Silink, Allison --- "Equitable estoppel in 'subject contract' negotiations" [2011] UTSLRS 2; (2011) 5 Journal of Equity 252

Last Updated: 7 April 2017

Estoppel In 'Subject To Contract' Negotiations.

Allison Silink *

Waltons Stores (International) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 was a watershed in the development of equitable estoppel in Australian law, recognising its reach to a representation of future intention from one party to another without the need for a pre-existing legal relationship between them. However, the scope for an equitable estoppel to arise from pre-contractual negotiations which do not result in a formal contract being executed, accepted in that case, remains unclear in certain respects. In particular, it is not clear whether or not a plaintiff seeking to establish an estoppel needs to have held a belief that the defendant was already bound by, or bound to enter into, the contract. On another view, it may be sufficient for the plaintiff to demonstrate that he or she was induced to assume that the contract would eventuate and then relied to his or her detriment upon that assumption, even if the plaintiff knew that the defendant had a right to withdraw from the negotiations. This article explores this uncertainty in Australian law about the nature of the assumption required to found an estoppel arising from pre-contractual negotiations which are said to be ‘subject to contract’.


Introduction

This article considers the scope under Australian law for an equitable estoppel to arise from pre-contractual negotiations in circumstances where those negotiations do not result in a contract being concluded. In particular, it focuses upon the scope for an estoppel to arise where the parties have been expressly negotiating 'subject to contract' or similar limitation. Is it necessary for a plaintiff in proceedings claiming equitable relief on this basis to have assumed that the defendant had already given up his freedom to withdraw from the negotiations which the 'subject to contract' status afforded and was 'bound to proceed' with the contract (“the narrower view”)? The alternative view is that in certain circumstances it may be sufficient if the plaintiff was induced to assume that a contract with the defendant would eventuate, even if the plaintiff knew that, technically, the parties had the right to withdraw from the negotiations (“the broader view”). The difference in the approaches to this threshold question about the necessary content of the plaintiff's assumption has the potential to lead to different outcomes in proceedings brought claiming an estoppel.

Australian law is not clear in this regard. In New South Wales there are conflicting decisions as to whether the broader or narrower view is the appropriate test to apply. In EK Nominees Pty Ltd v Woolworths Ltd^[1] White J applied the broader view in the context of pre-contractual negotiations which did not result in a formal contract being executed. In Franklins Ltd v Metcash Trading Pty Ltd^[2], the New South Wales Court of Appeal approved the narrower view of the necessary content of the plaintiff’s assumption. However, Metcash did not concern an estoppel arising from failure to complete a contract; in that case, a contract was entered into and the issue was whether pre-contractual representations gave rise to an estoppel after the entry into the formal contract on terms which differed from the alleged representations. The decision in EK Nominees Pty Ltd v Woolworths Ltd was not discussed in the judgment.

This article is structured in the following way. First, equitable estoppel as developed in Waltons Stores (Interstate) Ltd v Maher (“Waltons v Maher”)^[3] is discussed. Secondly, the status of negotiations as ‘subject to contract’ is considered briefly from the perspective of its relevance to equitable intervention. Thirdly, the article explores the development of the narrower view under which the plaintiff is required to hold a belief that the defendant has, during the negotiations, given up his or her right to withdraw from the negotiations and is bound to proceed. Fourthly, the article examines the cases which support the broader view of the nature of assumptions which will found an estoppel in this context, namely, an assumption that a binding contract will eventuate in the future, despite the existence of the legal right to withdraw. Fifthly, significant proprietary estoppel cases are examined and their relevance to the development of principles in relation to commercial negotiations is discussed. Finally, the article concludes with a consideration of the issues which will be relevant to the development of the law.


1. Equitable Estoppel in Waltons v Maher

The obvious starting point for a consideration of the general principles of equitable estoppel in Australia is Waltons v Maher. Waltons v Maher was of course a case concerning pre-contractual negotiations for a lease which was ultimately not concluded despite apparent agreement as to the terms. As is well known, the Mahers executed and sent their counterpart but never received the executed counterpart from Waltons. Accordingly, there was no basis for a belief that a contract had been formed. The issue was whether the plaintiff’s assumption that the contract would eventuate was sufficient to found an estoppel. Mason CJ and Wilson J, in a joint judgment, and Brennan J in a separate judgment, decided the case on the basis of equitable estoppel. The expressions of the elements of estoppel by the plurality and Brennan J are regularly cited together as alternative formulations without a difference in scope.^[4] It is true that both formulations confirm the core elements of equitable estoppel as being an assumption, inducement, detrimental reliance and knowledge of that reliance by the defendant. However there is a subtle but significant point of distinction in the two judgments in relation to this issue of the content of the plaintiff’s assumption.

Mason CJ and Wilson J held that promissory estoppel was capable of being extended to representations made between parties who were not in a pre-existing legal relationship.^[5] Their Honours reasoned that to do so would not outflank the law of contract because the doctrine only extends to the enforcement of voluntary promises where to depart from the assumption would be 'unconscionable'.^[6] Their Honours did not leave that concept without explanation in this context. Their Honours reasoned that "[a]s failure to fulfil a promise does not of itself amount to unconscionable conduct, mere reliance on an executory promise to does something, resulting in the promisee changing his position or suffering detriment does not bring promissory estoppel into play. Something more would be required" to be unconscionable in the circumstances.^[7] Their Honours found that that "something more" may be found:

"in 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."^[8] (emphasis added)

This passage contains the now familiar elements of equitable estoppel under Australian law of assumption, inducement, detrimental reliance and knowledge. Their Honours did not discuss or identify a requirement for the plaintiff to have held a belief that the defendant had already given up its freedom to withdraw at law. Their Honours’ expression of principle clearly extended to "an assumption that a contract will come into existence" - in other words, an expectation of future commitment or performance - without any requirement of a belief that the defendant was already bound to do so in any legal sense.

However, in contrast with Mason CJ and Wilson J, Brennan J confined its scope to circumstances where the plaintiff held a belief that the defendant was already bound to do what was promised. His Honour reasoned:

“... [A]n assumption or expectation by one party which does not relate to what the other party is bound to do or not to do gives no foundation for an equitable estoppel, though the assumption or expectation relates to the prospect of the other party conducting himself in a particular way. The risk that the other party who, being free to conduct himself in whatever way he chooses, may choose to conduct himself in a way different from that assumed or expected rests with the party who adopts the assumption or expectation.

Parties who are negotiating a contract may proceed in the expectation that the terms will be agreed and a contract made but, so long as both parties recognize that either party is at liberty to withdraw from the negotiations at any time before the contract is made, it cannot be unconscionable for one party to do so. Of course, the freedom to withdraw may be fettered or extinguished by agreement but, in the absence of agreement, either party ordinarily retains his freedom to withdraw. It is only if a party induces the other party to believe that he, the former party, is already bound and his freedom to withdraw has gone that it could be unconscionable for him subsequently to assert that he is legally free to withdraw."^[9] (Emphasis added)
In Brennan J’s view, it was necessary that the plaintiff have assumed during the course of the negotiations that the defendant was “already bound” and no longer free to withdraw. In this respect his Honour’s reasons differ from the broader formulation of Mason CJ and Wilson J.

Brennan J concluded by expounding six requirements, or probanda, to give rise to an equitable estoppel, to which reference is often made. ^[10] The form of Brennan J's first elements, was that “the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship”. Taken out of the context of his Honour's detailed reasons referred to above, this appears to admit either an assumption that a particular legal relationship already existed, or alternatively, an assumption that a particular legal relationship would eventuate in the future which would be binding at the time it comes into existence. If this interpretation were correct, it would be consistent with the scope of the principle described by Mason CJ and Wilson J. However, in Franklins v Metcash Trading the Court of Appeal in New South Wales appears to have held that Brennan J's first element requires the plaintiff to have believed that the defendant was not free to withdraw from entering into the expected future legal relationship.^[11] In other words, at the time of the events giving rise to the estoppel, the plaintiff must have assumed that either a binding contract had been formed, or expected that the plaintiff was somehow otherwise already legally bound to proceed to enter into the contract. This construction is undoubtedly more consistent with Brennan J's reasons referred to above which discussed the need for an extant belief that the defendant is already bound to proceed. In this respect, there is then a difference in the requirements for the doctrine between the reasons for judgment of Mason CJ and Wilson J, on the one hand, and Brennan J on the other.

Notwithstanding this difference, the basic requirements of equitable estoppel have since been summarised or restated in various forms drawing upon both the reasons of the plurality and Brennan J. ^[12] In addition to these elements, it is often stated, usually as separate points, that it is necessary for plaintiff’s reliance to have been reasonable;^[13] that the representation relied upon was clear and unequivocal or unambiguous^[14] and that the detriment to the plaintiff must be sufficiently substantial to make it unconscionable in the eye of equity for the representor to depart from it.^[15] The High Court cases since Waltons Stores v Maher in which the general elements of equitable estoppel have been considered have not contradicted any of these principles.^[16]

Accordingly, at this higher level of generality at least, it can be said that the core elements of equitable estoppel are relatively settled in Australia since their articulation in Waltons v Maher. However, the issue which this paper explores is this difference in the reasoning between the judgments of Mason CJ and Wilson J, on the one hand, and Brennan J, on the other, as to whether it is necessary for a plaintiff in the circumstances of pre-contractual negotiations which are ‘subject to contract’ which do not result in a contract, to establish that he or she held a belief that the defendant was ‘bound to proceed’ and that the defendant's ‘freedom to withdraw from the negotiations was gone’, before any of these principles are called into play. Is it necessary, or indeed appropriate, to prescribe the content of the relevant assumption with any more particularity than requiring an assumption that “a contract will come into existence or a promise be performed or an interest granted to the plaintiff by the defendant”?^[17]

Before considering these issues, it is appropriate to consider briefly the effect of the term 'subject to contract' upon contractual formation before examining its effect, if any, upon equitable intervention.

