Excel Polymers Ltd. v Achillesmark Ltd. [2005] EWHC 1927 (QB)

Case No 05/TLQ/0529[2005] EWHC 1927 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 28 July 2005
Before
ROBIN PURCHAS QC(sitting as a deputy judge of the High Court)_________________________________
Between
EXCEL POLYMERS LIMITEDClaimant- v -
Between
ACHILLESMARK LIMITEDDefendant__________________________________________________________________Neil Moody (instructed by Shoosmiths, Reading) for claimantFrancis Bacon (instructed by PI Direct) for defendant_________________________________JUDGMENT
[1]Introduction This application is for the determination of a preliminary issue as to limitation. The Defendant is an insurance broker. The claim is brought for damages for professional negligence arising out of the alleged failure of the Defendant to effect insurance cover for the Claimant’s premises at Mill Road, Wellingborough in the sum of £960,000. The instructions are accepted to have been given over the telephone on 12th February 1998 by Mr Patel, the Claimant’s Chief Executive, to Mr Parsons, an employee of the Defendant. The instructions were confirmed in a faxed letter from Mr Parsons to Mr Patel dated 13th February 1998. However, the Defendant alleges that there followed a further telephone conversation on 13th February 1998, during which Mr Patel instructed Mr Parsons to reduce the cover from £960,000 to £150,000. This is denied by the Claimant. The building was only insured for £150,000. In October 1990 the premises were destroyed by fire and the insurers were only prepared to pay the insured sum of £150,000. The claim is for the balance of £810,000 together with other losses.

Limitation Period

[2]It is agreed between the parties for the purposes of this application that the cause of action arose on 12th February 1998. The normal limitation period would accordingly have expired by 12th February 2004. Proceedings were not in fact issued until 2nd August 2004.[3]The Issues The issues which I have to determine are:(i) whether the effect of an agreement originally made between solicitors acting for the parties on 9th January 2004 was to extend the period for the service of proceedings to include 2nd August 2004 ; alternatively(ii) whether the Defendant is estopped by a convention between the parties from contending that the claim was then statute barred; or alternatively(iii) whether the Defendant should be estopped by a promissory estoppel from so contending.[4]Evidence I heard evidence from Maria Kearney, who is a solicitor formerly employed by PI Direct Limited, solicitors acting for the Defendant, and from Paul Eccles, a litigation executive employed by Messrs Shoosmiths, solicitors acting for the Claimant. I would comment at the outset that both witnesses gave their evidence openly, trying to help the court to the best of their ability.[5]There was not a great deal of dispute on the evidence as to the relevant facts, which I set out below.[6]Shoosmiths were initially instructed in early 1999 to deal with the insurance claim. Mr Eccles was dealing with the matter and settled the claim on the basis of the insured sum of £150,000. In cross-examination he said that the adjustors had told him that there was no evidence on the file relevant to the alleged further instruction to reduce the cover to that amount.[7]Negotiations with the Defendant commenced in early 2000. It is not necessary for me to set out the details of those negotiations. Matters did not proceed with any sense of urgency, but they were generally conducted in an open and friendly manner. I accept that Miss Kearney and Mr Eccles had a good working relationship. There was a marked contrast in their particular approach to the taking of notes. I accept Miss Kearney’s evidence that she made her notes as the discussion proceeded and they can accordingly be regarded as truly contemporaneous. Mr Eccles on the other hand on occasions made notes at the time, generally of a sketchy nature, but would normally dictate a summary of the discussion afterwards for subsequent typing.[8]I was told in evidence, and I accept, that there were voluminous papers relating to this claim, of which only a selection has been included in the bundle before the court for the purposes of determining the preliminary issue. In a number of instances, however, Mr Eccles was unable to find his note of a particular discussion, if indeed there was in fact a note in the first place. In one instance a note had been placed on the wrong file and was discovered overnight between the two days of the hearing.[9]On 18th January 2003 the Defendant was dissolved and removed from the Companies Register. In a without prejudice letter dated 1st May 2003, dealing fully with the matters in issue, Miss Kearney pointed out that for the claim to proceed the Defendant would have to be restored to the register. In the course of a telephone discussion on 2nd May 2003 between Miss Kearney and Mr Eccles reference was again made to the liquidation of the Defendant. During that discussion Miss Kearney also made an offer of £35,000 for the settlement of the claim and £10,000 towards costs.[10]On 10th October 2003 Mr Eccles wrote to Miss Kearney explaining that he had instructions to pursue pre-action disclosure of the underwriter’s file. That was followed by a telephone conversation between them on 9th December 2003. In Miss Kearney’s note of that discussion she recorded Mr Eccles as saying that “He understands our evidence and no hoper - fundamental to see what is on underwriting file.” Later in the discussion she noted “fundamentally (he) want to look at (underwriter’s) file - can't get client to accept advice”. At the end of the note she recorded the following:
“Just a question of waiting for a couple of months - early in New Year - limitation approaching February 1998 - protective proceedings - if limitation was an issue I would prefer to issue standstill etc.”
