Equitable estoppel, mutual restrictions and common resources

For reasons that we don’t need to explore*, I’ve found myself in my day job obliged to reinvestigate what I learned as a law student on the concept of estoppel. Not only is estoppel a quaint word but it’s a peculiar principle that arises in a number of different forms. It is another creation of equity, that odd and wonderful portion of the legal system that cares less about a strict interpretation of the law and rather (as the name implies) seeks to find what is the fair resolution in all the circumstances.

To simplify, estoppel enables someone who has acted to their detriment in reliance on another’s representation, or even just a course of dealing, to hold them to that representation (or to the representation that is implied by that course of dealing). The person making the representation is bound by the fact that the other has relied on their indicated intent, and will lose out if that intent isn’t delivered on. The key three elements of the doctrine of estoppel are representation, reliance and detriment.

A word that comes up often in equity case law is ‘unconscionable’ – someone is estopped from holding strictly to the letter of the law if their previous conduct would make that unconscionable. Instead, the court intervenes to ensure fairness. As law professor Alastair Hudson sets out in his guide to equity:

“estoppel is truly an example of equity at its purest, in that the court can do almost anything it wishes to prevent an unconscionable benefit being taken by the defendant or uncompensated detriment suffered by the claimant”

Again reflecting that heritage in equity, the courts have proven very open-minded in deciding on the appropriate remedy for such unconscionable behaviour. As Hudson explains: “the court’s intention is … to provide a remedy that prevents the claimant from suffering detriment”.

It is of course not quite as simple as this (the law, particularly equity, never is). “Estoppel in all its forms is based on a variety of underlying conceptions, varying from ‘honesty’ to ‘common sense’ to ‘common fairness’,” says Hudson. Indeed, Lord Sumption in a key recent Supreme Court case went even further, in saying that the “various doctrines of estoppel” offer a “safeguard against injustice”. Yet these broad words are not always fulfilled in practice: the English courts are clear that the various forms of estoppel – though they are sometimes referred to collectively, often as equitable estoppel – are separate and distinct, and not part of any great unified theory (courts elsewhere in the Commonwealth tradition have suggested otherwise). Though in his guide to equity and trusts, Hudson calls a chapter ‘Equitable estoppel’, he starts by pointing out the inaccuracy of the term, not least as some estoppels arise in common law, and not only in equity. In another of his books, he argues that the lack of clarity in defining and separating the different categories of estoppel is a necessary aspect of equity, leaving the courts free to reach the fair decision, and the fair remedy, according to the specific individual circumstances.

This peculiar artefact of fairness in the law is not only interesting in itself. Estoppel also helps illuminate some ongoing philosophical debates with regard to fairness more broadly. Indeed, the great fairness philosopher John Rawls talked about something that sounds very like estoppel within broad societal relations: “a person is [morally] required to do his part as defined by the rules of an institution when two conditions are met: first, the institution is just (or fair) … and second, one has voluntarily accepted the benefits of the arrangement or taken advantage of the opportunities it offers to further one’s interests”. In this, Rawls acknowledges his debt to earlier legal positivist philosopher Herbert (usually HLA) Hart, and especially Hart’s principle of mutual restriction. Rawls goes on: “The main idea is that when a number of persons engage in a mutually advantageous cooperative venture according to rules, and thus restrict their liberty in ways necessary to yield advantages for all, those who have submitted to these restrictions have a right to a similar acquiescence on the part of those who have benefited from their submission.”

In effect, Rawls argues, the whole rest of the societal group has acted to their own detriment, by themselves submitting to the social requirements, in reliance on the expectation that all who take the benefits of their shared endeavour should also submit. Free-riding on that goodwill and seeking to personally avoid the detriment is in many circumstances a breach of a representation given to society (not always explicitly, but perhaps by the course of dealing of enjoying the benefit) and ought to be remedied in some equitable fashion.

In a thorough and thoughtful article on free-riding, Australian philosopher (no, this is not an oxymoron) Garrett Cullity comes to talk about the unfairness of free-riders as being the act of objectionably granting themselves preferential treatment. Through his analysis, Cullity develops the thinking of Rawls and produces the following Principle of Fairness in relation to these kinds of challenges:

“If a person receives benefits from a scheme that satisfies the following conditions, it is unfair for her not to meet the requirements it makes of her in respect of her enjoyment of those benefits.

(i) The practice of participation in the scheme represents a net benefit for her.

(ii) It is not the case that practically everyone would be made worse off by the practice of participation in the recognition as obligatory of those further requirements that must in fairness be regarded as obligatory if the requirements in question are regarded as obligatory.

(iii) She is not raising a legitimate moral objection to the scheme.”

