Estoppel is an important equitable doctrine that prevents a party from relying on a right or factual assertion that is contrary to either previous conduct, or past assertions.  As it is an equitable remedy, it is at the discretion of the Court.  Essentially, its purpose is to ensure that one party cannot make a complete “volte face” to gain an advantage in litigation.

In two recent cases, the Court have looked at two strands of the equitable doctrine: estoppel by convention; and contractual estoppel.

Estoppel by Convention

In Tinkler v Commissioners for Her Majesty's Revenue and Customs [2021], the Supreme Court considered the law of estoppel by convention in detail for the first time.  Estoppel by convention stops a party from raising an argument where both parties to a dispute have previously proceeded on the same common mistake of fact or law (“the common assumption”).  Each party is “estopped” from denying the common assumption.  It only applies where:

(a) both parties have proceeded on the basis of the same mistake;
(b) that mistake has (in essence) been communicated to, relied on, and assumed by both parties; and
(c) it is not unconscionable or unjust for the party to rely on estoppel.

Tinkler: the facts

In February 2005, HMRC sent a Notice of Enquiry on a tax return (“Notice”) to Mr Tinkler in respect of his tax return for the year 2003/2004 and a letter to Mr Tinkler’s accountants and tax advisers BDO Stoy Hayward (“BDO”), which informed them of the enquiry and enclosed a copy of the Notice.  The Notice was sent to the incorrect address (an address of a company owned by Mr Tinkler).

Under sections 9A and 15 of the TMA 1970, HMRC must give notice of an enquiry into a taxpayer’s tax return by sending it addressed to the taxpayer’s usual or last known place of residence, or their place of business or employment. 

On 6 July 2005, BDO responded to HMRC’s as though it had been validly opened, confirming in a letter that they could not amend the tax return “as the Return is now the subject of a section 9A TMA 1970 enquiry”.

After various correspondence between HMRC and BDO (on Mr Tinkler’s behalf) on the subject of Mr Tinkler’s tax return, on 30 August 2012, HMRC issued a closure notice stating that Mr Tinkler owed £701,990.96 in tax.  Mr Tinkler appealed to the First Tier Tribunal (Tax).  In January 2015, for the first time, Mr Tinkler argued that the Noticewas invalid due to the failure to serve at the correct address. 

The case proceeded through the First Tier Tribunal, the Upper Tier Tribunal, and then to the Court of Appeal.

The Supreme Court found that Mr Tinkler was estopped from arguing that the enquiry was invalid, where the parties had proceeded (for nearly a decade) on the mistaken assumption that the enquiry was validly initiated.  It referenced BDO’s letter of 6 July 2005, which it held established the common assumption (that a valid enquiry had been opened), on which HMRC had relied.

The Court was also satisfied that it was not unconscionable for HMRC to raise an estoppel.  In fact, the Supreme Court felt that “unconscionability here supports the application of estoppel by convention . . . regarding Mr Tinkler’s knowledge . . . Mr Tinkler and/or his PA knew of HMRC’s enquiry in November 2005... At that time, Mr Tinkler could have informed HMRC that no notice of enquiry had been received by him… That would have left HMRC with sufficient time, within the 12-month deadline, to issue a replacement notice of enquiry. But Mr Tinkler and/or his PA did not do that… In those circumstances, it may be thought particularlyunconscionable for him to raise this point for the first time over nine years later”.

Although this case arose in a non-contractual context, the decision emphasises the importance of a party who has a claim, and/ or a valid defence, to consider when best to raise those arguments.  A party who raises arguments and/ or procedural points several months, or even years later, may be ultimately prevented from relying on those arguments.   

Contractual estoppel

Contractual estoppel is a developing area of law.  An explanation of contractual estoppel was set out in the Court of Appeal decision of Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd [2006] EWCA:

"Where parties express an agreement … in a contractual document neither can subsequently deny the existence of the facts and matters upon which they have agreed, at least so far as concerned those aspects of their relationship to which the agreement was directed. The contract itself gives rise to an estoppel".

It was recently considered by the High Court in the case of Wallis Trading Inc v Air Tanzania [2020].

Wallis Trading Inc: the facts

The case involved a Liberian company Wallis Trading Inc. (“Wallis”), which sought over $30 million in unpaid sums from the defendants, Air Tanzania Company (“Air Tanzania”) and the Government of Tanzania, arising out of the lease of an aircraft by Wallis to Air Tanzania.  The Government of Tanzania had guaranteed the obligations of Air Tanzania under the lease pursuant to a Tanzanian-law governed guarantee .  Both the lease and the guarantee contained representations and warranties that the lease was legal and valid, and that the parties had obtained all required authorisations and consents to enable them to enter into and perform the lease (“Representations”).

The Defendants’ primary defence was that the lease was invalid under grounds of illegality, as it did not comply with Tanzanian public procurement laws.

The Court held that, as the lease was made under English law, the lease was valid regardless of compliance with Tanzanian public procurement laws.  It also stated that, even if this was not the case, Air Tanzania was contractually estopped from subsequently alleging that the agreement was invalid by reason of non-compliance. This was because the Representations had given rise to an estoppel upon entry into the lease, and both parties had contractually accepted that a certain state of affairs was true, even if it was not or the parties had knowledge of the truth.  The Court stated that:

“The bases on which the Defendants contested the applicability of contractual estoppel were, in my judgment, ill-founded… One was the contention that there could be no estoppel if both parties had knowledge of the truth… I do not consider that that is an answer to a case of contractual estoppel, whose effect is that the parties have both accepted that a relevant state of affairs should be assumed to be true, whether it is or not.”

The case demonstrates the effectiveness of clauses which set out the basis on which the parties have entered into a contract, and the common assumptions between the parties.. 


  • When drafting contracts: ensure that the clause contains effective “boilerplate” provisions and that the assumptions of the parties in entering into the contract are effectively captured. Provisions of this type can be effective in defeating claims.
  • When faced with a claim or defence, consider immediately what grounds there are to challenge. The arguments may not succeed later if the other side can show it made the same assumption. 


This article was co-written by Alisha Muhmood, Trainee Solicitor. If you would like to discuss this topic in more detail, please contact Judith Hopper or Alisha Muhmood.

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