Estoppel by convention: need for a common assumption or understanding

In Preedy v Dunne ([2016] EWCA Civ 805, CA (Eng)) D’s mother (J) and his step-father (B) were partners in a pub business. J owned the pub building.

J died leaving her half share in the pub business to trustees. B had a life interest in the half share. After B’s death the half share was to go to D and his two siblings (J’s children).

D spent over GBP300,000 on renovations at the pub between 1999 and 2003. B sold D a half share in the business in 2001. The renovations enhanced the value of the interests of B as well as D and his siblings.

The dispute was as to whether the trustees of J’s share of the business were liable to contribute to the cost of the renovations.

D relied on estoppel by convention. He alleged a common assumption that the trustees owned J’s share of the business (they did not) and so jointly and severally liable to contribute to the repayment of the loan of the funds for the renovations. The claim failed because there was no such common assumption.

D tried to make a ‘wider case’ based on the proposition that he ought not, in justice, to be left to bear the cost of the renovation works on his own. This was rejected (Vos LJ at [59]).

D’s problem was that he had undertaken the work without securing a clear commitment from anyone else to contribute to the cost.

Michael Lower

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