[11]Miss Kearney told me that she had a good memory of that conversation and was confident that she had referred to the standstill agreement. By that she had meant an agreement for the extension of the limitation period on terms similar to a pro forma extension which she produced relating to an action during the previous year. I accept her evidence in that respect.[12]Mr Eccles’ note was brief. He told me that he had dictated it after the discussion and that it was thereafter typed. The note referred to his instructions to apply for pre-action disclosure and noted that Miss Kearney would let him have the details of the underwriter so that he could write threatening an application for disclosure. The note continued “… explaining that we must see that file to see what is on it before we go any further and she understands the reasons for this. We discussed limitation and she said (that) rather than issuing a protective claim form, she would prefer that we agree to dispense with limitation until such time as negotiations were concluded. She is still open to further negotiations after that time and we will speak about that in the New Year.”[13]In evidence Mr Eccles said that he could recall specifically Miss Kearney saying that they would agree to dispense with limitation and that he also recalled a reference by her to a standstill agreement. They had made an in principle agreement but had not specifically agreed the dates. They had agreed in principle to enter into an agreement. It was not an open ended dispensation and he had always contemplated that it would only be for a limited period.[14]Miss Kearney said that she had no recollection of saying “until such time as negotiations were concluded”. She said that there would have been no sense in her saying that because there would be no certainty and in any event it left open continuing negotiations after that time. She said that she had agreed to agree if necessary to put limitation to one side in the New Year.[15]Mr Eccles told me in evidence that he did not have in mind at that time that it would be necessary to reinstate the Defendant to the Companies Register before issuing proceedings. It had not been discussed. If they had not reached an agreement to agree as he described it, he would have taken steps to issue proceedings but not immediately. He had instructions in that respect. At the time he thought that the limitation period would expire by the 12 February 2004.[16]In general terms I accept that evidence, which does not seem to me fundamentally inconsistent with the evidence given by Miss Kearney, that the parties then agreed to agree, if it was necessary, an extension of the limitation period for a limited time to enable Mr Eccles to see the underwriter’s file and to take instructions on the offer of £35,000 and £10,000 towards costs, which was still on the table. Mr Eccles had mentioned that that would take two months. I do not accept that Miss Kearney specifically offered to extend the limitation period “until such time as negotiations are concluded”. That was in my judgment a broad summary of the purpose of the extension, as Mr Eccles understood it. I have no hesitation in accepting Miss Kearney’s evidence that she would not have been prepared to offer an extension which was unlimited or without a definitive end period. In that respect I also accept Miss Kearney’s evidence that it was in the interests of her insurer clients to achieve settlement and certainty in preference to litigation, if it could be secured earlier. This was already a stale claim and one that was dependent upon an alleged oral instruction, of which there was no written record.[17]On 9th January 2004 there was a further telephone conversation between Miss Kearney and Mr Eccles. I start with Miss Kearney’s note of that discussion. There was initially discussion about the underwriter’s file. The note then continued:
“Agreed standstill – W/O prejudice - know his views - not ruling out what NIG’s file might show - if nothing - position to advise clients on merits and another telephone con to see if can be resolved - in Mr Patel’s shoes to decide what to do next - (if I know what he means!) - standstill - agreed a standstill agreement on 10th February 2004 for 3 months - this will enable him to ascertain position.”
