Promissory Estoppel
1. Here, [insert representor] has made representations/promises as to future conduct upon which [insert representee] has relied on
2. Despite the absence of a pre-existing legal relation/obligation between [representor]
and [representee] such that a common law estoppel cannot be established, promissory estoppel may still arise in equity. (High Trees, Denning J; Crabb at 181)
a. FACTS:
i. D promised P to only enforce ½ rent during WWII (i.e. promise not to exercise a right) ; estopped from resiling from the promise and
claiming the difference later
3. Whilst traditionally, promissory estoppel merely operated as a shield (High Trees), per the majority in Walton Stores at 404, it now gives rise to a cause of action following the consolidation of promissory and proprietary estoppel into a single overarching doctrine of equitable estoppel
4. ELEMENTS: (Moratic, Brereton J at [32] citing the leading Australian formulation in Walton Stores, Brennan J at 428-9)
a. [insert representee] adopted an assumption as to the terms of a legal
relationship with [representor] by (1) assuming a particular legal relationship existed (e.g. right will not be exercised against them) or (2) assuming a legal relationship would come into existence (e.g. right will be granted in their favour)
i. For promissory estoppel there must have been a
clear/unequivocal/unambiguous representation (whether express or implied) regarding the terms of the relationship
1. Crown Melbourne v Cosmopolitan Hotel
a. Statement that tenants ‘would be looked after at renewal time’ of lease was insufficient
2. Austotel v Franklins
a. there was no specific representation by D that the supermarket deal would go through
b. Agreement had not reached a level of finality – there was still a substantial amount of approvals and issues to be finalised
ii. For proprietary estoppel: looking for an assumption as to the future acquisition of ownership of property (Giumelli v Giumelli at 112;
affirmed in Sidhu v Van Dyke at 511[2])
1. [insert representee] has adopted an assumption as to the future acquisition of ownership of property
b. [insert representor] induced/acquiesced in [insert representee’s] adoption of that assumption
i. Silence is sufficient to bind the conscience of [insert representor]
(Walton Stores)
1. W’s inaction constituted a clear encouragement or inducement to continue on the assumption that the contract would be finalised
ii. C.f. Austotel:
1. Parties had purposefully engaged in a cat & mouse game where neither party wanted to bind themselves to a final agreement hence, reliance by [insert representee] was unreasonable such that there was no inducement by [insert representor]
c. [insert representee] acted in reliance on its assumptions i. Reliance must have been reasonable
ii. Commonwealth v Verwayen
1. It is not reasonable for [insert representee] to rely on [insert representor’s] pleadings to assert an assumption that [insert representor] would not exercise their right (e.g. to plead a defence), as it is always open to the parties to adjust & amend their pleadings
iii. Commercial dealings: Austotel
1. [insert representor] and [insert representee] are not ordinary individuals with unequal bargaining power. The parties are substantial commercial enterprises, well-resourced and advised, dealing in a commercial transaction having a great value (Austotel, Kirby P at 585)
2. Such parties had purposefully engaged in a cat & mouse game where neither party wanted to bind themselves to a final agreement hence, reliance by [insert representee] was unreasonable such that there was no inducement by [insert representor]
3. Despite Pristley JA’s dissent at 614-15, courts are reluctant to substitute lawyerly conscience for the hard-headed decisions of business people. Hence, inducement/reliance is unlikely to be established
4. Relevant factor: whether agreement reached level of finality d. [insert representor] knew or intended that the [insert representee] so act and
i. Given the assumption was actively induced/encouraged by making of a promise, knowledge or intention element is satisfied (Walton Stores, Brennan J)
1. Parties had reached a final form of the agreement 2. Amended contracts were with the solicitors waiting for
instructions as to any further variations
3. Solicitors had suggested silence by the parties would suggest there would be no further amendments or variations in the lease such that it was in its final form
ii. If via acquiescence:
1. Agreement had not reached a level of finality – there was still a substantial amount of approvals and issues to be finalised (Austotel)
e. A departure from the assumption would occasion detriment to [insert representee]
i. In establishing a causal link between the detriment and the assumption, the assumption must have materially contributed to [insert
representee’s] course of conduct, but need not be the only factor (low bar)
