Claim No: BL-2022-002046 - [2025] EWHC 2534 (Ch)

Mr Kokelaar referred me to Wilken & Ghaly: The Law of Waiver, Variation, Estoppel, where the authors explain as follows (in a lengthy section, a significant part of which can be helpfully set out here):

“13.16

It is common for parties to insert into contracts clauses which purport to restrict the parties’ liabilities for extra-contractual statements. The most common of these are entire agreement clauses (which state that the agreement between the parties is solely as set out in the contract) and no reliance clauses (which provide (and usually warrant) that no reliance has been placed on any representations made by the other party to the contract and/or that a particular state of affairs or facts exists). The former raise questions as to whether such a clause may prevent any estoppel arising. The latter, since the Court of Appeal decision in Peekay Intermark Ltd v. Australia and New Zealand Banking Group Ltd, raise the question of whether a party can be precluded by the operation of a new and anomalous doctrine of contractual estoppel from ever contradicting the scope and content of such a clause or warranty.

13.17

In Peekay Intermark Ltd v. Australia and New Zealand Banking Group Ltd, Lord Justice Moore-Bick stated as follows:

“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 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: see Colchester Borough Council v. Smith [1991] Ch. 448, affirmed on appeal [1992] Ch 421.

…

13.18

Thus relying on Colchester Borough Council v. Smith and the long-standing commercial practice of inserting non-reliance clauses into contracts, Lord Justice Moore-Bick (with whom the rest of the Court of Appeal agreed and which formed part of the ratio of the case) created a new form of estoppel. If the parties had declared X to be the case in the contract then they would be estopped from denying that X was the case. This, as has been recognised, undoubtedly made commercial sense.

13.19

Peekay has been relied on numerous times at first instance in all cases save one without difficulty as if it were a recognised form of estoppel. Peekay has also been reconsidered by the Court of Appeal in Springwell Navigation Corporation v. JP Morgan Chase Bank. There Lord Justice Aikens held:

“143.

…I will try and analyse the matter from principle. 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 . . . there is no legal principle that states that parties cannot agree to assume that a certain state of affairs is the case at the time the contract is concluded or has been so in the past, even if that is not the case, so that the contract is made upon the basis that the present or past facts are as stated and agreed by the parties…

144.

…Apart from the remarks of Diplock J in Lowe v. Lombank, Mr Brindle did not show us any case that might support the proposition that parties cannot agree that X is the case even if both know that is not so. I am unaware of any legal principle to that effect. The only possible exception might be if the particular agreement between A and B on the certain state of affairs concerned contradicts some other specific or more general rule of English public policy. Like Moore-Bick LJ in Peekay I see commercial utility in such clauses being enforceable, so that parties know precisely the basis on which they are entering into their contractual relationship.

169.

…In my view the statements of Moore-Bick LJ are consistent with principle and authority. I respectfully regard the principles stated in Peekay as good law. That case has now been followed in a large number of first instance cases which need not be analysed in any detail.

…

177.

…To my mind, once it is accepted that there is a separate doctrine of “contractual estoppel” then there is no room for a requirement that the party which wishes to rely on that estoppel must demonstrate that it would be unconscionable for the other party to resile from the conventional state of affairs that the parties have assumed…”

13.21

As authority, Springwell could not be more clear. The contractual “estoppel” (a) is new; (b) is not linked to any established category of estoppel; (c) does not depend on unconscionability and (d) merely arises from the parties’ recitation of particular facts in the contract. Further, there is obvious commercial benefit to having such a doctrine and there is no reason (given the protection offered by consideration, economic duress and the unfair contract terms legislation) why commercial parties should not be able to agree, by their contract, a state of affairs.

13.22

The difficulty, however, is that the contractual “estoppel” is not an estoppel. As indicated throughout this text, estoppels at root require detriment. Albeit the forms detriment may take and the results that flow may vary, detriment is a theme common to all estoppels - all save for this contractual estoppel. Further, if the contractual estoppel were an estoppel, there would be no need for estoppel by deed. This contractual estoppel would replace the more narrowly formulated estoppel by deed completely. Yet, at no stage did the Court of Appeal state that it was abolishing or replacing the long-established doctrine of estoppel by deed or overruling (if it could) the numerous authorities that support it or, the third logical possibility, contending that estoppel by deed should now be treated as nothing more than a contractual estoppe1. The above, it is submitted, must mean that on the law as it currently stands the Peekay doctrine is not an estoppel.”

Counsel did not take me to the authorities themselves to which the authors refer. Nor did they take me to any other authorities which might call into question the text I have just quoted.

