’. In the context of that case, Briggs J allowed A a limited time after discovery of the error to protect himself before the estoppel would no longer operate, but where there is ongoing detriment to which A has committed himself in reliance on the convention, and from which he cannot protect himself, the estoppel by convention must continue to operate in order to avoid injustice. This point was implicitly recognised by Gloster J in Centrica Plc v Premier Power Ltd,188 in drawing a distinction between the operation of a convention on whose basis parties enter into a contract (with the result that the convention may bind as to the effect of the contract throughout its duration, notwithstanding discovery of the mistake, because commitment to the contract was made on that footing) and a convention established during the currency of the contract. Continuation of an estoppel as necessary to do justice between the parties, having regard to their reliance on the convention in entering into and operating the contract, has now also been upheld in Bristol Rovers (1883) Ltd v Sainsbury’s Supermarkets Ltd.189 The Court of Appeal framed the issue in terms of whether it was unconscionable190 at the stage in question for B to resile but in substance continued the estoppel as necessary to do justice, having regard to the detrimental reliance on the convention.191 In Dixon v Blindley Heath Investments Ltd,192 too, the estoppel was extended as justice required, the Court of Appeal holding that notwithstanding revelation of the error in the parties’ assumption ‘it will seldom if ever be fair to allow a party who has benefited from the assumption to repudiate it in order to prevent the other party obtaining a like benefit’. The other side of this coin193 is that B will

[135]–[138] (unaffected on appeal [2007] EWCA Civ 1225); Tamil Nadu Electricity Board v ST-CMS Electric Company Private Ltd [2007] 2 All ER (Comm) 701; Pearson v Lehman Brothers Finance SA [2012] 2 BCLC 151 at [122]. 186 It is not enough, of course, that B or his successor in title realises that the convention is mistaken if B or the successor does not communicate that to A: PW & Co v Milton Gate Investments Ltd [2004] Ch 142 at [202]–[205]. 187 HMRC v Benchdollar Ltd [2010] 1 All ER 174 at [60]. 188 [2006] EWHC 3068 (Comm) at [136]–[137] (unaffected on appeal [2007] EWCA Civ 1225). 189 [2016] EWCA Civ 160 at [76]–[93]. 190 At [92]. 191 See further 1.73 onwards, 1.83 onwards. 192 [2016] 4 All ER 490 at [101], citing The ‘Vistafjord’ [1988] 2 Ll R 343 at 353. 193 See PW & Co v Milton Gate Investments Ltd [2004] Ch 142 at [217].

345

8.55  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

not be estopped after A and B have agreed to resile from their previous convention or A has unilaterally done so.194

Effect of convention as to (non-proprietary) rights: illegality 8.56 As mentioned above, it is also an answer to an estoppel that it would be contrary to the public policy of a statute or rule of law whose maintenance prevents a party, whether by contract or estoppel, from depriving himself of rights under it, or undertaking obligations other than in accordance with it.195 The doctrine of consideration is one such rule of law protected by this answer to an ­estoppel,196 such that, even though a representation as to the rights between the parties may be characterised as factual197 and, therefore, as simply precluding a denial of those rights, this defence will prevent it from doing so if the effect would be to give A a cause of action based on a gratuitous promise. Simply to enforce on its terms a convention that the parties are bound, notwithstanding the absence of consideration or another essential element of a contract, would be to give effect to it as a contract which binds the parties to their word, notwithstanding the absence of the relevant essential elements of the contract, and the courts will not thereby allow circumvention of those requirements.198 8.57 Some estoppels, however, as both Robert Goff J at first instance, and Lord Denning MR and Brandon LJ in the Court of Appeal, expressly recognised in Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd,199 may have the effect of creating rights in contract, without being regarded as impermissibly subverting the doctrine of consideration. In the

194 Gloyne v Richardson [2001] BCLC 69 at [41]. In PW & Co v Milton Gate Investments Ltd [2004] Ch 142, a tripartite convention between a landlord head tenant and sub-tenant, as to sub-leases surviving termination of the head lease under a break clause, did not estop the landlord and sub-tenant against the head tenant once the landlord and sub-tenant had between themselves resiled from it ([207]–[219]) because the head tenant had not detrimentally relied on the convention ([220]–[249]) (although the judgment puts it in terms of unconscionability, as to which see 1.68 onwards, and the issue of detrimental reliance/unconscionability might now be argued and decided differently: see n 148 above, 5.41 onwards). 195 See 8.48 onwards, 8.66, Ch 7. See also 8.62 as to the defence that ‘A’ does not come with clean hands. 196 See 7.5; Azov Shipping Co v Baltic Shipping Co, n 199 below. 197 See 2.31. 198 See 8.58; for the view that a cause of action based on detrimental reliance on a promise should be recognised outside proprietary estoppel, see McFarlane and Sales (2015) 131 LQR 610. 199 [1982] QB 84 Robert Goff J at 105C–107D, Brandon LJ at 131H–132A, Lord Denning MR at 122A and Eveleigh LJ at 126D; see also the analysis of Colman J in Azov Shipping Co v Baltic Shipping Co [1999] 2 All ER (Comm) 453 at 473j–476g, concluding that the ‘sword/shield dichotomy’ should be ‘regarded as confined to the protection of consideration and as having no general application in the field of estoppel’ (also applied obiter by Colman J in Thornton Springer v NEM Insurance Co Ltd [2000] 2 All ER 489 at [217]). We respectfully agree with this: the rule operates to defeat an estoppel as necessary to protect the doctrine of consideration as a matter of public policy (see Ch 7); and Colman J consequently held in Azov at 476h: ‘Accordingly, Azov’s submission that estoppel is being impermissibly used to found a cause

346

The effect of an estoppel by convention 8.58

first place, although, on the true facts of a case, no cause of action in contract lies, an estoppel may establish a counterfactual basis for the cause of action, supplying an absent fact necessary to establish the contract by precluding the defendant from denying it: for instance, that a third party has been given B’s authority to enter into the contract on his behalf, as in Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd200 and Spiro v Lintern;201 or that B signed the contract, as in Oceanografia SA DE CV v DSND Subsea AS,202 or that his signature was duly witnessed, as in Shah v Shah.203 Secondly, the need for a contract or other valid disposition conferring rights in property to be in writing may be bypassed by establishing a proprietary estoppel;204 and, thirdly, as is now regarded as ‘well established’,205 rights under a contract (which contract can be proved without relying on an estoppel) may be enlarged by an estoppel by representation or convention as to its meaning, as in Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd206 itself. In ING Bank NV v Ros Roca SA207 an estoppel by convention from asserting the true construction of a contract defeated a claim and, on these authorities, such an estoppel as to the meaning of an agreement may also be deployed to make good a claim in contract that would otherwise fail, as was recognised in Pathfinder Minerals Plc v Veloso.208 8.58 Estoppel, including, as Lord Goff later held in Johnson v Gore Wood,209 estoppel by convention, will not, however, be allowed to subvert the doctrine of consideration by binding a party to a gratuitous promise and such an estoppel as to law will not simply bind the parties to their mistaken understanding of the

of action could be correct only if that which was represented was, if true, incapable of giving rise to a cause of action because, for example, the agreement represented to be binding on Azov was unsupported by consideration’. Colman J regarded the result of the current state of the authorities as uncertain in BP plc v Aon Ltd [2006] 1 All ER (Comm) 789 at [265]–[269], but his analysis is submitted to be correct in principle, given that it is recognised that, to protect the doctrine of consideration, the estoppel may not pull itself up by its own bootstraps, and detrimental reliance on a promise, representation or convention that B will be contractually or otherwise bound will not found a cause of action if unsupported by consideration (see further 14.22 onwards, 14.36 onwards). 200 [1964] 2 QB 480 and the cases establishing the doctrine of ostensible authority in the law of agency: see 9.2 onwards. 201 [1973] 1 WLR 1002; as acknowledged by Mance LJ in Baird Textiles Holdings Ltd v Marks and Spencer plc [2002] 1 All ER (Comm) 737 at [90]. 202 [2007] 1 Ll R 37. 203 [2002] QB 35. 204 See Ch 12. 205 Rivertrade Ltd v EMG Finance Ltd [2016] 2 BCLC 226 per Kitchin LJ, with unanimous concurrence. 206 [1982] QB 84; De Tchihatchef v Salerni Coupling Ltd [1932] 1 Ch 330; Sarat Chunder Dey v Copal Chunder Laha (1892) 19 LR Ind App 203; Calgary Milling Co v American Surety Co of New York [1919] 3 WWR 98; Parry v Edwards Geldard [2001] PNLR 44 at [16]; Mears Ltd v Shoreline Housing Partnership Ltd (2015) 160 Con LR 157 at [88]. 207 [2012] 1 WLR 472. 208 [2012] EWHC 2856 (Comm) at [133]. 209 [2002] 2 AC 1 at 38H–40E.

347

8.58  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

law. A convention which purports to do so may be deployed only subject to the limitations affecting a promissory estoppel, that is, defensively rather than so as to found a cause of action, and with the effect of suspending the claimant’s rights so far as necessary to avoid injustice rather than extinguishing them, as has now been held in the Court of Appeal in Baird Textiles Holdings Ltd v Marks and Spencer plc210 and Riverside Housing Association v White:211 an estoppel by convention which is, in substance, promissory is subject to such limitations on deployment and effect as the law applies to promissory estoppel to prevent subversion of the doctrine of consideration. 8.59 Further, although an estoppel by convention does not require an intention to contract212 nor the formality required by statute for certain forms of contract to be valid, an attempt to make good the defects in a contractual claim by deployment of an estoppel by convention will face the difficulty, aside from the defence of illegality, that the very flaws which invalidate the contractual claim also preclude satisfaction of the requirements for a convention, as in a number of recent cases213 where want of contractual intention entailed also a want of the actual or apparent intention to assume responsibility to the other party necessary to found an estoppel. If the parties have not made a contract, because there has been either no offer and acceptance of sufficiently certain terms, or no consideration, or no intention to contract, then an assertion that they should be deemed to have done so, because they have behaved as if they had, will fail. 8.60 Nonetheless, as explained above, a missing element required for a contract to bind, such as authority of an agent or due execution, may be supplied by estoppel, or the effect of a contract may be varied or extended by estoppel, if the

210 [2002] 1 All ER (Comm) 737 at [34], [38] per Morritt VC (second reason), at [55] per Judge LJ, and at [57], [91]–[92] per Mance LJ; see also Russell Brothers (Paddington) Ltd v John Lelliott Management Ltd (1995) 1 Con LJ 377 at 379–80; Topham v Charles Topham Group Ltd [2003] 1 BCLC 123 at [46]–[49], where Blackburn J held that an estoppel by convention as to a promissory undertaking could not be a source of legal obligation, citing Robert Goff J in Amalgamated Investment v Texas Commerce at 105; contrast Mitsui Babcock Energy Ltd v John Brown Energy Ltd (1996) 51 Con LR 129 at 185–186, where it was held (obiter) that, had there been no binding contract, an estoppel by convention as to its existence could have been deployed by a defendant; and Wilson Bowden Properties Ltd v Milner & Barden 22 Ltd [1995] NPC 182 (23 November 1995), where an estoppel by convention as to the construction of a contract was allowed to found a cause of action on the contract; the sword/shield point does not, however, appear to have been argued. For the view that a cause of action based on detrimental reliance on a promise should be recognised outside proprietary estoppel, see McFarlane and Sales (2015) 131 LQR 610. 211 [2008] 1 P & CR 13 at [59]–[67] (unaffected on appeal [2007] 4 All ER 97); and see cases at 1.47–1.49. 212 See eg Benchdollar [2010] 1 All ER 174. 213 Azov Shipping Co v Baltic Shipping Co (No 3) [1999] 2 All ER (Comm) 453 at 472j; [2002] 1 All ER (Comm) 737 at [34], [38] per Morritt VC (first reason), at [55] per Judge LJ, and at [57], [94] per Mance LJ; Tesco Stores Ltd v Costain Construction Ltd [2003] EWHC 1487 (TCC) at [191]–[198]; McNicholas Construction (Holdings) Ltd v Endemol UK Plc [2003] EWHC 2472 (Ch) at [50]–[57]; Intense Investments Ltd v Development Ventures Ltd [2006] EWHC 1586 (TCC); Greville v Venables [2007] EWCA Civ 878 at [41]; Haden Young Ltd v

348

The effect of an estoppel by convention 8.62

rules of law setting the requirements for a binding contract are not thereby unacceptably subverted. It is also worth considering the converse possible case, where satisfying the requirements for estoppel by convention also establishes a contract: offer and acceptance may be found in the necessity for communication of the conventional understanding, consideration in the possibility, when the convention is made, that either party may suffer detriment by adherence thereto, and intention to contract in the intention to be bound to adhere to the convention. If so, the convention may be enforced as a contract and the contract will dictate its result.

Convention as to proprietary rights 8.61 If the subject of the convention is property, as was the case in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd,214 then the estoppel will be, as it was held in that case, a proprietary estoppel, since the constituent elements of a proprietary estoppel will have been established. The estoppel constitutes a cause of action and its result (although the result was not in issue in Taylors Fashions) is in the discretion of the court,215 having regard both to detriment, without being limited to compensation, and expectation, without being bound to give satisfaction.

Clean hands 8.62 In Dixon v Blindley Heath Investments Ltd216 the Court of Appeal recognised that reliance-based estoppel by convention has developed from a common law estoppel by deed into an ‘equitable estoppel’. It is submitted that a consequence of this recognition is not only a discretion to mitigate the result of the estoppel to avoid injustice,217 but also, on appropriate facts, the availability of Laing O’Rourke Midlands Ltd [2008] EWHC 1016 (TCC); CIFAL Groupe SA Grontmij Investment Management SAS v Meridian Securities (UK) Ltd [2013] EWHC 3553 (Comm); Liberty Mercian Ltd v Cuddy Civil Engineering Ltd [2014] 1 All ER (Comm) 761 at [166]– [167]; Mears Ltd v Shoreline Housing Partnership Ltd [2013] BLR 393 at [24]; Transgrain Shipping BV v Deiulemar Shipping Ltd [2015] 1 Ll R 461 at [39]; see also Easat Antennas Ltd v Racal Defence Electronics Ltd (21 June 2000, unreported), where Hart J could not see how a shared mistaken belief as to the enforceability of the agreement could ‘render enforceable that which it ex hypothesi was not’, as the estoppel could not operate to cure the defects in the agreement which rendered it void for uncertainty; and J Murphy & Sons Ltd v ABB DaimlerBenz Transportation (Signal) Ltd (2 December 1998, unreported) is to the same effect in the same context at [119]. 214 [1982] QB 133n and, for a recent instance, Rivertrade Ltd v EMG Finance Ltd [2013] EWHC 3745 (Ch) at [203]–[211] affd on appeal [2016] 2 BCLC 226 at [46]–[51]. 215 See Valentine v Allen [2003] EWCA Civ 915 invoking at [55], [63] the dictum of Lord ­Denning MR in Amalgamated Investment v Texas Commerce [1982] QB 84 at 122C–D, to the effect that the court has a discretion to give ‘such remedy as the equity of the case demands’ in all cases of estoppel by convention (1.59 n 259, 12.75, 12.192 onwards); Lovett v Fairclough (1991) 61 P & CR 385 at 401, where the equity raised by reliance on the convention had already been satisfied. 216 [2016] 4 All ER 490 at [72]. 217 See 8.53, 1.57, 1.83–1.85, 1.99–1.100, 1.109; 5.66.

349

8.62  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

defence that A does not come to equity with ‘clean hands’218 to mitigate or even avoid the effect of the estoppel.

Effect of estoppel by convention: conclusion 8.63 The effect of a reliance-based estoppel by convention is, for these reasons of consistency and coherence, affected by the subject matter of the convention, that is, whether it is factual, promissory or proprietary. In each case, it is submitted that relief will be granted on the same principles as the corresponding doctrines of estoppel by representation of fact, promissory estoppel and proprietary estoppel. The aim of relief, it is submitted, that is common to all these doctrines is to afford relief in a measure that will avoid injustice to A without inflicting it on B, and recognition of this may in the future erode unprincipled distinctions and establish further communality of principle upon which such relief is granted between the various forms of the reliance-based doctrine.219

FURTHER ASPECTS OF ESTOPPEL BY CONVENTION Belief in the assumed state of facts irrelevant 8.64 An estoppel by convention need not involve any misleading of A by B, nor is it essential that B believe in the assumed state of facts or law.220 The full facts may be known to both parties; but if, even then, 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.221 As Dixon J said in the High Court of Australia in Grundt v Great Bolder Proprietary Gold Mines Ltd:222 ‘It is important to notice that belief in the correctness of the facts or state of affairs assumed is not always necessary. Parties may adopt as the conventional basis of a transaction between them an assumption which they know to be contrary to the 218 See 12.139. 219 For instance, it would be an odd result if the effect of an estoppel by convention as to the law should differ according to whether the question is one of foreign law (regarded as a question of fact in the English court) or English law. Estoppel as to the validity of an arbitration clause in Australian law was regarded as conclusive, as in The ‘Amazonia’ [1990] 1 Ll R 236, but Donaldson MR in Hiscox v Outhwaite (No 1) [1992] AC 562 at 575, which concerned an estoppel by convention as to the existence of a defence to an appeal against an arbitration, referred to The ‘Vistafjord’ as authority that estoppel by convention would not operate prospectively once the error in the common assumption was revealed; see further, as to the resolution of this conflict, 8.54 onwards and generally 1.99–1.100, 1.104 onwards. 220 See also 5.5. 221 This description of the minds of the parties is adverted to by Isaacs J in Newis v General Accident Fire and Life Assurance Corpn (1910) 11 CLR 620 at 636. 222 (1937) 59 CLR 641 at 676; this statement is referred to by Denning LJ in Central Newbury Car Auctions Ltd v Unity Finance Ltd [1957] 1 QB 371 as ‘The most satisfactory that

350

Further aspects of estoppel by convention 8.66

actual state of affairs. A tenant may know that his landlord’s title is defective, but by accepting the tenancy he adopts an assumption which precludes him from relying on the defect. Parties to a deed sometimes deliberately set out a hypothetical state of affairs as the basis of their covenants in order to create mutual estoppel. In the Yorkshire Insurance Co v Craine [1922] 2 AC 541, both parties may have been aware that the claim of the assured was out of time. In his interesting judgment in Ferrier v Stewart (1912) 15 CLR 32 at pp 44–46, Isaacs J held that an endorser of a promissory note was precluded from showing that at the time when he placed his signature upon the back of the note it was payable to the order of a payee who had not endorsed it and that there had been no delivery of the note. The ground on which His Honour put the estoppel simply was that the parties adopted a conventional basis for the transaction. They impliedly agreed that, when the promissory note should be completed by other endorsements, it should be assumed to have been issued and endorsed by the parties in due order. From this assumption the endorsee was not permitted to depart, although all parties had been aware of the actual state of affairs.’

8.65 It follows that, subject to the defence that the estoppel would deprive a party of the protection afforded to him by the law as a matter of public policy or otherwise unacceptably subvert a rule of law,223 a convention as to law may, in theory, be established, notwithstanding that the parties know the law to be otherwise, although it is unlikely to arise in practice.

Illegality/public policy 8.66 A well-established restriction on the ability of the parties to a convention to create a parallel factual or legal universe governing their relationship, by assenting to and acting on the convention, is, however, that A may not deprive B, by reliance on such a convention, of protection afforded to B by a statute or rule of law as a matter of a public policy, the imperative of maintaining which is greater than that of avoiding the unfairness on which the estoppel is founded.224 B may not be estopped out of such protection any more than he may contract out of it. This defence of illegality, considered further in Chapter 7, may be deployed wherever the estoppel by convention would unacceptably contravene public

I know’, and both the dicta of Dixon J and this paragraph of the fourth edition of this work were approved and applied by the Privy Council in Prime Sight Ltd v Lavarello [2014] AC 436, which was followed by Newey J in Destine Estates Ltd v Muir [2014] EWHC 4191 (Ch); see also Horton v Westminster Improvement Commissioners (1852) 7 Exch 780; Ashpitel v Bryan (1864) 5 B & S 723 at 727; McCance v London and North Western Rly Co (1864) 3 H & C 343. 223 See 8.66. 224 Eg to a minor: Smith v Low (1739) 1 Ack 489; Levene v Brougham (1909) 25 TLR 265, CA; or under the Rent Act (Welch v Nagy [1950] 1 KB 455) or the Agricultural Holdings Acts (Keen v Holland [1984] 1 WLR 251); conversely, the parties may estop themselves into, rather than out of, such protection: Daejan Properties Ltd v Mahoney [1995] 2 EGLR 75 at 79L; NRAM v McAdam [2016] 3 All ER 665: see 8.56 onwards and Ch 7 for further consideration.

351

8.66  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

policy.225 In Prime Sight Ltd v Lavarello the Privy Council recently affirmed this226 in relation to contractual estoppels also: ‘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’.227 On this principle, too, are founded the limitations on a reliance-based estoppel binding one party to a gratuitous undertaking by reason of another’s reliance on a convention as to its force.228

ESTOPPEL BY CONTRACT Principle 8.67 A convention of the parties to adhere to an assumed state of facts or law will, if under seal, or if consideration is found to move from both sides,229 and if it is made with the necessary contractual intention, bind by agreement.230 This has been recently recognised in Peekay Intermark Ltd v Australian and New Zealand Banking Group Ltd,231 but such contractual estoppels are not of recent invention, and may be found in charter-party cases.232 In Peekay, Moore-Bick LJ said:233 ‘There is no reason in principle why parties to a contract should not agree that a certain state of affairs should form the basis for the transaction, whether it be the case or not. For example, it may be desirable to settle a disagreement as to an existing state of affairs in order to establish a clear basis for the contract itself and its subsequent performance. Where parties express an agreement of that kind in a

225 See eg Horton v Westminster Improvement Commrs (1852) 7 Exch 780 at 79; Minister of Agriculture & Fisheries v Matthews [1950] 1 KB 148 at 153; Rhyl UDC v Rhyl Amusements Ltd [1959] 1 All ER 257 at 265–6; see also cases at 8.87(5) on estoppel by deed, and Ch 7 on illegality. 226 Which, as considered in Ch 7, is a defence to all reliance-based estoppels. 227 [2014] AC 436 at [47]. 228 See 1.47–1.49, 8.56 onwards. 229 Arguably by the making of the convention in itself if it has the potential to work for or against either; see 8.71. 230 See eg Burroughs Adding Machine Ltd v Aspinall (1925) 41 TLR 276, CA: the parties expressly provided, as a term of their written contract of agency, that all statements of account sent by the company to the salesman should be deemed to be accepted by the salesman as correct unless, within 30 days, he notified the company of the non-acceptance of them. The salesman received certain statements of account and failed to make any objections within the specified time: he was held disentitled to object when at last he wished to do so; Binder v Alachouzos [1972] 2 QB 151; Colchester BC v Smith [1992] Ch 421. 231 [2006] 2 Ll R 511; Braithwaite (2016) 132 LQR 120; Trukhtanov (2009) 125 LQR 648, (2014) 130 LQR 3; Gibaud (2010) 25 BJIBFL 336; Lewis (2011) 26 JIBLR 49; McMeel [2011] LMCLQ 185; Goh [2015] JBL 511. 232 Eg Lishman v Christie (1887) 19 QBD 333; Mediterranean and New York Steamship Co Ltd v Mackay [1903] 1 KB 297, CA; Crossfield & Co v Kyle Shipping Co Ltd [1916] 2 KB 885, CA; cf ACG Acquisition XX LLC v Olympic Airlines SA (In Liquidation) [2013] 1 Ll R 658, CA; see also Brownlie v Campbell (1880) 5 App Cas 925: the estoppel is a form of contractual allocation of risk and limitation of responsibility. 233 At [56].

352

Estoppel by contract 8.69

contractual document neither can subsequently deny the existence of the facts and matters upon which they have agreed, at least so far as concerns those aspects of their relationship to which the agreement was directed. The contract itself gives rise to an estoppel.’

8.68 As noted by Andrew Smith J in Credit Suisse International v Stichting Vestia Groep,234 this has been ‘widely accepted235 as an authoritative statement of the principle of law that has in recent years been dubbed “contractual estoppel”, and it was endorsed by Aikens LJ236 in Springwell Navigation Corp v J P M ­ organ Chase Bank.237 It is irrelevant that one party or both (or all) parties knew or could reasonably have discovered that the state of affairs was not as agreed”’. 8.69 Although the term ‘estoppel’ is used because the parties are prevented from departing from the basis they have agreed, the use of the term is confusing, as the parties are bound by contract rather than under the reliance-based principle that is the central subject of this work. The upholding of a contractual estoppel is simply the enforcement of a contractual term, as has been authoritatively stated by Aikens LJ in Springwell Navigation Corp v JP Morgan Chase Bank:238 ‘If A and B enter into a contract then, unless there is some principle of law or statute to the contrary, they are entitled to agree what they like’; by Briggs LJ in Wood v Capital Bridging Finance Ltd:239 ‘The essence of contractual estoppel, as it is now understood, is that it has contractual force’; and with persuasive authority by Lord Toulson JSC in Prime Sight v Lavarello:240 ‘Parties are ordinarily free to contract on whatever terms they choose and the court’s role is to enforce them … In short, contractual estoppels are subject to the same limits as other 234 [2014] EWHC 3103 (Comm). 235 See eg Bottin International Investments v Venson [2006] EWHC 3112 (Ch); Donegal International Ltd v Zambia [2007] 1 Ll R 397; Ravennavi SpA v New Century Shipbuilding Co Ltd [2007] 2 Ll R 24; Foodco UK LLP v Henry Boot Developments Ltd [2010] EWHC 358 (Ch); Proactive Sports Management Ltd v Rooney [2010] EWHC 1807 (QB) unaffected on appeal; North Eastern Properties v Coleman [2010] 3 All ER 528; Titan Steel Wheels Ltd v The Royal Bank of S­ cotland Plc [2010] 2 Ll R 92; Camerata Pty Inc v Credit Suisse Securities (Europe) Ltd [2011] 2 BCLC 54; Raiffeisen Zentralbank v Royal Bank of Scotland plc [2011] 1 Ll R 123 at [271]–[315]; Shaker v Vistajet Group Holding SA [2012] 2 Ll R 93; Torre Asset Funding Ltd v The Royal Bank of Scotland Plc [2013] EWHC 2670 (Ch) at [192]; ACG Acquisition XX LLC v Olympic Airlines SA (In Liquidation) [2013] 1 Ll R 658 (CA); NRAM Plc v McAdam [2015] 2 All ER 340 and on appeal [2016] 3 All ER 665; Crestsign Ltd v National Westminster Bank Plc [2015] 2 All ER (Comm) 133; Startwell Ltd v Energie Global Brand Management Ltd [2015] EWHC 421 (QB); Wood v Capital Bridging Finance Ltd [2015] ECC 17; Property Alliance Group Ltd v The Royal Bank of Scotland Plc [2016] EWHC 3342 (Ch) at [225]–[231]; the law has moved on from the obiter view expressed in Lambson Fine ­Chemicals Ltd v Merlion Capital Housing Ltd [2008] Env LR 37. 236 With the concurrence of Rix and Rimer LJJ. 237 [2010] 2 CLC 705 at [144]. 238 See n 237 above at [143]. 239 Note 235 above at [31]. 240 [2014] AC 246 at [47]. Although Andrew Smith J in Credit Suisse International v Stichting Vestia Groep [2014] EWHC 3103 (Comm) at [303] adopted the analysis of contractual ­estoppel in Wilken & Ghaly, The Law of Waiver, Variation and Estoppel (3rd edn, 2012) at [13.22] that it reflects the rule that a party may not benefit from its own wrong, such analysis is respectfully submitted to be over-elaborate.

353

8.69  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

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’. 8.70 The submission241 in the fourth edition of this work, that an estoppel by deed, properly analysed, is also a proposition to which the parties and their successors are bound by agreement under seal, rather than by reason of detrimental reliance, has now also been upheld by the Privy Council in Prime Sight Ltd v Lavarello;242 and in Richards v Wood243 Lewison LJ, citing Prime Sight Ltd v Lavarello, gave binding authority to the proposition that estoppels based on recitals to binding agreements such as deeds ‘are part of a sub-species of estoppel known as contractual estoppel’. Estoppels by the recitals or non-operative words of an instrument recording a transaction arise because, on the true construction of the instrument, the parties have agreed to assume the facts as the conventional basis of their transaction.244 In such cases, the estoppel may arise without any mistake or misleading of a representee, as the true facts may be known to both parties,245 and yet, having agreed to accept the truth of the assumption as the basis of their contract, they cannot subsequently be allowed to recede from that position.246 8.71 Indeed, up until the third edition of this work, the governing principle of estoppel by convention was said to be that stated in Blackburn’s Contract of Sale247 – viz that ‘When parties have agreed to act upon an assumed state of facts, their rights between themselves are justly made to depend on the conventional state of facts and not on the truth’. In those editions the principle was also stated as, ‘That the parties agree for the purposes of a particular transaction to

241 See fourth edition, [8.XIII.1], and 8.79. 242 [2014] AC 436 at [30]–[46], inc at [41]: ‘… if as a matter of construction the recital amounts to a mutual agreement to treat it as true, and if there are no vitiating factors such as illegality or misrepresentation, the fact that the parties have willingly so bound themselves is itself sufficient reason for the contract to be enforced’. 243 [2014] EWCA Civ 327 at [15], with unanimous concurrence. 244 See, for instance, Greer v Kettle [1938] AC 156 per Lord Russell of Killowen at 167 (summarising the effect of Stroughill v Buck (1850) 14 QB 781): ‘Where a recital is intended to be an agreement of both parties to admit a fact, it estops both parties, but it is a question of construction whether the recital is so intended’. In Greer v Kettle at 171–2, Lord Maugham stated that the parties to a deed would not be estopped by a statement or a recital therein based on a common mistake of fact: that the case for an estoppel is answerable by contractual defences (see 8.87) also reveals that such a convention derives its force from binding agreement. 245 So Pollock CB, in the course of argument in Ashpitel v Bryan (1864) 5 B & S 723 at 727: ‘Estoppel may arise without any mistake or misleading, as by matter of recital in a deed executed by two parties. So here, for the purpose of the transaction in question, the parties agreed that certain facts should be admitted to be facts on the basis of which they would contract, and they cannot recede from that’. See also Dabbs v Seaman (1925) 36 CLR 538 at 548–552. 246 Carpenter v Buller (1841) M & W 209 at 212; Ashpitel v Bryan, n 245 above at 727; McCance v London and North Western Rly Co (1864) 3 H & C 343; Dabbs v Seaman, n 245 above. 247 Third edition (1910) p 204.

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Estoppel by contract 8.72

state certain facts as true; and that so far as regards that transaction, there shall be no question about them’.248 This preceded – and reveals the subsequent differentiation by further judicial consideration of – the two strands of estoppel by convention identified in the fourth edition: that which binds by contract or agreement under seal, and that which is based on reliance. As mentioned above, there may therefore be cases of estoppel by convention which satisfy not only the criteria for a reliance-based estoppel, but also those for an estoppel by contract. Contractual intention may be found where the common assumption was intended to be an agreement of the parties.249 Consideration, if not to be found elsewhere, may be found in the agreement itself of each party that the convention shall govern their relationship, and the benefit or detriment that each may thereby gain or incur, unless it is known at the time that the convention will benefit one party alone. If a contract can be established, the estoppel will bind, by contract, according to its terms.

Construction and effect 8.72 An ‘entire agreement’ clause, which provides that the written contract constitutes the whole agreement and understanding between the parties and supersedes all prior oral and written communications, does not prevent a party from asserting reliance on a prior misrepresentation.250 An entire agreement clause incorporating a non-reliance provision will, however, if not disabled by statute, estop the parties from claiming reliance on non-fraudulent express or implied pre-contractual representations that are not replicated in the contract: in Peekay Intermark Ltd v ANZ Banking Corp251 and Springwell Navigation Corp v JP Morgan Chase Bank252 the Court of Appeal recognised that a contractual provision that the parties have not relied on any representations which are not recorded in the contract operates as an estoppel by contract against making a claim based on such reliance.253 Such an estoppel by contract may be established both by a clause to the effect that there have been no representations and by one in which a party agrees what it has and has not relied on.254

248 Horton v Westminster Improvement Commissioners (1852) 7 Exch 780 at 791; see also ­Burkenshaw v Nicolls (1878) 3 App Cas 1004 at 1026; Dabbs v Seaman, n 245 above. 249 As is required for an estoppel by deed: Greer v Kettle [1938] AC 156 at 167 per Lord Russell of Killowen at n 244 above. 250 Axa Sun Life Services Plc v Campbell Martin Ltd [2012] 1 All ER (Comm) 268, per Rix LJ at [78]–[97]; UBS AG (London Branch) v Kommunale Wasserwerke Leipzig GmbH [2014] EWHC 3615 (Comm) per Males J at [778]–[779]. 251 [2006] 2 Ll R 511. 252 [2010] EWCA Civ 121 at [141]–[169]. 253 See eg Standard Chartered Bank v Ceylon Petroleum Corporation [2011] EWHC 1785 (Comm) at [567]–[568] per Hamblen J. It is possible, though, that the clause in its context may be construed as estopping B only for a particular purpose and not otherwise: as in Camerata Pty Inc v Credit Suisse Securities (Europe) Ltd [2011] 2 BCLC 54. 254 Foodco UK LLP v Henry Boot Developments Ltd [2010] EWHC 358 (Ch) at [163]–[171] per Lewison J.

355

8.73  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

8.73 A contractual estoppel will not, however, exclude admission of evidence to establish that a written contract should be rectified255 or that a term is implicit256 in a contract, because such rectification or implication is a matter of declaring the parties’ true agreement rather than departing from the basis which the parties have agreed for their relations. Nor may a party thereby preclude reliance on and liability for his own fraudulent representation, and a party may do so in respect of his agent’s fraudulent representations only by clear specific wording to that effect.257 The estoppel clause may also be read as limited to precluding reliance on particular types of representation, such as investment advice or recommendations,258 and Andrew Smith J has held in Credit Suisse International v Stichting Vestia Groep that ‘mere representations’ as opposed to warranties, notwithstanding that they are made in a contract ‘do not, as I see it, engage the principle of contractual estoppel’:259 such an estoppel must be founded on contractual agreement as to the basis on which the parties’ relations will be governed and their rights and obligations determined.259a

Cross-estoppel by contract 8.74 If a contractual provision that the parties have not relied on any representations which are not recorded in the contract is deployed in answer to a claim to an estoppel by representation or convention, an issue may arise as to whether the contractual estoppel precludes reliance on the representation or convention, or vice versa.260 Correspondingly, a contractual estoppel may be undone, along with the rest of the contract, by rescission of the contract,261 but if the misrepresentation is innocent or negligent, notwithstanding that it would otherwise entitle A to rescind the contract containing the non-reliance clause, it seems that the 255 JJ Huber (Investments) Ltd v The Real DIY Co Ltd (1995) 70 P & CR 33; The Procter & Gamble Co v Svenska Cellulosa Aktiebolaget SCA [2012] EWHC 498 (Ch) at [99]–[109] (unaffected on appeal [2012] EWCA Civ 1413); DS Rendite Foods v Titan Maritime [2013] EWHC 3492 (Comm) at [48]; LSREF III Wight Ltd v Millvalley Ltd (2016) 165 Con LR 58 at [122]. 256 Compass Group UK and Ireland Ltd v Mid Essex Hospital Services NHS Trust [2012] 2 All ER (Comm) 300 at [44] (unaffected on appeal [2013] BLR 265). 257 Pearson & Son Ltd v Dublin Corporation [1907] AC 351; HIH Casualty & General Insurance Ltd v Chase Manhattan Bank [2003] 2 Ll R 61; Foodco UK LLP v Henry Boot Developments Ltd [2010] EWHC 358 (Ch) at [166] per Lewison J; agreed without argument in UBS AG (London Branch) v Kommunale Wasserwerke Leipzig GmbH [2014] EWHC 3615 (Comm). 258 As in Cassa di Risparmio della Repubblica di San Marino SpA v Barclays Bank Ltd [2011] EWHC 484 (Comm), [2011] 1 CLC 701 per Hamblen J at [513]–[515]; UBS AG (London Branch) v Kommunale Wasserwerke Leipzig GmbH [2014] EWHC 3615 (Comm) per Males J at [780]–[782]. 259 [2014] EWHC 3103 (Comm), at [303]. Cf NRAM v McAdam [2016] 3 All ER 665, where a contractual representation that a loan agreement was regulated by the Consumer Credit Act 1974 could not be construed as agreement that such of its provisions as could apply should do so as if it was a regulated agreement even though it was not. 259a Police and Crime Commr for Greater Manchester v Butterworth (unrep Ch Div 10 November 2016) at [27]–[31]. 260 See 4.55. 261 As in UBS AG (London Branch) v Kommunale Wasserwerke Leipzig GmbH [2014] EWHC 3615 (Comm) at [693] for bribery and conflict of interest.

356

Estoppel by contract 8.75

non-reliance clause will nonetheless262 contractually estop A from claiming reliance on the misrepresentation. In a number of recent cases,263 a reliance-based estoppel has therefore been precluded by contractual estoppel, but, on the other hand, in Pearson v Lehman Bros Finance SA,264 Lloyd LJ held, ‘The application of normal principles of estoppel by convention cannot be excluded by the use in the contractual documents of a provision that the document will prevail whatever may be done in practice. Such a provision may be relevant to a consideration of the issue, but it cannot be conclusive’. 8.75 A distinction must be made here between an estoppel based on a precontractual representation or assent to a convention by words or conduct, and a representation or assent made by post-contractual words or conduct. In the former case, unless A can pass the test, difficult265 in the absence of fraud, of establishing that B’s representation or assent and A’s reliance on it was such as to invalidate A’s agreement to the contractual estoppel clause itself,266 the contractual estoppel will preclude A’s assertion of reliance on the representation or convention. In the latter case, however, having made the agreement, including the contractual estoppel clause, the subsequent words or conduct of the parties may show B to have agreed to proceed on a basis that departs from it, notwithstanding an entire agreement clause that precludes reliance on pre-contractual representations.267 262 If not rendered ineffective by statute: see 8.76. 263 SERE Holdings Ltd v Volkswagen Group UK Ltd [2004] EWHC 1551 (Ch) per Christopher Nugee QC at [21]–[26]; Matchbet Ltd v Openbet Retail Ltd [2013] EWHC 3067 (Ch) at [112] and [132] per Henderson J; Dubai Islamic Bank PJSC v PSI Energy Holding Company BSC [2013] EWHC 3781 (Comm) at [31] per Flaux J (obiter); Finch v Lloyds TSB Bank Plc [2016] EWHC 1236 (QB) at [102] per HHJ Pelling QC; see also Mileform Ltd v Interserve Security Ltd [2013] EWHC 3386 (QB) per Gloster LJ at [98]–[107] on an entire agreement clause precluding collateral contract, doubting Ryanair Ltd v SR Technics Ireland Ltd 351 [2007] EWHC 3089 (QB). 264 [2012] BCLC 151 at [125], with unanimous concurrence; see further 4.55. 265 See 4.55 and the difficulties identified by Hamblen J in Standard Chartered Bank v Ceylon Petroleum Corporation [2011] EWHC 1785 (Comm) at [544] (unaffected on appeal [2012] EWCA Civ 1049). 266 If, say, he reasonably relied on a representation that the contract contained no such clause. 267 As in Pearson v Lehman Bros Finance SA [2012] BCLC 151 at [125]; Energy Venture Partners Ltd v Malabu Oil and Gas Ltd [2013] EWHC 2118 (Comm) at [269]; Deutsche Bank AG v Sebastian Holdings Inc (Rev 1) [2013] EWHC 3463 (Comm) at [992]; and, in Barclays Bank Plc v Unicredit Bank AG [2012] EWHC 3655 (Comm) at [90], the contractual provision did not preclude estoppel by convention as to an exercise of discretion under the contract; see also Seakom Ltd v Knowledgepool Group Ltd [2013] EWHC 4007 (Ch) at [117] per Carr J: ‘an “entire agreement” clause such as the one here might preclude reliance on prior extracontractual promises but not a shared interpretation as to the meaning and effect of the contract’; SAM Business Systems Ltd v Hedley & Co [2003] 1 All ER (Comm) 465 at [50]; correspondingly, in MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] 3 WLR 1519 and (obiter) in Globe Motors Inc v TRW Lucas Varity Electric Steering Ltd, [2016] EWCA Civ 396, the Court of Appeal held that a term that variations of a contract must be in writing to bind does not prevent the parties’ subsequent oral agreement from binding, provided that intention to bind themselves to the oral variation is established in spite of the clause; the point was not argued, however, in terms of contractual estoppel, and it may yet be argued that such a clause contractually estops the parties from asserting that an oral variation was intended to bind.

357

8.76  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

Statutory control 8.76 Non-reliance clauses have been held to be subject to statutory control as exclusion clauses under s 2 of the Unfair Contract Terms Act 1977 and s 3 of the Misrepresentation Act 1967,268 and therefore invalid unless they satisfy the requirement of reasonableness.269 A distinction has, however, been judicially developed between ‘basis’ clauses, which define the factual basis of the parties’ relationship by preventing a representation from having been made, and exclusion clauses, which exclude liability for the making of a representation.270 This distinction between limiting responsibility and excluding liability is, however, a difficult one, since, where a misrepresentation has been made which has induced A to enter into the contract or otherwise suffer loss, a clause by which A subsequently agrees that he has not relied on it excludes liability as well as limiting responsibility.271 Experienced parties on an equal footing may agree to define for the future what their responsibilities will be so as to prevent liability arising at all, but that will surely satisfy the test of reasonableness even if they are accepted to be exclusion clauses.

Receipt in a contract or deed 8.77 The Privy Council has recently held in Prime Time v Lavarello272 that, provided that the agreement is not intended to conceal illegality or otherwise

268 See also now s 62 of the Consumer Rights Act 2015. 269 Trident Turboprop (Dublin) Ltd v First Flight Couriers Ltd [2008] 2 Ll R 581 at [45]–[56] (they would be, but for the contracts being international supply contracts) (unaffected on appeal [2010] QB 86); followed in Foodco UK LLP v Henry Boot Developments Ltd [2010] EWHC 358 (Ch) at [172]; see also Peart Stevenson Associates Ltd v Holland [2008] EWHC 1868 (QB) at [95]–[108]; cf Axa Sun Life Services plc v Campbell Martin Ltd [2012] Bus LR 133 at [48]–[53]; contrast Thornbridge Ltd v Barclays Bank Plc [2015] EWHC 3430 (QB). 270 IFE Fund SA v Goldman Sachs International [2007] 1 Ll R 264 at [65]–[70] (unaffected on appeal [2007] 2 Ll R 449); Springwell Navigation Corp v JP Morgan Chase Bank [2010] 2 CLC 705; Titan Steel Wheels Ltd v Royal Bank of Scotland Plc [2010] 2 Ll R 92; Raiffeisen Zentralbank v Royal Bank of Scotland plc [2011] 1 Ll R 123 at [271]–[315]; Crestsign Ltd v National Westminster Bank Plc [2015] 2 All ER (Comm) 133 at [99]–[119]; Thornbridge Ltd v Barclays Bank Plc [2015] EWHC 3430 (QB) at [97]–[112]; Sears v Minco Plc [2016] EWHC 433 (Ch) at [76]–[80]. 271 See Smith v Bush [1990] AC 831; Government of Zanzibar v British Aerospace (Lancaster House) Ltd [2000] 1 WLR 2333 at 2347H–2348A per HHJ Jack QC; Avrora Fine Arts Investment Ltd v Christine, Manson & Woods Ltd [2012] PNLR 35 at [139]–[146] per Newey J; see also Toulson J in IFE Fund SA v Goldman Sachs International [2007] 1 Ll R 264 unaffected on appeal [2007] 2 Ll R 449 at [68], holding that Cremdean Properties Ltd v Nash (1977) EGLR 60 is authority that a party cannot, by a carefully chosen form of wording, circumvent the statutory controls on exclusion of liability for a representation which has on proper analysis been made. For further consideration of this topic, reference should be made to the standard works on the law of contract. 272 [2014] AC 436; following, on this point, Horton v Westminster Improvement Commissioners (1852) 7 Exch 780, in which a false recital of a debt bound by estoppel on this issue. See also Trukhtanov (2014) 130 LQR 3; contrast Handley (2014) 130 LQR 370.

358

Estoppel by contract 8.78

operate against public policy, a receipt in a deed or contract may bind as a contractual estoppel without need of detrimental reliance, although Close Asset Finance Ltd v Taylor,273 the relatively recent Court of Appeal authority that such receipts do not bind, was not brought to the attention of their Lordships.274 In the latter case a submission that a recital of debt in a mortgage deed is conclusive, unless the circumstances ‘justify equitable relief on the ground of a mistake, whether by way of rectification or otherwise, or, of course, fraud’,275 was rejected as inconsistent with the following holding of Kay J in Mainland v Upjohn:276 ‘There are many ways in which the equity to redeem was defended by stringent provisions laid down by the court which created that equity. Among them there was first of all this: that the amount stated in the mortgage deed to be advanced was never conclusive. The mortgagor or anybody claiming under him was always at liberty to show, if he could, that that amount had not been actually or advanced.’

and the obiter dicta of Lord Maugham in Greer v Kettle,277 whose application was not limited to a mortgage deed: ‘The well-known rule of the Chancery Courts in regard to a receipt clause in a deed not effecting an estoppel if the money has not in fact been paid is a good illustration of the equity view.’

8.78 The tension between the Privy Council and the Court of Appeal decisions is yet to be definitively addressed, but it is submitted that it may be resolved on the basis that prima facie a receipt in a contract or deed is understood as intended by the parties only to establish a presumption as to its accuracy, which may therefore be displaced by evidence as to its inaccuracy sufficient to rebut the presumption,278 unless the parties (and any successors bound by the estoppel) are precluded from adducing such evidence because it is established that they intended to contract or make their deed on the counterfactual basis that the money had been paid or was due, whether or not it was true.279 Thus, in Destine Estates Ltd v Muir,280 Newey J observed that, ‘There may be room for argument as to how far the Lavarello case detracts from equity’s traditional reluctance to allow a party to a deed to rely on a receipt clause when payment has not in fact been made’, but nonetheless upheld an estoppel against denial that the sum stated to have been received was due, because the deed also recited that the lender had

273 [2006] EWCA Civ 788; and, conversely, Horton v Westminster Improvement Commissioners (1852) 7 Exch 780 was not cited to the CA. 274 See further 5.38 onwards, 8.78. 275 [2006] EWCA Civ 788 at [25], [31]. 276 (1889) 41 Ch D 126 at 136; see also Reliance Finance Corp Ltd v Heid [1982] 1 NSWLR 466 at 483C–484B (affd (1983) 154 CLR 326); Cousens v Grayridge Pty Ltd [2000] VSCA 96 at [58]. 277 [1938] AC 156 at 171. 278 As in Oak Investment Partners XII LLP v Boughtwood [2009] EWHC 641 (Ch). 279 As in Prime Time v Lavarello [2014] AC 436; Horton v Westminster Improvement Commissioners (1852) 7 Exch 780; Ashpitel v Bryan (1864) 5 B & S 723; Slocom Trading Ltd v Tatik Inc [2012] EWHC 3464 (Ch) at [287]. 280 [2014] EWHC 4191 (Ch).

359

8.78  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

agreed to lend the sum for the relevant purchase and provided for its repayment. If, therefore, as in that case, in Lavarello and in Slocom Trading Ltd v Tatik Inc,281 the evidence, including the terms of the deed, shows that the recited making of the payment was agreed as the basis of the transaction between the parties, as opposed to the clause being a standard term to which no attention was paid, it seems that the recital will estop.

ESTOPPEL BY DEED Definition and foundation 8.79 For B to be estopped by a deed, he or his predecessor282 must have executed a deed on which A is entitled to maintain an action against B containing a statement283 whose truth B or his predecessor agreed to admit284 for the purposes of the deed. The necessity of finding that a recital was intended to be an agreement to admit its truth by B285 reveals that the foundation of an estoppel by deed inter partes is agreement to be bound by a statement under seal, the requirement of consideration, which would be necessary to bind by contract, being obviated by execution of the deed:286 B is, therefore, estopped by agreement under

281 [2012] EWHC 3464 (Ch) at [287] per Roth J; See also Bikam OOD v Adria Cable SARL [2013] EWHC 1985 (Comm) at [159]–[160] and cases at 8.67 n 232; cf 5.38 onwards. 282 See 8.84; 6.11, 6.12, 6.24 onwards. 283 The terms of the deed must be sufficiently clear and unambiguous to be construed as containing such a statement: see eg Herbert v Pegrum [2005] EWCA Civ 120 at [17]–[22]; ­Sydenhams (Timber Engineering) Ltd v CHG Holdings Ltd (2007) 112 Con LR 49 at [102]: it is a question of construction of the deed whether the admission has been made. 284 Greer v Kettle [1938] AC 156, with unanimous concurrence per Lord Russell of Killowen at 167 (confirming Stroughill v Buck (1850) 14 QB 781): ‘Where a recital is intended to be an agreement of both parties to admit a fact, it estops both parties, but it is a question of construction whether the recital is so intended’; and per Lord Maugham at 170: ‘Patteson J, in his judgment in Stroughill v Buck, stated it thus: “When a recital is intended to be a statement which all the parties to the deed have mutually agreed to admit as true, it is an estoppel upon all. But, when it is intended to be the statement of one party only, the estoppel is confined to that party, and the intention is to be gathered from construing the instrument.” My Lords, in agreement with the Court of Appeal and with the opinion of my noble and learned friend Lord Russell of Killowen I think that this statement of the law is correct;’ followed, eg, in Brudenell-Bruce v Moore [2012] WTLR 931 at [23]); Prime Sight Ltd v Lavarello [2014] AC 436 at 41, PC: ‘… if as a matter of construction the recital amounts to a mutual agreement to treat it as true, and if there are no vitiating factors such as illegality or misrepresentation, the fact that the parties have willingly so bound themselves is itself sufficient reason for the contract to be enforced’; Richards v Wood [2014] EWCA Civ 327 at [16]; see 8.70. 285 See 8.70 and n 284 above. A common expectation is insufficient if the deed is not construed as containing such an implicit agreement: see eg Capital Bank Cashflow Finance v Southall [2004] 4 All ER (Comm) 675, CA. 286 The agreement in the deed to admit the truth of the relevant statement will bind without the necessity of consideration by reason of the formality of the deed: see cases at Halsbury’s Laws of England vol 32 (2012) at [259], n 1; Cannon v Hartley [1949] Ch 213. This passage in the fourth edition was adopted in Singapore by Ang J: OMG Holdings Pte Ltd v Pos Ad Sdn Bhd [2011] SGHC 246 at [68] (unaffected on appeal [2012] SLR 201).

360

Estoppel by deed 8.80

seal.287 ‘The position, accordingly, is that, if a recital contains a statement which a party to the deed is to be taken to have agreed to admit as true, the statement is binding on him’.288 8.80 It is sufficient, therefore, that the parties execute the deed, without further detrimental reliance,289 for the estoppel to bind, and, since the scope of the estoppel is limited by their consensual intention, they are likely to be estopped only in relation to the transaction it effects.290 For this reason, Brett LJ in Simm v Anglo-American Telegraph Co291 inclined to the view that the use of the term ‘estoppel’ with reference to conveyancing deeds ‘is merely a phrase indicating that they must be truly interpreted’. The modern reliance-based doctrine of estoppel by convention,292 being (where the convention does not amount to a contract) founded on detrimental reliance by one party such that it is inequitable for the other to resile from the convention, is, therefore, distinguishable from estoppel by deed in this respect.293 In Greer v Kettle,294 in which the House of Lords

287 Even at the instance of a party to the deed who has not supplied consideration as, although equity will not assist a volunteer by granting specific performance of a gratuitous promise or restraining a breach thereof, the common law recognises an estoppel by deed and will hold the party estopped to his or her agreement to admit the relevant matter for the purpose of the transaction. 288 Brudenell-Bruce v Moore [2012] WTLR 931 at [23] per Newey J. 289 See eg Goodtitle d Edwards v Bailey 2 Cowp 597 at 600–1; Ferno Holdings Pty Ltd v Lee (1992) NSW Conv R 55–645 at 59–691 per Cohen J; Offshore Oil NL v Southern Cross Exploration NL (1985) 3 NSWLR 337 at 346 per Clarke J: ‘In that class of estoppel by convention concerned with recitals in deeds the authorities suggest that no detriment beyond the entry into the deed need be shown’; discussed by Derham (1997) 71 ALJ 860, 977 at 985; PW & Co v Milton Gate Investments Ltd [2004] Ch 142 at [149]; Labracon Pty Ltd v Cuturich [2013] NSWSC 97 at [128]; contrast the argument to the contrary by Handley (2014) 130 LQR 370 at 372, but, with respect, in no case has an estoppel by deed failed for want of detrimental reliance, and the argument ignores the confirmation of Stroughill v Buck in Greer v Kettle (see n 284 above) that estoppel by deed is founded on an agreement to admit that binds because it is under seal (eg per Lord Maugham at 170: ‘a solemn and unambiguous statement or engagement in a deed must be taken as binding between parties and privies’): it has subsequently been accepted by Handley, in Estoppel by Conduct and Election (2nd edn, 2016) [7-002] that detrimental reliance is not required for an estoppel by deed. 290 See 8.36, 8.86. 291 (1879) 5 QBD 188 at 206; see also Dabbs v Seaman (1925) 36 CLR 538, at 547, 549–550, 551. 292 See 8.2–8.7. 293 See 8.41 onwards; the requirement is simply absent from the authorities on estoppel by deed; see cases at 8.79, 8.80, 8.84; Handley (2014) 130 LQR 370 at 372 (n 289 above) cites a reference in Ashpitel v Bryan (1863) B & S 474 to A having altered his position (but this does not amount to a holding that such alteration was indispensable) and the observation of Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd (1938) 59 CLR 641, at 674, that detrimental reliance appears generally to be indispensable for an estoppel, but we submit that estoppel by deed is an exception to this, as it binds by force of declaration or agreement under seal, as is an estoppel which binds by contract, and the observation of Dixon J was directed towards the reliance-based estoppels: see 1.5 onwards. 294 [1938] AC 156 at 171; see also Williams v Pinckney [1897] 67 LJ 34; Re Distributors and Warehousing Ltd [1986] BCLC 129 at 139c–d.

361

8.80  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

confirmed estoppel by deed to be founded on agreement,295 Lord Maugham also described it as a rule of evidence but, for the same reasons as are set out in ­in relation to estoppel by representation of fact,296 it is nonetheless respectfully submitted to be a rule of law. 8.81 It is submitted that an estoppel in a deed poll may also bind in an action on the deed.297 The deed-maker has made a solemn declaration under seal which is intended to bind him, and anyone named298 or sufficiently indicated299 in a deed poll may sue to enforce an obligation thereby undertaken to him, notwithstanding that he has not executed the deed, in which action, it is submitted, the estoppel may bind the deed-maker.300

History 8.82 The view of Coke and his contemporaries that ‘neither doth a recital conclude, because it is no direct affirmation’301 was rejected by subsequent authority,302 leading to the distinction drawn in the first three editions of this work, between the operative provisions of a deed containing undertakings, and the recitals which, being prefaced by the word ‘whereas’, set out the basis of the deed and bind by estoppel. The reason for subsequent departure from this distinction is that the authorities also establish that recitals are allowed binding effect precisely because the parties are understood to intend to agree to admit the recited effect as true for the purposes of the transaction.303 It is submitted above that such an inferred agreement is no less operative than an express term of the ‘operative’ part of the deed.

295 See n 284 above. 296 See 1.51–1.62. 297 See also 8.84, 8.86. 298 Scudamore v Vanderstene (1587) 2 Co Inst 673; Green v Horne (1694) 1 Salk 197; Lowther v Kelly (1723) 8 Mod Rep 115 at 118. 299 Sunderland Marine Insurance Co v Kearney (1851) 16 QB 925 at 938. 300 In Cropper v Smith (1884) 26 Ch D 700, CA at 705, 708, 713 (unaffected on appeal (1885) 10 App Cas 249), an estoppel by deed poll was dismissed as a matter of construction; cf Foster v Mentor Life Assurance Co (1854) 3 E & B 48; Re Ghost (1883) 49 LT 588 at 590. 301 Coke on Littleton at 352(b); cf cases quoted in Rolle’s Abridgment, 870 onwards. 302 See Anon (1578) 2 Leon 11, per the Court of Common Pleas at 11: ‘although the common ground is that a recital is not an estoppel, yet when the recital is material, as it is here, it is otherwise … and in this case there shall be an estoppel’; Shelly v Wright (1737) Willes 9 (per Willes CJ, delivering the judgment of the Court of Common Pleas at 11, 12, where Coke’s statement is dissented from in express terms). See also Bowman v Taylor (1834) 2 Ad & El 278 (per Lord Denman CJ at 290, 291, Taunton J at 291, and Patteson J at 293, where the notion that the prefatory ‘whereas’ makes a recital any the less a representation than it would otherwise be is repudiated); Carpenter v Buller (1841) M & W 209 per Parke B at 212, adopted by Mellish LJ in Re Simpson, ex p Morgan (1876) 2 Ch D 72, CA at 89; Young v Raincock (1849) 7 CB 310 at 338; Prime Sight v Lavarello [2014] AC 436 at [31]. 303 See 8.79.

362

Estoppel by deed 8.84

8.83 Such are the historical vagaries of this doctrine: in Coke’s time an estoppel could be founded on the operative words of a deed but not on the recitals. Thereafter, it was thought that the recitals only would bind by estoppel: the operative words were undertakings and would not create an implied estoppel as to the pre-conditions necessary for performance of the undertakings.304 Now, an estoppel in a recital is understood to bind by implied undertaking so to be bound, and there is therefore no reason in principle why, in an appropriate case, an admission of fact should not be found to be implicit in an undertaking:305 thus, we submit, the operative words of a deed might, if they necessarily imply agreement as to a matter of fact or law, found an estoppel.306

Operation Parties 8.84 The estoppel may be raised by anyone who can sue on the deed307 against anyone who can be sued on it. It may, therefore, be raised by a party to the deed, or a party entitled to the benefit of the deed, either under a trust created by the deed of its covenants, or under s 56(1) of the Law of Property Act 1925,308 or as a successor in title.309 A non-party may, however, in the ordinary way, found a non-conventional estoppel on a statement contained in a deed, including a deed poll, if the statement in the deed has been communicated to him by another so as to induce him to rely on it to his detriment.310 Successors in title taking under the deed may be estopped by it in an action on it.311 It might be thought that the same

304 General Finance, Mortgage and Discount Co v Liberator Permanent Benefit Building Society (1878) 10 Ch D 15 at 23–24; Re Distributors and Warehousing Ltd [1986] BCLC 129 at 139f; contrast Welford v Transport for London [2011] RVR 125, CA, at [21]–[22], [32]–[33]. 305 See eg Spice Girls Ltd v Aprilia World Service BV [2002] EMLR 27 at 29; Fitzroy Robinson Ltd v Mentmore Towers Ltd [2009] BLR 505 at [160]; FoodCo UK LLP v Henry Boot Developments Ltd [2010] EWHC 358 (Ch) at [59]; Welford v Transport for London n 304 above at [21]–[22], [32]–[33], where the estoppel was based on the operative agreement at clause 3 of the deed. 306 Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] 1 QB 133n per Oliver J (obiter) at 159d–f; Welford v Transport for London n 304 abve at [21]–[22], [32]–[33]; contrast 8.88(5). 307 And not, therefore, by those who cannot: Doe d Shelton v Shelton (1835) 3 Ad & El 265; Cardwell v Lucas (1836) M & W 111 at 117; Gaunt v Wainman (1836) 3 Bing NC 69; Foligno v Martin (1852) 22 LJ Ch 502; Foster v Mentor Life Assurance Co (1854) 3 E & D 48;­­Chesterfield & Midland Silkstone Colliery Co Ltd v Hawkins (1865) 3 H & C 677; Bulley v Bulley (1874) 9 Ch App 739; Trinidad Asphalte Co v Coryat [1896] AC 587, PC, at 592; Woodward v ­Battersea BC [1911] 104 LT 51. 308 OTV Birwelco Ltd v Technical & General Guarantee Co Ltd [2002] 4 All ER 668 at [45]. 309 See Mackley v Nutting [1949] 2 KB 55, CA; Norwich & Peterborough Building Society v Steed [1993] 1 All ER 330 at 340b–d per Scott LJ; and further 6.11, 6.12, 6.24. 310 Webb v Spicer (1849) 13 QB 886; reversed on other grounds (1849) 13 QB 894; Billson v Crofts (1873) LR 15 Eq at 314; Re King’s Settlement [1931] 2 Ch 294; cf 5.39; and see, as to the possibility of estoppel by deed poll, 8.81. 311 Taylor v Needham (1810) Taunt 278; Doe d Marchant v Errington (1839) 6 Bing NC 79; Doe d Gaisford v Stone (1846) 3 CB 196; Howard v Earl of Shrewsbury (1867) LR 3 Eq 218;

363

8.84  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

principles should govern whether successors in title to property that is the subject of an estoppel by deed are bound thereby, as govern whether they are bound by a contractual right or any other estoppel claimed by a third party; and, accordingly, a bona fide purchaser for value without notice of land over which another claims rights solely by virtue of an estoppel by deed should not be affected thereby.312 However, since an estoppel by deed may be raised only in a claim founded on the deed,313 it may be said that, in any case where the successor can claim the benefit of the deed, he will be bound also by the implied agreement in it that gives rise to the estoppel.314 Subject matter 8.85 In PW & Co v Milton Gate Investments Ltd,315 Neuberger J, by reference to the dictum of Lord Maugham in Greer v Kettle316 that to found an estoppel by deed a recital in a deed must ‘relate to specific facts, must be clear, certain and unambiguous, and would not avail persons who were not parties or privies to the deed’, refused an estoppel ‘as to what may arise in the future as to a matter of law’. It is respectfully submitted that this bears reconsideration, first, in the light of the reasoning for allowing an estoppel by representation as to law,317 in particular the difficulty (noticed in Neuberger J’s judgment)318 of distinguishing a statement as to rights which is treated as factual from one which is treated as legal,319 and, secondly, because Neuberger J’s ground for a stricter approach in relation to estoppel by deed (that it binds without reliance)320 is of no greater force here than in relation to an estoppel by contract. Rather than a categorical preclusion of an estoppel by deed as to law,321 the limitations on such an estoppel should be imposed by construction of the deed so as to determine the propositions to which the parties have and have not agreed to bind themselves, and by the rule which precludes unacceptable subversion of a rule of law by an estoppel.322 Assertion of estoppel by recital of law faces the difficulty, first, of on appeal to Ch App 760; Sumner v Schofield (1880) 43 LT 763; First National Bank plc v ­Thompson [1996] Ch 231; cf Melbourne Banking Corpn v Brougham (1882) 7 App Cas 307; but see Doe d Shelton v Shelton (1835) 3 Ad & El 265; and, conversely, strangers to the deed are not bound: Gaunt v Wainman, n 307 above; Cracknall v Janson (1879) 11 Ch D 1, CA, at 11; Mowatt v Castle Steel and Ironworks Co (1886) 34 Ch D 58, CA at 63; Woodward v Battersea BC, n 307 above. 312 See 6.35 onwards; but contrast Taylor v Needham n 311 above; Sumner v Schofield n 311 above; First National Bank plc v Thompson n 311 above. 313 See 8.86. 314 See 8.79; cases at n 312 above; and see 6.11, 6.12, 6.24; but cf 6.42 n 151. 315 [2004] Ch 142 at [152]–[156]. 316 [1938] AC 156 at 170. 317 See 1.19, 2.8, 2.28 onwards. 318 At [153]–[154]. 319 See 2.28 onwards. 320 At [155]. 321 Even, in theory, one based on an implicit provision of the deed (see 8.88(4)), but that would face the additional difficulty of establishing both that it is a necessary unsaid part of what has been expressed, and that B has agreed to admit it: see 8.79, 8.88(5). 322 See 8.87(5), 8.66 and Ch 7.

364

Estoppel by deed 8.87

establishing that the parties intended to bind themselves as to the law rather than relying on their own advice and assessment, and, secondly, that, even if they did, such an agreement will not be valid if it would unacceptably subvert the public policy embodied in the relevant rule of law or statute.323 Effect of estoppel by deed 8.86 The operation of an estoppel by deed is limited to actions founded on the deed324 because the agreement of the parties made by assent to the relevant recital is interpreted as agreement to admit the proposition recited only for the purposes of the deed and the transaction effected thereby.325 The parties might, in theory, bind themselves by agreement under seal to admit a proposition for other purposes than the transaction effected by the deed itself, but this does not arise in practice.

Defences 8.87

The following defences may lie to an estoppel by deed:

(1) The deed is void:326 this may be by reason of fraud,327 duress of another party, illegality, fundamental mistake or non est factum.328 A party may not, however, raise his own fraud to invalidate a deed and thereby defeat an estoppel.329 (2) The deed is to be rectified, as by mistake it does not record the true agreement of the parties,330 or is to be rescinded because it was executed under a common mistake.331 Rescission will not, however, be available if the mistake is not such as to justify it332 or the court interprets the recital as agreement 323 See n 322 above. 324 Carpenter v Buller (1841) M & W 209; Wiles v Woodward (1850) 1 Exch 557; Carter v Carter (1857) 3 K & J 617 at 645; Bittlestone v Cooke (1856) 6 E & B 296; Fraser v Pendlebury (1861) 31 LJ CP 1; South Eastern Rly Co v Warton (1861) 6 H & N 520 at 527, 528; Re Simpson (1876) 2 Ch D 72, CA; Sydenhams (Timber Engineering) Ltd v CHG Holdings Ltd (2007) 112 Con LR 49 at [102]. 325 See 8.79 and 8.84, and cf 8.36. 326 Norfolk’s case (1667) Hard 464; Mitchell v Reynolds (1711) 1 P Wms 181; Doe d Preece v Howells (1831) 2 B & Ad 744; Ruben v Great Fingall Consolidated [1896] AC 439 at 446; see also 5.31. 327 See Greer v Kettle [1938] AC 156 at 171 (obiter); Norwich & Peterborough Building Society v Steed [1993] 1 All ER 330. 328 For consideration of which, reference should be made to the standard works on the law of contract. 329 Montefiori v Montefiori (1762) 1 Wm Bl 363; Doe d Roberts v Roberts (1819) 2 B & Ald 367; Gascoigne v Gascoigne [1937] 4 All ER 396, HL at 404. 330 Scholefield v Lockwood (No 2) (1863) 33 LJ Ch 106 at 110; Brooke v Haymes (1868) LR 6 Eq 25; Empson’s Case (1870) LR 9 Eq 597; Greer v Kettle n 327 above; Wilson v Wilson [1969] 1 WLR 1470. 331 Skipworth v Green (1724) 8 Mod Rep 311; Brooke v Haymes n 330 above; Re Simpson n 324 above; Greer v Kettle, n 327 above at 171–2. 332 As to which, see the standard works on the law of contract.

365

8.87  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

by B to be responsible for its truth or to admit it, whether right or wrong, nor if the parties so acted on the mistake that it would be inequitable to allow rescission.333 (3) So also, it is submitted, if the deed is to be rescinded by reason of misrepresentation or undue influence334 by A. Whether this defence lies against a successor of the misrepresentor or undue influencer,335 or where the misrepresentation was made or undue influence exercised by a third party,336 depends, it is submitted, on whether the estoppel raiser is a bona fide purchaser for value without notice of such misrepresentation or undue influence. (4) So also, an estoppel by deed will not operate so as to allow an equitable fraud by precluding the establishment of a resulting or constructive trust,337 unless an agreement to proceed on the basis that such a claim will not lie is established338 and does not contravene public policy. (5) The estoppel would contravene public policy.339

Construction of the deed 8.88 If a party is to be estopped, the court must construe the deed as containing agreement by him to admit the relevant proposition:340 (1) If the deed contains a recital in general terms, it will not estop a party from denying a specific fact,341 unless admission of the specific fact is necessarily 333 As to which, again, see the standard works on the law of contract. 334 See 5.31. 335 See 6.5. 336 See 5.31. 337 See Ali v Khan [2002] EWCA Civ 574. 338 On the principles enunciated in Prime Sight Ltd v Lavarello [2014] AC 436 at [31]–[47]. 339 Fairtitle d Mytton v Gilbert (1787) 2 Term Rep 169; Stratford and Moreton Rly Co v Stratton (1831) 2 B & Ad 518; Hill v Manchester and Salford Waterworks Co (1831) 2 B & Ad 544 at 553; Doe d Chandler v Ford (1835) 3 Ad & El 649; Prole v Wiggins (1836) 3 Bing NC 230; Doe d Levy v Horne (1842) 3 QB 757 at 766; Canterbury Corpn v Cooper (1909) 100 LT 597; Huddersfield Fine Worsteds Ltd v Todd (1925) 134 LT 82; Prime Sight Ltd v Lavarello [2014] AC 436 at [47]; cf Barrow Mutual Ship Insurance Co Ltd v Ashburner (1885) 54 LJQB 377, CA; see further Ch 7. 340 See eg Onward Building Society v Smithson [1893] 1 Ch 1 at 14 per Bowen LJ: ‘An estoppel can only be effected by what is express and clear – by a statement by which the parties mean to bind themselves in making their contract’; Greer v Kettle [1938] AC 156, where the House of Lords approved Patteson J in Stroughill v Buck (1850) 14 QB 781 at 787: ‘When a recital is intended to be a statement which all the parties to the deed have mutually agreed to admit is true, it is an estoppel upon all. But, when it is intended to be the statement of one party only, the estoppel is confined to that party and the intention is to be gathered from construing the instrument’; see at 167, per Lord Russell of Killowen and at 170 per Lord Maugham, with both of whom Lord Roche at 172, and Lord Atkin and Lord MacMillan at 161, agreed. See Skipworth v Green, n 331 above, for a case in which a recital that property conveyed consisted of meadows was interpreted as not amounting to an agreement to admit that fact for the purposes of the transaction. See also Brooke v Haymes, n 330 above. 341 Eg in Heath v Crealock (1878) LR 10 Ch App 22: a recital that the grantor was ‘well and sufficiently entitled’ did not specify whether he was entitled at law or in equity and therefore

366

Estoppel by deed 8.88

implicit in admission of the general proposition. Authorities342 which suggest that, even then, the generality of the statement will prevent the court from finding the necessary intention to make an admission should, it is submitted, be treated with caution: the question is simply whether one of the parties has, or both parties have, agreed to admit the relevant fact for the purposes of the transaction.343 (2) There are numerous authorities344 that the statement in the deed must be precise, clear and unambiguous.345 Does this mean that, if the consensual statement is open to more than one interpretation, each of which may be reasonably supported, and only one of which will found the estoppel, the court will find no estoppel?346 A court of construction, depending on the circumstances, may either find that one of the competing interpretations is correct, and the statement so interpreted may found an estoppel, or find that the parties did not commit themselves as between the alternatives, so no estoppel will lie. (3) The deed will be construed as a whole,347 so there will be no estoppel based on a recital if the truth appears elsewhere therein,348 unless the parties clearly intended, nonetheless, so to be bound.349 (4) There are authorities350 that only the express terms of a deed will found an estoppel. It is submitted, however, that the obiter view of Oliver J in

would not found an estoppel as to his legal title; in General Finance, Mortgage and Discount Co v Liberator Permanent Benefit Building Society (1878) 10 Ch D 15 at 23, a covenant that a mortgagor had power to grant and convey the legal mortgage did not imply a statement that he held the legal estate, as he could have complied with it as a beneficiary holding the whole equitable interest, who might compel his trustee to convey or he might have power under the statute of uses or under a will enabling him so to do without holding the legal estate himself. 342 Right d Jefferys v Bucknell (1831) 2 B & Ad 278; Hall d Doddington v Peart (1594) 2 Co Rep 32b; Salter v Kidley (1688) 1 Show 58; Bensley v Burdon (1830) 8 LJOS Ch 85; Re Distributors and Warehousing Ltd [1986] BCLC 129 at 139 onwards. 343 See 8.79; SE Rly Co v Warton (1861) 6 H & N 520 at 528. 344 Right d Jefferys v Bucknell n 342 above; General Finance, Mortgage and Discount Co v ­Liberator Permanent Benefit Building Society n 341 above; Williams v Pinckney (1897) 67 LT 34; Onward Building Society v Smithson n 340 above; Poulton v Moore [1915] 1 KB 400; Greer v Kettle [1938] AC 156 at 170; District Bank Ltd v Webb [1958] 1 WLR 148 at 149–150; ­Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] 1 QB 133 at 159d–f; Re Distributors and Warehousing Ltd n 342 above; PW & Co v Milton Gate Investments Ltd [2004] Ch 142 at [152]–[153]. 345 See 4.49, 4.50. 346 See 8.19 onwards, 8.31. 347 See 4.49, 4.50. 348 Coke on Littleton at 352b (8th rule); Hermitage v Tomkins (1699) 1 Ld Raym 729; Right d ­Jefferys v Bucknell n 342 above at 281; Doe d Lumley v Scarborough (1835) 3 Ad & El 2; Gillet v Abbott [1838] Ad & El 783; Pargeter v Harris (1845) 7 QB 708; Saunders v ­Merryweather (1865) 3 H & C 902. 349 Jolly v Arbuthnot (1859) 4 De G & J 224; Morton v Woods (1859) LR 4 QB 293 at 303. 350 Right d Jefferys v Bucknell n 342 above; Bowman v Taylor (1834) 2 Ad & El 279; Onward Building Society v Smithson n 340 above; Re Distributors and Warehousing Ltd n 342 above; First National Bank plc v Thompson n 311 above at 237A, 243E; PW & Co v Milton Gate

367

8.88  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd351 is to be preferred: that a statement necessarily implicit in the express terms of a deed will found an estoppel. If the court finds that a statement is implied by the terms expressly agreed between the parties, it interprets the express terms, spelling out what is implicit in them, and the tests for such implication are strict tests designed to do no more than elicit that which the parties have agreed without saying. The Privy Council has therefore recognised in A-G of Belize v Belize Telecom Ltd,352 and the Supreme Court in Marks and Spencer Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd,353 that an implicit statement is as much a term of an agreement (and, therefore by the same logic, a deed) as an explicit one: it should, therefore, be no less capable of founding an estoppel. (5) A related principle to that rejected at (4) above is that an estoppel may not be founded on the operative provisions of the deed, as opposed to the recitals, as the former contain covenants rather than admissions.354 Again, however, it is submitted that the view of Oliver J in Taylors Fashions355 is to be preferred, that an admission of fact may be implicit in a promise, but Investments Ltd [2004] Ch 142 at [150]–[151]; cf Gillett v Abbott (1838) 7 Ad & El 783; Cutler v Bower (1848) 11 QB 973 at 988. 351 [1982] 1 QB 133n at 159d–f; see also Welford v Transport for London [2011] EWCA Civ 129 at [21]–[22], [32]–[33]. 352 [2009] 1 WLR 1988 at [18]–[21] per Lord Hoffmann: ‘But the implication of the term is not an addition to the instrument. It only spells out what the instrument means’. We respectfully agree with Lord Hoffmann there, and with Lord Carnwath in Marks & Spencer Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd (although he was in this respect dissenting), that, by finding a term implicit in the terms of the agreement that the parties have expressed, the court is construing what the parties have expressed as implicitly stating what the court finds thereby to have been necessarily implied. This point is, with respect, missed by saying that the court cannot be construing an express term by implying a term because the implied term is not there to construe (see Paribas at [27], [76]): the point is that the court can only imply a term if it finds it necessarily (as a matter of business efficacy or obviousness) implicit in what has been expressly agreed, and is therefore interpreting an unstated element of what has been agreed. If the process of implication were otherwise, for a court to find, as courts may and do, a term to be implicit in a statute would be unconstitutional. It is surprising also that Lord Hoffmann and the Privy Council’s Opinion in Belize was thought by some to be a relaxation of the test of implication, when it emphasises the stringency of an exercise that may go no further than to unpack the necessary implications of what has been expressly stated. 353 [2015] UKSC 72 at [26] per Lord Neuberger, with majority concurrence: ‘I accept that both (i) construing the words which the parties have used in their contract and (ii) implying terms into the contract, involve determining the scope and meaning of the contract’; at [69] per Lord Carnwath: ‘On this point also I see no reason to depart from what was said in Belize. While I accept that more stringent rules apply to the process of implication, it can be a useful discipline to remind oneself that the object remains to discover what the parties have agreed or (in Lady Hale’s words) “must have intended” to agree’; and at [76] per Lord Clarke: ‘However, like Lord Neuberger (at para 26) I accept that both (i) construing the words which the parties have used in their contract and (ii) implying terms into the contract, involve determining the scope and meaning of the contract’. 354 General Finance, Mortgage and Discount Co v Liberator Permanent Benefits BS n 341 above at 24; Heath v Creelock n 341 above; Lovett v Lovett [1898] 1 Ch 82 at 88; First National Bank plc v Thompson [1996] Ch 231 at 243E per Staughton LJ; contrast Millett LJ at 237A. 355 See n 351 above.

368

Estoppel by deed 8.88

only if the fact is a pre-condition of the performance of the promise as a matter of strict logical necessity. In General Finance, Mortgage and Discount Co v Liberator Permanent Benefits Building Society356 a covenant that the mortgagor had power to convey and grant the legal mortgage did not amount to an admission that the mortgagor held the legal estate, not because it was a covenant, but because he might have had power to perform the covenant without holding the legal estate.357 It is respectfully submitted, however, that Jessel MR was wrong to go on to hold358 that a covenant can never imply an admission because it is only an agreement to pay damages in cases of non-performance: for if, as part of a transaction, B promises that he has a £1 coin in his pocket, he is warranting the truth of that proposition, and should therefore be held, as it were by a claim for specific performance, bound to admit, for the purposes of the transaction, that he has a £1 coin in his pocket. (6) A strict approach towards construction, reflecting caution as to the application of a doctrine ‘by which falsehood is made to have the effect of truth’,359 has been adopted in the authorities on estoppel by deed as to title,360 but it is questionable whether it would be applied today,361 now that estoppels no longer attract such odium.362 (7) The statement must be intended by the parties to be attributable to the party to be estopped. In Greer v Kettle,363 a recital that a principal debtor owed the creditor a debt secured on certain shares was held attributable to the principal debtor alone, and not the guarantor, as it concerned matters to be expected to be within the knowledge of the principal debtor rather than the guarantor. 356 See n 341 above. 357 At 23 per Jessel MR; see n 341 above. 358 At 24; Jessel MR has, however, the support of Mann J in Sycamore Bidco Ltd v Breslin [2012] EWHC 3443 (Ch) at [200]–[211] and Andrew Baker QC in Idemitsu Kosan Co Ltd v­ Sumitomo Corp [2016] EWHC 1909 (Comm) at [13]–[23], while Arnold J in Invertec Ltd v De Mol Holding BV [2009] EWHC 2471 (Ch) at [362]–[363] preferred the view that we espouse, which is that a warranty is a representation of fact and more, not less: ie a promise to pay damages in default that reinforces a representation of fact, rather than a promise only and no representation. 359 General Finance, Mortgage and Discount Co v Liberator Permanent Benefits Building ­Society n 341 above at 25 per Jessel MR. 360 See eg cases at n 349 above; Williams v Pinckney (1897) 67 LT 34, where a conveyance by grantors of their interests with ‘all right, title, claim and demand whatsoever’ subject to named encumbrances did not amount to a statement that those were the only encumbrances so as to prevent one grantor from claiming the benefit of a mortgage to him by one of the others over the property conveyed: he did not make any statement as to the title of his co-grantor; in District Bank Ltd v Webb [1958] 1 WLR 148, a statement that the title was ‘unencumbered’ was held not to mean that it was free from tenancies; such a result seems unlikely today. 361 See further 4.9 onwards. 362 See 1.64. 363 [1938] AC 156; see South Eastern Rly Co v Warton (1861) 6 H & N 520; Edwards v Brown (1831) 1 Cr & J 307; cf Carpenter v Buller (1841) M & W 209; Wiles v Woodward (1850) 5 Exch 557. In OTV Birwelco Ltd v Technical & General Guarantee Co Ltd [2002] 4 All ER 668 at [45], B, another party to a deed, was estopped against A, a beneficiary entitled to enforce the deed under s 56 of the Law of Property Act 1925, by the statement in the deed that C had executed it by affixing its common seal, although, if C had sought to raise the estoppel against

369

8.89  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

Development 8.89 Estoppel by deed has, therefore, in the past been subjected to a number of restrictions whose continued application in the same terms, to an estoppel whose force has been recognised364 to be that of an agreement under seal to admit the relevant proposition, must be questioned: namely, that the estoppel must be as to a matter of fact rather than law;365 the estoppel must be based on an express rather than an implied statement in the deed;366 the estoppel may not be derived from the operative provisions of the deed rather than its recitals;367 the estoppel may never be founded on a receipt;368 and the deed will be construed with a predisposition against the estoppel.369 Since, however, the foundation of the estoppel has been recognised by the House of Lords in Greer v Kettle370 and the Privy Council in Prime Sight Ltd v Lavarello371 as being B’s agreement under seal to admit the relevant proposition, the question must simply be whether B has, by the deed, on its true construction agreed to admit the relevant proposition for the purposes of the transaction (and, particularly in the case of a proposition of law, whether such an estoppel would contravene public policy by unacceptably subverting a rule of law).

ESTOPPEL AS TO TITLE Binding by agreement 8.90 The estoppels which automatically preclude a landlord and tenant from denying the landlord’s title to grant the tenancy,372 and a bailee from denying his bailor’s title373 by virtue of entry into that relationship, are submitted to be examples of estoppel by contract or deed rather than a reliance-based estoppel.

B, it might be answered that this was a statement for which B, not A, was responsible, as in Greer v Kettle; cf Bank of Scotland Plc v Waugh [2014] EWHC 2117 (Ch); Briggs v Gleeds [2015] Ch 212 at [43]. 364 See 8.79. 365 See 8.85. 366 See 8.88(1). 367 See 8.88(2). 368 See 8.77. 369 See 8.88(4). 370 See 8.70, 8.79. 371 See 8.70, 8.79. 372 See eg Cooke v Loxley (1792) 5 Term Rep 4; A-G v Hotham (1823) Turn & R 209 at 219; Agar v Young (1841) 1 Car & M 78; Moreton v Woods (1869) LR 4 QB 293; EH Lewis & Son v Morelli [1948] 2 All ER 1021; Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580, CA; WG Clark (Properties) Ltd v Dupré Properties Ltd [1992] Ch 297; Bruton v London & Quadrant Housing Trust [2000] 1 AC 406. 373 See eg Biddle v Bond (1865) 6 B & S 225 at 232 per Blackburne J: ‘The position of an ordinary bailee, where there has been no special contract or representation on his part, is very analogous to that of a tenant’; Leese v Martin (1873) LR 17 Eq 224; Re Saddler, ex p Davies (1881) 19

370

Estoppel as to title 8.91

No proof is required that a party was misled by the other’s representation or some belief that the landlord or bailor had good title.374 Where there is a recital as to title, this estoppel, it is submitted, binds by necessarily implied contractual agreement that the transaction proceeds on this basis: no further detrimental reliance is, therefore, required.375 These estoppels were originally upheld as estoppels by deed arising under conveyancing deeds,376 but have been applied in relation to agreements to a tenancy377 or licence378 that were not under seal. One such estoppel also precludes a landlord and tenant, upon grant of a new tenancy, from denying the surrender of the previous tenancy.379 They are considered more fully in Part II,380 as is the question who is bound by them in Chapter 6.381 8.91 It is submitted that these estoppels arise because the grantor’s title is the necessary foundation for the relationship or transaction into which the parties enter and, by entering into that relationship or transaction, the parties impliedly agree that their relationship will be governed on the basis that the grantor has such title: since, if he did not, then they could not be entering into the relationship or transaction into which they are agreeing to enter. In Bruton v London & Quadrant Housing Trust,382 Lord Hoffmann said of a tenancy by estoppel: ‘In fact, as the authorities show, it is not the estoppel which creates the tenancy, but the tenancy which creates the estoppel. The estoppel arises when one or other of the parties wants to deny one of the ordinary incidents or obligations of the tenancy on the ground that the landlord had no legal estate. The basis of the estoppel is that having entered into an agreement which constitutes a lease or tenancy, he cannot repudiate that incident or obligation’.

Ch D 86 at 90; Karflex Ltd v Poole [1933] 2 KB 251 at 263. This estoppel is a­ bolished for most purposes by the Torts (Interference with Goods) Act 1977; see further 9.52 onwards. 374 Agar v Young n 372 above, where the landlord had told the tenant that he had no title; Grundt v Great Boulder Proprietary Gold Mines Ltd (1938) 59 CLR 641 at 676 per Dixon J: ‘The tenant may know his landlord’s title is defective, but by accepting the tenancy he adopts an assumption which precludes him from relying on the defect’. See also EH Lewis & Sons v Morelli n 372 above at 1024. 375 See 8.70, 8.79. 376 See cases considered in First National Bank plc v Thompson [1996] Ch 231. 377 Mitchell v Watkinson [2014] EWCA Civ 1472; Cuthbertson v Irving (1859) 4 H&N 742 (Martin B), affirmed (1860) 6 H&N 135; Bruton v Quadrant Housing Trust [2000] 1 AC 406 at 415A–416F; Bell v General Accident Fire and Life Assurance Company Ltd [1998] 1 L & TR 1; Industrial Properties (Barton Hill) Limited v Associated Electrical Industries Ltd [1977] QB 580 at 596C–597B; Pawlowski (2015) 19 L & TR 79. 378 Sze To Chun Keung v Kung Kwok Wai David [1997] 1 WLR 1232; Couper v Albion Properties Ltd [2013] EWHC 2993 (Ch). 379 See Lyon v Reed (1844) 1 M & W 285 at 305–6; Wallis v Hands [1893] 2 Ch 75; Tarjomani v Panther Securities Ltd (1983) 46 P & CR 32 at 41; Mattey Securities Ltd v Ervin [1998] 2 EGLR 66, CA. 380 See 9.18 onwards. 381 See 6.24 onwards. 382 [2000] 1 AC 406 at 416A.

371

8.92  Estoppel by convention; estoppel by contract; estoppel by deed; estoppel as to title

Two historical doctrines of estoppel by deed as to title 8.92 In First National Bank plc v Thompson,383 Millett LJ carefully analysed a line of authorities establishing a doctrine of estoppel by deed as to title, as separate from that which he said was an instance of the wider doctrine of estoppel by representation, which applies only where the grantor expressly states his title. Millett LJ did not explicitly consider the authorities on the latter doctrine, of estoppel by representation as to title, but identified the former doctrine as ‘the product of the fundamental principle of the common law which precludes any grantor from disputing the validity or effect of his own grant’384 which ‘appears to be merely the product of the relative character of title to land in English law’.385 8.93 On the authorities, this principle operates where there is no express statement of the grantor’s title to estop the grantor from denying that he had a legal title. It is different in its operation, however, in that, unlike the doctrine based on an express representation of title it may not be deployed if ‘… the grantor had any present legal estate in the property, even if it was insufficient to support the grant. In such a case the grantee obtained an estate in interest and not by estoppel but it could not exceed the estate of his grantor’,386 since the estoppel was only from denying that the grantor had a legal estate, not necessarily one sufficient to support his grant. This latter form of estoppel also ‘did not bind a bona fide purchaser for value from the grantor without notice of the earlier transaction’,387 unlike an estoppel based on an express recital or representation of the grantor’s title, which bound the grantor and all persons claiming under him.388 8.94 For the reasons given above,389 however, it is submitted that estoppels as to the title of a grantor, whether or not explicitly stated in the grant, may both now be recognised as based on an express or implicit agreement to admit that which is necessary for the grant, and the issue of whether the estoppel should operate differently in the respects identified above, as laid down by the authorities, therefore bears reconsideration.

383 384 385 386 387

[1996] Ch 231 at 236H–240B, with concurrence at 242E, 243E–H. At 237A per Millett LJ. At 237B per Millett LJ. At 239F–G per Millett LJ. At 239H per Millett LJ; Right d Jefferys v Bucknell (1831) 2 B & Ad 278 at 283; General Finance, Mortgage & Discount Co v Liberator Permanent Benefits BS (1878) 10 Ch D 15. 388 239D–E. 389 See 8.70, 8.79, 8.88(4).

372

PA RT I I

Particular Applications of Reliance-Based Estoppel Fifth edition Chapters 9 and 11 by Peter Crampin QC Chapter 10 by Tom Leech QC

374

CHAPTER 9

Applications of reliance-based estoppel to various relationships

Agency, partnership and ownership by estoppel  9.2 Landlord and tenant  9.18 Bailor and bailee  9.52 Patentee and licensee  9.62 Customer and banker  9.70 Employers, trustees and members of occupational pension schemes  9.77 9.1 This work has so far been concerned with the constituent elements of the various kinds of reliance-based estoppel set out in Chapter 1 considered generally, and of the defence of illegality to those estoppels (Chapter 7). Chapter 8, which dealt with estoppels by convention and by deed, concluded this general section. In this and the following chapters, which comprise Part II of the work, the principles set out in Part I will be examined in their operation upon, and application to, various types of transactions. The present chapter is concerned with their application to the following categories of relationships between the parties: principal and agent (including partnership); landlord and tenant; bailor and bailee; patentee and licensee; and banker and customer. There is a new concluding section in which we consider the doctrine of reliance-based estoppel in relation to the position of employers, trustees and members of occupational pension schemes.

AGENCY, PARTNERSHIP AND OWNERSHIP BY ESTOPPEL 9.2 This section is concerned with the class of cases in which one person has represented (‘held out’) to another, by words or conduct, that a third person stands to the representor (or does not stand to him) in the relationship of agent, or partner, for the purposes of a particular transaction, or is the owner of property

375

9.2  Applications of reliance-based estoppel to various relationships

or entitled to deal with property as owner. Some of these cases are dealt with as part of the substantive law of agency or partnership,1 and do not necessarily refer to ‘estoppel’:2 expressions such as ‘apparent’ or ‘ostensible’ authority’ are often used. But whether they are described as examples of estoppel or by those other terms, the consequences are those which result from the application of the principles of reliance-based estoppel.3 9.3 Subject to the matter discussed in the following two paragraphs, the proposition that apparent authority is based on estoppel is clearly supported by the authorities.4 9.4 It is not in doubt that a disposition of a principal’s property by a person who either has apparent authority to bind the owner, or is the apparent owner of the property, may be effective not only to bind the owner in favour of the 1 2 3

4

And, in the case of partnership, some of the relevant estoppels have been given statutory effect in the provisions of the Partnership Act 1890: see 11.105 onwards. But see Pole v Leask (1862) 33 LJ Ch 155 at 162 per Lord Cranworth, where he referred to the representor’s being ‘estopped’ from disputing the agency, and the difference between ‘agency by estoppel’ and ‘real agency, however constituted’. Scarf v Jardine (1882) 7 App Cas 345, HL, at 349 (Lord Selborne); Re Fraser [1892] 2 QB 633, CA, at 637 (Lord Esher); Lloyds Bank v Cooke [1907] 1 KB 794, CA, at 799 (Collins MR); Rama Corp v Proved Tin & General Investments Ltd v Reckitt [1933] AC 1, HL, at 17–8 (Lord Atkin); Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, CA, at 498 (Pearson LJ) and 503 and 506 (Diplock LJ); R v Charles [1977] AC 177, HL, at 183 (Lord Diplock); Hudgell Yeates v Watson [1978] QB 451, CA, at 470C (Megaw LJ); Armagas Ltd v Mundogas SA (The Ocean Frost) [1986] AC 717, HL, at 777 (Lord Keith); Northside Developments Pty Ltd v Registrar-General (1989–1990) 170 CLR 146 (High Court of Australia), at 173–4 (Brennan J); Lloyd’s Bank plc v Independent Insurance Co Ltd [2000] QB 110, CA, at 122 and 133, where Waller LJ, with Peter Gibson LJ’s agreement, said that the weight of authority was to the effect that the doctrine of apparent authority was based on estoppel; SEB Trygg Liv Holding AB v Manches [2006] 1 WLR 2276, CA, at [31] per Buxton LJ (delivering the judgment of the CA): ‘Recognition that ostensible authority operates as a form of estoppel goes back at least as far as the speech of Lord Selborne LC in Scarf v Jardine’; Thanakharn v Akai Holdings Ltd [2010] HKCFA 64 (Court of Final Appeal, Hong Kong), at [52] per Lord Neuberger NPJ: ‘apparent authority is essentially a species of estoppel by representation’; Acute Property Developments Limited v Apostolou [2013] EWHC 200 (Ch) (N Strauss QC) at [4]. See the previous footnote. In the 18th and subsequent editions of Bowstead and Reynolds on Agency a distinction is drawn between two classes of case, ‘estoppel from denying existence of agency relationship’ (formerly labelled ‘agency by estoppel’) and ‘apparent authority’. ‘Estoppel from denying existence of agency relationship’ is reserved for situations where the person concerned has no authority whatever to act as agent, so that there is no agency other than by estoppel. This is in contrast with ‘apparent authority’, where the agent has been authorised to act by the principal only to a certain extent, but has been allowed by the principal to appear to have a wider authority than that actually conferred on him. It is suggested that in many cases in the second class (‘apparent authority’) the full requirements of estoppel may not be satisfied, because the representation giving rise to the estoppel may be general and the detriment incurred by the representee may be small. In these cases, it is said to be more appropriate to regard the estoppel as one with weak requirements, special to agency: see Bowstead and Reynolds (20th edn, 2014) at [2-100] and [8-028]. At [8-127] of that work there is identified a further difficulty in treating cases of apparent authority or ownership as examples of estoppel by representation, namely the rule that an estoppel only operates between the parties to it and their privies, and its alleged corollary that the estoppel raiser cannot acquire

376

Agency, partnership and ownership by estoppel 9.4

d­ isponee but also to divest the owner pro tanto of ownership of the property.5 This must be set alongside the rule that an estoppel only binds the parties to it and their privies.6 Basing himself on this rule, Spencer Bower advanced the proposition in the first edition of this work that estoppel by representation cannot prevent third parties from denying the estoppel raiser’s title and cannot therefore confer a title contra mundum. He went on to maintain that the phrase ‘title by estoppel’ is ‘a highly metaphorical and elliptical mode of indicating the use which may be made of the representation,’ and that a title by estoppel is ‘a mere negative title’.7 In Eastern Distributors Ltd v Goldring the Court of Appeal appeared to support this position, by holding that an apparent owner (or, possibly, apparent agent) could pass a ‘real’ title, while simultaneously doubting whether apparent authority or ownership ought to be regarded as part of the law of estoppel.8 Subsequent decisions of the Court of Appeal have nevertheless made it clear that a transaction the effectiveness of which clearly depends, at least in part, on estoppel by representation9 may nevertheless pass a ‘real’ title, divesting wholly or pro tanto the title of the party against whom the estoppel is raised.10 The position, therefore, is that, in this respect also, the authorities support – or, at any rate, do not impede – the view that apparent authority is an aspect of estoppel. a good title contra mundum. The point affects both classes (‘estoppel from denying existence of agency relationship’ and ‘apparent authority’) to the extent that they depend on estoppel. See further 9.4 and 9.5. 5 6

7

8 9 10

Pickering v Busk (1812) 15 East 37; Fuentes v Montis (1867–68) LR 3 CP 268 (Willes, Keating and Montague Smith JJ). Richards v Johnston (1859) 4 H & N 660; Richards v Jenkins (1887) 18 QBD 451; Simm v Anglo-American Telegraph Co (1879) 5 QBD 188, CA, at 203 per Brett LJ, obiter: ‘an estoppel gives no title to that which is the subject-matter of estoppel. The estoppel assumes that the reality is contrary to that which the person is estopped from denying, and the estoppel has no effect at all upon the reality of the circumstances’. First edition, 1923, [13]. The last phrase quoted is from Lord Lyndhurst LC in Bensley v Burdon (1830) 8 LJ (OS) Ch 85 at 88. The same text was retained up to the third edition, Ch I, [13]. It is, of course, consistent with the view that, if apparent ownership or authority depends on estoppel, only a ‘metaphorical title by estoppel’ can pass. See also In re Goldcorp Exchange Ltd (In Receivership) [1995] 1 AC 74, PC, at 94–G, per Lord Mustill, referring, in the context of estoppel, to ‘the pretence of title where no title exists’. [1957] 2 QB 600, CA, at 610–1 (Devlin J giving the judgment of the Court of Appeal). A ‘real title’ was contrasted with ‘a metaphorical title by estoppel’, no doubt referring to the first edition of this work. See the authorities referred to in n 3. The title thus transmitted is not limited to a ‘metaphorical title by estoppel’. See Mercantile Credit Co Ltd v Hamblin [1965] 2 QB 242, CA, at 270 per Pearson LJ: ‘Under section 21(1) [of the Sale of Goods Act 1893] there would not be a mere estoppel: [the owner] would lose her title and the [buyer] would acquire the title’; Stoneleigh Finance Ltd v Phillips [1965] 2 QB 537, CA, at 577–8 per Russell LJ: ‘the title acquired by the plaintiffs would be a real title, and not merely a right to plead an estoppel’; Snook v London and West Riding Investments Ltd [1967] 2 QB 786, CA, at 803–4 (Russell LJ); Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890, HL, at 918 per Lord Edmund-Davies: ‘the buyer acquires a good title to the goods and not merely a right to plead an estoppel’; and Lloyds Bank Plc v Independent Insurance Co Ltd [2000] QB 110 at 122 per Waller LJ: ‘It is true that a disposition of property can be effective under the doctrine of apparent authority so as to confer “a real title and not merely a metaphorical title by estoppel,” viz a title which can be transmitted to persons unable to rely on the estoppel’. The cases since Goldring thus provide no support for Spencer Bower’s proposition.

377

9.5  Applications of reliance-based estoppel to various relationships

9.5 The case of apparent ownership should be the same as that of apparent authority, although there appear to be few English authorities.11 There is no reason to doubt that, in all or at least some cases, apparent ownership depends on estoppel by representation.12 It is clear that a disposition by a person invested with apparent ownership passes a ‘real’ title and not merely a ‘metaphorical title by estoppel’.13 The notion of ‘apparent ownership’ was part of the ‘principle’ on which the decision in Goldring itself was based.14 If, as the authorities clearly show, apparent agency is a species of estoppel and a disposition by an apparent agent passes a ‘real’ title, there can be no impediment to the view that apparent ownership is itself a species of estoppel, operating, in its dispositive effects, in the same way as apparent agency.15 9.6 Four kinds of representation will be considered: first, B may represent to A that X is his agent (or partner) or has his authority, for certain purposes. Secondly, and conversely, B may represent to A that X is not his agent (or partner), or otherwise associated with or connected with him, but occupies a position entirely independent of him. Thirdly, B may represent to A that X is his principal; or, fourthly, and conversely, B may represent to A that he (B) has no principal.

11 12

13 14 15

Pickering v Busk (1812) 15 East 37 (where, however, estoppel is not referred to); Pickard v Sears (1837) 6 Ad & El 469. This was the view of the New Zealand Court of Appeal in Knight v Matson & Co (1902) 22 NZLR 293, where an agent to whom cattle had been entrusted for sale through an auctioneer was held not to be a mercantile agent. In breach of his actual authority he received from the auctioneer, and appropriated, the proceeds of sale. It was held, in proceedings between the owner of the cattle and the auctioneer, that the owner was estopped from denying the authority of the agent to receive the proceeds of sale, as if he was the owner. Eastern Distributors Ltd v Goldring [1957] 2 QB 600, CA. Goldring, above, at 607–11. It remains unclear how a theoretical reconciliation is to be achieved between (i) the judicial consensus that apparent authority is a species of estoppel by representation, (ii) the submission in the text that apparent ownership is also a species of estoppel, (iii) the ability of an apparent agent or owner to pass a real title in the true owner’s property, (iv) the rule that an estoppel only binds the parties to it and their privies, and (v) the suggestion in Goldring at 607 that ‘privies’ in estoppel do not include purchasers for value without notice. One partial solution might be found in the undoubtedly true propositions that (a) title to goods may pass by contract, and (b) an apparent agent is capable of binding his principal by contract. It is difficult to see how it is possible for an apparent agent and a third party to enter into a contract, binding by estoppel on the principal, without the contract also being able to pass a ‘real’ title in the principal’s goods. To this extent the propositions in (iv) and/or (v) – in particular, the version of (iv) found in Simm v Anglo-American Telegraph Co (1879) 5 QBD 188, CA, at 203 per Brett LJ (see n 6) – may need to be qualified. See further 1.33–1.34 and 11.46 onwards. This approach does not work, however, in the case of an apparent owner: he contracts for himself, not for the true owner, and nothing he does affects the rights of the true owner – eg his contract with the third party is not binding on the true owner – save that he is able to vest in the third party the true owner’s title to goods. The cases in n 10 suggest that Spencer Bower’s proposition must be abandoned or heavily qualified (though Goldring has not been expressly overruled in this respect), or that ‘privies’ in estoppel include purchasers for value without notice, or that the dispositive effects of transactions involving apparent authority or ownership do not depend – or do not depend only – on estoppel, but may also proceed on the basis of a rule of mercantile convenience ensuring the safety of mercantile transactions, which would be to adopt the reasoning of the Court of Appeal in Goldring at 607–8.

378

Agency, partnership and ownership by estoppel 9.7

Holding out as agent 9.7 The application of the doctrine of estoppel to representations of this kind results in the following well-established rules. Where B, by words or acts, or by silence or inaction (if there was a duty on him to speak or act),16 represents to A, or to the public or to a class of which A is a member, that X is his (B’s) agent, or has his authority, either generally,17 or for the purposes of a particular transaction or type of business, and A is induced by such representation to alter his position,18 B is estopped from afterwards disputing, as against A, that X was invested with such agency or authority at the time at which he was so accredited.19 The corollary is that, in the absence of a representation made by B,20 or conduct on B’s part, a representation made by X to A that he (X) is B’s agent cannot give rise to agency by estoppel or ostensible agency, for in such a case there has not been a holding out by B.21 Illustrations of the operation of this rule are abundant and can readily be found in, for example: the authority deemed to be given to a mercantile agent to dispose of goods;22 the apparent authority given by 16

All the circumstances must be taken into account when considering the conduct of the representor: Gurtner v Beaton [1993] 2 Lloyd’s Rep 369, CA, at p 379 per Neill LJ. 17 Apparent or ostensible authority is normally ‘general in character, arising when the principal has placed the agent in a position which in the outside world is generally regarded as carrying authority to enter into transactions of the kind in question’: The Ocean Frost [1986] AC 717, HL, at 777 (Lord Keith). 18 See 5.41–5.48. It seems to be sufficient for the estoppel raiser to show that he entered into a contract believing that the agent had the principal’s authority to contract on his behalf, and only if the principal can adduce evidence that the estoppel raiser is no worse off, taking into account the benefits he has received under the contract, is the estoppel defeated. 19 Egyptian International Foreign Trade Co v Soplex Wholesale Supplies Ltd (The Raffaella) [1985] 2 Lloyd’s Rep 36, CA, at 41 (Browne-Wilkinson LJ); The Ocean Frost, above, at 777 (Lord Keith); Strover v Harrington [1988] Ch 390 (Browne-Wilkinson V-C), at 409–10; Polish Steamship Co v A J Williams Fuels (Overseas Sales) Ltd (The Suwalki) [1989] 1 Lloyd’s Rep 511 (Steyn J), at 514. See also n 31. 20 If X tells A, expressly or by implication, that he has B’s authority to enter into a transaction, this will not normally result in X having apparent authority to bind B: The Ocean Frost, above, at 779 (Lord Keith). It is nevertheless conceptually possible for X to have actual or apparent authority to communicate to A that B has authorised the transaction. In The Raffaella, above, Browne-Wilkinson LJ said at 43: ‘suppose a company confers actual or apparent authority on X to make representations and X erroneously represents to a third party that Y has authority to enter into a transaction; why should not such a representation be relied upon as part of the holding out of Y by the company? By parity of reasoning, if a company confers actual or apparent authority on [X] to make representations on the company’s behalf but no actual authority on [X] to enter into the specific transaction, why should a representation made by [X] as to his [own] authority not be capable of being relied on as one of the acts of holding out?’. In Kelly v Fraser [2013] 1 AC 450, at [12] and [13], the Privy Council endorsed the proposition implicit in this passage. Such a case is one of ‘ostensible specific authority’, described by Lord Keith in The Ocean Frost at 777 as ‘very rare and unusual’. 21 See Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, CA, at 498 (Pearson LJ) and 503 and 506 (Diplock LJ); R v Charles [1977] AC 177, HL, at 183 (Lord Diplock). 22 Pickering v Busk (1812) 15 East 38; Weiner v Harris [1910] 1 KB 285, CA; Turner v Sampson (1911) 27 TLR 200. See 11.22, 11.26 and 11.29, for the provisions of s 2 and ss 8 and 9 of the Factors Act 1889 (ss 24 and 25(1) of the Sale of Goods Act 1979) which apply. See also Ch 3 in connection with estoppel by negligence.

379

9.7  Applications of reliance-based estoppel to various relationships

the maker of a negotiable instrument who signs it in blank to him to whom he hands it, to fill it in;23 company cases, in which the owner of shares or similar securities hands them or other documents of title to a broker, together with a transfer executed in blank;24 or where a representor allows himself to be held out as the person with whom goods may be deposited, by lending his name to the occupier of the premises where the business is carried on, and is thus estopped, as against a depositor, from asserting that such occupier is his tenant, and not his agent, and from setting up a claim to distrain upon the goods for rent on the former supposition.25

Holding out as partner 9.8 The same estoppel arises in cases of partnership as in those of agency, for the partners in a firm are agents for one another.26 Therefore, any person who represents, or allows it to be represented, to another or to a class of which that other is a member, that the relationship of partnership exists between him and a third person is estopped, as against a representee who has given credit to the person so held out as a partner, from denying the existence of the relationship at the time when it was stated to exist.27

No estoppel 9.9 Where, however, the representee fails to establish either a definite and unambiguous representation, or acts and conduct from which such a 23

24

25 26 27

Garrard v Lewis (1882) 10 QBD 30 (Bowen LJ), at 35; Nash v De Freville [1900] 2 QB 72, CA, at 83; Lloyds Bank v Cooke [1907] 1 KB 794, CA. But the apparent authority may be modified by the act of the maker in crossing the cheque ‘not negotiable’: Wilson and Meeson v Pickering [1946] KB 422. See further 11.76 for the provisions of s 20 of the Bills of Exchange Act 1882 which apply. Bentinck v London Joint Stock Bank [1893] 2 Ch 120; Fuller v Glyn, Mills, Currie & Co [1914] 2 KB 168 at 175–7; London Joint Stock Bank v Simmons [1892] AC 201, HL. Transfers in blank are expressly authorised by the Stock Transfer Act 1963 for the purpose of stock exchange transactions, but see also s 67 of the Finance Act 1963. Miles v Furber (1873) LR 8 QB 77 at 82. See s 5 of the Partnership Act 1890. Waugh v Carver (1793) 2 Hy Bl 235 at 246; Gurney v Evans (1858) 3 H & N 122; Martyn v Gray (1863) 14 CB (NS) 824; Hogg v Skeen (1865) 18 CB (NS) 426; Re Pulsford, ex p Hayman (1878) 8 Ch D 11; In re Rowland and Crankshaw (1866) 1 Ch App 421, CA, at 424 (Lord Cranworth LC); Mollwo March & Co v Court of Wards (1872) LR 4 PC 419, at 435 (Sir Montague Smith); Scarf v Jardine (1882) 7 App Cas 345, HL, at 349 (Lord Selborne LC); Tower Cabinet Co Ltd v Ingram [1949] 2 KB 397. The rule, enacted as s 14 of the Partnership Act 1890, reflects the common law: see UCB Home Loans Corporation Ltd v Soni [2013] EWCA Civ 62, CA, at [5] (Lloyd LJ). If the statutory estoppel is narrower in scope than the common law, this is only because it refers to the giving of credit as the only relevant act of reliance on the part of the estoppel raiser. As to this, see Lindley & Banks on Partnership (19th edn, 2010) at [5-43]) (the giving of credit should not be construed in a technical or restrictive sense but as describing any transaction of the firm). In Nationwide Building Society v Lewis [1998] Ch 482, at 487A (Peter Gibson LJ), and in Sangster v Biddulph [2005] PNLR 33, at

380

Agency, partnership and ownership by estoppel 9.10

r­epresentation may reasonably be implied,28 or fails to establish that the representation was made to the representee, or to a class of persons under such conditions of publicity as to justify the inference that it was made to the representee as a member of that class, and was acted upon by him, it has always been held that there is no estoppel against disputing the agency,29 or the partnership,30 as the case may be.

Limitation on authority must be express 9.10 It follows, as a corollary from the main proposition set out above, that the representor, in the circumstances described, is estopped from asserting any limitation upon, or qualification of, the authority represented to have been conferred on the third person, just as much as he is from asserting its non-existence; for, in holding out the third person as his agent, or partner, he is deemed, in the absence of any indication to the contrary, to have represented the apparent authority to be of a general, absolute and unconditional character, unless he can show (and the onus is on him to show it) that, though not so informed by ­himself, [18] (Etherton J), this was accepted as correct without argument. In HMRC v Pal [2008] STC 2442, at [33], Patten J held that giving credit does not include the registration of persons for VAT purposes, but rather denotes ‘a private law transaction of some kind with the partnership which arises either directly or indirectly out of reliance on the representations made’. The section applies even if there is no partnership at all: In re Stanton Iron Co (1855) 21 Beav 164, at 169 (Romilly MR); Bunny (D & H) Pty Ltd v Atkins [1961] VR 61; Spree Engineering & Testing Limited v O’Rourke Civil & Structural Engineering Limited, 18 May 1999, unreported, at [29] (Stow QC); UCB Home Loans Corporation Ltd v Soni, above, at [21] (Lloyd LJ). Where, however, the court’s jurisdiction depends on the de facto existence of a partnership (as under ss 220–1 of the Insolvency Act 1986) this cannot be established by an estoppel, eg by proving that A has held out B as his partner: see In re C & M Ashberg (1990) Times, 17 July (G Lightman QC). See also Revenue & Customs Commissioners v Pal, above, at [35]: in order for an alleged partner to be a ‘taxable person’ for VAT purposes, it is not enough that he be held out or that he held himself out as a partner; he must in fact have been carrying on business in partnership within s 45 of the Value Added Tax Act 1994. 28 29

30

The Suwalki [1989] 1 Lloyd’s Rep 511 (Steyn J). Way v Great Eastern Rly Co (1876) 1 QBD 692, at 695; Farquharson Bros & Co v King & Co [1902] AC 325, HL; Bailey and Whites Ltd v House (1915) 31 TLR 583. In First Sport Ltd v Barclays Bank plc [1993] 1 WLR 1229, the majority of the Court of Appeal held that the wording on a cheque guarantee card issued by the defendant bank did not clearly indicate that the bank would not pay against forged cheques supported by the card, and the bank was accordingly held liable to the representee on a forged cheque. See also Elite Business Systems UK Ltd v Price [2005] EWCA Civ 920; PEC Ltd v Asia Golden Rice Co Ltd [2014] EWHC 1583 (Comm) (Andrew Smith J) (in which the fact that the principal had previously fulfilled unauthorised contracts made by J on its behalf was not enough to amount to a representation that J had authority to conclude contracts for it; cf The Ocean Frost [1986] AC 717, HL, at 777, where Lord Keith said that apparent authority may arise where the agent has had a course of dealing with a particular contractor in which the principal acquiesced, honouring transactions arising out of it); Dzekova v Thomas Eggar LLP [2015] EWHC 2600 (QB) (Stewart J); Galaxy Aviation v Sayegh Group Aviation [2015] EWHC 3478 (Comm) (Andrew Smith J). Carter v Whalley (1830) 1 B & Ad 11; Fox v Clifton (1830) 6 Bing 776; Edmundson v Thompson and Blakey (1861) 31 LJ Ex 207; Spree Engineering & Testing Limited v O’Rourke Civil & Structural Engineering Limited, 18 May 1999, unreported (Stow QC).

381

9.10  Applications of reliance-based estoppel to various relationships

the representee had, from other sources, express or implied knowledge of the limitation, restriction or reservation sought to be set up.31 Difficult questions may arise in the case of modern corporations as to the extent of the apparent authority of an agent.32 9.11 On the other hand, whenever the representee has failed to establish that the authority or agency asserted by the representor was of this absolute, unqualified and unconditional character, the estoppel has always been defeated, and the representor has not been precluded from setting up any restriction or condition which he brought to the notice of the representee at the time of making the representation, or before the representee altered his position to his detriment on the faith of the non-existence of any such qualification.33 9.12 Furthermore, it is to be observed that, even where the representee has proved a representation of general authority sufficient to raise a prima facie case of estoppel against any assertion by the representor of a limitation upon an apparent general authority, it is still open to the representor, in his defence, to show that, although undisclosed by himself, such limitation was, from an external source, actually or presumptively known to the representee. The burden of establishing the representee’s actual or presumptive knowledge is upon the representor: accordingly, wherever this onus has not been discharged, the estoppel, if otherwise good, has always been sustained.34 31

Baines v Swainson (1863) 32 LJQB 281 at 289, per Blackburn J; Edmunds v Bushell and Jones (1865) LR 1 QB 281 at 289; Waugh v H B Clifford & Sons Ltd [1982] Ch 374; The Raffaella [1985] 2 Lloyd’s Rep 36, CA; Dornier GMBH v Cannon (1991) SC 310, Ct of Session, 1st Division; Freeman v Sovereign Chicken Ltd [1991] IRLR 408, EAT; Credit Lyonnais v Export Credit Guarantee Department [1996] 1 Lloyd’s Rep 200 (Longmore J). 32 In British Bank of the Middle East v Sun Life Insurance Co of Canada (UK) Ltd [1983] 2 Lloyd’s Rep 9, HL, a lender wrote to the ‘general manager’ of a company seeking confirmation that the ‘unit manager’ had authority to bind the company to enter into a guarantee. The letter was answered affirmatively by a ‘branch manager’ giving the requisite confirmation. Neither the unit manager nor the branch manager had authority to bind the company to enter into the guarantee, and there was no office of general manager. The company was held not to be bound by either unauthorised representation: the letter had been written to a ‘top manager’ (see at 17 per Lord Brandon) but was not answered by one. In The Ocean Frost [1986] AC 717, HL, the agent was known by the other party not to have general authority to enter into the specific transaction, but it was argued (unsuccessfully) that he had ostensible specific authority to do so. In First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd’s Rep 194, CA, it was held that the senior manager of a provincial branch of a bank had been clothed with ostensible authority to communicate that head office approval for a loan had been given, although he had no authority to sanction the loan. See also Credit Lyonnais Bank Nederland v Export Credit Guarantee Department, above. 33 Australian Bank of Commerce v Perel [1926] AC 737, PC; in Wilson and Meeson v Pickering [1946] KB 422, CA, the crossing of an inchoate cheque ‘not negotiable’ reduced the apparent authority of the agent in consequence of s 81 of the Bills of Exchange Act 1882 (‘Where a person takes a crossed cheque which bears on it the words “not negotiable,” he shall not have and shall not be capable of giving a better title to the cheque than that which the person from whom he took it had’); Yona International Ltd v La Reunion Française Société Anonyme d’Assurances et de Reassurances [1996] 2 Lloyd’s Rep 84 (Moore-Bick J). 34 As in Garrard v Lewis (1882) 10 QBD 30 (Bowen LJ); London and Joint Stock Bank v Simmons [1892] AC 201, HL; Re Henry Bentley & Co and Yorkshire Breweries Ltd, ex p Harrison

382

Agency, partnership and ownership by estoppel 9.14

Continuing nature of representation 9.13 There is another rule of estoppel, namely, the rule as to continuing representations and their revocation, the application of which to the present class of case gives rise to numerous illustrations. It follows from the principles governing these matters enunciated earlier in this work35 that, where A has once held out X as his agent, or partner, to B, or to a class of which B is a member, the representation is regarded as a continuing one, unless and until, before the time when B acts, or further acts, to his detriment on the faith of it, A wholly or partially revokes it, and A is accordingly estopped from setting up against B any withdrawal or restriction of X’s ostensible general authority, as originally represented to exist, of which he has not given B timely notice.36 But no estoppel arises where the representor proves that he gave such notice of revocation to the individual representee, if the original representation was made to a specific person,37 or, if it was made to a class of persons of whom the representee is one, on proof of notice by some means not less effectual to convey the withdrawal or restriction than were the means employed to convey the original ‘holding out’, to any member of that class.38 Where the representor fails to discharge this onus, the estoppel prevails.39

Representations of ownership or non-agency or independence 9.14 This is the converse of the type of case just discussed. It frequently happens that, whether from the motive of giving another a certain status and position, or with the object of safeguarding his own interests from inconvenient cross-claims, or in mere idleness, a man who is principal, or partner, of another, or is an incumbrancer upon his property, furnishes that other with all the indicia of absolute and unincumbered ownership, and either deliberately suppresses, or

(1893) 69 LT 204; Fuller v Glyn, Mills, Currie & Co [1914] 2 KB 168 (Pickford J); Hopkins v T L Dallas Group Ltd [2004] EWHC 1379 (Ch) (Lightman J). 35 See Ch 5. 36 See Carter v Whalley (1830) 1 B & Ad 11, at 13–4 (Parke B); cf the observations of Lord Selborne LC at p 33 of Debenham v Mellon (1880) 6 App Cas 24, HL. See also Scarf v Jardine (1882) 7 App Cas 345, HL, at 356–7 per Lord Blackburn: ‘where a person has given authority to another (it is not peculiar to partnership) the authority being such as would apparently continue, he is bound to those who act upon the faith of that authority, though he has revoked it, unless he has given the proper notice of the revocation’. More recently, see Morgan v Lifetime Building Supplies Ltd (1967) 61 DLR (2d) 178; Crabb v Arun DC [1976] Ch 179, CA, at 193 (Scarman LJ); Rockland Industries Inc v American Minerals Corpn of Canada Ltd (1980) 108 DLR (3d) 513 (Sup Ct of Can); Puplampu v Pathfinder Mental Health Service NHS Trust, EAT, 20 September 2001, Official Transcript, at [6]. See also s 36 of the Partnership Act 1890, setting out the position in the case of partnership. 37 As in Goode and Bennion v Harrison (1821) 5 B & Ald 147; Drew v Nunn (1879) 4 QBD 661, CA; Re Hodgson, Beckett v Ramsdale (1885) 31 Ch D 177, CA. 38 See Godfrey v Turnbull (1795) 1 Esp 371; Williams v Keats (1817) 2 Stark 290; Trueman v Loder (1840) 11 Ad & El 589; cf Willis Faber & Co Ltd v Joyce (1911) 104 LT 576. 39 In re Fraser [1892] 2 QB 633, CA.

383

9.14  Applications of reliance-based estoppel to various relationships

omits to disclose, the existence of his claims upon, or his connection with, the other person, as principal, partner, incumbrancer, or otherwise. He thus provides all the scenic apparatus by which his agent or debtor may pose as unaccountable to anyone. Indeed, he may go further and covertly pull the strings by which the puppet is made to assume the appearance of independent activity. This amounts to a representation by silence and inaction, or by negligence, types which have already been discussed in detail40 – as well as by conduct, that the person so armed with the external indications of independence is in fact unrelated and unaccountable to the representor as agent, debtor, or otherwise, and accordingly estops the representor from afterwards asserting, as against anyone dealing with the supposed independent person as if he were so in reality, the existence of any such relation or accountability, or from setting up any claim, incumbrance, or security which he otherwise would have been entitled to establish against the third person to the exclusion or prejudice of any claim against that person, or any set-off against himself, which may be advanced by the representee. In relation to the sale of goods, the rule has been judicially stated as follows: ‘Where goods are placed in the hands of a factor for sale, and sold by him in circumstances that are calculated to induce, and do induce, a purchaser to believe that he is dealing with his own goods, the seller is not permitted afterwards to turn round and tell the purchaser that the character he has himself allowed the factor to assume did not really belong to him.’41

Another group of cases forming examples of this type of estoppel are those in which it has been declared that, where a man by conduct or inaction, or both, has represented that he is not, or that, having once been, he is no longer, a partner or interested in a company or an undertaking, business, adventure or concern, and has disowned any association or connection with it, or has acquiesced in the determination, by forfeiture or otherwise, of any such interest therein as he may have formerly possessed, he is estopped afterwards, as against that company, from claiming to be a member thereof, and from denying, when that enterprise turns the corner, that independence of and disconnection with it, which he formerly found to his advantage to assert.42 And, generally, whenever a person, having a claim or incumbrance or right against, or on, or in respect of, a third person or his property, either designedly suppresses it, or carelessly omits to assert it at the proper time, and holds out such third person as, or encourages and enables him to present the appearance of, one who is entirely independent and entitled, so far as he (the representor) is concerned, to deal with the property as if it were wholly unincumbered, he is precluded, as against any representee who has, to his detriment, given credit to, or dealt with, the third person on the footing of the entire independence so represented to exist, from afterwards setting up any such

40 See 3.9 onwards, 3.27 onwards. 41 Per Wilde CJ at pp 691–2 of Fish v Kempton (1849) 7 CB 687; cf Borries v Imperial Ottoman Bank (1873) LR 9 CP 38. 42 Prendergast v Turton (1843) 13 LJ Ch 268; Rule v Jewell (1881) 18 Ch D 660; Palmer v Moore [1900] AC 293; Jones v North Vancouver Land and Improvement Co [1910] AC 317, PC.

384

Agency, partnership and ownership by estoppel 9.15

claim, incumbrance or right.43 But the estoppel fails, whenever any representee is unable to establish that the alleged representation of independence or dissociation was made to him either expressly, or by reasonable implication from the conduct, or inaction of the representor;44 or where the only representation proved is of an ambiguous or equivocal character,45 or where the representee, having succeeded in establishing a prima facie estoppel, is met by proof that he had at all material dates actual or presumptive knowledge of the connection between the representor and the third person,46 such knowledge on the part of the representee precluding him from contending that he was induced to act by the representation. It is for the representor to prove that the representee had such knowledge, at least in the sense that the burden lies upon him of adducing such evidence in answer to the representee’s statement that he was induced.47

Holding out a third person as principal of the representor 9.15 Where B represents to A that he is acting for a principal, but does not name him, there is no ground on which B can be estopped as against A from afterwards asserting that he is, and was all the time, his own principal. Obviously there is no inconsistency between the two statements, and the representee, who was content to render himself liable to a principal without ascertaining his name, can have no cause for complaint, since the identity of the principal can make no possible difference to him.48 But it may be otherwise where B represents to A that his principal is X. In that case, B may be estopped, as against A, from declaring at any subsequent time, before the contract or transaction has been wholly performed or carried through, that any person other than X is his principal, or, therefore, that he (B) is his own principal, if the personality of X, from the point of view of skill, financial responsibility or character as compared with that of B, was a material inducement to A to enter into the contract or transaction, in the sense that he would not have done so if he had been informed by B, or had 43

44 45 46 47 48

Rice v Rice (1854) 2 Drew 73; Briggs v Jones (1870) LR 10 Eq 92 (Lord Romilly MR); Gordon v James (1885) 30 Ch D 249, CA; Bickerton v Walker (1885) 31 Ch D 151, CA; Brocklesby v Temperance Permanent Building Society [1895] AC 173, HL; Lloyds Bank v Bullock [1896] 2 Ch 192 (Chitty J); Rimmer v Webster [1902] 2 Ch 163 (Farwell J); Powell v Browne (1907) 97 LT 854; In re King’s Settlement, King v King [1931] 2 Ch 294 (Farwell J). Clarke v Hart (1858) 6 HL Cas 633, at p 671; contrast the cases cited in n 42, which illustrate the kind of conduct, inaction or acquiescence which does amount to a representation of dissociation with the company or concern: Bowie’s Trustees v Watson [1913] SC 326. Shropshire Union Rly and Canal Co v Robson (1875) LR 7 HL 496; Burgis v Constantine [1908] 2 KB 484, CA; Carritt v Real and Personal Advance Co (1889) 42 Ch D 263 (Chitty J). Waring v Favenck (1807) 1 Camp 85; cf Semenza v Brinsley (1865) 18 CBNS 467. Bickerton v Walker (1885) 31 Ch D 151, CA; Hone v Boyle Low Murray & Co (1890) 27 LR Ir 137, CA; Marshall v National Provincial Bank of England (1892) 61 LJ Ch 465. Schmaltz v Avery (1851) 16 QB 655, where a charterparty having been executed by the plaintiffs, described as ‘agents for the freighters’, and the defendants having afterwards declared themselves to be the freighters, it was held that they were not precluded from asserting that they were their own principals, or from claiming, in that character, against the shipowners for breach of the charterparty (per Patteson J, delivering the judgment of the court, at 659–61), and where (at 662–3) Rayner v Grote (1846) 1 M & W 359 was distinguished.

385

9.15  Applications of reliance-based estoppel to various relationships

believed, that B, or any person other than X, was the party in whose skill, integrity or solvency he was to confide;49 and B may equally be estopped by any representation that he was acting as agent only for X, which led A into a transaction which, if the representation had been true, would not have been obnoxious to a statute rendering transactions of the nature in question unenforceable as between principals.50 Where, however, the contract or transaction between the parties has been wholly performed or carried through at the time when the representation is sought to be made against which the estoppel is raised, or where, whether or not this be so, the personality of X is not of the slightest materiality to A, B is not estopped from denying that X is his principal;51 nor is he so estopped in any case when he is able to establish that A had actual or presumptive knowledge that B’s principal was himself, or some person other than X.52

Representations that the representor has no principal 9.16 This is the converse case to that last discussed. Just as the representor may under certain conditions be estopped from denying, so here he may be estopped under corresponding conditions from asserting, that he was at the time of the representation acting solely as agent for a principal. The conditions in the latter class of case are that the representee be proved to have acted to his prejudice on the faith of the non-existence of such principal.53

Questions of law and fact 9.17 It is a question of fact whether, there being evidence both ways, the particular words or acts said to constitute the ‘holding out’ were, or were not, used or done by the representor respectively.54 It is a question of law, however, 49

50

51 52 53 54

It was so stated by Alderson B, delivering the judgment of the Court of Exchequer, in the following passage at p 365 of Rayner v Grote, above: ‘if, indeed, the contract had been wholly unperformed … the question might admit of some doubt. In many cases, such as, for instance, the case of contracts in which the skill or solvency of the person who is named as the principal may reasonably be considered as a material ingredient in the contract, it is clear that the agent cannot then state himself to be the real principal, and sue in his own name; and perhaps it may be fairly argued that this, in all, executory contracts, if wholly unperformed, or if partly performed, without the knowledge of who is the real principal, may be the general rule’. As in Moore v Peachey (1891) 7 TLR 748, where it was held (per Collins J, at 749) that the defendant having represented himself as a turf commission agent, and not a bookmaker, by express statements on his card and book of terms, as well as by other acts, was ‘estopped by his conduct from saying that he betted as a principal’, and from taking advantage of the Gaming Act 1845. This may be inferred from the passage cited in n 49, from Rayner v Grote (1846) 1 M & W 359. This was the actual decision in Rayner v Grote, above: see at 365–6 (Baron Alderson). The only instances in the books appear to be cases of women holding themselves out as a feme sole or widow. For further details, see the fourth edition, [IX.2–12], n 1. As in Filmer v Lynn (1835) 4 Nev & M KB 559; Martyn v Gray (1863) 14 CBNS 824; Debenham v Mellon (1880) 6 App Cas 24, HL, at 32–3; Maddick v Marshall (1864) 17 CBNS 829; Durrant v Holdsworth (1886) 2 TLR 763.

386

Landlord and tenant 9.18

whether there is any evidence at all of such words or conduct, and also whether the alleged, or any, representation can properly be inferred from the proved or admitted or assumed words or conduct of the representor.55

LANDLORD AND TENANT 9.18 Where, by his acts with respect to demised land, a person represents to another that he acknowledges the other as his landlord, or as his tenant (as the case may be), or conducts himself in his dealings with the other in relation to the land in a manner which is consistent only with a recognition and assertion of the subsistence and validity of such a relation between them, he is estopped, as long as the acts and conduct continue, from denying that the other party had an estate or title sufficient to warrant the demise of the land, or (as the case may be) from denying the validity of the other party’s tenancy and his right to enjoy possession of the premises in that character, and from setting up against the other party any title, interest, or right in himself, or in anyone else, which contradicts the right, title and interest so acknowledged.56 It will be noticed that, as in the case of other relationships, the estoppel against disputing the relation of landlord

55 See Carter v Whalley (1830) 1 B & Ad 11; Edmundson v Thompson (1861) 31 LJ Exch 207; M’Iver v Humble (1812) 16 East 169; Dickinson v Valpy (1829) 10 B & C 128; Schmaltz v Avery (1851) 16 QB 655; Russo-Chinese Bank v Li Yau Sam [1910] AC 174, PC; George Whitechurch Ltd v Cavanagh [1902] AC 117, HL; Farquharson Bros & Co v King & Co [1902] AC 325, HL; Morel Bros v Earl of Westmoreland [1904] AC 11, HL; Paquin Ltd v Beauclerk [1906] AC 148, HL; Lloyds Bank Ltd v Cooke [1907] 1 KB 794, CA; Baring v Corrie (1818) 2 B & Ald 137; Wilson v Anderton (1830) 1 B & Ad 450; Miles v Furber (1873) LR 8 QB 77; Société Generale v Metropolitan Bank Ltd (1873) 27 LT 849; Way v Great Eastern Rly Co (1876) 1 QBD 692; Shaw v Port Philip and Colonial Gold Mining Co Ltd (1884) 13 QBD 103; Lea Bridge District Gas Co v Malvern [1917] 1 KB 803; Waller v Drakeford (1853) 1 E & B 749; Herdman v Wheeler [1902] 1 KB 361; French v Howie [1906] 2 KB 674, CA; In re Jones Bros, ex p Associated Newspapers [1912] 3 KB 234; Semenza v Brinsley (1865) 18 CB NS 467; Borries v Imperial Ottoman Bank (1873) LR 9 CP 38; British Linen Co v Cowan (1906) 8 F 704 (Scotland). (For further details concerning these cases, see the fourth edition, [IX.2–13], n 3.) 56 See for instance Cooke v Loxley (1792) 5 Term Rep 4; Mackley v Nutting [1949] 2 KB 55, CA. Spencer Bower stipulated that, in a case of tenancy by estoppel, ‘all the other conditions of a valid estoppel by representation must be satisfied’. It is, however, the case that such a tenancy will arise even if, at the time of the representation, the tenant knows that the landlord does not own the reversion out of which he purports to grant the lease: Morton v Woods (1869) LR 4 QB 293, Ex Ch; E H Lewis & Son Ltd v Morelli [1948] 2 All ER 1021, CA. It should also be noticed, when the requirement of inducement is being considered, that this type of estoppel is one which rests on an assumption of fact derived, not from misrepresentation but from the convention of the parties; cf 8.32 onwards; National Westminster Bank Ltd v Hart [1983] QB 773, CA, at 778. The analogy between this type of estoppel, albeit that the tenancy may be created orally, and estoppel by deed, was noted by Harman J in E H Lewis & Son Ltd v Morelli, above, at 1024. It is the tenancy which creates the estoppel, and not the estoppel which gives rise to the tenancy; the estoppel arises when one or other of the parties wants to deny one of the ordinary incidents or obligations of the tenancy on the ground that the landlord had no legal estate. The basis of the estoppel is that, having entered into an agreement which constitutes a lease or tenancy, he cannot repudiate that obligation: see Bruton v London and Quadrant Housing Trust [2000] 1 AC 406, HL, at 416 (Lord Hoffmann). It is the fact that the

387

9.18  Applications of reliance-based estoppel to various relationships

and tenant is a reciprocal one.57 The obvious fairness of this rule, particularly that side of it which requires that the tenant shall be estopped from disputing his landlord’s title, has often been insisted upon in the authorities. ‘This state of law’, it was said in Cuthbertson v Irving,58 ‘in reality tends to maintain right and justice, and the enforcement of contracts which men enter into with each other (one of the great objects of all law); for so long as a lessee enjoys everything which his lease purports to grant, how does it concern him what the title of the lessor, or the heir or assignee of his lessor, really is?’. And other cases commend the rule for its convenience, policy, good sense and justice.59

Acts and conduct of the tenant which involve a recognition of the landlord’s title Acceptance of lease 9.19 The simplest example of an act by the tenant amounting to a representation and recognition of the landlord’s title is the act of accepting a lease from agreement between the parties constitutes a tenancy that gives rise to the estoppel and not the other way round. A tenancy by estoppel may arise by agreement between the landlord and the tenant: ibid. A tenancy by estoppel of business premises is capable of attracting the protection of Part II of the Landlord and Tenant Act 1954: Bell v General Accident Fire and Life Assurance Corp Ltd [1998] 1 EGLR 69, CA. In First National Bank plc v Thompson [1996] Ch 231, CA, Millett LJ, having at 236 commented that Spencer Bower’s ‘valiant attempt’ to demonstrate that all estoppels other than estoppel by record were subsumed in the single and all-embracing doctrine of estoppel by representation, and were all governed by the same requirements had been shown to be unsound (but see 1.29, 1.104), indicated at 237 that ‘title by estoppel’ covered (a) a species of estoppel by representation, involving a clear representation of title by the grantor, and (b) an example of the common law principle that, quite apart from any representation, a grantor is precluded from disputing the validity or effect of his own grant. At 239 he observed that the former operated so as to estop the grantor from denying that he had the particular title which he had asserted, and he could be estopped even if he had a lesser estate; the estoppel bound the grantor and all claiming under him, whether for value, and with, or without, notice. The latter estopped the grantor from denying that he had a legal title, but no title by estoppel could arise if the grantor had a lesser estate; the grantee would obtain an estate ‘in interest’ but it could not exceed the estate of the grantor; the estoppel did not bind a bona fide purchaser for value without notice. See 8.90 onwards. 57

As to reciprocity generally, in cases of estoppel by representation between two persons in a contractual or other relation, see 6.11. The importance of mutuality in landlord and tenant cases is illustrated in Otago Harbour Board v Spedding (1886) 4 NZLR 272. Here a landlord executed a lease which it had no power by law to grant. It was clear that the landlord could not be estopped form setting up the illegality of the contract. When therefore the landlord contended that the tenant was estopped from denying the validity of the lease, it was held that lack of mutuality was fatal to the submission of estoppel. 58 (1859) 4 H & N 742. 59 See Cooke v Loxley (1792) 5 Term Rep 4, at 5 per Lord Kenyon CJ (‘It ought not to be permitted to a tenant who occupies land by a licence of another to call upon that other to show the title under which he let the land. This is not a mere technical rule, but is founded on public convenience and policy’) and per Grose J on the same page. Cf Parker v Manning (1798) 7 Term Rep 537 at 539 and Alchorne v Gomme (1824) 2 Bing 54 at 61. The rule can be justified on the basis that, historically, title to land in English law was relative, and not absolute.

