HT-2025-000036 - [2025] EWHC 2707 (TCC)

As I have already observed, this is an unusual (albeit not impossible) argument to raise in the evidence free zone of Part 8.

This case is finally expressed as follows at para 30(d) of the Reamended Details of Claim:

“(d)

The estoppel by convention referred to above is found in, and/or arose by reason of the parties communications across the line, objectively construed, as found in the interim payment applications, the payment notices, and the invoices (including for the avoidance of doubt the subsequent interim payment applications) in which Gypcraft represented to VCL that the net summary position as at the start of that payment cycle was to be found only in the gross value of the work done less the amounts invoiced by Gypcraft in accordance with the previous payment cycles. In particular, by those representations Gypcraft impliedly represented there were no other notified but uninvoiced sums which had to be taken into account when assessing movement in the month (i.e. since the time of the last valuation). VCL relied on that convention when it took up, assessed and valued Gypcraft’s applications submitted on that basis, such that it would be unconscionable for Gypcraft to withdraw from that convention with retrospective effect and for Gypcraft to claim payment of its interim payment application 23 on the basis that that sum has self executed in the amount claimed.”

The relevant legal ingredients of this type of estoppel were set out in Mears Limited v Shoreline Housing Partnership Limited [2015] EWHC 1396 (TCC), 160 ConLR 157 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.”

There are several reasons why such an estoppel could not arise in the present case.

Firstly, all Gypcraft “represented” to VCL was that “Previous Net Payments” were as set out in the Application. This was no more than a statement of fact. Gypcraft did not “impliedly represent[ed] there were no other notified but uninvoiced sums which had to be taken into account when assessing movement in the month”. An implied representation would be a most unusual basis for this type of estoppel, and this aspect of the case seems, with respect, to be an ingenious lawyer’s gloss upon the facts, rather than a shared assumption.

Secondly, the estoppel is said to have the effect that the parties entered into a convention whereby Payment Notices could be given “out of time”. But there is simply no evidence or document which shows that there was such a convention. It is true that applications 20,21 and 22 were all dealt with out of time, but this does not give rise to a convention without more. It is equally consistent with confusion, inefficiency or a number of other possible explanations.

Thirdly, there is no evidence of reliance. To establish this, VCL would have to show that they fell into the habit of issuing their Payment Notices late because they were subject to some sort of convention.

Finally, I do not understand how a court could reach the conclusion that it was unconscionable and unjust on VCL to seek to go behind the convention, if there was one. That would require a full investigation of the facts and is an undertaking inherently unsuitable for Part 8.

For those reasons, I reject the estoppel case.