Court opts to enforce notice requirements over an over an estoppel defence (Almacantar v Railway Pension Exempt Unit Trust)

Court opts to enforce notice requirements over an over an estoppel defence.

Almacantar and the defendant ("RailPen") participated in many years of correspondence with HMRC to dispute the revenue's determination that SDLT was payable. The court held that RailPen was not estopped from relying upon the contractual time limits and requirement to serve a notice of claim. There was no shared assumption between the parties that those time limits and/or notice requirements would not apply. This was an assumption on Almacantar's part only.  The case serves as a useful lesson that the English court will hold the parties to their bargain, particularly in the case of the contractual time limits and notice provisions in contracts between commercial parties. Succeeding on an estoppel argument will be an uphill battle, unless there is clear evidence of common assumption which is expressly shared between the parties, reliance and detriment on that assumption.  

Almacantar (Marble Arch) SARL v Railway Pension Exempt Unit Trust [2021] EWHC 2385 (Comm)

What are the practical implications of this case?

The parties and their representatives had engaged in correspondence with HMRC over an eight-year period. Almacantar seems to have assumed that RailPen accepted that the seven-year time limit and notice provisions in the indemnity would no longer apply. RailPen and their representatives did not, on the evidence, have the same understanding.

Practitioners who are bringing an estoppel by convention argument will need to provide clear evidence:

  • of a common assumption which is expressly shared between the parties;
  • that the person alleged to have been estopped has assumed some element of responsibility;
  • that the person relying upon it has done so, rather than merely forming his/her own view;
  • some detriment has been suffered by the person alleging the estoppel.

This evidence can be in writing, or consist of words or conduct from which an inference as to the necessary sharing can be drawn.

The court remains firmly predisposed to enforce contractual time limits and notices clauses. An indemnity clause will often have some protection for the paying party which enables that party to have conduct for or involvement in a third party claim. While that conduct is ongoing and practitioners are focused on the back-and-forth of the correspondence or filings, it will be important to keep a careful eye on the time limits and other preconditions to make a claim under the indemnity.

A party which is working on the assumption that its counter party will not be seeking to enforce a contractual right would be advised to obtain express written confirmation from RailPen that this was the case or otherwise reach a binding agreement to disapply the time limits.

What was the background?

This was a summary judgment application by RailPen upon Almacantar's claim under an indemnity. The indemnity was contained an agreement dated 12 May 2011 for the transfer of RailPen's beneficial interest in an office tower.

The parties had anticipated that the transaction may trigger an SDLT liability. RailPen agreed to indemnify Almacantar for half of the potential SDLT liability, up to a maximum of £1.6m. If there was an SDLT liability, RailPen had the right to participate in any challenge to HMRC. The indemnity was time limited: Almacantar had to give notice of a claim within seven years of completion.

The judgment records a history of slow moving correspondence between Almacantar and HMRC from 2011 to 2019 (who determined that there was an SDLT liability of £3.1m). Throughout this time, RailPen's representatives provided comments on draft letters to HMRC and engaged in strategy discussions with Almacantar's representatives. This was until in July 2019, when RailPen advised that the time limit to bring a claim under the indemnity had expired and their involvement in the appeal would cease.

Almacantar then gave formal notice of a claim and served proceedings in which Almacantar was seeking £1.6m under the indemnity. RailPen applied for summary judgment, contending that Almacantar had failed to give notice of the claim within seven years of completion as required.

Almacantar submitted that, through its conduct in assisting with the correspondence to HMRC, RailPen was estopped from relying on the strict time limit. Alternatively RailPen had waived its rights and/or it was implied that RailPen was obliged to give reasonable notice that it was intending to rely upon the time limits in the indemnity clause (if there was an ongoing challenge).

What did the court decide?

The court gave summary judgment for RailPen because of Almacantar's failure to serve a notice of claim within seven years of the completion date.

Almacantar's estoppel by convention defence was its primary case. It argued that RailPen was estopped from denying its liability under the indemnity—it had to meet its obligation at the end of the process of appealing HMRC's determination of the SDLT liability. The judgment relies upon the recent Supreme Court decision on estoppel by convention in Tinkler v HMRC [2021] UKSC 39, which sets out the relevant principles.

Almacantar needed to establish that RailPen's words or conduct were sufficient to manifest a sharing of a common assumption which Almacantar had, i.e. notwithstanding the time limit in the agreement, RailPen would meet its share of the tax liability. In the judge's view, RailPen's words or conduct did not cross this line. RailPen was participating in Almacantar's correspondence with HMRC but this was consistent with its contractual rights.

Almacantar referred to the evidence showing that the parties were 'travelling down the same path' and were of the same 'understanding'. The judge viewed RailPen's involvement as contributing to a series of submissions to HMRC and discussions on how best to advance arguments before HMRC. Nothing expressly or impliedly conveyed a message that the notice periods would not apply.

RailPen's conduct was consistent with it potentially being liable under the indemnity and exercising its rights to contribute to the correspondence.

The dealings between the parties could not be interpreted as amounting to a waiver of the notice provisions. Besides, there was a 'no waiver' clause which required any waiver to be in writing.

The arguments on implied terms also failed, because it was not necessary to imply a term into the agreement that RailPen was required to give reasonable notice that it intended to rely upon the notice requirement.

Case details

  • Court: Queen's Bench Division, Commercial Court
  • Judge: Sir Ross Cranston (sitting as a High Court judge)
  • Date of judgment: 25 August 2021

This analysis was first published on Lexis®PSL on 09 September 2021.


Trustees training – November 2023


IFLR1000 MENA 2023 recognises Trowers as leading Middle East Law Firm


Two lateral hires further strengthen Trowers' Tax and Commercial practices


The Renters (Reform) Bill further delays to abolition of section 21


Guardianship properties found to require HMO licences 


Trowers further strengthens Oman office with strategic internal moves and new hire