388

Landlord and tenant 9.20

him and going into possession, which of itself precludes the party so accepting the lease from setting up, as against the party granting it, any plea disputing the existence of an estate in the grantor sufficient to warrant the grant of the lease.60 Generally speaking, not only any person who accepts a lease from another, but anyone who is let into possession or occupation by, or ‘comes under’ another, including a licensee,61 lodger, caretaker, servant and the like, by so doing acknowledges the title of that other to grant the right or licence by virtue of which he occupies the premises, and is accordingly estopped, so long as he remains in occupation, from controverting such title.62 But the transaction must be one of demise, or of licence,63 and the party sought to be estopped must have his grant or receive his possession from the party raising the estoppel.64 9.20 One who is in possession pursuant to a demise or licence from one landlord or licensor may, upon his term or licence coming to an end (for example, in the case of a licence revocable at will, by the death of the licensor), be deemed to have been let into possession afresh by the person who succeeds to the title of that landlord or licensor, notwithstanding that his physical possession has been continuous, and thereupon, by such an act, equivalent to attornment to the new landlord or licensor, as the payment of rent or dues to him, may become estopped as against such new landlord or licensor from denying the title of the latter. Thus in Terunnanse v Terunnanse,65 a licence having been terminated by the death of the licensor, the licensee remained in possession, and thereafter paid dues to the successor of the licensor. It was held by the Judicial Committee that he was estopped thereby from denying the latter’s title; notwithstanding that he had not been let physically into possession by the successor – he was already in 60 61 62

63 64

65

Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580, CA, at 596 (Lord Denning MR). Government of Penang v Oon [1972] AC 425, PC, at 433. 2 Coke on Littleton at 352a (‘Acceptance of an estate’); Cuthbertson v Irving (1859) 4 H & N 742, at 758 (Martin B); Williams v Heales (1874) LR 9 CP 177, at 183–6 (Keating, Brett and Denman JJ); Weeks v Birch (1893) 69 LT 759. The licence cases are illustrated in R v Swifte [1913] 2 Ir R 113 (caretaker of a football ground) and Tadman v Henman [1893] 2 QB 168, in which case it was held to be no estoppel against the alleged licensee, because he was never let into possession of, or went upon, the land, but the absence of any distinction between the case of a licensee and tenant, for the purposes of estoppel, was fully recognised by Charles J at 171. Crofts v Middleton (1855) 2 K & J 194 at 204–5; Government of Penang v Oon [1972] AC 425, PC. ‘There is a distinction’, as pointed out by Patteson J at 206–7 of Hall v Butler (1839) 10 Ad & El 204, ‘between disputing the title of one who has actually let the party into possession, and of one who afterwards claims to be entitled to it’. The following are illustrations of the failure of the estoppel set up on the ground that the party sought to be estopped had not been let into possession of the premises by the party setting up the estoppel: Brook v Biggs (1836) 2 Bing NC 572 (per Tindal CJ at 574); Gaunt v Wainman (1836) 3 Bing NC 69, at p 574 (Tindal CJ); Doe d Marchant v Errington (1839) 6 Bing NC 79, at 83–4 (Tindal CJ) and 84 (Coltman and Maule JJ). [1968] AC 1086, PC. Although the case was from Ceylon, where the law of estoppel had been codified, s 100 of the Ordinance provided that ‘whenever in a judicial proceeding a question of evidence arises not provided for by the Ordinance or by other law in force in Ceylon, such question shall be determined in accordance with the English law of evidence for the time

389

9.20  Applications of reliance-based estoppel to various relationships

p­ ossession at the date of the death of the licensor – he was deemed to have been let into possession afresh,66 and thereafter only the payment of dues was necessary to complete the foundation for an estoppel as to title. Payment of rent 9.21 Payment of rent by a person in occupation of the premises to the person who let him into possession is an acknowledgment by the former of the latter’s right to such rent and therefore of his title as landlord, which the former is accordingly estopped from disputing.67 The payment, however, must be satisfactorily proved, and it must be established that it was expressly or by necessary implication made as and for rent for the premises.68 Where the person receiving the payment was not the person who let the payer into possession, but someone who is claiming title as the latter’s assign, or successor, or otherwise, the mere act of paying the money as and for rent, without more, is not conclusive, and does not estop the payer from afterwards disputing the payee’s title, if he can explain away the payment by showing that he made it in mistake, misapprehension, ignorance or incomplete knowledge of the circumstances of the payee’s title, or of other material facts.69 Still less can he be denied the right and opportunity of showing that any such misapprehension or ignorance was brought about or fostered or encouraged by fraudulent misrepresentation or fraudulent concealment being’. The decision of the Board was therefore one made in accordance with the principles of the common law. 66

On an application of the principle in Foster v Robinson [1951] 1 KB 149, CA, at 157–8, for which see 9.42. 67 And the tenant was accordingly so estopped in Cooke v Loxley (1792) 5 Term Rep 4; Cuthbertson v Irving (1859) 4 H & N 742, affd (1860) 6 H & N 135; Duke v Ashby (1862) 7 H & N 600; Weeks v Birch (1893) 69 LT 759. In Moncure v Cahusac [2006] UKPC 54 there was a five-year lease, with options for the tenant to obtain nine renewals of the lease, with an increased rent at each renewal. The tenant failed to exercise the second option but remained in occupation as if he had, paying the increased rent, which the landlord accepted over the next five years; it was held that the landlord was estopped from denying that the option had been exercised. At [33], Lord Scott suggested that there are two possible explanations for a tenancy arising on the payment and acceptance of rent: an estoppel by representation, or a contract by conduct. 68 See A-G v Stephens (1855) 6 De GM & G 111; Batten-Pooll v Kennedy [1907] 1 Ch 256 (Warrington J). 69 As in Fenner v Duplock (1824) 2 Bing 10, where the party paying the rent was ignorant, or rather was not proved to have been fully aware, that the payee had only an estate pur autre vie in the premises, which estate had expired (per Best CJ at p 11: ‘before he can be so bound, it must appear that he was acquainted with the circumstances of the landlord’s title’); Gregory v Doidge (1826) 3 Bing 474 (per curiam, at 475, 476), a similar case; Doe d Harvey v Francis (1837) 2 Mood & R 57 (per Patteson J at p 58: ‘where a tenancy is attempted to be established by mere payment of rent, without any proof of an actual demise, or of the tenant’s having been let into possession by the person to whom the payment was made, evidence is always admissible on the part of the tenant to explain the payment of rent’); Doe d Higginbotham v Barton (1840) 11 Ad & El 307, a case of payment of rent in ignorance of the fact that the premises had been previously mortgaged by the recipient of the rent (per Lord Denman CJ at 312–3: ‘with respect to the title of a person to whom the tenant has paid rent, but by whom he was not let into possession, he is not concluded by such payment of rent, if he can show that it was paid under a mistake’); Jew v Wood (1841) Cr & Ph 185 (per Lord Cottenham LC at 194), a similar

390

Landlord and tenant 9.23

of material facts on the part of the person receiving the payment, and founding thereon his claim to the benefit of an estoppel.70 But, in the absence of fraud, the payment of rent by the tenant to any person is prima facie evidence of that person’s title; thereafter, it is not sufficient for the tenant to show that the person to whom he has been paying had no title, his receipt of the rent being sufficient until a better title is shown.71 Submission to distress 9.22 Submission to a distress for rent is, in like manner, a recognition of the distrainor’s title as landlord which gives rise to an estoppel.72 Indeed, it is a more conclusive and unequivocal recognition than any voluntary payment of money: for submission to any act which, unless done in the character of landlord, would be a gross outrage, is of itself obviously inconsistent with any attitude but that of acknowledging the distrainor’s right to assume that character; whereas, as has just been pointed out, the mere payment of a sum, or of periodical sums, of money is not an act which, of itself, always and necessarily imports such an acknowledgment. Attornment 9.23 Where a tenant, with full knowledge of the facts, either expressly in writing, or impliedly by acts, such as the payment of rent, attorns tenant to a person other than his original landlord or one who is claiming the estate or interest of such original landlord by assignment, succession, or otherwise, he is ordinarily estopped from questioning the title of the person to whom he has so attorned.73 But here, too, it is open to the party sought to be estopped to explain away the case to the last; Claridge v Mackenzie (1842) 4 Man & G 143, a case of the same class as the first two cited in this note (per Tindal CJ at 153–4, Coltman J at 155, Erskine J at 155–7, and Cresswell J at 157); Knight v Cox (1856) 18 CB 645, where rent had been paid to the plaintiff and executrix and devisee of the administratrix of the survivor of three lessors in ignorance of the facts showing that neither the plaintiff, nor her testatrix, had any title whatever (per curiam, at 650–1); Serjeant v Nash, Field & Co [1903] 2 KB 304, CA, at 314–5 (Stirling LJ) and 316 (Mathew LJ); Batten-Pooll v Kennedy [1907] 1 Ch 256, a case of mere ‘voluntary payment under a supposed legal obligation’ which did not exist: at 268–9 (Warrington J). The rule is recognised in the following cases where the facts were not such as to bring the tenant within its protection: Cooper v Blandy (1834) 1 Bing NC 45, at 52 (Bosanquet J); Carlton v Bowcock (1885) 51 LT 659, at 660 (Cave J). Whether there was such ignorance or mistake is a question of fact: Fenner v Duplock, above, at 11 (Best CJ) and 12 (Burrough J); Claridge v Mackenzie, above, at 153–4 (Tindal CJ). 70

For illustrations of payment of rent by the tenant under a mistake induced by the landlord’s representation, see Rogers v Pitcher (1815) 6 Taunt 202; Gravenor v Woodhouse (1822) 1 Bing 38; Doe d Plevin v Brown (1837) 7 Ad & El 447. The rule is also referred to in Carleton v Bowcock (1885) 51 LT 659. 71 Hindle v Hick Bros Manufacturing Co Ltd [1947] 2 All ER 825, CA. 72 See Panton v Jones (1813) 3 Camp 372, at 373 (Bayley J), Cooper v Blandy (1834) 1 Bing NC 45, at 52 (Bosanquet J). 73 As in Rennie v Robinson (1823) 1 Bing 147, at 149 (Dallas CJ); Morton v Woods (1869) LR 4 QB 293, Ex Ch, at 303 (Kelly CB).

391

9.23  Applications of reliance-based estoppel to various relationships

attornment, and so escape the estoppel to which he would otherwise be subject, by proof that, when he so attorned, he was labouring under mistake or ignorance as to material facts affecting the title of the person to whom he attorned, particularly if such error or ignorance was due to the fraud of that person.74 9.24 Where an equitable assignee of a lease has applied to the landlord for, and has been granted, a consent to a legal assignment to him of the lease, and has thereafter paid rent, but has taken no legal assignment, he may be precluded from contending (by way of defence to an action for rent) that he is not a legal assignee;75 but where an under-lessee in possession has paid rent, while he will thereby be estopped from denying the title of him to whom the rent is paid, yet by these acts alone he will not be estopped from denying that he is the assignee of the lease – for his conduct cannot be said to be unequivocal in this regard.76

Acts on the part of the landlord which involve recognition of the tenancy 9.25 These acts are the counterparts of the acts by which the tenant acknowledges the landlord’s title. The first and simplest of them is the grant of a lease, which act, of itself, imports a recognition of the tenant’s right to possession of the premises as such, and the validity of the lease, which he is accordingly estopped from afterwards contradicting, as against the tenant,77 just as, conversely, the tenant, by the mere act of accepting the lease, is estopped from afterwards denying the right of the landlord to grant it. 9.26 Just as payment of rent by the tenant ordinarily estops him from disputing his landlord’s title, so the acceptance of rent by the landlord ordinarily estops him from disputing his tenant’s right to possession of the premises, as such, and the validity of the lease or demise.78 But the acceptance by a lessor, without more, of rents due under a lease from a stranger who has, without notice to him, stepped into the shoes of a deceased lessee, will not be effective to estop the lessor from asserting a claim to possession.79 And the mere demand of rent by a landlord, after the expiration of notice to quit, is not necessarily even evidence,

74

75 76 77 78 79

Rogers v Pitcher (1815) 6 Taunt 202, at 210; Gravenor v Woodhouse (1822) 1 Bing 38, at 43–4; Cornish v Searell (1828) 8 B & C 471, at 475; Doe d Plevin v Brown (1837) 7 Ad & El 447; Jew v Wood (1841) Cr & Ph 185, at 194; Pearce v Boulton; Boulton v R (1902) 21 NZLR 464, CA. Rodenhurst Estates v WH Barnes Ltd [1936] 2 All ER 3, CA. Official Trustee of Charity Lands v Ferriman Trust Ltd [1937] 3 All ER 85. Cuthbertson v Irving (1859) 4 H & N 742 (Martin B); Ward v Ryan (1875) IR 1 CL 17, at 21; Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580, CA. See 2 Coke on Littleton at 352(a) (‘acceptance of rent’); Strong v Stringer (1889) 61 LT 470, at 472 (Kekewich J); Hartell v Blackler [1920] 2 KB 161, at 165–8 (Bailhache J) and 169 (Sankey J); and cf the landlord and tenant cases on election noted below. Tickner v Buzzacott [1965] Ch 426 (Plowman J).

392

Landlord and tenant 9.31

much less a conclusive recognition, of a new tenancy, or of the continuance of the tenant’s right to possession: it is a question of fact, to be determined with reference to this and the other circumstances of the case, whether such was the intention and effect of the demand.80 9.27 Where the landlord has received the rent in mistake or without any reason to suppose that the term was not properly vested or had ceased to be vested, in the person paying the rent, or otherwise in ignorance or imperfect knowledge of facts giving him a right to refuse the rent, or to put an end to the tenancy, there is no estoppel.81 9.28 Just as the tenant is estopped from disputing his landlord’s title by submission to a distress for rent, and even more unqualifiedly estopped thereby than by voluntary payment, as has already been observed,82 so the landlord is estopped from disputing his tenant’s right to possession, as such, by levying a distress which is acquiesced in by the tenant,83 and even more clearly so estopped than by acceptance of rent, which can be explained, whereas, ‘of course by a distress, the distrainor affirms by solemn act that a tenancy subsists’, and such act ‘cannot be qualified’.84 9.29 Where a landlord without title purports to serve on his tenant a notice to quit, or purports to forfeit the tenancy, he may be estopped from denying the validity of the notice or the forfeiture.85

‘Election cases’ 9.30 As will be seen when the topic of election is later considered,86 the relationship of landlord and tenant furnishes many examples of cases where, if given alternative courses of action of which he may choose one, a landlord’s election becomes binding upon him and precludes him thereafter from pursuing the other.

Who are entitled and bound by the estoppel 9.31 The following persons are liable as successors to the estoppel which in the first instance operates against the representor, whether tenant, or (as the case 80 Blyth v Dennett (1853) 13 CB 178. 81 Stait v Fenner [1912] 2 Ch 504 (Neville J). 82 In 9.22. 83 See Panton v Jones (1813) 3 Camp 372, at 373 per Bayley J: ‘the landlord after distraining cannot bring an ejectment’; Cooper v Blandy (1834) 1 Bing NC 45, at 53 (Bayley J); Doe d David v Williams (1835) 7 C & P 322, at 323 (Patteson J); Walrond v Hawkins (1875) LR 10 CP 342, at 348–50 (Lord Coleridge CJ) and 350–3 (Grove J). 84 Blyth v Dennett (1853) 13 CB 178 at 181. 85 Farrow v Orttewell [1933] 1 Ch 480, CA; Rother District Investments Ltd v Corke [2004] 2 P & CR 17 (Lightman J). 86 In Ch 13.

393

9.31  Applications of reliance-based estoppel to various relationships

may be) landlord: any heir, devisee, or assignee of such representor’s reversion, or term, as the case may be, and, generally, any person who ‘came in’, or is claiming ‘under’ him;87 and any person licensed by a tenant to go or be upon the demised premises,88 but not one who has a mere licence from the tenant to keep goods thereon which were previously his own and who has never acquired any interest in the land itself.89 In Mackley v Nutting90 the personal representative of a deceased person who had been admitted to possession by the plaintiff, and had paid rent thereafter, was held entitled to the benefit of the estoppel which would have been available to the deceased to establish a tenancy by way of a defence to an action for ejectment. But a mortgagee, who has excluded the statutory power of leasing, is not bound by a lease entered into by the mortgagor, and such a lease can take effect only by way of estoppel.91

Limits of the estoppel as between landlord and tenant 9.32 The validity of a lease is dependent on the landlord having a title sufficient to justify its grant; and to deny the existence of such a title is to attack the validity of the transaction into which the parties have entered, by removing its foundation. This is the classic basis of estoppels by convention and estoppels by deed;92 and, as against the landlord from whom he has taken possession, every tenant is consequently estopped from disputing the subsistence and validity of an estate in him, as at the date of the demise, sufficient to warrant the demise.93 But this is the limit of his disability: he is not further or otherwise estopped, because it is only a denial so limited which necessarily results in that contradiction or inconsistency between the original and the new position which, as has already been explained,94 is a condition of any valid estoppel by representation. Thus, in a case in which, at the time of granting the lease, the landlord did not own the legal estate in the land, but only an equitable interest under a contract for the sale and purchase of the land, in proceedings for damages for dilapidations brought by the landlord after the expiry of the term, the landlord was entitled to enforce the tenant’s covenant to deliver the premises in good repair at the end of the term; it was irrelevant to the liability which had arisen at the conclusion of the term that, by the

87

Cuthbertson v Irving (1859) 4 H & N 742, adopting a passage from 2 Williams’ Saunders 418a. This judgment was affirmed by the Court of Exchequer Chamber in a short judgment: (1860) 6 H & N 135. See, further, London and North Western Rly Co v West (1867) LR 2 CP 553, and 6.25–6.29. 88 As in Doe d Johnson v Baytup (1835) 3 Ad & El 188, at 191–2 (Patteson J) and 192–3 (Coleridge J). The liability of a tenant’s licensee to estoppel is recognised by Charles J in Tadman v Henman [1893] 2 QB 168, at 171. 89 Tadman v Henman, above, at 170–1. 90 [1949] 2 KB 55, CA; followed in Whitmore v Lambert [1955] 1 WLR 495, CA. 91 Dudley and District Benefit Building Society v Emerson [1949] Ch 707, CA. But see also Quennell v Maltby [1979] 1 WLR 318, CA. 92 See Grundt v Great Boulder Pty Gold Mines Ltd [1937] 59 CLR 641 (High Court of Australia) at 676. 93 See Cuthbertson v Irving (1860) 6 H & N 135. 94 See 4.4.

394

Landlord and tenant 9.33

time the proceedings had been commenced, the term had expired.95 A tenant may dispute any estate, title or interest alleged by the landlord to be vested in him if, in so doing, he does not expressly or impliedly deny that the landlord had, at the date of granting the lease, an estate, title or interest of a kind adequate to justify the grant of that lease. Conversely a landlord, who refrains from disputing his tenant’s title to possession as such, is not precluded from showing that the nature and quality of the tenancy is other or less than that asserted by the tenant.96 9.33 As to the duration of the estoppel in point of time, a tenant who is estopped from disputing his landlord’s title, or power to grant the lease, at the date of the demise, is nevertheless, if and when that title, or power to grant, subsequently lapses or comes to an end, at liberty to say so, and to contend that the landlord no longer has such title or power, because there is obviously no contradiction between his old and his new version of the facts. But he may still not deny that his landlord had that title or power as at the date of the demise;97 his denial is limited to an assertion that the title or power which the landlord once had, he has no longer. Accordingly, if and when his landlord’s title is determined, subsequently to the grant of the lease, either by his death, if he had an estate for life only, or by the death of another, if his estate was pur autre vie, or by the expiration of his own term, if he was a termor, or by any other means, the tenant, who was theretofore estopped from disputing his landlord’s title, is no longer precluded from setting up against the landlord that the title, which he once had, has now been determined; and the landlord, under the like conditions, enjoys a corresponding freedom against the tenant.98 So, where the landlord’s title to the reversion was determined, but the landlord failed to notify the tenant of that fact, the tenant was not estopped from relying on the determination of the landlord’s title in resisting the landlord’s claim for rent in relation to the period after the determination, even though no third party had made a claim.99 The estoppel, however, continues if there is no strict proof of the subsequent determination of the landlord’s title which, as at the date of the demise, is the subject of the estoppel;100 as, for instance, when it is shown that the title expired before, and not after, the commencement of the tenancy created by the estoppel,101 or where

95

Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580, CA. 96 Ward v Ryan (1875) IR 1 CL 17 at 21. 97 See Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580, CA. 98 In view of the decision in Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580, CA, the older authorities are no longer dealt with in detail. They are: James v Landon (1585) Cor Eliz 36; Brudnell v Roberts (1762) 2 Wils 143, 144; Watson v Lane (1856) 11 Exch 769, 773; Langford v Selmes (1875) 3 K & J 143, 144; Watson v Lane (1856) 11 Exch 220, 226; Weller v Spiers (1872) 26 LT 866; Serjeant v Nash Field & Co [1903] 2 KB 304, CA. Harrison v Wells [1967] 1 QB 263, CA, was overruled in the Industrial Properties decision. 99 National Westminster Bank Ltd v Hart [1983] QB 773, CA. 100 As in Gibbins v Buckland (1863) 1 H & C 732, at 738–9 (Pollock CB) and 739–740 (Martin B). 101 As in London and North Western Rly Co v West (1867) LR 2 CP 553, at 555 (Willes, Keating, Montague Smith JJ).

395

9.33  Applications of reliance-based estoppel to various relationships

the tenant’s evidence proves too much, and shows that the landlord never had any title at all – an assertion which the tenant is clearly estopped from making.102 9.34 It has been said that the tenant may free himself from the estoppel by giving up possession;103 but this is clearly too wide a statement. The mere expiry of his term, and his giving back possession to the lessor in consequence thereof, cannot so avail him; for, notwithstanding that he has given up possession in this way, he may still not dispute his lessor’s title, or his power to grant the lease, and for the duration of the term granted.104 It is only by acknowledging or by being compelled to acknowledge the validity of a claim to possession by some tertius, with the consequence of being put in peril of an adverse claim, that he is freed from the estoppel.105

Eviction of tenant by title paramount 9.35 The estoppels which mutually bind a landlord and tenant are estoppels by convention;106 and, when the lease is de facto as well as de jure ‘disrupted’ by the process of eviction by title paramount, there can be no injustice in allowing a tenant to establish this fact – and, indeed, this has always been allowed, and the tenant is permitted to use the evidence for the purpose of extinguishing completely any right to estoppel which the landlord might previously have enjoyed;107 for it is here a case, not of the mere innocent determination of the landlord’s estate, but of the dispossession of the tenant, and the destruction of his rights, contrary to the implied representation of the landlord at the time of the demise that he (the tenant) could safely accept the tenancy.108 102 As in Wogan v Doyle (1883) 12 LR Ir 69, at 74 (Palles CB). 103 It was so said in the first and second editions of this work, and Spencer Bower cited in support Doe d Knight v Lady Smythe (1815) M & S 347, 348–9; Doe d Manton v Austin (1832) 9 Bing 41, 45; Ward v Ryan (1875) IR 1 CL 17, 20–1; Tadman v Henman [1893] 2 QB 168 (Charles J), at 171. 104 Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580, CA. The estoppel by convention, which binds the landlord and the tenant as to the landlord’s title, will continue to bind the tenant in an action by the landlord for dilapidations, brought after the expiration of the term of the lease. 105 Harrison v Wells [1967] 1 QB 263, CA, was a case in which the tenant in fact enjoyed uninterrupted possession of the demised premises throughout the term. He nevertheless sought to deny the landlord’s title on the basis that his enjoyment might have been disturbed, and was permitted to do so. In Industrial Properties (Barton Hill) Ltd v Associated Electrical Industries Ltd [1977] QB 580, CA, Lord Denning MR held that it had been wrongly decided, and Roskill and Lawton LJJ held that it had been decided per incuriam. 106 See, for example, the judgment of the Court of Appeal, delivered by Harman J, in E H Lewis & Sons v Morelli [1948] 2 All ER 1021, CA, at 1024 onwards. See, however, n 56. 107 So stated or conceded in Parker v Manning (1798) 7 Term Rep 537 (per Lord Kenyon CJ and Ashhurst J at 539); Cooper v Blandy (1834) 1 Bing NC 45 (per Bosanquet J at 52); Hall v Butler (1839) 10 Ad & El 204 (per Patteson J at 207); Cuthbertson v Irving (1859) 4 H & N 742, at 757 per Martin B: ‘if the lessor has no title, and the lessee be evicted by him who has title paramount, the lessee can plead this, and establish a defence to any action brought against him’. 108 Biddle v Bond (1865) 6 B & S 225, at 232–3 per Blackburn J: ‘the case (which was one of bailment, in which ordinarily the representation is by the bailor to the bailee that he may safely

396

Landlord and tenant 9.38

9.36 Actual physical dispossession or expulsion is the most obvious and ordinary form of eviction; but eviction may be proved by less than this, and it is sufficient to prove acts and proceedings on the part of the third person, and reasonably and properly submitted to by the tenant, which are tantamount to actual dispossession by force. Such constructive or symbolic eviction is established by proof that there exists a third person claiming title paramount to the demised premises, that this third person has threatened to evict the tenant unless he attorns, or pays rent to, or makes a new arrangement with, him, and that such an attornment, payment, or arrangement is thereupon made by the tenant in reasonable apprehension that the threats and demands of the tertius are warranted by a title paramount, and are not made gratuitously or in collusion with the landlord.109 And to a prima facie case of estoppel raised by a person claiming as the assignee of the landlord’s reversion, the jus tertii is a sufficient answer without more, that is to say without proving even actual threats, or anything beyond the fact that there exists a tertius who is the real assignee, a persona designata who, if he were to bring ejectment, would be entitled to evict the tenant;110 but it is necessary for the tenant to show such a title in the persona designata as would entitle the latter to a verdict in ejectment.111 So also the jus tertii can be set up by a tenant who is co-operating with any such tertius, and defending himself upon his right and title and on his authority.112

Surrender by act and operation of law 9.37 The principles regulating the surrender of leases by operation of law are substantially the same as those which govern estoppels between landlord and tenant in general, of which such surrender is only one amongst several examples. But, since there are certain peculiar features and incidents to be noticed in the application of the general principles to this particular subject matter, it has been thought desirable to reserve the topic for special and separate examination. 9.38 The tenant may surrender his lease or interest to his landlord either by express agreement, or by acts and conduct from which the law infers a surrender, whether there was any surrender in fact or not, and whatever the tenant’s intention may have been, and for that reason the surrender in the latter case is said to be ‘by act and operation of law’. Surrenders by express agreement are

accept the bailment) is one of eviction by title paramount analogous to that of landlord and tenant’. 109 Hill v Saunders (1825) 4 B & C 529; Mountnoy v Collier (1853) 1 E & B 630; Watson v Lane (1856) 11 Exch 769. 110 Carlton v Bowcock (1885) 51 LT 659, at 661. 111 Hindle v Hick Bros Manufacturing Co Ltd [1947] 2 All ER 825, CA. 112 See Rogers v Pitcher (1815) 6 Taunt 202, as explained and distinguished in Doe d Nepean v Budden (1822) 5 B & Ald 626 (per curiam, at 627). So, in the analogous case of bailments, as to which see below, ‘the bailee can set up the title of another only if he defends upon the right and title, and on the authority of that person’ (per Blackburn J, at 233–4 of Biddle v Bond (1865) 6 B & S 225); but see 9.55 and 9.56.

397

9.38  Applications of reliance-based estoppel to various relationships

by the provisions of the Law of Property Act 1925 required to be by deed;113 but s 52(2)(c) of that statute expressly excepts ‘surrenders by operation of law’. Such surrenders may arise from the relinquishment of possession by the tenant, or from the grant and acceptance of a new interest irreconcilable with the supposition that the old interest is still subsisting. The principles which underlie this doctrine can be found expressed in a judgment of Parke B114 in which it was said: ‘This term (surrender by act and operation of law) is applied to cases where the owner of a particular estate has been a party to some act the validity of which he is by law afterwards estopped from disputing, and which would not be valid if his particular estate had continued to exist. There the law treats the doing of such act as amounting to a surrender. Thus, if a lessee for years accept a new lease from his lessor, he is estopped from saying that his lessor had not power to make the new lease; and, as the lessor could not do this until the prior lease been surrendered, the law says that the acceptance of such new lease is of itself a surrender of the former. So, if there be tenant for remainder to another in fee, and the remainderman comes on to the land and makes a feoffment to the tenant for life, who accepts livery thereon, the tenant for life is estopped from disputing the seisin in fee of the remainderman, and so the law says that such acceptance of livery amounts to a surrender of his life estate. Again, if tenant for years accepts from his lessor a grant of a rent issuing out of the land and payable during the term, he is estopped from disputing his lessor’s right to grant the rent, and as this could not be done during the term, therefore he is deemed in law to have surrendered his term to the lessor.’

9.39 It is clear from the above, and other judicial statements,115 that the rule of surrender by operation of law rests ultimately on the theory that the surrenderor is estopped by his acts from disputing the grant to him of a new interest inconsistent with the continuance of his former interest, and, consequently, from disputing the surrender of such former interest, although there may have been no surrender in fact. Whether the term ‘estoppel’ be actually used, as it is in many of the authorities,116 or not, the basis of the doctrine is unquestionably estoppel by representation.

113 Law of Property Act 1925, ss 52, 205. 114 Lyon v Reed (1844) 1 M & W 285, at 306–7; Phene v Popplewell (1862) CBNS 334; Tarjomani v Panther Securities Ltd (1983) 46 P & CR 32 (Peter Gibson J); Proudreed Ltd v Microgen Holdings plc [1996] 1 EGLR 89, CA. 115 The passage cited in 9.38 from the judgment of Parke B may be compared with the language used by Chitty J in Wallis v Hands [1893] 2 at 83: ‘the foundation of the doctrine that the acceptance of a new lease by an existing tenant operates as a surrender of law is estoppel by act in pais’. In Tarjomani v Panther Securities Ltd (1983) 46 P & CR 32, Peter Gibson J said at 41: ‘It is indeed estoppel that forms the foundation of the doctrine. The doctrine operates when the tenant is a party to a transaction that is inconsistent with the continuation of his tenancy, but in my judgment the conduct of the tenant must unequivocally amount to an acceptance that the tenancy has been terminated. There must either be relinquishment of possession and its acceptance by the landlord or other conduct consistent only with the cesser of the tenancy, and the circumstances must be such as to render it inequitable for the tenant to dispute that the tenancy has ceased’. 116 For example, Oastler v Henderson (1877) 2 QBD 575, at 577–8 and 580.

398

Landlord and tenant 9.42

Physical surrender no longer necessary 9.40 In the first edition of this work, the view was expressed that there could be no effective surrender by act and operation of law unless there was some physical surrender of possession either actual or symbolic (eg by delivery of the key) on the part of the lessee. It has long been settled, however, that this is not the position, and that, while this type of surrender is indeed the consequence in law of the actual relinquishment and acceptance of possession, such relinquishment is not essential in every case to effect a surrender by act and operation of law. The modern rule appears to be that there may be a surrender in law where parties purport to surrender, but without the requisite legal formality, and their agreement results in either (a) an actual relinquishment of possession by the lessee and its acceptance by the lessor, or (b) other acts of the parties whereby it is rendered inequitable that the lessee should thereafter contend that there has been no valid surrender.117 9.41 These requirements will be considered in turn. The first case is that in which a relinquishment of possession is relied upon as supporting the informal agreement to surrender. Such cases offer little difficulty; all that is required is an actual abandonment of possession by the surrenderor and a giving up of such possession to the surrenderee, or, in the case of a new tenancy being granted to a third person, to such new tenant. 9.42 But actual or even symbolic delivery of possession is no longer essential to support a surrender by operation of law. This result may now be brought about by unequivocal118 acts on the part of the surrenderor which make it plainly inequitable for him to contend that there had been no valid surrender. In Metcalfe v Boyce119 the plaintiff landlord sought possession from the defendant, a police constable, who had originally been his tenant. After the tenancy had continued for two years, there was a change in police procedure whereby the chief constable became the tenant of all police houses, the police officers occupying them as servants, and not as tenants. An arrangement was therefore concluded between the landlord, his policeman tenant, and the chief constable, whereby the old tenancy was to be surrendered and the chief constable constituted the landlord’s tenant, he thereafter being responsible for paying rent; the actual occupation continued as before, in the policeman. There was no formal surrender. It was held that, notwithstanding the continuity of occupation, there had been a surrender by act and operation of law, the defendant having ceased to occupy as tenant and begun to occupy as the servant of his master. This decision was followed and approved by the Court of Appeal in Foster v Robinson.120 In that case, Sir Raymond Evershed MR was able to conclude that there was something equivalent to a delivery-up of possession; but the facts appear to show that there was no physical delivery of possession and no symbolic act from which a delivery could be 117 118 119 120

Metcalfe v Boyce [1927] 1 KB 758 (Salter and Mackinnon JJ). This case is considered in 9.42. Relvok Properties Ltd v Dixon (1972) 25 P & CR 1, CA, at 5. [1927] 1 KB 758. [1951] 1 KB 149, CA.

399

9.42  Applications of reliance-based estoppel to various relationships

deduced. It seems settled as a result of these two cases that, while surrender by operation of law will most usually be evidenced by delivery of possession, it may be effected without this, by unequivocal acts which in themselves are sufficient to support the conclusion that there has been a purported surrender followed by such a change of circumstances as will make it inequitable for the surrenderor to deny the validity of the surrender. 9.43 It will be observed that, although in other cases of estoppel by representation the intention of the representor may be of importance, no question whether the parties have a specific intention to make, or, as the case may be, accept a surrender has the slightest materiality, ex vi termini, in cases of surrender by act and operation of law.121 For, as is said by Parke B in the judgment already cited,122 it is the law which: ‘says that the act itself amounts to a surrender. In such case … there can be no question of intention. The surrender is not the result of intention. It takes place independently, and even in spite of intention. Thus, in the cases which we have adverted to, … It would not at all alter the case to show that there was no intention to surrender the particular estate, or even that there was an express intention to keep it unsurrendered. In all these cases the surrender would be the act of the law, and would prevail in spite of the intention of the parties.’

Their intention is, however, relevant to the question whether the new arrangement involves substantially different terms from the former arrangement, for, unless it does, it will merely have effect as a variation of the terms of the lease, rather than as a surrender and re-grant.123 9.44 The next condition of a good surrender by operation of law is the validity of the new lease, or interest, if any, which the surrenderor accepts in exchange for the former lease or interest. If the new lease or interest is void, no surrender can be implied in law from its acceptance, any more than in such case there could be a surrender by express agreement, for ‘the cause, ground, and condition of the surrender fails’. This was the view always taken by Lord Mansfield CJ124 and adopted in the more modern authorities.125 121 Lansdowne Tutors Ltd v Younger (2000) 79 P & CR D36, CA, where the same individual represented the mind of the corporate claimants who were both parties to the alleged surrender. 122 Lyon v Reed (1844) 1 M & W 285, at 306–7 (Parke B). 123 Jenkin R Lewis v Kerman [1971] Ch 477, CA; Take Harvest Ltd v Liu [1993] AC 552, PC; Friends’ Provident Life Office v British Railways Board [1996] 1 All ER 336, CA. 124 In Zouch d Abbot and Hallet v Parsons (1765) 3 Burr 1794 at 1807: ‘no surrender express or implied, in order to, and in consideration of, a new lease, will bind if the new lease is absolutely void, for the cause, ground and condition of the surrender fails’; Wilson v Sewell (1766) 4 Burr 1975 at 1980, where we are told that Lord Mansfield CJ and Hewitt J ‘seemed to agree that, if the lease of 1762 had not been a good lease, then an acceptance of it would not have implied a surrender of the former one of 1755. For it was not reasonable in itself, nor could it have been the intent of the parties, that the acceptance of a bad lease should be an implied surrender of a good one. This … was so resolved in the case of Lloyd v Gregory … If the surrender is intended for a particular purpose, and that purpose, the only motive for it, fails, the surrender ought to fail too’. 125 For example, Canterbury Corp v Cooper (1908) 99 LT 612, affd in the Court of Appeal (1909) 100 LT 597; Barclays Bank v Stasek [1957] Ch 28 (Danckwerts J).

400

Landlord and tenant 9.46

9.45 Lastly, it is essential to show that the new lease or interest is absolutely incompatible with the continuance of the old lease or interest.126 Where a physically severable part of the land is surrendered by the acceptance of a new lease for that part, there is a surrender of that doubly leased part, as to which there is an inconsistency between the two leases, but not of the residue, as to which there is no such inconsistency; on the other hand, a lease for years cannot be surrendered, ‘either by act of the parties, or by act in law’ as to part of the term without being surrendered as to the whole, because the term is not divisible as the land is, and the two leases must therefore be incompatible with one another.127

Tripartite transactions 9.46 So far the discussion has had in view the case of transactions between the surrenderor and the surrenderee only. But there is also the rather more complicated type of surrender which involves a transaction between these two and a third person whom the tripartite transaction is designed to substitute for the surrenderor as tenant. Here, if an arrangement between the parties is shown, or a request by the surrenderor to the surrenderee to let the premises to some specified person, or to anyone, in place of himself, or a consent by the surrenderor to such letting by the surrenderee, and this arrangement, request or consent is accompanied by an actual shifting of possession, the surrenderor vacating the premises, and the new tenant entering, whether such shifting of possession follows upon, or precedes, the arrangement, request, or consent, there results a good surrender by operation of law,128 involving two sets of reciprocal estoppels, the first of which precludes the surrenderor and the surrenderee from disputing, as against one another, the discontinuance of the old tenancy, and the second of which precludes the surrenderee and the new tenant from disputing, as against one another, the establishment of the new tenancy.129 It was at one time thought that, if no actual change of possession was established by the evidence adduced, or if, as in cases where reversionary and incorporeal hereditaments were disposed of, such change of possession could not be established by evidence, there was no surrender by operation of law.130 It now seems that this view cannot stand in its entirety, for Metcalfe v Boyce131 was just such a case, in which a third party was involved, and the continued physical occupation of the original tenant did not

126 See the passage in Parke B’s judgment cited in 9.38. For instances of such inconsistency, see Hamerton v Stead (1824) 3 B & C 478; Peter v Kendal (1827) 6 B & C 703. The latter case was followed in Metcalfe v Boyce [1927] 1 KB 758. 127 See Bacon’s Abridgment, Leases (S), 3. This statement of law was adopted as correct in Holme v Brunskill (1878) 3 QBD 495, CA, at 504. 128 For example, Fenner v Blake [1900] 1 QB 426, although the result has been doubted on the particular facts: see Take Harvest Ltd v Liu [1993] AC 552, PC, where Sir Christopher Slade observed that no intention to create a new tenancy could have been inferred on the facts. 129 Christenson v Furs and Fashions Ltd [1971] NZLR 129. 130 See the first edition of this work, para 287. 131 [1927] 1 KB 758. See further Collins v Claughton [1959] 1 WLR 145, CA, in which the third party was the wife of the former tenant.

401

9.46  Applications of reliance-based estoppel to various relationships

prevent the court from holding, on the facts of that case, that there had been an effective surrender by operation of law.

Feeding the estoppel 9.47 Where the relationship of landlord and tenant rests on estoppel, the very foundation of the estoppel is the assumption that the landlord was in fact not able to devise the interest which he purported to grant. This is the fact which he is estopped from setting up as against his tenant. If, in fact, any interest of any kind effectively passed from the landlord to the tenant by the demise, there is no room or occasion for, and it is not competent to either party to set up, a tenancy by estoppel; the only possible question between the parties in such a case is as to the quality and quantity of the interest which has so passed.132 But an intermediate state may arise in the following circumstances: A conveys or demises land in which he has no estate or interest whatsoever to B, and thereby estops himself from afterwards disputing the validity of such grant or demise, as against B; afterwards, A acquires the estate or interest which, if it had been his at the time of the grant or demise, would have warranted it. On the happening of this event, there is then vested in B by interest that which he formerly had by estoppel only.133 This result has been described, in quaint scholastic metaphor, as ‘feeding the estoppel by the interest’.134 9.48 As mentioned in 9.4 above, the view was expressed in the first edition that, because estoppel operates only between parties and privies, it was impossible to regard estoppels as giving rise to titles to assets. That view has already been qualified.135 The doctrine of ‘feeding the estoppel’ is complementary to tenancy by estoppel, and may be regarded as a further qualification. Where a landlord’s estoppel is ‘fed’ by his subsequent acquisition of a sufficient interest, the result

132 Rawlin’s Case (1587) Jenk 254; Treport’s Case (1594) 6 Co Rep 14 (b) at p 15 (a); Doe d Strode v Seaton (1835) 2 Cr M & R 728 and Cuthbertson v Irving (1859) 4 H & N 742. Indeed, the judgment of Martin B in Cuthbertson v Irving uses the words ‘… if any estate or interest passes from the lessor … there is no estoppel at all’. In Universal Building Society v Cooke [1952] CA, it was attempted to argue from this passage that any estate, legal or equitable in the lessor, was fatal to the operation of the doctrine. It was there held by the Court of Appeal that, while any legal estate in the lessor, sufficient to vest an interest in the lessee by virtue of the demise, left no room for the doctrine, a mere equitable estate in the lessor, having no such effect, was insufficient to exclude its operation. 133 Where a landlord acquires the legal estate, so ‘feeding’ his reversionary estate, any tenancy by estoppel thereupon (but not before) becomes a legal tenancy: see Cuthbertson v Irving (1859) 4 H & N 742, at 754–5 per Martin B: ‘where a lessor by deed grants a lease without title and subsequently acquires one, the estoppel is said to be fed, and the lease and reversion then take effect in interest and not by estoppel’ (emphasis added); Mackley v Nutting [1949] 2 KB 55, CA; Bell v General Accident Fire and Life Assurance Corp Ltd [1998] L & TR 1, CA, at 12, (Mummery LJ); and First National Bank plc v Thompson [1996] Ch 231, CA, at 238 (Millett LJ). 134 Cuthbertson v Irving (1859) 4 H & N 742 at 744–5; Webb v Austin (1844) M & G 701; Rajapakse v Fernando [1920] AC 892 at 897. 135 See 9.4 and 9.5, 1.33–1.34 and 11.46 onwards.

402

Landlord and tenant 9.51

is an effective grant of an estate to his tenant, operating automatically without the need for a further assurance:136 that which was the subject only of an estoppel between the parties becomes, by being ‘fed’, an estate contra mundum.137 True, the last step by which it becomes so is a matter apart from the estoppel – it is the landlord’s acquisition of a sufficient interest; but an essential intermediate step in the perfection of the tenant’s estate is the estoppel by which the grant which would otherwise be a nullity is deemed good between the parties. 9.49 While the field of landlord and tenant provides the most common instances of ‘feeding the estoppel’, this conception is not necessarily confined to cases depending on this relationship between the parties. A vendor of freehold who purports to convey an unincumbered title, on which title a mortgage still validly enures, will be estopped from setting up the mortgage against his purchaser, and, if and when the mortgage debt is repaid, so that he becomes entitled to a reconveyance, the estoppel will be ‘fed’ by these events so as to give the purchaser an unincumbered title to the land – and this against all the world.138 9.50 The metaphor of ‘feeding’ an estoppel – so that what was a right or estate by estoppel becomes a right or estate in interest – has been employed in cases where the right or interest is claimed pursuant to a proprietary estoppel,139 or constructive trust.140 Where the tenancy or constructive trust or proprietary estoppel is created by B in favour of A at a time when B is a contracting purchaser, it creates personal rights only until B is clothed with the legal estate on the completion of his purchase. Such personal rights cannot affect B’s mortgagee, at any rate if the purchase and the mortgage are to be viewed, as will usually be the case, as a single, indivisible transaction, eg where the transfer and mortgage are completed simultaneously:141 there is no scintilla temporis when B has the legal estate subject to A’s rights but as yet unaffected by the mortgagee’s rights.142 9.51 In the third edition of this work, a group of cases often referred to as the ‘building society’ cases was referred to as illustrating the adaptability of old doctrines to the difficulties of modern times. The problem under consideration was whether a building society mortgagee, whose mortgage excluded the statutory power of leasing, was bound by a tenancy agreed to between the purchaser and the tenant before the completion of the purchase, the tenant having been let into 136 First National Bank plc v Thompson [1996] Ch 231, CA, at 237 (Millett LJ). 137 On this ground a ‘forfeiture by estoppel’, effected by a landlord without a legal estate, was held by Lightman J to have been validated retrospectively by subsequent acquisition of the legal estate reversionary on the tenancy by registration of it at the land registry: Rother District Investments Ltd v Corke [2004] 2 P & CR 17, at 316–7. Sed quaere: the feeding of the estoppel is not retrospective: see n 133; M Pawlowski (2011) L & TR 133. 138 Cumberland Court (Brighton) Ltd v Taylor [1964] Ch 29 (Ungoed-Thomas J). 139 Watson v Goldsbrough [1986] 1 EGLR 265, CA. 140 Abbey National Building Society v Cann [1991] 1 AC 56, HL. 141 See Southern Pacific Mortgages Ltd v Scott [2015] AC 385, SC, at [79] (Lord Collins, with whom Lords Sumption, Wilson and Reed agreed). 142 See 9.51.

403

9.51  Applications of reliance-based estoppel to various relationships

possession of the premises before completion. There was a conflict between first instance decisions,143 and the Court of Appeal resolved the question in favour of the tenant on the footing that there must be deemed to be a scintilla temporis between the time of execution of the conveyance by the purchaser, and the execution of the mortgage by him immediately following, during which the tenancy by estoppel of the tenant was ‘fed’.144 But in Abbey National v Cann145 the House of Lords decisively rejected the notion of a scintilla temporis as flying in the face of reality, which was that the purchaser of land relying on a building society or bank loan for the completion of the purchase never acquires anything but an equity of redemption. It is clear, in such cases, that the bank or building society would be unwilling to make an advance on the terms available for owneroccupiers if the property was to be tenanted, and the ‘attractive legal logic’ in the device146 of a scintilla temporis obscured that unwillingness, and allowed mortgagors to take advantage of their lenders in the knowledge that the lender would not in the circumstances have been prepared to make a loan. The House of Lords held that the scintilla temporis was no more than a legal artifice, and overruled Piskor’s case;147 the mortgagee was not bound by the tenancy. Subsequently, in Ingram v IRC,148 Lord Hoffmann commented that ‘I do not think that a theory based upon the notion of a scintilla temporis can have a very powerful grasp on reality’.

BAILOR AND BAILEE 9.52 The principles of estoppel, discussed in the foregoing section in their application to demises of land, are at common law equally applicable mutatis mutandis to bailments of goods,149 but have been substantially affected by the Torts (Interference with Goods) Act 1977.150 At common law, in the same way as one who receives possession of land from another is estopped from denying that

143 Coventry Permanent Economic Building Society v Jones [1951] 1 All ER 901 (Harman J); Woolwich Equitable Building Society v Marshall [1952] Ch 1 (Danckwerts J); City ­Permanent Building Society v Miller [1952] Ch 840, CA, in which, however, the mortgage post-dated the conveyance by a day, so that there could be no doubt that the tenant had a legal tenancy at the time when the mortgage was executed; Mornington Permanent Building Society v Kenway [1953] Ch 382 (Vaisey J). 144 Church of England Building Society v Piskor [1954] Ch 553, CA. 145 [1991] 1 AC 56, HL; Barclays Bank v Zaroovabli [1997] Ch 321 (Scott V-C). 146 Per Lord Oliver, at 92. 147 Per Lord Oliver, at 92–3; Lord Jauncey, at 102. 148 [2000] 1 AC 293, HL. 149 Cheeseman v Exall (1851) 6 Exch 341, where Pollock CB at 344 expressed doubt as to, and Martin B at 346 actively dissented from, the dictum of Heath J at p 764 of Ogle v Atkinson (1814) 5 Taunt 759 that the rule in question is ‘peculiar to the action of ejectment’, and ‘extends to no other action’, since according to Martin B ‘there are numerous cases in connection with wharves and docks, in which if the party entrusted with the possession of property were not estopped from denying the title of the person from whom he received it, it would be difficult to transact commercial business’, a passage approved by the Court of Queen’s Bench in Biddle v Bond (1865) 6 B & S 225, at 231 (Blackburn J). 150 See 9.60.

404

Bailor and bailee 9.53

other’s title to the land, whilst conversely, one who grants the possession of land to another is estopped from denying that other’s right to such possession, so one who, whether as warehouseman, wharfinger, depositary, auctioneer, factor storekeeper, pledgee, agent, servant, or otherwise, has received possession of goods from another on a bailment (or delivery), is estopped from denying his bailor’s title to the goods, whilst, conversely, the bailor is estopped from disputing his bailee’s right to the possession of them for the purposes of the particular bailment, or (as it is usually put) from contradicting the representation which he is deemed to have made to the bailee, at the time and by virtue of the bailment, that the bailee may safely accept delivery and hold possession of the goods. Contracts of hire-purchase151 may fairly be considered as bailments, but they stand in a class by themselves as regards this estoppel of a bailee; the element of sale makes them unique among bailments and has been held, at least in the former class of such agreements, to deprive the bailor of this estoppel.152 Furthermore, hirepurchase is the subject of considerable statutory regulation, most recently under the Consumer Credit Act 1974 in the case of regulated consumer hire agreement, or by virtue of the Supply of Goods and Services Act 1982 in the case of unregulated consumer hire agreements, and, for all of those reasons, the role of the common law estoppels in the case of hire-purchase has been displaced.

Analogy with estoppel between landlord and tenant 9.53 The analogy between estoppel in demises of land and estoppel in bailments of goods is considerable,153 not only in respect of the theory and main principle governing the two species, but also (as will be seen) in respect of the subordinate and derivative rules applicable.154 The actual term ‘estoppel’ is, not indeed universally, as it is in cases of landlord and tenant, but very generally, used in cases of bailment;155 and the utility and commercial convenience, almost amounting to necessity, of applying the doctrine of estoppel by representation to the latter, as well as to the former, type of transaction has on many occasions been judicially recognised.156 151 Helby v Matthews [1895] AC 471, HL; Lee v Butler [1893] 2 QB 318, CA. 152 See the judgment of Goddard J in Karflex v Poole [1933] 2 KB 251. 153 The difficulty of a bailee with whom goods have been deposited having to determine which of two competing claimants to the goods has the better claim may be compared with the difficulty to which the relativity of unregistered title to English land gives rise. 154 The analogy is pointed out by Blackburn J delivering the judgment of the Court of Queen’s Bench at p 232 of Biddle v Bond (1865) 6 B & S 225 and in several of the cases cited in nn 149, 150 and 151. 155 As in eg Knights v Wiffen (1870) LR 5 QB 660, at 665 (Blackburn J) and 666 (Mellor J); Carr v London and North Western Railway Co (1875) LR 10 CP 307, at 316–9 (Brett J); Seton, Laing & Co v Lafone (1887) 19 QBD 68, CA, at 71–2 (Lord Esher MR); Henderson & Co v Williams [1895] 1 QB 521, CA, at 530–1 (Lindley LJ) and 533–4 (AL Smith LJ); China Pacific SA v Food Corporation of India [1982] AC 939, HL, at 959 (Lord Diplock). 156 See the observations of Lord Ellenborough CJ in Stonard v Dunkin (1810) 2 Camp 344 (‘I should entirely overset the security of mercantile dealings were I now to suffer them to contest his title’); of Martin B in Cheeseman v Exall, see n 149; of Mellor J at p 666 of Knights v Wiffen, above (‘certainly very useful, a rule of great equity’); and of Lindley LJ at p 531 of

405

9.54  Applications of reliance-based estoppel to various relationships

Estoppel of the bailee 9.54 The following are typical cases of estoppel against a bailee. First of all (and this is the simplest case), whenever a bailee has expressly acknowledged the title of his bailor to the goods, whether in writing157 or by word of mouth,158 there is obviously a direct representation by him to his bailor which, if all the other conditions of a valid estoppel by representation are satisfied, he is precluded from afterwards contradicting as against such bailor. Secondly, as one who accepts a lease from another is estopped thereby from disputing his lessor’s title to the land, so a bailee, by acts and conduct such as accepting delivery of, or a delivery order for, the goods, and the like, is estopped from afterwards controverting his bailor’s title to the goods.159 Lastly, there is the type of case, analogous to that of one who, having received possession of land from A, afterwards attorns tenant to B, and is thenceforth estopped as against B, in which one who, being in the first instance bailee of the goods from A, afterwards attorns to B in respect of the same goods, by receiving an order from A to deliver them to B, and then giving to B an express recognition of his substituted title, or by transferring the goods from A’s name to B’s in his books, or by similar conduct indicative of attornment, and is accordingly thenceforth estopped from disputing B’s title to the goods, as until that date he had been estopped from disputing A’s title thereto.160 Aliter, however, if having received such an order he simply does nothing, in circumstances in which mere inaction is insufficient to amount to attornment.161

Estoppel of the bailor 9.55 Conversely, just as a landlord is deemed to represent to his tenant that he may solely use and occupy the demised land, so a bailor is deemed to represent to his bailee that he may safely accept the bailment, and he is accordingly estopped from setting up any right or claim which involves a contradiction of such representation.162 Henderson v Williams, below (‘any other decision would be most mischievous in a business point of view’). 157 Eg Henderson v Williams [1895] 1 QB 521, CA; Ross v Edwards & Co (1895) 73 LT 100. In Fairfield Shipbuilding and Engineering Co Ltd v Gardner Mountain & Co Ltd (1911) 104 LT 288 the estoppel failed through the qualified nature of the acknowledgment. A later case is Russian Commercial and Industrial Bank v Comptoir D’Escompt de Mulhouse [1925] AC 112, HL, at 148. 158 Gosling v Birnie (1831) 7 Bing 339; Knights v Wiffen (1870) LR 5 QB 660. 159 As in Betteley v Reed (1843) 4 QB 511; Seton Laing & Co v Lafone (1887) 19 QBD 68, CA. 160 Stonard v Dunkin (1809) 2 Camp 344; Knights v Wiffen (1870) LR 5 QB 660; Biddle v Bond (1865) 6 B & S 225; Dunedin Corpn v Cotton [1923] NZLR 1031; Leigh and Sillivan Ltd v Aliakmon Ltd (The Aliakmon) [1986] AC 785, HL, at 818 (Lord Brandon); In Re London Wine Co (Shippers) Ltd [1986] PCC 121, at 156–160 (Oliver J). 161 Laurie and Morewood v Dudin & Sons [1926] 1 KB 223, at 231 (Bankes LJ) and 237–8 (Scrutton LJ). 162 See Cheeseman v Exall (1851) 6 Exch 341, at 344–5 per Parke B: ‘in the ordinary case of a pledge, the pledgor impliedly undertakes that the property pledged is his own property, and

406

Bailor and bailee 9.58

Illegality 9.56 The defence of illegality which is available to the representor in other cases is available to any bailee, or bailor, as the case may be, who is sought to be estopped. Thus, fraud in the bailor will defeat any estoppel which might otherwise have prevailed against the bailee.163 So, also, there is no estoppel where the bailee did not voluntarily make the alleged acknowledgment of his bailor’s title, as was held in a case where common carriers delivered up to the real owner, on his demand, goods which they had received for carriage from one who was not the owner, and it was held that there was no estoppel, the ground of the decision being stated as follows: ‘the defendants were common carriers, and therefore bound to receive the goods for carriage. They could make no inquiry as to the ownership. They had never voluntarily raised the question; it was raised by the demand of the real owner, before the defendants had parted with the goods. The law would have protected them against the real owner, if they had delivered the goods in pursuance of their employment, without notice of his claim. It ought equally to protect them against the pseudo-owner from whom they could not refuse to receive the goods, in the present event of the real owner claiming the goods and their being given up to him. The compulsory character of the employment of a carrier furnishes ample ground for so holding.’164

9.57 The rules, already discussed, as to the right of a tenant to show that his landlord’s title has come to an end, whilst not disputing his title to demise in the first instance, apply equally, mutatis mutandis, to the case of a bailee, who is not estopped from setting up that his bailor’s title to the bailed chattels has been defeated by matters arising subsequently to the bailment.165

Eviction by title paramount 9.58 So also, the right of a tenant to set up eviction by title paramount, and generally, under certain conditions to set up the jus tertii against his landlord, is accorded, under the like conditions, to a bailee as against the bailor of chattels. may safely be returned to him’); Biddle v Bond (1865) 6 B & S 225, at 232 per Blackburn J: ‘in the ordinary class of bailment, such as the present’ (a case of goods placed in the hands of an auctioneer for sale) ‘the representation is by the bailor to the bailee that he may safely accept the bailment’; Ross v Edwards & Co (1895) 73 LT 100 where, at 101, the reciprocal character of the estoppel is insisted upon: for whilst, on the one hand, it is clear that the bailee, after acknowledging that he holds the goods on account of the bailor, cannot say to the bailor ‘the goods are not yours’, on the other hand, ‘the bailor represents to the bailee that he may safely accept the bailment’. 163 Eg Hardman v Willcock (1832) 9 Bing 382n; Cheeseman v Exall (1851) 6 Exch 341. 164 Sheridan v New Quay Co (1858) 4 CBNS 618, at 649–650 (Willes J delivering the judgment of the court). 165 Thorne v Tilbury (1858) 3 H & N 534, at 540 per Watson B: ‘the defendant must be at liberty to show that the plaintiff had a defeasible title, and that such title has been defeated’. At 539, Bramwell B is careful to note that ‘the case is analogous to one where a tenant says to his landlord, “you had a title when you let me into possession, but have not now”’.

407

9.58  Applications of reliance-based estoppel to various relationships

The eviction may occur, in its simplest form, where the true owner physically takes possession of the goods;166 but it may follow from a judgment awarding him the property in them167 or even from a command from the true owner which it is proper for the bailee to comply with, and unreasonable for him to resist.168 In such circumstances the estoppel will be defeated and, although it is certainly incorrect to say, broadly and unconditionally, that a bailee can always set up the jus tertii,169 it is a quite sound proposition that it is always open to a bailee to do so if he is content to stand or fall with the case of the tertius, and if he defends under his authority and title.170 But where the tertius joins with the bailor, and their actions are heard together, the bailee will be precluded from pleading the jus tertii against his bailor and collaterally setting up his bailor’s title against the tertius.171 9.59 But, as in landlord and tenant cases, ‘it is not enough that the bailee has become aware of the title of a third person, … nor is it enough that an adverse claim is made upon him so that he may be entitled to relief under an interpleader’.172 Accordingly, any bailee who does not profess to recognise the title of the tertius any more than he does that of the bailor but defends purely in his own interests cannot escape the estoppel.173 And where it is not a case of the ­tertius

166 Eg Shelbury v Scotsford (1602) Yelv 23. 167 As in Ross v Edwards & Co (1895) 73 LT 100, PC, at 101 per Lord Macnaghten, delivering the judgment of the Judicial Committee: ‘if there is that which amounts to eviction by title paramount, the bailee is discharged from his promise … In the present case, Edwards & Co did not dispute the title of the bailor while they were the bailees. But there was eviction by title paramount. The goods were adjudged to belong, not to Ross & Co, but to Hurteaux et Frere’. 168 As in Wilson v Anderton (1830) 1 B & Ad 450, where the tertius was admittedly the true owner, and, therefore, after the claim was made by him, the bailee was not merely entitled, but bound, to refuse redelivery to the bailor, and submit to the demand of the person whom he acknowledged as the real owner (per Lord Tenterden CJ at 456, Littledale J at 456–7, and Taunton J at 458). 169 At p 763 of Ogle v Atkinson (1814) 5 Taunt 759, Gibbs CJ stated nakedly that ‘if the property is in others’ the bailee may set up the jus tertii. But it was afterwards pointed out by Pollock CB at p 537 of Thorne v Tilbury (1858) 3 H & N 534 that this statement needs the qualifying addition ‘only if he depends upon the right and title and by the authority of such other’. And this observation was approved by the Court of Queen’s Bench at p 234 of Biddle v Bond (1865) 6 B & S 225, where it is also said, at 232, that ‘the position of an ordinary bailee … is very analogous to that of a tenant who, having accepted the possession of land from another is estopped from denying his landlord’s title, but whose estoppel ceases when he is evicted by title paramount’. 170 As in Hardman v Willcock (1831) 9 Bing 382n (where the bailee was defending under the title and by the direction of the third person, from whom he had received an indemnity). But nowadays, it is almost invariably the case that the bailee would interplead, and avoid altogether the risk of falling together with the tertius. 171 In re Savoy Estate Ltd, Remnant v Savoy Estate Ltd [1949] Ch 622, CA. 172 Biddle v Bond (1865) 6 B & S 225, at 233–4. 173 As in Rogers, Sons & Co v Lambert & Co [1891] 1 QB 318, CA, in which case the bailees did not even pretend that they withheld the copper in question from the bailors under the authority or upon the right of any of the various other claimants, nor did they interplead, but, on the contrary, in answer to interrogatories, avowed that they were defending the action solely in their own interests (per Lord Esher MR at 323–6, Lindley LJ at 327 and Lopes LJ at 327–8). Cf Sadler, ex p Davies (1881) 19 Ch D 86, CA, where the bailee, with full knowledge of the

408

Bailor and bailee 9.61

intervening after the bailment, but of the bailee having full knowledge of an adverse title in a third person acquired by him before the bailment, and yet, with that knowledge, accepting the bailment, there cannot be said to be any eviction by title paramount;174 nor is there if the bailee fails to prove the title paramount of the tertius, or if the tertius is not shown to have even made any claim, or to have persevered in it after it is made.175 There is nothing unfair to the bailee in these rules, because, if in difficulty and doubt, he can always extricate himself, by resort to interpleader proceedings, from any position in which he is exposed to cross-fires.176

Statutory modification by the Torts (Unlawful Interference with Goods) Act 1977 9.60 The Torts (Unlawful Interference with Goods) Act 1977 provides by s 8(1): ‘The defendant in an action for wrongful interference shall be entitled to show, in accordance with rules of court, that a third party has a better right than the plaintiff as respects all or any part of the interest claimed by the plaintiff, or in right of which he sues, and any rule of law (sometimes called jus tertii) to the contrary is abolished.’

By s 7(2) of the same Act: ‘In proceedings to which any two or more claimants are parties, the relief shall be such as to avoid double liability of the wrongdoer as between those claimants.’

9.61 The provisions of these sections, and of procedural rules of court made under them, are designed to prevent the possibility which arose at common law that the defendant might find himself sued by two claimants, each having a different interest in goods (for example, a proprietary interest and a security interest), and be liable to each of them. Protection against the converse mischief, that a defendant adverse claim of a bill of sale holder, did not attempt to show that it was good as against his bailor, the trustee in bankruptcy, whose title, so far as he (the bailee) was concerned, was wholly unchallenged, nor did he resort to interpleader (per Jessel MR at 92, and Lush LJ at 92–3, distinguishing Biddle v Bond (1865) 6 B & S 225). 174 As in Gosling v Birnie (1831) 7 Bing 399, at 346 per Alderson J: ‘he cannot afterwards be allowed to dispute that title upon grounds with which he was fully acquainted when he made the admission’, the ‘grounds’ being that the bailor had sold the timber in question to a third person previously to the bailment. 175 Bettely v Reed (1843) 4 QB 511, at 517–8 per Lord Denman CJ: ‘to allow a depositary of goods or money who has acknowledged the title of one person to set up the title of another who makes no claim, or who has abandoned all claim, would enable the depositary to keep for himself that to which he does not pretend to have any title in himself whatsoever’. This statement of law was accepted by the Court of Queen’s Bench in Biddle v Bond (1865) 6 B & S 225, at 233–4 (Blackburn J). 176 See Wilson v Anderton (1830) 1 B & Ad 450; Biddle v Bond (1865) 6 B & S 225, at 234; Re Sadler, ex p Davies (1881) 19 Ch D 86, CA; Rogers, Sons & Co v Lambert & Co [1891] 1 QB 318, CA.

409

9.61  Applications of reliance-based estoppel to various relationships

might seek to set up a spurious third party claim as a defence to the claimant’s claim, is conferred by the requirement that a defendant must establish his own title, and the requirement that the third party whose title the defendant is setting up must be notified, so that he has the opportunity to vindicate any claim which he may have to the goods. The provisions of s 8 apply, however, expressly only to actions for wrongful interference with goods, and if the bailor sues for damages for breach of contract, or for breach of the bailee’s common law obligations.177

PATENTEE AND LICENSEE 9.62 The principles of estoppel by representation operate as between the owner of a patent for an invention and his licensee in much the same way as they have been seen to operate as between landlord and tenant.178 The analogy between the two positions, as regards estoppel, has been described by Lord Blackburn as ‘very close’ and even as ‘perfect’.179 There is the same reciprocity in the representations, and in the resultant estoppels. On the one hand, a licensee who has used and enjoyed a licence granted to him by the owner of the patent, like a tenant who has been let into possession of the premises demised to him, or a bailee who has received goods on a bailment, is deemed to acknowledge the title of his licensor, and the validity of the patent, by the mere act of accepting the licence, as much as he is by any express recitals and representations to that effect which may be contained in the instrument whereby the licence is conferred, and he is accordingly estopped, as against the licensor, from afterwards disputing such title or validity by setting up that the patented invention was not used, or was not useful, or that the patentee was not the first and true inventor thereof, or that the specification was defective or was not enrolled within the period prescribed by statute, or on any other grounds.180 On the other hand, just as a landlord is estopped from denying his implied representation to the tenant that the latter has a right to use and enjoy the demised premises, or a bailor from denying his implied representation that the bailee may safely accept the bailment, and receive and return the goods, so the owner of the patent, by the mere grant of a licence to another, is deemed to represent to such licensee that he may safely work and enjoy the licence, and is accordingly estopped, as against him, from afterwards denying such representation on the ground of the invalidity of his own patent, or otherwise.181 It should, however, be noted that if a nochallenge clause in a patent assignment were to be struck down as contravening

177 See Palmer on Bailment (3rd edn, 2009), pp 285–6. 178 The analogy is pointed out by Lord Kenyon CJ at p 441 of Hayne v Maltby (1789) 3 Term Rep 438, and by Patteson J at p 294 of Bowman v Taylor (1834) 2 Ad & El 278. See now Xtralite (Rooflights) Ltd v Hartingdon Conway Ltd [2003] EWHC 1872 (Ch) (Pumfrey J). 179 At pp 435–6 of Clark v Adie (No 2) (1877) 2 App Cas 423, HL. 180 Bowman v Taylor (1834) 2 Ad & El 278; Bowman v Rostron (1835) 2 Ad & El 295n; Hills v Laming (1853) 9 Exch 256; Noton v Brooks (1861) 7 H & N 499; Clark v Adie (No 2) (1877) 2 App Cas 423, HL. 181 Per Patteson J at p 294 of Bowman v Taylor (1834) 2 Ad & El 278. Cf Chanter v Leese (1838) M & W 295, Heugh v Chamberlain (1877) 25 WR 742.

410

Patentee and licensee 9.65

Article 81(1) of the European Community Treaty, it would seem unlikely that the same result could be arrived at by application of the doctrine of estoppel.182 9.63 It must, of course, be shown by the licensor that the party sought to be estopped was a licensee. It is not enough to show that such person had merely agreed to purchase a licence,183 or that he had merely purchased an article manufactured according to the patented invention, on the sale of which the owner of the patent had imposed restrictive conditions, for such a purchaser is entitled to rely on his rights as such, and consequently to dispute the validity of the patent, and cannot be forced to assume the less favourable character of a mere licensee, unless he chooses to do so.184

Licence never used 9.64 If it appears that the licensee has never used the licence, then, as in the case of an alleged tenant who has never occupied the demised premises, and was not let into possession by the alleged landlords, there is no estoppel.185

Exclusive licence does not found estoppel 9.65 Where the owner of the patent purports to grant an exclusive licence, he not merely represents to the licensee, as in the ordinary case, that he can safely use the invention as against himself; but he bargains with him that he can safely use it as against the rest of the world, which bargain is broken by the owner of a patent which is invalid. It follows, therefore, and a fortiori, that an exclusive licensee can never be estopped from disputing the validity of the patent.186 182 See Robertson, ‘Is the Licensee Estoppel Rule still Good Law? Was it ever?’ [1991] 10 EIPR 373. 183 Baxter v Combe (1850) 1 Ir Ch R 284, at 288–9. 184 Gillette Safety Razor Co v A W Gamage Ltd (1909) 25 TLR 808, where the plaintiffs were in the habit of selling razors manufactured according to the patent of which they were the owners in equity, enclosed in cardboard boxes, on the outside of which there was an announcement that the razor was not to be sold for less than one guinea. The defendants, having bought a razor contained in one of those boxes, sold it for a less sum than one guinea. In an action for an injunction, the defendant pleaded the invalidity of the patent, to which the plaintiffs set up estoppel, but Parker J at 808 held that the defendants could not be forced into the position of licensees from the plaintiffs: they were merely purchasers, and had a right to rely on their title as such, and were therefore in no way estopped from attacking the plaintiffs’ patent. 185 As in Chanter v Leese (1838) M & W 295 where, it not appearing that the defendant ever accepted or enjoyed any part of the patents for the use of which the plaintiff, the patentee, had granted him an exclusive licence, it was held, on demurrer, that it was open to the licensee to challenge the novelty of the invention, and the validity of the patent (per Lord Abinger CB at 311, 313). Cf Gillette Safety Razor Co v A W Gamage Ltd, above. 186 This was the case in Chanter v Leese, above, which, on this ground, is distinguished in Besseman v Wright (1858) 6 WR 719 where the licence was not exclusive (per Crompton J who, at 719, points out that there ‘the bargain was for an exclusive right which could not be given; but here the plaintiff only says, as against me you can use the patent; but he says nothing as against the rest of the world’).

411

9.66  Applications of reliance-based estoppel to various relationships

9.66 Just as in cases of landlord and tenant, where the tenant cannot dispute his landlord’s title unless and until he gives up possession, and renounces his tenancy, and thereby puts himself in a position to assert an independent and adverse claim, so a licensee can only attack the patent which he is licensed to work if he first repudiates his character of licensee, and gives notice to his licensor of his intention thenceforth to use the invention in his own right, whereupon the latter is set free to raise the question by an action for infringement under fair conditions, which otherwise would not be possible.187

Limits on the estoppel 9.67 As in the analogous case of landlord and tenant, on the cesser of the licensor’s title, or the ouster of the licensee by title paramount, the latter is ‘unmuzzled’, and is no longer subject to the estoppel by which he was previously bound.188 9.68 It has already been pointed out that it is always competent to a landlord, or tenant, to set up that the land in respect of which he is sought to be estopped did not form part of the demised premises. Analogously, a licensee is not precluded from discussing the exact extent and boundaries of the patent rights of his licensor, and from setting up that his own operations did not come within the ambit of those rights; for this is not to dispute the existence or validity of such rights, whatever they are, which is all that he is estopped from controverting.189 And where a licensor institutes a claim against a licensee for infringement of the patent in respect of acts outside the limited area of the licence, there will be no estoppel against the licensee for neither the claim nor the defence is founded upon the licence.190 9.69 As in cases of estoppel by representation in general, and landlord and tenant cases in particular, fraud in the party setting up the estoppel, as, for instance, where it is shown that the licensor, when granting the licence, knew that the patent was void,191 is a good defence. 187 Lawes v Purser (1856) 6 E & B 930, at 933–5 (Lord Campbell) and 936 (Erle J); Crossley v Dixon (1863) 10 HL Cas 293, at 310 (Lord Chelmsford). 188 See Hayne v Maltby (1789) 3 Term Rep 438, at 441 (Lord Kenyon CJ) and 442 (Buller J), whose observations are so far correct, although the decision itself clearly wrong, which was that the equivalent of such ouster by title paramount is established by mere proof that the patent is void. 189 This was recognised in Crossley v Dixon (1863) 10 HL Cas 293, at 305, 308 (Lord Westbury LC), and also in Clark v Adie (No 2) (1877) 2 App Cas 423, HL, by Lord Cairns LC, at 426; and also at 435–6 by Lord Blackburn, who compares the ‘very closely analogous’ position of a tenant who is always at liberty to show that the land in respect of which he is said to be estopped from disputing his landlord’s title did not form part of the land demised. 190 Fuel Economy Co Ltd v Murray [1930] 2 Ch 93, CA. This passage in the text was cited with approval in the judgment of Lord Hanworth MR at 107. 191 So implied by Lord Campbell LC, at p 934 of Lawes v Purser (1856) 6 E & B 930 (‘fraud is not alleged’), and so stated by Erle J at 936 (‘I am decidedly of opinion that if the plaintiff had then known that his patent was void, this would prove fraud on his part; but that is not alleged’).

412

Customer and banker 9.71

CUSTOMER AND BANKER Customer estopped by negligence in the drawing of cheques and the like 9.70 There is a duty owed by the customer to the banker to use reasonable care in the preparation and delivery of any cheques which he may desire the banker to honour on his behalf out of the balance to his credit at the bank, or of any other order or mandate which he may give to his banker, as such, for execution on his behalf. It follows that any inaction or negligence on the customer’s part in breach of such duty may operate as the foundation of an estoppel against him in favour of the banker. The exact nature and extent of this duty, and of the estoppel arising front the customer’s neglect to discharge it, has already been discussed in detail, and illustrated, in the part of this work which is devoted to the subject of representation by silence and inaction.192

Banker estopped by entries in passbook in certain cases 9.71 Secondly, the book in which the banker renders to the customer an account of his dealings, as banker, with the customer’s funds in his hands, commonly called the ‘passbook’ (as distinct from other banking books, such as a ledger, in which the banker records such transactions for his own private use), is obviously of a nature to create estoppels against the banker. It was, indeed, at one time considered that entries to the credit of the customer in the passbook are only prima facie evidence against the banker193 but it is now established that the customer, if he in fact believes himself to have been accurately credited with a particular sum in the passbook, and acts upon such belief to his ­prejudice, as, for instance, by drawing a cheque on the faith of the supposed balance which the bank dishonours for insufficiency of assets, is entitled to rely upon the entry, not merely as evidence in his favour, but as a representation which, if not corrected before being acted upon, the banker is estopped from 192 See 3.20 for a general description of the nature and limits of the duty owed by a customer to his banker. 193 See Commercial Bank of Scotland v Rhind (1860) 3 Macq 643, HL, per Lord Campbell LC at 651–2. This decision may be fully justified by the fact that it was not shown in this case that the customer had moved to his detriment. Cf the decision of the Privy Council in Gaden v Newfoundland Savings Bank [1899] AC 281, at 286: ‘The entry in the passbook has been much relied upon as showing that the respondents accepted the cheque as cash; bus such entries are not conclusive; they are admissions only, and, as in the case of receipts for the payment of money, they do not debar the party sought to be bound by them from showing the real nature of the transactions which they are intended to record’. But, here again, it was not suggested that the customer had acted to his prejudice on the faith of the entry, which was, accordingly, a mere receipt, and, as such, not even capable of inducing the person to whom it was given to take any fresh step to his prejudice. The statement above cited is not sufficiently guarded: it is only correct if understood (as it was probably intended to be) as limited to entries in a passbook which are naked receipts, and nothing more. As to the different operation, by way of estoppel, of these two distinct classes of receipt, see generally 5.38 onwards.

413

9.71  Applications of reliance-based estoppel to various relationships

­disputing.194 It is not, however, sufficient for the customer to demonstrate that he has spent the money; he will have to demonstrate that he has changed his way of living in a manner which he would not have done if he had not believed that he was richer than he was.195 Where the bank committed a breach of a specific separate fiduciary duty owed to its customer to advise him to obtain independent legal or financial advice in connection with a poor-quality and high-risk investment for which it proposed to lend him money, however, it was estopped from recovering its loan by reason of its breach of duty in failing to advise him to seek such advice.196

Banker not estopped by honouring cheque 9.72 The mere fact that a banker pays a cheque presented to him for payment, on which the signature of the customer has in fact been forged, but in a manner which prudent inspection could not detect, cannot estop the banker in a subsequent action against the payee for moneys paid in mistake of fact from setting up the forgery, even if the cheque was presented for special collection. Any representation by the banker by such payment can be no more than that he believed the signature to be genuine.197 A bank will not, however, be able to rely on the validity of the transaction, either by way of estoppel or in support of a defence of change of position, where the underlying contracts have been void ab initio.198 Collateral promises made by a bank will also not give rise to a title based on estoppel over assets held by the bank.199

Customer not estopped by passbook 9.73 On the other hand, the conduct or inaction of the customer in returning to the banker, without correction or comment, a passbook in which he is

194 Holland v Manchester and Liverpool District Banking Co (1909) 25 TLR 386, per Lord Alverstone CJ at 386, who there cited and adopted the observations made by Bigham J at p 470 of Akrokerri (Atlantic) Mines Ltd v Economic Bank [1904] 2 KB 465: ‘the entries in the bank’s ledger did not make the bank holders for value … It might have been different if the entries had been made in the pass book, for that book belongs to the customer, and entries made in it by the bank are statements on which the customer is entitled to act’. See United Overseas Bank v Jiwani [1976] 1 WLR 964 (MacKenna J), where the plea failed, on the facts, on the ground of no detriment. 195 United Overseas Bank v Jiwani, above. 196 Hong Kong Bank of Canada v Phillips [1998] Lloyd’s Rep Bank 343 (Manitoba Court of Queen’s Bench, Canada). 197 National Westminster Bank Ltd v Barclays Bank International Ltd [1975] QB 654 (Kerr J). 198 South Tyneside Metropolitan Borough Council v Svenska International plc [1995] 1 All ER 545 (Clarke J). 199 In re Goldcorp Exchange Ltd (in receivership) [1995] 1 AC 74, PC. A representation made by or on behalf of an insolvent company as to the storage, safekeeping, insurance and maintenance of a stock of gold bullion could not confer title over generic goods when there was never a fixed bulk of goods from which an individual title could be derived.

414

Customer and banker 9.75

e­ rroneously debited, though prima facie evidence against himself,200 certainly does not, of itself, and without more, amount to a representation or acknowledgment of the accuracy of the entry, because the customer owes no duty to the banker to examine the entries at all, or to look for errors therein, and cannot, therefore, be estopped from proving their inaccuracy, and from disputing his liability in respect thereof, merely because he omitted to take a step which, in his own interests, it would have been prudent and business-like to take, or because his examination of the passbook was so careless that he failed to notice any error therein.201 9.74 It will be otherwise, of course, if the customer does in fact examine his passbook, and there is thereby actually brought to his notice the fact that some person is operating without authority on his account. If he is silent with this knowledge, an estoppel, at least as regards subsequent losses, may arise against him;202 but this is not an estoppel arising from any duty to examine the passbook; nor is it an estoppel at all peculiar to banker and customer. It is a perfectly ordinary example of the estoppel which arises from failure to discharge a duty to speak in circumstances in which such a duty has arisen. 9.75 It is scarcely necessary to add that neither the banker, as against the customer, nor the customer, as against the banker, can be estopped, unless all the other conditions of a good estoppel by representation are satisfied. There is no estoppel, for instance, where there is no proof that the banker, or that the customer, as the case may be, has altered his position for the worse on the faith of the representation relied upon.203

200 See the observations of Lord Campbell LC in Commercial Bank of Scotland v Rhind (1860) 2 Macq 643, HL, at 651–2. 201 Kepitgalla Rubber Estates Ltd v National Bank of India Ltd [1909] 2 KB 1010 (Bray J) at 1021–3, and Walker v Manchester and Liverpool District Banking Co Ltd (1913) 108 LT 728 (Channell J). See also Lloyds Bank v Chartered Bank of India, Australia and China [1929] 1 KB 40, CA, at 60 (Scrutton LJ); cf Slingsby v District Bank [1932] 1 KB 544, CA. In Tai Hing Cotton Mill v Liu Chong Hing Bank [1986] AC 80, the Privy Council made clear that the customer was under no wider duty than the duty in drawing cheques to take due care so as not to facilitate fraud or forgery, and to notify the bank immediately of any unauthorised cheques of which the customer became aware. Thus, there was no duty imposed on the customer to examine bank statements. 202 Greenwood v Martins Bank [1932] 1 KB 371, CA, affd [1933] AC 51, HL; West v Commercial Bank of Australia (1936) 55 CLR 315 (High Court of Australia); Tai Hing Cotton Mill v Liu Chong Hing Bank [1986] AC 80, PC; Limpgrange Ltd v Bank of Credit and Commerce International SA [1986] FLR 36 (Staughton J). 203 Thus, in Commercial Bank of Scotland v Rhind (1860) 2 Macq 643, HL, as pointed out in n 193, the decision might have been (although, in fact, it was not) put upon the ground that the bank could not have been estopped from contradicting an entry on the faith of which the customer had not acted; just as, conversely, in Walker v Manchester and Liverpool District Banking Co (1913) 108 LT 728 it was held that, even if there had been any duty on the customer to detect the bank’s errors in the passbook, his omission of this duty did not occasion the bank’s loss, and, therefore, on this ground also he had not subjected himself to any estoppel.

415

9.76  Applications of reliance-based estoppel to various relationships

Forged cheques 9.76 The nature and extent of the estoppels which may arise against the customer upon forged cheques form the subject of a discussion to be found earlier in this work relating to estoppels arising from silence and negligence.204

EMPLOYERS, TRUSTEES AND MEMBERS OF OCCUPATIONAL PENSION SCHEMES 9.77 Funded occupational pension schemes give effect to complex arrangements between employers, employees and scheme trustees, partly contractual (including what is sometimes called the employer’s ‘pension promise’) and partly trust-based (the scheme’s fund being held on trust, in essence as security for the pension promise). The scheme usually embodies the terms of a contract between the employer and the trustees and, it may be, contracts between the trustees and individual employees who become members of the scheme. The scheme’s assets consist of a fund of contributions by the employer and employees in which both present and future members may be contractually or beneficially interested. The trusts affecting the assets secure pension benefits for members on their retirement or other benefits on their death in service, and benefits for their dependants, such as surviving spouse’s pensions. 9.78 Estoppel by representation, estoppel by convention and promissory estoppel have all been invoked in disputes between pension scheme members, trustees and employers. Typically, the disputes concern either (i) the rights of a member or a class of members under the benefit rules, or (ii) the employer’s liabilities with respect to the funding of the scheme. Thus, estoppel may be invoked by members claiming that their rights have been represented to be greater than the rights they actually have under the rules, or by employers or trustees seeking to uphold rules which have been invalidly made, eg for want of formality. Very few cases of either kind have succeeded.205

204 See 3.20. 205 The difficulties facing estoppel claims in pension schemes cases are considerable. Neither of the only decisions where estoppel has been successfully invoked is a satisfactory precedent: (i) in Icarus (Hertford) Ltd v Driscoll [1990] Pens LR 1, Aldous J held that the employer could rely on an estoppel by convention. The decision has been described, however, as being based on ‘extremely compressed’ reasoning and as having laid down no general principle (Trustee Solutions Ltd v Dubery [2007] ICR 412, at [52] (Lewison J)), and as ‘a decision in the relatively early days of pension scheme litigation’ and ‘short and unreasoned’ (Steria Ltd v Hutchison [2007] ICR 445, CA, at [105] (Neuberger LJ)). (ii) In Catchpole v Trustees of the Alitalia Airlines Pension Scheme [2010] ICR 1405, Warren J held that the facts gave rise to an estoppel by representation in favour of the partner of a deceased scheme member. The decision is questionable: see 6.52. In Steria Ltd v Hutchison [2005] EWHC 2993 (Ch), Peter Smith J held that there was an estoppel, by both representation and convention, in favour of a scheme member concerning his retirement date under the scheme, but the decision was reversed by the Court of Appeal: see [2007] ICR 445.

416

Employers, trustees and members of occupational pension schemes 9.82

9.79 It has been said that all forms of estoppel are, in principle, capable of applying to a pension scheme.206 No case appears to have invoked proprietary estoppel, although the present editors see no reason why, as a matter of principle, a claim to a proprietary right, or an enlarged proprietary right, against a defined fund, such as a pension fund, should not be permitted. 9.80 There are several recurring difficulties which have tended to defeat estoppel claims made by employers, trustees or members. 9.81 Considering first claims by employers or trustees, these are usually concerned to establish or uphold or validate some rule of the scheme which, for some reason, such as want of formality, is invalid.207 Thus in Icarus,208 the rules required that amendments be made and consented to ‘by writing effected under hand’: the party whose consent was required consented but did not sign the writing effecting the amendment. For a period of some 10 years the scheme was administered on the footing that the amendment was valid. It was held that the employer could rely on an estoppel by convention. By contrast, in Trustee Solutions Ltd v Dubery209 the scheme’s rules could be amended by any ‘writing effected under hand’ by the trustees and the company. The trustees purported to amend the rules to raise the retirement age for women to 65 by means of documents which were not signed either by the trustees or by, or on behalf of, the company. The trustees claimed against representative scheme members the court’s determination whether a ‘group estoppel’ had arisen which precluded those members who would benefit from a reduced retirement age from alleging that the rules had not been validly amended. The claim failed by reason of an absence of clear evidence of ‘an intention or positive conduct to bind the general body of members to an assumption as to the yardstick by which contributions or benefits were to be calculated’. 9.82 Employers raising an estoppel have also failed to establish reasonable detrimental reliance.210 206 Steria Ltd v Hutchison [2007] ICR 445, CA, at [81] (Mummery LJ) (‘estoppel by convention … [and] other principles of estoppel’). See also Grievson v Grievson [2011] EWHC 1367 (Ch) (Lewison J) at [24] (estoppel by representation and estoppel by convention). 207 Icarus (Hertford) Ltd v Driscoll [1990] Pens LR 1 (Aldous J); Trustee Solutions Ltd v Dubery [2007] ICR 412 (Lewison J); Stena Line Ltd v Merchant Navy Ratings Pension Fund Trustees Ltd [2010] Pens LR 411 (Briggs J) (an appeal was dismissed: see [2011] Pens LR 223, CA: the decision on estoppel was not appealed). See also Briggs v Gleeds [2015] Ch 212 (Newey J), where an employers’ claim founded on an estoppel by representation with respect to a deed not duly attested failed because (i) non-compliance with section 1 of the Law of Property (Miscellaneous Provisions) Act 1989 was apparent on the face of the deed, and (ii) the company whose representations were relied on acted for the employers as well as the scheme trustees and so could not be said to have made representations on the trustees’ behalf to the employers. The case is of general importance in the law of estoppel in recognising that an estoppel by representation can be founded on a statement of law, not fact. 208 Icarus (Hertford) Ltd v Driscoll [1990] Pens LR 1 (Aldous J). 209 [2007] ICR 412 (Lewison J). The decision was varied on appeal, see Trustee Solutions Ltd v Dubery [2008] ICR 101, CA, but the estoppel issues were not appealed: see at [12]. 210 See eg South West Trains v Wightman [1998] Pens LR 113 (Neuberger J) at [113]; Stena Line Ltd v Merchant Navy Ratings Pension Fund Trustees Ltd [2010] Pens LR 411 (Ch) (Briggs J) at [144].

417

9.83  Applications of reliance-based estoppel to various relationships

9.83 Taking next the case of members’ claims, in most cases the trustees of occupational pension schemes issue explanatory booklets setting out in summary form the main benefits under the scheme.211 Attempts have been made by members to rely on the contents of the booklet as creating an estoppel by representation or convention. These have generally failed for one or both of two reasons. In the first place, the representation relied on was insufficiently ‘clear and unambiguous’.212 Further or alternatively, the booklet contained a warning that the scheme documents and rules were paramount, with the consequence, in effect, that it was unreasonable for members to rely on what the booklet informed them about their benefits.213 Lewison J summarised the p­osition thus:214 ‘the overwhelming majority of judges have said that explanatory booklets containing statements to the effect that in case of doubt or conflict the rules or trust deed will prevail do not on their own give rise to estoppels. To hold otherwise would mean that a booklet of that kind would override the rules, when the booklet itself says the contrary.’

9.84 Attempts to raise so-called ‘group estoppels’ also encounter considerable difficulties.215 These were outlined by Morritt V-C in Redrow plc v Pedley,216 as follows: (1) The trusts of a pension scheme cannot be altered by estoppel because they affect future members and there can be no estoppel binding on future members. 211 Laddie J characterised them thus in ITN v Ward [1997] Pens LR 131, at [22]: ‘such booklets are usually deliberately framed in general terms in an attempt to make them more readily intelligible to those members who read them. They are a précis of some, but by no means all, of the important features of the scheme. It must be borne in mind that any précis of long and complicated documents will lose some of the detail (unless the discarded matter is mere surplusage). To that extent any précis can be said to be inaccurate and there will be some who will be adversely affected by the inaccuracy, assuming, of course, that they take the précis to be definitive on the points it deals with rather than a basic introduction’. 212 See eg Prudential Staff Pensions Ltd v Prudential Assurance Company Ltd [2011] Pens LR 239 (Newey J) at [204]. 213 See eg Lansing Linde Ltd v Alber [2000] Pens LR 15 (Rimer J) at [201] (an appeal was compromised; see official transcript for 28 July 2000, unreported). 214 See Trustee Solutions Ltd v Dubery [2007] ICR 412, at [52]. Lewison J referred to ITN v Ward [1997] Pens LR 131, at [22] and [23] (Laddie J); Lansing Linde Ltd v Alber, above, at [198] (but he might also have referred to what Rimer J said at [201]: ‘If an estoppel arises in this case, then it appears to me that it would amount to allowing the booklet rather than the deed to govern the scheme, whereas the booklet itself proclaims that it does not’); Hoover Ltd v Hetherington [2002] Pens LR 297, at [51] (Pumfrey J); Redrow plc v Pedley [2002] Pens LR 339, at [65] (Morritt V-C); and Hearn v Younger [2005] Pens LR 49, at [111] (Etherton J). 215 For examples of unsuccessful attempts to raise group estoppels, see Redrow plc v Pedley [2002] Pens LR 339 (Morritt V-C); Hodgson v Toray Textiles Europe Ltd [2006] Pens LR 253 (Lewison J); Trustee Solutions Ltd v Dubery [2007] ICR (Lewison J); Steria Ltd v Hutchison [2007] ICR 445, CA, at [109] (Neuberger LJ); Foster Wheeler Limited v Hanley [2009] Pens LR 39 (Patten J) (unaffected on this point by [2010] ICR 374, CA); In re IMG Pension Plan [2010] Pens LR 23 (Arnold J) (unaffected on this point by [2011] ICR 329, CA); Prudential Staff Pensions Ltd v Prudential Assurance Company Ltd [2011] Pens LR 239 (Newey J). 216 [2002] Pens LR 339, at [60] onwards.

418

Employers, trustees and members of occupational pension schemes 9.84

(2) While it is not necessary to call evidence relating to each member’s intention, a claimant must lead sufficient evidence to show that the estoppel is applicable to the general body of members as such. (3) What must be proved is that each member has by his ‘course of dealing put a particular interpretation on the terms of [the rules]’ or has ‘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. However, 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. To this list, Lewison J, in Trustee Solutions Ltd v Dubery,217 added the following: (4) A former employee who left the scheme before any of the events which are said to have created the erroneous assumption cannot realistically be said to have shared the assumption. (5) Estoppels against (or in favour of) individual members which relate to retirement ages may, if upheld in relation to some but not all members, result in unequal treatment of some members as compared with others. This may, potentially, put the trustees in conflict with the equal treatment rule enshrined in section 62 of the Pensions Act 1995.218 In general the court will not uphold an estoppel in conflict with statute or public policy. (6) The assumption relied on as constituting the convention may be in conflict with European law, eg as laid down by the European Court of Justice in Barber v Guardian Royal Exchange Assurance Group.219 (7) If the shared assumption is anything other than that which was expressly stated to members of the scheme (ie 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. 217 [2007] ICR 412, at [52]. 218 Section 62 of the 1995 Act related to discrimination on grounds of sex. It was repealed by the Equality Act 2010, section 61 of which provides that an occupational pension scheme must be taken to include a non-discrimination rule by virtue of which a responsible person (A) must not discriminate against another person (B) in carrying out any of A’s functions in relation to the scheme. The non-discrimination rule extends to all of the so-called ‘protected characteristics’ listed in section 4, namely age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation. The ‘responsible persons’ are: the trustees or managers of the scheme; an employer whose employees are, or may be, members of the scheme; and a person exercising an ‘appointing function’ in relation to an office the holder of which is, or may be, a member of the scheme. 219 (Case C-262/88) [1990] ICR 616. Such a conflict would again prevent the court from upholding the estoppel. Were the assumption modified to remove the conflict, it could not then be said that the members and trustees shared the assumption thus modified.

419

9.85  Applications of reliance-based estoppel to various relationships

9.85 In several cases, members have failed to establish detrimental r­ eliance.220 In Catchpole v Trustees of the Alitalia Airlines Pension Scheme,221 however, A, the unmarried partner of a member, succeeded in obtaining a surviving spouse’s pension, the trustees having misrepresented that, under the benefit rules, ‘spouse’ included an unmarried person living with a member as their spouse. Warren J held, following the member’s death, that the facts gave rise to an estoppel by representation, whereby the trustees were precluded from treating A otherwise than as the deceased member’s surviving spouse.222 The case raises a point of importance which is discussed in Chapter 6.223

220 See eg Hodgson v Toray Textiles Europe Ltd [2006] Pens LR 253 (Lewison J) at [67]; Steria Ltd v Hutchison [2007] ICR 445, CA, at [75] (Mummery LJ) and [118] to [133] (Neuberger LJ); Prudential Staff Pensions Ltd v Prudential Assurance Company Ltd [2011] Pens LR 239 (Newey J) at [205], [206]. In Grievson v Grievson [2011] EWHC 1367 (Ch), Lewison J remitted an unrepresented member’s claim not mentioning estoppel to the Pensions Ombudsman in order that the Ombudsman should make the necessary findings of fact. 221 [2010] ICR 1405. 222 This was not a case of estoppel by representation of fact being used as a sword: A was not making a claim in estoppel. His claim was that he was entitled under the rules to a surviving spouse’s pension: estoppel by representation of fact was used to make good an essential element in the claim, namely the proposition that the rules provided that ‘spouse’ included an unmarried person living with a member as their spouse. 223 See 6.52.

420

CH A P T E R 1 0

Miscellaneous estoppels

Companies  10.1 Share certificates and transfers  10.1 Cheques and bills of exchange  10.22 Contracts of insurance  10.23 Payment of premiums  10.23 Non-disclosure  10.26 Breach of warranty and other terms  10.34 The Insurance Act 2015  10.40

COMPANIES Share certificates and transfers The Companies Act 2006 10.1 Every company must keep a register of its members which must contain the names and addresses of the members, the date on which each person was registered as a member, and the date at which any person ceased to be a member. In the case of a company having a share capital, there must be entered in the register, with the names and addresses of the members, a statement of the shares held by each member, distinguishing each share by its number and (where the company has more than one class of issued shares) by its class and also the amount paid or agreed to be considered as paid on the shares of each member.1 The court has power to rectify the register if the name of any person is, without sufficient cause, entered in or omitted from a company’s register of members, or default is made or unnecessary delay takes place in entering on the register

1

Section 113 of the Companies Act 2006 (‘CA 2006’).

421

10.1  Miscellaneous estoppels

the fact of any person having ceased to be a member.2 However, no notice of any trust, expressed, implied or constructive, shall be entered on the register of members of a company registered in England and Wales or Northern Ireland, or be receivable by the registrar.3 The register of members is prima facie evidence of any matters which are directed or authorised by the Act to be inserted in it.4 10.2 In the case of a company registered in England and Wales or Northern Ireland, a certificate under the common seal of the company specifying any shares held by a member is prima facie evidence of his title to the shares.5 A private company must complete the share certificate and have it ready for delivery within two months after the allotment of any shares, and failure to do so is a criminal offence.6 A company may not register a transfer of shares unless ‘a proper instrument of transfer’ has been delivered to it.7 In the context of a private company, the expression ‘a proper instrument of transfer’ means no more than ‘appropriate’ or ‘suitable’ for stamping for stamp duty purposes,8 but it will normally be a transfer in the form of section 1 of the Stock Transfer Act 1963.9 When a transfer of shares in or debentures of a company has been lodged with the company, the company must either register the transfer or give the transferee

2 3

Section 125. See section 126. The power to rectify the register is not concerned with the beneficial interest in shares or the right to be registered. It is only concerned with legal title. See, most recently, Nilon Ltd v Royal Westminster Investments SA [2015] 3 All ER 372, PC (which is concerned with the parallel provisions in the Business Companies Act 2001 of the British Virgin Islands) at [51] (Lord Collins) (who declined to follow the decision of the Court of Appeal in Re Hoicrest Ltd [2000] 1 BCLC 194): ‘In the view of the Board, proceedings for rectification can only be brought where the applicant has a right to registration by virtue of a valid transfer of legal title, and not merely a prospective claim against the company dependent on the conversion of an equitable right to a legal title by an order for specific performance of a contract’. 4 Section 127. With effect from 30 June 2016, private companies may keep information on the register kept by the registrar (‘the central register’) instead of entering it in their register of members: see section 128B. An election may be made by the subscribers wishing to form a private company or by the private company itself once it is formed and registered. Section 128F also provides that, when a person inspects or requests a copy of material on the central register relating to a company in respect of which an election under section 128B is in force, the person may ask the company to confirm that all information that the company is required to deliver to the registrar under this Chapter has been delivered. 5 See section 768(1). A company may have a common seal but need not have one: see section 43. A share certificate is not a deed nor need it be executed as a deed (unless this is a requirement of the Articles). 6 See section 769(1), (3). 7 See section 70(1), unless (a) the transfer is an exempt transfer within the Stock Transfer Act 1982 (such as government securities) or is in accordance with regulations under Chapter 2 of Part 21 of the CA 2006. Those regulations are the Uncertificated Securities Regulations 2001 (which were originally made under the Companies Act 1989). 8 See Dempsey v Celtic Football and Athletic Co Ltd [1993] BCC 514 (Court of Session, Outer House) (a decision on section 183 of the Companies Act 1985 where the transfers failed to comply with the Articles) and Nisbet v Shepherd [1994] 1 BCLC 300 (a decision on section 75 of the Companies Act 1948). 9 For a description of the form and effect of such a transfer (and the conclusion that it takes effect as an equitable assignment of the shares pending registration), see Pennington v Waine [2002] 1 WLR 2075 at [78]–[83] (Clarke LJ). A company’s articles may provide for specific

422

Companies 10.3

notice of refusal to register the transfer, together with its reasons for the refusal as soon as practicable, and in any event within two months after the date on which the transfer is lodged with it. If the company refuses to register the transfer, it must provide the transferee with such further information about the reasons for the refusal as the transferee may reasonably request.10 10.3 The usual method for the transfer of shares is that the transferor sends the share certificates to the transferee who lodges them with the company together with the transfer. Where the transferor does not transfer all the shares in the certificate or transfers them to more than one party, the articles of association usually require that the share certificates be produced before the company will register the transfer. The transferor sends the certificates directly to the company, with a request that the company ‘certificate’ the transfer. This process is called ‘certification’. The Companies Act 2006 provides that the certification by a company of an instrument of transfer of any shares is to be taken as a representation by the company to any person acting on the faith of the certification that there have been produced to the company such documents as on their face show a prima facie title to the shares or debentures in the transferor named in the instrument.11 But the certification is not to be taken as a representation that the transferor has any title to the shares.12 For these purposes a transfer is certificated if ‘it bears the words “certificate lodged” (or words to the like effect)’13 and it is made by the company if (i) the person issuing the instrument is a person authorised to issue certificated instruments of transfer on the company’s behalf, and (ii) the certification is signed by a person authorised to certificate transfers on the company’s behalf or by an officer or employee either of the company or of a body corporate so authorised.14 Where any person acts on the faith of a false certification made negligently, the company will be liable for false certification as if the certification had been made fraudulently.15

formalities for transfer, but the more usual modern practice under the Model Articles is to allow either the ‘usual form’ or any other form approved by the directors, provided it is executed by or on behalf of the transferor. Partly paid shares require execution by the transferee, because the transferee assumes liability for the unpaid balance. 10

11 12 13 14 15

See section 771(1), (2). The directors may refuse to register the transfer if it is not in proper form. In the case of private companies, the Articles will usually provide that: ‘Directors may in their absolute discretion and without assigning any reason therefor decline to register the transfer of a Share whether or not it is a fully paid share’. In Dixon v Blindley Heath Investments Ltd [2015] EWCA Civ 1023 at [106], Hildyard J provided the following gloss: ‘The true position is that the transferee is entitled to be registered unless within a reasonable time (which is prescribed by section 771(1) of the Companies Act 2006 to be a period of not more than two months after lodging of the transfers) the directors resolve as a board to reject. If the board resolves not to reject, or, if the board does nothing, after the expiry of a “reasonable time”, the transferee is entitled to registration’. Section 775(1). Section 775(2). Section 775(4)(a). Section 775(4)(b). Section 775(3).

423

10.4  Miscellaneous estoppels

The Uncertificated Securities Regulations 2001 10.4 The Uncertificated Securities Regulations 200116 govern the registration and transfer of uncertificated shares and securities electronically transferred under CREST.17 In respect of every company which is a participating issuer, there must be a register maintained by the participating issuer and a separate register maintained by the operator. Every participating issuer must enter in its issuer register of members the names and addresses of the members, the date on which each person was registered as a member and the date at which any person ceased to be a member. There must also be entered a statement of the shares, number and class and a statement of the amount paid or agreed to be considered as paid on the shares (as under the Companies Act 2006).18 Provided that registration has taken place in accordance with the Regulations, the register is also prima facie evidence of the matters recorded in it.19 10.5 Unlike the Companies Act 2006, the Regulations (as their name makes clear) does not provide for any form of certification process. The effect of any transaction depends on ‘properly authenticated dematerialised instructions’ being sent by the operator to the issuer company and those instructions being acted upon accurately. Regulation 28(5) imposes a duty on the issuer company to notify the operator whether it has registered a transfer in response to an instruction to do so. Regulation 35(5) also imposes a duty on the addressee of the instruction not to accept it if he or she has actual notice: that any information contained in it was incorrect; that the participant or the operator expressed to have sent the instruction did not send the instruction; or, where relevant, that the person on whose behalf it was expressed to have been sent had not given authority to the operator or the participant authority to send it.20 Regulation 46(1) also provides that certain breaches of the Regulations are actionable at the suit of a person who suffers loss as a result of the default or contravention or who is otherwise adversely affected by it. These include a breach of regulations 28(5) and 33(5). Regulation 36 also imposes a duty on the operator to provide compensation up to £50,000 in relation to a forged dematerialised instruction where the operator is guilty of fraud, wilful default or negligence. Finally, regulation 35 has effect without prejudice to the liability of any person for causing or permitting a dematerialised instruction to be sent without authority or to contain information which is incorrect or to be expressed to have been sent by a person who did not

16 17 18 19 20

SI 2001/3755 (as most recently amended by the Uncertificated Securities (Amendment) Regulations 2013 (SI 2013/632)). The acronym stands for ‘Certificateless Registry for Electronic Share Transfer’. For the registration requirements in full, see Schedule 4 to the Regulations issued under regulation 23(4). Regulation 24(1) (which does not apply to the extent that any of the particulars are inconsistent with the company’s Operator register of members). See regulation 35(5). This is subject to the limited exception that the addressee may accept the accuracy of the instruction if, at the time that he received the actual notice, it was not practicable for him to halt the processing of the instruction: see regulation 35(6).

424

Companies 10.7

send it.21 It therefore preserves the rights of any victim of a fraud or forgery to bring a direct claim against the perpetrator. 10.6 The Regulations do not prevent an issuer, operator or third party from relying on an estoppel. Regulation 24 provides the same basis for a binding representation as section 127 and, under each regime, the company has a duty to register the relevant information, and the officers may incur penalties if they fail to do so. There is no reason, therefore, why the principles of estoppel, as they have been applied to the transfer and registration of shares under the Companies Act 2006, should not apply to the registration and transfer of shares under the Regulations.22 Having said this, the kind of estoppel which has featured in the authorities under the Companies Acts since 1867 is unlikely to arise under the Regulations, because of the way in which the risk of fraud or forgery is allocated under regulations 35 and 36 and also because of the creation of a statutory cause of action under regulation 46. It is a feature of the authorities considered below that estoppel has often been the medium used by the courts for allocating the risk of fraud or forgery between innocent parties and the company. The Central Securities Depositories Regulation 2014 10.7 Private companies now have the option to keep information on the register kept by the registrar instead of entering it in their register of members.23 Article 3 of the Central Securities Depositories Regulation 201424 will also require compulsory dematerialisation of transferable securities (including shares) which are traded on regulated markets, multi-lateral trading facilities (‘MTFs’) or organised trading facilities (‘OTFs’) in the EU, so that new transferable securities issued after 1 January 2023 are in dematerialised form, and existing issued shares are in dematerialised form from 1 January 2025. Full dematerialisation will mean that share certificates will not be issued for traded shares and existing share certificates will be redundant. In July 2012, Professor John Kay’s final report on the review of UK equity markets and long-term decision-making was published. One of the recommendations of the report was ‘The government should explore the most cost effective means for individual investors to hold shares directly on an electronic register’. In December 2014 a working group of the Institute of Chartered Secretaries and Administrators (ICSA) published a model for how share ownership will work in a fully dematerialised market, which is currently being considered by the Department for Business, Energy & Industrial Strategy. It seems likely, therefore, that in the near future the registration of shares will be completely electronic (even for private companies). The extent to which estoppel will feature in the development of the law will depend very much on the way in which title to shares is guaranteed and how the risk of fraud or forgery is allocated between the parties. 21 22 23 24

Regulation 35(10). For a similar view, see Micheler, ‘Farewell Quasi-Negotiability? Legal Title and Transfer of Shares in a Paperless World’ [2002] JBL 358. See section 128B of the CA 2006 (which took effect on 30 June 2016). EU Regulation No 909/2014.

425

10.8  Miscellaneous estoppels

Genuine certificates 10.8 A share certificate or a debenture or a certificate of debenture stock normally contains a statement that the person named in it is the registered holder of the relevant shares or debenture or debentures in the relevant company specified and described. The certificate ‘is a declaration by the company to all the world that the person in whose name the certificate is made out, and to whom it is given, is a shareholder in the company, and it is given by the company with the intention that it shall be so used by the person to whom it is given, and acted upon in the sale and transfer of shares’.25 A certificate has, therefore, always operated as an estoppel against the issuing company preventing it from denying that the person named is the registered holder of the securities specified in the certificate as against any person who has relied on the certificate to his or her detriment. The Bahia estoppel has been held to apply to shares and stock certificates,26 to debentures27 and to other registered securities.28 In Cadbury Schweppes plc v Halifax Share Dealing Ltd,29 Lindsay J applied the principle to a number of fraudulent transactions, including some cases involving the Crest system.30 10.9 There are limitations on the scope of the representation contained in the certificate. It is prima facie evidence only of the entries on the register at the date on which the certificate is issued. It does not contain any representation as to

25 26

Re Bahia and San Francisco Rly Co (1868) LR 3 QB 584 at 595 (Cockburn CJ). Re Bahia and San Francisco Rly Co (1868) LR 3 QB 584 at 595 (Cockburn CJ), 596–7 (Blackburn J) and 598 (Lush J); Hart v Frontino and Bolivia South American Gold Mining Co (1870) LR 5 Exch 111 at 114–5 (Martin B) and 116 (Bramwell B); Shropshire Union Rly and Canal Co v Robson (1875) LR 7 HL 496 (where there was no estoppel because the company was not seeking to contradict the representation); Simm v Anglo-American Telegraph Co (1879) 5 QBD 188 (CA) at 207 (Brett LJ) and 213 (Cotton LJ) (considered in detail in 10.18); Balkis Consolidated Co v Tomkinson [1893] AC 396 at 403–5 (Lord Herschell LC), 408–10 (Lord Macnaghten), 411 (Lord Field) (company estopped against bona fide purchaser A where certificate issued to A and A selling on to purchaser B, Simm (above) distinguished); Re Ottos Kopje Diamond Mines Ltd [1893] 1 Ch 618 (CA) at 625–6 (Lindley LJ), 627–8 (Bowen LJ) (company estopped against bona fide purchaser relying on certificate signed by two directors under company seal where former secretary had forged the relevant transfer); Dixon v Kennaway & Co Ltd [1900] 1 Ch 833 at 837 (Farwell J) (company estopped against bona fide purchaser of shares under a forged transfer who applied to the company and was issued with a valid certificate for the shares, Simm (above) distinguished); Longman v Bath Electric Tramways Ltd [1905] 1 Ch 646 (CA) (company not estopped from asserting that the registered holder A had already transferred the relevant shares to purchaser B as against a rival purchaser C, the statements in the certificate were true and the company owed no duty to C to keep the certificates once A had lodged them for certification); Royal Bank of Scotland plc v Sandstone Properties Ltd [1998] 2 BCLC 429 at 432g (Tuckey J); and Alipour v UOC Corpn [2002] 2 BCLC 770 at [22]–[23] (David Donaldson QC). 27 Robinson v Montgomeryshire Brewery Co [1896] 2 Ch 841 (Vaughan Williams J). 28 See Bank of England v Cutler [1908] 2 KB 208 (CA) (where the transfer of inscribed stock was registered in the books of the company although no stock certificate was issued). 29 [2007] 1 BCLC 497. 30 See [8]. The decision is primarily concerned with the issue of duplicate share certificates in a different name to that of the original shareholder: see below.

426

Companies 10.10

dealings after that date.31 Further, the certificate is evidence only of the registered holder of the shares. As such, it only purports to show the legal and not the beneficial owner.32 Nor does it contain any representation that the registered holder has an unencumbered title to the shares.33 There is also authority that placing a note on the share certificate, to the effect that no transfer will be registered without the production of a certificated transfer, does not give rise to a representation by the company that this procedure has been complied with.34 The company is not estopped from denying a purchaser’s title because it has treated him as a shareholder by sending a dividend warrant.35 Finally, the share certificate is not a representation that the person actually in possession of the share certificate is the person named in it as the registered holder.36 This is an important limitation because it means that there is no estoppel where the fraudster obtains the genuine share certificate or a duplicate certificate and impersonates the registered holder of the shares rather than obtaining a new certificate in his own name or the name of an impostor (as in Cadbury Schweppes (below)). 10.10 The company will be bound by the representations in the share certificate as against all persons altering their position to their detriment in reliance on the certificate. This includes a person who buys shares in reliance on a certificate held by the vendor, even if the certificate has been obtained by fraud or mistake.37 31 See Longman v Bath Electric Tramways [1905] 1 Ch 646 (Farwell J and CA) and International Credit and Investment Co (Overseas) Ltd v Adham [1994] 1 BCLC 66 at 70h–j (Harman J): ‘It is trite law and unarguably the case that title to shares is based upon entries in the share register of the company. Certificates of holdings of shares are merely prima facie evidence of the existence on the share register of entries at the date on which the certificate is given. A share certificate is not in any sort of sense conclusive evidence at a later date of the proper title to shares at that later date. In order to prove title to shares one must go to the share register’. 32 See Shropshire Union Rly and Canal Co v Robson (1875) LR 7 HL 496 at 504–6 (Lord Cairns), 511–3 (Lord Hatherley) and 514–5 (Lord O’Hagan). In that case a mortgagee by deposit of share certificates could not claim priority as against the company itself where the depositor was a trustee for the company. 33 See Longman v Bath Electric Tramways [1905] 1 Ch 646 (CA) at 665 (Bowen LJ) and 667 (Stirling LJ). See also the observations of Brett LJ in Simm v Anglo-American Telegraph Co (1879) 5 QBD 188 (CA) at 210 and Foster v Tyne Pontoon and Dry Docks Co (1893) 63 LJ QB 50 at 54–5 (Collins J). 34 See Rainford v Keith and Blackman Co [1905] 1 Ch 296 (Farwell J). The decision was reversed on different grounds: see [1905] 2 Ch 147 (CA). A deposited the certificate and a transfer in blank with B as security for a loan. He then purported to transfer the shares to C. Contrary to the note on the certificate, the company registered the transfer without the certificate. The company was held liable to B in any event, because it had notice of his charge. 35 Foster v Tyne Pontoon and Dry Docks Co (1893) 63 LJ QB 50 (Collins J). 36 Royal Bank of Scotland plc v Sandstone Properties Ltd [1998] 2 BCLC 429 (Tuckey J). 37 See Balkis Consolidated Co v Tomkinson [1893] AC 396 at 405 (Lord Herschell): ‘If the company must have known … that persons wanting to purchase shares might act upon the statement of fact contained in the certificate, it must equally have been within the contemplation of the company that a person receiving the certificate from them might on the faith of it enter into a contract to sell the shares. The plaintiff did enter into such a contract, and thereby altered his position by rendering himself liable to the person to whom he contracted to sell the shares. All the elements necessary to create an estoppel would appear, therefore, to be present’. The only case which suggests that the estoppel is not available to purchasers is Simm v Anglo-American Telegraph Co (1879) 5 QBD 188 (CA) which is discussed in 10.18. It was distinguished in

427

10.10  Miscellaneous estoppels

In Cadbury Schweppes plc v Halifax Share Dealing Ltd38 the court had to consider the relationship between an estoppel of this kind and the implied right of indemnity which the company has against a person presenting a forged transfer.39 Fraudsters had perpetrated a fraud on two listed companies by obtaining duplicate share certificates from the registrar and then transferring the shares into false names. They lodged the duplicate certificates and forged transfers with the registrar and obtained new certificates in the false names. They then sold the shares in the market through a number of firms of stockbrokers, using the new certificates issued by the companies. On sale the stockbrokers would submit to the registrar the new share certificates issued by the companies (bearing the false names used by the fraudsters), together with transfers executed by the fraudsters in favour of innocent purchasers who were then registered as the new shareholders. The issue was whether the companies or the stockbrokers should bear the losses suffered by the innocent shareholders. This turned on whether the companies could enforce the implied indemnity against the stockbrokers who had lodged the false certificates or whether the companies were bound by the Bahia estoppel contained in them. Lindsay J held that the relevant ingredients of an estoppel by representation had been made out.40 He also held that there was no reason why the stockbrokers were not entitled to deploy it, and the companies’ claims against the stockbrokers failed.41 10.11 The burden is on B to establish that he or she relied on the representation by A (the company) to their detriment.42 In Cadbury Schweppes plc v Halifax Share Dealing Ltd,43 Lindsay J accepted that this meant detriment in the wider sense of comparing the position in which A (the stockbrokers) would have been if B (the companies) were permitted to withdraw or ‘disavow the truth of their representations’ and their actual position. The earlier authorities are all consistent with this approach. A transferor of shares who assumes a contractual liability to transfer them to a third party has changed his position to his detriment, as has a transferee to whom the share certificate is issued after he has bought and paid for

Balkis: see 406. It was also distinguished in Dixon v Kennaway [1900] 1 Ch 833 at 840–2 (Farwell J). A certificate for bearer shares contains a representation to each subsequent bearer: see Goodwin v Robarts (1876) 1 App Cas 476 at 490 (Lord Cairns). 38 39

[2007] 1 BCLC 497. Neither party relied on Simm: see [40]. For the implied right of indemnity (which was admitted), see Sheffield Corpn v Barclay [1905] AC 392, Welch v Bank of England [1955] Ch 508, Yeung Kei Yung v Hong Kong & Shanghai Banking Corpn [1981] AC 787 and Royal Bank of Scotland plc v Sandstone Properties Ltd [1998] 2 BCLC 429. 40 See [31]: ‘On the argument thus far, the Stockbrokers in my judgment thus appear to have made good the three essential elements of any estoppel by representation, namely the representation, reliance upon it and detriment suffered by way of reliance. Nor can the Companies say (nor do they say) that they did not know of the manner in which their share certificates might reasonably be relied on by, inter alios, stockbrokers or that they did not intend that there should be any such reliance’. 41 See [50]. 42 See Dixon v Kennaway [1900] 1 Ch 833 at 841 (Farwell J). 43 See [30], citing the fourth edition of this book at V.5.9 (p.124). For the paragraph in the current edition, see 5.50.

428

Companies 10.12

the shares if he or she does some act after receiving the certificate and in reliance upon it, such as paying a call.44 It is also ‘sufficient that the person to whom the statement is made rests satisfied with the position taken up by him in reliance on the statement so that he suffers loss’.45 If A is induced by the certificate to abstain from taking measures for his or her protection (such as making claims against the vendor or broker), an estoppel will also be raised.46 Although negligence should not prevent the shareholder from establishing reliance on the certificate,47 a number of claims have failed on the facts because the shareholder was unable to show that he or she had changed their position in reliance on the certificate at all.48 Forged certificates and other company documents 10.12 The general principle is that a forged share certificate, even though impressed with the seal of the company, will not give rise to an estoppel unless, by its conduct or otherwise, the company has become estopped from denying the genuineness of its execution.49 This is an exception to the rule in Turquand’s Case50 that persons dealing with a company in good faith may assume that acts within its constitution and powers have been duly performed and are not bound to inquire whether acts of internal management have been regular.51 The basis for the exception is that a forged instrument is a

44 See Hart v Frontino and Bolivia South American Gold Mining Co (1870) LR 5 Exch 111 at 114–5 (Martin B). 45 See Dixon v Kennaway [1900] 1 Ch 833 (Farwell J) at 838 (following Knights v Wiffen (1870) LR 5 QB 660). 46 In both Dixon v Kennaway (above) and Monarch Motor Car Co v Pease (1903) 19 TLR 148 the broker was bankrupt at the commencement of proceedings. It seems to have been a rule of thumb that, if the shareholder could show that the broker and vendor had gone bankrupt between the issue of the certificate by the company and the commencement of proceedings, it was then for the company to prove that the shareholder would have had no effective remedy against either of them in any event: see Farwell J at 839. 47 Bloomenthal v Ford [1897] AC 156, 162 (Lord Halsbury LC). 48 See, in particular, Simm v Anglo-American Telegraph Co (1879) 5 QBD 188 (CA) (referred to above). See also Waterhouse v London and South Western Railway Co (1879) 41 LT 553 at 554 (Field J); Re Vulcan Ironworks Co (1885) WN 120 (a case concerned with whether the shares were paid up); Foster v Tyne Pontoon and Dry Docks Co (1893) 63 LJ QB 50 at 55–6 (Collins J); Rainford v Keith and Blackman Co [1905] 1 Ch 296 at 302 (where Farwell J stated that ‘the plaintiff neither pleaded, nor alleged in his evidence that he saw the certificate before he made the loan … or that he acted on it’) and Platt v Rowe (1909) 26 TLR 49 at 51 (Swinfen Eady J). 49 See Ruben v Great Fingall Consolidated Ltd [1906] AC 439 (where the seal was affixed by the secretary who forged the signatures of two of the directors). 50 See The Royal British Bank v Turquand (1856) 6 El & B1 327 (where the company was held liable on a bond bearing the company’s seal, notwithstanding the absence of a resolution of the company in general meeting which was required by the company’s registered deed of settlement). 51 The rule was summarised as follows by Lord Simonds in Morris v Kanssen [1946] AC 459 at 474 (quoting Halsbury’s Laws): ‘But persons contracting in good faith with a company and dealing in good faith may assume that acts within its constitution and powers have been properly and duly performed and are not bound to inquire whether acts of internal management have been regular’.

429

10.12  Miscellaneous estoppels

nullity.52 Forgery in this context, however, can mean one of two things. It can mean forgery in the sense that the certificate bears a false seal or signature, or it can mean forgery in a wider sense where a person without authority purports to sign a document on behalf of a company although the seal and signature are genuine. In South London Greyhound Racecourses Ltd v Wake,53 Clauson J considered that a forgery in the wider sense was a nullity. In that case the managing director and secretary fraudulently issued the certificate to secure a guarantee given by another company in which they were interested. In Northside Developments Pty Ltd v Registrar-General54 the facts were very similar to Wake. The managing director and his son (who had consented to act as secretary but had not been formally appointed) sealed and executed a mortgage securing third party debts when no board resolution had been passed approving the transaction. The High Court of Australia declined to follow Wake and held that a company will be bound if it is ‘estopped from denying the authority of the persons affixing the genuine seal and writing the genuine signature to do so’. Although the mortgage was not held to be a nullity, the outcome was the same because the bank was put on inquiry that the mortgage had not been authorised.55 10.13 The question whether a share certificate or other document is binding on the company is now governed by section 44 of the Companies Act 2006.56

52 By contrast, where a certificate was issued with proper authority, the company will be estopped by its contents, even if the company has been induced to issue it by fraud: see Dixon v Kennaway [1900] 1 Ch 833 (Farwell J). 53 [1931] 1 Ch 496 at 510 (Clauson J): ‘The certificate being a mere nullity, there is nothing in the existence of the certificate to prevent the company from setting up the true facts’. 54 See (1990) 170 CLR 146 at 443 (Mason CJ). 55 The rule in Turquand’s Case does not apply where a person dealing with the company has been put on inquiry that the agent acting for the company may not have been authorised to enter into the transaction: see Houghton & Co v Nothard, Lowe & Wills Ltd [1927] 1 KB 246 at 260 and Morris v Kanssen [1946] AC 459 at 475. Following Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480 (CA), there was also a wider debate about whether the rule was unique to companies or a wider reflection of agency principles. The High Court of Australia considered it to be a special rule of company law, although the reasoning is criticised by Prentice in (1991) 107 LQR 14. 56 ‘(1) Under the law of England and Wales or Northern Ireland a document is executed by a company: (a) by the affixing of its common seal, or (b) by signature in accordance with the following provisions. (2)   A document is validly executed by a company if it is signed on behalf of the company: (a) by two authorised signatories, or (b) by a director of the company in the presence of a witness who attests the signature. (3)   The following are “authorised signatories” for the purposes of subsection (2): (a) every director of the company, and (b) in the case of a private company with a secretary or a public company, the secretary (or any joint secretary) of the company. (4)   A document signed in accordance with subsection (2) and expressed, in whatever words, to be executed by the company has the same effect as if executed under the common seal of the company. (5)   In favour of a purchaser a document is deemed to have been duly executed by a company if it purports to be signed in accordance with subsection (2). A “purchaser” means a pur-

430

Companies 10.14

That provision was considered in Lovett v Carson Country Homes Ltd57 where one director signed his own signature on a debenture in favour of a bank and also forged the signature of the other director. Davis J held that a bank taking a mortgage was a ‘purchaser’ for the purposes of section 44(5). He also held that the debenture was ‘deemed to have been duly executed by’ the company because it ‘purported’ to be signed by two directors in accordance with section 44(2). The critical part of his reasoning was that the word ‘purport’ operated to refer to the impression which a document conveyed and that the wording of section 44(5) was capable of validating a document where there had been fraud or forgery as well as mistake.58 He rejected the argument based on Ruben that the section could not have been intended to validate forgeries and held that, on normal agency principles, the director who had signed the debenture had ostensible authority to warrant to the bank that all relevant formalities had been complied with and that the debenture was genuine.59 Finally, he rejected a separate argument based on estoppel on the facts.60 10.14 Although the question whether a forged certificate or other company document is binding is governed by section 44, the rule in Turquand’s Case and the common law authorities on estoppel remain relevant in one context, namely, the execution of documents by overseas companies. Although section 44 applies with suitable modifications to an overseas company,61 there may not be a public chaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property’. 57 58 59

[2009] 2 BCLC 196. See [79]–[80]. See [81]–[97]. Northside (above) was not cited to the court, and Davis J accepted the wider view of the rule in Turquand’s Case as an agency principle: see, in particular, [93]–[95]. 60 The issue had not been pleaded and seems to have been an afterthought, and the court did not address the question of principle whether it is possible to rely on an estoppel at all in cases of forgery: see [103]–[107]. 61 Section 44(1)(a) of the Companies Act 2006 (as substituted by the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009 (SI 2009/1917)) provides as follows: ‘(1) Under the law of England and Wales or Northern Ireland a document is executed by an overseas company– (a) by the affixing of its common seal, or (b) if it is executed in any manner permitted by the laws of the territory in which the company is incorporated for the execution of documents by such a company. (2) A document which– (a) is signed by a person who, in accordance with the laws of the territory in which an overseas company is incorporated, is acting under the authority (express or implied) of the company, and (b) is expressed (in whatever form of words) to be executed by the company, has the same effect in relation to that company as it would have in relation to a company incorporated in England and Wales or Northern Ireland if executed under the common seal of a company so incorporated. (3) In favour of a purchaser a document is deemed to have been duly executed by an overseas company if it purports to be signed in accordance with subsection (2). A “purchaser” means a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property’.

431

10.14  Miscellaneous estoppels

register and it may not be possible to establish easily what formalities exist for the execution of documents by the relevant company. In those circumstances a third party may have to fall back on the common law. The point was considered at first instance in one unreported case (Abdullah Abbas Al-Wazir v Islamic Press Agency)62 where the court held that the mortgage was binding on traditional principles. Amount paid up 10.15 When shares are described as fully paid up, or as shares on which a certain proportion of the nominal amount has been paid, the company is also estopped, as against any person who has acted on the faith of the certificate, from denying that the shares are fully paid or the amount which has been paid.63 The company will also be estopped from denying that shares are fully paid as against a purchaser who acquires them in reliance on a certificate issued by the company showing that they are fully paid.64 Normally, the original recipient will be unable to prove reliance upon the certificate (because he or she will know whether or not they have paid for their shares or will not have relied on the certificate),65 but the principle is not necessarily confined to transferees and can extend, exceptionally, to the original allottee.66 Where the transferee has notice that the shares are unpaid, he or she cannot rely on the statement to the contrary in the certificate.67 In a number of the older cases, it was suggested that the burden of proving 62 Evans-Lombe J, 28 October 1999. The decision was upheld by the Court of Appeal: see [2001] EWCA Civ 1276. 63 Burkinshaw v Nicholls (1878) 3 App Cas 1004 at 1014–5 (Lord Cairns) (company estopped as against transferee from allottee); Re AW Hall & Co Ltd (1887) 17 Ch D 712 at 719 (Stirling J) (company estopped as against transferee from allottee); Christchurch Gas Co v Kelly (1887) 51 JP 374; Re London Celluloid Co (1888) 39 Ch D 190 (CA) at 205 (Bowen LJ) (liquidator not estopped as against two directors); Re Building Estates Brickfields Co (‘Parbury’s Case’) [1896] 1 Ch 100 (CA) at 104–5 (Vaughan Williams LJ) (company estopped as against original allottee); Bloomenthal v Ford [1897] AC 156 (company estopped as against mortgagee of shares); Re African Gold Concessions and Development Co (‘Markham and Darter’s Case’) [1899] 1 Ch 414 at 430 (Wright J) (liquidator not estopped as against allottee); Monarch Motor Car Co v Pease (1903) 19 TLR 148; Re Coasters Ltd [1911] 1 Ch 86 at 90–1 (Neville J); Re Schneideman Bros Ltd [1917] NZLR 48. When a limited company allots shares, it is required to deliver a return of allotments in the prescribed form to the registrar of companies. Many of the cases involved section 25 of the Joint Stock Companies Act 1867, which rendered the subscription payment void if the allotment contract had not been registered: see eg Crickmer’s Case and Burkinshaw v Nicholls (above). 64 See Burkinshaw v Nicholls (1878) 3 App Cas 1004 at 1014–15 (Lord Cairns) and Re AW Hall & Co Ltd (1887) 17 Ch D 712 (Stirling J). 65 See Re Vulcan Ironworks Co [1885] WN 120. 66 See Re Building Estates Brickfields Co (‘Parbury’s Case’) [1896] 1 Ch 100 (Vaughan Williams J), where B agreed to pay A £500 for an allotment of 100 £5 shares to which A was entitled under an agreement with the company. The shares were allotted directly to B and he was issued with a certificate showing them as fully paid. He sold 20 and kept the rest. The liquidator was held to be estopped from recovering the payment from B as a contributory. See also Bloomenthal v Ford [1897] AC 156, where the certificate confirmed an express representation made by the company to the allottee that the shares were fully paid. 67 See Re London Celluloid Co (1888) 39 Ch D 190 (CA) at 200 (Cotton LJ) and 205 (Bowen LJ) and Re African Gold Concessions and Development Co (‘Markham and Darter’s Case’)

432

Companies 10.16

notice is on the company rather than the shareholder.68 But it is suggested that they are not consistent with the modern approach to burden of proof.69 In Re Stapleford Colliery Co (‘Barrow’s Case’),70 it was also held that the company was estopped from denying that shares were fully paid as against a subsequent purchaser whether or not they had notice of the true position.71 In the recent case of Blomqvist v Zavarco,72 the court applied these principles to shares listed on an exchange or traded through Crest:73 ‘In my judgment, a company that applies to have its shares or other securities listed on an exchange, or traded through a system such as Crest, which in either case requires that the securities be fully paid, is to be taken as thereby representing to potential acquirers of its shares that they are fully paid. That representation should be taken as relied upon, unless the company proves the contrary, by any purchaser or transferee who buys or acquires the securities with knowledge that the shares are so listed or traded. An acquisition through the market would clearly demonstrate such knowledge. But an off-market purchaser is very likely also to have the requisite knowledge. A purchaser for value evidently relies on the representation, unless he is shown to know it is untrue. But so too in my view would any other transferee, if by acquiring the securities they would become potentially liable for a call.’

Certification 10.16 Before 1948, there were a number of decisions concerned with the effect of a certified transfer and whether a company was bound by the acts of an officer or agent who fraudulently certificated transfers without the certificates being lodged.74 The position is now regulated by section 775 of the Companies [1899] 1 Ch 414 (Wright J). Some of the cases suggest that notice for these purposes includes not only actual knowledge but also constructive knowledge: see Re Eddystone Marine Insurance Co [1894] WN 30 (where the word ‘bonus’ was printed on the shares) and Re Veuve Monier et ses Files Ltd, ex p Bloomenthal [1896] 2 Ch 525 (CA). The decision was reversed in Bloomenthal v Ford [1897] AC 156 on the basis that B was not on notice: see 161–2 (Lord Halsbury) and 168 (Lord Herschell). Notice to an agent has also been held to be sufficient: see Re Halifax Sugar Refining Co [1891] WN 29 (CA). 68 See Re AW Hall & Co Ltd (1887) 37 Ch D 712 at 719–21 (Stirling J), Monarch Motor Car Co v Pease (1903) 19 TLR 148 (Walton J) and Re Coasters Ltd [1911] Ch 36 at 40–1 (Neville J). 69 See 5.59. However, see the quotation from Blomqvist v Zavarco plc (below) in the text. In any event, the court accepted the evidence of the claimant that he saw and relied on company information (including the inaccurate return on allotments): see [2016] EWHC 1143 (Ch) at [90]. 70 (1880) 14 Ch D 432 (CA). 71 The basis of the decision appears to have been that the title of the original transferees was perfected by the estoppel and, on sale, they could give a good title to any subsequent transferee: see 445 (Sir George Jessel MR). The decision has been doubted in Re London Celluloid Co (1888) 39 Ch D 190 (CA) at 197 (Cotton LJ in argument) and Re Railway Time Tables Publishing Co (1889) 42 Ch D 98 at 110 (Stirling J). However, the subsequent purchaser would probably avoid liability for any call under section 588(2) of the CA 2006. 72 [2016] EWHC 1143 (Ch) (HHJ David Cooke). 73 At [90] and [91]. 74 Bishop v Balkis Consolidated Co (1890) 25 QBD 512 (CA), Re Concessions Trust Ltd (‘Mackay’s Case’) [1896] 2 Ch 757 (Vaughan Williams J) and George Whitechurch Ltd v Cavanagh [1902] AC 117.

433

10.16  Miscellaneous estoppels

Act 2006, which provides that certification is to be taken as a representation by the company that there have been produced to the company such documents as on their face show a prima facie title to the shares or debentures in the transferor named in the transfer.75 The representation is only made, however, where the certification has been made by a person authorised under section 775(4)(b). That person must have both authority to issue certificated transfers and authority to certificate them and must be either expressly or impliedly authorised by the directors or the directors must have conferred apparent authority on that person. In the absence of that, subsection (3)(b) cannot apply. However, a single director or the secretary may have ostensible authority to warrant that the company has complied with the relevant formalities.76 Effect of the Bahia estoppel 10.17 The effect of a Bahia estoppel is not to deprive the original shareholder of his title to the relevant shares or to confer title to them on the transferee or other party relying on the certificate as against third parties.77 Nor does the certificate operate as a warranty of title, and the issue of a new or duplicate certificate to the transferee does not prevent the company from claiming an indemnity against the transferee or his broker who has submitted a false or fraudulent transfer for registration.78 But, because the company owes a duty to the transferee of shares to register him or her as a member within a reasonable time, a transferee relying on a share certificate which has been issued by mistake or as a consequence of fraud may bring an action for damages against the company for the failure to register the transfer, and the company will be estopped from denying the transferee’s right to be registered. The measure of damage is the value of the

75 The section was originally enacted in 1947 as part of the earlier consolidating legislation before the Companies Act 1948. It reversed the effect of George Whitechurch Ltd v Kavanagh (above), where it had been held that the company was not estopped by the certification of the secretary. It also applies to the certification of a broker’s transfer under section 1 of the Stock Transfer Act 1963: see section 2(2); and to the certification of debentures issued by an LLP: see regulation 26 of the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 (SI 2009/1804). 76 See Lovett v Carson Country Homes Ltd [2009] 2 BCLC 196 at [96] (Davis J), discussed in 10.13. See also Thanakharn v Akai Holdings Ltd (No 2) (2010) 13 HKCFAR 479 at [52] (Lord Neuberger). It was not clear traditionally that certification fell within the usual authority of a company secretary: see Panorama Developments (Guildford) Ltd v Fidelis Furnishing ­Fabrics Ltd [1971] 2 QB 71. But the court might now consider that this practice has changed. 77 For the position in relation to certificates, see Re Bahia and San Francisco Rly Co (1868) LR 3 QB 584 at 595 (Cockburn CJ). For the position in relation to certification, see section 775(2) of the CA 2006. 78 See Royal Bank of Scotland plc v Sandstone Properties Ltd [1998] 2 BCLC 429 (Tuckey J). See also Blomqvist v Zavarco [2016] EWHC 1143 (Ch) at [102]–[113] (where HHJ Cooke held that the issue of shares at a discount was valid and that the claimant could not establish that the shares were registered in the name of a transferee ‘without sufficient cause’ under section 125 of the Companies Act 2006, even though there was an estoppel).

434

Companies 10.19

shares at the time when the transferee should have been registered.79 Where the other shareholders are also bound by the estoppel, its effect may be to prevent the company or its directors from disputing the fact that the transferee is a contributory or from opposing a claim for rectification of the register.80 10.18 It is clear that a subsequent transferee or shareholder who relies on an inaccurate share certificate may set up a Bahia estoppel.81 But whether a subsequent transferee who does not rely on the share certificate can set up a Bahia estoppel is problematic. In Simm v Anglo-American Telegraph Co82 the Court of Appeal reversed the decision of Lindley J and rejected a claim based on title to the shares acquired through a shareholder who had presented the forged transfer for registration. The decision is a difficult one, because it appears at first sight to conflict with the authorities which suggest that a subsequent purchaser of shares may rely on a Bahia estoppel. The case also contained a number of important statements about the effect of estoppel on title which have been cited with approval on subsequent occasions.83 The facts of the case are complex and, because the shares were acquired by nominees, pledged to a third party and the loan paid off, none of the subsequent holders of the shares who might have relied on the certificate suffered detriment. For this reason, the decision appears to have turned on the question whether B could rely on a share certificate which it had induced the company to produce by presenting a forged transfer for registration.84 Put like that, the decision seems to be correct. Indeed, by presenting a transfer for registration, the transferee represents to the company that he or she is entitled to be registered, and a transferee who knows that he or she is not entitled to be registered will be liable in damages to the true shareholder for the tort of injurious falsehood.85 Share transfers 10.19 Finally, the question of estoppel may arise in relation to completion of the formalities for the transfer and registration of shares. Registration in the share register is necessary to complete the transfer of the legal estate, and difficulties have arisen where a donor has made a gift of shares to a donee by completing 79 Re Ottos Kopje Diamond Mines Ltd [1893] Ch 618 (CA). 80 Alipour v UOC Corpn [2002] 2 BCLC 770 (David Donaldson QC). 81 See 10.10. 82 (1879) 5 QBD 188 (CA). See, in particular, 202–4 (Bramwell LJ): ‘I cannot see any principle by which the company are precluded from saying to Burge & Co, “You brought us a forged transfer: we believed it to be genuine, and we have registered you as stockholders; but we are not precluded from saying that the transfer was forged, and that you had not a real title”’. 83 See Eastern Distributors Ltd v Goldring [1957] 2 QB 600 and Re Goldcorp Exchange Ltd [1995] 1 AC 74. In both cases the court relied on the dictum of Brett LJ at 206: ‘… it seems to me that an estoppel gives no title to that which is the subject-matter of estoppel. The estoppel assumes that the reality is contrary to that which the person is estopped from denying, and the estoppel has no effect at all upon the reality of the circumstances’. 84 In Cadbury Schweppes plc v Halifax Share Dealing Ltd [2007] 1 BCLC 497, Lindsay explained the difficulties with applying the decision: see [40]. 85 See Lloyd v Popely [2000] 1 BCLC 19 (Peter Leaver QC).

435

10.19  Miscellaneous estoppels

an instrument of transfer (either partly or fully) but failed to deliver it to the company for registration. Traditionally, equity will not complete an imperfect gift. In Curtis v Pulbrook,86 Briggs J identified three ways in which the court might avoid the rigorous application of this principle (in the absence of a valid declaration of trust): first, where the donor has done everything necessary to enable the donee to enforce a beneficial claim without further assistance from the donor; secondly, where there is some detrimental reliance by the donee upon an apparent although ineffective gift; and, thirdly, by a benevolent construction an effective gift or implied declaration of trust may be teased out of the words used. He derived these three methods from the judgment of Arden LJ in Pennington v Waine (No 1)87 and he considered that case to be an example of the second method, because the donee had agreed to become a director of the subject company upon an assumption that he had received an effective gift of qualifying shares in it.88 This is therefore a form of reliance-based estoppel and it gives rise to a constructive trust of the legal estate in the shares in the same way as the constructive trust of land in Yaxley v Gotts.89 Indeed, it may be one example of a proprietary estoppel which is not concerned with an interest in land. 10.20 Transfers in blank also present a number of difficulties. A common way of giving security upon shares is by depositing with the mortgagee a transfer executed by the mortgagor and the certificates of the shares.90 The transfer is commonly in blank as regards the name of the transferee and the date of execution. A good equitable security may thus be given upon the shares, and notice to the company is not necessary for the purpose of perfecting the mortgagee’s title and so preserving priority against subsequent equitable titles.91 In general terms, if the holder of the blank transfer completes the name of a transferee and the transfer is then registered, the transferor is estopped from objecting to the title of the transferee, provided that he or she is a purchaser for value without notice92 and believes that the shares have been lawfully transferred.93 10.21 Difficulties arise where the share certificates and blank transfer are given to a third party (such as an equitable mortgagee or a broker), whose authority to 86 [2011] 1 BCLC 638 at [43]. 87 [2002] 1 WLR 2075 at [55]–[66]. 88 In Zeital v Kaye [2010] 2 BCLC 1, Rimer LJ stated that the second method ‘was to tread the path that is now well trodden by those presented with a section 53(1)(c) problem (see section 53(2))’. 89 [2000] Ch 162 (CA). 90 It is unclear how common this form of security really is now, because an equitable mortgagee might well require a fully completed transfer: see eg MacMillan Inc v Bishopsgate Investment Trust plc (No 3) [1995] 1 WLR 978 (Millett J). 91 See section 126 of the CA 2006. 92 See Easton v London Joint Stock Bank (1886) 34 Ch D 95 (CA) (reversed on the facts by the House of Lords in Earl of Sheffield v London Joint Stock Bank (1888) LR 13 App Cas 333). 93 See London Joint Stock Bank v Simmons [1892] AC 201 at 208, where Lord Halsbury LC distinguished Sheffield’s case on the following basis: ‘But the cardinal distinction between the two cases is that in this case, upon the facts proved, I am of opinion that the bankers were under the full belief and conviction that the bonds were being lawfully dealt with, whereas in Lord Sheffield’s Case, I thought (and I believe those of your Lordships who were parties to

436

Companies 10.22

complete the transfer and submit it for registration is obviously limited.94 The basic principle appears to be that, where the transferor deposits a share certificate and a transfer in blank with a third party for a limited purpose, there is no representation or holding out that the holder has authority to deal with the shares.95 However, in a number of exceptional cases it has been held that the transferee acquired a good title to the shares if he was a bona fide purchaser for value without notice of the holder’s lack of authority. In some cases the transferor deposited a share certificate and transfer in blank with an agent for the purpose of raising a loan and the agent exceeded his authority.96 In others the transferor has been held to be bound by the actions of a broker who received share certificates and transfers and then dealt with them on his own account. The basis for these decisions appears to be a holding out by the transferor that the broker had authority to pledge them to a third party such as a bank.97 All of these cases may perhaps best be explained as examples of apparent authority where there has been some holding out, course of dealing or practice which makes it reasonable for the transferee to accept a transfer of the shares without further inquiry of the transferor.

