[2] On the facts, the Judge held that, had the defendant not succeeded on: (a) interpretation; nor (b) rectification, then the defendant would have succeeded on estoppel by convention (see paragraph 161)

[3] In Abraaj Investment Management Ltd (In Liquidation) v KES Power Ltd [2026] EWHC 65 (Comm), Foxton LJ (at first instance), under the subheading 'Estoppel by convention', said, at paragraph 180 to 182:

'...it is helpful at this point to consider a case applying the doctrine in a similar context: Rivertrade Ltd v EMG Finance Ltd [2013] EWHC 3745 (Ch) (Mann J); [2015] EWCA Civ 1285. In that case:

i) Rivertrade made a loan to Holdings. Holdings purported to provide security for the loan by assigning the benefit of sums due under a contract with Ranhill Berhad ("the Ranhill Contract"). However, Holdings was not a party to the Ranhill Contract: the party entitled to payments under that contract was another company, Finance, which was a wholly owned subsidiary of Holdings and part of the "EMG Group". Another group company, Forburg, claimed to have prior rights in relation to the Ranhill Contract arising from certain debentures. There were a number of common directorships across the group, and one individual, Mr Govindia, "pulled the strings" of all group companies ([27]).

ii) In January 2008, Finance entered into the Ranhill Contract.

iii) In May 2008, Finance assigned all its receivables to Holdings who assigned them to Forburg.

iv) In May 2008, Rivertrade provided a loan to Forburg, who in turn said that they had had assignments of various transaction fees due to Finance via Holdings, and would provide security in relation to certain of those assigned fees.

v) In December 2008, Rivertrade provided a further loan to the EMG Group.

vi) In April 2009, the EMG Group's financial problems deteriorated further, and Mr Govindia approached Rivertrade for a further loan, mentioning the Ranhill Contract as a possible source of security.

vii) That month, Rivertrade advanced further funds in return for what was presented as a security interest in the Ranhill Contract under an agreement with "EMG". Mann J found that all relevant companies in the group were party to this agreement, Mr Govindia having authority to act for them all, including Finance in relation to the assignment.

viii) The attempt to document the terms of the April 2009 advance took place after the advance had been made, being signed by 1 July 2009. There was a loan agreement between Rivertrade and Holdings, which provided that "as security" for the loan, Holdings "hereby assigns to Rivertrade …. [the Ranhill Contract] held in the name of [Finance]". Holdings also signed a letter confirming the assignment of the Ranhill Contract. Mr Govindia was acting for all group companies, including Finance, in entering into this agreement, with the result that Finance became obliged to effect the assignment. ix) The effect of the June 2009 documents on their face was that Holdings, and not Finance, purported to be the assignor of the Ranhill Contract, and Finance was not a party to any of the transaction documents. In addition, Finance and Holdings had already assigned all of their relevant rights to Forburg in 2008, such that they had nothing to assign, and they had both purported to give prior rights to Forburg over their assets in the form of debentures.

At [189]-[203], Mr Justice Mann considered and rejected various contractual answers to the problems created for Rivertrade by the June 2009 documents. However, he held that an estoppel by convention was made out. At [209]-[210], he found:

"The doctrine applies in the following manner.

(i) The June transaction was designed to embody the principles of the April transaction. That earlier transaction clearly embodied, and agreed, the concept of effective security over the Ranhill proceeds (albeit limited to 35%).

(ii) The earlier transaction was one in which all the relevant companies in the group joined by agreement, or at the very least by acquiescence and implicit signification of approval - see above. The idea that they would be seeking finance, proffering security and yet holding back that security because of a debenture (or because of historic assignments up the group) is contrary to common sense and commercial propriety. I do not think that Mr Govindia (who was the principal person involved) or Mr Hofer (who had some lesser involvement) harboured those reservations. They assumed that the security would be effective, probably not thinking at that stage about mechanics. Mr Govindia represented Forburg for these purposes - see above.

(iii) There was therefore at that stage a common assumption, plainly communicated between the parties (because it was of the essence of the transaction) that there was, and would be, effective security over the Ranhill proceeds.

(iv) Nothing changed in that assumption between then and the June transaction, save that the amount standing as security increased to 100%. It is true that by then the Finance debenture was referred to between the parties, but in a sense that reinforces the assumption. The parties assumed it would not be an obstacle. When proposals were made for a deed of postponement in July they were made because of the assumption, not because the assumption did not exist.

