Blindley Heath Investments Ltd v. Bass
09 Sep 2015
There was a relatively informal shareholders’ agreement in place. It contained pre-emption provisions, obliging a shareholder to serve a transfer notice in respect of his shares in the event that he wished to transfer them. Many years later, a third party purchaser, for whom Robin acted in the appeal, entered into negotiations for the purchase of some shares. A share sale agreement was entered into, with the vendor (who had forgotten about the earlier agreement and pre-emption provisions) representing that there was no impediment to the sale. The other shareholders, who had previously raised no objection to the sale, then claimed to have found the earlier agreement and relied upon its pre-emption provisions. Robin’s client relied inter alia upon the doctrine of estoppel by convention.
Held: dismissing the appeal, the other shareholders were estopped by convention from relying upon the earlier agreement – the parties’ mutual assumption that there were no pre-emption provisions was evident from their mutual conduct.