Cheques and bills of exchange 10.22 Section 349 of the Companies Act 1985 provided that, if a director or agent of a company signed a cheque or bill of exchange without stating the name of the company in full, he or she would be personally liable to a fine and also liable on the cheque or bill of exchange. The section was the subject of the decision in Durham Fancy Goods Ltd v Michael Jackson (Fancy Goods) Ltd,98 which is considered in Chapter 14.99 There is no equivalent section or liability in the Companies Act 2006. Section 82 of the 2006 Act and the Companies (Trading)

that judgment thought also) that the bank had actual knowledge that the person pledging them had only a limited authority to raise money upon them’. 94

See eg Sheffield’s case (above), where the owner of shares and negotiable securities agreed to lend money to E and to use them to raise the money. E put them in the hands of M who was a specialist broker. He used the securities to secure his own loans. The House of Lords held that the banks were aware of his business and the limited authority which he had to deal with the securities. 95 See France v Clark (1884) 26 Ch D 257 (CA) at 264–5 (Earl Selborne LC). See also PanElectric Industries Ltd v Sim Lim Finance Ltd [1993] 3 SLR 242 at 259I–260A (Chao Hick Tin J, High Court of Singapore): ‘In my judgment the mere leaving of a share certificate with a blank transfer with a broker does not give rise to an estoppel … the shares in the possession of a stockbroker could be there on account of a number of reasons. No estoppel can arise. There must be something more in the owner’s conduct for estoppel to arise’. 96 See Brocklesby v Temperance Building Society [1895] AC 173, Rimmer v Webster [1902] 2 Ch 163 (Farwell J) and Fry v Smellie [1912] 3 KB 282 (CA). 97 See Colonial Bank v Hepworth (1887) 36 Ch D 36 (Chitty J), Colonial Bank v Cady (1890) 15 App Cas 267 and Fuller v Glyn, Mills, Currie & Co [1914] 2 KB 168 (Pickford J). In Mercantile Bank of India Ltd v Central Bank of India Ltd [1938] AC 287 (PC) at 302–3 (Lord Wright), Hepworth was explained on the basis that it was within the ordinary course of business for a broker to pledge shares. 98 [1968] 2 QB 839 (Donaldson J). 99 See 14.23.

437

10.22  Miscellaneous estoppels

Regulations 2008100 provide for the disclosure of information outside premises and on documents. Section 83 provides that, if a company brings proceedings to enforce a contractual right where the company is in breach of the requirements, and the defending party can show that he has a claim arising out of the contract that he or she has been unable to pursue by reason of the company’s breach of the regulations or has suffered some financial loss, then the proceedings brought by the company shall be dismissed unless the court is satisfied that it is just and equitable to permit the proceedings to continue. Section 83(3) preserves any other rights available to a person affected by the company’s failure to comply with the information requirements under the regulations, and it may be that an estoppel may arise out of the failure to comply with the regulations, either in favour of or against the company; but it will no longer lead to the personal liability of the directors.

CONTRACTS OF INSURANCE Payment of premiums 10.23 The amount, time and manner of payment of an insurance premium on inception of the policy will be governed by the specific terms of the proposal or the policy conditions once the proposal has been accepted. There is no rule of law that there cannot be a binding insurance contract until the premium is paid.101 However, if the policy expressly provides that cover is conditional upon pre-payment of the premium, the insurer is entitled to insist on strict compliance and the insured cannot obtain relief against forfeiture.102 The only way in which the insured will be able to mitigate the effect of a failure to comply with a strict condition for payment is by establishing that there has been a waiver by election or a waiver by estoppel.103 Where the policy conditions specify payment in cash but the insurer accepts another method of payment, the insurer will be held to have made an unequivocal representation that it will not insist on strict compliance with the method of payment.104 Equally, where pre-payment of the premium is a condition precedent to the creation of the contract or to the assumption of cover, an unequivocal representation by the insurer that the contract will be effective without payment of the premium will amount to a waiver by estoppel of the relevant condition if the insured could and would have complied with the condition (if the representation had not been made). For instance, insurers will be held to have waived payment of the premium where credit is given105 or their

100 SI 2008/495. 101 See Wooding v Monmouthshire Indemnity Society [1939] 4 All ER 570 at 592 (Lord Wright): ‘Apart from express agreement, there is no general rule of law in insurance contracts that there is no cover unless the premium is paid’. 102 See Scandinavian Trading Tanker Co A/B v Flota Petrolera Equatoriana; ‘the Scaptrade’ [1983] 2 AC 694 (affirming [1983] QB 529 (CA)). 103 For discussion of these terms, see 13.6–13.10. 104 See Bell Bros v Hudson Bay Insurance Co Ltd (1911) 44 SCR 419. 105 Prince of Wales Life Assurance Co v Harding (1858) EB & E 183.

438

Contracts of insurance 10.24

agent accepts a promissory note,106 or where they state in correspondence that payment of the premium is not necessary or even that it has been paid.107 Again, where the insurer accepts the premium with knowledge of the legal right to forfeit or avoid the policy for breach of a condition requiring pre-payment of the premium, this will amount to a binding election.108 Where the policy is made by deed and it contains a recital that the premium has been paid or a receipt clause, there will be an estoppel by deed and the insurer will be estopped from denying that the premium has been paid.109 10.24 The same principles apply where the insured is bound to make periodic payments under the insurance contract or on renewal of the policy. As a general rule, an insurer who accepts the payment of a premium with knowledge of a breach of condition may be held to have waived the breach, either by election or by estoppel.110 In Compagnia Tirrena Di Assicurazioni SpA v Grand Union Insurance Co Ltd111 the reinsured failed to pay instalments of premium under three reinsurance contracts in breach of premium warranty clauses. Waller J held

106 London and Lancashire Life Assurance Co v Fleming [1897] AC 499 (PC). 107 See Farquharson v Pearl Assurance Co Ltd [1937] 3 All ER 124 (Singleton J), where C (the mortgagee of a life policy) tendered the premium within a 30-day period of grace but insurers refused to accept it on the basis that the assured had agreed to pay the premium by cheque within a few days. Singleton J held that the policy had not lapsed and that insurers had waived strict compliance with the condition for payment. See also Handler v Mutual Reserve Fund Life Association (1904) 90 LT 192 (CA), where the insured tendered late payment and the insurer accepted the payment by issuing a receipt. The receipt contained certain conditions on the reverse (including the provision of additional medical evidence) which the insured failed to read or satisfy. The Court of Appeal held that the policy had lapsed. Finally, see Re Economic Fire Office Ltd (1896) 12 TLR 142, where insurers refused to accept payment on the mistaken basis that the premium had been paid. 108 See Beasant v Northern Life Insurance Co Ltd (1923) 2 DLR 1086 at 1094–5 (Denistoun J), where insurers were held to have waived a condition in a life policy for payment of higher premiums for military service when they accepted payments at the lower rate in the knowledge that the insured had enlisted in the militia. See also Wing v Harvey (1854) De GM & G 265 (CA), where insurers were held to have waived a condition in a life policy that the policy would become void if the insured moved abroad by accepting the premiums with full knowledge of the facts. 109 See Roberts v Security Co [1897] 1 QB 111 (CA). The decision was distinguished in Equitable Fire and Accident Office Ltd v Ching Wo Hong [1907] AC 96 (PC) (where the wording of a particular condition did not involve a representation or convention that the premium had been paid). For estoppel by deed in relation to receipt clauses more generally, see Prime Sight Ltd v Lavarello [2014] AC 436 (PC) at [45] and [46] (Lord Toulson) and Destine Estates Ltd v Muir [2014] EWHC 4191 (Ch) at [90]–[94] (where Newey J held that there was an estoppel despite ‘equity’s traditional reluctance to allow a party to a deed to rely on a receipt clause when payment has not in fact been made’). For the effect of the estoppel on assignees, see 10.25. 110 See Ayrey v British Legal and United Provident Assurance Co Ltd [1918] 1 KB 136 (where the insurer accepted the payment of premiums under a life policy for 18 months in the knowledge that the insured was in the Royal Naval Reserve). The policy contained a basis clause which entitled the insurer to avoid. Lawrence J put it in terms of election (see 140) and Atkin J put it in terms of estoppel (at 141–2). 111 [1991] 2 Lloyd’s Rep 143.

439

10.24  Miscellaneous estoppels

that the reinsurer had waived the breaches by election.112 The warranties in question were promissory warranties113 and it may be doubtful, in the light of recent authorities, whether waiver by election can apply to breaches of this kind.114 But it probably makes little difference whether this kind of waiver is treated as a waiver by election or by estoppel, since it will be necessary to show that the insurer had knowledge of the breach of condition before the insurer’s conduct – in accepting the premiums – can be treated as a representation that the insurer has affirmed the policy.115 It should also be relatively easy for the insured to establish that he or she relied upon this conduct to their detriment, both by paying the premiums and by failing to take out alternative cover. The insurer may be held to have waived the breach of condition even where the policy has lapsed.116 But, even if the insurer has waived the right to avoid or forfeit the policy by accepting the premiums which are paid late, the policy may provide that the insured risks are only covered from the date of payment. There is US authority for the proposition that, by accepting the premium and waiving the right to forfeit or avoid the policy, the insurer does not necessarily represent that cover is accepted or that there is any liability to indemnify the insured for any losses incurred in the period prior to receipt of the premium.117 Finally, there is also US authority for the proposition that the habitual acceptance of late renewal premiums without objection will give rise to a waiver.118 There must be some doubt whether an English court would reach the same conclusion without evidence of some positive conduct on the part of the insurer, because silence is equivocal.119 10.25 The extent to which an estoppel is binding as against a third party is considered generally in Chapter 6. Where an insurer issues a policy which contains a receipt clause, or recites that the premiums have been paid or issues a receipt to the same effect, the insurer will be estopped from denying liability

112 See 154: ‘In this case it seems to me that the demands for premium which were only due on the basis that the contracts continued, were unequivocal acts affirming the contracts communicated to the guilty party. In my view from the moment of their communication they affirmed the contract and both parties were bound by that election’. 113 See the analysis in JA Chapman & Co Ltd v Denizcilik Ve Ticaret AS (Thomas J, unreported, 14 November 1997). 114 See 10.21. 115 For further examples, see 10.34. 116 See Kirkpatrick v South Australia Insurance Co (1886) 11 App Cas 177 at 178 (Lord Hobhouse): ‘All other terms of the contract are ascertained, the money was paid, and there was from that moment a perfectly good contract for renewal of the old insurances’. It may be that cases of this kind are better regarded as examples of an informal but binding contract for renewal. For a further example of an informal but binding contract created upon payment of the premium, see Holliday v Western Australian Insurance Co Ltd (1936) 54 Ll L Rep 373 (Branson J). 117 See McGeachie v North American Life Insurance Co (1893) 23 SCR 148 and Duncan v Missouri State Life Insurance Co 60 F 648 (1908, 8 Cir). 118 See eg Smith v New England Mutual Life Assurance Co 63 Fed Rep 769 (1894). 119 See Scandinavian Trading Tanker Co A/B v Flota Petrolera Equatoriana; ‘the Scaptrade’ [1983] QB 529 (CA) at 535–6 (Robert Goff LJ) (affirmed at [1983] 2 AC 694), where acceptance of late payments of hire under a charterparty did not give rise to an estoppel.

440

Contracts of insurance 10.26

under the policy as against third parties.120 Further, where the premium is paid by the insured through a broker but the broker fails to pay it on to the insurer who still issues the policy, the insurer will be estopped from denying that there is a valid contract of insurance.121 Finally, there may be circumstances in which an assignee or mortgagee of the policy may rely on a waiver by the insurer.122

Non-disclosure 10.26 Before entering into a contract of insurance, the insured is under a duty to disclose to the insurer all material facts which are known to the insured but unknown to the insurer. The parties to an insurance contract also owe each other a continuing duty of disclosure. Both duties are aspects of the duty of utmost good faith.123 Section 18 of the Marine Insurance Act 1906 contains the insured’s pre-contractual duty of disclosure, and an express provision for waiver of that duty (which is considered below).124 For the purposes of the section, a fact is material if it ‘is one which would have had a decisive effect on the insurer’s 120 See section 68(1) of the Law of Property Act 1925, which provides that: ‘A receipt for consideration money, or other consideration, in the body of a deed or endorsed thereon shall, in favour of a subsequent purchaser, not having notice that the money or other consideration thereby acknowledged to be received was not in fact paid or given, wholly or in part, be sufficient evidence of the payment or giving of the whole amount thereof’. 121 See section 54 of the Marine Insurance Act 1906, which provides that: ‘Where a marine policy effected on behalf of the insured by a broker acknowledges the receipt of the premium, such acknowledgement is, in the absence of fraud, conclusive as between the insurer and the insured, but not as between the insurer and broker’. 122 See eg Farquharson v Pearl Assurance Co Ltd [1937] 3 All ER 124 (Singleton J) (mortgagee entitled to enforce life policy). See also the US decision of Mutual Reserve Fund Life Association v Cleveland Woollen Mills 82 Fed Rep 508 (1897). 123 See section 17 of the Marine Insurance Act 1906, which applies equally to other contracts of insurance (including reinsurance): see HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6, [2003] Lloyd’s Rep IR 230 at 247 (Lord Hoffmann). 124 ‘(1) Subject to the provisions of this section, the assured must disclose to the insurer, before the contract is concluded, every material circumstance which is known to the assured, and the assured is deemed to know every circumstance which, in the ordinary course of business, ought to be known by him. If the assured fails to make such disclosure the insurer may avoid the contract. (2) Every circumstance is material which would influence the judgment of a prudent insurer in fixing the premium or determining whether he will take the risk. (3) In the absence of inquiry the following circumstances need not be disclosed, namely: (a) Any circumstance which diminishes the risk; (b) Any circumstance which is known or presumed to be known to the insurer. The insurer is presumed to know matters of common notoriety or knowledge, and matters which an insurer in the ordinary course of his business, as such, ought to know; (c) Any circumstance as to which information is waived by the insurer; (d) Any circumstance which it is superfluous to disclose by reason of any express or implied warranty. (4) Whether any particular circumstance, which is not disclosed, be material or not, is, in each case, a question of fact. (5) The term “circumstance” includes any communication made to, or information received by, the assured’.

441

10.26  Miscellaneous estoppels

decision to accept the risk at the premium actually agreed’.125 However, it only applies to facts within the actual knowledge of the potential insured126 (or which he or she would be deemed to know in the ordinary course of business),127 and he or she is not required to disclose every detail of every fact or matter which might be material to the underwriter’s decision, provided that the insured has made a fair presentation of the risk.128 Section 18 only applies now to business insurance and not to consumer insurance contracts.129 10.27 Where the insurer is put on enquiry by the information disclosed by the potential insured but fails to ask for further information, the insurer has long been held to have waived disclosure of the information.130 This form of waiver is reflected in section 18(3)(c) of the Marine Insurance Act 1906. The test applied in these circumstances is as follows: if insurers receive information from the insured or his or her agent which (either taken on its own or in conjunction with other facts known to them or which they are presumed to know) would naturally prompt a reasonably careful insurer to make further inquiries, then, if insurers omit to make the appropriate check or inquiry (assuming that it could be made simply), they will be held to have waived disclosure of the material fact which the inquiry would have revealed.131

125 James v CGU Insurance plc [2002] Lloyd’s Rep IR 206 at 219 (Moore-Bick J). For a useful summary of all of the relevant principles applicable to section 18, see Garnat Trading & Shipping (Singapore) Ltd v Baominh Insurance Corp [2010] EWHC 2578 (Comm) at [135] (Christopher Clarke J) (upheld on appeal at [2011] 2 Lloyd’s Rep 492). 126 Economides v Commercial Union Insurance [1998] QB 587 at 601C (Simon Brown LJ) and 607C–F (Peter Gibson LJ). 127 Section 18(1) (above). Before the Consumer Insurance (Disclosure and Representation) Act 2012 came into force, the Court of Appeal had held that the deemed knowledge provision in section 18 did not apply to a private individual who is not obtaining insurance in the course of a business: see Economides (above). However, the section now has no application to consumer insurance contracts: see 10.40. 128 See eg Asfar v Blundell [1896] 1 QB 123 (CA) at 129 (Lord Esher MR) (where the claimant disclosed the existence of a charterparty but failed to specify the terms as to freight). 129 Section 11 of the Consumer Insurance (Disclosure and Representation) Act 2012 abolishes the common law rules reflected in sections 18, 19 and 20 of the 1906 Act in relation to consumer insurance contracts and dis-applies them in relation to consumer marine insurance. For the effect of the Insurance Act 2015 more generally, see 10.40–10.44. 130 See the famous case of Carter v Boehm (1766) 3 Burr 1905 at 1910 (Lord Mansfield LC) (where the insurer was held to have waived disclosure of further information in relation to the defence of ‘Fort Marlborough’). 131 See MacGillivray on Insurance Law (13th edn, 2015) at 17-089. The same passage in earlier editions was cited with approval in WISE Ltd v Grupo Nacional Provincial SA [2004] 2 Lloyd’s Rep 483 at [110] (Longmore LJ), Garnat Trading & Shipping (Singapore) Ltd v Baominh Insurance Corp [2010] EWHC 2578 (Comm) at [135] (g) (Christopher Clarke J) (upheld on appeal at [2011] 2 Lloyd’s Rep 492) and Synergy Health (UK) Ltd v CGU Insurance Plc [2010] EWHC 2583 (Comm) at [172] (Flaux J). In Axa Versicherung AG v Arab Insurance Group (BSC) [2015] EWHC 1939 (Comm), Males J found it unnecessary to decide whether the appropriate test was that of the majority in WISE (Longmore and Peter Gibson LJJ) (which is reflected in the text of 10.27) or whether the minority view of Rix LJ should be preferred because the defence of waiver failed both tests: see [146]–[149]. In Marc Rich & Co AG v Portman [1996] 1 Lloyd’s Rep 430 (upheld on

442

Contracts of insurance 10.28

10.28 There has been little judicial or academic discussion about the nature of this kind of waiver. It is clear that a waiver of disclosure may be the subject of an express agreement between the parties132 or a contractual estoppel.133 But it is more difficult to categorise the kind of waiver which is engaged where there is no formal agreement between the parties. In Marc Rich & Co AG v Portman,134 Longmore J considered that the waiver of disclosure cannot be easily categorised either as a waiver by estoppel or as a waiver by election, because it was not necessary for there to be a clear and unequivocal representation by the insurer that he would not insist on the right of disclosure. It is best regarded therefore as a special form of statutory waiver which arises out of the duty of good faith and ultimately depends on the insured making a fair presentation of the risk.135 It follows from this that waiver will not be available to an insured where he or she has failed to disclose unusual or special facts which are not reflected in the presentation of risk.136 The burden of proving that the insured failed to disclose material facts is upon the insurer, but the burden of proving waiver is upon the insured.137 Many of the cases which involve this kind of waiver are concerned with the failure to provide a complete claims history in marine insurance or reinsurance, where it is common for the insured to be asked to provide a detailed summary of loss experience.138

appeal at [1997] 1 Lloyd’s Rep 227), Longmore J adopted a similar test (at 442) and held that there would be a waiver where insurers were on notice of the existence of facts which ‘would raise in the mind of a reasonable insurer a suspicion that there are other circumstances material to the risk, but makes no enquiry about those facts and proceeds to underwrite the risk’. 132 See eg Container Transport International and Reliance Group Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd’s Rep 476 (CA) at 511 (Parker LJ) contrasting ‘express waiver’ with ‘implied waiver’. 133 See Cantiere Mercanico Brindisino v Janson [1912] 3 KB 452 (CA) at 463 (Vaughan Williams LJ), 467–8 (Fletcher Moulton LJ) and 473 (Buckley LJ) (where cargo insurance contained a ‘seaworthiness admitted’ clause). 134 [1996] 1 Lloyd’s Rep 430 at 442. 135 In Garnat Trading & Shipping (Singapore) Ltd v Baominh Insurance Corp (above) at [135](g), Christopher Clarke J stated that: ‘… waiver in insurance law bears a wider meaning than it does in other areas of the law. There is no need for an intentional act with full knowledge of the facts. If the facts and matters disclosed give a fair presentation of the risk, the underwriter must ask if he wishes to have more information and even if the initial presentation was unfair, waiver might arise if the information disclosed was such as to prompt a reasonably careful insurer to make further inquiries’. 136 See Container Transport International and Reliance Group Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd’s Rep 476 (CA) at 497–8 (Kerr LJ): ‘The doctrine of waiver cannot be applied to undisclosed facts which are unusual or special so that their non-disclosure distorts the presentation of risk’. See also Parker LJ at 511–2. See also Marc Rich & Co v Portman [1997] 1 Lloyd’s Rep 225 (CA) at 234 (Leggatt LJ). 137 See Noblebright Ltd v Sirius International Corpn [2007] Lloyd’s Rep IR 584 at [17]–[21] (HHJ Hegarty QC) (failure to disclose three armed robberies). In Synergy Health (UK) Ltd v CGU Insurance plc [2011] Lloyd’s Rep IR 500 at [167], Flaux J also stated that the way in which the broker and the insured conducted themselves may be of some assistance in determining how a reasonable man would have read the declaration in the proposal form. 138 For examples where there was no waiver, see Container Transport International and Reliance Group Inc v Oceanus Mutual Underwriting Association (Bermuda) Ltd [1984] 1 Lloyd’s Rep 476 (CA) at 499 (Kerr LJ) (loss experience was ‘not merely an unfair summary but a gross

443

10.29  Miscellaneous estoppels

10.29 Most proposal forms contain a number of specific questions relating to the particular risk or risks to be insured. But the insured’s duty of disclosure is not limited by the scope of those questions.139 The purpose of the questions is to enable the insurer to decide whether to underwrite the risk. The mere fact, therefore, that the insurer asks about one thing rather than another does not mean that the insurer has no interest in other information about the same subject matter.140 Nevertheless, the scope of the insured’s duty of disclosure may be limited by a particular question or questions on the proposal form.141 For instance, if insurers ask whether the insured has made any claims of a certain kind over the last five years, they will be held to have waived disclosure of any claims before that.142 In Hair v Prudential Assurance Co Ltd,143 Woolf J applied the following test to determine whether the questions impliedly excluded disclosure of the relevant information: ‘Would a reasonable man reading the proposal form be justified in thinking that the insurer had restricted his right to receive all material information and consented to the omission of the particular information in issue?’. This test has been consistently applied to determine whether insurers have waived the right to other information outside the scope of the questions.144 Whether this test is satisfied will depend on the individual question, the scope of the proposal form and

distortion of the true picture’); Marc Rich & Co AG v Portman [1997] 1 Lloyd’s Rep 225 (CA) (where the insured had a substantial and extraordinary loss experience in respect of demurrage which it failed to disclose); and New Hampshire Insurance Co v Oil Refineries Ltd [2003] Lloyd’s Rep IR 386 at 387–9 (HHJ Chambers QC) (failure to disclose substantial claims). Contrast Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1992] 1 Lloyd’s Rep 101 (Waller J) (where the insured made the earlier loss experience available the year before and underwriters knew that the loss experience was available but chose to renew on the same terms); and Societe Anonyme D’Intermediaires Luxembourgeois v Farex Gie [1995] LRLR 116 (Gatehouse J) (where the reasonable and accurate assumption for underwriters to make from the information provided was that insurers stated when they intended to retain risks for their own account). 139 McCormick v National Motor and Accident Insurance Union Ltd (1934) 49 Ll L Rep 361 (CA) at 363 (Scrutton LJ): ‘it does not matter whether he is asked questions about it, he must tell every material fact’. The dictum was applied in March Cabaret Club and Casino Ltd v London Assurance [1975] 1 Lloyd’s Rep 169 at 176 (May J). See also James v CGU Insurance plc [2002] Lloyd’s Rep IR 206 at 225 (Moore-Bick J): ‘The insurer does not waive that duty by failing to ask questions or by asking questions about other matters’. 140 See Moore Large & Co Ltd v Hermes Credit Guarantee plc [2003] Lloyd’s Rep IR 315 at 328–9 (Colman J). 141 See Joel v Law Union and Crown Insurance Co [1908] 2 KB 863 (CA) at 878 (Vaughan Williams LJ), Schoolman v Hall [1951] 1 Lloyd’s Rep 139 (CA) and Roberts v Plaisted [1989] 2 Lloyd’s Rep 341 (CA). 142 See Schoolman v Hall [1951] 1 Lloyd’s Rep 139 (CA) at 143 (Asquith LJ). 143 [1983] 2 Lloyd’s Rep 667 at 673 (citing the corresponding passage in MacGillivray, which may now be found in the current edition at 17-021). 144 See Doheny v New India Assurance Company Ltd [2004] EWCA Civ 1705 at [19] and [20] (Longmore LJ) and [37] (Potter LJ). The decision on this point was obiter but it has been applied in Noblebright Ltd v Sirius International Corp [2007] Lloyd’s Rep IR 584 (HHJ Hegarty QC) at [21] (question relating to claims experience did not waive disclosure of three armed robberies), R&R Developments Ltd v AXA Insurance UK Plc [2009] EWHC 2429 (Ch) at [39]–[44] (Nicholas Strauss QC) (question regarding director’s bankruptcy did not waive disclosure of the fact that a director of insured was director of another company in

444

Contracts of insurance 10.30

the form of the declaration which the insured is required to make. For example, where a motor insurer asked about convictions in the last five years, it was held to have waived disclosure of any earlier convictions;145 and, where a fire insurer asked a number of specific questions about the use to which a hotel would be put, it was held that the insurer had waived disclosure of the fact that part of the hotel would be used as a discotheque.146 Where the insurer asks specific questions in the proposal form but the potential insured leaves them unanswered or partially answered, and the insurer underwrites the risk without repeating the question or asking for clarification, this may also amount to a waiver.147 The fact that the answers to the question are incomplete may also provide evidence that the insurer is indifferent to the information and amount to a waiver on that basis.148 However, where the insured deliberately leaves the question unanswered or the failure to answer distorts the presentation of risk, this may amount to a new and separate misrepresentation which will give rise to a separate right to avoid or rescind.149 10.30 Whether or not there has been a waiver of disclosure under section 18(3) (c) of the Marine Insurance Act 1906 or the equivalent common law, the conduct of the parties after the inception of the policy may amount to a waiver of the breach of the duty of disclosure. One of the most common defences raised to an insurer’s claim to avoid a policy for breach of the duty of disclosure is waiver by election, and one of the leading cases in this area is Insurance Corpn of the Channel Islands Ltd v The Royal Hotel Ltd (No 2).150 In order to establish a ­administrative receivership), Sugar Hut Group Ltd and others v Great Lakes Reinsurance (UK) plc [2011] Lloyd’s Rep IR 198 at [2](c) and [34]–[38] (Burton J) (format of the proposal form did not amount to a waiver) and Synergy Health (UK) Ltd v CGU Insurance plc [2011] Lloyd’s Rep IR 500 (Flaux J) at [167] (no waiver of disclosure of failure to install an intruder alarm). 145 Jester-Barnes v Licenses and General Insurance Co Ltd (1934) 49 Ll L Rep 231 (McKinnon J). 146 Roberts v Plaisted [1989] 2 Lloyd’s Rep 341 (CA). 147 See Marcovitch v Liverpool Friendly Society (1912) 28 TLR 188 (CA) (where the insured had the relevant information available); Keeling v Pearl Assurance Co Ltd (1923) 129 LT 573 (Bailache J) (where the answer was obviously a mistake); Roberts v Avon Insurance Co Ltd [1956] 2 Lloyd’s Rep 240 (Barry J) (where the answer to the question could be implied) and Stowers v GA Bonus plc [2003] Lloyd’s Rep IR 402, 409 (HHJ Knight QC, CLCC) (where the answer could be assumed). The position in the US appears to be that failure to follow up a blank or incomplete answer will amount to a waiver: see Phoenix Mutual Life v Raddin 120 US 183 (1886). 148 Indifference is also a basis for waiver: see Garnat Trading & Shipping (Singapore) Ltd v Baominh Insurance Corp [2010] EWHC 2578 (Comm) (upheld on appeal at [2011] 2 Lloyd’s Rep 492) at [135](g) (Christopher Clarke J): ‘Finally, an assured is entitled to assume that the insurers are waiving disclosure of matters concerning which they appear to be indifferent or disinterested’. 149 See Moore Large & Co Ltd v Hermes Credit Guarantee plc [2003] Lloyd’s Rep IR 315 at 329 (Colman J): ‘It [the waiver doctrine] is concerned with the scope of specific questions directed to the presentation of risk and would in any event be displaced if the questions were answered in such a way as to amount to a misrepresentation by disclosing only part of the true state of things’. 150 [1998] Lloyd’s Rep IR 151 (Mance J). For detailed comment, see 13.16. For further examples of the kind of conduct which may give rise to a waiver by election in other contexts, see 13.16–13.19.

445

10.30  Miscellaneous estoppels

binding election, the insured must establish that insurers unequivocally represented that they had an intention to affirm the contract or policy with knowledge of the non-disclosure by the insured and of the right to avoid. The principles of election are considered in detail in Chapter 13 and many of those principles have been developed in insurance cases. In general terms, the authorities demonstrate that ‘continued performance of the substantive terms of the contract or a request for further performance of such provisions, without reserving entitlement to avoid, will normally be sufficiently consistent only with an intention to treat the contract as continuing in effect so as to amount to an election to that effect’.151 10.31 Thus, the acceptance of an instalment or instalments of a premium under a life policy,152 or the acceptance of a renewal premium153 or a premium for an extension of the policy,154 should amount to an unequivocal representation of an intention to affirm. The issue of the policy itself may also amount to an affirmation155 or the payment of a claim under the policy without a reservation of rights156 or the making of an interim payment.157 A good example of continued performance is where the insurer under a credit guarantee policy insists upon the insured bank making further requests of the borrower under a facility letter and

151 Strive Shipping Corpn v Hellenic Mutual War Risks Association (Bermuda) Ltd; ‘the Grecia Express’ [2002] Lloyd’s Rep IR 669, 750 (Colman J). See also 13.16, n 61. 152 See Phoenix Mutual Life v Raddin 120 US 183 (1886) at 196 (Gray J), Wing v Harvey (1845) De GM & G 265 (CA) and Hemmings v Sceptre Life Association Ltd [1905] 1 Ch 365 at 369–70 (Kekewich J) (where the insured misrepresented her age but the insurer accepted a number of premiums with knowledge of her true age). 153 See Frans Maas (UK) Ltd v Sun Alliance & London Insurance plc [2004] 1 Lloyd’s Rep 484 at [63] (David Steel J). MacGillivray considers it debatable whether renewal alone would be sufficient to amount to an affirmation: see 17-006. However, in Moore Large & Co Ltd v Hermes Credit and Guarantee plc [2003] Lloyd’s Rep IR 315 at [77], Colman J held that the acceptance of an additional premium under a credit insurance policy formed part of the conduct which amounted to an election to affirm. More recently, in Dedames v National Farmers’ Union Mutual Insurance Society Ltd [2009] EWHC 2805 (QB), HHJ Mackie QC distinguished Hemmings and Frans Maas because of a reservation of rights (although it might have been wiser for the insurer to take the stance which it did at an earlier stage). He also stated that it was a question of fact in each case whether the insurer had affirmed the policy: see [105] and [106]. 154 See Scottish Coal Co Ltd v Royal and Sun Alliance Insurance Plc [2008] Lloyd’s Rep IR 718 (David Steel J) at [93]. 155 See Hadenfayre Ltd v British National Insurance Society Ltd [1984] 2 Lloyd’s Rep 393 at 401–2 (Lloyd J). This argument failed in Morrison v Universal Insurance Co (1873) LR 8 Exch 197 (where the slip was passed to the secretary’s department for issue before the underwriter became aware of the breach of duty). 156 See Barber v Imperio Insurance Co (UK) Ltd (CA, 15 July 1993, unreported) and Svenska Handelsbanken v Sun Alliance and London Insurance plc [1996] 1 Lloyd’s Rep 519 at 569–70 (Rix J). 157 See Callaghan v Thompson (CA, unreported, 16 January 1998) which was the hearing of a preliminary issue. At the subsequent trial, however, David Steel J held that there had been no waiver because the brokers who had made the payment were not acting for the insurer in that capacity: see [1999] All ER (D) 1205. Compare IHC v Amtrust Europe Ltd [2015] EWHC 257 (QB) (HHJ Seymour QC), where the insurer made an interim payment and an extension to the policy. However, this representation did not give rise to an estoppel, because the conduct did not carry with it the apparent awareness of the right to avoid.

446

Contracts of insurance 10.32

asking for further security without a reservation of rights.158 One contentious issue on which there is conflicting first instance authority is whether the exercise of a contractual right of inspection or investigation amounts to an affirmation of the policy (where the insurer has knowledge of the right to avoid).159 The commencement of arbitration or court proceedings by the insurer against the insured, or the participation in such proceedings, may amount to an affirmation where the issues in question do not relate to non-disclosure (or to the relevant nondisclosure) but assume the validity of the contract of insurance.160 10.32 More problematic is the effect of an insurer’s decision to take over the conduct of proceedings, even if the insurer has knowledge of the right to avoid.161 The decision to take over the conduct of the defence of third party proceedings under a liability policy is usually regarded as equivocal when the insurer later seeks to argue that the policy did not cover the liability,162 although insurers may be held to have made an election where they continue to defend the claim up until trial and give the insured no real opportunity to take over the conduct of the defence.163 In other cases, the issue whether the conduct of the insurer in continuing to defend the claim amounts to a waiver may well turn on the reason why the insurer declines cover. Conduct of the claim may be equivocal in the context of breach of a procedural condition, but it may involve an unequivocal representation that the insurer does not intend to avoid the policy for non-disclosure.164 Before insurers will be held to have affirmed the policy, they must be given sufficient time to make up their

158 Svenska Handelsbanken v Sun Alliance and London Insurance plc [1996] 1 Lloyd’s Rep 519 at 569–70 (Rix J). 159 The authorities are set out in 13.16 at n 66. The most recent view expressed by Leggatt J in Involnert Management Inc v Aprilgrange Ltd [2015] 2 Lloyd’s Rep 289 at [171]–[178] is that the invocation of a right to inspect without reservation would amount to an affirmation. 160 See Insurance Corpn of the Channel Islands Ltd v Royal Hotel Ltd (No 2) (above) (where there were two policies and the insurer affirmed one but not the other) and Moore Large & Co Ltd v Hermes Credit and Guarantee plc [2003] Lloyd’s Rep IR 315, 332–4 (Colman J) (where the insurer affirmed by the issue of court proceedings which assumed that an endorsement to the policy was valid). 161 Knowledge of the right to avoid is a requirement of waiver by election. Although it is not a requirement of waiver by estoppel, it is highly unlikely that there will be an estoppel unless the insurer is also aware of the right to avoid. See HIH Casualty and General Insurance Ltd v Axa Corporate Solutions [2003] Lloyd’s Rep IR 1 at [21]–[23] (Tuckey LJ): ‘Unless the representation carries with it some apparent awareness of rights it goes nowhere’. For detailed discussion in the wider context, see 14.21. 162 See Soole v Royal Insurance Co Ltd [1971] 2 Lloyd’s Rep 332 at 339 (Shaw J). 163 See Reid v Campbell Wallis Moule [1990] VR 859 (where Tadgell J distinguished Soole because of the terms of the policy and the practical difficulty of the insured taking over conduct of the claim). 164 See Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] EWCA Civ 147 (breach of a procedural condition) at [69] (Rix LJ): ‘Thus the exercise of a right under a policy to conduct an insured’s defence might be unequivocally inconsistent with a right to avoid the policy, but only a merely equivocal alternative (to not conducting the defence) so far as concerns any alleged representation to the effect that the insured is accepting liability, to indemnify the insured for a claim’.

447

10.32  Miscellaneous estoppels

mind.165 Where the insurer fails to avoid within a reasonable time, however, this may give rise to an estoppel.166 Where the insured relies to his or her detriment on the conduct of the insurer in defending the proceedings, this will give rise to an estoppel,167 whether or not the facts also justify a finding of waiver by election. 10.33 Section 19 of the Marine Insurance Act 1906 imposes a separate duty upon the agent of an insured to disclose to the insurer every material circumstance which is known to himself, and an agent is deemed to know every circumstance which, in the ordinary course of business, ought to be known by, or to have been communicated to, him. Section 19 is expressly made subject to section 18 and, in particular, to section 18(3)(c) (quoted above). It follows that, if the insurer has waived the insured’s duty to disclose certain information (on the basis set out above), the insured’s agent is under no duty to provide the same information, even though the agent would otherwise owe a duty to do so.168 In HIH Casualty and General Insurance Ltd v Chase Manhattan Bank,169 however, the insurer entered into an agreement with the insured under which the insurer expressly waived ‘any duty or obligation to make any representation, warranty or disclosure of any nature, express or implied’. The House of Lords held that the parties could agree to waive their remedies for misrepresentation and nondisclosure. But they did not decide whether it was possible to exclude their remedies for the fraudulent misrepresentation or non-disclosure by an agent, because the agreement was personal to the insured and, by waiving its obligations, the insurer had not waived the obligations of the agent.

Breach of warranty and other policy terms 10.34 The term ‘warranty’ has a special usage in the context of insurance contracts. Although it can be used in more than one sense, it is usually used in the sense of a ‘promissory warranty’ which is defined by section 33(1) of the Marine Insurance Act 1906 as ‘a warranty by which the assured undertakes that some particular thing shall or shall not be done, or whereby he affirms or negatives the existence of a particular state of facts’. It was also described by Lord Goff in

165 See McCormick v National Motor and Accident Insurance Union Ltd (1934) 40 Com Cas 76 (CA) (cited by Rix LJ in Kosmar (above) at [78]) (where the relevant information came out at trial). 166 See 13.27. 167 See Barratt Bros (Taxis) Ltd v Davies [1966] 2 Lloyd’s Rep 1 (CA). In Kosmar Rix LJ described the decision ‘in the classic terms of promissory estoppel’: see [54]. 168 See Société Anonyme d’Intermediaires Luxembourgeois v Farex Gie [1995] LRLR 116 (CA) at 157 (Saville LJ), cited with approval in HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] Lloyd’s Rep IR 230 (HL) at 249 (Lord Hoffmann). 169 See above at 242 (Lord Bingham) and 249 (Lord Hoffmann). A distinction was drawn between waiver of information by an insurer on the grounds that it was not material and waiver of a duty personal to the insured.

448

Contracts of insurance 10.35

the Good Luck170 as ‘a promise by the assured that the warranty will be fulfilled’. Section 33(3) of the 1906 Act currently provides that, if it is not complied with, then (subject to any express terms of the policy) ‘the insurer is discharged from liability as from the date of the breach of warranty, but without prejudice to any liability incurred by him before that date’. Section 34 of the Act provides certain circumstances in which a breach of warranty can be excused, and s 34(3) expressly provides that ‘a breach of warranty may be waived by the insurer’. In the Good Luck the House of Lords held that the effect of a breach of warranty was to discharge the insurer from liability under the policy from the date of the breach with immediate effect.171 Before the decision, there was authority that the insurer could elect to waive the breach of a promissory warranty.172 However, it is now clear that waiver by election does not apply to a breach of warranty or to breach of a procedural condition precedent.173 It follows that, in order to raise a waiver of a breach of warranty, the insured will have to establish the necessary ingredients of a promissory estoppel, namely that the insurer gave a clear and unequivocal assurance that it would not rely on the breach of warranty as having discharged the liability to indemnify the insured, and that the insured relied on that representation to his or her detriment in circumstances which make it inequitable for the insurer to withdraw that assurance. 10.35 In the following situations, insurers have been found to have given a clear and unequivocal assurance not to rely on the breach of warranty as having discharged the liability to the insured: demand or acceptance of a premium or further premiums;174 the issue or renewal of the policy;175 approval of new security arrangements required under the policy;176 payment into court of a sum

170 Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd; ‘the Good Luck’ [1992] 1 AC 233 at 261H–262A. 171 See 262H–263E (Lord Goff). 172 For examples, see Allen v Robles [1969] 2 Lloyd’s Rep 61 (CA) (breach of a procedural ­condition precedent) at 63–4 (Fenton Atkinson J) and 10.24. 173 See Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] EWCA Civ 147 (which involves a full review of the authorities). For detailed discussion, see 13.19–13.22. 174 See Edge v Duke (1849) 18 LJ Ch 183 (Shadwell VC) (where the insured failed to pay the demand and it was held, at 184, that the ‘demand was annihilated by the refusal to pay’); Jones v Bangor Mutual Shipping Insurance Syndicate Ltd (1889) 61 LT 727 (DC) at 729 (Mathew J): ‘The directors of the society, therefore, knowing that another policy had been effected, and having taken the premiums on the policy granted by themselves, are estopped by their conduct from relying on rule 43 as a defence to this action’; Holdsworth v Lancashire and Yorkshire Insurance Co Ltd (1907) 23 TLR 521 (Bray J) (where the insured committed a breach of warranty by failing to provide certain information but then notified the insurer’s agent); and Ayrey v British Legal and United Provident Assurance Co [1918] 1 KB 136 (DC) at 141–2 (Atkin J) (although Lawrance J appeared to decide the case on the basis of election: see 140). See 10.24. 175 See Sulphite Pulp Co Ltd v Faber (1895) 1 Comm Cas 143 at 153 (Lord Russell CJ) and Hadenfayre Ltd v British National Insurance Society Ltd [1984] 2 Lloyd’s Rep 393 at 401–2 (Lloyd J). 176 See De Maurier (Jewels) Ltd v Bastion Insurance Co Ltd [1967] 2 Lloyd’s Rep 550 at 559 (Donaldson J) (where the insurer waived a breach by approving changes in security at the insured’s premises under the same policy).

449

10.35  Miscellaneous estoppels

by the insurer;177 and the exercise of a right of cancellation on 30 days’ notice.178 But, in the following situations, the insurer has not been found to have given a clear and unequivocal assurance: acceptance of an instalment of the premium;179 the call for risk management reports;180 an inspection of the premises;181 rejection of an individual claim;182 the acceptance of a towage survey endorsed ‘noted and agreed’ (where both a condition and a towage survey were required);183 and an agreement not to carry out additional investigations and instruct experts.184 Again, although it is not necessary to establish that insurers understood their rights, it is highly unlikely that the conduct and statements of an insurer could reasonably be understood by the insured as an unequivocal representation that it did not intend to rely on the breach of warranty unless the insurer was aware both of the breach of warranty and also that its effect was to discharge the insurer from liability.185 Indeed, where neither the insurer nor the insured understood that the breach of warranty automatically discharged the insurer, the conduct of the insurer was held to be equivocal.186 Unless, therefore, the insured can prove that the insurer was aware of the consequences of a breach of warranty, it will be necessary for the insured to show that the proper inference to be drawn from the insurer’s conduct was that the insurer was prepared to give up any rights at all arising out of that conduct.187 10.36 In cases where the insured discloses the breach and the necessary information after the policy has been issued and the insurer then waives the breach, reliance usually takes the form of the failure to seek alternative cover and the payment of additional premiums.188 Where, however, the insurer discovers the

177 Harrison v Douglas (1835) 3 Ad & El 396 at 402 (Lord Denman CJ). 178 Mint Security Ltd v Blair [1982] 1 Lloyd’s Rep 188 at 198 (Staughton J). 179 See Brownsville Holdings Ltd v Adamjee Insurance Co Ltd; ‘The Milasan’ [2000] 2 Lloyd’s Rep 458 at 467 (Aikens J) (where the claim failed on reliance). 180 HIH Casualty and General Insurance Ltd v AXA Corporate Solutions [2002] Lloyd’s Rep IR 1 (CA) at 8 (Tuckey LJ). 181 See Peters v Brock [1968] 1 Lloyd’s Rep 387 (Megaw J) (where the inspector failed to spot that an alarm was not working). See also Melik & Co v Norwich Union Fire Insurance Society Ltd [1980] 1 Lloyd’s Rep 523 (Woolf J) (where disclosure to an inspector that an alarm was not working did not bring about a waiver). 182 See Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd; ‘the Good Luck’ [1992] 1 AC 233 at 257B–C and 265H (Lord Goff). 183 See Kirkaldy & Sons Ltd v Walker [1999] Lloyd’s Rep 410 at 422–3 (Longmore J). 184 See Ted Baker plc v Axa Insurance UK plc [2014] EWHC 3548 (Comm) at [128]–[132] (Eder J). 185 See 14.21. For an example, see IHC v Amtrust Europe Ltd [2015] EWHC 257 (QB) (HHJ Seymour QC). 186 See HIH Casualty and General Insurance Ltd v AXA Corporate Solutions [2002] Lloyd’s Rep IR 325 (CA) at 8 (Tuckey LJ): ‘Conduct from which it might be inferred that Axa thought they were still on risk does not of itself amount to a representation that they would not enforce a right or rights. None of the cases goes this far’. 187 Youell v Bland Welch & Co Ltd (the ‘Superhulls Cover’ Case) (No 2) [1990] 2 Lloyd’s Rep 431 at 450 (Phillips J). 188 See Holdsworth v Lancashire and Yorkshire Insurance Co Ltd (1907) 23 TLR 521 (Bray J); Ayrey v British Legal and United Provident Assurance Co Ltd [1918] 1 KB 136, DC, 142 (Atkin J) (both payment of additional premiums).

450

Contracts of insurance 10.37

breach of warranty in the course of investigating a claim, it is likely to be more difficult for the insured to establish reliance. In most cases, the period of insurance will have expired and the issue between the parties is whether the insurer is entitled to rely on the breach of warranty as a defence to the insured’s claim. In those circumstances, it is unlikely that the insured will be able to demonstrate reliance sufficiently detrimental to make it inequitable to permit the insurer to withdraw the waiver.189 However, the insured may suffer detriment in the wider sense where, as a result of a representation by the insurer, he or she does not comply with a condition or warranty (which they would otherwise have done). In Barrett Bros (Taxis) Ltd v Davies190 the insured failed to provide the insurer with the notice of prosecution and a copy of the summons which he had received. The insurer was aware of the prosecution and had written to the insured, making it clear that it did not require copies.191 It was conceded that he would have had time to comply with the condition when he received the letter. Where there has been a waiver of a breach of warranty, the form of relief is usually obvious; the insurer is prevented from defending the insured’s claim by asserting the breach of warranty. But, in the Good Luck, Lord Goff appeared to contemplate that it might be possible to waive reliance on a breach of warranty on a temporary basis or to treat the breach as discharging the insurer from liability temporarily without discharging the policy altogether.192 In some cases, therefore, it may be open to the court to adopt a proportionate response in determining what effect to give to the waiver, eg by preventing the insurer from defending the insured’s claim by raising the breach of warranty but permitting the insurer to be discharged from all further liability under the policy. 10.37 The description ‘procedural conditions’ is usually used to refer to the terms of a contract of insurance dealing with claims handling and procedure. The principal procedural conditions of an insurance policy deal with notification of circumstances and claims, the provision of particulars and proof of loss, co-operation between the parties in relation to third party claims, and dispute resolution. The effect of a failure to comply with a procedural condition depends on the construction of the contract. Procedural conditions are either conditions precedent to payment of the claim by the insurer, suspensive conditions (which suspend the insurer’s obligations until the condition has been complied with) or terms the breach of which entitles the innocent party to claim damages but no more. Where the insured has failed to comply with a procedural condition (apart from a procedural condition precedent), the insured will not be entitled to an indemnity, unless he or she is able to establish that the insurer waived compliance with the

189 See HIH Casualty and General Insurance Ltd v Axa Corporate Solutions [2002] Lloyd’s Rep IR 1 (CA) at 8 (Tuckey LJ). 190 [1966] 1 WLR 1334 (CA). 191 See 5 (Lord Denning MR): ‘By not asking for the documents, they as good as said they did not want them. So he did not send them’; and 6 (Salmon LJ): ‘In my judgment, any reasonable person receiving that letter would have concluded that the respondents, having learnt all about the intended prosecution, no longer required him to notify them of it or send them the summons. All they had wanted was to be told why he had not done so already’. 192 See [1992] 1 AC 233 at 260H and 265H–266A.

451

10.37  Miscellaneous estoppels

condition, either as a consequence of a binding election or as a consequence of an estoppel. Where the insured has failed to comply with a procedural condition precedent, the insured will only establish a valid waiver where there is an estoppel for the reason set out in 13.21 and 10.34. 10.38 One of the earliest decisions to distinguish between the separate doctrines of election and estoppel is an example of a waiver of a procedural condition. In Craine v Mutual Fire Insurance Co Ltd193 the insured failed to comply with the time limit for notifying the insurer of damage to business premises. The insurer rejected the claim for late notification and, when the insured raised the defence of waiver, the insurer relied on a term in the policy that any waiver of any provision of the policy had to be in writing and endorsed on the policy. This term was construed by the High Court of Australia to mean a deliberate choice by the insurer with knowledge of its rights, and therefore did not extend to an estoppel. Because the insurer had exercised rights under the policy to the detriment of the insured, without waiting to see whether the insured would comply with the condition, the insurer was estopped from relying on the insured’s failure to comply with it. Where the insured fails to comply with a procedural condition but, with knowledge of this fact and of the right to reject the claim, the insurer chooses not to reject the claim and communicates that decision to the insured, either by words or by conduct, the insurer will be bound by that decision.194 However, if the insurer rejects the claim on one ground (such as lack of cover), the insurer does not elect to waive the possibility of relying on the breach of a procedural condition at a later stage if that breach occurred prior to the rejection of the claim.195 Where the procedural condition is a condition precedent, waiver by election has no application altogether.196 10.39 Even if the insured is unable to show that the insurer has waived the failure to comply with a procedural condition by making a binding election – or if waiver by election is not available because the procedural condition is a condition precedent – the insured may be able to establish a waiver by estoppel (as in Barratt Bros (Taxis) Ltd v Davies).197 For example, in Toronto Railway Co v National British and Irish Millers Insurance Co Ltd,198 insurers were held to have waived certain procedural conditions precedent (which required

193 (1920) 28 CLR 305 (HCA) (affirmed sub nom Yorkshire Insurance Co Ltd v Craine [1922] 2AC 541). For further discussion, see 13.7. 194 See Fraser Shipping Ltd v Colton [1997] 1 Lloyd’s Rep 586 (CA) 592–3 (Potter LJ) (where the claim that insurers had waived notification by agreeing to an endorsement with knowledge of the breach failed on the facts). See also McBlain v Dolan [2003] Lloyd’s Rep IR 309 (SC(OH)) at 312 (Lord Johnston) where the insurers waived notification under the Road Traffic Act 1988. 195 Bolton Metropolitan Council v Municipal Mutual Insurance Ltd [2006] 1 WLR 1492 at [31]–[34] (Longmore LJ) (rejecting the suggestion in the fourth edition that it was possible to waive the breach of a procedural condition by election). 196 See 10.33 and 13.19–13.22. 197 [1966] 2 Lloyd’s Rep 1 (CA). 198 (1914) 111 LT 555 (CA).

452

Contracts of insurance 10.40

the insured to produce proof of loss within 60 days and then to comply with a special procedure) by agreeing to the appointment of a loss adjuster. In Webster v General Accident Fire and Life Assurance Corpn Ltd,199 insurers were held to have waived compliance with a procedural condition requiring full written particulars, after the insured’s solicitors had explained to the insurer’s claims manager precisely what occurred and made it clear that he was making a claim on the insured’s behalf. In each of these cases, the insured could have complied with the conditions if insurers had not led them to believe that this was not necessary, and the insured suffered detriment by losing the opportunity to comply with the condition.

The Insurance Act 2015 10.40 On 12 August 2016, most of the provisions of the Insurance Act 2015 came into force. The Act involves a major reform of the law which is, for the most part, outside the scope of this book. For present purposes the most relevant provisions of the Act are contained: in Part 2 (sections 2 to 8), which creates a new duty of fair presentation in place of sections 18 to 20 of the Marine Insurance Act 1906;200 in Part 3 (sections 10 and 11), which abolishes the rule of law that a breach of warranty results in the discharge of the insurance contract;201 and in Part 4 (sections 12 and 13), which provide new remedies for fraudulent claims. Section 14 of the Act also abolishes the rule of law which permits a party to avoid a contract of insurance on the ground of breach of the duty of utmost good faith. These changes are likely to reduce the number of cases in which it is essential for the insured to rely on either waiver by election or waiver by estoppel, because one of the principal purposes of the Act is to mitigate the ‘all or nothing’ consequences of non-disclosure and breach of warranty, by replacing them with a series of proportionate remedies. Part 2 applies to non-consumer insurance contracts only.202 Parts 3 and 4 apply to both consumer and non-consumer insurance contracts.203 It is possible for the parties to a non-consumer insurance contract to contract out of the provisions of Parts 2 to 4 if the ‘transparency requirements’ set out in section 17 are satisfied.204

199 [1953] 1 QB 520 at 523–4 (Parker J). 200 Section 21(2) omits sections 18 to 20 from the 1906 Act, and section 21(3) abolishes the equivalent common law rule. 201 See section 10(1). 202 The pre-contract conduct of the parties to a consumer insurance contract are primarily governed by the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA). The term ‘consumer insurance contract’ and the corresponding term ‘non-consumer insurance contract’ are defined by reference to CIDRA: see section 1 of the 2015 Act. 203 Section 9 applies only to non-insurance contracts and it provides that it is not possible to convert a representation into a warranty by using, for example, a declaration that the representation is to form the basis of the contract. 204 Section 17 provides that the insurer must bring the relevant term (which is defined as ‘the disadvantageous term’) to the insured’s attention and it must be clear and unambiguous as to its effect.

453

10.41  Miscellaneous estoppels

10.41 Section 3(1) imposes a statutory duty of fair presentation upon the insured in place of the duty of disclosure contained in section 18(1) of the Marine Insurance Act 1906 or arising out of the duty of good faith. Section 3(3) defines a ‘fair presentation of risk’ as one which (a) makes the disclosure required by section 3(4), and (b) makes the disclosure in a manner which would be reasonably clear and accessible to a prudent insurer. Section 3(4) requires the insured to give ‘(a) disclosure of every material circumstance of which the insured knows or ought to know or (b) failing that, disclosure which gives the insurer sufficient information to put a prudent insurer on notice that it needs to make further enquiries for the purpose of revealing those material circumstances’.205 Section 3(5) then provides that, in the absence of inquiry, section 3(4) does not require the insured to disclose a circumstance if it is something as to which the insurer waives information.206 Some cases which might have been regarded of cases of waiver under section 18 may now fall within section 3(4)(b). But, overall, it is suggested that the effect of section 3 is to reflect the case law on waiver of ­non-disclosure and the principle described in 10.27. 10.42 The remedies for breach of the duty of fair presentation are set out in Schedule 1 and depend on whether the ‘qualifying breach’ (as it is defined) is either deliberate or reckless. If it is deliberate or reckless, the insurer remains entitled to avoid the policy and to the return of any premiums.207 If the qualifying breach is not deliberate or reckless, the insurer may avoid the contract and refuse all claims if it would not have entered into the contract on any terms but must return the premiums.208 If the insurer would have entered into the contract but on different terms (other than terms relating to the premium), the contract is to be treated as if it had been entered into on those different terms.209 Additionally, if the insurer would have entered into the contract but would have charged

205 The combined report of the Law Commission and the Scottish Law Commission ‘Insurance Contract Law; Business Disclosure; Warranties; Insurers’ Remedies for Fraudulent Claims’ (Law Com No 353 and Scots Law Com No 238) identified section 3(4)(b) as the key change: see §7.38. They stated (at §7.39): ‘We include clause 3(4)(b) because we recognise that there may be circumstances in which satisfying the duty without guidance from the insurer will be almost impossible for an insured, and where an insurer could and should have assisted by making further enquiries. Recognising that disclosure will often require participation by the insurer is a central theme of our recommendations’. It may be argued that this was no more than a reflection of the existing law: see Garnat Trading & Shipping (Singapore) Ltd v ­Baominh Insurance Corp [2010] EWHC 2578 (Comm) (upheld on appeal at [2011] 2 Lloyd’s Rep 492) at [135](d) (Christopher Clarke J). 206 ‘In the absence of enquiry, subsection (4) does not require the insured to disclose a ­circumstance if – (a) it diminishes the risk, (b) the insurer knows it, (c) the insurer ought to know it, (d) the insurer is presumed to know it, or (e) it is something as to which the insurer waives information’. 207 See Schedule 1, paragraph 2. 208 Paragraph 4. 209 Paragraph 5. For an example of how this provision would work, see Involnert Management Inc v Aprilgrange Ltd [2015] Lloyd’s Rep 289 (where the insurer was entitled to avoid a

454

Contracts of insurance 10.43

a higher premium, the insurer may reduce proportionately the amount to be paid on a claim.210 10.43 For present purposes, the key reform made by the Insurance Act 1015 in relation to breach of warranty is to provide that it suspends rather than discharges the insurer’s liability so that it may be revived if and when the breach is remedied.211 Section 10(1) abolishes the rule that breach of warranty results in the discharge of the insurer’s liability, and section 10(7) repeals section 34 of the Marine Insurance Act 1906, including the statutory waiver contained in section 34(3). Section 10(2) introduces the key concept of a remediable breach of warranty. It provides that an insurer has no liability in respect of any loss occurring or attributable to something happening after a warranty has been breached but before it has been remedied. Section 10(2) does not affect the liability of the insurer in respect of losses occurring or attributable to something happening before the breach of warranty or after it has been remedied,212 and the section extends the circumstances in which a breach is taken to be remedied.213 Section 10(2) does not apply, however, if the warranty ceases to be applicable through a change of circumstances or compliance with the warranty is rendered unlawful by any subsequent law or the insurer waives the breach of warranty.214 It may be argued that the new statutory waiver contained in section 10(2)(c) extends to both waiver by election and waiver by estoppel. Although the effect of the breach of warranty is to suspend the liability of the insurer, it can be said that the insurer has a choice whether to waive the obligation to remedy the breach or to repudiate liability. On the other hand, it can also be said that the effects of section 10(2) are automatic. Liability is suspended until the breach is remedied and the insurer has no choice. But, in any event, this issue may turn out to be largely academic. Where the insurer makes an unequivocal representation that it is unnecessary for the insured to remedy the breach of warranty, and the insured fails to do so in reliance on that representation, the detriment will be obvious and the insured ought to be able to rely on a waiver by estoppel. The insured could and would have acted to remedy the breach and restore cover more promptly.

marine policy for overvaluation of a yacht). Leggatt J stated at [186]: ‘The just result in these circumstances would be to treat the insurance as valid in a reduced amount of Eur 8m. Such a result will be achieved in cases to which the new Insurance Act 2015 applies when the Act comes into force. Until then, however, it remains a blot on English insurance law that in a case of the present kind the insurer is permitted to avoid liability altogether. That is the law even though it puts the insurer in a better position as a result of the insured’s innocent failure to make full disclosure than the insurer would have been in if full disclosure had been given’. 210 Paragraph 6. 211 See the joint report (above) at §12.6. The other key reforms were to abolish basis of contract clauses and provide that, where terms are designed to reduce the risk of loss of a particular type (or at a particular time or place), they should not affect losses of a different kind (or at a different time or place). These recommendations are reflected in sections 9 and 11. 212 Section 10(3). 213 Section 10(5), (6). 214 Section 10(3)(c).

455

10.44  Miscellaneous estoppels

10.44 Finally, section 12 of the Insurance Act 2015 introduces new statutory remedies for fraudulent claims which replace the right to avoid the policy from inception under section 17 of the Marine Insurance Act 1906 with a number of remedies. Forfeiture of the claim is a well-established consequence of making a fraudulent insurance claim (even if elements of it are genuine), and section 12(1)(a) provides that, if the insured makes a fraudulent claim, the insurer is not liable to pay the claim, and section 12(1)(b) provides that the insurer may recover any sums paid to the insured in respect of the claim. Section 12(1)(c) also gives the insurer the option to treat the contract as terminated with effect from the fraudulent act.215 If the insurer does treat the contract as having been terminated, it may refuse all liability to the insured in respect of a relevant event occurring after the fraudulent act, and it need not return any premiums, although treating the contract as terminated does not affect the rights of the parties with respect to a relevant event occurring before the time of the fraudulent act.216 The effect of the statutory right is not only to relieve insurers of liability for the fraudulent claim but also, at their option, to relieve insurers of liability for any further claims made during the remainder of the period of insurance (even if the policy has already come to an end). The closest analogy to the statutory right is the common law right to accept a repudiatory breach of contract, and it ought therefore to be one to which the principles of both waiver by election and waiver by estoppel will apply.217

215 In the combined report (above), it is described as an option: see §22.7. 216 Section 12(2), (3). ‘Relevant event’ is defined in section 12(4) as ‘whatever gives rise to the insurer’s liability under the contract (and includes, for example, the occurrence of a loss, the making of a claim, or the notification of a potential claim, depending on how the contract is written)’. 217 For detailed discussion of waiver by election in the context of affirmation of a contract, see 13.13–13.28.

456

CH A P T E R 11

Statutory estoppel

Sale of goods  11.2 Bills of exchange  11.67 Bills of lading  11.81 The Partnership Act 1890  11.105 11.1 The present chapter considers certain statutes which declare, codify, apply or adapt the common law principles of estoppel by representation, waiver and election, including the creation of new estoppels, or the enlargement, restriction, or abolition of existing estoppels. We are concerned here with estoppel, waiver and election in their relation to: the sale of goods; bills of exchange; bills of lading; and partners.1

SALE OF GOODS Codification of the nemo dat rule and of estoppel as an exception to it 11.2 that:

Section 21(1) of the Sale of Goods Act 1979 (‘the 1979 Act’) provides ‘where goods are sold by a person who is not their owner, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell.’2

1 2

Other statutory estoppels are dealt with elsewhere. It should be noted that a different kind of question can arise as to whether an estoppel can be relied upon as a defence or answer to the provisions of a statute; such questions are not within the scope of this chapter: see Ch 7. It has been suggested that the word ‘precluded’ was used in order to render the principle intelligible in Scots law where the term ‘estoppel’ is unknown: see Benjamin’s Sale of Goods

457

11.3  Statutory estoppel

11.3 The subsection first sets out the effect of the common law maxim nemo dat quod non habet.3 It then carves out an exception, or ‘saving clause,’4 preserving for the buyer a non-statutory right based on the seller’s apparent authority to sell.5 This protects the buyer where the owner’s conduct, including his failure to act, raises against him either (i) an estoppel by representation, if he has represented, by words or conduct, that the seller was the owner of the goods or had his authority to sell,6 or (ii) an estoppel by negligence, if the owner has breached a duty of care owed by him to the buyer and the breach was the proximate cause inducing the buyer to buy the goods.7 11.4 Whenever the exception in s 21(1) is invoked, the inquiry must be focused on the real or apparent authority of the seller to do what the buyer says induced him to buy, rather than a general inquiry as to the seller’s authority to sell.8

(9th edn, 2014), [7-008]; Chitty on Contracts (32nd edn, 2015), Vol 2, [44–194]. Sir ­Mackenzie Chalmers, the draftsman of the Sale of Goods Act 1893 in which this provision first appeared, did not advert to this in his discussion of s 21 in The Sale of Goods Act 1893 (2nd edn, 1894), but in any event ‘preclude’ and ‘estop’ are used interchangeably in English law: see eg Scarf v Jardine (1882) 7 App Cas 345, HL, 359 (Lord Blackburn). 3 See Colonial Bank v Whinney (1886) 11 App Cas 426, 435–6 (Lord Blackburn). 4 Farquharson Bros & Co v King & Co [1902] AC 325, HL, 333 (Lord Halsbury LC). 5 ‘[The] section expresses the old principle that apparent authority to sell is an exception to the maxim nemo dat quod non habet’: Eastern Distributors Ltd v Goldring [1957] 2 QB 600, CA, 606 et seq. 6 See Ch 9. To illustrate the exception, Chalmers, The Sale of Goods Act 1893 (2nd edn, 1894) cited the following: Pickard v Sears (1837) 6 A & E 469; Gregg v Wells (1839), 10 A & E 90; Freeman v Cooke (1848) 2 Exch 654; 18 LJ Ex 114; Knights v Wiffen (1870), LR 5 QB 660; cf Seton v Lafone (1887) 19 QBD 68, CA. The attempt to set up an estoppel by representation succeeded in Henderson & Co v Williams [1895] 1 QB 521, CA, but failed in Farquharson Bros & Co v King & Co [1902] AC 325, HL. Cf Lloyds and Scottish Finance Ltd v Williamson [1965] 1 WLR 404, which was not a case of estoppel at all, since the principal conferred on the agent actual, albeit implied, authority to represent that he was selling the car as an apparent principal: see at 409 (Salmon LJ). For the view that the exception also extends to apparent ownership, see Eastern Distributors Ltd v Goldring [1957] 2 QB 600, CA, 610–1 and 11.48. 7 See Farquharson Bros & Co v King & Co [1902] AC 325, HL, 339 (Lord Robertson); Central Newbury Car Auctions Ltd v Unity Finance Ltd [1957] 1 QB 371, CA, 393–6 (Morris LJ); Mercantile Credit Co Ltd v Hamblin [1965] 2 QB 242, CA, 271–2 (Pearson LJ); Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890, HL; Gator Shipping Corp v Trans-Asiatic Oil Ltd [1978] 2 Lloyd’s Rep 357 37–8; Cadogan Finance Ltd v Lavery and Fox [1982] Com LR 248. Lord Denning MR saw estoppel by negligence as the underlying principle, whether in the exception to s 21(1) or in ss 2, 8 and 9 of the Factors Act 1889, saying, in Beverley Acceptances Ltd v Oakley [1982] RTR 417, CA, 426: ‘The old maxim – nemo dat quod non habet – no longer prevails. It has been replaced by the modern principle which gives protection to a person who takes in good faith and for value without notice. If the original owner of goods is so wanting in the care of them, or in the evidence of title to them, that his failure actually facilitates the thief in his disposal of them, then he is the author of his own loss … We need no longer interpret the Factors Acts by the letter. We can go by the spirit which lies behind them. Modern law has made them a particular application of general principle’. Unsurprisingly, this has not received general acceptance. 8 Farquharson Bros & Co v King & Co [1902] AC 325, HL, 341 (Lord Lindley).

458

Sale of goods 11.10

11.5 An agreement to sell, not concluded by a sale, does not fall within s 21(1).9 11.6 The fact that the seller has possession of the goods or documents of title to goods is not sufficient, of itself, to preclude the owner from denying the possessor’s authority to sell, since possession is ambiguous.10 11.7

Only a voluntary representation will bring a case within the exception.11

11.8 In relation to estoppel by negligence, it has been said that the behaviour which will preclude the owner from denying a seller’s authority to sell must involve more than mere carelessness in the conduct of his affairs; it must amount to a disregard of his obligations towards the person who is setting up the defence (generally the purchaser of the goods).12 11.9 It is not only common law estoppels by representation or negligence which are excepted from the nemo dat principle, since s 21(2)(a) provides that ‘nothing in this Act affects the provisions of the Factors Acts … enabling the apparent owner of goods to dispose of them as if he were their true owner’. The provisions with which the following part of this chapter is concerned are ss 2, 8 and 9 of the Factors Act 1889 (‘the 1889 Act’), which remain in force today,13 and ss 24 and 25(1) of the 1979 Act, which re-enact, with minor amendments, ss 8 and 9 of the 1889 Act. 11.10 In addition, s 62(2) of the 1979 Act (as amended) provides: ‘The rules of the common law, including the law merchant, except in so far as they are inconsistent with the provisions of legislation including this Act and the Consumer Rights Act 2015, and in particular the rules relating to the law of principal and agent and the effect of fraud, misrepresentation, duress or coercion, mistake, or other invalidating cause, apply to contracts for the sale of goods.’

9

10

11 12 13

Shaw v Metropolitan Police Commr [1987] 1 WLR 1332, CA. The decision is described as ‘unsatisfactory’ in Atiyah’s The Sale of Goods (12th edn, 2010), and is questioned in Benjamin’s Sale of Goods (9th edn, 2014), [7-008], but at 1337 Lloyd LJ, delivering the only reasoned judgment, held that ‘sold’ does not, ‘on principle’, include ‘agreed to sell’, and we see no reason to doubt this. Johnson v Credit Lyonnais Company (1877) 3 CPD 32, CA, 36 (Lord Cockburn CJ); ­Mercantile Bank of India Ltd v Central Bank of India Ltd [1938] AC 287, PC, not following Commonwealth Trust Co v Akotey [1926] AC 72, PC; Central Newbury Car Auctions Ltd v Unity Finance Ltd [1957] 1 QB 371, CA, 380 (Denning LJ), where the principle was applied to documents of title as well as the goods themselves. Henderson & Co v Williams [1895] 1 QB 521, CA, is not a case to the contrary, since the owner, by his agent, actually attorned to the buyer. Debs v Sibec Developments Ltd [1990] RTR 91 (Simon Brown J), where thieves extracted a ‘receipt’ for a stolen car by threatening the owner. Johnson v Credit Lyonnais Company (1877) 3 CPD 32, CA, and Heap v Motorists Advisory Agency [1923] 1 KB 577 (Lush J) 587. In both cases, it was held on the facts that there was no evidence of negligence in the required sense on the part of the true owner of the goods. See generally Merrett [2008] CLJ 376.

459

11.11  Statutory estoppel

Dispositions by mercantile agents, sellers and buyers in possession The Factors Acts 11.11 There have been five Factors Acts. The first was an Act of 1823. Its broad effect was that a person entrusted with goods for the purpose of sale, who shipped the goods in his own name, was deemed to be the true owner of them, so far as to entitle a bona fide consignee of the goods to a lien upon them in respect of money advanced to, or for the use of, the named shipper. The basis of the protection was that the person adversely affected by the lien was a person who had entrusted the goods to the shipper. The Factors Act 1825 extended the protection conferred by the 1823 Act in two ways: first, to cases where it was not the goods, but documents of title, which had been entrusted to the agent; secondly, by providing that contracts for the purchase of goods made with agents entrusted with goods should be ‘binding upon and good against the owner of such goods’. This provision was subject to the proviso that ‘such contract … be made in the usual and ordinary course of business, and that [the purchaser] … shall not … have notice that such agent … is … not authorised to sell the said goods …’. Thus, an unauthorised sale in the usual and ordinary course of business by an agent entrusted with documents of title was made binding on the owner in favour of a purchaser without notice. This was followed first by the Factors Act 1842, which extended the protection so as to validate pledges, liens or other security granted upon goods or documents of title, and then by the Factors Act 1877, ss 3 and 4 of which legislated for the cases of dispositions by sellers or buyers of goods who were in possession of documents of title to goods. These Acts were directed to giving protection to those who had dealt in good faith with agents, to whom goods, or documents of title to goods, had been entrusted, to the extent that the rights of such persons should override those of the owner who had entrusted the goods or documents to the agent.14 The 1889 Act repealed and consolidated the Acts of 1823 to 1877. Sections 3 and 4 of the 1877 Act became, with amendments, ss 8 and 9 of the 1889 Act. These were in turn re-enacted as ss 24 and 25(1) of the 1979 Act, with minor amendments.15

14 15

This account of the history and policy of the Factors Acts 1823 to 1889 is based on the speech of Lord Goff of Chieveley in National Employers’ Mutual General Insurance Association Ltd v Jones [1990] 1 AC 24, HL, 57–63. See also Battersby [1991] MLR 752. Sections 8 and 9 were re-enacted as s 25(1) and (2) of the Sales of Goods Act 1893, with the omissions in each case of certain words: see 11.26 and 11.29. The omissions arguably narrowed, albeit in a minor way, the scope of the later provisions. Section 25(1) and (2) of the 1893 Act was re-enacted, verbatim, as ss 24 and 25(1) of the 1979 Act. The reason for the omissions – indeed, the reason for the re-enactment of ss 8 and 9 of the 1889 Act in the Sale of Goods Acts of 1893 and 1979, without repealing ss 8 and 9 – is obscure. Commenting on s 8 in 1894, Sir Mackenzie Chalmers wrote: ‘The Sale of Goods Bill originally proposed to repeal [ss 8, 9 and 10]; but the repeal was afterwards omitted, in order that the draftsman of the Factors Acts might be consulted; and the matter was left over to be dealt with by a Statute Law Revision Act’. Decisions on ss 2, 8 and 9 are authoritative in relation to ss 24 and 25(1): National Employers’ Mutual General Insurance Association Ltd v Jones [1990] 1 AC 24, HL, 63 (Lord Goff).

460

Sale of goods 11.13

11.12 The following thesis was advanced by Spencer Bower in the first edition of this work and repeated in subsequent editions:16 ‘Where any person is empowered by law to enforce a right “as if” the conditions precedent to the exercise of such right were present, though they were not so in fact, this can mean only (whatever be the exact language used) that the party against whom the right may be enforced, notwithstanding the absence of those conditions, is estopped from asserting their absence.’

11.13 We do not feel able to continue to support this without some modification to it. Take, for example, the statutory hypothesis in s 8 of the 1889 Act and s 24 of the 1979 Act, namely that the relevant transaction is to have the same effect ‘as if the person making the delivery or transfer were expressly authorised by the owner of the goods to make the same’. A disponee relying on the section in order to establish a title to goods as against the owner cannot simply plead that M, the person delivering the goods to him, was expressly authorised by the owner: in such a case the owner would not be estopped from denying M’s authority. The words ‘as if’ do not provide the disponee with an estoppel as to the content of any representation made by the owner, so as to assist the disponee in establishing a non-statutory right; they enact instead that, on proof of the matters referred to in the section, the disponee has a statutory right with the same legal effect as the general law accords to the facts assumed in the hypothesis.17 The true position, we submit, is that ss 2, 8 and 9 of the 1889 Act and ss 24 and 25(1) of the 1979 Act create statutory rights and statutory causes of action.18 They do not operate merely as estoppels in the sense intended by Spencer Bower.19 16

17

18 19

First edition, 1923, p 301. In earlier editions this passage appeared in the commentary on s 20 of the Bills of Exchange Act 1882 (as to which, see 11.67 onwards). Were it true, it would be equally applicable to the statutory hypotheses to be found in the sections of the 1889 Act and the 1979 Act with which this part of this chapter is concerned. It cannot, however, be accepted without qualification. See below. We therefore respectfully agree with the observation of Devlin J (giving the judgment of the Court of Appeal) in Eastern Distributors Ltd v Goldring [1957] 2 QB 600, 609, that ‘the language which [ss 2, 8 and 9 of the 1889 Act and s 25 of the Sale of Goods Act 1893] employ … is not the language of estoppel’. The same, we would say, is true of the other sections considered in this chapter with respect to ‘as if’ statutory hypotheses: see the proviso to s 20 of the Bills of Exchange Act 1882 (‘as if it had been filled up within a reasonable time and strictly in accordance with the authority given’) and s 14 of the Partnership Act 1890 (where the reference to liability ‘as a partner’ is equivalent to liability ‘as if he were a partner’). And the same is true of s 20 of the Bills of Exchange Act 1882 and s 14 of the Partnership Act 1890. It may also be observed that, while the fact of possession of the goods by a mercantile agent or a seller or buyer may loosely equate to a representation that the possessor has the right or power to dispose of the goods, ss 2, 8 and 9 of the 1889 Act and ss 24 and 25(1) of the 1979 Act do not refer to the other elements of an estoppel by representation, viz reliance and detriment. Of course, entry into the disposition, the validation of which the disponee seeks to achieve by invoking the relevant section, may always be a sufficient act of detrimental reliance, but it is at least surprising that, if Parliament intended the sections to result in non-statutory estoppels, it did not make detrimental reliance a necessary condition of their operation.

461

11.14  Statutory estoppel

11.14 The sections do nevertheless codify, adapt and enlarge the general law,20 and have developed out of principles of apparent ownership and apparent ­authority21 which are themselves aspects of, or related to, estoppel.22 Moreover, each section operates in accordance with the doctrine of estoppel, in the wider concept of estoppel adopted herein, since its effect is to attribute to the owner of goods responsibility for the disponee’s change of position (his purchase of the goods or acceptance of them by way of pledge, etc), and to preclude the owner from changing his own position by denying to the disposition the effect accorded to it by the section.23 Expressions common to some or all of the provisions 11.15 The expression ‘the owner’ in s 2 of the 1889 Act, otherwise undefined, means the person who can give express authority with regard to ‘the dealing in question’.24 Where the proprietary rights in goods are shared or divided between two or more persons, eg pledgor and pledgee, the persons who, acting together, can give such an authority constitute ‘the owner’.25 Moreover, a pledgee, with only a ‘special property’ in goods, is, by himself, ‘the owner’ if, by the terms of the pledge, he has power to exercise ‘all the rights of ownership over the goods’.26

20 21

They are ‘based on and supplement the common law’: Goldring, 609. See s 21(2)(a) of the 1979 Act, re-enacting s 21(2)(a) of the Sale of Goods Act 1893, and 11.48. 22 See 9.4 and 9.5. 23 For the effects of ss 2, 8 and 9 of the 1889 Act and ss 24 and 25(1) of the 1979 Act, see 11.24, 11.28 and 11.31. For a case of a non-statutory estoppel by which a representor precluded itself from denying that the representee was entitled to be treated as if she had a status which she did not have, either in fact or in law, see Daejan Properties Ltd v Mahoney [1995] 2 EGLR 75, CA, 78 (Bingham MR). In Wroe (t/a Telepower) v Exmos Cover Ltd [2000] 15 EG 155, CA, a similar estoppel was asserted unsuccessfully, for want of detrimental reliance. 24 Lloyds Bank Ltd v Bank of America National Trust and Savings Association [1938] 2 KB 147, CA, 161 (Greene MR). The ‘dealing in question’ is a reference to the statutory hypothesis in s 2 that ‘any sale, pledge, or other disposition of the goods’ is as valid as if the mercantile agent were ‘expressly authorised by the owner of the goods to make the same’. The ‘dealing’ therefore refers to the disposition (sale, pledge or other disposition) which is sought to be validated, and the question is whether the person whose title it is sought to divest or bar had the power to give express authority for the disposition in question. 25 Ibid. 26 Lloyds Bank Ltd v Bank of America, above, 164 (Greene MR). Presumably it is sufficient that the proprietary interest of that person entitles him to authorise the dealing in question. In Beverley Acceptances Ltd v Oakley [1982] RTR 417, the Court of Appeal went further and held that a pledgee on his own was ‘the owner’ for the purposes of s 2, notwithstanding that at the time of the disposition in question he had no power of sale: see p 429 (Donaldson LJ). That the pledgee was ‘the owner’ was conceded (see 431). Lord Denning MR, at 424, said the point was ‘quite plain’, and Donaldson and Slade LJJ, at 431 and 436, considered that it was covered by Lloyds Bank Ltd v Bank of America. With respect, neither the concession nor the decision on this aspect of the appeal was justified by Lloyds Bank Ltd v Bank of America, where, in contrast with the position in Beverley Acceptances, the pledgee’s power of sale was exercisable ‘at once’, without any demand: see Lloyds Bank Ltd v Bank of America, 158 (Greene MR).

462

Sale of goods 11.18

11.16 The expression ‘mercantile agent’, which is common to all the sections, is defined as:27 ‘a mercantile agent having in the customary course of his business as such agent authority either to sell goods, or to consign goods for the purpose of sale, or to buy goods, or to raise money on the security of goods.’28

11.17 A mercantile agent can be in possession with the consent of the owner, even if the proprietary interests in the goods are shared or divided between two or more persons, eg pledgor and pledgee.29 11.18 The expressions ‘document of title’ and ‘person’ receive the same definitions in both Acts.30 The expression ‘sale’ is defined in the 1979 Act,31 but

27 See s 1(1) of the 1889 Act and s 26 of the 1979 Act. 28 See Heyman v Flewker (1863) 13 CB (NS) 519; Lamb v Attenborough (1862) 1 B & S 831; Cole v North Western Bank (1875) LR 10 CP 354, 372 (carrier, clerk and warehouseman not mercantile agents); Weiner v Harris [1910] 1 KB 285, CA (a retail jeweller receiving goods for ‘sale or return’ held to be an agent for sale and so a mercantile agent); Lowther v Harris [1927] 1 KB 393 (Wright J) (a person may be a mercantile agent, although acting for one principal only and having no general occupation as an agent); Heap v Motorists Advisory Agency Ltd [1923] 1 KB 577 (Lush J) (if a person is not a mercantile agent when he receives goods, the fact that he becomes one later, before he sells them, does not bring the case within s 2); Lloyds Bank Ltd v Bank of America National Trust and Savings Association [1938] 2 KB 147, CA (the pledgors were the pledgee’s mercantile agents under a ‘trust receipt’ appointing them the pledgee’s agents for sale). It is sometimes asserted that a person who is authorised to act as a mercantile agent on a single occasion is a mercantile agent; see eg Benjamin’s Sale of Goods (9th edn, 2014), [7-032], where Lowther v Harris and Heap are cited for this proposition. See also Fairfax Gerrard Holdings Limited v Capital Bank Plc [2007] 1 Lloyd’s Rep 171 (HHJ Mackie QC), [31], citing Benjamin and Lloyds Bank Ltd v Bank of America, above. In Lloyds Bank Ltd v Bank of America, however, the standard arrangements between the pledgee and the pledgors constituted the pledgors agents of the pledgee for the purpose of selling the pledged goods; it was not a ‘one-off’ transaction. No doubt a person who sets up in business as a mercantile agent within the statutory definition is such from the outset. But there is a danger of losing sight of the definition in s 1(1). In Beverley Acceptances Ltd v Oakley [1982] RTR 417, CA, Lord Denning MR said, at 420, 424, that it was ‘quite plain’ that a person who was ‘interested in collecting old motor cars, renovating them and re-selling them’ was a ‘mercantile agent’, but made no reference to the definition; Donaldson LJ merely noted, at 431, that it had been conceded that it was no bar to a person being a ‘mercantile agent’ that he did not normally deal in goods and that the relevant transaction may have been a ‘one off’; and Slade LJ said, at 436, that ‘on the evidence’ the person in question was ‘at all material times’ a ‘mercantile agent’. With respect, the facts recited in the judgments do not appear to support the finding that the person in question was carrying on the business of a mercantile agent. 29 Lloyds Bank Ltd v Bank of America National Trust and Savings Association [1938] 2 KB 147, CA, 163 (Greene MR). On the special facts of that case, the pledgee was treated as ‘the owner’, albeit he had only a special property in the goods, while the pledgors, who had the general property in the goods, were the pledgee’s mercantile agents. The decision was purportedly followed in Beverley Acceptances Ltd v Oakley [1982] RTR 417, CA, but see n 28 above. 30 See s 1(4) of the 1889 Act and s 61(1) of the 1979 Act (‘document of title’) and s 1(6) of the 1889 Act and Sch 1 to the Interpretation Act 1978 (‘person’). 31 See s 61(1). The expression ‘seller’ appears in s 9 of the 1889 Act and s 25(1) of the 1979 Act. It is defined in the later Act to mean ‘a person who sells or agrees to sell goods’. It plainly

463

11.18  Statutory estoppel

undefined in the 1889 Act; on the other hand, ‘pledge’ is defined in the 1889 Act,32 but undefined in the 1979 Act. The expression ‘disposition’, which is common to all the sections and obviously wider than ‘sale’ or ‘pledge’, is undefined in either Act or in the Interpretation Act 1978, and no doubt has the same meaning throughout the sections. 11.19 The expression ‘goods’ is defined differently in the two Acts,33 although, in all probability, nothing would ever turn on this.34 11.20 The expression ‘possession of [the] goods, or of the documents of title to the goods’ is common to all five sections. Section 1(2) of the 1889 Act provides: ‘A person shall be deemed to be in possession of goods or of the documents of title to goods, where the goods or documents are in his actual custody or are held by any other person subject to his control or for him or on his behalf.’35

11.21 Consent, good faith and notice are discussed below.36 Dispositions by mercantile agents in possession 11.22 Section 2(1) of the 1889 Act provides: ‘Where a mercantile agent is, with the consent of the owner, in possession of goods or of the documents of title to goods, any sale, pledge, or other disposition of the goods, made by him when acting in the ordinary course of business of a mercantile agent, shall, subject to the provisions of this Act, be as valid as if he were expressly authorised by the owner of the goods to make the same; provided that the person taking under the disposition acts in good faith, and has not at the time of the disposition notice that the person making the disposition has not authority to make the same.’

bears the same meaning in the 1889 Act, the seller being the counterparty to the person who ‘bought or agreed to buy goods’. 32 33

See s 1(5). See s 1(3) of the 1889 Act: ‘goods’ includes ‘wares and merchandise’; and s 61(1) of the 1979 Act: ‘goods’ includes ‘all personal chattels other than things in action and money …; and in particular “goods” includes emblements, industrial growing crops, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale and includes an undivided share in goods’. 34 Chalmers, The Sale of Goods Act 1893 (2nd edn, 1894) commented: ‘The term used in the 17th section of the Statute of Frauds is “goods, wares, and merchandise”. [The definition of “goods” in the 1889 Act], therefore, probably incorporates the numerous decisions on the meaning of those words in [the Statute of Frauds], which are reproduced in the definition of “goods” given by s 62 of the Sale of Goods Act [now s 61(1) of the 1979 Act].’ In other words, the two definitions are, in effect, co-extensive. 35 There is no corresponding provision in the 1979 Act. In City Fur Manufacturing Company Ltd v Fureenbond (Brokers) London Ltd [1937] 1 All ER 799, Branson J held that the meaning of ‘possession’ in s 1(2) of the 1889 Act should be adopted for the 1979 Act. 36 See 11.37–11.44.

464

Sale of goods 11.23

11.23 In order for P, or a person claiming through P, to make good a title ­deriving from O, relying on s 2, the following conditions must be satisfied:37 1.

A mercantile agent,38 M, has possession of goods or documents of title,39 as a mercantile agent,40 with the consent of O, the owner.41

2. M sells, pledges or otherwise disposes of the goods to P.42 In so doing, M acts in the ordinary course of business of a mercantile agent.43 As to the burden of proof, see 11.45. For a case where the disponor was held to be a ‘mercantile agent’, see Turner v Sampson (1911) 27 TLR 200, 202 (Channell J). Cases where the person in possession was held not to be a ‘mercantile agent’ include Mehta v Sutton (1913) 109 LT 529, CA; Belvoir Finance Co Ltd v Harold G Cole & Co Ltd [1969] 1 WLR 1877 (Donaldson J); and Fadallah v Pollak [2013] EWHC 3159 (QB) (HHJ Seymour QC); in these cases, the person alleged to be a ‘mercantile agent’ only bought and sold on his own account. 39 See 11.18, 11.19 and 11.20. 40 Cole v North Western Bank (1875) LR 10 CP 354, 371–2 (Blackburn J); Folkes v King [1923] 1 KB 282, 295–6 (Bankes LJ); Staffs Motor Guarantee v British Wagon Co [1934] 2 KB 305 (Mackinnon J); Pearson v Rose & Young Ltd [1951] 1 KB 275, CA, 288 per Denning LJ: ‘the owner must consent to the agent having them for a purpose which is in some way or other connected with his business as a mercantile agent. It may not actually be for sale. It may be for display or to get offers, or merely to put in his showroom; but there must be a consent to something of that kind before the owner can be deprived of his goods’. See also Astley Industrial Trust v Miller [1968] 2 All ER 36 (Chapman J); Belvoir Finance Co Ltd v Harold G Cole & Co Ltd [1969] 1 WLR 1877 (Donaldson J). 41 Section 2(4) provides that, for the purposes of the 1889 Act, the consent of the owner is to be presumed in the absence of evidence to the contrary. See further 11.37 onwards. 42 The mercantile agent must be in possession of the goods or documents of title at the time of the disposition: Beverley Acceptances Ltd v Oakley [1982] RTR 417, CA, 431 (Donaldson LJ), and 438 (Slade LJ) (‘the possession and disposition must be simultaneous’). The same conclusion was reached independently in Fairfax Gerrard Holdings Limited v Capital Bank Plc [2007] 1 Lloyd’s Rep 171 (HHJ Mackie QC), [31] (reversed on another ground [2008] 1 Lloyd’s Rep 297, CA). 43 In considering whether a transaction is validated by s 2, the question is whether the agent has acted in the transaction as a mercantile agent would act. This means that the transaction must take place within business hours and in the kind of circumstances in which a mercantile agent in the trade would ordinarily transact business: Oppenheimer v Attenborough & Son [1908] 1 KB 221, CA, 226–7 (Lord Alverstone CJ). If the mercantile agent was in fact acting in the ordinary course of his business as such, it makes no difference that, in the particular trade, there is a custom that agents are not supposed to deal with the goods in the particular manner alleged, for example by pledge, and evidence of such a custom is inadmissible: Oppenheimer v Attenborough & Son [1908] 1 KB 221, CA (per Lord Alverstone CJ at 225–8, Buckley LJ at 229–231, and Kennedy LJ at 232). See also Biggs v Evans [1894] 1 QB 88; De Gorter v Attenborough & Son (1905) 21 TLR 19; Janesich v Attenborough & Son (1910) 102 LT 605; Turner v Sampson (1911) 27 TLR 200. Newtons of Wembley Ltd v Williams [1965] 1 QB 560, CA, was unusual in that the sale of a used car in the street for cash was held to be in the ordinary course of business, the evidence being that there was a well-established street market in Warren Street, London, for cash dealing in used cars. See also Lloyds & Scottish Finance Ltd v Williamson [1965] 1 WLR 404, CA, 408–9 (Salmon LJ). It is not necessary, however, that P should know that M is acting as a mercantile agent: ‘The question whether [P] believed [M] to be an agent, or believed him to be the owner of the goods, is a question that is not material for the purposes of the Factors Act’: Oppenheimer v Attenborough & Son, above, 228 ­(Buckley LJ). It follows from this that s 2 is not a straightforward exemplification of the ­doctrine of apparent authority, since it covers a case of M appearing to act, and being treated by P, as principal/owner. By contrast, ss 8 and 9 plainly have some affinity with apparent a­ uthority: cf Bowstead & Reynolds on Agency (20th edn, 2014), [8–144]. 37 38

465

11.24  Statutory estoppel

3.

P acts in good faith and without notice of M’s lack of authority.44

11.24 If these conditions are satisfied, the disposition to P is as valid as if M were expressly authorised to make the disposition by ‘the owner of the goods’. For this purpose, ‘the owner of the goods’ is O, the person who consented to M having possession of the goods or documents of title.45 The effect of the section, when it applies, is to make O’s title subject to the disposition made between M and P. If that disposition is a sale, the effect is to divest O of his title.46 If it is a pledge, it seems that O retains the general property in the goods, subject to a special property in P as pledgee.47 If O is not the true owner, the section has no effect on the title of the true owner. 11.25 Section 2 of the 1889 Act is a clear example of Parliament adopting the principle of estoppel to deny the true owner protection where he has himself consented to a mercantile agent having possession of goods or documents of title: ‘by leaving them in the agent’s possession, he has clothed the agent with apparent authority to sell them; and he should not therefore be allowed to claim them back from an innocent purchaser’.48 Dispositions by sellers in possession 11.26 Section 8 of the 1889 Act provides:49 ‘Where a person having sold goods continues or is in possession of the goods, or of the documents of title to the goods, the delivery or transfer by that person, or by a mercantile agent acting for him, of the goods or documents of title under any sale, pledge, or other disposition thereof, [or under any agreement for sale, pledge, or other disposition thereof,]50 to any person receiving the same in good faith and without notice of the previous sale, has the same effect as if the person making the delivery or transfer were expressly authorised by the owner of the goods to make the same.’51 44 See 11.43–11.44. 45 National Employers’ Mutual General Insurance Association Ltd v Jones [1990] 1 AC 24, HL, 60 per Lord Goff, who noted that the reference to ‘the owner’ in the hypothesis in s 2 of the 1889 Act (‘as if he were expressly authorised by the owner of the goods to make the same’) can only be a reference to the previously mentioned ‘owner’ (whether or not he is the true owner) who consented to the mercantile agent having possession of the goods or documents of title. 46 Cf Rutherford and Todd [1979] CLJ 346. 47 See nn 58 and 67 below. 48 Pearson v Rose & Young Ltd [1951] 1 KB 275, CA, 286–7 (Denning LJ). 49 In Chalmers, The Sale of Goods Act 1893 (2nd edn, 1894), p 128, it was said that s 3 of the Factors Act 1877, which was re-enacted with amendments as s 8 of the 1889 Act, was passed in order to reverse the effect of Johnson v Credit Lyonnais Company (1877) 3 CPD 32, CA, where it was held that, if the buyer, P1, for his own convenience, left the goods and documents of title in the hands of the seller, S, who fraudulently resold or pledged them, P1 could nevertheless recover the goods from P2, an innocent later disponee from S. Section 3 of the 1877 Act only applied to the possession and delivery by S of documents of title. Section 8 of the 1889 Act extended the principle to goods. 50 See nn 56 and 62 below. 51 The words in square brackets are omitted from s 24 of the 1979 Act.

466

Sale of goods 11.28

11.27 In order for P2, or a person claiming through P2, to make good a title deriving from S, relying on s 8,52 the following conditions must be satisfied:53 1.

The goods to which P2 later claims title are sold by S to P1.54

2.

S continues or is in possession of the goods or the documents of title.55

3.

S makes or agrees to make a sale, pledge or otherwise disposition of the goods to P2.56

4.

S delivers or transfers the goods or documents of title to P2 (or effects this by a mercantile agent acting for him).

5.

P2 acts in good faith and without notice of the sale by S to P1.57

11.28 If these conditions are satisfied, the disposition to P2 has the same effect as if S, or his mercantile agent, were expressly authorised to make the disposition by ‘the owner of the goods’.58 For this purpose, ‘the owner of the goods’ is P1, the first buyer.59 The effect of the section, when it applies, is to make P1’s title subject to the disposition made by S to P2. If that disposition is a sale, the effect is to divest P1 of his title. If it is a pledge, it seems that P1 retains the general 52 53 54

Section 24 of the 1979 Act. As to the burden of proof, see 11.45. Section 24 obviously does not apply (and does not need to apply) in a case where P1 has only agreed to buy, since in such a case S retains title and P2 does not need to invoke the section. 55 The phrase ‘continues in possession’ means that S continues in physical possession of the goods, irrespective of the quality of his possession: Worcester Works Finance Ltd v Cooden Engineering Co Ltd [1972] 1 QB 210, CA, applying Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd [1965] AC 867, PC, and on this point overruling Eastern Distributors Ltd v Goldring [1957] 2 QB 600, CA, and Staffs Motor Guarantee Ltd v British Wagon Co Ltd [1934] 2 KB 305, CA. The possession need not be with P1’s consent: ibid. 56 For this purpose, ‘disposition’ involves a transfer of property in the goods, as contrasted with mere transfer of possession: Worcester Works Finance Ltd v Cooden Engineering Co Ltd, above. Thus, under s 8, though possibly not under s 24, the transaction between S and P2 may be an agreement to sell, eg an agreement for sale with a title reservation clause: cf In re Highway Foods International Ltd [1995] BCC 271 (EG Nugee QC) and P4 Limited v Unite Integrated Solutions Plc [2006] BLR 150 (Ramsey J), both of which concerned s 9 and s 25(1). 57 See 11.43–11.44. 58 The statutory hypothesis does not appear to bring P1 and P2 into direct contractual relations: cf P4 Limited v Unite Integrated Solutions Plc [2006] BLR 150 (Ramsey J) (a case on s 9). This seems to be right, since the sections are only concerned with validating dispositions, ie with matters of title. On the other hand, Benjamin’s Sale of Goods (9th edn, 2014), [7-065], in discussing this section, suggests that P2 may have contractual rights against the owner, P1, ‘although this is by no means explicit in the wording of the statute’. See also n 67 below. 59 National Employers’ Mutual General Insurance Association Ltd v Jones [1990] 1 AC 24, HL, at 60 and 62. It is evident that Lord Goff construed the hypothesis in s 8 of the 1889 Act and s 24 of the 1979 Act (‘as if the person making the delivery or transfer were expressly authorised by the owner of the goods to make the same’) as operating in the same way as the ­hypothesis in s 3 of the Factors Act 1877, ie ‘as if such vendor or person were an agent or person entrusted by the vendee with the goods or documents’. Thus ‘the owner’ in the statutory hypothesis in ss 8 and 24 (whether or not he is the true owner) is P1 – as it were, ‘the vendee’ in s 3 who has ‘entrusted’ S with possession.

467

11.28  Statutory estoppel

property in the goods, subject to a special property in P2 as pledgee.60 If P1 is not the true owner, the section has no effect on the title of the true owner. Dispositions by buyers in possession 11.29 Section 9 of the 1889 Act provides:61 ‘Where a person having bought or agreed to buy goods obtains, with the consent of the seller, possession of the goods or the documents of title to the goods, the delivery or transfer by that person, or by a mercantile agent acting for him, of the goods or documents of title, under any sale, pledge, or other disposition thereof, [or under any agreement for sale, pledge, or other disposition thereof,]62 to any person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods, has the same effect as if the person making the delivery or transfer were a mercantile agent in possession of the goods or documents of title with the consent of the owner.’63

11.30 In order for P2, or a person claiming through P2, to make good a title deriving from P1, relying on s 9,64 the following conditions must be satisfied:65 1.

The goods to which P2 later claims title are bought or agreed to be bought by P1 from S.66

2.

With S’s consent, P1 obtains possession of the goods or the documents of title to the goods.

60 See Benjamin’s Sale of Goods (9th edn, 2014), [7-065] and n 71 below. 61 Section 4 of the 1877 Act only applied to the possession and delivery of documents of title. Section 9 of the 1889 Act extended the principle to goods. 62 The effect of the additional words in ss 8 and 9 of the 1889 Act is uncertain: see Benjamin’s Sale of Goods (9th edn, 2014), [7-065] (s 8) and [7-084] (s 9). In Shenstone & Co v Hilton [1894] 2 QB 452 a hirer under a hire purchase agreement had delivered goods to an auctioneer for sale. The auctioneer sold the goods. Bruce J held that s 9 protected the auctioneer from a conversion claim by the true owner on the grounds that the hirer was a person who had agreed to buy the goods and had delivered them to the auctioneer under an agreement for sale. The statutory phrase ‘delivery … of the goods … under any agreement for sale to any person receiving the same in good faith [etc]’ was construed as including delivery under an agreement for a sale, not to the deliveree (the auctioneer), but by the deliveree. (Shenstone was decided in light of the Court of Appeal decision in Helby v Matthews [1894] 2 QB 262. After Shenstone was decided, Helby v Matthews was reversed by the House of Lords [1895] AC 471, which held that the hirer under a hire purchase agreement is not a person who has agreed to buy. Even on its own terms, however, Shenstone seems impossible to justify.) 63 The words in square brackets are omitted from s 25(1) of the 1979 Act. 64 Section 25(1) of the 1979 Act. 65 As to the burden of proof, see 11.45. 66 Section 25(1) of the 1979 Act includes the case where the first buyer, P1, has ‘bought’ the goods, and so has acquired the general property in the goods under a ‘sale’: cf s 2(4) of the 1979 Act. It seems that the concern of s 25(1) is to protect P2 in a case where P1 has the general property in the goods but S has a lien on them, eg for the price payable to him by P1, provided, of course, that P2 has no notice of S’s lien. (S’s lien would terminate if he delivered the goods to a carrier or other bailee for the purpose of transmission to P1 without reserving the right of disposal of the goods, or P1 or his agent lawfully obtained possession of the

468

Sale of goods 11.31

3.

P1 makes or agrees to make a sale, pledge or otherwise disposition of the goods to P2.67

4.

P1 delivers or transfers the goods or documents of title to P2 (or effects this by a mercantile agent acting for him).

5.

P2 acts in good faith and without notice of any lien or other right of S in respect of the goods.68

11.31 If these conditions are satisfied, the disposition to P2 has the same effect as if P1, or his mercantile agent, were a mercantile agent in possession of the goods or documents of title with the consent of ‘the owner’.69 For this purpose, ‘the owner’ is S.70 The effect of the section, when it applies, is to make S’s title subject to the disposition made by P1 to P2. If that disposition is a sale, the effect is to divest or bar S’s title. If it is a pledge, S retains the general property in the goods, subject to a special property in P2 as pledgee.71 If S is not the true owner, the section has no effect on the title of the true owner.

goods: see s 43(1) of the 1979 Act. It may be, therefore, that, in referring to a person having ‘bought’ goods, s 25(1) can only be directed at a case where either (i) S has reserved the right of disposal when delivering the goods to P1, or (ii) P1’s possession of them is unlawful.) 67

Thus, under s 9, though possibly not under s 25(1), the words in square brackets cover a transaction between P1 and P2 taking the form of an agreement to sell, eg an agreement for sale with a title reservation clause: see In re Highway Foods International Ltd [1995] BCC 271 (EG Nugee QC); P4 Limited v Unite Integrated Solutions Plc [2006] BLR 150 (Ramsey J). (This must also be true of the bracketed words in s 8 of the 1889 Act.) 68 See 11.43–11.44. 69 The statutory hypothesis does not appear to bring S and P2 into direct contractual relations: see P4 Limited v Unite Integrated Solutions Plc [2006] BLR 150 (Ramsey J) at [16]: ‘what occurs is that there is delivery under an agreement for sale between that mercantile agent [ie P1 under the statutory hypothesis] and the other party [ie P2]’. This seems to be right, since the sections are only concerned with validating dispositions, ie with matters of title. On the other hand, Benjamin’s Sale of Goods (9th edn, 2014), dealing with s 8 of the 1889 Act, suggests at [7-065] that P2 may have contractual rights against P1 which, if correct, would translate into contractual rights for P2 against S under s 9. 70 National Employers’ Mutual General Insurance Association Ltd v Jones [1990] 1 AC 24, HL, 63 per Lord Goff, who construed the hypothesis in s 9 of the 1889 Act and s 25(1) of the 1979 Act (‘as if the person making the delivery or transfer were a mercantile agent in possession of the goods or documents of title with the consent of the owner’) as operating in the same way as the hypothesis in s 4 of the Factors Act 1877, ie ‘as if such vendee or other person were an agent or person entrusted by the vendor with the documents’. Thus, ‘the owner’ in the statutory hypothesis in ss 9 and 25(1) is the same person (whether or not he is the true owner) as S – as it were, ‘the vendor’ in s 4 who has ‘entrusted’ P1 with possession. This conclusion reflects the view of Professor Atiyah in The Sale of Goods (7th edn, 1985), pp 302–30. See also Battersby and Preston (1972) 35 MLR 268 and Battersby (1991) 54 MLR 752. 71 In re Highway Foods International Ltd [1995] BCC 271 (Edward Nugee QC). In P4 Limited v Unite Integrated Solutions Plc [2006] BLR 150, at [17] Ramsey J said: ‘if there is something less than a sale so that the disposition [between P1 and P2] is not a transfer of title but is merely an agreement for sale or an agreement for a disposition, then the “same effect” provision would lead to there being an agreement for sale between the mercantile agent [ie P1] and [P2]’. See too Benjamin’s Sale of Goods (9th edn, 2014), [7-065] (s 8) and [7-084] (s 9).

469

11.32  Statutory estoppel

11.32 Illustrations of the application of s 25(1) may be found in Cahn v Pockett’s Bristol Channel Steam Packet Co72 and Marten v Whale.73 11.33 The stipulation in s 25(1) that the buyer must have ‘bought or agreed to buy goods’ is satisfied notwithstanding that the buyer’s title has been avoided by his seller, since such a buyer, having obtained possession of the goods with the consent of the seller, is able to pass a good title.74 11.34 For the purposes of s 25(1), a buyer under a conditional sale agreement is to be taken not to be a person who has bought or agreed to buy goods.75 11.35 ‘Delivery’ of goods, for the purposes of each pair of sections, requires a voluntary act on the part of the buyer transferring possession of the goods, although it need not be physical delivery.76 11.36 A particular difficulty arose with respect to s 9 of the 1889 Act and s 25(1) of the 1979 Act, when stating the effect of a delivery or transfer of goods etc by a buyer in possession. The sections state that this is to have ‘the same effect as if the person making the delivery or transfer were a mercantile agent in possession of the goods or documents of title with the consent of the owner’. These words direct one to s 2 of the 1889 Act, which provides that a disposition by a mercantile agent who satisfies the statutory conditions is to be ‘valid as if he were expressly authorised by the owner of the goods to make the same’. The conditions for a disposition by a mercantile agent to have this effect require that he be ‘acting in the ordinary course of business of a mercantile agent’. The difficulty arose with respect to the conditions to be satisfied in order for a delivery or transfer of goods etc by a buyer in possession to have the stated effect. It is

72 73 74

75

76

[1899] 1 QB 643, CA. [1917] 2 KB 480, CA. Newtons of Wembley Ltd v Williams [1965] 1 QB 560, CA. Indeed, recourse to s 9 or s 25(1) assumes that, at the time of the transaction with P2, P1 has no title, or only a ‘possessory’ title, since if he had the general property in the goods there would be no need to invoke the section. The position would be otherwise if the transaction between S and P1 was void, eg because S never intended to contract with P1: cf Shogun Finance Ltd v Hudson [2004] 1 AC 919, HL, where the law is reviewed. In such a case the first condition would not be satisfied: P1 would not have bought or agreed to buy. (Additionally, it may be doubted whether P1 would be in possession with S’s consent.) Section 25(2)(a). For this purpose, ‘conditional sale agreement’ means an agreement for the sale of goods which is a consumer credit agreement within the meaning of the Consumer Credit Act 1974, under which the purchase price or part of it is payable by instalments, and the property in the goods is to remain in the seller (notwithstanding that the buyer is to be in possession of the goods) until such conditions as to the payment of instalments or otherwise as may be specified in the agreement are fulfilled: s 25(2)(b). This applies also to s 9 of the 1889 Act. Forsythe International Ltd v Silver Shipping Ltd [1994] 1 WLR 1334 (Clarke J) (s 25(1)); Michael Gerson (Leasing) Ltd v Wilkinson [2001] QB 514, CA, expressly obiter, at [10] (Clarke LJ). In the latter case it was held that s 24 could be relied upon, although there was only constructive delivery of the goods, which were thereafter held by the seller as bailee of the buyer. See Merrett [2008] CLJ 376.

470

Sale of goods 11.40

clear that a buyer in possession of goods need not be a mercantile agent.77 How, then, could one who is not in fact a mercantile agent make a sale ‘acting in the ordinary course of business of a mercantile agent’? The solution, according to Pearson LJ in Newtons of Wembley v Williams, is that, in such a case, s 2 of the 1889 Act must be modified so that the disposition is valid if the person in possession is ‘doing something which would constitute acting in the ordinary course of business if he were a mercantile agent’.78 Consent 11.37 The concept of ‘consent’ appears in s 2 of the 1889 Act (‘the consent of the owner’) and in s 9 of that Act and s 25(1) of the 1979 Act (‘the consent of the seller’).79 The word must have the same meaning in all three sections.80 11.38 Section 2(3) of the 1889 Act provides: ‘Where a mercantile agent has obtained possession of any documents of title to goods by reason of his being or having been, with the consent of the owner, in possession of the goods represented thereby, or of any other documents of title to the goods, his possession of the first-mentioned documents shall, for the purposes of this Act, be deemed to be with the consent of the owner.’

11.39 Section 2(4) provides that, for the purposes of the Act, the consent of the owner is to be presumed, in the absence of evidence to the contrary. There is no corresponding provision in the 1979 Act. It is impossible to suppose, however, that there should be a presumption in the case of s 9 of the 1889 Act but no presumption in the case of s 25(1) of the 1979 Act. 11.40 It is clear that proof that consent was induced by fraud is not, of itself, sufficient to rebut the presumption that the owner consented.81 In the past, there was uncertainty as to the circumstances, if any, in which a consent obtained by 77 78

79

80 81

Section 9 of the 1889 Act and s 25(1) of the 1979 Act refer to the delivery or transfer of the goods ‘by that person, or by a mercantile agent acting for him’. See also Newtons of Wembley v Williams [1965] 1 QB 560, 578 (Pearson LJ). The solution was criticised by Goode in (1965) 105 Law Jo 4. The point was made that it was not necessary to read s 2 with s 9, and it was contended that the intention of the legislature was that, under s 9, a good title should be passed, such as would be passed if the sale had been by a mercantile agent complying with the requirements of s 2. It was also observed that, if the point had been taken and accepted in Lee v Butler [1893] 2 QB 318, that case might have been decided quite differently, and the whole of the development of the law on hire purchase which followed on that decision might have been unnecessary. The phrase ‘the consent of the owner’ appears in s 25(1) of the 1979 Act as part of the hypothesis on which the disponee claims his title: by contrast, ‘the consent of the owner’ in s 2 of the 1889 Act and ‘the consent of the seller’ in s 25(1) of the 1979 Act are concerned with actual, not hypothetical, consents. Du Jardin v Beadman Bros Ltd [1952] 2 QB 712, 716 (Sellers J). See eg Cahn v Pockett’s Channel Steam Packet Co [1899] 1 QB 643, CA, 654–6 (AL Smith LJ); Folkes v King [1923] 1 KB 282, CA; Lowther v Harris [1927] 1 KB 393; Pearson v Rose & Young Ltd [1951] 1 KB 275, CA, 288–9 (Denning LJ); Du Jardin v Beadman Brothers Ltd [1952] 2 QB 712 (Sellers J).

471

11.40  Statutory estoppel

fraud or a trick would satisfy the requirements of ss 2 and 9 of the 1889 Act and s 25(1) of the 1979 Act. It is also reasonably clear, however, that proof that the mercantile agent committed larceny (in the form of larceny by a trick) when obtaining possession was not, of itself, sufficient to rebut the presumption, even though the definition of larceny was a taking without consent.82 The matter is put effectively beyond argument by the changes to the criminal law made by the Theft Act 1968, where the definition of the offence of theft (replacing larceny) says nothing about an absence of consent on the owner’s part. 11.41 On the other hand, a mercantile agent is not in possession with the consent of the owner if the owner did not intend the agent to have possession at all,83 or if the consent relied on is involuntary, eg having been extracted under threats to the owner’s life,84 or is contained in a contract which is void for illegality.85 11.42 The 1889 Act provides that, once there is possession of goods or documents of title with the owner’s consent, the determination of such consent does not invalidate a sale, pledge or other disposition of the goods, unless the person taking under the disposition had, at the time of the disposition, notice that the consent had been determined.86

82

83

84 85 86

Conflicting views were expressed, obiter, in the Court of Appeal: compare Oppenheimer v Frazer and Wyatt [1907] 2 KB 50 (where it was said that, if the mercantile agent obtained possession by larceny by a trick, this prevented his possession being with the consent of the owner) with Folkes v King [1923] 1 KB 282 (where Bankes and Scrutton LJJ considered that it did not matter whether the mercantile agent obtained possession by larceny by a trick, or by larceny as a bailee, or by false pretences: the owner had consented to his having possession, and the purchaser from him was protected by s 2). In Pearson v Rose & Young Ltd [1951] 1 KB 275, CA, Somervell and Denning LJJ preferred Folkes v King. Sellers J followed Pearson in Du Jardin v Beadman Bros Ltd [1952] 2 QB 712, where at 717 he said: ‘the inquiry is whether the possession was obtained with the consent of the owner … and … it is his knowledge and intention which have to be assessed’ (emphasis added). Denning LJ continued to refer to ‘the classic distinction between obtaining goods by false pretences and larceny by a trick’: see Central Newbury Car Auctions Ltd v Unity Finance Ltd [1957] 1 QB 371, CA, 382, without referring to Du Jardin v Beadman Bros Ltd. However, in Ingram v Little [1961] 1 QB 31, CA, Devlin LJ, who dissented on the facts and alone discussed the present point, said, at 70: ‘Until recently, the ruling judgments on this point have been obiter; but I trust that the law may now be regarded as settled by the decision of Sellers J in Du Jardin v Beadman, where he held that “consent” in the Factors Act 1889 was not to be interpreted in an artificial way in order to bring it into harmony with the criminal law.’ Pearson v Rose & Young Ltd [1951] 1 KB 275, CA (s 2); Du Jardin v Beadman Bros Ltd [1952] 2 QB 712 (Sellers J), 718 (s 9); Stadium Finance Ltd v Robbins [1962] 2 QB 604, CA (s 2). It is suggested in Chitty on Contracts (32nd edn, 2015), Vol 2, [31-081], that this feature of s 2 of the 1889 Act, and no doubt also of s 25(1) of the 1979 Act, is inconsistent with the common law, since it makes relevant matters which the third party may have no means of knowing; on this view, the sections are not merely specific examples of the common law estoppel doctrine of apparent authority. See also nn 17–19 above. Debs v Sibec Developments Ltd [1990] RTR 91 (Simon Brown J) (a case on s 21(1) of the 1979 Act). Belvoir Finance Co Ltd v Harold G Cole & Co Ltd [1969] 1 WLR 1877 (Donaldson J) (doubted in Atiyah’s The Sale of Goods (12th edn, 2010), p 377). Section 2(2). See also Cahn v Pockett’s Bristol Channel Steam Packet Co Ltd [1899] 1 QB 643, CA, 658 (Collins LJ).

472

Sale of goods 11.45

Good faith 11.43 In order for any of the sections to operate, it is necessary for the party setting up the estoppel to have been acting in good faith.87 It is a good defence to any claim made in reliance on the provisions of either statute that the party relying on the statutory protection had notice that the mercantile agent had no authority from the owner to make the disposition which he purported to make,88 in the same way as a representee’s knowledge of the true facts prevents him from relying on an estoppel at common law.89 Notice 11.44 The concept of notice, or rather an absence of notice, is common to all the sections. In relation to s 2(1) of the 1889 Act, Sir Mackenzie Chalmers wrote that the term ‘notice’ ‘probably means actual, though not formal, notice; that is to say, either knowledge of the facts, or a suspicion of something wrong, combined with a wilful disregard of the means of knowledge.’90 Burden of proof 11.45 For the purposes of the statute, the consent of the owner is to be presumed, in the absence of evidence to the contrary.91 That matter apart, a person claiming title to goods under any of the sections here under consideration bears the burden of proving every element in his case.92

87

Section 61(3) of the 1979 Act provides: ‘A thing is deemed to be done in good faith within the meaning of this Act when it is in fact done honestly, whether it is done negligently or not’. There is no corresponding provision in the 1889 Act, but good faith is generally understood in the sense described in s 61(3); see Jones v Gordon (1877) 2 App Cas 616, 628 (Lord Blackburn); Bills of Exchange Act 1882, s 90; Mogridge v Clapp [1892] 3 Ch D 383, Kekewich J and CA, 391 (Kekewich J) and 401 (Kay LJ); Central Estates (Belgravia) Ltd v Woolgar [1972] 1 QB 48, CA, 55 (Lord Denning MR) and 57 (Megaw LJ); Smith v Morrison [1974] 1 WLR 659, at 676 (Plowman J); Barclays Bank Ltd v TOSG Trust Fund Ltd [1984] BCLC 18 (Nourse J) (unaffected on this point by the decisions of the CA and HL, see [1984] AC 626). Reference may also be made to Janesich v Attenborough & Son (1910) 102 LT 605; Moody v Pall Mall Deposit and Forwarding Co Ltd (1917) 33 TLR 306; Heap v Motorists Advisory Agency Ltd [1923] 1 KB 577 (Lush J), at 590–1 (good faith and notice interrelated concepts; cf Heap at 589: good faith and absence of notice ‘distinct’); G E Capital Bank Ltd v Rushton [2006] 1 WLR 899, CA (whether evidence of value relevant to good faith). As to the burden of proof, see 11.45. 88 Turner v Sampson (1911) 27 TLR 200. 89 See 5.10. 90 The Sale of Goods Act 1893 (2nd edn, 1894), at p 124. This is also the view taken in Atiyah’s The Sale of Goods (12th edn, 2010) at p 387, in Benjamin’s Sale of Goods (9th edn, 2014) at [7-047] and in Chitty on Contracts (32nd edn, 2015), Vol 2, [44–229]. 91 Section 2(4) of the 1889 Act. 92 Heap v Motorists’ Advisory Agency Ltd [1923] 1 KB 577 (Lush J), at 590–1: ‘Under s 2 of the Factors Act 1889 … the buyer gets no title apart from the section. He is allowed to get … a statutory title provided he complies with the terms of the section. In order to acquire a title which he would not otherwise have, the buyer has to prove all these things that I have

473

11.46  Statutory estoppel

The title acquired by the disponee 11.46 It is clear from the language of the 1889 and 1979 Acts that a disponee from a mercantile agent or a seller or buyer in possession can acquire a better title than his disponor: in each of the sections we have been considering, the clear effect of the statutory hypothesis is not only to preclude the owner from disputing the disponee’s title, but also to divest the owner of his title. 11.47 The position is the same in relation to the common law principle preserved by s 21(1) of the Sale of Goods Act 1893 (now s 21(1) of the 1979 Act),93 since this has always provided that where an owner is ‘precluded’ from denying a seller’s authority to sell, the buyer acquires a better title than his seller had. 11.48 This was indeed the view of the Court of Appeal in the leading decision on the exception in s 21(1), Eastern Distributors Ltd v Goldring,94 where the exception was expressly held to preserve the principle in relation to apparent ownership as well as apparent authority.95 In that case, O held out M to P1 as being the owner of O’s van. Without authority, M, as apparent owner,96 sold the van to P1, who acted in good faith and without notice of M’s want of ownership or authority. In terms of the exception to s 21(1), O was ‘precluded’ from denying M’s authority to sell. O nevertheless retained possession of the van. O then sold it to P2, who acted in good faith and in ignorance of the sale to P1. P1 sued P2 in conversion. P2 joined O as third party. O and P2 claimed that P1 had no more than a title by estoppel, based on M’s apparent ownership or authority, and that this had no effect on P2: ‘[P2], as an outside party quite ignorant of what [O] and [M] had done, is … entitled to rely upon the reality of the transaction; and in reality the property never passed from [O]’.97 Since O retained the ‘real’ title to ­ entioned: that the owner consented to the mercantile agent having possession, that the agent m acted in the ordinary course of business, and also, I think, that the buyer acted in good faith and had no notice’. Reference may also be made to Fairfax Gerrard Holdings Ltd v Capital Bank Plc [2007] 1 Lloyd’s Rep 171 (HHJ Mackie QC) at [31] (reversed on another ground [2008] 1 Lloyd’s Rep 297, CA). 93 94 95

96 97

See n 5. [1957] 2 QB 600, CA. At 607–11, the Court of Appeal explained that the exception to the nemo dat rule in s 21(1) embodies a common law principle, derived from Pickering v Busk (1812) 15 East 37 and expounded by Fuentes v Montis (1868) LR 3 CP 268, whereby apparent ownership, no less than apparent authority, enables a seller to confer a better title than he himself has, namely ‘a good title against all the world’: ‘… in our judgment the principle applies to any form of representation or holding out of apparent ownership or the right to sell. It is embodied in section 21(1) of the Sale of Goods Act …’. In fact, the exception to s 21(1) refers only to ‘the seller’s authority to sell’ and, while s 21(2)(a) refers to ‘the apparent owner of goods’, it does so only in the context of the Factors Acts. The doctrine of ‘apparent ownership’ exists at common law and is not limited to the Factors Acts. Neither part of s 21 is expressly directed at the rule as to apparent ownership at common law, although the Court of Appeal in Goldring was able to bring it within s 21(1). The preservation of the common law rules by s 62(2) of the 1979 Act arguably provides an alternative basis for preserving the doctrine of apparent ownership at common law. At 606. At 606.

474

Sale of goods 11.50

the van, despite M’s purported sale to P1, O’s sale to P2 was effective to vest the property in the van in P2.98 11.49 The Court of Appeal rejected P2’s submission and upheld P1’s title. First, it addressed the nature of apparent authority which, it said, was based on mercantile convenience, not estoppel:99 ‘[The courts of common law] began with the principle that no one could pass a better title than that which he had: nemo dat quod non habet. To this general principle they admitted a number of exceptions, simply on the ground of mercantile convenience. The best known relate to transfers of currency and negotiable instruments … In these cases, as is well known, a transferee may acquire a better title than that of his transferor. In the same way, and for the same reason of mercantile convenience, the courts of common law allowed a good title to a buyer who bought in good faith from a man who apparently had been given by the true owner the right to dispose of the goods. Such a buyer did not merely acquire a title by estoppel, based on the implied representation by the owner that there was a right of disposition and vulnerable at the suit of anyone who was not bound by that representation. He acquired in the same way as the transferee of a negotiable instrument or the buyer … a good title against all the world.’

11.50 Having extended the principle to include apparent ownership, the Court of Appeal proceeded to recognise that, if apparent ownership or apparent authority is a form of estoppel, it is in tension with Spencer Bower’s thesis in the first edition of this work that an estoppel confers ‘title’ only in a ‘metaphorical’ sense. Devlin J said: ‘We doubt whether this principle [apparent ownership or authority], which is sometimes referred to … as common law estoppel, ought really to be regarded as part of the law of estoppel.100 At any rate it differs from what is sometimes called 98

P2 also submitted that the sale by O to P2 was validated by s 25(1) of the 1893 Act (s 8 of the 1889 Act and s 24 of the 1979 Act): see at 603. The argument was that, following the sale to P1, O was ‘a person having sold goods [who] continues or is in possession of the goods’, ie a ‘seller in possession’. The Court of Appeal disposed of the submission on the narrow basis that s 25(1) requires the seller to be in possession as seller, which O was not, since after the sale to P1, a hire purchase company, he retained possession of the van as hirer, not seller: see at 614. This aspect of Goldring was overruled by Worcester Works Finance Ltd v Cooden Engineering Co Ltd [1972] 1 QB 210, CA: see n 55. The overruling therefore leaves P2’s submission undisposed of. In Goldring the Court of Appeal had considered, without deciding, the question who was ‘the seller’ in the transaction with P1, namely O or M? If O was the seller to P1, he remained in possession of the van: s 25(1) would therefore have applied to the sale by O to P2, and P2 would have succeeded. If, however, M was the seller to P1, s 25(1) would not have applied to the sale to P2, since, although O was in possession and sold the van to P2, he was not a seller in possession, and although M was the seller (to P1), he was not in possession and did not sell the van to P2. In the view of the Court of Appeal, both possibilities were arguable: see at 613–4. The current editors of this work think the better view is that M conducted the transaction with P1 as apparent owner (see the text to n 96 in 11.48) and so was the seller to P1, from which it follows that the sale by O to P2 was not validated by s 25(1) of the 1893 Act – the same result as that arrived at by the Court of Appeal, but by a different route. 99 At 607. 100 Commenting on this in the third edition, [13] at n 3, Sir Alexander Turner wrote, despite the Court of Appeal’s doubts, that ‘the principles’ (ie apparent ownership or authority and estoppel) ‘appear to be identical’.

475

11.50  Statutory estoppel

‘equitable estoppel’ in this vital respect, that the effect of its application is to transfer a real title and not merely a metaphorical title by estoppel.’101

11.51 Finally, the Court of Appeal addressed s 21(1) and concluded: ‘[It] is plain from the wording [of s 21(1)] that if the owner of the goods is precluded from denying authority, the buyer will in fact acquire a better title than the seller … The result is that [O] is, in the words of s 21, precluded from denying [M’s] authority to sell, and consequently [P1] acquired the title to the goods which [O] himself had and [O] had no title left to pass to [P2].’102

11.52 Goldring brought into focus a conflict between two theses of Spencer Bower’s: (A) an estoppel cannot confer a title contra mundum;103 and (B) ‘whether described as “holding out”, or “apparent” or “ostensible” authority … the legal consequences of the “holding out” [etc] are no other than those which result from the application of the principles of estoppel …’.104 Thesis (A) comes to this: where O is estopped from denying to P that M is the owner of goods, or has O’s authority to sell goods, the estoppel only operates as between O and P; O remains the ‘real’ owner of the goods and, in principle, can pass a good title to C. Thesis (B) asserts that the same consequences flow where the doctrine of apparent ownership or apparent authority precludes O from denying M’s power of disposition. 11.53 Goldring, however, is a decision that apparent ownership or apparent authority confers a real title. This means that either there are circumstances in which estoppel can confer a real title or the doctrines of apparent ownership/authority and estoppel (or, at any rate, ‘equitable estoppel’) are, in this ‘vital respect’, different.105 101 At 611. It is clear that Devlin J’s reference to a ‘metaphorical title by estoppel’ was to the first edition of this work – referred to in argument – where Spencer Bower asserted (at [13]) that: estoppel by representation is a rule of evidence which is personal to the parties to the estoppel and has no true relation to title; it can only be used to prevent the party estopped from denying the other party’s title; and it cannot prevent third parties from denying the estoppel raiser’s title and cannot therefore confer a title contra mundum. He went on to maintain that the phrase ‘title by estoppel’ is ‘a highly metaphorical and elliptical mode of indicating the use which may be made of the representation … and the “title” so said to be conferred must be understood as, in the language of Lord Lyndhurst LC, “a mere negative title”’. (The reference is to Bensley v Burdon (1830) 8 LJ (OS) Ch 85 at 88.) 102 At 611. Goldring was followed in Mercantile Credit Co Ltd v Hamblin [1965] 2 QB 242, CA, at 270 per Pearson LJ: ‘Under section 21(1) there would not be a mere estoppel: [O] would lose her title and [P] would acquire the title’; Stoneleigh Finance Ltd v Phillips [1965] 2 QB 537, CA, at 577–8 per Russell LJ: ‘the title acquired by the plaintiffs would be a real title, and not merely a right to plead an estoppel’; Snook v London and West Riding Investments Ltd [1967] 2 QB 786, CA, 803–4 (Russell LJ); Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890, HL, at 918 per Lord Edmund-Davies: ‘the buyer acquires a good title to the goods and not merely a right to plead an estoppel’; and Lloyds Bank Plc v Independent Insurance Co Ltd [2000] QB 110 at 122 per Waller LJ: ‘It is true that a disposition of property can be effective under the doctrine of apparent authority so as to confer “a real title and not merely a metaphorical title by estoppel”, viz a title which can be transmitted to persons unable to rely on the estoppel’. 103 First edition, [13]. 104 First edition, [231]. It is clear that Spencer Bower treated cases of apparent ownership and apparent authority as both being examples of the operation of the doctrine of estoppel: ibid. 105 Even before Goldring, however, the conflict existed, unacknowledged, in the first and second editions of this work. There can never have been any doubt that the effect of ss 2, 8 and 9 of

476

Sale of goods 11.57

11.54 Underlying the conflict was Spencer Bower’s principal thesis that estoppel is not a cause of action and never creates one. Its influence can be felt in Devlin J’s reference to ‘equitable estoppel’. This must have been a reference to promissory estoppel, which only six years earlier had been held by the Court of Appeal not to give rise to a cause of action.106 It was Spencer Bower’s principal thesis which produced the alleged consequence that estoppel cannot confer a title contra mundum. 11.55 In the third edition, Sir Alexander Turner adhered to Spencer Bower’s principal thesis, re-analysing the exceptions to it as comprising three categories: (i) ‘true’ exceptions (acquiescence and election); (ii) ‘apparent’ exceptions: the ‘minesweeper’ cases, where the estoppel does not raise a cause of action but demolishes a defence; and (iii) cases in which facts that would found an estoppel also found a cause of action independent of and collateral with the estoppel, eg an action in deceit.107 Sir Alexander acknowledged, however, a need to ‘recede a little’ from Spencer Bower’s position with respect to estoppel and title.108 What caused him to do so was the decision in Goldring. It was said that the principle underlying Goldring was estoppel, and that it was an illustration of the principle that an estoppel enures not only between the representor and representee personally, but also binds their ‘privies in estate’.109 This involves a modification to thesis (B). There was, however, no overt departure from Spencer Bower’s principal thesis, that estoppel is not a cause of action and never creates one, or from thesis (A), that an estoppel cannot confer a title contra mundum. In other words, while the consequence was removed, the underlying causes of the difficulty remained unresolved. 11.56 In truth, it is necessary to choose between (i) modifying thesis (A), (ii) recognising that ‘privies’ in estoppel include purchasers for value without notice, and (iii) recognising that the dispositive effects of transactions involving apparent authority or ownership do not depend – or do not depend only – on estoppel, but may also proceed on the basis of a rule of mercantile convenience ensuring the safety of mercantile transactions.110 11.57 Turning to ss 2, 8 and 9 of the 1889 Act and ss 24 and 25(1) of the 1979 Act, these are only concerned to affect adversely the title of the person the 1889 Act and of the exception to s 21(1) of the 1893 Act was to vest a ‘real’ title in the disponee, and not a mere ‘metaphorical title by estoppel’, and Spencer Bower did not suggest otherwise. 106 Combe v Combe [1951] 2 KB 215, CA. Goldring was decided before the re-emergence of the doctrine which has come to be known as proprietary estoppel (as to which, see Ch 12). 107 Third edition, [11]. 108 Third edition, [13]. 109 Third edition, [13] and [126]. This despite the fact that Devlin J said, at 607: ‘the way it has always been put is that the estoppel binds the representor and his privies. But it is not easy to determine exactly who for this purpose is a privy. … It would also appear that anyone whose title is obtained from the representor as a volunteer is a privy for this purpose. But it is very doubtful whether a purchaser for value without notice [such as P2] is bound by the estoppel’. 110 Alternative (iii) reflects the reasoning of the Court of Appeal in Goldring at 607–8. See further 9.5, text and n 15.

477

11.57  Statutory estoppel

who might have prevented the mercantile agent or the seller or the buyer, as the case may be, from having or remaining in possession of the goods or documents of title. For this reason, they have no effect on the title of a victim of a theft or fraud, whose goods, without his consent, come into the possession of a mercantile agent, or are sold by or bought from the thief or a person deriving title under him.111 This, of course, is consistent with the doctrine of estoppel, since a person who parts with possession without his consent obviously does not represent that the thief or any person in possession claiming under or through the thief has his authority to deal with the goods. 11.58 It is submitted that the sections do not bring persons into contractual relations who would not otherwise be so, and that their concern is solely with the validation of dispositions, ie with matters of title.112

Waiver of rights and election between inconsistent rights Section 11(2) of the 1979 Act 11.59 Section 11(2) provides: ‘Where a contract of sale is subject to a condition to be fulfilled by the seller, the buyer may waive the condition, or may elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated.’

11.60 For this purpose, a ‘condition’ is a stipulation in the contract any breach of which by the seller entitles the buyer to treat the contract as repudiated, irrespective of its gravity.113 The 1979 Act provides that the statutorily implied terms as to title, description and quality or fitness, and in sales by sample, are conditions.114 11.61 Section 11(2) contemplates that a buyer of goods may respond in one of three ways to the seller’s breach of a term which is a condition of the contract. First, it recognises the buyer’s right at common law to waive any breach of contract, ie to excuse the breach completely: he may say that he has no objection to the goods as they are and will not even seek damages.115 The subsection then

111 See 11.24, 11.28 and 11.31. If the victim of a theft or fraud has nevertheless consented to the thief having possession of goods, the latter, if a mercantile agent, can pass a good title under s 2: see Folkes v King [1923] 1 KB 282, CA. 112 See nn 58 and 69 above. 113 See s 11(3) and Photo Production Ltd v Securicor Transport Ltd [1980] AC 827, HL, at 849 (Lord Diplock). 114 Sections 12, 13, 14 and 15, as amended by the Sale and Supply of Goods Act 1994. The sections do not apply to contracts made on or after 1 October 2015 to which Chapter 2 of Part 1 of the Consumer Rights Act 2015 applies: see paras 11 to 14 of Sch 1 to the 2015 Act, amending ss 12 to 15. The contracts in question are for the supply of goods by traders to consumers: see s 3 of the 2015 Act. 115 Benjamin’s Sale of Goods (9th edn, 2014), [12-036].

478

Sale of goods 11.65

goes on to confer on the buyer an express right to elect between two further course of action: (i) treating a breach of a condition as a ground for treating the contract as repudiated; and (ii) treating it as a breach of warranty, ie as giving rise to a right to damages only. 11.62 Section 11(4) provides: ‘Subject to section 35A below where a contract of sale is not severable and the buyer has accepted the goods or part of them, the breach of a condition to be fulfilled by the seller can only be treated as a breach of warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is an express or implied term of the contract to that effect.’116

11.63 Subject to the terms of the contract, therefore, a buyer who accepts the goods or part of them under a non-severable contract does not necessarily waive any breach of condition on the part of the seller, in the sense of ‘waiver’ expressly employed in s 11(2), but he does thereby elect against treating the contract as repudiated.117 11.64 Section 11 thus provides an illustration of a statute adopting the doctrine of election between alternative and inconsistent courses of action.118 Consumer Rights Act 2015 11.65 This Act, to which reference has already been made, treats as included in the contract (by ss 9, 10, 11, 13 and 14) terms concerning the quality, fitness for purpose, description etc of goods supplied by a trader to a consumer.119 Where the goods fail to conform to one or more of these terms, the consumer enjoys the following rights: (a) a short-term right to reject; (b) a right to repair or replacement; and (c) a choice between a right to a price reduction and a final right to reject.120

116 Section 35A confers a right of partial rejection where only part of the goods have been accepted. Neither s 11(4) nor s 35A applies to contracts made on or after 1 October 2015 to which Chapter 2 of Part 1 of the Consumer Rights Act 2015 applies: see n 114 above. 117 Ie he affirms the contract. In Panchaud Frères SA v Et General Grain Co [1970] 1 Lloyd’s Rep 53, CA, at 57, this was said to be the true sense of ‘waiver’. Motor Oil Hellas (Corinth) Refineries SA v Shipping Corpn of India (The Kanchenjunga) [1990] 1 Lloyd’s Rep 391, HL, at 397–9 contains a discussion of the two kinds of waiver contemplated by s 11(2). 118 The doctrine of election is discussed in Ch 13. 119 Part 1 of the Act applies to contracts between traders and consumers for the supply of goods, digital content or services: see s 1(1). ‘Trader’ means a person acting for purposes relating to that person’s trade, business, craft or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf: s 2(2). ‘Consumer’ means an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession: s 2(3). For further details of the legislation, reference should be made to one of the specialised works on sale of goods, eg Benjamin’s Sale of Goods (9th edn, 2014), First Supplement, Ch 14A. 120 Section 19(3).

479

11.66  Statutory estoppel

11.66 Each of the two rights of rejection entitles the consumer to reject the goods and treat the contract as at an end. The short-term right is lost if the time limit for exercising it passes without the consumer exercising it, unless the trader and the consumer agree that it may be exercised later.121 A consumer’s rights to repair or replacement are rights to inconsistent remedies between which he must elect, save that he cannot require one of these remedies if it is impossible or disproportionate compared to the other.122 The right to a price reduction is the right (i) to require the trader to reduce by an appropriate amount the price that the consumer is required to pay under the contract, or anything else the consumer is required to transfer under the contract, and (ii) to receive a refund from the trader for anything already paid or otherwise transferred by the consumer above the reduced amount.123 Section 24(5) provides that a consumer who has the right to a price reduction and the final right to reject may only exercise one (not both). Thus, in the event of non-conformity, the statute requires the consumer to make one or more elections between inconsistent remedies.

BILLS OF EXCHANGE 11.67 The law as to negotiable (money) instruments has long been codified and is to be found in the provisions of the Bills of Exchange Act 1882. It is clear from the authorities which preceded the passing of the first of the Bills of Exchange Acts, as well as from those which have since been decided, that the theory and principles of estoppel at common law have always been put forward as the basis and justification of most of the rules which govern the rights and liabilities of the parties to bills of exchange, cheques and promissory notes.124 In some cases, the term ‘estoppel’ is actually used, though not in all.125 The statute uses the word ‘preclude’, but this terminology implies no difference from estoppel. 11.68 The estoppels relating to negotiable instruments considered in the following paragraphs concern: (1) estoppels against the acceptor of a bill; (2) estoppels against the maker of a promissory note; (3) fictitious or non-existent payees; (4) estoppels against the drawer of a bill and the first indorser of a note; (5) estoppels against the indorser of a bill or note; (6) signatures in blank; and (7) estoppels in respect of forged or unauthorised signatures.