(v) The assumption was shared by all the directors of the relevant EMG companies, who had the objective of saving the group through the loan that Mr Kinder was offering. It was in the interests of all of Forburg, Holdings and Finance that it be given, and the directors had an eye to all three businesses when conducting the deal. The assumption should be attributed to them wearing all hats, and to Mr Govindia wearing his hat as representative of the entire group.

(vi) Mr Hofer was indeed acting as agent in initialling the Forburg letter. The existence of that letter demonstrates that Forburg was party to the overall arrangement. He was still a director when he initialled it.

(vii) The reference to Finance in the Facility Letter demonstrates that the individuals who were directors of that company (and principally, for these purposes, Mr Hofer and Mr Govindia) had that company in mind and should be taken as entertaining an assumption about the validity of the security in that capacity as well as in their capacity as the directors of the other companies.

(viii) I doubt if Mr Govindia was being deliberately silent about what he knew to be blots on the title of Rivertrade to security over the Ranhill proceeds. He shared the assumption of Rivertrade as to what the June documents had achieved in this respect. But if he was being deliberately silent, he acquiesced in, and indeed probably encouraged, the assumption of Rivertrade in this respect.

(ix) Rivertrade acted on that assumption by continuing to lend money, and by financing the Ranhill proceedings both before and after the June transaction. It is inconceivable that Mr Kinder would have done that if had not believed Rivertrade had got security over that asset. There would be no reason for Rivertrade to have funded the litigation (and indeed given instructions in relation to it) absent such an interest. All the EMG companies (including Forburg) must have known and appreciated that.

In those circumstances it would be plainly unjust to allow any of EMG companies to resile from the assumption which underpinned the June transaction. As well as being a breach of faith, it would completely undermine a fundamental aspect of the transaction."

The decision was upheld on appeal ([2015] EWCA Civ 1295), Kitchen LJ addressing this point at [50]-[51]:

"In my judgment these findings are fatal to Mr Buttimore's submissions. He accepted that in June 2009 Finance held no more than the bare legal title to the Ranhill receivable. Indeed, it was the case of the parties for whom he appears, Mr Govindia and Forburg, that all receivables had been assigned in May 2008 from Finance to Holdings and then from Holdings to Forburg. Accordingly, prior to the 2009 agreements, Forburg was the holder of at least the beneficial title to the Ranhill receivable. Moreover, on the judge's findings, Forburg and Holdings were, with Rivertrade, parties to the June 2009 agreement. Further, for the reasons I have given, I have no doubt that it was the common intention of the parties to the June 2009 agreement that the benefit of the whole of the Ranhill receivable should be transferred to Rivertrade. It follows that this is not a case in which an estoppel is relied upon to create an enforceable right where none previously existed. It is instead one of those cases in which the estoppel is relied upon to bind the parties to an agreement to an interpretation which would not otherwise be correct.

That point aside, I am satisfied that the judge approached the case in an entirely conventional way. He found that the parties were proceeding on the common underlying assumption that Rivertrade would have effective security over the Ranhill proceeds; this assumption was communicated between the parties; and Rivertrade acted on that assumption by continuing to lend monies and by financing the Ranhill proceedings. In light of all of these circumstances I am satisfied that the judge was entitled to find that it would be unjust to allow any EMG company to resile from that position."

[4] In Abraaj Investment Management Ltd (In Liquidation) v KES Power Ltd [2026] EWHC 441 (Comm) ('Abraaj Investment 441'), Foxton LJ considered whether to grant permission to appeal, to the Claimants, against his judgment at trial ([2026] EWHC 65 (Comm); 'the Judgment') on Ground 2: 'The effect of my ruling was that the estoppel by convention created a new right for Mashreq, which is contrary to authority'.

Under 'The legal principles' Foxton LJ said in Abraaj Investment 441, at paragraphs 8 to 16:

'8. I accept that there is considerable authority for the view that estoppel by convention cannot, of itself, create a new cause of action (see Chitty on Contracts (36 th) [7-025]), or, as it was put in this case, create new rights. However, that cannot operate simply as a slogan. It is necessary to consider what the phrase means, and whether that meaning is engaged.

