Lay and another (Respondents) v Independent Vetcare Limited (Appellant)

Permission to Appeal application lodged

Case summary
Permission to Appeal
Previous proceedings

Case summary

Case ID

UKSC/2026/0151

Parties

Appellant(s)

Inspiring Vet Care Limited

Respondent(s)

(1) Jacqueline Lay, (2) Clifford Lay

Issue

(1) Where a party adopts a particular position (“position X”) in interim proceedings, is that party estopped by its conduct from adopting a position contrary to position X in a later action between the parties? Does it matter that the party to be estopped successfully amended its position in the first proceedings to remove any inconsistency with that taken in the later action? (2) Did the Court of Appeal correctly apply the causation test for the estoppel by conduct doctrine? (3) Was the Court of Appeal correct to strike out the estopped party’s counterclaim as an abuse of process, rather than leaving the issue to be resolved at trial?

Facts

Easy Direct Debits Limited (“EDD”) provides subscription services to veterinary practices to help them receive direct debit payments from their pet-owner clients. To do this, EDD needs access to the Bankers’ Automated Clearing Services system (“BACS”). Prior to EDD’s acquisition by the Appellant (“IVL”) on 28 October 2020, EDD accessed BACS indirectly by contracting with BACS-approved payment services providers (the “Indirect Model”). After EDD’s acquisition, EDD – in addition to continuing to use the Indirect Model – began to access BACS directly (the “Direct Model”). The First Respondent (“Mr Lay”) was EDD’s CEO and Managing Director until 7 June 2023, when he was dismissed by IVL for alleged gross misconduct and an irretrievable breakdown in trust and confidence. Mr Lay was unhappy with his dismissal. He brought proceedings (the “Employment Proceedings”) in the Employment Tribunal (the “ET”), initially for interim relief (reinstatement of his employment). Mr Lay argued that the real reason for his firing was that he had made a “protected disclosure” under Section 43B of the Employment Rights Act 1996. This disclosure was that, if EDD wished to operate the Direct Model, it needed to obtain authorisation from the Financial Conduct Authority (the “FCA”) under the Payment Services Regulations 2017. IVR resisted this interim application on the basis that, amongst other things, EDD did not need to seek this authorisation as it was not a regulated activity. This entailed arguing that the Indirect Model was also not a regulated activity and was thus lawful. The ET dismissed Mr Lay’s application. The ET also stayed the Employment Proceedings. This was because Mr Lay and the Second Respondent (“Mrs Lay”), his wife, had brought another action against IVL under the contract by which IVL had acquired EDD (the “SPA”). IVL counterclaimed, arguing that the Respondents had breached the SPA (the “Counterclaim”). IVL contended that EDD’s pre-SPA operation of the Indirect Model was a regulated payment service which, in breach of the SPA, EDD did not have authorisation from the FCA for. IVL also successfully sought to amend its Grounds of Resistance before the ET to remedy any contradiction between its stance in the Employment Proceedings versus the Counterclaim. The Respondents sought to have the Counterclaim struck out (the “Strike Out Application”), submitting that IVL was “estopped by conduct” from alleging that the Indirect Model was a regulated payment service given its stance in the Employment Proceedings that the Indirect Model was not regulated and was thus lawful. HHJ Bird dismissed the Strike Out Application. The Respondents successfully appealed, the Court of Appeal striking out the Counterclaim. IVL now appeals to the Supreme Court.