121 Section 22(1). 122 Section 23(3). 123 Section 24(1). 124 See Lloyds Bank Ltd v Cooke [1907] 1 KB 794, CA, a case of signature in blank of a stamped paper (per Collins MR at 799: ‘The question appears to be purely one of estoppel at common law’); Vagliano Bros v Bank of England (1889) 23 QBD 243, CA (per Bowen J at 260: ‘down to the date of the passing of the recent statute, the exception that bills drawn to the order of a fictitious or non-existing payee might be treated as payable to bearer, was based uniformly upon the law of estoppel’). For examples of cases prior to the Act, see Drayton v Dale (1823) 2 B & C 293; Braithwaite v Gardiner (1846) 8 QB 473. 125 In Cooper v Meyer (1830) 10 B & C 468, Lord Tenterden CJ used the language of preclusion, at 471.

480

Bills of exchange 11.71

Estoppels against the acceptor of a bill 11.69 Section 54 of the Act provides: ‘The acceptor of a bill, by accepting it– (1)

Engages that he will pay it according to the tenor of his acceptance;

(2)

Is precluded from denying to a holder in due course: (a)

The existence of the drawer, the genuineness of his signature, and his capacity and authority to draw the bill;

(b) In the case of a bill payable to the drawer’s order, the then capacity of the drawer to indorse, but not the genuineness or validity of his indorsement; (c)

In the case of a bill payable to the order of a third person, the existence of the payee and his then capacity to indorse, but not the genuineness or validity of his indorsement.’

11.70 The estoppels set out in s 54(2) operate only in favour of a ‘holder in due course’.126 The term ‘holder in due course’ does not include the named payee of a cheque, even though he is the ‘holder’.127

Estoppels against the maker of a promissory note 11.71 Just as the acceptor of a bill, by accepting it, engages that he will pay it according to its tenor, so the maker of a promissory note, by making it, similarly engages that he will pay it. He is also regulated, by reason of his being the maker of the note, by an estoppel similar to that which operates against the acceptor of a bill. This estoppel is set out in s 88,128 which provides: ‘The maker of a promissory note by making it– (a)

Engages that he will pay it according to its tenor;

(b) Is precluded from denying to a holder in due course the existence of the payee and his then capacity to indorse.’

126 ‘Holder in due course’ is defined in s 29. Note also s 29(3): ‘A holder (whether for value or not), who derives his title to a bill through a holder in due course, and who is not himself a party to any fraud or illegality affecting it, has all the rights of that holder in due course as regards the acceptor and all parties to the bill prior to that holder’. The statutory estoppels do not exclude the possibility of an estoppel at common law: see eg Brook v Hook (1871) LR 6 Ex 89, at 99, per Kelly CB: ‘where one sued upon a bill or note has declared or admitted that the signature is his own, and has thereby altered the condition of the holder to whom the declaration or admission has been made, he is estopped from denying his signature upon an issue joined in an action upon the instrument’. 127 R E Jones Ltd v Waring and Gillow Ltd [1926] AC 670, HL; Ayres v Moore [1940] 1 KB 278, at 287 (Hallett J). ‘Holder’ is defined by s 2 to mean ‘the payee or indorsee of a bill or note who is in possession of it, or the bearer thereof’. 128 See also s 89(2), which deems the maker of a note to correspond to the acceptor of a bill when applying the provisions of Part II of the Act to promissory notes.

481

11.72  Statutory estoppel

Fictitious or non-existent payees 11.72 Where the name of a payee is shown in the bill, but the name is that of a fictitious or non-existent person, it is provided by s 7(3) that ‘the bill may be treated as payable to bearer’. This is applicable not only where the name is not that of any real person, but where it is the name of a real person who nevertheless never had, or never was intended to have, any right to the bill.129 Although this rule is not expressed as a rule of estoppel, and appears merely to define the rights of a holder, its origin lies in the rule of estoppel.130

Estoppels against the drawer of a bill (first indorser of a promissory note) 11.73 Section 55(1)(b) provides that the drawer of a bill, by drawing it, is precluded from denying, to a holder in due course, the existence of the payee and his then capacity to endorse. 11.74 Section 89(2) imposes the same estoppel upon the first indorser of a promissory note.

Estoppels against the indorser of a bill or note 11.75 Section 55(2) provides that the indorser of a bill, by indorsing it, is precluded from denying, to a holder in due course, the genuineness and regularity in all respects of the drawer’s signature and all previous indorsements; he is further precluded from denying, to his immediate or a subsequent indorsee, that the bill was, at the time of his indorsement, a valid and subsisting bill, and that he had then a good title thereto. The section is not intended to cure anything other than an illegality involved in the negotiation of the cheque itself; it cannot be relied upon to cure retrospectively an illegality inherent in the cheque itself which is known to the indorsee.131

Signatures in blank 11.76 This topic is covered by s 20,132 which provides: ‘(1)  Where a simple signature on a blank paper is delivered by the signer in order that it may be converted into a bill, it operates as a prima facie authority to fill it 129 130 131 132

Bank of England v Vagliano [1891] AC 107, HL. See the first edition of this work at pp 297–9; Ashpitel v Bryan (1863) 3 B & S 474. Ladup Ltd v Shaikh [1983] QB 225. As amended by the Finance Act 1970. Originally, s 20(1) applied only where the bill was completed on stamped paper and only insofar as the amount for which it was completed was covered by the stamp. This of itself provided a measure of protection for the signer. However, s 33 of the Finance Act 1961 replaced the original ad valorem duty on bills and notes by a fixed duty of 2d, which was later abolished by the Finance Act 1970.

482

Bills of exchange 11.78

up as a complete bill for any amount, using the signature for that of the drawer, or the acceptor, or an indorser; and, in like manner, when a bill is wanting in any material particular, the person in possession of it has a prima facie authority to fill up the omission in any way he thinks fit. (2)  In order that any such instrument when completed may be enforceable against any person who became a party thereto prior to its completion, it must be filled up within a reasonable time, and strictly in accordance with the authority given. Reasonable time for this purpose is a question of fact. Provided that if any such instrument after completion is negotiated to a holder in due course it shall be valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up within a reasonable time and strictly in accordance with the authority given.’

11.77 The proviso is a declaration that the signer in blank of an inchoate instrument,133 or the person who becomes party thereto, is precluded, as against a holder in due course, from afterwards contradicting or limiting the representation as to the authority of the person to whom he delivered the incomplete instrument, which he impliedly made to the class of holders in due course by his act in signing it in blank or becoming party to it. It is therefore a further illustration of estoppel by ‘holding out’ or by representation of authority.134 But it is necessary for there to be a delivery by the signer of the inchoate instrument.135 11.78 Where the paper signed in blank was not intended to be converted into a negotiable instrument in any event, but only upon the happening of a condition which was not fulfilled,136 or where the person seeking to enforce the instrument is not a holder in due course,137 there is no estoppel either within the common 133 Section 20 is entitled ‘Inchoate instruments’. 134 See 9.7; Russel v Langstaffe (1780) 2 Doug KB 514. In Schultz v Astley (1836) 2 Bing NC 544, Tindal CJ said at 553: ‘the blank acceptance is an acceptance of the bill which is afterwards put upon it, … it does not lie in the mouth of the acceptor to say that the drawing or indorsing of the bill is irregular … And, if the defendant is estopped from denying the right of the drawer to draw the bill, whoever he may be, he is bound by the indorsement made by such drawer.’ See also London and South Western Bank v Wentworth (1880) 5 Ex D 96, where the rule is stated at 104–5 by Pollock B, who said at 104 that ‘it is rested upon the ground of estoppel usually’. 135 See Ch 3, above, and Baxendale v Bennett (1878) 3 QBD 525; Smith v Prosser [1907] 2 KB 735. 136 As in Smith v Prosser [1907] 2 KB 735, CA, where the defendant gave two persons, as custodians, two unstamped pieces of paper, signed by himself, in which everything was left blank except his signature, with authority to convert them into negotiable instruments, not in any event, but only if they should receive instructions from him by letter or cable to that effect, and it was held that he was not estopped, as against the plaintiff, who was a holder in due course, from setting up that the notes into which the pieces of paper had been fraudulently converted by one of the two custodians were invalid, either by the statute or at common law (per Vaughan Williams LJ at 744–749, Moulton LJ at 752–4, and Buckley LJ at 755). 137 Paine v Bevan and Bevan (1914) 110 LT 933, which was an action for damages for conversion on the following facts. It was the practice of the plaintiff, a stockbroker, to hand to his clerk a number of cheques signed by himself in blank to be filled in with names and figures for the purposes of settlement. The clerk fraudulently filled in certain of the cheques so handed to him with the names of the defendants, who were bookmakers to whom he owed various sums

483

11.78  Statutory estoppel

law rule or within the enactment which codifies it. In fact, the section seems to be coextensive with the principles enunciated in the cases decided before the passing of the Act,138 or, if it does not cover precisely the same ground, it certainly cannot, as it was at one time thought that it might,139 be construed as intended to curtail or abrogate any of the established common law rights of or liabilities to estoppel in relation to inchoate instruments,140 any more than it can be said to enlarge those rights or liabilities.141

Estoppels in respect of forged or unauthorised signatures 11.79 Section 24 provides: ‘Subject to the provisions of this Act, where a signature on a bill is forged or placed thereon without the authority of the person whose signature it purports to be, the forged or unauthorised signature is wholly inoperative, and no right to retain the bill or give a discharge therefor or to enforce payment thereof against any party thereto can be acquired through or under that signature, unless the party against whom it is sought to retain or enforce payment of the bill is precluded from setting up the forgery or want of authority.’

11.80 The exception here indicated in the most general terms covers not only estoppels recognised in the Act itself, which have already been dealt with above, but also all those common law estoppels by representation implied from ­inaction for gambling debts, and with the figures representing the sums so owed. The defendants took these cheques in good faith, but (by reason of the Gaming Act 1835, rendering the securities void) without legal consideration. They were therefore not holders in due course, and on this ground Bailhache J held, at 934–5, distinguishing Lloyds Bank Ltd v Cooke [1907] 1 KB 794, CA, that they were not entitled to take advantage of the proviso in s 20(2), any more than they were to raise an estoppel against the plaintiff at common law. See further Wilson and Meeson v Pickering [1946] 1 KB 422 at 429. 138 Smith v Prosser [1907] 2 KB 735, CA, per Vaughan Williams LJ at 742 and per Moulton LJ at 753. 139 Herdman v Wheeler [1902] 1 KB 361, DC, where it was doubted whether ‘holder in due course’ includes a payee, and held that, even if this were so, there is no ‘negotiation’ to such holder, within the meaning of s 20(2), where there is no transfer of the instrument from the payee to a holder, or from a holder to another holder, but only, as in the case before the court, a delivery of the instrument direct to the payee (at 369–76). It was conceded (at 366–9) that there would have been an estoppel at common law. This was, therefore, a clear decision – but a clearly erroneous one – that the section has the effect of restricting the common law principles of estoppel. 140 Lloyds Bank Ltd v Cooke [1907] 1 KB 794, CA, where the facts were, for the purposes of statutory and common law estoppel, similar to those of Herdman v Wheeler, above, and it was held, first, that there was a clear estoppel at common law (per Collins MR at 802–4, and Cozens-Hardy LJ at 804); secondly, that it never could have been intended by the section to cut down by implication the common law right of the holder in due course to set up estoppel against the signatory of the blank paper, and that, in this respect Herdman v Wheeler must be overruled (per Collins MR at 799, 800, 803, Cozens-Hardy LJ at 803–5, and Moulton LJ at 805–6); and, lastly (per Moulton LJ at 806–9), that, on the construction of the section, ‘holder in due course’ does not exclude a payee. On this point, the decision was overruled by R E Jones Ltd v Waring and Gillow [1926] AC 670, HL. 141 Paine v Bevan and Bevan (1914) 100 LT 933, at 934–5 (Bailhache J).

484

Bills of lading 11.82

(or negligence) outside the instrument itself, where a duty is owed by the party sought to be estopped to the party raising the estoppel, which have been discussed and illustrated in an earlier chapter.142 In the course of that discussion it was pointed out, with special reference to negotiable instruments,143 where a duty of this kind exists and by and to whom it is owed sufficient to raise an estoppel against the party neglecting or omitting the duty,144 and where, on the other hand, in the absence of any such duty, there is no estoppel.145

BILLS OF LADING Definition 11.81 A bill of lading has been defined as: ‘a writing signed on behalf of the owner of a ship in which goods are embarked, acknowledging the receipt of the goods, and undertaking to deliver them at the end of the voyage, subject to such conditions as are mentioned therein.’146

11.82 A bill of lading, though not strictly a negotiable instrument, has many of the attributes of one,147 and the estoppels which arise in respect of it resemble in many ways those which arise in the course of the negotiation of bills of exchange: for example, the situation of a holder in due course of a bill of exchange is closely analogous to that of an assignee for value for goods for which a bill of lading has been issued and indorsed to the purchaser. It might be argued that the estoppels which arise on bills of lading do not so clearly or obviously derive their origin and authority from statutory provisions as do the estoppels arising upon the negotiation of bills of exchange. But the analogy has often been pressed, and the two topics have accordingly been grouped together in this work. 142 See 3.9 et seq. 143 But note United Dominions Trust Ltd v Western [1976] QB 513, CA, where Megaw LJ said, at 522: ‘the doctrine of estoppel by negligence does not apply only to negotiable instruments’. 144 As to the nature and limits of the duty owed by customer to banker, see 3.20 for a statement of the general proposition and of the theory on which it is based and illustrations in the cases. 145 For illustrations of cases in which it has been held that no duty is owed by the customer to the banker, see notes to 3.20. For cases in which it has been held that no duty is owed to future holders, or to the public, by a party to a negotiable instrument, see Morris v Bethell (1869) LR 5 CP 47, and Brook v Hook (1871) LR 6 Exch 89. 146 Blackburn on Sale of Goods (3rd edn) Part IV, Ch I, p 491. By s 1(2) of the Carriage of Goods by Sea Act 1992, ‘references in this Act to a bill of lading (a) do not include references to a document which is incapable of transfer either by indorsement or, as a bearer bill, by delivery without indorsement; but (b) subject to that, do include references to a received for shipment bill of lading’. The definition in Benjamin’s Sale of Goods (6th edn, 2002), [18–008], is ‘a document issued by or on behalf of a carrier of goods by sea to the person (usually known as the shipper) with whom he has contracted for the carriage of the goods.’ But this definition is not carried through to the 9th edn (2014): cf [18–143]. 147 For example, it is assignable by delivery and indorsement of the instrument, no notice to the shipowner of the assignment being necessary, and the assignee may thereafter sue upon it in his own name.

485

11.83  Statutory estoppel

11.83 The principal statute considered in this section is the Carriage of Goods by Sea Act 1992 (referred to in this section as ‘the 1992 Act’), which replaced the Bills of Lading Act 1855. 11.84 By s 1(1) of the 1992 Act, the statute applies to any bill of lading, any sea waybill and ship’s delivery order, but it should be noted that the provisions of s 4 of the 1992 Act apply only to bills of lading.

No estoppel between immediate parties 11.85 It is clear from the definition given above that, so far as the immediate parties are concerned, that is to say, the shipper on the one hand, and the shipowner, or master of the ship, on the other, no question can ordinarily arise of any estoppel by representation in a bill of lading, either as a receipt for goods, or as an ‘undertaking’ to deliver them; for, as an acknowledgment of the receipt of goods shipped on board, a bill of lading, like any other receipt, whether for goods or money, as has already been explained,148 is not a representation on the faith of which, as a rule, the shipper himself alters his position in the slightest degree; while, as an ‘undertaking’, a bill of lading, like any other promise, is not a representation of fact at all, or, therefore, the subject of estoppel by representation of fact.149

Estoppels arising from negotiation 11.86 When, however, bills of lading, unlike other instruments relating to the delivery of goods,150 in the course of time came to be recognised, first, by the custom of merchants, and the common law, and afterwards by the legislature, as negotiable instruments, a class of persons came into being, such as consignees of the goods carried, and indorsees of the bill of lading, as between whom and the shipowner, or master, there was the possibility of inducement, and of alteration of position, which does not ordinarily exist as between the immediate parties to the bill of lading. This invited the application of the doctrine of estoppel.151 The invitation was accepted by the courts, and by the legislature, although it has

148 In 5.38 onwards. 149 But see 2.23 onwards. 150 Such as delivery notes or orders, as to which see the observations of Lord Cottenham LC at pp 325–6 of McEwan v Smith (1849) 2 HL Cas 309: ‘It is said that, though the delivery note did not pass the property as a bill of lading would have passed it, by being indorsed over by one party to another, still it operates as an estoppel upon the party giving it, so far at all events as a third party is concerned … But that argument … assumes that such a document has all the effect of a bill of lading. But, as the nature and effect of these two documents are quite different from one another, it seems to me that such an argument has no foundation at all’. So, at p 210 of Union Credit Bank v Mersey Docks and Harbour Board [1899] 2 QB 205, Bigham J recognised that a delivery order is not negotiable. But see now s 2 of the 1992 Act, which applies to delivery orders as well as bills of lading and sea waybills. 151 See 5.38–5.40, and eg Brandt v Liverpool Brazil and River Plate Steam Navigation Co [1924] 1 KB 575, 600 (Atkin LJ), and Silver v Ocean Steamship Co Ltd [1930] 1 KB 416, 428

486

Bills of lading 11.88

taken the legislature several attempts over the course of more than 130 years to arrive at the present position. 11.87 As soon as bills of lading were established in the mercantile world as negotiable to the extent of passing the property in the goods to which they related by indorsement, it might have been expected that the law would have recognised their negotiability for all purposes necessary or ancillary to the effective assertion and maintenance of the title so transferred, and that all rights of action and otherwise in respect of the goods (including the right to set up any estoppel by representation in the bill of lading to which the party resisting such action might be liable) would pass with the property itself. So it was held in the earliest of the authorities on this subject.152 Nor was it held to the contrary in any of the four other cases which were decided before the passing of the Bills of Lading Act 1855;153 although, judging from the preamble to that statute, the legislature seems to have conceived the then state of the law to be that neither consignees of goods nor indorsees of bills of lading had any rights of action whatsoever in respect of the goods, the property in which had been transferred to them.

Parties 11.88 As regards the parties subject to the estoppel, it seems to have been recognised (at all events, it was never decided to the contrary) during the pre-­ statutory period that any person signing a bill of lading would be estopped, as against any person induced by a representation contained therein, to alter his position for the worse, from afterwards denying such representation, to the same extent and on the same general principles as any other representor. But, by some curious process of reasoning, the courts persuaded themselves that, as regards any statement as to the quantity of goods shipped, the principal of the person signing the bill of lading, that is, the shipowner, ought to be exempt from the liability to estoppel which attaches to every other principal of an actual representor.154 As to other representations in the bill of lading, there is no decision before 1855

(­Scrutton LJ). Cf Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steamships Ltd [1947] AC 46, PC. 152 This was Howard v Tucker (1831) 1 B & Ad 712, an action by the indorsee of a bill of lading against persons who had by their acts placed themselves in the position of the shipowners, where Lord Tenterden CJ, at the trial, ruled, at 713–4, that the shipowners would have been, and therefore the defendants were, estopped, as against any person taking the bill of lading in good faith and for value, from disputing the representation contained therein that the freight for the goods had been paid, which ruling the Court of King’s Bench affirmed, refusing, at 715, to grant even a rule for a new trial. 153 See n 154. In two of the cases there cited, the plaintiff claimed as shipper of the goods, and the matter therefore was not in controversy; in the others, where the plaintiff was either the consignee of the goods, or indorsee of the bill of lading, the action failed only because the shipowner sued was held not liable to the estoppel set up, no suggestion being made that a consigneee, or indorsee, is not entitled to the benefit of the estoppel against any party who is so liable. 154 The four cases before 1855, in which it was held that the shipowner was not estopped from contradicting a statement in the bill of lading signed by the master of the vessel as to the

487

11.88  Statutory estoppel

that the shipowner is not estopped according to the ordinary rule, and there is one authority (relating to a statement in the bill that the freight had been paid) which distinctly declares that he is so estopped.155

The Bills of Lading Act 1855 11.89 The discussion which follows is briefer than that found in the previous edition of this work,156 because, since the enactment of the 1992 Act, it is largely of only historic interest. 11.90 The intention of s 1 of the 1855 Act was to remove the anomaly and inconvenience of the fact that rights in connection with the contract contained in the bill of lading did not pass to the indorsee, and the section provided that all such rights (and liabilities) should be transferred with the property in the goods, so that any consignee of the goods named in the bill of lading, or indorsee of such bill, should no longer be compelled to sue, or be liable to be sued, in the name of the shipper, but might thenceforth sue (and be sued) in his own name. The object of the statute was to place the indorsee or consignee in exactly the same position as that in which the shipper had previously stood.157 11.91 As the corollary to s 1 of the 1855 Act, the latter part of the preamble158 recognised the desirability and justice of expressly enacting an estoppel in favour of such consignee or indorsee against the master, or other person signing the bill of lading, in respect of the quantity of goods represented to have been shipped. Section 3 of the 1855 Act provided: ‘Every bill of lading in the hands of a consignee or indorsee for valuable consideration, representing goods to have been shipped on board a vessel, shall be conclusive evidence of such shipment against the master, or some other person signing the same, notwithstanding that such goods, or some part thereof, may not have been so shipped, unless such holder of the bill of lading shall have had actual notice at the time of receiving the same that the goods had not been in fact laden q­ uantity of goods received on board, are: Bates v Todd (1831) 1 Mood & R 106, where, however, the ground of the judge’s ruling at nisi prius was that any bill of lading is merely a receipt, and is ‘liable to be opened by evidence of the real facts’ (per Tindal CJ at 107) – obviously, too broad a statement and one which did not raise the question of the shipowner’s liability to the estoppel more than that of anyone else; Berkley v Watling (1837) 7 Ad & El 29, where again the ground of the decision was one which did not involve any question of the position of the shipowner as such; Grant v Norway (1851) 10 CB 665, where the question was distinctly raised, for the first time, and decided as stated in the text; and Hubbersty v Ward (1853) 8 Exch 330, following Grant v Norway. 155 Howard v Tucker (1831) 1 B & Ad 712; see n 152. 156 See the third edition, Ch 11, paras 276 et seq. 157 The Emilien Marie (1875) 32 LT 435, 442; Craig and Rose v Delargy (1879) 16 Sc L R 750; Cox, Patterson & Co v Bruce & Co (1886) 18 QBD 147, 150. 158 ‘Whereas it frequently happens that the goods in respect of which bills of lading purport to have been signed have not been laden on board, and it is proper that such bills of lading in the hands of a bona fide holder for value should not be questioned by the master or other person signing the same on the ground of the goods not having been laden as aforesaid …’.

488

Bills of lading 11.93

on board: provided that the master or other person so signing may exonerate himself in respect of such misrepresentation by showing that it was caused without any default on his part, and wholly by the fraud of the shipper or of the holder or some person under whom the holder claims.’

11.92 The section gave the benefit of the estoppel only to a consignee of the goods, or to an indorsee of the bill of lading, who took for value and without notice and in good faith, and rendered only the master or the actual signer of the bill of lading liable to the estoppel, leaving the position of the shipowner unaffected. No representation in the bill of lading other than a representation as to the quantity of goods put on board was in terms made the subject of the estoppel, and statutory recognition was given to certain of the common law defences of illegality or fraud on the part of the representee, or knowledge of the true facts. 11.93 At common law, a statement or representation made by, or on behalf and with the authority of, the carrier was capable of giving rise to an estoppel, in favour of a consignee of the goods or the indorsee of the bill of lading.159 But the carrier was not liable by way of estoppel at common law in respect of any representation as to the quantity of goods shipped on board if the bill of lading was signed, not by the carrier or the carrier’s authorised agent, but by the master or the master’s agent.160 Nor, if the bill of lading was not signed by or on behalf of the carrier, was the carrier liable by way of estoppel in respect of any representation as to the nature, description, and quality of the goods shipped on board,161 or as to their mode of stowage.162 But a particular difficulty arose from the decision in Grant v Norway163 that the master did not have authority on behalf of the carrier to sign bills of lading in respect of goods which had not been shipped on board. It has been pointed out that representations that goods had been shipped on board, and as to the quantities of such goods, are the kind of representations which carriers can be expected to make reliably, in contrast to representations as to the quality of goods.164 More recently, because such representations are of the

159 See Meyer v Dresser (1864) 16 CBNS 646, where the estoppel was set up by an indorsee against the master who was suing him for freight, and it was recognised that the master was estopped, but the indorsee failed in his defence on the procedural ground that the matters raised by him were, as the law then stood, the subject of a cross-action; Valieri v Boyland (1866) LR 1 CP 382; Blanchet v Powell’s Llantivit Collieries Co (1874) LR 9 Exch 74 (where the estoppel raised for the indorsee against the master failed because the statement in the bill of lading as to the weight was held to be immaterial); Parsons v New Zealand Shipping Co [1901] 1 KB 548, CA which was an action by an indorsee against the actual signers of the bill of lading, and the estoppel failed on the same ground as in Blanchet’s case (per Collins LJ at 564). 160 Jessel v Bath (1867) LR 2 Exch 267; Smith v Bedouin Steam Navigation Co [1896] AC 70, HL. 161 As in Cox, Patterson & Co v Bruce & Co (1886) 18 QBD 147 (misdescription of ‘quality marks’ of certain bales of jute); Craig and Rose v Delargy (1879) 16 Sc LR 750. 162 Craig and Rose v Delargy (1879) 16 Sc LR 750 at p 757; Craig and Rose v Delargy (1879) 16 Sc LR 750; but see now The Nea Tyhi [1982] 1 Lloyd’s Rep 604, in which representations that goods had been shipped under deck were held to give rise to an estoppel. 163 (1851) 10 CB 665. 164 Cox, Patterson & Co v Bruce & Co (1886) 18 QBD 147.

489

11.93  Statutory estoppel

kind which carriers can be expected to make reliably, at common law, representations as to the date on which goods were shipped,165 and as to whether they are shipped on deck or under deck,166 have been held to give rise to estoppels. But the fundamental problem, in cases in which no goods whatsoever were shipped on board, was that (unless there was a separate, antecedent contract for the carriage of the goods), the very fact that no goods were shipped meant that there was no contract.167 Even in a case where some goods were shipped, but the quantity shipped was less than was stated in the bill of lading signed by the master, the common law decreed that the representation as to quantity was not, as against the carrier, of contractual effect.168 11.94 Section 3 of the Bills of Lading Act 1855169 did not resolve the problems which arose at common law. The statutory estoppel which it created applied as against the master or signer, but, unless the master or signer was authorised to sign as the carrier’s agent, it did not apply as against the carrier who was the other party to the contract of carriage. Nor would the consignee or indorsee be able to sue the master, because the consignee is not the bailor of the goods: the shipper is; and the master is not the bailee of the goods: the carrier is.170

The Carriage of Goods by Sea Act 1971 11.95 Under this Act the provisions of the Hague-Visby Rules were incorporated in British law. Article III of the Rules stipulates that: ‘3.

The carr ier shall, on demand of the shipper, issue to the shipper a bill of lading showing, amongst other things– (a) The leading marks necessary for identification of the goods as the same are furnished in writing by the shipper before the loading of such goods starts … (b) Either the number of packages of pieces, or the quantity, or weight, as the case may be, as furnished in writing by the shipper. (c) The apparent order and condition of the goods.

4.

Such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described in accordance with paragraph 3(a), (b) and (c). However, proof to the contrary shall not be admissible when the bill of lading has been transferred to a third party acting in good faith.’

165 166 167 168

The Saudi Crown [1986] 1 Lloyd’s Rep 261. The Nea Tyhi [1982] 1 Lloyd’s Rep 604. Heskell v Continental Express [1950] 1 All ER 1033 at 1037 (Devlin J). V/O Rasnoimport v Guthrie & Co Ltd [1966] 1 Lloyd’s Rep 1 at 7; the position would be otherwise if the signer was authorised by the carrier because, in such a case, a contract of carriage would have come into existence. 169 Repealed by the Carriage of Goods by Sea Act 1992. 170 Leigh and Sillivan Ltd v Aliakmon Shipping Co Ltd (The Aliakmon) [1986] AC 785, HL.

490

Bills of lading 11.98

11.96 These provisions, in a case to which the Hague-Visby Rules apply, have the effect of negativing the rule in Grant v Norway171 in a case in which some goods have been shipped. But, in a case in which no goods whatsoever have been shipped, it is questionable whether they have the effect of negativing the common law rule, for the same reasons as have already been stated. Furthermore, since, under Article I(a), ‘carrier’ is defined to include the owner or the charterer who enters into a contract of carriage with a shipper, if no goods are shipped and no contract of carriage is entered into by the owner or charterer, the terms of Article III do not avail a third party, if, in relation to goods, none of which were shipped, the owner or charterer can rely on that fact to show that he does not fall within the meaning of the word ‘carrier’.

The Carriage of Goods by Sea Act 1992 11.97 This Act represents a further endeavour to resolve the difficulties in this area. Section 4 provides: ‘A bill of lading which – (a) represents goods to have been shipped on board a vessel or to have been received for shipment on board a vessel; and (b)

has been signed by the master of the vessel or by a person who was not the master but had the express, implied or apparent authority of the carrier to sign bills of lading,

shall, in favour of a person who has become the lawful holder of the bill, be conclusive evidence against the carrier of the shipment of the goods, or as the case may be, of their receipt for shipment.’

11.98 There can be no doubt172 that the legislative intention behind s 4 was to negative the rule in Grant v Norway.173 It would indeed be remarkable if this intention were to be held by the courts not to have been achieved by the legislation. But, in the case in which no goods whatsoever have been shipped, the same fundamental problem arises, namely that (unless there has been a separate, antecedent, contract) no contract of carriage has come into existence, and so no rights under any contract can be transferred by s 2. If the legislative intention is to be effectuated, it may depend upon the carrier being estopped from denying that a contract has come into existence, despite the fact that no goods have been shipped. That is tantamount to the estoppel itself constituting a right of action, which is, of course, inconsistent with the common law position.174 But it 171 (1851) 10 CB 665. 172 See the Report of the English and Scottish Law Commissions Rights of Suit in Respect of Carriage of Goods by Sea (1991) Law Com No 196; Scot Law Com No 130; Effort Shipping Co Ltd v Linden Management SA (The Giannis NK) [1998] AC 605, HL; Borealis AB v Stargas Ltd [1999] QB 863. 173 (1851) 10 CB 665. 174 Note, however, the observation of Brandon LJ in Amalgamated Investment and Property Co v Texas Commerce International Bank [1982] QB 84 at 131–2 that ‘while a party cannot in

491

11.98  Statutory estoppel

is ­competent for Parliament to legislate to that effect. If the representations on the bill of lading have, however, been sufficiently qualified, then the consignee may not be able to rely on as estoppel.175 11.99 In order for a person who has become a lawful holder of the bill176 to be able to rely on the estoppel, it is necessary that the bill be signed by the master, or by someone (not the master) with authority of the carrier to sign the bill. Thus, if the bill was stolen, and a signature affixed to it by the thief, the estoppel would not arise. It is perhaps surprising that s 4(b) does not in terms refer to signature ‘by’ the carrier,177 particularly where the common law recognised that signature by the carrier could give rise to an estoppel. It is conceived that, if a case arose of signature of the bill of lading by the carrier, where no goods whatsoever were shipped on board, the court would strive to avoid the conclusion that it was bound by Grant v Norway to hold that a lawful holder of the bill could not rely upon the representations contained in it. 11.100 The section does not modify the common law rule that the master has no authority to make representations concerning the commercial quality of goods.178 In this respect, the provisions of the Hague-Visby Rules have a wider effect.179 11.101 At common law, in order to establish an estoppel by statements in the bill of lading, all the conditions of an effective estoppel by representation in general must be satisfied; moreover, the statement in the bill of lading, which is relied on as the basis of the estoppel, must be read fairly, as a whole and without fine distinctions and technicalities.180 Thus, as in other cases, the statement in the bill of lading which is said to give rise to the estoppel must be of a definite unconditional and unqualified character, and one which substantially conflicts with the assertion made or the case made up by the party sought to be estopped. It is not thought that these requirements will be applied less strictly in a case where the estoppel arises under statutory provisions.181 11.102 Accordingly, there is no estoppel where the party has qualified his representation in the bill of lading by a protective clause or condition so framed as to exempt him from responsibility in respect of the representation, and has (in effect) contracted out of any liability to estoppel which might otherwise terms found a cause of action on an estoppel, he may, as a result of being able to rely on an estoppel, succeed on a cause of action on which, without being able to rely on that estoppel, he would necessarily have failed’. 175 Agrosin Pte Ltd v Highway Shipping Co Ltd (The Mata K) [1998] 2 Lloyd’s Rep 614. 176 The expression is defined in s 5(2) of the 1992 Act. 177 The section refers to signature by the master or some other person who had the express, implied, or apparent authority of the carrier to sign. 178 Cox, Patterson & Co v Bruce & Co (1886) 18 QBD 147. 179 Section 5(5) provides that the provisions of the 1992 Act are without prejudice to the application of the Hague-Visby Rules. 180 Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steam Ships Ltd [1947] AC 46, PC, at 55 (Lord Wright). 181 Agrosin Pte Ltd v Highway Shipping Co Ltd (The Mata K) [1998] 2 Lloyd’s Rep 614.

492

Bills of lading 11.102

attach;182 or where he has introduced into the bill of lading, or into any document incorporated therewith by reference, a clear and unambiguous declaration of his ignorance of the weight, contents, quantity, quality, measure or value of the goods, such a declaration being equivalent to an express refusal to make any representation as to those matters, or to treat the statements as to them, which purport to be made by him in other parts of the bill of lading, as anything more than statements adopted from the shipper, and based solely on his information,183 but only if the alleged neutralising statement is at least as precise and unequivocal as that which it is said to neutralise;184 or where in a marginal note, or incorporated ‘protest’, or otherwise, he has qualified his acknowledgment of the quantity of goods received on board by a definite statement of the loss of a specified portion of that quantity in a specified manner.185 So, also, the estoppel has always been defeated whenever it has been shown that there was no discrepancy in any material respect between the representation which the party is sought to be precluded from making, and that which he had formerly made in the bill of lading,186 but not where, though a mere literal consistency between the two representations may have been plausibly suggested, there is a real disconformity between them in substance.187 Again, as in other cases of estoppel by representation, there is no estoppel if the party who relies upon the bill of lading as creating it fails to establish intentional or reasonable inducement, and detrimental alteration of position. As regards the last-named element, it is enough to show that the ‘holder in due course’ of the bill of lading, or the 182 As in Ohrloff v Briscall (1866) LR 1 PC 231; Craig and Rose v Delargy (1879) 16 Sc LR 750. 183 Jessell v Bath (1867) LR 2 Exch 267; Lebeau v General Steam Navigation Co (1872) LR 8 CP 88 at 94; The Ida (1875) 32 LT 541; Hogarth Shipping Co v Blyth, Greene, Jourdain & Co Ltd [1917] 2 KB 534. 184 See Ch 4, above. Thus, in Martineaus Ltd v Royal Mail Steam Packet Co Ltd (1912) 17 Com Cas 176, the words ‘contents unknown’ were held too indefinite and ambiguous to get rid of the master’s plain and unequivocal acknowledgment of the receipt of good on board ‘in apparent good order and condition’, or to qualify it by the implied addition thereto of ‘as wet sugar’ (per Scrutton J at 179–80). In The Tromp [1921] P 337, it was held that the words ‘weight, quality and condition unknown’ did not refer to external order and condition, or quality, therefore, the acknowledgment of the receipt of the cargo ‘in good order and condition’, which meant external condition, and the shipowner was accordingly estopped from denying that he had received the cargo (potatoes) in good external condition or from setting up (as the fact was) that they had been shipped in wet bags (per Duke P at 348–9). 185 As in Lohden & Co v Calder & Co (1898) 14 TLR 311. In Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steam Ships Ltd [1947] AC 46, PC, a bill of lading was a ‘received for shipment’, not a ‘shipped’, document. It showed the goods as received for shipment in apparent good order and condition, but was clearly indorsed in the margin ‘signed under guarantee to produce ship’s clean receipt’. Not only could the plaintiff not produce a clean receipt from the ship but the ship’s receipt showed the goods as damaged. It was held that the terms of the bill of lading, read fairly as a whole, could not be construed as the plain representation of fact necessary to support and estoppel. 186 As in Blanchet v Powell’s Llantivit Collieries Co (1874) LR 9 Exch 74; Parsons v New Zealand Shipping Co [1901] 1 KB 548. 187 See Lishman v Christie & Co (1887) 19 QBD 333, CA, where Lord Esher MR at 339 expressed his dissent from a suggestion thrown out by Hawkins J at p 212 of Pyman v Burt (1884) C & E 207 that an assertion of goods not having been put on board is not inconsistent with a representation that they had been ‘received’ which might, he though, mean merely ‘received alongside’. See also Crosfield & Co v Kyle Shipping Co [1916] 2 KB 885.

493

11.102  Statutory estoppel

consignee of the goods (to whom the ­inducement is addressed) has, on the faith of the representation, either taken some step which has caused him loss, immediate or probable, or has abstained from adopting measures for his protection to which he would otherwise have resorted, and which would have obviated the possibility of such loss, or merely has been put to trouble, and has bestowed time and labour which, but for his belief in the truth of the representation, he would not have done. Thus in Howard v Tucker,188 it was held that an indorsee of a bill of lading containing a representation that the freight had been paid might fairly be supposed to have acted on the faith of this statement to his detriment, because he might have been induced thereby ‘to receive the bill of lading for a value which [he] might otherwise have thought inadequate’. In more modern times, the courts have expressed the opinion that the mere fact that a consignee has taken a clear bill of lading without objection is, in itself, sufficient evidence that he relied on it.189 In Compania Naviera Vasconzada v Churchill and Sim,190 Channell J held that, where the indorsee of a bill of lading containing the words ‘shipped in good order or condition’ on the faith of this statement obtained an award against the shippers for damages which he was unable to enforce against them in full, they being foreigners who afterwards became insolvent, this was clearly an alteration of his position for the worse, and that it would have been so even if the shippers had not been insolvent, because a mere right to recover damages by process of law is not the same thing as money in possession, and the party who has parted with his money on the faith of a clean bill of lading tendered to him, even if he eventually gets back the money, is at any rate deprived of interest thereon in the meantime, and is put to trouble and expense in the proceedings necessary to recover it. 11.103 In The Skarp,191 Langton J held – in a case in which a bill of lading in terms provided that the consignee was obliged to accept the goods, paying for them in the manner therein stipulated, but referring to arbitration any dispute as to their condition – that the assignee of the bill, being bound by its conditions, could not support a contention (essential for the foundation of an estoppel) that he had altered his position for the worse in accepting them; for he was obliged by the terms of the bill to do so irrespective of whether they had arrived in his hands in the same, or in worse, condition than when shipped. This decision has been the subject of discussion in later cases, however, and it may be doubted whether the principle enunciated will be held applicable in every case in which the bill of lading includes such a clause; the circumstances forming the circumstantial context of the contract may influence the court.192

188 (1831) 1 B & Ad 712. 189 Silver v Ocean Steam Ship Co [1930] 1 KB 416, 428 (Scrutton LJ); see also Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steam Ships Ltd [1947] AC 46, PC, where (at 56) a similar inference is taken for granted. 190 [1906] 1 KB 237. See 5.39. Compare, on the question of damage, Martineaus Ltd v Royal Mail Steam Packet Co (1912) 17 Com Cas 176, 180 (Scruton J). 191 [1935] P 134, 148–9. 192 See Dent v Glen Line Ltd (1940) 45 Com Cas 224, 258; Cremer v General Carriers SA [1974] 1 WLR 341 (Kerr J).

494

Bills of lading 11.104

Situations in which estoppel is not made out; illegality 11.104 Estoppel by representation in a bill of lading is subject to the same requirements as estoppel by representation generally. It has been explained in previous chapters that no estoppel arises where the representee had actual or presumptive knowledge of the real facts at the time when the representation was made. Accordingly, knowledge of the truth on the part of any consignee of goods, or indorsee of the bill of lading, precludes reliance on estoppel, both at common law before 1855193 and afterwards pursuant to the Bills of Lading Act 1855.194 Article III.4 of the Hague-Visby Rules provides that evidence to the contrary of the matters set out in Article III.3 shall not be admissible when the bill of lading has been transferred to a third party acting in good faith, and s 5(2) of the 1992 Act stipulates that a lawful holder of a bill of lading means a specified person who has become the holder of the bill in good faith. A party who has knowledge of the actual state and condition of the goods, as they were at the time of loading on board, could not allege reliance on a representation in the bill of lading to different effect where he knew the true facts; he would not be acting in good faith, having knowledge of the true facts. But the court will require it to be shown that the holder of the bill of lading had before him information contradicting its terms which was of at least equal value with the statement in the bill itself, for persons to whom bills of lading are tendered ought to be entitled, as against the shipowner, to take the bills at face value, unless the contrary evidence in their possession is of conclusive and overwhelming weight. Any other view would tend to diminish the value of bills of lading in commerce, and would also tend to promote carelessness, if not fraud, on the part of shipmasters.195 Similarly, the rule that fraud on the part of the representee defeats the estoppel was applied to bills of lading before the introduction of the statute in 1855,196 and the requirement of good faith embodied in Article III.4 of the Hague-Visby Rules and s 5(2) of the 1992 Act is to the same effect. So also, as in other cases, where the statement in the bill of lading which is said to give rise to the estoppel was itself induced by, or a repetition of, a previous representation made by the shipper or other party setting up the estoppel, though not made fraudulently, a good answer to the estoppel is established:197 but, where the inducement is not made out, as, for instance, where the shipper delivers, to be

193 As in Berkley v Watling, Nave and Crisp (1837) 7 Ad & El 29. 194 Section 3 of the Bills of Lading Act 1855 states: ‘unless such holder of the bill of lading shall have had actual notice at the time of receiving the same that the goods had not been in fact laden on board’. The word ‘actual’ is noteworthy, for it can hardly have been intended to abrogate impliedly the common law rule according to which presumptive knowledge is an answer to an estoppel. 195 Per Wright J in Evans v James Webster Bros. Ltd (1928) 34 Com Cas 172 at 176; Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steam Ships Ltd [1947] AC 46, PC, per Lord Wright. 196 Bates v Todd (1831) 1 Mood & R 106. For cases after the introduction of the 1855 Act, see Valieri v Boyland (1866) LR 1 CP 382; Craig and Rose v Delargy (1879) 16 Sc LR 750; Pyman v Burt (1884) C & E 207. 197 As in Cox Patterson & Co v Bruce & Co (1886) 18 QBD 147.

495

11.104  Statutory estoppel

carried, a closed case stated by him to contain goods of a certain character, and the captain does not accept the statement, or act on the faith of it, but expressly states in the bill of lading that the contents are ‘unknown’, the answer fails, and the captain or shipowner cannot pass responsibility for the statement back to the shipper or other party.

THE PARTNERSHIP ACT 1890 11.105 There are three sections of the Act which codify the pre-existing common law principles of estoppel by representation, as they have been held to apply to partnership transactions.

Holding out 11.106 Section 14 concerns the liability of persons held out as partners. It provides: ‘(1)  Every one who by words spoken or written or by conduct represents himself, or who knowingly suffers himself to be represented, as a partner in a particular firm, is liable as a partner to any one who has on the faith of such representation given credit to the firm, whether the representation has or has not been made or communicated to the person so giving credit by or with the knowledge of the apparent partner making the representation or suffering it to be made. (2)  Provided that where after a partner’s death the partnership business is continued in the old firm’s name, the continued use of that name or of the deceased’s partner’s name as part thereof shall not of itself make his executors or administrators estate or effects liable for any partnership debts contracted after his death.’

11.107 This estoppel, which is only an illustration of the common law doctrine of estoppel by representation of fact,198 is discussed at 9.8.

Notice to partners 11.108 Section 16 raises an estoppel against the firm with respect to a notice given to an active partner in the firm, save in the case of fraud. It provides as follows: ‘Notice to any partner who habitually acts in the partnership business of any matter relating to partnership affairs operates as notice to the firm, except in the case of a fraud on the firm committed by or with the consent of that partner.’

11.109 The general principle, of which this section is a particular application, is discussed at 5.11. 198 Hudgell Yeates & Co v Watson [1978] QB 451, CA, at 470 (Megaw LJ); Nationwide Building Society v Lewis [1998] Ch 482, CA, at 487 (Peter Gibson LJ).

496

The Partnership Act 1890 11.111

Dissolution 11.110 Section 36 is concerned with notice of dissolution, and with its effect as a withdrawal of a continuing representation of authority. It provides: ‘(1)  Where a person deals with a firm after a change in its constitution he is entitled to treat all apparent members of the old firm as still being members of the firm until he has notice of the change. (2)  An advertisement in the London Gazette as to a firm whose principal place of business is in England or Wales, in the Edinburgh Gazette as to a firm whose principal place of business is in Scotland, and in the Belfast Gazette as to a firm whose principal place of business is in Ireland, shall be notice as to persons who had not dealings with the firm before the date of the dissolution or change so advertised.199 (3)  The estate of a partner who dies, or who becomes bankrupt, or of a partner who, not having been known to the person dealing with the firm to be a partner, retires from the firm is not liable for partnership debts contracted after the date of the death, bankruptcy or retirement respectively.’

11.111 No particular form is required for a notice to be effective under s 36(1).200

199 The reference to Ireland is to be construed as exclusive of the Republic of Ireland: SR&O 1923/405, art 2. 200 Hussein and Asim (t/a Pressing Dry Cleaners) v Commissioners of Customs and Excise [2003] V & DR 439, [50].

497

498

PA RT I I I

Proprietary Estoppel, Election, Promissory Estoppel and Procedure Fifth edition Chapter 12 by Peter Crampin QC Chapters 13 and 14 by Tom Leech QC Chapter 15 by Piers Feltham

500

CH A P T E R 1 2

Proprietary estoppel

Introduction  12.1 The evolution of proprietary estoppel  12.12 Property  12.34 Parties  12.48 Raising the equity: the scope of the inquiry  12.58 A’s misapprehension  12.64 A’s change of position  12.87 B’s responsibility for A’s change of position  12.104 Unconscionability  12.133 Defences  12.138 The nature of the equity; third parties  12.166 Satisfying the equity  12.179 Overlap with other reliance-based estoppels  12.192 Proprietary estoppel and constructive trusts  12.197

INTRODUCTION 12.1 The doctrine of proprietary estoppel1 overlaps with other reliance-based estoppel doctrines, since the same facts may give rise to more than one form of estoppel.2 It has, however, two distinguishing features: (i) it is subject to a limiting condition, being concerned only with rights over property; and (ii) it generates an equitable cause of action, enabling A, the estoppel raiser, to sue B, the party 1

The first use of ‘proprietary estoppel’ in a reported judgment was by Danckwerts LJ in ER Ives Investment Ltd v High [1967] 2 QB 379, CA, at 399. 2 See 1.13–1.14; 12.192–12.196.

501

12.1  Proprietary estoppel

sought to be estopped,3 for discretionary equitable relief which may result in the adjustment of their proprietary rights or an award of compensation.

The doctrine’s place in equity and estoppel 12.2 Reliance-based estoppel forms part of an original equitable jurisdiction to protect against unconscionable conduct.4 Proprietary and promissory estoppel, although both species of equitable estoppel, nonetheless have different origins from each other and from estoppel by representation of fact and estoppel by convention.5 This work, however, treats all the reliance-based estoppels as being instantiations of a single general principle, namely that, if B is responsible for A’s detrimentally changing or maintaining his position in reliance on a proposition, B is precluded (estopped) from unfairly (unconscionably) changing his own position and denying the proposition on which A relied.6 This is reflected in the principal thesis of this work, namely that the unifying element in all the estoppels discussed herein is that they are generated by a reliance-based change of position by A.7 In the case of proprietary estoppel, the general principle operates by protecting A from all or some of the consequences of an unfair change of position by B with respect to A’s rights over, or enjoyment of, his own or B’s property,8 by empowering the court to limit a proprietary right of B and to create or augment a corresponding right of A.9 12.3 Proprietary estoppel exhibits two features which traditionally have been considered distinguishing.10 It shares the first with promissory estoppel. Where

3 4

Where appropriate, references to A and B include their successors in title. Ie the equitable jurisdiction concerned with protection against fraud, unconscionable bargain, undue influence and mistake. Cf Gillett v Holt [2001] Ch 210, CA, at 225 per Robert Walker LJ: ‘the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine [ie proprietary estoppel]’. And see Beale v Harvey [2004] 2 P & CR 18, CA, at [37] and Uglow v Uglow [2004] WTLR 1183, CA, at [9]. See also Thompson (1983) 42 CLJ 257, p 277: ‘The basis of the doctrine is not that “a man should keep his word”. Rather, it is that one party having induced the other to rely on an expectation, it becomes unconscionable to deny some remedy to him’. 5 See 1.35–1.41; and, as to the equitable nature of estoppel by representation of fact and reliance-based estoppel by convention, 1.99–1.100. Throughout this chapter, it is understood that a representation as to a present right is a representation of fact (see 2.31), so that ‘estoppel by representation of fact’ should be taken to stand for ‘estoppel by representation of fact or law’. 6 National Westminster Bank Plc v Somer International (UK) Ltd [2002] QB 1286, CA, at [38]. For convenience, we use ‘change of position’ in this chapter to include the maintaining of an existing position. This is a form of detrimental reliance: see eg Wayling v Jones (1993) 69 P & CR 170, CA and 12.99–12.103. 7 See 1.5–1.9. 8 See 12.35 onwards. 9 Sutcliffe v Lloyd [2008] EWHC 1329 (Ch), at [4] (unaffected on appeal [2007] 2 EGLR 13); see also 1.21 (nn 107–109). One of the ways in which B’s proprietary right may be limited is by A’s acquisition of a non-proprietary right, such as a licence: see 12.189, nn 519, 520, 521 and 534. 10 There is a summary account of the doctrine of proprietary estoppel and its relationship to other estoppels in Sledmore v Dalby (1996) 72 P & CR 196, CA, at 207–8. It arguably gives greater prominence, however, to restitutionary principles than would be justified today.

502

Introduction 12.3

an estoppel by representation of fact is established, it operates, in litigation between A and B, as a rule of law:11 as hitherto understood, it precludes B from denying a proposition about some matter of fact or law on the basis of which A has regulated his affairs.12 Proprietary and promissory estoppel, by contrast, raise an equity in A’s favour,13 enabling him to seek protection by way of discretionary equitable relief.14 A discretion of the court to mitigate the effect of an estoppel by representation of fact based on the equitable nature of that doctrine has, however, now been recognised, suggesting this first distinction is one of degree rather than essential quality.15 The second is a distinction between promissory and proprietary estoppel. A promissory estoppel equity can only be satisfied by dismissing or reducing or otherwise mitigating some claim made by B against A. In the case of proprietary estoppel, by contrast, not only may the equity be used defensively: it may also be sued on as a cause of action,16 in response to which the court may order B to transfer property to A or create a right over his property in A’s favour or pay compensation or grant other equitable relief.17 Like the first, this distinction is not, we suggest, one of essential quality: the limitation on the deployment of promissory estoppel as a cause of action is simply the effect of a general rule, applicable to all reliance-based estoppels, that an estoppel may not

11 See 1.51–1.62. 12 Low v Bouverie [1891] 3 Ch 82, CA; National Westminster Bank Plc v Somer International (UK) Ltd, above, at [36]. 13 Crabb v Arun District Council [1976] Ch 179, CA (‘Crabb’), at 187 (Lord Denning MR). As to the nature of the ‘equity’, see 12.166 onwards. 14 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, per Brennan J at [15]: ‘Equitable estoppel … does not operate by establishing an assumed state of affairs. Unlike an estoppel in pais [ie an estoppel by representation of fact], an equitable estoppel is a source of legal obligation. It is not enforceable against the party estopped because a cause of action or ground of defence would arise on an assumed state of affairs; it is the source of a legal obligation arising on an actual state of affairs’ (emphases added). See 1.2–1.4; also Snell’s Equity (33rd edn, 2015), [12–36]. 15 See 1.57, 1.99. 16 It stands alone as ‘a cause of action in itself’: see Baird Textile Holdings Limited v Marks & Spencer Plc [2002] 1 All ER (Comm) 737, CA, at [88] (Mance LJ). Thus, A can sue B in proprietary estoppel, rather than in contract, in trespass etc. As Lord Denning MR said in Crabb, n 13, at 187: ‘When [Counsel] for the plaintiff, said that he put his case on an estoppel, it shook me a little because it is commonly supposed that estoppel is not itself a cause of action. But that is because there are estoppel and estoppel. Some do give rise to a cause of action. Some do not. In the species of estoppel called proprietary estoppel, it does give rise to a cause of action.’ See also Williams v Pinckney (1897) 67 LJ Ch 34, at 3, per Vaughan Williams LJ. In The Law of Proprietary Estoppel (2014, OUP), [1.12], Professor McFarlane analyses the doctrine as being made up of three ‘strands’, one of which is estoppel by representation of fact (often misleadingly called ‘common-law estoppel’: see n 5). In his view, the representation strand does not of itself generate a cause of action: see ibid, [9.18]. We respectfully disagree. We prefer to regard estoppel by representation of fact and proprietary estoppel as being different applications of the same reliance-based principle, which, in respect of rights over or in property, generates an equitable cause of action: see 2.5, 12.71–12.77, 12.131, 12.192 onwards. In any event, it is a source of potential confusion to include within proprietary estoppel a form of estoppel which, on McFarlane’s view, lacks a quality which is essential to the doctrine. 17 Thus the effect of a proprietary estoppel may be, and generally is, permanent: see Sledmore v Dalby, n 10, at 208.

503

12.3  Proprietary estoppel

unacceptably subvert the policy of a statute or rule of law, namely, in that case, the doctrine of consideration.18

The elements of proprietary estoppel 12.4 A comprehensive and uncontroversial definition of proprietary estoppel has yet to be devised.19 Because the doctrine applies in a wide variety of factual situations, ‘any summary formula is likely to prove to be an over-simplification’.20 Moreover, cases of proprietary estoppel are intensely fact-sensitive.21 These features of the doctrine make for difficulty in capturing the principles and reducing them to a coherent body of rules.22 The first step, it is submitted, is to recognise that a proprietary estoppel arises out of a misapprehension, ie a mistake of fact or law (a false belief that something has happened or is the case) or a misprediction23 (an expectation, subsequently falsified, that something will happen or be the case).24 A proprietary estoppel arises out of a detrimental change of position by A on the faith of a misapprehension concerning property or rights over property.25 12.5 The mistake form of the estoppel involves a mistake by A (which may be unilateral or may be shared by B) as to his present rights in or over property. A believes a false proposition concerning his own or B’s rights: eg A mistakenly believes that he owns land which in fact belongs to B or that he is entitled to

18 See 1.47–1.50; 14.22, 14.25; see also McFarlane and Sales (2015) 131 LQR 610, questioning the continuing validity of this limitation. Subject to the same limitation, that they may not unacceptably subvert the policy of a rule of law, estoppels by representation or convention may also supply a fact to make good a cause of action: see 1.43–1.50, 8.56–8.60. 19 See Gardner, An Introduction to Land Law (4th edn, 2015); Thorner v Major [2009] 1 WLR 776, HL, [29] (Lord Walker), referring to the 1st edn of that work. 20 Jennings v Rice [2003] 1 P & CR 8, CA, [44] (Robert Walker LJ). See also Actionstrength Ltd v International Glass Engineering In.Gl.En SpA [2003] 2 AC 541, HL, [25], where Lord Hoffmann, citing Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd (Note) [1982] QB 133n (‘Taylors Fashions’), a leading case in proprietary estoppel, described the general doctrine of estoppel as ‘a principle of broad, not to say protean, application’. 21 Eg Lester v Woodgate [2010] 2 P & CR 21, CA, [39]. In Liden v Burton [2016] EWCA Civ 275, at [25], the Court of Appeal said, in a proprietary estoppel case, that an appellate court will be reluctant to overturn conclusions of a trial judge on fact-sensitive issues which have been reached having regard to the correct legal principles. 22 For example, consider the different views which have been taken as to the effect on proprietary estoppel of the fact of negotiations being ‘subject to contract’: cf A-G of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd [1987] AC 114, PC; Gillett v Holt, n 4, at 228; Gonthier v Orange Contract Scaffolding Ltd [2003] EWCA Civ 873, [61]; Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 (‘Cobbe’); and Haq v Island Homes Housing Association [2011] 2 P & CR 17, CA. See further 12.118 onwards. 23 Cobbe, n 22, at [63] (Lord Walker). 24 The notion of ‘expectation’ employed here is of ‘a strong belief that something will happen or be the case’: Oxford Dictionaries. Neither a hope nor a weak belief that something may happen or be the case is sufficient for a proprietary estoppel claim. Cf nn 64 and 67 below. 25 The kinds of property which come within the doctrine are described in 12.34 onwards.

504

Introduction 12.7

renew a lease of land from B, and in consequence expects no adverse claim from B if he builds on the land; or A mistakenly believes that B has released or abandoned a restrictive covenant affecting his, A’s, land and in consequence expects no adverse claim from B if he builds on the land.26 12.6 In the misprediction form of the estoppel, A has an unenforceable27 expectation concerning (i) the future acquisition from B of a right in or over B’s property, or (ii) the future enjoyment of B’s or his own property.28 For example, B makes a non-contractual promise to leave property to A by will,29 or B induces A to expect that his lease will be renewed, or that he will not be disturbed in using B’s land in some way (eg as an access to his own land, or as his residence) or in the use of his own land (eg he is induced to expect B to refrain from exercising rights he has to control what A does on his own property). Over time, A may come to believe that B is under some kind of obligation to fulfil the expectation, but it is not essential that he should do so. When the expectation is disappointed, or falsified, it can be seen, retrospectively, to have been a misprediction. 12.7

The elements of the doctrine can be stated as follows:30

(1) A has a misapprehension concerning his ownership of or rights over B’s property, or concerning his future acquisition of an interest in or right over or the future enjoyment of B’s property, or concerning the future enjoyment of his own property. 26 Eg Shaw v Applegate [1977] 1 WLR 970, CA. See also Chadwick v Abbotswood Properties Ltd [2005] 1 P & CR 10, [70] per Lewison J: ‘… an estoppel can arise where, instead of expecting to acquire a right over someone else’s land, the person who acts to his detriment (A) expects that other person (B) to release a right over A’s land’. That refers to expectations, ie to the misprediction form of the estoppel. But it is submitted that a mistaken belief that a right has already been released suffices to generate the mistake-based form. 27 Edwin Shirley Productions Ltd v Workspace Management Ltd [2001] 2 EGLR 16, [41]: ‘[Gillett v Holt, n 4] confirms that the promise or assurance relied upon by the claimant need not be binding or irrevocable (for otherwise there would be no need for an estoppel doctrine)’. See also Shield v Shield [2014] EWCA Civ 1136, [11], [18], [21]. 28 It is not necessary that A be mistaken as to his present rights: see 12.65 onwards. This is a point of importance in the misprediction form of the estoppel. It does not easily fit with the majority reasoning in Ramsden v Dyson (1865) LR 1 HL 129, which may have been decided on the basis that all forms of proprietary estoppel involve mistakes about present rights. (If this were the law, B’s non-contractual promise to leave property to A could only found a proprietary estoppel if A mistakenly believed that the promise was legally enforceable; but we submit that it is not the law.) 29 See eg Gillett v Holt, n 4; Jennings v Rice, n 20; Thorner v Major, n 19; Henry v Henry [2010] 1 All ER 988, PC. In In re Basham [1986] 1 WLR 1498, 1503–4, Edward Nugee QC considered this to have ‘something in common with estoppel’ but ‘properly to be regarded as giving rise to a species of constructive trust’, relying on cases on secret trusts and mutual wills. In Thorner v Major, [20], Lord Scott, obiter, agreed. However, at [63] Lord Walker, repeating doubts he had expressed earlier in Gillett v Holt, n 4, at 228–9, questioned reliance on authorities about mutual wills. 30 For a recent analysis of the elements, see Davies v Davies [2016] EWCA Civ 463, at [38] (Lewison LJ, with the concurrence of Underhill and Patten LJJ). In attempting to analyse the elements of proprietary estoppel, it must always be understood that ‘the doctrine of proprietary estoppel cannot be treated as subdivided into three or four watertight compartments. …

505

12.7  Proprietary estoppel

(2) A relies on the misapprehension to change his position,31 eg by building on land which he mistakenly believes is his but which in fact belongs to B, or by giving up employment to move in with B in order to care for him in the expectation of inheriting his house. (3) B is responsible for A’s change of position. This responsibility derives from B’s having (a) remained silent during the course of A’s change of position, in breach of a duty to speak out, or (b) created the misapprehension, usually by an assurance (a representation or a promise) to A, or (c) otherwise encouraged A to rely on the misapprehension. The following further conditions must be satisfied in order for B to be responsible for A’s change of position: (i) B’s assurance must be unequivocally to the effect understood by A. It need not be unequivocal as to the nature of the interest or right owned or to be acquired by A, but it must be unequivocally to the effect that some interest or right is owned or will be acquired;32 (ii) B must actually have intended, or must have been reasonably understood by A to be intending, that A should rely on the misapprehension as he did, without any reservation by B of his responsibility to A for such reliance;33 and (iii) in the case of an estoppel founded on silence, it must have been B’s duty to make a statement that would correct the misapprehension (without such a duty, B’s silence is equivocal and will not found an estoppel). (4) B changes his own position from one of real or apparent acceptance of A’s misapprehension to one of repudiating or failing to give effect to it, eg by asserting his rights over the land on which A has built or by refusing to fulfil A’s expectation or failing to make the expected will. In at least some situations, B is seeking to take advantage of A’s unilateral34 or common35 mistake or his misprediction. (5) Having regard to A’s change of position, B’s change of his own position is unconscionable (unfair), because it makes A worse off (or B better off relative to A) than if he had not relied on the misapprehension. Where these conditions are satisfied, B must allow effect to be given to A’s belief or fulfil his expectation or pay compensation to such extent as is just. the quality of the relevant assurances may influence the issue of reliance, … reliance and detriment are often intertwined, and … whether there is a distinct need for a “mutual understanding” may depend on how the other elements are formulated and understood’. See Gillett v Holt, n 4, at 225 (Robert Walker LJ); see further 1.75–1.82. 31

A’s change of position is usually referred to as ‘detrimental reliance’, though its detrimental quality, while necessary, may not become apparent until B’s own change of position. See Gillett v Holt, n 4, at 232, per Robert Walker LJ: ‘The issue of detriment must be judged at the moment when the person who has given the assurance seeks to go back on it’. See further 12.59 onwards, 12.88 onwards. 32 See 4.2, 4.13 onwards, 4.40; Cobbe, n 22. 33 See further 12.118 onwards. For other situations in which B’s responsibility is qualified, see 12.125 onwards. 34 Eg where B knowingly takes advantage of A’s unilateral mistake as to the ownership of land: see Cobbe, n 22, at [63] (Lord Walker). 35 Eg the very question for decision in Taylors Fashions, n 20, at 155, namely: ‘whether, in all the circumstances of this case, it was unconscionable for the defendants to seek to take ­advantage of the mistake which, at the material time, everybody shared’.

506

Introduction 12.11

12.8 Proprietary estoppel thus involves successive changes of position by A and B. Its central concern, and that which enables A to claim equitable protection, is B’s responsibility for A’s change of position and for the unconscionable or unfair consequences which would flow if he were allowed to persist in his own change of position.36 12.9 An equity is raised in A’s favour as soon as: (i) A has changed his position on the faith of a belief or expectation concerning property or property rights; (ii) B is responsible for A’s change of position; and (iii) it would be unconscionable for B not to give effect to A’s belief or expectation. 12.10 It is not necessary, therefore, for B to have behaved unconscionably before the equity is raised.37 The equity is an inchoate right in the nature of a floating equity, the precise content of which can only be determined by the court. Whether it is, at any particular point in time, an equitable interest in property can only be determined retrospectively. 12.11 If, subsequently, B unconscionably changes his own position, by repudiating or failing to give effect to A’s belief or expectation, an equitable cause of action is thereby generated entitling A to sue B for the satisfaction of the equity.38 But A can only maintain a cause of action in proprietary estoppel when it would be unconscionable for B not to give effect to A’s belief or expectation.39 Thus the equity and the cause of action for its satisfaction can be, and usually are, generated at different times.40 36 37

38 39

40

Kelly v Fraser [2013] 1 AC 450, PC, at [17]. Taylors Fashions, n 20, at 151–2, 154–5; Lim v Ang [1992] 1 WLR 113, PC, 117; Lovett v Fairclough (1991) 61 P & CR 385 at 401, where the equity was satisfied before proceedings brought. Cf Shield v Shield [2014] EWCA Civ 1136, at [19], where Patten LJ said: ‘For an equity based on a claim of estoppel to arise, not only must there be a representation, promise or agreement of the kind which my Lord has indicated, but it has to be demonstrated to the court that the person who made that promise or representation has failed to keep it’. We respectfully disagree: see Jennings v Rice, n 20, at [36]; Clarke v Meadus [2013] WTLR 199, at [75], where Warren J did not regard an unconscionable change of position by B as being one of the ‘elements’ of proprietary estoppel; Webster v Ashcroft [2012] 1 WLR 1309, at [25]–[28]; Walden v Atkins [2013] EWHC 1387 (Ch), at [45]–[48]. To the extent that ­Patten LJ’s dictum is inconsistent with these authorities, it was made, we submit, per incuriam. In Shield v Shield, B was still living at the material time so that it could not be said that his promise to leave shares to A in his will had not been kept. Assuming the other conditions were satisfied, an equity had been raised in A’s favour, but so long as B was willing and able to perform his promise, there was no cause of action in proprietary estoppel for the satisfaction of the equity: see further n 40. Pascoe v Turner [1979] 1 WLR 431, CA, 436. So long as there is no unconscionability at work – eg while B is willing and able to perform his promise to A – there may be an equity raised in A’s favour, consequential on A’s change of position on the faith of his belief or expectation, but there can be no cause of action for its satisfaction: see n 37. Webster v Ashcroft [2012] 1 WLR 1309. In response to a submission that no property interest arose until B’s death, unless B did something inconsistent with the promise in his lifetime to A’s knowledge (when A would have an immediate claim, as in Gillett v Holt, n 4), the deputy judge (Nicholas Strauss QC) said, at [27]: ‘This seems to me to confuse the right with the circumstances in which the right is enforced … But the property here is not the cause of action

507

12.12  Proprietary estoppel

THE EVOLUTION OF PROPRIETARY ESTOPPEL 12.12 Proprietary estoppel is a doctrine of comparatively recent development, if not recent origin.41 Two lines of evolutionary descent are ‘standing by’ (or acquiescence)42 and the misprediction form of proprietary estoppel. Each has developed separately from a third, namely estoppel by representation of fact.43 A fourth line, the doctrine of making representations good, once played an important part but is now of mainly historical interest.44

Standing by 12.13 In a case of standing by, B knows of A’s misapprehension but chooses not to intervene and not to assert his own inconsistent rights until after A has but the equity …’. See also Clarke v Meadus [2013] WTLR 199, at [75] and ­Muhammad v ARY Properties Ltd [2016] EWHC 1698 (Ch), at [48]. 41

Watson v Goldsbrough [1986] 1 EGLR 265, CA, 267, per Browne-Wilkinson V-C. The misprediction form, which was apparently denied a future by Jorden v Money (1854) 5 HLC 185, nevertheless survived. It owes its modern existence to subsequent interpretations of Lord Kingsdown’s principle in Ramsden v Dyson, n 28, at 170–1: see 12.19 onwards. 42 The doctrine of acquiescence is not, however, confined to proprietary estoppel (see 1.88 onwards, 3.9 onwards): consider Cairncross v Lorimer (1860) 3 Macq 827, HL, 830; De Bussche v Alt (1878) 8 Ch D 286, CA, 314; Sarat Chunder Dey v Gopal Chunder Laha (1892) LR 19 IA 203, PC, 215–6; In re William Porter & Co Ltd [1937] 2 All ER 361, 363; In re Eaves [1940] Ch 109 (CA), 117–8; Perlman v Rayden [2004] EWHC 2192 (Ch), [75] per ­Patten J, demonstrating the overlap: in the case of a legal right, ‘acquiescence giving rise to an estoppel bars the enforcement of [the] right and, with it, any claim in damages’. There is a separate line of cases at common law where a similar principle applies: see Webb v Paternoster (1619) Palm 71 (‘a licence executed is not countermandable; but only when it is executory’); Winter v Brockwell (1807) 8 East 308; Tayler v Waters (1816) 7 Taunt 374; Hewlins v Shippam (1826) 5 B & C 221; Liggins v Inge (1831) 7 Bing 682; Wood v Manley (1839) 11 Ad & El 34; and Wood v Leadbitter (1845) 13 M & W 838. Armstrong v Sheppard & Short Ltd [1959] 2 QB 384, CA, is a modern application of the common law principle. It is noteworthy that, in Plimmer v Mayor etc of the City of Wellington (1884) 9 App Cas 699 (‘Plimmer’), a seminal case in the evolution of proprietary estoppel, the Privy Council regarded Winter v Brockwell and Liggins v Inge (both of which followed Webb v Paternoster) as ‘analogous’ cases, presumably because Plimmer’s equity had been ‘executed’ (ie acted on), by building the wharf and jetty. 43 For an account of the development of estoppel by representation of fact, see 1.35 onwards. 44 In re Fickus [1900] 1 Ch 331, 334–5. For a detailed discussion of the doctrine of making representations good, see Dawson (1982) 1 Canterbury Law Review 329. The proposition that the doctrine is defunct is doubted by Handley [2016] CLJ 432, at p 434, but without reference to Maddison v Alderson (1883) 8 App Cas 467, HL, or In re Fickus. The doctrine’s contemporary interest resides in two areas. First, it still strongly influences the courts’ approach to the satisfaction of a proprietary estoppel equity: see eg Lloyd LJ in the Court of Appeal in Thorner v Major [2008] EWCA Civ 732, [68] (unaffected on this point by the decision of the House of Lords, n 19). Secondly, the misprediction form of proprietary estoppel is illuminated by two of the cases just mentioned. In Loffus v Maw, A relied on the doctrine of making representations good and succeeded. In Maddison v Alderson, A relied on Loffus v Maw but failed: Lord Selborne LC disapproved of Loffus v Maw (and, by implication, the doctrine of making representations good) on the ground that it was irreconcilable with Jorden v Money (1854) 5 HLC 185. It is a striking fact that, if litigated today, Loffus

508

The evolution of proprietary estoppel 12.13

changed his position.45 For example, B knowingly stands by while A builds on B’s land mistakenly believing it to be his own, and B later claims the land and the buildings;46 or B allows his property to be sold to A by another, who represents himself to be the owner, and then B seeks to upset the sale;47 or B so acts as to cause A to refrain from exercising compulsory powers to acquire B’s land.48 From the earliest times, the courts considered B’s standing by to amount to ‘fraud’.49 That this could lead to the grant of a proprietary right to A was ­recognised in the early cases.50 There are relatively few modern examples.51

v Maw and Maddison v Alderson would each result in a successful misprediction proprietary estoppel claim, as Lloyd LJ pointed out in Thorner v Major [2008] EWCA Civ 732, [31]. 45 In Fisher v Brooker [2009] 1 WLR 1764, HL, [62], Lord Neuberger called this the ‘classic example’ of proprietary estoppel. See also Lester v Woodgate [2010] 2 P & CR 21, CA, [27]. The Earl of Oxford’s Case in Chancery (1615) Chan Rep 1 and Peterson v Hickman, referred to in the former at 5, were possibly very early cases of standing by, though they arguably turned on a different, and now defunct, doctrine. Further illustrations are Edlin v Battaly (1675) 2 Lev 152; Short v Taylor, cited in Anon (1709) 2 Eq Ca Abr 522; Huning v Ferrers (1711) Gilb Rep 85; East India Co v Vincent (1740) 2 Atk 83 (for a fuller account of the facts and the decision, see McManus v Cooke (1887) 35 Ch D 681, 694); Steed v Whitaker (1740) Barn Ch 220; Stiles v Cowper (1748) 3 Atk 693 (considered in Svenson v Payne (1945) 71 CLR 531, HCA, at 543 and Taylors Fashions, n 20, at 147–8); The King v The Inhabitants of Butterton (1796) 6 Term Rep 554; Clavering’s Case, mentioned in Jackson v Cator (1800) 5 Ves Jun 688, 690; Duke of Leeds v Earl of Amherst (1846) 2 Ph 117 (discussed in De Bussche v Alt, n 42 above); Powell v Thomas (1848) 6 Hare 300; Rochdale Canal Company v King (1853) 16 Beav 630; Mold v Wheatcroft (1859) 27 Beav 510; Laird v The Birkenhead Railway Company (1859) Johns 500. 46 A building belongs to the owner of the land on which it is erected (quod solo inaedificatur solo cedit), so that B, the landowner, is entitled at common law to possession of the land and the building; subject to any possible claim in unjust enrichment, A has no common law right to compensation: see Falcke v Scottish Imperial Insurance Co Ltd (1886) 34 Ch D 234, at 248, and In re Vandervell’s Trusts (No 2) [1974] Ch 269, at 299–300, referring to In re Leslie (1883) 23 Ch D 552. Cf Wu [2011] Conv 8. 47 Savage v Foster (1722) 9 Mod 35. 48 Somersetshire Coal Canal Company v Harcourt (1858) 2 De G & J 596. 49 Huning v Ferrers, above; Savage v Foster (1723) 9 Mod 35. In Dann v Spurrier (1802) 7 Ves Jun 231, at 235, Lord Eldon referred to ‘bad faith and bad conscience’. In Ramsden v Dyson, n 28, Lord Cranworth referred to ‘dishonesty’ (see 12.14), as did Lord Wensleydale (at 168); Fry J referred to ‘fraud’: see 12.23; Scarman LJ to an ‘unconscionable, inequitable or unjust’ taking of advantage: see Crabb, n 13, at 195; Robert Goff J, in Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84, at 103, to ‘fraudulently taking advantage of another’s error’. 50 Hunt v Carew (1649) Nels 46; Edlin v Battaly (1674) 2 Lev 152; Savage v Foster (1723) 9 Mod 35; East India Company v Vincent (1740) 2 Atk 83 (see further McManus v Cooke (1887) 35 Ch D 681, 694); Stiles v Cowper (1748) 3 Atk 692; Neesom v Clarkson (1845) 4 Hare 97; Duke of Devonshire v Eglin (1851) 14 Beav 530; Duke of Beaufort v Patrick (1853) 17 Beav 60; Unity Joint Stock Mutual Banking Association v King (1858) 25 Beav 72. 51 Standing by was successfully relied on in A-G to the Prince of Wales v Collom [1916] 2 KB 193, Michaud v The City of Montreal [1923] UKPC 31 and ER Ives Investment Ltd v High [1967] 2 QB 379, CA. It was unsuccessfully invoked in Willmott v Barber (1880) 15 Ch D 96; Russell v Watts (1884) LR 25 Ch D 559; Proctor v Bennis (1887) 36 Ch D 740, CA; ­Armstrong v Sheppard & Short Ltd [1959] 2 QB 384, CA; Shaw v Applegate [1977] 1 WLR 970, CA, at 978; Taylors Fashions, n 20 (the first of the two cases); and Blue Haven Enterprises Limited v Tully [2006] UKPC 17.

509

12.14  Proprietary estoppel

12.14 The principle was authoritatively stated by Lord Cranworth LC in Ramsden v Dyson:52 ‘If a stranger begins to build on my land supposing it to be his own, and I, perceiving his mistake, abstain from setting him right, and leave him to persevere in his error, a Court of equity will not allow me afterwards to assert my title to the land on which he had expended money on the supposition that the land was his own. It considers that, when I saw the mistake into which he had fallen, it was my duty to be active and to state my adverse title; and that it would be dishonest in me to remain wilfully passive on such an occasion, in order afterwards to profit by the mistake which I might have prevented.’

12.15 Lord Cranworth considered separately a case where A builds on B’s land, knowing it to be B’s but mistakenly believing that he has an enforceable present right to acquire an interest in the land in the future, eg a right to renew a lease.53 Lord Cranworth regarded this as a version of the same mistake-based standing by principle. 12.16 In the same case, Lord Kingsdown set out the principle with which his name is now mainly associated:54 ‘If a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing, under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a Court of equity will compel the landlord to give effect to such promise or expectation. This was the principle of the decision in Gregory v Mighell (1811) 18 Ves 328, and, as I conceive, is open to no doubt. If, at the hearing of the cause, there appears to be such uncertainty as to the particular terms of the contract as might prevent a Court of equity from giving relief if the contract had been in writing, but there had been no expenditure, a Court of equity will nevertheless, in the case which is above stated, interfere in order to prevent fraud … [E]ither in the form of a specific interest in the land, or in the

52

53

54

Note 28, at 140–1. Lords Brougham (at 162), Wensleydale (at 168) and Westbury (at 174) agreed with Lord Cranworth. This is the mistake form of proprietary estoppel: see 12.5. Lord Kingsdown’s principle (see 12.16) is stated ‘differently and rather more broadly’: see Taylors Fashions, n 20, at 145. Note 28, at 142. The case considered by Lord Cranworth was one of A’s building a house ‘in the belief, created or encouraged by [B, the landowner], that [A] was at any time entitled to call for such a lease as he claimed’, when B knew of A’s mistaken belief, but nevertheless allowed him to proceed. Lord Cranworth considered that it would not be just to allow B to profit by expenditure made by A in consequence of his mistake, saying: ‘… if I had come to the conclusion that [A], when he erected his building … did so in the belief that he had against [B] an absolute right to the lease he claims, and that [B] knew that he was proceeding on that mistaken notion, and did not interfere to set him right, I should have been much disposed to say that he was entitled to the relief he sought’. Lawton LJ relied on this passage in Crabb, n 13, at 192. Note 28, at 170–1.

510

The evolution of proprietary estoppel 12.18

shape of compensation for the expenditure, a Court of equity would give relief, and protect in the meantime the possession of the tenant.’

12.17 The two limbs of Lord Kingsdown’s principle are: (i) ‘a verbal agreement [by A] with [B] for a certain interest in land’ and (ii) ‘an expectation, created or encouraged by [B], that [A] shall have a certain interest’.55 The language of (ii) reflects, in part, Lord Cranworth’s second version of standing by – a ‘belief, ­created or encouraged by [B], that [A] was at any time entitled to call for’ a lease – with the substitution of ‘expectation’ for ‘belief’. Lord Kingsdown said the two limbs are in effect the same. The second limb, with its focus on expectations, is said to be the source of the misprediction form of proprietary estoppel.56 12.18 Lord Cranworth’s standing by principle in Ramsden v Dyson, in both versions, concerns a case where A changes his position on the faith of a mistake as to present rights.57 It is arguable that, notwithstanding the reference to expectations, the second limb of Lord Kingsdown’s principle, like the extended version of Lord Cranworth’s principle, is concerned with the same mistake-based standing by doctrine. It has often been said that there was no disagreement in the House of Lords on the legal principles,58 and Lord Kingsdown himself may have implied that he differed from the other judges only on the facts. It may be that he had in mind a misprediction arising out of a mistake by A that he had an enforceable present right to obtain an interest in the future. That this was indeed his view is arguably confirmed by (i) his reliance on Gregory v Mighell, which was not a misprediction case;59 (ii) his acceptance of A’s case;60 and (iii) his analysis of the evidence, which was focused on whether or not A believed he had an enforceable present right to a long lease.61 Moreover, if Lord Kingsdown intended to state a principle different from the other judges, its origins are obscure.62

55

‘The first of these principles appears to be directed towards preventing a person from fraudulently taking advantage of another’s error, whereas the latter appears to derive from encouragement or representation’: per Robert Goff J in Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84, at 103. 56 Eg Crabb, n 13, at 194 (Scarman LJ). 57 The same is true of Nunn v Fabian (1865–66) LR 1 Ch App 35, decided by Lord Cranworth only six months after Ramsden v Dyson. Its principal interest lies in his citation of Gregory v Mighell, the case relied on by Lord Kingsdown. 58 Bankart v Tennant (1870) LR 10 Eq 141, at 146; Plimmer, n 42, at 711; Civil Service Musical Instrument Association Ltd v Whiteman (1899) 68 LJ Ch 484; Crabb, n 13, at 194; Pascoe v Turner [1979] 1 WLR 431, CA, at 435; Taylors Fashions, n 20, at 144; Cobbe, n 22, at [64] (Lord Walker). 59 Lord Cranworth’s citation of Gregory v Mighell in Nunn v Fabian in the context of the standing by principle (see n 57) can be seen as agreeing with this. See further n 74. 60 At 172. 61 Cobbe, n 22, at [64] (Lord Walker). For an opposing view, see Mee in Bright (ed), Modern Studies in Property Law, vol 6 (2011). 62 Cases concerning ‘encouragement’ are legion: see the fourth edition of this work at [XII.1.5], n 4. But few early cases have been found which refer to the encouragement of ‘expectations’. In Dann v Spurrier (1802) 7 Ves Jun 231, at 235–6, Lord Eldon referred to ‘a lessor knowing and permitting those acts, which the lessee would not have done, and the other must conceive he would not have done, but upon an expectation, that the lessor would not throw an objection

511

12.19  Proprietary estoppel

The misprediction form of the estoppel 12.19 The view which has come to be accepted is that, by the second limb of his principle, Lord Kingsdown (perhaps, we suggest, unwittingly) laid the foundation for the misprediction form of proprietary estoppel, where A, without any mistaken belief in a present entitlement,63 acts to his detriment in reliance on an unenforceable expectation,64 created or encouraged by B, that B will grant him an interest in the future. This is largely a consequence of the way Lord Kingsdown’s speech has been interpreted in subsequent cases such as Plimmer, Inwards v Baker, Ward v Kirkland, Crabb and Taylors Fashions. 12.20 In Plimmer,65 the Privy Council applied the second limb of Lord Kingsdown’s principle. There were earlier cases in which this was expressly advanced as the basis for a misprediction estoppel,66 but Plimmer seems to have been the first example of a positive decision in favour of the misprediction form.67 The principle was so applied by the Privy Council in Ahmad Yar Khan v The

in the way of his enjoyment’ (emphasis added: an expectation as to B’s future conduct, and so at least consistent with a misprediction-based proprietary estoppel). See also Note 2 in (1809) 2 Ves Jun Supp 26 (‘if the owner fraudulently encourages the occupier of an estate to lay out his money in improvements thereon, the jurisdiction of a court of equity will attach to such a case … The tenant, under such circumstances, may be entitled, not merely to compensation for improvements upon, but even to be protected in the possession of, the estate, for any term which he had encouragement to expect …’). In Thornton v Ramsden (1864) 4 Giff 519, at 571, Stuart V-C used the phrase ‘reasonable confidence’, suggestive of an expectation. 63 See 12.65 onwards. 64 Lord Kingsdown’s speech refers to a ‘hope or expectation’, with the implication that a hope, if created or encouraged by B, may be a sufficient foundation for an estoppel. In Cobbe, n 22, at [65], Lord Walker said neither a ‘hope’ nor a ‘confident expectation’ suffices (this despite Scarman LJ’s references to a ‘confident expectation’ in Crabb, n 13, at 196–7). Lord Walker appears to have modified his view in Thorner v Major, n 19, at [60], saying that B’s handing over of a bonus notice on life policies, an act which played a significant role in generating the estoppel, marked for A ‘the transition from hope to expectation’, by which it seems that Lord Walker accepted that an expectation may suffice. 65 Note 42. See (1883) 1 NZLR 229, CA, for a fuller account of the facts. 66 Bankart v Tennant (1870) LR 10 Eq 141, Morgan v Griffith (1870–71) LR 6 Ex 70, Southampton Dock Company v Southampton Harbour and Pier Board (1872) LR 14 Eq 595, Willmott v Barber (1880) 15 Ch D 96 and Bastin v Bidwell (1881) 18 Ch D 238. In Bankart v Tennant and Bastin v Bidwell, Lord Kingsdown’s principle was distinctly referred to, in both cases in support of a misprediction claim: in the former, it was mentioned in the judgment at 146, but held inapplicable on the facts; in the latter, it was mentioned only in argument. 67 While it is difficult to be sure whether Plimmer was decided as a case of mistake or misprediction, overall it appears to support a misprediction interpretation of the second limb of Lord Kingsdown’s principle: see Inwards v Baker [1965] 2 QB 29, CA, 37 (Lord Denning MR), 38 (Danckwerts LJ); Taylors Fashions, n 20, at 148. It is true that, in Cobbe, n 22, at [65], Lord Walker suggested that Plimmer was a case of mistake: ‘In Plimmer’s case … the Privy Council … regarded it as an irresistible inference that Mr Plimmer thought that his compliance with the Government’s request gave him a right to security of tenure, even if the duration of that security was uncertain. It is not enough to hope, or even to have a confident expectation, that the person who has given assurances will eventually do the proper thing’. However, this is consistent with its being a case both of mistake and of misprediction. (Lord Walker appears to have later modified his view that an expectation is insufficient: see n 64.)

512

The evolution of proprietary estoppel 12.22

Secretary for State for India,68 and again in Forbes v Ralli.69 In Inwards v Baker the Court of Appeal adopted a broad interpretation of Plimmer which is only consistent with the misprediction form.70 12.21 Despite Plimmer, there was for some time no general acceptance of a misprediction form of the estoppel. The decision in Maddison v Alderson71 appeared to have precluded it; and there were repeated attempts by the Privy Council72 and some commentators73 to hold the line believed to have been thereby established.74 12.22 Despite these efforts, the misprediction form of proprietary estoppel ultimately survived. In a series of decisions beginning in 1963, it was recognised and, where the facts permitted, allowed.75 68 69 70

(1901) LR 28 IA 211, PC. (1925) LR 52 IA 178, PC. [1965] 2 QB 29. At 37, Lord Denning MR, relying on Plimmer, said: ‘All that is necessary is that the licensee [A] should, at the request or with the encouragement of the landlord, have spent the money in the expectation of being allowed to stay there’ (emphasis added). ­Danckwerts LJ referred at 38 to A’s ‘expectation of obtaining protection’. Salmon LJ agreed. It is evident that neither Lord Denning nor Danckwerts LJ considered that A’s case depended on his having made a mistake about present rights. 71 (1883) 8 App Cas 467, HL. See n 44. 72 Lala Beni Ram v Kundan Lal (1899) LR 26 IA 58, PC; Ariff v Rai Jadunath Majumdar ­Bahadur (1931) LR 58 IA 91, PC; Canadian Pacific Railway Company v The King [1931] AC 414, 429. See also New South Wales Trotting Club Ltd v Council of the Municipality of the Glebe (1937) 37 SR (NSW) 288, to the same effect. 73 Ashburner, Principles of Equity (1st edn, 1902), p 634; the first edition of this work, 1923, p 356, n (x); Pollock, The Principles of Contract (11th edn, 1942), p 569, citing Jorden v Money (1854) 5 HLC 185 and insisting that ‘A promise de futuro cannot be an estoppel’. 74 Ariff v Rai Jadunath Majumdar Bahadur, above, per Lord Russell of Killowen: ‘[Lord Kings­ down] would appear to be dealing simply with the equitable doctrine of part-performance … Gregory v Mighell (1811) 18 Ves 328 … was simply an earlier instance of the application of the doctrine [of part-performance]’. (See also Mee in Bright (ed), Modern Studies in ­Property Law, vol 6 (2011); Megarry & Wade, The Law of Real Property (8th edn, 2012), [16-004], fn 38; McFarlane, The Law of Proprietary Estoppel (2014), [2.104]; and Snell’s Equity (33rd edn, 2015), [12-039].) The implicit suggestion that Gregory v Mighell does not support a misprediction form of proprietary estoppel seems to be correct. On the other hand, Lord Kingsdown cannot have cited it in support of a decree of specific performance founded on part-performance, since no such claim was made: see Ramsden v Dyson, n 28, at 136, 164. Lord Kingsdown’s citation of Gregory v Mighell may possibly be explained on the basis that Gregory v Mighell recognised a wide equitable jurisdiction to enforce a transaction on the faith of which A has acted and in which B has acquiesced despite incompleteness in its terms (ie a jurisdiction wide enough to outflank the rule in Milnes v Gery (1807) 14 Ves Jun 400, on which B had relied). This would also help to explain its citation in Nunn v Fabian (see n 57). See too Olsson v Dyson (1969) 120 CLR 36, HCA, at [9], where Kitto J referred to Gregory v Mighell as a case where, despite there being no contract, B’s conduct was such as ‘to bind him in conscience to make the legal situation correspond with the implication in the encouragement that he gave’ to A to lay out money. What does seem clear, however, is that Gregory v Mighell was not cited in Nunn v Fabian in support of a misprediction form of estoppel, and the same is probably true of its citation by Lord Kingsdown in Ramsden v Dyson. 75 Chalmers v Pardoe [1963] 1 WLR 677, PC; Inwards v Baker [1965] 2 QB 29, CA; Ward v Kirkland [1967] Ch 194; ER Ives Investment Ltd v High [1967] 2 QB 379, CA; Dodsworth v Dodsworth (1973) 228 EG 115, CA; Crabb, n 13; Jones (A E) v Jones (F W) [1977] 1 WLR

513

12.23  Proprietary estoppel

Willmott v Barber 12.23 This has been an important and influential decision on standing by.76 In it, Fry J laid down what came to be known as the ‘five probanda’.77 He said: ‘A man is not to be deprived of his legal rights unless he has acted in such a way as would make it fraudulent for him to set up those rights. What, then, are the elements or requisites necessary to constitute fraud of that description? In the first place A must have made a mistake as to his legal rights. Secondly, A must have expended some money or must have done some act (not necessarily upon the defendant’s land) on the faith of his mistaken belief. Thirdly, [B], the possessor of the legal right, must know of the existence of his own right which is inconsistent with the right claimed by A. If he does not know of it he is in the same position as A, and the doctrine of acquiescence is founded upon conduct with a knowledge of your legal rights. Fourthly, [B], the possessor of the legal right, must know of A’s mistaken belief of his rights. If he does not, there is nothing which calls upon him to assert his own rights. Lastly, [B], the possessor of the legal right, must have encouraged A in his expenditure of money or in the other acts which he has done, either directly or by abstaining from asserting his legal right. Where all these elements exist, there is fraud of such a nature as will entitle the Court to restrain [B] the possessor of the legal right from exercising it, but, in my judgment, nothing short of this will do.’

12.24 The probanda were described as ‘essential elements’ of ‘quasi-estoppel by acquiescence’.78 They have proved, however, to be a ‘stumbling-block’ in the development of proprietary estoppel,79 since they have been wrongly treated, on occasion, as essential to every form of proprietary estoppel, when in truth they are only concerned with unilateral mistakes about present rights, having nothing to do with either the misprediction form of the estoppel,80 or cases of common mistake.81 There was, however, no consistency in the courts’ approach.82 438, CA; Griffiths v Williams [1978] 2 EGLR 121, CA; Taylors Fashions, n 20; In re Sharpe (A Bankrupt) [1980] 1 WLR 219; In re Basham [1986] 1 WLR 1498; and numerous later cases. 76

(1880) 15 Ch D 96, 105–6. The probanda are consistent with Lord Cranworth’s standing by principle: see 12.14. They are not, however, limited to B’s ‘abstaining from asserting his legal right’, since they extend to cases of B’s actively (or ‘directly’) encouraging A’s change of position (‘his expenditure of money or … the other acts which he has done’). 77 The label seems to derive from the first edition of this work, 1923, [387]. 78 Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850, 884-F, per Lord Diplock. In the fourth edition of this work, at [XII.2.2], n 1, the word ‘acuminates’ was wrongly attributed to Lord Diplock in place of ‘elements’. The same mistake appears in Westlaw and in McFarlane, The Law of Proprietary Estoppel (2014), [2.08]. 79 Cobbe, n 22, at [56] (Lord Walker). 80 Finn, Essays in Equity (1985), Ch 4, Equitable Estoppel, p 69. 81 Ibid, p 79. 82 The probanda were applied correctly, we think, in the following cases, all clearly or arguably cases of unilateral mistake: Civil Service Musical Instrument Association Ltd v Whiteman (1899) 68 LJ Ch 484; Svenson v Payne (1945) 71 CLR 531, HCA; Crabb, n 13, at 194–5 (criticised by Gray & Gray, Elements of Land Law (5th edn, 2008), [10.204] n 1, and Finn, above (see n 92 to the text at p 69 of Finn), but on one view, at least, it was a case of a unilateral mistake: cf 12.75); Blue Haven Enterprises Ltd v Tully [2006] UKPC 17, at [23]. They were applied, arguably incorrectly, in Armstrong v Sheppard & Short Ltd [1959] 2 QB 384,

514

The evolution of proprietary estoppel 12.26

12.25 The modern view, to which we subscribe, is that the probanda are ­relevant only to a case where A’s change of position is in reliance on a unilateral mistake.83

Crabb and Taylors Fashions 12.26 These have been very influential decisions in the revival of proprietary estoppel. Their common feature is a refusal to be pinned down to any particular form of estoppel as underlying the decision. It is possible to analyse Crabb84 either as a case of unilateral mistake induced by a representation of fact – the fact being that B was bound, or regarded itself as bound, by the ‘agreement in principle’85 – or as a case of misprediction, A having an expectation that B would perform the ‘agreement in principle’.86 The successful outcome in the second of the two cases in Taylors Fashions87 was alternatively grounded by Oliver J in estoppel by representation of fact and acquiescence.88 In Crabb, Scarman LJ doubted the utility of the distinction between promissory and proprietary estoppel.89 In ­similar vein, Oliver J in Taylors Fashions said:90 ‘… the application of the Ramsden v Dyson, LR 1 HL 129 principle – whether you call it proprietary estoppel, estoppel by acquiescence or estoppel by encouragement is really immaterial – requires a very much broader approach which is CA, and Coombes v Smith [1986] 1 WLR 808, at 818, neither being a case of unilateral mistake. Their universal application was doubted in Electrolux Ltd v Electrix Ltd (1954) 71 RPC 23, CA, at 33, Hopgood v Brown [1955] 1 WLR 213, CA, at 223, Shaw v Applegate [1977] 1 WLR 970, CA, at 978 and H P Bulmer Ltd v J Bollinger SA [1977] 2 CMLR 625, CA, at [173]. See also Ali v Rahman (14 February 1996, unreported), CA, where an appeal, on the grounds, inter alia, that it was necessary in a case of proprietary estoppel for the five probanda to be established, was struck out by the Court of Appeal. The probanda were not applied in the following cases (correctly, we think, insofar as they did not involve unilateral mistakes): Plimmer, n 42; Inwards v Baker [1965] 2 QB 29, CA; ER Ives Investment Ltd v High [1967] 2 QB 379, CA; Taylors Fashions, n 20, at 147; Matharu v Matharu (1994) 68 P & CR 93, CA; Orgee v Orgee [1997] EWCA Civ 2650; Perlman v Rayden [2004] EWHC 2192 (Ch); Munt v Beasley [2006] EWCA Civ 370; Lester v Woodgate [2010] 2 P & CR 21, CA. There is a survey of the modern cases in Hoyl Group Ltd v Cromer Town Council [2016] 1 P & CR 3, CA, at [39]–[53]. 83

Taylors Fashions, n 20, at 147–152; Lloyds Bank plc v Carrick [1996] 4 All ER 630, CA, at 639; Cobbe, n 22, at [58], [63] (Lord Walker). 84 Note 13. 85 See 12.75. 86 Thus, both Lord Denning MR and Scarman LJ referred to A’s believing that he already had a right of way and alternatively believing that he would be granted one: see at 186 (Lord ­Denning), and 196–7 (Scarman LJ); and see also 12.70, n 191. 87 Note 20. 88 At 157–8. 89 Note 13, at 193: ‘I do not find helpful the distinction between promissory and proprietary estoppel. This distinction may indeed be valuable to those who have to teach or expound the law; but I do not think that, in solving the particular problem raised by a particular case, putting the law into categories is of the slightest assistance’. Notwithstanding this, the distinction is firmly established. 90 At 151–2. Approved by the Court of Appeal in Habib Bank Ltd v Habib Bank AG Zurich [1981] 1 WLR 1265, at 1285, 1287. Buckley and Goff LJJ had earlier reached much the same view in Shaw v Applegate [1977] 1 WLR 970, CA, at 978, 980. Lord Walker described Oliver

515

12.26  Proprietary estoppel

directed rather at ascertaining whether, in particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly, or unknowingly, he has allowed or encouraged another to assume to his detriment than to inquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour.’

12.27 In Crabb, there was a recognition of the unilateral mistake and misprediction forms of the estoppel, and in Taylors Fashions the recognition of a further form, that of common mistake. In both cases, there was a reluctance to distinguish them.

Cobbe 12.28 In Cobbe, one of only two cases of proprietary estoppel to have reached the House of Lords since Ramsden v Dyson, Lord Scott, with the unqualified concurrence of Lords Hoffmann, Brown and Mance, advanced the following as a statement of the principle of proprietary estoppel:91 ‘An “estoppel” bars the object of it from asserting some fact or facts, or, ­sometimes, something that is a mixture of fact and law, that stands in the way of some right claimed by the person entitled to the benefit of the estoppel. The ­estoppel becomes a ‘proprietary’ estoppel – a sub-species of a ‘promissory’ ­estoppel – if the right claimed is a proprietary right.’

12.29 Some commentators doubted whether the misprediction form of proprietary estoppel could survive.92 As Professor McFarlane has pointed out,93 this is an account of estoppel by representation of fact, and provides no comprehensive account of either (i) the unilateral mistake form of proprietary estoppel (where B’s silently standing by cannot always be treated as a representation by conduct) or (ii) the misprediction form (which is based on a promise, not a representation of present fact or law).94 Either form may and often does result in A’s belief or expectation being satisfied. One may go further and say that Lord Scott’s J’s analysis of the authorities as ‘masterly’ in Cobbe, n 22, at [58], and at [59] said of the passage quoted that it ‘certainly favours a broad or unified approach to equitable estoppel’, with the qualification that ‘it is emphatically not a licence for abandoning careful analysis for unprincipled and subjective judicial opinion’. 91 92

Note 22, at [14]. McFarlane and Robertson [2008] LMCLQ 449 (‘The death of proprietary estoppel’); Etherton [2009] Conv 104; Griffiths [2009] Conv 141; Delany (2009) 31 Dublin ULJ 440. 93 The Law of Proprietary Estoppel (2014), [1.14]. See also Mee [2009] CFLQ 367, p 379. 94 See also Mee in Bright (ed), Modern Studies in Property Law, vol 6 (2011). Lord Scott’s ­‘succinct summary of the principle’ (see Capron v Government of Turks & Caicos Islands [2010] UKPC 2, at [33]) may be contrasted with that of the High Court of Australia in Giumelli v Giumelli (1999) 196 CLR 101, HCA, at [6], describing a proprietary estoppel equity as being founded on ‘an assumption as to the future acquisition of ownership of property … induced by representations upon which there had been detrimental reliance by [A]’. If, as we s­ ubmit, ­proprietary estoppel comprises both mistake-based and misprediction-based forms, Lord Scott addressed only the former, and that incompletely, while the High Court of Australia primarily addressed the latter.

516

The evolution of proprietary estoppel 12.32

f­ ormulation leaves no room for proprietary estoppel as a cause of action, since it regards A’s right as arising dehors the estoppel, which simply removes an obstacle to A’s claiming it. The true position, however, is that, in a proprietary estoppel claim, the right or equity claimed by A does not exist outside and before the creation of the estoppel but is generated by the estoppel itself. Additionally, the suggestion that proprietary estoppel is a sub-species of promissory estoppel is, with respect, both historically and conceptually unsound. 12.30 Lord Scott returned to the nature of proprietary estoppel later in his speech when, comparing proprietary estoppel and constructive trust with the tort of deceit, he concluded that ‘representations of intention’ (ie promises) on which A relies ‘cannot, in principle, entitle him to a remedy intended to give him the value of his expectations engendered by the representations’.95 12.31 Lord Scott’s point is of considerable importance: if A is the representee of a fraudulent misrepresentation (or, we would add, a negligent mis-statement) by B, A has a cause of action in tort for deceit (or negligence), for which the remedy is damages calculated on the tortious measure, protecting his ‘reliance interest’ and aimed, broadly, at compensating him for his detrimental reliance.96 If he can sue in proprietary estoppel, however, he need prove neither fraud nor negligence. Moreover, he may, at the court’s discretion, obtain an award which protects his ‘expectation interest’ in the same way as a decree of specific performance of a contract or an award of damages for loss of bargain. The difference in outcomes reflects profound differences between the common law and equity, but the modern justification for it is not easy to see.97 12.32 If Lord Scott were right that ‘the representations of intention on which [A] acted in the present case cannot, in principle, entitle him to a remedy intended to give him the value of his expectations engendered by the representations’, this would not destroy the misprediction form of proprietary estoppel, but it would dramatically restrict the available forms of relief.98 95 96 97

98

Note 22, at [38]. Ie on the principle of putting A in the position he would have been in if the representation had not been made, aimed at protecting a reliance interest rather than an expectation interest: see McGregor on Damages (19th edn, 2014), [22-003], [47-007], [47-048]. One justification may lie in the difficulty, indeed impossibility, of arriving at fair compensation where, in reliance on B’s promise, A has lost opportunities or invested emotionally in a home or made life-changing commitments. An example of this is Thorner v Major, n 19, where the trial judge referred to the virtual impossibility of valuing A’s contribution to the farm: see [2007] EWHC 2422 (Ch), at [142]. See also Davies v Davies [2016] EWCA Civ 463, at [66]–[67], where the Court of Appeal recognised the impossibility of evaluating imponderable non-specific detriment as a reason for awarding in specie relief. The point is discussed by Robertson in [2008] Conv 295, drawing the conclusion at p 315 that ‘If the primary goal of proprietary estoppel is to protect [A] against harm resulting from reliance on [B]’s conduct, then the most complete way to provide that protection is to fulfil [A]’s expectations in specie. [A] suffers no detriment as a result of his or her reliance on a particular assumption if that assumption is made good’. See further n 454. The fact that Lord Scott went on to except ‘a genuine proprietary claim’ does not undermine the point made in the text, given his view of proprietary estoppel and the criticisms that can be made of it: see 12.29.

517

12.33  Proprietary estoppel

12.33 The uncertainties created by Cobbe were short-lived, however, since in the following year the House of Lords decided Thorner v Major,99 a misprediction proprietary estoppel claim which resulted in an expectation-based award and must be taken to have confined Cobbe to cases in which A is or should be aware that B has withheld responsibility for A acting in reliance on his assurance. In effect, therefore, it reaffirmed the law as it was previously understood.100

PROPERTY Property within the doctrine 12.34 Almost all the cases have concerned land. In re Foster (No 2)101 is said to be an early example of the application of the doctrine to other forms of property, in that case a policy of life assurance; but the decision went on the basis of an ‘implied arrangement’, and so may have been contractual. In Moorgate Mercantile Co Ltd v Twitchings,102 Lord Denning MR suggested that the doctrine extends to goods; and in Western Fish Products Ltd v Penwith District Council,103 Megaw LJ opined that it may extend to ‘other forms of property’. It has been held to apply to a trust fund,104 and to personalty.105 It applies to shares,106 and intellectual property.107 In Strover v Strover, it was applied to the proceeds 99 Note 19. 100 See McFarlane and Robertson (2009) 125 LQR 535; Piska (2009) 72 MLR 998; Mee [2009] CFLQ 367; Dixon [2009] Conv 260. In Thorner v Major, n 19, Lord Scott’s statement of principle in Cobbe (see 12.28) was referred to only twice, on both occasions by Lord Walker: at [31] he dismissed as ‘rather apocalyptic’ the view that the doctrine of proprietary estoppel had been ‘severely curtailed’ by Cobbe; and at [67] he said that he had ‘some difficulty’ with Lord Scott’s claim that proprietary estoppel is a sub-species of promissory estoppel. (It has even been said that, in effect, the courts are ‘pretending that Cobbe did not happen’: see Mee in Bright (ed), Modern Studies in Property Law, vol 6 (2011).) Reversion to the law as previously understood permits adherence to the views of Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, referred to in n 14 above, contrasting the assumed state of affairs in estoppel by representation of fact (and, we would add, estoppel by convention as to a fact) and the actual state of affairs in promissory and proprietary estoppel, a contrast which Lord Scott’s statement of principle denied or at least obscured. 101 [1938] 3 All ER 610. 102 [1976] QB 225, CA, at 242. (Reversed by the House of Lords at [1977] AC 890, not affecting this point.) 103 [1981] 2 All ER 204, CA, at 218. See also Baird Textile Holdings Limited v Marks & Spencer Plc [2002] 1 All ER (Comm) 737, CA, at [34], [35], [54] and [97]; and Motivate Publishing FZ LLC v Hello Ltd [2015] EWHC 1554 (Ch), at [59]. 104 In re Vandervell’s Trusts (No 2) [1974] Ch 269, CA. See Gardner [2014] Conv 202, at p 205. 105 In re Basham [1986] 1 WLR 1498. The decision itself has been doubted (see 12.44 onwards), but not on this point. In Thorner v Major [2007] EWHC 2422 (Ch), at [143], A was awarded the land and buildings, the live and dead stock and the other chattels comprised in Steart Farm. 106 Ali v Rahman (14 February 1996, unreported); Pinfield v Eagles [2005] EWHC 477 (Ch); Harris v Kent [2007] EWHC 463 (Ch); Montalto v Popat [2016] EWHC 810 (Ch), at [118]. 107 Godfrey v John Lees [1995] EMLR 307; Film Investors Overseas Services SA v Home Video Channel [1997] EMLR 347. In Campbell v Campbell [2016] EWHC 765 (Ch), at [54], it was assumed, without deciding, that a proprietary estoppel claim could lie with respect to a domain name.

518

Property 12.35

of a policy of life assurance,108 and in Sutcliffe v Lloyd to development profits.109 In Cobbe,110 Lord Scott, with Lords Hoffmann, Brown and Mance in agreement, said that the subject matter of a proprietary estoppel is ‘usually a right to or over land but, in principle, [the estoppel is] equally available in relation to chattels or choses in action’. In Fisher v Brooker the House of Lords assumed (rather than decided) that proprietary estoppel extends to copyright.111 It has been applied to patents.112 Murphy v Rayner included a proprietary estoppel based on an expectation of a testamentary gift of a share of an investment portfolio; the claim failed, but not on the ground that the subject of the estoppel was not a ‘distinct’ interest in property.113 Proprietary estoppel has been held to extend to a licence to use intellectual property.114 The position now must be that any kind of property, real or personal, tangible or intangible, is, in principle, capable of being the subject matter of a proprietary estoppel.115

The need for property 12.35 There is, however, a fundamental condition to be satisfied in order for the doctrine to be engaged, namely that A’s misapprehension must concern identifiable property of B’s or identifiable rights that B has over A’s property.116

108 109 110 111 112

[2005] EWHC 860 (Ch), at [36], though the contrary appears not to have been argued. [2007] 2 EGLR 13, CA. Note 22, at [14]. [2009] 1 WLR 1764. The proprietary estoppel defence failed. Yeda Research and Development Company Limited v Rhone-Poulenc Rorer International Holdings Inc [2008] RPC 1, HL, at [22]; Merck Canada Inc v Sigma Pharmaceuticals Plc [2013] 3 CMLR 436, CA. 113 [2011] EWHC 1 (Ch), at [278]. 114 Motivate Publishing FZ LLC v Hello Ltd, above, where the doctrine’s applicability to intellectual property was conceded, but only as a shield, not as a sword. It was held that, in principle, proprietary estoppel was available to support a claim for the grant of a licence: see at [18], [61] and cf Shaw-Mellors [2015] Conv 529. See also Sony/ATV Music Publishing LLC v WPMC Ltd [2015] EWHC 1853 (Ch), at [94]. 115 For estoppels arising from the payment of money or assurances as to entitlement thereto, see the third edition of this work ([301]–[302]), where this topic is discussed. 116 In Michaels v Harley House (Marylebone) Ltd [1997] 1 WLR 967, it was held that A would have succeeded in an estoppel claim against B, where B had led A to believe that B either did not have or was not intending to exercise a right of first refusal under the Landlord and ­Tenant Act 1987, Part I (conferring on qualifying tenants rights of first refusal on disposals by their landlord). Since the estoppel could have led to the extinguishment of B’s right to acquire A’s freehold, it is at least arguable that the estoppel would have been a proprietary estoppel. (In the Court of Appeal [2000] Ch 104, at 126, Robert Walker LJ doubted its correctness on other grounds.) Cf Newport City Council v Charles [2009] 1 WLR 1884, CA, [27], where a proprietary estoppel claim by the council, A, was correctly rejected by Laws LJ (Richards LJ concurring): A had no belief or expectation of having or acquiring from B the right it claimed, namely a right to possession; rather, it had a mistaken belief, induced by B’s fraudulent misrepresentation, that it had no right to possession; and this could not support a proprietary estoppel. As Laws LJ correctly recognised, at [27], the case was one of a non-proprietary estoppel by representation of fact or it was nothing. See further 1.14.

519

12.35  Proprietary estoppel

Thus the doctrine cannot impose on B an obligation to make a future payment of money to A117 or to employ A.118 12.36 Thus a proprietary estoppel does not arise where A seeks a declaration, as against a planning authority, B, that he is entitled to be treated as having planning permission with respect to the use of his own land: even if A has, to his detriment, spent money on his own land at B’s encouragement, he has not done so in the expectation of acquiring any rights in relation to B’s or any other person’s land.119 12.37 It is submitted that the position with respect to contractual rights is as follows. There is no reason why a proprietary estoppel should not arise out of a misapprehension A has about a chose in action consisting in B’s rights under a contract between B and C: as between A and B, the latter’s rights against C are rights of property,120 which A may mistakenly believe he, A, already owns or which he may expect B to give him or bequeath to him, eg pursuant to a promise by B. The position is, however, conceptually different where the chose consists in B’s rights under a contract between himself and A. In such a case, B’s rights are rights in personam, not property. To allow such rights to be the subject matter of a proprietary estoppel in A’s favour would permit a form of contract variation outflanking both the role of consideration in the law of contract and the doctrine of promissory estoppel.121 12.38 It is not the case, however, that the interest or right which A mistakenly believes himself to own or expects to acquire must itself be proprietary in nature: thus an expectation of rent-free occupancy of B’s land as a licensee is capable of founding a proprietary estoppel, and the resulting equity may be satisfied by an award of a non-proprietary licence.122

117 Unless, perhaps, it is a payment out of an identifiable fund: see 12.34, n 104 and see Gardner [2014] Conv 202, at p 205. 118 See Finn, op cit, n 80 above, at p 74. For this reason, it is submitted that Salvation Army ­Trustee Co Ltd v West Yorkshire Metropolitan County Council (1981) 41 P & CR 179 was wrongly decided, despite the contrary view of the Privy Council (Lord Templeman) in Attorney-­General of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd [1987] AC 114, at 127. The result in the former case was the imposition of a liability on B to pay money in exchange for the acquisition of A’s property. The justification for the order was said to be that the arrangement ‘really amounted to the exchange of one site for another’, but the case was not a failed exchange, and even if it was, A’s misapprehension concerned the disposition of its own property, not the acquisition of B’s property. 119 Western Fish Products Ltd v Penwith District Council [1981] 2 All ER 204, CA. 120 See Chitty on Contracts (32nd edn, 2015), [1-222]. 121 For example, if A makes a binding contract to sell property to B, A cannot sue B in proprietary estoppel on the ground that B has created or encouraged in A a belief that the contract has been dissolved or an expectation that it will not be enforced, even if all the other conditions for proprietary estoppel are satisfied. 122 Cf Lord Scott in Cobbe, quoted in 12.28, stating that A must be making a claim to a ­‘proprietary right’. But, against this, see 12.189, nn 519, 520, 521 and 534, and Gardner [2014] Conv 202, at p 205. For the non-proprietary nature of such a licence, see Ashburn Anstalt v W J Arnold & Co [1989] Ch 1, CA and 12.175.

520

Property 12.42

Whose property? 12.39 A’s misapprehension must relate to his own or B’s property.123 It may originate in a belief or expectation about any matter of fact or law, so long as it relates to rights over or the enjoyment of property.

After-acquired property 12.40 The fact that B only later acquires an interest in the property that is the subject of A’s misapprehension does not prevent a proprietary estoppel from arising: the estoppel is ‘fed’ when B acquires the interest, and the equity raised by the estoppel affects the property from that time.124

Certainty of interest 12.41 In stating his principle, Lord Kingsdown referred to ‘a verbal agreement … for a certain interest in land, or … an expectation, created or encouraged … that [A] shall have a certain interest’.125 The issue of certainty of interest arises in two, sometimes overlapping, contexts: (i) when identifying the property to which A’s misapprehension relates; and (ii) when ascertaining the extent of the rights to which the misapprehension relates. In a misprediction case, the identification of the property must be sufficient to give the promise the unequivocal character required to found this species of estoppel.126 12.42 Take first the case of a promise of a particular asset – eg a house or a farm – which B already owns.127 Here, A’s expectation is of ‘a certain interest’, since it concerns a particular asset. There was, however, an area of doubt where the asset changes between the date of the promise and the date when the promise

123 There is no room, however, for a proprietary estoppel claim by A against B with respect to land of which A is already the sole beneficial owner, having bought the land from B and paid the purchase price: see Lloyd’s Bank plc v Carrick [1996] 4 All ER 632, CA. See Ferguson (1996) 112 LQR 549. 124 Watson v Goldsborough [1986] 1 EGLR 265, CA, at 267. But see Lord Walker’s requirement of ‘identified property owned (or, perhaps, about to be owned) by [B]’: see 12.44. The words ‘or, perhaps, about to be owned’ may reflect Chadwick v Abbotswood Properties Ltd [2005] 1 P & CR 10, at [70], where B was only a contracting purchaser of a plot when he gave assurances to A, an adjoining plot owner, as to the boundary between their plots. 125 Lord Kingsdown’s principle cannot be taken literally: if it were, it would confine proprietary estoppel to rights in land. Moreover, as discussed above, A’s claim may be based on a belief or expectation of a non-proprietary right such as an occupational licence. 126 MacDonald v Frost [2009] WTLR 1815, at [11]. See also Davis [1996] Conv 193; Mee [2009] CFLQ 367, at p 377. 127 The requirement that B already own the asset at the date of his promise to A reflects Lord Walker’s view in Thorner v Major, n 19, at [61]: see 12.44. The problems arise most obviously in the case of promises of gifts out of B’s estate on his death. But the same problems can arise whenever A has an expectation of some benefit to be received in the future, eg on­ B’s retirement.

521

12.42  Proprietary estoppel

is to be performed. Between promise and performance the quantum of B’s interest may be enlarged, eg by B buying more land, or by redeeming a mortgage, or on the expiration or forfeiture or surrender of a lease to which the property was subject, or by exercising an option to renew or extend a lease or by enfranchisement. Or B may sell the property,128 or part of it,129 with or without acquiring a substitute for what he sells; or he may grant a mortgage or other adverse right over it, such as a lease or an easement. In Thorner v Major, both A and B knew that the extent of the promised farm was liable to fluctuate, according to sales and purchases of land from time to time. It was nevertheless clear that B’s promise related to the farm as it would exist at the time of his death. The House of Lords held that there was sufficient certainty of subject matter to found a proprietary estoppel. Whether A’s expectation reasonably relates to the enlarged interest, or whether B’s acts in diminishing the property constitute an unconscionable change of position for which A should be compensated, will depend on the facts and circumstances of the case.130 Provided, however, that the subject matter of A’s expectation is still ‘identifiable’, changes over time do not necessarily operate to extinguish A’s equity,131 although they may affect the way in which it is satisfied. 12.43 Take next the sharply contrasting case of a promise of unspecific ‘financial security’ or ‘support’. In Layton v Martin,132 A had an expectation of ‘financial security’ on B’s death. Scott J rejected a proprietary estoppel claim: ‘A representation that “financial security” would be provided by [B] to [A] … is not a representation that [A] is to have some equitable or legal interest in any particular asset or assets’. The claim was rejected because A’s expectation did not relate to an identifiable asset of B’s.133 It appears to follow that a promise of a testamentary gift of ‘a house’ or a legacy should suffer the same fate: while

128 Eg Wayling v Jones (1993) 69 P & CR 170. The effect was to adeem the gift to A in B’s will. B acquired a substitute property but, despite telling A that he would re-make his will, ­omitted to do so. The subject of A’s original expectation was, with B’s encouragement, translated to the substitute property, which was still owned by B at his death. The substitute property ­having been sold, A was awarded the proceeds of sale. 129 Thorner v Major, n 19, at [90]: the extent of the farm varied between 350 acres in 1976 to 160 acres in hand in 1998, the remainder of the land at that time being let. 130 In Suggitt v Suggitt [2012] EWCA Civ 1140, outbuildings which had once been used in the farming business but were not being so used at B’s death were excluded from A’s award: see [2012] EWCA Civ 1140 at [53]–[55]. A bungalow was excluded from the farm in Davies v Davies [2015] EWHC 1384 (Ch). 131 Thorner v Major, n 19, at [9] (Lord Hoffmann); at [18] (Lord Scott); at [62] (Lord Walker); and at [98], per Lord Neuberger: ‘It would represent a regrettable and substantial emasculation of the beneficial principle of proprietary estoppel if it were artificially fettered so as to require the precise extent of the property … to be strictly defined in every case. … [Focusing] on technicalities can lead to a degree of strictness inconsistent with the fundamental aims of equity’. In the result, A received the land and buildings known as Steart Farm, the live and dead stock and chattels and the working capital comprised in the farming business at B’s death: see Thorner v Major [2007] EWHC 2422 (Ch), at [143]. 132 [1986] 2 FLR 227. 133 A similar outcome was reached in Lissimore v Downing [2003] 2 FLR 308, where A’s expectation was that B would provide ‘support’. In Australia, there is a decision the other way: see

522

Property 12.44

there need not be any issue of uncertainty as to the quantum of the gift, A has no expectation of an ‘interest’ in any ‘particular asset or assets’ of B’s, whether during B’s lifetime or on his death.134 12.44 In In re Basham,135 a proprietary estoppel claim to B’s entire estate was allowed. The decision has been cited to the Court of Appeal with its apparent approval.136 In Thorner v Major, however, its correctness was deliberately left open by Lord Walker,137 who prefaced his doubts with the following significant passage:138 ‘In my opinion it is a necessary element of proprietary estoppel that the assurances given to [A] (expressly or impliedly, or, in standing by cases, tacitly) should relate to identified property owned (or, perhaps, about to be owned) by [B]. That is one of the main distinguishing features between the two varieties of equitable estoppel, that is promissory estoppel and proprietary estoppel. The former must be based on an existing legal relationship (usually a contract, but not necessarily a contract relating to land). The latter need not be based on an existing legal relationship, but it must relate to identified property (usually land) owned (or, perhaps, about to be owned) by [B] …’139

Harrison v Harrison [2013] VSCA 170. It is at least doubtful whether a similar claim would succeed in England. In our view, in Layton v Martin and Lissimore v Downing, an alternative basis of the decision could have been the absence of certainty as to the nature and extent of the promised ‘financial security’ or ‘support’ and that reliance on such an imprecise promise is unreasonable. 134 This would reflect the position where B makes a contract with A to make some testamentary provision for him. If B breaks a promise to leave A a legacy, A has a claim against B’s estate, not for the legacy, but in debt: see Schaefer v Schuhmann [1972] AC 572, PC, at 585–6. The same must be true in the case of a promised general devise (eg ‘a house’), except that here the contractual claim would be for damages. See also 12.35, nn 117, 118. 135 [1986] 1 WLR 1498. 136 Jones v Watkins [1987] CAT No 1200, in which Slade LJ referred to Basham as containing a helpful statement of principle, though without addressing the point about the estoppel extending to the whole of B’s estate; see also Wayling v Jones (1993) 69 P & CR 170, CA, at 172, of which the same comment can be made. In Gillett v Holt, n 4, the headnote states that Basham was approved, though Robert Walker LJ said at 226 that Layton v Martin, n 132, had not been cited in Basham, and that it was difficult to reconcile the latter with the former. In Jennings v Rice, n 20, at [46], Robert Walker LJ said that Basham had been approved more than once in the Court of Appeal, but the cases do not approve it with respect to the whole of B’s estate. 137 Note 19, at [63]. 138 At [61]. The emphases are in the original. Lord Walker’s proposition requires that there be property owned (or about to be owned) at the date of the promise. Cf nn 124, 127. 139 Lord Neuberger is to similar effect at [95]: ‘the property the subject of the equity could be conceptually identified from the moment the equity came into existence’. This suggests that a proprietary estoppel may require that there be ‘conceptually identified’ property no later than the time when the equity arises (presumably when A has changed his position to a more than trivial extent). See also In re Goldcorp Exchange Ltd (In Receivership) [1995] 1 AC 74, PC, at 92–E, where it was held that representations made by a bullion-dealing company, to buyers of unascertained, ex-bulk bullion, that the buyers had title to parts of the bulk, did not raise an estoppel (whether by representation or proprietary) in the buyers’ favour, owing to the impossibility of there being a title to goods ‘when nobody knows to which goods the title relates’ (where ‘title’ evidently means any kind of interest, legal or equitable, including a proprietary estoppel equity).

523

12.45  Proprietary estoppel

12.45 This led the High Court, in MacDonald v Frost,140 to approach In re Basham ‘with the utmost caution’:141 ‘[In re Basham] certainly cannot be regarded as laying down any general principle to the effect that assurances given about inheriting a residuary estate will always be sufficient to give rise to a proprietary estoppel. If and insofar as the decision indicates that the property in question does not need to be identified, it is inconsistent with Thorner.’

12.46 Indeed, if ‘identified property’ is essential, as Lord Walker said, then the court in In re Basham was wrong to say without qualification, as it did,142 that proprietary estoppel may apply so as to raise an equity against B extending to the whole of B’s estate.143 It is thus arguable, at all senior court levels, that In re Basham was in this respect wrongly decided. 12.47 By contrast, the extent of the right or enjoyment A believes he has or expects to acquire need not be defined with precision.144 For example, in Inwards v Baker,145 B, the father, allowed an expectation to be created in the mind of A, his son, that a bungalow built by A on B’s land was to be A’s home: it was to be his home for his life or as long as he wished it to remain his home. A’s proprietary

140 [2009] WTLR 1815. 141 At [19]. The court added, at [20], that B might make a promise to A about ‘my estate’, meaning, in context, specific property. Cf n 143. 142 [1986] 1 WLR 1498, at 1510. 143 If the court in Basham meant only that A’s expectation may relate to particular assets of B’s – his house, its contents, his money in the bank etc – which remain unchanged and happen to constitute B’s estate at his death, then the inconsistency with Lord Walker’s insistence on identified property would disappear: cf n 141 above. It may be for this reason that Lord Walker did not say that Basham was wrong. But it is reasonably clear that in context – in particular, in the context of the references to cases on mutual wills – the court in Basham was saying that proprietary estoppel extends to an expectation of inheriting B’s estate, or his residuary estate, whatever it consists in at B’s death; and this is inconsistent with Lord Walker’s proposition. 144 Ramsden v Dyson, n 28, at 171 (Lord Kingsdown) referring to ‘such uncertainty as to the particular terms of the contract as might prevent a Court of equity from giving relief if the contract had been in writing’, quoted in 12.16. See also Plimmer, n 42, at 713: ‘the equity arising from expenditure on land need not fail merely on the ground that the interest to be secured has not been expressly indicated’; Jones v Watkins [1987] CAT No 1200 (an assurance of land that is equivocal as to the interest to be granted, which could not have founded a contract, is nevertheless capable of founding a proprietary estoppel); Gillett v Holt, n 4, at 226B–D; Lim v Ang [1992] 1 WLR 113, PC; Matharu v Matharu (1994) 68 P & CR 93, CA; Flinn v Flinn [1999] 3 VR 712, at 738–9; Baird Textile Holdings Ltd v Marks and Spencer Plc [2002] 1 All ER (Comm) 737, CA at 762c–e. See also James v Thomas [2007] EWCA Civ 1212, at [31]–[32], where, referring to Lissimore v Downing [2003] 2 FLR 308, [18], the distinction is drawn between ‘a specific interest’ in B’s property (which A does not need to establish) and ‘an interest in specific property’ of B’s (which he does). Cf Orgee v Orgee [1997] EWCA Civ 2650 and Willis v Hoare (1999) 77 P & CR D42, CA, where the number of unresolved issues as to terms meant that A had not been encouraged in his belief that he would be granted a tenancy; followed in Parker v Parker [2003] EWHC 1846 (Ch) at [222]–[237]. See also Pridean Ltd v Forest Taverns Ltd (1998) 75 P & CR 447, CA. 145 [1965] 2 QB 29, CA.

524

Parties 12.51

estoppel claim succeeded on the basis that, despite the lack of particularity as to the interest he was to have, equity would protect him in his occupation.146

PARTIES 12.48 This topic is covered more broadly and in greater detail in Chapter 6, to which reference should be made. In this chapter, the topic is considered with reference to cases of proprietary estoppel.

Minors and mentally disordered persons 12.49 Prima facie one would expect the capacity of such persons to have the benefit of, or be subject to, a proprietary estoppel equity to be co-terminous with their capacity at law to own and deal with property of the kind in question. There are, however, further considerations, essentially of a factual nature, such as their ability to possess the knowledge or means of knowledge needed for acquiescence or standing by.147

The Crown 12.50 A proprietary estoppel may bind the Crown.148

Statutory corporations 12.51 As a general principle, an estoppel cannot fetter a statutory discretion entrusted to eg a local authority.149 Moreover, an estoppel cannot validate what

146 Lord Denning MR said, at 37: ‘even though there is no binding contract to grant any particular interest to A, nevertheless the court can look at the circumstances and see whether there is an equity arising out of the expenditure of money’. Danckwerts LJ said, at 38: ‘the person who has made the expenditure is induced by the expectation of obtaining protection, and equity protects him so that an injustice may not be perpetrated’. Salmon LJ agreed with both. In Dillwyn v Llewelyn (1862) 4 De G F & J 517 the court had to consider whether A’s reasonable expectation was of the fee simple or only a life interest. In awarding A (the son) the fee simple, Lord Westbury took account of all the circumstances, saying, at 522: ‘No one builds a house for his own life only, and it is absurd to suppose that it was intended by either party that the house, at the death of the son, should become the property of the father’. 147 In Duke of Leeds v Earl of Amherst (1846) 2 Ph 117, at 124, Lord Cottenham LC said: ‘there is no acquiescence here, for the act was done when the present duke was a minor, and when, if he had knowledge or means of knowledge – and he does not appear to have been of an age for that – nothing of acquiescence can be imputed to him’. It is not clear whether this is an irrebuttable presumption. 148 A-G to the Prince of Wales v Collom [1916] 2 KB 193, at 204. See also Plimmer, n 42. This appears to be limited to the Crown considered as a corporation sole: see further 6.16. 149 Western Fish Products Ltd v Penwith DC [1981] 2 All ER 204, CA.

525

12.51  Proprietary estoppel

would otherwise be an ultra vires act.150 The inquiry is limited, however, to whether the act was ultra vires: when a plea of ultra vires is raised as a defence to a claim based on estoppel, the issue is not whether the power has been exercised, but whether it could have been.151

Trustees 12.52 Recent proprietary estoppel cases concerning property held on trust have addressed two issues. The first is whether an equity is generated where one or more, but not all, of the trustees are responsible for A’s change of position.152 The general rule is that trustees must all join in decisions if they are to be binding on their beneficiaries. The same rule applies when it is claimed that a proprietary estoppel binds not only the trustees but also the beneficiaries.153 12.53 The second issue is what effect an estoppel, binding on trustees, has against beneficiaries. In one case, the question was whether trustees can estop themselves from exercising or not exercising a dispositive power.154 Trustees cannot bind themselves as to how they will exercise a fiduciary power in the future, and cannot be compelled, by estoppel, to exercise their powers in a particular way. It appears, however, that this does not prevent the court from holding that an assurance by trustees to a beneficiary, A, that they will exercise a dispositive power, such as a power of appointment, in his favour has raised a proprietary estoppel equity which may be satisfied by an award of the asset that A was led to expect in consequence of the trustees’ assurance.155 12.54 The point has been directly addressed in only one case. For the purpose of exercising their functions, trustees of land have very wide powers of management (‘all the powers of an absolute owner’) under section 6(1) of the

150 Rhyl UDC v Rhyl Amusements Ltd [1959] 1 WLR 465, at 474; West Middlesex Golf Club ­Limited v London Borough of Ealing (1994) 68 P & CR 461, at 485; London Borough of ­Bexley v Maison Maurice Limited [2007] 1 EGLR 19, at [55]. 151 London Borough of Bexley v Maison Maurice Limited, above, at [60] per Lewison J: ‘Ex hypothesi the power has not been exercised; because if it had been there would be no need for an estoppel. What matters is whether it could have been. If it could have been, then the doctrine of ultra vires does not provide a defence’; but see further 7.54–7.55. 152 Fielden v Christie-Miller [2015] EWHC 87 (Ch), at [7] (the ‘unanimity principle’) and [26]; Preedy v Dunne [2015] EWHC 2713 (Ch), at [34] onwards. The latter case went to appeal, where it was re-argued, unsuccessfully, as a case of estoppel by convention: see [2016] EWCA Civ 805. The Court of Appeal had no occasion to consider the questions of law mentioned in 12.52–12.54. See further at 6.47 onwards. 153 Preedy v Dunne, above, at [41]–[42]. 154 Fielden v Christie-Miller, above, at [7] (the ‘non-fettering principle’) and [27] onwards. 155 Fielden v Christie-Miller, above, at [39]. Sed quaere. The court did not expressly address the question how the estoppel (a proprietary estoppel) would bind the trust property, or current beneficiaries who were innocent of any involvement in the creation of the estoppel, or future beneficiaries. As to this, see further 6.61–6.62.

526

Parties 12.56

Trusts of Land and Appointment of Trustees Act 1996. In the context of a proprietary estoppel claim, it was held that these powers are ‘concerned with administrative transactions which are formally and substantively complete’, such as sales, leases, mortgages, etc, and are not dispositive powers, ie powers to alter ­beneficial interests; and that, in the absence of a sufficiently wide dispositive power, trustees have no power to alter beneficial interests, save as against beneficiaries who themselves have acquiesced or encouraged A’s change of position.156 By contrast, it has been decided, in a case of estoppel by representation of fact, that A, a stranger to the scheme, was, as represented to him, entitled to the ­payment of benefits as if he were a surviving spouse, without any variation to the trusts.157

Co-owners 12.55 One of two or more beneficial co-owners cannot bind the other (or others) to a proprietary estoppel unless the other (or others) becomes (or become) responsible for A’s change of position by standing by or encouragement. Any equity should, at most, attach only to the interest (at best, equitable) of the co-owner responsible for A’s change of position.158

Principal and agent 12.56 A principal, B, may be fixed with liability in proprietary estoppel by the words or conduct of his agent. Moreover, B may be so estopped, notwithstanding that his agent has no authority, actual or apparent, to bind him by contract, provided that he has actual or apparent authority to make representations or non-binding assurances on B’s behalf with respect to the relevant property. The conditions for finding that an agent has apparent authority to make such representations or assurances are (i) B can only act through an agent,159 and (ii) the agent has authority to perform particular functions in connection with the property,

156 Preedy v Dunne, n 152, at [34], [44] onwards (the ‘trustee-beneficiary point’). The decision that s 6(1) powers are ‘concerned with … transactions which are formally and substantively complete’ is criticised by Dixon [2015] Conv 469, pp 471–2, on the basis that it takes too ­narrow a view of s 6(1). We are inclined to agree with the criticism, but the decision is ­nevertheless correct in treating the s 6(1) powers as administrative, not dispositive. See further 6.53 onwards. 157 See Catchpole v Trustees of the Alitalia Airlines Pension Scheme [2010] ICR 1405. See 6.52. 158 Preedy v Dunne, above, at [41], following Fielden v Christie-Miller, above, at [26]. 159 A-G to the Prince of Wales v Collom [1916] 2 KB 193, at 203–4 per Atkin J: ‘… I think that in a case where it can only be contemplated that [B] can act through agents, the knowledge or conduct of the agent whose special duty it is to look after mine buildings, such as this is, must bind [B] …’. This passage addresses both of the conditions referred to in the text.

527

12.56  Proprietary estoppel

eg to look after it, to answer questions about it, to carry out some specific task with respect to it,160 or to conduct negotiations concerning it.161

Fluctuating bodies of persons 12.57 Estoppel cannot be established against a fluctuating class of persons. In principle, however, it can be established against individuals who are, for the time being, members of a class, so as to preclude them from asserting rights, or joining with others to exercise rights, to which they would otherwise be entitled.162

RAISING THE EQUITY:   THE SCOPE OF THE INQUIRY 12.58 In Crabb,163 Scarman LJ said that, in a proprietary estoppel case, the court has to answer three questions: ‘First, is there an equity established? Secondly, what is the extent of the equity, if one is established? And, thirdly, what is the relief appropriate to satisfy the equity?’

12.59 The essential point is that A’s equity can generally only be established by looking backwards from the time when A’s misapprehension is revealed, usually but not necessarily when B changes his own position.164 The court must

160 Moorgate Mercantile Co Ltd v Twitchings [1976] QB 225, CA, at 243 per Lord Denning MR, relying on A-G to the Prince of Wales v Collom, above: ‘the owner is estopped by the conduct of anyone to whom he entrusts the task of looking after his property and interests … Whenever the true owner puts someone in his place to answer questions as to his property, he must be bound by his answers just as if he gave them himself’. See also Crabb, n 13, at 189 per Lord Denning MR, relying on A-G to the Prince of Wales v Collom and Moorgate Mercantile Co Ltd v Twitchings: ‘I do not think [Bs] can avoid responsibility by saying that their representative had no authority to agree this. They entrusted him with the task of setting out the line of the fence and the gates, and they must be answerable for his conduct in the course of it’. The passage from the judgment of Scarman LJ in the same case, quoted below in n 161, does not expressly refer to either of the two conditions, although it does mention unspecified ‘reasonable limits’. 161 Crabb, n 13, at 193 per Scarman LJ, referring to A-G to the Prince of Wales v Collom and Moorgate Mercantile Co Ltd v Twitchings: ‘The approach of equity, when there is a question of agency in a field such as this, must I think be a very simple one. It will merely be that, within reasonable limits, those to whom [B] entrusts the conduct of negotiations must be treated as having the authority, which, within the course of the negotiations, they purport to exercise’. See also the Note by P J Millett QC, counsel for A in Crabb, at (1976) 92 LQR 342, explaining why problems over agency meant that the case could not succeed in contract but were not an obstacle to a claim in proprietary estoppel. In Fielden v Christie-Miller [2015] EWHC 87 (Ch), at [25], Collom, Crabb and Armagas Ltd v Mundogas SA (The Ocean Frost) [1986] AC 717 were all treated as cases concerned with the scope of B’s agent’s apparent authority. 162 Michaels v Harley House (Marylebone) Ltd [1997] 1 WLR 967, at 986. 163 Note 13, at 192–3. 164 Walton v Walton [1994] CAT No 479 (a misprediction case), per Hoffmann LJ: ‘equitable estoppel … looks backwards from the moment when the promise falls due to be performed

528

Raising the equity:   the scope of the inquiry 12.60

examine retrospectively and in the round the whole of the dealings between the parties in order to assess whether or not B would be behaving unconscionably if his change of position were to be permitted. The approach is ‘holistic’.165 The elements of proprietary estoppel do not lie in ‘watertight compartments’; in a misprediction case, the quality of B’s assurance may influence the issue of reliance, and detriment and reliance are often ‘intertwined’: ‘… the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end the court must look at the matter in the round.’166

12.60 It is nevertheless still necessary to identify the constituent elements of a proprietary estoppel. Judges and commentators have proposed three or sometimes four elements, but with no unanimity as to what they are. They have been said to be: expectation, reliance and discretion;167 detriment, expectation, encouragement and no bar to the equity;168 assurance, reliance and ­detriment;169 ­expectation, detrimental reliance and unconscionableness;170 and encouragement/acquiescence, detrimental reliance and unconscionability.171 ­ Some of these ­formulations focus on the misprediction form of proprietary estoppel and overlook the mistake form, where there may be no representation or assurance by B (eg A’s mistake is self-induced). and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept’. In order to make this applicable to proprietary estoppel generally, it needs to be modified (i) to include cases of mistake (where there is no promise to be performed) by referring to the time when the falsity of A’s belief is revealed, and (ii) to refer to the time when A’s expectation is falsified, rather than the time when B’s promise falls due to be performed, since B may change his position before the time for performance, eg where, after he has promised to leave property to A, he and A fall out and he gives the property to someone else (as happened in Gillett v Holt, n 4). See also Willmott v Barber (1880) 15 Ch D 96, at 105–6, Crabb, n 13, at 195 and Taylors Fashions, n 20, at 147, all of which recognise the element of retrospection. In a celebrated passage in Thorner v Major, n 19, at [8], Lord Hoffmann, evoking Hegel in his preface to The Philosophy of the Right (1820), said: ‘Past events provide context and background for the interpretation of subsequent events and subsequent events throw retrospective light upon the meaning of past events. The owl of Minerva spreads its wings only with the falling of the dusk’. 165 Davies v Davies [2014] EWCA Civ 568, [58] (Floyd LJ), referring to Gillett v Holt, n 4. See also Taylors Fashions, n 20, at 154, where Oliver J refused to allow the doctrine of proprietary estoppel to be forced into ‘a Procrustean bed constructed from some unalterable criteria’. But see 1.75–1.82. There is no requirement in CPR r 16.5 or para 13.3 of the Pt 16 Practice Direction that A must specify the type of estoppel he relies on: see Beale v Harvey [2004] 2 P & CR 18, CA, at [34]. But see further 15.3 onwards. 166 Gillett v Holt, n 4, at 225 (Robert Walker LJ). 167 Thompson (1983) 42 CLJ 257, at p 277. 168 Brinnand v Ewens (1987) 19 HLR 415, CA, and Baker v Baker (1993) 25 HLR 408, CA, respectively relying on the 28th and 29th editions of Snell’s Principles of Equity. 169 Walton v Walton [1994] CAT No 479; Thorner v Major, n 19, at [29], [55] (Lord Walker) and [72] (Lord Neuberger); Crossco No 4 Unlimited v Jolan Ltd [2012] 1 P & CR 16, CA, at [114]; Megarry & Wade, The Law of Real Property (8th edn, 2012), [16-001]; Snell’s Equity (33rd edn, 2015), [12-33]; Gardner, An Introduction to Land Law (4th edn, 2015). 170 Jennings v Rice, n 20, at [49]. See also Morris v Morris [2008] Fam Law 521, CA, at [28] (‘assurance, reliance or change of position and unconscionable disadvantage’). 171 Megarry & Wade, above, [16-007].

