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PRINCIPLES OF AUSTRALIAN EQUITY AND TRUSTS [T]he basal purpose of the doctrine [of estoppel] … is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the [relying party] acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment. The principle enunciated by Dixon J applies to both promissory and proprietary estoppels: Delaforce v Simpson-Cook at 491. 12.49 There must be a link between the detriment and the assumption or expectation. In Thompson v Palmer (1933) 49 CLR 507 at 547, Dixon J said that the relying party must suffer detriment in the sense that, ‘as a result of adopting [the assumption or expectation] as the basis of action or inaction, [the relying party] will have placed himself in a position of material disadvantage if departure from the assumption is permitted’. 12.50 The notion of detriment conjures up the idea that the relying party will be worse off in some way. It is not enough that the relying party merely acted upon the representor’s promise. In Je Maintiendrai Pty Ltd v Quaglia (1980) 26 SASR 101 at 106, the Full Court in South Australia held that it was necessary that the going back on the promise or representation would ‘result in some detriment and therefore some injustice’ to the relying party. 12.51 In Walsh v Walsh [2012] NSWCA 57 at 14, Meagher JA, speaking for a unanimous Court of Appeal, said that ‘[t]he detriment which can support an estoppel by encouragement need not be financial and it is not necessary, where that detriment is the expenditure of money, that the expenditure have been on the property in respect of which the estoppel is sought to be enforced’. The detriment suffered cannot be minor. It has been variously described as needing to be material or significant or substantial. In Sullivan v Sullivan [2006] NSWCA 312 at [20], Handley JA said: The object of the exercise is to do equity and for that purpose ‘detriment’ is no narrow or technical concept. It need not consist of expenditure of money or other quantifiable financial disadvantage so long as it is something substantial. The requirement must be approached as part of a broad inquiry as to whether departure from a promise would be unconscionable in all the circumstances. In Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298 at 307–8, Handley JA said: While a single peppercorn may constitute valuable consideration which can support a simple contract it seems to me that the loss of such an item would not constitute a ‘material detriment’, ‘material disadvantage’, or a ‘significant disadvantage’ for the purposes of the law of estoppel. It may seem strange that there should be such a distinction. However in the first case the consideration has been accepted as the price of a bargain which the law strives to uphold. Promissory estoppels and estoppels by representation lack this element of mutuality, and the relevant detriment has not been accepted by the party estopped as the price for binding himself to the representation or promise. Copyright LexisNexis. Sample only, not for classroom use or distribution. 280 Spi-Radan & Stewart - Principles of Australian Equity and Trusts 2nd ed. Ch.12.indd 280 10/10/2012 05:22:31 200595
281 CHAPTER 12: EQUITABLE ESTOPPEL 12.52 In assessing the existence of detriment one must distinguish between expectation and reliance loss. It is clear that it is the reliance loss, and not expectation loss, that goes to establishing detriment. In Delaforce v Simpson-Cook at 491, Handley AJA summarised the position as follows: The relevant detriment is not the loss flowing from non-fulfilment of the promise or assurance. The detriment that makes an estoppel enforceable is that which the [relying party] would suffer, as a result of his or her original change of position, if the assumption which induced it was repudiated by the [representor]. In the context of the facts of Waltons Stores v Maher, the expectation loss suffered by the Mahers was the loss of rent they expected Waltons to pay during the term of the anticipated lease. The reliance loss was the wasted expenditure incurred in demolishing and rebuilding the premises. It was the reliance loss, and not the expectation loss, that established detriment in that case. 12.53 The significance of detriment is that it is this factor which makes it unconscientious or unjust for the representor to depart from the promise or representation. In Waltons Stores v Maher, at CLR 404; ALR 524, Mason CJ and Wilson J said: [E]quity will come to the relief of a [relying party] who has acted to his detriment on the basis of a basic assumption in relation to which the other party has ‘played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it’: per Dixon J in Grundt [at 675]… Equity comes to the relief of such a [relying party] on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption. Failure to avoid detriment 12.54 The representor must have failed to act to avoid the relying party suffering detriment. One way in which action could be taken to avoid the detriment is by simply fulfilling the assumption or expectation. 12.55 However, it must be understood that the object of equitable estoppel is not to compel the representor to fulfil the assumption or expectation, but rather to avoid detriment if the assumption or expectation goes unfulfilled. Thus, this might be done by the representor advising the relying party that the assumption is mistaken before irreversible detriment has been incurred. In this respect, in Vella v Wah Lai Investment (Australia) Pty Ltd [2004] NSWSC 748 at [169], in a passage subsequently approved by the Victorian Court of Appeal in ACN 074 971 109 (as trustee for the Argot Unit Trust) v The National Mutual Life Association of Australasia Ltd (2008) 21 VR 351 at 391, Campbell J said: If one party, who has encouraged another to act on the basis that a particular state of affairs exists, gives notice that that state of affairs should no longer be regarded as existing then, unless the other party has already irretrievably prejudiced himself by acting on the assumption that that state of affairs exists, the estoppel will cease to bind, either immediately or after the other party has been given reasonable notice. This is the result of the principle that the relief which is appropriate to give effect to an estoppel is the minimum relief which would prevent the injustice arising by the person estopped departing from the assumption or expectation which has been induced. Copyright LexisNexis. Sample only, not for classroom use or distribution. Spi-Radan & Stewart - Principles of Australian Equity and Trusts 2nd ed. Ch.12.indd 281 10/10/2012 05:22:31 200595
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