Estoppel by Convention

In Tinkler v Commissioners for HM Revenue and Customs [2021] UKSC 39, the Supreme Court gave its first detailed treatment of estoppel by convention, endorsing Lord Steyn's formulation in Republic of India v India Steamship Co Ltd (The Indian Endurance) that 'estoppel by convention may arise where parties to a transaction act on an assumed state of facts or law, the assumption being either shared by them both or made by one and acquiesced in by the other', with the effect that a party is precluded 'from denying the assumed facts or law if it would be unjust to allow him to go back on the assumption'. The doctrine is not confined to assumptions about to be acted on in a fresh transaction; it can also arise where parties conduct subsequent mutual dealings on a conventional, shared basis.

The Supreme Court endorsed the five-part test derived from Briggs J's judgment in the Benchdollar case (as refined in Blindley Heath): the common assumption must be expressly shared between the parties rather than merely understood in the same way by each of them independently; the party said to be estopped must have conveyed an understanding that they expected the other party to rely on the assumption; the party alleging the estoppel must actually have relied on the common assumption rather than on their own independent view; that reliance must have occurred in connection with subsequent mutual dealings between the parties; and, finally, 'some detriment must thereby have been suffered by the person alleging the estoppel, or benefit thereby have been conferred upon the person alleged to be estopped, sufficient to make it unjust or unconscionable' for the latter to assert the true legal or factual position. On the facts, HMRC's correspondence with the taxpayer's agents about a tax enquiry, and the agents' substantive responses to it, were held sufficient to found the estoppel.