2. Relevance of ‘Subject to Contract’ Status of Negotiations at Law and in Equity Compared

It is trite law but worth repeating that commercial negotiations in which it is envisaged that a formal contract will be entered into between the parties may fall into a number of classes which are treated differently at law. In Masters v Cameron, the High Court (Dixon CJ, McTiernan and Kitto JJ) identified three classes into which such negotiations might fall. ^[18] The first is where the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise form. The second is where the parties have agreed on all essential terms and intend no departure from them but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. The third category is where the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract. A fourth category has been described since, being where the parties are content to be bound immediately by the terms they have agreed upon although the parties expect to make a further contract in substitution for the first contract which will contain, by consent, additional terms.^[19]

This is not the occasion to add to the debate about the worth of the fourth category.^[20] At the end of the day, as noted by Giles JA in Tasman Capital v Sinclair, “The Masters v Cameron ... categories, and a possible fourth category, are intellectual aids, but whether parties have come to a binding agreement is a matter of their objectively ascertained intention. Categorisation does not greatly contribute to the decision in the particular case, which is concerned with finding what agreement, if any, the parties came to.”^[21] In all cases, it is a matter for the court to determine whether, as a question of fact, the parties reached a binding agreement. However, accepting that the categories are but as “intellectual aids”, in that capacity they can assist in predicting the outcome of cases of contested contractual formation which fall within their scope. In the first two classes, and arguably the fourth, a binding contract is likely to have arisen before the execution of the formal contract. However, in the third class of case, this being the class of case into which negotiations expressly made to be ‘subject to contract’ or under some other equivalent limitation tend to fall, it is highly unlikely^[22] that the negotiations will amount to a binding contract. The natural meaning of the words is to reserve the right to withdraw from the contract until it is executed and to preclude liability at law for withdrawing from the negotiations.^[23] The High Court in Masters v Cameron held that, “such words prima facie create an overriding condition, so that what has been agreed upon must be regarded as the intended basis for a future contract and not as constituting a contract.”^[24]

In Gonthier v Orange Contract Scaffolding Ltd (Lindsay J, Kay LJ and Waller LJ) Lindsay J for the Court said that so familiar is the use of the phrase ‘subject to contract’ in the conveyancing context that “its effect is, without proof to be taken to be known to the parties.”^[25] It is of course important to note that in relation to negotiations for the disposition of an interest in land, a condition that negotiations are ‘subject to contract’ has more relevance where the parties have already reduced the terms of their negotiations to writing in some form which would be otherwise be capable of constituting a binding agreement. If the negotiations are wholly oral, a ‘subject to contract’ condition has little work to do as an oral agreement is in any event unenforceable at law by reason of Statute of Frauds provisions embodied in legislation in all Australian states.^[26]

‘Subject to Contract’ – the Third Category of Masters v Cameron and its Relevance to Equitable Estoppel

It is important to remember that the status of negotiations as ‘subject to contract’ is relevant for different purposes at law and in equity. At law it serves to negative an intention to be contractually bound prior to entry into the formal contract. Without contractual intention, there is no possibility of contractual liability. However, in equity, the inquiry as to whether an estoppel arises from pre-contractual negotiations is not determined by the legal status of the negotiations. The equitable inquiry depends upon the elements of the doctrine of estoppel being satisfied, not upon whether a contract was formed. In EK Nominees Pty Ltd v Woolworths Ltd,^[27] White J observed, “The fact that the parties have not entered a contractual relationship provides the occasion for considering the doctrine of estoppel. It is not the end of the inquiry.”^[28]

However, if in order to give rise to an estoppel between parties to commercial negotiations which are ‘subject to contract’, it is necessary for a plaintiff to have assumed that a contract became binding even though no formal contract had been executed, then the Masters v Cameron classification and the other cases referred to above become indirectly relevant. The same cases which tell against contractual liability tell against such an assumption. The cases referred to above suggest that it will be almost impossible for a plaintiff to ‘subject to contract’ negotiations to have reasonably believed that the defendant was already bound or otherwise bound to enter into the agreement.

On the other hand, if it is not necessary for the plaintiff to have believed that the defendant was already bound, the ‘subject to contract’ status of the negotiations is but one of the factors to take into account in determining whether the plaintiff’s reliance upon an assumption that a contract would eventuate was reasonable in all the circumstances. In other words, if the issue is not what the plaintiff believed that the defendant had to do, but rather what the plaintiff had been induced to believe the defendant would do, the fact that no contract was yet binding does not of itself preclude an estoppel arising.

3. The Narrower Approach – the Need for an Assumption that the Freedom to Withdraw from Negotiations is Gone.

This part of the paper explores the development of the narrower view of the requirements for an estoppel arising from failed commercial negotiations, requiring a belief held by the plaintiff that he or she had a ‘legally enforceable expectation’^[29] or that the defendant was legally 'bound to proceed' to enter the contract. This view arises from the reasoning that, given the fact that parties are taken to know that ‘subject to contract’ status of negotiations permits the parties to walk away from the negotiations, it cannot be unconscionable in equity for a defendant to encourage the plaintiff to believe that it will proceed with the contract unless the defendant has represented that it is bound to proceed and has given up its right to withdraw. Short of such a representation, any other encouragement that the contract will eventuate cannot give rise to a duty to disabuse the mistaken plaintiff. In effect, the ‘subject to contract’ status of the negotiations protects the defendant from liability in equity as much as at law. In Gonthier v Orange Contract Scaffolding Ltd, Lindsay J put the questions rhetorically in this way:

“How can one rely upon the unreliable? Equally, it could be asked how it could be unconscionable for [the defendants] to resile from an arrangement which [the plaintiff’s] side had itself made such as could be withdrawn from with impunity?”^[30]

Significant cases in which this narrower view was applied are considered in this part.
Attorney General (Hong Kong) v Humphreys Estate (Queens Gardens) Ltd [1986] UKPC 58; [1987] AC 114

The modern requirement for a representation or assumption that the defendant's freedom to withdraw from commercial negotiations is gone in order for an estoppel to arise is often attributed to the decision of the Privy Council in Attorney General (Hong Kong) v Humphreys Estate (Queens Gardens) Ltd (“A-G (Hong Kong) v Humphreys Estate”).^[31]

A-G (Hong Kong) v Humphreys Estate concerned negotiations between a group of companies ("HKL"), which included the plaintiff company, and the defendants representing the Hong Kong Government. The proposal was for an exchange of properties, whereby the government was to acquire a number of flats in premises owned by the HKL in exchange for the grant of a Crown lease of government property known as Queens Gardens to HKL, with the right to develop it and certain adjoining property. By 1981, the negotiations between the parties reached the stage of an agreement in principle which was expressed to be ‘subject to contract’. The agreement in principle was thereafter largely carried out notwithstanding the fact that the contractual documents had not been executed. However, in April 1984, before any contact had been concluded, HKL withdrew. HKL then gave notice to the government to vacate the flats to which possession had been given and commenced proceedings to recover the payments it had made to the defendant. The government claimed that both parties were estopped from withdrawing from the agreement in principle. HKL was successful at first instance and the government’s appeals to the Court of Appeal of Hong Kong and Privy Council failed.

In the Privy Council, in a judgment delivered by Lord Templeman on behalf of the Judicial Committee, their Lordships held that to make out an estoppel:

"First the government must show that HKL created or encouraged a belief or expectation on the part of the government that HKL would not withdraw from the agreement in principle. Secondly the government must show that the government relied on that belief or expectation.”^[32]

Counsel for the government argued that the actions of both parties served to create or encourage a belief and expectation in the government that the agreement in principle would be carried into effect and that HKL would not withdraw. However, whilst the Judicial Committee accepted that the government acted in the “confident and not unreasonable hope that the agreement in principle would come into effect” and that with the passing of time, those hopes were undoubtedly strengthened, the claim failed. Their Lordships held:

“But at no time did HKL indicate expressly or by implication that they had surrendered their right to change their mind and to withdraw. That right, expressly reserved and conferred by the government, was to withdraw at any time before "document or documents necessary to give legal effect to this transaction are executed and registered." HKL did not encourage or allow a belief or expectation on the part of the government that HKL would not withdraw...”^[33]

It is suggested that the reasons of the Privy Council extracted above contain two separate propositions which need to be made distinct. On the one hand, to "encourage or allow a belief or expectation on the part of the government that HKL would not withdraw" is synonymous with encouraging an assumption that HKL intended to enter into a binding contract, or in other words, that a binding legal relationship with HKL would eventuate. On the other hand, the earlier observation that "at no time did HKL indicate expressly or by implication that they had surrendered their right to change their mind and to withdraw" suggests that the only reasonable basis for such an expectation was an assumption or belief that HKL was legally bound to proceed. These propositions are not synonymous.

It is significant to note that the evidence in that case disclosed that on several occasions through the relevant period of reliant conduct, each of the parties sent correspondence to the other expressly reserving the right not to be bound unless and until the final contracts had been executed.^[34] There was also an internal memorandum from within the government which their Lordships held disclosed that "the government did not rely upon the belief or expectation that HKL would not withdraw from the draft agreement."^[35] In these circumstances, it was held that "the government chose to begin and elected to continue on terms that either party might suffer a change of mind and withdraw."^[36]

However, their Lordships accepted that it was "possible but unlikely that in circumstances at present unforeseeable a party to negotiations set out in a document expressed to be ‘subject to contract’ would be able to satisfy the court that the parties had subsequently agreed to convert the document into a contract or that some form of estoppel had arisen to prevent both parties from refusing to proceed with the transactions envisaged by the document."^[37] Whilst allowing this theoretical possibility, the reasons leave some doubt as to what a plaintiff needs establish it believed in order to make good that claim. If it is necessary to demonstrate that it believed the defendant had “surrendered” its right to withdraw, the case falls within the narrower view.

The issue of interest for present purposes is how this case has been subsequently interpreted and applied in Australia.
Waltons v Maher

Waltons v Maher was heard five months after the Privy Council delivered its reasons in A-G (Hong Kong) v Humphreys Estate. Mason CJ and Wilson J, in their joint judgment, and Brennan J, in separate reasons, considered this case. However their reasons indicate somewhat different treatment of the decision.

Mason CJ and Wilson J observed that in A-G (Hong Kong) v Humphreys Estate the Privy Council had rejected the government’s estoppel claim “on the ground that the Government failed to show (a) that H.K.L. created or encouraged a belief or expectation on the part of the Government that H.K.L. would not withdraw from the agreement in principle and (b) that the Government relied on that belief or expectation.”^[38] Their Honours discussed the case as relevant to identifying the unconscionable conduct in an estoppel claim. Their Honours said:

“Humphreys Estate suggests that [the unconscionability] may be found, if at all, in 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. Humphreys Estate referred in terms to an assumption that the plaintiff would not exercise an existing legal right or liberty, the right or liberty to withdraw from the negotiations, but as a matter of substance such an assumption is indistinguishable from an assumption that a binding contract would eventuate.”^[39] (emphasis added)
It is clear that Mason CJ and Wilson J saw no difference between an assumption that a party would not exercise their right to withdraw from negotiations on the one hand, and an assumption that a binding contract would eventuate, on the other. As a matter of logic, it follows that if a plaintiff believes that a binding contract would eventuate, the plaintiff must also believe that the defendant would not withdraw from the negotiations in order for that to happen. However an assumption as to what would happen is not necessarily the same thing as a belief that the plaintiff is legally bound to proceed and has already given up the right to withdraw. Their Honours did not discuss such a requirement.

Brennan J, on the other hand, concluded that the Privy Council had required a representation that HKL was ‘bound to proceed’, not merely an assumption that a binding contract would eventuate. His Honour said of the reason of the Privy Council in that case:

"To found an estoppel it was not sufficient to show that the Government expected that, as a matter of probability, H.K.L. would not withdraw from the agreement; it was necessary to show an expectation that H.K.L. was ‘bound to proceed’^{.” [40]}
His Honour concluded from his analysis of that case that, “It follows that an assumption or expectation by one party which does not relate to what the other party is bound to do or not to do gives no foundation for an equitable estoppel.”^[41]

In this respect, his Honour’s treatment of A-G (Hong Kong) v Humphreys differs from the plurality’s treatment of the case. This requirement that a plaintiff hold a belief that the defendant is somehow legally bound to proceed before an estoppel can arise remains a significant contention in relation to estoppel in commercial negotiations, as the cases discussed in this part demonstrate.

Subsequent cases requiring an assumption by the plaintiff that the defendant was ‘bound to proceed’.