[18]Later on the same day she wrote a letter to Mr Eccles referring to recent correspondence and in particular the telephone conversation on 9th December 2003. She recorded that they were checking with their insured to confirm that there were no further documents within their possession and that Gordon Allen was the relevant underwriter. The letter concluded:
“I confirm that we agreed to a “standstill agreement” regarding limitation to run for three months from the 10th February 2004. We will forward an agreement setting out the proposed terms in the week commencing 19th January 2004.”
[19]Miss Kearney told me, and I accept that she had intended that the standstill agreement would have the effect of extending the limitation period for the period of three months from 10th February 2004 to allow sufficient time for the further inquiries and instructions, for which Mr Eccles had suggested two months would be required. Although she was going on holiday the following week, she had intended to forward the agreement in the form to which I have earlier referred.[20]Mr Eccles made a short contemporary note of the conversation. It is dated the 13January 2004. However, he agreed in evidence that the conversation in fact took place on 9th January 2004. He thought that the explanation for the incorrect date was that the note that he subsequently dictated was typed on 13th January 2004 and he then incorrectly dated his contemporary note. I accept that explanation. The contemporary note referred to the underwriters and then continued “Standstill agreement for 3 months - 10-2-04 / 10-5-04 expires - will let me (have) agreement”. That contemporary note, short as it is, broadly confirms the full and contemporaneous note by Miss Kearney.[21]I should also refer to the note which he subsequently dictated. That first referred to the underwriters and then continued “Maria then discussed that she would like to a Standstill Agreement for three months from 10 February 2004 (sic). This agreement would then expire on 10 May 2004. As I understand it, we will not take any action in commencing proceedings during that time period.”[22]In cross-examination he accepted that it had not been expressly stated that no action would be taken to commence proceedings during the three month period but said that that had been his understanding from the conversation. Mr Eccles had never come across a standstill agreement before. He had regularly dealt with extensions of the limitation period. If they had agreed to an extension to the limitation period, he would have fully understood what was meant and would have issued proceedings before that date. It was, however, his understanding, as recorded in the note that he was not to take any action to commence proceedings during the specified period.[23]Miss Kearney denied any discussion or agreement to the effect that no steps were to be taken to commence proceedings during the period of the agreement. In cross-examination her witness statement made on 12th May 2005 was put to her and, in particular, paragraph 14, which stated:
“It is for the claimants to ensure that they are in a position to issue proceedings before that period expires or at the very least immediately thereafter.”
It was suggested to her that that could only be consistent with an agreement that no steps would be taken during the period of extension and that it was then open to the Defendant to issue proceedings after the expiry of the period. She accepted that the paragraph was not clear and sought to withdraw that part of the witness statement.[24]In my judgment the assertion in the witness statement was plainly inconsistent with what Miss Kearney had said in her evidence. I do, however, accept her evidence in that respect. The inconsistency with paragraph 14 of her second witness statement does not persuade me that she had any other intention or understanding of the agreement than that it was in effect a simple extension of the limitation period.[25]I also accept that, at least following the conversation, Mr Eccles genuinely believed that the standstill agreement meant that he was to take no steps to commence proceedings during the three month period. However, at that time he had not thought through what the implications would involve. In my judgment he did not anticipate any difficulty in commencing proceedings and anticipated that negotiations would be concluded well before the end of the period, consistent with the two month period he indicated would be required in December. He did not have in mind the need to restore the Defendant to the register. To that extent, as a matter of fact, there was not an identity of mind between the two solicitors as to what was the effect of what had been agreed. That is a matter for me to determine and to which I return in this judgement.