ESTOPPEL

Question 1

What is estoppel?

Answer 1

Not a part of contract law, runs alongside it
Can be invoked to provide relief if a promise/assumption has been detrimentally relied upon and is not enforceable through contract law
Protects against loss that would be suffered if someone was allowed to act inconsistently

Question 2

Elements of estoppel

Answer 2

Assumption
Inducement
Detrimental reliance
Reasonableness
Unconscionability 
Departure

Question 3

Assumption-

Answer 3

Assumption- The relying party have adopted an assumption, either of fact or about future conduct

Question 4

Inducement-

Answer 4

The assumption must have been induced by the conduct of the representor- made a representation in relation to a particular fact, or made a promise (must be a clear and unequivocal representation)

Question 5

Detrimental reliance-

Answer 5

Relying party must have acted on the assumption in such a way that he/she will suffer detriment if the representor does not adhere to assumption- somehow changed their position to their detriment (assessed at the time of the departure, not limited to financial loss)

Question 6

Reasonablesness-

Answer 6

Relying party has acted reasonably in adopting the assumption, and in the detrimental action they took in reliance on the assumption

Question 7

Unconscionability-

Answer 7

It would be unconscionable in the circumstances for the representor to depart from the assumption- has to be pretty bad

Question 8

Departure-

Answer 8

Representor has departed or threatened to depart from the assumption adopted and acted upon the relying party

Question 9

Common law estoppel-

Answer 9

estoppel by representation, estoppel in past (representations that lead to assumptions of an existing fact) “I have signed the contract”

Question 10

Equitable estoppel-

Answer 10

representations that lead to an assumption about future conduct “I will sign the contract”

Question 11

Proprietary estoppel

Answer 11

• assumptions of a grant of an interest in land

Question 12

Promissory estoppel-

Answer 12

assumptions that a contractual right will not be enforced, or is about assumptions concerning anything but a grant of an interest in land

Question 13

Je Maintiendrai Pty Ltd v Quaglia

issue

Answer 13

• Quaglia argued that the landlord should be estopped from claiming the rental arrears under the doctrine of promissory estoppel. On this basis, the landlord’s promise related to a future intention to accept reduced rent as and when it became due
– Could Je Maintiendrai (landlord) claim the extra rent in arrears under contract law?

Question 14

Je Maintiendrai principles

Answer 14

• Promissory estoppel introduced into Australia and accepted by Australian courts
  
  • Pre Walton: Estoppel used as a defence of a contract claim
  • Flexible approach to detriment

Detriment should be assessed at the time of the representing party’s departure or threatened departure from the assumption

Question 15

Je Maintiendrai Pty Ltd v Quaglia application

Answer 15

Assumption: Quaglia assumed they wouldn’t have to pay the full rent price (they would just pay the reduced price)
Inducement: Landlord’s agreement to a reduced price
Detrimental Reliance: Paying a lump sum (much more difficult especially for a small, struggling company), giving up opportunity to abandon the shop
Reasonableness: Landlord accepted the lower rent for a period of time
Departure: Je Maintiendrai requesting extra money
Unconscionability: They accepted the money before; if they didn’t want the lower rent they could have disagreed at the start

Question 16

Legione v Hateley - issue

Answer 16

Was Mrs. Williams statement “I think that’ll be all right but I’ll have to get instructions” a clear representation for which the Hateleys could have relied upon

Question 17

Legione v Hately - principle

Answer 17

Statement was not clear enough to warrant promissory estoppel
Mrs. Williams was a secretary and therefore it was not reasonable that she had the authority to make such a promise
Estoppel argued as a defence to breach of contract claim (failed)

Question 18

Walton Stores Ltd v Maher - facts

Answer 18

Mahers owned land with a building on it. They negotiated with Waltons Stores for Waltons to lease the property and for the Mahers to demolish the existing building and build a store to Walton’s specifications

- Negotiations on agreement
- 21 Oct: Waltons send draft lease
- Maher sends revised lease
- Early Novemeber: Mahers begin demolitions and advises Waltons to sign lease before Christmas
- Late November: Waltons advises solicitor to 'go slow' with lease
- Early January: Mahers commences building. Reaches 40% complete.
- Late January: Walton advises does not want to proceed

Question 19

Walton Stores Ltd v Maher - was there a contract?

Answer 19

○ No: Instruments Act s126 requires an agreement in writing, signed by the person to be charged

Question 20

Walton Stores Ltd v Maher - 2. Could Promissory estoppel be applied?

Answer 20

○ Existing form could not be applied:
§ Parties were not in an existing contractual relationship
§ Promissory estoppel only acted as a shield, not a sword. Mahers wanted to use it as a sword: o enforce their rights.

Question 21

Walton Stores Ltd v Maher - effect on estoppel (5)

Answer 21

1. The doctrine of estoppel can operate in the absence of existing contractual relations (pre-contractual)
2. Estoppel can be used offensively as a separate cause of action (sword) as well as defensively if someone else sues first (shield)
3. Unification of proprietary and promissory estoppel into a single doctrine of equitable estoppel
4. Remedy is the minimum necessary to meet the detriment (could be reliance based or expectation based damages)
5. Established elements

Question 22

Walton Stores Ltd v Maher - elements

Answer 22

Assumption:
- Legal relations existed
- Waltons would sign the contract
Inducement:
- Waltons encouraged actions
- Silence
- Agreement that ‘time is of the essence’
Detrimental Reliance:
- 40% construction of a specific building for Waltons
○ Time
○ Building they don’t want/need
Reasonableness:
- Walton’s silence whilst knowing that construction had started
Departure/threat to depart:
- Walton’s withdrew and denied any existence of an agreement
Unconscionability
- Building was already 40% completed and Walton’s knew that and didn’t do anything - actually slowed signing process

