Category Archives: Estoppel

Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7 | 19 February 1988

Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 (19 February 1988).

http://www.austlii.edu.au/au/cases/cth/HCA/1988/7.html

Maher owned a commercial property at Nowra. Waltons was a national department store. Waltons and Maher entered into negotiations regarding the lease of Maher’s property conditional upon Maher demolishing the existing building and constructing a new one in accordance with Waltons’ requriements.

Waltons provided Maher with a draft lease contract. Maher suggested amendments and indicated they needed to complete the agreement in the next day or so in order to arrange building supplies before Christmas. Maher indicated that he did not want to demolish the building until he knew there was no problem with the lease. The solicitor for Waltons said to Maher that Waltons had informed him that the amendments were acceptable but would obtain formal instructions and inform him by the next day if they did not agree with any of the amendments. The solicitor for Waltons then sent Maher’s solicitor a redrafted lease with the suggested amendments and did not object to the amendments the next day, or at all. Maher then sent Waltons an executed lease by way of exchange and then proceeded with the demolition. A week later, Waltons had concerns about the transaction and, not having exchanged their counterpart of the lease, instructed their solicitor to go slow. Waltons then became aware that the building had been demolished and when the new building was 40% completed advised Maher that they did not wish to proceed with the transaction.

Maher sued Waltons in the Supreme Court of NSW, obtaining an order for specific performance or damages in lieu. An appeal to the NSW Court of Appeal was dismissed, as was an appeal to the High Court of Australia.

Per Mason CJ, Wilson, Brennan and Deane JJJ, Waltons was bound to enter into a lease agreement and estopped from denying an implied promise to complete the contract as it would be unconscionable for Waltons to take a course of inaction that exposed Maher to detriment by acting on a false assumption.

The High Court brought together proprietary and promissory estoppel under the broader principle of equitable estoppel. When a person makes a non-contractual or voluntary promise and knowingly induces the other party to act to his or her detriment in reliance on that promise, that person is precluded from resiling from the promise without avoiding the detriment. The person who makes the promise is liable to either honour the promise or avoid detriment to the other party.

Per Brennan J at 428-9:

“In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant’s property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff’s reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.”

Lawyers

Sydney, Australia

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Commonwealth v Verwayen (“Voyager case”) [1990] HCA 39 | 5 September 1990

ON 5 SEPTEMBER 1990, the High Court of Australia delivered Commonwealth v Verwayen (“Voyager case”) [1990] HCA 39; (1990) 170 CLR 394 (5 September 1990).

Estoppel – Waiver – Action against Commonwealth by serviceman injured in collision between Australian naval vessels engaged in combat exercises – Defence – Failure to plead expiration of limitation period or absence of duty of care – Statements by Commonwealth that it would not rely on either defence – Subsequent amendment of defence to plead both grounds – Whether Commonwealth estopped from relying on defences – Whether defenced waived – Limitation of Actions Act 1958 (Vict.), s. 5(6).

In 1964, the Australian Navy ships Melbourne and Voyager collided whilst performing exercises off Jervis Bay. Hundreds of servicemen were injured and 82 died.

Verwayen was one of the many servicemen who claimed damages for personal injury against the Commonwealth. His action was brought many years after the limitation period expired.

Verwayen’s solicitor acted for a number of servicemen. In another claim, the solicitor was assured in writing by the solicitor for the Commonwealth and the Minister of Defence that the Commonwealth would not be invoking the limitation defence. In other words, the Commonwealth would not be defending the case on the basis that the proceedings were barred because they were commenced after the expiry of the three year time limit.

The solicitor sought the same assurances from the Commonwealth before commencing Verwayen’s proceedings.  The assurances were subsequently given after the proecceings were issued and the Commonwealth filed a defence pleading that the Commonwealth did not owe a duty of care because the harm occurred in combat exercises. The Commonwealth did not plead the limitation defence.

About 18 months after the proceedings were issued and 14 months after the defence was filed, the Commonwealth filed an amended defence pleading the limitation defence.

By a majority of 4:3, the High Court held that the Commonwealth could not plead the limitation defence.

Deane and Dawson JJ held that the appeal be dismissed applying the principle of estoppel by conduct. Both inferred that Mr Verwayen had prepared and prosecuted his action in reliance upon the representations made by the Commonwealth. The Commonwealth’s conduct raised an equity that could only be accounted for by holding it to the assumed state of affairs.

Toohey and Gaudron JJ held that the appeal be dismissed because the Commonwealth had waived its right to rely upon the defence.

Mason CJ, Brennan, Deane, Dawson and McHugh JJ were of the view that reliance upon a representation was fundamental to the establishment of an estoppel, but only Deane and Dawson JJ held that an estoppel could be applied in this case.

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Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45 | 1 September 1981

ON 1 SEPTEMBER 1981, the High Court of Australia delivered Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 (1 September 1981).

http://www.austlii.edu.au/au/cases/cth/HCA/1981/45.html

A party may be estopped (ie barred) from litigating a claim that could have been litigated in previous proceedings if it was unreasonable for the claim not to have been so litigated or if the new proceedings would result in an inconsistency with the earlier decision.