This begins to seem very like the way in which common resource problems are in practice effectively managed, according to the analysis of the great Elinor Ostrom, with mutual sharing of the burdens so that the benefits can also be shared, and often with scope to punish or ostracise those who seek to free-ride. And indeed, Cullity’s ‘recalcitrant fisherman’ example, with which he tests various versions of a possible rule against free-riding, seems very close to an explicit common resource problem and how it might be managed effectively.

In a later article further developing this thinking, Cullity directly references Ostrom. His articulation of general principles in this latter article is striking. I especially like one that is highly relevant to current considerations: “Relationships of trust involve an expressed commitment to reciprocal self-constraint for the sake of cooperation.” This has particular resonance given that, as I explain in my book, trust is the reciprocal of fairness. Cullity argues that failures of appropriate impartiality are at the core of all unacceptable unfair behaviour. He explains that any free-rider granting themselves preferential treatment by exempting themselves from contributing to a common good is exactly such a failure of appropriate impartiality.

Fairness in various forms – including the legal concepts of equity, philosophical approaches to fairness principles, and practical solutions to challenges of managing common resources – reach similar conclusions: there need to be mechanisms and controls over free-riding or reneging on a shared endeavour from which all participants benefit. People undertake a fair set of obligations through their participation in human societies; estoppel is just one way in which they are held to those obligations.

Fairly sharing the commons, sharing the future

I am happy to confirm as ever that the Sense of Fairness blog is a purely personal endeavour

* I don’t think I should inflict on readers a discussion of the current definition of a constructive obligation under IAS 37 accounting standard, nor proposals under consideration for building upon that definition

Understanding Equity and Trusts (7th ed), Alastair Hudson. Routledge, 2022

Rock Advertising v MWB Business Exchange Centres [2018] UKSC 24

Great Debates in Equity and Trusts, Alastair Hudson. Macmillan, 2014

A Theory of Justice, John Rawls. Harvard University Press, 1971

Are There Any Natural Rights? HLA Hart. Philosophical Review, 64, 1955

Moral Free Riding, Garrett Cullity. Philosophy & Public Affairs, Vol. 24, No. 1 (Winter, 1995)

Governing the Commons: The Evolution of Institutions for Collective Action, Elinor Ostrom. Cambridge University Press, 1990

Public Goods and Fairness, Garrett Cullity. Australasian Journal of Philosophy, Vol. 86, No. 1, March 2008

Fairness in Business and Investment, Paul Lee. Routledge, 2026

Fairness piercing the veil, and filling gaps in the law

An extraordinary legal case was decided in the UK in April, and it has recently been determined that there can be no appeal from it. The court decision has led directly to the insolvency of a major property development group, and it illustrates the way in which fairness fills gaps in the law – indeed how fairness is a core element of how the law works.

The case is extraordinary because it deploys fairness effectively to overthrow a fundamental element of corporate law. The decision in effect enables the piercing of the corporate veil – the legal barrier that means the liabilities of a company stop at its doors and cannot be claimed from a parent, other group company, or shareholder. Limited liability, through this mechanism of the corporate veil, is generally regarded as a core element of capitalism, a protection of the shareholder providing capital, freeing them from the risk that they might lose more than their contribution to the company through their buying of shares. Because of this perceived centrality to the capitalist system, courts, and indeed legislators, are deeply wary of piercing the veil in the way this decision does.

However, there are certain policy aims that are so substantial that such effective veil piercing is seen as necessary. That is true of the policy underlying the law in the case in question, Crest Nicholson Regeneration v Ardmore Construction. It concerns Building Liability Orders, established under the Building Safety Act to ensure that appropriate contributions are made by those responsible for the remediation of buildings which since the terrible Grenfell Tower fire (see Power leads us astray: fairness lessons from Grenfell) are recognised as representing significant risks. Building Liability Orders (BLOs) allow the courts to extend the liability for remediation costs from the immediate company involved to associated companies where it is ‘just and equitable’ (what this blog would call fair) to do so.

Image from *KCTMO – Feeling the Heat!*, sadly prescient blog from Grenfell Action Group, March 14 2017

I deliberately say that this ‘in effect’ pierces the corporate veil, because it’s worth noting that there is some debate as to whether this is a full piercing, though to a non-specialist this may seem a debate on the head of a pin. As Christopher Veal of leading barristers’ chambers Pump Court explains:

“Whether this constitutes “piercing the corporate veil” in the traditional sense is contested: some courts and commentators treat BLOs as a distinct statutory remedy rather than classic veil-piercing, on the basis that the court is not disregarding the corporate structure but rather applying a legislative override. Others characterise the practical effect as functionally equivalent to piercing the veil. The distinction matters less in practice than the statutory test itself, which turns on whether it is just and equitable to extend liability.”