529

12.61  Proprietary estoppel

12.61 We take the basic elements of proprietary estoppel to be: (i) A’s misapprehension; (ii) his change of position in reliance on the misapprehension; (iii) B’s responsibility for A’s change of position; and (iv) B’s own change of position. 12.62 The inquiry requires the following questions to be addressed: (1) Did A have a reasonable belief or expectation about the ownership, extent, exercise or enjoyment of present or future rights over property, as between himself and B? (2) Did A change his position in reasonable reliance on his belief or expectation? (3) Was B responsible for A’s change of position? (4) Would B be behaving unconscionably if he were permitted to change his own position? 12.63 The need to take a ‘flexible’ and ‘very fact-specific approach’ to cases of proprietary estoppel has been emphasised.172 It has also been said that the court should approach a claim by any person to have acquired an interest over another’s land by way of proprietary estoppel ‘with a degree of caution’.173

A’s MISAPPREHENSION Source of the misapprehension 12.64 Misapprehensions may be self-induced, or induced by B or a third party.174 A self-induced belief or expectation may be rare in proprietary estoppel cases but is not conceptually impossible. For example, there might be a family tradition of inheritance, from which B had benefited and which A, the next heir, assumed B would follow by passing on family assets to him, and on which, to B’s knowledge, A relied. It is submitted that it would be wrong to rule out, in principle, the possibility of A succeeding in a proprietary estoppel claim without any promise by B.175

172 Lester v Woodgate [2010] 2 P & CR 21, CA, at [39] (Patten LJ), referring only to estoppel by acquiescence, but the same approach must apply to all forms of proprietary estoppel. 173 Watts v Story (1983) 134 NLJ 631, CA (Slade LJ). See also Rawlings v Chapman [2015] EWHC 3160 (Ch), at [34]. 174 Yeo v Wilson (27 July 1998, unreported): ‘[B] must be shown to have said or done something to encourage in [A] the belief that he would inherit the estate or some part of it. This may involve an express mutual promise of the kind which would support a contract, but need not necessarily do so. An unprompted assumption or a tacit understanding on the part of [A] is enough, provided that [B] knew of it and fostered it’. It is not always necessary, however, for B to know that A’s belief or expectation is mistaken. In a case of common mistake, it is enough that he and A share the mistake. Cf Taylors Fashions, n 20, at 148 (‘common supposition’), 153 (‘[B] must know merely of [A]’s belief which, in the event, turns out to be mistaken’) and 155 (‘the mistake which, at the material time, everybody shared’). 175 Cf n 317.

530

A’s misapprehension 12.66

Belief in a present right 12.65 An important issue for the misprediction form of the estoppel is whether A must believe mistakenly that he has a present right.176 If there were such a requirement, the misprediction form would collapse into the mistake form: all cases of proprietary estoppel would involve mistakes as to present rights, albeit that, in misprediction cases, the right would be to B’s future performance of the correlative duty. 12.66 It is submitted that there is no such requirement. Before Gillett v Holt, there were cases where it was considered whether it was necessary for A to have made a mistake, but the precise content of the mistake was not directly addressed.177 In Gillett v Holt, at first instance,178 one of the grounds on which Carnwath J rejected a misprediction claim was that A ‘must have been well aware that his expectations … had no legally enforceable foundation’. In the Court of Appeal,179 Robert Walker LJ characterised this as ‘[begging] the whole question’: ‘Whether those assurances put [A]’s expectations on a legally enforceable foundation was not a question for [A]’. The Court of Appeal did not in fact require that A should believe that B’s promise was legally enforceable, and there was no finding of fact that A believed that B’s promises were legally e­ nforceable.180 The court nevertheless found the estoppel established.181 Again, in Hoyl Group 176 In a case of unilateral mistake to which the Willmott v Barber probanda apply (see 12.23–12.25), such a belief on A’s part is essential: it is the first probandum. The issue is whether, in a misprediction case, there is a similar requirement. See Mee [2009] CFLQ 367, pp 372–4. 177 Ward v Kirkland [1967] Ch 194, at 215, 238, where the reference to ‘misapprehension of the facts’ not being an essential ingredient does not exclude the possibility that Ungoed-Thomas J considered it necessary to establish a mistake by A as to his rights; and Crossco No 4 Unlimited v Jolan Ltd [2011] EWHC 803 (Ch), at [275] (not affected on this point by the Court of Appeal [2012] 1 P & CR 16), where the same comment can be made. Holiday Inns Inc v Broadhead (1974) 232 EG 951, 1087, per Goff J: ‘… mistake is not an essential element’. The discussion of the Willmott v Barber probanda in Taylors Fashions, n 20, 147, did not address the first probandum (A’s unilateral mistake as to his present rights), since both the cases before Oliver J involved shared mistakes. In Kinane v Mackie-Conteh [2005] WTLR 345, CA, at [29], Arden LJ (with the agreement of Thorpe LJ) said: ‘In this sort of case [a case of proprietary estoppel by representation of fact], [A] has to show that [B] represented to [A], by his words or conduct, including conduct in the provision or delivery of the agreement, that the agreement created an enforceable obligation’. But that was not a misprediction case: A’s claim was that B had led him to believe that B was contractually bound. In Sutcliffe v Lloyd [2007] 2 EGLR 13 the Court of Appeal held that B is not required to represent that he cannot w ­ ithdraw his promise, but this does not address the content of A’s misapprehension. 178 [1998] 3 All ER 917, at 932. 179 Note 4, at 229, with the unqualified concurrence of Waller and Beldam LJJ. 180 On the contrary, at 228, Robert Walker LJ observed that ‘the inherent revocability of testamentary dispositions … [was] well understood by the parties, as [A] candidly accepted’. Moreover, at 229: ‘it is [A]’s detrimental reliance on the promise which makes it irrevocable’. But see Mee [2009] CFLQ 367, at pp 370–1, discussing the ambiguity in the notion of revocability. 181 In Cobbe, n 22, at [63]–[68], Lord Walker directly asked the question whether it was necessary for A to believe, wrongly, that B had no legal right to revoke his promise. His discussion of the question is apparently inconclusive. He considered that Lord Kingsdown’s view in

531

12.66  Proprietary estoppel

Ltd v Cromer Town Council,182 Floyd LJ addressed a submission by B that the trial judge’s finding that A believed that he ‘had or would have’ a right of access was insufficient for proprietary estoppel by acquiescence. Counsel for B cited Ramsden v Dyson183 as an example of a case where the absence of a belief in an existing right was fatal. With the agreement of Longmore and McFarlane LJJ, Floyd LJ rejected the submission on the ground that it ‘does not hold good outside pure acquiescence cases’. It is true that, in Thorner v Major, Lord Neuberger said that B’s assurances were reasonably understood by A to indicate that B was ‘committing himself’ to leaving the farm to A,184 and were reasonably relied on by A as having that effect,185 but this does not entail that A mistakenly believed that B’s promise was legally enforceable: it is consistent with our view that A believed that B would perform, not that B was legally bound to perform. We respectfully agree with Professor McFarlane that, in Thorner v Major, it would not have been reasonable for A to believe that B had made a legally binding promise,186 in which case unreasonable reliance on such a belief, if held by A, would have caused his proprietary estoppel claim to fail.

Mistakes and mispredictions 12.67 In our view, therefore, it is not the case that mispredictions always involve mistakes about present rights. On the other hand, mistake and misprediction are not exclusive categories: a belief about present rights commonly implies an expectation about the future conduct of the person who is believed to be subject to the correlative duty. Moreover, an expectation of a future right may be allied to a belief that the expectation is enforceable, so that if B makes A a noncontractual promise of an inheritance, A may mistakenly believe from the outset that it is legally binding;187 or he may come to believe mistakenly that services Ramsden v Dyson, n 28, was that A believed, wrongly, that he had a legal right to a long lease, and that in Plimmer, n 42, A believed that his compliance with B’s request gave him a ‘right to security of tenure’. But neither case involves a decision that it was necessary for A so to believe, and Lord Walker did not suggest this. It is true that at [66] he said that, in Inwards v Baker [1965] 2 QB 29, Pascoe v Turner [1979] 1 WLR 431, Gillett v Holt [2001] Ch 210, Grundy v Ottey [2003] WTLR 1253 and Jennings v Rice, n 20, A ‘believed that the assurance on which he or she relied was binding and irrevocable’. But, in Inwards v Baker, A merely had an ‘expectation of being allowed to stay there’ (Lord Denning) or an ‘expectation of obtaining protection’ (Danckwerts LJ), and in Grundy v Ottey and Jennings v Rice there was no finding that A believed the promise to be legally enforceable. As to Gillett v Holt, see n 180. There was no decision in these cases that, as a matter of law, such a belief is an essential ingredient of proprietary estoppel. No other member of the Appellate Committee in Cobbe addressed this precise issue. 182 [2016] 1 P & CR 3, CA, at [63]. 183 Note 28. 184 In fact, there does not appear to have been a finding of fact that A had the belief that B’s promise was legally enforceable: see Thorner v Major [2007] EWHC 2422 (Ch). 185 Note 19, at [77]. Lord Neuberger was the only judge to address the point. 186 See The Law of Proprietary Estoppel (2014), [2.154]; Snell’s Equity (33rd edn, 2015), Ch 12 (by McFarlane), n 309. 187 Thus a case of misprediction may include a mistake by A as to his present rights. In such a case, B may make an express representation that he regards himself as bound to perform, or

532

A’s misapprehension 12.70

he has since rendered to B have caused the promise to become legally binding; or he may throughout understand correctly that, in law, B can change his mind, while believing that he will not do so; yet each of these situations may give rise to a proprietary estoppel.188 The issue is whether A can and does reasonably regard B’s position as something on which he can rely and on which he can base his own conduct in the expectation that it will not change. 12.68 It is submitted, therefore, that there is no material distinction, for present purposes, between (i) a representation by B to A that A has a present right to or over property or a present right to acquire such a right in the future, and (ii) an unenforceable promise by B to grant A a right to or over property in the future. The former is descriptive, capable of creating in A a belief which is true or false when it is made, while the latter is only predictive, capable of creating in A an expectation which is neither true nor false when it is made but will be falsified in the future if B resiles from the promise. In our view, however, this difference does not justify a difference in the operation of an estoppel based thereon.189 12.69 It is submitted, in particular, that the differences between mistakes and mispredictions do not justify different responses to the question whether detrimental reliance on the misapprehension should afford relief or what relief it should afford.190 12.70 This approach is reflected in the courts’ previously noted disinclination to dissect misapprehensions into mistakes and mispredictions.191 In part, this may reflect equity’s disposition to reject the ‘technical and schematic’ doctrines the making of the promise may carry an implied representation to the same effect. This creates something of a dilemma for McFarlane’s ‘three strand’ approach to proprietary estoppel: is such a case an example of the ‘representation’ strand or the ‘promise’ strand or both? See further 12.75, n 207, 12.77, n 214, and 12.131, n 343. 188 It is not enough, however, for A merely to hope that B will carry out his promise: see nn 64, 67. 189 See 2.23 onwards. 190 Lord Cranworth LC in Jorden v Money (1854) 5 HLC 185, at 214–5, distinguished between ‘a representation of a fact’ and ‘a statement of something which [B] intends or does not intend to do’, the latter having no effect save as a term of a contract. The doctrine of proprietary estoppel eventually managed to evade this rule, preferring the dissenting speech of Lord St Leonards who, at 248, found it ‘utterly immaterial’ whether it is a misrepresentation of fact or a misrepresentation of an intention as to the future. See Thompson (1983) 42 CLJ 257, p 278: ‘[In] recent years we have witnessed a principled progression from regarding estoppel as being based on representations of fact towards regarding it as a means by which expectations are fulfilled’. 191 See 12.26–12.27. In the following cases, the courts did not concern themselves with deciding whether A had a mistaken belief as to present rights or a falsified expectation of future rights (emphases added): Crabb, n 13, 186 per Lord Denning MR: ‘the parties acted in the belief that he had or would be granted … a right [of way]’; and at 188: ‘[B] led [A] to believe that he had or would be granted a right of access’. Similarly, at 197 per Scarman LJ: ‘I ask myself: as at March 1968 had [B] encouraged [A] to think that he had or was going to be given a right? … This was the act which was detrimental to the interests of [A]. He did it in the belief that he had or could enforce a right of way …’. Again, per Mummery LJ in Scottish & Newcastle Plc v Lancashire Mortgage Corporation Ltd [2007] EWCA Civ 684, at [44]: ‘the courts will

533

12.70  Proprietary estoppel

of the common law,192 but it is also because A’s expectation of future acquisition may include a mistaken belief that he has a present right to it. 12.71 In contrast to our approach, a thesis of Professor McFarlane’s requires that an estoppel claim referable to property rights be categorised as a case of either present mistake (of fact or law) or misprediction (promise). If it is a case of mistake, it must be further sub-categorised as a case of either acquiescence or estoppel by representation of fact. The reason suggested for this is that, unlike cases of acquiescence and promise, an estoppel by representation of fact does not, by itself, generate an equity, but simply produces an absolute, non-­discretionary outcome, precluding B from denying the content of his representation, either by way of defence or by making good some matter essential to an independent cause of action in contract or property sued on by A against B.193 12.72 Professor McFarlane claims support for his thesis in Hopgood v Brown.194 In that case, A and B were owners of adjoining plots on a building estate. The boundary between the plots was not apparent. A and B made an informal boundary agreement, pursuant to which A built in a manner encroaching over the true boundary. B’s successor in title, C, sued A in trespass, claiming (inter alia) a declaration as to the position of the boundary. The claim failed.195 The Court of Appeal held that B was estopped, after A had erected his building, from asserting that the boundary was anywhere other than as agreed, and that the estoppel was binding on C.196 The form of the estoppel was expressly stated by Evershed MR and also, possibly, by Morris LJ, to be estoppel by representation of fact.197 The estoppel simply precluded denial of the agreed boundary line.

compel effect to be given to acquiescence by [B] in the known expectation of [A] that he has or will have a proprietary right …’. See also Hoyl Group Ltd v Cromer Town Council [2016] 1 P & CR 3, CA, at [61], per Floyd LJ: ‘I accept that it is necessary for [A] to show that [it] believed that [it] had or would have a right of way via the garden access’. In that case, B submitted to the Court of Appeal that the trial judge’s finding that A ‘had or would have’ a right of access was insufficient for proprietary estoppel, and cited Ramsden v Dyson, n 28, as an example of a case where the absence of a belief in an existing right was fatal to the claim. The submission was rejected, Floyd LJ holding that it ‘does not hold good outside pure acquiescence cases’. 192 New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd (The Eurymedon) [1975] AC 154 (HL), at 167–E (Lord Wilberforce). Cf 1.75–1.82. 193 See McFarlane, The Law of Proprietary Estoppel (2014), [1.09]–[1.14]; [9.18]–[9.22]. 194 [1955] 1 WLR 213, CA. 195 Ibid. 196 The Court of Appeal had recourse to Taylor v Needham (1810) 2 Taunt 278 in order to find that C, as B’s successor in title, was bound by the estoppel. The soundness of the Court of Appeal’s reasoning is questioned in McFarlane, The Law of Proprietary Estoppel (2014), [8.50] onwards. See further n 550. 197 [1955] 1 WLR 213, at 223–4, 227 (Evershed MR). Jenkins LJ, at 228–9, decided the case on the principle of the ‘executed licence’ (as to which, see n 42). Morris LJ, at 230–1, held that B had represented by conduct that A could safely proceed to build. This could be interpreted as either a representation of fact or private law concerning the line of the boundary or a promise or assurance with respect to B’s future conduct.

534

A’s misapprehension 12.75

12.73 Another case that might be said to be in the same line is the second of the two cases decided in Taylors Fashions. While part of the judgment is concerned with the misprediction form of proprietary estoppel, both claims were framed in contract, and the award of specific performance in A’s favour in the second case was arguably on the basis of an estoppel by representation of fact, with the estoppel operating absolutely.198 It is notable that, although Oliver J described it as ‘most inequitable’ that, having encouraged A to incur expenditure and to alter its position irrevocably by taking additional premises on the faith of a supposition as to the enforceability of an option, B should be permitted to resile from that supposition, he nevertheless proceeded to decree specific performance without mentioning A’s ‘equity’ or discussing how it should be satisfied.199 12.74 Neither Hopgood v Brown nor Taylors Fashions is, however, a decision that an estoppel by representation of fact that A has rights over property precludes an action in proprietary estoppel with a discretionary result: Hopgood v Brown pre-dated the revival of interest in proprietary estoppel; there was no discussion of A having an ‘equity’; and it was not argued that the estoppel, if established, might operate otherwise than in an absolute fashion. Taylors Fashions is also consistent with the view that the case was one of proprietary estoppel with a discretionary result, since there may have been no argument as to the relief granted.200 12.75 Crabb,201 however, arguably creates a difficulty for Professor ­McFarlane’s thesis, as a case of an implied representation by B that A had a present right to future performance of a promise to grant a proprietary right. Although there was an implied representation of a present entitlement to future performance,202 as well as a promise, the result in Crabb was nevertheless discretionary. Lawton LJ found a mistake by A as to his present rights, saying: ‘[A] must I think be taken to have believed there was [an agreement] because his subsequent behaviour in selling the land without reserving any right of way across it would have been gross folly if he had not believed that he had been given a right of access’; and later: ‘[Counsel’s] answer was that [A] had not got an absolute right to have the gates put up. For the reasons I have stated, I am of the opinion that he had in the sense that he had been given a firm undertaking’. Lord Denning MR thought the same:203 ‘That certainly led [A] to believe that [B] agreed that he should have the right of access through 198 Note 20, at 135, 142 (where the claims for relief are described) and 159 (where specific ­performance was decreed in the second case). For the grounds on which the relief was granted, see 157–8. The ‘Ramsden v Dyson principle’ – that A had been encouraged to alter its legal position irrevocably upon the faith of the belief or expectation as to the length of term it would be acquiring – was an alternative ground to estoppel by representation of fact: ibid. 199 At 158. 200 The ICLR report is formally described as a Note, the submissions of counsel not being included. It is possible that B conceded that A should be awarded specific performance (cf 8.61), although in that case it is surprising that Oliver J did not record the fact in his judgment. 201 Note 13. Lord Walker described Crabb as a ‘difficult case’ in Cobbe, n 22, at [79]. 202 See n 5. 203 At 189.

535

12.75  Proprietary estoppel

point B without more ado’. Scarman LJ based his decision on a finding that ‘there was acceptance in principle that there should be access and a right of way over the [B’s] land’204 (also indicating that for him the distinction between a belief as to the existence of a right and an expectation was not material to the existence or discretionary outcome of the estoppel). All the members of the Court of Appeal proceeded on the basis that A’s belief was created or encouraged by B’s implied representation as to A’s present entitlement as well as an implied promise,205 and decided the case as one of B’s standing by while A changed his position under a mistaken belief as to his present rights.206 They all then resorted to familiar equitable principles by awarding discretionary relief in satisfaction of a proprietary estoppel equity.207 As Crabb reflects, a representation by B that A has a present right to a grant of an interest in or over property may be made by conduct or silent endorsement of A’s belief made known to B, as well as express language.208 Since a representation as to A’s rights may found an estoppel by representation of fact,209 on Professor McFarlane’s thesis it might be said to follow that, in any case in which B has, by words, conduct or silence, assured A that he has a particular right in property, A might, to make good a cause of action or defence, deploy an estoppel by representation of fact to preclude B from denying that A has that particular right, the court having no discretion as to that result by reference, for instance, to the degree of A’s detrimental reliance on the assurance. We respectfully submit that authority does not require such a result, but allows the court a discretion. 12.76 Kinane v Mackie-Conteh is a similar case, ie an estoppel by representation of fact producing a mistake as to present rights, but still leading to discretionary equitable relief.210 Arden and Neuberger LJJ considered that A had a 204 At 196. 205 At 188 per Lord Denning: ‘[B] led [A] to believe that he had or would be granted a right of access …’. At 197 per Scarman LJ: ‘To use the language of Fry J, had [B] done it directly [sc encouraged [A] to think that he had or was going to be given a right] or had [B] done it by abstaining from asserting a legal right? Their encouragement of the belief in the mind of [A] … was both direct and indirect. It was direct because of what they had done on the ground …’. 206 At 189 per Lord Denning: ‘[B] did nothing to disabuse [A] but rather confirmed it [sc his belief that he had a right of way] by erecting gates … it was their conduct which led him to act as he did: and this raises an equity in his favour against them’; at 192 per Lawton LJ: ‘[B], knowing that [A] intended to sell part of this land, stood by when he did so and without a word of warning allowed him to surround himself with a useless piece of land from which there was no exit’; at 197 per Scarman LJ: ‘[B] had abstained from giving [A] … any indication that they were standing on their rights’. 207 At 189 (Lord Denning); at 192 (Lawton LJ); and at 198 (Scarman LJ). The case therefore suggests that the consequence of a proprietary estoppel should not be determined by analysing it as being made up of three ‘distinct strands’ comprising standing by, representation and promise: cf McFarlane, The Law of Proprietary Estoppel (2014), [1.03]. Crabb involved all three ‘strands’, plus a fourth, namely a non-promissory encouragement of A’s belief or expectation and of his change of position, with each ‘strand’ contributing to the conclusion that an equity was raised in A’s favour. The fact that one of the ‘strands’ was a representation of fact (namely, that A had a present entitlement to the future performance of B’s promise of a right of way) did not exclude a proprietary estoppel cause of action, with consequential discretionary relief. 208 See Ch 3. 209 See 2.31. 210 [2005] WTLR 345, CA.

536

A’s misapprehension 12.77

proprietary estoppel equity calling for satisfaction.211 The ‘appropriate remedy’ was ‘an interest in land’.212 This, we suggest, was a case of a proprietary estoppel generated by representation of fact as to the existence of a present right which raised an equity and resulted in discretionary relief. 12.77 Professor McFarlane takes the view, with which we agree, that in H ­ opgood v Brown, where the land had been conveyed on sale by B to C, A’s defence of estoppel by representation of fact should not have been held to bind C: the effect of the estoppel on B was that A had a title to the land superior to B’s title, but in order for C to be bound, A needed a title binding on C, which he could only obtain under the doctrine of proprietary estoppel.213 As mentioned above, however, part of Professor McFarlane’s three-‘strand’ analysis of proprietary estoppel is his view that an estoppel by representation of fact, by itself, never generates an equity. He accordingly contends that the only ‘strands’ of proprietary estoppel on which A could have founded a proprietary estoppel claim against C were ‘an acquiescence-based or promise-based proprietary estoppel claim’, not an estoppel by representation. In our view, by contrast, a representation of fact may itself generate a proprietary estoppel.214 We recognise that this view, unlike Professor McFarlane’s, needs to 211 B’s contention was that, if A had only established a proprietary estoppel, s 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 would have provided him with a defence. The Court of Appeal found a proprietary estoppel and satisfied it by a constructive trust, thereby enabling A to escape from s 2(1) through s 2(5). On our view, the court could have achieved the same result without recourse to a constructive trust: see 12.152–12.157. See also Dixon [2005] Conv 247, pp 253–4. 212 Note 210, at [33] (Arden LJ), [45] (Neuberger LJ). 213 See The Law of Proprietary Estoppel, [8.50] onwards. At [8.60], McFarlane explains that, if the land was registered, A’s proprietary estoppel equity was an overriding interest under s 70(1)(g) of the Land Registration Act 1925; and if it was unregistered, C had actual or constructive notice of A’s encroachment on the land, and his claim to be a bona fide purchaser without notice of A’s equity would have been defeated by A’s occupation, under the doctrine of Hunt v Luck [1902] 1 Ch 428, CA. On the same facts today, the position, if the land were registered, would be that A’s proprietary estoppel equity would bind C by reason of the Land Registration Act 2002, s 116(a) and ss 28 and 29 and Sch 3, para 2: see 12.168 and 12.176. 214 See 12.75–12.76. The same, we submit, is true of estoppel by convention: see Valentine v Allen [2002] EWCA Civ 915, at [63]–[65] (Chadwick LJ) and [74] (Sir Peter Gibson), where the Court of Appeal re-analysed a trial judge’s finding of a proprietary estoppel, with an equity raised and satisfied by equitable relief, as a case of estoppel by convention, but without disturbing the result. See also Lovett v Fairclough (1991) 61 P & CR 385, at 401, another case of estoppel by convention, which Mummery J analysed as raising an equity, albeit the equity was satisfied before the action was brought. Thus an estoppel by convention concerning rights over property operates like any other form of proprietary estoppel by generating an equity, resulting in discretionary relief. Cf McFarlane, The Law of Proprietary Estoppel, [8.59]. We question why a representation by B that A has a proprietary right, made by B’s silent conduct communicating endorsement of A’s belief that he has, should operate as an acquiescence-based proprietary estoppel, while a representation to the same effect made by words should operate differently. Indeed, at [8.60], McFarlane accepts that ‘a representation that [A] has a particular right may also, in a particular case, amount to a commitment or promise by [B] that [A] has such a right’; and this is offered as ‘a better explanation’ of Hopgood v Brown, ie that A obtained a title superior to C’s by proprietary estoppel. If, however, a representation of fact, without apparently losing that character, may nevertheless amount to a commitment or promise, there is no genuine distinction between them, thus providing another reason for rejecting McFarlane’s thesis of a separate ‘strand’ of proprietary estoppel that does not generate a cause of action.

537

12.77  Proprietary estoppel

address what might be thought to be a potential conflict between the deployment of an estoppel by representation of fact in an absolute, preclusionary manner and its deployment as a proprietary estoppel, with a claim for discretionary relief.215

Content of the misapprehension 12.78 The misapprehension may be a mistaken belief relating to, for instance, the effectiveness of an instrument of gift,216 or the location of a boundary,217 or the enforceability of an option.218 Or it may be an expectation about how B will conduct himself in the future in relation to his or A’s property, such as an expectation of the future ownership or enjoyment of B’s property arising out of: B’s permission to A to build with lights over B’s land;219 B’s request to A to extend a jetty on B’s land;220 B’s invitation to A to build a bungalow on B’s land;221 B’s permission to A to lay drains on B’s land;222 an agreement in principle by B to grant A a right of way;223 or a promise by B of a gift of property to A, eg by will,224 or otherwise out of B’s estate.225 12.79 As previously mentioned, it is not necessary in a misprediction case that A be mistaken as to his present rights.226

B’s knowledge or ignorance of A’s misapprehension 12.80 An important question is whether B must be aware of the belief or expectation on which A is relying, and whether he must also be aware that it is a misapprehension. The answer depends on whether it is sought to make B responsible for A’s change of position on the basis of (i) dishonest standing by or (ii) encouragement, including authorship of the misapprehension and innocent standing by. 12.81 In the former case, it has always been necessary for A to prove that B knew of his own rights in the matter, and of his right to intervene.227 Moreover, 215 This is addressed in 12.192 onwards. 216 Dillwyn v Llewellyn (1862) 4 De G F & J 517. 217 Hopgood v Brown [1955] 1 WLR 213, CA; Chadwick v Abbotswood Properties Ltd [2005] 1 P & CR 10. 218 Taylors Fashions, n 20. 219 East India Company v Vincent (1740) 2 Atk 83 (see further McManus v Cooke (1887) 35 Ch D 681, at 694). 220 Plimmer, n 42. 221 Inwards v Baker [1965] 2 QB 29, CA. 222 Ward v Kirkland [1967] Ch 194. 223 Crabb, n 13. 224 In re Basham [1986] 1 WLR 1498, 1510; Thorner v Major, n 19. But as to the former, see 12.44 onwards. 225 Ottey v Grundy [2003] EWCA Civ 1176. 226 See 12.65 onwards. 227 Ramsden v Dyson, n 28, at 141 per Lord Cranworth: ‘… to raise such an equity two things are required, first, that the person expending the money supposes himself to be building on his

538

A’s misapprehension 12.83

according to the third and fourth probanda in Willmott v Barber,228 B must not only know of the existence of his own inconsistent right (‘the doctrine of acquiescence is founded upon conduct with a knowledge of your legal rights’) but must also know of A’s mistaken belief of his rights, since without such knowledge there is nothing which requires him to assert his own rights.229 12.82 In cases of encouragement, including authorship and innocent standing by,230 B’s ignorance of the truth is held to be, at most, a factor. In Sarat Chunder Dey v Gopal Chunder Laha,231 where B was the author of A’s mistake, Lord Shand said: ‘the principle on which the law and the statute rest is, that it would be most inequitable and unjust to [A] that if [B] by a representation made, or by conduct and amounting to a representation, has induced [A] to act as he would not otherwise have done, [B] should be allowed to deny or repudiate the effect of his former statement, to the loss and injury of [A]. If [B] did so without full knowledge, or under error, sibi imputet. It may in the result be unfortunate for him, but it would be unjust, even though he acted under error, to throw the consequences on [A] the person who believed his statement and acted on it as it was intended that he should do.’

12.83 In Dillwyn v Llewellyn,232 as in Hopgood v Brown,233 Bank Negara Indonesia v Hoalim,234 Taylors Fashions,235 and Munt v Beasley,236 B shared A’s mistake, but in all cases A’s estoppel claim or defence succeeded. own land; and, secondly, that the real owner at the time of the expenditure knows that the land belongs to him and not to the person expending the money in the belief that he is the owner’. 228 See 12.23. 229 Cf Taylors Fashions, n 20, at 153, where Oliver J considered an ambiguity in the fourth probandum, when discussing Scarman LJ’s finding in Crabb, n 13, that all five probanda were satisfied: ‘… it seems clear … that, up to the critical moment when [A] acted, both parties [in Crabb] thought that there was a firm assurance of access. [B] had, indeed, even erected a gate at [its] own expense to give effect to it. What gave rise to the necessity for the court to intervene was [B’s] attempt to go back on this subsequently when [it] fell out with [A]. I infer therefore that Scarman LJ must have construed [the fourth] probandum in the sense … that [B] must know merely of [A]’s belief which, in the event, turns out to be mistaken’. 230 The forms of encouragement are discussed in 12.110 onwards. 231 (1892) LR 19 IA 203, PC. 232 (1862) 4 De G F & J 517, always assuming that this was a case of proprietary estoppel and not contract (as it was considered to be in Ward v Kirkland [1967] Ch 194, at 235). Cf Cobbe, n 22, at [50] where Lord Walker likened it to a ‘common expectation’ case. We would prefer to call it a case of common mistake as to the effectiveness of an imperfect gift of land, ie a mistake as to present rights. It is discussed by Kitto J in the High Court of Australia in Olsson v Dyson (1969) 120 CLR 36, HCA, at [9]. 233 [1955] 1 WLR 213, CA. The claim succeeded as an estoppel by representation of fact: see at 223 (Evershed MR) and at 230 (Morris LJ). 234 [1973] MLJ 3, PC, a promissory estoppel case. 235 Note 20, at 151–2: the question is ‘whether, in particular individual circumstances, it would be unconscionable for [B] to be permitted to deny that which, knowingly, or unknowingly, he has allowed or encouraged [A] to assume to his detriment … knowledge of the true position by [B], becomes merely one of the relevant factors – it may even be a determining factor in certain cases – in the overall inquiry’ (emphasis added). This was also, on one view, a case of estoppel by representation of fact: see at 157D–F. 236 [2006] EWCA Civ 370, a case of proprietary estoppel; and see further 1.96–1.98, 3.15, 8.13.

539

12.84  Proprietary estoppel

12.84 On the other hand, Nourse LJ said in Brinnand v Ewens:237 ‘any belief which [A] may have had that [he was] acquiring an interest in the property … could not have been encouraged by [B] or anyone acting on [B’s] behalf. You cannot encourage a belief of which you do not have any knowledge.’

12.85 The Court of Appeal, however, in Hoyl Group Ltd v Cromer Town Council,238 considering this to be obiter dictum, effectively disapproved it, saying that, if B encourages A to do acts which are only consistent with A owning or having some interest in B’s property, thereby inducing A to believe that he owns it or has such an interest, B’s ignorance of A’s belief is not necessarily a reason to deny that B has encouraged it.239 12.86 There is, therefore, a clear distinction to be drawn between cases where B is sought to be fixed with responsibility for A’s change of position on the basis of dishonest standing by, where B’s knowledge of A’s misapprehension is essential, and cases of encouragement, including authorship and innocent standing by, where B’s ignorance of A’s misapprehension, if relevant at all, is ‘merely one of the relevant factors’.240

A’s CHANGE OF POSITION 12.87 Change of position, which incorporates notions of inducement, ­reliance and detriment, is a not uncommon alternative for detrimental reliance in ­estoppel.241 The subject is covered in detail in Chapter 5 of this work, to which reference should be made.

Detriment 12.88 Detriment is a matter to be assessed retrospectively, looking backwards from the point in time when B’s change of position reveals to A his misapprehension and the new predicament in which he now finds himself. It follows that change of position and detriment are distinct, albeit ‘intertwined’, requirements.242 237 (1987) 19 HLR 415, CA. Apparently, Taylors Fashions was not cited. 238 [2016] 1 P & CR 3, CA, at [53], [73]. See also Moorgate Mercantile Co Ltd v Twitchings [1976] QB 225, CA, at 242, per Lord Denning MR: ‘[proprietary estoppel] operates by reason of [B]’s conduct – what he has led [A] to believe – even though he [B] never intended it’. (Unaffected by the House of Lords’ reversal at [1977] AC 890.) 239 On the other hand, in circumstances where B neither knows nor has the means of knowing that A believes that he is to be granted a right affecting property, Floyd LJ considered that it may be necessary for B to have at least constructive notice of A’s belief. 240 See n 235. 241 Eg ER Ives Investment Ltd v High [1967] 2 QB 379, CA, at 405; Pascoe v Turner [1979] 1 WLR 431, CA, at 438; Jones v Watkins [1987] CAT No 1200; Suggitt v Suggitt [2012] EWCA Civ 1140, at [24]. As stated in n 7, ‘change of position’ is used in this chapter to include the maintaining of an existing position. 242 Gillett v Holt, n 4, 225 (Robert Walker LJ).

540

A’s change of position 12.91

12.89 Detriment is not a narrow or technical concept.243 It need not consist of expenditure of money or other quantifiable financial detriment so long as it is something substantial and such as to make it unjust for B to resile.244 It includes the maintenance of an existing position,245 and the loss of an opportunity to change one’s position.246 On the other hand, the denial or non-receipt of the property or property right that A believed he already had or expected to acquire from B is not a relevant detriment.247 12.90 A common form of detriment is that, as a result of his reliance on the misapprehension, A has lost an opportunity to protect his interests by taking some alternative course of action which offered a real prospect of benefit, notwithstanding that the prospect was contingent and uncertain.248 12.91 Detriment is not presumed and must be proved.249 But it may be proved, and often is, by establishing facts from which it can be inferred.250 The question of what A would have done, and with what results, is necessarily a matter for retrospective and hypothetical reconstruction.251

243 Gillett v Holt, n 4, at 232 (Robert Walker LJ). For criticism of the Court of Appeal’s treatment of the facts in that case, see Wells [2001] 65 Conv 13. 244 Sledmore v Dalby, n 10, at 207 per Hobhouse LJ (‘detriment must be distinct and substantial’); Kelly v Fraser [2013] 1 AC 450, PC, at [17], a case of estoppel by representation of fact, but the principles are the same. See also Greasley v Cooke [1980] 1 WLR 1306, CA, at 1311, per Lord Denning MR: ‘It so happens that in many of these cases of proprietary estoppel there has been expenditure of money. But that is not a necessary element’. And see Watts v Story (1984) 134 NLJ 631, CA; Walton v Walton [1994] CAT No 479 per Hoffmann LJ (‘expense or sacrifices’). Cf Century (UK) Ltd SA v Clibbery [2004] EWHC 1870 (Ch), at [71] (performing minor chores – cooking, doing laundry etc – is insufficient). See further 1.5 onwards, 5.41 onwards. 245 Eg Wayling v Jones (1993) 69 P & CR 170, CA. 246 Lloyd v Dugdale [2002] 2 P & CR 13, CA, at [38]; Catchpole v Trustees of the Alitalia Airlines Pension Scheme [2010] ICR 1405, at [42], see n 157; Kelly v Fraser, n 244, ibid. See further 5.45 onwards. 247 Steria Ltd v Hutchison [2007] ICR 445, CA, [125], per Neuberger LJ: ‘[Counsel] said that the fact that [A] would not obtain the [expected] benefit … was itself a detriment upon which he could rely for the purpose of establishing his claim in estoppel. In my opinion, that point plainly will not do. If it were correct, the requirement for detriment in a claim for estoppel would be nugatory, because in every case where [A] advances a claim based on estoppel, he will, virtually by definition, be better off if the estoppel is established than if it is not: otherwise he would not be raising an estoppel. The essential point of principle is that [A] must establish relevant detriment’. 248 Kelly v Fraser, n 244, ibid. 249 Stevens & Cutting Ltd v Anderson [1990] 1 EGLR 95, CA, at 99, not following Greasley v Cooke [1980] 1 WLR 1306, at 1314. See also Coombes v Smith [1986] 1 WLR 808, at 821; Gillett v Holt, n 4, at 232 (Robert Walker LJ); Steria Ltd v Hutchison, n 247, at [131] ­(Neuberger LJ). 250 Eg Lim v Ang [1992] 1 WLR 113, PC, at 118. 251 Kelly v Fraser, n 244, at [18]: ‘The fact that [A] has not engaged in this process [of retrospective and hypothetical reconstruction] in his written or oral evidence at trial will not necessarily prevent the court from doing so if there is some other proper evidential basis for the reconstruction’. Cf Meghraj Bank Ltd v Arsiwalle (10 February 1994, unreported), CA, where it was submitted that, if A had known that B was going to resile from his promise, A might

541

12.92  Proprietary estoppel

12.92 The act or acts inflicting detriment on A need not have been requested by B; indeed, B may not know or have foreseen what A has done.252 12.93 The following illustrate the kinds of conduct on which A has successfully relied to establish a detrimental change of position: erecting ­buildings;253 installing a drain;254 making home improvements;255 selling his own land without reserving rights of access over it;256 contributing to the purchase of a house for joint occupation with B, giving up secure accommodation and moving home;257 looking after B’s house and family, caring for B’s mentally ill daughter, and receiving no payment for her services for 30 years;258 providing B with meals, cleaning his cottage and keeping the garden in order for no wages and buying carpets;259 giving up privately rented accommodation;260 acting as B’s companion and chauffeur and giving substantial help in running B’s

have acted differently, and to that extent A did rely on the promise. To this Peter Gibson LJ responded: ‘I cannot accept that submission, which would seem to me to render enforceable a bare promise in virtually every situation. In my judgment, the court can only decide a question of promissory estoppel on the evidence put before it of what the promisee did in reliance on the promise rather than on speculation as to what the promisee might have done’. This must apply also to proprietary estoppel. It should not be understood, however, as denying the proposition in Kelly v Fraser that proven inaction, resulting from the loss of an opportunity, unknown to A, to take action, can amount to a change of position. In particular, in Steria Ltd v Hutchison [2007] ICR 445, CA, Neuberger LJ accepted, at [127], that ‘the mere fact that it is a possibility, as opposed to a probability, that something would have happened may not prevent that possibility founding an estoppel’. On the other hand, a ‘pure speculation’, unsupported by evidence or inherent likelihood or possibility, is insufficient to support an estoppel. See further 5.4 onwards. 252 Thorner v Major, n 19, at [5], per Lord Hoffmann. See also Crabb, n 13, at 189, 197, and Joyce v Epsom & Ewell Borough Council [2012] EWCA Civ 1398, at [39], in both of which, however, B knew what A intended to do. See further Hoyl Group Ltd v Cromer Town Council [2016] 1 P & CR 3, CA, at [54]. Depending on the circumstances, A may be under a duty to warn B of his intentions. As Scarman LJ said in Crabb, at 198: ‘I can conceive of cases in which it would be absolutely appropriate for [B] to say: “But you should not have acted to your detriment until you had had a word with me and I could have put you right”. But there are cases in which it is far too late for [B] to get himself out of his pickle by putting upon [A] that sort of duty’. See also Delaforce v Simpson-Cook (2010) 78 NSWLR 483 (NSWCA), at [56], where Handley JA, addressing the issue of remedy, made the important observation that: ‘The detrimental reliance that supports the estoppel need not constitute, in any sense, a consideration moving to the party bound. It is a unilateral element of the estoppel and not the price paid for it’. 253 Rochdale Canal Co v King (No 2) (1853) 16 Beav 630 (mill); Cotching v Bassett (1862) 32 Beav 101 (ancient lights); Plimmer, n 42 (extending jetty); Hopgood v Brown [1955] 1 WLR 213, CA (garage); Inwards v Baker [1965] 2 QB 29, CA (house); ER Ives Investment Ltd v High [1967] 2 QB 379, CA (garage); Salvation Army Trustee Co Ltd v West Yorkshire MCC (1980) 41 P & CR 179 (meeting hall). 254 Ward v Kirkland [1967] Ch 194. 255 Dodsworth v Dodsworth (1973) 228 EG 1115; Pascoe v Turner [1979] 1 WLR 431, CA. 256 Crabb, n 13. 257 Jones (AE) v Jones (FW) [1977] 1 WLR 438 (CA); Baker v Baker (1993) 25 HLR 408, CA. 258 Greasley v Cooke [1980] 1 WLR 1306, CA. 259 In re Basham [1986] 1 WLR 1498. 260 Maharaj v Chand [1986] AC 898, PC; Parker v Parker [2003] EWHC 1846 (Ch), at [238].

542

A’s change of position 12.95

businesses;261 working for B for low wages, forgoing educational and other employment opportunities;262 incurring significant out-of-pocket expenses on B’s behalf, and maintaining B’s house and garden;263 giving up a career or giving devoted care to B (beyond that of an ordinary friendly lodger);264 constructing a road;265 making life-changing sacrifices with respect to a career etc;266 abandoning a court case against B;267 laying hardcore and moving a garage;268 and abandoning a secure home in which A had invested, and investing in a home to which she had no legal title.269

Reliance 12.94 As to reliance, reference should again be made to Chapter 5 for a full treatment of this subject. In this chapter, two particular points are briefly mentioned and a third discussed at greater length. The ‘but for’ test; the ‘significant factor’ test 12.95 First, reliance being essentially an issue of causation,270 the question is the appropriate test. Various alternatives have been canvassed.271 It is submitted that the ‘significant factor’ test suggested by Neuberger LJ, as he then was, in Steria Ltd v Hutchison,272 correctly states the law: ‘In order to succeed in a claim based on estoppel, it is probably not necessary for a claimant to satisfy what is known in a somewhat different area of the law as the “but for” test. In other words in the present case it does not appear to me that [A] has to show that, if the representation in question had not been made, he would not have joined the scheme. He merely has to show that the representation was a significant factor which he took into account when deciding whether to join the scheme.’

261 262 263 264 265 266

Wayling v Jones (1993) 69 P & CR 170, CA. Gillett v Holt, n 4; Thorner v Major, n 19. Campbell v Griffin [2001] EWCA Civ 990. Chun v Ho [2002] EWCA Civ 1075; Ottey v Grundy [2003] EWCA Civ 1176. Bexley LBC v Maison Maurice Ltd [2007] 1 EGLR 19. Gill v Woodall [2009] EWHC B34 (Ch) (unaffected on this point by [2010] EWCA Civ 1430), at [552]: ‘… devotion and loyalty to and care of [B] for over 30 years … strenuous physical labour … adoption of a career … not the one she would have chosen … probable loss of the difference in incomes between that which she did receive … and what she would have received employed full time … loss of promotion prospects … inability to return to full time employment … expenditure of some very substantial sums of money in the purchase of … property … time and inconvenience …’. 267 Delaforce v Simpson-Cook [2010] NSWCA 84. 268 Joyce v Epsom & Ewell Borough Council [2012] EWCA Civ 1398. See Mee [2013] Conv 157. 269 Southwell v Blackburn [2014] HLR 47, CA, at [20]. 270 Campbell v Griffin [2001] EWCA Civ 990, [19] (Robert Walker LJ), at [39], [40]. 271 See 5.13 onwards. See also McFarlane, The Law of Proprietary Estoppel (2014), [3.104] onwards. In Davies v Davies [2016] EWCA Civ 463, at [39], Lewison LJ referred to a ‘sufficient causal link’, which tends to beg the question. 272 [2007] ICR 445, CA, at [117].

543

12.96  Proprietary estoppel

The burden of proof 12.96 Secondly, there is the issue of the burden of proof.273 In Greasley v Cooke,274 Lord Denning MR said: ‘These statements to [A] were calculated to influence her – so as to put her mind at rest – so that she should not worry about being turned out. No one can say what she would have done if [B] had not made those statements … So, instead of looking for another job, she stayed on in the house looking after [B]. There is a presumption that she did so, relying on the assurances given to her by [B]. The burden is not on her, but on [B], to prove that she did not rely on [the] assurances. [B] did not prove it, nor did [B’s] representatives. So she is presumed to have relied on them.’

12.97 A rebuttable presumption of reliance has been accepted and applied in later cases in the Court of Appeal.275 In particular, in Wayling v Jones,276 ­Balcombe LJ said: ‘Once it has been established that promises were made, and that there has been conduct by [A] of such a nature that inducement may be inferred then the burden of proof shifts to [B] to establish that he did not rely on the promises.’

12.98 In these circumstances, it seems impossible not to accept the existence of the presumption, unless and until, if ever, it is overruled by the Supreme Court.277 It is submitted, however, that the presumption only arises in the absence of conflicting evidence and upon a finding of fact that B’s assurance is material 273 This issue does not arise, of course, if there is relevant evidence before the court: see Cook v Thomas [2010] EWCA Civ 227, at [77] (Lloyd LJ), [112], [113]. 274 [1980] 1 WLR 1306, CA, at 1311. Waller LJ agreed with Lord Denning. Dunn LJ said that the presumption related to proof of detriment, a proposition not now adhered to: see n 249. 275 Wayling v Jones (1995) 69 P & CR 170, CA; Grant v Edwards [1986] Ch 638, CA, at 657; Walton v Walton [1994] CAT No 479. The presumption was applied in In re Basham [1986] 1 WLR 1498, at 1507. It was distinguished in Watkins v Emslie [1982] 1 EGLR 81, CA. In Watts v Story (1984) 134 NLJ 631, CA, Dunn LJ summarised the effect of Greasley v Cooke as follows: ‘All that Lord Denning was saying was that, the assurances having been established, there was no need for [A] to prove that the obvious detriment had resulted from them’. This suggests a watering-down of the presumption, but the later cases mentioned above lend this view no support. 276 Above, at 173, citing Greasley v Cooke and Grant v Edwards, with the agreement of Hoffmann LJ. The same principle was applied by the Court of Appeal in Commission for the New Towns v Cooper (Great Britain) Ltd [1995] Ch 259, a case of rectification for a mistake deliberately induced by B, where Stuart-Smith LJ (with the concurrence of Evans and ­Farquharson LJJ) said, at 282: ‘… in my judgment, where a false representation is made for the purpose of inducing the other party to adopt a certain course of conduct and the representation is such as to influence a person behaving reasonably to adopt that course of conduct, the court should infer, in the absence of evidence to the contrary, that the representation did have that effect. Here the representation was made for the purpose of concealing from [A]’s representative that the language used was wide enough to cover the put option. It would be likely to have that intended effect and it is impossible to say what [A] might have thought but for the smokescreen. It is no answer to a claim for fraudulent misrepresentation that, if [A] or his agent, who was deceived, had taken proper care, he would not have been misled’. 277 The general principle was doubted by Neuberger LJ in Steria Ltd v Hutchison [2007] ICR 445, CA, at [128]–[130], who nevertheless recognised that the presumption might continue to

544

A’s change of position 12.100

to A’s conduct,278 and that, when the presumption arises, it does no more than permit a proper inference to be drawn from that finding. The Wayling test 12.99 In Wayling v Jones,279 A and B had been domestic partners for several years. B promised to leave property to A by will. The promise was not performed on B’s death. A sued B’s estate in proprietary estoppel. In affidavit evidence, A said that he had relied on the promise. In examination in chief, he was asked what he would have done if, at some unspecified time after making the promise, B had told him he was not going to keep it, to which he answered that he would have left. In cross-examination, he was asked whether he would still have stayed with B if the promise had not been made. He answered that he would have remained with B, whether or not B had made the promise. Finally, in reexamination, he repeated the answer he gave in cross-examination, adding: ‘He needed me, he couldn’t do without me’. The trial judge dismissed the claim on the ground that A had not acted to his detriment on the faith of, or in reliance on, the promise. The Court of Appeal allowed the appeal. Balcombe LJ said: ‘I am satisfied that [A]’s answers in cross-examination do not relate to the only question that mattered: “What would you have done if [B] had told you that he was no longer prepared to implement his promises?” To that question [A] had given his answer in chief as already mentioned. On the application of the principles set out above to the facts of this case I am satisfied: (a) that the promises were made; (b) that [A]’s conduct was of such a nature that inducement may be inferred; (c) that the defendants have not discharged the burden upon them of establishing that [A] did not rely on the promises. The judge fell into error in holding that [A] did not rely on the promises to his detriment.’

Leggatt LJ, agreeing, said that the effect of the evidence was that, if B had made no promise, A would have stayed with him; B did make a promise; and if B had reneged on his promise, A would have left; from which ‘it must be inferred that it was because [A] relied on the promise that he would have left if he had learned that it was not going to be kept’.280 Hoffmann LJ simply agreed. 12.100 The Wayling test281 – that in order to disprove reliance, B must show that A would have acted as he did, even if B had withdrawn his assurance – has been applied in two Court of Appeal decisions.282 It has nevertheless been apply in proprietary estoppel cases. Cf per Mummery LJ at [67] in the same case: ‘I would be prepared, in general, to apply the presumption of reliance …’. 278 Above. See 5.7, 5.33 onwards. 279 Above. See further 5.17. 280 This presumably means: A would have left if he had learned that the promise was not going to be kept, from which it is to be inferred that he relied on the promise. 281 Ie testing reliance by the question: What would A have done if B had told him that the promise would not be kept? 282 Walton v Walton [1994] CAT No 479; Ottey v Grundy [2003] WTLR 1253, CA. See also Thorner v Major [2008] EWCA Civ 732, at [48] (unaffected on this point by the reversal in the House of Lords, n 19), referring to Ottey v Grundy.

545

12.100  Proprietary estoppel

criticised on the basis that A’s answer in cross-examination (that he would have remained with B, whether or not B had made the promise) demonstrated that the ‘but for’ test of causation was not satisfied.283 12.101 An immediate riposte to this criticism is to argue, as we do, that the ‘but for’ test is the wrong test. But there is an important additional reason why, in our view, the criticism is misguided. In Wayling, A did not carry out a real change his position, either in a positive sense (eg by moving in to live with B) or in a negative sense (eg by refraining from pursuing career opportunities). He simply maintained his former position, by continuing as he had before the promise was made. Wayling clearly recognises that maintaining an existing position can amount to detrimental reliance. In such a case, the question of how A would have conducted himself if the assurance had not been made is essentially irrelevant: the parties had already lived in a stable relationship for a significant period, and there was no suggestion that the promise formed part of a quasi-bargain whereby A agreed to stay with B in return for the promise of an inheritance. But showing that A did not rely on the making of the promise did not prove that A did not rely on B’s keeping the promise. It is submitted that Balcombe LJ was right, therefore, to say that in cases like Wayling, where A simply maintains his former position, the only question that matters, in relation to reliance, is what A would have done if B had told him that the promise would not be kept.284 12.102 In many cases, A’s conduct involves not only a real change of position, in the active or negative senses mentioned above, but also the maintenance of the new position taken up. In order to rebut the presumption of reliance in such a case, B must show both (i) that in changing his position, A did not rely on the making of the assurance, and (ii) that in maintaining his new position, he did not rely on B’s not resiling from the assurance, once made. In these cases, therefore, it is not enough for B to ask what A would have done if the assurance had not been made: he must go on to ask what A would have done if the assurance had later been repudiated (ie the Wayling test). 12.103 It is further submitted that the approaches to causation taken in the criticisms of the Wayling test fail to take sufficient account of the maintaining of an existing position as a form of detrimental reliance, and for this reason fail to give 283 See Cooke (1995) 111 LQR 389; McFarlane, The Law of Proprietary Estoppel (2014), [3.114]. Cooke referred to Coombes v Smith [1986] 1 WLR 808 as an example of a case which would have been decided differently on the Wayling test. But Wayling had not then been decided and there was no discussion in Coombes v Smith of the issue whether A’s expectation that B’s promise would be kept played any part in her decision to stay with him. At p 391, Cooke also suggested that, if the Wayling test were correct, it would be satisfied by B’s breach of any promise, including one unrelated to the promise on which A’s proprietary estoppel claim is founded, since any breach of promise by B would cause A to leave B on the ground of B’s untrustworthiness. With respect, however, if A relied on all B’s promises being kept, he must have relied on B’s keeping the particular promise on which A’s estoppel claim was founded. Cf Gardner [2014] Conv 202, at pp 208–9. 284 It is submitted that it is enough that, as in Wayling, A gives credible, unrebutted evidence to the effect that he was induced to remain by his expectation of the promise being kept.

546

B’s responsibility for A’s change of position 12.104

a role to the Wayling test when carrying out the retrospective exercise involved in assessing a proprietary estoppel claim.285 As Lord Kingsdown said in Ramsden v Dyson,286 the purpose of the court’s intervention in a case of proprietary estoppel is the prevention of equitable fraud.287 A’s fundamental complaint is that, by changing his own position, B is seeking to take advantage of him unconscionably. It is submitted that the Wayling test plays an important – and sometimes, as in Wayling itself, a decisive – role in determining whether A’s complaint is justified.

B’s RESPONSIBILITY FOR A’s CHANGE OF POSITION 12.104 In proprietary estoppel, A changes his position in reliance on a misapprehension. B is not, however, necessarily responsible for A’s misapprehension: it may be self-induced or induced by another.288 What matters is B’s responsibility for A’s change of position.289 The conduct of B which may fix him with such responsibility may take a variety of forms: standing by in silence while A unwittingly infringes B’s legal rights; passive or active encouragement of expenditure or alteration of position by A upon the footing of some unilateral or shared legal or factual supposition; or stimulating, or not objecting to, some change of legal position on the faith of a unilateral or shared assumption as to the future conduct of one or other party.290

285 See 12.59, 12.88. In Walton v Walton [1994] CAT No 479, Hoffmann LJ said: ‘it could be inferred that [A’s conduct] was induced by the promise having been made and his not having been told that it would not be kept’. Cooke, n 283, suggests that in Walton v Walton it was only Balcombe LJ who applied the Wayling test and that Hoffmann LJ gave ‘reliance’ its ‘usual meaning’. But it is clear from the above passage that Hoffmann LJ considered the issue of reliance from both points of view. 286 Note 28, at 171. 287 Cf Crabb, n 13, at 195 per Scarman LJ: ‘“Fraud” was a word often in the mouths of those robust judges who adorned the bench in the 19th century. It is less often in the mouths of the more wary judicial spirits today who sit upon the bench. But it is clear that whether one uses the word “fraud” or not, [A] has to establish as a fact that [B], by setting up his right, is taking advantage of him in a way which is unconscionable, inequitable or unjust’. 288 See 12.64, n 174. 289 Where B is not responsible for A’s change of position, a proprietary estoppel claim will fail: A-G v Baliol College, Oxford (1744) 9 Mod 407; Pilling v Armitage (1805) 12 Ves 78; Master of Clare Hall v Harding (1848) 6 Hare 273; Ramsden v Dyson, n 28; Brinnand v Ewens (1987) 19 HLR 415. 290 Taylors Fashions, n 20, at 148, per Oliver J, referring to ‘acquiescence or encouragement’ (meaning, it is submitted, proprietary estoppel): ‘I am not at all convinced that it is desirable or possible to lay down hard and fast rules which seek to dictate, in every combination of circumstances, the considerations which will persuade the court that a departure by the acquiescing party [B] from the previously supposed state of law or fact is so unconscionable that a court of equity will interfere’. See also Ward v Kirkland [1967] Ch 194, at 239 per Ungoed-Thomas J: ‘The fundamental principle of the equity is unconscionable behaviour, and unconscionable behaviour can arise where there is knowledge by the legal owner [B] of the circumstances in which [A] is incurring the expenditure as much as if he was himself requesting or inciting that expenditure. It seems to me that abstention as well as a request or incitement can fall within the principle from which [A]’s equity arises’.

547

12.105  Proprietary estoppel

12.105 It is nevertheless possible to identify two, and, it is submitted, only two,291 bases on which responsibility for A’s change of position can be attributed to B: (i) dishonest standing by; and (ii) encouragement, whether by authoring A’s misapprehension or by other forms of encouragement.

By dishonestly standing by 12.106 Dishonesty is a feature of the classic form of proprietary estoppel, where B knowingly stands by while A mistakenly builds on B’s land.292 The case is one of a unilateral mistake by A and B’s dishonest acquiescence in it.293 12.107 Such a case may also be regarded as one of encouragement. As Lord Eldon LC said in Dann v Spurrier:294 ‘this court will not permit a man knowingly, though but passively, to encourage another to lay out money under an erroneous opinion of title; and the circumstance of looking on is in many cases as strong as using terms of encouragement.’

12.108 This might suggest that the basis for attributing to B responsibility for A’s change of position is ‘encouragement’, whether passive encouragement (by standing by) or active encouragement (by creating the belief or expectation or otherwise positively encouraging A’s change of position).295 There is, however, a theoretical reason for retaining dishonesty as an independent basis for such attribution. This is because it is possible to suppose a case where A is unaware 291 Eg Proctor v Bennis (1887) 36 Ch D 740, where A failed because (i) he had made no mistake as to B’s patent, and (ii) B was not dishonest and did not encourage A’s change of position. Cf Barclays Bank Plc v Zaroovabli [1997] Ch 321, at 331. In the case of a common mistake, where there is no question of attributing responsibility for A’s acts to B on the basis of B’s dishonestly standing by, there can only be a proprietary estoppel if B is the author of A’s mistake or has otherwise encouraged A to act on it. 292 Ramsden v Dyson, n 28, at 140–1, per Lord Cranworth: see n 45 and 12.14. 293 In Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84, at 103, Robert Goff J called this ‘the doctrine of acquiescence’, which ‘appears to be directed towards preventing a person from fraudulently taking advantage of another’s error’. See also Lester v Woodgate [2010] 2 P & CR 21, CA, at [29] per Patten LJ: ‘There is no doubt that if the landowner becomes aware of the work and knows that the other party is carrying it out in the belief that he owns the land in question or has rights over it but fails to object, his silence will be treated as a species of equitable fraud sufficient to found an estoppel’. 294 (1802) 7 Ves 231, at 235–6. Lord Eldon said that ‘the party setting up the estoppel must prove the case by strong and cogent evidence’; he also said that A had to prove ‘bad faith and bad conscience’ against B. 295 Cf Thorner v Major, n 19, at [55] per Lord Walker, referring to the passage quoted above from Dann v Spurrier: ‘if all proprietary estoppel cases (including cases of acquiescence or standing by) are to be analysed in terms of assurance, reliance and detriment, then the landowner’s conduct in standing by in silence serves as the element of assurance’. See also Munt v Beasley [2006] EWCA Civ 370 at [44], where Mummery LJ said: ‘The doctrine applies even though [B] did not realise that the loft was his … Such knowledge is not required if the circumstances are such that it would be unconscionable for [B] to rely on his legal rights to the loft. It would be unconscionable in this case, as [B] acquiesced in the works and [A] suffered detriment in executing them in the belief that the loft was included in the lease’.

548

B’s responsibility for A’s change of position 12.110

of B’s existence and, indeed, unaware that there could be anyone owning property rights inconsistent with his own beliefs or expectations.296 In such a case, it seems artificial to say that, by standing by, B encourages A to change his position:297 he is to be found responsible for A’s change of position, if at all, on the ground that remaining silent in the circumstances is dishonest. 12.109 According to Lord Cranworth in Ramsden v Dyson, there are two stages in the attribution of responsibility to B on the ground of his dishonesty. First, there is a ‘duty to be active and to state [his] adverse title’,298 arising out of B’s perception of A’s mistaken acts. Secondly, it is dishonest of B to remain ‘wilfully passive’, where his motive is to profit by the mistake. A modern, and looser, formulation of this ‘duty to speak’ states that it arises where ‘a reasonable man would expect B, acting honestly and responsibly, to bring the true facts to [A’s] attention’.299

By encouragement 12.110 Apart from dishonestly standing by, B can only be fixed with the responsibility essential to a finding of proprietary estoppel by encouragement. In many cases, this is by an assurance – a representation of fact or law or a promise – but encouragement may also be found in standing by without any finding of dishonesty.

296 The possibility is identified by McFarlane in The Law of Proprietary Estoppel (2014), at [1.12] and [2.45]. He cites no reported case where this has occurred. He rightly rejects any attempt to treat it as involving an implied representation. 297 Fry J’s fifth probandum (see Willmott v Barber (1880) 15 Ch D 96 and 12.23) treats abstention from asserting a legal right as indirect encouragement. McFarlane agrees: op cit, [2.45]. We prefer to say that this need not be encouragement at all. On the other hand, knowing abstention from asserting a legal right may satisfy Lord Cranworth’s test, since, depending on the facts, it may be B’s duty, on seeing A’s mistake, to state his adverse title and dishonest of B not to do so. This view entails that (i) the fifth probandum is imperfectly stated, (ii) encouragement is not the only basis for attributing to B responsibility for A’s change of position, and (iii) dishonest standing by, not involving encouragement, may be an independent basis for such attribution. 298 The ‘duty to speak’ is strictly a misnomer: a ‘breach’ of the ‘duty’ is not an independent wrong, with its own remedy: see Fung Kai Sun v Chan Fui Hing [1951] AC 489, PC, 501. What is meant is that B’s failure to speak, when he is under a ‘duty to speak’, results in the attribution to him of responsibility for what he might have prevented by speaking. 299 Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890, at 903 (Lord Wilberforce); The Lutetian [1982] 2 Lloyd’s Rep 140, at 157; ING Bank NV v Ros Roca SA [2012] 1 WLR 472, CA, at [93] and [94] (Rix LJ); Lester v Woodgate [2010] 2 P & CR 21, at [39] (­Patten LJ). Thus the test of dishonesty is objective: what the reasonable man would expect of B. It has been said that, absent a relationship of good faith or partnership or something akin to a joint enterprise, the court will not impose a duty to speak unless there is ‘impropriety’ on B’s part: see Starbev GP Limited v Interbrew Central European Holdings BV [2014] EWHC 1311 (Comm), at [133]. This may add nothing to the formulation in the text, since the court accepted that ‘impropriety’ may be found in the very act of staying silent, as where a reasonable person would expect B, acting honestly and responsibly, to bring the true facts to A’s attention: ibid. Impropriety here seems to cover the same ground as objectively d­ etermined dishonesty. For further discussion see 1.90 onwards, 3.11 onwards.

549

12.110  Proprietary estoppel

Thus, in cases in which silence is combined with encouraging conduct, as opposed to cases of pure passivity and silence, B may be estopped although he shares A’s mistaken belief.299a Encouragement of what? 12.111 The cases are ambivalent as to the subject of the encouragement: is it A’s expenditure (or other change of position) or his belief or expectation? Encouraging expenditure is the language of Plimmer300 and the fifth probandum in W ­ illmott v Barber.301 In Crabb,302 Scarman LJ applied the fifth probandum, asking whether B had encouraged A’s change of position. Later,303 he asked whether B had encouraged A’s expectation. In Taylors Fashions,304 Oliver J said that encouraging A’s expectation is not necessarily the same as encouraging A’s change of position. The correct position is that, to be prevented by a reliancebased estoppel from denying a proposition to A, B must be responsible both for A’s faith in, and for A’s reliance on, the proposition.305 Responsibility for faith in the proposition is necessary to establish the subject matter of the estoppel, but it is responsibility for A’s change of position that founds it.306 The same conduct may, however, create either responsibility: B may be responsible for A’s faith in the proposition because he has encouraged A’s change of position on the faith of it (by words or acts of encouragement, including standing by, other than encouraging or creating the belief or expectation itself) and, conversely, B may be responsible for A’s change of position because he has encouraged A’s belief or expectation, including the creation of the belief or expectation in A’s mind. Assurances 12.112 The most obvious way in which B may make himself responsible for A’s change of position in reliance on a belief or expectation is to create the belief or expectation in A’s mind by an assurance, ie a representation of fact or law, or a promise.307 The considerations relating to representations as to content, form, unequivocality, construction, causative impact and responsibility that are discussed in Chapters 2 to 5 are applicable also in the context of proprietary estoppel, and reference should be made to those chapters for a full discussion of them. In particular, 299a See 12.83, 1.96–1.98, 3.15, 8.13. 300 See 12.23. 301 (1880) 15 Ch D 96, 105–6. 302 Note 13, at 195. 303 At 197. 304 Note 31, at 145. 305 See 2.1. 306 See 1.5–1.9. 307 Examples of B’s creating in A the belief or expectation on which he later relies include: Campbell v Griffin [2001] EWCA Civ 990 and Griffiths v Williams [1978] 2 EGLR 121 (assuring A of a home for life); Pascoe v Turner [1979] 1 WLR 431, CA (assuring A that the house in which they lived was A’s); In re Basham [1986] 1 WLR 1498 (promising house and contents by will); Jennings v Rice, n 20 (promising a house by will); Gillett v Holt, n 4

550

B’s responsibility for A’s change of position 12.113

on a critical issue as to when and why an assurance that is otherwise legally inconsequential may give rise to an estoppel, in Thorner v Major308 the Court of Appeal expressly, and the House of Lords implicitly, accepted, in the context of proprietary estoppel, the criterion, applicable in estoppel by representation of fact, that the assurance must be one which A reasonably understood B to intend him to be able to rely on,309 which criterion will not be satisfied in a case, such as Cobbe,310 in which B has withheld responsibility for such reliance. In this chapter, the discussion is confined to certain particular issues that have arisen in proprietary estoppel cases. Whether a promise is essential in cases of misprediction 12.113 It has been said that, in the misprediction form of the estoppel, n­ othing less than a promise will do, and that acquiescence in a misprediction, as opposed to acquiescence in a mistake as to present rights, will not found such an ­estoppel.311 In Crabb, however, Lord Denning MR said:312 ‘Short of an actual promise, if B, by his words or conduct, so behaves as to lead [A] to believe that he B will not insist on his strict legal rights – knowing or (promising a farming business by will); Thorner v Major, n 19 and Suggitt v Suggitt [2012] EWCA Civ 1140, CA (promising a farm by will). 308 [2008] EWCA Civ 732. See 4.13, and, in the House of Lords, n 19, Lord Hoffmann at [5]: ‘It was enough that the meaning he conveyed would reasonably have been understood as intended to be taken seriously as an assurance which could be relied upon’; Lord Walker (with concurrence of Lords Scott, Rodger and Neuberger) at [56]: ‘I would prefer to say (while conscious that it is a thoroughly question-begging formulation) that to establish a proprietary estoppel the relevant assurance must be clear enough. What amounts to sufficient clarity, in a case of this sort, is hugely dependent on context’, and his approval of Hoffmann LJ in Walton v Walton (‘Taken in its context, it must have been a promise which one might reasonably expect to be relied upon by the person to whom it was made’); and Lord Neuberger (with the concurrence of Lord Scott) at [77]: ‘In my judgment, those findings clearly indicate that the deputy judge was of the opinion, contrary to the view expressed by the Court of Appeal, that the statements he found to have been made by Peter were reasonably understood by David to indicate that Peter was committing himself to leaving the farm to David, and were reasonably relied on by David as having that effect’. 309 See 5.19 onwards. The test may also be put as whether B actually, or as reasonably understood by A, intended A to act on the assurance (provided that it is understood that it will not be satisfied where A knows or should understand that B is withholding responsibility for such reliance). We suggest that, in proprietary estoppel as well as estoppel by representation of fact, it is sufficient if the evidence establishes that B actually had the relevant intention, as well as where A reasonably understands B to have it; see 4.14. 310 Note 22. See 12.123. 311 See Mee [2009] CFLQ 367, at pp 370–2; McFarlane, The Law of Proprietary Estoppel (2014), [2.19], [2.80] onwards. McFarlane’s argument depends heavily on treating Lord ­Hoffmann’s brief statement in Thorner v Major, n 19, [2] (‘Such a claim … requires [A] to prove a promise or assurance …’) as applying to every misprediction case of proprietary estoppel. We submit that Lord Hoffmann’s statement should be read in the context of the facts of the case. The phrase ‘such a claim’ refers back to [1], where Lord Hoffmann set out A’s claim that ‘by reason of [B’s] assurance and reliance, [B]’s estate is estopped from denying that [A] has acquired the beneficial interest in the farm’, ie a misprediction claim based on an assurance (or promise). Read thus, it does not require a promise or assurance in every misprediction claim. 312 Note 13, at 188. The words ‘Short of an actual promise’ have greater emphasis when contrasted with Lord Denning’s earlier phrase ‘Short of a binding contract’, in reference to promissory estoppel. See further at 189 (Lord Denning MR).

551

12.113  Proprietary estoppel

intending that [A] will act on that belief – and [A] does so act, that again will raise an equity in favour of [A]; and it is for a court of equity to say in what way the equity may be satisfied. The cases show that this equity does not depend on agreement but on words or conduct.’313

12.114 A corollary of the view in 12.113 is that a misprediction estoppel cannot be founded on an expectation induced by someone other than B, eg a selfinduced expectation, or an expectation acquiesced in by B or encouraged by his words or conduct, but without any promise from B. In Scottish & Newcastle Plc v Lancashire Mortgage Corporation Ltd, however, Mummery LJ said:314 ‘the courts will compel effect to be given to acquiescence by [B] in the known expectation of [A] that he has or will have a proprietary right …’

12.115 This is said by Professor McFarlane to be ‘contrary to House of Lords authority and inconsistent with principle’.315 We respectfully disagree, although the practical difference between us may be marginal. The issue is whether B has become responsible to A for A’s expectation. In our view, this requires either B’s dishonest standing by or encouragement by B which may include, but is not limited to, a commitment by B on which A can reasonably rely (eg a promise). We thus prefer, subject to the qualification noted below, the view of Professor Thompson:316 ‘… one does not need to identify an express promise or representation; one simply ascertains when it would be unconscionable for one party to deny an expectation that the other has acted on.’ 313 Cited by the Court of Appeal in Matharu v Matharu (1994) 68 P & CR 93, CA, 99; in Jennings v Rice, n 20, at [19]; and in Thorner v Major [2008] EWCA Civ 732, at [36]. It is true that, at [54], Lloyd LJ said: ‘… there must be a representation which can be categorised as a promise or assurance’, but this too must be read in context, since Lloyd LJ was concerned to distinguish between a statement as to current testamentary intentions and a promise or assurance by B as to what he will do by his will: see [36]. It is submitted that Lloyd LJ did not make, and that it would be wrong to make, a ‘promise’ a sine qua non of every misprediction case of proprietary estoppel. In Thorner v Major at first instance, [2007] EWHC 2422 (Ch), at [18], John Randall QC said that there is no absolute requirement of a promise, but ‘where the assurances relied on fall significantly short of express promises made in terms as such, it will be all the more important for [A] to be able to support his case with clear and substantial detrimental reliance, and perhaps with evidence from others corroborating the meaning and intention which he ([A]) imputes to [B]’s words or actions’. It is submitted that nothing in the Court of Appeal or the House of Lords undermines the correctness of that proposition. Cf 12.64 and n 316. 314 [2007] EWCA Civ 684, at [44]. 315 See The Law of Proprietary Estoppel (2014), [2.19]. The House of Lords authority referred to is Ramsden v Dyson, n 28, and Cobbe, n 22: see [2.24]. In Ramsden v Dyson the misprediction form of the estoppel is only addressed (if it is addressed at all) by Lord Kingsdown, who referred to ‘an expectation, created or encouraged’. This does not require a promise. Cobbe is relied on for the principle that there is no proprietary estoppel if ‘[A] has simply relied on a belief that [B] will act in a particular way in the future’: see [1.26], [2.21]. But again this does not require a promise to found an estoppel on an expectation: in Cobbe, B withheld responsibility for A acting on B’s assurance. This is consistent with B becoming estopped by dishonestly standing by in the knowledge of, or by encouraging, A’s expectation, without making a promise to A. 316 (1983) 42 CLJ 257 at p 277. The qualification reflects Keelwalk Properties Ltd v Waller [2002] EWCA Civ 1076, where it was held that a long-standing practice by a lessor to renew leases

552

B’s responsibility for A’s change of position 12.117

No need for B to represent to A that he cannot withdraw his assurance 12.116 In Sutcliffe v Lloyd317 the Court of Appeal held that it is not a requirement of proprietary estoppel that B represent to A that he cannot withdraw his assurance: ‘[It] is misconceived in law [to suggest] that it is either necessary to the creation of a proprietary estoppel or, at any rate, an important factor in the weighing of what is unconscionable that [B] should have made clear that his promise was irrevocable (or enforceable), that is, unable in law to be revoked (or able in law to be enforced). Equity intervenes to make the promise unable to be revoked (and able to be enforced) not at the time when it is made but only at a significantly later stage, namely in the events both that [A] should have acted to his detriment in reliance upon it and that [B] should have sought unconscionably to withdraw from it. Equity does not require [B], in making the promise, to mis-state the law in this regard. In the words of Robert Walker LJ in Gillett v Holt [2001] Ch 201, at p 229D: “[the trial judge] must, it seems to me, have been exaggerating the degree to which a promise of this sort must be expressly made irrevocable if it is to found an estoppel. As already noted, it is the other party’s detrimental reliance on the promise which makes it irrevocable.” The law requires that the promisor should make clear not that the promise cannot be revoked but that it will not be revoked.’

The clarity of the assurance 12.117 It is trite law that ‘a representation, if it is to found a claim based on proprietary estoppel, must be clear and unequivocal’.318 The topic is discussed fully in Chapter 4, to which reference should be made. on a building estate at a ground rent without taking a premium, or to offer to sell the freehold of the plot to the lessee without taking account of the capital value of the building on the plot, although raising expectations in the minds of lessees, as the lessor knew, was insufficient to raise a proprietary estoppel. At [62], per Jonathan Parker LJ (with the agreement of Rix LJ and Morritt V-C): ‘… a long-standing practice by a landlord of renewing leases at a ground rent cannot in itself justify an expectation on the part of the tenants that that practice will continue in perpetuity. Something more is … required before any question of unconscionability can arise. The mere fact that it may have been reasonable for a tenant to incur capital expenditure on the basis that the likelihood was that the practice would continue into the future cannot … be sufficient to convert the long-standing practice into a representation or assurance sufficient to found a proprietary estoppel’. Echoed in Parker v Parker [2003] EWHC 1846 (Ch), at [213], where Lewison J said that ‘something more [than family tradition] is needed before any question of unconscionability can arise’. It is submitted, however, that the ‘something more’ need not necessarily be a promise to honour the practice or the tradition: it could be B’s dishonest standing by or his encouragement of A in ways not involving a promise. See also Gill v Woodall [2009] EWHC B34 (Ch) (unaffected on this point by [2010] EWCA Civ 1430). 317 [2007] 2 EGLR 13, CA, at [38] per Wilson LJ, with the concurrence of Maurice Kay LJ and Sir Peter Gibson. This is not the same point as that discussed in 12.66 onwards, and n 177 (last sentence), concerning the question whether A must believe that B’s assurance or promise is legally enforceable: there, the focus is on A’s subjective state of mind; here, it is on the content of B’s assurance. 318 Southwell v Blackburn [2014] HLR 47, at [6], [22], [23], citing Lord Scott in Thorner v Major, n 19, at [18]. In Kim v Chasewood Park Residents Ltd [2013] EWCA Civ 239, at [23],

553

12.118  Proprietary estoppel

Promises made ‘in honour’; failed negotiations 12.118 In Ramsden v Dyson,319 Lord Cranworth stated the following principle: ‘If any one makes an assurance to another, with or without consideration, that he will do or will abstain from doing a particular act, but he refuses to bind himself, and says that for the performance of what he has promised the person to whom the promise has been made must rely on the honour of the person who has made it, this excludes the jurisdiction of Courts of equity no less than of Courts of law.’

12.119 The case envisaged by Lord Cranworth is one where B makes it clear that he is free to withdraw his promise (‘he refuses to bind himself’). If, however, B makes it clear that he regards himself as bound, although he is not, a proprietary estoppel may arise if A reasonably proceeds in the expectation that B will perform.320 12.120 A and B may negotiate terms under which A expects to acquire a right over or interest in property. If the negotiations succeed, their rights are determined by their contract. If no contract is concluded, a proprietary estoppel may nevertheless arise if B has encouraged A to believe that a contract has in fact been concluded, or that he is bound by, or will perform, the terms of an agreement, without consideration of whether a legally binding contract has been made.321 B may also create or encourage an expectation in A that, if negotiations fail, A shall have some right or interest in property. 12.121 Where, however, A changes his position in the hope, but without any reasonable expectation, that B will perform terms only agreed ‘in principle’ or ‘subject to contract’ or where the terms are still under negotiation, then no proprietary estoppel will arise.322 In A-G of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd323 the government of Hong Kong and B entered into negotiations for an exchange of properties. Agreement in principle was reached and the government changed its position in the belief that the transaction would proceed.

Patten LJ said: ‘There is no doubt that in order to found a promissory estoppel (in the same way as any other estoppel based on a representation of fact) the representation or promise must be clear and unambiguous’. See also McGuinness v Preece [2016] EWHC 1518 (Ch). Uncertainty of expectation is not, however, an objection to a proprietary estoppel, as was emphasised in Plimmer, n 42, at 713: ‘the equity arising from expenditure on land need not fail merely on the ground that the interest to be secured has not been expressly indicated’. See also Gardner (1999) 115 LQR 438 at pp 450–1. 319 Note 19, at 145–6. 320 Lloyd v Dugdale [2002] 2 P & CR 13, CA (‘a man of his word’). 321 Crabb, n 13, may be such a case. See also Kinane v Mackie-Conteh [2005] WTLR 345, CA and 12.76. 322 An early example is East India Company v Vincent (1740) 2 Atk 83: ‘… where parties have treated upon an agreement for building, and the owner has not come to an absolute agreement; there, if persons will build notwithstanding, they must take the consequence …’. 323 [1987] AC 114, PC. Followed in Akiens v Salomon (1993) 65 P & CR 364, CA. The same line was taken in Pridean v Forest Taverns (1996) 75 P & CR 447, CA, 453–4, and Parker v Parker [2003] EWHC 1846 (Ch), at [218].

554

B’s responsibility for A’s change of position 12.123

The Privy Council rejected the government’s proprietary estoppel claim: it had failed to prove that B had encouraged it to expect that there would be no withdrawal from the agreement in principle.324 12.122 In Pridean Ltd v Forest Taverns Ltd,325 A and B entered into negotiations with the intention of forming a joint venture company which would acquire certain pub premises from B. A entered upon the premises with B’s consent and carried out works. The negotiations continued but, when the terms of participation in the joint venture company were not agreed, B claimed possession. A resisted by claiming in proprietary estoppel that it had changed its position by carrying out works in the belief or expectation, created or encouraged by B, that it was entitled, or would be allowed, to occupy and trade from the premises. The proprietary estoppel claim failed: the terms upon which A believed that it was entitled to remain and manage the premises were never agreed. The only expectation A had was that negotiations would be concluded as anticipated, not that it could remain even if the negotiations failed.326 12.123 In Cobbe,327 A, an experienced property developer, orally agreed with B to purchase a property, owned by B, for redevelopment. The arrangement was that A would develop it and keep any profit subject to overage under which the parties would share equally the gross proceeds in excess of a particular figure. Acting in the belief, encouraged by B, that the property would be sold to him, A spent time and money applying for planning permission. Following the grant of planning permission, B withdrew, demanding new terms. A claimed in proprietary estoppel: B had encouraged him to expect that the property would be sold to him and had then refused to honour the agreement after he had changed his position. A’s claim failed because his only expectation was that the negotiations would be successfully concluded. Lord Scott, with the unqualified concurrence of Lords Hoffmann, Brown and Mance, said:328 ‘The problem is that when [A] made the planning application his expectation was, for proprietary estoppel purposes, the wrong sort of expectation. It was not an

324 At 127–8. Lord Templeman recognised the possibility that, ‘in circumstances at present unforeseeable’, some form of estoppel may arise to prevent both parties from refusing to proceed with a ‘subject to contract’ transaction. In Gillett v Holt, n 4, at 228, Robert Walker LJ described A-G of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd as ‘essentially an example of a purchaser taking the risk, with his eyes open, of … spending money while his purchase remains expressly subject to contract’. See also Cobbe, n 22, at [91]. But cf Gonthier v Orange Contract Scaffolding Ltd [2003] EWCA Civ 873, at [61], per Lindsay J: ‘I see [Gillett v Holt, n 4] as opening up a possibility which Attorney-General of Hong Kong … had seemed to deny … [that] where a very strong case can be made on the facts as to the obviousness and duration of reliance upon a “subject to contract” dealing nonetheless being implemented, … the right to withdraw from the dealing may be lost …’. Cf Haq v Island Homes Housing Association [2011] 2 P & CR 17, CA. 325 (1998) 75 P & CR 447, CA. 326 Cf Pridean Ltd v Forest Taverns Ltd, above, at 454 (Aldous LJ). 327 Note 22. 328 Note 22, at [20]–[21]. The fact that A was an experienced property developer was emphasised throughout the principal speeches in Cobbe: see [5] and [27] (Lord Scott) and [60], [71],

555

12.123  Proprietary estoppel

expectation that he would, if the planning application succeeded, become entitled to “a certain interest in land”. His expectation was that he and [B] … would … agree the outstanding contractual terms to be incorporated into the formal written agreement, which he justifiably believed would include the already agreed core financial terms, and that his purchase, and subsequently his development of the property, in accordance with that written agreement would follow … To the extent that he had an expectation of a “certain interest in land”, it was always a contingent one, contingent not simply on the grant of planning permission but contingent also on the course of the further contractual negotiations and the conclusion of a formal written contract.’329

[75] and [91] (Lord Walker). See also Thorner v Major, n 19, at [96]–[97] (Lord Neuberger). A distinction between commercial and domestic cases has been founded on this: see Whittaker v Bean [2011] EWHC 1479 (QB), at [31]–[32], emphasising that it is the nature of the parties’ dealings, not the nature of the property, which determines whether a case is to be regarded as commercial or domestic. The distinction, which has been questioned (see eg Mee in Bright (ed), Modern Studies in Property Law, vol 6 (2011)), reflects the law of contract when considering an intention to create legal relations, where it affects the burden of proof: see Chitty on Contracts (32nd edn, 2015), Vol 1, [2-168]. In the context of proprietary estoppel, where its relevance was first noted by Hoffmann LJ in Walton v Walton (see 12.125), it does not affect the burden of proof (which remains throughout on A) but concerns the content of A’s expectation: see Lord Scott in Cobbe at [20]–[21]. In the same vein, at [68] Lord Walker said: ‘In the commercial context, the claimant is typically a business person with access to legal advice and what he or she is expecting to get is a contract. In the domestic or family context the typical claimant is not a business person and is not receiving legal advice. What he or she wants and expects to get is an interest in immovable property, often for long term occupation as a home. The focus is not on intangible legal rights but on the tangible property which he or she expects to get. The typical domestic claimant does not stop to reflect (until disappointed expectations lead to litigation) whether some further legal transaction (such as a grant by deed or the making of a will or codicil) is necessary to complete the promised title’. It is submitted that the commercial/domestic distinction may also be relevant to the issue of the reasonableness of A’s reliance on B’s assurance: in Cobbe it was unreasonable of A, an experienced property developer, to change his position in reliance on an ‘agreement in principle’, which he knew to be unenforceable without a contract. As Lord Walker said at [91]: ‘[A]’s case seems to me to fail on the simple but fundamental point that, as persons experienced in the property world, both parties knew that there was no legally binding contract, and that either was therefore free to discontinue the negotiations without legal liability – that is, liability in equity as well as at law, to echo the words of Lord Cranworth LC in Ramsden v Dyson, at 145–146’ (quoted in 12.118). (One may question, however, whether the failure of A’s appeal depended on both parties knowing that there was no legally binding contract: it was surely enough in that case that A knew that both parties were free to withdraw.) See also Capron v Government of Turks & Caicos Islands [2010] UKPC 2, at [36]–[38]. 329 It is interesting to compare the very different (and now presumably discredited) approach of the Court of Appeal, [2006] EWCA Civ 1139, [52], per Mummery LJ: ‘[B’s counsel’s] distinction between, on the one hand, a promise to give a contract and, on the other hand, a promise to grant an interest in property is unconvincing. There is no real difference between them either in principle or on the authorities. The essence of proprietary estoppel is unconscionable conduct in inducing or encouraging [A] to believe that he will obtain an interest in, or right over, [B]’s property. The particular means by which he will acquire the interest (via a formal exchange of contracts, by a transfer or some other means) are irrelevant so long as the assurance made by [B] is not too vague or uncertain to give rise to an expectation or to be made effective in practice’.

556

B’s responsibility for A’s change of position 12.126

He continued later:330 ‘The reason why, in a “subject to contract” case, a proprietary estoppel cannot ordinarily arise is that the would-be purchaser’s expectation of acquiring an interest in the property in question is subject to a contingency that is entirely under the control of the other party to the negotiations … The expectation is therefore speculative.’

12.124 The following points may be derived from these cases: (i) A cannot reasonably regard B as committed to the outcome of ‘subject to contract’ negotiations, or change his position in reliance on an agreement understood to be ‘subject to contract’ or ‘in principle’, so long as the position is, as he knows, that either party is free to withdraw at any time; any such expectation is speculative and involves A in taking the risk of the negotiations failing;331 (ii) it is nevertheless possible (though unlikely as between parties who are experienced or properly advised) for the facts to generate a proprietary estoppel equity if B has so conducted himself as to encourage A reasonably to believe that B has made a commitment to A to perform a ‘subject to contract’ agreement or an agreement ‘in principle’ that B intends that A can rely on; and (iii) A may also have a proprietary estoppel claim if he can prove that he had a reasonable expectation, encouraged by B, that he would acquire a right over or the enjoyment of property if the negotiations were to fail. Promises impliedly subject to a condition or reservation; change of circumstances 12.125 In Walton v Walton,332 Hoffmann LJ recognised that B’s promise or assurance may have to be understood as being qualified or conditional: ‘in many cases of promises made in a family or social context, there is no intention to create an immediately binding contract. There are several reasons why the law is reluctant to assume that there was. One which is relevant in this case is that such promises are often subject to unspoken and ill-defined qualifications. Take for example the promise in this case. When it was first made, [B] did not know what the future might hold. Anything might happen which could make it quite inappropriate for the farm to go to [A].’

12.126 Lord Scott briefly discussed the same issue in Thorner v Major:333 ‘the expected fruits of the representation lie in the future, on the death of [B], and, in the meantime, the circumstances of [B] or of his or her relationship with [A], or both, may change and bring about a change of intentions on the part of [B].’ 330 At [25], citing British Steel Corpn v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504, at 511 (Robert Goff J); Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; London & Regional Investments Ltd v TBI plc [2002] EWCA Civ 355, at [42], (Mummery LJ) and Pridean v Forest Taverns, n 325 above. 331 It is also possible to frame the issue in terms of unconscionability: in good conscience, A cannot make an equitable demand on B, on the grounds of his allegedly unconscionable departure from a non-binding agreement, when he, A, has reserved precisely the same right not to ­perform. See 12.137. 332 [1994] CAT No 479. See further n 328. 333 Note 15, at [19].

557

12.127  Proprietary estoppel

12.127 He postulated a situation in which B, having promised A the farm, came to require full-time care and so needed to sell assets to meet the costs of care. He doubted whether A’s proprietary estoppel claim could prevent a sale.334 Lord Walker and Lord Neuberger touched on the same issue.335 Lord Walker declined to speculate on what might have been, given the retrospective nature of the assessment required by proprietary estoppel. Lord Neuberger considered it possible, without deciding, that in the assumed circumstances B could have gone back on his assurances to A, without paying compensation, provided that his change of mind was attributable to, and could be justified by, a change of circumstances. 12.128 It is submitted that there are two further relevant considerations: (i) whether in all the circumstances (including, for example, B’s financial circumstances and his state of health) it is reasonable for A to expect to receive the promised property regardless of changes in B’s circumstances; and (ii) even if it is reasonable for A to form the expectation of receiving the property regardless of changes in B’s circumstances, whether in all the circumstances (which might include, for example, some foreseeable event) it would be against conscience for A to insist on receiving anything at all or anything more than compensation for his detriment.336 The revocability of testamentary assurances 12.129 In Taylor v Dickens,337 an elderly lady, B, said that she would leave her estate to A, the gardener, and did so, but then changed her mind (without telling him) after he had stopped charging her for his help with gardening and odd jobs. B had told A ‘not to count his chickens before they were hatched’. Judge Weeks QC, relying on A-G of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd,338 rejected A’s claim, saying: ‘it is not sufficient for [A] to

334 At [19]. Lord Scott concluded the point with the comment: ‘it is an odd sort of estoppel that is produced by representations that are, in a sense, conditional’. He went on to suggest that such cases would be better addressed ‘via the principles of remedial constructive trusts’. See further 12.197. 335 At [65] (Lord Walker) and [89] (Lord Neuberger). 336 See further 12.137. 337 [1998] 1 FLR 806. See Swadling [1998] RLR 220; Dixon [1999] Conv 46; Thompson [1998] Conv 210; Thompson [2001] Conv 78. Swadling’s comment, quoted by Robert Walker LJ with apparent approval, was: ‘[Taylor v Dickens] is clearly wrong, for the judge seems to have forgotten that the whole point of estoppel claims is that they concern promises which, since they are unsupported by consideration, are initially revocable. What later makes them binding, and therefore irrevocable, is the promisee’s detrimental reliance on them. Once that occurs, there is simply no question of the promisor changing his or her mind’. But see the persuasive criticism in Gardner [2014] Conv 202, at footnote 24. As Gardner points out, at p 207, the Court of Appeal in Thorner v Major [2008] EWCA Civ 732 discerned in the findings of the trial judge only a revocable assurance, and so denied relief; while the House of Lords, n 19, read the judge’s findings differently and restored the relief awarded at trial. See further 4.13–4.33; also Mee [2009] CFLQ 367, at pp 370–1. 338 [1987] AC 114, PC. See 12.121.

558

B’s responsibility for A’s change of position 12.131

believe that he is going to be given a right over [B]’s property if he knows that [B] has reserved the right to change his mind. In that case, [A] must show that [B] created or encouraged a belief on [A]’s part that [B] would not exercise that right’. In reliance on this, at first instance in Gillett v Holt,339 Carnwath J rejected A’s claim on the ground that there was nothing in B’s representations to A ‘which could reasonably be construed as an irrevocable promise that [A] would inherit, regardless of any change in circumstances’. In the Court of Appeal in Gillett v Holt, Robert Walker LJ disapproved of Taylor v Dickens, saying:340 ‘the inherent revocability of testamentary dispositions (even if well understood by the parties, as [A] candidly accepted that it was by him) is irrelevant to a promise or assurance that “all this will be yours” … Even when the promise or assurance is in terms linked to the making of a will … the circumstances may make clear that the assurance is more than a mere statement of present (revocable) intention, and is tantamount to a promise.’

Other forms of encouragement 12.130 Standing by may itself constitute a form of encouragement.341 12.131 In addition, standing by and active encouragement may combine together in a particular case so as to make B responsible for A’s change of position. If B, having promised A the farm, changes his mind and decides not to tell A, dishonesty and encouragement may both play their part in attributing responsibility to B. Or, in a case where B acquiesces innocently in A’s change of position, B’s acquiescence may nevertheless assist, with other forms of encouragement, in the attribution of responsibility to B. Thus in Thorner v Major,342 the fact that little was said on the subject of the inheritance of the farm, but what was said had great significance for both B and A, with the unspoken assumption of inheritance being a shared feature of their shared working lives, combined to reinforce the few and ambiguous assurances that B made to A.343

339 [1998] 3 All ER 917, at 932. Another case to follow Taylor v Dickens was Flinn v Flinn [1999] VSCA 109, at [75] (per Brooking JA): ‘If a woman says to her niece, “It’s time I made a new will. I’ll see the solicitor soon. I’m going to leave you my house. But don’t forget that I might change my mind again and leave it to your brother next year”, any claim to an equity by proprietary estoppel would very likely break down at the start. This would be on the basis there had never been a ­promise to leave property by will, only an intimation of intention to make a will coupled with a ­disclaimer of an intention not to revoke it’. 340 Note 4, at 227–8. See also 12.116. 341 See 12.107. 342 Note 19. See further 4.16, 4.27 onwards. 343 The factually common situation, where representation and standing by combine to reinforce a promise, provides another reason why we do not adopt McFarlane’s unravelling of proprietary estoppel into three distinct ‘strands’ in The Law of Proprietary Estoppel (2014).

559

12.132  Proprietary estoppel

12.132 Any conduct on B’s part that is susceptible of the construction that B is ad idem with A as to A’s belief or expectation, or some aspect of it, is capable of constituting encouragement.344

UNCONSCIONABILITY 12.133 It is not necessary that B should have been guilty of unconscionable conduct in permitting or encouraging A to have the misapprehension on which he relied: it is enough if, in all the circumstances, it is unconscionable for B to resile from it.345 The ‘fraud’346 or unconscionable act, which B perpetrates by changing his own position, arises after the event, when he seeks to rely on his strict legal rights to defeat the expectations which he has encouraged in A.347 12.134 In Cobbe, Lord Scott, with the unqualified concurrence of Lords Hoffmann, Brown and Mance, considered B’s conduct to have been ­ ­unconscionable.348 He insisted that this fact was insufficient for the success of A’s proprietary estoppel claim: ‘unconscionability of conduct may well lead to a remedy but, in my opinion, proprietary estoppel cannot be the route to it unless the ingredients for a proprietary estoppel are present.’

12.135 Lord Walker alone addressed B’s argument that, even if the elements for an estoppel were in other respects present, it was not unconscionable for her to insist on her legal rights.349 He described unconscionability as ‘an objective

344 Examples include: Huning v Ferrers (1711) Gilb Rep 85 (directing A to keep a mill on B’s land in repair); Jackson v Cator (1800) 5 Ves Jun 688 (meeting A’s surveyor and consenting to the cutting down of trees); Rochdale Canal Company v King (1853) 16 Beav 630 (directing B’s engineer to supervise A’s works); Mold v Wheatcroft (1859) 27 Beav 510 (standing by and allowing A to erect a building on B’s land, and afterwards agreeing the rent to be paid for it); Cotching v Bassett (1862) 32 Beav 101 (consenting to the alteration of ancient lights); Dillwyn v Llewelyn (1862) 4 De G F & J 517 (inducing A to believe that he owns land by executing an informal memorandum of gift and acquiescing in A’s building a house on it); Plimmer, n 42 (requesting A to carry out works on B’s land); Michaud v City of Montreal [1923] UKPC 31 (offering land to A as a gift, and acquiescing in A’s taking possession and spending money on it); Ward v Kirkland [1967] Ch 194 (‘inciting’ A to spend money); Hammersmith and Fulham LBC v Top Shop Centres Ltd [1990] Ch 237 (demanding and accepting rent from A under subleases extinguished by the forfeiture of a headlease, and requiring A to insure the premises). 345 Taylors Fashions, n 20, at 151–2, 154–5; Lim v Ang [1992] 1 WLR 113, PC, at 117. Thus the issue of unconscionability is only an essential ingredient of proprietary estoppel at the time when B repudiates or otherwise fails to give effect to A’s belief or expectation: see 12.11. 346 See 12.13, 12.16, 12.23, 12.103, n 287. 347 Crabb, n 13, at 195 (Scarman LJ). See also Walton v Walton [1994] CAT No 479 per H ­ offmann LJ: ‘equitable estoppel … looks backwards from the moment when the promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept’ (emphasis added). 348 Note 22, at [28]. 349 Note 22, at [92].

560

Defences 12.138

value judgment on behaviour (regardless of the state of mind of the individual in question)’.350 It plays ‘a very important part in the doctrine of equitable estoppel, in unifying and confirming, as it were, the other elements’.351 He proceeded to say, in a passage with which we respectfully agree: ‘If the other elements appear to be present but the result does not shock the conscience of the court, the analysis needs to be looked at again. In this case [B]’s conduct was unattractive. She chose to stand on her rights rather than respecting her non-binding assurances, while [A] continued to spend time and effort … in obtaining planning permission. But [A] knew that [B] was bound in honour only, and so in the eyes of equity [B’s] conduct, although unattractive, was not unconscionable.’

12.136 There is, it is submitted, much to be said for Lord Walker’s view, not discussed by Lord Scott, as to the place of unconscionability in the doctrine of proprietary estoppel. It is clearly right to regard it as involving an objective evaluation of conduct. Moreover, it is helpful to see it as operating at a different and higher level as compared with the other elements. 12.137 It is further submitted that unconscionability plays a part in judging the demand now made by A on B. For example, in a case like Cobbe,352 there was a lack of mutuality in the positions of A and B: neither was legally bound to the other, and each of them knew it, yet A claimed to be entitled to enforce their ‘agreement in principle’ through proprietary estoppel, a claim which B could never have made against A, in view of B’s lack of any proprietary expectation. Again, when considering an unforeseen change in B’s circumstances after the making of an assurance, the assessment of A’s proprietary estoppel claim of an unconscionable change of position by B includes asking whether and how far, as a matter of conscience, A’s claim ought to be allowed in B’s current situation. In neither case is there a rule of law to which B can appeal: the issue is, rather, as to the effect these circumstances, viewed in the round, have on what the conscientious response of B should be towards A.353

DEFENCES Equity satisfied 12.138 It is axiomatic that it is a defence for B to show that he has already satisfied A’s equity, eg by meeting or offering to meet his expectation, or by providing or offering to provide a substitute for it. It has been argued, however, that B has a

350 Emphasis in the original. But this is to be understood as part of a retrospective inquiry which normally only arises after the time when B repudiates or otherwise fails to give effect to A’s belief or expectation. 351 See n 349 and 1.64–1.85. 352 Note 22. 353 Thus lack of mutuality is not a reason in itself for rejecting the argument set out in 12.152 onwards with respect to s 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989.

561

12.138  Proprietary estoppel

defence to a proprietary estoppel claim if he has provided or offered compensation to A for his detriment. The argument is that, if A’s detriment is compensated, an essential element in a proprietary estoppel claim is taken away.354

General equitable defences 12.139 Since proprietary estoppel is an entirely equitable doctrine and relief is discretionary, it is vulnerable to all the usual equitable defences.355 Thus, in seeking equity, A must do equity, must come with clean hands,356 and must not be guilty of laches.357 For example, if A claims that the effect of a proprietary estoppel is to bind B to honour a non-contractual agreement between the parties, relief to A may be conditional on his performance of his side of the agreement.358 Again, A’s behaviour towards B may deny relief to A,359 or there may be features of the parties’ dealings which make particular equitable relief inappropriate.360 An unsuccessful attempt to run a laches defence was made in Joyce v Epsom and Ewell Borough Council.361 12.140 The effect of a successful equitable defence may be either to defeat the proprietary estoppel claim, denying A relief altogether, to deny particular

354 See Robertson [2008] Conv 295, pp 296, 302. But see 12.179, n 454. See also Davies v Davies [2016] EWCA Civ 463, at [39] (Lewison LJ, with the concurrence of Underhill and Patten LJJ) and n 472. On the question whether B can be personally liable to A after having disposed of the property in favour of a person who is not bound by A’s equity, see 12.178. 355 Williams v Staite [1979] Ch 291, CA, at 299 per Goff LJ (with whom Cumming-Bruce LJ agreed): ‘It is said that the court has to determine when the matter is brought before it whether there is any equity to restrain the legal owner from exercising his legal right and, therefore, where there has been … impropriety in relation to the property by the party setting up the equity, the court has to consider whether he comes with clean hands so as to be entitled to equitable relief. If that be right in law and on the facts, it is a complete answer, and the party seeking to set up the equity is left with no right at all and the legal owner is at liberty to exercise his legal right. If it were necessary to decide that novel point, I am inclined to think that it is right in principle …’. 356 Eg J Willis & Son v Willis [1986] 1 EGLR 62, CA: false evidence at trial (a promissory ­estoppel case but A was seeking equitable relief and so the principles are the same); Pridean Ltd v Forest Taverns Ltd (1998) 75 P & CR 447, CA, at 457 (Ward LJ): claim based on a forged letter rejected; Gonthier v Orange Contract Scaffolding Ltd [2003] EWCA Civ 873, at [33]: false evidence at trial. 357 Reference may be made to Snell’s Equity (33rd edn), [5-009], [5-010] and [5-011]. 358 Eg Herbert v Doyle [2009] WTLR 589, at [73]. 359 In Yeo v Wilson (27 July 1998, unreported), relief was refused in any event on the ground that A’s relationship with B involved ‘deliberate persistent and oppressive manipulation of a vulnerable old man by a greedy and self-obsessed lover who had established a powerful psychological hold over him’. 360 McGuane v Welch [2008] 2 P & CR 24, CA, at [44] (Mummery LJ), [51] (Arden LJ), [57] (Sir Peter Gibson). 361 [2012] EWCA Civ 139, at [45] per Davis LJ: ‘it is both counter-intuitive and unprincipled that an apparent right arising and exercised in reliance on the assurance given by the council to [A] has become something of a “lesser” right, and the equity arising has somehow diminished, simply by virtue of long exercise’. Cf Williams v Greatrex [1957] 1 WLR 31, CA.

562

Defences 12.144

relief, or to reduce the relief given. It may, of course, be possible to discuss these cases simply in terms of unconscionability, without reference to the maxims of equity.362 12.141 Once the equity has been satisfied, however, by an order of the court, it is not forfeited or lost by improper conduct.363

Informality 12.142 The general topic of illegality, which encompasses the subject matter of this section, namely non-compliance with statutory formalities, is considered in Chapter 7, to which reference should be made. Section 1 of the Law of Property (Miscellaneous Provisions) Act 1989 12.143 Section 1 lays down the formal requirements for the due execution of a deed. In the case of execution by an individual, these include the witnessing of his signature.364 12.144 Suppose that B makes a deed granting A a right of way over B’s land. The deed fails to satisfy the requirements of section 1. A nevertheless believes, and is encouraged by B to believe, that the deed is effective. On the faith of that belief, A changes his position. Assume that all the conditions for both an estoppel by representation of fact and a proprietary estoppel are satisfied. A question arises whether section 1 provides B with a defence to (i) a claim to enforce the ‘deed’, assisted by an estoppel by representation of fact or estoppel by convention, or (ii) a proprietary estoppel claim.

362 See 12.133 onwards. 363 Williams v Staite, above, per Goff LJ (Cumming-Bruce LJ agreeing): ‘Excessive user or bad behaviour towards the legal owner cannot bring the equity to an end or forfeit it. It may give rise to an action for damages for trespass or nuisance or to injunctions to restrain such behaviour, but I see no ground on which the equity, once established, can be forfeited. Of course, the court might have held, and might hold in any proper case, that the equity is in its nature for a limited period only or determinable upon a condition certain. In such a case the court must then see whether, in the events which have happened, it has determined or it has expired or been determined by the happening of that condition’. 364 In Deeds and Escrows (Law Com No 163), the Law Commission recommended at [2.15] that ‘failure to have a signature witnessed and attested should have the effect that the signatory would not prima facie be bound but that the deed, if capable of operating without that signatory, would still be valid. The signatory should still be bound if he took the benefit of the deed or through estoppel if someone else had acted on the assumption that the deed was properly executed’. TCB Ltd v Gray [1986] Ch 621 was cited. The recommendation was not included in either the draft Bill or the Act, suggesting that the Commission believed that no legislation was required for this recommendation.

563

12.145  Proprietary estoppel

12.145 The availability of estoppel to validate a formally invalid deed depends on the nature of the non-compliance with the statutory requirements. Where the non-compliance is not apparent on the face of the instrument, general social policy may not require the exclusion of estoppel. Thus, where the instrument appears to be regular and complete on its face and duly executed, and the noncompliance consists in the attestation not complying with section 1(3)(a), an estoppel may succeed, since the public interest lies in the requirement for a signature of the maker of the deed, and not that the person attesting the signature should be present when the document was signed.365 Where, on the other hand, an instrument purporting to be a deed is not complete and regular on its face, eg owing to the omission of the attestation of the signature of an individual purporting to execute the deed, the invalidity cannot be overcome in reliance on an estoppel.366 12.146 The cases referred to above were cases where A relied on the ‘deed’ by invoking an estoppel by representation of fact or by convention.367 In a proprietary estoppel claim, by contrast, A does not seek to enforce a common law claim on the ‘deed’ but seeks the protection of equity. As there is no provision in section 1 similar to section 2(5),368 it is possible that the policy considerations underlying the two sections are not the same. But since estoppel is not excluded in limine from validating a formally invalid deed,369 it may nevertheless be the position that a proprietary estoppel claim is not excluded, whatever the nature of the non-compliance.370 If the net effect is to claim a right in or over property, we suggest that the discretion as to the just result of such an estoppel should be recognised. Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 12.147 Section 2 provides that a contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each. The section superseded and repealed section 40 of the Law of Property Act 1925. The doctrine of part-performance, which depended on the making of a valid, albeit unenforceable, parol contract,371 was

365 Shah v Shah [2002] QB 35, CA, at [21], [33]. 366 Briggs v Gleeds [2015] Ch 212, at [43]. 367 In such a case, A claims or defends on an ‘assumed’ state of affairs (see n 14), ‘as if’ the instrument were a deed complying with s 1. 368 See 12.147. 369 Shah v Shah, above. 370 The nature or extent of the non-compliance may nevertheless make it unreasonable for A to rely on the instrument. See also n 364. The views of the Law Commission are, however, strictly irrelevant, since, while reference to its reports is permitted in order to identify the defect that the change in the law is intended to address (cf 12.153), no relevant defect is identified in Law Com No 163. 371 Eg Maddison v Alderson (1883) 8 App Cas 467, HL.

564

Defences 12.150

necessarily abolished.372 Section 2(5) provides that section 2(1) does not affect the creation or operation of resulting, implied or constructive trusts.373 12.148 Suppose that A and B make an agreement for a disposition of an interest in land which fails to satisfy the requirements of section 2. There is, therefore, no contract. A nevertheless believes, and is encouraged by B to believe, that B is contractually bound. On the faith of that belief, A changes his position. Assume that all the conditions for both an estoppel by representation of fact and a proprietary estoppel are satisfied. The question is whether section 2 provides B with a defence to (i) a contractual claim assisted by an estoppel by representation of fact or an estoppel by convention as to a fact, or (ii) a proprietary estoppel claim. 12.149 There is a powerful argument that the contractual claim should fail for non-compliance with section 2. In Daejan Properties Ltd v Mahoney,374 ­Bingham and Hoffmann LJJ agreed that a person cannot be estopped from denying something to which, on the proper construction of a statute, he could not have agreed in the first place. Parties cannot agree that section 2 shall not apply to them or that they shall be contractually bound otherwise than in compliance with the statutory requirements.375 Thus there appears to be no scope for an estoppel by representation of fact or by convention as to a fact to make good a contractual claim based on an oral agreement or one embodied in a written instrument which, on its face, does not comply with section 2(1).376 12.150 As to the proprietary estoppel claim, Lord Scott said in Cobbe:377 ‘My present view … is that proprietary estoppel cannot be prayed in aid in order to render enforceable an agreement that statute has declared to be void.

372 Nata Lee Ltd v Abid [2015] 2 P & CR 3, CA, at [13], per Briggs LJ, obiter. The obiter view of Neill LJ in Singh v Beggs (1996) 71 P & CR 120, CA, at 122, doubting whether the doctrine of part-performance had been abolished, must be regarded as unsound. 373 The need for s 2(5) is far from obvious. Section 2(1) lays down the conditions for making a ‘contract’, ie the creation of bi- or multi-lateral consensual obligations recognised and primarily enforced at common law. Resulting, implied and constructive trusts do not depend on establishing a common law contract. See further Owen and Rees [2011] Conv 495. 374 [1995] 2 EGLR 75, CA, at 77, 79. 375 Eg Hutchison v B & D F Ltd [2009] L & TR 12, at [68], where the claimant was suing in contract. See also M P Kemp Ltd v Bullen Developments Ltd [2014] EWHC 2009 (Ch), at [123]: a variation of a contract within s 2 cannot be effected by a promissory estoppel; approved in Dudley Muslim Association v Dudley MBC [2016] 1 P & CR 10, CA, at [34], where Lewison LJ (with the concurrence of Treacy and Gloster LJJ) also said at [33]: ‘it would be surprising if one could do by promissory estoppel what one could not do by informal contract’. 376 Cf 12.145. An instrument may appear to comply with s 2(1) but may fail to do so because (i) it is signed by an unauthorised agent or (ii) it omits an expressly agreed term. The former may be overcome by estoppel arising out of a representation of fact by B that the signer has B’s authority to sign on his behalf, thereby conferring on the signer apparent authority to sign. It would seem that (ii) could not be cured by such an estoppel, though it might be cured by either rectification under s 2(4) or via the collateral contract doctrine: see Chitty on Contracts (32nd edn, 2015), [5-030]. 377 Note 22, at [29]. This passage was expressly obiter (‘It is not necessary in the present case to answer this question … My present view …’). The only member of the Appellate C ­ ommittee

565

12.150  Proprietary estoppel

The proposition that an owner of land [ie B] can be estopped from asserting that an agreement is void for want of compliance with the requirements of section 2 is, in my opinion, unacceptable. The assertion is no more than the statute provides. Equity can surely not contradict the statute.’

12.151 There is a series of decisions where effect was given to agreements not complying with section 2 on the basis that they gave rise to proprietary ­estoppel equities which also took effect as constructive trusts, thereby escaping from ­section 2(1) through the door left open by section 2(5).378 12.152 It is submitted that Lord Scott’s words, although addressed to proprietary estoppel, in fact only apply to the contractual claim. Section 2 only makes the agreement void as a contract: it prevents proof of a contract, but does not purport to deprive the parties’ dealings of all legal or equitable effect. If A sues B in proprietary estoppel, he does not need to prove a contract: he seeks neither to estop B from asserting that the agreement fails to comply with section 2 nor to enforce the agreement as a contract at common law;379 he claims the benefit of an equity and seeks equitable protection.380 The fact that section 2(5) does not

to consider it in Thorner v Major, n 19, was Lord Neuberger. At [99], he thought that s 2 might have presented A with a problem: ‘he was seeking to invoke an estoppel to protect a right which was, in a sense, contractual in nature … and s 2 lays down formalities which are required for a valid “agreement” relating to land’. In Lord Neuberger’s view, however, s 2 had no impact on ‘a straightforward estoppel claim without any contractual connection’. 378 The judgment of Robert Walker LJ in Yaxley v Gotts [2000] Ch 162 has played a major role in fostering this view. See also Kinane v Mackie-Conteh [2005] WTLR 345, CA; Oates v Stimson [2006] EWCA Civ 548, at [15]; Scottish & Newcastle Plc v Lancashire Mortgage Corp Ltd [2007] EWCA Civ 684, at [55] – all decided before Cobbe in the House of Lords. Herbert v Doyle [2010] EWCA Civ 1095 is a post-Cobbe example. But see Dixon in Cooke (ed), Modern Studies in Property Law, vol 2 (2003) and [2005] Conv 247, pp 253–4. 379 Actionstrength Ltd v International Glass Engineering In.Gl.En SpA [2003] 2 AC 541, HL, is not inconsistent with the proposition in the text. (Lord Neuberger’s contrary view in Kinane v Mackie-Conteh, above, at [45] is, with respect, unjustified, and does not stand with his own extra-judicial view, with which we respectfully agree: see 12.156.) Actionstrength was a claim in contract on an oral contract of guarantee which A sought to enforce, despite s 4 of the Statute of Frauds 1677, on the basis that B, the guarantor, was estopped from relying on the statute. The form of estoppel relied on was estoppel by representation of fact. Thus it was a claim arising out of an assumed state of facts (see n 14). If the court had acceded to the claim, it would have enforced a transaction which the statute declared to be unenforceable. Rejecting A’s appeal, the House of Lords did not decide that an estoppel could never succeed, only that, on the facts as pleaded, A had not received any encouragement from B to believe that the guarantee would be honoured despite non-compliance with the statute or that the statute did not apply: at [9] (Lord Bingham), [12] (Lord Woolf), [28] (Lord Hoffmann), [35] (Lord Clyde) and [54] (Lord Walker). No proprietary estoppel claim was made (see [47]), but neither was one possible, since A’s expectation was of receiving money, not some identified property of B’s: see 12.35. Had it been possible for A to claim in proprietary estoppel, the claim would have been one arising out of an actual state of facts (see n 14), and the court would not have been invited to contradict the statute, any more than a claim to satisfy an equity arising out of part-performance : see [47] (Lord Walker). 380 See Kinane v Mackie-Conteh, above, at [29], per Arden LJ (with the concurrence of Thorpe LJ): ‘The cause of action in proprietary estoppel is … not founded on the unenforceable agreement but upon the defendant’s conduct which, when viewed in all relevant respects,

566

Defences 12.153

refer to proprietary estoppel does not mean that a proprietary estoppel can only escape section 2(1) if it takes effect by way of a constructive trust.381 12.153 The possibility of the satisfaction of A’s equity by the same relief as he would obtain when enforcing the agreement as a contract gives rise to a different question, namely whether this use of proprietary estoppel infringes the policy, as opposed to the letter, of the statute.382 There are, however, two answers to this. First, section 2(5) itself demonstrates that it is not the policy of the statute that all informal land agreements are to be without effect in equity. Equity is not being invoked in order to contradict the statute, since the statute is not aimed at equitable relief. Secondly, the Law Commission regarded the abolition of part-performance as a principal objective of its proposed reforms, but recognised that this might cause injustice in particular cases.383 It expressed the confident expectation that estoppel – by which it meant, or at any rate included, proprietary estoppel – would ‘achieve very similar results where appropriate to those of part-performance’.384 In Yaxley v Gotts, Clarke and Beldam LJJ relied on the report of the Law Commission in order to identify the mischief at

is unconscionable’. (The Court of Appeal went on to find a constructive trust, and thus an escape from s 2(1) via s 2(5), but in our submission this was unnecessary.) Cf Cobbe [2006] 1 WLR 2981, CA, at [68], where Mummery LJ said: ‘The section is irrelevant to an action to enforce a cause of action for proprietary estoppel which does not depend on the existence of a concluded agreement for sale or the enforcement of it …’. The implication is that proprietary estoppel is barred by s 2(1) if there is a ‘concluded’ agreement, unless, presumably, it takes effect as a constructive trust and s 2(5) provides the escape route. We would say, in respectful agreement with Arden LJ, that a claim in proprietary estoppel does not depend on whether or not the agreement is ‘concluded’, since it never seeks the enforcement of the agreement as a contract. Cf also Herbert v Doyle [2009] WTLR 589, at [73]–[74], where it was held that if A were to satisfy the other terms of the agreement (which was void as a contract by reason of s 2), then ‘he would in principle be entitled to require’ B to transfer the subject matter of the agreement; sed quaere, since proprietary estoppel results only in equitable protection and discretionary relief, not an ‘entitlement’ to the enforcement of the agreement as a contract. See also Muhammad v ARY Properties Ltd [2016] EWHC 1698 (Ch), at [49]. 381 Yaxley v Gotts [2000] Ch 162, CA, at 181, per Clarke LJ: ‘The Act neither expressly saves the operation of the doctrine of proprietary estoppel nor expressly provides that it should have no application’. Cf United Bank of Kuwait Plc v Sahib [1997] Ch 107, CA, at 144. Cf also Kinane v Mackie-Conteh, above, at [41], per Neuberger LJ: ‘in my view, it would be wrong to give an artificially wide (or indeed an artificially narrow) meaning to the words of section 2(5) of the 1989 Act’. In Cobbe, n 22, [29], Lord Scott said: ‘[Section 2(5)] expressly makes an exception for resulting, implied or constructive trusts … Proprietary estoppel does not have the benefit of this exception’. 382 Godden v Merthyr Tydfil Housing Association [1997] NPC 1, CA, a case of estoppel by convention, where attention was drawn to the public policy principle set out in what is now para 310 of Halsbury’s Laws of England, vol 47 (2014): it was held that the estoppel could not stand against s 2. But see Bankers Trust Company v Namdar [1997] EGCS 20, where Godden v Merthyr Tydfil Housing Association, above, was seriously doubted. See also McCausland v Duncan Lawrie Ltd [1997] 1 WLR 38, CA, at 50. See also Dixon in Cooke (ed), Modern Studies in Property Law, vol 3 (2005). 383 Thompson [1994] Conv 233. 384 Law Com No 164, [5.4], [5.5]. There are two oddities in this: (i) In [4.2] the Commission considered the ‘potential lack of mutuality’ in part-performance as being ‘especially ­indefensible’. In fact, in a parol agreement for a ­disposition of an interest in land, part-performance was

567

12.153  Proprietary estoppel

which the statute was directed or the defect in the law which its recommendations were intended to correct. After agreeing that a proprietary estoppel taking effect as a constructive trust was saved by section 2(5), Clarke LJ provided an alternative ground for his decision, namely that public policy did not require that proprietary estoppel cannot be invoked ‘in so far as its principles are different from those relating to constructive trusts’.385 Beldam LJ held that the Commission’s proposals were not intended to affect the power of the court to give effect in equity to the principles of proprietary estoppel and constructive trusts. 12.154 This view of the ratio of Yaxley v Gotts was endorsed by the Court of Appeal in McGuane v Welch.386 There Mummery LJ, with the agreement of Arden LJ and Sir Peter Gibson, allowed a proprietary estoppel claim arising out of an informal contract for the sale of land despite section 2(1), saying:387 ‘I agree that the absence of a written agreement for sale is not a problem. The fact that the agreement found by the judge was itself unenforceable by reason of s 2 of the Law of Property (Miscellaneous Provisions) Act 1989 would not, as a matter of public policy, preclude reliance on the doctrine of proprietary estoppel (or constructive trust): see Yaxley v Gotts [2000] Ch 162.’

available, on grounds of mutuality, to disponor as well as disponee. It is proprietary estoppel that involves a lack of mutuality: only the intended disponee of the land can bring a claim in proprietary estoppel. (Cf 12.35 and n 118.) (ii) In [4.3] the Commission recommended that proprietary estoppel be excluded ‘from the main recommendation’, but neither the draft Bill nor the Act refers to it as such. Beldam LJ, who chaired the Commission at the time of the report, provided no enlightenment on this point in Yaxley v Gotts beyond asserting, at 193, that s 2(5) ‘effectively excludes from the operation of the section cases in which an interest in land might equally well be claimed by relying on constructive trust or proprietary estoppel’. 385 In other words, despite s 2(1), proprietary estoppel can be invoked without reliance on s 2(5). 386 [2008] 2 P & CR 24, CA, [37], [48], [55]. The decision preceded Cobbe, n 22, by 20 days. It was not referred to in Cobbe or in Herbert v Doyle [2010] EWCA Civ 1095. The latter case, discussing ‘Cobbe-compliance’ at [6], [46], [57], [85] and [86], seems to treat Lord Scott’s expressly obiter dictum in Cobbe at [29] as stating a binding proposition of law. Moreover, McGuane v Welch was not cited. (McGuane v Welch may itself be said to have been decided per incuriam, since, according to the report, of the pre-Cobbe cases mentioned in n 378 only Yaxley v Gotts was cited.) 387 At [37]. In fact, the possibility of a constructive trust was expressly rejected on the ground that it was inconsistent with the parties’ agreement: [35]. The Court of Appeal could not, therefore, have been relying on s 2(5) as the means of escape from s 2(1), unless it was adopting Beldam LJ’s approach in Yaxley v Gotts (‘… the plain words of s 2(5) … were included to preserve the equitable remedies to which the Commission had referred’ (which included proprietary estoppel). (Beldam LJ had earlier noted, at 192: ‘There are circumstances in which it is not possible to infer any agreement, arrangement or understanding that the property is to be shared beneficially but in which nevertheless equity has been prepared to hold that the conduct of an owner in allowing a claimant to expend money or act otherwise to his detriment will be precluded from denying that the claimant has a proprietary interest in the property. In such a case it could not be said that to give effect to a proprietary estoppel was contrary to the policy of s 2(1) of the Act of 1989. Yet it would be a strange policy which denied similar relief to a claimant who had acted on a clear promise or representation that he should have an interest in the property’. It is clear, therefore, that he regarded s 2(5) as an escape route for proprietary estoppel independently of constructive trust.)

568

Defences 12.158

12.155 The High Court has also decided that, in a case involving a sale of land, proprietary estoppel has survived the enactment of section 2, notwithstanding Lord Scott’s obiter dictum in Cobbe.388 12.156 Since Thorner v Major,389 Lord Neuberger has amplified his views extra-judicially,390 saying: ‘where there is the superadded fact that [A], with the conscious encouragement of [B], has acted in the belief that there is a valid ­contract, … section 2 offers no bar to a claim based in equity’, which must mean or include a proprietary estoppel claim. If adopted as the law, as we submit it should be, his marking out of cases with a ‘contractual connection’ as potentially bringing section 2(1) into play391 would cease to apply. This would, we submit, be a beneficial development by removing uncertainty. It would also avoid the perverse result of an estoppel being the more likely to be upheld the less certain and contractual in nature the assurance on which it is based.392 12.157 It is submitted, therefore, that section 2(1) does not touch a proprietary estoppel claim. 12.158 That is not to say, however, that a court of equity considering a proprietary estoppel claim will always ignore the fact of non-compliance with statutory requirements. In McGuane v Welch, for example, Mummery LJ denied A the transfer of land to which B had agreed and limited A’s relief to a charge for his expenditure, on grounds which included the fact that the transfer would enforce the performance of a transaction which was not a binding contract for sale for non-compliance with section 2(1). This was not out of deference to the statute but a discretionary consideration in conjunction with other matters: ‘To order the transfer of the Lease to [A] [rather than reimbursing him for his expenditure on the Property] would enforce the performance of a transaction,

388 Whittaker v Kinnear [2011] EWHC 1479 (QB). See also Ghazaani v Rowshan [2015] EWHC 1922 (Ch), at [192] and Dixon [2015] Conv 469. In Ely v Robson [2016] WTLR 1383, the Court of Appeal apparently accepted, albeit without contrary argument, that an oral agreement concerning beneficial interests in land, in reliance on which A changes his position, may generate a proprietary estoppel equity which avoids s 2(1) because it falls within s 2(5): see [27] and [43]. In that case, A claimed to be sole owner of a property, while B claimed to be an equal tenant in common with A. They settled their differences in an oral agreement whereby the property was to be held on new trusts. At [30] the Court of Appeal doubted whether B’s original claim to an interest was an interest in land, and so doubted whether the agreement came within s 2(1) at all. With respect, the doubt is misconceived: the settlement involved, as a minimum, an agreement by A to dispose of his interest in the property on the new trusts, which clearly fell within s 2(1), whether or not it also involved an agreement by B to dispose of any interest she had. 389 Note 19. 390 In (1990) 68 CLJ 537, 546. 391 See n 377. 392 A ‘contractual connection’ would encourage A to minimise, while encouraging B to maximise, the ‘contractual connection’, in A’s case in order to diminish, while in B’s case to enhance, B’s chance of obtaining the benefit of s 2(1). Counter-intuitively, the further A’s case is from a contract, the better A’s chances, while the closer it is to a contract, the better B’s chances. See also Muhammad v ARY Properties Ltd [2016] EWHC 1698 (Ch), at [49].

569

12.158  Proprietary estoppel

which was not a binding contract for sale, at a price which was at a substantial undervalue and in respect of which the transferor had received no independent advice.’393

Section 52 of the Law of Property Act 1925 12.159 Section 52 requires that all conveyances of land or of any interest therein are void for the purpose of conveying or creating a legal estate unless made by deed. Where there is an imperfect gift of land, lacking a deed, A cannot sue on the deed by praying in aid an estoppel by representation of fact. If, however, A sues B in proprietary estoppel, he does not need to prove the deed: he seeks neither to estop B from asserting that the deed fails to comply with section 52 nor to enforce the deed as a contract at common law; he claims the benefit of an equity and seeks equitable protection.394 Section 53 of the Law of Property Act 1925 12.160 Similar issues arise under section 53 of the Law of Property Act 1925. The section lays down varying formal requirements for a disposition of an interest in land (section 53(1)(a)), a declaration of a trust of land (section 53(1)(b)) and a disposition of an equitable interest in any property (section 53(1)(c)). ­Section 53(2) provides that the creation or operation of resulting, implied or constructive trusts is not affected. 12.161 There appears to be no case in which the relevance of section 53(1)(a) to proprietary estoppel has been decided.395 It is submitted, in agreement with Professor McFarlane, that the equitable interest created or disposed of when a proprietary estoppel equity in land is generated is excepted from the application of section 53(1)(a) by its closing words: ‘by operation of law’.396 A specifically enforceable contract effects the disposition of an equitable interest by reason of the doctrine that equity regards as done that which ought to be done,397 but it does not come within section 53(1)(a) because the disposition so effected is by operation of law, not by force of the contract.398 In the same way, an equitable

393 Note 386, at [46]. 394 An example is Dillwyn v Llewellyn (1862) 4 De G F & J 517, a case of a gift of real property under hand (but see Ward v Kirkland [1967] Ch 194, 235, and Chitty on Contracts (32nd edn, 2015), [4-144], where a contractual analysis is suggested or considered); see also Pascoe v Turner [1979] 1 WLR 431, CA, a case of a parol gift. 395 As McFarlane points out in The Law of Proprietary Estoppel (2014), [6.124], s 53(1)(a) was relied on in Kinane v Mackie-Conteh [2005] WTLR 345, CA. The issue did not, however, arise for decision, as the Court of Appeal held that the equity arose under a constructive trust so that s 53(2) applied: see [34], [35]. 396 The Law of Proprietary Estoppel, [6.123]. 397 Central Trust and Safe Deposit Company v Snider [1916] 1 AC 266, PC. 398 McLaughlin v Duffill [2010] Ch 1, CA, at [25], [26]. Although the court did not say so in so many words, the decision is only consistent with the proposition in the text, namely that the equitable interest was disposed of by operation of law.

570

Defences 12.165

interest generated by a proprietary estoppel equity depends, not on A’s reliance on the belief or expectation, but on the availability of specific relief, thus taking effect by operation of law. 12.162 As to section 53(1)(b), an express trust claim which is dependent on the establishment of a declaration of trust within section 53(1)(b) may well fail for non-compliance with the statutory requirements, but a proprietary estoppel claim should be unaffected: A does not seek to enforce the declaration of trust as such; he claims an equity, and in view of section 53(2), permitting informal transactions dependent on general equitable principles, no public policy should be engaged. 12.163 Similarly, a claim as the assignee of an equitable interest under a noncompliant assignment may well fail for non-compliance with section 53(1)(c), while a proprietary estoppel claim should be unaffected.399 Wills Act 1837 12.164 It does not appear to have been suggested in any of the cases that a proprietary estoppel claim arising out of a promise of testamentary provision might conflict with the public policy underlying the Wills Act 1837.400 Following Thorner v Major,401 it must be assumed that the point, although not the subject of either argument or decision, does not arise. Miscellaneous cases of statutory illegality 12.165 In Chalmers v Pardoe,402 the Judicial Committee dismissed a claim which would have succeeded but for the provisions of a Land Ordinance; and it is clear that, in E R Ives Investments Ltd v High,403 judgment would have gone in B’s favour had the relief granted infringed section 13 of the Land Charges Act 1925. In Maharaj v Chand,404 no proprietary relief could be granted to A where 399 We would say that, although the trust claim mentioned in 12.162 and a claim on an assignment should both fail, A will have an alternative claim in proprietary estoppel, leading to discretionary equitable relief. 400 Dixon mentions the possible conflict in [2008] Conv 65. See also McFarlane, The Law of Proprietary Estoppel (2014), [6.136]–[6.137]. Doubtless the explanation is that a contract to make a will is enforceable by a common law action for damages (though not specific performance) or in equity for relief by way of constructive trust (see eg Schaefer v Schuhmann [1972] AC 572, PC): such a contract does not dictate the terms of the promisor’s will (hence the refusal of the courts to order specific performance), but it binds the promisor at common law and may bind the property affected by it in equity. This being so in the case of a contract, there is no reason in principle why the statute should inhibit a proprietary estoppel. 401 Note 19. In Gillett v Holt, n 4, such a proprietary estoppel claim was successfully brought during B’s lifetime, as McFarlane points out. For another example of this, see Moore v Moore, 19 August 2016, unreported. 402 [1963] 1 WLR 677, PC; on this and the following cases, see further 7.13. 403 [1967] 2 QB 379, CA. 404 [1986] AC 898, PC.

571

12.165  Proprietary estoppel

to do so would have infringed section 12 of the Native Land Trust Act of Fiji, and in Lloyds Bank plc v Carrick405 it was held that section 4(6) of the Land Charges Act 1972, requiring estate contracts to be registered, precluded A, a purchaser, from relying on a proprietary estoppel to circumvent A’s failure to register an estate contract.

THE NATURE OF THE EQUITY;   THIRD PARTIES 12.166 The effect of a proprietary estoppel equity, prior to its satisfaction by an order of the court, raises two principal questions: (i) whether the equity is a burden on B’s property; and (ii) whether the benefit of the equity is assignable, including the question whether it vests in A’s trustee in bankruptcy if A becomes bankrupt.406 The answers to both questions depend on whether the equity generates an equitable interest out of court.407 12.167 Three possibilities have been suggested: the equity is a purely personal right, a ‘mere equity’ or an equitable interest.

Registered land 12.168 Section 116 of the Land Registration Act 2002 disposes of these questions in relation to registered land.408 Before the enactment of section 116, a proprietary estoppel equity which would be satisfied by a non-proprietary award409 would not have been considered capable of binding B’s successor in title. It seemed clear that section 116 was not intended to alter the law in this respect. This has now been confirmed by the Supreme Court.410 405 406 407 408

[1996] 4 All ER 630, CA. The question whether an estoppel binds a successor in title is considered in 6.24 onwards. See McFarlane [2003] CLJ 661. Halifax Building Society v Curry Popeck [2008] EWHC 1692 (Ch), at [29]. Section 116 ­provides: ‘It is hereby declared for the avoidance of doubt that, in relation to registered land, each of the following– (a) an equity by estoppel, and (b) a mere equity, has effect from the time the equity arises as an interest capable of binding successors in title (subject to the rules about the effect of dispositions on priority)’. The Law Commission intended this to be ­declaratory of the law: see [2001] Law Com No 271, [5.31]. 409 Eg an award of a licence or an unsecured money payment. 410 Southern Pacific Mortgages Ltd v Scott [2015] AC 385, at [59], [123]. (See Hopkins [2015] Conv 245; Sparkes [2015] Conv 301.) The Supreme Court decided that, where a contracting purchaser of land, B, enters into a tenancy or a contract or some other arrangement with A, including one which would give rise to a trust (eg a constructive trust) or a proprietary estoppel in A’s favour if B were the legal estate owner, the contract only creates personal rights as between B and A prior to completion. On completion, A’s tenancy by estoppel is ‘fed’ and takes effect as a full legal tenancy: see 9.47 onwards. In the same way, A’s rights under a contract or trust or estoppel only become proprietary rights as between A and B upon B’s acquisition of the legal estate on completion. This means that, as between A and a lender taking a mortgage or charge on completion, the latter’s rights have priority, since there is no scintilla temporis when B holds the legal estate subject to A’s equity but free from the lender’s mortgage or charge. In the process of so deciding, the Supreme Court held that ‘section 116

572

The nature of the equity;   third parties 12.172

12.169 Section 116 does not apply to unregistered land. The following discussion accordingly focuses on unregistered land.411

Unregistered land 12.170 One view is that, prior to the issue of proceedings, A has no proprietary interest capable of binding a disponee from B, so that the ‘mere equity’ it creates is a purely personal right.412 This would suggest that the equity has no effect on a disponee from B (including a volunteer), that it may be non-assignable, and that, if A becomes bankrupt, it may not vest in a trustee in bankruptcy. 12.171 Lord Walker has said that proprietary estoppel gives rise to a ‘mere equity’.413 The expression ‘mere equity’ is, however, ambiguous: it may mean a purely personal right,414 or it may mean a right which in some circumstances binds successors in title.415 If the former, Lord Walker agrees with the previous paragraph. If the latter, he contemplates that a proprietary estoppel equity may bind successors. It is submitted that a proprietary estoppel equity cannot be a ‘mere equity’ in the sense in which this expression is conventionally understood as capable of binding successors, viz as a right ancillary to or dependent upon an equitable estate or interest in the land:416 a proprietary estoppel equity is a freestanding right, not a right ancillary to some other estate or interest. 12.172 Unless a proprietary estoppel is sui generis, this leaves the choice between a purely personal right and an equitable interest. Supporters of the former point to the fact that the court may satisfy the equity by the grant of a personal remedy, such as an award of monetary compensation. But this only shows that it

rights require a proprietary element to have any effect’. In this respect, therefore, the position is the same as it was under s 70(1) of the Land Registration Act 1925, dealing with ‘overriding interests’. Those were held by the House of Lords to be confined to ‘rights in reference to land which had the quality of being capable of enduring through different ownerships of the land, according to normal conceptions of title to real property’: see National Provincial Bank Ltd v Ainsworth [1965] AC 1175, at 1226 (Lord Hodson) and 1228 (Lord Cohen). 411 The effect and content of the equity in relation to chattels and choses in action presumably mirrors its effect and content in relation to unregistered land. 412 Hayton (1990) 106 LQR 87, n 26: ‘… the flexible [proprietary estoppel] claim does not seem certain or stable enough to qualify as a property interest’ (emphasis in the original). This echoes Lord Wilberforce in National Provincial Bank Ltd v Ainsworth, above, at 1238, 1247–8: ‘Before a right or an interest can be admitted into the category of property, or of a right affecting property, it must … have some degree of permanence or stability’. 413 Stack v Dowden [2007] 2 AC 432, HL, at [37]. 414 In National Provincial Bank Ltd v Ainsworth, above, at 1238, Lord Upjohn referred to ‘a mere “equity” naked and alone’. By this he meant a purely personal right which is incapable of binding successors in title, even with notice. Section 116 clearly proceeds on the footing that ‘an equity by estoppel’ and ‘a mere equity’ are different. 415 The second possibility is, of course, contemplated by s 116(b) of the Land Registration Act 2002: see n 408. 416 National Provincial Bank Ltd v Ainsworth, above, at 1238 (Lord Upjohn). Lord Wilberforce was to the same effect, at 1254.

