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IN
THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
|
A3/99/1142
CHANF
|
Royal Courts of Justice
Strand
London WC2A 2LL
Friday, 16 June 2000
Before
LORD JUSTICE SWINTON THOMAS
LORD JUSTICE WALLER
and
MRS JUSTICE ARDEN
Between
LONDON BOROUGH OF HILLINGDON Claimant/Appellant
and
ARC LIMITED
Defendant/Respondent
---------------------------------------
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
--------------------------------------
Mr Joseph Harper QC (instructed by the Solicitor for the London Borough
of Hillingdon) appeared on behalf of the Appellant/Claimant
Mr Neil King QC (instructed by Lawrence Tucketts (Bristol)) appeared on
behalf of the Respondent/Defendant.
Judgment
As Approved by the Court
Crown Copyright ©
Mrs Justice Arden giving the judgment of the Court:
1. This appeal is another round in the litigation between London Borough of
Hillingdon ("LBH") and ARC Limited ("ARC") arising out of the latter's claim to
compensation following the compulsory acquisition by LBH of land occupied by
ARC at Yiewsley. As explained below, in April 1982, LBH entered the land to
construct phase 1 of the works which were completed in April 1984. ARC
submitted its original claim for compensation on 19 April 1982. However, no
reference to the Lands Tribunal was made until 6 September 1995, some thirteen
years after the original claim. LBH took the point that the proceedings were
statute-barred as a result of the Limitation Act 1980, section 9. On 12 June
1997, Mr Stanley Burnton QC, sitting as a deputy judge of the High Court, held
that ARC's claim was statute-barred unless LBH was precluded by its conduct
from so asserting. He held that the relevant period was six years from the
date on which LBH entered the land. On 7 April 1998, this court (Nourse,
Potter and Mummery LLJ) dismissed the appeal.
2. Following the decision of Mr Burnton QC, and in accordance with directions
given by him, ARC served a statement of claim in support of its contention that
LBH was precluded from relying on the limitation point. LBH served its
defence, and trial of the action took place before His Honour Judge Pryor QC.
On 30 April 1999, HH Judge Pryor QC gave judgment in favour of ARC (which is
now reported at [1999] 3 EGLR 125). He held that LBH was precluded by
convention estoppel from relying on the limitation point. He further
considered, that if the concept of estoppel by convention did not exist, it
would have been possible to spell out a promissory estoppel or waiver on the
basis that LBH's valuer, Mr Chambers, had allowed the negotiations to continue
in the sense that he attended meetings and sought further details of ARC's
claim, after he became aware of the possibility at least of a limitation
defence becoming available. This is an appeal by LBH from the decision of HH
Judge Pryor QC.
3. ARC founded its estoppel claim primarily on the communications between the
parties from just prior to 26 April 1988 when the limitation period expired to
18 March 1994 when LBH indicated for the first time to ARC that ARC's claim
might be statute-barred but also on communications after this later date. The
material parts of its statement of claim were as follows:
"69. Both the Plaintiff and the Defendant conducted negotiations and
discussions as to the Defendant's claim for compensation before and after the
expiry of the limitation period on 26 April 1988 upon a common
understanding that the Defendant had a valid claim for compensation to be
agreed (or in the absence of agreement) to be determined by reference to the
Lands Tribunal. It would be unconscionable for the Plaintiff now to be allowed
to rely on section 9 of the Limitation Act 1980.
70. Further or alternatively the Plaintiff after the expiry of the limitation
period continued until 18 March 1994 to negotiate and discuss the Defendant's
claim for compensation on the basis that it was and remained a valid claim.
Such continued negotiation and discussion amounted to a representation that the
Plaintiff would not rely upon section 9 of the Limitation Act 1980. In
reliance upon such representation and to the Plaintiff's knowledge the
Defendant altered its position by instructing valuers and solicitors (namely
Strutt and Parker and Lawrence Tucketts respectively) and by not making a
reference of its claim to the Land Tribunals until 6 September 1995.
71. Further or alternatively the Plaintiff by its aforesaid conduct after the
expiry of the limitation period waived its right to rely upon section 9 of the
Limitation Act in relation to the Defendant's claim for compensation."
4. Accordingly the common understanding relied on by ARC, and found by the
judge, was that set out in paragraph 69 of the statement of claim. The
representation relied on in the alternative was that LBH would not rely on the
Limitation Act 1990, section 9. There was no express communication to this
effect. ARC did not identify any particular communication by LBH as giving
rise to this representation. The judge considered that promissory estoppel
arose after Mr Chambers became aware of the possibility of a limitation
defence, which on the facts found by the judge was in September 1991/January
1992.
The background
5. It is necessary to set out the parties' discussions in some detail. They
are to be found in the agreed statement of facts in this case, the
correspondence between the parties and the facts found by the judge. At the
trial there were witness statements from Mr SWJ Pasterfield, Mr JK Chambers, Mr
N McArthur, Mr RN Smith, Mr FJ Thompson and Mr RJC Dickinson, which we
have seen, though we have not seen any transcript of the cross-examination of
these witnesses.
6. LBH is the highway authority for its area. The Yiewsley by-pass was a road
that was originally proposed to be built to by-pass Yiewsley and to access
London Airport from the north. In fact the road was built in two phases. The
first phase was a single carriageway. The second phase involved building a
second carriageway. On 24 December 1980, LBH made a compulsory purchase order
(the "CPO") authorising LBH to purchase land compulsorily for the purposes
(among other things) of "the construction of a new highway from a point
approximately 190 metres north of the junction of Stockley Close with Stockley
Road for a distance of approximately 122 metres including the construction of a
new bridge over the railway line and the Grand Union Canal south-east of the
Forester's Arms public house in the London Borough of Hillingdon."
7. The land required for these purposes included part of a site occupied by ARC
as a railway aggregates depot under a lease granted by the British Waterways
Board ("BWB") for a term of 35 years commencing on 25 December 1970. LBH
sought by means of the CPO to acquire a plot of land and also the right to
construct a bridge over part of the land, the right to use an access road and
the right to construct a bridge over a canal.
8. On 21 December 1981, the CPO was confirmed by the Secretary of State for
Transport. On 22 March 1982, LBH served a notice to treat in respect of the
plots which it sought to acquire. On 7 April 1982, LBH served notice of
intention to enter. On 19 April 1982 ARC returned a claim in answer to the
notice to treat. Thereafter LBH commenced work at ARC's site for the
construction of the Yiewsley by-pass. These works involved the construction of
the highway bridge, including the four column bases with columns for the first
carriageway shown and also accommodation works for ARC. Those works included:
the construction of a two-storey office building in place of the existing
single-story building, of aggregate storage bunkers and a mess room/laboratory
(in each case prior to the demolition of the building/structure being
replaced); the repositioning of railway sidings; cesspool and drainage works;
the construction of a new weigh-bridge office; the provision of lighting for
the site; the construction of a new concrete vehicle wash area; fencing works
and resurfacing works for the site entrance. LBH claimed that the value of the
accommodation works was not less than £441,000.