9. My account of the relevant authorities can begin with Amalgamated Investment v Texas Commerce Bank [1982] QB 84, in which the claimant had provided a guarantee of a loan made by the bank to the claimant’s subsidiary (ANPP), but the relevant lending had taken the form of a loan from the bank to a wholly-owned Bahamian subsidiary of the bank (Portsoken) which itself made a loan to ANPP. The bank had applied amounts recovered from realising securities provided by the claimant in discharge of its liability under the guarantee, and the claimant brought proceedings seeking a declaration that it was not liable in respect of ANPP’s liabilities:

i) At first instance, Robert Goff J addressed the sword and shield issue at p.105. He said that it was “not of itself a bar to an estoppel that its effect may be to enable a party to enforce a cause of action which, without the estoppel, would not exist”. While an estoppel cannot be “a source of legal obligation”, it “may have the effect that a party can enforce a cause of action which, without the estoppel, he would not be able to do.” He gave an example of such an estoppel Spiro v Lintern [1973] 1 WLR 1002, in which a husband, who had not authorised his wife to agree to sell his house, was held to be estopped from denying that his wife had such authority, with the effect that a purchaser from his wife was enabled to enforce against him a contract by his wife for the sale of the house.

ii) On appeal, Eveleigh LJ held that estoppel by convention allowed the bank to resist the claim for the declaration (and thus continue to exercise its self-help remedy) but it would not have been able to bring a claim under the guarantee (p.126).

iii) Brandon LJ (at p.132) was of the view that the bank could enforce the guarantee:

“In my view much of the language used in connection with these concepts is no more than a matter of semantics. Let me consider the present case and suppose that the bank had brought an action against the plaintiffs before they went into liquidation to recover moneys owed by A.N.P.P. to Portsoken. In the statement of claim in such an action the bank would have pleaded the contract of loan incorporating the guarantee, and averred that, on the true construction of the guarantee, the plaintiffs were bound to discharge the debt owed by A.N.P.P. to Portsoken. By their defence the plaintiffs would have pleaded that, on the true construction of the guarantee, the plaintiffs were only bound to discharge debts owed by A.N.P.P. to the bank, and not debts owed by A.N.P.P. to Portsoken. Then in their reply the bank would have pleaded that, by reason of an estoppel arising from the matters discussed above, the plaintiffs were precluded from questioning the interpretation of the guarantee which both parties had, for the purpose of the transactions between them, assumed to be true.”

In this way the bank, while still in form using the estoppel as a shield, would in substance be founding a cause of action on it. This illustrates what I would regard as the true proposition of law, that, while a party cannot in terms found a cause of action on an estoppel, he may, as a result of being able to rely on an estoppel, succeed on a cause of action on which, without being able to rely on that estoppel, he would necessarily have failed. That, in my view, is, in substance, the situation of the bank in the present case.”

iv) Only Lord Denning was willing to contemplate the operation of estoppel by convention on a wider scale.

v) It is the judgment of Brandon LJ which has come to be recognised as the correct statement of the law: see Rix LJ in Dumford Trading A-G v OAO Atlantrybflot [2005] EWCA Civ 24, [39] and Mance LJ in Baird Textile Holdings Ltd v Marks & Spencer Plc [2001] EWCA Civ 274, [88].

10. However, it is accepted that estoppel by convention can defeat a defence, and enlarge the effect of an agreement, and in both instances enable one party to succeed where it would otherwise have failed (Chitty, [7-026]). This can include cases in which the claim is advanced on the basis of an asserted legal relationship between the parties which does not otherwise exist. As Colman J (who had a particular expertise in estoppel by convention, having appeared a lead counsel for the bank in Texas Commerce Bank) observed in Azov Shipping Co v Baltic Shipping Co [1999] 2 Lloyd’s Rep 159, 175:

“It is reasonably clear that, at least in cases of proprietary estoppel and estoppel by convention, the claimant may formulate his cause of action on the basis of a mutually-assumed factual or legal relationship which differs from that which truly exists. The estoppel is not in itself the cause of action but it prevents the party estopped from relying by way of a defence on the factual and legal basis which truly exists”.