Both A-G (Hong Kong) v Humphreys Estate and Brennan J’s obiter in Waltons v Maher have been applied in Australia as authority for the proposition that in order to make out an estoppel in ‘subject to contract’ negotiations it is necessary that the plaintiff assumed that the defendant was ‘bound to proceed’ and would not be free to withdraw.^[42] In Barnes v Alderton^[43] Young CJ in Eq cited A-G (Hong Kong) v Humphreys Estate as authority for the proposition has that where the plaintiff knows that the defendant retains the right to withdraw, there can be no relevant representation. In Pacific National (ACT) Limited (ACN 48 052 134 362) v Queensland Rail (ABN 47 564 947 264) Jacobson J applied these cases in support of the narrower view in relation to an estoppel claim brought in those proceedings. His Honour said, in enumerating the elements of estoppel, that:

“(15) In order to found an estoppel between parties who are in contractual negotiations, it is necessary for the party asserting the estoppel to prove that the other party induced him or her to believe that the other’s freedom to withdraw has gone; that is to say, there must be an expectation that the other party is bound to proceed. This is reflected in the first of the six principles stated by Brennan J above and in the decision of the Privy Council in Attorney-General (Hong Kong) v Humphreys Estate (Queen’s Gardens) Limited [1986] UKPC 58; [1987] 1 AC 114 (“Humphreys”)”.^[44]

This was apparently influential in the finding against an estoppel. His Honour concluded that there was nothing in the correspondence which revealed any intimation by Queensland Rail that it was already bound or that it had lost its freedom to withdraw from the negotiations. His Honour said further that:

“Commercially, the decision to proceed with the expenditure was probably entirely well founded. That is not for me to determine. But even assuming it was, that cannot leave the door open for the assertion of an estoppel where NRC was aware that no legally binding agreement had been entered into, or at least where there was nothing to induce NRC to believe that QR had lost its freedom to withdraw.”^[45]

Franklins Pty Ltd v Metcash Trading Ltd

Franklins Pty Ltd v Metcash Trading Ltd,^[46] a decision of the New South Wales Court of Appeal (Allsop P, Giles JA and Campbell JA), was a case primarily about contractual construction and rectification of the contract which had in fact been concluded. However there was also an estoppel claim in which it was alleged that pre-contractual representations which were inconsistent with the terms of the contract which had been entered into, gave rise to an estoppel. Campbell JA, who delivered the leading judgment, applied the narrower view to the question of the content of the alleged assumption by Metcash.

Briefly stated, the facts were these. In 2001 Franklins was a new retailer in the supermarket industry in the process of acquiring the right to use the well-known ‘Franklins’ name in a chain of new supermarkets. Metcash was a warehousing operation stocking grocery goods. The case concerned negotiations between April 2001 and September 2001 between the parties for a supply contract whereby Franklins would purchase exclusively from Metcash those products that Metcash stocked at the time of Franklins submitting an order to it. A contract was entered into between the parties on 14 September 2001 but was terminated on 31 January 2005. Franklins then commenced proceedings alleging that it had been overcharged for items supplied to it by Metcash because Metcash had not passed on to Franklins the benefit of certain discounts which it had obtained from its suppliers.

The primary judge, Palmer J, held that the correct construction of the Supply Agreement of 14 September 2001 required Metcash to pass on all discounts, however the parties had held the common intention that only ‘published’ discounts which appeared on suppliers’ invoices would be passed on. Palmer J ordered that the contract be rectified accordingly. On appeal, Franklins contended that the primary judge had erred in ordering the rectification of the agreement. Metcash cross-appealed claiming, amongst other things, that Franklins was estopped from asserting that it was entitled to the benefit of any other discounts.

The estoppel case for Metcash was put on the basis that prior to entering into the Supply Agreement, Franklins had made various representations to Metcash about Franklins’ understanding and intention concerning the pricing arrangements and that Metcash had acted in reliance upon those representations in entering into the Supply Agreement. Campbell JA rejected the estoppel claim made by Metcash in its cross-appeal. In so doing, his Honour applied Brennan J’s requirements and reasoning from Waltons v Maher. His Honour said that, “The relevant expectation is that, at the time of the events alleged to give rise to the estoppel, the plaintiff expected that a particular legal relationship would in future exist with the defendant and, at that time, the plaintiff also expected that the defendant would not be free to withdraw from the expected legal relationship.”^[47] (emphasis added) His Honour held:

“By contrast, in the present case, negotiations between the solicitors were ongoing concerning the drafting of the Supply Agreement. There was no express evidence that anyone relevant from Metcash expected that Franklins would not be free to withdraw from the negotiations. (Whether they expected that Franklins would not in fact withdraw, or were unlikely to withdraw, is a different thing.) Nor would I infer that anyone relevant from Metcash had such an expectation.”^[48]

Furthermore, in relation to establishing the defendant’s knowledge of the plaintiff’s reliance, Campbell JA again expressed it in terms of Franklins’ knowledge of Metcash’s reliance upon the expectation “that Franklins was bound to purchase good at a price...”^[49] His Honour held that Franklins had no such knowledge. In that case, the estoppel claim also failed because it had not been demonstrated that the defendant knew that the plaintiff was relying upon the assumption or expectation alleged.^[50] However the reasoning illustrates the narrower test applied to the element of what the assumption or expectation needed to comprise.

Cobbe v Yeoman’s Row Management Ltd

In England, estoppel in commercial negotiations was considered by the House of Lords in Cobbe v Yeoman’s Row Management Ltd (“Cobbe”).^[51] This decision represents clear support for the narrower view in relation to claims of proprietary estoppel in commercial negotiations under English law.^[52]

In that case, the appellant company owned a block of 13 flats. Mrs Lisle-Mainwaring, on behalf of the appellant, commenced negotiations in February 2001 with Mr Cobbe for the development of the property. By early 2002 an oral agreement in principle had been reached. The substance of the agreement, containing the core elements of the agreement, was that Mr Cobbe would apply for planning permission to demolish the block of flats and build a new terrace of six houses upon it. Upon the grant of planning permission, the block would be sold by Yeoman’s Row Management Ltd to Mr Cobbe for £12 million, and then Mr Cobbe or his nominee would develop the property and sell the houses and pay the appellant 50% of the amount by which the proceeds exceeded £24 million. Although Mr Cobbe knew that the agreement was not binding at law, he believed it was 'binding in honour'. Mr Cobbe incurred significant expense over the period between late 2002 and early 2004 in his efforts to secure planning approval in keeping with their agreement. However, by late 2003 Mrs Lisle-Mainwaring had decided not to proceed on the terms of the agreement in principle if planning permission was granted and to seek a higher payment. This intention was not conveyed to Mr Cobbe; rather, she continued to encourage his efforts to obtain planning approval. Planning approval was given on 17 March 2004. The following day, Mrs Lisle-Mainwaring let Mr Cobbe know of her dissatisfaction with the terms of the agreement in principle and demanded payment of £20 million for the sale of the block, and the reduction of Mr Cobbe’s profit to 40% of the net proceeds. Mr Cobbe commenced proceedings, ultimately seeking relief on the basis of a constructive trust, proprietary estoppel or for restitution.

The trial judge, Etherton J, held that the claim for proprietary estoppel had been satisfied. This was upheld in the Court of Appeal. However, the House of Lords overturned the finding on estoppel but granted relief upon the quantum meruit claim. In the House of Lords, Lord Scott of Foscote (with whom Lord Hoffman, Lord Brown of Eaton-under-Heywood and Lord Mance agreed) and Lord Walker of Gestingthorpe (with whom Lord Brown also agreed) each gave detailed, though somewhat different, reasons for rejecting the estoppel claim.^[53]

The pleaded estoppel was that “the appellant and Mrs Lisle-Mainwaring are estopped from denying that [Mr Cobbe] has such an interest in the Property and/or proceeds of sale thereof as the Court thinks fit.”^[54] Lord Scott held that Mr Cobbe had failed to identify what it was that the company was estopped from denying and had failed to identify with sufficient certainty what proprietary interest the estoppel was needed to protect.^[55] Over and above the question of the certainty of the interest in the land, his Lordship appears to have rejected the proposition that an expectation under an oral agreement in principle, binding in honour only, could found a claim in estoppel because as a non-binding agreement it was always open to the other party to change their mind. His Lordship noted that Mr Cobbe did not spend his money under a mistaken belief that the agreement was legally enforceable. To the contrary, he was well aware that it was not.^[56] In relation to ‘subject to contract’ negotiations generally, Lord Scott said:

“The reason why, in a ‘subject to contract’ case, a proprietary estoppel cannot ordinarily arise is that the would-be purchaser’s expectation of acquiring an interest in the property in question is subject to a contingency that is entirely under the control of the other party to the negotiations.”^[57]

However, his Lordship held that the question of ‘subject to contract’ reservations had only “peripheral relevance” in the context of oral negotiations for the sale of land which were required by law to be in writing to be valid.

Lord Walker of Gestingthorpe in his reasons for judgment gave detailed consideration to the question whether it is necessary for the plaintiff in an estoppel case to have believed that he had a legally binding right to the interest in the defendant’s land. His Lordship considered A-G (Hong Kong) v Humphreys and observed that in that case, the parties’ knowledge that neither had any enforceable rights was fatal to the government’s claim to rely upon equitable estoppel.^[58] His Lordship then posed the question, “Was it also necessary for Mr Cobbe to believe, wrongly, that Mrs Lisle-Mainwaring had no legal right to withdraw from [the arrangements]?”^[59] His Lordship held that, "It is not enough to hope, or even to have a confident expectation, that the person who has given assurances will eventually do the proper thing"^[60] (emphasis added). His Lordship concluded from the evidence that whilst Mr Cobbe believed that Mrs Lisle-Mainwaring was "bound in honour" to enter into a formal written agreement if planning permission was granted, that neither regarded themselves as legally bound. Ultimately, Lord Walker concluded that:

“Mr Cobbe’s case seems to me to fail on the simple but fundamental point that, as persons experienced in the property world, both parties knew that there was no legally binding contract, and that either was therefore free to discontinue the negotiations without legal liability – this liability in equity as well as at law ...”^[61]

The reasoning in Cobbe lends clear support to the narrower view.

The next section of this paper considers the cases in which the broader view has been considered or applied.
4. The Broader Approach – an assumption that the defendant intends to enter into the contract is capable of giving rise to an estoppel in exceptional circumstances

The “broader approach” to the nature of the assumption or expectation simply requires an assumption that a contract would eventuate or promise be performed or interest granted, rather requiring an assumption or belief that the defendant was legally bound to proceed. Under this approach, in exceptional cases, a plaintiff may succeed in an estoppel claim where he or she has been induced to rely to his or her detriment upon an assumption that the defendant intended to complete the contract in the future if the defendant has knowingly encouraged that detrimental reliance. The plaintiff’s knowledge of the defendant’s legal right to withdraw is but one of the facts to be taken into account and weighed against the extent of the defendant’s encouragement to rely upon his or her express or implied intention to proceed.^[62] This section discusses a number of the cases in which the broader view of the requirements of estoppel in failed contractual negotiations has been applied or considered in relation to estoppel claims in ‘subject to contract’ negotiations.

Austotel Pty Ltd v Franklins Selfserve Pty Ltd

Austotel Pty Ltd v Franklins Selfserve Pty Ltd^[63] concerned negotiations between a property developer (Austotel) and the proprietors of the Franklins supermarket store (Franklins) for lease of space in a new development in Sydney which was in the course of construction. Through the course of the ongoing ‘subject to contract’ negotiations, Franklins took steps to acquire special equipment and fittings and terminated its existing lease and Austotel proceeded to construct the store in accordance with Franklins’ specifications. However, the parties had not agreed the price for the final area to be leased.

