Christopher Charles Dixon EFI (Loughton) Ltd v Blindley Heath Investments ltd & 9 Ors (2015)

9th October 2015



[2015] EWCA Civ 1023
CA (Civ Div) 09/10/2015


The court examined the scope and applicability of the doctrine and principles of estoppel by convention to cases of mistaken assumption and forgetfulness.


The appellant company appealed against a decision ([2014] EWHC 1366 (Ch)) upholding a transfer of its shares to the respondent company.

The judge had conceded that there were valid pre-emption rights in place, but that the appellant was estopped by convention from relying on them to prevent the transaction. She found there to be clear evidence of a common assumption between the parties that there were no valid rights of pre-emption in relation to the shares. In her judgment she had described seven instances where their conduct communicated such an assumption. The appeal raised issues as to the scope and applicability of the doctrine and principles of estoppel by convention.

The appellant submitted that (1) the parties had not adopted an assumption that there were no pre-emption rights, but had merely forgotten that they existed, and that while estoppel by convention attached to mistaken assumption, it did not attach to forgetfulness; (2) any assumption had not been sufficiently clear and unequivocal for estoppel by convention to apply.

HELD: (1) Estoppel by convention was not confined to cases of mistake. Furthermore, a mistaken recollection was not a legally different state to forgetfulness. The essence of the principle was that the parties had conducted themselves on a basis which was different from the true basis and had mutually adopted a common assumption. Ignorance of the law could operate as a valid assumption, and if ignorance was enough, then forgetfulness had to be enough also, as long as the requirements as to conduct and unconscionability were also met. The real difficulty for a person seeking to establish an estoppel based on an assumption contrary to the true state of things was an evidential problem, not a legal one. It was the problem of showing that something other than forgetfulness had played a part in the adoption of the assumption, and that the person sought to be estopped assumed some responsibility for it. The assumption had to be shared, and while there did not necessarily have to be an expression of accord, there had to be more than a mere coincidence of view. Agreement could be inferred from conduct or even silence, but something had to be shown as "crossing the line" within the meaning of Norwegian American Cruises A/S v Paul Mundy Ltd (The Vistafjord) [1988] 2 Lloyd's Rep. 343 sufficient to manifest assent to the assumption. That was largely a question of fact, Amalgamated Investment & Property Co Ltd (In Liquidation) v Texas Commerce International Bank Ltd [1982] Q.B. 84 followed, Taylor Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] Q.B. 133 applied and Grundt v Great Boulder Proprietary Gold Mines Ltd 59 C.L.R. 641 and The Vistafjord considered. In the instant case, the judge had been convinced that both parties had manifested assent, and there was no reason to depart from that conclusion (see paras 79, 82-93 of judgment). (2) On the facts, the assumption that there were no pre-emption rights was evident from the mutually manifest conduct of both parties. Some of the appellant's personnel had benefited from the assumption in pursuing their plan to take control of the appellant, so it would be unconscionable and inequitable to allow them to go back on the transfer. The doctrine of estoppel by convention was applicable (paras 98, 101, 118). (3) The court granted the respondent company permission to appeal costs orders. Appeals in relation to costs were discouraged as an appeal court would be particularly loath to interfere with a lower costs decision, SCT Finance Ltd v Bolton [2002] EWCA Civ 56, [2003] 3 All E.R. 434 followed. Nevertheless it had to be astute to correct plain injustice, and there was evidence of that in the instant case (paras 127-129, 133, 136, 139).

Appeal dismissed

For the appellants: Bernard Weatherill QC
For the first respondent: Robin Hollington QC, Hashim Reza
For the second to seventh respondents: Timothy Carlisle
For the eighth and ninth respondents: Dov Ohrenstein (Direct Access)

For the appellants: Kenneth Elliott & Rowe
For the first respondent: JP Fletcher & Co
For the second to seventh respondents: Summit Law LLP 


LTL 9/10/2015

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