9. Substantial completion of the first carriageway bridge structure took place
on 30 November 1983 and the accommodation works arising from the
construction of the first carriageway were substantially completed in
March/April 1984. While the scheme constructed at this time involved the
construction of a single carriageway LBH was proposing (subject to funding) to
construct a further carriageway adjacent and to the west of the single
carriageway. In the course of carrying out the construction of the first
carriageway, LBH also constructed the column bases and columns for the second
carriageway. These column bases fell partly outside the land which LBH was
authorised to acquire under the CPO. This was recognised by the parties at the
time, and ARC gave LBH permission to proceed. LBH completed construction of
the column bases and columns for the second carriageway in August/September
1983.
10. The first carriageway was officially opened on 11 May 1984.
11. LBH commenced construction of the second carriageway (other than the
already constructed column bases and columns) in June 1985. The construction
of a second carriageway required carrying out further accommodation works in
relation to the land demised to ARC. These works included the construction of
a replacement DIY/store building and resurfacing and fencing works also
commenced in June 1985.
12. Substantial completion of the second carriageway bridge structure
(excluding surfacing) was effected in November 1986. The ARC accommodation
works arising from the construction of the second carriageway were completed by
January 1987. Substantial completion of the section of the second carriageway
including the bridge took place on 1 June 1987. The land for phase II had not
been acquired under the CPO. The second carriageway was officially opened on
7 June 1987. LBH contends that the limitation period for the land taken
under phase II was 31 May 1993, and this has not been disputed by ARC.
13. On 29 March 1991, BWB conveyed to LBH its freehold interest in the land on
which the column bases are situated and granted easements for among other
things the highway bridge upon which the dual carriageway runs.
14. Most of the communications between the parties can be taken from the
correspondence between the parties. On 7 October 1987, Mr Douglas, principal
valuer for LBH, wrote to Mr Thompson of ARC asking for further progress on
ARC's claim. He stated: "I would now like to conclude this claim as soon as
possible and if the matter is not going to be capable of settlement by
agreement I would wish to refer it to the Lands Tribunal as soon as possible."
Following further correspondence, on 10 March 1988, Mr Douglas wrote to Mr
Thompson asking whether he was in a position to finalise the matter. He stated
that in addition to the claim under the CPO: "I would like to settle terms for
use by your company of the land underneath the piers of the bridge which were
acquired from British Waterways Board.".
15. On 26 April 1988, the six year limitation period for starting proceedings
in the Lands Tribunal to determine the compensation payable to ARC for the
appropriation of its land pursuant to the CPO (phase 1) expired. As stated
above, this was decided by the Court of Appeal in Hillingdon LBC v. ARC
Ltd [1999] Ch 139, dismissing an appeal from Mr Burnton QC. In giving his
judgment, Mr Burnton QC observed that it had been widely assumed, on the
basis of the decision of the Divisional Court in Turner v. Midland Railways
Co [1911] KB 832, that no limitation period was applicable until the amount
of the compensation had been agreed or determined. Indeed, we note that in the
recent case of Co-operative Wholesale Society v. Chester-le-Street District
Council (1997) 73 P & CR 111, 120 the President of the Lands Tribunal,
HH Judge Bernard Marder QC, held that where an acquiring authority proceeded
under a CPO by notice to treat followed by notice of entry, there was no
statutory time limit for a reference of disputed compensation to the Lands
Tribunal. The President accepted that this was then a widely-held view, and we
have no reason to doubt that the view was indeed widely held.
16. On 13 February 1989, Mr Thompson wrote to LBH stating that the access was
about to be permanently resolved and that thereafter it should be possible to
resolve ARC's compensation claim. On 10 March 1989, LBH wrote to Mr Thompson
stating: "I agree with you it should now be possible to resolve the
compensation payable to your company due to the Yiewsley by-pass works. If you
will submit your claim we will endeavour to reach agreement with you as Mr
Douglas has now left for greener pastures".
17. On 22 June 1990, Mr Harper, valuer for LBH, wrote to ARC stating that LBH
was waiting for further details of ARC's claim and adding: "We are near to the
point of closing down accounts for this scheme and it has become necessary to
ask if you intend to pursue your claim". A reminder was sent on 31 July 1990,
to which ARC responded on 4 September 1990 by requesting LBH to bear ARC's
agent's fee so that the matter could be resolved quickly.
18. By letter dated 21 September 1990, Mr Smith, then principal valuer for LBH,
agreed to meet the cost of ARC's surveyor's fees in accordance with Ryde's
Scale. In consequence of this letter, ARC appointed Strutt & Parker to act
as valuers on its behalf in October 1990. The representative of Strutt &
Parker was Mr Thompson. ARC submits that there could be no reason for LBH to
agree to pay ARC's surveyor's fees unless it considered that ARC's claim was a
valid claim and submit that by this date all the ingredients of convention
estoppel were fulfilled.
19. A meeting took place between LBH's newly-appointed principal valuer, Mr
Chambers and Mr Thompson in July 1991. Following that meeting, by a letter
dated 20 August 1991, Mr Thompson submitted a revised claim for compensation of
£1.2m. He also suggested a way in which the matter could proceed. Mr
Chambers referred this letter to LBH's solicitor, Mr Dickinson. Mr Chambers
asked for advice as to whether the claim was statute-barred. The judge found
that Mr Dickinson gave no definitive answer to this question but that both
Mr Chambers and Mr Dickinson thought that the point might be a good
one and that in due course they would need to take specialist advice about it.
The date which the judge gives for this advice is 8 January 1992. These
findings are not challenged.
20. On 17 September 1991, Mr Chambers wrote to Mr Thompson. He promised to
find out more information about the second carriageway. He added: "In the
meantime I note that your claim for compensation is of the order of £1.2m
and I look forward to receiving a detailed break down of this claim".
21. On 2 January 1992, Mr Thompson sent Mr Chambers a detailed break down of
the claim. He stated: "The details enclosed are comprehensive and
self-explanatory, however, we will be pleased to discuss these further should
you so wish".