On the basis of that text, I have concluded that contractual estoppel significantly affects the outcome of the applications.

Ms Gleyze suggested that the entire agreement clause and clause 7.2 should not be given their plain meaning, at least arguably.

It is right that, by clause 16.4 of the LLP agreement, Holdings, as managing member, was entitled to borrow money from the members of the LLP and charge to the lender(s) the LLP’s property as security for their loan. If it is correct to view the granting of such a charge as the giving of a proprietary interest in the LLP’s property to a member, to that extent, on the proper construction of clause 7.2, some departure from its plain meaning can be said to be justified. However, as a matter of fact, there is no question, in this case, of the claimant having lent any money to the LLP or of being a chargee of its property, and, other than to the extent I have just mentioned, there is no basis for departing from the plain meaning of the provisions in question (or, for that matter, for departing from the plain meaning of clause 12.1). Although Ms Gleyze suggested that, if this case proceeded to trial, there might be further factual background evidence which might inform the proper construction of the provisions, particularly in relation to the entire agreement clause, she did not point to any material which would support the conclusion that such evidence could reasonably be expected to be available at trial. Put another way, the submission that the provisions in question should not be given their plain meaning (subject, in the case of clause 7.2, to the point I have just made) does not carry a sufficient degree of conviction for me to give it any weight.

By the deed of adherence, the claimant covenanted with the first defendant, amongst others, to be bound by the terms of the LLP agreement with effect from 18 July 2012. In the circumstances, whether indirectly, by the deed of adherence (to which the LLP was also a party), or as a party to the LLP agreement (to which the first defendant and the LLP were also parties), the claimant agreed that he would have no proprietary interest in the LLP’s property (see clause 7.2) (which, as I have alluded to, includes the performance fees and the right to receive them) and that Holdings had a discretion exercisable from time to time about what profit share would be payable to an LLP member (see clause 12.1) and, by executing the deed of adherence on 10 December 2015, the claimant agreed that that state of affairs continued to exist then. Put another way, the claimant agreed, as of 10 December 2015, that Holdings had a discretion as to proportion of the performance fees (the LLP’s property), if any, the claimant might receive as a profit share.

It must follow from this that the claimant cannot claim that he has had any proprietary interest in or entitlement under the CDO Monies Commitment, because all the representations he alleges the first defendant made in that respect were made before 10 December 2015.

In consequence, the claims in relation to the CDO Monies Commitment (see paras.28-29 above) do not have a real prospect of success against the first defendant (and there is no compelling reason for them to go to trial nevertheless). To the extent that a claim has been pleaded in the POC, it must be struck out (and the claim then dismissed), and to the extent that amendments are proposed in this context in the APOC, permission to amend cannot be given.

This conclusion is reinforced, at least in relation to the proposed claim that a contract arose between the claimant and the first defendant which was collateral to the claimant’s execution of the deed of adherence and by which the first defendant (allegedly) promised to pay the claimant the 15%. Such a collateral contract clearly falls within the ambit of the entire agreement clause and would fall foul of the contractual estoppel arising in relation to that clause.

The claims in relation to the CDO Monies Commitment are not sustainable against the Maltese company because the claimant does not plead that the Maltese company has (knowingly) received any of the performance fees or has received and retained their traceable proceeds.

Even if the conclusions I have reached so far are wrong, there are further reasons why the claims I have summarised in paras.28-29 above are unsustainable (although, in relation to some of them their unsustainability might have been cured by further pleading if the underlying facts supported such further pleas).

I briefly set out some of those further reasons now.

A claim in relation to the constructive trust pleaded in the POC (see para.28 above) cannot be sustained against the defendants on the current state of the statements of case, because it is not alleged that they have (knowingly) received any of the performance fees or received and retained them or their traceable proceeds.

The claim of an express trust of “C’s right to receive 15% of the CDO Monies and/or of 15% of the CDO Monies for the benefit of C” (i.e., of the claimant’s (alleged) pre-existing rights comprised in the CDO Money Commitment) (see para.29(i) above) cannot succeed. It is a claim which alleges that the first defendant “constituted himself” as trustee of that property (i.e. he was the settlor), but there is no foundation for claiming, as the claimant does by this proposed plea, that the first defendant ever received (beneficially or otherwise) these supposed pre-existing rights of the claimant, the basis for which is wholly unpleaded.

The claim of a constructive trust arising because the first defendant (allegedly) voluntarily undertook fiduciary duties (see para.29(ii) above) is unsustainable. The fiduciary duties which the first defendant is alleged to have undertaken are not particularised and, in any event, as I have said there is no claim that any relevant property which may be impressed with such a trust came into the first defendant’s hands.