In a passage which has been often cited since with apparent approval, Priestley JA, with whom Kirby P agreed, held that Waltons Stores v Maher may be understood as requiring that:

“For equitable estoppel to operate there must be the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed or an interest granted to the plaintiff by the defendant, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable.”^[64]

Priestley JA concluded:

“The question in every case will be, ... not that of contractual intent, but
whether there has been reliance by the plaintiff induced by the defendant on the defendant's commitment to act in a certain way. When the “subject to” argument is looked at to see whether there was inducement-reliance etc, rather than by asking whether there was contractual intent (although of
course some of the same ideas are latent in each), it seems to me easier to see that on the facts of the present case, the argument should not be accepted.”^[65]

Priestley JA was in the minority in finding that the estoppel claim ought to have succeeded in that case. However, Kirby P agreed with Priestley JA’s analysis of English and Australian law and accepted his statement of principle referred to above.^[66] Rogers A-JA expressed no disagreement with Priestley JA’s analysis of the law. For his Honour, the critical problem was the lack of evidence of any assumption by Mr Frew who was negotiating on behalf of Franklins. His Honour said that the “true question to ask in the present context is what was the relevant assumption upon which Mr Frew, and therefore the plaintiff, was encouraged to proceed by the actions of the defendant. Mr Frew did not assert that he had any assumption in mind... Not having identified the assumption, makes it difficult for the plaintiff to argue that it was encouraged by the defendant’s actions to act in reliance upon that assumption.”^[67]

The estoppel claim also failed because the majority (Kirby P and Rogers A-JA) found that the lack of agreement about the rental to be charged for the increased space to be let, which was the result of a deliberate negotiating strategy of Franklins,^[68] meant that, as found by Rogers A-JA, “[Franklins] was not entitled to believe that a lease would be entered into until the additional rental was agreed or otherwise determined.”^[69] None of the separate judgments applied Brennan J’s dictum in Waltons v Maher that, short of a belief that the defendant was “bound to proceed”, there could be no basis for an estoppel claim. It is submitted that Austotel represents acceptance of the broader view notwithstanding the result in that case.

Whittle v Parnell Mogas Pty Ltd

Whittle v Parnell Mogas Pty Ltd^[70] was a decision of the Court of Appeal of the Supreme Court of South Australia in which Debelle J appears to have applied the broader view and Vanstone and Layton JJ the narrower view. That case concerned a proposed lease of a service station.

Debelle J applied what may be described as the broader approach. His Honour’s view of the evidence was that the plaintiff had every reason to assume that the defendant, the proposed lessee, would enter into the lease, and expended very substantial sums of money on the basis of that assumption. His Honour found that the defendant knew that the works were being undertaken by the plaintiff, and encouraged it. The defendant required alterations and amendments to the plans and knew that works were carried out in accordance with those requested amendments. His Honour allowed the appeal on the estoppel claim. His Honour did so by adapting the remarks of Mason CJ and Wilson J in Waltons v Maher^[71] and holding that the defendant was not entitled to stand by in silence when it must have known that the plaintiffs were proceeding on the assumption that the terms of the lease had been agreed and that the execution of the lease was but a mere formality. As a result of its encouragement of the assumption, the defendant was under an obligation to inform the plaintiffs if it did not have a firm intention to proceed.^[72]

However, his Honour was in the minority. Vanstone and Layton JJ both appear to have applied the narrower view and rejected the estoppel claim. Vanstone J found “it was necessary to show, at least that the defendant induced in them an assumption or belief that both parties were bound by an agreement”^[73] and that [m]erely acting in the hope, assumption or expectation that an agreement will be reached does not give rise to an estoppel.”^[74] Layton J held that on the evidence, the lack of clarity as to the terms of the agreement and the existence of a pre-condition ‘significantly hampered’ the estoppel claim. However, her Honour also applied Brennan J’s dictum that “It is only if a party induces the other party to believe that he, the former party, is already bound and his freedom to withdraw has gone that it could be unconscionable for him subsequently to assert that he is legally free to withdraw.”^[75]

This case illustrates the different approaches to estoppel in this context arising from the application of the reasons of Mason CJ and Wilson J in Waltons v Maher on the one hand, which seem to permit the broader approach, and the dicta of Brennan J, on the other, which supports the narrower approach.

EK Nominees Pty Ltd v Woolworths Ltd

If there was any doubt as to the potential for different outcomes as a result of the application of the narrower approach or the broader approach to cases of commercial negotiations ‘subject to contract’, the issue arose squarely in EK Nominees Pty Ltd v Woolworths Ltd.^[76] In this case, White J clearly approved the broader approach and found that an estoppel arose from protracted contractual negotiations which did not result in a contract being concluded despite the fact that the plaintiff knew that the defendant was entitled to withdraw from the negotiations.

In that case, the plaintiff was the owner of property in Auburn, Sydney which it wished to develop. It entered into negotiations with the defendant for the development of the site to lease to it for the establishment of a Woolworths supermarket. On 18 July 2001, an agreement in principle was reached. The defendant by letter to the plaintiff approved terms for an agreement for lease, although approval was subject to certain terms and conditions including “agreement to lease and lease”. Thereafter, the plaintiff incurred significant expenditure in developing the premises, with the knowledge and encouragement of the defendant, until May 2002 when it found out that the defendant was not going to proceed and ceased development. The plaintiff claimed relief from the defendant to recoup expenditure incurred in obtaining development approval and satisfying its conditions, and preparing a development site for the purposes of an anticipated lease of the premises to the defendant.

However, the evidence disclosed that the plaintiff understood from the defendant’s letter of 18 July 2001 that Woolworths was not contractually bound until it entered into a formal lease and was free to walk away if it chose to do so.^[77] For this reason, Woolworths submitted that it was not unconscionable for it to walk away from the negotiations when E K Nominees knew that Woolworths considered itself free not to enter into any such lease.^[78] The issue in relation to the estoppel case was put in this way by White J:

“The question is whether it is sufficient for E K Nominees to prove that it was induced by Woolworths reasonably to assume that Woolworths would enter into an agreement for lease with it, and acted to its detriment in reliance on that assumption, or whether it is necessary for E K Nominees to have assumed, or expected, that Woolworths was bound to proceed. If it is necessary for E K Nominees to demonstrate an assumption that Woolworths was bound to proceed, that is, to have assumed that Woolworths was not free to withdraw from the expected legal relationship, then its claim based on estoppel must fail.”^[79] (Emphasis added)

There were a number of features in the evidence which were important to the ultimate finding that an estoppel had been made out.^[80] His Honour found that Woolworths knew of E K Nominees’ expenditure from July 2001 until May 2002 in reliance on the assumption that Woolworths intended to proceed with the lease of its premises and throughout that time, had encouraged that expenditure. The plaintiff knew that it was necessary to obtain approval from the board of Woolworths to the agreement in principle and that approval was given. Woolworths represented that the approval which its board had given would be operative for a period of twelve months and that if the agreement for lease were not entered into by that time, Woolworths would regard itself as free to terminate the agreement in principle, free of any claim. However, that period had not expired when it withdrew from negotiations for the agreement for lease. Woolworths had insisted that if E K Nominees failed to perform in accordance with the agreement in principle which had been reached, that is, if it failed to take all the preliminary steps which were necessary before entering into the agreement for lease, Woolworths would be entitled to make a claim for its own costs and loss of profits, which encouraged the defendant’s belief that the contract would eventuate. His Honour noted that E K Nominees had previously sought assurances that notwithstanding the possibility of a better site being available to Woolworths, Woolworths had a bona fide interest in locating a Woolworths supermarket on the Auburn Road site, and that assurance was given. Finally, his Honour concluded that Woolworths’ words and conduct conveyed that it would not pull out of negotiations with E K Nominees, after E K Nominees had expended substantial moneys on the Auburn Road site, in order to relocate its supermarket to an alternative site.

One of the issues which White J considered particularly relevant to the formation of the plaintiff’s assumption that the defendant would enter into the contract was its assessment of the risk of the defendant withdrawing from the negotiations. His Honour held^[81] that in the context of the approval which had been given by the board of Woolworths for a period of twelve months, EK Nominees did not accept a risk of Woolworths abandoning the project “not for any reason associated with bona fide disagreement concerning the terms of the contract to be entered into, but for reasons which, however valid, pertain[ed] only to [its] own position”, citing Sheppard J in Sabemo v North Sydney Municipal Council.^[82] During that twelve month period, EK Nominees was obliged to commit itself to the project or face a claim from Woolworths for its costs and loss of profit. These factors weighed significantly in the plaintiff’s assessment of the risk of the defendant not proceeding and contributed in this way to its assumption that the defendant would proceed as long as there was no supervening problem such as a problem with satisfying the relevant Council’s requirements.

White J undertook a detailed review of the cases dealing with the question whether it is necessary to demonstrate that the plaintiff assumed that the defendant was legally bound to proceed, including Attorney-General (Hong Kong) v Humphreys Estate, Austotel Pty Ltd v Franklins Selfserve Pty Ltd, Ramsden v Dyson and Waltons v Maher, amongst others, and concluded that none of these cases required an assumption that the defendant was ‘bound to proceed’^[83]. His Honour rejected the argument that “so long as both parties recognise that either party is at liberty to withdraw from the negotiations at any time before the contract is made, it cannot be unconscionable for one party to do so.” His Honour held:

“Whether it is unconscionable for one party to withdraw will depend on what was the nature of the risk of his or her withdrawal which the other party was induced to assume, and the extent to which the other party acted to his or her detriment on the basis of that assumption, to the knowledge, or with the encouragement, of the first party.” ^[84]

His Honour concluded that:

“.. the recognition by one party that the other party is not legally bound by a contract, or is not legally bound to enter into a contract, (if there is a difference), cannot in all circumstances mean that it is not unconscionable for the opposite party to withdraw if it has induced the first party to act to its detriment in the belief that a contract will eventuate. Whether the first party is relying on the other’s contractual intentions, whether it is doing so reasonably, and whether it has accepted the risk of the allegedly estopped party not proceeding in any circumstance, are questions of fact depending upon particular circumstances.”^[85]

White J found that in the circumstances, notwithstanding that E K Nominees, through its director Mr Marcocci, did not believe that Woolworths was bound to enter into an agreement for lease and knew it was free to withdraw, it was nonetheless unconscionable for Woolworths to deny E K Nominees’ assumption that Woolworths would proceed to enter into the agreement for lease.^[86]
In EK Nominees, whilst no contract had been formed and no surrender of the right to withdraw had been offered, there was agreement between the parties on all essential terms of the proposed agreement between them. There was nothing of substance left to negotiate, or renegotiate. In this respect, the case is distinguishable from Austotel Pty Ltd v Franklins Selfserve Pty Ltd^[87] and Cobbe. EK Nominees v Woolworths clearly illustrates the potential for a difference in outcome depending upon the test which is applied to circumstances in which a party was acting upon an assumption that a contract would be entered into, as opposed to an assumption that the defendant was bound by the contract or bound to enter the contract.

5. The Narrow and Broad View in Other Proprietary Estoppel Cases.
In Part 3 of this paper dealing with the development of the narrower view of the scope of equitable estoppel arising from pre-contractual negotiations, two significant English proprietary estoppel cases were discussed; A-G (Hong Kong) v Humphreys and Cobbe v Yeoman’s Row Management Ltd. Many, if not most, of the equitable estoppel cases arising from commercial negotiations in Australia involve contracts for the grant of an interest in land. As a result, Australian equitable estoppel cases will inevitably consider proprietary estoppel cases. In England, equitable estoppel as a source of rights between parties who are not in a pre-existing legal relationship is restricted to circumstances falling within the scope of proprietary estoppel.^[88] In Waltons v Maher, Mason CJ and Wilson J noted with approval that proprietary and promissory estoppel had been treated as “mere facets of the same general principle”.^[89] Brennan J saw “little purpose in dividing cases of equitable estoppel into categories of promissory and proprietary estoppel” which his Honour commented were “not necessarily exhaustive of cases in which equity will intervene.”^[90] Significant Australian reformulations of equitable estoppel treat the doctrine as encompassing both: Austotel Pty Ltd v Franklins Selfserve Pty Ltd^[91] and Evans v Evans^[92] are but examples. Whilst there remains academic debate as to whether Waltons v Maher really effected a merger of promissory and proprietary estoppel, other proprietary estoppel cases dealing with the same question of the nature of the plaintiff’s assumption are relevant to the present discussion. This part focuses on two further aspects of proprietary estoppel as relevant to informing the development of the scope of equitable estoppel in Australia.

