LAWS5980 Lecture V - Binding the Conscience - Estoppel I 30.1.25 PDF

Binding the Conscience: Estoppel Equity & Trusts 30 January 2025 Structure of this Topic Lecture 5: 1. Historical development of the estoppels 2. Estoppel by representation 3. Promissory estoppel 4. Thematic question: how to classify the estoppels? Lecture 6: 5. Proprietary estoppe...

Binding the Conscience: Estoppel Equity & Trusts 30 January 2025 Structure of this Topic Lecture 5: 1. Historical development of the estoppels 2. Estoppel by representation 3. Promissory estoppel 4. Thematic question: how to classify the estoppels? Lecture 6: 5. Proprietary estoppel 6. Measuring the estoppel 7. Thematic question: the expansion and contraction of estoppel Expansion and Contraction of Estoppel Andrew Robertson “Revolutions and Counterrevolutions in Equitable Estoppel” “What is clearly discernible in this field of obligation… is a tendency for the law to cycle through expansionary and contractionary movements.” (p162) Not a linear historical narrative, but “cycles”: Expansions of estoppel – when do we see the doctrine being widened in its uses? What informs these expansions when they happen? How is ‘estoppel’ being described? Contractions of estoppel – when do the courts scale back the use of estoppel? What is the reasoning behind this? What does it suggest about what estoppel is and what it is for? Looking for Expansion and Contraction… 1. The historical development of estoppel/ estoppel by representation 2. The modern development of estoppel (promissory estoppel and the Australian approach) 3. (Tomorrow): challenges/controversies in proprietary estoppel 4. (Tomorrow): Measuring the estoppel Historical Development ‘“Estoppe,” commeth of the French word estoupe, from whence the English word stopped: and it is called an estoppel or conclusion, because a man’s owne act or acceptance stoppeth or closeth up his mouth to alleage or plead the truth….’ - Sir Edward Coke (1628) Historical Development (continued) Technique of evidence At Common Law: limited use – Something stated in a deed Something in a renowned act At Chancery: wider approach – More flexible than common law Estoppel by representation Would consider words and conduct Hunt v Carew (1649) Son estopped from denying validity of lease A right in the lease was created on the basis of the estoppel Historical Development: estoppel by representation ‘where one by his words or conduct wilfully causes another to believe the existence of a certain state of things, and induces him to act on that belief, so as to alter his own previous position, the former is concluded from averring against the latter a different state of things as existing at the same time...’ - Pickard v Sears (1837) - Lord Denman CJ Early questions for estoppel by representation Did estoppel by representation compel the performance of the representation? Did estoppel by representation extend to promises for the future? Or simply statements about current states of fact? Three cases in point: Montefiori v Montefiori (1762) Hammersley v De Biel (1845) Jorden v Money (1854) Historical Development: Statement of Existing Fact ‘The law is, that where, upon proposals of marriage, third persons represent any thing material, in a light different from the truth, even though it be by collusion with the husband, they shall be bound to make good the thing in the manner in which they represented it. It shall be, as represented to be.’ - Montefiori v Montefiori (1762) – Lord Mansfield CJ Historical Development: Future Statements ‘[I]f a party holds out inducements to another to celebrate marriage, and holds them out deliberately, and the other party consents, and celebrates the marriage in consequence of them... a Court of Equity will take care that he is not disappointed, and will give effect to the proposal.’ - Hammersley v De Biel (1845) – Lord Lyndhurst LC Estoppel by Representation: Not binding the “Future” ‘...that doctrine does not apply to a case where the representation is not a representation of fact, but a statement of something which the party intends or does not intend to do.’ - Jorden v Money (1854) – Lord Cranworth LC Jorden v Money - Lord St Leonards on the present and the future… Fine distinction between a representation of fact and a representation of intention: To say we don’t intend to enforce our rights is a statement of fact as to our present abandonment of our rights (i.e., Ms Jorden’s present forgiveness of the debt) Wording? “I will not enforce the debt” vs “I have abandoned the debt”? NB: Lord St Leonards in the minority. Limits/Uses of estoppel by representation As evidential device it holds people to ‘truth’ But can be seen as problematic: Cause of action – would undermine contract (Baird Textile Holdings v Marks & Spencer (2001)) Defence to restitution – an inflexible remedy? (Derby v Scottish Equitable (2001) and National Westminster v Somer International (2001): ‘...estoppel should not operate in full where it would clearly be inequitable or unconscionable to retain a balance in his hands.’) Expansion, Contraction and Modern Developments Estoppel by Representation up to 19C Montefiore – expansion: estoppel by representation has the effect of creating rights Hammersley v de Biel – expansion: giving effect to proposals (promises/future intent) 19C Contraction Jorden v Money – contraction: estoppel by representation does not apply to statements of future intent Next: Modern Developments - Promissory Estoppel (20th C) - Proprietary Estoppel (next lecture) Towards the Modern Development ‘If parties who have entered into definite and distinct terms involving certain legal results afterwards by their own act enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict right arising under the contract will not be enforced[,] the person who otherwise might have enforced those rights will not be allowed to enforce them when it would be inequitable’ - Hughes v Metropolitan Railway Company (1877) – Lord Cairns LC Promissory Estoppel: High Trees ‘A promise intended to be binding, intended to be acted on and in fact acted on, is binding so far as its terms properly apply.’ - Central London Property Trusts Ltd v High Trees House Ltd (1947) – Denning J The Approach in Australia: Walton’s Stores Walton’s Stores (Interstate) Ltd v Maher (1988): Lessees instructed solicitor to ‘go slow’ – lease never signed Meanwhile, landowner had begun demolition and building works Lessees subsequently withdrew from project High Court: Landowner could use promissory estoppel to enforce the contract – held lessees to their implied promise (absence of formalities!) Significantly: promissory estoppel now used as a cause of action Question: was this a new form of reliance contract? Held: No; the remedy is not the enforcement of a promise, but only the ‘minimum equity needed to avoid the detriment’ otherwise suffered Worthington: how sound is this reasoning? The effect was to enforce the conclusion of the contract (surely a new type of ‘reliance contract’?) Classification of the Estoppels Why recategorisation? – Coherence, certainty Fusion: Procedural Terminological Substantive Tradition? Something that always ‘resists’ re-classification? A way of solving legal problems (Smith) Positivism: avoiding incoherence; achieving clarity; law that can be easily used/expected; rule of law Creates order from the confusion Re-organises law into a coherent system… (Re)Classification Consider Worthington. Is what we’re calling ‘estoppel’ simply…? Contract Tort Unjust Enrichment Unilateral Negligent Restitution of UE contracts? misstatement? – not entitled to retain the Specific benefit of the enforcement of claimant’s unwritten land services? contracts? Did equity simply pre-empt: 1. Unilateral contracts (Carlill v Carbolic Smoke Ball Co – 1893)? 2. Negligent misstatement (Hedley Byrne v Heller – 1964)? 3. Unjust Enrichment (Lipkin Gorman v Karpnale – 1991)? Classifying Estoppel: A Unitary Concept? “There is no single explanation for the manner in which all estoppels operate. Estoppel in all its forms is based on a variety of underlying conceptions, varying from honesty to common sense to common fairness. What emerges just from this short list is that common principles underpinning all estoppel can be identified only at the most rarefied levels – that of fairness, justice and so forth.” (Hudson, A. Equity and Trusts (p585-6) “Unconscionability” as the underlying feature of all estoppels? Hudson: “…there is nevertheless a distinction between those forms of proprietary estoppel which arise variously on the basis of avoidance of detriment, enforcement of promise, or on grounds of mistake…” (ibid) Lord Goff: “…the many circumstances capable of giving rise to an estoppel cannot be accommodated within a single formula, and… it is unconscionability that provides the link between them.” Johnson v Gore Wood