22. On 16 January 1992, there were discussions between Mr Thompson and Mr
Chambers. These related to the substance of ARC's claim. The note of these
discussions prepared by Mr Chambers records that Mr Thompson stated that
ARC was likely to apply for an advance payment of 90% under section 52 of the
Land Compensation Act 1973, and that Mr Chambers told him that he was in
no position to make any estimate for anything other than the land taken element
since LBH had not then been provided with anything on which to base an opinion,
for example, certified accounts over the period plus receipts etc. The judge
found that at the date of this meeting Mr Thompson was assuming that the claim
would be taken to the Lands Tribunal if it could not be settled. Mr Thompson
gave evidence that he was not aware of any set legal time limit. The judge
found that it was Mr Chambers' view throughout that ARC had not provided
sufficient information to substantiate its claim ([1999] EGLR 125 at 127K). In
his witness statement he said: "so far as I was concerned, and in so far as I
can determine my predecessors were concerned, we adopted a "wait and see"
attitude; there was no negotiation because there was nothing to negotiate
about." Accordingly LBH submitted that there could have been no common
assumption between the parties that they were negotiating a settlement of a
valid claim. On 24 January 1992, ARC wrote to LBH with a revised claim
for the value of their interest in the land taken in the sum of £83,487.
They submitted this claim for attention by LBH. Mr Thompson added that he was
seeking accounting evidence in proof of the other points of claim and hoped to
return to LBH shortly. In addition, he stated that he was seeking instructions
to submit a claim under section 52 of the 1973 Act.
23. On 5 March 1992, there was a further meeting between Mr Chambers of LBH and
Mr Thompson of Strutt & Parker and Mr Lee and Mr Smith of ARC. ARC's
substantive claim was discussed in detail. According to Mr Thompson's note of
this meeting, LBH told ARC that LBH was taking legal advice but limitation was
not mentioned; ARC was encouraged to submit a further proof of claim, including
accounts, and LBH confirmed that, if the claim was substantiated, ARC's claim
would be settled. Indeed the judge found that Mr Chambers said that the claim
could be determined within two weeks ([1999] EGLR125 at 129A). According to Mr
Chambers' note Mr Thompson said: "Their accounts are likely to show a drop in
profits but that there were items to be added to ARC's claim."
24. By letter dated 10 April 1992, marked "without prejudice", Mr Chambers
wrote to Mr Thompson. He stated that to avoid double counting, he
considered that the "land taken" claim and "injurious affection" claim should
be taken together. He added that the matter was complicated by the interaction
of compensation rights and lease liabilities having regard to the
landlord/tenant relationship with BWB. He ended: "As mentioned I am not sure
as to the correct method of dealing with some of these issues and to avoid the
risk of some wasted effort I am trying to obtain appropriate legal advice
during this period whilst ARC are assembling accounts and receipts etc. prior
to finalising the details and the basis of their claim." This was a reference
to the legal advice discussed on 5 March 1992. On 28 April 1992, Mr Thompson
wrote to LBH in order to encourage discussions to reach an agreed sum for
compensation. The possibility was mentioned of a reference to the Lands
Tribunal in the last resort. By letter dated 1 July 1992, Mr Thompson
sent a formal request to LBH's solicitor for an advance payment of
compensation. He stated that the company wished to complete this claim and
therefore asked LBH's solicitor to deal with the matter diligently. Mr
Thompson pointed out (in a letter on the same date to Mr Chambers) that some
evidence would have been lost. He added: "Nevertheless, we would like to agree
as much as possible and to identify only those areas where we are in dispute
prior to any future reference of the matter for determination of the Lands
Tribunal." Mr Thompson ended his letter by asking LBH to deal with the matter
diligently in order that an advanced payment could be made and/or a
satisfactory reference to the Lands Tribunal.
25. On 30 July 1992, LBH wrote to ARC requesting further particulars of its
claim "so that it can be fully and properly considered, negotiated, agreed
and/or rejected as appropriate."
26. On 8 August 1992, ARC submitted further material. ARC stated that its
losses due to LBH's bridge construction works had not been included. It
invited LBH's valuer to examine and discuss each item of the claim in order
that proof of evidence could be obtained for those parts of the claim in
dispute.
27. On 3 September 1992, there was a discussion between Mr Chambers and Mr
Thompson. Mr Chambers stated that LBH's view was that the three months' time
limit for responding to ARC's request for an advance payment of compensation
had not yet started because LBH had not received reasonable proof under the
section 52 notice. He recorded in his note that Mr Thompson was to get ARC's
solicitor to examine whether they can agree with this interpretation. Mr
Chambers' note added that either side could refer the claim to the Lands
Tribunal at any time in any event. Accordingly by this date it was clear to
LBH that ARC was contemplating the possibility of taking its claim to the Lands
Tribunal.
28. On 13 October 1992, Mr Thompson wrote to LBH asking what the position was
and inviting discussions regarding a settlement. This was acknowledged by LBH
on 20 October 1992. ARC instructed solicitors, Lawrence Tucketts who wrote to
LBH on 20 November to ask about the position and again on three occasions in
December 1992.
29. On 6 January 1993, Mr Thompson wrote to LBH asking LBH what progress they
were making. On 25 January 1993, LBH confirmed that the date of entry for the
purposes of assessing interest on compensation should be taken as 28 April
1992.
30. On 1 February 1993, Mr Chambers spoke to Mr Thompson repeating his earlier
view that he (Mr Chambers) still felt that the claim should be dealt with as
one item because of the overlap. Mr Thompson told him that ARC might be in a
position to put in a fully revised claim in about three to four weeks. This
did not happen and eventually, on 6 April 1993, LBH wrote to Strutt &
Parker asking what progress was being made in the matter. Mr Thompson promised
to submit an amended claim as quickly as possible.
31. Finally, on 25 October 1993, ARC submitted a revised claim to LBH. At this
point Mr Thompson's involvement ended. Also on 25 October 1993, ARC wrote
to Mr Rippingale, the managing director of LBH, asking for an assurance that
the claim would be dealt with expeditiously by LBH.
32. On 27 October 1993, Mr Chambers submitted a draft response to Mr Rippingale
and wrote an internal memorandum to him stating that counsel's advice was
awaited on a number of points including whether ARC's claim may be time barred.
However, nothing was said about limitation to ARC.
33. On 28 October 1993, Mr Rippingale replied to ARC (in terms of the
draft):
"I understand that the claim is long outstanding due to the inability of your
company to provide sufficient details for the claim to be properly proven and
if these matters have now been adequately dealt with there should be no
significant obstacle to its resolution".
34. On 9 November 1993, LBH wrote to ARC stating that much of the compensation
claim submitted by ARC was insufficiently proven, that the betterment exceeded
the provable loss and that LBH had decided to take counsel's advice. On 28
January 1994, Lawrence Tucketts wrote again, reserving their rights including
the right to refer the matter to the Lands Tribunal. It appeared that
counsel's opinion had not then been sought. A reminder was sent. Finally LBH
wrote to ARC on 18 March 1994. The letter was marked "without prejudice". The
letter said: "Thank you for your letter of 22 February. The Council is
currently considering whether your client's claim is out of time ..." and then
sought further information. Lawrence Tucketts replied on 18 March 1994. They
did not refer to the limitation point but asked to see counsel's opinion.