First, this part considers the debate surrounding the proper construction of Ramsden v Dyson and its application in other significant subsequent proprietary estoppel cases. Ramsden v Dyson^[93] is of particular significance in this regard, being one of the seminal proprietary estoppel cases in relation to estoppel by encouragement.^[94] Ramsden v Dyson has been cited in support of both the narrower view (for example in Cobbe per Lord Walker) and in support of the broader view (for example in Waltons v Maher per Mason CJ and Wilson J, and EK Nominees per White J).
Secondly, this part also considers recent developments in relation to proprietary estoppel in testamentary dispositions inter vivos. This class of estoppel bears some analogy with commercial negotiations because it also concerns circumstances where it is expected that a party may change his or her mind over a lifetime, in the same way that ‘subject to contract’ negotiations are expected to permit negotiating parties the freedom, in ordinary cases, to walk away from negotiations before the contract is executed.

(i) Ramsden v Dyson

Ramsden v Dyson concerned certain claims by Mr Thornton, a tenant of property owned by Sir John Ramsden, that Sir John Ramsden’s agent had represented two things to him and others; first, that tenants at will upon Ramsden’s property would be entitled to hold their land forever provided they paid the rent and so no lease was necessary, and secondly, that a tenant at will would be entitled to call for a long lease of property held under a tenancy at will on his estate at any time if he sought to do so.^[95] Thornton had taken two plots of land under a tenancy at will at a certain fixed rent at different times. Notices to determine the tenancies were given to the tenant by the appellant. Thornton and his mortgagee, Dyson, filed a bill claiming an equitable right to a long lease of the properties.

The majority (Lord Cranworth LC, Lord Wensleydale and Lord Westbury, Lord Kingsdown dissenting), dismissed the bill. In dealing with the claim for an entitlement to a long lease, Lord Cranworth (with whom Lord Westbury agreed) stated the general principle in terms of mistaken belief as to rights. His Lordship stated the principle as:

"If a stranger begins to build on my land supposing it to be his own, and I, perceiving his mistake, abstain from setting him right, and leave him to persevere in his error, a Court of equity will not allow me afterwards to assert my title to the land..."^[96]

Lord Cranworth LC stated that if Thornton had been able to establish that he had acted in the mistaken belief that he had against Sir John Ramsden "an absolute right to the lease", and that Sir John Ramsden knew that he was proceeding on that mistaken notion and did not interfere to set him right, he may have granted the relief sought. However, on the evidence, his Lordship did not accept that Thornton believed he had any such absolute right beyond that of a tenant from year to year, or that Sir John Ramsden knew or believed that Thornton was expending his money in the mistaken belief that he possessed such a right.^[97] His Lordship considered the separate claim that Sir John Ramsden's agent had led Thornton to believe that his tenancy at will would not be disturbed so long as he paid his rent. In addressing this claim, Lord Cranworth did not accept Thornton's contention that it was a representation of a right to hold the land forever provided the rent was paid. His Lordship preferred the appellant's construction of the representation which was that so long as the rent was paid, there was no intention on the part of Sir John Ramsden to disturb the tenants in their possession and that they might thus safely allow the matter to rest in the honour of the Ramsden family. It was in the context of this second claim that Lord Cranworth made these observations with claims based on reliance upon the defendant’s “honour”:

"If anyone makes an assurance to another, with or without consideration, that he will do or will abstain from doing a particular act, but he refuses to bind himself, and says that for the performance of what he has promised the person to whom the promise has been made must rely upon the honour of the person who has made it, this excludes the jurisdiction of the Courts of equity no less than of Courts of Law."^[98]

Lord Wensleydale, in a separate judgment, expressed the general principle of estoppel in the same way^[99] as Lord Cranworth by reference to a mistaken belief as to rights and also dismissed the bill.

Lord Kingsdown dissented in the result. Furthermore, his Lordship expressed the general equitable principle to be applied to the claim of an entitlement to a long lease in a different way. His Lordship's now well known and widely accepted formulation was:

"If a man, under a verbal agreement with a landlord for a certain interest in land, or what amounts to the same thing, under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a Court of equity will compel the landlord to give effect to such promise or expectation."^[100] (emphasis added)

Lord Kingsdown held that the claim fell within this class. His Lordship accepted Thornton's contention that he had built on the land on the basis that he was led by Sir John Ramsden's agents to assume that they might have a lease whenever they required one and would not be disturbed in their possession, at least without compensation and that having relied upon such an "assurance" that a right would be granted, he was entitled to relief.^[101]

Ramsden v Dyson is at the centre of a ‘tug of war’ between the narrower and broader views. Notwithstanding the finding of the Privy Council in Plimmer v The Mayor of Wellington that the only difference between the judgments in Ramsden v Dyson was as to the facts,^[102] there is a strong argument to be made that Lord Kingsdown’s judgment differed from the judgments in the majority in relation to this requirement for a belief as to a legal right. The modern cases developing the narrower view invariably rely upon Ramsden v Dyson as authority for this requirement of a belief as to a legal right and interpret Lord Kingdown’s reasons as consistent with it. For example, in Cobbe, Lord Walker, whilst noting that Lord Kingsdown’s formulation is “not without ambiguity”^[103], gave it a construction which conforms to the narrower view of the scope of equitable estoppel. His Lordship concluded that "an expectation of an interest", which Lord Kingsdown had equated with a verbal agreement, "is the same thing as a contracted interest only it if can be relied upon."^[104] His Lordship interpreted the rest of Lord Kingsdown’s speech as finding that the tenants believed that they had a legal right to a long lease and therefore found that Ramsden v Dyson had decided that the only relevant expectation which could give rise to an estoppel was a belief as to legal right.^[105] His Lordship held that "conscious reliance on honour alone will not give rise to an estoppel."^[106]
However, it is submitted that it can be argued equally that an expectation of an interest in land “amounts to the same thing” as a verbal agreement for the disposition of an interest in land because neither can be relied upon in a legal sense, both being unenforceable at law. Hence the role for equity in the circumstances Lord Kingsdown described – creation or encouragement by the defendant of an expectation in the plaintiff that he shall have an interest and knowledge of the detrimental reliance. On this basis, it is arguable that the only sense in which it could be said that both a verbal agreement for an interest in land and an expectation of an interest in land can be ‘relied upon’ is in the sense in which Lord Walker used those words in a more recent proprietary estoppel case, Thorner v Major, which is that the assurance was ‘intended to be taken seriously and to be relied upon.’^[107] This alternative interpretation of Lord Kingsdown's statement of principle fits squarely within the broader view.

In Waltons v Maher, Mason CJ and Wilson J described the principle of proprietary estoppel applied in Ramsden v Dyson as the principle that " .. a person whose conduct creates or lends force to an assumption by another that he will obtain an interest in the first person's land and on the basis of that expectation the other person alters his position or acts to his detriment, may bring into existence an equity in favour of that person, the nature and extent of the equity depending on the circumstances"^[108](emphasis added). No mention of a requirement for a belief as to a legal right was drawn from the case. In EK Nominees Pty Ltd v Woolworths Ltd, White J considered the case in detail and observed that Lord Kingdown’s dissenting judgment in Ramsden v Dyson did not require a belief by the tenant in that case that the landlord was legally obliged to confer an interest in the land to him.^[109] His Honour reasoned that the absence was “conspicuous” given the fact that the majority in Ramsden v Dyson held that the tenant had failed because of a lack of belief that he had acquired an absolute right. In other contexts under Australian law, Lord Kingsdown’s formulation appears to have been accepted as having the broader construction extending to expectations of future interest not necessarily predicated upon a belief as to present legal rights.^[110]

The tension between the majority’s requirement in Ramsden v Dyson for a belief as to a legal right and the broader construction which may be given to Lord Kingsdown’s formulation was raised directly in Inwards v Baker and Crabb v Arun District Council.

Inwards v Baker^[111] concerned a claim by Mr Baker in relation to an assurance his father had given him about his entitlement to live in a bungalow which he had built on his father’s land at his father’s suggestion. After his father’s death, the trustees for his de facto widow took proceedings to evict him. Counsel for the trustees argued that it was necessary for the defendant to have been led to believe that he had some actual right in the property^[112] and relied upon Lord Cranworth’s judgment in Ramsden v Dyson that to raise such an equity the person spending money must suppose the land to be his own and the owner must know that the building is going on.

Lord Denning MR noted that in Plimmer v Wellington Corporation^[113] the Privy Council had expressly affirmed the statement of the law by Lord Kingsdown and held:

"It is quite plain from those authorities that if the owner of land requests another, or indeed allows another, to expend money on the land under an expectation created or encouraged by the landlord that he will be able to remain there, that raises an equity in the licensee such as to entitle him to stay. He has a licence coupled with an equity."^[114]

His Lordship said further:

"So in this case, even though there is no binding contract to grant any particular interest to the licensee, nevertheless the court can look at the circumstances and see whether there is an equity arising out of the expenditure of money. All that is necessary is that the licensee should, at the request or with the encouragement of the landlord, have spent the money in the expectation of being allowed to stay there. If so, the court will not allow that expectation to be defeated where it would be inequitable so to do ...”^[115]
Both Lord Justice Danckwerts and Lord Justice Salmon agreed with Lord Justice Denning.^[116] This case also appears to support the broader scope of proprietary estoppel.^[117]

In Crabb v Arun District Council ^[118] the plaintiff owned a block of land which had access to a road owned by the defendants at one point only. The plaintiff entered into negotiations with the defendant for a second point of access to enable him to subdivide his land and sell it in two parts, both with access to the road. No written contract eventuated. Nonetheless, the parties acted upon the basis that the right would eventuate. Most significantly, the defendant constructed a gate at the second entry point. After the plaintiff sold the part of his land which had the original access, the defendants removed the gate at the second access point, leaving the plaintiff's property landlocked. The plaintiff commenced proceedings claiming that the defendant was estopped from denying him access to the road at the second access point.^[119]

Both Lord Denning MR and Scarman LJ held that upon the evidence there was an agreement in principle reached between the parties^[120] but Lord Denning MR noted that the parties envisaged "further processes" which would be required to render it binding, such as the entry into a written contract.^[121] Scarman LJ found that the plaintiff held a "confident expectation that such a right would be granted upon reasonable conditions"^[122].

Lord Denning MR held that short of a binding contract, either a promise not to insist upon strict legal rights or alternatively, "if [the plaintiff] by his words or conduct, so behaves as to lead another to believe that he will not insist on his strict legal rights - knowing or intending that the other will act on that belief - and he does so act, that again will raise an equity in favour of the other."^[123] In his Lordship's view, the defendants' did nothing to disabuse the plaintiff of the assumption he held, but rather confirmed it by erecting the gates and this conduct raised the equity against them.^[124]

Scarman LJ approached the issues in a similar way to Lord Denning MR. It is of interest that Scarman LJ was of the view that the difference between the judgments in Ramsden v Dyson was as to the facts.^[125] However, his Lordship noted the argument put by the defendant that Ramsden v Dyson required a belief by the plaintiff in the existence of a legal right against the defendant. His Lordship said of the argument, "I do not think that is today a correct statement of the law. I think the law has developed so that today it is to be considered as correctly stated by Lord Kingsdown in his dissenting speech in Ramsden v Dyson."^[126] It is implicit in Scarman LJ’s reasoning that Lord Kingsdown’s formulation in Ramsden v Dyson should be construed as having the broader meaning. Scarman LJ also found that the encouragement of the "confident expectation" had been made out and the equity arose.