1. [insert representee] likely satisfies the low bar of establishing a causal link between detriment the assumption, given the
assumption has clearly materially contributed to his/her course of conduct
2. Whilst [include facts] may have played a role in the loss, the [representor’s] representation need not be the only factor to [insert representee’s] detriment
a. EXAMPLE:
i. Sidhu v Van Dyke
1. VD’s affection for Sidhu also played a factor in VD staying, but the promise to convey the house was also relevant 3. Per Walton Stores, reliance loss, and not the expectation loss,
goes to establishing detriment
a. Expectation loss: loss of rent W was expected to pay to M during the term of the anticipated lease
b. Reliance loss: wasted expenditure incurred in demolishing and rebuilding the premises
Promissory Relief
1. In exercising its discretion to make an order in favour of the relying party, in promissory estoppel cases, the courts generally will make orders for a reliance- based relief (Waltons Stores v Maher at 427; Commonwealth v Verwayen at 411- 12)
2. However, the reasoning in Sidhu suggests that proprietary estoppel’s reasoning for granting expectation-based relief may equally be applied to promissory estoppel cases
o Given the apparent consolidation of the doctrines of promissory and proprietary estoppel under the overarching principle of unconscionability (Brennan J in Waltons Stores); and
o Guimelli; Sidhu the suggestion that courts are not restricted to doing the minimum equity such that broader circumstances may be considered to award a relief based remedy
▪ the starting point for promissory estoppel may also be argued to be the fulfilment of the promise subject to any adverse effects on third parties (see Giumelli)
• Where to do justice in the circumstances would not require fulfilment of the promise but the value of promise to the son
• However, this is yet to be confirmed
• For now, it appears from Waltons Stores, notion of minimum equity still applies
Proprietary Estoppel
1. Here, [insert representor] has made representations/promises as to future conduct upon which [insert representee] has relied on
2. Despite the absence of a pre-existing legal relation/obligation between [representor]
and [representee] such that a common law estoppel cannot be established, promissory estoppel may still arise in equity
3. Proprietary estoppel has always provided for a cause of action (Crabb)
4. Unlike promissory estoppel, there is no need for an unequivocal/unambiguous representation
5. SEE ABOVE
Proprietary Relief
1. A line of historical cases suggests that the court must do the minimum equity required to do justice in providing relief such that a reliance-based relief would be awarded to [insert representee] (Walton Stores at 419; Commonwealth v Verwayen)
2. However, more recent cases have favoured an expectation-based relief reflecting the value of the promise (Giumelli, Gleeson CJ, McHugh, Gummow and Callinan JJ at 123; Commonwealth v Verwayen, Deane J at 445)
3. Hence, prima facie, [insert representee] is entitled to a (1) fulfillment of the promise and grants a constructive trust over the land (Giumelli) subject to the court’s discretion
4. However, there must be proportionality between the relief ordered and the detriment suffered. The disproportion between the values are such that the award of a larger sum cannot be justified, especially considering there was nothing personal or special in the representee’s disappointment to justify fulfilment of the promise (Mutual Life
Association) a. FACTS:
i. Value of promise was $1.5 billion vs detriment suffered in reliance was only $27 million
ii. Court did not fulfil promise & allowed a more limited relief of loss suffered
5. Despite the apparent disproportionality in value, the promise will be fulfilled as the detriment is of a kind or extent that involves life-changing decisions that have irreversible consequences of profoundly personal nature (Donis; Sidhu v Van Dyke)
a. It would not be disproportionate to force [insert representor] to complete or adhere to his/her promise to [insert promise]
i. Sidhu:
1. Argument that P’s reliance on representation to transfer house was unreasonable + detrimental reliance only extended to decision not to seek a property settlement from divorce proceeded such that it would be disproportionate to transfer house was rejected
6. However, the promise will not be enforced where third party interests would be adversely affected
a. Sidhu v Van Dyke at 529-30 b. Giumelli
i. Brother was already living in the house 7. EXAMPLE of broad discretion of court:
a. Given [insert representee’s] interest would be at risk of being interfered with by [insert representor], the promise will be fulfilled and the property conveyed
b. Pascoe v Turner
i. D spent money improve the house thinking P transferred it to her – a grant of a licence would place D’s interest at risk of being interfered with, court ordered property to be conveyed