LBH's reply dated 21 March 1994 indicated that counsel had still not been
instructed and indeed counsel was not instructed until June 1994 or possibly
early July. Further correspondence was exchanged. Finally, on 19 October 1994
LBH wrote to Lawrence Tucketts rejecting ARC's claim. The first reason LBH
gave was that leading counsel had advised that the six-year limitation period
in the Limitation Act 1980, section 9(1) "most probably applies". Further
correspondence ensued. LBH refused ARC's request to see counsel's opinion.
LBH saw no purpose in having a meeting. In June 1995, ARC suggested a "without
prejudice" meeting and they repeated that offer in July 1995 and told LBH
that they had been advised that the claim was not statute-barred. On
27 July 1995 Lawrence Tucketts wrote to LBH giving LBH one further
opportunity "to respond positively". When LBH failed to respond, ARC, on 6
September 1995, submitted a notice of reference to the Lands Tribunal.
35. The Lands Tribunal declined to deal with a preliminary point raised by LBH
on limitation and LBH then commenced proceedings in the High Court to determine
this question.
Judgment of HH Judge Pryor QC
36. As explained the judge found as a fact that it never occurred to Mr Smith
and Mr Thompson, both of whom were concerned in this matter for ARC, that
there was any statutory limitation period (page 129C).
37. The judge found that Mr Smith and Mr Thompson thought they were involved in
negotiations, however desultory, of what they regarded as a genuine claim for
compensation which if not settled could be taken to the Lands Tribunal.
38. The judge found that LBH did not consider that ARC had put forward a valid
claim which deserved to be taken seriously in negotiation, and LBH's view was
that any claim was matched by betterment. In addition the judge found that Mr
Chambers had doubts about the position on limitation from about the autumn of
1991. The judge also found that from that time Mr Dickinson did not share any
assumption with ARC as to application of the Limitation Act but the doubts
which Mr Chambers had were not communicated to ARC until March 1994.
39. Notwithstanding this, the only sensible explanation which the judge could
see for the letters between 13 February 1989 and 10 March 1989 was that both
parties believed that ARC had a valid claim and that this was confirmed by
LBH's agreement to pay ARC surveyors' fees in September 1990 ([1999] EGLR 125
at 129K-L). He considered that the overwhelming probability was that both
sides made the same mistake that there was no statutory time limit applying to
ARC's claim. The only sensible inference to draw was that both parties were
dealing with ARC's claim on the basis that it was a valid claim, capable of
being resolved by negotiation or referred to the Lands Tribunal if settlement
could not be reached ([1999] EGLR 125, 130B). With regard to Mr Chambers'
uncommunicated reservations about the time-bar, Mr Chambers "consciously
allowed Mr Thompson to continue negotiations on the mistaken assumption that
[LBH] would have been if he had shared the same assumption."
40. The judge rejected the argument that because the limitation period had not
expired in relation to phase II it would be wrong to conclude that the parties
were negotiating on the basis that the limitation period in respect of phase I
had not expired. Phase I constituted the greater part of the claim. Whatever
may have been the position in relation to phase II "the discussions about phase
I were continuing in a way that only made sense if, ultimately in the absence
of agreement there could be a reference to the Lands Tribunal." ([1999] EGLR
125, 130F).
41. In relation to the letter dated 20 September 1991 marked "without
prejudice", the judge held that "without prejudice" must be construed as
meaning simply "without prejudice to any arguments which can be raised on an
effective reference to the Lands Tribunal". He saw no reason why in any event
that the privilege should not be limited to the arguments that might be raised
before the Lands Tribunal rather than the reference to it.
42. The judge held that LBH's letter dated 18 March 1994 was in effect notice
bringing the shared assumption to an end, but that nonetheless ARC initiated
the reference to the Lands Tribunal in sufficient time. The letter of 18 March
1994 was equivocal, and in view of the general understanding of the law up to
that time it was reasonable for ARC to wait for a clear indication that LBH no
longer shared the common assumption before embarking on the expense of a
reference to the Lands Tribunal. Even after the clear notice by LBH in
October 1994 that it would rely on the statutory time-limit, the time taken by
ARC to take its own advice and refer the matter to the Lands Tribunal was not
in the circumstances "so unreasonable as to preclude further reliance on the
estoppel." ([1999] EGLR 125, 131D). Any prejudice would fall on ARC.
Convention estoppel
43. The ingredients of estoppel are summarised in Waiver, Variation and
Estoppel (Wilkens & Villiers, 1998, page 201-2) as follows:
"9-01 On one level, the elements of estoppel by convention can be simply
stated. Thus, the estoppel will arise where:(i) the parties have established,
by their construction of their agreement or a common apprehension as to its
legal effect, a convention basis; (ii) on that basis, the parties have
regulated their subsequent dealings; and (iii) one party would suffer detriment
if the other were to be permitted to resile from that convention. As such
estoppel by convention can, on this level, be relatively easily distinguished
from estoppel by representation and equitable forbearance. Estoppel by
convention depends on a shared assumption which can be one of fact or law and
not on either a representation as to a state of facts or a promise as to future
obligations. Estoppel by convention is, as the law currently stands, therefore
to be distinguished from equitable forbearance or estoppel by
representation.
9-02 However, there are three complications to the above analysis. First, when
as a matter of fact will the doctrine apply. Secondly, can estoppel
by convention provide the party relying on it with a cause of action. Thirdly,
can or could estoppel by convention be viewed as part of an overarching
doctrine of estoppel. [footnotes omitted]"
44. The three ingredients identified by the authors in paragraph 9.-01 follow
very closely the description of convention estoppel given by the Court of
Appeal in Keen v Holland [1984] 1 WLR 251 ,261 save that the Court of
Appeal gave as the third ingredient that it would be unjust or unconscionable
if one of the parties resiled from that contention. There may be little
difference between the two formulations provided that it is borne in mind that
detriment is not a narrow or technical concept (see Gillett v Holt
[2000] 2 AER 289; and see John v George (1996) 71 P & CR 375). As
respects paragraph 9-02, above, we are concerned in this case with the first
only of the complications mentioned there. The second so-called complication
does not arise in this case. As to the third complication we note that the
court has frequently said that various forms of estoppel can now be seen to
merge into one general principle (see for example the Amalgamated
Investment case, below, page 122 per Lord Denning MR, and the
Taylors Fashions case below). However, as that issue was not argued in
this case, it is not appropriate for us to express a view upon it on this
occasion.
45. The leading authority is Amalgamated Investment & Property Co Ltd v.
Texas Commerce International Bank Ltd [1982] 1 QB 84. In that case the
bank agreed to make a further loan to a company on the basis that it would be
covered by a guarantee to be executed by its parent company. The parent
company duly executed a guarantee of all monies due to the bank from the
subsidiary but the loan in question was in fact made through a subsidiary of
the bank and thus was not covered by the parent company 's guarantee. The
parties believed that the guarantee covered the loan by the bank's subsidiary
and in reliance on that belief the bank allowed the loan to remain outstanding
notwithstanding opportunities to call it in. The Court of Appeal held that
since the parties had acted on the agreed assumption that the parent company
was liable for the loan to its subsidiary the parent was estopped by convention
from denying that they were bound to discharge its indebtedness to the bank.
