James Henry Ashworth v Kevin Philbin

An implied agreement extending contractual time limits requires a consensus ad idem inferred objectively from the parties’ conduct. General assurances of payment and payments made for commercial or moral reasons do not necessarily establish agreement to extend specified dates.

Estoppel by convention requires a shared assumption or common understanding. Estoppel by representation requires a clear representation of existing fact, intended reliance, reliance and detriment making it unjust for the representor to resile. Detriment is assessed when the representation is repudiated and must be more than minimal in the circumstances.

Estoppel by representation operates defensively and may prevent reliance on an inconsistent defence, but it does not create an independent cause of action.

The claimant sought £429,500 from the defendant under a guarantee of liabilities arising under a share purchase agreement. The agreement provided for additional consideration of £900,000 if a new lease was entered into by specified dates, or by such later dates as the parties agreed.

The lease was granted after the contractual dates had expired. The claimant relied on an alleged implied agreement extending the dates and, alternatively, estoppel by convention, estoppel by representation and promissory estoppel. The defendant denied any extension or estoppel and relied on the written variation clause and principles concerning the discharge of sureties.

The central issues were whether the contractual conditions had been extended or were treated as satisfied, and whether the defendant was estopped from relying on the expiry of the contractual dates.

1. Claim dismissed. The claimant failed to establish that the dates in clause 3.1(a) of the Share Purchase Agreement had been extended or that the additional £900,000 had become payable.
2. An implied agreement is an agreement inferred from conduct. The party asserting it must establish the necessity for implying it and must show a consensus ad idem or meeting of minds. The evidence showed no common understanding about the effect of the expired dates or any specific later dates. Assurances that further money would be paid, together with payments made to retain the claimant’s assistance, were insufficiently unequivocal.
3. Estoppel by convention could not arise because there was no shared assumption or common understanding of the kind alleged.
4. The representations relied on were representations of existing fact, namely that the claimant was entitled to further consideration despite expiry of the contractual dates. The requirements of estoppel by representation were a clear representation, intended reliance, reliance and detriment. The claimant had shown reliance only narrowly. He had received sufficient payments to meet the tax and property-related expenditure relied upon, and his other alleged financial difficulties were insufficiently explained. It would not therefore be unjust or inequitable to permit the defendant to rely on the contractual dates.
5. The submission that estoppel necessarily failed because it was being used as a sword was rejected. Properly analysed, estoppel by representation operates as a shield against an inconsistent defence and does not itself create a cause of action. This did not assist the claimant because detriment had not been established.
6. It was unnecessary to decide the alternative defences based on the written variation clause or the rule in Holme v Brunskill. Had an agreement extending the dates been established, the judge would have regarded it as carrying clause 3.1(a) into effect rather than varying the agreement, and would have rejected the surety defence on that basis.