573

12.172  Proprietary estoppel

may turn out that A’s equity has never affected, or has ceased to affect, property. As the Law Commission observed,417 if an estate contract is specifically enforceable, it creates an equitable interest in land; but specific performance, being a discretionary remedy, may be refused, in which case the claimant is left to a personal remedy in damages against the counter-party to the contract.418 The view in favour of a purely personal right has also been said to derive support from judicial statements to the effect that it is for the court to satisfy A’s equity;419 but to say that the court satisfies the equity does not mean that only the court can satisfy it,420 or that, until the court satisfies it, there is no equitable proprietary interest. Moreover, there does not appear to be a decision that A has no interest until the equity is satisfied by the court’s order. There are, however, decisions which support the alternative view, that the equity has a proprietary effect before it is satisfied by order of the court. These include cases where the equity operates as a defence to a proprietary claim by B, eg for possession or an injunction, where A would have no such defence unless he already had a proprietary right or interest.421 It is submitted that this stream of authority has always tended to support the view that the equity is an equitable interest, albeit inchoate,422 from the time when it arises.423 It is true that, until recently, this has been generally assumed, rather

417 [2001] Law Com No 271, [5.30]. 418 Where a purchaser’s claim for specific performance is refused, his equity, as an interest affecting the land, must have already come to an end. If it were necessary to identify the moment in time when the purchaser ceased to have an equitable interest, it would be when specific performance ceased to be available to him: see Central Trust and Safe Deposit Company v Snider [1916] 1 AC 266, PC, at 272 (Lord Parker of Waddington). 419 Evans [1988] Conv 346, pp 351–2: ‘In proprietary estoppel it is the court that is directly responsible for the creation of the rights … Indeed all the cases that talk of the court satisfying the equity support the view that it is the court that creates rights in the proprietary estoppel action’. See also Davis (2002) 61 CLJ 423, p 445, citing Inwards v Baker [1965] 2 QB 29, CA, 38; ER Ives Investments Ltd v High [1967] 2 QB 379, CA, at 394, 395, 400, 405; Crabb, n 13, at 188, 192–193; Greasley v Cooke [1980] 1 WLR 1306, CA, at 1311; Griffiths v Williams (1978) [1978] 2 EGLR 121, CA, at 122. 420 The most obvious way in which the equity is satisfied is by B fulfilling A’s expectation. The contrary view – that no equity is raised unless and until B repudiates A’s expectation – is, we submit, wrong: see n 37. 421 An example is Plimmer, n 42, 710: ‘by the transactions of 1856 the licence [previously revocable] had ceased to be revocable at the will of the Government’. But the extent of Plimmer’s interest could only be determined by the court: at 713. Thus, Plimmer had a defence to ejectment proceedings by the Government before the extent of his interest was determined. See also Inwards v Baker [1965] 2 QB 29, at 37 per Lord Denning MR: ‘the father could not in 1932 have turned to his son and said: “You are to go. It is my land and my house”’. For criticism, see Evans [1988] Conv 346; Battersby [1991] Conv 36. 422 Habermann v Koehler (No 2) [2000] EGCS 125, CA, at [23], per Robert Walker LJ: ‘… the inchoate rights created by proprietary estoppel …’. See also Battersby [1991] Conv 36; ­Ferguson (1993) 109 LQR 114 at p 122. 423 Eg Duke of Devonshire v Eglin (1851) 14 Beav 530, 534 (‘The work has, however, been effected and used nearly ten years, … [B] cannot prevent [A]’s enjoyment of this right’); Unity Joint Stock Mutual Banking Association v King (1858) 25 Beav 72 (lien for monies laid out on B’s land); Ahmad Yar Khan v The Secretary for State for India (1901) LR 28 IA 211, PC (‘under the circumstances [A] acquired a proprietary interest in so much of B’s lands taken for the purpose of the canal as was required for its construction’); Ward v Kirkland [1967] Ch 194, at 242; ER Ives Investment Ltd v High, above, where B’s successors were held bound by

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The nature of the equity;   third parties 12.173

than clearly and specifically decided.424 Arguably, however, it was a matter of decision in Plimmer.425 In two recent cases concerned with the vesting of the equity in A’s trustee in bankruptcy, it was clearly a matter of decision.426 12.173 Nonetheless, to say, without qualification, that the equity comes into existence as a full equitable interest on A’s relying to his detriment pays insufficient attention to the flexibility and retrospective quality of the doctrine: (i) A’s acts in reliance must be more than de minimis; (ii) if an equity is created as soon as A relies, it cannot be said with certainty that it is, or will mature into, a full equitable interest; (iii) the extent or content of an equitable interest, if one is generated at all, will not be ascertainable until the time arrives for the fulfilment or recognition of A’s belief or expectation, or until

A’s equity, in the form of a right of way, which did not need to be registered as a land charge; In re Sharpe [1980] 1 WLR 219, 225–6; Voyce v Voyce (1991) 62 P & CR 290, CA, at 294 (‘while [A] remained in his occupation of [B’s property] under the equitable rights which were ultimately satisfied by the direction for a conveyance, he was … the equitable owner’); Lloyd v Dugdale [2002] 2 P & CR 13, CA, a case of registered land which proceeded on the basis that A’s equity was a proprietary interest which would have bound a disponee from B if A had been in actual occupation at the relevant time (but he was not): see also Dixon [2002] Conv 584. (The case preceded the enactment of s 116.) See also Clarke v Meadus [2013] WTLR 199, at [74], [75]. For academic comment, see Crane (1967) 31 Conv (NS) 332; Wilkinson (1967) 30 MLR 580; Evans [1988] Conv 346 at pp 352–3; [1991] Conv 36; Battersby (1995) 58 MLR 637; Battersby (1995) 58 MLR 637 at p 643. 424 In Lloyds Bank Plc v Carrick [1996] 4 All ER 630, CA, the point was argued but not decided. At 641, Morritt LJ said it was hard to see how in the Court of Appeal the argument could surmount the decision in ER Ives Investments Ltd v High, above. In Sutcliffe v Lloyd [2007] 2 EGLR 13, CA, at [38], Wilson LJ said, obiter, that equity intervenes ‘not at the time when [the promise] is made but only at a significantly later stage, namely in the events both that the promisee should have acted to his detriment in reliance upon it and that the promisor should have sought unconscionably to withdraw from it’ (emphases added). If and insofar as this suggests that no equity is raised unless and until B withdraws from the promise, we respectfully disagree: B may never withdraw and may fulfil A’s expectation, but this does not mean that there is never an equity: an equity is still raised but is satisfied out of court (see 12.9–12.10, 12.138). In any event, it has been decided that the equity is raised when the promise is relied on and a detriment is suffered by A: see Walden v Atkins [2013] EWHC 1387 (Ch) and n 426. 425 Note 42. The appellants were lessees of A’s successor in title. The argument for B, which was that on the facts no equity was raised, was rejected by the Privy Council, who held, at 714, that the equity created, out of court, a right in A: ‘The consequence [of the transactions of 1856] is that [A] acquired an indefinite, that is practically a perpetual, right to the jetty …’. A subsequently disposed of this right to his successor, who granted a 21-year lease to the appellants. The Privy Council declared that the appellants had an interest in the land. It is nevertheless the case that neither in Plimmer nor in either of the decisions referred to in the next footnote was it distinctly argued that A’s equity, if he had one, created only a ‘mere equity’ or a purely personal right. See also Ferguson (1993) 109 LQR 114, pp 121–3. 426 Webster v Ashcroft [2012] 1 WLR 1309, where the issue concerned the definition of ‘property’ in s 436(1) of the Insolvency Act 1986. See also Walden v Atkins [2013] EWHC 1387 (Ch), another bankruptcy case, at [48]: ‘The equity comes into existence, if at all, as the result of a promise being made to and relied upon by and a detriment being suffered by a promisee [A].

575

12.173  Proprietary estoppel

B repudiates it, and will depend on everything that has previously occurred;427 (iv) the extent of the property over which any equitable interest extends may have changed over time;428 (v) the equity may always be, or turn out to be, confined to a personal compensatory remedy; (vi) it may be wholly defeated by A’s predeceasing B;429 (vii) it may ‘expire’ or be ‘exhausted’ or B’s conduct may cause it to be satisfied;430 and (viii) the extent of the equity as a proprietary interest is normally required to be proportionate to the detriment suffered.431 12.174 It is submitted, therefore, that A’s equitable interest is in the nature of a ‘floating’ equity, which crystallises in stages: first, with respect to the extent of the property subject to A’s equity, at the time when A’s belief or expectation falls to be fulfilled or recognised, or when B repudiates the assumption on which A has acted;432 and, secondly, upon the making of the court order by

It is at that point that the promise becomes irrevocable, the equity is recognised, and it is this equity to which the definition of property at s 436 [Insolvency Act] 1986 is to be applied’. 427 On the other hand, depending on the facts the equity may have some limited but effective content before its full extent has been determined by the court: cf Plimmer, where A’s licence became irrevocable upon carrying out works at B’s request, many years before the court decided on the extent of the equity. 428 Gillett v Holt, n 4, at 236, per Robert Walker LJ: ‘the extent of [B]’s property in respect of which the equity is established is [B]’s farming business as the parties would have contemplated it during the period when the assurances were given and down to the time when those assurances were repudiated’. See also Thorner v Major, n 19, at [95], per Lord Neuberger: ‘the nature of the interest to be received by [A] was clear: it was the farm as it existed on [B]’s death. As in the case of a very different equitable concept, namely a floating charge, the property the subject of the equity could be conceptually identified from the moment the equity came into existence, but its precise extent fell to be determined when the equity crystallised, namely on [B]’s death’. 429 This possibility exists in the case of a contract to make a will in A’s favour: see Schaefer v Schuhmann [1972] AC 572, PC, at 579, 588. See also Theobald on Wills (18th edn, 2016), [8-037]. There seems to be no reason why the doctrine of lapse should not apply, by analogy, to a proprietary estoppel claim for testamentary provision. There appears to have been no case in which A has predeceased B and A’s estate has sued in proprietary estoppel based on an expectation of a benefit on B’s death. (In Sledmore v Dalby, n 10, the promise of the house on B’s death was made to A1. B made a will devising the house to A1. A1 predeceased B, so that the devise lapsed. The claimant, A2, who was A1’s husband, had relied on the promise to his ­detriment by incurring expense in improvements. The claim failed. In the view of Hobhouse LJ, the expectation of A1 and A2 that B would leave the house to A1 was not falsified: it was fulfilled by B’s will, even though the devise to A1 had lapsed. There was no claim, however, by A1’s estate.) If the fulfilment of the expectation is subject to an express or implied condition that A survive B, then A’s estate should receive nothing. If there is no such condition, then A’s predeceasing B should not preclude a proprietary estoppel claim. Its satisfaction would no doubt reflect the extent of A’s detrimental reliance and, if this is relevant, the fact that the expected property is not required for A’s use. 430 Sledmore v Dalby, n 10, at 205 (Roch LJ) and 209 (Hobhouse LJ), and n 429 above. 431 See 12.188 onwards. 432 Gillett v Holt, n 4, at 236 per Robert Walker LJ: ‘… down to the time when those assurances were repudiated’.

576

The nature of the equity;   third parties 12.175

which the equity is satisfied.433 The concept of a floating equity, although not novel,434 is relatively undeveloped. 12.175 The equity raised by a proprietary estoppel may be compared with a promissory estoppel equity, and both equities may be compared with so-called common intention constructive trusts and ‘equitable licences’.435 The doctrine of the ‘equitable licence’ or ‘licence coupled with an equity’ flourished under Lord Denning MR.436 In Errington v Errington,437 a father, wishing to provide a home for his son and daughter-in-law, bought a house on mortgage. He retained the legal estate, but promised that if they continued in occupation and duly paid all the instalments, he would transfer the property to them. The father died and his widow inherited. The son separated from his wife and left the house. The daughter-in-law continued to pay the mortgage instalments. Both at first instance and in the Court of Appeal, the widow failed in her attempt to recover possession from the daughter-in-law. Denning LJ held that the son and daughter-in-law were licensees with an ‘equitable right’ to remain so long as they paid the instalments, and that this right ‘would grow into a good equitable title to the house itself as soon as the mortgage was paid’. In National Provincial Bank Ltd v Hastings Car Mart Ltd,438 Lord Denning MR included Errington v Errington as the latest in a line of cases where, the owner of land having granted another a licence 433 Cf Birmingham v Renfrew (1937) 57 CLR 666, HCA, 689, per Dixon J (with reference to a constructive trust generated by an agreement for mutual wills, which, however, may be an insecure foundation for the application of the concept elsewhere: see n 29): ‘… a floating obligation, suspended, so to speak, during the lifetime of the survivor [which] can descend upon the assets at his death and crystallize into a trust’. (Accepted by Nourse J in In re Cleaver [1981] 1 WLR 939, at 945–7, another case of mutual wills.) The notion of an equity crystallising echoes Lord Neuberger’s suggestion in Thorner v Major, n 19, [95]: see n 428. Moreover, Robert Walker LJ had employed it earlier in Habermann v Koehler (No 2) [2000] EGCS 125, CA, at [23]: ‘… it is only by the judge’s order, made years after [B] became registered proprietor, that the inchoate rights created by proprietary estoppel have crystallised into a defined proprietary interest’. As these last-mentioned cases suggest, however, crystallisation of the equity may occur by stages: in Thorner v Major the crystallisation to which Lord Neuberger referred occurred on B’s death and concerned the extent of the farm over which A’s equity extended. We would say that it was followed by a further and different kind of crystallisation when the court awarded Steart Farm to A. In Habermann v Koehler, by contrast, the extent of the property was never in doubt, and crystallisation took place on the making of the court’s order satisfying the equity by the award of a proprietary interest (in that case, by the execution of a declaration of trust in A’s favour). The two crystallisations may be widely separated in time. See also Ferguson (1993) 109 LQR 114 at p 122. 434 See Davis (2002) 61 CLJ 423. 435 The principal difference between proprietary and promissory estoppel equities is that the ­former generates a free-standing cause of action for its satisfaction, while the latter can only be used defensively: see Chapter 14. The principal difference between proprietary estoppel and common intention constructive trust is that the former is ‘remedial’, the latter ­‘institutional’: see n 568. 436 For a fuller treatment of the doctrine, see Megarry & Wade, The Law of Real Property (8th edn, 2012), [16-006], [16-037]. 437 [1952] 1 KB 290, CA. 438 [1964] Ch 665, CA, 686. The case concerned the so-called ‘deserted wife’s equity’, that is to say, her right, on desertion, to remain in occupation of the matrimonial home as licensee. The issue was whether her right bound the bank, a mortgagee of the legal estate.

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to occupy land and to execute works upon it,439 it had been held that, once the works were executed, the licensee has an ‘equity’ which was binding not only on the licensor but also his successors.440 That case was the high-water mark of the ‘equitable licence’ doctrine, after which it fell away and can be seen now as largely defunct.441 12.176 The consequences of the view that proprietary estoppel generates a potentially full, albeit inchoate, equitable interest out of court are: (i) the equity is assignable inter vivos or by will or on intestacy;442 (ii) if A becomes bankrupt, it vests in his trustee in bankruptcy;443 (iii) if it relates to registered land of B, then it has priority over the registered estate unless B makes a registered disposition for valuable consideration and the equity is unprotected by a notice on the register or actual occupation;444 (iv) if it relates to unregistered land of B, it binds a disponee from B, other than a purchaser for value without notice; and (v) if it 439 The other cases to which Lord Denning referred included Duke of Beaufort v Patrick, n 50; Dillwyn v Llewelyn, n 146; and Plimmer, n 42, all of which are now generally explained as examples of proprietary estoppel. 440 This, of course, closely resembles proprietary estoppel, a doctrine which had yet to be revived, having lain dormant since the 1920s: see 12.20–12.22. 441 National Provincial Bank Ltd v Hastings Car Mart Ltd went to the House of Lords as National Provincial Bank Ltd v Ainsworth [1965] AC 1175, where it was held that the wife had a purely personal right incapable of binding the bank. Errington v Errington was treated by Lord Upjohn, at 1239, as a case in the line of Webb v Paternoster (1619) Popham 151 (a case at common law: see n 42). The doctrine of equitable licences nevertheless continued: see eg DHN Food Distributors Ltd v Tower Hamlets BC [1976] 1 WLR 852, CA, at 859 (a contractual licence giving rise to a constructive trust); Hardwick v Johnson [1978] 1 WLR 683, CA; and In re Sharpe [1980] 1 WLR 219. At the same time, irrevocable licences for life were being awarded as relief in cases of proprietary estoppel: see eg Inwards v Baker [1965] 2 QB 29, CA; Williams v Staite [1979] Ch 291, CA; and Pascoe v Turner [1979] 1 WLR 431, CA. In Ashburn Anstalt v Arnold [1989] Ch 1, at 24, the Court of Appeal held that a contractual licence does not create a property interest, having previously stated, at 17, that Errington v Errington, while correct on the facts, is better understood as a case of contract and part-­performance, or proprietary estoppel, or constructive trust. Since then, the doctrine of equitable licences has effectively left the field to proprietary estoppel. Thus, in Parker v Parker [2003] EWHC 1846 (Ch), at [21], Lewison J held that A had a right to remain in occupation, ‘whether … from the equitable perspective of proprietary estoppel, or from the common law perspective of a licence’, making no suggestion of a licence ‘from an equitable perspective’. There remains a question whether a licence awarded by the court in proprietary estoppel proceedings is capable of binding a third party, despite Ashburn Anstalt v Arnold. Academic and textbook opinion favours a negative answer, albeit with varying intensity: see Battersby [1991] Conv 36; Megarry & Wade, The Law of Real Property (8th edn, 2012), [16-006]; McFarlane, The Law of Proprietary Estoppel (2014), [8.73]–[8.79]. Cf Preedy v Dunne [2015] EWHC 2713 (Ch), at [54], and criticism in Dixon [2015] Conv 469, at p 473. It is submitted that the negative answer must be correct unless, remarkably, A’s equity is not completely satisfied by the award of a licence, so that a partially satisfied equity continues and is capable of binding third parties. But the court’s order must be intended to satisfy A’s equity; and, if the court intends A to have an interest capable of binding third parties, it can order B to grant A a legal lease. 442 See 6.8 onwards. 443 See n 426. 444 See Land Registration Act 2002, ss 28 and 29 and Sch 3, para 2. In Lloyd v Dugdale [2002] 2 P & CR 13, CA, A’s proprietary estoppel counterclaim failed against B’s successor because A was not in actual occupation at the material time. See also Chaudhary v Yavuz [2013]

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The nature of the equity;   third parties 12.178

relates to a chattel or a chose in action belonging to B, it binds a disponee from B, other than a purchaser for value without notice.

Proprietary estoppel easements and registered land 12.177 An equity arising by way of proprietary estoppel and giving rise to an equitable easement appears to be unprotectable by registration as a land charge: if it binds a transferee, it does so by way of the equitable doctrine of notice.445 Apparently the Land Registration Act 2002 has no provision to deal with such an equity. On first registration, therefore, the registered estate will vest in the registered proprietor (who may be B), free of the equity.446 (It is unlikely, though not impossible, that the equity is an overriding interest protected by ‘actual occupation’ of the servient tenement.) It is possible, however, that an application to rectify the register by the entry of a notice could succeed on the ground of a successful estoppel claim, if it were ‘unjust’ not to rectify against the proprietor.447 On the registration of a disposition of registered land, an equitable easement arising by way of proprietary estoppel binds the disponee if he does not give valuable consideration.448 As against a disponee for value of the servient tenement, however, it only takes priority if noted on the register or A is in ‘actual occupation’,449 which is very unlikely.

The position where the equity does not bind a purchaser for value 12.178 Where property that is the subject matter of A’s misapprehension is disposed of to a third party who takes free of A’s equity, the question arises as to whether the equity can then be satisfied by an award of compensation against B, measured either by the value of the property or the relevant right or interest in the property that the court would have awarded to A, but for the disposition, or by A’s detriment.450 There appears to be no authority directly in point.451 In the distant past, it would presumably have been rejected, since monetary awards in Ch 249, CA, and the comment thereon by McFarlane in [2013] Conv 74. ‘Actual occupation’ is unlikely to assist A with respect to an equity giving rise to an easement over B’s registered servient tenement. Reference should be made to Ruoff & Roper, Registered Conveyancing, Vol 1, [36.002]–[36.005]. 445 446 447 448 449

ER Ives Investment Ltd v High [1967] 2 QB 379, CA. Land Registration Act 2002, s 11. Land Registration Act 2002, Sch 4, para 3(2)(b). Land Registration Act 2002, ss 28 and 29. Chaudhary v Yavuz, n 444. The 2002 Act has thus reversed the law as it stood following Celsteel Ltd v Alton Holdings Ltd [1985] 1 WLR 204. 450 For the possibility of a continuing liability on B’s part after disposing of the property, see Bright and McFarlane [2005] Conv 14 and McFarlane, The Law of Proprietary Estoppel, [8.141] onwards, where the question is fully discussed. 451 In Lloyd v Dugdale [2002] 2 P & CR 13, CA, at [55], Sir Christopher Slade left the point open, while doubting the possibility of an alternative personal liability of B.

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12.178  Proprietary estoppel

proprietary estoppel cases were then always made by way of a declaration of a charge over the property.452

SATISFYING THE EQUITY 12.179 The satisfaction of an equity generated by a proprietary estoppel has given rise to some difficult issues. It is not clear that these are all resolved.453 The problem is to identify the primary aim of the court in satisfying the equity.454 Several possibilities are suggested in the authorities, not all consistent with each other. 12.180 It has been said that there are three possible functions which can be attributed to proprietary estoppel:455 (i) that an estoppel award should generally aim to enforce A’s expectation; (ii) that it should seek to protect A’s reliance on B’s assurances; and (iii) that the court has a discretion to choose the award necessary to prevent B’s acting unconscionably.

The different approaches taken by the courts 12.181 The following approaches can be found in the cases: (1) B is required to give effect to A’s expectation.456 452 Perhaps on the footing that a court of equity had no inherent power to award a money judgment save pursuant to a declaration of charge or an account: see In re Diplock, Diplock v Wintle [1948] Ch 465, CA, at 519. 453 See Davies v Davies [2016] EWCA Civ 463, at [39] (Lewison LJ, with the concurrence of Underhill and Patten LJJ). For academic discussion, see Moriarty (1984) 100 LQR 376; Cooke (1997) 17 LS 258; Gardner (1999) 115 LQR 438; Thompson [2003] Conv 225; Bright and McFarlane [2005] CLJ 449; Gardner (2006) 122 LQR 492; Lord Walker (2008) 6 Trust Quarterly Review 5; Robertson [2008] Conv 295; Mee in Dixon (ed), Modern Studies in Property Law, vol 5 (2009); Biehler [2015] Irish Jurist 79; McFarlane and Sales (2015) 131 LQR 610. See also Snell’s Equity (33rd edn), [12-048]; Wilken and Ghaly, The Law of Waiver, Variation and Estoppel (3rd edn, 2012), [11.94]; McFarlane, The Law of Proprietary Estoppel (2014), [7.37]. 454 In [2008] Conv 295, pp 296, 302, Robertson suggested that the reason why A should, in principle, be limited to the lower of his expectation loss and his reliance loss (ie normally his reliance loss) is that, since both expectation loss and reliance loss are essential elements of the equity, A ceases to have a proprietary estoppel claim when either element is extinguished. Robertson nevertheless took the view that the most complete way to protect A is to fulfil his expectation in specie, since ‘[A] suffers no detriment as a result of his or her reliance on a particular assumption if that assumption is made good’: see [2008] Conv 295, at p 315; if the fulfilling of A’s expectation is the surest means of avoiding A’s suffering any reliance loss, the difference between the rival approaches is, in practice, much reduced, if not indeed eliminated. 455 Bright and McFarlane [2005] Conv 14 at pp 23–4, referring to (inter alia) Hayton [1990] Conv 370; Lunney [1992] Conv 239; Cooke (1997) 17 LS 258; Robertson [1998] LS 360; Gardner (1999) 115 LQR 438; Edelman (1999) 15 Journal of Contract Law 179; and Thompson [2004] Conv 137. 456 Ramsden v Dyson, n 28, at 170. To interpret Lord Kingsdown’s words as meaning that A is entitled to this relief is, however, unsustainable.

580

Satisfying the equity 12.181

(2) A’s equity gives rise to an equitable obligation on B’s part which a court of equity will prima facie require B to fulfil.457 (3) The aim is to prevent B from falsifying A’s belief or expectation without paying compensation for the detriment A has incurred.458 (4) The aim is to protect A from the injustice which would result if his expectation were falsified, by holding B to the expectation.459 (5) The aim is to preclude B from an unconscionable exercise of his legal rights.460 (6) The equity is to have A’s expectation made good, so far as this may fairly be done.461 (7) The court makes an order securing to A ‘the rights in expectation of which he incurred the expenditure or did the work’.462 (8) The court gives effect to a proprietary estoppel by giving effect to the common intention, so far as may fairly be done between the parties.463 (9) The court makes good to A, so far as may fairly be done between the parties, the expectation which B has encouraged.464 (10) Where it is practicable to do so, the court may find it ‘appropriate’ to satisfy the equity by granting A the interest he was intended to have. If that is not practicable, the court must ‘do the best it can’.465 (11) The value of A’s equity depends upon all the circumstances, including the expectation and the detriment. The task of the court is to do justice.466 (12) The aim is to satisfy the equity; it is not to satisfy A’s expectation or to compensate him for his detriment.467

457 Chalmers v Pardoe [1963] 1 WLR 677, at 681–2: ‘[Where] an owner of land has invited or expressly encouraged another to expend money upon part of his land upon the faith of an assurance or promise that that part of the land will be made over to the person so expending his money, a court of equity will prima facie require the owner by appropriate conveyance to fulfil his obligation’. 458 Chalmers v Pardoe, n 457. 459 Inwards v Baker [1965] 2 QB 29, CA, at 37, per Lord Denning MR: ‘… the court will not allow [A]’s expectation to be defeated where it would be inequitable so to do’, and at 38, per Danckwerts LJ: ‘… equity protects him so that an injustice may not be perpetrated’. 460 Ward v Kirkland [1967] Ch 194, 235: ‘The foundation of [the equity] … is the recognition by the court that it would be unconscionable in the circumstances for a legal owner [B] fully to exercise his legal rights’. 461 Griffiths v Williams [1978] 2 EGLR 121, CA, at 123. 462 Watson v Goldsbrough [1986] 1 EGLR 265, CA. 463 Grant v Edwards [1986] Ch 638, at 657. 464 Jones v Watkins [1987] CAT No 1200. 465 Burrows v Sharp (1991) 23 HLR 82, CA, at 92. 466 Jennings v Rice, n 20, at [36]. 467 Jennings v Rice, n 20, at [49]. But, in most if not all cases, the court is invited to choose between these two courses and, when choosing, the court appears to be prima facie disposed to satisfy A’s expectation.

581

12.181  Proprietary estoppel

(13) Ordinarily, A’s claim is to be satisfied by making good B’s representation.468 12.182 Seeking a single ‘right’ approach inevitably runs the risk of oversimplification, in part owing to the very different factual situations which may generate a proprietary estoppel.469 In any particular case the answer may be unclear, hence the need for flexibility in the remedy.470 It is nevertheless submitted that the main current of authority supports the making good of A’s expectation (‘making-good’ relief).471 One can go as far as saying that, in practice, this appears to be the courts’ prima facie response to the estoppel,472 as is the

468 Thorner v Major [2008] EWCA Civ 732, at [68] (Lloyd LJ, overruled on a different point in the House of Lords, n 19). This suggests that, where B has made an assurance, be it a representation of fact or a promise, it is the assurance that the court makes good. It is submitted that it would be more accurate to say that the court makes good A’s belief or expectation (or, as it was put in Public Trustee v Wadley (1997) 7 Tas LR 35, his ‘induced assumption’). Such awards are made seemingly without much, if any, regard to their value. On the facts in Thorner v Major, the net value of the trial judge’s award was some £2.1m: see [2008] EWCA Civ 732, at [27]; but Lloyd LJ, at [68](iii) and [75], expressed sympathy with the notion of making good B’s representation, and in the House of Lords no criticism was made of the award: see n 19, at [66], where Lord Walker added that there was no ground on which to challenge the trial judge’s exercise of discretion. The value of the award in Suggitt v Suggitt [2012] EWCA Civ 1140, CA, was £3.3m. In Bradbury v Taylor [2013] WTLR 29, CA, A obtained ownership of a historic mansion in Cornwall on 15 acres of grounds. See Mee [2013] Conv 280, 292–3. 469 Jennings v Rice, n 20, at [44]. For this very reason, proprietary estoppel has been said to be ‘an amalgam of doubtful utility’: see Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84, at 103 (Robert Goff J). 470 See Thompson [2003] Conv 225, a Case Comment on Jennings v Rice. 471 It is, however, necessary to analyse with care what precisely A’s expectation was; in one case, the Court of Appeal deprecated a failure to analyse it with sufficient rigour: see Davies v Davies [2016] EWCA Civ 463, at [42]–[43] (Lewison LJ, with the concurrence of Underhill and Patten LJJ). In Australia, where the principles governing the satisfaction of the equity have been litigated at the highest Commonwealth and State levels, there has been a shift from a reliance-based approach (Commonwealth v Verwayen (1990) 170 CLR 394, HCA) to a makinggood approach (Giumelli v Giumelli (1996) 196 CLR 101, HCA; Donis v Donis (2007) 19 VR 577; Delaforce v Simpson-Cook (2010) 78 NSWLR 483, NSWCA; Harrison v Harrison [2013] VSCA 170, VCA; and Sidhu v Van Dyke (2014) 251 CLR 505). See also Meagher, & Lehane’s Equity Doctrine and Remedies (5th edn, 2015), [17-110]: A has ‘a prima facie right to relief in the measure of the expectation or assurance which founded the estoppel’. 472 In the opinion of the Privy Council (on appeal from Fiji), this is indeed the position in English law: see Chalmers v Pardoe [1963] 1 WLR 677, at 681–2. See also Jennings v Rice, n 20, at [30], where Robert Walker LJ, commenting on the Australian authorities in 2002, in particular Public Trustee v Wadley (1997) 7 Tas LR 35, rejected the view that a proprietary estoppel award should only or primarily aim to compensate for A’s detriment. But the tide may be turning: see Davies v Davies, above, at [39], where the Court of Appeal viewed sympathetically the ‘logic’ of Robertson’s argument in [2008] Conv 295 but without deciding anything on the issue. The Court of Appeal did not, however, refer to Robertson’s view that the most complete way to protect A is nevertheless to fulfil his expectation in specie: see [2008] Conv 295, at p 315, and see also n 454. In this respect, it may be said that estoppel sits at the interface of contract and tort. It is possible to agree with the then Peter Millett QC that prejudice is the gist of the estoppel (see 1.18, n 81), and therefore to share the Court of Appeal’s sympathy for the view, echoing Robertson (see n 454), that if A’s detriment is avoided, the equity is satisfied. We suggest that the courts start from the position that A’s expectation should be satisfied, with the onus on B to establish that A’s detriment may be avoided by a lesser remedy.

582

Satisfying the equity 12.183

position in Australia.473 Certainly, it is the court’s ‘natural response’ to cases of ‘mutual understanding’ or quasi-bargain involving a consensual character,474 where there is a clear understanding between A and B as to what A should receive as a quid pro quo for some action requested of him by B, as where B promises property to A in return for A’s services.475 12.183 Cases of ‘mutual understanding’ fall into two categories: (i) a quasi-bilateral bargain,476 and (ii) a quasi-unilateral agreement.477 In these cases the courts’ natural response is the fulfilment of A’s expectation. There is a third category of misprediction proprietary estoppel consisting of cases of bare promises by B, not conditioned on the performance of any acts by A.478 In this category, too, the courts’ primary response has in practice been the same, although the justification for it is less apparent. Making-good relief is awarded when B’s promise or 473 Giumelli, above, at [42] and [50], adopting the following statement of Deane J in Verwayen, above: ‘Prima facie, the operation of an estoppel by conduct is to preclude departure from the assumed state of affairs. It is only where relief framed on the basis of that assumed state of affairs would be inequitably harsh, that some lesser form of relief should be awarded’. 474 Quasi-bargain, because the understanding falls short of a contract, eg for uncertainty as to what is required of A (cf Maddison v Alderson (1883) 8 App Cas 467, HL) or lack of contractual intention (cf Walton v Walton [1994] CAT No 479) or non-compliance with s 2 of the Law of Property (Miscellaneous Provisions) Act 1989. 475 Jennings v Rice, n 20, at [45], per Robert Walker LJ: ‘In a case of that sort both [A]’s expectations and the element of detriment to [A] will have been defined with reasonable clarity’. See also [50]: ‘To recapitulate: there is a category of case in which [B] and [A] have reached a mutual understanding which is in reasonably clear terms but does not amount to a contract. I have already referred to the typical case of a carer who has the expectation of coming into [B]’s house, either outright or for life. In such a case the court’s natural response is to fulfil [A]’s expectations’. For discussions of the relevance of a quasi-bargain, see Powell v Benney [2007] EWCA Civ 1283, at [22]–[23] and cf Davies v Davies, n 471, at [43]. 476 Eg A and B exchange promises, whereby A agrees to perform services for B, and B agrees to reward A with a transfer of property inter vivos or by will. This is not a contract: eg what is required of A is uncertain or there is a lack of contractual intention (cf n 474) or the property is land and s 2 is not complied with. 477 Eg B requests A to perform services for him, in return for which he promises to reward A with a transfer of property inter vivos or by will. This will seldom create a unilateral contract, because what is required of A is usually too uncertain or there is a lack of contractual intention: cf n 474. Moreover, s 2 has made a valid unilateral land contract practically extinct, since entry into a s 2-compliant writing would have to be either (i) one of the conditions which A must satisfy in order to earn the disposition promised by B, or (ii) a promise by B to A to enter into a s 2-compliant contract to make the promised disposition on A’s satisfaction of the stipulated conditions. As to (i), there would be no point in B imposing a condition that A enter into a s 2 writing, since by definition a unilateral contract contains no executory promises by A. As to (ii), a promise by B to enter into a contract to make a disposition in A’s favour, in the event that A complies with B’s conditions, is itself subject to the requirements of s 2: see Daulia Ltd v Four Millbank Nominees Ltd [1978] 1 Ch 231, CA (a decision on s 40 of the Law of Property Act 1925, but the statutory language is, in this respect, indistinguishable). 478 Eg A acts to his detriment in ways which B has not requested and of which B may be unaware: see Thorner v Major, n 19, at [5] (Lord Hoffmann). See also Hayton [1990] Conv 370, 377. Thorner v Major itself is probably not an example of this category: at [40], Lord Walker referred to the trial judge’s finding of an ‘unspoken mutual understanding … which encouraged the expectation which [A] had formed that he would be [B]’s successor to Steart Farm upon his death and encouraged [A] to continue with his very considerable unpaid help to [B] there’ (emphasis added). This serves to emphasise that the demarcations between types of proprietary estoppel are difficult to draw.

583

12.183  Proprietary estoppel

representation is clear and unconditional,479 even though it is made without any request for a quid pro quo from A,480 and such relief has frequently been given.481 12.184 Where, however, A’s expectation is ‘uncertain’, ‘extravagant’ or ­‘disproportionate’ to the detriment he has suffered, making his expectation good is likely to be rejected in favour of some more limited award, usually in the form of a money payment to compensate him for the detriment he has suffered.482 It would nevertheless be wrong to suppose that the choice is merely between making good the expectation in specie and monetary compensation for detriment incurred: in an appropriate case, compensation may be measured by the value of the property promised rather than the detriment suffered.483 479 Contrast Jennings v Rice, n 20, at [47] per Robert Walker LJ: ‘If [A]’s expectations are uncertain (as will be the case with many honest claimants) then their specific vindication cannot be the appropriate test. A similar problem arises if the court, although satisfied that [A] has a genuine claim, is not satisfied that the high level of [A]’s expectations is fairly derived from [B]’s assurances, which may have justified only a lower level of expectation. In such cases the court may still take [A]’s expectations (or the upper end of any range of expectations) as a starting point, but unless constrained by authority I would regard it as no more than a starting point’. 480 Walton v Walton [1994] CAT No 479, where Hoffmann LJ preferred the outright transfer of the property over a life interest precisely because B had always encouraged A to expect nothing less than the entire interest. See also Suggitt v Suggitt [2012] EWCA Civ 1140, CA (criticised by Mee [2013] Conv 280, p 285), where at [45] Arden LJ said: ‘Since the promise was that [A] should have the farmland unconditionally, I do not consider that to grant him the farmland … could be said to be out of all proportion’, and again at [50]: ‘I have taken into account both the farmland and Wellfield are very valuable. Their aggregate value was said to be some £3.3 million. … However, the fact is that, on the judge’s findings, the assurances were made and the values only reflect the assurances’. Walton v Walton had the flavour of a quasi-bargain; Suggitt perhaps less so. 481 The following, taken from Robertson [2008] Conv 295, are cases in the last dozen or so years where the equity was satisfied by a making-good award: Parker v Parker [2003] EWHC 1846 (Ch); Jiggins v Brisley [2003] EWHC 841 (Ch); Wormall v Wormall [2004] EWCA Civ 1643; Sweet v Sommer [2004] EWHC 1504 (Ch); Sleebush v Gordon [2004] EWHC 2287 (Ch); Van Laethem v Brooker [2005] EWHC 1478 (Ch); Clark v Clark [2006] EWHC 275 (Ch); Munt v Beasley [2006] EWCA Civ 370; Bexley LBC v Maison Maurice Ltd [2007] 1 EGLR 19; Scottish & Newcastle Plc v Lancashire Mortgage Corp Ltd [2007] EWCA 684; Holman v Howes [2007] EWCA Civ 877. To these may be added: Gill v Woodall [2009] EWHC B34 (Ch) (unaffected on this point by [2010] EWCA Civ 1430); Stallion v Albert Stallion Holdings (Great Britain) Ltd [2009] EWHC 1950 (Ch); Thompson v Foy [2010] 1 P & CR 16; Suggitt v Suggitt, above; Bradbury v Taylor [2013] WTLR 29, CA; Moore v Moore, 19 August 2016, unreported. 482 Jennings v Rice, n 20, at [47]. See also Burrows v Sharp (1991) 23 HLR 82, CA, at 92, per Dillon LJ: ‘The way in which the equity should be satisfied may, however, take a wholly different form from what had been intended when the parties were on good terms: for instance, there may be an order for repayment of the expenditure with or without a lien on the relevant property … or there may be a solution which is completely different either from repayment of the expenditure or from what the parties had intended …’. Cases where A was compensated for detriment include Dodsworth v Dodsworth (1973) 228 EG 115, CA and Campbell v Griffin [2001] EWCA Civ 990. 483 Giumelli (1996) 196 CLR 101, HCA, at [50], [51]. In specie relief was rejected on two grounds: (i) it would have caused injustice to others; and (ii) it would have exceeded what was required in terms of conscientious conduct by B. See also Davies v Davies [2016] EWCA Civ 463, at [67]–[69], where the Court of Appeal awarded compensation for disappointed expectations, past and future. This cannot be compensation for detriment suffered, since a disappointed expectation is not ‘relevant detriment’: see 12.89, n 247.

584

Satisfying the equity 12.186

Factors taken into account in exercising the discretion 12.185 The court has a discretion how to satisfy the equity,484 although there is an incipient tendency to see the task as one of making an evaluation of what good conscience required of B at the time when A’s belief or expectation fell to be recognised or fulfilled or when his misapprehension was repudiated.485 12.186 The court must look at the circumstances in each case to decide in what way the equity can be satisfied.486 It takes a ‘principled approach’ and cannot exercise a completely unfettered discretion according to the individual judge’s notion of what is fair in any particular case.487 Its approach is flexible,488 yet ­cautious.488a The court’s overriding concerns are to avoid oppression,489 and to do justice.490 484 Lord Cawdor v Lewis (1835) 1 Y & C Ex 427, 433; Dodsworth v Dodsworth (1973) 228 EG 115, CA; Holiday Inns Inc v Broadhead (1974) 232 EG 951, at 1087; Griffiths v Williams (1978) 248 EG 947, CA, at 122; Jennings v Rice, n 20, at [21] per Aldous LJ (‘If the conscience of the court is involved, it would be odd that the amount of the award should be set rigidly at the sum expected by [A]’). 485 Suggitt v Suggitt [2012] EWCA Civ 1140, CA, at [44]; Bradbury v Taylor [2013] WTLR 29, CA, at [51]. Both are subjected to criticism by Mee in [2013] Conv 280. 486 Plimmer, n 42, at 714. 487 Jennings v Rice, n 20, at [43]. 488 Snell’s Equity (26th edn, 1966), at p 633, was the origin of the oft-repeated dictum that ‘the doctrine [proprietary estoppel] thus displays equity at its most flexible’: see further ER Ives Investment Ltd v High [1967] 2 QB 379, CA, at 399 (Danckwerts LJ); Crabb, n 13, at 189 (Lord Denning MR). See Crabb, n 13, at 193 per Scarman LJ: ‘an immensely flexible … doctrine’; Gillett v Holt, n 4, at 235; Campbell v Griffin [2001] EWCA Civ 990, at [30], and at [33] where Robert Walker LJ described Sledmore v Dalby, n 10, as a good illustration of the flexible nature of the court’s jurisdiction. Lord Walker nevertheless sounded a note of caution in Cobbe, n 22, [46]: ‘Flexible though it is, the doctrine must be formulated and applied in a disciplined and principled way. Certainty is important in property transactions. As Deane J said in the High Court of Australia in Muschinski v Dodds (1985) 160 CLR 583, at 615–616, “Under the law of [Australia] – as, I venture to think, under the present law of England – proprietary rights fall to be governed by principles of law and not by some mix of judicial discretion, subjective views about which party ‘ought to win’ and ‘the formless void’ of individual moral opinion …”’. See also McGuane v Welch [2008] 2 P & CR 24, CA, at [43], relying on a passage from Snell’s Principles of Equity (31st edn, 2005) at p 285. Cf [2009] Conv 104 at p 125, where Sir Terence Etherton MR (then Chairman of the Law Commission and Lord Justice of Appeal) remarked that ‘the wide discretion of the court as to the choice of actual remedy (proprietary or personal) … makes [proprietary estoppel] a particularly appropriate and sensitive tool for achieving justice’. 488a Watts v Story (1983) 134 NLJ 631, CA, per Slade LJ: ‘In a case where the doctrine of proprietary estoppel operates, it may have the drastic effect of conferring on one person a permanent, irrevocable interest in the land of another, even though he has given no consideration for such acquisition, by way of contractual arrangement, and no legally effective gift of it has been made in his favour. For these reasons, the court should, in my opinion, approach with a degree of caution a claim by any person to have acquired an interest over another’s land by way of proprietary estoppel’. 489 Commonwealth v Verwayen (1990) 170 CLR 394, HCA, per Deane J at [17]: ‘where an estoppel by conduct is established and would prima facie operate to preclude departure from the assumed state of affairs, the circumstances may be such that to grant unqualified relief on that basis would exceed any requirements of good conscience and be unduly oppressive of the other party’. 490 Sledmore v Dalby, n 10, at 206 per Hobhouse LJ: ‘The doctrine of estoppel exists for the purpose of enabling courts to do justice, modifying what otherwise might be the strict legal rights

585

12.187  Proprietary estoppel

12.187 In Crabb, Scarman LJ famously said that the aim is ‘the minimum equity to do justice’ to A.491 This is to be read in the context of the facts of that case.492 While the court is not required to be ‘constitutionally parsimonious’, it is implicit that it must do justice to B,493 as well as to A.494 The approach which the courts have adopted is to determine the maximum extent of the equity. Having done so, the task is to arrive at an award which represents the minimum required to satisfy the equity, so long as this does justice between the parties.495 12.188 The overriding limit on the jurisdiction is that the remedy is not to exceed the value of A’s expectation.496 A primary aim is to avoid disproportion between the expectation and the detriment.497 The courts have taken numerous different

of the parties. If the supposed application of such a doctrine produces injustice not justice, then something has gone wrong’. 491 Note 13, at 198. Applied in Yaxley v Gotts [2000] Ch 162, CA, at 175, Gillett v Holt, n 4, 235, at 237, Jennings v Rice, n 20, at [48], and many later cases. 492 Jennings v Rice, n 20, at [48]. In Sutcliffe v Lloyd [2008] EWHC (Ch) 1329, at [13], the minimum equity to do justice resulted in an award considered to be ‘the least unsatisfactory solution’. 493 Jennings v Rice, n 20, at [48]. 494 Ibid; Sutcliffe v Lloyd [2008] EWHC (Ch) 1329, at [4]; Suggitt v Suggitt [2012] EWCA Civ 1140, at [42], where, after rejecting relief by way of monetary compensation, Arden LJ said: ‘That would have done the minimum, yes indeed, but it would not have done justice to A given the assurances he had … been given and his acting to his detriment’. See also Joyce v Epsom and Ewell Borough Council [2012] EWCA Civ 1398, at [48] per Davis LJ: ‘the overall focus has to be on what is fair and proportionate as between the parties’. The ‘minimum equity’ approach is thus subordinate to the need to do justice (cf Mee [2013] Conv 157). 495 Gillett v Holt, n 4, at 237. In Australia the ‘minimum equity’ probably no longer applies as a ‘governing principle’: Delaforce v Simpson-Cook (2010) 78 NSWLR 483, NSWCA, at [3]. It has arguably lost some of its potency in England as well: see the preceding footnote. 496 Watson v Goldsborough [1986] 1 EGLR 265, CA, at 267 per Browne-Wilkinson V-C: ‘so far as I am aware it has never been applied so as to give the person establishing the estoppel any right greater than that which he either mistakenly thought he had or thought he was going to be afforded’. See also Dodsworth v Dodsworth (1973) 228 EG 115, CA; Matharu v Matharu (1994) 68 P & CR 93, CA; Baker v Baker (1993) 25 HLR 408, CA; Parker v Parker [2003] EWHC 1846 (Ch), at [210]; Jules v Robertson [2011] EWCA Civ 1322, at [24]; Joyce v Epsom and Ewell Borough Council [2012] EWCA Civ 1398, at [51]. Cf the more guarded words of Dillon LJ in Burrows v Sharp (1991) 23 HLR 82, CA, at 92: ‘In general [the court] would, if possible, want to avoid giving A more than he was ever intended to have’. See also Balen and Knowles [2011] Conv 176. It is possible, however, to think of cases where the cost of putting A in the position in which he would have been if his expectation had been met exceeds the value of the property that he expected to acquire: see Bright and McFarlane [2005] Conv 14, at p 27. 497 Jennings v Rice, n 20, at [50] (Robert Walker LJ); Henry v Henry [2010] 1 All ER 988, PC, at [65]; Fisher v Brooker [2009] 1 WLR 1764, HL, at [11] (Lord Walker). In Ottey v Grundy [2003] EWCA Civ 1176, at [57], Arden LJ derived from Jennings v Rice: ‘the relationship between the promise and the remedy must be proportionate’. In Suggitt v Suggitt [2012] EWCA Civ 1140, at [44], [45], Arden LJ said: ‘this … does not mean that there has to be a relationship of proportionality between the level of detriment and the relief awarded … if the expectations are extravagant or “out of all proportion to the detriment which A has suffered”, the court can and should recognise that A’s equity should be satisfied in another and generally more limited way … this particular question is … a question of evaluation and judgment’. See also Commonwealth v Verwayen, n 489, per Deane J at [17], providing a well-known illustration

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Satisfying the equity 12.188

particular factors into account.498 These include the nature of A’s e­ xpectation,499 benefits received by A,500 the parties’ conduct,501 the need to balance the interests of B and others interested in the property,502 achieving a workable arrangement, making, where occasion requires,503 a clean break,504 and avoiding administrative inconvenience.505 The range of possible factors and the difficulties in putting a value on detriment mean that it is often very difficult for advisers to predict the conclusion at which the court will arrive.505a of gross disproportion in an imaginary case where A claims ownership of a $1m block of land owned by B on the basis of detriment consisting of $100 spent on the erection of a shed; Sledmore v Dalby, n 10, at 209; Beale v Harvey [2004] 2 P & CR 18, CA; Davies v Davies [2015] EWHC 1384 (Ch), at [55]. Examples of awards upset on appeal as disproportionate are Sledmore v Dalby, n 10; Baker v Baker, n 496. It is not an error of law for a judge to give a reliance-based award in a non-bargain case, on grounds of eg unworkability (Dodsworth v Dodsworth (1973) 228 EG 115, CA) or proportionality (Powell v Benney [2007] EWCA Civ 1283, at [25]). 498

Jennings v Rice, n 20, at [52], per Robert Walker LJ: ‘It would be unwise to attempt any comprehensive enumeration of the factors relevant to the exercise of the court’s discretion, or to suggest any hierarchy of factors. In my view they include, but are not limited to … misconduct of A as in J Willis & Sons v Willis [1979] Ch 261 or particularly oppressive conduct on the part of the defendant, as in Crabb [n 13], or Pascoe v Turner [1979] 1 WLR 431 … a need for a clean break; alterations in the benefactor’s assets and circumstances, especially where [B]’s assurances have been given, and [A]’s detriment has been suffered, over a long period of years; the likely effect of taxation; and (to a limited degree) the other claims (legal or moral) on [B] or his or her estate. No doubt there are many other factors which it may be right for the court to take into account in particular factual situations’. It may be doubted whether a court deciding a case on facts similar to those of Pascoe v Turner today would conclude that the minimum equity needed to do justice between the parties and confer security on A was to order the conveyance of the freehold of the property, which was also the most extensive relief which could be awarded. The Court of Appeal appears to have been strongly influenced by B’s conduct: [1979] 1 WLR 431, at 438–9. 499 Sutcliffe v Lloyd [2008] EWHC 1329 (Ch), at [4]. 500 A-G v Baliol College, Oxford (1744) 9 Mod 407; Sledmore v Dalby, n 10; Jennings v Rice, n 20, at [51]; Uglow v Uglow [2004] WTLR 1183, CA, at [32]; Powell v Benney [2007] EWCA Civ 1283, at [30]. Cf Campbell v Griffin [2001] EWCA Civ 990, at [33]; Fisher v Brooker [2009] 1 WLR 1764, HL, at [11] (Lord Walker). 501 Crabb, n 13, at 199 (‘a history of delay, and indeed high-handedness’); London Borough of Bexley v Maison Maurice Limited [2007] 1 EGLR 19, at [70] (‘tantamount to creating a trap’); Sutcliffe v Lloyd [2008] EWHC 1329 (Ch), at [4]. 502 Sledmore v Dalby, n 10, at 204; Giumelli v Giumelli (1996) 196 CLR 101, HCA, at [50]; Flinn v Flinn [1999] 3 VR 712, VSCA, at 749, 750; Campbell v Griffin, above, at [35]; Delaforce v Simpson-Cook (2010) 78 NSWLR 483, NSWCA, at [60]; Davies v Davies [2015] EWHC 1384 (Ch), at [57]. In Durrant v Heritage (unreported, 20 July 1994) it was held that, if A establishes what she needs to raise the equity in her favour, the law ‘compels’ the court to give effect to it: ‘I cannot override or disregard it on the ground that [H] deserves more from the estate of [B] than she will get if Holme Farm has to go to [A]’. It is possible that this overlooks the discretionary nature of the jurisdiction and fails to pay due regard to the interests of the person otherwise entitled to the property (in that case, H). 503 Stallion v Albert Stallion Holdings (Great Britain) Ltd [2009] EWHC 1950 (Ch), at [137], where it did not. 504 Pascoe v Turner [1979] 1 WLR 431, CA, at 438–9; Burrows v Sharp, above, at 93; Gillett v Holt, n 4, at 237; Jennings v Rice, n 20, at [52]. 505 Campbell v Griffin, above, at [34]. 505a See eg Davies v Davies [2016] EWCA Civ 463, at [67]–[69], where, by a process of adding unspecified sums to B’s offer of £350,000, including interest for late payment with respect to

587

12.189  Proprietary estoppel

Examples of the exercise of the discretion 12.189 In exercising its discretion (or making its evaluation), the court has done the following: ordered B to execute,506 or to procure the execution of,507 a transfer of property to A;508 ordered B to redeem or procure the redemption of a mortgage on property which is to be transferred to A;509 ordered B to grant a lease to A;510 ordered B to execute a deed granting A a right over B’s property;511 declared the existence of fishing rights in favour of an angling club;512 declared that B’s property was subject to an equitable right or interest in A’s favour;513 declared that B’s property is subject to a trust in A’s favour;514 declared that A was entitled to B’s half share in property;515 declared that the proceeds of sale of property are to be held by B, after recoupment of expenditure to A and B, for A and B in equal shares;516 declared that B’s property was subject to an equitable charge in A’s favour;517 ordered B to execute a charge by means of a constructive trust;518 declared that A had a licence to remain in B’s property for life or such shorter period as A might decide;519 declared that A’s previously revocable licence over past expectations and discount for early receipt with respect to future expectations, the Court of Appeal concluded by awarding compensation equal to half the trial judge’s award of £1 million. 506 Dillwyn v Llewelyn (1862) 4 De G F & J 517; Thomas v Thomas [1956] NZLR 785; Pascoe v Turner [1979] 1 WLR 431, CA; Voyce v Voyce (1991) 62 P & CR 290, CA; Lim v Ang [1992] 1 WLR 113, PC (transfer of beneficial interest subject to obtaining necessary consent); Suggitt v Suggitt [2011] EWHC 903 (Ch); Griffiths v Williams, above. If the court’s object is to vest in A a legal estate or interest in land, B or some other person will have to execute the necessary conveyance, transfer, lease or other grant. 507 Gillett v Holt, n 4, 237 (B ordered to procure the transfer to A of land owned by company under B’s control); Ottey v Grundy [2003] EWCA Civ 1176 (B’s English executor ordered to use best endeavours to procure the transfer of B’s flat in Jamaica). 508 Eg Durrant v Heritage (unreported, 20 July 1994); Gillett v Holt, n 4; Ottey v Grundy, n 507; Thorner v Major, n 19. 509 Gillett v Holt, n 4, at 238. 510 Hunt v Carew (1649) Nels 46; J T Developments Ltd v Quinn (1990) 62 P & CR 33, CA; Yaxley v Gotts [2000] Ch 162, CA. 511 Duke of Devonshire v Eglin (1851) 14 Beav 530 (where a deed was ordered for a watercourse). Although not stated in the report, it seems that a deed of grant of a right of way was ordered in Crabb, n 13. (The alternative of a licence was considered by Scarman LJ at 198.) 512 Watson v Goldsbrough [1986] 1 EGLR 265, CA. 513 Ward v Kirkland [1967] Ch 194 (equitable easement of drainage). 514 Jiggins v Brisley [2003] EWHC 841 (Ch); Bradbury v Taylor [2013] WTLR 29, CA. These were cases where the court declared that a promised property was held by B’s personal ­representatives on trust for A (in the later case, subject to inheritance tax). 515 Lim v Ang [1992] 1 WLR 113, PC. 516 Holiday Inns Inc v Broadhead (1974) 232 EG 951. 517 McGuane v Welch [2008] 2 P & CR 24, CA. 518 Kinane v Mackie-Conteh [2005] WTLR 345, CA. The order is not apparent from the judgment. The appeal was dismissed on the basis that A was entitled under a constructive trust: see 12.76. (At trial, A claimed specific performance and the judge appears to have so ordered.) 519 Inwards v Baker [1965] 2 QB 29, CA; Williams v Staite [1979] Ch 291, CA; Pascoe v Turner [1979] 1 WLR 431, CA; In re Sharpe [1980] 1 WLR 219, at 223 (‘an irrevocable licence or trust’); Maharaj v Chand [1986] AC 898, where the Privy Council declared in effect that A had a ‘purely personal’ right, ie a licence, of permanent residence, on the basis that A’s and B’s children should stay with A for as long as they needed a home. A did not sue B in common intention constructive trust, since her acquisition of a proprietary interest would have involved

588

Satisfying the equity 12.189

B’s property had become irrevocable and so was, in effect, perpetual;520 required an extended period of notice to be given to A to determine his licence to occupy;521 declared that A was entitled to a payment of money out of the proceeds of sale of B’s property, A being ordered to give possession to B;522 declared that A was entitled to the proceeds of sale of property he expected to inherit;523 ordered B to pay A the value of property which A expected to acquire from B;524 ordered B to pay A compensation either for the detriment A had incurred, with or without a charge on property,525 or to fulfil A’s expectation, in whole or in part;526 ordered a personal guarantee to support a money award against B, a company;527 ordered B to pay money to A in default of his transferring property to A;528 declared that B’s property was subject to an equitable charge to secure a payment of money to A;529 an illegal ‘dealing’ under the laws of Fiji: Chalmers v Pardoe [1963] 1 WLR 677, PC (also on appeal from Fiji). For the same reason, A sued in promissory, not proprietary, estoppel. But for this special concern, the case could have been brought in proprietary estoppel, with precisely the same result. See also Matharu v Matharu (1994) 68 P & CR 93, CA. 520 Plimmer, n 42. 521 Parker v Parker [2003] EWHC 1846 (Ch), at [256], [262] and [290] (2 years’ notice to determine licence). 522 Powell v Benney [2007] EWCA Civ 1283. 523 Wayling v Jones (1993) 69 P & CR 170, CA. 524 Baker v Baker (1993) 25 HLR 408, CA (money payment equal to the value of rent-free occupation of part of B’s property for the rest of A’s life); Gillett v Holt, n 4 (claim made in B’s lifetime; A expected to inherit B’s farming business; compensation based on making good, discounted for accelerated receipt, for A’s exclusion from the business); Giumelli v Giumelli (1996) 196 CLR 101, HCA, at [50], [51]; Galaxidis v Galaxidis [2004] NSWCA 111 (though the basis of the award was agreed by the parties); Davies v Davies [2016] EWCA Civ 463, at [54], [64] (compensation awarded for financial and non-financial elements of detriment suffered, together with a ‘modest’ element for A’s disappointed expectation). See further ­Robertson [2008] Conv 295, at p 316. 525 Burrows v Sharp (1991) 23 HLR 82, CA (money payment equal to expenditure incurred by A in connection with acquisition and extension of the property, as part of a ‘clean break’); Campbell v Griffin [2001] EWCA Civ 990. 526 Wayling v Jones (1993) 69 P & CR 170, CA (see Davis [1995] Conv 409, pp 413–4); Giumelli v Giumelli above; Jennings v Rice, n 20; Ottey v Grundy [2003] EWCA Civ 1176 (where, it has been suggested, A’s expectation interest was £250,000; her reliance loss was reckoned to be £20,000; but the award was of £50,000, plus a flat in Jamaica, if this could be procured, failing which a further £50,000, ie some £100,000: see Gardner [2014] Conv 202, at p 211). 527 Sutcliffe v Lloyd [2008] EWHC 1329 (Ch), citing Gilford Motor Co v Horne [1933] Ch 935 and Jones v Lipman [1962] 1 WLR 832. 528 Ottey v Grundy, above, [33], where B’s executor was ordered to use best endeavours to transfer B’s flat in Jamaica to A and in default to pay her £50,000. Consider also Chalmers v ­Pardoe [1963] 1 WLR 677, PC, at 684: ‘equity … intervene[s] to prevent [B] from going back upon his word and taking the buildings for nothing’. This comes close to suggesting that the choice between fulfilling A’s expectation or paying compensation is at B’s option. 529 Neesom v Clarkson (1845) 4 Hare 97 (lien for purchase-money and cost of improvements to B’s land); Unity Joint Stock Mutual Banking Association v King (1858) 25 Beav 72, at 80 (declaration of lien for cost of buildings); In re Foster (No 2) [1938] 3 All ER 610 (lien for premiums on B’s insurance policy paid by A under a common mistake that it belonged to A; not expressly decided in proprietary estoppel); Chalmers v Pardoe, above (but for the agreement between A and B being unlawful, the Privy Council would have declared an equitable charge over B’s land for A’s cost of building on it); In re Whitehead, Whitehead v Whitehead [1948] NZLR 1066; Morris v Morris [1982] 1 NSWLR 61; Savva v Costa (9 October 1980, unreported, CA); Stratulatos v Stratulatos [1988] 2 NZLR 424; Cadorange Pty Ltd v Tanga

589

12.189  Proprietary estoppel

allowed A to acquire property at a discount set by the court;530 dismissed B’s claim against A, eg for possession;531 restrained B from proceeding against A for damages at common law in nuisance;532 granted relief to B conditional on a money payment to A;533 declared that A is entitled to occupy property rent-free for life or until the property is sold (when a contractual promise by B to pay money to A out of his estate would take effect);534 and ordered compensation sufficient to restore A to the position she was in before her change of position.535 12.190 Any such order may be made on terms.536 It may be made against B’s personal representatives.537 It may involve detailed and complicated Holdings Pty Ltd [1990] 20 NSWLR 26; Burrows v Sharp, above; Baker v Baker (1993) 25 HLR 408, CA; Campbell v Griffin [2001] EWCA Civ 990, [36] (the court has power to award a fixed sum charged on B’s property); Young v Lalic [2006] NSWSC 18. 530 Cameron v Murdoch (1986) 63 ALR 575. 531 Steed v Whitaker (1740) Barn Ch 220; Forbes v Ralli (1925) LR 52 1A 178, PC; Inwards v Baker [1965] 2 QB 29, CA; Jones (AE) v Jones (FW) [1977] 1 WLR 438, CA (dismissal of claim seeking execution of trust for sale); Williams v Staite [1979] Ch 291, CA; Matharu v Matharu (1994) 68 P & CR 93, CA; Maharaj v Chand [1986] AC 898, PC. 532 Short v Taylor, cited in Anon (1709) 2 Eq Ca Abr 522; Williams v Earl of Jersey (1841) Cr & Ph 91. Today the court could simply dismiss B’s claim for damages. Cf Shaw v ­Applegate [1977] 1 WLR 970, CA. 533 Edlin v Battaly (1675) 2 Lev 152 (A entitled to remain in possession until reimbursed building costs); Dodsworth v Dodsworth (1973) 228 EG 115, CA (declaration that B not entitled to a possession order until A reimbursed for improvements); Griffiths v Williams [1978] 2 EGLR 121, CA, at 123 (B entitled to possession but A to have reimbursement of his expenditure; possession deferred until payment). 534 Stallion v Albert Stallion Holdings (Great Britain) Ltd [2009] EWHC 1950 (Ch), [137]. 535 Southwell v Blackburn [2014] HLR 47, CA. 536 Eg that A shall continue to employ B: see East India Company v Vincent (1740) 2 Atk 83 (see McManus v Cooke (1887) 35 Ch D 681, at 694 for a fuller account of the facts); Stiles v ­Cowper (1748) 3 Atk 693 (A sought a common injunction to restrain proceedings in ejectment, but in order to avoid ejectment was required to execute a new lease containing proper covenants: see also Svenson v Payne (1945) 71 CLR 531, HCA, at 543–4); Duke of Devonshire v Eglin (1851) 14 Beav 530 (where the court fixed an annual rent); Duke of Beaufort v Patrick (1853) 17 Beav 60 (conveyance ordered on payment of unimproved value); Somersetshire Coal Canal Company v Harcourt (1858) 2 De G & J 596 (A required to exercise power to purchase B’s land compulsorily as a condition of restraining B from proceeding in ejectment); Mold v Wheatcroft (1859) 27 Beav 510 (compensation to be paid by A to B for the use and occupation of a building erected by A on B’s land); cf Crabb, n 13, 198–199 per Scarman LJ: ‘there can be no doubt that since Ramsden v Dyson the courts have acted upon the basis that they have to determine not only the extent of the equity, but also the conditions necessary to satisfy it …’; Lim v Ang [1992] 1 WLR 113, PC (beneficial ownership conditional on payment of unimproved value of acquired share); Matharu v Matharu (1994) 68 P & CR 93, CA (B’s claim for possession dismissed on terms that A be responsible for repairs and outgoings, including past and future mortgage instalments); Flinn v Flinn [1999] 3 VR 712, CA, at 749 (the farm awarded to A on condition that A ‘maintains’ B’s widow, assumes responsibility for mortgages of the farm and makes other payments); Campbell v Griffin [2001] EWCA Civ 990, at [36] (money payment subject to giving up possession); Davies v Davies [2015] EWHC 1384 (Ch), at [58] (as a condition of obtaining the farm outright from his father’s estate, A was required to continue to make periodical payments to his mother for her life); Moore v Moore, 19 August 2016, unreported, at [176] (B and his wife to continue to receive what they were intending and expecting to receive, up until their deaths, A taking over the farming for all practical purposes, but the assets of the ­farming enterprise being ‘fixed with the obligation to pay the agreed sums out to support [B and his wife] going forwards’). 537 Thorner v Major, n 19.

590

Satisfying the equity 12.191

machinery.538 It may permit B to choose between alternative forms of relief.539 Further or alternatively, the court can give effect to A’s belief or expectation by a mandatory or prohibitory injunction.540 Compensation for infringement of A’s equity is, it seems, itself a possible head of relief.541 In an appropriate case, the granting of relief may be postponed.542 12.191 It is also possible for an estoppel to be established but lead to no relief. The detriment may be too slight to justify any relief,543 the estoppel may have been satisfied by countervailing benefits already received,544 or circumstances may have changed so as to deny A’s equitable claim altogether.545 If A no longer has the property to which A’s belief or expectation relates, and the present owner is not bound by A’s equity, A’s remedy will be confined to a money claim against B, a remedy which has yet to be judicially recognised.546 If B never had the property to which A’s belief or expectation relates, or has no power to create the proprietary right over it which A believed he had or expected to acquire, A’s remedy will similarly be a money claim against B, thus far similarly unrecognised. 538 In Gillett v Holt, n 4, land to be transferred to A was owned by a company controlled by B. The court was prepared to order (i) B to procure the company to issue shares to A of sufficient value, (ii) the liquidation of the company, and (iii) the distribution of the land to A as shareholder in the course of the liquidation. However, in domestic situations, particularly where the parties have fallen out, complicated arrangements are not encouraged and a simple ‘clean break’, which may involve monetary compensation rather than proprietary relief, may be favoured: see eg the arrangements rejected and replaced by compensation in Burrows v Sharp (1991) 23 HLR 82, CA. 539 Yaxley v Gotts [2000] Ch 162, CA (B ordered to execute a 99-year lease to A or pay a sum equal to its value). 540 East India Company v Vincent (1740) 2 Atk 83 (B ordered to pull down a wall and restrained from obstructing A’s light); Jackson v Cator (1800) 5 Ves Jun 688 (B restrained from cutting down ornamental trees during the term of lease); Powell v Thomas (1848) 6 Hare 300 (interlocutory injunction to restrain proceedings in ejectment); Duke of Devonshire v Eglin (1851) 14 Beav 530; Duke of Beaufort v Patrick (1853) 17 Beav 60; Somersetshire Coal Canal Company v Harcourt (1858) 2 De G & J 596; Cotching v Bassett (1862) 32 Beav 101. 541 In Mold v Wheatcroft (1859) 27 Beav 510, B was ordered to compensate A for interference with A’s railway. In Crabb, n 13, the court ordered B to grant A a right of way without payment, even though A had expected to pay for it. The court declined to make A pay because (at 199, Scarman LJ) B had infringed A’s equity by high-handedly erecting a fence, thereby sterilising A’s land. Compensation for the infringement exceeded, and was in effect set off against and extinguished, the price for the easement. See further Crabb (No 2) (1977) 121 Sol Jo 86, CA. 542 Brightlingsea Haven Ltd v Morris [2009] 2 P & CR 11, at [64]. 543 Jones v Watkins [1987] CAT No 1200; Beale v Harvey [2004] 2 P & CR 18, CA. 544 Lee-Parker v Izzet (No 2) [1972] 1 WLR 775; Watts v Story (1984) 134 NLJ 631, CA (benefits received under B’s will and by living in the house rent-free); Sledmore v Dalby, n 10 (rent-free accommodation for 18 years); Lloyds Bank v Carrick [1996] 4 All ER 630 (CA), at 641 (valid contract arose between A and B and so the benefit of that contract removed any detriment that might otherwise have resulted from B’s reliance); Davies v Davies [2016] EWCA Civ 463, at [61]. 545 For example, if B has to sell the property in order to meet unanticipated needs, such as the expenses of care or medical treatment (cf Thorner v Major, n 19, [18], at [86]) or, perhaps more doubtfully, provision for others, eg a new spouse. See further Neuberger (1990) 68 CLJ 537, at 545. 546 See 12.178 and Bright and McFarlane [2005] Conv 14.

591

12.192  Proprietary estoppel

OVERLAP WITH OTHER RELIANCE-BASED ESTOPPELS 12.192 In Hopgood v Brown,547 an estoppel by representation was successfully deployed by way of defence to an action in trespass or ejectment. The Court of Appeal did not hear argument addressed to the estoppel being given effect in any other way, nor was there any discussion of A having an ‘equity’.548 On the traditional view, A could have counterclaimed a declaration as to the title to the disputed land, using his paper title and relying on an estoppel by representation of fact or estoppel by convention as to a fact to prevent B from disputing the line of the boundary. If the counterclaim were decided under the doctrines of estoppel by representation of fact or convention as to a fact, as traditionally understood, the estoppels would have operated in an absolute or ‘all or nothing’ way. 12.193 It is submitted that the ‘representation’ strand of proprietary estoppel, to use Professor McFarlane’s classification, is a particular application of the doctrine of proprietary estoppel, generating an equity and an equitable cause of action in A,549 and that the same is also true of estoppel by convention.550 On precisely the same facts as in Hopgood v Brown, A would be entitled to counterclaim in proprietary estoppel for discretionary relief.551 12.194 In a proprietary context, therefore, different forms of reliance-based estoppel might be argued to have different effects, depending on whether they are used defensively, or offensively in aid of some independent cause of action (say, in contract or property), or as a cause of action in itself in proprietary estoppel. Take the extreme example given in Commonwealth of Australia v Verwayen,552 where A relies on a representation by B, the owner of a $1m block of land, that he, A, is the owner, but where he has sustained no detriment in reliance on the representation beyond the erection of a shed costing $100: in such a case, it might be argued that the estoppel can be deployed defensively, to defeat a claim made against A by B, eg a claim to possession; or offensively, in aid of a claim by A against B in, say, trespass, enabling A to succeed on the footing that, as between A and B, A has a superior title to the land than B; or as a proprietary estoppel, defensively or offensively, enabling A to obtain such relief as is just and equitable (which, on these facts, would be compensation for the modest detriment suffered). 12.195 Prior to the decisions of the Court of Appeal in Scottish Equitable plc v Derby553 and National Westminster Bank plc v Somer International UK Ltd,554 it might have been said that A has a free choice as to the estoppel he invokes; and

547 [1955] 1 WLR 213, CA. See 12.72. 548 See 12.74. 549 Crabb, n 13, and Kinane v Mackie-Conteh [2005] WTLR 345, CA. See 12.75 onwards. 550 See n 214 above. 551 See 12.75–12.77. 552 (1990) 170 CLR 394, HCA, at [17] (Deane J). 553 [2001] 3 All ER 818, at [44], [46]–[51]. 554 [2002] QB 1286, at [46], [57]–[58], [67].

592

Overlap with other reliance-based estoppels 12.196

that the court has no discretion to mitigate its absolute, preclusionary effect if A claims an estoppel by representation of fact rather than a proprietary estoppel. Since Somer, however, it is possible to say that in some circumstances, at least, the ‘ordinary rule’555 may be mitigated by an equitable discretion to avoid injustice. The Somer exception proceeds on the footing that an estoppel by representation, when deployed defensively to a claim for the restitution of money, produces an absolute, preclusionary result, which equity may mitigate.556 The extent, if at all, to which this can or will be generalised to cases other than defences to claims for the restitution of money is uncertain.557 It is, however, consistent with the principal thesis of this work – of a single doctrine of reliance-based estoppel aimed at protecting A from an unconscionable or unfair change of position by B – and with the ‘underlying principles’ on which the Somer exception is based,558 to extend it to any case where an absolute, preclusionary effect given to an estoppel by representation of fact or convention as to a fact, whether deployed defensively or offensively, would produce a result which is ‘clearly inequitable or unconscionable’.559 12.196 There is, moreover, a different possible submission in cases of overlap between estoppel by representation of fact or convention and proprietary estoppel. The submission is that, where the subject matter of the representation or

555 The Privy Council restated the ‘ordinary rule’ in Kelly v Fraser [2013] 1 AC 450, PC, at [17], as follows (per Lord Sumption): ‘The relevance of detrimental reliance in the law of estoppel by representation is that it is generally what makes it unjust for the representor to resile from his previously stated position. However, for this purpose, the ordinary rule is that the detriment is not the measure of the representee’s relief, and need not be commensurate with the loss that he would suffer if the representor did resile: see Avon County Council v Howlett [1983] 1 WLR 605, 620–625, where the authorities are reviewed by Slade LJ’. The Privy Council did not comment adversely, however, on the recognition in Howlett (see 1.59) of an equitable discretion to mitigate the result. In addition to Howlett (which sowed the seed of what has become the Somer exception), Scottish Equitable plc v Derby was cited, but not Somer itself. 556 See Somer, n 554, at [55]–[60] (Clarke LJ). See further 1.57, 5.66. 557 See 1.57, n 247, referring to Kaupthing Singer & Friedlander Ltd v UBS AG [2014] EWHC 2450 (Comm) at [106]–[110], where Andrew Smith J indicated his obiter view that the equitable jurisdiction to mitigate an unjust result discovered in Somer is confined to estoppel against the restitution of money. (Unaffected on this point by Kaupthing Singer & Friedlander Ltd v UBS AG [2016] EWCA Civ 319.) 558 See Somer, n 554, per Potter LJ (with the concurrence of Clarke and Peter Gibson LJJ), at [40]–[42], where, at [43], he summarised the ‘underlying principles’ thus: ‘… it is clear that the doctrine of estoppel by representation [of fact] stems from and is governed by considerations of justice and equity. That being so, it is difficult to see why equity should as between the parties be impotent in an appropriate case or category of case to require a person relying upon the defence of estoppel by representation to rely upon it only to the extent of any detriment suffered’. The same principles are, we submit, no less applicable to a case where A deploys an estoppel by representation of fact or convention, offensively in aid of an independent cause of action, with an intended absolute, preclusionary result: equity should not be impotent to restrict relief to A as for a proprietary estoppel, eg to compensation for detriment suffered. 559 The exception only applies where it would be ‘clearly inequitable or unconscionable’ for A to be allowed to insist on the estoppel’s absolute, preclusionary effect: see Somer, n 554, at [58] (Clarke LJ): see 1.59.

593

12.196  Proprietary estoppel

convention is the existence of a right or interest in or over property, any estoppel raised is a proprietary estoppel, so that whether the estoppel be deployed defensively or offensively, it raises an equity which the court satisfies by exercising a discretion to secure the just result.560

PROPRIETARY ESTOPPEL AND CONSTRUCTIVE TRUSTS 12.197 In Thorner v Major, Lord Scott discussed the relationship between proprietary estoppel and constructive trust and ‘their respective roles in ­ ­providing remedies where representations about future property interests have been made and relied on’.561 He said:562 ‘There are many cases in which the representations relied on relate to the acquisition by the representee of an immediate, or more or less immediate, interest in the property in question. In these cases [of which he gave as examples Crabb, n 13, and Ramsden v Dyson, n 28] a proprietary estoppel is the obvious remedy. The representor is estopped from denying that the representee has the proprietary interest that was promised by the representation in question. … There are many other examples of decided cases where representations acted on by the representee have led to the representor being estopped from denying that the representee had the proprietary interest in the representor’s land that the representation had suggested. Constructive trust, in my opinion, has nothing to offer to cases of this sort. But cases where the relevant representation has related to inheritance prospects seem to me difficult, for the reasons I have given, to square with the principles of proprietary estoppel established by the Ramsden v Dyson and Crabb … line of cases and, for my part, I find them made easier to understand as constructive trust cases. The possibility of a remedial constructive trust over property, created by the common intention or understanding of the parties regarding the

560 There is authority for this in relation to proprietary estoppel by convention in the cases at n 214 above (see further 8.45 onwards), and in relation to estoppel by representation of fact in the dictum of Lord Scott in Cobbe, see 12.28, with majority concurrence, that an estoppel which bars B from asserting a fact or matter of law and fact against a claim by A to a proprietary right is a proprietary estoppel. Lord Scott’s analysis is, however, open to the criticisms identified at 1.2 n 3, 1.22, and 12.29. The proposition that a representation or convention as to the existence of a proprietary right founds a proprietary estoppel with a discretionary result is, nevertheless, consistent with our principal thesis and with the underlying principles relied on in Somer. See further 1.51–1.62. Cf The Law of Proprietary Estoppel (2014), [7.32]–[7.34], where McFarlane considers that our proposition involves ‘a fundamental rethinking of the nature and operation of the doctrine of estoppel by representation’. 561 It is important, in this discussion, to distinguish between (i) the inclusion, among the many remedies by which a court may satisfy a proprietary estoppel equity, of a trust declared by the court (eg where A’s expectation is of a share of B’s property which can only exist under a trust: see nn 514, 515 and 516), and (ii) a ‘remedial constructive trust’, which, where it exists, is a distinct and independent equitable doctrine aimed at counteracting unconscionable conduct and leading to a single remedy, namely the imposition of a constructive trust: see further n 568, and Sen v Headley [1991] Ch 425 at 440, CA. See also Martin [1987] Conv 211; ­Hayton (1987) 46 CLJ 215. 562 Note 19, at [20]. (None of the other members of the Appellate Committee addressed this issue.) See further Cook v Thomas [2010] EWCA Civ 227, at [105], where Lloyd LJ expressed no enthusiasm for Lord Scott’s view.

594

Proprietary estoppel and constructive trusts 12.200

property on the basis of which the claimant has acted to his detriment, has been recognised at least since Gissing v Gissing [1971] AC 886 … The “inheritance” cases [illustrated by Gillett v Holt, n 4, In re Basham, decd, n 29, Walton v Walton, n 164, and Thorner v Major itself] … are, to my mind, more comfortably viewed as constructive trust cases … For my part I would prefer to keep proprietary estoppel and constructive trust as distinct and separate remedies, to confine proprietary estoppel to cases where the representation, whether express or implied, on which [A] has acted is unconditional and to address the cases where the representations are of future benefits, and subject to qualification on account of unforeseen future events, via the principles of remedial constructive trusts.’

12.198 Lord Scott’s view was prompted by concerns about possible changes in B’s circumstances between giving the assurance and the time when it falls to be performed. He said: ‘… it is an odd sort of estoppel that is produced by representations that are, in a sense, conditional’.563 This may reflect the limited view of proprietary estoppel he had expressed in Cobbe when defining it in terms more appropriate to estoppel by representation of fact, a view on which we have previously commented,564 and which was not followed in Thorner v Major. 12.199 Moreover, what divides proprietary estoppel from constructive trust, on Lord Scott’s account, is whether the assurances are unconditional or conditional. Conditionality, however, may be implicit in any misprediction or promise-based case of proprietary estoppel, and the uncertain length of time between promise and performance during which B’s circumstances may change is common to ‘inheritance’ cases and other promise-based cases of proprietary estoppel. Conditionality thus seems to be a strange basis for treating ‘inheritance’ cases differently. 12.200 We also respectfully doubt whether, as Lord Scott considered, a remedial constructive trust would be better suited than proprietary estoppel to deal with the conditional assurances and unforeseen future events in ‘inheritance’ cases. He evidently considered a remedial constructive trust to be a more flexible remedy than proprietary estoppel.565 But the array and flexibility of the court’s remedial responses to B’s unconscionable change of position is acknowledged to be the hallmark of proprietary estoppel.566 By contrast, a common intention 563 At [19]. Cf 12.126–12.127. It would indeed be odd to produce an estoppel by representation of fact by means of a conditional representation. 564 See 12.28–12.29. 565 It is important, in this discussion, to distinguish between a constructive trust declared by the court, which is one, but only one, of the ways in which a court may satisfy a proprietary estoppel equity (eg where A’s expectation is of a share of B’s property which can only exist under a trust: see nn 514, 515 and 516), and a ‘remedial constructive trust’, which, where it exists, is a distinct and independent equitable doctrine aimed at counteracting unconscionable conduct and leading to a single remedy, namely the imposition of a constructive trust. See Sen v Headley [1991] Ch 425 at 440, CA. See also Martin [1987] Conv 211; Hayton (1987) 46 CLJ 215. 566 This was recognised at least as long ago as Plimmer, n 42, at 714 (‘the Court must look at the circumstances in each case to decide in what way the equity can be satisfied’); see further n 488. See also Mee [2009] CFLQ 367, at p 379.

595

12.200  Proprietary estoppel

constructive trust (a ‘CICT’), which Lord Scott treated as a species of remedial constructive trust,567 has generally considered to be an ‘institutional’, not a ‘remedial’, doctrine568 concerned with ascertaining the true beneficial interests of the parties. It is true that not all constructive trusts are CICTs: in principle, they can arise in any circumstances where the conscience of the legal owner is affected.569 There may therefore be room for a full remedial constructive trust doctrine to be recognised in English law. But such a doctrine, if recognised, would offer no more flexibility for dealing with unforeseen changes in B’s circumstances than proprietary estoppel. 12.201 Before Stack v Dowden, it had become commonplace to see at least some forms of CICT as fully overlapping with proprietary estoppel. Despite a formidable accretion of authority to this effect,570 not all commentators were

567 In this he may have been prescient, since it was held in Jones v Kernott [2012] 1 AC 776, SC, that, where the parties have had no specific intention as to the size of their respective shares in the property, the court may impute an intention to them to hold the property in such shares as the court considers ‘fair’. This looks more like a remedial constructive trust, involving a significant exercise of discretion. 568 Stack v Dowden [2007] 2 AC 432, HL, at [37] (Lord Walker); Hameed v Qayyum [2009] EWCA Civ 352, at [41] (Etherton LJ, with concurrence); Mee [2009] CFLQ 367, p 379. The contrast is between a ‘substantive’ or ‘institutional’ constructive trust and a ‘remedial’ constructive trust: see Snell’s Equity (33rd edn, 2015), [26-014]; and see Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, HL, at 714G–715A per Lord Browne-Wilkinson: ‘… hitherto English law has for the most part only recognised an institutional constructive trust … Under an institutional constructive trust, the trust arises by operation of law as from the date of the circumstances which give rise to it: the function of the court is merely to declare that such trust has arisen in the past. The consequences that flow from such trust having arisen (including the possibly unfair consequences to third parties who in the interim have received the trust property) are also determined by rules of law, not under a discretion. A remedial constructive trust, as I understand it, is different. It is a judicial remedy giving rise to an enforceable equitable obligation: the extent to which it operates retrospectively to the prejudice of third parties lies in the discretion of the court’. The expression ‘constructive trust’ is often used in a remedial sense, usually in the context of recipient liability or accessory liability (eg liability ‘as a constructive trustee’), but a full remedial constructive trust, in the sense of an equitable proprietary remedy giving priority over the defendant’s creditors to a claimant with no pre-existing proprietary interest, has yet to be recognised by English courts: cf In re Polly Peck (No 2) [1998] 3 All ER 812, CA, at 827 and 831. Cf the position in Australia, where, in Giumelli v Giumelli (1999) 196 CLR 101, HCA, at [2]–[11], constructive trust, apparently of the remedial variety, is discussed in parallel with proprietary estoppel. 569 Stack v Dowden, n 568 at [128] (Lord Neuberger). 570 In re Sharpe [1980] 1 WLR 219, at 223; Grant v Edwards [1986] Ch 638, CA, at 656 per Browne-Wilkinson V-C: ‘The two principles [common intention constructive trust and proprietary estoppel] have been developed separately without cross-fertilisation between them: but they rest on the same foundation and have on all other matters reached the same conclusions’; Coombes v Smith [1986] 1 WLR 808; In re Basham [1986] 1 WLR 1498 at 1504: ‘the equity which arises in favour of [A] in cases of proprietary estoppel is in the nature of a constructive trust’; Maharaj v Chand [1986] AC 898 at 907, PC; Austin v Keele [1987] ALJR 605, PC, at 609 per Lord Oliver: the CICT doctrine ‘in essence … is an application of proprietary estoppel’; Lloyd’s Bank Plc v Rosset [1991] 1 AC 107, HL, at 129, 132–3 (Lord Bridge); Stokes v Anderson [1991] 1 FLR 391, CA; Sen v Headley [1991] Ch 425, at 439–40; Yaxley v Gotts [2000] Ch 162 at 176, CA per Robert Walker LJ: ‘At a high level of generality, there is much common ground between the doctrines of proprietary estoppel and the constructive trust … Plainly there are large areas where the two concepts do not overlap: when a landowner stands

596

Proprietary estoppel and constructive trusts 12.202

convinced.571 In Stack v Dowden, Lord Walker signalled a change of mind.572 He drew attention to the following differences between the two doctrines:573 (1) Proprietary estoppel typically consists of asserting an equitable claim against the conscience of the ‘true’ owner. (2) It raises a ‘mere equity’.574 (3) The equity is to be satisfied by the minimum award necessary to do justice, which may sometimes lead to no more than a monetary award. (4) A CICT identifies the true beneficial owner or owners, and the size of their beneficial interests. (5) Where, in a CICT case, there is an express agreement as to the beneficial shares that the claimant is to have, the court will give effect to this, even where some smaller share or other remedy would otherwise seem appropriate.575 12.202 It has been suggested that the law might develop by subsuming the CICT doctrine under the doctrine of proprietary estoppel; that this would have the advantage of avoiding the often difficult and somewhat artificial exercise of searching for an express or inferred ‘common intention’;576 that the proprietary estoppel doctrine should be preferred over the CICT, since (so it is claimed) the by while his neighbour mistakenly builds on the former’s land the situation is far removed (except for the element of unconscionable conduct) from that of a fiduciary who derives an improper advantage from his client. But in the area of a joint enterprise for the acquisition of land (which may be, but is not necessarily, the matrimonial home) the two concepts coincide’; Birmingham Midshires Mortgage Services Limited v Sabherwal (2000) 80 P & CR 256, CA, at [31] per Robert Walker LJ: ‘In this type of family situation, the concepts of [common intention constructive] trust and equitable [ie proprietary] estoppel are almost interchangeable’; ­Banner Homes Group plc v Luff Developments Ltd [2000] Ch 372 at 384, CA; Chan Pui Chun v Leung Kam Ho [2002] EWCA Civ 1075, at [91]; Oxley v Hiscock [2005] Fam 211, CA, at [66], [70]–[71]; Oates v Stimson [2006] EWCA Civ 548. 571 In favour: Hayton [1990] Conv 370 (‘the apparent distinction between common intention constructive trusts and equitable estoppel claims is illusory’); (1993) 109 LQR 485; Dixon [2005] Conv 79. Doubting: Ferguson (1993) 109 LQR 114; Gardner (1993) 109 LQR 263; Mee (2009) 21 CFLQ 367. 572 At [37]: ‘I am now rather less enthusiastic about the notion that proprietary estoppel and “common interest” constructive trusts can or should be completely assimilated’. See Mee [2009] CFLQ 367, at p 380. See also Powell v Benney [2007] EWCA Civ 1283, at [24]; ­Herbert v Doyle [2010] EWCA Civ 1095, at [55]–[56]. 573 Thus, although Lord Scott may have drawn the line in the wrong place, he was right in Thorner v Major to say that proprietary estoppel and constructive trust are ‘distinct and separate remedies’: see 12.197. 574 Whatever view is taken of the precise nature of the equity raised by a proprietary estoppel (see 12.166 onwards), at its highest it is, until satisfied, only an inchoate property right, unlike a full beneficial interest arising under a CICT. 575 This list should not be seen as exhaustive. For example, it is not clear that detrimental reliance is necessary today for all forms of CICT. See further Law Com No 278, Sharing Homes (2002), [2.101] onwards. 576 See Underhill and Hayton, Law of Trusts and Trustees (19th edn, 2016), [30.48]–[30.50]. See also Liew [2015] Conv 210, where the CICT remedy is considered as an Austinian ‘primary right’, while a proprietary estoppel remedy vindicates A’s ‘secondary right’, a right which is generated

597

12.202  Proprietary estoppel

former is available whenever a CICT is available; and that the flexibility of the remedy means that it can be adjusted to fit the circumstances of the case.577 12.203 Given the significant differences between the two doctrines, the suggested development could not easily occur. It is nevertheless true that, on particular facts, A may be able to advance a claim to a share in property, such as a family home, on the basis of either a CICT or proprietary estoppel. If he chooses the former, he will obtain a non-discretionary remedy which may exceed what he would obtain under proprietary estoppel. Where a case lies factually in the intersection between a CICT and proprietary estoppel, it is clear that A cannot be compelled to forgo the CICT remedy and accept a lesser proprietary estoppel remedy, such as compensation.578 Whether A can choose proprietary estoppel over CICT is unclear.579 12.204 The difficulties in the way of assimilating completely the doctrines of CICT and proprietary estoppel should not obscure, however, the important similarities they share. While it is essential to retain the flexibility of the doctrine, it is submitted that it would be a beneficial step to regard proprietary estoppel as requiring the court to look at the matter in the round, in the light of all the circumstances as they appeared at the time when A’s belief or expectation fell to be fulfilled or recognised or his assumption was repudiated, and to make an evaluation of what good conscience required of B at that time.580 This approach may involve no more of an exercise of an uncontrolled discretion than the ascertaining of the beneficial interests under a CICT where these have not been expressly agreed.581 If adopted, it might go some way towards narrowing the differences between a CICT and proprietary estoppel, by giving the latter more of an ‘institutional’ character. by B’s violation of A’s ‘primary right’, viz his equity. The proposal is that the CICT become a doctrine based on ‘secondary rights’, making it possible to subsume it in proprietary estoppel. 577 Ibid. The assumption that proprietary estoppel is always available where a CICT is available is, we submit, questionable. 578 See Stokes v Anderson [1991] 1 FLR 391, CA, at 399; Hyett v Stanley [2004] 1 FLR 394, CA, at [27], where, rejecting B’s submission that a CICT case ought to be treated as a case of proprietary estoppel, Nourse LJ (with the concurrence of Keene and Peter Gibson LJJ) said: ‘… the two doctrines have not been assimilated, and in my view we in this court must continue to regard cases such as the present as being governed by the principles of Gissing v Gissing’. This reflects a fundamental principle of the estoppel doctrine, viz that it cannot be allowed unacceptably to subvert a rule of law: see Ch 7. Thus, where A’s rights arise under a legal doctrine, such as CICT, that is not identical with reliance-based estoppel they cannot be reduced by B’s invoking proprietary estoppel. The position is different in cases of overlapping estoppels, where that principle has no application: cf 12.192–12.196. 579 It is difficult to see why A would ever do this, given that relief in proprietary estoppel cannot exceed A’s belief or expectation: see 12.188. 580 Suggitt v Suggitt [2012] EWCA Civ 1140, CA, at [44], and Bradbury v Taylor [2013] WTLR 29, CA, at [51], suggest an incipient tendency to characterise proprietary estoppel remedies as involving ‘evaluation’ rather than discretion. See n 485. 581 It is the apparently unconstrained discretionary character of the remedy which has led to the suggestion that different judicial approaches to the remedial aspect of proprietary estoppel may not conform to the Rule of Law (see Gardner (1999) 115 LQR 438; Mee [2013] Conv 280, at pp 295–6) or may create the risk of the court being seen as doing palm-tree justice (cf Taylor v Dickens [1998] 1 FLR 806).

598

CH A P T E R 1 3

Election

Introduction  13.1 Common law election  13.12 Election between substantive rights  13.13 Election between remedies  13.34 Election between persons  13.44 Equitable election  13.50 Instruments  13.50 Litigation  13.54

INTRODUCTION 13.1 Election applies where B is faced with inconsistent courses of action which affect A’s rights or obligations. If B, with knowledge of the choice between them, decides on one course of action rather than the other and communicates that choice to A, B is bound by that decision.1 The rationale for the principle is that parties to an ongoing legal relationship are entitled to know where they stand, and classic examples of situations in which the principle applies are where B has to decide whether to accept a repudiatory breach of contract by B and

1 See Motor Oil Hellas (Corinth) Refineries SA v Shipping Corpn of India (the ‘Kanchenjunga’) [1990] 1 Lloyd’s Rep 391 (HL) at 398 (Lord Goff). The decision is referred to as the Kanchenjunga in this chapter. For an earlier but equally authoritative statement of the principle, see Kammins Ballroom Co Ltd v Zenith Investments Ltd [1971] AC 850 (HL) at 882–3 (Lord Diplock). Both statements were cited by Rix LJ in Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] EWCA Civ 147 at [36] and [37]. For a recent statement of the test at first instance, see Involnert Management Inc v Aprilgrange Ltd [2015] 2 Lloyd’s Rep 289 (Leggatt J) at [159]–[161].

599

13.1  Election

either terminate or affirm,2 or where B has a right to rescind a contract for misrepresentation or undue influence and must decide whether to exercise it.3 But it also applies in the context of statutory rights and obligations and litigation. Because the decision itself will regulate the future rights and obligations of the parties, it is binding. For the same reason, the law requires B to make a decision within a reasonable time. 13.2 Election binds B immediately upon communication and does not depend on proof of detrimental reliance.4 It is not therefore a reliance-based principle or a species of estoppel.5 It is the choice between inconsistent rights which underpins the principle.6 Because of its origins at common law, and because the principle depends on choice, there is no equitable discretion to grant relief. Nevertheless, estoppel and election are based on the same underlying conception of fairness.7 Moreover, there is often a factual overlap between the two principles (for example, where A relies on B’s election to his or her detriment). Finally, the principle that a party must elect within a reasonable time, which limits the operation of election, is itself a form of promissory estoppel. For instance, B will be held to have lost the right to terminate or rescind a contract where he or she delays too long and A continues to perform.8 13.3 The function of this chapter is to explain the often confusing terminology which has been applied to both estoppel and election (particularly in the context of contractual rights) and to summarise the different categories of election, before examining in more detail the ingredients of the doctrine of election. Separate treatment is also given to election between persons which often o­ verlaps

2

See, for example, Insurance Corpn of the Channel Islands, Royal Insurance (UK) Ltd v Royal Hotel Ltd (No 2) [1998] Lloyd’s Rep IR 151 (Mance J) at 161 and Sphere Drake Insurance plc v Orion Insurance plc [1999] All ER (D) 133 (Langley J). 3 See, for example, Goldsworthy v Brickell [1987] Ch 378 (CA) at 409–12 (Nourse LJ) which provides a good illustration of affirmation in both the wider sense of laches or acquiescence and in the narrower sense of election. 4 For a clear statement to this effect, see BDW Trading Ltd v JM Rowe (Investments) Ltd [2011] EWCA Civ 548 at [75] (Patten LJ). 5 In the third edition of this book, detrimental reliance was considered to be an ingredient of election by Sir Alexander Turner: see page 313. The relevant passage was cited with approval in Meng Leong Development Pte Ltd v Jip Hong Trading Co Pte Ltd [1985] 1 All ER 120 (PC) at 122h–j (Lord Templeman) and Nurcombe v Nurcombe [1985] 1 WLR 370 (CA) at 379D–F (Sir Denys Buckley). But these citations cannot be regarded as authoritative in the light of the Kanchenjunga. See in particular [1990] 1 Lloyd’s Rep 391 at 399, where Lord Goff set out the similarities and differences between common law election and promissory estoppel. 6 See Sargent v ASL Developments Ltd (1974) 131 CLR 634 (HCA) at 641 (Stephen J): ‘The doctrine only applies if the rights are inconsistent the one with the other and it is this concurrent existence of inconsistent sets of rights which explains the doctrine; because they are inconsistent neither one may be enjoyed without the extinction of the other and that extinction confers upon the elector the benefit of enjoying the other, a benefit denied to him so long as both remained in existence’. 7 See Oliver Ashworth Ltd v Ballard Ltd [2000] Ch 12 (CA) at 27D–E (Robert Walker LJ). 8 See 13.27. It is described by Professor Cooke in Halsbury’s Laws of England (5th edn, 2014) at §363 as ‘election by estoppel’.

600

Introduction 13.4

with ratification in the law of agency. We begin, however, with a brief historical survey of the origins of the principle which is of fairly ancient origin.9 In the nineteenth and early twentieth centuries, the common law cases on contract made little distinction between election and estoppel10 although they sometimes used alternative formulations such as ‘concluded’, ‘conclusive’ or ‘precluded’ to describe the consequences of an election.11 At the same time the cases often used the term ‘waiver’ interchangeably with ‘estoppel’ or ‘election’.12 Because no real distinction was drawn at this time between election, waiver and estoppel, the cases rarely explored the nature of election, and whether it required full knowledge on the part of the electing party, or contrasted it with the more objective nature of promissory estoppel and estoppel by representation of fact.13 13.4 The terms ‘approbate’ and ‘reprobate’ are also used in election cases. These words are normally associated with the equitable doctrine of election rather than with the common law doctrine which was applied to contractual rights. The terms originated in Scots law and the equitable doctrine of election developed

9

The earliest reference to election appears to be Coke on Littleton, 146a, cited by Lord Blackburn in Scarf v Jardine (1882) 7 App Cas 345 (HL) at 362. 10 See Tyerman v Smith (1856) 6 E & B 719 at 724 (Lord Campbell CJ): ‘The plaintiff is estopped by his conduct from objecting that there was no written contract for enlarging the time’. See also Haddow v Morton [1894] 1 QB 565 (CA) at 566–7: ‘the judgment creditor … elected to accept the money instead of the goods, and was thereby estopped from afterwards denying that, as against himself, the goods were the goods of the claimant’. See also R v Rowe (1894) 7 LT 578 (DC) at 579 (Charles J): ‘estopped from denying the proper service of the writ’; Re Brindley, ex p Taylor, Sons & Co [1906] 1 KB 377 (CA) at 384 (Vaughan Williams LJ): ‘estoppel based on acquiescence’; Re Stray, Ex p Stray (1867) 2 Ch App 374 at 378 and 381 (Lord Cairns); Neale v Electric Ordnance Accessories Co Ltd [1906] 2 KB 558 (CA); Re Jones Bros, ex p Associated Newspapers Ltd [1912] 3 KB 234 (DC) 239 at 240 (Phillimore J) and 240 (Lord Coleridge); and Re Wilson [1916] 1 KB 382 (Horridge J) at 392–5. 11 These expressions were often used in cases where a party to litigation was taken to have waived a procedural irregularity. See Benwell v Hinxman (1835) 3 Dowl 500 at 501 (Parke B): ‘concluded’; Smith v Baker (1873) LR 8 CP 350 at 355 (Bovill CJ), 356 (Keating J) and Curtis v Williamson (1874) LR 10 QB 57 (CA): both ‘conclusive’; Doe d Morecraft v Meux (1825) 4 B & C 606 at 609 (Bayley J); Paterson v Gandassequi (1812) 15 East 62 at 68–9 (Lord Ellenborough CJ); Thomson v Davenport (1829) 9 B & C 78 (Bayley J); Clough v London and N.W. Rly Co (1871) LR 7 Ex 26 at 35 (Blackburn J); and Ives and Barker v Willans [1894] 2 Ch 478 (CA) at 483 (Lindley LJ): all ‘preclude’. 12 See Lucking v Denning (1701) 1 Salk 201 at 202 (Holt CJ): ‘if he waives this … he is estopped to say’; Palmer v Metropolitan Rly Co (1862) 31 LJ QB 259 at 260 (Mellor J), where waiver was said to give rise to an estoppel; and Kingsland v Lowndes (1864) CBNS 514 at 528: ‘no waiver, no estoppel’. See also Norwich Corpn v Norwich Electric Tramways Co [1906] 2 KB 119 (CA) at 125–6; Ayrey v British Legal and United Provident Co [1918] 1 KB 136 (DC) at 141; Re Suarez [1918] 1 Ch 176 (CA) 200; and Hartley v Hymans [1920] 3 KB 475 ­(McCardie J) at 495. 13 See eg Bentsen v Taylor, Sons & Co [1893] 2 QB 274 (CA) at 284 (Bowen LJ): ‘Did the Defendants by their acts and conduct lead the plaintiff reasonably to suppose that they did not intend to treat the contract for the future as at an end, on account of the failure to perform the condition precedent, but that they only intended to rely on the misdescription as a breach of warranty, treating the contract as still open for future performance?’. Compare the observations of Atkin LJ in Mann Macneal v Capital and Counties Insurance Co [1921] 2 KB 300 (CA) at 312.

601

13.4  Election

quite separately from the common law.14 It is a traditional principle of equity that a person who accepts a benefit under an instrument must adopt it in its entirety, giving full effect to its provisions and, if necessary, renouncing any other rights which are inconsistent with it. The equitable principle requires, therefore, that a person who accepts the benefit of a disposition must also accept the burden of it or compensate any other person intended to benefit by it.15 The first modern statement of the principle can be found in Evans v Bartlam16 where the House of Lords rejected the argument that, because he had applied for a stay of execution, a debtor should be held to have affirmed the underlying judgment and could not apply to set it aside. In Lissenden v CAV Bosch Ltd17 the House of Lords then accepted that a party might be held to have elected to affirm a judgment or award by accepting a benefit or payment under it (although it did not apply to the statutory scheme for workers’ compensation which was the subject matter of the appeal).18 13.5 In Express Newspapers plc v News (UK) Ltd,19 Sir Nicolas BrowneWilkinson V-C applied this principle to litigation generally. He accepted that this involved a novel extension but held that a newspaper which had commenced proceedings and obtained summary judgment against another for breach of copyright and breach of confidence by repeating a story could not defend a claim brought by a third newspaper on the same basis. The decision suggested a wider role for the doctrine of election in litigation but it has rarely been followed.20 14 See Lissenden v CAV Bosch Ltd [1940] AC 412 at 418 (Viscount Maugham), 429 (Lord Atkin) and 435 (Lord Wright). See also Young v Bristol Aeroplane Co Ltd [1946] AC 163 at 173 (Viscount Simon). 15 See 13.50–13.53. 16 [1937] AC 473 (HL) at 483 (Lord Russell of Killowen): ‘The doctrine of approbation and reprobation requires for its foundation inconsistency of conduct; as where a man having accepted a benefit given him by a judgment cannot allege the invalidity of the judgment which ­conferred the benefit’. 17 [1940] AC 412 (HL) at 426 (Lord Atkin): ‘In these circumstances it may be right to say that if a party takes a benefit under an award he cannot afterwards be heard to say that it was entirely invalid for, if so, he would have had no right to the benefit he took’. 18 In Banner Industrial and Commercial Properties Ltd v Clark Paterson Ltd [1990] 2 EGLR 139 at 140M–141A, Hoffmann J accepted that Lord Atkin had left open the question whether the election was irrevocable: ‘The last remark is a reference to the possibility, in cases of equitable election, of allowing a person who has taken a benefit under the instrument to avoid having to compensate the disappointed donee by returning the benefit’. 19 [1990] 1 WLR 1320 (Sir Nicolas Browne-Wilkinson VC) at 1329G–H: ‘There is a principle of law of general application that it is not possible to approbate and reprobate. That means that you are not allowed to blow hot and cold in the attitude that you adopt. A man cannot adopt inconsistent attitudes towards another: he must elect between them and, having elected to adopt one stance, cannot thereafter be permitted to go back and adopt an inconsistent stance’. For further discussion, see 13.54. See also Banque des Marchands de Moscou ­(Koupetschetsky) v Kindersley [1951] Ch 112 (CA) at 119 (Lord Evershed MR). 20 In Union Music Ltd v Watson [2002] EWCA Civ 680 at [27], Robert Walker LJ stated that it was a ‘decision on the unusual, and fairly extreme, facts of the case, but it embodies a general principle. Indeed the principle is so general and so hard to argue with as a general proposition that it needs careful handling’. In Nexus Communications Group Ltd v Lambert [2005] EWHC 345 (Ch), Gabriel Moss QC took the same position: see [36]–[41]. For a recent e­ xample in which the court followed Express Newspapers, see Eight Representative ­Claimants v MGN Ltd [2016] EWHC 855 (Ch) (Mann J) at [26]–[36] (considered in 13.58).

602

Introduction 13.6

In Oliver Ashworth (Holdings) Ltd v Ballard (Kent) Ltd,21 all of the strands of election came together. In that case a tenant purported to serve a break notice terminating a lease. The landlord refused to accept the validity of the notice and the tenant remained in occupation beyond the expiry of the notice. The landlord commenced proceedings for recovery of the rent but, when the notice was declared valid, the landlord amended to claim double rent.22 The tenant defended the claim on the basis that the landlord had elected to treat him as a tenant:23 ‘The principle that a party to litigation cannot “approbate and reprobate” (or “blow hot and cold”) does sometimes curtail that party’s theoretical freedom to plead wholly inconsistent cases as alternatives. The principle is an importation into English law from Scotland and although it covers much the same ground as elective waiver and waiver by estoppel, it may be rather more flexible: there is a fairly recent example in the decision of Sir Nicolas Browne-Wilkinson V-C in Express Newspapers plc v News (UK) Ltd [1990] 1 WLR 1320. No authorities are cited in the relevant passage of the judgment at p.1329, but the principle and its limits were considered by the House of Lords in Lissenden v CAV Bosch Ltd [1940] AC 412, especially in the speech of Viscount Maugham, at pp 417–418. It seems to me at least arguable that by demanding and suing for rent the landlord was unequivocally treating the tenant as not being a trespasser; and that the subsequent amendment of the statement of claim to plead an alternative and inconsistent case should not be allowed to operate retrospectively so as to make the tenant’s occupation unlawful.’

Although there are similarities, common law election and equitable election are not the same. Unlike common law election, the equitable doctrine does not involve a choice or decision by the electing party. Instead, it prevents a party from asserting a right which is inconsistent with the benefits which he has taken before, either under an instrument or through the court process. 13.6 A further problem for anyone undertaking a historical survey of the principles of election and promissory estoppel is that the term ‘waiver’ was often used interchangeably with the words ‘election’ and ‘estoppel’. In the nineteenth century and early twentieth century, courts were prepared to give limited effect at common law (often in the context of time stipulations) to an informal waiver of contractual rights or obligations which did not amount to a contractual variation

21 22 23

[2000] Ch 12 (CA). See section 18 of the Distress for Rent Act 1737 which permits a landlord to claim double rent against a tenant who refuses to give up occupation and becomes a trespasser. See 31D–E (Robert Walker LJ). See also First National Bank plc v Walker [2001] FLR 505 (CA) where the court made a property adjustment order in favour of a wife on the basis that the matrimonial home was charged to the claimant and that her outgoings included the loan repayments. She later opposed the claimant’s claim for possession on the ground that it was liable to be set aside for undue influence. The Court of Appeal held that she could not rely on the existence of the charge in obtaining the property adjustment order but later deny the validity of the charge. Sir Andrew Morritt V-C and Rix LJ both based their conclusions on equitable election, although Chadwick LJ based his decision on abuse of process. See further 13.53.

603

13.6  Election

and was not supported by consideration.24 The development of coherent principles was also hampered by the Statute of Frauds, which rendered unenforceable any contractual variation which was not evidenced in writing. In cases where reliance was placed on a waiver, most of the analysis was devoted to the question whether the conduct of the parties should be characterised as a contractual variation rather than to the reasons why a party should be held to the course of action which he or she had adopted. Equity, on the other hand, had always taken a less rigid attitude to time stipulations and developed a more flexible principle of equitable forbearance which formed the foundation for the modern doctrine of promissory or equitable estoppel.25 13.7 In Craine v Mutual Fire Insurance Co Ltd,26 Isaacs J was probably the first to draw a clear distinction between election which required ‘an intentional act with knowledge’ (which he called ‘waiver’) and promissory estoppel (which he called ‘estoppel by conduct’). This analysis, which was adopted in the second and third editions of this book, proved to be very influential.27 But, in both editions, Sir Alexander Turner also recognised that there was an ambiguity in the way in which the term was used. Some judges or commentators used it to describe the conduct or process by which a particular outcome or effect is achieved. In Craine, Isaacs J used it in that sense, to contrast election with waiver. Other judges and commentators used it in a narrower sense of the effect or outcome of that conduct: the abandonment or modification of a right or obligation. In Kammins Ballroom Co Ltd v Zenith Investments Ltd,28 Lord Diplock used it in that sense. He considered that the circumstances described by Isaacs J were ‘better characterised as “election” rather than “waiver”’. The real insight in the second and third editions of this book was to identify the ambiguity itself which made it clear that most of the inconsistencies in the treatment of waiver were inconsistencies in the use of language.29 There is no right or wrong way in

24 See Ogle v Earl Vane (1868) LR 3 QB 272 (Blackburn J), followed in Hickman v Haynes (1875) LR 10 CP 598 (Lindley J). See also Plevins v Downing (1876) 1 CPD 220; Panoutsos v Raymond Hadley Corpn [1917] 2 KB 473 (CA); and Hartley v Hymans [1920] 3 KB 475 (McCardie J). 25 For discussion of both lines of authority, see Rickards v Oppenheim [1950] 1 KB 616 (CA) at 623, where Denning LJ described both as ‘a kind of estoppel’ and ‘a particular application of the principle which I endeavoured to state in Central London Property Trust Ltd v High Trees House Ltd’. 26 (1920) 28 CLR 305 (HCA) at 317 (affirmed on appeal at [1922] 2 AC 541). See also the article by Ewart ‘Waiver Distributed’ (1917) which was also highly influential. 27 See China National Foreign Trade Transportation Corpn v Evlogia Shipping Co SA [1979] 1 WLR 1018 (HL) at 1034F (Lord Scarman). The decision and the text of the second and third editions were also quoted in The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 (HCA) at 451 (Dawson J) and 466–7 (Toohey J). 28 [1971] AC 850 at 852H–883C. See also Smyth & Co v Bailey & Co [1940] 3 All ER 60 (HL) at 70 (Lord Wright). 29 The relevant passage in the second edition was quoted with approval by Viscount Dilhorne in Kammins Ballroom Co Ltd v Zenith Investments Ltd [1971] AC 850 (HL) at 872G–873B. The relevant passage in the third edition was also quoted with approval by Lord Scarman in China National Foreign Trade Transportation Corpn v Evlogia Shipping Co SA [1979] 1 WLR 1018 at 1034G–H and by Dawson J in The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 (HCA) at 451.

604

Introduction 13.8

which to use the word ‘waiver’, as long as it is recognised that it can bear a variety of meanings and the meaning which is attributed to it is clearly understood. This point is made in a number of the modern leading cases.30 13.8 In this edition (as in the last edition) we use the term ‘waiver’ in the way used by Robert Walker LJ in Oliver Ashworth Ltd v Ballard Ltd.31 He used the term ‘waiver’ in the sense of the effect of an election or estoppel, and he adopted the terms ‘elective waiver’ and ‘waiver by estoppel’ to distinguish between the waiver of a right as a consequence of an election and the waiver of a right as a consequence of promissory estoppel. We also use the terms ‘waiver by election’ or ‘elective waiver’ and ‘waiver by estoppel’ in the same way. This terminology is particularly useful not only because it eradicates the ambiguity in the word ‘waiver’ but also because it recognises that a waiver in the narrower sense may arise in other circumstances apart from election or promissory estoppel. For instance, a contract may contain an express or implied term entitling one party to waive a condition or breach or providing that a party may be held to have waived a benefit to be conferred by the contract or its performance by the other party. We call this type of waiver ‘waiver by agreement’ or ‘contractual waiver’.32 There are also a group of cases in which it has been held that a party may waive

30

31 32

The term ‘waiver’ was used in the narrower sense of end result or outcome by Lord Goff in the Kanchenjunga [1990] 1 Lloyd’s Rep 391 (HL) at 397–8: ‘It is a commonplace that the expression “waiver” is one which may, in law, bear different meanings. In particular, it may refer to a forbearance from exercising a right or to an abandonment of a right. Here we are concerned with waiver in the sense of abandonment arises by virtue of a party making an election’. See also Banning v Wright [1972] 1 WLR 972 (HL) at 978–979 (Lord Hailsham LC): ‘In my view, the primary meaning of the word “waiver” in legal parlance is the abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted, and is either express or implied from conduct. It may sometimes resemble a form of election, and sometimes be based on ordinary principles of estoppel, although, unlike estoppel, waiver must always be an intentional act with knowledge’. Finally, see also Oliver Ashworth Ltd v Ballard Ltd [2000] Ch 12 (CA) at 28G–29A (Robert Walker LJ): ‘Waiver is not a precise term of art: … It can be used to describe the effect of an election (especially in the old expression “waiver of forfeiture”, which in the law of landlord and tenant is apt to describe a landlord’s decision not to terminate a lease by re-entry for breach of covenant and not to seek the remedy of an order for possession, although he may still be able to seek some other remedy, usually damages for breach of covenant). However, the expression “waiver” is often used in a wider sense of any deliberate decision by a party not to stand on his strict legal rights, for instance, as in Kammin’s case, not to take a technical point as to the validity of a notice. In that case, Lord Diplock, at p 883, regarded this second type of waiver as being a form of estoppel and said that ordinary principles of estoppel apply to it’. [2000] Ch 12 (CA) at 30D–G. See eg HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] Lloyd’s Rep IR 230 (HL). See also Atlantic Shipping and Trading Co v Louis Dreyfus & Co [1922] 2 AC 250 and Ets Soule et Cie v International Trade Development Co Ltd [1980] 1 Lloyd’s Rep 129 (CA). Both were concerned with arbitration clauses, under which claims were deemed to have been waived if not made within a certain time limit.

605

13.8  Election

a ­condition in a contract imposed exclusively for his or her benefit.33 We also regard this as a type of ‘contractual waiver’.34 13.9 The term ‘waiver’ is also used in a statutory context where legislation may confer on a party an express right of waiver. Again, we call this ‘statutory waiver’ and perhaps the most familiar example is section 11(2) of the Sale of Goods Act 1979 which contains a reference both to ‘waiver’ and ‘election’.35 The debate about the scope of the section also provides another illustration of the difficulty with which the term has historically been used. It was uncertain for many years whether waiver of breach of condition under the section required actual knowledge on the part of the buyer, but this proposition was finally rejected by Lord Salmon in Bremer Handelsgesellschaft mbH v Vanden Avenne-Izegem36 and, although he did not distinguish between the two in terms, Lord Salmon has generally been understood to be referring to waiver by estoppel rather than waiver by election.37 Section 10(3)(c) of the Insurance Act 2015 contains another example of statutory waiver.38 Finally, there are also another group of cases in which it has been held that a party may waive a statutory condition precedent or a ‘statutory option’.39 13.10 This leaves the problematic concept of ‘unilateral waiver’ which does not fit neatly into this classification. Unilateral waiver involves an informed

33

See eg Heron Garage Properties Ltd v Moss [1974] 1 WLR 148 (Templeman J) and Balbosa v Ali [1990] 1 WLR 914 (PC). 34 The right to waive will often be the subject of an express term, although this is not essential. Even though the right to waive may be implicit (in the nature of the condition), these cases are best regarded as a type of contractual waiver because it is unnecessary to satisfy the additional requirements of waiver by election or waiver by estoppel. 35 ‘Where a contract of sale is subject to a condition to be fulfilled by the seller, the buyer may waive the condition, or may elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated’. Section 11(2) is qualified by ­section 11(4) and section 35, and the right to elect may be lost if the buyer accepts the goods or a part of them: see Peyman v Lanjani [1985] Ch 457 at 483D (Stephenson LJ). 36 [1978] 2 Lloyd’s Rep 109 (HL) at 126, followed by the majority in Bremer Handelsgesellschaft mbH v Mackprang Jr [1979] 1 Lloyd’s Rep 221 at 226 (Lord Denning) and 230 (Shaw LJ). 37 It was treated as an estoppel by Robert Goff LJ in The Post Chaser [1982] 1 All ER 19 at 25b–26f; by Mustill LJ in The Wise [1989] 2 Lloyd’s Rep 451 (CA) at 460; by Phillips J in Youell v Bland Welch & Co Ltd; the ‘Superhulls Cover’ Case (No 2) [1990] 2 Lloyd’s Rep 431 at 449–451; and by Mance J in Insurance Corpn of the Channel Islands, Royal Insurance (UK) Ltd v Royal Hotel Ltd (No 2) [1998] Lloyd’s Rep IR 151 at 161. 38 Section 34(3) of the Marine Insurance Act 1906 (which is repealed by the Insurance Act 2015) provided for the statutory waiver of a breach of promissory warranty. This was interpreted to mean waiver by estoppel: see HIH Casualty and General Insurance Ltd v Axa Corporate Solutions [2002] Lloyd’s Rep IR 1 (CA) at 7 (Tuckey LJ). See also J Kirkaldy & Sons Ltd v Walker [1999] Lloyd’s Rep IR 410 (Longmore J) and Brownsville Holdings Ltd v Adamjee Insurance Co Ltd (‘The Milasan’) [2000] 2 Lloyd’s Rep 456 (Aikens J). The Act came into force on 12 August 2016. For further discussion of waiver in the insurance context, see 10.23 onwards. 39 See Young v Bristol Aeroplane Co Ltd [1946] AC 163 at 178–183 (Lord Macmillan).

606

Introduction 13.11

v­ oluntary decision to abandon or suspend a right. It differs from waiver by election because it does not involve a choice between inconsistent or alternative rights. It also differs from waiver by estoppel because it does not involve reliance by A but a unilateral decision by B to abandon or suspend a right which is then communicated to A. The principle of a binding unilateral waiver which does not involve detrimental reliance or a choice between inconsistent rights or remedies has never been clearly recognised by English courts. The decision of the House of Lords in Kammins40 also presents a number of difficulties for the recognition of such a principle. In that case the House of Lords held by a majority that a landlord had power to waive the time limits in section 29(3) of Part II of the Landlord and Tenant Act 1954 but there had been no waiver because the landlord had made no unequivocal representation that it would not take the point. The speeches of the majority proceed on the basis that there would only have been an effective waiver if the tenant had been able to establish an estoppel.41 13.11 Unilateral waiver also arose in The Commonwealth of Australia v ­Verwayen42 where B obtained permission to amend its defence, to raise a defence of limitation to A’s personal injury claim. Both the original decision not to take the limitation point and the subsequent decision to do so were matters of deliberate policy. The trial judge found that the waiver was unilateral and voluntary and that B was entitled to withdraw it. A bare majority of the full High Court of Australia held that the Commonwealth was not entitled to do so, although there was no clear majority in favour of the principle of unilateral waiver.43

40

[1971] AC 850 (HL). The question whether a statutory right is capable of waiver was one of the principal issues in Kammins. It is outside the scope of this book, but for the proposition that mandatory statutory rules relating solely to procedure can be waived: see Latifi v ­Colherne Court Freehold Ltd [2003] 1 EGLR 78 (Cooke J). 41 See Lord Morris at 864–5, Viscount Dilhorne at 872–3 and Lord Diplock at 882–884, who considered waiver by election to be irrelevant because the landlord was not required to choose between inconsistent rights and that the tenant could only rely on waiver by estoppel. Lord Pearson considered that the landlord could waive the prematurity of the application unilaterally. Lord Reid agreed with Lord Pearson. See also Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] EWCA Civ 147 at [38] where Rix LJ stated that: ‘An unequivocal representation without the necessary reliance, and reliance without the necessary unequivocal representation, are each insufficient’. 42 (1990) 170 CLR 394. For similar facts, see Cooperative Wholesale Society v Chester le Street DC (1996) 73 P & CR 111 (HHJ Marder QC, President of the Lands Tribunal), Hillingdon BC v ARC Ltd (No 2) [2000] 3 EGLR 97 (CA) and Seechurn Ace v Insurance SA-NV [2002] Lloyd’s Rep IR 489 (CA). In the first of these cases, the court held that the defendant was prevented from relying on a time limit both because of an estoppel by convention and also because of a waiver by election. In the remaining cases, the claimant failed because there was no unequivocal representation that the defendant did not intend to take the limitation point. 43 Mason CJ (one of the minority) adopted the traditional approach in Kammins: see 407. ­Brennan J considered that waiver and election were distinct but that a party could only ­irrevocably waive a limitation period (which bars the remedy) immediately before the remedy is granted: see 423 and 428. McHugh J decided the waiver point on very similar grounds to Mason CJ: see 496–7. Toohey J (one of the majority) adopted a wider test of unilateral waiver: ‘Waiver, in the sense used for the purposes of this appeal, may be found in the deliberate act of a defendant not to rely upon a defence available to him. That is not to say that there must be

607

13.11  Election

A limited principle of unilateral waiver has been accepted in Scotland in relation to the ‘adjudicative process’.44 There are two decisions of an English court which support the suggestion that a unilateral waiver may be binding, but neither ­contains detailed consideration of the issue and both are probably better classified as examples of contractual waiver or waiver by agreement.45

COMMON LAW ELECTION 13.12 The principle of common law election is normally stated in terms of election between courses of action.46 However, it is necessary to distinguish between various kinds of common law election, because the nature of the election may determine the point at which the electing party becomes faced with alternative and mutually inconsistent courses of action and must make an election. We divide the types of common law election into election between substantive rights, election between remedies, and election between persons. In most cases it should be easy to distinguish between rights and remedies. But this is not always the case. For instance, where B is induced by A to enter into a contract by misrepresentation, B is entitled to elect whether to rescind or to affirm the contract and claim damages. This choice is normally regarded as an election between substantive rights. Where A refuses to complete the contract, B is also entitled to elect whether to claim specific performance or damages. This is ­typically regarded as an election between remedies.47

an intention to bring about the consequences of waiver; rather, the conduct from which waiver may be inferred, must be deliberate. Detriment is not an essential attribute of waiver, though it will often be found as a consequence’. Gaudron J agreed with Toohey J, but Dawson and Deane JJ (the other members of the majority) decided the case on estoppel. 44 See Millar v Dickson [2002] 1 WLR 1615 (HL). However, there is no separate principle of waiver by election in Scotland and the defence of waiver or ‘personal bar’ appears to be much more flexible: see McMullen Group Holdings Ltd v Harwood [2011] CSOH 132 at [69]–[76] (Lord Hodge). 45 See Marseille Fret SA v D Oltmann Schiffarts Gmbh & Co; The Trado [1982] 2 Lloyd’s Rep 157 (Parker J), where shipowners were held to have waived an option to extend a charter. See also Glencore Grain Ltd v Flacker Shipping Ltd; the Happy Day [2002] EWCA Civ 1068, where charterers were held to have waived the service of a premature notice of readiness. Potter LJ stated (at [64]): ‘Broadly speaking, there are two types of waiver strictly so-called: unilateral waiver and waiver by election. Unilateral waiver arises where X alone has the benefit of a particular clause in a contract and decides unilaterally not to exercise that right or to forego the benefit conferred by that particular clause’. 46 See China National Foreign Trade Transportation Corpn v Evlogia Shipping Co SA of ­Panama [1979] 1 WLR 1018 at 1034H–1035A (Lord Scarman). 47 Oliver Ashworth Ltd v Ballard Ltd [2000] Ch 12 (CA) at 28E–G (Robert Walker LJ). In Evlogia Shipping, B had to elect between accepting an underpayment or exercising a contractual right to withdraw the vessel. Lord Diplock considered this to be an election between remedies: see 1024D. Viscount Dilhorne considered it to be a choice between rights: see 1028F–G. For a further recent example, see Willis Ltd v Jardine Lloyd Thompson Group plc (unreported, 12 February 2016) where Soole J held that an election between inconsistent claims was distinct from an election between inconsistent remedies and that a claimant was not required to elect between compensatory and restitutionary damages until judgment.

608

Common law election 13.14

Election between substantive rights Contracts 13.13 The effect of an election by one party to a contract will depend on the nature of the rights which the electing party has chosen to enforce or waive. There appears to be no limitation on the contractual rights to which the doctrine of election will apply, provided that the rights in question are inconsistent.48 The requirement of inconsistency may require a careful analysis of the contractual rights in question and it is considered in more detail below. But the most common contractual situation in which a party must elect is where he or she is faced with the decision either to accept a renunciation or repudiatory breach of contract and then to bring it to an end, or to affirm its existence and insist on continued performance by the contract breaker. In Tele2 International Card Co SA v Post Office Ltd,49 Aikens LJ summarised the relevant principles as follows: ‘(1) if a contract gives a party a right to terminate upon the occurrence of defined actions or inactions of the other party and those actions or inactions occur, the innocent party is entitled to exercise that right. The innocent party has to decide whether or not to do so. Its decision is, in law, an election. (2) It is a prerequisite to the exercise of the election that the party concerned is aware of the facts giving rise to its right and the right itself. (3) The innocent party has to make a decision, because if it does not do so then “the time may come when the law takes the decision out if [its] hands, either by holding [it] to have elected not to exercise the right which has become available to [it], or sometimes by holding [it] to have elected to exercise it” … (4) Where, with knowledge of the relevant facts, the party that has the right to terminate the contract acts in a manner which is consistent only with it having chosen one or other of two alternative and inconsistent courses of action open to it (ie to terminate or affirm the contract), then it will be held to have made its election accordingly. (5) An election can be communicated to the other party by words or conduct. However, in cases where it is alleged that a party has elected not to exercise a right, such as a right to terminate a contract on the happening of defined events, it will only be held to have elected not to exercise that right if the party “has so communicated [its] election to the other party in clear and unequivocal terms”.’

13.14 Where B elects to affirm the contract rather than to treat it as discharged or to exercise his right of rescission, it does not follow that he or she should also be treated as having elected to waive the right to claim damages as well. This will depend on both the terms of the contract and also the terms of the

48 See eg Insurance Corpn of the Channel Islands Ltd v The Royal Hotel Ltd (No 2) [1998] Lloyd’s Rep IR 151 (Mance J) (affirmation of an arbitration agreement and the underlying insurance policy), Round Imports v Rexam Glass Barnsley Ltd (5 October 2000, unreported, CA) (claim for damages for breach of design rights under an earlier contract), Walbrook Trustees (Jersey) Ltd v Fattal [2009] EWCA Civ 297 at [38] (right of pre-emption) and Dubai Islamic Bank PJSC v PSI Energy Holding Co BSC [2011] EWHC 1019 (Comm) (Beatson J) (jurisdiction clause). 49 [2009] EWCA Civ 9 at [53].

609

13.14  Election

e­ lection. The most common situation in which B elects to affirm the contract, but reserves the right to claim damages, is where a buyer waives the right to reject defective goods and elects to treat the seller’s breach of condition as a breach of warranty. Section 11(2) of the Sale of Goods Act 1893 gives a buyer a statutory right to waive a breach of condition which the seller has not fulfilled and to treat the breach as a breach of warranty. The Kanchenjunga50 also provides another example. There, the owners of a ship waived the right to reject the nomination of an unsafe port and to terminate the contract for that reason. But they were not held to have given up their right to claim damages. Further, by electing to affirm the contract, B cannot be taken to have waived future compliance with the terms of the contract. Where A’s renunciation or repudiation of the contract is continuing or repeated, B may be entitled to elect again whether to terminate or affirm.51 Finally, there are dicta which suggest that an election may not be irrevocable and that B may withdraw it where the renunciation of the contract is anticipatory and the time for performance has not yet passed.52 The other common contractual situation in which a party must elect is where he or she is faced with the decision whether to rescind a contract for misrepresentation or whether to affirm it. The leading case on election in this context is Peyman v Lanjani53 where Slade LJ made it clear that the common law principles of election apply to the equitable remedy of rescission in the same way as they apply to the repudiation or affirmation for breach of contract at common law. 13.15 Where B elects between inconsistent contractual rights, he or she will only be held to have made an election if he or she has communicated that election to A in clear and unequivocal terms.54 The court will also be slow to assume

50 [1990] 1 Lloyd’s Rep 391 (HL) at 400. See also Ets Soules & Cie v International Trade ­Development Co Ltd [1980] 1 Lloyd’s Rep 129 (CA) at 137–8 (Megaw LJ). 51 See Safehaven v Springbok (1995) 71 P & CR 59 at 66 (Jonathan Sumption QC), approved in Stocznia v Latco [2002] 2 Lloyd’s Rep 436 at [96] (Rix LJ), White Rosebay Shipping SA v Hong Kong Chain Glory Shipping Ltd [2013] EWHC 1355 (Comm) at [43]–[54] (Teare J) and Primera Maritime (Hellas) Ltd v Jiangsu Eastern Heavy Industry Co Ltd [2014] 3066 (Comm) at [36]–[39] (Flaux J). A may also be entitled under the contract to elect again. Where, for instance, time is originally of the essence but A waives compliance with that term, A will usually be entitled to make time of the essence again on reasonable notice: see Rickards v Oppenheim [1950] 1 KB 616 (CA). 52 See Stocznia v Latco [2002] 2 Lloyd’s Rep 436 at [100] (Rix LJ). The point was left open because it was not necessary for decision. For academic discussion of this point, see Treitel ‘Affirmation after Repudiatory Breach’ (1998) 114 LQR 22. For the general suggestion that irrevocability should not automatically follow from an election to terminate or affirm, see Liu ‘Rethinking Election: A General Theory’ (2013) 35 Sydney Law Review 599. 53 [1985] Ch 457 (CA) at 500D–E: ‘Where the other stated conditions for the operation of the common law doctrine of “election” are present, a person may be held to his election even though the other party has not in any way acted to his detriment in reliance on the relevant communication; the mere fact of the unequivocal act or statement, coupled with the communication thereof to the other party, suffice to bring the doctrine into play’. See also Dyer v Potter [2011] EWCA Civ 1417 at [56] (Etherton LJ). 54 See the Kanchenjunga [1990] 1 Lloyd’s Rep 391 (HL) at 398 (Lord Goff). For the nature of the representation, see 399. Compare also the nature of the representation required to establish promissory estoppel: see 14.10–14.21.

610

Common law election 13.16

that a contracting party has chosen to give up a right.55 B will not be held to have made an election simply by protesting at A’s conduct.56 But B will be held to have made an election where he or she expressly, or by necessary inference, abandons a contractual right in correspondence.57 This will usually require a detailed examination of the relevant contractual provisions and the correspondence. Moreover, a reservation of rights will usually be fatal.58 It is also necessary to focus on the representations made by B after the right to elect has arisen (although previous statements may be relevant to the proper inferences to be drawn about B’s subsequent conduct).59 13.16 A party may be held to have made an unequivocal election either by words or by conduct. The question whether B has made an unequivocal representation is to be judged objectively (in the same way as promissory estoppel). B will be treated as having elected to affirm if he or she speaks or acts in a way which would reasonably be understood as consistent only with having made an informed choice.60 The usual case in which B will be held to have made an election by conduct is where he or she continues to perform or accept performance of the contract for a substantial period without a reservation of rights.61 It must be clear, however, that performance of the relevant obligations is inconsistent with

55 See Yukong Line Ltd of Korea v Rendsburg Investments Corpn of Liberia [1996] 2 Lloyd’s Rep 604 at 608 (Moore-Bick J): ‘The law does not require an injured party to snatch at a repudiation and he does not automatically lose his right to treat the contract as discharged merely by calling on the other to reconsider his position and recognize his obligations’. 56 See the facts of Yukong itself, where telexes from A objecting to B’s repudiatory breach of contract were held to be ‘a cry of protest’ inviting B to reconsider its position rather than an election to affirm the contract. For an unsuccessful attempt to argue that the acceptance of hire under protest amounted to an affirmation, see Parbulk II A/S v Heritage Maritime Ltd SA; The Mahakam [2011] EWHC 2917 (Comm) at [21]–[26] (Eder J). The argument turned on whether the court has recognised ‘automatic’ waiver in relation to the payment of rent in landlord and tenant cases and, if so, whether the same approach should be adopted in shipping cases. The ‘automatic’ waiver point is considered in the context of the landlord and tenant cases below: see 13.32. 57 For a recent example, see Harrison v Shepherd Homes Ltd [2011] EWHC 1811 (TCC) at [184]–[188]. 58 For recent examples, see Involnert Management Inc v Aprilgrange Ltd [2015] 2 Lloyd’s Rep 289 (Leggatt J) at [179] and Brit UW Ltd v F & B Trenchless Solutions Ltd [2015] EWHC 2237 (Comm) at [164]–[188] (Carr J). In the former case, the service of a Defence (which did not contain the same reservation of rights as the correspondence) was not fatal either. The latter case is also of interest because it demonstrates that there need be no formal use of the words ‘reservation of rights’ and that no particular form of words need be used in order to prevent an election. 59 For an example, see Lancashire Insurance Company Ltd v MS Frontier Reinsurance Ltd [2012] UKPC 42 at [21]–[28] where there was a delay of no more than a few days between the right to terminate arising and the exercise of that right: see [27]. 60 For a recent statement of the test emphasising its objective nature, see Involnert Management Inc v Aprilgrange Ltd [2015] 2 Lloyd’s Rep 289 (Leggatt J) at [159]–[161]. 61 For a statement to this effect, see Strive Shipping Corpn v Hellenic Mutual War Risks ­Association (Bermuda) Ltd; the Grecia Express [2002] 2 Lloyd’s Rep 88, [2003] 1 CLC 401 at 533G (Colman J): ‘It is important to emphasise the need for there to be an unequivocal representation by words or conduct of an intention not to treat the contract as terminated.

611

13.16  Election

the rights which B is said to have elected to waive62 and, if B’s performance or B’s acceptance of A’s performance is ambiguous or consistent with B continuing to exercise the disputed right, there is no election.63 Where B continues to exercise his or her rights under the contract which survive termination, B will not be held to have made an election. A good example of conduct of this nature is participation in arbitration proceedings. In the Royal Hotel litigation, insurers were able to repudiate a business interruption policy after the appointment of an arbitrator but before the first interim award, because participation in the arbitration did not involve any representation that they had made an election.64

Thus, a continued performance of the substantive terms of the contract or a request for further performance of such provisions, without reserving entitlement to avoid, will normally be sufficiently consistent only with an intention to treat the contract as continuing in effect’. For examples, see the Kanchenjunga [1990] 1 Lloyd’s Rep 390 (HL) 391 at 400 (Lord Goff) itself, where the arrival of the ship and service of notice of readiness were held to be an unequivocal representation that the owners had waived the right to object to the charterers’ nomination of an unsafe port. A number of the cases on election are concerned with the service of a notice or readiness (NOR) under charterparties. Those cases are analysed in Ocean Pride Maritime LP v Qingdao Ocean Shipping Company, The Northgate [2007] EWHC 2796 (Comm) at [105]–[116] (Richard Siberry QC), where A was held to have made an election by accepting the NOR without a reservation of rights. The reason why it is so critical in these cases that A should elect whether to reject the NOR or to accept it subject to a reservation of rights is that the owner would be able to cure the defect immediately by serving a new notice: see Tidebrook Maritime Corporation v Vitol SA of Geneva; The ‘Front Commander’ [2006] EWCA Civ 944 at [52]. 62

For examples, see Chandris v Isbrandsten-Moller Co Inc [1951] 1 KB 240 (Devlin J, affirmed on appeal) (where the master’s consent to the shipment of dangerous cargo was held to be an affirmation); Panoutsos v Raymond Hadley Corpn [1917] 2 KB 473 (CA) (where sellers who agreed to shipment of goods without a confirmed letter of credit were held to have waived that condition); Pearl Carriers Inc v Japan Lines Ltd; the ‘Chemical Venture’ [1993] 1 Lloyd’s Rep 508 (Gatehouse J) (where ship owners were held to have waived their right to insist that a ship was employed between safe ports); and Tele2 International Card Co SA v Post Office Ltd [2009] EWCA Civ 9 at [51]–[58] (above). 63 See Mardorf Peach & Co Ltd v Attica Sea Carriers of Liberia; the ‘Laconia [1977] AC 850 (where it was held that routine receipt of monies paid into a bank account was not a waiver); Finagrain SA Geneva v Kruse [1976] 2 Lloyd’s Rep 508 (CA) (where acceptance of three bills of lading which did not comply with the contract specification was not a waiver of future compliance with the specification); China National Foreign Trade Transportation Corpn v Evlogia Shipping SA of Panama [1979] 1 WLR 1018 (HL) (where acceptance of a part-payment of hire in advance was not an election to affirm); Peyman v Lanjani [1985] Ch 457 (CA) (where a payment of £10,000 and taking possession of the premises did not amount to an affirmation because the purchaser was at all times a licensee pending assignment); Stocznia v Latco [2002] 2 Lloyd’s Rep 436 (where the exercise of contractual termination rights was not inconsistent with termination at common law); and BDW Trading Ltd v JM Rowe (Investments) Ltd [2011] EWCA Civ 548 (where compliance with a reasonable endeavours obligation to agree the form of warranties was not inconsistent with the exercise of a contractual right to rescind). 64 Insurance Corpn of the Channel Islands Ltd v McHugh [1997] Lloyd’s Rep IR 94 (Mance J) at 132: ‘The only representations that insurers made at any stage in my judgment were that they did not have full information or a full understanding of the position, that they were anxious to achieve this, that they wanted to cross-examine Royal Hotel’s relevant witnesses for that very reason and that, once it became clear that those witnesses were not to be called, insurers were at very likely to assert fraud in the absence of any satisfactory last minute explanation’.