Lord Denning MR held (at 122):
"When the parties to a transaction proceed on the basis of an underlying
assumption (either of fact or of law, and 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."
46. Eveleigh and Brandon LLJ gave concurring judgments. They both referred to a
passage on estoppel convention from Spencer Bower and Turner, Estoppel by
Representation 3 ed (1977) (p157). The full quotation reads:
"This form of estoppel is founded, not on a representation of fact made by a
representor and believed by a representee, but on an agreed statement of facts
the truth of which has been assumed, by the convention of the parties, as the
basis of a transaction into which they are about to enter. When the parties
have acted in their transaction upon the agreed assumption that a given state
of facts is to be accepted between them as true, then as regards that
transaction each will be estopped as against the other from questioning the
truth of the statement of facts so assumed."
This passage has often been cited in other cases on convention estoppel.
Brandon LJ also made another point on which Mr King placed reliance that the
claimant's error need not have originated in some communication from the party
sought to be estopped ([1982] QB 84 at 130).
47. In the Amalgamated case, the Court of Appeal affirmed the decision
of Robert Goff J. That judgment also contains a valuable discussion of
convention estoppel. Of particular relevance to this appeal is a passage on
causation (i.e. the need for the claimant to have acted on the faith of the
communication from the party sought to be estopped) at [1982] QB 84, 104-5. In
this passage, Robert Goff J stated:
"[I]t can only be unconscionable for the encourager or representor to enforce
his strict legal rights if the other party's conduct has been influenced by the
encouragement or representation."
48. In Norwegian American Cruises v. Paul Mundy Ltd (The
"Vistafjord") [1988] 2 Lloyd's Law Rep 343), the plaintiffs were the
owners of a cruise liner, The Vistafjord, and the defendants were the
plaintiff's general passengers sales agents. By an agreement made in 1975 the
plaintiffs agreed to pay the defendants 15% commission on gross United Kingdom
ticket sales deductible on remittance of balance monies. The defendants
arranged a charter to British Leyland Cars for £1.3m and a sub-charter for
the outward and inward legs of the charter. The plaintiffs objected strongly
about the sub-charter and said they would not be paying the defendants any
commission or at most 1%, 2% or 3%. However they had the choice to accept the
charter and the sub-charter or to decline the charter and thus avoid the
sub-charter. They took the former course. After the charter and sub-charter
were duly performed the plaintiffs sued the defendants for amounts which they
had retained representing 10% commission on the charter hire after giving 5% to
British Leyland Cars' brokers. The plaintiffs claimed that the commission was
outside the general passenger sales agreement. The Court of Appeal held that
the parties entered into the transaction between themselves on the basis of an
agreed assumption that the defendants would receive commission and it would not
be fair to allow the plaintiffs to repudiate that assumption which enabled them
to obtain the business in the first place. Bingham LJ held that there was
very clear conduct crossing the line in that case. Both parties knew about the
sub-charter and that the defendants would not commit themselves without
expectation of commission as a cushion against loss. It was not a case of
inaction but of action on both sides of which the other was fully cognisant.
The charter to British Leyland Cars was dependent on the sub-charter. A number
of authorities were cited. The Court of Appeal approved a "valuable and
illuminating commentary on the law" by Peter Gibson J in Hamel-Smith v.
Pycroft & Jetsave Ltd (unreported, 5 February 1987). Peter Gibson J
held that the well-known passage from Spencer Bower & Turner quoted above
was best seen as illustrating rather than defining convention estoppel for a
number of reasons:
"First, the agreed assumption need not be of fact, but may be of law...
Secondly, I do not see why the parties need to be about to enter a transaction
when they make a common assumption...Estoppel is not dependent on a contract,
but on a common assumption...A third reason why the two sentences in Spencer
Bower should not be taken as definitions is that they are not unqualified, as I
think that they should be, by considerations of justice and equity... Even if
the parties had acted on a common mistaken assumption it does not follow that
the estoppel will follow as of course..."
49. Bingham LJ also referred to Troop v. Gibson (1986) 277 EG 1134, in
which the relevant transaction was not one entered into between the parties to
the convention estoppel and in which Purchas LJ held (at 1143) that:
"The crucial requirement for convention estoppel is that at the material time
both parties should be of a like mind."
50. A number of authorities illustrate the requirement for communication of the
assumption between the parties. Communications complying with this requirement
were described as "crossing the line" in K Lokumal v. Lotte Shipping (The
August Leonhardt) [1985] 2 Lloyd's Rep 28, , in which a claim that a
time-bar did not apply, based on convention estoppel, failed because of the
lack of communication. In that case, the plaintiffs sued as assignees of cargo
owners. They had a claim of damage to the cargo incurred in December 1980.
This meant that they had a two-year limitation period for bringing their claim.
On 18 December 1982, the owners, P and I Club sent a telex agreeing to an
extension of time "provided charterers agreed likewise". The plaintiffs
assumed that the owners had obtained the permission of the charterers.
Thereafter the charterers objected to the extension of time and the owners
asserted that the plaintiffs' claim was statute-barred. The Court of Appeal
held that the case was one of genuine misunderstanding but there was no scope
for estoppel by silence or acquiescence against the owners of the club and in
addition that there was no scope for convention estoppel. The parties had
acted independently of each other. Nothing "crossed the line between them".
Kerr LJ, giving the judgment of the Court of Appeal, held that
"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, for example 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 estoppel by silence or acquiescence.
Similarly, in the case 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 on by the representee as a basis for this form of
estoppel....
... There cannot be any estoppel unless the alleged representor has said or
done something, or failed to do something, with a 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 alleged
representor to resile by challenging the belief or expectation which he had
engendered. To that extent at least therefore, the alleged representor must be
open to criticism."
51. In Republic of India v. India Steamship Co Ltd (The Indian
Endurance) [1988] AC 878, the plaintiffs were consignees of a cargo of
munitions which were damaged in the course of the voyage. On 1 September 1988,
they issued proceedings in Cochin seeking damages in respect of a jettisoned
cargo and in December 1989 obtained judgment in the rupee equivalent of
£7,200. Meanwhile, on 25 August 1989, the plaintiffs issued a writ in rem
in the Admiralty Court in England and it was served on the defendants' vessel
Indian Endeavour. The plaintiffs claim was for the Swedish kronor
equivalent of £2.5m. The question arose as to whether there had been
waiver or estoppel defeating the operation of section 34 of the Civil
Jurisdiction and Judgments Act 1982 and whether the judgment in the Cochin
court being in personam was on the same cause of action as that on which
the plaintiffs asserted in the Admiralty Court action. Section 34 of the Act
of 1982 precludes proceedings on a cause of action in respect of which judgment
has been given in any jurisdiction unless that judgment is unenforceable in
England. The House of Lords held that section 34 applied. The House further
held that the Court of Appeal had been entitled to hold that the defendants
were not estopped by convention estoppel or acquiescence from relying on
section 34. As Lord Steyn held at 913:-
"It is not enough that each of the two parties acts on an assumption not
communicated to the other. But it was rightly accepted by counsel for both
parties that a concluded agreement is not a requirement for an estoppel by
convention. ...
