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PRINCIPLES OF AUSTRALIAN EQUITY AND TRUSTS confined, at common law the focus has been upon assumptions of fact. These could arise by means of judicial decision (estoppel by record or issue estoppel), agreement by both parties (estoppel by deed or estoppel by convention), and also by representation made by one to the other (estoppel by representation). The general principle of common law estoppel was stated by Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674 as being that, ‘the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations’. 12.5 It was due to the decision of the House of Lords in Jorden v Money [1843–60] All ER Rep 350 that common law estoppel was confined to assumptions and representations of existing fact. This limitation was intended by their Lordships to apply to all forms of estoppel and should be understood in light of the development of contract law during this time. Representations of future intention (that is, promises) were to be governed by the presence of a contractual relationship between representor and representee with a price being paid for the promise in the form of sufficient consideration. 12.6 Estoppel in equity, however, never really laboured under the restriction imposed by Jorden v Money. Parties who made representations of future intention were estopped from denying them in situations where they had been reasonably relied upon by others. This inconsistency with Jorden v Money was more covert than blatant at first but the distinction between existing fact and future intention came to be that which defined the realms of estoppel under the common law and equity respectively. 12.7 The second distinction between estoppel under the two jurisdictions is that it is commonly said of common law estoppel that it is a rule of evidence, while estoppel in equity may confer substantive rights. By this it is meant that common law estoppel is a device used merely to determine the facts upon which the legal rights of the parties will then be determined by the court, whereas, in equity, rights flow directly from the operation of estoppel in equity. This classification is a natural consequence of the first distinction — if the scope of common law estoppel is confined to representations of fact, its true role is to establish which facts the court will adjudge. If the estoppel is successfully raised, then the representor will be precluded from denying the facts assumed by the representee. 12.8 The idea of common law estoppel as an evidentiary rule derives from the judgment of Bowen LJ in Low v Bouverie [1891] 3 Ch 82 at 105, and is a significant barrier to attempts by some recent members of the High Court to fuse equitable and common law estoppel into one doctrine, despite their otherwise quite high level of similarity: see 12.66–12.70. The limited role of estoppel at common law was well conveyed by the metaphor that it was a shield but not a sword. Conversely, when estoppel in equity conferred substantive rights it was said to be a sword as well as a shield. However, it would be a mistake to see the analogy of common law estoppel as a shield as implying that its use was defensive only. As Mason CJ and Wilson J said in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 400; 76 ALR 513 at 521, ‘this does not mean that a plaintiff cannot rely on an estoppel. Even according to traditional orthodoxy, a plaintiff may rely on an estoppel if he has an independent cause of action’. The role of the estoppel in such a case is to establish the state of affairs from which the action arises. Copyright LexisNexis. Sample only, not for classroom use or distribution. 268 Spi-Radan & Stewart - Principles of Australian Equity and Trusts 2nd ed. Ch.12.indd 268 10/10/2012 05:22:31 200595
269 CHAPTER 12: EQUITABLE ESTOPPEL 12.9 In Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 at 472, Priestley JA set out a series of enumerated points in order to clarify the law on estoppel. The first three offer a concise summary of the ideas presented so far: (1) Common law and equitable estoppel are separate categories, although they have many ideas in common. (2) Common law estoppel operates upon a representation of existing fact, and when certain conditions are fulfilled, establishes a state of affairs by reference to which the legal relation between the parties is to be decided. This estoppel does not itself create a right against the party estopped. The right flows from the court’s decision on the state of affairs established by the estoppel. (3) Equitable estoppel operates upon representations or promises as to future conduct, including promises about legal relations. When certain conditions are fulfilled, this kind of estoppel is itself an equity, a source of legal obligation. THE DEVELOPMENT OF EQUITABLE ESTOPPEL 12.10 Equitable estoppel is the result of bringing together the two significant forms of estoppel that existed in equity — promissory estoppel and proprietary estoppel. The essential difference between the two forms of estoppel was described by Brennan J in Waltons Stores (Interstate) Ltd v Maher at CLR 420; ALR 535–6, as follows: In cases of promissory estoppel, the equity binds the holder of a legal right who induces another to expect that that right will not be exercised against him … In cases of proprietary estoppel, the equity binds the owner of property who induces another to expect that an interest in the property will be conferred on him. Unlike the situation at common law since Jorden v Money, neither of these estoppels were limited to assumptions of existing fact but operated so as to hold a representor to a statement of future intention. The bringing together of these two estoppels reflects the high incidence of doctrinal similarity between them. 12.11 Before considering equitable estoppel in its modern form, it is worth noting the former roles of both promissory and proprietary estoppel and their attendant differences. Promissory estoppel 12.12 The doctrine of consideration has often been seen as leading to injustices. The equitable doctrine of promissory estoppel evolved to overcome many of these injustices. The very essence of promissory estoppel is that a promisor is precluded from going back on his or her promise even though the promise is not supported by consideration moving from the promisee. In Equititrust Ltd (formerly Equitiloan Ltd) v Franks (2009) 259 ALR 388 at 401, Handley AJA, noted that promissory estoppel ‘is based on a non-contractual promise or assurance which, in its orthodox form, becomes binding in equity, so as to restrain the promisor from enforcing his strict legal rights’. In DHJPM Pty Limited v Blackthorn Resources Limited (2011) 285 ALR 311 at 323, Meagher JA said that ‘a promissory estoppel operates as an equitable restraint on the exercise or enforcement of contractual and other rights and is negative in substance’. 12.13 Although the initial impact of promissory estoppel on the law of contract was to provide equitable relief where a contractual remedy was not available due to the absence of consideration, the Copyright LexisNexis. Sample only, not for classroom use or distribution. Spi-Radan & Stewart - Principles of Australian Equity and Trusts 2nd ed. Ch.12.indd 269 10/10/2012 05:22:31 200595
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