[26]In the event, Miss Kearney did not send a form of agreement to Mr Eccles and Mr Eccles never asked for one. Miss Kearney explained that following her holiday there were other matters pressing and that in part she thought that as this was in effect a simple limitation extension there was no need for any specific additional conditions. It is evident that Mr Eccles had not considered the question of a written agreement further.[27]On 28th January 2004 Mr Eccles wrote to the underwriter seeking disclosure including reference to an application for pre-action non-party disclosure. There were then a number of phone calls and a letter from Mr Eccles to the underwriter, culminating in a letter dated 15th April 2004 seeking disclosure of the underwriter’s file. On the same day Mr Eccles wrote to Miss Kearney, reporting that the underwriter had agreed to track down the “elusive underwriting file” and continuing “I am (conscious) that it may run into mid May with us not having any further documents. I would be grateful if you could consider one final “Stand Still Agreement” say until the 10th June 2004, so an additional 2 months. I look forward to hearing from you as a matter of urgency.” On the 26 April 2004 Mr Eccles spoke on the telephone to the underwriter, but the file had still not been located.[28]At the beginning of May 2004 Mr Eccles, who was preparing for a trial which was due to commence on 12th May, passed this matter over to Mr Stuart Little, a solicitor and now partner of Shoosmiths, asking him to prepare particulars of claim. When he was asked in cross-examination why he had instructed Mr Little to prepare the particulars of claim during what was the standstill period, he explained that he had instructions from his clients to prepare the claim.[29]On 6th May 2004, as recorded in Miss Kearney’s note, she spoke to Mr Little on the telephone. Mr Little explained the position so far as the underwriter’s file was concerned. Miss Kearney said that she was happy to agree “one further month” as an extension but asked that Mr Eccles call to discuss where they were.[30]Mr Little made a note on the same day that he had reviewed the file and had ascertained that the Defendant was dissolved in January 2003. He spoke to Mr Eccles later that day, telling him that it would be necessary to restore the Defendant to the register to issue proceedings. Up until that time Mr Eccles had forgotten that that would be required. He also told Mr Eccles about the request from Miss Kearney to speak with her but that she had extended the standstill agreement for a month. Mr Eccles told me that Mr Little then questioned him whether “I thought the standstill agreement was okay re limitation”.[31]Mr Eccles said that the conversation with Mr Little had raised doubts in his mind whether his interpretation of the stand still agreement was correct but “that he had not considered the issue properly until the end of July”. He said that Mr Little was very experienced and respected as a solicitor. According to Miss Kearney’s note, Mr Eccles then spoke to her explaining about his trial and that Mr Patel was not available to take instructions and asking if the matter could wait until after his trial. He would then “recommend (the offer) to (his) client chapter and verse”.[32]In the event Mr Eccles’ trial went short and on 17th May 2005 Miss Kearney recorded a further conversation between them. She is confident that the initial words in the note were his, namely “we had agreed short extension re limitation”. Mr Eccles had then said that they were highly unlikely to take proceedings because he had reached the conclusion that he was going to say to Mr Patel “let's do the deal (and bully him into it) if he ignores advice”. Mr Eccles is then noted as referring to the need to restore the Defendant to the register and that it could take at least one month. He asked whether Miss Kearney would accept substituted service and her note then records “or otherwise throw themselves on our mercy re limitation again”. The note concludes to the effect that Miss Kearney would review the matter and revert.[33]In cross-examination Mr Eccles said that he had no recollection of saying words to that effect, but that he could not ignore the note by Miss Kearney. If he had said this, it would have been in banter, having regard to the good working relationship between him and Miss Kearney.[34]I accept Miss Kearney’s note as an accurate record of what was said in the discussion. It is clear to my mind that, at least following the discussion with Mr Little and in the context of the extension of the agreement to 10th June 2004, Mr Eccles had formed the view that the extension had the effect of simply extending the limitation period and that he would have to issue proceedings before its expiry. That is consistent with his enthusiasm for settlement on 17th May and also the request for substituted service and the reference to dependence on the goodwill of the Defendant. I acknowledge that no doubt the words used were in banter but in my judgement they are only consistent with a belief that limitation expired on 10th June 2004 without any additional time for the service of proceedings.