...
The evidence does not begin to show that the defendants evinced an attitude
that they were content that judgment should be given in Cochin, and that
whatever the outcome of the proceedings in Cochin they would not raise a plea
or defence elsewhere on the basis of the fact of a judgment in Cochin. There
is no evidence to warrant such a finding."
52. Reference was also made to Taylors Fashions Ltd v Liverpool Trustees
Co [1982] 1 QB 133, a leading case on the law of estoppel in which Oliver
J propounded a general test of unconscionability for determining whether a
party should be estopped in preference to applying a number of separate
technical tests. This case was decided before the Amalgamated case and
was cited in argument in that case but was then unreported. It is now reported
in the official law reports immediately following the Amalgamated case.
The case concerned tenants who under separate leases wished to enforce options
to extend their leases given in the leases which (unknown to the parties at any
material time prior to the commencement of the proceedings) were unenforceable
for want of registration. The case concerned proprietary estoppel and estoppel
by representation. Oliver J rejected the argument that the party sought to be
estopped had to be aware of what his strict rights were and of the fact that
the other party is acting in the belief that will not be enforced against him.
He held that the approach was a broad one of whether in the 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. Both tenants had carried out substantial works to the property
they had leased. But in the case of one of the tenants, his mistaken belief
was not the result of encouragement by the lessor but what he had been told by
his own solicitors. In addition, relevant to causation, the work he carried
out would have been done anyway and was not done on the faith of the option for
renewal. Accordingly, his claim in estoppel failed.
53. The recent case of Co-operative Wholesale Society Ltd v
Chester-le-Street District Council [1998] EGCS 76 illustrates that in
appropriate circumstances a party may be estopped from raising a time-bar. In
that case the parties had made a common assumption that there should not be a
reference to the Lands Tribunal of a claim for compensation for land taken
under a CPO save as a matter of last resort. The parties had negotiated for
some time and the District Valuer had indeed made offers to the appellant to
settle the matter. The Lands Tribunal held that the authority was estoppel
from relying on a statutory limitation defence. On appeal, the main question
was whether section 10(3) of the Compulsory Purchase (Vesting Declarations) Act
1981 (under which the reference had been made) was jurisdictional or procedural
so that the statutory limitation period applying to claims thereunder could not
be overridden by (for example) estoppel. This point failed. The Court of
Appeal also dismissed a further ground of appeal that there was insufficient
material to enable the Lands Tribunal to find that the authority was
estopped.
The issues
54. The principal issues argued on this appeal were
(1) Was the judge correct in his conclusion that each of the parties had made a
shared assumption of fact communicated to each other and on which both were
proceeding i.e. that ARC's claim was not subject to a statutory period of
limitation?
(2) If so, was it (as the judge concluded) unconscionable for LBH now to rely
on a limitation defence?
(3) Did any statement or conduct by LBH amount to promissory estoppel which
would preclude it from relying on a limitation defence?
(4) Was LBH's letter of 18 March 1994 sufficient notice to bring any estoppel
to an end? If so what was the effect of this notice?
The parties' submissions
The appellant's submissions
55. Mr Joseph Harper QC, for the appellant, made the following submissions:
-
(1) Mr Harper submitted that there were two stages. First, the court had to
identify the common understanding on which the parties were proceeding.
Second, the court had to decide whether acting contrary to the common
understanding was unconscionable. (These two stages were common ground).
(2) The requirements for convention estoppel were not established in this case
in that there was no shared common understanding on limitation.
(3) In any event the claim based on convention estoppel failed because there
was no causation. ARC's failure to file its claim with the Lands Tribunal was
not because of any shared assumption but because of its own problems in
formulating its claim.
(4) The judge found that the convention was that the parties had negotiated on
a common understanding that ARC had a valid claim for compensation to be
agreed. In fact LBH did not consider ARC's claim to be valid. It therefore
adopted a "wait and see" approach. It considered that ARC's claim was wiped
out by better access and the £400,000 spent on rebuilding buildings to
ARC's specification. LBH was keeping its options open. The recent case of
Co-operative Wholesale Society v. Chester-le-Street DC (1997) 73 P &
CR 111; (on appeal) [1998] EGCS 76 was distinguishable on its facts.
(5) There was nothing that LBH did which would enforce the belief in ARC that
there was no limitation period in this case. He submitted that this point had
not been considered by the judge.
(6) The judge failed to appreciate that whether or not following the expiry of
the limitation period the parties continued to believe that there remained a
valid claim capable of being resolved was not the same thing as an
understanding between them that LBH would not take any point whether procedural
or otherwise that might be open to it on a reference to the Lands Tribunal.
(7) ARC was in no different position from any other litigant who finds that the
law "changes" because of a decision of the House of Lords or the Court of
Appeal. It would be odd if there was an estoppel by convention in every such
case. The true position was that a party had to take the law as he found it.
Where parties had acted on the basis of a generally assumed state of the law
which was found to be wrong it was more difficult "to cross the line".
(8) There was no suggestion that the parties had negotiated on any particular
basis prior to the expiration of the limitation period. If in May/June 1988
there had been an application to the Lands Tribunal, there would on the judge's
findings have been nothing to stop LBH taking the point. The convention found
by the judge came into existence after the limitation period. It was not
suggested that the convention estoppel had arisen at any earlier date.
(9) The communications in the present case were inadequate to sustain
convention estoppel. There had to be something more than "Where is your
claim?". There did not have to be a specific mention of limitation but there
had to be a far-ranging representation that LBH would see ARC right or that ARC
would get some compensation.
(10) In any event until 31 May 1993, the claim for compensation in respect of
the lands taken under phase II was not statute-barred, and accordingly LBH had
continued to negotiate a claim that in part at least was not statute-barred.
Mr King did not suggest that the limitation period expired on some date other
than 31 May 1993. Mr Harper did not demonstrate this submission by reference to
the documents. Mr King submitted that the judge was right to reject this
argument. The parties still thought it was necessary to deal with the claim in
respect of phase 1. We agree with the reasons which the judge gave, set out
above, for rejecting Mr Harper's argument on this point.
