Copyright LexisNexis. Sample only, not for classroom use or ...

PRINCIPLES OF AUSTRALIAN EQUITY AND TRUSTS
Entire agreement clauses and equitable estoppel
12.56 A question with respect to equitable estoppel is whether a clause in a contract which denies
any legal effect to previous negotiations and representations can prevent a relying party from pleading
a case based upon equitable estoppel. In relation to such entire agreement clauses, in Franklins
Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603 at 734; 264 ALR 15 at 141, Campbell JA,
speaking for the Court of Appeal on this point, said:
I would accept that an entire agreement clause … that … specifically denies efficacy to all previous
negotiations and representations, could not overcome an equitable estoppel, once established. An
‘entire agreement clause’ might create a factual difficulty in the way of proof of the elements of
equitable estoppel, most obviously, proof of inducement or reliance, and I would not want to rule
out the possibility that it might be relevant to any precise remedy granted (though I cannot at
present think of an example of when that might occur). However, it does not create an insuperable
obstacle of principle. Consistently with the equitable principle that it will not allow a contract to
be an instrument of fraud, equity would not permit an entire agreement clause to stultify the
operation of its doctrines.
RELIEF BASED UPON EQUITABLE ESTOPPEL
12.57 Establishing the elements of equitable estoppel gives rise to an equity in favour of the relying
party. This means that the relying party is entitled to some equitable relief. The relief is not based
upon there being a promise or representation, but rather upon the expectation that the promise or
representation generated: Giumelli v Giumelli at CLR 121; ALR 482.
12.58 It has often be said that there needs to be proportionality between the relief ordered
and the detriment suffered, or that the court will, in making its orders, determine the minimum
equity required to do justice to the relying party: Waltons Stores v Maher at CLR 419; ALR 535;
Commonwealth v Verwayen at CLR 417, 429–30, 441–2; ALR 336, 345–6, 354. However, this is no
longer the case. In Walsh v Walsh at [31], Meagher JA stated the current position as follows:
There is no governing principle that requires that the relief granted be that which is the minimum
necessary to do justice. To the extent that there is a prima facie entitlement to relief on the basis
that the adopted expectation is to be made good, that entitlement must be weighed against any
injustice to the estopped party in doing so and the detriment suffered by the party who has acted
upon the induced expectation. Consideration should also be given to whether the proposed relief
has any adverse effects on the interests of third parties.
12.59 In exercising its discretion to make an order in favour of the relying party, in promissory
estoppel cases the courts have made it clear that the orders to be granted are generally reliance based
in the sense that they are designed to prevent the relying party from suffering detriment: Waltons
Stores v Maher at CLR 427; ALR 540; Commonwealth v Verwayen at CLR 411–12, 429, 501; ALR
331–2, 345, 397–8. This is because, satisfying the relying party’s equity will not usually require going
beyond preventing that party from suffering detriment.
12.60 Thus, in Mobil Oil v Lyndel Nominees at 238, the court concluded that relief in such cases
‘is intended to relieve against detriment suffered and not to make good an expectation’. Similarly, in
ACN 074 971 109 v The National Mutual Life Association of Australasia at 394, Dodds-Streeton JA said:
Copyright LexisNexis. Sample only, not for classroom use or distribution.
282
Spi-Radan & Stewart - Principles of Australian Equity and Trusts 2nd ed. Ch.12.indd 282 10/10/2012 05:22:31
200595