The court has reviewed the requirements of estoppel by convention in relation to a property contract in Almacantar (Marble Arch) Sarl and Almacantar (Marble Arch (No 2)) Sarl v The Railway Pension Exempt Unit Trust (Acting by its trustee BNY Mellon Trust & Depositary (UK) Ltd [2021] EWHC 2385 (Comm).
The claimants sought payment under a contractual indemnity contained in an agreement dated 12 May 2011 (“the agreement”) whereby the defendants had agreed to pay half of any stamp duty land tax payable in connection with the sale of property interests to a maximum of £1.6m. The agreement provided that the indemnity was subject to time limits: notice of claim had to be given by 23 June 2018 and court proceedings issued and served within six months after the claim was made, otherwise it would be deemed to have been waived or withdrawn.
The sale was completed on 23 June 2011 and the parties corresponded with each other and HMRC in relation to the tax payable, which was complicated by a restructuring of the claimant companies. HMRC determined in May 2015 that tax of £3.2m together with accrued interest was payable. The claimants challenged this with the approval of the defendants, who were fully engaged with the process, approving tactics and correspondence with HMRC. No notice of claim was given by the deadline of 23 June 2018.
The claimants argued that it was clear to them before and after the deadline that the parties were travelling down the same path and were of the same understanding that they would continue to engage with HMRC and that the defendants would meet their share of the tax liability once the dispute had run its course. The defendants relied on the express time limits in the agreement and sought summary judgment.
The court considered the position in light of the Supreme Court’s decision in Tinkler v Commissioners for her Majesty’s Revenue and Customs [2021] UKSC 39, which endorsed established principles on estoppel by convention. The claimants had to establish that the defendants shared the common assumption and that they were strengthened or influenced in their reliance on that common assumption by that knowledge; and the defendants had to objectively intend or expect that that would be the effect on the claimants of their conduct crossing the line so that it could be said that the defendants had assumed some element of responsibility for the claimants’ reliance on the common assumption. The claimants must also have suffered some detriment sufficient to make it unjust or unconscionable for the defendants to assert the true legal or factual position.
In the court’s view, there had been no crossing of the line through the defendants’ words or conduct – including silence – sufficient to manifest a sharing of any assumption which the claimants might have had. The dealings between the parties were expressly contemplated in the agreement. There was no shared assumption that the notice provisions and time limits in the agreement would not apply.
Louise Clark is a property law consultant and mediator