612

Common law election 13.17

However, they were held to have made an election in relation to a related material damage policy, where they had accepted the validity of a number of awards without attempting to avoid the policy.65 The position is less clear cut where B exercises ‘subsidiary’ rights under the contract. The immediate exercise of these rights should not normally amount to an election where B is attempting to establish the facts. However, there may come a point in time at which the exercise of these rights can only be consistent with an affirmation of the contract. For instance, there is a difference of view in the authorities at first instance about the effect of the exercise of a right of inspection.66 13.17 A party may also be taken to have made a binding election by silence or inactivity. That silence or inactivity, when coupled with lapse of time, may indicate unequivocally to the other party that the electing party has made a final decision.67 In most cases, the lapse of time will also justify a conclusion that B has given up or lost the right to elect (which is considered below). But there is a conceptual difference between the two, because the first conclusion involves a finding that B has made a true election, and the second involves a finding of promissory estoppel. For instance, B may make a conscious decision, to try and keep his or her options open, which A relies on to his or her detriment. In those circumstances the court will take the choice out of B’s hands. But there are also a number of examples in the authorities which can genuinely be regarded as examples of election by silence.68 Such examples are likely to be rare, because of the

65

Insurance Corpn of the Channel Islands Ltd v The Royal Hotel Ltd (No 2) [1998] Lloyd’s Rep IR 151 (Mance J) at 172–3: ‘A party to an arbitration who, with knowledge that he has a right to avoid, allows further performance by the arbitrator of the tri-partite arbitration contract between the parties and the arbitrator, whose decision will give rise to enforceable rights and duties between the parties, may in my view be taken to recognize the continuing applicability of the arbitration agreement and, in the present context, the continuing validity of the insurance policy upon which its applicability was predicated. He owes a duty to speak and to prevent or at least dissent from further performance, if his conduct is not to be so construed’. 66 See Strive Shipping Corpn v Hellenic Mutual War Risks Association (Bermuda) Ltd; the ‘Grecia Express’ [2002] 2 Lloyd’s Rep 88 (where requests for disclosure and access to witnesses under a marine policy with a reservation of rights was not an affirmation of the contract). Colman J drew a distinction between exercising subsidiary rights such as the investigatory powers in that case and the exercise of primary rights. See also Pan Atlantic Insurance Co Ltd v Pine Top Insurance Co Ltd [1992] 1 Lloyd’s Rep 101 (Waller J) at 107–8 (where a request for inspection of documents was not an election to affirm). However, in Involnert Management Inc v Aprilgrange Ltd [2015] 2 Lloyd’s Rep 289 at [171]–[178], Leggatt J held that ‘the express invocation, without reservation, of a right to examine documents pursuant to this clause would … be inconsistent with treating the contract as having been avoided’. 67 See Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] EWCA Civ 147 at [38] (Rix LJ): ‘Thus the choice has either to be communicated unequivocally by the party electing to the other party or else the objective circumstances have to be such that the effluxion of time by itself constitutes that communication’. 68 See, in particular, Glencore Grain Ltd v Flacker Shipping Ltd; The ‘Happy Day’ [2002] All ER (Comm) 896 (where charterers were held to have waived the invalidity of a notice of readiness, which had been served before the time prescribed by the contract by failing to reject the notice or reserving their position and then permitting the vessel to unload).

613

13.17  Election

equivocal nature of silence. Further, even where B is held to have made an election between inconsistent rights by taking no action, there may be subsequent opportunities to elect where new facts or information comes to light.69 13.18 Finally, it is not enough to show that the electing party has demonstrated that he has made a choice. It must be shown that the choice was clearly an informed one. In many cases the fact that the electing party has made an informed decision will be self-evident. Where a party elects to rescind a contract and gives notice of this fact to the other party, the exercise of the right will demonstrate that the electing party has been advised as to his or her rights. But it may not be quite so clear cut where the choice is between other courses of action and, in particular, where the electing party chooses to affirm:70 ‘Where the circumstances justify an avoidance and the choice is to avoid, the requirement of an unequivocal communication creates no problem. The claim to avoid demonstrates of itself at one and the same time awareness of the choice and its making. Where it is said that there has been an election to affirm, the position is more problematic. Is it sufficient for affirmation that there is knowledge and a communication (by words or conduct) which, assuming such knowledge, demonstrates an unequivocal choice? Or must the communication itself or the surrounding circumstances demonstrate such knowledge to the other party? In principle, it seems to me that the latter approach is correct in the context of affirmation. The communication itself or the circumstances must demonstrate objectively or unequivocally that the party is making an informed choice.’

The decision is concerned with a technical area of shipping law but, for the purpose of understanding the election issue, there is a very useful analysis by Richard Siberry QC in Ocean Pride Maritime Limited Partnership v Qingdao Ocean Shipping Company; The ‘Northgate’ [2007] EWHC 2796 (Comm) at [106]–[116]. See also Tidebrook Maritime Corporation v Vitol SA; The ‘Front Commander’ [2006] EWCA Civ 944 at [52]. Both cases are referred to in n 61 above. See also Simner v New India Assurance Co Ltd [1995] Lloyd’s Rep IR 240 (HHJ Diamond QC) at 259–6 (where an underwriter was held to have affirmed a contract of reinsurance by failing to correct an endorsement when he became aware that he had the right to avoid the policy). The decision was distinguished in Callaghan v Thompson (3 November 1999, unreported, David Steel J) (where the silence of the underwriters was equivocal). 69 See Involnert Management Inc v Aprilgrange Ltd [2015] 2 Lloyd’s Rep 289 (Leggatt J) at [169]. For other circumstances in which silence will amount to a representation, see 3.9 and 3.10. For discussion of the circumstances in which the duty to speak will also give rise to an estoppel, see 3.11–3.23. 70 Insurance Corpn of the Channel Islands Ltd v Royal Hotel Ltd (No 2) [1998] Lloyd’s Rep IR 151 (Mance J) at 162. The proposition cited in the text was challenged in Callaghan v Thompson (3 November 1999, unreported) and rejected by David Steel J. The passage was then cited with approval by Rix LJ in Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] EWCA Civ 147 at [73] and [74] with the following gloss: ‘That was said in a case concerned with an established area of true election, the affirmation of an insurance contract which an insurer is entitled to avoid for non-disclosure. I take this analysis as relating to what in that context needs to be objectively available to the non-electing party. I do not think that it is saying that in cases of election the party with the choice will be bound by sufficiently clear appearances even in the absence of any informed choice’. Finally, the passage was also cited by Ramsey J in Harrison v Shepherd Homes Ltd [2011] EWHC 1811 (TCC) at [185].

614

Common law election 13.19

This distinction can be illustrated by the facts of Peyman v Lanjani.71 In that case, B took an assignment of commercial premises from A in circumstances where he had obtained consent from the landlord by a subterfuge. Although B was found to have accepted A’s title to the premises by taking possession, this did not amount to an election because there was no representation by B that he had made an informed choice whether to rescind or affirm. The right question was not whether B had accepted title but whether his conduct ‘would have led the first defendant and his advisers reasonably to infer that he did not intend to object to the particular defect in title which had arisen through the first impersonation’. A could not have inferred that B ‘was abandoning any right to object to the as yet undisclosed defect in the first defendant’s title’.72 13.19 Election is only engaged, however, where a contracting party has mutually inconsistent rights not merely alternative rights.73 For this reason, common law election is rare outside the familiar situations where B must choose whether to terminate or affirm a contract after A has committed a repudiatory breach or whether to rescind or affirm a contract induced by misrepresentation or voidable on other equitable grounds. It is clear that the right to avoid an insurance policy for non-disclosure falls into the same category.74 However, not every contractual right of rescission or termination will necessarily require B to make an immediate election. For example, in BDW Trading Ltd v JM Rowe (Investments) Ltd75 the contract contained the option to terminate a development agreement where certain conditions precedent were not satisfied. The right could be exercised ‘at any time’ upon the service of a notice. Moreover, a notice could not be served by a party in default of its existing obligations. The contract also contained a reasonable endeavours obligation which B continued to perform. The Court of Appeal held that, because B had the right to rescind at any time following the failure to satisfy the relevant conditions, continued performance of the contract did not amount to an election. B could have waived or abandoned the right to rescind but this would have required an unequivocal representation. Patten LJ explained the difference between termination following a repudiatory breach or waiver of forfeiture and a contractual right of rescission in the following terms:76 ‘The classic and common situation in which a party to a contract is put to an election of the kind described by Lord Diplock is where the other party has committed

71 [1985] Ch 457 (CA). 72 See 502A–H (Slade LJ). 73 Indeed, A may have a choice between two or more alternative courses of action: see the Kanchenjunga [1990] 1 Lloyd’s Rep 391 (HL) at 396 (Lord Goff): ‘They [the arbitrators] considered that waiver only applied where there were just two alternative courses of action available; here there were at least three courses of action open to the owners, and so they held that the defence must fail. This reasoning was, as in now accepted, erroneous’. 74 See Involnert Management Inc v Aprilgrange Ltd [2015] 2 Lloyd’s Rep 289 (Leggatt J). The right to avoid for non-disclosure has now been circumscribed by the Insurance Act 2015: see 10.40 and 10.41. 75 [2011] EWCA Civ 548 at [65]–[83]. 76 See [76] and [77]. Compare Crosstown Music Co 1 LLC v Rive Droite Music Ltd [2012] Ch 68 where the Court of Appeal adopted a similar approach to a provision for the automatic reverter

615

13.19  Election

the breach of a significant term of the contract amounting to a repudiation. The innocent party is then faced with a choice between accepting that repudiation and thereby terminating the contract or affirming the contract and thereby waiving the breach. Because the continued performance of the contract is ipso facto likely to amount to an affirmation of the contract, the innocent party is necessarily put to his election and most choose. Similarly in the case of a lease where the tenant commits a breach of covenant entitling the landlord to forfeit, he must decide whether to issue and serve proceedings for possession thereby exercising his right of forfeiture or to accept rent and thereby waive the right to forfeit for that breach. Because an acceptance of rent will necessarily have that consequence under the lease, there is again an immediate election to be made. But not all rights to terminate a contract arise in these circumstances or have the effect of putting the party with the right to rescind to an immediate election. The lease with a break clause entitling the landlord or tenant to terminate the lease after the end of part of the term does not have to be exercised immediately unless the lease so provides. In most cases it will remain exercisable at any time after the right has arisen. The continued acceptance of rent by the landlord will not, without more, operate as a waiver of his rights under the break clause because there is nothing inconsistent between the continuation of the landlord and tenant relationship and the reservation of the right to break. If it is exercisable at any time during the remainder of the term the landlord is not put to an election and does not make an election by continuing to perform the contract until he chooses to exercise his right to break.’

13.20 There is no room for the operation of election either where the effect of A’s breach of contract is to bring the contract to an end or to release A from liability automatically. In those circumstances, B has no choice to make at all. This is demonstrated by a series of cases involving the breach of procedural conditions in insurance policies. In Bolton Metropolitan Council v Municipal Mutual ­Insurance Ltd77 the Court of Appeal held that B (the insurer) had not waived the right to rely on late notification of a claim by A (the insured) by denying liability on other grounds, because these two courses of conduct were not inconsistent with each other. In Kosmar Villa Holidays plc v Trustees of Syndicate 124378 the court held that breach of a procedural condition precedent automatically discharged B from liability and, for this reason, there was no scope for the doctrine of election. The court also rejected the submission that, even though there was an automatic discharge from liability, an insurer still had to elect whether to take the point or to affirm the policy. Finally, the court also rejected the argument that, by

of musical rights. The court refused to accept that there was an implied term that the assignor had to make an election within a reasonable time and rejected the analogy with termination for repudiatory breach: see [59]–[78] (Mummery LJ) and [110]–[128] (Morgan J). 77

78

[2006] 1 WLR 1492 at [31]–[34] (rejecting the suggestion in the fourth edition that it was possible to waive the breach of a procedural condition by election). See, in particular, [34] (Rix LJ): ‘It is, therefore, not sufficient for a party to a contract to have alternative courses of action; for the doctrine of election to apply (which it must be remembered requires no acting on it by, or detriment to, the other party) the courses of action must be inconsistent or, as it is sometimes said, mutually exclusive’. See also Tonks v UK Insurance Ltd [2006] EWHC 1120 (TCC) at [170] (HHJ Coulson QC). [2008] EWCA Civ 147 at [65]–[75].

616

Common law election 13.21

u­ ndertaking the defence of the claim, an insurer could be held to have elected to treat the claim as valid. Rix LJ held that this was properly the province of estoppel rather than election:79 ‘I am not dealing with the question whether an insurer’s exercise of rights under his policy for instance to conduct a claim in the name of the insured, is consistent with or pre-empts his right of election to avoid his policy, as for non-disclosure. Thus the exercise of a right under a policy to conduct an insured’s defence might be unequivocally inconsistent with a right to avoid the policy, but only a merely equivocal alternative (to not conducting the defence) so far as concerns any alleged representation to the effect that the insured is accepting liability, to indemnify the insured for a claim. In sum, I do not think that we have been shown any case where the doctrine of election has been applied, in the context of a merely procedural condition precedent, to the conduct of a claim on behalf of an insured by an insurer, nor do I think it would be consistent with the paradigm examples of election, or with the nature of the doctrine, which requires unequivocal conduct which has irrevocable effect, to treat that doctrine as being by its rationale applicable to this situation. The doctrine is ill-fitting in these circumstances, and unneeded. For there remains the doctrine of estoppel: in circumstances where it can be said that the handling of a claim by an insurer is an unequivocal representation that the insurer accepts liability and/or will not rely on breach of some condition precedent as affording a defence, and there has been such detrimental reliance by the insured as would make it inequitable for the insurer to go back on his representation, the insured will have all the protection that he needs.’

13.21 This analysis was developed further in Lexington Insurance Co Multinacional de Seguros SA80 where B (a reinsurer) rejected a claim by A (a reinsured) for failure to comply with a procedural condition precedent but then relied on a second and later breach in the alternative. A sought to argue that, by rejecting the claim initially, B had elected to treat the policy as automatically at an end. Christopher Clarke J rejected this argument on the basis that B’s rights were alternative and not inconsistent:81 ‘It is true that Kosmar Villa Holidays was a case where the insurers were said to have waived (by election) a past breach of the condition precedent, whereas in the present case, the reinsurers are said to have waived future performance, which is the equivalent of saying that reinsurers waived any future breach. That makes no difference. If, because of the automatic effect of the breach of a condition precedent, the original breach asserted gave rise to no obligation to choose between inconsistent rights, and, thus, to no duty to elect between them, it is impossible to see how any question arises of reinsurers having to elect between reliance on the original breach and any future breach of the clause. The assertion by the reinsurer that he has a defence to liability arising from breach of a condition precedent is not a choice by him between inconsistent remedies. It is simply an unproved assertion that he is not liable to the reinsured on that account. Nor is it an irrevocable decision. The reinsurer may change his mind about the defence he asserts (as insurers often do) and abandon it; or rely on a different one or none at all. As the

79 80 81

See [69] and [70]. [2008] EWHC 1170 (Comm) at [50]–[68]. See [62].

617

13.21  Election

court held in the Kosmar Villa Holidays case raising a defence, although it may involve a choice, is not a contractual election.’

13.22 These cases are of less importance than they were in the insurance field because of the changes which will be made by the Insurance Act 2015. The effect of these changes on the law of election and estoppel is considered at 10.23 onwards.82 However, these cases remain of interest because they illustrate the principle that contractual rights must be mutually inconsistent before a contracting party will be put to his or her election. They also show that detrimental reliance remains important, because a promissory estoppel may well arise where there is no election. 13.23 Before B will be bound by an election, it is necessary for A to show that B had knowledge both of the facts giving rise to the election and of the right to elect.83 The requirement provides an important distinction between election and reliance-based estoppels. The case often cited as authority for the proposition that knowledge of the underlying facts is necessary is Matthews v Smallwood84 (a landlord and tenant case). B will not be held to have made a binding election where he or she has insufficient evidence upon which to make an informed choice.85 But B will be bound by an election if he or she has sufficient knowledge upon which it would be reasonable or safe to act.86 It is not necessary to

82 For the effect of failure to give notice in the construction insurance field, see Harrison v ­Shepherd Homes Ltd [2011] EWHC 1811 (TCC) at [184]–[188], where Ramsey J held that it was possible to waive by election the notice provisions in a Buildmark Cover policy and that, on the facts, such an election had taken place. 83 The necessity for knowledge of both elements is stated in Insurance Corp of the Channel Islands v Royal Hotel Ltd (No 2) [1998] Lloyd’s Rep IR 151 at 161–3, WISE Underwriting Agency Ltd v Grupo Nacional Provincial SA [2003] EWHC 3038 (Comm) at [46] (affirmed on appeal on this issue at [2004] 2 Lloyd’s Rep 483) and Involnert Management Inc v Aprilgrange Ltd [2015] 2 Lloyd’s Rep 289 at [159]. 84 [1910] 1 Ch 777 at 786, cited with approval in Fuller’s Theatre and Vaudeville Co v Rofe [1923] AC 435 (PC) at 445; Kammins Ballroom Co Ltd v Zenith Investments Ltd [1971] AC 850 at 873B (Viscount Dilhorne) and 883B (Lord Diplock); Peyman v Lanjani [1985] Ch 457 at 482G–483A and 485H (Stephenson LJ), 499C (Slade LJ); The Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 491 (McHugh J); and Glencore Grain Ltd v Flacker ­Shipping Ltd; the ‘Happy Day’ [2002] EWCA Civ 1068 at [65] (Potter LJ). An example of a case in which election failed on this ground is Fraser Shipping Ltd v Colton [1997] 1 Lloyd’s Rep 586 (Potter J). 85 See now Kosmar Villa Holidays plc v Trustees of Syndicate 1243 [2008] EWCA Civ 147 at [36] (Rix LJ) stating that election ‘generally requires knowledge of all the facts giving rise to the choice on the part of the party electing’. 86 Insurance Corpn of the Channel Islands Ltd v Royal Hotel Ltd [1997] Lloyd’s Rep IR 94 at 126–132 (where Mance J held that the insurer did not have sufficient knowledge). Compare Insurance Corp of the Channel Islands v Royal Hotel Ltd (No 2) [1998] Lloyd’s Rep IR 151 at 163–72 (where he held that the insurer did have sufficient knowledge) and Callaghan v Thompson (16 January 1998, unreported, CA) (where the argument that an underwriter had sufficient information to instruct inquiry agents but not to avoid the policy was rejected).

618

Common law election 13.24

show that the electing party had a full or complete knowledge of all of the detail, ­provided that he or she had knowledge of those facts ‘relevant to his choice or indication of intention’.87 It is enough that the electing party knows enough about the facts to know that he or she has the right to elect.88 13.24 The requirement that B must have knowledge of the right to elect is more controversial.89 There are dicta in Kammins Ballrooms Co Ltd v Zenith Investments Ltd90 which suggest that this requirement is not necessary and, in the Kanchenjunga,91 Lord Goff left the question open. But, below the Supreme Court, this issue can be regarded as settled. In Peyman v Lanjani92 the Court of Appeal held that B had not elected to affirm the contract because he had had no knowledge of his legal right to rescind. Stephenson LJ stated that: ‘knowledge of the facts which give rise to the right to rescind is not enough to prevent the plaintiff from exercising that right, but he must also know that the law gives him that right but choose with that knowledge not to exercise it’.93 The proposition that a party is not bound by an election without knowledge of the right to elect has generally been accepted a number of times without argument, both at first

87 88

89

90

91

92 93

Glencore Grain Ltd v Flacker Shipping Ltd; the ‘Happy Day’ [2002] All ER (Comm) 896 at [65] (Potter LJ). See Insurance Corpn of the Channel Islands Ltd v Royal Hotel Ltd [1997] Lloyd’s Rep IR 94 at 126: ‘It is also clear that if a party to a contract is aware that the contract represents a fraud on him, it is unnecessary that he should know all aspects or incidents of the fraud before he can be said to have deprived himself by conduct of his right to rescind’. See also Insurance Corp of the Channel Islands v Royal Hotel Ltd (No 2) [1998] Lloyd’s Rep IR 151 at 161: ‘Provided that a party knows sufficient of the facts to know that he has that right, it is unnecessary that he should know all aspects or incidents of those facts’. For older citations, see La Banque Jacques-Cartier v La Banque D’Epargne De La Cite et Du District De Montreal (1887) 13 App Cas 111 (PC) at 118 (Lord Fitzgerald) and De Bussche v Alt (1877) 8 Ch D 286 (CA) at 313 (Thesiger LJ): ‘It should be shewn that he has had full knowledge of its nature and circumstances, in other words, that he has had presented to his mind proper materials upon which to exercise his power of election’. The requirement was criticised by Leggatt J in Involnert Management Inc v Aprilgrange Ltd [2015] 2 Lloyd’s Rep 289 at [160]: ‘The need for knowledge of the legal right, although established by authority, is difficult to justify in principle. The requirement is inconsistent both with the principle that ignorance of the law is no defence and with the principle that in the field of commerce the existence and exercise of legal rights should depend on objective manifestations of intent and not on a party’s private understanding’. [1971] AC 850 at 883A (Lord Diplock): ‘the law holds him to his choice even though he was unaware that this would be the legal consequence of what he did’; and 878E (Lord Pearson): ‘The party alleging waiver does not have to show that the party alleged to have waived his right appreciated the legal position resulting from the relevant facts’. [1990] 1 Lloyd’s Rep 390 (HL) at 391: ‘I add in parenthesis that, for present purposes, it is not necessary for me to consider certain cases in which it has been held that, as a prerequisite of election, the party must be aware not only of the facts giving rise to his rights but also of the rights themselves, because it is not in dispute that the owners were aware both of the relevant facts and of their relevant rights’. [1985] Ch 457 (CA). 487F–G. See also 494E–F (May LJ) and 500H (Slade LJ).

619

13.24  Election

instance94 and in the Court of Appeal.95 However, it is not necessary to show that there has been some kind of conscious decision on the part of the relevant party. Unequivocal conduct, coupled with knowledge of the right to elect, is enough.96 13.25 It is not easy to plead or prove that a party has both knowledge of the relevant circumstances and knowledge of the right to elect.97 Where (as is normally the case) both parties receive legal advice, the nature of that advice is likely to be significant. There is a suggestion in the judgment of Stephenson LJ in Peyman v Lanjani that the knowledge of B’s solicitor that B has the right to elect can be imputed to the client.98 However, it is clear from the context that he was not using the expression ‘imputed knowledge’ in the sense of a rule or principle of attribution, whereby the knowledge of one person should be treated as a matter of law as that of another, but in the sense of an evidential presumption that, in the ordinary course, the knowledge of a solicitor or agent should be imputed to his client.99 Where it is obvious that B has received legal advice and made an informed decision based on that advice, a number of authorities suggest that it may be open to the court to draw the inference that he or she acted with knowledge of the relevant legal rights, unless evidence is adduced to the contrary.100 There are also two recent first instance decisions which suggest that a party who is legally advised will be presumed to have received appropriate advice and that this presumption will only be rebutted where that party waives legal professional privilege and proves otherwise. In Moore Large & Co Ltd v

94

Banner Industrial and Commercial Properties v Clark Paterson Ltd [1990] 2 EGLR 139 at 141B; Youell v Bland Welch & Co Ltd; The ‘Superhulls Cover’ Case (No 2) [1990] 2 Lloyds Rep 431 at 450; Yukong Line Ltd of Korea v Rendsburg Investments Corpn of Liberia [1996] 2 Lloyd’s Rep 604 at 608; Insurance Corpn of the Channel Islands Ltd v Royal Hotel Ltd (No 2) [1998] Lloyd’s Rep IR 151 at 161; Sphere Drake Insurance plc v Orion Insurance plc [1999] All ER (D) 133; Callaghan v Thompson (3 November 1999, unreported, David Steel J); WISE Underwriting Agency Ltd v Grupo Nacional Provincial SA [2003] EWHC 3038 (Comm) at [46]; and Involnert Management Inc v Aprilgrange Ltd [2015] 2 Lloyd’s Rep 289 at [159]. 95 HB Property Developments Ltd v Secretary of State for the Environment (17 February 1998, unreported, CA), Stevens and Cutting Ltd v Anderson [1990] 1 EGLR 95 at 97C–E and BDW Trading Ltd v JM Rowe (Investments) Ltd [2011] EWCA Civ 548 at [75]. 96 See BDW Trading (above) at [75]. 97 In Peyman v Lanjani [1985] Ch 457 (CA) at 500H–501D, Slade LJ explained the difficulties involved. The passage also contains an interesting remark about the interplay between reliance-based estoppel and election in this context. 98 See 487G. 99 See 491H–492B. 100 See Stevens and Cutting Ltd v Anderson [1990] 1 EGLR 95 (CA) in which Stuart Smith LJ was prepared to accept that (at 97D–E): ‘No doubt in the ordinary way a solicitor should be presumed to know the law’. In HB Property Developments Ltd v Secretary of State for the Environment (17 February 1998, unreported, CA), Sir Christopher Staughton referred to this passage without comment. In First National Bank plc v Walker [2001] 1 FLR 505 (CA) at 518 (Sir Andrew Morritt VC) and 523 (Chadwick LJ), the court was prepared to draw inferences about the knowledge of the defendant’s solicitors and to attribute that knowledge to her when she declined to waive privilege in the solicitor’s file.

620

Common law election 13.26

Hermes Credit Guarantee plc101 (the first of those decisions), Colman J stated as follows: ‘In my judgment, in a case where the party said to have elected has been represented by solicitors and counsel whose conduct is relied upon as amounting to an election, it is normally to be inferred that such conduct has been specifically authorised by the client and has been the subject of legal advice. If, on the evidence before the court it is established that either the legal advisers or the client had knowledge of the facts giving rise to the right said to have been waived at the time when the affirmatory conduct took place, there must be the further inference that the party has been given legal advice as to his rights arising out of those facts. If that inference is to be displaced, there must be evidence of the advice, if any, that was given by solicitors and counsel and of the extent to which the party concerned was aware or was made aware of the right which he appears to have abandoned.’

13.26 Where B does waive privilege and call his or her solicitor to give evidence, it does not follow that the court is bound to find that he or she was aware of the right to elect. This will turn on the evidence.102 But, even where B is unaware of the right to elect between inconsistent rights, he or she may be held to have made an election if there is a deliberate failure to investigate. In Insurance Corpn of the Channel Islands Ltd v Royal Hotel Ltd (No 2),103 Mance J held that election requires actual rather than constructive knowledge. He did, however, distinguish between constructive knowledge and the situation in which a party knows that he may have rights but deliberately decides not to investigate or to act on them: ‘A person who deliberately and for tactical reasons decides not to acquire definite knowledge of a matter which he believes it likely that he could confirm must be treated as having knowledge of that matter. This is not to introduce any conception of constructive knowledge into the present situation.’

He held that the insurers should be treated as having knowledge of their right to avoid the material damage policy, because their solicitors were aware of the point and they took a tactical decision not to raise or pursue it.104

101 [2003] Lloyd’s Rep IR 315 at 335–6. The passage was cited with approval by Leggatt J in Involnert Management Inc v Aprilgrange Ltd [2015] 2 Lloyd’s Rep 289 at [160] (although this was not necessary for his decision). See also Harrison v Shepherd Homes Ltd [2011] EWHC 1811 (TCC) at [184]–[188] (where Ramsey J held that there had been a waiver by election based on actual or presumed knowledge). For discussion of the circumstances in which the knowledge of a solicitor (or agent) will be imputed to the client (or principal) for the purposes of estoppel, or the client or principal will be held to have constructive notice, see 5.11. 102 See, for instance, Stevens and Cutting Ltd v Anderson [1990] 1 EGLR 95 (CA) (where the solicitor saw the point very late and immediately took advice from counsel). 103 [1998] Lloyd’s Rep IR 151 at 161. 104 See also Transcatalina De Commercio SA v Incobras Industrial e Commercial Braziliera SA [1995] 1 Lloyd’s Rep 215 (Mance J). Compare Allcard v Skinner (1887) 36 Ch D 145 (CA), where B was held to have lost the right to rescind a number of transactions for undue influence after a deliberate decision not to inquire into her rights: see 188 (Lindley LJ) and 192 (Bowen LJ).

621

13.27  Election

13.27 A party may also be held to have made an election without making an informed choice where he or she delays taking action.105 Clough v London and North Western Rly106 is usually cited as authority for the proposition that B may lose that right to elect if he or she fails to exercise it within a reasonable time. This principle can either be categorised as an example of the equitable doctrine of laches or as a form of estoppel by silence (where the electing party has a duty to speak within a reasonable time).107 In Kosmar Villa Holidays plc v Trustees of Syndicate 1243,108 Rix LJ did not find it necessary to decide which explanation is correct and it may be that it is unnecessary to decide between them. It may be that B’s conduct will give rise to an estoppel because A acts on the assumption that B has elected one way or the other. In cases where equitable relief is available, it may also be that B’s conduct will amount to laches in the sense of unreasonable delay coupled with prejudice to A. But, whichever explanation is correct, it is important to recognise that the principle is not confined to equitable relief but applies to all contractual rights, such as the waiver of a condition in a policy of insurance or waiver of an event of default in a loan contract.109 The same principle is also embodied in section 35 of the Sale of Goods Act 1979, which provides that a buyer is deemed to have accepted goods when ‘he intimates to the seller that he has accepted them or … when after a lapse of a reasonable time he retains the goods without intimating to the seller that he has rejected them’.110 13.28 Finally, communication is ordinarily a necessary element of a binding contractual election, and B will not be bound until the relevant decision has been

105 See the Kanchenjunga [1990] 1 Lloyd’s Rep 391 (HL) at 398 (Lord Goff). 106 (1871) LR 7 Exch 26 at 31 (Mellor J): ‘We think that so long as he has made no election he retains the right to determine it either way, subject to this, that if in the interval whilst he is deliberating, an innocent third party has acquired an interest in the property, or if in consequence of his delay the position even of the wrongdoer is affected, it will preclude him from exercising his right to rescind’. 107 See the judgment of Adam J in Coastal Estates Pty Ltd v Melevende [1965] VR 433 (Supreme Court of Victoria), cited and applied by Stephenson LJ in Peyman v Lanjani [1985] Ch 457 at 489A–491F. 108 [2008] EWCA Civ 147 at [74]. 109 See Allen v Robles [1969] 2 Lloyd’s Rep 61 (Fenton Atkinson J), Scandinavian Trading Tank Co AB v Float Petrolera Ecuatoriana; the ‘Scaptrade’ [1981] 2 Lloyd’s Rep 425 (Lloyd J) at 431 (affirmed on appeal at [1983] QB 529) and Bank of New York Mellon v GV Films Ltd [2009] EWHC 3315 (Comm) at [36]–[38]. In cases of this kind, loss of the right to elect must give rise to an estoppel, and we suggest elsewhere that this is an example of a duty to speak arising out of the terms of the contract: see 3.15. 110 For examples, see Panchaud Freres SA v Etablissements General Grain Co [1970] 1 Lloyd’s Rep 53 (CA) and Glencore Grain Rotterdam BV v Lorico [1997] 2 Lloyd’s Rep 386 (CA) at 396 (Evans LJ). The first decision provoked widespread comment: see Procter and Gamble Philippine Manufacturing Corpn v Peter Cremer GmbH & Co; the ‘Manila’ [1988] 3 All ER 843 at 848c–853b (Hirst J). The controversy surrounding the decision arises because the buyer had alternative grounds for accepting the repudiation of the seller (which were unknown to either party at the time) and because of the different routes taken by the members of the court in reaching their conclusion. In Glencore Grain Rotterdam BV v Lorico, Evans LJ considered that the decision could be explained either as an application of the common law rule of acceptance or on the basis of estoppel.

622

Common law election 13.29

communicated to A. In the third edition of this book, Sir Alexander Turner considered the requirement of communication to be evidence that election was, in substance, a form of reliance-based estoppel. But there is nothing in the authorities to support such a conclusion, and most of the cases turn on whether notice of the election was required as a matter of contractual interpretation. For instance, in Lakshmijit v Sherani111 the Privy Council held that an election to rescind a contract for the sale of land had to be communicated by B to A before it was effective. In BMW Financial Service (GB) Ltd v Hart112 the Court of Appeal adopted the same reasoning in relation to notice of acceptance of a repudiatory breach of contract. Where communication is required but the service of a notice is not a condition precedent to liability, it is possible for B to make and communicate a binding election by the commencement of legal proceedings.113 It is also possible to communicate an election by conduct.114 Finally, if communication is required by the contract, time will not begin to run for limitation purposes until the election has been communicated by B to A.115 Instruments 13.29 Common law election between rights also applies to inconsistent rights arising under all kinds of unilateral instruments in the same way that it applies to contracts.116 Election at common law between inconsistent rights in a unilateral instrument should be distinguished, however, from equitable election, which

111 [1974] AC 605 (PC) at 616 (Lord Cross): ‘An election by the vendor to exercise a remedy of rescission alters the rights and obligations of both parties to the sale agreement since it puts an end to the purchaser’s right to possession of the land and prevents any further instalment of the purchase price becoming due. For this reason the election must, their Lordships think, be communicated to the purchaser if it is to give him a right to recover possession of the land’. 112 [2012] EWCA Civ 1959 at [21], [26] and [30]. The contract expressly provided for termination by serving notice of acceptance but it is suggested that this would be implicit in most contracts. Compare Mardorf Peach & Co Ltd v Attica Sea Carriers Corpn of Liberia [1977] AC 850 (a leading decision in relation to the late payment of hire under a charterparty). The House of Lords also held that the owners had not elected to affirm by annotating a payment order and making book entries: see at 871H (Lord Wilberforce) and 886E (Lord Fraser). 113 See Clough v London and North Western Rly Co (1871) LR 7 Exch 16 at 36 and Capel & Co v Sim’s Ships Composition Co Ltd (1888) 58 LT 807 at 811 (Kekewich J). In Garnac Grain Co Inc v HMF Faure and Fairclough Ltd [1968] AC 1130 at1140A, Lord Pearson left open the question whether the issue of a writ could by itself amount to an election to accept a repudiatory breach of contract. 114 See Vitol SA v Norelf Ltd [1996] AC 800 (where a failure to perform a contract was held to be communication by A to B of an election to accept a repudiatory breach of contract). Lord Steyn also gave as an example the case of an employer who tells a contractor not to return the following day, thereby repudiating the contract. The contractor’s failure to return would amount to acceptance of the breach: see 811E–G. 115 See BMW Financial Service (GB) Ltd v Hart (above) at [30] (Lewison LJ): ‘… as a matter of general principle where a remedy arises on the election of one party to the contract, the cause of action does not accrue until the election is made’. 116 See Wright v Vanderplank (1856) 8 De GM & G 133 and Bullock v Lloyds Bank Ltd [1955] Ch 317 (Vaisey J).

623

13.29  Election

embodies the different principle that a party cannot both accept and reject the same instrument. This principle is considered in more detail at 13.50. Landlord and tenant 13.30 Again, common law election applies to rights arising from relationships outside the law of contract. The most familiar examples are to be found in the law of landlord and tenant, and perhaps the most familiar situation is waiver of forfeiture. Where a tenant commits a breach of covenant, or some other event gives rise to a right to forfeit or re-enter, the landlord is put to his or her election and may choose either to forfeit and to bring the lease to an end, or to waive the right to forfeit and treat the lease as continuing to exist. It is clear from the early authorities that this is a form of election between inconsistent rights, in the same way as an election to rescind or affirm a contract or any of the other examples discussed above.117 It follows that a landlord will only be held to have waived the right to forfeit where, with knowledge of the facts giving rise to the right to forfeit,118 he or she does some unequivocal act recognising the continued existence of the lease.119 The landlord must also communicate the recognition of the existence of the lease to the tenant.120 13.31 There are two features, however, of the law of waiver of forfeiture which differ from the general principles of election. First, the knowledge required for waiver of forfeiture differs in some respects from the knowledge required in the contractual cases. Although the law relating to knowledge of the underlying facts121 and the attribution of the knowledge of an agent appears to be the

117 See Croft v Lumley (1858) 6 HL Cas 672 at 705 (Bramwell B): ‘[T]he common expression “waiving a forfeiture”, though sufficiently correct for most purposes, is not strictly accurate. When a lessee commits a breach of covenant on which the lessee has a right of re-entry, he may elect to avoid or not avoid the lease, and he may do so by deed or by word; and if with notice he says, under circumstances which bind him, that he will not avoid the lease, or he does an act inconsistent with his avoiding, as distraining for rent, he elects not to avoid the lease; but if he says he will avoid it, or he does an act with its continuance, as bringing ejectment, he elects to avoid it’. This statement was approved in Clough v London and North Western Rly Co (1871) LR 7 Exch 26 at 34 (Blackburn J). 118 See Matthews v Smallwood [1911] 1 Ch 777 at 786 (Parker J): ‘Waiver of a right of re-entry can only occur where the lessor, with knowledge of the facts upon which his right to reenter arises, does some unequivocal act recognizing the continued existence of the lease’. The entire passage was approved by the House of Lords in Kammins Ballroom Co Ltd v Zenith Investments Ltd [1971] AC 850 at 883 (Lord Diplock) and by the Court of Appeal in Cornillie v Saha (1996) 72 P & CR 147 at 155 (Aldous LJ). 119 See Stevens & Cutting v Anderson [1990] 1 EGLR 95 (CA). 120 See Cornillie v Saha (above). 121 See David Blackstone v Burnetts (West End) Ltd [1973] 1 WLR 1487 (knowledge of the basic facts is sufficient) and Van Haarlam v Kasner Charitable Trust (1992) 64 P & CR 214 (suspicion of breach on reasonable grounds held sufficient where landlord took no action to establish the truth).

624

Common law election 13.32

same,122 the authorities suggest that it is not necessary to establish that the landlord knew that he had the right to forfeit.123 (It is, however, unnecessary to show that the landlord had the intention to forfeit.)124 GS Fashions Ltd v B & Q plc125 illustrates the extent to which the state of mind of the landlord is relevant. A landlord issued proceedings for forfeiture for breach of the alienation covenant, and the tenant admitted the breach of covenant and accepted the issue of proceedings as terminating the lease. The landlord then sought to argue that there had, in fact, been no breach of the covenant and that there was no binding election. The court held that the landlord had made an unequivocal election to forfeit the lease and could not withdraw it, even if it had been induced by mistake.126 13.32 Secondly, waiver of forfeiture by demanding or accepting rent may fall into a special category where the demand or, more usually, the acceptance of rent appears to amount almost automatically to a waiver of forfeiture.127 The circumstances in which such a waiver will arise are relatively narrow, however, because rent must have become due since the landlord had notice of the breach or cause for forfeiture, and it must have been tendered and accepted by the landlord as

122 See Metropolitan Properties Co Ltd v Cordery (1980) 39 P & CR 10 (where it was held that the knowledge of a porter who had a duty to report to the landlord could be attributed to the landlord itself). Compare Official Custodian of Charities v Parway Estates Developments Ltd [1985] Ch 151 (where it was held that information published in the London Gazette could not be imputed to a landlord). 123 See Cornillie v Saha (above) at 156–7 citing Swanwick J in David Blackstone (above): ‘Once he or his agent knows those facts an appropriate act by himself or any agent will in law effect a waiver or a forfeiture. His knowledge or ignorance of the law is, in my judgment, irrelevant. If it were not so, a vast gap would be opened in the administration of the law of landlord and tenant and a facile escape route for landlords would be provided’. 124 See Thomas v Ken Thomas Ltd [2007] 1 EGLR 31 at [16] (­Neuberger LJ). However, for ­contractual election, a conscious decision is not necessary either: see 13.22. 125 [1995] 4 All ER 899 (Lightman J). 126 See 905c: ‘It is well established that a lack of knowledge or a mistake as to the full facts may preclude a waiver, for example of a breach of covenant or a right to forfeit; but there is no like requirement of knowledge or absence of a mistake for a valid and binding decision to exercise a contractual right, for example to forfeit a lease or exercise any other contractual option’. 127 See Oliver Ashworth (Holdings) Ltd v Ballard (Kent) Ltd [2000] Ch 12 (CA) at 30D–G (Robert Walker LJ): ‘This is not an area of the law where any rigid or precise taxonomy of principles is possible … The consequences of waiver of this type are a question of law, not fact, in the sense that if a landlord, knowing of a tenant’s breach of covenant, demands rent (even through a clerical error), he cannot avoid the consequences even by an express reservation of his rights …’. In Thomas v Ken Thomas Ltd (above), Neuberger LJ stated: ‘This is a very wellestablished if, to some people, a rather archaic rule’. He also approved the following statement in the current edition of Woodfall: ‘It is not necessary that the landlord should intend to waive the right to forfeit. If, objectively, his act recognises the continued existence of the tenancy, a waiver will result in respect of his intention. Thus the acceptance of rent because of a clerical error will amount to a waiver, as will the receipt of rent “without prejudice”, or under protest. It is a question of fact whether the money is tendered and accepted as rent, but once it has been decided that money was tendered and accepted as rent, the question that the right to forfeit has been waived is a question of law’.

625

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rent. In those circumstances the landlord is treated as having elected not to take advantage of the forfeiture.128 Although there is little discussion in the authorities of the landlord’s knowledge, it does not follow that knowledge of the breach of covenant is not required for waiver by demand or acceptance of rent. In all of the relevant authorities, the landlord was clearly aware of the breach of covenant by the time of the demand or receipt and, in most cases, the critical question was whether the landlord has demanded (or accepted) rent following the breach of covenant.129 In Olubayo v Seahive Investments Ltd,130 Rix LJ stated that knowledge was the basis for the waiver and expressly reserved the question whether it was possible for a landlord to accept rent for an earlier period with knowledge of the breach.131 In Parbulk II A/S v Heritage Maritime Ltd SA; ‘the Mahakam’132 the charterers of a vessel sought to argue that the court should apply the same approach as the landlord and tenant cases (which he described as ‘automatic’ waiver) to the demand for payment of hire by the owners of the vessel. Eder J considered that this argument raised ‘interesting and difficult questions’ but held that it was unnecessary to resolve them. In passing, he pointed out that, even in the landlord and tenant field, there was no binding authority that an unambiguous demand (as opposed to acceptance) of rent operated as an automatic waiver of forfeiture. 13.33 Apart from waiver of forfeiture, the circumstances in which a landlord or tenant will be put to an election between inconsistent rights are rare. This is illustrated by the leading decision of the House of Lords in Kammins Ballrooms Co Ltd v Zenith Investments Ltd133 which concerned waiver of the statutory time limit for making an application to the court for a new tenancy under Part II of the Landlord and Tenant Act 1954. The majority held that waiver by election was not available and that the landlord could only be held to have waived the time limit by estoppel. The minority held that waiver by election was available and that, by

128 For this formulation, see Olubayo v Seahive Investments Ltd [2009] 1 EGLR 32 at [3] ­(Mummery LJ). 129 Where payment is made by electronic transfer, the landlord will not be held to have waived the forfeiture if he or she rejects the payment or returns it within a reasonable time. In Thomas v Ken Thomas Ltd (above) the critical question was whether the tenant’s appropriation of the rent to the relevant period could be challenged, and the Court of Appeal held that it could not: see [19]–[28]. By contrast, in Olubayo v Seahive Investments Ltd the landlord who accepted a payment in respect of rent which had accrued due before the breaches of covenant (and which was the subject of a statutory demand) and returned the balance was not held to have waived the forfeiture: see [21]–[33]. 130 [2009] 1 EGLR 32 at [31]: ‘On principle, I would be inclined to think that knowledge is what is necessary to found the waiver, since one cannot waive without knowledge, but that once there is the necessary knowledge it should not matter whether the rent which is accepted has accrued due before or after the date of knowledge’. 131 Another situation in which a landlord may be held to an election is by the acceptance of rent by a landlord after termination of the lease: see Dun and Bradstreet Software Services (England) Ltd v Provident Mutual Life Assurance Association [1997] NPC 91 (Knox J) (reversed on different grounds at [1998] 2 EGLR 175). 132 [2011] EWHC 2917 (Comm) at [21]–[24]. 133 [1971] AC 850.

626

Common law election 13.35

failing to challenge the tenant’s application, the landlord had made no election on the facts.134 It is also illustrated by the leading decision of the Court of Appeal in Oliver Ashworth (Holdings) Ltd v Ballard.135 In that case the tenant served a break notice which the landlord claimed to be invalid. However, when the notice was declared to be valid, the landlord claimed double rent from the tenant (who had remained in occupation) under section 18 of the Distress for Rent Act 1737, on the basis that the tenant had been a trespasser all along. The tenant’s argument that the landlord had irrevocably elected to treat him as a tenant failed, because the landlord did not have a choice between inconsistent rights. Either the tenant’s notice was valid, in which case the lease had come to an end and he had become a trespasser, or the notice was invalid, in which the lease was subsisting and he remained a tenant. In neither case was the legal relationship between the parties a matter of choice for the landlord.136

Election between remedies 13.34 Where a claimant has alternative and inconsistent remedies against a defendant, he or she must elect between them at some stage of the proceedings. In the context of election between remedies, three principal issues arise: first, the time at which the claimant must elect; secondly, whether the remedies which he or she is seeking are truly inconsistent or alternative, or whether they should be treated as cumulative; and, thirdly, what effect an earlier judgment will have on the claimant’s claim. This third issue involves not so much the principles of election but questions of merger and satisfaction of a judgment. 13.35 Although the early authorities disagree about when B had to elect,137 it is now firmly established that, in the absence of special circumstances, B must elect between remedies at judgment. In United Australia Ltd v Barclays Bank Ltd138 an officer of B bank endorsed a cheque in favour of a third party, C, without the authority of the account holder. C paid the cheque into its account with A bank, who collected it and credited C’s account with the money. B issued proceedings against C for money had and received but, when C went into liquidation before judgment, B then issued proceedings against A for conversion. The

134 Compare Bristol Cars Ltd v RKH Hotels Ltd (1979) 38 P & CR 411 (CA) (where the landlord was held to have made an election to waive the defect in a section 26 request and, therefore, the invalidity of the tenant’s application for a new tenancy) and Co-operative Wholesale Society v Chester le Street District Council (1996) 73 P & CR 111 (LT) (where a local authority was held to have waived a statutory time limit for referring statutory compensation under compulsory purchase legislation to the Lands Tribunal). 135 [2000] Ch 12. 136 See 31F (Robert Walker LJ). 137 Compare Lamine v Dorrell (1705) 2 Ld Raym 1216 at 1217 (where Holt CJ suggested that A did not have to elect before execution) with Smith v Baker (1873) LR 8 CP 350 at 355 (where Bovill CJ suggested that B had to elect before commencing proceedings). 138 [1941] AC 1.

627

13.35  Election

principal issue for the House of Lords was whether, by ‘waiving’ the tort and choosing to claim in restitution against C, B had ratified the endorsement of the cheque and authorised A to collect it. The House of Lords rejected the implied contract theory of restitution and held that the claim in restitution and the claim in tort were separate remedies for the same wrong.139 They also held that B had to elect between alternative and inconsistent remedies, although there was no reason in principle why it had to do so until judgment.140 13.36 In United Australia, B bank had three different remedies. It had a claim for two different but alternative remedies against C (a claim in conversion and claim for restitution) and it had to elect between those two remedies before judgment. But it also had an additional claim against A bank for conversion. In Tang Man Sit v Capacious Investments Ltd,141 Lord Nicholls distinguished between the claims against the two different defendants. It was unnecessary for B to elect which of the two defendants to pursue, provided that any recovery which it made against C was taken into account in assessing the loss which it was entitled to recover from A. Since C was in liquidation and had not obtained a judgment or been able to enforce it, B was free to pursue A for the full amount of its loss:142 ‘Faced with alternative and inconsistent remedies a plaintiff must choose, or elect, between them. He cannot have both. The basic principle governing when a plaintiff must make his choice is simple and clear. He is required to choose when, but not before, judgment is given in his favour and the judge is asked to make orders against the defendant. In the normal course the decision made when judgment is entered is made once and for all. That is the normal rule. The order is a final order, and the interests of the parties and justice alike dictate that there should be finality. The principle, however, is not rigid and unbending. Like all procedural principles, the established principles regarding election between alternative remedies are not fixed and unyielding rules. They are no more than practical applications of a general and overriding principle governing the conduct of legal proceedings, namely, that proceedings should be conducted in a manner which strikes a fair and reasonable balance between the interests of the parties, having proper regard also to the wider public interest in the conduct of court proceedings.’

13.37 In Tang Man Sit v Capacious Investments Ltd a trustee was guilty of a breach of trust by exploiting trust property for his own benefit. The claimant brought a claim against his personal representatives both for an account of profits and for damages. The claim for damages included two heads: first, compensation for the loss of the use of the trust property; and, secondly, compensation for the damage done to the property itself. In the courts below, the claimant obtained both an account of profits and compensation under both heads for the same breach of trust. The estate appealed to the Privy Council on the basis that

139 See 29 (Lord Atkin) and Tang Man Sit v Capacious Investments Ltd at 524D–E (Lord Nicholls). 140 See 18–19 (Viscount Simon LC), 30 (Lord Atkin), 34 (Lord Romer) and 50 (Lord Porter). 141 [1996] AC 514 (PC) at 522H–524F. 142 See 521D.

628

Common law election 13.38

the claimant must have made a binding election for an account of profits at an earlier stage. The Privy Council held that the claimant could elect, at any time before judgment, to receive the higher award to which it was entitled but that it had to give credit against the damages for loss of use and occupation for the sums received pursuant to the account of profits (as it had done). It was also held that there was nothing inconsistent between the claims for the two heads of damage. These were cumulative remedies for different losses. In Ramzan v Brookwide Ltd143 the Court of Appeal applied this reasoning in holding that a claim for damages for breach of trust and a claim for loss of profit were not cumulative remedies, but alternative and inconsistent remedies, and that the claimant should be treated as having elected to receive the greater award. In Tang Man Sit v Capacious Investments Ltd, Lord Nicholls also made it clear that the general principle is that the claimant should have the necessary information to make an informed choice, and the court will make orders to assist the claimant before he or she is put to their election.144 It is a feature of both cases that the claimant had never been put to an election by the defendant at any stage, either before or after judgment, and this explains why, in each case, the appellate court had to decide whether the remedies awarded were alternative or cumulative. A well-advised defendant would obviously require the claimant to elect between remedies at the end of the trial. 13.38 Equitable claims for specific performance or an injunction involve an added complication. Equitable relief of this nature is only available where damages are an inadequate remedy. But they are alternatives to a claim for damages and there is authority that a claimant must elect between them.145 Where B elects to accept A’s repudiation of the contract and to claim damages once and for all, he or she will be bound by that election and cannot later claim to enforce the contract. However, where B chooses not to accept A’s repudiation of the contract but to claim specific performance, it is not always necessary to elect between remedies, even at judgment. Where B elects to claim specific performance of the contract but is unable to enforce the order, he or she may later apply to the court to discharge the order for specific performance and substitute it with an award of damages. In Johnson v Agnew,146 B (the vendor) obtained summary judgment

143 [2012] 1 All ER 903 at [49]–[63] (Arden LJ) (doubting the ­earlier decision of the court in Severn Trent Water v Barnes [2004] EGLR 95). 144 See 521G (Lord Nicholls): ‘To meet this difficulty, the court may make discovery and other orders designed to give the plaintiff the information which he needs, and which in fairness he ought to have, before deciding upon his remedy’. This passage was also cited by Arden LJ in Ramzan v Brookwide Ltd at [58]. The same principle was expressed by Mummery LJ in Redcar and Cleveland BC v Bainbridge [2009] ICR 133 at [246]. In that case the Court of Appeal rejected the argument that employees had to elect between two kinds of equal pay claim for the same period. 145 See Plumbly v Beatthatquote.Com Ltd [2009] EWHC 321 (QB) at [130] (Beatson J). 146 [1980] AC 367.

629

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for specific performance of a contract for the sale of land. A (the purchaser) failed to comply with the order and, in the meantime, A’s mortgagees took possession of the property and sold it. B then applied to the court for the discharge of the order for specific performance, because he could no longer perform the contract, and to replace it with an award of damages. The House of Lords rejected A’s argument that B had irrevocably elected to claim specific performance at the time of judgment:147 ‘In my opinion, the argument based on irrevocable election, strongly pressed by counsel in the present appeal, is unsound. Election, though the subject of much learning and refinement, is in the end a doctrine based on simple considerations of common sense and equity. It is easy to see that a party who has chosen to put an end to a contract by accepting the other party’s repudiation cannot afterwards seek specific performance. This is simply because the contract is gone – what is dead is dead. But it is no more difficult to agree that a party, who has chosen to seek specific performance may quite well thereafter, if specific performance fails to be realised, say, “Very well, then, the contract should be regarded as terminated.” It is quite consistent with a decision provisionally to keep alive, to say, “Well, this no use – let us now end the contract’s life.” A vendor who seeks (and gets) specific performance is merely electing for a course which may or may not lead to implementation of the contract – what he elects for is not eternal and unconditional affirmation, but a continuance of the contract under control of the court which control involves the power, in certain events, to terminate it. If he makes an election at all, he does so when he decides not to proceed under the order for specific performance but to ask the Court to terminate the contract.’

13.39 Often, the more difficult issue is whether the remedies claimed by B are cumulative or whether they are alternative and inconsistent. In historical terms, the principle that a claimant must elect between alternative remedies has presented most difficulty in relation to the torts of interference with goods.148 The position in relation to claims in tort is now regulated by the Torts (Interference with Goods) Act 1977, which provides a limited form of statutory election for both the claimant and defendant. It also provides another example of the circumstances in which the court may discharge an order for one remedy and replace it with another. Section 3 of the Act provides that the court may order (1) specific restitution, (2) damages, or (3) damages, but giving the defendant (rather than the claimant) the option of returning the chattels. The power to order specific restitution (as opposed to damages, with the defendant’s option to return the goods) is purely in the discretion of the court, but the claimant may elect between the other two remedies.149

147 See at 398E–G (Lord Wilberforce). In Tang Man Sit v Capacious Investments Ltd [1996] AC 514 (PC), Lord Nicholls treated the choice between specific performance and damages as an example of a case in which a claimant can elect after judgment: see 522B–C. 148 For the different remedies available, see the fourth edition at XIII.2–9. 149 For the relevant questions which may arise under section 3 and for an example of the practical application of the section, see Mann v Shelfside Holdings Ltd [2015] EWHC 2583 (QB) (HHJ Simpkiss).

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Common law election 13.40

13.40 The classic example of alternative and inconsistent remedies is an account of profits for a breach of fiduciary duty and damages or equitable compensation for the same breach.150 The former is measured by the wrongdoer’s gain and the latter by the injured party’s loss.151 A claimant may pursue an account of profits for breach of contract,152 and claims in contract for both an account of profits and damages for compensation for the same breach should also be alternative and inconsistent remedies in the same way. However, monetary awards often include elements of compensation and restitution as well as an element designed to strip the defendant of any gain. The difficulties in identifying which interests an award of damages or compensation are intended to protect, and whether they are available in any particular case, are beyond the scope of this chapter.153 But, when applying the principle of election between remedies, the court will look to the substance of the relevant award and not the cause of action or the form of the claim. Thus a claim for mesne profits may be either compensatory or intended to reverse the benefit obtained by the wrongdoer and, if it falls into the latter category, it will be inconsistent with a claim for an account of profits.154 A claim to recover a bribe from an employee as money had and received and a claim to recover compensation are alternative and inconsistent remedies.155 There is no authority in which a claimant has been required to elect between claims for equitable relief in relation to a bribe or secret commission (whether personal or proprietary) and claims for damages (whether against the employee or a third party). But, in principle, the position should be the same.156 A claim in restitution for unjust enrichment is inconsistent with a claim as a secured creditor to enforce a legal charge.157

150 For a recent example where the court refused to accept that B had made a binding election by letter between an account of profits and compensation and was free to pursue both claims until judgment, see Willis Ltd v Jardine Lloyd Thompson Group plc (Soole J, unreported, 12 February 2016). 151 See Tang Man Sit v Capacious Investments Ltd (above) at 521B–C (Lord Nicholls). See also Redcar and Cleveland BC v Bainbridge [2009] ICR 133 at [248] (Mummery LJ). 152 See A-G v Blake [2001] 1 AC 268. 153 For a useful summary, see Devenish Nutrition Ltd v Sanofi-Aventis SA [2009] Ch 390 at [36]–[38] (Arden LJ). 154 See Ramzan v Brookwide Ltd [2012] 1 All ER 903 at [67] (Arden LJ). 155 See Mahesan v Malaysia Government Officers Co-operative Housing Society Ltd [1979] AC 374 (PC), followed in Daraydan Holdings Ltd v Solland International Ltd [2005] Ch 119 at [54] (Lawrence Collins J) and Shell International Trading & Shipping Co Ltd v Tikhonov [2010] EWHC 1399 (QB) (Jack J). 156 It is now established that an agent who receives a bribe or secret commission holds it on trust for his or her principal and that the principal has a proprietary as well as a personal remedy: see FHR European Ventures LLP v Cedar Capital Partners LLC [2015] AC 240. In Tikhonov (above), Jack J would have awarded proprietary relief if there had been any assets upon which it could bite: see [30]. 157 See Halifax BS v Thomas [1996] Ch 217 (CA). The first ground of the decision was election: see 227–8 (Peter Gibson LJ) following Re Simms [1934] Ch 1 (where the court refused to permit a trustee in bankruptcy to recover the profits made by a receiver of the bankrupt as money had and received). The decision has been much criticised but it was accepted as correct by

631

13.41  Election

13.41 By contrast, personal and proprietary claims against a trustee or company director who has misappropriated trust or company assets are cumulative, and not alternative or inconsistent. The trustee or director is personally liable to restore the misappropriated assets, but the beneficiaries or the company may also have proprietary claims to recover the assets in specie or their proceeds both against the director or any third party into whose hands the assets can be traced, except for a bona fide purchaser for value without notice. Where the proceeds of the relevant assets remain in the hands of the trustee or director, the beneficiaries or the company may also have the option to assert an equitable lien or charge over them.158 Where, therefore, a director misappropriated the funds of a number of claimants who had invested in a Portuguese development and they had successfully pursued both personal and proprietary claims against the development company and a bank, they were not prevented from making a further claim to recover the proceeds of a life policy from the director’s estate (where the premiums had been paid using company funds). The House of Lords rejected the argument that the company had made an election between inconsistent remedies and held that the claims were unrelated.159 It would also be a mistake in this context to see all claims for an account against a fiduciary as alternative and inconsistent remedies.160 An account in this context is not necessarily an account of profits. Trustees and fiduciaries are accounting parties, and the beneficiaries or a principal have a substantive right to require them to provide an account of their dealings with trust property. An order for an account in this sense is an order requiring a fiduciary to comply with a fundamental obligation. As such, it is the first step in a process which enables the beneficiaries to identify and quantify any deficit in the trust fund and then to seek a range of orders to restore it (which may or may not include an account of profits). Where the trustee or fiduciary is ordered by the court to make good the deficit by paying a sum of money, this is often called ‘equitable compensation’. But the beneficiaries or principal may

Arden LJ in Devenish Nutrition Ltd v Sanofi-Aventis SA [2009] Ch 390 at [86]: ‘In the Halifax case, the claimant had received repayment of all that was due to it. There was therefore no need for a restitutionary award, and such an award would have been inappropriate. This case does not decide that a restitutionary award cannot be made in a non-proprietary tort claim, but it does prevent Devenish from claiming the profits made by the defendants merely on the basis that they made their profits through violations of competition law’. 158 Foskett v McKeown [2001] 1 AC 102 at 130A–131H, applied in Fern Advisors Ltd v Burford [2014] EWHC 762 (QB) at [18] and [19] (HHJ Mackie QC). 159 See Foskett v McKeown at 117H–118C (Lord Hope of Craighead). The other members of the House of Lords agreed on this point: see 108D, 115E and 145E. For a similar approach, see Westminster City Council v Porter [2003] Ch 436 (where Hart J held that claims against local government officers for a statutory remedy for wilful misconduct in the conduct of their office and for breach of trust were cumulative). See also Lordsvale Finance plc v Bank of Zambia [1996] QB 752 (where Colman J held that no question of election arose in relation to default interest because the cause of action had not existed at the relevant time). 160 See Libertarian Investments Ltd v Hall (2013) 17 ITELR 1, [2015] WTLR 241 (HKCFA) at [167] (Lord Millett).

632

Common law election 13.43

be entitled to a range of remedies (both personal and proprietary) and, at every stage, may elect to seek further accounts and inquiries to enforce them.161 13.42 Where B elects between two alternative remedies before judgment, that election is final. The reason why B must elect before judgment is that the cause of action merges in the judgment of the court and the finality of the election arises from the principle of res judicata.162 Where the remedies are not alternative but cumulative or concurrent, the decision to enter judgment will not amount to an election at all. The only limit which such a judgment will place upon the claimant is that, in enforcing the judgment against the defendant, he must account for any sums which he has received from any other source of liability.163 Where judgment has been entered by mistake, the court may set it aside on B’s application if the parties can be restored to the positions which they occupied before the election.164 This jurisdiction appears to be limited to genuine cases of mistake, and there is no general discretion to set a judgment aside where a party has made a final election, even where there is no injustice.165 Where B is successful in setting aside the judgment, A is entitled to claim restitution of any benefits which have passed under it.166 13.43 Where a party elects to enforce a judgment, the court will hold that party to the election and he or she will lose any right of appeal. In Meng Leong Developments Pte Ltd v Jip Hong Trading Co Pte Ltd,167 B commenced proceedings against A for specific performance and damages. At trial the judge awarded damages in lieu of specific performance and A paid the damages to B’s solicitors. The Privy Council held that, by enforcing the award of damages, B had elected to

161 See Libertarian at [168]–[174]. The relevant passage in Lord Millett’s speech was cited with approval by Lord Toulson in AIB Group (UK) plc v Mark Redler & Co Solicitors [2015] AC 1503 at [57]. 162 See Morel Bros Ltd v Earl of Westmoreland [1904] AC 11 and United Australia Ltd v Barclays Bank Ltd [1941] AC 1 (HL) at 30 (Lord Atkin). 163 Morris v Robinson (1824) 3 B & C 196 (Bayley J) at 205–6; United Australia Ltd v Barclays Bank Ltd (above) at 30–31 (Lord Atkin) and Tang Man Sit v Capacious Investments Ltd [1996] AC 514 (PC) at 521B–C (Lord Nicholls). 164 See Cannan v Reynolds (1855) 5 E & B 301, Re Collie (1878) 8 Ch D 807 and S Kaprow & Co Ltd v MacLelland & Co Ltd [1948] 1 KB 618 (CA) (where A made two alternative claims, B made a payment into court, and A’s solicitor accepted the payment in the mistaken belief that it had been paid into court in satisfaction of one claim only). 165 See Meng Leong Development Pte Ltd v Jip Hong Trading Co Pte Ltd [1985] 1 All ER 120 (PC) at 125b (Lord Templeman): ‘The authorities do not support the view that a litigant who has elected to enforce a judgment for damages and to abandon the right to appeal against that judgment may change his mind after the damages have been paid’. Compare Lissenden v CAV Bosch Ltd [1940] AC 412 at 426 (Lord Atkin) and Banner Industrial and Commercial Properties Ltd v Clark Paterson Ltd [1990] 2 EGLR 139 at 140M–141A (Hoffmann J). It is suggested that neither passage can be regarded as authority for a general discretion to set aside an award or judgment, although they suggest a more liberal approach. 166 See Lissenden (above) at 430 (Lord Atkin). 167 [1985] 1 All ER 120 (PC).

633

13.43  Election

enforce the judgment and had lost the right of appeal against the original order.168 Furthermore, where a party elects to continue with an appeal on a limited basis, he or she will be bound by that election, and the advancement of a subsequent claim which raises the same issue which could have been raised on the appeal (or remitted to the court at first instance) will be an abuse of process.169

Election between persons 13.44 Election is also said to arise where B has alternative claims against A and C and chooses to enforce his or her rights against one rather than the other. We refer to this as election between persons and it primarily operates in the field of agency. B can only be required to elect where his or her claims against both parties and the liabilities of B and C are alternative rather than joint or joint and several. The circumstances in which two parties will assume alternative obligations or liabilities to a third party must be very rare indeed, and it follows from this that election between persons is also very rare. In practice, those circumstances are mostly limited to the situation in which an agent contracts with a third party on behalf of an undisclosed principal but the third party becomes aware of the agency relationship prior to enforcement. The language of election is also used in a few disclosed or unidentified principal cases where alternative liability is justified by the existence of two separate contracts or liabilities; but, even now, there remains controversy about the application of election to these cases. Furthermore, even if B does not have alternative claims against A and C but they are jointly liable as co-debtors or co-obligees, the claims against both will merge in a judgment.170 For present purposes, therefore, the key point is that a party will only be put to an election between persons before judgment where he or she has alternative claims. Finally, it is suggested that the doctrine of election between persons is probably best regarded as a particular form of election between substantive rights, because the time at which B must finally elect between A and C is before the commencement of proceedings.171

168 See 125b–c: ‘The authorities do not support the view that a litigant who has elected to enforce a judgment for damages and to abandon the right to appeal against that judgment may change his mind after the damages have been paid’. Sir Robin Cooke dissented on the basis that, by agreeing to the damages being paid to a stakeholder, there was no real attempt to enforce the judgment and nothing inconsistent in the purchaser’s conduct. 169 See Koshy v DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH [2008] EWCA Civ 27. 170 See Bowstead & Reynolds on Agency (20th edn, 2015) at 8-120 (for the alternative liability of agent and undisclosed principal) and 8-121 (for the liability of agent and disclosed principal). See also Reynolds ‘Election Distributed’ (1970) 86 LQR 318, 320–8 and 328–344. Professor Reynolds explains the first group of cases on the grounds that they are really examples of promissory estoppel and the second that they are primarily concerned with the formation of contracts. 171 For the contrary view, however, see Agip (Africa) Ltd v Jackson [1990] Ch 265 at 284B–C (affirmed on appeal at [1991] Ch 547) (where Millett J considered it to be a form of election between remedies).

634

Common law election 13.46

13.45 The usual justification for imposing alternative liability is that, although the law will permit an undisclosed principal to sue or be sued on a contract on proof that he was the contracting party and not his agent, it will not deprive the third party of his claim against the person with whom he believed he was contracting. Some of the authorities explain this rule in terms of election, on the basis that, although the law preserves the third party’s right to sue both principal and agent, he or she must ultimately choose between them.172 But some of the older cases explain it in terms of merger, on the basis that, because the third party thought he or she was contracting with one person, there is a single contract and that the claim against the principal merges in the judgment against the agent, and vice versa.173 To add to this confusion, there are also a small number of cases which suggest that, where an agent contracts both as principal and as agent on behalf of a disclosed principal, their liability should be treated as alternative rather than joint or joint and several. Again, in these cases the rule is sometimes said to be based on election and sometimes said to be based on merger.174 Finally, there will be some cases which turn on the ratification by the principal of the conduct of the agent. But the Court of Appeal has recently confirmed that there is a clear distinction between election and ratification.175 13.46 The traditional authority for election between persons is the decision of the House of Lords in Scarf v Jardine176 (which is not an agency case at all).

172 See United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 30 (Lord Atkin): ‘On the other hand if a man is entitled to one of two inconsistent rights it is fitting that when with full knowledge he has done an unequivocal act showing that he has chosen the one he cannot afterwards pursue the other, which after the first choice is by reason of the inconsistency no longer his to choose. Instances are the right of a principal dealing with an agent for an undisclosed principal to choose the liability of the agent or the principal’. See also Clarkson Booker v Andjel [1964] 2 QB 775 (CA) at 794 (Russell LJ): ‘The defendant having contracted as agent for an undisclosed principal, the plaintiffs were entitled to enforce the contract either against the defendant on the footing that he was contracting and liable as principal, or against the principal on the footing that the defendant was not liable, being merely an agent. The plaintiff could not enforce both. The right against the defendant and their right against the principal were inconsistent rights. At some stage the plaintiffs had to elect to avail themselves of one of these inconsistent rights and abandon the other’. 173 See Buckingham v Trotter (1901) 1 SR (NSW) 253 at 261 (Darley CJ) and Moore v Flanagan [1920] 1 KB 919 (CA) at 928 (Scrutton LJ). 174 See Benton v Campbell Parker & Co [1925] 2 KB 410 at 414 (Salter J): ‘Where an agent purports to make a contract for a principal, disclosing the fact that he is acting as an agent, but not naming the principal … two contracts are made in identical terms, one with the principal and the other with the agent, and the opposite party, unless prevented by some election, can enforce either, but not both’. Compare Debenham’s Ltd v Perkins (1925) 133 LT 252 (CA) at 254 (Scrutton LJ): ‘When an agent acts for a disclosed principal it may be that the agent makes himself or herself personally liable as well as the principal. But in such a case the person with whom the contract is made may not get judgment against both. He may get judgment against the principal or he may get judgment against the agent who is liable as principal, but once he has got judgment against either the principal or the agent who has the liability of the principal, he cannot then proceed against the other party, who might be liable on the contract if proceedings had been taken against him or her first’. 175 See SEB Trygg Liv Holding AB v Manches [2006] 1 WLR 2276 at [46] (Buxton LJ). 176 (1882) 7 App Cas 345 (HL).

635

13.46  Election

In that case the claimant, Jardine, supplied goods to the defendant, Scarf, and his partner, Rogers. The partnership was dissolved and Rogers went into partnership with Beech, although Jardine continued to supply goods to the new partnership without knowing about the dissolution. When Jardine became aware of the dissolution, Jardine elected to sue Rogers and Beech and then to prove in their bankruptcies. He later brought proceedings against Scarf to recover the price of the goods supplied between the date of dissolution and the date on which he became aware of it. It was held that he had made an irrevocable election to sue Rogers and Beech and was therefore precluded from proceeding against Scarf, even for the more limited amount. It is clear from the speeches in Scarf v Jardine that the liability of the two partnerships was considered to be an alternative liability and that the claimant could not proceed against both firms.177 Chestertons v Barone178 (which is an agency case) is the leading modern authority. A firm of estate agents accepted instructions from a solicitor to sell a property on behalf of a foreign company. The solicitor did not disclose the existence of his client until after a buyer had been found. The client refused to pay the commission and the estate agents sued the solicitor on the basis that he was liable as agent for an undisclosed principal. He contended that, by invoicing the client, the estate agents had elected to pursue his principal. The Court of Appeal found on the facts that there had been no election but May LJ set out the following statement of principle:179 ‘The doctrine of election, in order to excuse the agent acting on behalf of the undisclosed principal, requires the agent to show that the third party has abandoned or will no longer look to him for payment; it is not sufficient that he would be looked to for payment merely in addition to his principal. He, the agent for the undisclosed principal, remains liable at the same time as the principal unless and until he can demonstrate that the other party to the contract has abandoned the legal right that he has against him.’

13.47 Scarf v Jardine180 is also authority for the proposition that, where A and C are alternatively liable and B chooses to commence proceedings against one

177 See 359 (Lord Blackburn) and 363 (Lord Watson). In Bradford and Bingley BS v Seddon [1999] 1 WLR 1482 (CA), Auld LJ summarised the effect of the decision at 1493H as: ‘an attempt to sue a former partner of a firm in respect of a partnership liability after having sued the current partners and, upon their bankruptcy, having proved against their estate. The House of Lords held, on the facts, that the plaintiff had necessarily been put to an election because either the current partners or the former members were potentially liable, but not both’. 178 [1987] 1 EGLR 15 (CA). 179 See 16M. There was no statement that the liabilities of solicitor and client were alternative, but this appears to have been assumed. The only authority cited to the court was Clarkson Booker Ltd v Andjel [1964] 2 QB 775 (CA), where the Court of Appeal stated clearly that A need only elect between persons who are alternatively liable: see 794 (Russell LJ). 180 (1882) 7 App Cas 345 (HL) at 362 (Lord Blackburn): ‘I do not think that going to judgment is material. That he could possibly do a more unequivocal act than issuing proceedings against Rogers & Beech, I cannot imagine’. See also Chestertons v Barone [1987] 1 EGLR 15 (CA) at 17F (May LJ). But contrast Clarkson Booker Ltd v Andjel [1964] 2 QB 775 (CA), where it was held that the issue and service of a writ did not, by itself, amount to an election on the particular facts, although it was considered to be strong prima facie evidence of an election.

636

Common law election 13.47

but not the other with full knowledge of the relevant facts, B will be held to have made an irrevocable election. A different view has been taken in ­Australia.181 In Chestertons v Barone182 the court indicated that anything short of issuing proceedings is unlikely to amount to an election and, in a number of cases, it has been unsuccessfully argued that the issue of a bankruptcy petition or a windingup petition or proving in a bankruptcy or liquidation amounts to an ­election.183 In fact, there are only two reported instances of a party being held to have elected before judgment and both can be explained as conventional examples of ­estoppel.184 One explanation for the absence of any case following Scarf v Jardine is its unusual facts. Because it involved two partnerships rather than an agency relationship, A (as an old partner) was only liable for goods supplied by C (his former partner) and A (C’s new partner) between the date on which the original partnership was dissolved and the date on which B became aware of the dissolution. C (who was both an old partner and a new partner) ceased to have ostensible authority to contract on B’s behalf at that date. Moreover, when B became aware of the dissolution of the old partnership, he had a choice either to

181 See Petersen v Moloney (1957) 84 CLR 91 (HCA) at 102: ‘In such a case a final election to treat either as liable would preclude the plaintiff from proceeding against the other, and it is a well-settled general principle that, while the commencement of an action against one of two persons alternatively liable does not, the entry of judgment against one of them does, constitute a final and irrevocable election’. The decision was applied in Bain Securities Ltd v Curmi (1990) 1 ACSR 91 (SC of NSW, Rogers CJ). Dicta to the contrary may also be found in Agip (Africa) Ltd v Jackson [1990] Ch 265 at 284B–C (Millett J): ‘Where an agent has paid away his principal’s money in circumstances which give rise to a right of recovery, either principal or agent can sue, while if the money has been paid without authority, the principal has alternative remedies to sue the agent or the person to whom he paid the money. By suing one he does not in any sense waive the claim against the other. He must of course elect between the alternative remedies but there is no final election until a judgment is obtained and satisfied’. 182 [1987] 1 EGLR 15 (CA) at 17F (May LJ): ‘For my part, I think it is difficult to think of facts where a plaintiff is claiming against both principal and agent, the agent having acted originally on behalf of the principal undisclosed, where an election can be shown without legal proceedings having been started. However, I would not like to be thought to be saying that in exceptional circumstances such a situation could not arise. It seems to me that the clearest evidence of an election is at least the commencement of proceedings by the plaintiff against one or other of the two relevant parties’. In that case, it was unsuccessfully argued that an election had been made by invoicing the agent rather than the principal. In Clarkson Booker Ltd v Andjel [1964] 2 QB 775 (CA), it was also unsuccessfully argued that a letter before action amounted to an election. 183 See Petersen v Maloney (1957) 84 CLR 91 (HCA), where V sued P for the purchase price of a property. P’s defence was that payment had been made to the agent who had gone bankrupt. It was held that proving in the bankruptcy was not an election. The result is consistent with the English authorities which have considered this issue: see Curtis v Williamson (1874) LR 10 QB 57 (where a clerk filed an affidavit of proof and it was held that there was no election) and Re Collie, ex p Adamson (1878) 8 Ch D 807 (where the creditor was permitted to withdraw his proof). Although the creditor did not have the relevant knowledge to support an election in the latter case, it is probably better regarded as an instance of the rule against double proofs in insolvency: see further 5.49 at n 225. 184 See Smethurst v Mitchell (1859) 1 E & E 622 and Maclure v Schemeil (1871) 20 WR 168, discussed in Bowstead & Reynolds (above) at 8-120.

637

13.47  Election

affirm the contract with the new partnership or to enforce against the old partnership by relying on A’s ostensible authority. But he could not do both. His decision to issue proceedings against the new partnership was therefore an unequivocal election to affirm the contracts made with the new partnership. On this basis, Scarf v Jardine can be explained as an example of an election between alternative and inconsistent rights against different people.185 13.48 Another explanation for the absence of any case following Scarf v Jardine is that, although the issue of proceedings is prima facie evidence of an election in cases of alternative liability, B can easily rebut the presumption of election and preserve the right to elect at any time before judgment. In a number of cases it has been held that a judgment obtained against either a principal or agent precludes an action against the other. Sometimes the entry of judgment is said to be an election by the third party.186 The better view is that a cause of action merges in a judgment of the court and that the finality of taking such a step arises from the principle of res judicata rather than as a result of an election187 and does not depend on B’s knowledge of the alternative claims against the principal and agent.188 There is no reason, therefore, why the issue of proceedings should be treated as an automatic election. B can issue proceedings against both A and C in the alternative, leaving it to the court to decide which one is liable. B can also choose to issue protective proceedings against A whilst he or she attempts to identify and locate C (especially where a limitation period is about to expire). Finally, B should be able to amend the Claim Form to join C as a party, even after issuing proceedings against A alone. The rules of court permit B to apply to join C as a party before any limitation period has expired, and the general principle is that ‘a pleading is inherently liable to be amended’.189 13.49 It follows, therefore, that B will only be held to have made an election before judgment in the very clearest of cases where he or she has actual knowledge of the alternative claims, and the issue of the Claim Form manifests a clear choice to hold A liable rather than C. On the facts, Scarf v Jardine was such a

185 The explanation given in the text above is the same as in the previous edition but differs from that offered in earlier editions. Sir Alexander Turner made two attempts to explain this decision: see the second edition at 324–5 and the third edition at 359–361. In the latter edition, he took the point that the election had not been communicated to Scarf and that the decision can only be justified on the principle of approbation and reprobation. 186 For a recent example, see Alexis v YM International Realty Ltd [2016] HKDC 48 applying Bonus Garment v Karl Rieker GmbH & Co [1995] HKC 721, where the Court of Final Appeal held that the obtaining of judgment was a step of such consequence that it must be taken as a conclusive election by the claimant: see 728F–H. The latter decision was appealed to the Privy Council, which allowed the appeal on different grounds but did not indorse this reasoning: see [1997] HKLRD 735. 187 See Morel Bros Ltd v Earl of Westmoreland [1904] AC 11 and United Australia Ltd v Barclays Bank Ltd [1941] AC 1 at 30 (Lord Atkin). 188 See Kendall v Hamilton (1879) 4 App Cas 504 and Moore v Flanagan [1920] 1 KB 919 (CA). 189 See First National Bank plc v Walker [2001] 1 FLR 505 (CA) at [37] (Sir Andrew Morritt VC).

638

Equitable election 13.50

case.190 An alternative and more radical view is that Scarf v Jardine is wrong and that, in the absence of an estoppel, A should not have been prevented from pursuing the claim against C by commencing proceedings against B.191 The liability of a partner for post-dissolution debts is based on estoppel in modern partnership law.192

EQUITABLE ELECTION Instruments 13.50 There is a separate equitable doctrine of election which mainly applies to wills, deeds or other instruments which confer a benefit on one party (B) and at the same time purports to dispose of some property belonging to him or her to another party (A). The principle requires B to elect either to accept the instrument in its entirety by giving effect to the purported disposition to A (or by compensating A for the benefit which he or she would have obtained), or to reject the instrument in its entirety without accepting the intended benefit. There is some dispute about the origin of this principle and its original rationale, and it has been criticised by a number of commentators.193 But the existence of the doctrine has been accepted at the highest level by the House of Lords.194 Many of the old cases relate to the effect of wills on complex family settlements where the testator may have been attempting to achieve a reorganisation of family interests.195 But in the modern context the principle usually comes into play where the testator has made a mistake about the scope of his or her interests, usually in relation

190 In Scarf v Jardine the House of Lords considered that the election was made when Jardine communicated his decision to Rogers and Beech (by commencing proceedings) rather than to Scarf himself: see (1882) 7 App Cas 345 (HL) at 362. Indeed, it appears from this passage that Jardine’s decision to pursue the new partners was what drove them into bankruptcy. For further discussion, see Reynolds ‘Election Distributed’ (1970) 86 LQR 318 at 321–3 and 327. 191 This is the view of modern commentators who have discussed this issue. Professor Reynolds considers that liability should be based on estoppel: see Bowstead & Reynolds (above) at 8-120. Liu ‘Rethinking Election: A General Theory’ (2013) 35 SLR 599 suggests that the doctrine of election should depend on whether the electing party obtains a benefit (as in equitable election) and that A should only be prevented from bringing a claim against C where the claim against B is satisfied or partially satisfied: see 619–623. 192 See section 14(1) of the Partnership Act 1890. The authorities indicate that it is a form of statutory estoppel: see, in particular, Nationwide BS v Lewis [1998] Ch 482 (CA) at 487A (Peter Gibson LJ), followed in Sangster v Biddulphs [2005] PNLR 33 (Etherton J) and Walsh v Needleman Treon [2014] EWHC 2554 (Ch) (Barling J). 193 See Crago ‘Mistakes in wills and election in equity’ (1990) 106 LQR 487 (and responses by Millett and Jago at (1990) 106 LQR 571), Histed ‘Election in equity: the myth of mistake’ (1998) 114 LQR 621 and Liu ‘The Use and Misuse of Equitable Election’ [2013] UNSW Law Journal 42. For a summary of the detailed arguments, see also Scarfe v Matthews [2012] STC 2487 (Nicholas Strauss QC) at [28]–[46]. 194 See Cooper v Cooper (1874) LR 7 HL 53. 195 See eg Noys v Mordaunt (1706) 2 Vern 581, 23 ER 978 (which is the subject matter of ­interesting and detailed discussion in Histed (above)).

639

13.50  Election

to the joint or shared ownership of property.196 In Re Gordon’s Will Trusts,197 Buckley LJ gave, perhaps, the most complete modern statement of the principle: ‘The equitable doctrine of election can, I think, be formulated in this way: If A by a disposition effected by an instrument such as a will confers a beneficial interest in property of which he is competent to dispose on B, and by the same instrument purports to confer a beneficial interest on C in property of which A is not competent to dispose, being the property of B, B may elect to adopt one of two courses. He may elect to accept the entire benefit under the will, in which case he will be equitably bound so far as he is able, to give effect to A’s purported gift to C; or he may elect not to give effect to that purported gift. In the latter case, he will not forfeit his interest under the will, but will be equitably bound to submit to C being compensated out of that interest, so far as practicable, for being deprived of the beneficial interest which A intended to give him.’

13.51 The original rationale for the development of equitable election was that it was an ‘implied condition’ of the first gift that the beneficiary had to honour the second gift by giving up his or her own property.198 But this rationale was rejected by the House of Lords in Cooper v Cooper199 and, following that decision, it has been accepted that equitable election is a rule of equity independent of intention.200 The modern rationale appears to be similar to the rationale for common law election. A beneficiary must choose between two inconsistent rights: either the right to accept the will and claim the benefit under it, or the right to reject the will and assert inconsistent property rights. A beneficiary cannot approbate and reprobate by accepting the will for some purposes and rejecting it for others. This rationale is expressed in the statements that ‘no person can accept and reject the same instrument’201 and that the beneficiary must elect to take ‘under the instrument’ or to take ‘against the instrument’.202 It is also an established principle that electing beneficiaries who choose to take against the instrument do not forfeit their own property but have a duty to compensate the

196 Most of the more modern cases fall into this category: see Re Mengel’s WT [1962] Ch 791 (Buckley J), Re Gordon’s WT [1978] Ch 145 (CA) and Frear v Frear [2009] FCR 727. See also the comment of Nicholas Strauss QC in Scarfe v Matthews [2012] STC 2487 at [35]. 197 [1978] Ch 145 (CA) at 153. For other useful statements of the principle, see Rogers v Jones (Sir George Jessel MR), and Banner Industrial and Commercial Properties Ltd v Clark Paterson Ltd [1990] 2 EGLR 139 (Hoffmann J) at 140. 198 See Noys v Mordaunt (above) at 978 (Lord Keeper Cowper): ‘it is upon an implied condition that each party acquit and release the other …’. 199 (1874) LR 7 HL 53 at 67 (Lord Cairns): ‘The rule … does not proceed either upon an expressed intention, or upon a conjecture of a presumed intention, but it proceeds on a rule of equity founded on the highest principles of equity, and as to which the court does not occupy itself in finding out whether the rule was present or was not present to the mind of the party making the will’. 200 See Brown v Gregson [1920] AC 860 at 868–70 (Viscount Haldane) (cited by Buckley LJ in Re Gordon’s WT [1978] Ch 145 (CA) at 154–5 and by Wilson LJ in Frear v Frear [2009] FCR 727 at [32]). 201 Ker v Wauchope (1819) 1 Blight 1 (Lord Eldon LC) at 19. 202 See Snell’s Equity (33rd edn, 2015) at 6-013.

640

Equitable election 13.52

disappointed beneficiaries to the value of their interests.203 Thus, where T makes a gift to B1 and a gift to B2 of an interest in B1’s property, B1 is put to his election. If B1 elects to take against the instrument and to keep his own property, he renounces his right to the first gift under the will. If he elects to take under the instrument, he must compensate B2 to the value of the gift which she would have received if T had been the owner.204 There is also authority that a beneficiary who asserts competing rights against the estate (such as forced heirship or other inheritance rights) must compensate the beneficiaries under the will, even if there is no right of election.205 13.52 The rejection of the ‘implied condition’ theory does not mean, however, that intention has no part to play in the operation of equitable election. There is a strong presumption that ‘a testator will have purported to dispose only of property of which he was free to dispose’.206 However, where it is clear that the testator intended to dispose of property belonging to a beneficiary, the court will put that beneficiary to an election. Extrinsic evidence of the surrounding circumstances is also admissible to prove the testator’s intention in cases of doubt.207

203 This was established by the early nineteenth century. In Ker v Wauchope (above), Lord Eldon stated: ‘In our Courts we have engrafted upon this primary doctrine of election, the equity as it may be termed of compensation. Suppose a testator gives his estate to A, and directs that the estate of A, or any part of it, should be given to B. If the devisee will not comply with the provision of the will, the Courts of Equity hold that another condition is to be implied, as arising out of the will, and the conduct of the devisee; that inasmuch as the testator meant that his heir-at-law should not take his estate which he gives to A, in consideration of his giving his estate to B; if A refuses to comply with the will, B shall be compensated by taking the property, or the value of the property, which the testator meant for him, out of the estate devised, though he cannot have it out of the estate intended for him’. 204 See eg Frear v Frear [2009] FCR 727 at [41] (Wilson LJ): ‘Equity thereupon directs the Claimant to elect between, on the one hand, keeping both his existing quarters of the beneficial interest but renouncing his right to a further quarter under the Will and, on the other hand, ceding to the siblings one of his two existing quarters but asserting his right to one quarter under the Will’. Although it may not make very much difference in individual cases, Snell suggests (see 6-013) that election works slightly differently and that, where B1 elects to take under the instrument, B2 is entitled to her gift under the will but, where B1 elects to take against the instrument, he must compensate B2 to the value of her gift under the will. 205 See Scarfe v Matthews [2012] STC 2487 (Nicholas Strauss QC) at [57]: ‘Equity intervenes in analogous cases to require compensation to be paid by a beneficiary under the will who has had no power of election, but who has nevertheless also taken a benefit “against the will” ’. In that case, the court required three beneficiaries who asserted French inheritance rights to compensate the beneficiaries under the will for the tax which was payable by them. This was an alternative ground of the decision: see n 210 below. 206 See Frear v Frear (above) at [37]. 207 See Frear v Frear (above) at [32]–[38], where the Court of Appeal admitted in evidence an attendance note of T’s solicitor establishing that she owned the house which formed the principal asset of her estate. In fact, she and her son owned it in equal shares. He was, therefore, put to his election whether to accept the half share which she purported to give him under the will or to assert his existing interest and give up his share under the will to his siblings. Since both outcomes were the same, he received only a half share in the property. Wilson LJ was prepared to accept that section 21 of the Administration of Justice Act 1982 enabled the court to admit extrinsic evidence of the surrounding circumstances (although the Court of Appeal did not hear full argument on the point).

641

13.52  Election

The doctrine only applies where T makes a gift to B1 of some property under the will and the owner is capable of disposing of it in order to compensate B2.208 Moreover, it only applies where B1 owned the relevant property at the date of death.209 Obviously, equitable election can have no application where T makes no gift of property to B1 at all. It did not apply, therefore, where the court found, on the true construction of the will, that T did not intend his estate to benefit his three adoptive children or to pay the inheritance tax which fell due when they exercised their heirship rights over his French property.210 13.53 The knowledge required for common law election is also required for equitable election. Thus a beneficiary will not be required to elect without full knowledge of the funds and properties in question and of the right to elect.211 The effect of an election is retrospective and the amount of compensation is struck at the date of the will.212 However, a beneficiary who has enjoyed the property for a long period will be held to have made an election, even though he or she did not have knowledge of the right to elect.213

Litigation 13.54 Apart from two very specific instances, there are no rules of court or principles of law which compel a party to elect between alternative but inconsistent cases in the same proceedings.214 The two instances in which a party to litigation will be put to an election are: first, where a defendant is required to decide whether to submit to the jurisdiction of the court, and CPR Part 11 provides a

208 See Re Lord Gresham (1886) 31 Ch D 466, where T purported to devise chattels to B1 who was the life tenant and residuary beneficiary, but it was held that election did not apply because he had no interest in the chattels capable of being transferred to the other beneficiaries. Chitty J stated at 472: ‘He has in effect no interest in the chattels which he can make over to them, or from which they can derive any benefit, apart from the mansion house … he cannot make an assignment because he has no assignable interest’. 209 See Grissell v Swinhoe (1869) LR 7 Eq 291 (discussed by Wilson LJ in Frear v Frear (above) at [41]). 210 See Scarfe v Matthews [2012] STC 2487 at [18]–[27] (where Nicholas Strauss QC applied the principles of construction of a contract to the construction of a will). The decision supports the theory of Liu (above) that it is the taking of a benefit rather than the making of a choice which engages the principle. Compare also Carr-Glynn v Frearsons [1999] Ch 326 (CA), where T purported to leave her share in the house to B2 but, because she failed to sever a joint tenancy, it passed under the right of survivorship to B1. Because B1 received no benefit under the will, he was not put to an election and B2 was left to make a White v Jones claim against T’s solicitors: see Towns [1999] Conv 393–8. 211 See Wilson v Thornbury (1875) 10 Ch App 239 (CA) (affirming the decision of Malins V-C). 212 See Re Hancock [1905] 1 Ch 16. 213 See Dewar v Maitland (1866) LR 2 Eq 834 (Stuart V-C). The decision is consistent with the authorities considered in 13.27. 214 Although the Civil Procedure Rules require a statement of case to be verified by a statement of truth, this requirement does not prevent the assertion of inconsistent claims: see Clarke v Marlborough Fine Art (London) Ltd [2002] 1 WLR 1731 at 1745F–H (Patten J).

642

Equitable election 13.55

procedure by which a defendant must make such an election.215 Secondly, where a defendant makes a submission of no case to answer at the conclusion of the claimant’s case, the court will normally put the defendant to an election either to call no evidence, if the application is to proceed, or to withdraw the application and call evidence in the normal way.216 Both instances have generated their own jurisprudence which is outside the scope of this chapter. In addition to these two specific instances, there is also the general equitable principle that a party to proceedings may not approbate and reprobate (which is analogous to the principle considered at 13.50 onwards). The source of this principle is set out in 13.5, and examples of its application are rare. In Nexus Communications Group Ltd v Lambert,217 Mr Gabriel Moss QC explained the difference between common law election and the equitable principle as follows: ‘Election at common law occurs where a person has two inconsistent rights, only one of which can be exercised. Once he exercises that right he cannot exercise the inconsistent right. Likewise, in the case of remedies, the boundary between the two being often difficult to distinguish. Election in equity means that a party cannot both accept an instrument or judgment and reject it. He cannot take a benefit under the instrument or judgment without taking the accompanying burden. By analogy, this principle also extends to litigation where a party succeeds in obtaining judgment on the basis of a particular contention and cannot then resist judgment based on that same contention, where that would be inequitable. The inequity here is once again based on the benefit/burden principle: having taken the benefit of the judgment on a particular basis the party must accept the burden of the judgment for the other relevant party on the same basis. On the other hand, except where this would be contrary to established equitable principles, any party to a legal dispute, before or during litigation, can put forward inconsistent arguments prior to judgment. One inconsistent argument does not prevent reliance on any other inconsistent argument except where the common law or equitable doctrines of election or some other doctrine applies. This inconsistency is not of itself a reason for invoking either the common law or the equitable doctrines of election.’

13.55 In Express Newspapers plc v News (UK) Ltd,218 one of B’s publications published material which it later claimed was copied in breach of copyright by a publication owned by A. Subsequently, another publication owned by B copied a piece published by A. The claim and counterclaim, based on allegations of breach of copyright, were similar. B obtained summary judgment in respect of its claim against A, and Sir Nicolas Browne-Wilkinson gave summary judgment on A’s counterclaim, even though B had an arguable defence. At first sight the case

215 CPR Part 11(4) provides that a defendant who wishes to contest the jurisdiction of the court must apply within 14 days of acknowledgement of service, and CPR Part 11(5) provides that, if the defendant acknowledges service but does not make such an application, he or she is to be treated as having accepted that the court has jurisdiction. 216 See Boyce v Wyatt Engineering [2001] EWCA Civ 692 at [4]–[6] (Mance LJ), followed in Lloyd v John Lewis Partnership [2001] EWCA Civ 1529 and Miller v Cawley [2002] EWCA Civ 1100. 217 [2005] EWHC 345 (Ch) at [44]–[46]. 218 [1990] 1 WLR 1320 (Sir Nicolas Browne-Wilkinson VC).

643

13.55  Election

appears to be no more than an unattractive example of a party taking inconsistent positions in litigation. There was no question in that case of accepting the benefit of an instrument whilst trying to avoid its burden. Nor was it a case of taking a benefit of a judgment and then seeking to contend that it was invalid. However, the critical and additional feature of the case, which made it inequitable for B to defend the counterclaim, was that B had obtained a judgment on its own claim.219 13.56 In Nurcombe v Nurcombe220 a husband and wife were shareholders in one company whilst the husband was the sole shareholder in a second company. In matrimonial proceedings the wife’s claim for ancillary relief was assessed on the basis that her shares in the first company had no value, and her husband’s shares in the second company reflected the fact that it was a highly profitable company. In the course of the husband’s cross-examination, it became apparent that he had diverted a number of contracts from the first company to the second company and that he had acted in breach of his fiduciary duty to the first company as one of its directors. Instead of raising this issue, the wife did nothing until after the conclusion of the matrimonial proceedings when she launched a derivative action against the husband for breach of fiduciary duty. It was held that, by proceeding with her application for ancillary relief, the wife had elected to affirm the relevant transactions and this was a good defence in the subsequent proceedings. First National Bank plc v Walker221 also involved ancillary relief proceedings. In that case, proceedings under a charge had been brought by a bank against husband and wife but adjourned on the wife’s undertaking to pay £100 per month. In the ancillary relief proceedings, she relied on this fact to obtain a property adjustment order requiring her husband to transfer his interest in the matrimonial home to her. Having taken this position, she was held to have affirmed the loan and the charge and could not challenge their validity. Both of these cases involved one party taking the benefit of a favourable judgment in one set of proceedings but then seeking to challenge the basis of that judgment in subsequent proceedings. Both cases are similar, therefore, to the Express Newspapers case in this respect. They also involve a close analogy with Henderson v Henderson abuse of process. 13.57 There are also a number of cases in which the principle has been considered outside ancillary relief proceedings. In Union Music Ltd v Watson222 the court put a party to his election in the course of litigation (rather than after

219 See Nexus Communications Group Ltd v Lambert (above) at [41]. 220 [1985] 1 WLR 370 (CA) at 375C–E and 377D (Lawton LJ, who affirmed the judge’s finding on election), 377F–379A (Browne-Wilkinson LJ, who did not consider it a true case of election but of affirmation or acquiescence) and 379D–380D (Buckley LJ, who also considered it to be a true case of election). 221 [2001] 1 FLR 505 (CA). Sir Andrew Morritt VC considered that the case was one of ‘estoppel, approbation and reprobation, abuse of process, affirmation or release’, Chadwick LJ decided it on abuse of process, and Rix LJ decided it on the basis of election. 222 [2002] EWCA Civ 680 at [26].

644

Equitable election 13.58

j­udgment). In that case, A made claims against B for breach of a shareholders’ agreement and breach of fiduciary duty. B defended the claims on the basis of undue influence and restraint of trade. He also applied to strike out one claim on the basis that it was not authorised under the shareholders’ agreement or the articles of the company. The judge ordered B to elect between relying on the terms of the agreement and seeking to avoid it, and the Court of Appeal refused to overturn this order. Robert Walker LJ explained the fluidity of election in cases of this kind: ‘The authorities … show that there is a clear distinction in principle between election between substantive rights and election between remedies although inevitably there are cases in which the two become confused. Sometimes the need for an election is another way of describing a situation in which a litigant, if he takes a particular course, will be at risk (sometimes amounting to a near certainty) of having affirmed or acquiesced in a transaction and so lost his right to challenge it. There is, I think, a strong element of that in this case. Sometimes there is an element of abuse of process and sometimes the need for an election is little more than a matter of case management (as for instance with a submission of no case to answer). There is, I think, something of that also in this case.’

13.58 In Nexus Communications Group Ltd v Lambert, B and A were parties to a share purchase agreement which provided for a complex valuation procedure in the event of disagreement. A attempted to trigger the procedure by serving the documents required by the expert determination clause but B challenged the validity of these ‘trigger’ documents. Later, B decided to serve a counter-notice under the clause challenging the substance of A’s case and requiring the matter to be determined by the expert. The issue was whether B’s counter-notice was invalid because it had chosen to challenge the validity of B’s ‘trigger’ documents. The court rejected the argument that B’s conduct amounted to an equitable election. Although B had adopted inconsistent arguments, there were no ‘factors which operate pursuant to established equitable principles and which make the inconsistency intolerable at a particular stage’.223 Finally, in 8 Representative Claimants v MGN Ltd224 a large number of cases had been brought by individuals alleging that they had been the victims of invasion of privacy by the defendant newspaper publisher in the form of phone hacking and illicit information gathering. In eight cases taken to trial, judgment and costs orders were given in the claimants’ favour.225 However, the court rejected the claimants’ claim for a 10% uplift in damages, on the basis that they had been litigating with the benefit of a conditional fee agreement (CFA) under which their solicitors and counsel were entitled to an uplift in the event of success and that most of them had taken out ‘after the event’ (ATE) cover. Twelve other cases had also settled, with agreed orders for costs, on the same basis. The publisher then took the point that the recovery of the uplift under the CFA and the ATE premium were incompatible with Article 10 of the European Convention on

223 [2005] EWHC 345 (Ch) at [68]. 224 [2016] EWHC 855 (Ch) at [26]–[36]. 225 [2015] EWHC 1482 (Ch).

645

13.58  Election

Human Rights. Mann J rejected this argument but he also held that the publisher was estopped from asserting that the CFA was invalid, because it had relied on the CFA in earlier proceedings and applied the principle stated by Sir Nicolas Browne-Wilkinson in Express Newspapers:226 ‘I agree that those words can be made to apply in the present case. The way in which it works is obvious. Having relied on the availability of the recovery of CFA additional liabilities in this class of litigation, the defendant now seeks to rely on the absence of that recovery in the present application. That is a classic approbation and reprobation. It is an inconsistency which should not be allowed. An alternative way of looking at it would be to view it as an abuse of process, which in my view it is. But whichever label one chooses to give it, the present stance is one which MGN should not be allowed to adopt.’

226 See n 19 above.

646

CH A P T E R 1 4

Promissory estoppel

Introduction  14.1 The High Trees principle  14.3 Subsequent treatment  14.7 The elements of promissory estoppel  14.10 Promise or representation  14.10 Legal relationship  14.22 Reliance  14.26 Detriment  14.28 Effect  14.32 Inequitable  14.35 The limitations of promissory estoppel  14.36

INTRODUCTION 14.1 Where, by words or conduct, B makes an unequivocal promise or assurance to A which is intended to affect the legal relationship between them or was reasonably understood to have that effect and, before it is withdrawn, A acts upon it altering his or her position so that it would be inequitable to permit B to withdraw it, B will not be permitted to act inconsistently with it for so long as that would be unfair to A. A must also show that the promise or assurance was intended to be binding in the sense that it was intended, on an objective basis, to affect the legal relationship between the parties and that B either knew or could have reasonably foreseen that the maker would act upon it.1 1

This revised formulation is taken from the decisions of Morgan J in Crossco No 4 Unlimited v Jolan Ltd [2011] EWHC 803 (Ch) at [332] (affirmed on appeal: see [2011] EWCA Civ 1619) and CF Partners (UK) LLP v Barclays Bank plc [2014] EWHC 3049 (Ch) at [156], citing Snell’s Equity (32nd edn, 2010) (a formulation prepared by the editor of this chapter).

647

14.2  Promissory estoppel

14.2 This principle has been variously described as ‘promissory estoppel’2 or ‘equitable forbearance’3 and ‘equitable estoppel’.4 The expression ‘equitable estoppel’ is sometimes used as a term to describe proprietary estoppel and promissory estoppel together.5 The term ‘waiver’ is often used as well as, or instead of, these terms where the effect of the principle is to preclude the party making the promise from enforcing strict compliance with a contractual or statutory obligation.6 We use the term ‘promissory estoppel’ in this chapter primarily because the principle being considered can properly be regarded as a species of reliance-based estoppel, even though it has traditionally had a number of features

As before, A denotes the estoppel raiser and B the party estopped. In relation to the requisite intention, it may be that the test for all reliance-based estoppels can be more accurately stated as an intention to be responsible for inducing the other party to rely upon the promise or assurance: see 5.19–5.23. 2

3

4

5 6

For the earliest reference, see Dean v Bruce [1952] 1 KB 11 (CA) at 14 (Denning LJ). For references at appellate level, see Ajayi v RT Briscoe (Nigeria) Ltd [1964] 1 WLR 1326 (PC) at 1330 (Lord Hodson): ‘The principle which has been described as quasi estoppel and perhaps more aptly as promissory estoppel’; Woodhouse AC Israel Cocoa Ltd v Nigerian Produce Marketing Co Ltd [1972] AC 741 at 758B–C (Lord Hailsham LC), 762C–D (Lord Pearson) and 767E (Lord Cross); Secretary of State for Employment v Globe Elastic Thread Co Ltd [1980] AC 506 at 518H (Lord Wilberforce); Spence v Shell UK Ltd (1980) 256 EG 55 (CA) at 63 (Oliver LJ); James v Heim Gallery (London) Ltd (1980) 256 EG 819 (CA) at 821 (Buckley LJ) and 825 (Shaw and Oliver LJJ); China Pacific SA v The Food Corpn of India; the ‘Winson’ [1980] 2 Lloyd’s Rep 213 (CA) at 222 (Megaw LJ); Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84 (Robert Goff J and CA) at 122B (Lord Denning MR); Maharaj v Chand [1986] AC 898 (PC) at 908A (Sir Robin Cooke) citing this chapter in the third edition; Goldsworthy v Brickell [1987] Ch 378 (CA) at 410A–E (Nourse LJ); Dun and Bradstreet Software Services (England) Ltd v Provident Mutual Life Assurance Association [1998] 2 EGLR 175 (CA) at 180L (Peter Gibson LJ); Emery v UCB Corporate Services Ltd [2001] EWCA Civ 675 at [27] (Peter Gibson LJ); Johnson v Gore Wood & Co [2002] 2 AC 1 at 40F–G (Lord Goff); and Collier v P & MJ Wright Ltd [2008] 1 WLR 643 at [29] (Arden LJ). This term appears to have originated with Treitel in The Law of Contract. It is used by the editors of Chitty on Contracts (32nd edn, 2015), Vol 1 at 4-086, and Wilken and Ghaly The Law of Waiver, Variation and Estoppel (3rd edn, 2012) at 8.06. This may be explained by the fact that both Treitel and Chitty treat the part payment of debts separately. Professor Elizabeth Cooke uses ‘promissory estoppel’ in Halsbury’s Laws of England (5th edn, 2014) at §385. For influential cases, see Motor Oil Hellas (Corinth) Refineries SA v Shipping Corpn of India (the ‘Kanchenjunga’) [1990] 1 Lloyd’s Rep 391 (HL) at 398 (Lord Goff) and Youell v Bland Welch & Co Ltd; the ‘Superhulls Cover’ Case (No 2) [1990] 2 Lloyd’s Rep 431 (Phillips J) at 449 and 454. For a recent example, see Virulite LLC v Virulite Distribution Ltd [2014] EWHC 366 (QB) (Stuart-Smith J) at [101]. See eg Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84 (Robert Goff J and CA) at 103D (Robert Goff J). See eg W J Alan & Co v El Nasr Export and Import Co [1972] 2 QB 189 (CA) at 213A–B (Lord Denning MR): ‘The principle of waiver is simply this: If one party, by his conduct, leads another to believe that the strict rights arising under the contract will not be insisted upon, intending that the other should act on that belief, and he does act on it, then the first party will not afterwards be allowed to insist on the strict legal rights when it would be inequitable for him to do so …’; see also Bremer Handelsgesellschaft mbH v Vanden Avenne-Izegem [1978] 2 Lloyd’s Rep 10 (HL) at 127 (Lord Salmon); Bremer Handelsgesellschaft mbH v C Mackprang Jr [1979] 1 Lloyd’s Rep 221 (CA) at 226 (Lord Denning MR), 229 (Stephenson LJ): ‘waiver or

648

Introduction 14.3

which distinguish it from other forms of estoppel. We also use the term ‘waiver’ in a narrow sense to describe the outcome or result which promissory estoppel may produce. For example, if B gives an assurance which A acts on to his or her detriment, B may be held to have waived a particular right. But there are other ways in which B may also be held to have waived a right, such as making a binding election or by express contractual agreement. In this context, therefore, the term ‘waiver by estoppel’ is used to distinguish a waiver which arises as a result of a promissory estoppel from a waiver which arises as a result of the doctrine of election or by a contractual variation supported by consideration.

The High Trees principle 14.3 In the first edition of this book published in 1923, Spencer Bower stated that no estoppel could be founded upon a representation other than one of existing fact.7 For many reasons, that statement is no longer accurate, but one of the most important reasons is the emergence of the doctrine of promissory estoppel in Central London Property Trust Ltd v High Trees House Ltd.8 In 1937, B let a block of flats to A (one of its subsidiaries) for 99 years at a rent of £2,500. In 1940, it became apparent that A would be unable to pay the rent because of low occupancy due to wartime conditions. On 3 January 1940, after discussions between their respective directors, B wrote to A agreeing to reduce the rent to £1,250 per annum. The letter stated: ‘[W]e confirm the arrangements made between us by which the ground rent should be reduced as from the commencement of the lease to £1,250 per annum’. In March 1941 a receiver was appointed over B’s assets by a debenture holder. In 1945, when the block of flats was fully let, the new receiver wrote to A demanding payment of the rent in full and repayment of the arrears. He commenced ‘friendly’ proceedings to recover the difference between the full rent reserved by the lease and the concessionary rent agreed in 1940 for

equitable estoppel’); MSAS Global Logistics Ltd v Power Packaging Inc [2003] EWHC 1393 at [50]–[53] (Davis J); Fortisbank SA v Trenwick International Ltd [2005] EWHC 339 at [29] (Gloster J) (‘… it is to be equated with promissory/equitable estoppel’); EDO Corp v Ultra Electronics Ltd [2009] 2 Lloyd’s Rep 349 at [28] (Bernard Livesey QC) (‘… whether this should be classified as promissory estoppel, an estoppel by representation, a waiver or an estoppel by convention … makes no difference to the effect’); and Virulite LLC v Virulite Distribution Ltd [2014] EWHC 366 (QB) at [117]. 7 8

This statement of principle was based on the decision of the House of Lords in Jorden v Money (1854) 5 HL Cas 185 at 214–5 (Lord Cranworth LC). See also Jackson ‘Estoppel as a Sword’ (1965) 86 LQR 84, 87–95 and 2.14 onwards. [1947] KB 130. Sir Guenter Treitel described the decision as ‘surely one of the most prominent of the landmarks in twentieth century contract law’: see ‘Some Landmarks of Twentieth Century Contract Law’ (2002) pp 29–34. It was argued and decided on 18 July 1946, and judgment was unreserved. Neither of the two principal decisions on which Denning J relied, Hughes v Metropolitan Rly Co and Birmingham and District Land Co v London and North Western Rly Co, was cited by counsel.

649

14.3  Promissory estoppel

the two quarters ending on 29 September and 25 December 1945. Denning J held that B was entitled to recover these two quarters rent, although he also indicated that the arrears down to that date would not be recoverable. He found that the promise was binding, although it was only intended to be a temporary expedient and understood by the parties to apply just for the period during which the flats were substantially unlet. 14.4 The reasoning in High Trees remains controversial because of the tension between the High Trees principle and the doctrine of consideration. It is a rule of English contract law that part payment of a debt (or the debtor’s promise to pay part of a debt) is not good consideration for the release of the whole debt (or the creditor’s promise to discharge it).9 If the High Trees principle can prevent a creditor from recovering the balance of a debt in these circumstances, then this rule may be subverted. It also remains controversial because a reliancebased estoppel usually requires detriment in order to be binding. If the High Trees principle means that an agreement to accept part payment of a debt in satisfaction of the whole is binding, then this does not involve detriment to the debtor in any legal sense but rather a benefit. Finally, it still remains a matter of debate whether the High Trees principle can be relied on to extinguish a debt or obligation or whether the creditor can withdraw the promise or assurance (whatever its terms).10 For these reasons, it still remains important, 70 years later, to examine Denning J’s reasoning in High Trees in some detail. He began by stating that the law had not stood still since Jorden v Money11 and he identified a series of decisions which were ‘not cases of estoppel in the strict sense’ but ‘promises intended to be binding, intending to be acted upon, and in fact acted upon’.12 He continued: ‘In each case the court held the promise to be binding on the party making it, even though under the old common law it might have been difficult to find any consideration for it. The courts have not gone so far as to give a cause of action in damages for the breach of such a promise, but they have refused to allow the party making it to act inconsistently with it. It is in that sense, and that sense only, that such a promise gives rise to an estoppel. The decisions are a natural result of the fusion of law and equity: for the cases Hughes v Metropolitan Ry Co, ­Birmingham and District Land Co v London and North Western Ry Co and Salisbury (Marquess) v Gilmore afford a sufficient basis for saying that a party would

9 See Foakes v Beer (1884) App Cas 605, following Pinnel’s Case (1602) 5 Co Rep 117a. In Collier v P & MJ Wright (Holdings) Ltd [2008] 1 WLR 643 the Court of Appeal affirmed this rule: see [22] and [23] (Arden LJ) and [44] and [45] (Longmore LJ). 10 See 14.32–14.34. The first decision to raise this issue was Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd [1955] 1 WLR 761 (HL). 11 See [1947] KB 130 at 134. 12 The other examples which he gave were Fenner v Blake [1900] 1 QB 426, DC; Re Wickham (1917) 34 TLR 158 (Horridge J); Buttery v Pickard [1946] WN 25 (Humphreys J); Re Wm Porter & Co Ltd [1937] 2 All ER 361 (Simonds J); and Salisbury (Marquess) v Gilmore [1942] 2 KB 38, CA.

650

Introduction 14.6

not be allowed in equity to go back on such a promise. The logical consequence, no doubt is that a promise to accept a smaller sum in discharge of a larger sum, if acted upon, is binding notwithstanding the absence of consideration: and if the fusion of law and equity leads to this result, so much the better. That aspect was not considered in Foakes v Beer. At this time of day however, when law and equity have been joined together for over seventy years, principles must be reconsidered in the light of their combined effect.’13

14.5 In Hughes v Metropolitan Rly Co14 a landlord served a schedule of dilapidations on the tenant, who responded by offering to sell the premises back to him. Negotiations then took place but, after they broke down, the landlord brought proceedings for forfeiture on the basis that the tenant had failed to carry out the relevant works. The House of Lords held that the tenant was entitled to relief against forfeiture, on the basis that the negotiations had had the effect of suspending the operation of the notice until they had been broken off. Lord Cairns LC stated:15 ‘[I]t is the first principle upon which all Courts of Equity proceed that if parties have entered into definite and distinct terms involving certain legal results – certain penalties or legal forfeiture – afterwards by their own acts or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties.’

14.6 The word ‘estoppel’ does not feature in any of the speeches in Hughes v Metropolitan Rly Co, and the ‘first principle’ stated by Lord Cairns might have been left as authority for the more limited proposition that relief against forfeiture could be granted to a tenant in a case where a breach of covenant continued with the landlord’s tacit consent.16 But, in Birmingham and District Land Co v London and North Western Rly Co,17 this argument was rejected by the Court of Appeal: ‘Now, it was suggested … that the proposition only applied to cases where penal rights in the nature of forfeiture, or analogous to those of forfeiture, were sought to be enforced. I entirely fail to see any such possible distinction. The principle

13

See at 135. Arden LJ described the last part of this passage as the ‘brilliant obiter dictum of Denning J in the High Trees case’ in Collier v P & MJ Wright (Holdings) Ltd [2008] 1 WLR 643 at [42]. 14 (1877) 2 App Cas 439. 15 See 448. 16 See Shiloh Spinners Ltd v Harding [1973] AC 691 at 722A–725C. In Brikom Investments Ltd v Carr [1979] QB 467, 485F–486H and 489A–G, Roskill LJ (citing the third edition and the discussion of Crabb v Arun DC [1976] Ch 179, CA) also considered Lord Cairns’ principle to be a statement relating to estoppel by acquiescence rather than promissory estoppel. 17 (1888) 40 Ch D 268, CA at 286 (Bowen LJ). The word ‘estoppel’ was not used either by counsel or by the judges in this case.

651

14.6  Promissory estoppel

has nothing to do with forfeiture. It is a principle which lies outside forfeiture, and everything connected with forfeiture, as will be seen in a moment by reflection. It was applied in Hughes v Metropolitan Rly Co in a case in which equity could not relieve against forfeiture upon the mere ground that it was a forfeiture, but could interfere only because there had been something in the nature of acquiescence, or negotiations between the parties, which made it inequitable to allow the forfeiture to be enforced. The truth is that the proposition is wider than forfeiture. It seems to me to amount to this, that if persons who have contractual rights against others induce by their conduct those against whom they have such rights to believe that such rights will either not be enforced or will be kept in suspense or abeyance for some particular time, those persons will not be allowed by a Court of Equity to enforce the rights without at all events placing the parties in the same position as they were before.’

Subsequent treatment 14.7 In Collier v P & MJ Wright (Holdings) Ltd18 a debtor applied to set aside a statutory demand on the basis that the creditor had agreed to accept one-third of the debt and pursue his two co-debtors (who had now gone bankrupt) for the balance. The Court of Appeal set aside the statutory demand on the basis that he had a real prospect of succeeding in his defence of promissory estoppel. Only Arden LJ went further than this. She considered that if (1) a debtor offers to pay part only of the amount he owes, (2) the creditor voluntarily accepts that offer and (3) in reliance on the creditor’s acceptance the debtor pays that part of the amount he owes in full, then the creditor is bound to accept that sum in full and final satisfaction of the whole debt by virtue of the doctrine of promissory estoppel.19 Longmore LJ accepted that where (1) the creditor had made a promise or representation which could be regarded as a permanent surrender of the creditor’s rights, and (2) the debtor had relied upon that promise or representation, then ‘it can be a sufficient reliance for the purpose of promissory estoppel if a lesser payment is made as agreed’. However, he was far from satisfied that the debtor had relied on the promise in any meaningful way and would have been better off by pursuing his co-debtors. He also identified a third question: (3) whether it would be inequitable for the creditor to ‘resile’ from this promise.20 14.8 Collier v Wright stands as authority for the proposition that, where the requirements of promissory estoppel are made out, a creditor may be bound by a promise to accept part payment of a debt in satisfaction for the entire debt. However, because it was an application to set aside a statutory demand,

18 [2008] 1 WLR 643. 19 See [42]. She relied upon the subsequent formulation of the High Trees principle by Lord Denning MR in D&C Builders Ltd v Rees [1966] 2 QB 617 at 625: ‘Where there has been a true accord, under which the creditor voluntarily agrees to accept a lesser sum in satisfaction, and the debtor acts upon that accord by paying the lesser sum and the creditor accepts it, then it is inequitable for the creditor afterwards to insist on the balance’. 20 See [45]–[47].

652

Introduction 14.9

it was unnecessary for the court to decide whether the circumstances made it inequitable for the creditor to withdraw the promise.21 In MWB Business Exchange Centres Ltd v Rock Advertising Ltd,22 Kitchin LJ reviewed all of the authorities and confirmed that relief was, in principle, available but would depend on all of the circumstances. In both High Trees itself and Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd23 a creditor agreed to suspend the right to receive periodic payments for a temporary period and was permitted to withdraw the promise or assurance for the future. However, because there was no claim to recover the arrears, it was unnecessary to examine the reliance by the debtor during the relevant period. Where the creditor promises to surrender his or her rights on a permanent basis, the detrimental reliance relied on by the debtor must make it inequitable for the creditor to withdraw the promise. It is that reliance which underpins the estoppel and makes it unfair for the creditor to go back on the promise. No doubt the court can properly recognise the benefit to a creditor of receiving a significant element of the debt and the detriment to the debtor in agreeing to pay a substantial part of the debt, rather than enter into some form of insolvency process such as an individual or company voluntary arrangement. But it is suggested that part payment of the debt should not be sufficient by itself to bind the parties, because it does not involve any detrimental reliance on the part of the debtor.24 14.9 The decision in High Trees was a novel one because Denning J applied an equitable doctrine to the part payment of debts.25 Although the effect of the

21

22

23 24

25

If the judgment of Arden LJ is correct, it is enough for the parties to reach a true accord for part payment of the debt. This is what she meant when she stated (at [42]): ‘This part of our law originated in the brilliant obiter dictum of Denning J in the High Trees case [1947] KB 130. To a significant degree it achieves in practical terms the recommendation of the Law Revision Committee chaired by Lord Wright MR in 1937’. Longmore LJ was much more cautious and left this point open: see [49]. [2016] EWCA Civ 553 at [61]: ‘Drawing the threads to together, it seems to me that all of these cases are best understood as illustrations of the broad principle that if one party to a contract makes a promise to the other that his legal rights under the contract will not be enforced or will be suspended and the other party in some way relies on that promise, whether by altering his position or in any other way, then the party who might otherwise have enforced those rights will not be permitted to do so where it would be inequitable having regard to all of the circumstances. It may be the case that it would be inequitable to allow the promisor to go back upon his promise without giving reasonable notice, as in the Tool Metal case; or it may be that it would be inequitable to allow the promisor to go back on his promise at all with the result that the right is extinguished. All will depend upon the circumstances’. See further 14.35. [1955] 1 WLR 761 (HL). For a similar view point, see Capper ‘The Extinctive Nature of Promissory Estoppel’ (2008) 37 CLRWR 105. This analysis is also consistent with the ‘promise-detriment’ principle articulated in McFarlane and Sales ‘Promises, Detriment and Liability: Lessons from Proprietary Estoppel’ (2015) 131 LQR 610. Trukhtanov ‘Foakes v Beer: reform of common law at the expense of equity’ (2008) 124 LQR 364 considers that the decision was more dogmatic than this. For further justification of the need for detriment for a promissory estoppel (and the scope of what may be treated as detriment in that context), see 5.54–5.56. Treitel, in ‘Some Landmarks of Twentieth Century Contract Law’ (2002) pp 31–2, explains the novelty as follows: ‘Before the High Trees case this “reliance” principle had not been

653

14.9  Promissory estoppel

estoppel in that case was only to suspend payment, the judgment recognises that the ‘reliance’ principle may justify the extinction of debts or obligations in suitable circumstances. It is unclear whether, at this stage, Denning J considered this principle to be an extension of the doctrine of estoppel by representation or a form of estoppel at all. In Charles Rickards Ltd v Oppenheim26 he described the doctrine as ‘a kind of estoppel’. In Combe v Combe27 he did not use the term at all. It was not until Dean v Bruce28 that he first used the term ‘promissory estoppel’.29 By Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd,30 however, he had formed the view that all forms of estoppel could be seen ‘to merge into one general principle shorn of limitations’. Finally, as the decision in High Trees became fully absorbed, promissory estoppel came to be seen, both by Lord Denning and by other leading judges, as one facet of the general equitable jurisdiction to relieve against unconscionable conduct.31

THE ELEMENTS OF PROMISSORY ESTOPPEL Promise or representation The nature of the promise 14.10 The words or conduct necessary to support a promissory estoppel are usually different in quality from the statement of existing fact or law necessary for the foundation of an estoppel by representation. This is because they will usually consist of a promise or assurance as to the future conduct of B in relation to the exercise of existing rights on which A relies to his detriment or acts in some other way which would make it inequitable to allow B to go back on it.32

applied to promises unsupported by consideration to accept part payment of a debt in full settlement; the novelty of the case lay in its assertion that the principle applied to such promises and that “the logical consequence” was that “a promise to accept a smaller sum in discharge of a larger sum, if acted upon is binding notwithstanding the absence of consideration”’. 26

[1950] KB 616 (CA) at 623. The case was a sale of goods case and it is interesting to note that, by this time, he did not consider promissory estoppel to be an exclusively equitable doctrine, because he also considered the common law waiver cases to be examples of the same principle. 27 [1951] 2 KB 215 (CA) at 219. 28 [1952] 1 KB 11 (CA) at 14. 29 The term was first used in Williston on Contracts (1st edn, 1920) Vol 1 §139. 30 [1982] QB 84 (CA) at 122B–D. 31 See Crabb v Arun DC [1976] Ch 179 (CA); Taylors Fashions Ltd v Liverpool Victoria Trustee Co Ltd (Note) [1982] QB 133 (Oliver J); and Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84 (Robert Goff and CA) especially at 103 (Robert Goff J). 32 The corresponding passage in the third edition was quoted with approval by Megaw LJ in China-Pacific SA v Food Corpn of India; the Winson [1981] QB 403 at 429E. A representation of law has now been held capable of founding an estoppel: see 1.19, 2.8.

654

The elements of promissory estoppel 14.11

This point was made by Denning J in High Trees, and later cases continued to emphasise the distinction between the two classes of estoppel and between the representations of fact which support the one and the promises or assurances as to the future which give rise to the other.33 Later cases have also emphasised the distinction between the kind of representation necessary to support a binding election and the kind of promise or assurance which gives rise to a promissory estoppel. Thus, a party making his election ‘is communicating his choice whether or not to exercise a right which has become available to him’, whereas an assurance will only give rise to a promissory estoppel where the party making the promise ‘is representing that he will not in future enforce his legal rights’.34 The promise must be unequivocal 14.11 In Woodhouse AC Israel Cocoa Ltd v Nigerian Produce Marketing Co Ltd35 the House of Lords confirmed that a clear and unequivocal representation is as much a requirement of the doctrine of promissory estoppel as it is of the doctrine of estoppel by representation of fact. More recently, in Dun and Bradstreet Software Services Ltd v Provident Mutual Life Assurance Association,36 the Court of Appeal resisted an attempt to challenge this requirement and to argue that it was not necessary for the exercise of the equitable jurisdiction in Hughes v Metropolitan Rly Co.37 Peter Gibson LJ considered that it was implicit in the decision of the House of Lords that the representation had to be clear and unequivocal and that it was. There are also numerous other decisions in which this requirement has been accepted.38 The test is the same for

33 See [1947] KB 130 at 134; Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd [1955] 1 WLR 761 (HL); Ajayi v RT Briscoe (Nigeria) Ltd [1964] 1 WLR 1326 (PC) at 1330 (Lord Hodson citing Tungsten): ‘when one party to a contract in the absence of fresh consideration agrees not to enforce his rights’; Woodhouse AC Israel Cocoa Ltd v Nigerian Produce Marketing Co Ltd [1972] AC 741 at 762C–D (Lord Pearson): ‘far removed from the familiar kind of estoppel by representation of fact and seems, at any rate in a case of this kind, to be more like a waiver of rights’; and 768A–B (Lord Cross) distinguishing between a ‘representation of fact as opposed to a promise with regard to future conduct’. See also James v Heim Gallery (London) Ltd (1980) 256 EG 819 (CA) at 821 (Buckley LJ). 34 See Motor Oil Hellas (Corinth) Refineries SA v Shipping Corpn of India (the ‘Kanchenjunga’) [1990] 1 Lloyd’s Rep 391 (HL) at 399. 35 [1972] AC 741. 36 [1998] 2 EGLR 175 (CA) at 180H–M. 37 (1877) 2 App Cas 439. 38 See Bremer Handelsgesellschaft mbH v Vanden Avenne-Izegem [1978] 2 Lloyd’s Rep 109 (HL) 126 (Lord Salmon); Avimex SA v Dewulf and Cie [1979] 2 Lloyd’s Rep 57 at 67 (Robert Goff J); BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 812C (Robert Goff J) (no representation that would not enforce right to treat contract as frustrated); ChinaPacific SA v Food Corpn of India; the ‘Winson’ [1981] QB 403 (CA) (citing this paragraph in the third edition, statements by solicitors that they had advised their clients that they were liable for a certain sum held to be equivocal); Spence v Shell UK Ltd (1980) 256 EG 55 (CA) at 63 (Oliver LJ): ‘some unambiguous promise or assurance’; Société Italo-Belge pour le Commerce et L’Industrie SA v Palm and Vegetable Oils (Malaysia) Sdn Bhd (the ‘Post Chaser’) [1982] 1 All ER 19 (Robert Goff J) at 25b–j (sellers’ unqualified request to buyers to present

655

14.11  Promissory estoppel

waiver by estoppel.39 The origin and meaning of waiver are considered further in Chapter 13.40 14.12 It is more difficult to decide what this means, especially in those cases where the words or conduct are capable of more than one possible meaning. This issue was the subject of some discussion in the individual speeches in Woodhouse.41 In the third edition of this work, it was suggested that a representation need not satisfy the certainty of terms required for a binding contract in order to support a promissory estoppel, but it must be sufficiently certain to amount to an enforceable variation, and this suggestion received some judicial support.42

documents to sub-buyers a clear and unequivocal representation that they would not insist on their legal rights to reject goods); Bremer Handelsgesellschaft mbH v Bunge [1983] 1 Lloyd’s Rep 476 (CA) at 482 (Robert Goff LJ); Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatorian, the Scaptrade [1983] QB 529 (CA) at 535 (Robert Goff LJ); Telfair Shipping Corp v Athos Shipping Co SA [1983] 1 Lloyd’s Rep 127 (CA) at 136 (Kerr LJ): ‘Emphatic reliance upon some important disputed point does not imply any unequivocal representation to the effect that compliance with other parts of the bargain is thereby waived’; Troop v Gibson [1986] 1 EGLR 1 (CA) at 6 (Ralph Gibson LJ); London and Clydesbank Properties Ltd v HM Investment Co Ltd [1993] EGCS 63 (Mummery J); Hillingdon BC v ARC Ltd (No 2) [2000] 3 EGLR 97 (CA) at [66] (Arden LJ): ‘[I]n our view ARC would have to satisfy the court that there was some clear and unequivocal representation by LBH to ARC that its claim was a valid one and in addition that LBH would not rely on any statutory limitation defence’; Baird Textiles Holdings Ltd v Marks and Spencer plc [2001] EWCA Civ 274 at [84] (Mance LJ); Emery v UCB Corporate Services Ltd [2001] EWCA Civ 675 at [27] (Peter Gibson LJ): ‘A promissory estoppel, in my judgment, arises where there is a clear and unequivocal promise that strict legal rights will not be insisted upon’; Seechurn v Ace Insurance SA-NV [2002] Lloyd’s Rep IR 489 at 497–8 (Ward LJ): ‘Is there a clear, unequivocal, unambiguous and unconditional promise by the insurers that they will not raise the defence that the action is statute barred’; HIH Casualty and General Insurance Ltd v Axa Corporate Solutions [2003] Lloyd’s Rep IR 1 at [19] (Tuckey LJ); Evans v Amicus Healthcare Ltd [2003] EWHC 2161 (Fam) at [303]; Bridgestart Properties Ltd v London Underground Ltd [2005] 1 P & CR 15 at [17]; Re Co-operative Bank plc [2013] EWHC 4074 (Ch) (Hildyard J) at [51] (stressing the need for ‘an entirely unequivocal representation’). See further Ch 4. 39 See Persimmon Homes (South Coast) Limited v Hall Aggregates (South Coast) Ltd [2009] EWCA Civ 1108 at [51] (Rix LJ): ‘A party to a contract (A) may waive the obligation of the other party to the contract (B) to perform a stipulation in the contract that is for the benefit of A. A may waive the obligation without any request by B that A do so. But A will only be taken to have waived the obligation of B to perform that stipulation of the contract if, (in the absence of a request to do so by B), A has made an unequivocal representation to B that A does waive the performance of the stipulation. That unequivocal representation can be by words or conduct, but does not have to be as blunt as “I hereby waive” the other party’s obligation to perform the stipulation’. 40 See 13.6–13.11. 41 See, in particular, [1972] AC 741 at 755G–756F (Lord Hailsham LC) and 768A–768A (Lord Cross). The debate was prompted by the famous dictum of Bowen LJ in Low v Bouverie [1891] 3 Ch 83, CA and the decision of McNair J in Bute (Marquess) v Barclays Bank Ltd [1955] 1 QB 202. 42 See China-Pacific SA v Food Corpn of India (the ‘Winson’) [1981] QB 403, CA at 429–30 (reversed on other grounds at [1982] AC 939) and Drexel Burnham Lambert International SA v El Nasr [1986] 1 Lloyd’s Rep 356 at 365 (Staughton J).

656

The elements of promissory estoppel 14.13

In the fourth edition, we also suggested that the test for both estoppel by representation of fact and promissory estoppel should be the same. A representation will be unequivocal if it is reasonable in the circumstances for one to interpret it as one does without seeking further clarification. In Kim v Chasewood Park Residents Ltd,43 Patten LJ confirmed that, if B’s statement was open to more than one reasonable interpretation (one of which was fatal to the estoppel defence), then A was not entitled to rely on what was said without further clarification. 14.13 Woodhouse itself illustrates this principle. The case arose out of the devaluation of the pound sterling in the late 1960s and involved a contract for the sale of cocoa. The contract originally provided for payment in Nigerian pounds, but the buyers asked if the sellers would ‘agree to accept payment against documents in sterling in Lagos as a temporary alternative’. The sellers wrote to confirm ‘that payment can be made in sterling in Lagos … not only with contracts already entered into but also with future contracts’. A month or so later, the pound sterling was devalued. The buyers claimed that the effect of this exchange was to enable them to make payment on the basis that the parties had agreed to substitute pounds sterling for Nigerian pounds as the currency of account of the contract. The sellers disputed this on the basis that all that they had conceded was that the buyers could tender payment in pounds sterling, but that the denomination of the contract price remained Nigerian pounds and the buyers still had to pay the equivalent value of the price in Nigerian pounds. The House of Lords held that, on the true construction of the correspondence, the parties were referring only to the payment of the purchase price and not to its denomination. But they also held that, if the correspondence was ambiguous, the claim based on promissory estoppel must fail. As Lord Pearson put it:44 ‘In a case of this kind the alleged “representation” or promise or assurance ought to be reasonably clear and definite both as to the terms of the contract being waived and as to the duration of the waiver. It may be that the “representation” or promise or assurance has to have at least as much precision as would be needed for a variation of the contract.’

Sir Andrew Morritt VC reached the same conclusion in Baird Textiles Holdings Ltd v Marks and Spencer plc,45 relying on Woodhouse and Troop v Gibson.

43

[2013] HLR 309 at [23]. In that case the court considered that there was no promise at all where a residents’ association wrote to each long leaseholder setting out the benefits of enfranchisement. The decision was followed by Richard Snowden QC (as he then was) in Closegate Hotel Development (Durham) Ltd v Mclean [2013] EWHC 3237 (Ch) at [57]. In that case the representation or assurance was said to be derived from a series of documents and statements but was held to be insufficiently certain. 44 [1972] AC 741 at 762C–D. See also Lord Cross at 767G–768A: ‘Even if one assumes in favour of the buyers that it was reasonable for them to read the letter of September 30 as they did it was at least equally reasonable for the sellers to have read the letter of September 20 as they did and, that being so, they can say “We were not ad idem as to the character of the indulgence which you were seeking and we were granting”’. 45 [2002] 1 All ER (Comm) 737.

657

14.13  Promissory estoppel

He stated that ‘it would be necessary for such an obligation to be sufficiently certain to enable the court to give effect to it’. A number of other authorities have also considered the analogy with certainty of terms.46 A good example is Tameside MBC v Barlow Securities Group Services Ltd,47 where the trial judge accepted that, by agreeing to draw a line ‘under the matter’, the employer under a building contract waived the right to insist on a final certificate. The Court of Appeal reversed his decision on the basis that the parties had not agreed with sufficient certainty what effect this would have on other rights and obligations which depended on the issue of a final certificate. For instance, the employer could not be said to have waived any claim for faulty materials or defective workmanship. 14.14 The court will apply an objective test in interpreting the words and conduct of the party making the promise or giving the assurance. If B’s words or conduct are not reasonably capable of bearing the meaning understood by A, then the requirement of an unequivocal representation will not be satisfied.48 46 See Drexel Burnham Lambert International SA v El Nasr [1986] 1 Lloyd’s Rep 357 at 365, where Staughton J cited the third edition of this book and agreed that: ‘[I]t would be, at the least, unusual that words which were insufficient to constitute a promise should nevertheless be a sufficient representation to give rise to a promissory estoppel’. See also Food Corpn of India v Anticlizo Shipping Corpn; the ‘Anticlizo’ [1987] 2 Lloyd’s Rep 130 (CA) (affirmed without reference at [1988] 1 WLR 603) at 142 (Bingham LJ). Contrast R&H Electric Ltd v Haden Bill Ltd [1995] 2 BCLC 280 at 291 (where Robert Walker J accepted the submission that a promissory estoppel can be based on a less clearly defined representation ‘up to a point’); and Surrey Shipping Co Ltd v Compagnie Continentale (France) SA; the ‘Shackleford’ [1978] 2 Lloyd’s Rep 154 (CA) at 159 (where Sir David Cairns’ gloss on Woodhouse was: ‘The speeches in the House of Lords show that reasonable clarity is sufficient’); see further 4.11. 47 [2001] BLR 113 (CA) at 122 (Henry LJ). 48 See Bremer Handelsgesellschaft mbH v Vanden Avenne-Izegem [1978] 2 Lloyd’s Rep 109 (HL) at 126 (Lord Salmon): ‘It is quite enough if they behave or write in such a way that reasonable sellers would be led to believe that the buyers were waiving any defect’; Bremer Handelsgesellschaft mbH v C Mackprang Jr [1979] 1 Lloyd’s Rep 221 (CA) at 226 (Lord Denning MR) and 230 (Shaw LJ); Goldsworthy v Brickell [1987] Ch 378 (CA) at 410H–411D (Nourse LJ): ‘It cannot in my view have been enough that the defendant might reasonably have arrived at that conclusion. There could only have been a clear and unequivocal representation if he could not reasonably have arrived at any other conclusion’; Pearl Carriers Inc v Japan Lines Ltd; the ‘Chemical Venture’ [1993] 1 Lloyd’s Rep 508 at 521 (Gatehouse J); Rose v Stavrou (9 June 1999, unreported) (where Neuberger J held that the defendant’s agent’s intention in writing the letter was not relevant and its terms had to be construed in the light of the surrounding circumstances); Azov Shipping Co v Baltic Shipping Co [1999] 2 Lloyd’s Rep 159 at 173 (Colman J): ‘the objective construction of alleged representations is the same for the purposes of estoppel as for the constituents of a contract’; Ace Insurance SA-NV v Seechurn [2002] Lloyd’s Rep IR 489, CA, 497 (Ward LJ): ‘The promise must be construed objectively, not subjectively. The question is whether the correspondence can reasonably be understood to contain that particular promise. It does not matter what Mr Seechurn thought it meant nor does it matter what a layman might have thought, as Mr Shaw contends, unless, of course, that layman is a passenger on the Clapham omnibus’; and Argo Systems FZE v Liberty Insurance Pte Ltd [2011] EWCA Civ 1572 at [41] (Aikens LJ): ‘The judge has to place his assessment of the evidence against the legal concept of what constitutes an “unequivocal representation by words or conduct”. That is an objective legal concept; either there has been such an unequivocal representation or there has not. It does not depend on whether the “representee” subjectively believed that a representation was being made to him or how he, subjectively, understood any particular words, action or inaction’. But see further 4.14.

658

The elements of promissory estoppel 14.16

By contrast, where the representation is clear and unequivocal on an objective basis, the fact that A interpreted B’s assurance more widely than it was reasonable to do will not prevent an estoppel arising.49 In assessing B’s words and conduct, the court may take into account the admissible background in the same way as the construction of a contract.50 Given that most cases will involve an existing contract, this will usually involve the contract terms and the way in which they have been performed. Where the trial judge’s findings are made on the basis of the assessment of oral evidence, the Court of Appeal will take particular care before deciding that it can safely interfere with the judge’s assessment.51 Promise implied from conduct 14.15 A clear and unequivocal promise or assurance not to enforce one’s legal rights can be implied from conduct. In this context the statement of Phillips J in Youell v Bland Welch & Co Ltd (the ‘Superhulls Cover’ Case) (No 2)52 is often quoted: ‘A party can represent that he will not enforce a specific legal right by words or conduct. He can say so expressly – this of course he can only do if he is aware of the right. Alternatively he can adopt a course which is inconsistent with the exercise of that right. Such a course of conduct will only constitute a representation that he will not exercise the right if the circumstances are such as to suggest either that he was aware of the right when he embarked on the course of conduct inconsistent with it or that he was content to abandon any rights that he might enjoy which were inconsistent with that course of conduct.’

This is a particularly helpful analysis because it emphasises not only B’s actions but the proper interpretation to be placed on those actions by A, given the shared background and knowledge of the parties. 14.16 The question whether a promise or assurance can be implied from conduct often arises in the context of one party’s failure to object (or to object promptly) to the defective performance by the other party to the contract or of his own continued performance of the contract without any reservation of rights. There are a number of clear statements to the effect that a failure to object to defective performance is equivocal and will not by itself amount to an assurance

49 See Fontana v Mautner (1980) 254 EG 199, 203 (Balcombe J). 50 See Surrey Shipping Co Ltd v Compagnie Continentale (France) SA (the ‘Shackleford’) [1978] 2 Lloyd’s Rep 154, CA, 158 (Sir David Cairns): ‘Now it is clear that in construing a contract it is right to take into account all the surrounding circumstances. I think that the same is true in the realm of estoppel; what is said or written is to be interpreted in the light of the circumstances, and words should not be given a meaning which obviously could not be intended in the circumstances’. 51 See Argo Systems FZE v Liberty Insurance Pte Ltd (above) at [41]. 52 [1990] 2 Lloyd’s Rep 431 at 450. It was applied in HIH Casualty and General Insurance Ltd v Axa Corporate Solutions [2002] Lloyd’s Rep IR 325 (Jules Sher QC) and on appeal at [2002] Lloyd’s Rep IR 1 (CA). It was also applied in Glencore Grain Ltd v Flacker Shipping Ltd (the ‘Happy Day’) [2002] All ER (D) 219 (CA). See further 4.41 onwards.