Lawyers

Sydney, Australia

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Sidhu v Van Dyke [2014] HCA 19

ON 16 MAY 2014, the High Court of Australia delivered Sidhu v Van Dyke [2014] HCA 19 (16 May 2014).

http://www.austlii.edu.au/au/cases/cth/HCA/2014/19.html

The High Court dismissed an appeal from the NSW Court of Appeal, which had held that Mr Sidhu could not depart from assurances previously given to his former partner, Ms Van Dyke, that he would transfer certain real property to her.

The High Court was satisfied from the evidence given by Ms Van Dyke at the trial that she had acted to her detriment in reliance on Mr Sidhu’s representations and that she was entitled to equitable compensation to be assessed with reference to the value of the property in question.

.”

Lawyers

Sydney, Australia

1300 00 2088

Commonwealth v Verwayen (“Voyager case”) [1990] HCA 39

ON 5 SEPTEMBER 1990, the High Court of Australia delivered Commonwealth v Verwayen (“Voyager case”) [1990] HCA 39; (1990) 170 CLR 394 (5 September 1990).

In 1964, the Australian Navy ships Melbourne and Voyager collided whilst performing exercises off Jervis Bay. Hundreds of servicemen were injured and 82 died.

Verwayen was one of the many servicemen who claimed damages for personal injury against the Commonwealth. His action was brought many years after the limitation period expired.

Verwayen’s solicitor acted for a number of servicemen. In another claim, the solicitor was assured in writing by the solicitor for the Commonwealth and the Minister of Defence that the Commonwealth would not be invoking the limitation defence. In other words, the Commonwealth would not be defending the case on the basis that the proceedings were barred because they were commenced after the expiry of the three year time limit.

The solicitor sought the same assurances from the Commonwealth before commencing Verwayen’s proceedings.  The assurances were subsequently given after the proecceings were issued and the Commonwealth filed a defence pleading that the Commonwealth did not owe a duty of care because the harm occurred in combat exercises. The Commonwealth did not plead the limitation defence.

About 18 months after the proceedings were issued and 14 months after the defence was filed, the Commonwealth filed an amended defence pleading the limitation defence.

By a majority of 4:3, the High Court held that the Commonwealth could not plead the limitation defence.

Deane and Dawson JJ held that the appeal be dismissed applying the principle of estoppel by conduct. Both inferred that Mr Verwayen had prepared and prosecuted his action in reliance upon the representations made by the Commonwealth. The Commonwealth’s conduct raised an equity that could only be accounted for by holding it to the assumed state of affairs.

Toohey and Gaudron JJ held that the appeal be dismissed because the Commonwealth had waived its right to rely upon the defence.

Mason CJ, Brennan, Deane, Dawson and McHugh JJ were of the view that reliance upon a representation was fundamental to the establishment of an estoppel, but only Deane and Dawson JJ held that an estoppel could be applied in this case.

Lawyers 1300 00 2088

Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7

Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 (19 February 1988).

http://www.austlii.edu.au/au/cases/cth/HCA/1988/7.html

Maher owned a commercial property at Nowra. Waltons was a national department store. Waltons and Maher entered into negotiations regarding the lease of Maher’s property conditional upon Maher demolishing the existing building and constructing a new one in accordance with Waltons’ requriements.

Waltons provided Maher with a draft lease contract. Maher suggested amendments and indicated they needed to complete the agreement in the next day or so in order to arrange building supplies before Christmas. Maher indicated that he did not want to demolish the building until he knew there was no problem with the lease. The solicitor for Waltons said to Maher that Waltons had informed him that the amendments were acceptable but would obtain formal instructions and inform him by the next day if they did not agree with any of the amendments. The solicitor for Waltons then sent Maher’s solicitor a redrafted lease with the suggested amendments and did not object to the amendments the next day, or at all. Maher then sent Waltons an executed lease by way of exchange and then proceeded with the demolition. A week later, Waltons had concerns about the transaction and, not having exchanged their counterpart of the lease, instructed their solicitor to go slow. Waltons then became aware that the building had been demolished and when the new building was 40% completed advised Maher that they did not wish to proceed with the transaction.

Maher sued Waltons in the Supreme Court of NSW, obtaining an order for specific performance or damages in lieu. An appeal to the NSW Court of Appeal was dismissed, as was an appeal to the High Court of Australia.

Per Mason CJ, Wilson, Brennan and Deane JJJ, Waltons was bound to enter into a lease agreement and estopped from denying an implied promise to complete the contract as it would be unconscionable for Waltons to take a course of inaction that exposed Maher to detriment by acting on a false assumption.

The High Court brought together proprietary and promissory estoppel under the broader principle of equitable estoppel. When a person makes a non-contractual or voluntary promise and knowingly induces the other party to act to his or her detriment in reliance on that promise, that person is precluded from resiling from the promise without avoiding the detriment. The person who makes the promise is liable to either honour the promise or avoid detriment to the other party.

Per Brennan J at 428-9:

“In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant’s property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff’s reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.”

Lawyers

Sydney, Australia

1300 00 2088

Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45

ON 1 SEPTEMBER 1981, the High Court of Australia delivered Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589 (1 September 1981).

http://www.austlii.edu.au/au/cases/cth/HCA/1981/45.html

A party may be estopped (ie barred) from litigating a claim that could have been litigated in previous proceedings if it was unreasonable for the claim not to have been so litigated or if the new proceedings would result in an inconsistency with the earlier decision.

Lawyers

Sydney, Australia

1300 00 2088