[35]Miss Kearney explained in her evidence that, once the period of one month to restore the Defendant had been indicated, she became aware that the proceedings would not be able to be commenced within the limitation period. Accordingly she considered that it was her duty to take instructions specifically on the point from her insurer clients. She is not to be criticised for taking that view.[36]According to Miss Kearney’s note, on 21stMay Mr Eccles spoke to her again, indicating that the application to restore the Defendant to the register should result in automatic restoration and that he would be issuing a protective claim. She said that she would come back to him on the extension. On 26th May an assistant of Mr Eccles left a reminder for Miss Kearney, seeking an extension of the standstill agreement or substituted service.[37]On 27th May Miss Kearney wrote to Mr Eccles, saying that she would have to obtain instructions from the underwriting syndicate on the question of extension and asking what steps had been taken to reinstate the Defendant. On the same day in a without prejudice letter she wrote recording the Defendant’s wish to reach a commercial resolution of the matter and that “on this basis we were prepared to grant extensions of time within which your client could issue proceedings. As stated in our open letter, due to the issue relating to the reinstatement of the insured company, we need to revert to our syndicate to get instructions.” The letter concluded that “we are prepared to leave the offer made … open until 14 days after the date to which we agreed that (the) standstill would run (i.e 10 June 2004)”.[38]On 2nd June 2004 Mr Eccles wrote a letter to Miss Kearney confirming his client’s commitment to reach a commercial resolution and seeking clarification as to her client’s instructions as soon as possible. In a faxed letter of the same date he again sought instructions on that matter as a matter of urgency and explained that an application to the County Court for restoration of the Defendant had been prepared. He continued “I would advise that, in relation to any limitation arguments, 13th February 2004 may not be the correct limitation date in any event. On our case clearly (the Claimant) would not have known about the shortfall in the sum insured until after the fire. In any event, it is my view that you/your policy holder are not prejudiced by any proceedings issued out of time and it will be for your clients to raise limitation as an issue in their defence. As, however, we have been continually corresponding and negotiating, I do not see there is any prejudice to you.” He went on to ask for confirmation of an extension as soon as possible.[39]I note that as part of the arguments why limitation would not apply from the 10 June 2004 there is no reference to the contention relied upon in this court that proceedings could only be issued after the expiry of the extension period, albeit within a reasonable time.[40]On 3rd June 2004, application was made to the County Court for restoration of the Defendant to the Companies Register. On 7th June 2004 (recorded in a note by Miss Kearney incorrectly dated 7 May 2004) Miss Kearney spoke to Mr Eccles on the telephone. He confirmed that he was meeting Mr Patel on 23rd June. She said that she would extend the time for acceptance of the offer until 30th June, but her clients could not accept an extension of time for issue. Mr Eccles replied that he would issue an application for restoration and that they could argue that there was no prejudice. Miss Kearney noted the point on time and said that she would get further instructions, once the company had been reinstated.[41]On 23rd June 2004 there was a further conversation between Mr Eccles and Miss Kearney recorded in her note. He asked again about an extension of time, but she said that she currently had no instructions to extend.[42]On the 29 June 2004 Mr Eccles wrote to Miss Kearney rejecting the offer of £35,000 plus £10,000 contribution towards costs. The letter continued “We note that you have not reverted to us on the question of extending limitation. It is our view, in any event that the court will exercise its discretion in this regard given that there has been regular communication between the parties throughout and so you are not in any way prejudiced or taken by surprise. Can you please specifically revert to us on this issue as well?”[43]On 15th July 2004 there is another conversation recorded by Miss Kearney between Mr Eccles and herself. The note records reference to advice from counsel and then continues:
“Standstill till 10th June - hadn’t agreed (reasonable provision) to commence - must be implicit that couldn’t have taken any action before that - spot of danger - will need instructions.”