This discussion of these proprietary estoppel cases is by no means exhaustive and it is beyond the scope of this paper to do complete justice to such a discussion. However, it illustrates that the same debate has been going on about the nature of the assumption required in relation to proprietary estoppel in commercial negotiations, and that proponents of both the narrower and broader views find support from these key cases.

(ii) Developments in Testamentary Dispositions Inter Vivos – Comparison with Commercial Negotiation Cases

Testamentary dispositions inter vivos, as another class of proprietary estoppel cases, bear some analogy with commercial negotiations despite the obvious contextual differences. The analogy arises because it is a field in which parties are taken to be aware of the right of an individual to change their mind about promised dispositions before death,^[127] in much the same way as ‘subject to contract’ negotiations give parties the right to change their mind about entering into a contract before a contract becomes legally binding. The inherent revocability of testamentary intentions therefore makes a useful comparison with the revocability of contractual intentions, despite the otherwise obvious, and significant, differences between arms’ length commercial negotiations and familial or other personal relationships.^[128] Recent developments relaxing the requirement of “irrevocability” in testamentary cases in England provide some support, it is submitted, for the broader view of estoppel in commercial negotiation cases.

In Australia, as in England, it has been traditionally required that the representation or promise of testamentary wish was expressed to be, and believed to be, irrevocable: Parente v Parente.^[129] In Barnes v Alderton Young CJ in Eq concluded that “one has to show circumstances that the promise was given and understood to be irrevocable.”^[130] Again in Weeks v Hrubala, Young CJ in Eq repeated these observations and said that it was necessary to have evidence from the plaintiffs “that they considered the promises to be irrevocable.”^[131] As already noted, the position was similar in England: Cobbe v Yeoman’s Row Management Ltd.^[132] However, in England, there appears to be a shift in emphasis away from requiring an initial expression of irrevocability of promise in testamentary cases.

Gillett v Holt

In Gillett v Holt,^[133] a landowner, Holt, repeatedly assured the claimant, Gillett, that he would inherit his land when he died. It was held that despite Gillett’s awareness that the assurances were revocable^[134], the estoppel claim succeeded against Holt’s estate, because of the fact that the assurances were repeatedly given over a long period of time and some of them were completely unambiguous.^[135] In that case, Robert Walker LJ (as he then was) cited with apparent approval criticisms made by William Swadling of the decision of Judge Weeks QC in the Chancery Division of the English High Court in Taylor v Dickens. Judge Weeks QC held that “it is not sufficient for A to believe that he is going to be given a right over B’s property if he knows that B has reserved the right to change his mind. In that case, A must show that B created or encouraged a belief on A’s part that B would not exercise that right.”^[136] Mr Swadling had said:

“This decision is clearly wrong, for the judge seems to have forgotten that the whole point of estoppel claims is that they concern promises which, since they are unsupported by consideration, are initially revocable. What makes them later binding, and therefore irrevocable, is the promissee’s detrimental reliance on them. Once that occurs, there is simply no question of the promisor changing his or her mind.”^[137]

It was held in Gillett v Holt that the initial revocability of the testamentary dispositions is irrelevant to a promise or assurance of the type given in that case because “the circumstances may make it clear that the assurance is more than a mere statement of present (revocable) intention, and is tantamount to a promise.”^[138] In particular, Robert Walker LJ referred to the trial judge’s finding that he was “unable to find in the representations reviewed ... anything which could reasonably be construed as an irrevocable promise that the Gilletts would inherit, regardless of any circumstances” and held that the judge must have been “exaggerating the degree to which a promise of this sort must be expressly made to be irrevocable if it is to found an estoppel.”^[139] His Lordship found that the judge had misdirected himself as to what he was looking for in the facts, and restated the proposition that it is in fact the other party’s detrimental reliance on the promise which makes it irrevocable.^[140]

In Gonthier v Orange Scaffolding Ltd,^[141] a case dealing with ‘subject to contract’ negotiations rather than testamentary dispositions, Lindsay J observed that “Gillett suggests that where the facts are strong enough a right to revoke an unbinding assurance can be lost even where the recipient of the assurance accepts that he has actual knowledge of its revocability”.^[142] His Honour observed:

“Unless there is some principle by reason of which, in relation to its effect on the parties and the consciences of either of them, ‘subject to contract’ revocability is invariably to be treated differently to the revocability of wills during a testator’s lifetime, I see Gillett as opening upon a possibility which Attorney-General of Hong Kong in the Privy Council had seemed to deny. The possibility, after Gillett, at any rate where a very strong case can be made on the facts, as to the obviousness and duration of reliance upon a ‘subject to contract’ dealing nonetheless being implemented, is that notwithstanding the Privy Council case [in A-G (Hong Kong) v Humphreys], the right to withdraw from the dealing may be lost as the earlier Salvation Army and Island Holdings cases had suggested could be the case.”

These remarks were obiter in Gonthier v Orange Contract Scaffolding as the appeal was allowed by reason of a lack of clean hands on the part of the appellant. However, they provided some further support for both the analogy between ‘subject to contract’ negotiations and testamentary dispositions and the broader view of the scope of estoppel in commercial negotiations.^[143]

This issue of the revocability of assurances for the purposes of estoppel in testamentary dispositions, and the nature of the plaintiff’s belief about the representation which had been made, was most recently discussed by the House of Lords in Thorner v Major.^[144] That case appears to have taken a broader view of the requirement of belief of irrevocability of the promise made in that context.^[145]

Thorner v Major^[146]

In that case, the parties, two “taciturn and undemonstrative men committed to a life of hard and unrelenting physical work, by day and sometimes by night, largely unrelieved by recreation or female company”^[147] together worked a farm owned by the respondent’s father for many years. The appellant worked on the farm for no pay. The appellant and respondent were cousins. The trial judge found that between 1990 and 2005, the respondent (Peter) encouraged the appellant (David) to believe that he would inherit the farm and that David acted in reliance upon that assurance, and allowed the claim in estoppel. The Court of Appeal reversed the decision ([2008] EWCA 732). The House of Lords unanimously restored the trial judge’s decision.

In relation to the question of the character or quality of the assurance, about which there was much debate as to whether the assurances had to be “clear and unequivocal”, Lord Walker (with whom Lord Rodger of Earlsferry agreed) did not suggest there was a requirement that the statements upon which the claimant had relied were “irrevocable”. Rather, his Lordship concluded with apparent approval that it was sufficient that the deputy judge had found that the assurances “objectively assessed, were intended to be taken seriously and to be relied upon.”^[148] In this sense, it seems that the words ‘to be relied upon’ are used by his Lordship to encompass something less than an assurance of a present legal right, but nonetheless an assurance which could be trusted and acted upon. It is implicit for his Lordship’s discussion that this sufficed in terms of the character and quality of the representation, being the first of the two major issues before the House.^[149]

On this question, Lord Neuberger observed:

“... even if Peter’s ‘implicit statement’ may have been revocable, as the Court of Appeal thought, I should not be taken as accepting that it would necessarily follow that, once the statement had been maintained by Peter and acted on by David for a substantial period, it would have been open to Peter freely to go back on it. It may be that he could not have done so, at least without paying David appropriate compensation, unless the change of mind was attributable to, and could be justified by, a change of circumstances. It seems to me that it would be arguable that, even assuming that the ‘implicit statement’ was not irrevocable, if, say in 2004, Peter had changed his mind, David would nonetheless have been entitled to equitable relief, in light of his 14 or more years of unpaid work on the farm. It is not as if Peter had given any sort of clear indication that the statement was revocable. The Court of Appeal considered that it was not clear that the statement was irrevocable, not that it was clear that the statement was revocable.”^[150]

Lord Neuberger’s observations represent further support for the broader view of the type of assurance which can found an estoppel in testamentary dispositions in appropriate circumstances. These observations emphasise the factors of the length of detrimental reliance to the knowledge of the defendant, and the absence of any clear reminders or statements that the assumption was either false or clearly revocable.

It is suggested that the apparent move away from requiring ‘irrevocability’ of representations in testamentary cases in Thorner v Major lends further support to the argument against requiring a belief as to an absolute legal right in ‘subject to contract’ cases. It is undoubtedly true that there are significant contextual differences between domestic testamentary disposition cases and commercial negotiation cases.^[151] But should contextual differences warrant different tests for the nature of the assumption required? It is suggested that these differences are able to be accommodated in the assessment of the reasonableness of the reliance in the circumstances without the need for different requirements at law. Dealing with the contextual differences by way of assessment of the reasonableness of the reliance avoids what is arguably a risk to doctrinal clarity posed by requiring different tests for the nature of the assumption in relation to all different categories of proprietary estoppel.

5. Comment

This paper has examined a series of cases which demonstrate that both the narrower view and the broader view of the scope of estoppel in commercial cases have been applied by courts in England and in Australia in deciding whether an estoppel has arisen during the course of commercial negotiations. The particular difficulty which arises in relation to commercial contractual negotiations which are 'subject to contract' is that at law, that clause amounts to a right to walk away from the negotiations. Does it mean equitable intervention is avoided as well? The narrower view of the scope of equitable estoppel, in a sense, follows the law. The broader view treats the 'subject to contract' status of the negotiations as but one of the factors to take into account in determining whether an estoppel arises from the defendant's conduct in the circumstances: the right to walk away at law is not a complete answer to equity's inquiry.

The rationale for the narrower view of the circumstances in which equity will recognize an estoppel as arising from pre-contractual negotiations may be summarized in this way: because the defendant retains the right to withdraw at any time, the plaintiff ought to know that nothing is certain without a signed contract and any reliance upon contractual intention without a representation that the right to withdraw has been given up is misplaced and unreasonable. The narrower view of the scope of equitable estoppel in these circumstances therefore requires a belief that the defendant is ‘already bound’ in a legal sense by the contract, as distinguished from a moral sense such as being bound ‘in honour’.

Such a belief could only arise if the plaintiff believed, falsely, that the agreement in principle was already binding at law, or if there had been a secondary promise to give up the right to withdraw before entry into the contract, which the plaintiff believed rendered the defendant effectively bound to proceed. The effect of negotiations being subject to contract renders it virtually impossible for parties who are taken to know that the clause precludes a binding contract coming into effect, to assume that the other party is ‘already bound’. As for a secondary promise, in addition to being extremely unlikely in practice, such a promise, without more, is also unenforceable at law and as has been said, it is not clear “why an equally revocable subsidiary promise has more force than the initial revocable promise”.^[152] Nonetheless, this requirement for a mistaken belief that the defendant is in some way already legally bound by the agreement or bound to proceed with it is a threshold test under this view.

The case for the broader approach of the scope of equitable estoppel is premised upon the argument that in some exceptional circumstances, where a defendant has encouraged the plaintiff to assume that it intends to proceed with the contract and then knows of the plaintiff’s detrimental reliance upon it, an equity can arise. By not requiring an assumption that the defendant is legally bound, it is capable of applying in ‘subject to contract’ cases in circumstances where the assumption as to the defendant’s intention causes detrimental reliance. Whether such an assumption was reasonably held is another matter. But, in theory at least, upon this view, the fact that each of the parties has the right to withdraw from the negotiations at law does not preclude the intervention of equity.