The claim of a common intention constructive trust (see para.29(iii) above) is unsustainable. The claimant pleads that the parties to that trust were the claimant (and not the LLP for example) and the first defendant. Such a trust can only have arisen in respect of property coming into the first defendant’s hands, but, as I have said, there is no claim that any relevant property has come into the first defendant’s hands.

The claim of a Pallant v. Morgan equity (see para.29 (iv) above) cannot succeed. As Chadwick LJ explained in Banner Homes Holdings Ltd v. Luff Developments Ltd [2000] Ch 372 (see also per Lewison LJ in Generator Developments v. Lidl UK GmbH [2018] P& CR 7, at [43]):

“(1)

A Pallant v. Morgan equity may arise where the arrangement or understanding on which it is based precedes the acquisition of the relevant property by one party to that arrangement…

…

(3)

It is necessary that the pre-acquisition arrangement or understanding should contemplate that one party (“the acquiring party”) will take steps to acquire the relevant property; and that, if he does so, the other party (“the non-acquiring party”) will obtain some interest in that property…

(4)

It is necessary that, in reliance on the arrangement or understanding, the non-acquiring party should do (or omit to do) something which confers an advantage on the acquiring party in relation to the acquisition of the property; or is detrimental to the ability of the non-acquiring party to acquire the property on equal terms…”

The claimant does not claim that he conducted himself in a way which has conferred an advantage on the first defendant; in particular, that he gave up the right to obtain the CDO Monies Commitment directly from the LLP.

I understand the claims in relation to the CDO Monies Commitment I have summarised in paras.29(vi), (vii) to be contractual claims subject to a 6 year limitation period, under s.5 of the Limitation Act 1980, which has expired. They are also new claims. Under CPR 17.4(2) the court may allow amendments whose effect will be to add new claims, but only if the new claims arise out of the same facts or substantially the same facts as are already in issue in a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.

The correct application of CPR 17.4(2) was summarised as follows by Charles Hollander KC (sitting as a Deputy High Court Judge) in Amtrust Europe Ltd v. MD Insurance Services Ltd [2025] EWHC 1468 (Comm) at [44]-[49]. In particular, he recorded at [48]-[49]:

As to what constitutes “the same or substantially the same” set of facts, a summary of the principles was set out in Niprose Investments Ltd v. Vincents Solicitors Ltd [2025] EWHC 14 (Ch), at [31] :

“(1)

Whether a new claim arises out of the same, or substantially the same, facts as an existing claim is not a matter of discretion or case management but is a substantive question of law, which depends on analysis and evaluation to arrive at the correct answer.

(2)

It is of critical importance to carry out a careful, comparative evaluation of the scope and nature of the facts in issue in the existing claim and the facts alleged in the new claim.

(3)

If, on evaluation, the new facts are of an entirely different character from the existing facts in issue, the threshold for permission will not be met. Broadly similar facts, implicitly raised or understood, will not do.

(4)

“Same or substantially the same” is not synonymous with “similar”.

(5)

Whilst, in borderline cases, the answer to this question may be substantially a “matter of impression”, in others it must be a question of analysis.

(6)

The purpose of the requirement at stage 3 is to avoid placing the defendant in a position where he will be obliged, after the expiry of the limitation period, to investigate facts, and obtain evidence of matters, completely outside the ambit of, and unrelated to, the facts which he could reasonably be assumed to have investigated for the purpose of defending the unamended claim.

(7)

It is thus necessary to consider the extent to which the defendants would be required to embark upon an investigation of facts which they would not previously have been concerned to investigate. At stage 3 the court is concerned at a much less abstract, more granular, level than at stage 2; it is a matter of considering the whole range of facts which are likely to be adduced at trial….”

In Ballinger v. Mercer [2014] EWCA Civ 996 (at [34]), the Court of Appeal endorsed guidance given by Colman J in BP plc v. Aon Ltd [2006] 1 Lloyd’s Rep 549, 558 where he said at [53]:

“In Lloyds Bank plc v. Rogers [1997] TLR 154 Hobhouse LJ said of section 35: “The policy of the section was that, if factual issues were in any event going to be litigated between the parties, the parties should be able to rely on any cause of action which substantially arises from those facts.””

A key element of the proposed new claims is that the first defendant undertook a personal liability to the claimant. That assertion is, as I have explained, not made in the POC. The proposed new claims do not therefore arise out of substantially the same facts, at least as are already in issue. I would therefore not be able to give permission to amend to permit the proposed new contractual claims to be brought.