Even though there is this debate, the case makes clear that sometimes statute and policy considerations will take decisions to extend liability notwithstanding the perceived strong constraint of the corporate veil. This step was seen as particularly needed in the development sector, where there is a history of each individual development being built by a thinly capitalised subsidiary so as to protect the parent, and wider group, from exposures to any potential liability. The immediate subsidiary involved in the development, Ardmore Construction Ltd, had been put into administration on the day before the initial adjudication against it (the judge decided to accept the suggestion that this was coincidence), and the court also found that there had been a corporate restructuring with some intent to limit broader liability. The ruling means that this restructuring has failed: following the court’s decision to pierce the veil, the whole Ardmore Construction Group entered administration in mid-June, and other related companies have sought protection from creditors.

This application of fairness to close gaps in the law isn’t as infrequent as people might imagine. In many ways, it is a core element of the functioning of the common law, under which judges reach decisions that are not explicitly covered by legislation, applying broader judgement and higher principles to do so. Fairness is often one of those higher principles. Think about the famous 1930s case of the snail in the bottle of ginger beer, Donoghue v Stevenson. There would have been no need for the case to reach the House of Lords (then the UK’s highest court) if the drinker of the ginger beer in question had been its purchaser rather than her friend for whom she bought it. If the buyer had drunk it and suffered the consequences, contract law protections would have applied. In the absence of some form of contractual protection for the drinker, the House of Lords applied a more general duty of care to manufacturers and found that the Stevenson business could be seen to have negligently breached that duty of care. From this finding based in fairness has arisen the whole modern concept of the law of tort, whereby in certain constrained circumstances duties of care arise outside of contractual relationships.

In other situations, courts will imply fairness into contracts that on the face of it do not expect it. In her interesting book Fool Proof, law professor Tess Wilkinson-Ryan discusses the Massachusetts Supreme Court case Fortune v National Cash Register. Orville Fortune was employed at will and at a low salary, with his main pay opportunity through commission on sales – a portion paid at the point of sale and the rest on delivery and installation of the equipment. Fortune was sacked between landing a big sale and the point at which he would have received the second part of his commission from that sale. While on the face of the contract his employer could indeed do this, the courts implied a duty of good faith such that National Cash Regiester was not in fact permitted to exploit its worker in this way. Instead, it needed to treat Fortune fairly and allow him to take the fair benefit of the commission he had earned through his sale. The court stated bluntly:

“we are merely recognizing the general requirement in this Commonwealth that parties to contracts and commercial transactions must act in good faith toward one another. Good faith and fair dealing between parties are pervasive requirements in our law; it can be said fairly, that parties to contracts or commercial transactions are bound by this standard.”

Further, there is a whole section of the English legal system fully animated by fairness. It is not by chance that this is called ‘equity’, now formally combined with the rest of the legal system but with its origins in a mediaeval court system focused on delivering fairness. As Alastair Hudson states in the opening words of the seventh edition of his Understanding Equity & Trusts: “Equity is a means by which English law ensures fair outcomes in individual cases where the strict application of the common law or statute would otherwise generate injustice.” In practice, the concept of equity applies somewhat more narrowly than this assertion implies, but the intent is to identify the fair outcome when there is a lack of clarity in the common law or in statute. Equity lies at the heart of trust law, and so as I explore in my forthcoming book, the sense of fairness animates the fiduciary duties with which trustees are vested.

Hudson develops the thought further in his Great Debates in Equity and Trusts, recognising the need for the equity approach to soften the edge cases of common law and statute, so as to ensure that the legal system overall is “rounded”. He argues: “Clearly, there need to be rules … However, there will also be situations in which the ‘letter of the law’ will not necessarily produce an ideal response, or worse, a positively unfair response. There will be situations in which people need some flexibility in which to create new models which will work better for them personally or better in unanticipated situations. One future for the UK economy is likely to be in the creative field and in the new frontiers of technology. By definition, an innovative economy may need innovative legal models … to maximise its success. Therefore, non-rigid ways of thinking will be important.”

He concludes: “a legal system needs a synthesis of strict rules (of the sort typified by statute and by common law) and mechanisms for achieving fair outcomes when the strict rules will not achieve that”.

The extent to which fairness will require further substantive upendings of traditional legal understandings such as the Crest Nicholson Regeneration v Ardmore Construction piercing of the corporate veil remains to be seen. But it seems clear that fairness will continue to be needed to fill gaps in, and round off the edges of, the common law and legislation.

