Jill Leddington & Anor v Pamela Ann Sandercock & Anor

A gratuitous promise to make a future payment is not contractual where it is unsupported by consideration. Past services and an earlier agreement do not provide consideration for a later promise, and subsequent conduct must genuinely be undertaken in reliance on that promise.

Estoppel by representation operates defensively and cannot convert an unsupported promise into a contractual obligation. It requires a representation of existing fact or law, intended reliance, actual reliance and detriment. Estoppel by convention likewise requires an expressly shared assumption, reliance on the other party’s adoption of it, subsequent mutual dealing and sufficient detriment or benefit to make it unjust to depart from the assumption.

Settlement communications through an intermediary will not necessarily create legal relations, particularly where the terms remain vague and formal execution is contemplated.

The claimants alleged that they had operated a social-care business arrangement with the defendants and that the first defendant promised to pay the first claimant a share of the proceeds of sale of the defendants’ company. The claim was advanced in contract, estoppel and, alternatively, on the basis of a later settlement for £330,000.

The first defendant counterclaimed against the second claimant under an alleged 2010 written agreement providing for a 30% share of distributable profits, said to have been varied so that payments were made to her personally.

The court determined whether the alleged agreements existed, whether the promise concerning the sale proceeds was contractual or enforceable by estoppel, whether a concluded settlement had been reached, and whether the counterclaim was properly brought.

1. Claim dismissed. The court found that the first defendant had told the first claimant that she would receive £500,000 or more when the company was sold. That statement was a gratuitous assurance, not a contractual promise. The claimant’s past contribution to the business and the earlier agreement permitting the company to retain 30% of income were past consideration. The later transfer of staff to the company’s payroll was neither consideration for the promise nor undertaken in reliance on it.
2. Estoppel by representation did not assist the claimant. As explained by reference to Low v Bouverie [1891] 3 Ch 82 and Silver v Ocean Steam Ship Co. [1930] 1 KB 416, the doctrine operates defensively and is not an independent cause of action. The statement in the car was a promise, not a representation of existing fact or law. There was no intended or actual reliance, and the circumstances would not make it unjust for the promisor to resile.
3. Estoppel by convention also failed. Applying the principles stated in Tinkler v Revenue and Customs Commissioners [2021] UKSC 39, [2022] AC 886, including the approved guidance from Revenue and Customs Commissioners v Benchdollar Ltd [2009] EWHC 1310 (Ch), [2010] 1 All ER 174, there was no sufficient shared assumption, reliance or detriment.
4. No concluded settlement was reached through the accountant. The communications were exploratory, the amount was initially vague, the intermediary was facilitating negotiations rather than making authorised offers, and there was no objective intention to create legal relations. In any event, the claimant gave no consideration.
5. The signed draft settlement for £330,000 was not binding. It contemplated execution by both parties, and the first defendant never signed it.
6. The counterclaim was dismissed. The alleged 2010 agreement was not proved, and any claim for sums allegedly owed would have belonged to the company rather than the first defendant personally.