Promissory Estoppel Flashcards
Promissory Estoppel
General rule?
Estoppel is an equitable remedy where there’s insufficient consideration. Differences to consideration:
There is no legally binding promise. If there is, the plaintiff must resort to the law of contract.
What attracts the principle of estoppel is not the promise but the expectation that it creates that is acted on to their detriment.
Estoppel has no application where the transaction is wholly executory on the plaintiff’s part. It’s not the existence of an unperformed promise that attracts equity, but the conduct of the plaintiff in acting upon the expectation to which the promise gives rise.
Promissory Estoppel
Property Limited v High Trees [1947]
PE may only be used as a defence: ‘A Shield not a Sword’
H had leased a prop from P in Ldn 1939. H then sublet it. Outbreak of war, many tenants failed to rent in Ldn and properties were vacant. H asked P if he’d accept half the rent payable. P agreed.
But, H gave no consideration. War ended, prop was occupied again. P sought to reinstate the original rent. Held as the cause of the reduced rent (war) had ended, P entitled to request full rent.
While P didn’t seek the deficit not paid during the war, Denning stated even if he did, he wouldn’t have been successful. Despite no consideration, he was estopped from going back on his word.
NB: He represented he would accept half rent and H acted on that statement/representation.
Ingredients of PE - Pre-Existing Relationship
Combe v Combe [1951]
D promised ex-wife £100 p/a, but she gave no consideration. Tried to rely on High Trees for PE.
No: PE only operates as defence, not a cause of action and there was no pre-existing legal relationship
Ingredients of PE - An Unambiguous Representation
Bennett Construction v Greene [2004]
B bought land from defs w outline planning permission. Site plan showed planned installation of pipe running across the prop of one of the defs. After contract completed, def refused to let the pipe be inst.
B claimed Ds made an unambiguous representation through the site plan which gave B permission to install the pipe and thus Ds were estopped from denying B had permission.
Held no representation existed: Evidence showed Ds’ solicitor raised objections to the pipe and B sought Ds permission before the contract but did not receive it.
Ingredients of PE - An Unambiguous Representation
Kelleher and Kelleher v O’Connor [2010]
K used premises as restaurant when landlord complained that, under the lease, they were to be use only as a “shop”. Turns out the definition of “shop” in the lease included a restaurant.
Held even if not, O had allowed this over a long period without complaint so thus was estopped.
Ingredients of PE - Reliance by Promisee
Daly v Minister for Marine [2001
D got letter from Department wrongly stating he was eligible under a fisheries scheme. A representation was made, but no evidence of reliance so estoppel couldn’t be raised.
Ingredients of PE - Unconscionability or Unfairness
D&C Builders v Rees [1965]
D was threatened that if he didn’t accept a lesser payment in full satisfaction R would pay nothing
D not estopped from bringing a claim for the outstanding balance as R’s threat was made in knowledge of D’s dire financial position and thus was acting inequitably.
Ingredients of PE - Unconscionability or Unfairness
Revenue Commissioners v Moroney [1972]
Dad made agreement with sons to transfer licensed premises to them to avoid estate duty.
The deed of transfer said they’d buy it for £16k, but it was never intended they’d pay this.
Dad never represented to sons that he’d seek it, and on this basis the deed was signed.
Dad died, RCs looked for estate duty payable on the £16k. Kenny J held bc dad said his sons wouldn’t be liable and they’d acted on this representation, the RCs couldn’t pursue the debt
Ingredients of PE - Unconscionability or Unfairness
Zurich Bank v McConnon [2011]:
Held the bank seeking repayment of loan after they agreed a standstill period (which they extended) and a revised payment plan was allowed as it was not unconscionable. It was a fair request in the context of a large commercial loan facility.
Ingredients of PE - Shield not Sword
Waltons Stores Ltd v Maher [1988] AUSTRALIA
P and D negotiating lease of land by P to D. Plan: P demolish a building on the land and erect a new one to D’s specifications. Negotiations neared ending, D suggested they were about to sign
P began to demolishing. Then D had 2nd thoughts & instructed solicitor to go slow in finalising the contract, but knew P started. Month later, D withdrew (built 40%) P allowed use PE as cause of action
Ingredients of PE - Shield not Sword
Re JR, a Ward of Court [1993]
Committee of elderly ward wanted to sell his house (dilapidated). He’d lived there for years with R, having represented to her it’d be her home for the rest of her life. Left everything in will to R.
Held a case of promissory estoppel was made: R acted to her detriment in reliance on the representation. Held she was entitled to a life interest in the house.
But held in the circumstances, more appropriate to sell the house and buy a new house for her from the proceeds. This is promissory estoppel creating proprietary rights (SWORD not shield!)
Ingredients of PE - Shield not Sword
Association of GPs Ltd v Minister for Health [1995] Reasserted the restriction
Doctrine of equitable PE cannot create a new cause of action where none existed before
Ingredients of PE - Shield not Sword
Daly v Minister for Marine [2001]:
No mention of the limitation. Appeared to allow sword.
Ingredients of PE - Shield not Sword
What does Clark have to say?
The restriction is unsatisfactory as the basis of PE is to avoid inequitable and unfair consequences that may arise from the non-observance of promises that are meant to be binding and acted upon. It seems vital that a flexible remedy system be available to the courts
Ingredients of PE - The Remedy is a Matter for the Court
Re JR, a Ward of Court [1993]
PE is applied at the discretion of the court and not as a right. The court must decide how to satisfy the equity that has been raised by the estoppel:
Committee wanted to sell the house, R claimed an interest in it due to the representation he made.
Court found, on the facts, an estoppel arose. They had to give effect to the equity that arose and entitled her to stay in the house for free as long as she wished. Held best way to satisfy this equity was to sell the house and buy a smaller, more suitable one from the proceeds for R