Humphreys Estate and Cobbe, in England, and Brennan J's dictum in Waltons v Maher in Australia and the cases in which they have been applied, all support the narrower view. In New South Wales, there is also recent appellate authority in support of the narrower view in Franklins v Metcash. On the other hand, Mason CJ and Wilson J in their joint judgment in Waltons v Maher appear to have endorsed the broader view, as did the Court of Appeal in England in Crabb v Arun District Council. The broader view seems at the heart of the principle expressed in Austotel v Franklins Selfserve Pty Ltd. The broader view has since been expressly considered and applied by White J in EK Nominees v Woolworths.
It is not suggested in this paper that the result in any of the cases referred to ought to have been different. However, there is a lack of consistency in the reasoning in the cases and the very real potential for different outcomes by the application of the two different tests.

There is no clear answer to these questions. However, it is suggested that there are several reasons which favour the broader view of the nature of the assumption required to found an estoppel in commercial negotiations.

First, the narrower view of the scope of equitable estoppel in Australia to arise from commercial negotiations draws on the same reasoning as the narrower view of the scope of proprietary estoppel in England. This view arguably does not give full due to the scope of the principle underpinning proprietary estoppel expounded by Lord Kingsdown in Ramsden v Dyson. Whilst it is a question about which debate continues, that principle was not clearly in its terms limited to circumstances of a belief of a legal right. As noted by Mcfarlane and Robertson,^[153] the narrower view of the scope of proprietary estoppel found in Cobbe does not easily accommodate cases such as Crabb v Arun District Council which did not turn on the presence of a belief as to a legal right and indeed, seems to have been decided with that belief conspicuously absent. As already noted, in Waltons v Maher, Mason CJ and Wilson J did not restrict their interpretation of the principle in Ramsden v Dyson to cases in which the claimant believed he had an absolute or legally enforceable right in order to found an estoppel.^[154]

Secondly, as discussed in the last part, the relaxation under English law of the requirement for a belief in the irrevocability of the disposition in testamentary proprietary estoppel cases (Gillett v Holt, Thorner v Major) lends support to the argument for the relaxation of a requirement for a belief that the defendant was irrevocably bound to proceed in commercial cases on the basis that it is undesirable to have different doctrinal requirements for different classes of case such as commercial negotiations and testamentary promises. It is submitted that Lord Walker’s inquiry in Thorner v Major into whether the assumption was one which was “intended to be taken seriously and to be relied upon” in fact gets to the heart of equity’s concern in all cases.

Thirdly, the narrower ‘bound to proceed’ test runs the risk of being too prescriptive as a threshold test for the content of the relevant assumption because it fails to allow for factual variations in exceptional circumstances which might warrant equitable intervention – the very ground in which equity traditionally operates to prevent unconscientious assertion of legal rights. In Thorner v Major, Lord Neuberger observed that “focussing on technicalities can lead to a degree of strictness inconsistent with the fundamental aims of equity.”^[155] This echoes the observations of Oliver J back in Taylor’s Fashions Ltd v Liverpool Victoria Trustees Co Ltd where his Lordship said:

“I am not at all convinced that it is desirable or possible to lay down hard and fast rules which seek to dictate, in every combination of circumstances, the considerations which will persuade the court that a departure by the acquiescing party from the previously supposed state of law or fact is so unconscionable that a court of equity will interfere. Nor, in my judgment, do the authorities support so inflexible an approach...”^[156]

Prescribing the content of an assumption that a contract would eventuate to the degree of requiring the plaintiff to have given conscious thought to whether the assurances made gave rise to a legal right arguably goes this step too far.

Finally, is the broader view likely to open the floodgates to claims for equitable estoppel arising from commercial negotiations? It is submitted that this is unlikely. The requirement that reliance is reasonable is a significant obstacle to the recognition of estoppel in commercial negotiations in respect of assumptions that a contract would eventuate. As discussed in cases dealing with the effect of the clause ‘subject to contract’ at law in commercial negotiations, parties are taken to know that no contract will arise until the formal contract is concluded. Most negotiating parties will have conscious reservations about the reliability of the other party’s expression of intention to proceed in these circumstances. In Austotel Pty Ltd v Franklins Selfserve Pty Ltd, Priestley JA said, following a consideration of Attorney General (Hong Kong) v Humphreys Estate:

"... the reason why it is in general unlikely that there will be an estoppel in circumstances where parties are negotiating by reference to a document expressed to be ‘subject to contract’ or ‘subject to exchange’, is that the circumstances are likely to show that neither party is relying on the contractual intention of the other, and thus the reliance element of any estoppel will usually be absent." ^[157]

In most cases, the overriding awareness of the ‘subject to contract’ status will not only prevent a contract from arising at law, but it will also prevent any reliance placed upon the intentions of the defendant from arising, or if so, from being reasonable, so as to found a claim for equitable relief. It is certainly clear from the cases that regular reminders of the status of the negotiations as ‘subject to contract’ can function to negate the reasonableness of any assumption as to the defendant’s intention; for example in Attorney-General (Hong Kong) v Humphreys Estates^[158] and in another recent case in New South Wales, BBB Constructions Ltd v Aldi Foods.^[159] In such circumstances, regular and repeated representations of the right to withdraw function as a representation that there is no clear and firm intention to proceed with the contract. An assessment of the reasonableness of the plaintiff’s assumption about the defendant’s intention to proceed must take into account these circumstances and will most likely fail. It will only be in exceptional commercial cases where the defendant’s conduct will be held to have induced the reasonable assumption that a contract would eventuate.
Furthermore, there is no shortage of reminders from equity courts that, as noted recently by Lord Walker of Gestingthorpe in Cobbe, courts should be very slow to introduce uncertainty into commercial transactions by over-ready use of equitable concepts such as equitable estoppel and, as his Lordship said, “[t]hat applies to commercial negotiations whether or not they are expressly stated to be ‘subject to contract.’"^[160] Similar views have been stated in Australia for some time.^[161] In Summer Hill Business Estate v Equititrust, Pembroke J recently emphasised the need for caution and careful scrutiny before using estoppel in cases involving sophisticated businessmen.^[162] These reservations are undeniably appropriate starting positions when dealing with claims of estoppel in commercial dealings and are consistent with Lord Templeman's reservation in A-G (Hong Kong) v Humphreys Estate.^[163] Commercial certainty demands a high degree of judicial reticence before commercial negotiations are interfered with. With these brakes firmly held upon judicial interference with commercial negotiations, it is highly unlikely that a broader test for the basis for estoppel would lead to commercial uncertainty or an inordinate rise in estoppel claims.

As noted by Lord Scott in Cobbe, it is critical that estoppel is not used by the courts as a means by which to express judicial opprobrium in the face of unconscionable behaviour which, however morally offensive, does not satisfy the elements of the doctrine.^[164] However, if the core elements of the doctrine under Australian law are maintained - assumption, inducement, detrimental reliance and knowledge/intention - then it is arguably unnecessary to prescribe the content of the assumption to the degree which the narrower view requires.

Conclusion

For the reasons developed in this paper, it is suggested that the broader view of the scope of equitable estoppel, both in relation to commercial negotiations and more generally, is preferable to the narrower test with its rigid requirement for a belief as to legal entitlement. As has been developed, it is submitted that the broader view of the scope of equitable estoppel is not a weaker test, simply a less prescriptive one, and one that is consistent with the scope of proprietary estoppel as it has developed both prior and since to the development of equitable estoppel in Waltons v Maher.

Ultimately, even if this resolution of the competing narrower and broader views is not accepted, and the stricter test for the nature of the relevant assumption in commercial cases is preferred, it is to be hoped that a suitable vehicle for appellate consideration of these questions in Australia arrives sooner rather than later. The scope of equitable estoppel in relation to the potential for an estoppel to arise from commercial negotiations which do not result in a formal contract being concluded, particularly those which are ‘subject to contract’, remains unclear under Australian law by reason of the latent discord in this respect between the reasons for judgment of Mason CJ and Wilson J in Waltons v Maher on the one hand and the reasons of Brennan J on the other, which is brought to the fore in this context. Similar questions have been subjected to significant judicial and academic consideration in England and the same questions need to be raised and resolved under Australian law.

A J Silink

---

* Lecturer, Faculty of Law, University of Technology, Sydney. I would like to thank Michael Bryan, Peter Edmundson, Jason Harris, Paul Redmond and Cathy Sherry for their very helpful comments upon earlier drafts. I would also like to thank the anonymous reviewer for further most helpful suggestions. All errors are my own.