[44]That note is the first record of the argument which is now relied upon being advanced that the standstill agreement meant that no steps should be taken to commence proceedings until after its expiry and that it was accordingly implicit that there would be reasonable time for that to take place. Miss Kearney’s response was that she had not agreed to any reasonable provision for that purpose. The reference to “spot of danger” was accepted by Mr Eccles as reflecting his concern over the limitation issue.[45]Thereafter the Defendant was restored to the register and proceedings were issued on the 2nd August 2004. Negotiations continued without success including discussion on limitation issues.[46]I turn accordingly to the issues I have identified above, starting with the effect of the agreement.[47]The Agreement Neither party has contended that as a result of the different understanding of the two solicitors no agreement was in fact made on 9th January 2004. Moreover both parties have accepted that the effect of the extension agreed on 6th May 2004 was to extend whatever had been agreed on 9th January 2004. On the evidence I agree with both as the correct approach in this case.[48]Starting accordingly with the construction of the agreement, the approach to be taken is familiar and well-established. Having ascertained the facts which surrounded the making of the agreement, its meaning is for this court to determine. The task of ascertaining the meaning of the agreement should be approached objectively. The question is not what one or other of the parties actually intended or understood by what had been agreed but the meaning which the words used in the circumstances in which they were used would convey to a reasonable person having all the background knowledge which would reasonably have been available to the actual parties in the situation in which they were at the time the agreement was made.[49]I have set out the relevant findings of fact that I have made on the evidence above. Both Miss Kearney and Mr Eccles were litigation professionals and on the evidence both were familiar with the effect of limitation and agreements to extend the period of limitation. As I have concluded above, Miss Kearney was clear throughout that the agreement was no more than a straightforward extension of the limitation period. Mr Eccles on the other hand believed at the time that its effect was that no steps should be taken to commence litigation within the period of the agreement.[50]Mr Moody, who appears for the Claimant, submits that the effect understood by Mr Eccles is the appropriate construction of the agreement and that accordingly any steps to commence proceedings during the limitation period would be in breach of that agreement. Mr Moody further contends that as a consequence it was a necessary implication that the Claimant should be allowed a reasonable time to commence proceedings after the expiry of the agreement. Moreover, he submits, while neither solicitor at the time had in mind the need to restore the company to the register, a condition should be implied to enable reasonable steps to be taken for that necessary preliminary step after the expiry of the agreement. In the circumstances two months from 10th June 2004 would be a reasonable period, thus including issue on the 2 August 2004.[51]I note that no point is taken on behalf of the Defendant that, if the Claimant’s construction of the agreement is correct, two months would in the circumstances of the present claim be unreasonable. The issue is accordingly whether the effect of the agreement was that the limitation period was simply extended to 10th June or whether, properly understood, it precluded the taking of any steps to commence proceedings before that date and that a reasonable period would necessarily be allowed thereafter. I am in no doubt that the correct interpretation of the agreement was as a simple extension of the limitation period, first until 10th May and then to 10th June 2004. In coming to that conclusion, I have taken the following into account.[52]First, the agreement was made in the context of the expiry of the limitation period and the need for extension. A reasonable person would understand the operation of the limitation period as a cut off, before which proceedings should be commenced. Moreover, this was litigation involving insurers, for whom certainty and the early resolution or disposal of claims would be important. It would be an unusual approach to an extension to allow an indefinite period thereafter, to be determined having regard to what might reasonably be required for the issue of proceedings. It would introduce uncertainty and potentially militate against the early disposal of the claim. Thus in my judgement the natural construction of the agreement would be as a simple extension of the limitation period, unless there was a term expressly agreed to the effect that proceedings were not to be issued in that period. I have found as a fact on the evidence that no term to that effect was agreed.[53]Second, I note that that construction would be consistent not only with the understanding of Miss Kearney but also apparently with the concerns expressed by Mr Little, although I have not had the benefit of evidence directly from him. That conclusion is also supported by the reaction of Mr Eccles after 6th May 2004, when, as I have found, he treated the agreement as one for a simple extension of the limitation period, expiring on the 10 June 2004. The argument that a reasonable time would be required for the issue of proceedings only emerged subsequently, for the first time in the discussion between the two solicitors on 15th July 2004.[54]I consider that the period of three months originally allowed was to include both a reasonable time for conclusion of the outstanding steps of inquiry and taking instructions from Mr Patel. The period that was in the mind of the parties was the two month period referred to on 9th December 2003. The concluded agreement on 9th January 2004 would have allowed a further month for the commencement of proceedings.[55]In my judgment it was not a necessary implication of this agreement that the period would be extended, once it was recognised that restoring the company to the register would take longer than the period of one month originally contemplated after the period for negotiation and agreement. I consider that the agreement would operate sensibly and reasonably if it is treated as a simple extension of a limitation period, whatever the basis for determining that period. I reject the contention that the agreement was to extend limitation for whatever time was required for the remaining steps to be completed. I accept Miss Kearney’s evidence in that respect as to the need for certainty. In my judgement a reasonable bystander would have come to the same conclusion. It is for the Claimant to commence proceedings within the limitation period and to take all necessary steps in that respect. In my judgment, in the absence of specific provisions to the contrary, one would not reasonably construe an agreement of this sort as having the opposite effect, notwithstanding that neither solicitor had in mind the need to restore the Defendant to the register or the time that might take when the agreement was made.[56]For these reasons I conclude that the effect of the agreement reached on the 9 January 2004 was for the extension of the limitation period, which as extended expired on the 10 June 2004. On that basis I determine this issue against the Claimant with the effect that in the absence of any other consideration the claim would now be statute barred.