11. In Baird, [89], when commenting on The Henrik Sif [1982] 1 Lloyd’s Rep 456 (where an estoppel by convention was found which had the effect of preventing a charterer from denying that it was the contractual carrier under bills of lading), Mance LJ saw “no reason to doubt the outcome” because:

“There was an undoubted legal relationship, contained or evidenced in the bill of lading contracts — whoever were the parties thereto. The conduct relied upon bound the charterers to accept that they were one of such parties”;

contrasting The Henrik Sif with the case before the court where the law was asked “to attach legal consequences to a bare assurance or conventional understanding (falling short of contract) between two parties, without any actual contract or third party being involved or affected”.

12. It is also clear that an estoppel by convention can operate between parties who are not in contractual privity. In Tinkler v Revenue and Customs Commissioners [2021] UKSC 39, for example, this species of estoppel operated in relation to a common assumption that a valid tax enquiry had been opened (such that the closure notice resulting from this enquiry would itself be valid and generate a tax debt). At [70]-[72], Lord Burrows stated:

“As was said at the start of this judgment, estoppel by convention most commonly arises where there is a contract between the parties. It is also true that many statements of the doctrine refer to there being a transaction between the parties … It is also correct that many of the statements of the doctrine by commentators, … refer to there being a transaction between the parties.

However, it would appear that such statements merely reflect the primary contractual or transactional context in which estoppel by convention arises. And there have been wider statements of estoppel by convention that refer to mutual relations or dealings between the parties.

On the facts of this case, while there was no transaction between HMRC and BDO/Mr Tinkler, there were mutual dealings between them subsequent to the common assumption.”

13. At [75], Lord Burrows suggested that Brandon LJ’s statement that estoppel cannot create a cause of action was “too sweeping” because proprietary estoppel could have such an effect. He continued:

“The particular concern about allowing promissory estoppel and estoppel by convention to create a cause of action is that this might undermine the requirement of consideration for the validity of a contract. However, that concern is not relevant to the facts of this case which do not concern contractual dealings. In any event, in the context with which we are concerned, even if one were to insist that the estoppel by convention can support, but must not create, a cause of action in relation to the mutual dealings between HMRC and a taxpayer, it would appear that that restriction is satisfied. The underlying duty to pay tax is imposed by statute and the estoppel relates merely to the dealings between HMRC and the taxpayer in connection with the procedure by which HMRC determine the correct amount of tax to be paid under the statute.”

14. As to that last statement, while the underlying legal duty to pay tax does arise by statute, the existence of a tax debt in any particular case may depend on the operation of a series of procedural provisions and steps, and, so far as the demand for tax in question was concerned, the valid service of a closure notice. On one view, Lord Burrows’ statement attaches significance to the context in which the common assumption arose, which was between two parties in a legal relationship created and regulated by the statutory tax regime as, respectively, taxing authority and tax payer.

15. Finally, it should be noted that the KESP Receivable existed in advance and independently of the alleged estoppel, which is concerned with whether there has been an effective transfer of the debt. A Moorgate v Twitchings estoppel might in some sense be said to create a new right in this sense, because the effect of the estoppel is to allow the party asserting the estoppel to prevail against the anterior right of the party estopped, but that does not prevent the doctrine operating.

16. These authorities suggest that some care is required when dealing with the general assertion that an estoppel by convention cannot create new rights, and they suggest that the particular legal context in which the issue arises is likely to be relevant to the correct analysis. In particular, it will generally be necessary for the estoppel to operate in relation to and affect a legal relationship between the parties which exists independently of the estoppel asserted. Even that proposition cannot be stated in unqualified terms – Mance LJ in Baird contemplates the legal relationship may exist independently of the estoppel, but the estoppel can arise as to who is party to it; and both Mance LJ in Baird (see the discussion of ostensible authority at [90]) and Colman J in Azov Shipping contemplated the doctrine extending to a case when a legal relationship had ostensibly been created between two parties, and the issue arises as to whether those purporting to act for one of them had authority to do so. Finally Furness Withy (Australia) Pty Ltd v Metal Distributors (UK) Ltd (The Amazonia) [1990] 1 Lloyd’s Rep 237 would suggest that estoppel by convention can also operate in some circumstances where two parties purport to enter into a legal relationship which is legally ineffective (subject to the rule that estoppel cannot oust the effect of a statute). Alternatively, The Amazonia can be treated as a case where the independent legal relationship affected is the matrix contract.'