659

14.16  Promissory estoppel

that the innocent party will never enforce his legal rights.53 Even where B has not objected to A’s failure to perform for many years, this may be insufficient to give rise to a promissory estoppel.54 However, in certain contexts the failure by B to object to A’s defective performance within a reasonable time can amount to a representation that B has waived the right to reject that performance. For instance, the failure by an owner to object to late payment under a time charter will ordinarily amount to a waiver of the right to terminate.55 In sale of goods the failure to reject documents of title or the goods themselves within a reasonable time will amount to a waiver if the buyer is aware of the defect or could have discovered the defect if he had taken reasonable steps. If B is aware of the defect, the failure to object will be treated as an abandonment of the right to reject. If B is not aware of the defect, but it is obvious or could have been discovered by taking reasonable steps, B will be treated as having abandoned any rights which are inconsistent with that course of conduct.56 The reason why the failure to object is clear and unequivocal in cases of this kind is that continued performance amounts to a clear assurance that B will not exercise an express right to terminate.57

53 See Société Italo-Belge pour le Commerce et L’Industrie SA v Palm and Vegetable Oils (Malaysia) Sdn Bhd; the ‘Post Chaser’ [1982] 1 All ER 19 at 25 (Robert Goff J) ‘[T]he mere absence of protest or reserve on the part of the buyers when they received the declaration could not of itself give rise to any unequivocal representation on their part that they waived their rights’. The decision was followed in Vitol SA v Esso Australia Ltd; the ‘Wise’ [1989] 2 Lloyd’s Rep 451 (CA) at 460 (Mustill LJ) and Scandinavian Trading Tanker Co AB v Flota Petrolera Ecuatoriana, the ‘Scaptrade’ [1983] QB 529 (CA) at 535F (Robert Goff LJ): ‘Now it is not at all easy to infer, from the mere fact that late payments had been accepted in the past by the owners without protest, an unequivocal representation by them not to exercise their strict right of withdrawal in the event of late payment by the charterers of a subsequent instalment of hire – if only because the circumstances prevailing at the time when the earlier late payments were accepted may not be the same as those prevailing in the future’. 54 See Warren v Burns [2014] EWHC 3671 (QB) (Knowles J), where A deducted commission of 15% from payments due to B rather than 25% which was the contractual rate for a period of six years. It was held that this was equivocal because B intended to wait until A was earning more before taking his full commission. 55 See eg Mardorf Peach & Co Ltd v Attica Sea Carriers Corpn of Liberia; the ‘Laconia’ [1977] AC 850 at 872 (where Lord Wilberforce accepted that ship owners would be held to have waived default by accepting late payment under a time charter or did not within a reasonable time give notice that they have rejected it). See also CMA CGM SA v Beteiligungs-KG MS ‘Northern Pioneer’ Schiffahrtsgesellschaft mbH [2003] 1 WLR 1015 (CA) at 1032F–1038C (where the issue was considered again, although it was unnecessary to decide it). In both cases, punctual payment was a condition conferring an express right to withdraw. 56 See Bremer Handelsgesellschaft mbH v C Mackprang Jr [1979] 1 Lloyd’s Rep 221 (CA) and nn 59 and 76 (below). This was the explanation given by Phillips J in the ‘Superhulls Cover’ Case (No 2) for the majority decision in Mackprang that it was unnecessary for the buyer to have actual knowledge of the defect before he would be held to have waived it. Stephenson LJ would have restricted this to patent defects. 57 For other examples, see Coastal Estates Pty Ltd v Melevende [1965] VR 433 at 453, cited by Stephenson LJ in Peyman v Lanjani [1985] Ch 457 (CA) at 490E and Strive Shipping Corpn v Hellenic Mutual War Risks Association (Bermuda) Ltd; the ‘Grecia Express’ [2002] EWHC 203 (Comm) (Colman J).

660

The elements of promissory estoppel 14.17

14.17 A general reservation of rights will normally be sufficient to prevent a promissory estoppel arising.58 However, a careful examination of the conduct of the parties may give rise to a promissory estoppel, even where B has adopted one of the usual formulae in dealing with A. Where, for instance, the reservation of rights is very specific, the failure to reserve or refer to another contractual provision may amount to unequivocal representation that B does not intend to rely on that provision.59 The entry into a new agreement on inconsistent terms may also amount to an unequivocal representation that B will not enforce a contractual right, even if the agreement is expressed to be ‘without prejudice’60 (although the failure to use of the words ‘without prejudice’ will not by itself be fatal).61 The words ‘subject to contract’ or ‘subject to licence’ may also be insufficient to prevent a promissory estoppel arising.62

58 See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 (Robert Goff J) at 813E (series of ad hoc informal agreements made with reservation of rights) and Peter Cremer v Granaria BV [1981] 2 Lloyd’s Rep 583 (Robert Goff J) at 588 (express reservation of contractual rights): ‘[T]he core of the message is that the buyers were reserving all their rights. I do not see how such a message can constitute a representation that the buyers are not insisting on a particular part of their rights’. See also Telfair Shipping Corpn v Athos Shipping Co SA [1983] 1 Lloyd’s Rep 127 (CA) at 135 (Kerr LJ) (without prejudice correspondence); and Cook Industries Inc v Meunerie Liegeois SA [1981] 1 Lloyd’s Rep 359 at 368 (Mustill J): ‘When one reads the message as a whole, including the reservation of the buyer’s contractual rights, it cannot in my view be construed as a sufficiently clear and unequivocal waiver …’. Finally, see Argo Systems FZE v Liberty Insurance Pte Ltd [2011] EWCA Civ 1572 (‘The foregoing is without prejudice to all the remaining terms and conditions of the policy’) at [44] (Aikens LJ): ‘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’; see also 4.51 onwards. 59 In Bremer Handelsgesellschaft mbH v C Mackprang Jr [1979] 1 Lloyd’s Rep 221 (CA) a reservation of rights was insufficient to prevent a waiver by estoppel arising. Lord Denning MR considered that the reservation did not cover the right in question, although the language of the members of the court went wider than this (at 225): ‘The receivers seek to avoid this result by relying on the telexes in which the contractual rights were reserved. If their conduct was such as to constitute a waiver, they cannot by such a formula escape the consequences of it’. See also Shaw LJ (at 230): ‘The oft repeated statement that they “reserved their contractual rights” cannot of itself dissipate the inferences to be drawn from their contemporaneous conduct’; see also 4.61. 60 See Vitol SA v Esso Australia Ltd; the ‘Wise’ [1989] 2 Lloyd’s Rep 451 (CA), where a number of issues arose in relation to the sale of goods and the parties entered into a without prejudice agreement enabling them to release the goods whilst the relevant issues were litigated. At a very late stage, the buyers took the point that the documents tendered by the sellers entitled them to reject. It was held that their failure to take the point earlier, when coupled with the way in which they dealt with other issues, amounted to an assurance that they would not take it at all. The decision was distinguished by Aikens LJ in Argo Systems FZE v Liberty Insurance Pte Ltd [2011] EWCA Civ 1572 on this basis: see [44]. See also Thornton Springer v NEM Insurance Co Ltd [2000] 2 All ER 489 (Colman J) (where the parties also entered into a without prejudice agreement). 61 See James v Heim Gallery (London) Ltd (1980) 256 EG 819 (CA) at 826 (Oliver LJ) (where the failure to use these words by mistake on rent demands was not held to be fatal). 62 See A-G of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd [1987] AC 114 (PC) at 127H–128A. See also Rose v Stavrou (9 June 1999, unreported, Neuberger J) (where correspondence ‘subject to licence’ between landlord and tenant gave rise to an estoppel and amounted to consent to the variation of the user of the premises).

661

14.18  Promissory estoppel

Promise implied from silence 14.18 Silence or inactivity is usually equivocal.63 In Wallis’s Cayton Bay Holiday Camp Ltd v Shell-Mex and BP Ltd,64 A’s promissory estoppel claim failed because B’s silence did not give rise to an estoppel or prevent him from asserting adverse possession where he failed to respond to an offer by B to sell the land nine months before the limitation period expired. The claim failed, even though it was obvious to B that A was not aware of the possible adverse possession claim. This is a clear example, therefore, of the proposition that, unless there is a duty to act or speak, the failure to do so will not give rise to an estoppel.65 Estoppel by silence and the duty to speak are considered elsewhere in this work in more detail.66 But the most common issue in the context of promissory estoppel is where one party makes a mistake about their legal rights and the other party, who is aware of the mistake, attempts to take advantage of it. Where there is a duty to give advice or make disclosure, the failure to point out the mistake will give rise to an estoppel. Not every contractual relationship will give rise to such a duty. It will depend on the nature of the relationship.67 Moreover, the duty to speak out need not necessarily arise out of a contractual relationship.68 The court may also impose a duty to correct a mistake where it would be reasonable to

63 See Allied Marine Transport Ltd v Vale de Rio Doce Navegacao SA, the Leonidas D [1985] 1 WLR 925 (CA) at 941A–E (Robert Goff LJ): (five-year hiatus in arbitration): ‘silence and inaction are of their nature equivocal, for the simple reason that there can be more than one reason why the person concerned has been silent and inactive’. The decision was followed by Bingham J in Cie Française D’Importation et de Distribution SA v Deutsche Continental Handelsgesellschaft [1985] 2 Lloyd’s Rep 592 at 598. See also Argo Systems FZE v Liberty Insurance Pte Ltd [2011] EWCA Civ 1572 at [46] (Aikens LJ): ‘Saying nothing and “standing by”, ie doing nothing, are, to my mind, equivocal actions’. Finally, see Personal Management Solutions Ltd v Brakes Bros Ltd [2014] EWHC 3495 (QB) at [233]–[235] (HHJ Curran QC); see also 1.88 onwards, 4.42 onwards. 64 [1974] 3 All ER 575 (CA). 65 See Bethell Construction Ltd v Deloitte & Touche [2011] EWCA Civ 1321 at [20] (Sir Andrew Morritt C): ‘It is well established that whether or not a party is bound by an estoppel of any description depends on his own acts. Generally silence will not ground an estoppel. But if there is a duty to act or speak then a failure to do so may give rise to an estoppel’. 66 See 1.88 onwards, 3.9–3.10 and 3.11–3.23. 67 See Youell v Bland Welch & Co Ltd; the ‘Superhulls Cover’ Case (No 2) [1990] 2 Lloyd’s Rep 431 at 452, where Phillips J held that a pre-existing relationship between insurers and brokers was not sufficient to give rise to such a duty: ‘In the context of estoppel silence differs from a positive representation in that its effect will not normally be to induce a misunderstanding but to permit a misunderstanding that has already been induced to persist. In such circumstances a party who has remained silent may be estopped from asserting that the facts are other than those which they were mistakenly assumed to be. But such an estoppel will only arise if the party estopped was under a legal duty to dispel the other party’s misunderstanding’. 68 See Langsam v Beachcroft LLP [2011] EWHC 1451 (Ch) at [41], where Roth J was dealing with the duty of a solicitor to an opposing party: ‘I am satisfied that a breach of the rules of professional conduct will not in itself give rise to a cause of action, though consideration of the duties and responsibilities of a solicitor will illuminate and assist in the determination of whether estoppel or mistake prevent the Defendant from relying upon the agreement made at 11.40 am’.

662

The elements of promissory estoppel 14.19

expect an honest and reasonable person to do so. In the ‘Henrik Sif’,69 Webster J held 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.’70

14.19 In the Henrik Sif, A claimed damages for a contaminated cargo from the charterers (B1) and the owners (B2) under a bill of lading. The bill provided that it was only to be treated as a contract with B2 but not with B1. A obtained an extension of time from B1 but not from B2 under the Hague Rules and, when A finally issued proceedings, B1 claimed not to be liable because it was not a party to the bill of lading, while B2 claimed that the proceedings were out of time. Webster J held that B1 was estopped from denying that it was a party to the bill of lading. The decision was followed by Clarke J in the Stolt Loyalty71 on very similar facts. A’s solicitors requested an extension of time from agents acting for both B1 and B2 who gave the extension on behalf of B1. B2 later contended that it had not given an extension of time and was entitled to rely on the time limit. The judge held that B2 was estopped from denying that it had consented to an extension of time on the basis that it owed a duty to correct A’s error. Both cases involve strong facts where A’s mistake was obvious. In order to establish a promissory estoppel by silence, therefore, it is necessary for A to show that B was aware of the mistake or suspected it and either deliberately kept silent or encouraged the mistake by sending a misleading reply. This was found to be the position in both the Henrik Sif and the Stolt Loyalty72 but not in any of the other cases which have considered this issue.73 Finally, in one case at least,

Pacol Ltd v Trade Lines Ltd [1982] 1 Lloyd’s Rep 456 at 465; see also 1.90 onwards. This statement of principle has been directly applied in The Stolt Loyalty [1993] 2 Lloyd’s Rep 281 at 290–1, Thames Trains Ltd v Adams [2006] EWHC 3291 (QB) at [42] (Nelson J), Langsam v Beachcroft LLP [2011] EWHC 1451 (Ch) at [246] and [247] (Roth J) and Parkin v Alba Proteins Ltd [2013] EWHC 2036 (QB) at [73] (Holroyde J). 71 [1993] 2 Lloyd’s Rep 281. 72 In Bethell Construction Ltd v Deloitte & Touche [2011] EWCA Civ 1321 at [20], Sir Andrew Morritt considered the Stolt Loyalty to be authority for the following proposition: ‘A duty to speak may arise from the circumstance that a failure to do so may render false an express statement which may be literally true’. It was cited for the same proposition in Edray Ltd v Canning [2015] EWHC 2744 (Ch) at [42] (Stephen Jourdan QC). 73 The claim of estoppel failed in each of the cases identified in n 70 above, apart from The Stolt Loyalty itself. It also failed in Republic of India v India Steamship Co Ltd (No 2) [1998] AC 878 (CA): see 893B–F (Staughton LJ); in Dun and Bradstreet Software Services Ltd v Provident Mutual Life Assurance Association [1998] 2 EGLR 175 (CA): see 181F–G (although Peter Gibson LJ stated at 181L that the position might have been different if A had been aware of the mistake); and in Bethell Construction Ltd v Deloitte & Touche (above): see [21] and [22] (where A’s solicitor gave a sufficiently full reply). By contrast, the claim of estoppel succeeded in AC Yule & Co Ltd v Speedwell Roofing & Cladding [2007] EWHC 1360 (TCC) at [19] and [20]. 69 70

663

14.19  Promissory estoppel

the court has refused to find an estoppel by silence where the effect would be to create a new cause of action.74 The relevance of knowledge 14.20 With the possible exception of estoppel by silence (where B’s knowledge of A’s mistake may give rise to a duty to correct it), it is unnecessary to show that B understood the legal rights of either party.75 Indeed, in certain circumstances it may not be necessary to show that B was aware of the underlying facts at all if the relevant statements or conduct indicate sufficiently clearly a willingness to give up or forgo whatever rights he or she may have.76 However, although it is not necessary to show that B understood his or her rights or the underlying facts, B’s knowledge can be highly relevant. If B fails to take a point and this conduct gives the impression that B does not intend to do so, this conduct is likely to be ambiguous unless B knows of his or her legal rights and A knows that B knows. This is clear from the analysis of Phillips J in the ‘Superhulls Cover’ Case (No 2) above, and also from the decision of the Court of Appeal in HIH Casualty and General Insurance Ltd v Axa Corporate Solutions where Tuckey LJ stated:77 ‘Unless the representation carries with it some apparent awareness of rights it goes nowhere: the representee will not understand the representation to mean that

74 See Parkin v Alba Proteins Ltd (above) at [77]. 75 See Peyman v Lanjani [1985] Ch 457 (CA) at 495B (May LJ): ‘waiver or estoppel by conduct, for the operation of which knowledge of the relevant facts is enough, a party does not have to be aware of the legal rights to which those facts give rise’. See also Motor Oil Hellas (Corinth) Refineries SA v Shipping Corpn of India (the ‘Kanchenjunga’) [1990] 1 Lloyd’s Rep 391 (HL) at 399: ‘No question arises of any particular knowledge on the part of the representor’; see further 1.96, 3.15, 8.11–8.18. 76 See Bremer Handelsgesellschaft mbH v Vanden Avenne-Izegem [1978] 2 Lloyd’s Rep 109 (HL) at 126 (Lord Salmon): ‘If the buyers by their telexes or by their conduct lead the sellers to believe that they accepted the July 3 notice as a good notice under cl 22, they necessarily waived any defect it might contain whether they were aware of it or not’. There has been some debate about the defects to which this statement applies. In Bremer Handelsgesellschaft mbH v C Mackprang Jr [1979] 1 Lloyd’s Rep 221 (CA), the majority held that it applied not only to a patent error in a notice but also to a defect in shipping documents which was not obviously apparent but which the buyers could have discovered by making further enquiries. In Cerealmangimi SpA v Alfred Toepfer; the ‘Eurometal’ [1981] 3 All ER 533 at 539h, Lloyd J found it unnecessary to decide between the two views and, in Procter and Gamble Philippine Manufacturing Corpn v Peter Cremer GmbH; the ‘Manila’ [1988] 3 All ER 843 at 854b–d, Hirst J was not prepared to extend the principle to circumstances in which the evidence before the buyers (in this case, a survey report) would only have raised doubts in their minds rather than shown clearly that the goods were defective. The minority view of Stephenson LJ on waiver more generally was cited in Crown Aluminium Ltd v Northern & Western Insurance Co Ltd [2011] EWHC 1352 (TCC) at [92] (Stuart-Smith J). 77 The issue was whether insurers had waived a breach of a promissory warranty under the Marine Insurance Act 1906: see [2003] Lloyd’s Rep IR 1 at [21]–[23]. The decision was applied in Prudential Assurance Co Ltd v Exel UK Ltd [2010] 1 P & CR 7 at [190]–[203] (Jeremy Cousins QC) and in IHC v Amtrust Europe Ltd [2015] EWHC 257 (QB) (HHJ Seymour QC). It was distinguished in Dixon v Blindley Heath [2015] EWCA Civ 1023 at [95].

664

The elements of promissory estoppel 14.21

the representor is not going to insist upon his rights because he has said or done nothing to suggest that he has any. What I have said illustrates the difficulty in establishing this type of estoppel when neither party is aware of the right which is to be foregone. A representor who is unaware that he has rights is unlikely to make a representation that carries with it some apparent awareness that he has rights. Conversely a representee who is not aware that the representor has a particular right is unlikely to understand the representation to mean that the representor is not going to insist on that right or abandon any rights he may have unless he expressly says so. It follows, I think, that knowledge, or rather lack of it in this case, is important when one comes to consider whether the estoppel has been established. Nothing in the authorities or the texts to which we have been referred casts doubt on this conclusion.’

The promise must be intended to be binding 14.21 The recipient of the promise or the assurance must also show that it was ‘intended to create legal relations and … to the knowledge of the person making the promise was going to be acted on by the person to whom it is made’.78 This requirement incorporates a number of different elements. First, the statements or representations must be promissory in nature. It is axiomatic that they must involve a genuine undertaking from the party giving the assurance that he will not enforce his legal rights as opposed to the provision of information or advice or some other kind of communication.79 Thus, a threat by a party to take some action does not amount to a promise or assurance to take that action, nor does a letter of advice stating that some course of action is appropriate or a letter stating that a party has received certain advice himself.80 Secondly, the party making the promise must have intended it to be binding.81 A temporary indulgence

78 See Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 (Denning J) at 134. It may be that the test for all reliance-based estoppels can be more accurately stated as an intention to be responsible for inducing the other party to rely upon the promise or assurance: see 5.19–5.23. 79 See Kim v Chasewood Park Residents Ltd [2013] EWCA Civ 239 at [31] (Patten LJ), describing the relevant letter as: ‘… little more than a list of possible potential benefits rather than a guarantee or promise of what would be done’. 80 See James v Heim Gallery (London) Ltd (1980) 256 EG 819 (CA) at 823 (Buckley LJ), where the landlord served a rent review notice out of time but took no action when the tenant challenged it until the law was changed: ‘To bow to the inevitable or the near inevitable is quite different from agreeing to forego a right’; China-Pacific SA v Food Corpn of India, the ‘Winson’ [1981] QB 403 (CA) (reversed on different grounds at [1982] AC 939), where the assurance relied on was a statement by solicitors that they had advised their clients that they were liable for a certain sum; Marseille Fret SA v D Oltmann Schiffahrts GmbH; the ‘Trado’ [1982] 1 Lloyd’s Rep 157 (Parker J), where the relevant telex contained no more than a suggestion; and Drexel Burnham Lambert International SA v El Nasr [1986] 1 Lloyd’s Rep 357 (Staughton J), where there was held to be a threat not a promise. See also Graham v Secretary of State for the Environment [1993] JPL 353 (Mr David Widdicombe QC), where the relevant letters were described as ‘advisory rather than authoritative in tone’. 81 See James v Heim Gallery (London) Ltd (1980) 256 EG 819 (CA) at 821 (Buckley LJ): ‘Nevertheless, the promise, assurance or representation must be one which the promisor intends

665

14.21  Promissory estoppel

or ­concession will not therefore give rise to a promissory estoppel unless it is clear that it was intended to have legal effect.82 This causes particular difficulty in cases where parties are negotiating whilst a time limit or limitation period expires. The fact that B may be negotiating with A on the basis that there is a live claim will not prevent B from later taking a limitation point unless there is a binding commitment.83 Thirdly, the party making the promise must intend that the assurance would be acted upon or must be reasonably understood to have had that intention.84 Baird Textile Holdings Ltd v Marks and Spencer plc illustrates the importance of this requirement. A retailer and supplier had had a close and long-term commercial relationship involving successive contracts, but the retailer had deliberately abstained from entering into long-term contracts with the supplier. The Court of Appeal held that any assurance by the retailer that it would not terminate the relationship did not give rise to a promissory estoppel, because there was no binding legal commitment by the retailer. Mance LJ stated as follows:85 ‘It is also on authority an established feature both of promissory estoppel and conventional estoppel that the parties should have had the objective intention to make, affect or confirm a legal relationship … As I have already said, the fact that

to be binding; that is to say, it must have the qualities of a promise’; Argy Trading Development Co Ltd v Lapid Developments Ltd [1977] 1 WLR 444 at 457B (Croom-Johnson J): ‘But there are restrictions on the use of that form of estoppel. In the first place, the representation must be intended to affect the legal relations of the parties’; and Ace Insurance SA-NV v Seechurn [2002] Lloyd’s Rep IR 489 (CA) at 497 (Ward LJ): ‘It is common ground that the promise or representation must be made intending to affect the legal relations between the parties’. It may be sufficient to demonstrate that B intended to be responsible for inducing A to rely on the representation or assurance: see 5.19–5.23. 82

Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd [1955] 1 WLR 761 (HL) at 764 (Viscount Simonds): ‘I would not have it supposed, particularly in commercial transactions, that mere acts of indulgence are apt to create rights’. 83 See, for example, Bridgestart Properties Ltd v London Underground Ltd [2004] EWCA Civ 793 and Law Society v Sephton & Co [2004] EWHC 544 (Ch) (Michael Briggs QC) at [108], where the correspondence was held to contain no more than a ‘representation that the defendants and their advisers did not then have in mind any accrued limitation defence of all or part of the Society’s claim’. The estoppel point was not the subject of the further appeal: see [2006] 2 AC 543; see further 4.44(1). 84 See Combe v Combe [1951] 2 KB 215 (CA) at 225 (Denning LJ): ‘which was intended to affect the legal relations between them and to be acted on accordingly’; Brikom Investments Ltd v Carr [1979] QB 367 (CA) at 482 (Lord Denning MR): ‘intending that the other should rely on it’; and James v Heim Gallery (London) Ltd (1980) 256 EG 819 (CA) at 823 (Buckley LJ): ‘Assuming a promise, to establish a promissory estoppel, that promise must have been made in circumstances in which, to the promisor’s knowledge, the promise would have been acted upon by the promisee’. See also 825 (Oliver LJ): ‘[T]here was no suggestion that the plaintiffs knew or could reasonably have known anything about the manner in which the defendants chose to conduct their business’. For a good example of the dividing line between a mere indulgence and a promissory estoppel (cited in the third edition), see Morrow v Carty [1957] NI 174 (McVeigh J). See also the formulation in Goldsworthy v Brickell [1987] Ch 378 (CA) at 411A (Nourse LJ): ‘the representation [must be] made with the knowledge or intention that it would be acted upon by the defendant in the manner in which it was acted upon’; see further 5.19 onwards. 85 [2001] EWCA Civ 274 at [92] and [94].

666

The elements of promissory estoppel 14.22

there never was any agreement to reach or even to set out the essential principles which might govern any legally binding long-term relationship indicates that neither party can here objectively be taken to have intended to make any legally binding commitment of a long-term nature and the law should not be ready to seek to fetter business relationships with its own view of what might represent appropriate business conduct, when parties have not chosen, or have not been willing or able, to do so in any identifiable legal terms themselves.’

Legal relationship 14.22 Closely connected to the requirement that the promise should be intended to be legally binding is the question whether there must be an existing legal relationship between the parties. In a number of cases, it has been accepted that an existing legal relationship is an essential ingredient of promissory estoppel,86 although it still remains controversial whether this is a legal limitation on the application of the principle.87 In Thorner v Major,88 Lord Walker stated that promissory estoppel must be ‘based on an existing legal relationship’ and, although this did not form part of the essential reasoning for the decision, it must be treated as very persuasive authority. If it is correct that promissory estoppel is limited to existing legal relationships, this is one of the major differences between proprietary estoppel and promissory estoppel. It limits promissory estoppel to preventing the enforcement of existing legal rights, whereas proprietary estoppel may prevent the enforcement of existing rights or lead to the grant of new rights over property.89 The primary reason for this separate limitation is that the law

86

87

88 89

See, in particular, BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 810G (Robert Goff J) and James v Heim Gallery (London) Ltd (1980) 256 EG 819 (CA) at 821 (Buckley LJ): ‘The promise must be one relating to a legal relationship of some kind, existing between the promisor and the promisee’. In a number of cases in the 1970s, Lord Denning MR suggested that it was unnecessary to establish an existing legal relationship: see Evenden v Guildford City Football Club [1975] QB 917 (CA) at 924 (although the decision was itself overruled in Secretary of State for Employment v Globe Elastic Thread Co Ltd [1980] AC 506); Crabb v Arun DC [1976] Ch 179 (CA) at 187H; and Brikom Investments Ltd v Carr [1979] QB 467 (CA) at 482G–H at 485F– 486. In Brikom, however, Roskill LJ rejected that analysis, adopting the criticisms of Lord Denning’s judgment in Crabb expressed in the third edition: see, in particular, 485F–486D. Note also the statement of Mance LJ in Baird Textiles Holdings Ltd v Marks and Spencer plc [2001] EWCA 274 at [89], quoted above, that the parties should have had the objective intention ‘to make, affect or confirm’ a legal relationship. There is also a dispute between commentators as to whether it is or should be a necessary requirement: see Snell’s Equity (33rd edn, 2015) at 12-026 (arguing that the better view is that it is not a requirement) and Chitty on Contracts (32nd edn, 2015) Vol 1 at 4-089 (arguing that the subject matter of the doctrine can only be rights arising out of an existing legal relationship). [2009] 1 WLR 776 at [61]. The passage is quoted in 14.39. See eg Patten LJ’s formulation in Lester v Woodgate [2010] EWCA Civ 199 at [26]: ‘Proprietary estoppel is conventionally based on a representation by words or conduct which amounts objectively to a statement about the future enforcement of legal rights or an intention to confer on the representee an interest in property’.

667

14.22  Promissory estoppel

will not enforce gratuitous promises in the absence of consideration or the intention to create legal relations.90 It can also be argued that the law adopts a different approach to commercial relationships where it will not normally be reasonable for A to rely on a promise or assurance by B in the absence of an existing legal relationship.91 14.23 There is perhaps greater uncertainty over the extent to which promissory estoppel has a role to play outside existing contractual relationships. In both Hughes v Metropolitan Rly92 and Birmingham and District Land Co v London and North Western Rly Co93 the principle was expressed in terms of an existing contractual relationship between the parties. Denning J did not consider the point in High Trees because the relationship of landlord and tenant was clearly one to which the principle in Hughes could apply and, as late as Ajayi v RT Briscoe (Nigeria) Ltd,94 promissory estoppel was still being described in contractual terms only. However, in Durham Fancy Goods Ltd v Michael Jackson (Fancy Goods) Ltd,95 Donaldson J held that a contractual relationship was not essential, provided that there was pre-existing legal relationship which could give rise to liabilities and penalties. In that case, B prepared a bill of exchange for A (who was a company director) to sign. There was a mistake in the bill which exposed A to personal liability under the Companies Act 1948. Donaldson J held that the claimant was estopped from enforcing the bill, because there was a sufficient legal relationship between the parties created by (a) the Companies Act 1948, (b) the fact that A was a director, and (c) the existing contractual relationship

90 See Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84, CA at 106F–107B (Robert Goff J), stating that the court will not enforce ‘a mere promise to make a gift or to increase his obligations under an existing contract’; and that ‘such promise will not generally give rise to an estoppel, even if acted on by the promisee, for the promisee may reasonably be expected to appreciate that, to render it binding, it must be incorporated in a binding contract or contractual variation, and that he cannot therefore safely rely upon it as a legally binding promise without first taking the necessary contractual steps’. For an examination of this rationale, see Spence ‘Equitable Estoppel, Unconscionability and the Enforcement of Promises’ (1988) 104 LQR 362 and Spence Protecting Reliance (1999, Hart Publishing) at 79–81, and also Halson ‘The offensive limits of promissory estoppel’ [1999] LMCLQ 257. Halson argues that the proper context for promissory estoppel is the variation or renegotiation of a contract which prevents a party exploiting the existence of an ongoing contractual relationship to extract a higher price for his performance or to pay a lower price for the other party’s performance. 91 See Bant ‘Fact, Future and Fiction: Risk and Reasonable Reliance in Estoppel’ (2015) 35 OJLS 427, who links reasonable reliance to commercial risk taking. 92 (1877) 2 App Cas 439 at 448: ‘If parties who have entered into definite and distinct terms involving certain legal results … enter upon a course of negotiations’ and ‘a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced’. 93 (1888) 40 Ch D 268 (CA) 286 (Bowen LJ): ‘if persons who have contractual rights against others induce by their conduct those whom they have such rights to believe’. 94 [1964] 1 WLR 1326 (PC) at 1330: ‘[W]hen one party to a contract in the absence of fresh consideration agrees not to enforce his rights an equity will be raised in favour of the other party’. 95 [1968] 2 QB 839 (Donaldson J).

668

The elements of promissory estoppel 14.25

between B and the company. Strictly speaking, the point still remains open in the Court of Appeal96 but we consider it unlikely that the court would overrule the decision of Donaldson J at first instance or that there is a compelling reason to do so.97 14.24 Where the promissory estoppel relates to rights over land, the limitation of an existing legal relationship may not apply (or may not apply with the same force). The relationship of husband and wife has been held sufficient in the context of land.98 Promissory estoppel has also been applied to statutory rights and obligations in the public law context.99 In the context of land, a legal relationship which has come to an end has also been held sufficient.100 On the other hand, it has also been held that there was an insufficient relationship to give rise to a promissory estoppel where the parties were landowner and trespasser,101 or between neighbouring landowners where there was a claim for nuisance.102 14.25 The more difficult case is where the assurance or promise relied upon relates to the enforceability of the legal relationship itself. In Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd,103 Robert Goff J said this: ‘Where, as in cases of promissory estoppel, the estoppel is founded upon a representation by a party that he will not enforce his legal rights, it is of course a

96 See James v Heim Gallery (London) Ltd (1980) 256 EG 819 (CA) at 821 (Buckley LJ). 97 The High Court of Australia took the same view in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 (although the decision was concerned with land). 98 See Maharaj v Chand [1986] AC 898 (PC) at 908C–D (Sir Robin Cooke): ‘Moreover she supported the application to the housing authority, she used her earnings to pay for household needs and she looked after her de facto husband and the children as wife and mother. A sufficient relationship had previously existed between the parties’. See also Luo v Hui [2008] HKEC 996 (Court of Final Appeal) noted by Lee and Ho ‘Disputes over family homes owed by companies: constructive trust or promissory estoppel’ (2009) 125 LQR 25–31. 99 See eg Robertson v Minister of Pensions [1949] 1 KB 227, CA (payor and payee of statutory entitlement); Co-operative Wholesale Society v Chester Le Street DC (1997) 73 P & CR 111 (HHJ Marder QC) (statutory compensation for compulsory purchase); Graham v Secretary of State for the Environment [1993] JPL 353 (David Widdicombe QC) (local planning authority bound); and Augier v Secretary of State for the Environment (1978) 38 P & CR 218 (Sir Douglas Frank QC) (applicant for planning permission bound). See, in particular, 227: ‘there is a sufficient legal relationship with the Secretary of State, standing in the shoes of the local planning authority, in the wide sense giving rise to penalties and liabilities’. 100 See Bank Negara Indonesia v Hoalim [1973] 2 MLJ 3 and Handley ‘Uncertainty in Leases: a role for Promissory Estoppel’ (2013) 129 LQR 10. Tenant A gave up his protected tenancy and accepted an unprotected monthly tenancy of new premises in the same building to enable landlord B to redevelop. B was held to be estopped from enforcing a contractual notice to quit. The Privy Council held that the same equitable principles applied to rights which were not pre-existing but ‘rights coming into existence upon the change in the respondent’s situation’. 101 See Morris v Tarrant [1971] 2 QB 143 at 160D (Lane J). Compare Wallis’s Cayton Bay Holiday Camp Ltd v Shell-Mex and BP Ltd [1974] 3 All ER 576 (CA) (decided on different grounds), where Morris v Tarrant was not cited to the court. 102 See Parkin v Alba Proteins Ltd [2013] EWHC 2036 (QB), considered in n 107 below. 103 [1982] QB 83 at 106F.

669

14.25  Promissory estoppel

prerequisite of the estoppel that there should be an existing legal relationship between the parties. But where, for example, the estoppel relates to the legal effect of a transaction between the parties, it does not necessarily follow that the underlying transaction should constitute a binding legal relationship. In such a case the representation may well, as I have already indicated, give rise to an estoppel although the effect is to enlarge the obligations of the representor; and I can see no reason in principle why this should not be so, even if the underlying transaction would, but for the estoppel, be devoid of legal effect.’

In the ‘Henrik Sif’104 (considered above), Webster J found that there was a sufficient legal relationship between the parties for the doctrine to apply, even though the charterers were not parties to the relevant contract. In Baird Textiles Holdings Ltd v Marks and Spencer plc105 the correctness of the decision was challenged, but Mance LJ stated that he thought that the case had been correctly decided. He stated that there was ‘an undoubted legal relationship, contained on or evidenced in the bill of lading contracts – whoever were the parties thereto’. He drew an analogy with the doctrine of apparent or ostensible authority, where a party who holds another party out as his agent is estopped from denying that that party had authority to act on his behalf. He stated: ‘But in these situations there is either a purported or an actual legal relationship created by the conduct of B and C, to which A is estopped from denying that he is a party’. The ‘Henrik Sif’ was also cited with approval by the High Court of Australia in The Commonwealth of Australia v Verwayen,106 although the court took a much wider view of the kind of legal relationships which might satisfy the requirement than any English court has done. The decision probably represents the outer limits of the kind of situation in which a promissory estoppel may arise.107

104 [1982] 1 Lloyd’s Rep 456 at 466. For a similar case, where the estoppel relied on was an estoppel by representation which failed on the facts, see Azov Shipping Co v Baltic Shipping Co (No 3) [1999] 2 Lloyd’s Rep 159 at 175 (Colman J). 105 [2001] EWCA Civ 274 at [89] and [90]. 106 (1990) 170 CLR 394 at 455 (Dawson J): ‘For the parties here, whilst not in a contractual relationship, were in a legal relationship which began at least with the commencement of the action by the respondent against the appellant. It may well be that legal relations arose between the parties at an earlier stage upon the commission of the tort alleged by the respondent, but it is unnecessary to go back any further than the commencement of the action’. 107 See Parkin v Alba Proteins Ltd [2013] EWHC 2036 (QB) at [77] (Holroyde J): ‘It may be that the important feature of the case, and one which distinguishes it from the present, is that there was a contractual relationship between the plaintiffs and the first defendant, at least capable of giving rise to a cause of action, and the effect of the estoppel was that the first defendant was prevented from relying on a contractual provision which would have relieved it from liability in certain circumstances’. In Parkin, A brought proceedings in tort against the wrong company with the consequence that B, the right company, acquired a limitation defence. It was held that there was no sufficient relationship to give rise to a promissory estoppel. See also Evans v Amicus Healthcare Ltd [2005] Fam 1, where Wall J held that the statutory rights and obligations created by the Human Fertilisation and Embryology Act 1990 did not give rise to a sufficient relationship to engage the principle. The decision was upheld by the Court of Appeal.

670

The elements of promissory estoppel 14.26

Reliance 14.26 In the early cases, the requirement for reliance was implicit rather than explicit, but the obvious reason why it was inequitable for the party making the promise to enforce his strict legal rights was because the promisee has changed his position in reliance on the representation.108 In High Trees, Denning J stated that a promise or assurance would be binding not only if it was intended to be acted upon, but also if it ‘was in fact so acted on’.109 In Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd,110 Viscount Simonds stated that the promisee must have been led ‘to alter his position’ and, in WJ Alan & Co Ltd v El Nasr Export and Import Co,111 Lord Denning stated that ‘[A] must have been led to act differently from what he otherwise would have done’. Reliance may, of course, take the form of inaction rather than action.112 The test for reliance in promissory estoppel is the same as the test for other reliance-based estoppels.113 The promise by B must have a material influence on the conduct of A.114 It is not necessary to show that the promise or assurance was the only factor which induced A to act or that it was the single most important factor. Nor is it necessary for A to establish precisely what he or she would have done if the promise had not been made.115 The burden of proving detrimental reliance remains throughout on the

108 In Hughes v Metropolitan Rly (1877) 2 App Cas 439 at 448, Lord Cairns LC stated that the doctrine would operate ‘where it would be inequitable having regard to the dealings which have taken place between the parties’. In Birmingham and District Land Co v London and North Western Rly Co (1888) 40 Ch D 268 (CA), Bowen LJ stated at 286 that: ‘those persons will not be allowed by a court of equity to enforce the rights … without at all events placing the parties in the same position as they were before’. 109 [1947] KB 130 at 134. 110 [1955] 1 WLR 761 (HL) at 764 (adopted by Lord Hodson in Ajayi v RT Briscoe (Nigeria) Ltd [1964] 1 WLR 1326 (PC) at 1330). 111 [1972] 2 QB 189 (CA) at 213G. 112 See Nippon Yusen v Pacifica Navegacion SA; the ‘Ion’ [1980] 2 Lloyd’s Rep 245 at 250 (Mocatta J): ‘There was reliance upon the representation by way of omission’. See also Ace Insurance SA-NV v Seechurn [2002] Lloyd’s Rep IR 489 (CA) at 497–8 (Ward LJ). Note, however, the more limited dicta in Emery v UCB Corporate Services Ltd [2001] EWCA Civ 675 at [30] and [31] (Peter Gibson LJ). 113 See 1.9, 5.54–5.56. 114 See Lark v Outhwaite [1991] 2 Lloyd’s Rep 132 at 142 (Hirst J): ‘[T]he test is whether the representation influenced the representee, which may include the reinforcement of a belief already held, or a contribution to lulling the representee into state of false security’. See also Steria Ltd v Hutchinson [2007] ICR 445 at [117]: ‘In order to succeed in a claim based on estoppel, it is probably not necessary for a Claimant to satisfy what is known in a somewhat different area of the law as the “but for” test. In other words, in the present case, it does not appear to me that Mr Hutchison has to show that, if the representation in question had not been made, he would not have joined the Scheme. He merely has to show that the representation was a significant factor which he took into account when deciding whether to join the Scheme’. For an example, see Thornton Springer v NEM Insurance Co Ltd [2000] 2 All ER 489 (Colman J) at 518b–g and 519a–e. 115 See Finagrain SA Geneva v Kruse [1976] 2 Lloyd’s Rep 508 (CA) at 535 (Megaw LJ) and Vitol SA v Esso Australia Ltd; the ‘Wise’ [1989] 2 Lloyd’s Rep 451 (CA) at 461 (Mustill LJ). Compare Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 462, where Gaudron J

671

14.26  Promissory estoppel

party asserting the promissory estoppel,116 although it may be possible to draw the inference of reliance in suitable cases.117 The defence of promissory estoppel has failed where A would not have acted any differently in reliance on B’s promise118 or where A believed in his own view of his rights119 or where A relied on her own mistaken understanding.120 Where, however, the promise made is relied on ‘but with an imperfect understanding of the legal or other mechanisms involved in producing that state of affairs’, then a sufficient nexus exists to raise the equity.121 14.27 In formulations of the rule, the requirement of reliance is often combined with the need to prove detriment or unconscionability, and often in terms that the reliance by A upon B’s promise or assurance must be of such a kind that it would be unjust or inequitable for the promisor to go back on his promise.122

spoke in terms of ‘proximate cause’. She also stated that, even where the imprudence of the promisee was a proximate cause of his behaviour, an estoppel would still be made out. 116 In Brikom Investments Ltd v Carr [1979] QB 467 (CA) at 483A and Greasley v Cooke [1980] 1 WLR 1306 (CA) at 1311H, Lord Denning MR suggested that, where a promise is made and intended to be acted upon, a presumption arises that the person to whom it was made did rely on it. Greasley v Cooke was distinguished by Robert Goff J in Peter Cremer v Granaria BV [1981] 2 Lloyd’s Rep 583 at 589, and this proposition was rejected by Neuberger LJ in Steria Ltd v Hutchinson [2007] ICR 445 at [128]–[129]. He held, however, that, in the absence of evidence to the contrary, it may be possible to infer reliance: see [130]. 117 See Smith v Lawson (1998) 75 P & CR 466 (CA); Cerealmangini SpA v Alfred C Toepfer, the Eurometal [1981] 3 All ER 533 at 539f–g (Lloyd J) and Southwark LBC v Logan (1995) 29 HLR 40 (CA). 118 See Fontana NV v Mautner (1980) 254 EG 199 (Balcombe J) at 207: ‘He did what he was going to do anyway, and that was to sit tight for as long as he possibly could’. 119 Hillingdon LBC v ARC Ltd (No 2) [2000] 3 EGLR 97 (CA) at 105F (Arden LJ). 120 Kim v Chasewood Park Residents Ltd [2013] 2 P & CR D9 at [36]–[40]. 121 See Kim v Chasewood Park Residents Ltd (above) at [38]. 122 See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 810G (Robert Goff J): ‘reliance by the representee (whether by action or omission to act) on the representation which renders it inequitable, in all the circumstances, for the representor to enforce his strict rights, or at least to do so, until the representee is restored to his former position’; James v Heim Gallery (London) Ltd (1980) 256 EG 819 (CA) at 823 (Buckley LJ) and 825 (Oliver LJ): ‘the final requirement that the party claiming the estoppel must have altered his position in such a way as to render it unfair or inequitable that the strict rights of the party should now be enforced between them’; Société Italo-Belge pour le Commerce et L’Industrie SA v Palm and Vegetable Oils (Malaysia) Sdn Bhd; the ‘Post Chaser’ [1982] 1 All ER 19 at 26a: ‘such action, or inaction, by the representee on the faith of the representation as will render it inequitable to permit the representor to enforce his strict legal rights’; Goldsworthy v Brickell [1987] Ch 378 (CA) at 411A (Nourse LJ): ‘the defendant in reliance on the representation, acted to his detriment, or in some other way which would make it inequitable to allow the plaintiff to go back on his representation’; Motor Oil Hellas (Corinth) Refineries SA v Shipping Corpn of India; the ‘Kanchenjunga’ [1990] 1 Lloyd’s Rep 391 (HL) at 399 (Lord Goff): ‘such reliance by the representee as will render it inequitable for the representor to go back upon his representation’; and Emery v UCB Corporate Services Ltd [2001] EWCA Civ 675 at [28] (Peter Gibson LJ): ‘A promissory estoppel, in my judgment, arises where (1) there is a clear and unequivocal promise that strict legal rights will not be insisted upon (2) the promisee has acted in reliance on the promise; and (3) it would be inequitable for the promisor to go back on the promise’.

672

The elements of promissory estoppel 14.29

Detriment is considered in greater detail immediately below but, in some cases, the question whether A changed his or her position or suffered any detriment at all in reliance on the promise will be determinative of the court’s decision whether to grant relief. For example, in Emery v UCB Corporate Services Ltd123 the trial judge found that A had relied on B’s assurance in two ways. The Court of Appeal held that it was not inequitable for B to go back on it, because there was nothing A could have done to mitigate the position. In the Post Chaser,124 A relied on B’s waiver of a defect in certain shipping documents. However, two days later, B changed its mind and rejected the goods. The judge held that it was not inequitable to permit B to withdraw the representation or assurance and rely on the defect, because it would have made no difference. All that would have happened is that the goods would have been rejected two days earlier.

Detriment 14.28 One of the more controversial issues about the scope of promissory estoppel is the extent to which it is necessary to prove detriment before a promise or assurance will become binding. In Hughes v Metropolitan Rly Co,125 neither reliance nor detriment was said to be necessary before the promise was held to be binding. However, it is fairly clear that the tenant would have been worse off if the landlord had been able to enforce its strict legal rights. The tenant took no steps to comply with a repair notice in reliance on the landlord’s assurance that he need not do so whilst the parties were negotiating for the sale of the property. The tenant was therefore in a worse position than he would have been if the landlord had made it clear that he expected immediate compliance and, when the landlord attempted to enforce the obligation to perform the repairs, the court gave the tenant further time to comply with his obligations. In High Trees, Denning J did not address the issue of detriment, although he later expressed the view that there was no detriment in cases of this kind.126 14.29 The question whether detriment was a strict requirement of the doctrine of promissory estoppel arose for decision for the first time in the Post Chaser,127

123 124 125 126

[2001] EWCA Civ 675. [1982] 1 All ER 19. (1877) 2 App Cas 439. See ‘Recent Developments in the Doctrine of Consideration’ (1952) 15 MLR 1 at 5 and WJ Alan & Co Ltd v El Nasr Export and Import Co [1972] 2 QB 189 (CA) at 213D–214H. The issue did not arise for decision, although Stephenson LJ found that there was detriment: see 221F–G. Megaw LJ did not deal with this issue, although he found that Hughes v Metropolitan Rly Co applied: see 218D–E. The point was also left open by Lord Salmon in Bremer Handelsgesellschaft mbH v Vanden Avenne-Izegem [1978] 2 Lloyd’s Rep 9 (HL) at 127. 127 Société Italo-Belge pour le Commerce et L’Industrie SA v Palm and Vegetable Oils (Malaysia) Sdn Bhd; the ‘Post Chaser’ [1982] 1 All ER 19 at 27b: ‘To establish the inequity, it is not necessary to show detriment; indeed, the representee may have benefited from the representation, and yet it may be inequitable, at least without reasonable notice, for the representee to enforce his legal rights’.

673

14.29  Promissory estoppel

and Robert Goff J decided that it was not a necessary requirement of the doctrine. His decision on this point was not an essential part of the reasoning, however, because he held on the facts that the nature of A’s reliance did not make it inequitable for B to enforce its strict legal rights.128 There can be little doubt, however, that detriment (in the wider sense identified by Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd)129 is generally necessary to establish the unconscionable conduct necessary to give rise to a promissory estoppel.130 An obvious example of a case in which a promissory estoppel is based on detriment in the wider sense is the waiver of a limitation period. A will only suffer detriment if B is allowed to withdraw the promise or assurance not to take the limitation point. Moreover, A will be worse off than if the promise had never been made, because he or she could have brought an action before the limitation period had expired.131 As we suggest elsewhere, detriment in the sense used by Dixon J in Grundt is a requirement of all reliance-based estoppels.132 14.30 The other controversial issue which arises in relation to detriment in the context of promissory estoppel is whether performance of an existing obligation, either in part or in full, amounts to detriment for the purposes of promissory

128 The decision was followed by Phillips J in Youell v Bland Welch & Co Ltd; the ‘Superhulls Cover’ Case (No 2) [1990] 2 Lloyd’s Rep 431 at 454. The question was formally left open by the Court of Appeal in Southwark LBC v Logan (1995) 29 HLR 40 at 46. See also Emery v UCB Corporate Services Ltd [2001] EWCA Civ 675, CA at [28] (Peter Gibson LJ) and Ace Insurance SA-NV v Seechurn [2002] Lloyd’s Rep IR 489 (CA) at 497 (Ward LJ). Most recently, in Virulite LLC v Virulite Distribution Ltd [2014] EWHC 366 (QB) at [121], StuartSmith J stated that it was not necessary to show detriment. 129 (1937) 59 CLR 641 at 674–5. Dixon J’s analysis has been adopted in promissory estoppel cases in this country for a number of years: see Fontana NV v Mautner (1980) 254 EG 199 at 203–7 (Balcombe J); Banner Industrial and Commercial Properties Ltd v Clark Paterson Ltd [1990] 2 EGLR 139 at 140D (Hoffmann J); and Thornton Springer v NEM Insurance Co Ltd [2001] 2 All ER 489 at 518b–g and 519a–e (Colman J). For application to promissory estoppel cases in Australia, see Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 426 (Brennan J), Commonwealth of Australia v Verwayen (1990) 170 CLR 394 (HCA) at 415 (Mason CJ), Je Maintiendrai Pty Ltd v Quaglia (1980) 26 SASR 101 and Council of the City of Sydney v Wilson Parking Australia Pty Ltd [2015] NSWLEC 42. In the last of these cases, Beech-Jones J usefully described the two aspects of reliance and detriment as: ‘the necessity to demonstrate that a party relied on an assumption engendered by a promise or representation and the detriment that may be suffered if the assumption is departed from’. See also Marston, ‘High Trees in Australia’ [1983] CLJ 34. For detailed discussion of the different meanings and application of detriment more generally in reliance-based estoppels, see 5.41 onwards. 130 See Steria Ltd v Hutchinson [2007] ICR 445 at [93]–[95] (Neuberger LJ). The passage was cited by Popplewell J in Molton Street Capital LLP v Shooters Hill Capital Partners LLP [2015] EWHC 3419 (Comm) at [123]. Mummery LJ did not go quite this far: see [73]. Jacob LJ agreed with both judgments: see [85]. For a recent example, see PM Project Services Limited v Dairy Crest Ltd [2016] EWHC 1235 (TCC) (Edwards-Stuart J) at [40]. 131 See the ‘Henrik Sif’ [1982] 1 Lloyd’s Rep 456 at 463 (where Webster J found that the buyers would have brought claims if they had not relied on the extension of time) and Ace Insurance SA-NV v Seechurn [2002] Lloyd’s Rep IR 489 (CA) (where the claim of estoppel failed on the facts). 132 See 1.5 onwards, 1.73 onwards, 5.50–5.56.

674

The elements of promissory estoppel 14.30

estoppel, or whether it is necessary to prove some additional prejudice. This issue commonly arises in two situations: first, where B promises to accept part payment of a debt by A in discharge of the whole debt and, secondly, where B agrees to pay a higher price in return for the same performance by A (where, for example, the price has become uneconomic or to avert the risk of insolvency).133 In the first situation, it is difficult to see how A (the debtor) can genuinely be said to have suffered any detriment. Indeed, viewed rationally, A has obtained a benefit. In the second situation, it is difficult to see how A (the contractor) can bring an action to recover the additional price of the work, because there is no consideration for the promise and because promissory estoppel will not found a cause of action. In neither of these situations is there clear authority under English law. In an obiter dictum in High Trees,134 Denning J stated that a promise to accept a lower sum in discharge of a higher sum was binding, notwithstanding the absence of consideration, and he repeated this in D & C Builders Ltd v Rees.135 Although Arden LJ adopted this proposition in Collier v P & MJ Wright (Holdings) Ltd,136 there was no final determination of the issue and neither of the other members of the court could be said to have gone this far. In Bolkiah v the State of Brunei,137 Lord Scott appeared to accept that the performance of an existing contractual obligation might be sufficient to give rise to a promissory estoppel. In fact, there is only one case at first instance in which this principle has been directly applied.138 Likewise, in Williams v Roffey Bros

133 See Foakes v Beer (1884) 9 App Cas 605 and Stilk v Meyrick (1809) 2 Camp 317. Treitel, ‘Some Landmarks of Twentieth Century Contract Law’ (2002) describes the first kind of agreement as ‘a decreasing pact’ (an agreement to pay a lower price in discharge of an existing obligation) and the latter as ‘increasing pact’ (an agreement to pay a higher price for the performance of an existing obligation). For further justification of the need for detriment for a promissory estoppel (and the scope of what may be treated as detriment in that context), see 5.54–5.56. 134 [1947] 1 KB 130. 135 [1966] 2 QB 617 (CA). 136 [2008] 1 WLR 643 at [42]: see 14.7–14.9. Her judgment should now be read in the light of her remarks in MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] EWCA Civ 553 at [91] and [92] (where there was held to be a binding variation, although the alternative defence of promissory estoppel failed). See, in particular, her statement at [91](ii): ‘But there was evidence from the debtor that, if the creditor had not, as the debtor alleged, agreed to accept part payment from him of one-third of the debt, he would have pursued the other partners to ensure that they paid their share of the debt and that he had potentially been prejudiced because he was no longer able to do so ([14]). All such matters (including any evidence brought forward subsequently that it was not inequitable for the creditor to resile from his agreement) remained to be investigated and considered at trial’. 137 [2007] UKPC 63 at [21]: ‘In their Lordships’ opinion, the discharge of a clearly enforceable contractual obligation should not be accepted as a change of position in reliance on a representation so as to enable a promissory estoppel to be established unless there is clear evidence that but for the representation the person concerned would not have complied with his contractual obligation’. 138 See JT Sydenham & Co Ltd v Enrichem Elastometers Ltd [1989] 1 EGLR 257 (HHJ Bromley QC) at 260D–E, where a landlord was held to be prevented from challenging an expert rent review determination.

675

14.30  Promissory estoppel

and Nicholls (­Contractors) Ltd,139 the question whether a party could enforce through promissory estoppel an agreement to pay a higher sum for performance of the same obligations was not fully argued and the Court of Appeal did not resolve the point. 14.31 One way to resolve these questions is to acknowledge that, in many cases, it will be detrimental for a debtor or a contractor to continue to perform contractual obligations rather than to take advantage of some insolvency process (such as a composition with creditors, a voluntary arrangement or even administration).140 Another would be to recognise that a second variation to the obligations of the debtor by withdrawing the promise may also cause detriment (eg by requiring the payment of a lump sum rather than instalments), even though the overall effect of the arrangement is to give the debtor more time to pay.141 A third way would be to recognise that there is legitimate commercial prejudice in continuing to perform where there might be an opportunity to negotiate other terms.142

Effect 14.32 The effect of a promissory estoppel is generally said to be ‘suspensory’143 or ‘revocable’,144 in the sense that B may withdraw the promise or assurance

139 [1991] 1 QB 1 (CA) at 13E–F and 17G–H. The principle in Stilk v Meyrick was still said to be good law, although it was accepted that, if the promisor secured a benefit or avoided a detriment from the agreement to pay a higher price, this would be good consideration. 140 Treitel (above) would resolve this conflict by resorting to the doctrine of consideration: see pp 42–43. He considers that, although Foakes v Beer was properly decided on its facts, the performance of existing obligations should be recognised as good consideration. In Re Selectmove Ltd [1995] 1 WLR 494 the Court of Appeal refused to apply Williams (above) or to accept that a practical benefit of the kind considered here can be good consideration for an agreement to accept part payment of a debt in satisfaction of the whole. However, see now MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] 2 Ll R 391 at [46]–[48] where such consideration was found. 141 See Je Maintiendrai Pty Ltd v Quaglia (1980) 26 SASR 101, where the tenant negotiated a temporary reduction in the rent but afterwards the landlord sought to recover the full amount. The court held that the requirement or obligation to pay a lump sum had caused the detriment. 142 In High Trees the submission made by counsel was that ‘the defendants had arranged their affairs on the basis of the reduced rent’ and this is picked up in the judgment: see [1947] KB 130 at 133. But there is no indication what this involved. The tenant might have suffered prejudice by continuing to maintain the building, keep it in repair and to pay rates when it might have negotiated a surrender of the lease or an assignment to a third party: see Wilson (1967) 67 LQR 330 at 342. See also Capper ‘The Extinctive Effect of Promissory Estoppel’ (2008) 37 CLRWR 105. 143 See Kim v Chasewood Park Residents Ltd [2013] 2 P & CR D9 at [41] (Patten LJ): ‘The generally accepted view is that promissory estoppel is usually only suspensory and that the representor may resile from his promise on reasonable notice unless it would be unconscionable for him to do so’. 144 Virulite LLC v Virulite Distribution Ltd [2014] EWHC 366 (QB) at [122] (Stuart-Smith J): ‘The effect of a representation is generally revocable’.

676

The elements of promissory estoppel 14.33

given to A and enforce his or her strict legal rights once it has been withdrawn. Some care needs to be taken with the use of these terms. Where the obligation in question requires performance by a certain date, then the effect of the promissory estoppel will be to suspend performance until the promise is withdrawn. When it is withdrawn, the obligation will revive. In this sense, therefore, the promissory estoppel is ‘suspensory’. Hughes v Metropolitan Rly Co145 was a case of that kind. There was no issue that the landlord should be permitted to enforce his rights once the negotiations had come to an end. The issue was whether the landlord could rely on the tenant’s failure to carry out the works during the course of the negotiations in seeking to forfeit the lease, and it was held that the landlord’s rights were suspended during the course of the negotiations and revived once those negotiations had broken down.146 But, where the obligation is a continuing or recurring one (for example, to make periodic payments), the effect may be to revive the obligation to comply in the future but to extinguish the obligation to comply with it before the promise is withdrawn. Again, the effect of the promissory estoppel can also be described as ‘suspensory’ in the sense that it is not permanently binding. High Trees was a case of this kind. The court found that the rent concession was intended to last as long as wartime conditions remained the same. But it extinguished the tenant’s liability for the period until the concession came to an end.147 14.33 Exceptionally, however, where A has incurred permanent detriment in reliance upon B’s promise and the parties cannot be restored to their former positions, the effect of the promissory estoppel will be to extinguish the relevant rights altogether.148 Birmingham and District Land Co v London and North

145 (1877) 2 App Cas 439. 146 Even then, it can be said that the landlord’s right to sue for breaches committed during the relevant period were extinguished. See the explanation in Virulite LLC v Virulite Distribution Ltd (above) at [123]: ‘So in Hughes, the Appellant’s representations in November and December 1874 had the effect of suspending the notice issued in October 1874 to the Respondents requiring them to repair premises within six months. That period of suspension did not come to an end until 31 December 1874, until which time the operation of the notice was waived. Time ran under the notice from the end of the period of suspension; but no time during the period of suspension could retrospectively be relied upon by the Appellant: see Lord Cairns LC at 447. It could therefore be said that the effect of the suspension was to extinguish the Appellant’s right to rely upon the rights that would otherwise have accrued to him during the period of suspension’. 147 Brikom Investments Ltd v Carr [1979] QB 467 (CA) may also be an example of this kind. In order to induce a number of tenants to take long leases in a block of flats where the roof was out of repair, the landlord gave assurances that it would repair the roof at no cost to the tenants. After it had done so, it sought to recover the costs through the service charge provisions. The claim failed on the alternative bases that there was a promissory estoppel or a collateral contract. There was no suggestion that the service charge could not be enforced in the future. For a recent example, see PM Project Services Limited v Dairy Crest Ltd [2016] EWHC 1235 (TCC) (Edwards-Stuart J) at [43] to [50], where it was held arguable that the creditor had withdrawn the promise or assurance prematurely. 148 See D & C Builders Ltd v Rees [1966] 2 QB 617 (CA) at 624D–E (Lord Denning MR): ‘It is worth noticing that the principle may be applied, not only so as to suspend strict legal rights, but also to preclude the enforcement of them’.

677

14.33  Promissory estoppel

Western Rly Co was a case of this kind. It is important to emphasise that reliance is the justification for preventing B from going back on the promise, and that the reason which Bowen LJ gave for preventing B from enforcing its legal rights was not that the parties had intended the effect of the promise to be permanent, but that A could not be restored to its former position.149 Again, whatever the terms of the promise or assurance, B will be permitted to withdraw it on reasonable notice, provided that A has not irrevocably or permanently changed position in reliance on it and that the parties can still be restored to their former positions.150 The position was summarised by Lord Hodson in Ajayi v RT Briscoe (Nigeria) Ltd151 in the following propositions: ‘The principle, which has been described as quasi estoppel and perhaps more aptly as promissory estoppel, is that when one party to a contract in the absence of fresh consideration agrees not to enforce his rights an equity will be raised in favour of the other party. This equity is subject to the qualifications that (1) the other party has altered his position; (2) that the promisor can resile from his promise on giving reasonable notice which need not be formal notice, giving the promisee reasonably opportunity of resuming his position; and (3) the promise only become final and irrevocable if the promisee cannot resume his position.’152

This formulation and most of the cases on the effect of a promissory estoppel tend, therefore, to focus on the detrimental reliance and whether it is reversible, rather than upon the nature and terms of the promise itself. They also suggest

149 (1888) 40 Ch D 268 (CA) at 286: ‘Those persons will not be allowed by a court of equity to enforce their rights until such time has elapsed, without at all events placing the parties in the same position as they were before’. 150 For early examples, see Hickman v Haynes (1875) LR 10 CP 598 (Lindley J) (an early waiver by estoppel case); Panoutsos v Raymond Hadley Corpn of New York [1917] 2 KB 473 (CA) (another early waiver by estoppel case in which the decision was based on the failure to give adequate notice which would have entitled A to revert to the original conditions); Besseler Waechter Glover & Co v South Derwent Coal Co [1938] 1 KB 408; Berg & Son Ltd v Vanden Avenne-Izegem [1977] 1 Lloyd’s Rep 499 (CA) at 504 (Lawton LJ): ‘if in the course of working out of a contract one party by his conduct leads the other to think that he will not insist on the strict performance of a particular term of the contract so that the other party alters his position, the former party will not be permitted to resile and to seek to insist upon strict performance – at least without notice’. See also the more familiar statements of principle in BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 810D–E (Robert Goff J); Sociéte Italo-Belge pour le Commerce et L’Industrie SA v Palm and Vegetable Oils (Malaysia) Sdn Bhd (the ‘Post Chaser’) [1982] 1 All ER 19 at 26 (Robert Goff J); Motor Oil Hellas (Corinth) Refineries SA v Shipping Corpn of India (the ‘Kanchenjunga’) [1990] 1 Lloyd’s Rep 391 (HL) at 399 (Lord Goff). 151 [1964] 1 WLR 1326 (PC) at 1330. For a similar formulation in one of the early cases, see also Alma Shipping Corpn v Union of India; the ‘Astraea’ [1971] 2 Lloyd’s Rep 494 at 502 (Roskill J): ‘I accept that so long as any estoppel is operating the party who is relying on the representation is entitled to rely on it until adequate notice is given to bring it to an end’. 152 For a case where the effect of the promissory estoppel was permanent, see Nippon Yusen v Pacifica Navegacion SA; the ‘Ion’ [1980] 2 Lloyd’s Rep 245 at 251 (where Mocatta J held that the failure to make a claim within a limitation period involved a permanent detriment). For a case on similar facts, where the promissory estoppel was revocable, see Hillingdon LBC v ARC Ltd (No 2) [2000] 3 EGLR 97 (where the Court of Appeal held that the failure by B to bring the claim within a reasonable time after the withdrawal of the promise was fatal).

678

The elements of promissory estoppel 14.34

that, unless the detriment is reversible, it must be possible for B to withdraw the promise or assurance (whatever its terms).153 14.34 There are, however, cases in which the court will hold A to the representation or promise because it is inequitable to withdraw it. In Virulite LLC v Virulite Distribution Ltd154 the nature of the promise was itself a critical factor. B agreed to suspend a payment obligation under a contract until 30 days after obtaining third party approval and, in reliance upon that promise, A spent time and effort in obtaining the relevant approval. Before the approval was obtained, B purported to insist upon payment and then to terminate the contract. StuartSmith J held that it was inequitable for it to do so because of the specific nature of the promise. He held that, where the representation or promise defined its intended duration and there was substantial reliance sufficient to give rise to a waiver or estoppel over a significant period, a positive justification would be required before B would be permitted to withdraw it and there was no justification for B to do so.155 Even in a case of this kind, it is the detrimental reliance which makes the promise enforceable, although the nature of the promise may dictate the terms of the relief. In other cases where the promise is open-ended, the court may imply a term or qualification that the promise can be withdrawn on reasonable notice. In Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd156 the terms of a licence provided that the licensee should pay compensation to the patent holder for manufacturing in excess of a certain number of articles. The licensor agreed to suspend the payment of compensation pending agreement of new terms but, when negotiations broke down, it revoked the concession and sought to recover the compensation provided in the licence. The Court of Appeal dismissed this claim on the ground that the agreement to suspend the claims

153 See eg MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] 2 Ll R 391, where the creditor agreed to reschedule payment terms and, in reliance upon this agreement, the debtor paid the first instalment at the revised rate. After two days the creditor attempted to re-impose the original payment terms. The Court of Appeal held that there was good consideration for the revised agreement and that it was binding. But the court also went on to consider the alternative defence of promissory estoppel. Kitchin LJ considered that it was not inequitable for the creditor to withdraw the promise because the debtor achieved a short moratorium and the creditor had, in substance, given reasonable notice: see [61]. See also Standard Bank plc v Bin Issa Al Jaber [2011] EWHC 2866 (Comm), where Burton J rejected the argument that the court should imply a representation in order to enlarge the scope of the assurance or promise and to prevent B from enforcing a number of guarantees. He stated the principle to be distilled from the authorities in these terms at [20]: ‘They are cases where an apparently timeless representation is given that a party will not enforce its rights, which is ­normally only suspensive (ie for example notice can be given to end its effect) but can in certain circumstances be extinctive if there were equitable grounds for concluding that the representor should not be entitled to terminate an apparently timeless representation’. 154 [2014] EWHC 366 (QB). For another recent example where it was inequitable for the promise to be withdrawn at all, see Stevensdrake Ltd v Hunt [2016] EWHC 1111 (Ch) (HHJ Barker QC). 155 See [141]. 156 [1955] 1 WLR 761.

679

14.34  Promissory estoppel

could only be revoked on reasonable notice, and no notice had been given. The licensor gave notice again and, in a second action, the House of Lords upheld its right to recover the contractual sums.157 Finally, in some cases the nature of the reliance may be such that either no notice or informal notice is all that is required before B is entitled to enforce the relevant rights. In Dunbar Assets plc v Butler,158 B agreed to suspend enforcement of a guarantee, provided that A gave informal assistance in relation to a development project. However, this assurance did not prevent B from bringing the arrangement to an end unilaterally and then enforcing the guarantee. A could not prevent enforcement by continuing to offer his services.159

Inequitable 14.35 In deciding whether to grant relief and the terms of that relief, the underlying question is whether it would be inequitable for B to withdraw the promise and enforce his or her strict legal rights against A (or whether it would be inequitable to do so but only on certain terms).160 In deciding whether and on what terms to permit the promisor to withdraw the promise, the court will take into account: (a) the nature of the legal rights which the promisor is seeking to enforce;161 (b) the nature of the promise or assurance;162 (c) the extent of the

157 In Virulite (above), Stuart Smith J also expressed the view that the terms of the contract ought to be ‘highly influential and will be usually determinative’ when determining what period is reasonable. 158 [2015] EWHC 2546 (Ch) (Jeremy Cousins QC). The court also stated that it would not have been fatal to a promissory estoppel that there was no agreement as to a fixed period for the suspension of B’s rights, because the arrangement could have been terminated upon reasonable notice, as in Tool Metal v Tungsten: see [53]. 159 For other examples, see Fontana NV v Mautner (1980) 254 EG 199 (where Balcombe J held that a landlord who had originally assured a tenant that he could stay as long as he wanted was permitted to withdraw this assurance six months later); and MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] 2 Ll R 391 (discussed at 14.33). See also 8.54. 160 See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 at 810D–H (Robert Goff J); Nippon Yusen v Pacifica Navegacion SA; the ‘Ion’ [1980] 2 Lloyd’s Rep 245 at 250 (Mocatta J); Société Italo-Belge pour le Commerce et L’Industrie SA v Palm and Vegetable Oils (Malaysia) Sdn Bhd; the ‘Post Chaser’ [1982] 1 All ER 19 at 27b (Robert Goff J); Motor Oil Hellas (Corinth) Refineries SA v Shipping Corpn of India; the ‘Kanchenjunga’ [1990] 1 Lloyd’s Rep 391 (HL) at 399 (Lord Goff); and the Stolt Loyalty [1993] 2 Lloyd’s Rep 281 at 290 (Clarke J). For recent statements, see Virulite LLC v Virulite Distribution Ltd [2014] EWHC 366 (QB) at [122] (Stuart-Smith J): ‘… the determinative consideration is whether it is inequitable in all the circumstances for the representor to enforce his rights inconsistently with his representation’; and CF Partners (UK) LLP v Barclays Bank plc [2014] EWHC 3049 (Ch) at [156](5) (Hildyard J): ‘the principal issue … is whether the promise or assurance had a sufficiently material influence on C’s conduct to make it inequitable for the maker to depart from it’. 161 See eg Marseille Freit SA v D Oltman Schiffahrts GmbH & Co Ltd; the ‘Trado’ [1982] 1 Lloyd’s Rep 157 (Parker J) and Bremer Handelsgesellschaft mbH v Bunge Corpn [1983] 1 Lloyd’s Rep 476 (CA). 162 See Virulite (discussed at 14.34).

680

The limitations of promissory estoppel 14.36

detriment suffered;163 (d) whether the promisor later withdrew the representation or attempted to mitigate its effect;164 (e) the behaviour of the promisor;165 (f) the relative fault of the promisor and the promisee;166 (g) whether the promisee has actually performed the contract as modified;167 and (h) the wider public duty of the promisor.168 In the Commonwealth of Australia v Verwayen,169 Mason CJ expressed the view that: ‘A central element of that doctrine is that there must be a proportionality between the remedy and the detriment which is its purpose to avoid. It would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption’. Although the law of promissory estoppel in England and Australia has now developed in different directions, it remains useful to test the suitability of the relief by asking whether it would be out of all proportion to the detriment suffered by A to prevent B from enforcing his or her strict legal rights.

THE LIMITATIONS OF PROMISSORY ESTOPPEL 14.36 Although it shares many of the features of other reliance-based estoppels, promissory estoppel is primarily concerned with the abuse of existing rights and not with the creation of new rights. In Combe v Combe,170 Denning LJ stated that the doctrine does not ‘create new causes of action where none existed before’ and ‘the principle never stands alone as giving a cause of action in itself’. Birkett LJ agreed and adopted the analogy that the doctrine operates ‘as a shield not a sword’.171 Although the usefulness of this analogy has been doubted,172 the analogy and the principle have been consistently applied by the English courts, and Combe v Combe remains clear authority for the proposition that promissory estoppel cannot be used to generate a new cause of action.173 The reason why a promissory estoppel may not support an independent cause of action has often

163 See Banner Industrial and Commercial Properties Ltd v Clark Paterson Ltd [1990] 2 EGLR 139 (Hoffmann J), where relief was refused because the detriment was ‘too trivial’: see 140E–F. The decision was followed in Brown and Root Technology Ltd v Alliance and London Insurance Co Ltd [1996] Ch 51 at 68B–F (HHJ Paul Baker QC). 164 See eg Hillingdon LBC v ARC Ltd (No 2) [2000] 3 EGLR 97 (CA) and Civil Aviation Authority v International Nederlanden Aviation Lease BV [1997] 1 Lloyd’s Rep 96 (HHJ Diamond QC). 165 D & C Builders Ltd v Rees [1966] 2 QB 617 (CA). 166 Ogilvy v Hope Davies [1976] 1 All ER 683 at 688b–689a (Graham J). 167 Re Selectmove [1995] 1 WLR 474 (CA) at 481H (Peter Gibson LJ). 168 Southwark LBC v Logan (1995) 29 HLR 40 at 47 (Neill LJ). 169 (1990) 170 CLR 394 (HCA) at 413. 170 [1951] 2 KB 215 (CA) at 219 and 220–1. 171 See 218. 172 See Brikom Investments Ltd v Seaford [1981] 1 WLR 863 (CA) at 869B (Ormrod LJ) and Azov Shipping Co v Baltic Shipping Co (No 2) [1999] Lloyd’s Rep 159 at 175 (Colman J). 173 See Argy Trading Co Ltd v Lapid Developments Ltd [1977] 1 WLR 444 at 457 (CroomJohnson J); James v Heim Gallery (London) Ltd (1980) 256 EG 819 (CA) at 821 (Buckley LJ); Syros Shipping Co SA v Elagill Trading Co; the ‘Proodos C’ [1980] 2 Lloyd’s Rep 390 at 391–392 (Lloyd J); Brikom Investments Ltd v Seaford [1981] 1 WLR 863 (CA) at 869B

681

14.36  Promissory estoppel

been expressed by reference to the doctrine of consideration, in the same way as the debate over the enforceability of a promise to accept part payment of a debt in satisfaction for the full amount.174 But the concern here is also that the creation of enforceable rights by promissory estoppel would undermine the certainty and predictability of the law of contract in commercial relationships. This point can be illustrated by two cases in which the law of England and Australia have taken a different course. 14.37 In Waltons Stores v Maher,175 A agreed to demolish and rebuild a building on B’s land, and B agreed to grant a lease to A on completion. Terms were agreed, the lease was drawn up and executed by A and then sent to B’s solicitors. A started work but B failed to execute the lease and, after A had performed a substantial amount of work, B finally informed him that it no longer intended to enter into the lease. A majority of the High Court of Australia176 held that, although A had started work knowing that no lease had been executed but in the expectation that it would be in the future, B was estopped from denying that a binding contract had come into existence. The court accepted the invitation of A’s counsel ‘to drive promissory estoppel one step further by enforcing directly in the absence of a pre-existing relationship of any kind a non-contractual promise on which the representee has relied to his detriment’.177 14.38 In Baird Textiles Holdings Ltd v Marks and Spencer plc178 the Court of Appeal was offered the same invitation but declined it. The facts are briefly stated in 14.21 above. A claimed compensation from B for unlawfully t­erminating the relationship between them, even though there was no long-term contractual

(Ormrod LJ); and Baird Textile Holdings Ltd v Marks and Spencer plc [2001] EWCA Civ 274 at [38] (Sir Andrew Morritt V-C), [53] (Judge LJ) and [91] (Mance LJ). The proposition was not applied in Re Wyvern Developments Ltd [1974] 1 WLR 1097 at 1104H (Templeman J) or in Evenden v Guildford City Football Club [1975] QB 917 (CA): see Lord Denning MR at 924D–E. But Evenden was itself overruled in Secretary of State for Employment v Globe Elastic Thread Co Ltd [1980] AC 506 at 518 (Lord Wilberforce), although this point was not the subject of comment. Webster J left the point open in Pacol Ltd v Trade Lines Ltd; the ‘Henrik Sif’ [1982] 1 Lloyd’s Rep 456. 174 See eg Commonwealth v Scituate Savings Bank (1884) 137 Mass 301 at 302 (Holmes J): ‘It would cut up the doctrine of consideration by the roots, if a promisee could make a gratuitous promise binding by subsequently acting in reliance on it’ (cited by Mason CJ and Wilson J in Waltons Stores v Maher (below) at 400). See also Brikom Investments Ltd v Carr [1979] QB 467 (CA) at 485–486 (Roskill LJ): ‘I would respectfully add that it would be wrong to extend the doctrine of promissory estoppel, whatever its precise limits at the present day, to the extent of abolishing in this backhanded way the doctrine of consideration’; and Drexel Burnham Lambert International SA v El Nasr [1986] 1 Lloyd’s Rep 356 at 365 (Staughton J); see also 1.47–1.49, 8.56 onwards. 175 (1988) 164 CLR 387 (HCA). 176 Mason CJ, Wilson J and Brennan J. The minority (Deane and Gaudron JJ) differed on the facts but held that there was an estoppel by representation because B’s conduct had caused A to believe that there was a contract. 177 See Mason CJ and Wilson at 400 and 405–406 and Brennan J at 425–7. 178 [2001] EWCA Civ 274.

682

The limitations of promissory estoppel 14.39

arrangement and A had only ordered goods under individual contracts. The Court of Appeal held that, in the absence of a contract, the doctrine of promissory estoppel could not be used to create a cause of action. In response to the argument which had been accepted by the majority in Waltons Stores, Mance LJ stated this:179 ‘In the present case, what is submitted is that the law ought to attach legal consequences to a bare assurance or conventional understanding (falling short of contract) between two parties, without any actual contract or third party being involved or affected. The suggested justification is the limitation of the relief claimed to reliance loss. On this submission, the requirements of contract (consideration, certainty and an intention to create legal relations) are irrelevant because no contract is asserted. The requirements of estoppel (e.g. that is an unequivocal promise to found a promissory estoppel or conventional conduct of sufficient clarity to found an estoppel by convention and, secondly, the objective intention to affect some actual or apparent pre-existing legal relationship) are by-passed by the limitation of relief. But no authority in this jurisdiction supports the submission that estoppel can here achieve so expanded an application, simply by limiting recovery to reliance loss (assuming that reliance loss could anyway be distinguished satisfactorily from expectation loss – an apparent difficulty which I have already mentioned). Any development of English law in such a direction could and should, in my view, now take place in the highest court’.

14.39 This remains the position. In Riverside Housing Association Ltd v White180 a social landlord claimed the recovery of rent arrears from a number of tenants on the basis that their rent had been increased in accordance with the rent review provisions in each assured tenancy. The tenants defended the claims on the basis that the landlord had not complied strictly with the time limits in each rent review clause (although they had accepted the rent increases and paid rent on that basis for a number of years). The Court of Appeal rejected the claim in contract and followed Baird in rejecting the claim based on promissory estoppel. The House of Lords reversed the decision, holding that time was not of the essence for initiating the rent review provision. For this reason, it was not necessary for the House of Lords to take the opportunity to consider the question whether promissory estoppel could found a cause of action, and they did not do so.181 It therefore remains an open question at the highest level. In Thorner v Major,182 however, Lord Walker did make the following observations: ‘In my opinion it is a necessary element of proprietary estoppel that the assurances given to the claimant (expressly or impliedly, or, in standing-by cases, tacitly) should relate to identified property owned (or, perhaps, about to be owned) by the defendant. That is one of the main distinguishing features between the two varieties of equitable estoppel, that is promissory estoppel and proprietary estoppel. The former must be based on an existing legal relationship (usually a

179 180 181 182

See [91]. [2006] 1 EGLR 45. See [2007] 4 All ER 97. [2009] 1 WLR 776 at [61].

683

14.39  Promissory estoppel

contract, but not necessarily a contract relating to land). The latter need not be based on an existing legal relationship, but it must relate to identified property (usually land) owned (or, perhaps, about to be owned) by the defendant. It is the relation to identified land of the defendant that has enabled proprietary estoppel to develop as a sword, and not merely a shield.’

Although it was not necessary for the House of Lords to determine whether a promissory estoppel can be used offensively in Thorner v Major, these observations may be regarded as an indication that the Supreme Court would uphold Baird Textiles Holdings Ltd v Marks and Spencer plc and Riverside Housing Ltd v White. 14.40 This does not mean that promissory estoppel is only available to a defendant or that it cannot be used in certain circumstances to support an existing cause of action, eg a claim for damages for breach of contract. There is no clear authority for the proposition that a party may rely on a promissory estoppel not only as a defendant but also as a claimant, but there is no reason why a claimant should not be entitled to do so, and to suggest otherwise seems excessively formalistic.183 A claimant may, for instance, rely on a promissory estoppel to meet a specific defence raised by the defendant. The obvious example is a limitation defence.184 The doctrine may also extend to prevent a party from asserting that a contract is unenforceable for failure to comply with any relevant statutory formalities. In Actionstrength Ltd v International Glass Engineering SpA,185 B, the employer under a building contract, orally agreed with A, a sub-contractor, to pay sums due from the main contractor if they remained on site and continued work. When A brought proceedings to enforce the agreement, B applied to strike them out on the basis that the agreement was unenforceable under section 4 of the Statute of Frauds 1677.186 The House of Lords struck out the claim on the basis that it was a claim to enforce an oral guarantee. However, all of the members of the court accepted that, if there had been a further assurance or promise

183 Buckley J may have thought that the doctrine could only be used as a defence in Beesley v Hallwood Estates Ltd [1960] 2 All ER 324 at 324C–F (affirmed on different grounds by CA at [1961] Ch 549). But see, to the contrary, Rose v Stavrou (9 June 1999, unreported, Neuberger J): ‘It seems to me that a person who claims to have the benefit of a promissory estoppel, although he cannot found it as a basis for claiming damages, or something like that, is perfectly entitled to seek the assistance of the court as to the extent of his right or defence under the estoppel in question’. 184 For examples of a party raising a promissory estoppel successfully in these circumstances, see Bristol Cars Ltd v RKH (Hotels) Ltd (1979) 37 P & CR 411 (CA); Nippon Yusen v Pacifica Navegacion SA; the ‘Ion’ [1980] 2 Lloyd’s Rep 245 (Mocatta J) and Co-operative Wholesale Society v Chester Le Street DC (1997) 73 P & CR 111 (HHJ Marder QC). Smith v Lawson (1997) 75 P & CR 466 (CA) also falls into this category but the facts were highly unusual. A was relying on his own inability to enforce his legal right to defeat B’s defence of limitation. 185 [2003] 2 AC 541. 186 ‘No action shall be brought whereby to charge the Defendant upon any special promise to answer for the debt default or miscarriage of another person unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing and signed by the party to be charged therewith or some other person thereunto by him lawfully authorised’.

684

The limitations of promissory estoppel 14.41

by B that it would not take the formalities point, and A had relied upon that assurance by remaining on site without insisting that it was recorded in writing, there would have been a binding promissory estoppel.187 Lack of formality was also raised as a defence in Waltons Stores. In Baird, Mance LJ did not consider that the absence of formalities would have prevented an English court from deciding the case in the same way.188 14.41 In these cases, it is relatively easy to describe the promissory estoppel as a shield not a sword, because A has a cause of action which can be formulated without reference to the assurance or promise made by B, and it is only necessary for A to plead and rely on B’s promise or assurance to meet a particular defence of limitation or formalities. It is more difficult where the promise in question relates to the rights which A is seeking to enforce or, indeed, to the identity of the parties to the contract. In Baird, Mance LJ stated that an estoppel may ‘enlarge the effect of an agreement, by binding parties to an interpretation which would not otherwise be correct’.189 But it is uncertain how far these remarks apply to the doctrine of promissory estoppel or how far the approach adopted in estoppel by convention cases can be applied to cases of promissory estoppel.190 In both Azov Shipping Co v Baltic Shipping Co191 and Thornton Springer v NEM Insurance Co Ltd,192 Colman J drew a distinction between promissory estoppel on the one hand and other forms of estoppel on the other. He considered that the absence of consideration for the enlargement of rights would not prevent the court enforcing an estoppel by representation of fact, but it would prevent the court from enforcing a promissory estoppel. If the Henrik Sif193 was correctly decided,194 it is possible for A to enforce a promise or representation by B that he agrees to be bound by a contract to which he is not a party, even though the effect is to give rise to a new contract or a new contractual relationship.

187 See MP Kemp plc v Bullen Developments Ltd [2011] EWHC 2009 (Ch) (a case on an oral variation of a contract for the sale of land under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989), where Nugee J analysed Actionstrength as follows (at [124]): ‘The ratio of Actionstrength … is that it is not enough to point to a promise or assurance that the party will do something (in that case an assurance by St-Gobain that it would pay Inglen’s debts to Actionstrength) as giving rise to an estoppel taking the promise outside the statute. What is needed is some representation that such an assurance would be legally enforceable, for example a representation that the party concerned “would honour the agreement despite the absence of writing, or that it was not a contract of guarantee”, or that “the promise was to be honoured”, or an assurance not to plead the statute, or that it would be treated as enforceable’. 188 [2001] EWCA Civ 274 at [98]. Compare A-G of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd [1987] AC 114 (PC), where the facts were similar. The Privy Council accepted that a claim of estoppel might have been successful if ‘HKL created or encouraged a belief or expectation on the part of the government that HKL would not withdraw from the agreement in principle’: see 124D and 127H–128A (Lord Templeman). 189 [2001] EWCA Civ 274 at [78]. 190 See Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84 at 105H–106A (Robert Goff J) and 131D–132A (Brandon LJ). 191 [1999] 2 Lloyd’s Rep 159 at 175. 192 [2000] 2 All ER 489 at 519b–c. 193 Pacol Ltd v Trade Lines Ltd; the ‘Henrik Sif’ [1982] 1 Lloyd’s Rep 456 (Webster J). 194 See 14.25.

685

686

CH A P T E R 1 5

Stating the case

General principle  15.1 The need to plead  15.3 Consequences of failure  15.7 Appeal  15.12 Estoppel against amendment  15.14

GENERAL PRINCIPLE 15.1 As reliance-based estoppel claims usually involve detailed issues of fact, save where use of the Part 8 procedure is dictated by the CPR for the type of claim in issue,1 or the claimant can see that a substantial dispute of fact is unlikely to be involved,2 Part 7 procedure is to be preferred for a case involving such an estoppel.3 15.2 The rules governing the pleading and evidence of both reliance-based estoppel and estoppel by binding agreement or declaration are no different in principle from the rules for the pleading and evidence of any other relationship or course of events between the parties alleged to afford or deny one party the right to relief against another.4 It is a corollary of what we submit to be the true

1 2 3

4

CPR Part 8.1(2)(b), (6), Part 8 Practice Direction 8A para 9. CPR Part 8.1(2)(a). James v Heim Gallery (London) Ltd (1981) 41 P & CR 269 at 274 per Buckley LJ; a claim to an estoppel by deed or contract, on the other hand, may involve no more questions of fact than a construction summons, and therefore be suitable for a Part 8 claim. In a Part 8 case the relevant facts and estoppel should be set out in the claim form (if raised by the claimant) and witness statements as appropriate to give the other party fair notice of the case against it; cf cases from the third edition cited at Ch 15 para 359. As to which, see CPR Parts 7–8, rule 15.18 as to claim forms and statements of case; and Parts 31–33 as to disclosure and evidence; and accompanying notes in the White Book.

687

15.2  Stating the case

status of reliance-based estoppels, including estoppel by representation of fact, as well as estoppels by binding agreement in a contract or under seal, as rules of substantive law,5 that the facts alleged to give rise to the estoppel, and the consequence it is claimed to have, should be set out in A’s statement of case, so that B knows the case that he has to meet in this respect and the dispute may be resolved fairly.6 With due notice of the issues at stake, the parties will then have a proper opportunity to collate and adduce (and then test each other’s) evidence6a of the relevant facts so that the court may determine, with the benefit of properly prepared argument, whether they are established, and what the consequence is in law, which may include the exercise of a discretion as to that result of the estoppel.7

THE NEED TO PLEAD 15.3 Accordingly, the courts have, for example, seven times in 2006 alone,8 confirmed or acknowledged that estoppel should be pleaded; that the ‘pleading should state with precision and clarity all the matters relied upon, including detriment’ was also recently confirmed in Magrath v Parkside Hotels Ltd.9 The fundamental point, stated in Uppal v Uppal,10 is that B is ‘clearly entitled to detailed notice of the case as put’, and ‘even in the more relaxed post-Woolf world, the discipline of pleadings remains an important element of the procedure and an important safeguard for the parties’. 15.4 As to the discipline of pleading an estoppel, in Fielden v ChristieMiller,11 Sir William Blackburne, disallowing amendments so as to plead a proprietary estoppel as insufficiently clear, referred to the statement of the requirements of a statement of case in Tchenguiz v Grant Thornton UK LLP12 by Leggatt J: ‘Statements of case must be concise. They must plead only material facts, meaning those necessary for the purpose of formulating a cause of action or defence, and no background facts or evidence. Still less should they contain 5 See 1.51–1.62. 6 See eg James v Heim Gallery (London) Ltd (1981) 41 P & CR 269 at 274 per Buckley LJ; Goldsworthy v Brickell [1987] Ch 378 at 411A–B (inadequately pleaded promissory estoppel); see also Tool Metal Manufacturing Co Ltd v Tungsten Electric Co Ltd [1955] 1 WLR 761 at 781–4 per Lord Tucker; for nineteenth and early twentieth century examples of pleaded estoppels, see cases cited in the third edition at Ch 15 at [358] p 406 nn 1–4. 6a As to the burden of proof, see 4.59 n 249. 7 See 1.57, 5.66, 8.45 onwards, 12.179 onwards, 14.32 onwards. 8 Uppal v Uppal [2006] EWCA Civ 1595 at [19]; Whitehead Mann Ltd v Cheverny Consulting Ltd [2007] 1 All ER (Comm) 124 at [50], [56], [93], [102]; Eastaugh v Crisp [2006] EWHC 2298 (Ch) at [124]–[131]; Wolsey Securities Ltd v Abbeygate Management Services Ltd [2006] EWHC 1493 (QB) at [11]–[12] (unaffected on appeal [2007] EWCA Civ 423); see also Keeley v Fosroc International Ltd [2006] IRLR 961 at [30]; Stone v Fleet Mobile Tyres Ltd [2006] EWCA Civ 1209 at [34]; Moncure v Cahusac [2006] UKPC 54. 9 [2011] EWHC 143 (Ch) at [32]. 10 [2006] EWCA Civ 1595 at [19]–[20]. 11 [2015] EWHC 752 (Ch). 12 [2015] 1 All ER (Comm) 961 at [1].

688

Consequences of failure 15.7

arguments, reasons or rhetoric. These basic rules were developed long ago and have stood the test of time because they serve the vital purpose of identifying the matters which each party will need to prove by evidence at trial’. In particular, Sir William Blackburne required the pleader13 to state what was relied on, to establish an estoppel by acquiescence or silence, as giving B the requisite knowledge of A’s belief to make B responsible for it. 15.5 Notwithstanding that the reliance-based estoppels are submitted to be different applications of the same principle,14 since the criteria for their establishment and result in some respects differ, where the facts are claimed to satisfy the criteria of more than one such estoppel, we suggest that, as a matter of good practice,15 each should be identified as claimed, both because the requirements of one but not another may be satisfied on the facts as determined, and because the claimant will wish to seek the most beneficial result available.16 15.6 An exception to the requirement of pleading, although its pleading remains, of course, desirable, should, however, be noted here in the case of the defence to an estoppel of illegality. If A establishes all the requisite elements of an estoppel, an affirmative answer17 may remain open to B that the estoppel would deprive B of rights protected by public policy, prevent B performing a public duty, give B a power which the law denies him, or give the court a jurisdiction it lacks. The court will refuse an estoppel on these grounds, as they are matters of public policy, even if unpleaded.18 If, however, there was evidence that A did not adduce because B did not plead the defence, which might answer the defence, the court might then be prevented from affirming and upholding such a defence, or at least B might be ordered to pay any increase in costs as a result of the court now having to make arrangements to admit that evidence late rather than in due order.

CONSEQUENCES OF FAILURE 15.7 In determining the consequence of a failure to plead the constituent elements of the estoppel and whether the default can be remedied, the court will

13 At [19]. 14 See 1.9. 15 There is, however, no requirement in CPR r 16.5 or para 13.3 of the Pt 16 Practice Direction that A must specify the type of estoppel he relies on: see Beale v Harvey [2004] 2 P & CR 18, CA at [34]. 16 But see 2.5. 17 See Ch 7. 18 Fairtitle d Mytton v Gilbert (1787) 2 Term Rep 169 at 171; Norwich Corp v Norwich Electrical Tramways Co [1906] 2 KB 119; NW Salt Co Ltd v Electrolytic Alkali Co Ltd [1914] AC 461 at 469; Awwad v Geraghty [2001] QB 570 at 596; the same is the case for the general defence of illegality: Bilta (UK) Ltd (In Liquidation) v Nazir [2016] AC 1 at [62]; contrast Waltham Forest LBC v Oakmesh Ltd [2010] JPL 249 at [47] sed quaere.

689

15.7  Stating the case

pursue the overriding objective,19 establishing the procedural terms on which the dispute between the parties may be fairly addressed. The consequence of A’s failure to plead the constituent elements of the relevant estoppel turns largely on whether prejudice is thereby occasioned to B; and whether an amendment will be allowed to plead an estoppel is governed by the general principles on which permission to amend is granted.20

Prejudice 15.8 If A has not duly pleaded, and evidenced in his witness statements, a fact on which he wishes to rely to establish the estoppel, such that B would be prejudiced by his seeking to assert it on the basis of what emerges at trial because, without due notice of this assertion, B did not have the proper opportunity to answer it, which B could have used to adduce material evidence and argument which he now cannot, then, as an application of the general rules of procedural fairness, A will not be permitted to assert that fact. Thus, in Fisher v Brooker21 the House of Lords would not allow A, claiming detrimental reliance on B’s silence, by counterfactual comparison with what would have happened had B spoken, to make a case as to what would have happened had B spoken which contradicted A’s pleaded case, since, in relation to that new case, ‘The necessary factual investigation and findings will not have been made by the judge, and [B] will not have been given an appropriate opportunity to investigate the relevant facts before and during the trial’.22 15.9 Similarly, in Uppal v Uppal,23 where a judge’s finding that the estoppel he upheld was ‘(just) within the terms of the defendants’ amended pleading’ was overturned, and his decision reversed for failure to plead the basis of the estoppel, A did not even think it worth applying to the Court of Appeal for permission to amend, and it was observed that the application would have been ‘very difficult to sustain’, given all the points of fact and law that B would have wished to make below had the estoppel been pleaded. In Lloyds TSB v Hayward,24 also, permission to amend to plead estoppel by representation at the end of the trial was refused because the evidence would have had to be reopened; and in Kaupthing Singer & Friedlander Ltd v UBS AG25 an argument that an estoppel by representation should not operate as an absolute bar, but only pro tanto to remedy the detrimental reliance on a representation, was rejected because it had

19

20 21 22 23 24 25

CPR Part 1.1; thus, for instance, opportunity to amend will be given on a strike-out application and, in Magrath v Parkside Hotels Ltd [2011] EWHC 143 (Ch), it was held disproportionate to strike out an estoppel case without giving the opportunity to amend, as the relevant point was not taken in the strike-out application or skeleton argument. For which, see the White Book notes to CPR Part 17.3. [2009] 1 WLR 1764 at [65]–[70]. At [67] per Lord Neuberger, with unanimous concurrence. [2006] EWCA Civ 1595 at [19]. [2004] EWHC 1798 (Ch) at [45] (unaffected on appeal [2005] EWCA Civ 466). [2014] EWHC 2450 (Comm) at [106]–[109].

690

Consequences of failure 15.10

not been pleaded. In Eastaugh v Crisp,26 estoppel from denying sealing of a deed was also refused for failure to plead it.

No prejudice 15.10 Hopgood v Brown,27 on the other hand, was decided, after B had a coincidental 14-day adjournment to consider and address it, on an unpleaded estoppel raised by the judge; and, in Wade v Grimwood,28 objection that the waiver found by the judge had not been pleaded was rejected, as a sufficiently similar estoppel was pleaded, and B did not identify the further evidence he could and would have adduced had waiver been pleaded on the precise grounds upheld. Allowances may be made, provided that the other party is not unfairly prejudiced, and in AJ Building and Plastering Ltd v Turner,29 HHJ Keyser QC said, ‘Statements of case are not always the place for refined legal analysis, and the precise nature of the relevant defence (estoppel, misrepresentation etc) might well emerge only in the course of argument. But the need to plead the basic facts relied on is well known and was obvious in this case’. In Herbert v Doyle30 it was held that the pleader need not use the words ‘proprietary estoppel’ if its elements were pleaded, and in Welford v Transport for London31 an estoppel by deed was upheld, although the estoppel had not been argued in terms of estoppel below, since pleading and argument of binding agreement by a deed of settlement was sufficiently close. Such allowance may be made, provided that the relevant facts are pleaded and the consequences argued by A in such a way that B is not irremediably prejudiced by A’s failure to claim and define the appropriate estoppel.32 26 27

[2006] EWHC 2298 (Ch) at [124]–[131] (unaffected on appeal [2007] EWCA Civ 638). [1955] 1 WLR 213, at 226–7: the failure to plead was, however, a principal factor leading to a reduction by the Court of Appeal of the costs order in favour of A to one half of his costs in the court below. 28 [2004] WTLR 1195 at [17]; and for want of reliance (on which there had been no crossexamination as estoppel was not pleaded), given an admission that A’s conduct had not been affected. 29 [2013] Lloyd’s Rep IR 629 at [80]; see also Keith v R Gancia & Co Ltd [1904] 1 Ch 744 (CA) at 789: ‘We propose now to deal with the question whether estoppel will enable the defendant successfully to defend this action. If the conduct of the plaintiff enabled the defendant to do so, we do not trouble ourselves about the exact form of the pleadings. It is plain that all parties came into Court prepared to try the question of the effect of the plaintiff’s assuming the character of reversioner, and inducing the defendants to alter their position. That being so, all necessary amendments must be treated as made’; and Valentine v Allen [2003] EWCA Civ 915 at [61]–[62]. 30 [2008] EWHC 2663 (Ch) at [3] (unaffected on appeal [2011] 1 EGLR 119); see also the Respondent’s Notice in Moncure v Cahusac n 41 below. 31 [2011] RVR 172 at [13], [20]–[24]; the Court of Appeal doubting whether estoppel was even the correct categorisation, but see 1.29, 8.79 onwards. In Preedy v Dunne [2016] CP Rep 44, argument on appeal of an estoppel by convention was allowed because its elements were sufficiently pleaded as a proprietary estoppel below (and see further 8.61 for the overlap between these doctrines). 32 See pre-CPR (under which the overriding objective will govern): Bell v Lever Bros [1931] 1 KB 551 at 582–3 per Scrutton LJ (unaffected on appeal [1932] AC 161): ‘In my opinion the practice of the Courts has been to consider and deal with the legal result pleaded facts, though the particular legal result alleged is not stated in the pleadings, except in cases where

691

15.11  Stating the case

15.11 The court may even uphold an estoppel that has not been specifically pleaded or argued by A, but only if B has not been prejudiced by the failure, and all the relevant facts are before it, because estoppel is the mechanism by which to do justice in the case, as in Wade v Grimwood,33 where, although a waiver had been pleaded and argued, the specific waiver found by the judge, and upheld by the Court of Appeal, was neither pleaded nor argued below: B could not, however, identify any further evidence that he could or would have adduced if that specific waiver had been pleaded. In Strover v Strover34 it occurred to Hart J, after the close of evidence and argument at trial, that the facts would found an unpleaded proprietary estoppel by convention, which he upheld after receiving further submissions, on the basis that the issue as to the convention was canvassed in evidence, without prejudice to B, in relation to a claim for rectification, and the issue as to detrimental reliance was a matter of counterfactual argument.35 Indeed, in Lloyds TSB Bank Plc v Crowborough Properties Ltd36 the bank was even permitted to reopen proceedings after judgment and amend its pleadings to include a plea of estoppel by convention, in connection with an application to rectify a Tomlin order, which estoppel was then upheld: the court itself had raised the estoppel issue during closing submissions, but no opportunity to amend had been offered, the court had already found all the facts relevant to the plea, the issue of permission to amend had been raised soon after oral judgment and, on the evidence, the bank had plainly relied on a shared underlying assumption to its detriment in the negotiations that preceded the order.

APPEAL 15.12 In the Court of Appeal, however, since, save in exceptional cases,37 the court considers the appeal by way of a review of the decision of the judge rather than a rehearing, the court will refuse, as in Muskham Finance Ltd v Howard,38 to entertain a claim to estoppel unargued and unpleaded below and not the subject of a respondent’s notice, unless an out of time amendment to the pleading and notice of appeal or respondent’s notice is allowed because it is necessary to

to ascertain the validity of the legal result claimed would require the investigation of new and disputed facts which have not been investigated at the trial’; adopted by Lawton LJ in Re Vandervell’s Trusts (No 2) [1974] 3 All ER 205 at 215, in upholding an estoppel which had not been expressly pleaded; see also Lord Denning MR at 213: ‘It is sufficient for the pleader to state the material facts. He need not state the legal result. If, for convenience, he does so, he is not bound by, or limited to, what he has stated. He can present in argument any legal consequence of which the facts permit’; see also Ismail v Polish Ocean Lines [1976] QB 893. 33 [2004] WTLR 1195. 34 [2005] WTLR 1245. 35 Contrast Fisher v Brooker n 21 above: whether there is further evidence that would have been relevant to the counterfactual argument will depend on the case. 36 [2013] EWCA Civ 107. 37 CPR Part 52.11. 38 [1963] 1 QB 904 at 910, 913.

692

Estoppel against amendment 15.14

do justice in the case and will not prejudice the other side in relation to evidence or argument.39

Second appeal 15.13 In Harnam Singh v Jamal Pirbhai,40 as the relevant facts had been found at first instance and the respondent had not been prejudiced in relation to their finding by the failure to plead the estoppel, the Privy Council upheld an estoppel unpleaded but argued at first instance; and, in Moncure v Cahusac,41 the Privy Council upheld an estoppel pleaded at first instance (on which the judge had not had to rule, in view of other findings overturned by the Court of Appeal), although estoppel was not argued in the Court of Appeal. The Privy Council and the Supreme Court may uphold a point of law, such as estoppel, not pleaded or argued below, if the parties have not been deprived of the opportunity to adduce all the material evidence, the relevant facts have been found, and the point is not one of such novelty and difficulty that it would be salutary to have the judgments of the courts below to review in order to decide it.42

ESTOPPEL AGAINST AMENDMENT 15.14 The doctrine of estoppel might itself be invoked to resist an application to amend, if A has detrimentally relied on a representation by B, or a convention between them, that B would not make the case he now seeks to introduce 39

40 41

42

See, by analogy, the second appeal cases at 15.13; Pickard v Sears (1837) 6 Ad & El 469, where A raised the estoppel for the first time on the argument of the rule for a new trial at 472; George Whitechurch Ltd v Cavanagh [1902] AC 117 where, at the trial, A succeeded on a ground independent of any question of estoppel, but the decision was affirmed by the Court of Appeal solely on the ground that B was estopped from disputing A’s right to be placed on the register of shareholders of the company (no objection being made to this course by B), and the case was then argued in the House of Lords on the same basis of estoppel (per Lord Macnaghten at 123). [1951] AC 688. [2006] UKPC 54; the Respondent’s Notice in the Court of Appeal also did not claim estoppel in terms but was held to make the contention sufficiently clear without doing so. In Prime Sight Ltd v Lavarello [2014] AC 436 at [55], the Board upheld an estoppel by deed argued before the Court of Appeal but not at first instance, and in the Privy Council with the benefit of additional authorities drawn to the parties’ attention by the Board. Handley (2014) 130 LQR 370 queries at 373 whether sufficient facts had been found (at [49–50]) to uphold an estoppel unargued at first instance, but as Lord Toulson reminds at [50], the proceedings were at the summary stage, prior to the finding of facts, of determining whether a winding-up petition was genuinely disputed on substantial grounds, and the issue was therefore whether the defence could succeed on the defendant’s case as to the facts. See eg Connecticut Fire Ins Co v Kavanagh [1892] AC 473; Grey v Manitoba & NW Railway Co of Canada [1897] AC 254; North Staffs Railway Co v Edge [1920] AC 254; in Ajayi v RT Briscoe (Nigeria) Ltd [1964] 1 WLR 1326, the Privy Council considered a claim to promissory estoppel unpleaded and unargued at first instance and argued in the appellate court, but dismissed it for failure to establish in evidence the facts necessary to establish it; see also George Whitechurch Ltd v Cavanagh [1902] AC 117 n 39 above.

693

15.14  Stating the case

by amendment. If, however, A’s only detriment is the incurring of legal costs which would not have been incurred had B pleaded his case originally, then it may be argued that such detriment should not found an estoppel, as the practice of the courts is, in general, in pursuit of the overriding objective of dealing with cases justly, to allow amendments if any prejudice to A can be compensated in costs.43 An estoppel against amendment based solely on the incurring of legal costs would not lie because it would undermine the public policy of the CPR.44 15.15 The doctrine of election may also be deployed if B has, with the requisite knowledge, previously made a binding election to pursue a course which precludes the making of the case he now seeks to introduce. 15.16 The court can only, however, determine such issues of estoppel or election on the application to amend itself if there is no real issue as to the facts material to the estoppel or election. Otherwise, the question will have to be determined at trial, allowing B to amend to plead his new case and A to amend to plead the estoppel or election in response.45

43 See Cobbold v Greenwich LBC (9 August 1999 unreported, CA) per Peter Gibson LJ, with concurrence and cases noted in the White Book under CPR 17.3. 44 Cf Commonwealth of Australia v Verwayen (1990) 170 CLR 394. 45 As, for instance, in Commonwealth of Australia v Verwayen, n 44 above.

694

Index

A Actionstrength v International Glass informal guarantees  7.25 Actual knowledge inducement  5.11 Agency, partnership and ownership  9.2–9.6 continuing nature of representation  9.13 holding out agent  9.7 partner  9.8 third person as principal of representor  9.15 limitation on authority must be express  9.10–9.12 no estoppel  9.9 questions of law or fact  9.17 representations ownership or non-agency or independence  9.14 representor has no principal  9.16 Assumption nature of  1.81 rights in or over property  1.14 B Bailor and bailee  9.52 analogy with estoppel between landlord and tenant  9.53 estoppel of bailee  9.54 estoppel of bailor  9.55 eviction by title paramount  9.58, 9.59 illegality  9.56, 9.57 statutory modification by Torts (Unlawful Interference with Goods) Act 1977  9.60, 9.61 Banker see Customer and banker Bills of exchange  11.67, 11.68 director or agent of company signing, personal liability  10.22 estoppels against acceptor of bill  11.69, 11.70 drawer of bill (first indorser of promissory note)  11.73 indorser of bill or note  11.75 maker of promissory note  11.71 signatures in blank  11.76–11.78 estoppels in respect of forged or unauthorised signatures  11.79, 11.80 fictitious or non-existent payees  11.72 Bills of lading Bills of Lading Act 1855  11.89–11.94 Carriage of Goods by Sea Act 1971  11.95, 11.96 Carriage of Goods by Sea Act 1992  11.97–11.103 definition  11.81–11.84 estoppels arising from negotiation  11.86, 11.87

Bills of lading – contd illegality  11.104 no estoppel between immediate parties  11.85 parties  11.88 situations where estoppel not made out  11.104 Burden of proof  11.45, 12.96–12.98 C Causation  1.4, 1.77, 1.108 establishing  1.82 inducement  5.13–5.18 responsibility and harm, interaction  1.79 Change of position  5.41–5.48 damage repaired  5.50 different test for promissory estoppel  5.55–5.57 expenditure after receipt of money  5.49 inequity without detriment  5.58–5.61 onus of proof  5.62 proprietary estoppel  12.87 detriment  12.88–12.93 reliance  12.94 burden of proof  12.96–12.98 ‘but for’ test  12.95 ‘significant factor’ test  12.95 Wayling test  12.99–12.103 responsibility for  12.104, 12.105 by dishonestly standing by  12.106–12.109 by encouragement  12.110 assurances  12.112 clarity  12.117 testamentary, revocability  12.129 withdrawal  12.116 change of circumstances  12.125–12.128 failed negotiations  12.118–12.124 other forms of encouragement  12.130–12.132 promise in cases of misprediction  12.113–12.115 promises impliedly subject to condition or reservation  12.125–12.128 promises made ‘in honour’  12.118–12.124 subject of encouragement  12.111 questions of law and fact  5.70–5.72 standard against which detriment measured  5.51–5.54 unfair see Unfair change of position Cheques see also Customer and banker director or agent of company signing, personal liability  10.22 Co-owners proprietary estoppel  12.55

695

Index Common law election  13.12 election between persons  13.44–13.49 election between remedies  13.34–13.43 election between substantive rights contracts  13.13–13.28 instruments  13.29 landlord and tenant  9.30, 13.30–13.33 Common law estoppel  1.39 equitable estoppel, distinction  1.99, 1.100 Communication actual  1.93, 1.94 assent  1.15, 2.1 breach of duty  1.31 constituent element of representation of fact  2.11–2.13 proposition  1.116 responsibility  1.117 silence  1.88, 1.89, 1.93 Companies cheques and bills of exchange  10.22 share certificates and transfers amount paid up  10.15 Central Securities Depositories Regulation 2014  10.7 certification  10.16 Companies Act 2006  10.1–10.3 effect of Bahia estoppel  10.17, 10.18 forged certificates and other company documents  10.12–10.14 genuine certificates  10.8–10.11 transfer and registration of shares  10.19–10.21 Uncertificated Securities Regulations 2001  10.4–10.6 Complex or qualified representations  4.49 language and conduct  4.60–4.63 oral representations  4.56 qualified and conditional representations  4.51–4.55 series of documents  4.57 statements in a single document  4.50 written and oral statements  4.58, 4.59 Concealment representation  3.8 Conduct language  4.60–4.63 representation by  3.4 proving  3.5, 3.6 unequivocality  4.41 Construction  4.4, 4.45 complex or qualified representations see Complex or qualified representations meaning of representation, law or fact  4.46–4.48 Constructive notice/knowledge inducement  5.11 Constructive trusts proprietary estoppel  12.197–12.204 Contracts detrimental reliance on informal contract for sale of land  7.15–7.22 election between substantive rights  13.13–13.28

Contracts of insurance breach of warranty and other policy terms  10.34–10.39 Insurance Act 2015  10.40–10.44 non-disclosure  10.26–10.33 payment of premiums  10.23–10.25 Contractual estoppels see Estoppel by contract Creditors  7.42 Crown proprietary estoppel  12.50 Culpably uncontradicted belief inducement  5.6–5.8 causation  5.14 materiality  5.32, 5.36 Customer and banker banker estopped by entries in passbook in certain cases  9.71 banker not estopped by honouring cheque  9.72 customer estopped by negligence in drawing of cheques, etc  9.70 customer not estopped by passbook  9.73–9.75 duty of customer  3.20 forged cheques  9.76 D Death see Parties to estoppel Defence of illegality  7.1 application of rules of equity  7.8 bailee or bailor  9.56, 9.57 creditors  7.42 equitable estoppel  7.4 foreign law  7.56 formality  7.14, 7.26 Actionstrength and informal guarantees  7.25 deeds  7.23, 7.24 detrimental reliance on informal contract for sale of land  7.15–7.22 inducement and reliance  7.3 infants  7.39 marriage, divorce and parenthood  7.41 mental incapacity  7.40 no estoppel as to jurisdiction estoppel from denying facts  7.45 principled distinction  7.46, 7.47 Royal prerogative  7.43 waiver of procedural irregularity  7.44 protection of statutory and common law rules  7.5 public policy  7.6, 7.7 weighing, and justice of case  7.9–7.11 statute or rule of law  7.2 statutory construction  7.12, 7.13 statutory duty and discretion discretion  7.50 estoppel in private dealings of public authorities  7.53–7.55 legitimate expectation displaces estoppel in sphere of government  7.52 no estoppel against performing public duty  7.48, 7.49 possible exceptions  7.51

696

Index Defence of illegality – contd ultra vires  7.36–7.38 waiving protection of statute benefit  7.28 common issue  7.27 estoppel into protection  7.31–7.35 paternalism  7.29, 7.30 Defences see also Defence of illegality estoppel by deed  8.87 proprietary estoppel equitable  12.139–12.141 equity satisfied  12.138, 12.141 informality  12.142 Law of Property Act 1925 section 52  12.159 section 53  12.160–12.163 Law of Property (Miscellaneous Provisions) Act 1989 section 1  12.143–12.146 section 2  12.147–12.158 miscellaneous cases of statutory illegality  12.165 Wills Act 1837  12.164 Detriment see also Change of position promissory estoppel  14.28–14.31 responsibility  1.73–1.75 Detrimental reliance informal contract for sale of land  7.15–7.22 onus of proof  5.62 representation  1.56 representation or assent to convention  1.49, 1.80 representation or silence  1.2 responsibility  1.17 Disability see Parties to estoppel Divorce  7.41 Documentary representation materiality  5.38–5.40 Documents signed in blank see Estoppel by negligence Duty of care see Estoppel by negligence Duty to speak see also Estoppel by silence breach  3.11 inducement and reliance  5.4, 5.7, 5.11, 5.18, 5.19, 5.32 change of position  5.54 duty to correct misrepresentation  3.19 duty of customer to banker  3.20 knowledge of mistake  3.12 contractual, fiduciary, tortious and statutory duty to speak  3.17, 3.18 mistake as to contractual and other rights  3.16 mistake as to proprietary rights  3.13–3.15 no duty to speak see No duty to speak E Election  1.12, 1.32, 13.1–13.11 common law election  13.12 election between persons  13.44–13.49 election between remedies  13.34–13.43

Election – contd common law election – contd election between substantive rights contracts  13.13–13.28 instruments  13.29 landlord and tenant  9.30, 13.30–13.33 equitable election instruments  13.50–13.53 litigation  13.54–13.58 ‘unilateral waiver’  13.10, 13.11 ‘waiver’  13.8, 13.9 Equitable election instruments  13.50–13.53 litigation  13.54–13.58 Equitable estoppel common law estoppel, distinction  1.99, 1.100 defence  7.4 unconscionability  1.72 Estoppel definition  1.1–1.4 ‘estop’  1.1 estoppel by representation or convention  1.3 proprietary estoppel  1.3, 1.4 establishing title, relation or status  1.33, 1.34 historical development  1.35–1.41 modern doctrines see Modern doctrines reliance-based see Reliance-based estoppel theoretical basis and justification see Unfair change of position unified doctrine see Unified doctrine Estoppel as to title  1.29 binding by agreement  8.90, 8.91 doctrines of estoppel by deed as to title  8.92–8.94 Estoppel by acquiescence  1.15, 1.30, 1.106 overarching principle  1.101 term peculiar to proprietary estoppel  1.86, 1.87 silence as a representation  1.88, 1.89 Estoppel by contract  1.12, 1.20 construction and effect  8.72, 8.73 cross-estoppel by contract  8.74, 8.75 principle  8.67–8.71 receipt in contract or deed  8.77, 8.78 statutory control  8.76 Estoppel by convention  1.3, 1.15, 1.27, 1.28, 1.106, 1.115 belief in assumed state of facts irrelevant  8.64, 8.65 convention as to law or fact  8.4, 8.5 definition  8.2, 8.3 effect clean hands  8.62 concluding comments  8.63 consistency with other reliance-based estoppels  8.48–8.51 convention as to proprietary rights  8.61 effect of convention as to fact  8.52, 8.53

697

Index Estoppel by convention – contd effect – contd effect of convention as to (non-proprietary) rights illegality  8.56–8.60 suspensory  8.54, 8.55 ‘Indian Endurance’  8.45 modulated effect not precluded  8.46, 8.47 general statement of requirements  8.6, 8.7 actual inducement  8.32–8.34 actual or presumptive intention to induce  8.23–8.31 communication of shared assumption  8.8–8.10 assent by conduct  8.11–8.14 assent by silence  8.11, 8.15–8.18 inducement  8.22 unequivocality  8.19–8.21 mutual dealings  8.35–8.37 parties  8.40 reliance by entry into transaction  8.38, 8.39 unjust benefit or detriment  8.41–8.44 illegality/public policy  8.66 origin and evolution of doctrine  8.1 overarching principle  1.101 promises, source of new rights  1.105 Estoppel by deed  1.12, 1.17, 1.29, 1.35, 1.36, 1.106 construction of deed  8.88 defences  8.87 definition and foundation  8.79–8.81 development  8.89 effect  8.86 history  8.82, 8.83 operation parties  8.84 subject matter  8.85 successors in title  6.12 Estoppel by encouragement term peculiar to proprietary estoppel  1.86, 1.87 silence as a representation  1.88, 1.89 Estoppel by negligence  1.15, 1.31, 1.104, 1.106, 1.115, 3.27 criticism theory  3.51, 3.52 duty of care  3.32, 3.33, 3.36 breach  3.35 no breach  3.34 elements of doctrine  3.28 ‘facilitation’ theory  3.50 limited scope of doctrine  3.29–3.31 negligence ‘in the transaction’ and ‘proximate’ cause  3.37 non est factum  3.49 parting with property, indicia of title or documents signed in blank  3.38 documents signed in blank  3.46–3.48 possession of property and indicia of title  3.40–3.45 statute  3.39 Estoppel by record  1.35, 1.36

Estoppel by representation  1.3, 1.37, 1.39, 1.103 not rule of evidence  1.109, 1.110 present right to future performance and promissory estoppel  1.111 silence as representation  1.88, 1.89 Estoppel by representation of fact  1.13, 1.14, 1.16–1.18, 1.37, 1.104 consequences  5.63–5.69 mitigation  1.105 rule of evidence  1.42, 1.109 conflict of laws  1.63 deployment of estoppel  1.43–1.50 rule of law  1.51–1.62 unified doctrine present right to future performance and promissory estoppel  1.111 proprietary estoppel  1.114 rule of evidence  1.109 Estoppel by representation of law  1.13, 1.19, 1.104 unified doctrine proprietary estoppel  1.114 rule of evidence  1.110 Estoppel by silence  1.15, 1.30, 1.104, 1.106, 1.115 duty to speak  1.90–1.92 foundation, reliance-based estoppel by silence  1.94–1.98 silence as a cause but not a representation  1.93 silence as representation  1.88, 1.89 Estoppel in pais  1.35, 1.36 Estoppel per rem judicatam  1.12 Eviction by title paramount bailee and bailor  9.58, 9.59 tenant  9.35, 9.36 Exaggeration  2.22 F Fluctuating bodies of persons proprietary estoppel  12.57 Foreign law defence of illegality  7.56 representation  2.34 Fraud see also Illegality unequivocality  4.39 G ‘Group estoppels’ occupational pension schemes  9.84 H Harm  1.77 establishing  1.82 responsibility and causation, interaction  1.79 Historical development  1.35–1.41 I Illegality see also Defence of illegality; Estoppel by convention bills of lading  11.104

698

Index Inaction representation  3.9, 3.10 Inducement and reliance  5.1–5.5, 7.3 actual inducement in result  5.6 causation  5.13–5.18 change of position see Change of position constructive notice or knowledge of truth  5.11 estoppel by convention see Estoppel by convention inducement to inactivity  5.8, 5.9 intention to be responsible for reliance  5.19–5.32 materiality  5.33–5.37 inference of inducement  5.7 receipts for money and goods/bills of lading  5.38–5.40 no actual inducement  5.10 questions of law and fact  5.70–5.72 Infants  7.39 Informal guarantees Actionstrength  7.25 Insolvency see Parties to estoppel Insurance see also Contracts of insurance representation  2.33 J Jurisdiction no estoppel estoppel from denying facts  7.45 principled distinction  7.46, 7.47 Royal prerogative  7.43 waiver of procedural irregularity  7.44 K Knowledge of mistake see Duty to speak L Language conduct  4.60–4.63 representations in  3.2, 3.3 Landlord and tenant  9.18 acts and conduct of tenant involving recognition of landlord’s title acceptance of lease  9.19, 9.20 attornment  9.23, 9.24 payment of rent  9.21 submission to distress  9.22 acts on part of landlord involving recognition of tenancy  9.25–9.29 common law election  9.30, 13.30–13.33 eviction of tenant by title paramount  9.35, 9.36 feeding estoppel  9.47–9.51 identifying those entitled and bound by estoppel  9.31 limits of estoppel  9.32–9.34 physical surrender no longer necessary  9.40–9.45 surrender by act and operation of law  9.37–9.39 tripartite transactions  9.48

Licensee see Patentee and licensee Litigation equitable election  13.54–13.58 M Marriage  7.41 Materiality see Inducement and reliance Mental incapacity  7.40 proprietary estoppel  12.49 Minors proprietary estoppel  12.49 Mistake, knowledge of see Duty to speak Mitigation estoppel by representation of fact  1.105 Modern doctrines overlapping categories  1.11–1.17 election  1.32 estoppel as to title  1.29 estoppel by contract  1.29 estoppel by convention  1.27, 1.28 estoppel by deed  1.20 estoppel by negligence  1.31 estoppel by representation of fact  1.18 estoppel by representation of law  1.19 estoppel by silence of acquiescence  1.30 promissory estoppel  1.25, 1.26 proprietary estoppel  1.20–1.24 N Negotiating stances  2.22 Nelsonian knowledge inducement  5.11 No duty to speak no duty to answer question  3.25 no duty to correct mistake  3.21 no duty to dispute assertion  3.22–3.24 no duty to register  3.26 O Occupational pension schemes arrangements between employers, trustees and members  9.77–9.85 Onus of proof detrimental reliance  5.62 ‘Overarching principle’ see Unified doctrine P Parenthood  7.41 Parties to estoppel  6.1 bills of lading  11.88 persons bound by estoppel  6.14 person responsible  6.15, 6.16 death or disability  6.17–6.19 insolvency  6.20–6.23 successors in title contractual assignees  6.24 landlord and tenant  6.25 representations or conventions as to title  6.26–6.29 successors in title to property  6.30 first alternative rejected  6.31, 6.32 personal property  6.46 registered land  6.44, 6.45

699

Index Parties to estoppel – contd persons bound by estoppel – contd person responsible – contd successors in title to property – contd second alternative rejected  6.33, 6.34 thesis supported  6.35–6.40 unregistered land  6.41–6.43 trustees  6.47–6.62 persons who may raise estoppel persons entitled to benefit of an estoppel on death or disability disability and insolvency  6.9 personal representatives  6.8 representee or person to whom duty owed  6.2–6.7 successors in title  6.10, 6.11 estoppel by deed  6.12 proprietary estoppel  6.13 proprietary estoppel  12.48 co-owners  12.55 Crown  12.50 fluctuating bodies of persons  12.57 minors and mentally disordered persons  12.49 principal and agent  12.56 statutory corporations  12.51 trustees  12.52–12.54 Partnerships see also Agency, partnership and ownership Partnership Act 1890  11.105 dissolution  11.110, 11.111 holding out  11.106, 11.107 notice to partners  11.108, 11.109 Patentee and licensee  9.62, 9.63 exclusive licence does not found estoppel  9.65, 9.66 licence never used  9.64 limits on estoppel  9.67–9.69 Payment representation  3.7 Possession of property and indicia of title see Estoppel by negligence Prejudice  1.4, 1.108 stating the case  15.8, 15.9 Principal and agent see also Agency, partnership and ownership proprietary estoppel  12.56 Private rights representation  2.31 Promissory estoppel  1.13, 1.14, 1.25, 1.26, 1.40, 1.41, 1.104, 14.1, 14.2 change of position  5.55–5.57 detriment  14.28–14.31 effect  14.32–14.34 High Trees principle  14.3–14.6 inequitable  14.35 legal relationship  14.22–14.25 limitations  14.36–14.41 promise or representation nature of promise  14.10 promise implied from conduct  14.15–14.17 promise implied from silence  14.18, 14.19

Promissory estoppel – contd promise or representation – contd promise must be intended to be binding  14.21 promise must be unequivocal  14.11–14.14 relevance of knowledge  14.20 reliance  14.26, 14.27 source of new rights  1.105 subsequent treatment  14.7–14.9 unified doctrine estoppel by representation as to present right to future performance  1.111 proprietary estoppel  1.112, 1.113 Promissory notes see Bills of exchange Property see also Proprietary estoppel rights in or over  1.14 successors in title  6.30 first alternative rejected  6.31, 6.32 personal property  6.46 registered land  6.44, 6.45 second alternative rejected  6.33, 6.34 thesis supported  6.35–6.40 unregistered land  6.41–6.43 Proprietary estoppel  1.3, 1.4, 1.14, 1.16, 1.20–1.24, 1.38, 1.39, 1.104 acquiescence and encouragement  1.86, 1.87 silence as a representation  1.88, 1.89 change of position  12.87 detriment  12.88–12.93 reliance  12.94 burden of proof  12.96–12.98 ‘but for’ test  12.95 ‘significant factor’ test  12.95 Wayling test  12.99–12.103 responsibility for  12.104, 12.105 by dishonestly standing by  12.106–12.109 by encouragement  12.110 assurances  12.112 clarity  12.117 testamentary, revocability  12.129 withdrawal  12.116 change of circumstances  12.125–12.128 failed negotiations  12.118–12.124 other forms of encouragement  12.130–12.132 promise in cases of misprediction  12.113–12.115 promises impliedly subject to condition or reservation  12.125–12.128 promises made ‘in honour’  12.118–12.124 subject of encouragement  12.111 constructive trusts  12.197–12.204 defences equitable  12.139–12.141 equity satisfied  12.138, 12.141

700

Index Proprietary estoppel – contd defences – contd informality  12.142 Law of Property Act 1925 section 52  12.159 section 53  12.160–12.163 Law of Property (Miscellaneous Provisions) Act 1989 section 1  12.143–12.146 section 2  12.147–12.158 miscellaneous cases of statutory illegality  12.165 Wills Act 1837  12.164 doctrine  12.1 place in equity and estoppel  12.2, 12.3 elements  12.4–12.11 evolution  12.12 Cobbe  12.28–12.33 Crabb and Taylors Fashion  12.26, 12.27 misprediction form of estoppel  12.19–12.22 standing by  12.13–12.18 Willmott v Barber  12.23–12.25 misapprehension belief in present right  12.65, 12.66 content  12.78, 12.79 knowledge or ignorance of  12.80–12.86 mistakes and mispredictions  12.67–12.77 source of  12.64 nature of equity  12.166, 12.167 position where equity does not bind purchaser for value  12.178 registered land  12.168, 12.169 easements  12.177 unregistered land  12.170–12.176 overlap with other reliance-based estoppels  12.192–12.196 parties  12.48 co-owners  12.55 Crown  12.50 fluctuating bodies of persons  12.57 minors and mentally disordered persons  12.49 principal and agent  12.56 statutory corporations  12.51 trustees  12.52–12.54 property after-acquired  12.40 application of doctrine  12.34 certainty of interest  12.41–12.47 need for  12.35–12.38 ownership  12.39 raising equity, scope of inquiry  12.58–12.63 satisfying equity  12.179, 12.180 different approaches taken by courts  12.181–12.184 exercise of discretion examples  12.189–12.191 factors taken into account  12.185–12.188

Proprietary estoppel – contd successors in title  6.13 unconscionability  12.133–12.137 unequivocality  4.40 unified doctrine estoppel by representation of fact or law  1.114 promissory estoppel  1.112, 1.113 Public authorities estoppel in private dealings  7.53–7.55 Public policy defence of illegality  7.6, 7.7 weighing public policy and justice of case  7.9–7.11 estoppel by convention  8.66 Puffing  2.22 R Reliance see also Inducement and reliance detrimental see Detrimental reliance promissory estoppel  14.26, 14.27 responsibility  1.73–1.75 Reliance-based estoppel  1.5–1.8 application of principles to relationships between parties  9.1 agency, partnership and ownership  9.2–9.6 continuing nature of representation  9.13 holding out agent  9.7 partner  9.8 third person as principal of representor  9.15 limitation on authority must be express  9.10–9.12 no estoppel  9.9 questions of law or fact  9.17 representations ownership or non-agency or independence  9.14 representor has no principal  9.16 bailor and bailee  9.52 analogy with estoppel between landlord and tenant  9.53 estoppel of bailee  9.54 estoppel of bailor  9.55 eviction by title paramount  9.58, 9.59 illegality  9.56, 9.57 statutory modification by Torts (unlawful Interference with Goods) Act 1977  9.60, 9.61 customer and banker banker estopped by entries in passbook in certain cases  9.71 banker not estopped by honouring cheque  9.72 customer estopped by negligence in drawing of cheques, etc  9.70 customer not estopped by passbook  9.73–9.75 forged cheques  9.76

701

Index Reliance-based estoppel – contd application of principles to relationships between parties – contd employers, trustees and members of occupational pension schemes  9.77–9.85 landlord and tenant  9.18 acts and conduct of tenant involving recognition of landlord’s title acceptance of lease  9.19, 9.20 attornment  9.23, 9.24 payment of rent  9.21 submission to distress  9.22 acts on part of landlord involving recognition of tenancy  9.25–9.29 ‘election cases’  9.30 eviction of tenant by title paramount  9.35, 9.36 feeding estoppel  9.47–9.51 identifying those entitled and bound by estoppel  9.31 limits of estoppel  9.32–9.34 physical surrender no longer necessary  9.40–9.45 surrender by act and operation of law  9.37–9.39 tripartite transactions  9.48 patentee and licensee  9.62, 9.63 exclusive licence does not found estoppel  9.65, 9.66 licence never used  9.64 limits on estoppel  9.67–9.69 overlapping doctrines  1.104 modern doctrines see Modern doctrines proprietary estoppel see Proprietary estoppel requirements  1.9, 1.10 silence, foundation of duty to speak  1.94–1.98 stating the case see Stating the case unified doctrine see Unified doctrine Rent Acts representation  2.32 Representation see also Parties to estoppel; Responsibility by words, conduct or silence  1.16, 1.59 complex or qualified  4.49 language and conduct  4.60–4.63 oral representations  4.56 qualified and conditional representations  4.51–4.55 series of documents  4.57 statements in a single document  4.50 written and oral statements  4.58, 4.59 constituent elements  2.2 construction see Construction detrimental reliance  1.2, 1.49, 1.56, 1.80 factual or promissory  1.13, 1.20 inducement see Inducement and reliance informal  1.36 nature of  1.81, 1.83 reliance-based estoppel necessary foundation  2.1 requirements  1.9

Representation see also Parties to estoppel; Responsibility – contd resiling from  1.37 rights in or over property  1.14 silence  1.88, 1.89, 1.93 third party  1.31 unequivocality see Unequivocality Representation of fact  2.3 constituent elements  2.10 communication  2.11–2.13 relation to matter of fact  2.14, 2.15 exaggeration, puffing and negotiating stances  2.22 foreign law  2.34 insurance  2.33 private rights  2.31 Rent Acts  2.32 significance  2.4–2.7 statements as to intention  2.16, 2.17 statements of facts and promises  2.23–2.27 statements of law and as to rights  2.28, 2.35–2.39 statements of law and fact  2.29 statements of opinion or belief  2.18–2.21 warranty of authority  2.30 Representation of law  2.3, 2.8, 2.9 Responsibility  1.4, 1.108, 3.1 breach of duty to speak see Duty to speak causation and harm, interaction  1.79 communication  1.116, 1.117 detriment  1.73–1.75 detrimental reliance  1.17 establishing  1.82 estoppel by negligence see Estoppel by negligence proposition  1.9, 1.69 faith in/‘reliance of mind’  2.1 relevant  1.13, 1.15, 1.28 representations concealment  3.8 payment  3.7 representation by conduct  3.4 proving  3.5, 3.6 representation by silence or inaction  3.9, 3.10 representations in language  3.2, 3.3 silence  1.89 duty to speak  1.90, 1.94 S Sale of goods codification of nemo dat rule and of estoppel as exception to it  11.2–11.10 dispositions by mercantile agents/sellers/ buyers in possession  11.22–11.36 burden of proof  11.45 consent  11.37–11.42 expressions common to some/all of provisions  11.15–11.21 Factors Act  11.11–11.14 good faith  11.43 notice  11.44 title acquired by disponee  11.46–11.58

702

Index Sale of goods – contd waiver of rights and election between inconsistent rights Consumer Rights Act 2015  11.65, 11.66 s 11(2) of 1979 Act  11.59–11.64 Share certificates and transfers amount paid up  10.15 Central Securities Depositories Regulation 2014  10.7 certification  10.16 Companies Act 2006  10.1–10.3 effect of Bahia estoppel  10.17, 10.18 forged certificates and other company documents  10.12–10.14 genuine certificates  10.8–10.11 transfer and registration of shares  10.19–10.21 Uncertificated Securities Regulations 2001  10.4–10.6 Silence detrimental reliance  1.2 reliance-based estoppel  1.94–1.98 representation  1.88, 1.89, 1.93, 3.9, 3.10 unequivocality  4.42, 4.43 wrongful  1.108, 1.116–1.118 Statements as to intention  2.16, 2.17 Statements in a single document  4.50 Statements of facts and promises  2.23–2.27 Statements of law and as to rights  2.28, 2.35–2.39 Statements of law and fact  2.29 Statutory corporations proprietary estoppel  12.51 Statements of opinion or belief  2.18–2.21 Stating the case appeal  15.12 second  15.13 consequences of failure  15.7 no prejudice  15.10, 15.11 prejudice  15.8, 15.9 estoppel against amendment  15.14–15.16 general principle  15.1, 15.2 need to plead  15.3–15.6 Statutory estoppel  1.12, 1.34, 11.1 bills of exchange  11.67, 11.68 estoppels against acceptor of bill  11.69, 11.70 drawer of bill (first indorser of promissory note)  11.73 indorser of bill or note  11.75 maker of promissory note  11.71 signatures in blank  11.76–11.78 estoppels in respect of forged or unauthorised signatures  11.79, 11.80 fictitious or non-existent payees  11.72 bills of lading Bills of Lading Act 1855  11.89–11.94 Carriage of Goods by Sea Act 1971  11.95, 11.96 Carriage of Goods by Sea Act 1992  11.97–11.103 definition  11.81–11.84

Statutory estoppel – contd bills of lading – contd estoppels arising from negotiation  11.86, 11.87 illegality  11.104 no estoppel between immediate parties  11.85 parties  11.88 situations where estoppel not made out  11.104 Partnership Act 1890  11.105 dissolution  11.110, 11.111 holding out  11.106, 11.107 notice to partners  11.108, 11.109 sale of goods codification of nemo dat rule and of estoppel as exception to it  11.2–11.10 dispositions by mercantile agents/ sellers/buyers in possession  11.22–11.36 burden of proof  11.45 consent  11.37–11.42 expressions common to some/all of provisions  11.15–11.21 Factors Act  11.11–11.14 good faith  11.43 notice  11.44 title acquired by disponee  11.46–11.58 waiver of rights and election between inconsistent rights Consumer Rights Act 2015  11.65, 11.66 s 11(2) of 1979 Act  11.59–11.64 Statutory/regulatory protection see Defence of illegality Strictness unequivocality representation must be unambiguous  4.8–4.12 Thorner v Major  4.25–4.29 Successors in title see Parties to estoppel Successors in title to property see Parties to estoppel T Tenants see Landlord and tenant Thorner v Major  4.13 Lord Hoffmann, subjective unequivocality, subsequent acquiescence  4.14–4.17 Lord Scott and Lord Rodger  4.18 Lord Walker and Lord Neuberger  4.19–4.22 representee understands representor’s meaning  4.24 strictness  4.25–4.29 summary  4.23 unequivocality intention to induce reliance  4.30 reasonable understanding  4.31–4.33, 4.37, 4.38 Trustees persons bound by estoppel  6.47–6.62 proprietary estoppel  12.52–12.54

703

Index U Unconscionability proprietary estoppel  12.133–12.137 unfair change of position correspondence with responsibility for reliance and detriment  1.73, 1.74 meaning  1.68 not an additional requirement  1.71, 1.72 not an alternative to requirements for estoppel  1.70 objective and equivalent to unfairness  1.69 relaxation of estoppel requirements by reference to  1.75–1.82 Uncorrected belief  5.1, 5.2, 5.53 Unequivocality  4.1–4.3 conduct  4.41 estoppel by convention  8.19–8.21 fraud  4.39 proprietary estoppel  4.40 recent examples  4.44 representation must be unambiguous principle  4.5–4.7 strictness  4.8–4.12 silence  4.42, 4.43 Thorner v Major see Thorner v Major Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd  4.34–4.36 Unfair change of position  1.5, 1.64–1.67 fairness and result of estoppel  1.83–1.85 unconscionability correspondence with responsibility for reliance and detriment  1.73, 1.74 meaning  1.68

Unfair change of position – contd unconscionability – contd not an additional requirement  1.71, 1.72 not an alternative to requirements for estoppel  1.70 objective and equivalent to unfairness  1.69 relaxation of estoppel requirements by reference to  1.75–1.82 Unified doctrine  1.101–1.106 reliance-based estoppel  1.107, 1.108 common requirements  1.116–1.119 estoppel by convention  1.115 estoppel by negligence  1.115 estoppel by representation not distinct as rule of evidence  1.109, 1.110 present right to future performance and promissory estoppel  1.111 estoppel by representation of fact or law and proprietary estoppel  1.114 estoppel by silence  1.115 promissory estoppel and proprietary estoppel  1.112, 1.113 W Warranty of authority representation  2.30 Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Ltd unequivocality  4.34–4.36 Written and oral statements  4.58, 4.59

704