A starting point on the law of estoppel was the account given by Sir Edward Coke, writing in 1628. His discussion begins “Touching estoppels, which is an excellent and curious kinde of learning”, and he explains as follows.
‘Estoppe,’ cometh of the French word estoppe, 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 . . . [T]here be three kinde of estopples, viz. by matter of record, by matter in writing, and by matter in paiis. Co. Litt. 352a.
The Encyclopaedic Australian Legal Dictionary describes estoppel as the doctrine designed to protect a party from the detriment which would flow from that party’s change of position if the assumption or expectation that led to it were to be rendered groundless by another. The dictionary entry cites Walton’s Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.
Estoppels are recognised both at common law and in equity. Some estoppels operate as substantive rules of law; others as evidentiary rules.
Kinds of Estoppel
An estoppel by convention arises by reason of the parties’ mutual adoption of an agreed or assumed state of facts as the basis for their relationship: Con-Stan Industries of Australia Pty Ltd v Norwich Winterhur Insurance (Aust) Ltd (1986) 160 CLR 226.
An estoppel by Deed is a rule of evidence founded on the principle that a solemn and unambiguous statement in a deed must be taken as binding the party who makes it, and therefore, as not admitting any contradicting proof: Greer v Kettle [1938] AC 156.
Estoppel by Representation is the doctrine established in both equity and in the common law that a person, who by representation of fact has led another to alter his or her position, may not deny that fact is as represented: Discount & Finance Ltd v Gehrig’s NSW Wines Ltd (1940) 40 SR (NSW) 598.
Estoppel in pais is estoppel by conduct. It is an estoppel arising from facts, not as a matter of record or deed. It prevents an unjust departure from an assumption of fact, which the person estopped has caused another to adopt or accept for the purposes of their legal relations: Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641.
Practical Case Examples
Central London Property Trust Ltd v High Tree House Ltd [1947] KB 130.
In 1939 Central London leased a block a flats to High Trees, at an annual rental of £2500. Due to the outbreak of war, High Trees had difficulty in filling the flats and, accordingly, in 1940 the parties agreed in writing that the rental would be reduced by half. The parties did not, however, stipulate the period for which this reduced rental was to apply. High Trees paid the rent at the reduced rate for five years and in 1945, the flats began to fill again. In fact, by the second half of 1945, the flats were full and Central London sued for payment of the full rental in respect of this period.
Lord Denning J said that had Central London sued for the arrears for the years 1940-45, it would have failed. It would have been estopped from going back on its promise, as set out in the 1940 agreement, to accept a reduction in rental, even though that promise had not been supported by any consideration from High Trees because to hold otherwise would have been unjust.
Waltons’ Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.
Maher owned some property. He was negotiating with a department store company called Waltons Stores for a lease of the land. They wanted an existing building to be demolished and a new one erected. In reliance on representations made before a contract was completed, Maher demolished the building and started to erect a new one. But the contract never came to completion because Waltons Stores did not sign the lease. Waltons told their solicitors to slow the deal while they did further investigations as to whether the transaction would be good business, but allowed Maher to remain under the impression that the deal would be completed.
The High Court held that to avoid detriment through Waltons' unconscionable behaviour, Waltons was estopped from denying the contract. But not only the reliance interest was protected.
Mason CJ and Wilson J, stated that the creation or encouragement by the party estopped in the other party of an assumption that a contract will come into existence or a promise will be performed and that the other party relied on that assumption to his detriment to the knowledge of the first party.
Sample Exam Question
Fred made an agreement to rent a few hectares from his neighbour, Jack. Due to the downturn in commodity prices, he was having difficulty meeting the rental payments, so he asked Jack if he would agree to a 20% reduction for the next financial year. Jack said he thought that would be OK. The following week, Fred had the expensive repairs done to his barn that he had wanted to do for some time. However on the weekend, Jack phoned him to say he had been thinking about it and he decided he could not really afford to reduce the rent.
Advise Fred as to whether Jack’s original promise is enforceable and if not whether he can claim promissory estoppel. Use the IRAC approach in your answer.
Sources:
E. Cooke, The Modern Law of Estoppel Oxford University Press, Oxford, 2000.
Con-Stan Industries of Australia Pty Ltd v Norwich Winterhur Insurance (Aust) Ltd (1986) 160 CLR 226.
Greer v Kettle [1938] AC 156.
Discount & Finance Ltd v Gehrig’s NSW Wines Ltd (1940) 40 SR (NSW) 598.
Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641.
Central London Property Trust Ltd v High Tree House Ltd [1947] KB 130.
Waltons’ Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.
Co. Litt. 352a.
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