(11) It was open to ARC at any time after entering on to the land to apply to
Lands Tribunal. It did not do so until many years after the claim had been
made and until some 18 months after having been given notice by LBH that there
might be a limitation point. ARC had had some 18 months notice. In addition,
at no time did they take any step or incur any expenditure which they would not
have done in any event for the purpose of pursuing the claim. As appears from
the correspondence, the valuer's fees were to be paid by LBH on Ryde's Scale.
Accordingly, there was nothing to feed the estoppel.
(12) Mr Harper submitted that the judge had not considered the effect of the
words "without prejudice" which LBH had added to its letter dated 10 April
1992. This clearly had the effect that what was said in the letter was to be
without prejudice to any rights which LBH might have: see Unsworth v. Elder
Dempster Line [1940] 1 AER 362. We agree with the judge's reasons for
rejecting this argument.
(13) If the appeal on convention estoppel was allowed, the case should be sent
back to the judge to find the facts relevant to promissory estoppel.
(14) If the appeal was allowed, the court could attach a condition to
permitting LBH to rely on the statutory limitation period that LBH should still
pay ARC's surveyors' fees in any event.
The respondent's submissions
56. Mr Neil King QC, for the respondent, made the following submissions:
(1) The judge was right on the conclusions he drew from the evidence. There
was a common assumption that the claim to compensation was valid and
enforceable and the parties conducted themselves on the basis that there was a
live claim that could be referred to the Lands Tribunal without any limitation
period. The common assumption had been communicated between the parties.
(2) The relevant transaction here was the payment of compensation. This was
common ground. There was nothing to prevent convention estoppel arising in
this sort of case. The acquiring authority could not in any event require a
transfer of the land to it until the compensation had been agreed.
(3) The convention estoppel in the present case would merely create a
procedural bar and was therefore distinguishable from a convention estoppel
which had the effect of conferring jurisdiction on a tribunal or conferring
power on the local authority to pay compensation.
(4) The period between entry and reference in this case (thirteen years) was
not unusually long. If the claim was stale, that is bound to redound to the
disadvantage of the claimant rather than that of the authority.
(5) The requirements for promissory estoppel were satisfied. As from April
1988 LBH were prepared to discuss and negotiate the substance of ARC's claim
for compensation with a reference to the Lands Tribunal as a last resort. Mr
Chambers had concerns about the limitation period from late 1991 and
Mr Dickinson had concerns from January 1992. If by this date there was a
shared assumption between the parties and that had been communicated from LBH
to ARC, it would be unconscionable for LBH to consider internally that there
might be difficulties about limitation and not to communicate them to ARC. By
January 1992, ARC could establish that there was a shared assumption between
the parties because in September 1990 LBH had agreed to pay ARC's valuers'
fees. It was highly significant that the limitation point was in Mr
Rippingale's mind when he wrote to ARC on 28 October 1993 assuring them that
the matter could proceed to resolution, meaning substantive resolution.
(6) On 18 March 1994, LBH mentioned the limitation point to ARC for the first
time. The statement was not unequivocal. The letter dated 18 March 1994 was
not effective to bring any estoppel to an end. However, from this date there
was no common assumption or representation that any statutory limitation period
would not be relied on.
(7) When LBH wrote to Lawrence Tucketts on 19 October 1994 stating that counsel
had advised that a six year limitation period "most probably applies", LBH did
not rely on that reason alone for rejecting ARC's claim. LBH's letter dated
19 October 1994 left open the possibility of agreeing the claim.
(8) The eleven month period between October 1994 and September 1995 was not too
long. There had been delays in the past on the part of LBH and ARC acted
reasonably in giving an opportunity to LBH to reply. The application to the
Lands Tribunal would have been made in June 1995 if LBH had not indicated that
it would consider the position again. Given that there was a widely held
assumption that there was no applicable limitation period it was reasonable to
wait for LBH to take counsel's advice.
(9) It was unconscionable for LBH to acquire ARC's property and not pay
compensation. If no compensation was payable, then, under Ryde's Scale, no
surveyors' fees would be recoverable either.
Conclusions
57. The principal issue raised by this case is an important one. It is clearly
established that a party may waive the right to rely on a limitation defence
and that parties may enter into an agreement to waive the limitation defence
(see for example Halsbury's Laws of England, vol 28 (1997) paras. 842 and 843).
The courts will enforce any such waiver or agreement duly made. A party may
also be estopped in an appropriate case from relying on a limitation defence.
However no authority has been cited to us, apart from the decision of the judge
in this case, whereby a party has been held disentitled from relying on a
limitation defence merely because he has continued to negotiate with another
party about the claim after the limitation period had expired and without
anything being agreed about the manner in which the claim was to be resolved if
negotiations broke down. What was happening here was that the parties were
negotiating without any regard to the limitation period. At its extreme the
point may be put as it was expressed by Mr Harper in his written argument: "if
the judge is right, it means that unless a negotiating party expressly draws
the other side's attention to the expiry of the limitation period and expressly
negotiates against the background of that threat he will be held estopped from
taking the point."
58. As the authorities, the facts and the submissions have been set out above,
it is possible to state our conclusions comparatively shortly.
59. The first issue to be considered is whether the judge was right to conclude
that the parties shared an assumption that ARC's claim was a valid claim. The
judge's conclusion was that the only sensible explanation for the letters dated
13 February 1989 and 10 March 1989 was that both parties believed that ARC had
a valid claim for compensation. In our judgment the evidence does not
support this conclusion. As the judge found, at all material times LBH took the
view that ARC's claim was not supported by appropriate evidence and was not a
valid claim This was LBH's position in June 1990 and it remained its position.
This case is thus unlike the Co-operative Society case, above, in which
it was clear that the local authority regarded the claim as one which entitled
the claimant to some compensation.
60. In our judgment the correspondence on examination reflects LBH's position.
The evidence simply does not establish a shared assumption communicated one to
the other that limitation was not a defence to be relied on as a basis on which
negotiations proceeded post-April 1988. The point can be tested by considering
other defences open to LBH apart from limitation, for example betterment or an
equitable bar such as laches. It could not be suggested that by agreeing to
pay ARC's surveyor's fees LBH was restricted from raising any such defence. It
is difficult to see how any distinction for this purpose can be drawn between a
limitation defence and any other form of defence. There has to be more to
establish a convention than simply a request for details of ARC's claim. Where
parties are acting on the basis of some generally assumed view of the law,
which turns out to be wrong, more is needed than simply an assumption as to the
legal position if a party is to be estopped from taking a defence which he then
discovers is available to him.
61. As regards the later correspondence and meetings, it is clear that LBH
could not have made or communicated any assumption about limitation after
September 1991/January 1992 when Mr Chambers and Mr Dickinson realised that a
limitation defence might be available. As we see it there is nothing in the
correspondence between September 1990 and 17 January 1992 which would form a
basis for the convention on which ARC relies.