Question 23

Mobil Oil - elements

Answer 23

• No inducement: All they committed to was a generalised commitment to ‘find a way’ to implement an appropriate tenure for achievement scheme and this did not give rise to an expectation of a particular legal relationship coming into existence or the grant of an identifiable ‘interest’. They were too uncertain so as to induce an assumption for an estoppel to operate
  
  • No detrimental reliance: their efforts working harder was actually beneficial to their business practises

Question 24

Effect of Common law estoppel

Answer 24

Representor is prevented from asserting facts contrary to the representation
Rights of parties are then determined by reference to that assumed state of affairs
Equates to the “expectation” interest- as if fact is true

Question 25

Effect of equitable estoppel

Answer 25

Raises an “equity” in favour of the relying party- court will provide the “minimum equity” to do justice between the parties May be the reliance loss or the expectation loss Relying party has prime facie entitlement to have the relied upon assumption made good Subject to pragmatism Subject to proportionality Relief is discretionary

Question 26

``` Cho promises to pay for $10,000 holiday for Molly Molly pays $2,000 non refundable deposit Cho changes his mind expectation loss? reliance loss? ```

Answer 26

Molly’s expectation loss is $10,000 (as if the assumption is made good) Molly’s reliance loss is $2,000 (loss from relying on the assumption)

Question 27

Commonwealth v Verwayen | Issue

Answer 27

- Could the Commonwealth change their policy and therefore change their defences in the negligence case against Verwayen

Question 28

Commonwealth v Verwayen elements

Answer 28

ELEMENTS Assumption: Commonwealth wouldn’t use the Limitations Act as a defence Inducement: Indication not to use it; two years didn't use it Detrimental reliance: Legal costs, hopes were risen in the possibility of claiming compensation Reasonableness: Yes, no indication to use it as a defence until 2 years into law sit Departure/threat to depart: Commonwealth attempting to claim the Act as a defence Unconscionability: Had the opportunity to use it at the beginning, allowed Verwayen to put time/money/ effort into case for two years

Question 29

Commonwealth v Verwayen judgements

Answer 29

Dawson and Deane JJ (in estoppel): the remedy should be to prevent the Commonwealth from going back on its promise not to plead the defences Gaudron and Toohey JJ (in waiver): the Commonwealth should be prevented from pleading the defences; so Verwayen was able to proceed with his claim Dissenting Mason CJ, Brennan and McHugh JJ (in estoppel): minimum necessary to meet the detriment would be to cover Verwayen’s legal costs, and that the Commonwealth should still be able to plead the defences

Question 30

Guimelli v Guimelli | facts

Answer 30

* The case involved a family orchard business. There were two sons in the family. One of the sons, Robert, was a partner in the business and he lived on one of the properties owned by his parents * His parents promised him that if he stayed on the property, the land would be subdivided and they would transfer the land with the house to him.  In reliance on this promise, he passed up full time work to stay and work on the farm * Relationship broke down when he married a woman his parents did not approve of. Robert’s parents refused to transfer the property to him  * His brother moved onto the property and made improvements to it

Question 31

Guimelli v Guimelli | elements

Answer 31

Assumption: He would get the property with the house when the land was divided Inducement: Statement from parents Detrimental reliance: Gave up opportunity to work full-time Reasonableness: Relationship with parents - was reasonable to believe his family would uphold their word Departure: Parents refusing to give house Unconscionable: Directly, knowingly went against the agreement with the knowledge that it'd affect their son - out of spite because they didn't like the girlfriend/wife

Question 32

Guimelli v Guimelli judgement

Answer 32

* The Full Court ordered that as a remedy the farm should be conveyed to Robert. That gave effect to expectation damages. * The matter was appealed to the High Court on basis that it did more than award the minimum necessary to award Robert on basis of reliance on assumption * But High Court did not accept that lesser relief should be given on these facts * Changed the order from one of specific performance to an award of equitable damages for the same amount  * The circumstances of the family relationship made it a bad idea to allow Robert to move onto the property! Also, his brother was living on the property so it affected a third party

Question 33

Ways to 'make good' the assumption

Answer 33

○ Specifically enforce a promise upon which the relying party has relied (so this can involve ordering that some property be transferred to the relying party); or ○ Make an award of damages to compensate the relying party, because to enforce the promise would be impractical, unjust or unfairly impact on a third party; (used in Giumelli v Giumelli) or ○ Make an award to compensate the relying party for losses incurred up until the point the representor sought to resile from the assumption

Question 34

Can estoppel be used as an independent course of action?

Answer 34

Yes W v G | - sword rather than sheild

Question 35

W v G elements

Answer 35

Assumption: The defendant created or encouraged in the plaintiff an assumption that she would act as parent to the children, accept responsibility for their general welfare and provide for the needs of their mother There was no emphasis that there be an existing or expected legal relationship of any type Inducement: The inducement was that the defendant induced the Plaintiff to adopt the assumption by encouraging the conduct and she was quite closely involved in the artificial insemination concept Detriment: the task and expense of bringing them up on her own, whereas if G had acted in accordance with that assumption, W would have had her assistance in this task Reasonableness: the Plaintiff’s reliance here was not unreasonable so as to prejudice the finding that there was reliance and that this was intended by G  Unconscionability: it was unconscionable for G to make no contribution whatsoever to the upbringing of the children.  Ordered: G provide $150,000 to be paid for the benefit of the children