I am happy to confirm as ever that the Sense of Fairness blog is a purely personal endeavour.

Crest Nicholson Regeneration v Ardmore Construction [2026] EWHC 789

Crest Nicholson v Ardmore [2026] EWHC 789 (TCC): A Landmark Decision on Building Liability Orders, Christopher Veal. Pump Court Chambers, 22 May 2026

Donoghue v Stevenson [1932] AC 562

Fool Proof: How Fear of Playing the Sucker Shapes our Selves and the Social Order – and what we can do about it, Tess Wilkinson-Ryan. Harper Collins, 2023

Fortune v National Cash Register Co, 373 Mass 96 (1977)

Understanding Equity & Trusts, Alastair Hudson. Routledge, Seventh Edition 2022

Great Debates in Equity and Trusts, Alastair Hudson. Macmillan, 2014

Unfairness fuels conflict: fraying threads

Perceived unfair treatment is a driver not just of resentment but of outright conflict. Unfairness destabilises our world.

That’s the clear conclusion of some recent research by an IMF economist and a professor at Rice University in Houston in the US. Their focus is sub-Saharan Africa, a region with disproportionate levels of conflict and human suffering, whose violence fuels emigration and so more instability elsewhere. But it seems sure that while there unfairness fuels outright military conflict, the logic must be that in other parts of the world unfairness will drive unrest and discontent in different forms. The researchers refer to “conflict-inducing alienation”. That alienation can be seen in many countries of the world, not just sub-Saharan Africa.

But sticking first with their area of focus, the blog that accompanies the launch of the paper summarises the researchers’ findings:

“While various factors can fuel conflict, our research shows that discontent with state institutions among marginalized groups is a key driver of unrest in the region. Such distrust reflects perceptions that governments fail to address equity issues and inclusive growth—including the fair allocation of natural resources and human capital development… Poverty and underdevelopment alone may not fuel conflict. But those underlying factors are exacerbated by the experience or perception of social and economic exclusion, thus providing a fertile breeding ground for armed groups, necessitating urgent intervention.”

These countries in sub-Saharan Africa are of course among the first to experience the most brutal impacts of climate change, and this exacerbates the experiences of those at the edges of society. “Climatic fluctuations and food insecurity have been particularly acute in this subregion,” the paper reads. “Forecasts for 2023 indicate that nearly 142 million individuals in the region will confront acute food insecurity.” It should not be a surprise that “Food insecurity contributes negatively to trust in government.” Also unsurprisingly, the desperation that arises from this hunger drives individual actions, especially among those who have lost trust in governments. It must of course be noted that much of the poverty in the region is a legacy of colonialism.

The consequences of this are stark. Essentially, there is a close correlation between the sense of exclusion and unfairness and the fragility of nation states and their susceptibility to conflicts of various forms. This chart from the paper illustrates the finding well:

The researchers conclude:

“Our findings show that the crisis of confidence experienced by marginalized groups towards state institutions is the primary driver of conflict. This crisis of confidence originates from the perceived failure of state institutions to safeguard interests, ensure justice, promote human capital development equitably, oversee fair allocation of natural resources, and encourage inclusive economic growth. Such institutional failures, contributing to perceptions of social and economic exclusion, invite conflict as they undermine the principles of fairness and inclusivity vital for sustainable development.”

These findings emphasise the importance of the Rule of Law in fostering trust in government and so in building the foundations for economic growth and investment. And there is a clear need to foster the basic expectations of a cohesive society in order to lean against these perceived unfairnesses: “These results suggest strongly that governments in the Sahel G5 as well as sub-Saharan Africa more broadly should focus their efforts on improving the quality of their institutions (reduce corruption and improve law and order) and provision of public goods (healthcare, education, air and water quality, food and shelter sufficiency) rather than focus primarily on macroeconomic variables such as the levels of economic growth and unemployment.”

The sense of being forgotten and left behind by government and wider society is greater for those at the geographic edges: “conflict is often concentrated near national borders where there tend to be more limited or insufficient public services, fostering feelings of exclusion”. Many of those national borders were drawn with the arbitrary straight lines of empire.

That sense of living at the periphery, having been forgotten by government and wider society, is of course not unique to people in the countries of sub-Saharan Africa. Many in all the countries of the world now feel left behind and peripheral. In sub-Saharan Africa these frustrations appear to be reflected in outright conflict but in other parts of the world the same sense of abandonment has inevitable, if different, consequences. The consequential violence can fuel crime, it can drive social division and anger in and with politics, but these are just other forms of the violence and dislocation that comes from people feeling that society no longer operates fairly to protect their interests.

Perceptions of fairness seem to be vital to hold states and their people together in peaceful coexistence.