62. A shared assumption is not on the authorities sufficient to establish an
estoppel unless it is communicated. It follows that if in this case there was
no shared assumption to the effect that ARC had a valid claim that was not
time-barred, there could be no communication by LBH that it was making any such
assumption. It also follows from what we have said above that the
communication required would in any event be not simply that ARC had a valid
claim but also that LBH would not take any defence that might be open to it on
the basis of a statutory limitation period.
63. The next question is whether in any event the estoppel was brought to an
end by the letter of 18 March 1994. It was common ground that in this case any
estoppel could be brought to an end by the giving of reasonable notice that LBH
intended to rely on the limitation defence. During that period ARC would have
the option of referring its claim to the Lands Tribunal and if it did so LBH
would (if it had been estopped immediately before notice was given) be estopped
from relying on any statutory limitation defence in the proceedings so
commenced. Put another way it would not be unconscionable for LBH to rely on a
limitation defence if it gave such notice and proceedings were not commenced
with a reasonable time thereafter.
64. In our view the letter of 18 March 1994 was an effective warning that if
indeed there was a good limitation point LBH considered itself free to take it.
From that date it could no longer even be suggested that the parties were
proceeding on some shared assumption, and ARC were no longer entitled to rely
on there being a common assumption. If a common assumption existed up
to this moment in time, ARC were entitled to a reasonable time to re-act to the
disappearance of their assumption. In the circumstances of this claim that
period might be measured in weeks rather than days, but not in months. Even if
that were too harsh a view, once the position had been more firmly clarified in
October 1994, a swift response for ARC was required. To take advantage of any
estoppel ARC would have to have started proceedings within about 2 months of
this date. That period would give sufficient time to establish if there was
any room for agreement with LBH and obtain Counsel's opinion itself if it
wished. On any basis the delay of a further period of eleven months was too
long. We appreciate that the parties had already been dealing with this claim
for many years and that it is not unusual for claims to be referred to the
Lands Tribunal many years after the local authority has entered the property
being acquired but that it probably a good reason for acting quickly rather
than a reason for further dilatoriness. The point on delay is not capable of
being met by asserting that any prejudice or at least the greater prejudice
would be suffered by ARC and not LBH. There was no reason why proceedings
could not be started immediately. For these reasons alone in our judgment the
appeal must as respects convention estoppel be allowed.
65. We turn to the issue of unconscionability below but we will next deal with
the submissions on promissory estoppel.
66. The judge also alternatively found that there was promissory estoppel. Mr
Harper submitted that if the appeal was allowed on convention estoppel the case
should be remitted to the judge on the question of promissory estoppel as the
facts on which he upheld this claim are not clear. We would have been in
favour of this course if we had thought that there was a reasonable prospect of
promissory estoppel now being shown. However it follows from the above that in
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. The
earliest point in time for a relevant representation is said to be the letter
of 17 September 1990. In our judgment this does not amount to a representation
of the type required and no such representation is to be found in any later
communication, when for the most part LBH rejected ARC's claim or emphasised
that its claim had to be substantiated. Moreover ARC has not sought to show
that the condition imposed by Mr Rippingale's letter was fulfilled i.e. that
the matter was adequately dealt with by the information provided by LBH to ARC.
On any view the letter dated 18 March 1994 gave notice that LBH would be
relying on a limitation defence and the point made above in relation to
estoppel by convention so far as that notice is concerned is as valid in
relation to promissory estoppel.
67. We now turn to the question of unconscionability. This question does not
as we see it arise but as we have heard a number of submissions on this
question we will set out our conclusions on it.
68. Unconscionability can potentially involve a wide range of factors,
including causation on which Mr Harper has particularly relied. The judge does
not refer to this argument in his judgment and it may be that this point was
not in fact taken as a separate issue at the trial. In a convention estoppel
case, the assumption arises by inference or implication rather than from
anything said expressly and this presents difficulties when it comes to showing
that the party seeking to rely on the estoppel took some course on the faith of
the assumption as communicated to him by the party to be estopped. Moreover
the difficulties for ARC in this case are increased because on the facts found
by the judge it never occurred to Mr Smith and Mr Thompson (representatives of
ARC) that there might be a statutory limitation point. In those circumstances,
reliance, which is here a matter of inference, cannot be shown. The further
points on causation made by Mr Harper are in our judgment also sound, namely
that ARC was really acting on the basis of the widely-held view of the law
rather than anything LBH is shown to have said or done. In this connection, it
is worthy of note that ARC's position was at all times prior to the decision of
the Court of Appeal in this case on 7 April 1999 that its claim to compensation
was not statute-barred, and that the question of estoppel was not raised at any
time in correspondence and only emerged in ARC's skeleton argument lodged for
the hearing before Mr Burnton QC.
69. Another aspect of unconscionability is the question of detriment suffered
by the party asserting estoppel. In the present case the convention estoppel
is not alleged to have arisen before the expiration of the limitation period in
respect of phase 1. Accordingly Mr Harper submits that detriment cannot be
shown. The claim to compensation was time-barred and worthless, and LBH had
promised to pay ARC's surveyors' fees. There is no evidence as to the amount
of loss which ARC suffered apart from the loss of its phase I claim. It may
have lost a considerable amount of management time dealing with the claim or it
may have to pay Strutt & Parker for the difference between their fees on
Ryde's scale (which we were told vary according to the amount of compensation
obtained) and fees determined on some other basis. The phase II claim may be
for a significant amount. Assuming for the moment that such loss could be
shown and is not trivial, it would not in our judgment be an insuperable hurdle
for ARC that any estoppel arose after the expiration of the limitation period
for phase 1. But clearly the amount of any such detriment would be a factor to
be taken into account if it had been necessary to determine the issue of
unconscionability.
70. Mr King relies on the fact that if there is no estoppel LBH will be able to
acquire land compulsorily for no payment. We do not consider that that is a
strong point because ARC had ample opportunity to refer its claim for
compensation to the Lands Tribunal before the limitation period expired.
71. Mr Harper submitted that ARC had done nothing that it would not have done
to pursue its claim in any event. In so far as Mr Harper was suggesting that
ARC could have incurred no detriment as a result of any convention estoppel we
do not accept his point. If LBH had communicated an assumption to ARC that it
would not rely on any statutory limitation period, ARC would for the reasons
given above be able to claim that it had incurred expenditure that it would not
otherwise have incurred. In our judgment Mr Harper's stronger point is that
ARC did not rely on any communication from LBH, and that its loss was not
caused by any act of LBH.
72. Finally Mr Harper suggested that if the Court thought fit it could impose
as a term of allowing LBH to rely on the statutory limitation defence that LBH
should pay ARC's surveyors' fees on the agreed scale. Mr King did not press
for this, and indeed he informed us that Ryde's scale provides for the fee to
be fixed according to the amount of the compensation. For our own part we do
not consider that there is a basis for imposing the term suggested if the
appeal is allowed.
73. In conclusion, in our judgment this appeal should be allowed.
= = = = = = = = =
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