Estoppel by convention

[57]The principles of estoppel by convention are conveniently set out in the judgment of Arden J, as she then was, in London Borough of Hillingdon v. ARC Limited 2000 16 June, paras 43-52. It requires:a. that the parties proceeded on the basis of an underlying assumption on which they had conducted the dealings between them;b. that that common assumption had been communicated between the parties; andc. that it would be unfair or unjust to allow either of the parties to go back on that common assumption.[58]It is submitted in the present case that there was a common assumption and that there should be an estoppel by convention that the agreement had the effect understood originally by Mr Eccles,that is that it precluded the commencement of proceedings in the extension period and that a reasonable period should be allowed thereafter for that purpose.[59]In my judgment this contention fails for the following reasons. First, there was, in my judgment, no common assumption to that effect. Insofar as Mr Eccles considered the matter at all, his conclusion at that time as to the effect of the agreement was different from that which Miss Kearney consistently held throughout. Second, in any event, there was no communication of the suggested common assumption between the parties. The letter dated 9 January 2004 from Miss Kearney to Mr Eccles was entirely consistent with the understanding that she had of the agreement and which I have found would have been the understanding of a reasonable person in the circumstances. Mr Eccles never sent his note to Miss Kearney. The first time that the point was raised by Mr Eccles was, as I have found, on 15th July 2004.[60]In all the circumstances in my judgement no equity would arise which would support an estoppel by convention. I resolve the second issue against the Claimant.

Estoppel by representation

[61]In this respect the Claimant relies upon the statement recorded in Mr Eccles’s note dated 9 December 2003 that Miss Kearney “would prefer that we agree to dispense with limitation until such time as negotiations were concluded.” Mr Moody submits that that amounted to a representation on which Mr Eccles relied in not commencing proceedings at that time, which would otherwise have enabled restoration of the Defendant to the Register and the issue of proceedings before the expiry of the limitation period on the 12 February 2004.[62]In my judgment this contention fails for a number of reasons. First, as a matter of fact, I have found that Miss Kearney did not say that she would “agree to dispense with limitation until such time as negotiations were concluded”. In my judgment the evidence indicates that that would have been most unlikely. The object of the extension to be agreed was to enable the negotiations to be concluded, but that is different from a representation sufficient to found an estoppel that Miss Kearney was giving an assurance that there would be an open ended extension to that effect.[63]In any event, that was not how Mr Eccles understood the position. His understanding was consistent in my judgment with what was said, namely that this was an agreement in principle to extend limitation for a period to be agreed between the parties. That was what was in fact agreed on 9th January 2004. Further in my judgment any effect of whatever was said on 9th December 2003 was subsumed in the agreement made between Mr Eccles and Miss Kearney on 9th January 2004. On that date, as I have found, the parties agreed for a definite period of extension of three months from 10th February 2004 and that any effect of what had been said on 9th December 2003 was accordingly not causative of the actions that followed thereafter. In all the circumstances, in my judgment, this contention of the Claimants fails and I determine the third issue against them.

Conclusion

[61]For the above reasons I conclude that the preliminary issue should be determined in favour of the Defendant and hold that the claim is now statute barred. Robin Purchas QC Sitting as a deputy High Court Judge 28th July 2005