- Bookmark
- Share
- CaseIQ
Lay & Anor v Independent Vetcare Ltd
Factual and Procedural Background
The appeal arose from a counterclaim by Company A for sums said to be due under a share purchase agreement for the purchase of shares in Company B from the Appellants. Company A alleged that Company B had been operating unlawfully in breach of the Payment Services Regulations 2017 at completion, so that the Appellants had breached the conduct warranty in the agreement. The dispute was complicated by earlier Employment Tribunal proceedings in which Company A advanced the opposite position about the lawfulness of Company B’s business in resisting an interim relief application brought by Appellant 1 after summary dismissal. [Para 34][Para 35][Para 42][Para 47][Para 48][Para 51][Para 71][Para 72]
Company B provided subscription services to veterinary practices using BACS access through an indirect model involving regulated payment service providers; after completion, it later adopted a direct model for new clients as well. Company A gave notice of warranty claims close to the contractual deadline, later pleaded the counterclaim, and then attempted to explain its change of position by reference to later legal advice and a fuller factual understanding. [Para 64][Para 65][Para 71][Para 73][Para 74][Para 176][Para 177][Para 178]
Legal Issues Presented
- Whether Company A’s counterclaim should be struck out as an abuse of process, or as contrary to the rule against approbation and reprobation, because it advanced a case inconsistent with its position in the earlier Employment Tribunal proceedings. [Para 34][Para 51][Para 62]
- Whether Company A had shown a sufficient change in circumstances, including a change in legal advice and factual understanding, to justify departing from its earlier position. [Para 51][Para 54][Para 57][Para 59][Para 60][Para 61][Para 62]
- Whether Company A’s earlier stance was a material factor in the Employment Tribunal’s refusal of Appellant 1’s application for interim relief. [Para 59][Para 60][Para 61][Para 63][Para 68][Para 70][Para 72]
Arguments of the Parties
Appellants' Arguments
- Company A had taken irreconcilably inconsistent positions and should be barred from resiling from the position it had successfully advanced in the Employment Tribunal. [Para 76][Para 80]
- The judge could not fairly assess Company A’s explanation for the change of stance because it did not waive privilege over the legal advice on which it relied. [Para 52][Para 54][Para 57][Para 179][Para 180]
Respondent's Arguments
- Company A contended that there was no clear inconsistency, or that any inconsistency did not matter for the outcome below. [Para 53]
- In the alternative, Company A said any change was explained by later legal advice and a fuller understanding of the facts, so the counterclaim should not be struck out. [Para 51][Para 54][Para 122][Para 146][Para 169][Para 176]
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| LA Micro Group (UK) Ltd v LA Micro Group Inc and others [2021] EWCA Civ 1429; [2022] 1 WLR 336 | Estoppel by conduct is assessed by a broad, merits-based approach rather than strict issue-estoppel rules. [Para 83][Para 86] | Used as the main domestic authority for the overall approach and for the need to examine whether the earlier decision was made on the footing of the earlier stance. [Para 82][Para 83][Para 86][Para 119][Para 120] |
| Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 | A litigant who has elected a position and obtained an order affecting others may be held to that conduct. [Para 83][Para 84] | Cited as a foundational statement of the estoppel-by-conduct principle. [Para 83][Para 84] |
| New Hampshire v Maine [2001] 532 US 742 | Judicial estoppel turns on clearly inconsistent positions, prior judicial acceptance, and unfair advantage or detriment; prior positions may be excused only in limited circumstances such as inadvertence or mistake. [Para 85][Para 86][Para 93][Para 99][Para 102] | Relied on heavily to frame the policy rationale and to reject Company A’s attempt to justify its volte-face by vague references to later information and advice. [Para 106][Para 107][Para 186][Para 187][Para 188][Para 189] |
| Davis v Wakelee (1895) 156 US 680 | A party that succeeds on one legal position may not later adopt a contrary position if that would prejudice the other side. [Para 93][Para 94] | Quoted as part of the explanation of judicial estoppel. [Para 93][Para 94] |
| Malik v Malik [2024] EWCA Civ 1323; [2025] 4 All ER 409 | An inconsistent later position can found estoppel by conduct where the earlier court acted on the basis of that position; the inquiry also turns on the purpose for which the earlier stance was taken. [Para 108][Para 109][Para 111] | Used to support the finding of clear inconsistency and to assess whether Company A gained an advantage in the earlier interim-relief application. [Para 112][Para 113][Para 114][Para 194][Para 202][Para 205][Para 207] |
| Steer v Stormsure Ltd [2021] ICR 1671 | The interim-relief threshold under ERA is high and requires a claimant to show a likely successful case on the relevant elements. [Para 195][Para 196] | Used to explain why Appellant 1 faced a demanding threshold in the Employment Tribunal. [Para 195][Para 196][Para 197] |
Court's Reasoning and Analysis
The court accepted the established broad, merits-based approach to estoppel by conduct: the question was not whether there had been a technical inconsistency, but whether Company A’s later stance was so inconsistent with its earlier position, and so tied to the earlier tribunal’s decision, that allowing it would undermine the integrity of the judicial process. [Para 82][Para 86][Para 108][Para 109][Para 119][Para 120]
On the facts, Company A had plainly taken a different position in the Employment Tribunal. There, it maintained that Company B’s business operated lawfully and that no FCA authorisation was required; here, it alleged the opposite in support of a warranty claim. The court held that this was a true volte-face and that the earlier position went to the heart of whether Appellant 1 had made protected disclosures. [Para 47][Para 48][Para 51][Para 59][Para 60][Para 121][Para 123][Para 124][Para 129][Para 130][Para 131][Para 136][Para 137]
The court rejected Company A’s explanation that it changed position because of later advice and better information. Company A had conducted due diligence, had already raised and explored the relevant regulatory questions, and had not identified with any specificity what new material emerged between the Employment Tribunal proceedings and the counterclaim. Because it did not waive privilege, the court said its bare assertions could not carry the necessary weight. [Para 138][Para 139][Para 146][Para 147][Para 149][Para 152][Para 158][Para 161][Para 166][Para 167][Para 169][Para 171][Para 176][Para 178][Para 179][Para 180][Para 186][Para 187][Para 188][Para 189]
The court also agreed that Company A’s earlier stance materially affected the refusal of interim relief. Under the ERA interim-relief test, Appellant 1 had to show a likely protected-disclosure claim and a likely dismissal-for-that-reason claim; the Employment Judge’s written reasons showed that Company A’s position on lawfulness contributed significantly to the finding that Appellant 1 had not met that threshold. [Para 195][Para 196][Para 197][Para 198][Para 199][Para 202][Para 205][Para 206][Para 207]
Holding and Implications
ALLOWED The Court of Appeal allowed the appeal and dismissed the cross-appeal, holding that the counterclaim should have been struck out as an abuse of process / estoppel by conduct. The immediate effect was that Company A could not pursue its counterclaim on the contradictory regulatory-compliance case; the judgment also reinforces that a party cannot justify a volte-face by relying on undisclosed legal advice and vague assertions of new facts. [Para 212][Para 54][Para 57][Para 180][Para 186][Para 189]
Alert