¹ [2006] NSWSC 1172.
^[2] [2009] NSWCA 407.
^[3] [1988] HCA 7; (1988) 164 CLR 387.
^[4] Mobil Oil Australia Ltd v Wellcome International Pty Ltd [1998] FCA 205; (1998) 81 FCR 475 [511]-[512]; Whittle v Parnell Mogas Pty Ltd [2006] SASC 129 per Debelle J at [37].
^[5] Ibid 405.
^[6] Ibid 406.
^[7] Ibid.
^[8] Ibid.
^[9] Ibid 422-423.
^[10] Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, 428-429.
^[11] Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407, [558]-[559].
^[12] For example, in Austotel Pty Ltd v Franklins Selfserve Stores Pty Ltd, (1989) 16 NSWLR 582, 612 Priestley JA, with whom Kirby P agreed, held that Waltons Stores v Maher may be understood as requiring that: “For equitable estoppel to operate there must be the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed or an interest granted to the plaintiff by the defendant, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable.” This passage has often been cited with approval: see for example, Fernkiln Pty Ltd v Australian Building Industries Pty Ltd [1999] QCA 179 [15]; Savage v Bianchino & Associates Savage v Bianchino Don [2011] NSWSC 140 [19]; Czipo-Barna V The Council Of The City Of Orange [1999] NSWSC 323; Buchholz v Kempsey Shire Council [2005] NSWSC 235 [31]; S and E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637, 653; Evans v Maclean Shire Council and Another [2003] NSWLEC 352 [14]; Witham v Witham [2000] WASC 236 [86]; Chanrich Properties Pty. Limited & Ors v Baulkham Hills Shire Council [2001] NSWSC 229 [91]; Mobil Oil Australia Ltd v Wellcome International Pty Ltd [1998] FCA 205; (1998) 81 FCR 475 [512]; Horsman v Commissioner of Main Roads [1999] FCA 1733 [8]. In O’Neill v Williams [2006] NSWSC 707 [40], Brereton J held the elements of equitable could be expressed in the following form: “First, as to the conduct of the plaintiff, that the plaintiff acted, or abstained from acting, in reliance upon an assumption or expectation that a particular legal relationship existed, or would exist, between the plaintiff and the defendant, or that the plaintiff had or would acquire some interest in the defendant's property. Secondly, as to the conduct of the defendant, that the defendant induced the plaintiff to adopt the assumption or expectation and encouraged the reliant activity of the plaintiff, or at least failed to deny the assumption or expectation with knowledge that the plaintiff was relying on it to the plaintiff's potential detriment and that the expectation could be fulfilled only by transfer of the defendant's property, a diminution of the defendant's rights or an increase in the defendant's obligations. Thirdly, as to the subject matter, that the assumption or expectation in respect of it was one that the defendant could lawfully satisfy [see generally Waltons v Maher, 428-429 (Brennan J); Meagher, Gummow & Lehane, [17-105]].” Again, this formulation has also been subsequently cited with approval: Evans v Evans [2011] NSWCA 92 per Campbell JA at [13], approving it as a statement of principle in the judgment at first instance by Brereton J (Evans v Evans [2010] NSWSC 170]); Butler v Wilson [2011] NSWSC 262 per Tamberlin AJ at [60].
^[13] State Rail Authority (NSW) v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170.
^[14]Legione v Hateley [1983] HCA 11; (1983) 152 CLR 406 at 435-436 affirmed in cases such as, for example, Summer Hill Business Estate Pty Ltd v Equititrust Ltd [2010] NSWSC 776 per Pembroke J, and confirmed on appeal in Summer Hill Business Estate Pty Ltd v Equititrust Ltd [2011] NSWCA 149.
^[15] See Grundt v Great Boulder Pty Gold Mines [1937] HCA 58; (1937) 59 CLR 641, 674–675 per Dixon J. In Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101, the High Court cited with approval Deane J’s statement in Commonwealth v Verwayen (1990) 170 CLR 394 that ultimately “the question whether departure from the assumption would be unconscionable must be resolved not by reference to some preconceived formula framed to serve as a universal yardstick but by reference to all the circumstances of the case, including the reasonableness of the conduct of the other party in acting upon the assumption and the nature and extent of the detriment which he would sustain by acting upon the assumption if departure from the assumed state of affairs were permitted.”
^[16] See Foran v Wight [1989] HCA 51; (1989) 168 CLR 385; Commonwealth v Verwayen (1990) 170 CLR 394; Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101.
^[17] Austotel Pty Ltd v Franklins Selfserve Stores Pty Ltd, (1989) 16 NSWLR 582, 612 per Priestley JA, with whom Kirby P agreed.
^[18] [1954] HCA 72; (1954) 91 CLR 353, 360-2.
^[19] Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 per McLelland J, affirmed by the New South Wales Court of Appeal in GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631. There are examples of cases in which the fourth category has been applied such as Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39.
^[20] For a more detailed consideration of the role of the fourth category and the analytical purpose served by the categories, see E Peden, JW Carter and GJ Tolhurst, ‘When Three Just Isn’t Enough: the Fourth Category of the “Subject to Contract” Cases’ (2004 20 Journal of Contract Law 156; D McLauchlan, ‘In Defence of the Fourth Category of Preliminary Agreements: Or Are There Only Two’ (2005) 21 Journal of Contract Law 286, and B Walker SC, ‘The Fourth Category of Masters v Cameron’ (2009) 25 Journal of Contract Law 108.
^[21] [2008] NSWCA 248 at [26]. The decision is reported at [2008] NSWCA 248; (2008) 75 NSWLR 1 however this paragraph was in a section of the judgment not included in the report. The case is referred to by B Walker SC in ‘The Fourth Category of Masters v Cameron’ (2009) 25 Journal of Contract Law 108 at 109.
^[22] Unlikely though not impossible as acknowledged by the High Court in Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353, 602. There are, of course, exceptions: see for example, Michael Richards Properties v Corporation of St Saviour’s [1975] 3 All ER 416.
^[23] Eccles v Bryant and Pollock [1948] Ch 93.
^[24] [1954] HCA 72; (1954) 91 CLR 353, 362-3.
^[25] [2003] EWCA 873. Their Honours cited Regalian Properties plc v L.D.D.C. [1995] 1 WLR 212 ad 231; Edwin Shirley Productions Ltd v Workspace Management Ltd [2001] 2 EGLR 16 at 22 j-k.
^[26] Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55; [2008] 4 All ER 713, 730 per Lord Scott. Under Australian law, oral agreements for the disposition of an interest in land are not void but are unenforceable: see for example, Conveyancing Act 1919 (NSW), s 54A.
^[27] [2006] NSWSC 1172
^[28] [2006] NSWSC 1172, [259].
^[29] Rt Hon the Lord Neuberger of Abbotsbury MR, “Thoughts on the Law of Equitable Estoppel” (2010) 84 Australian Law Journal 225, 231.
^[30] [2003] EWCA 873 [42].
^[31] This case has been applied referred to with approval several times by the High Court of Australia, see Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, 406 per Mason CJ and McHugh J; Commonwealth of Australia v Verwayen (1990) 170 CLR 394, 411; Orr v Ford [1989] HCA 4; (1989) 167 CLR 316, 329.
^[32] Attorney General (Hong Kong) v Humphreys Estate (Queens Gardens) Ltd [1986] UKPC 58; [1987] AC 114, 124-125.
^[33] Ibid.
^[34] Correspondence from the government on 12 January 1981, containing the offer and agreement in principle, was expressed to be on the basis that any agreement would be subject to formal approval by the government. By a licence dated 17 November 1981 the government authorised HKL to enter into and demolish the buildings on Queen's Gardens. However, by Clause 22 of that licence, the arrangement was expressed to be revocable and not binding upon the government. Then, on 3 February 1982, HKL stipulated that in the event that the grant of the flats was not completed within six months, HKL might determine the licence by seven days' notice in writing and that the government would be required to deliver up vacant possession of the flats to HKL if the licence were terminated.
^[35] Attorney General (Hong Kong) v Humphreys Estate (Queens Gardens) Ltd [1986] UKPC 58; [1987] AC 114, 126.
^[36] Ibid 128.
^[37] Ibid 127-8.
^[38] Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, 405.
^[39] Ibid 406.
^[40] Ibid 421-422.
^[41] Ibid, 422.
^[42] See, for example, Blazeley v Whiley (unreported, Supreme Court of Tasmania, 12 March 1995, per Wright J); Ransa Sydney Squadron Ltd v Rushcutters Bay Maritime Reserve Trust [1999] NSWSC 569; Nepean District Tennis Association Inc v Council of the City of Penrith (unreported, Supreme Court of New South Wales, 24 October 1998, per Hodgson J); AXA Trustees Ltd v Ergun; [2000] NSWSC 872 [18]-[19]; Whittle v Parnell Mogas Pty Ltd. [2006] SASC 129; (2006) 94 SASR 421 [116] per Layton J.
^[43] Barnes v Alderton [2008] NSWSC 107, [51]. However, cf Hon Peter Young AO, Clyde Croft, Megan Smith, On Equity (Lawbook, 2009), 827-828.
^[44] Pacific National (ACT) Limited (ACN 48 052 134 362) v Queensland Rail (ABN 47 564 947 264) [2006] FCA 91 [668].
^[45] Ibid [831].
^[46] [2009] NSWCA 407.
^[47] Ibid [558].
^[48] [2009] NSWCA 407, [563].
^[49] Ibid [564]
^[50] Ibid [571].
^[51] [2008] 1 WLR 1752; [2008] UKHL 55
^[52] But see Thorner v Major [2009] 1 WLR 776; [2009] UKHL 18 in relation to the principles relevant outside of the commercial context. Estoppel as a source of rights remains restricted to proprietary claims in England: Baird Textile Holdings Ltd v Marks & Spencer plc [2001] EWCA Civ 274; [2001] All ER (D) 352.
^[53] See B Macfarlane and A Robertson, "The Death of Proprietary Estoppel" [2008] Lloyd’s Maritime and Commercial Law Quarterly 449 for a detailed examination of the reasons for judgment.
^[54] Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55; [2008] 1 WLR 1752, 1762 [16].
^[55] Ibid 1761-1762.
^[56] Ibid1768.
^[57] Ibid 1767.
^[58] Ibid 1780.
^[59] Ibid 1781.
^[60] Ibid 1781.
^[61] Ibid 1788.
^[62] EK Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172.
^[63] (1989) 16 NSWLR 582.
^[64] Ibid, 610. This passage has been cited with approval many times: see for example, Fernkiln Pty Ltd v Australian Building Industries Pty Ltd [1999] QCA 179 [15]; Savage v Bianchino & Associates Savage v Bianchino Don [2011] NSWSC 140 [19]; Czipo-Barna V The Council Of The City Of Orange [1999] NSWSC 323; Buchholz v Kempsey Shire Council [2005] NSWSC 235 [31]; S and E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637, 653; Evans v Maclean Shire Council and Another [2003] NSWLEC 352 [14]; Witham v Witham [2000] WASC 236 [86]; Chanrich Properties Pty. Limited & Ors v Baulkham Hills Shire Council [2001] NSWSC 229 [91]; Mobil Oil Australia Ltd v Wellcome International Pty Ltd [1998] FCA 205; (1998) 81 FCR 475 [512]; Horsman v Commissioner of Main Roads [1999] FCA 1733 [8].
^[65] (1989) 16 NSWLR 582, 614.
^[66] (1989) 16 NSWLR 582, 610.
^[67] (1989) 16 NSWLR 582, 620.
^[68] Ibid 620.
^[69]Ibid.
^[70] [2006] SASC 129
^[71] [1988] HCA 7; (1988) 164 CLR 387, 406-7.
^[72] [2006] SASC 129, [48]-[49].
^[73] Ibid [98].
^[74]Ibid [100].
^[75] Ibid [116].
^[76] EK Nominees Pty td v Woolworths Ltd [2006] NSWSC 1172.
^[77] EK Nominees Pty td v Woolworths Ltd [2006] NSWSC 1172, [232].
^[78] Ibid [225].
^[79] Ibid [232].
^[80] Ibid [268]
^[81] Ibid [260]
^[82] [1977] 2 NSWLR 880. It is beyond the scope of this paper to consider whether similar facts might also give rise to a quantum meruit claim for reimbursement of expenses or reasonable remuneration. In EK Nominees Pty Ltd v Woolworths White J considered the possibility of such a claim, although it was unnecessary to decide as it had not been pleaded. At paragraph [214]-[218] his Honour referred to recent Australian cases and academic consideration of the question. In England, such a claim was upheld in the alternative to estoppel by the House of Lords in Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752; [2008] UKHL 55.
^[83] EK Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172 [247].
^[84] Ibid [258]
^[85] Ibid [261].
^[86] Ibid [268]
^[87] (1989) 16 NSWLR 582.
^[88] For a recent discussion of the elements of proprietary estoppel in England, see the Rt Hon Lord Neuberger of Abbotsbury in "Thoughts on the Law of Equitable Estoppel" (2010) 84 Australian Law Journal 225 and J Randall, “Proprietary estoppel and the common intention constructive trust – Strange bedfellows or a match in the making?” (2010) 4 Journal of Equity 171.
^[89] Waltons Stores (Interstate) Ltd v Maher (1988) 387, 403.
^[90] Ibid, 420.
^[91] (1989) 16 NSWLR 582, 610 per Priestley JA.
^[92] [2010] NSWSC 170 per Brereton J, approved on appeal Evans v Evans [2011] NSWSC 92 at [13].
^[93] (1866) LR 1 HL 129.
^[94] The House of Lords did not consider the doctrine of proprietary estoppel again after Ramsden v Dyson until Cobbe v Yeoman's Row Management Ltd [2008] 1 WLR 1752; [2008] UKHL 55.
^[95] (1866) LR 1 HL 129, 143 and 145, per Lord Cranworth.
^[96] Ibid 141.
^[97] (1866) LR 1 HL 129, 142.
^[98] Ibid 145-146.
^[99] Ibid 168.
^[100] Ibid 170.
^[101] (1866) LR 1 HL 129, 172.
^[102] (1884) 9 App Cas 699, 711-712, discussed by White J in EK Nominees Pty Ltd v Woolworths Ltd at [239].
^[103] [2008] UKHL 55; [2008] WLR 1752, 1781.
^[104] Ibid.
^[105] This effect of this construction upon the scope of equitable estoppel has been criticised: see for example B Macfarlane, A Robertson, “The Death of Equitable Estoppel” [2008] Lloyd’s Maritime and Commercial Law Quarterly 449, and endorsed by the Rt Hon Lord Neuberger of Abbotsbury in "Thoughts on the Law of Equitable Estoppel" (2010) 84 Australian Law Journal 225, 229.
^[106] Ibid 1785.
^[107] [2009] UKHL 18; [2009] 1 WLR 776, 795 [60], [65].

^[108] Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, 404. This formulation of the principle has been applied by the New South Wales Court of Appeal in State of NSW v Scharer [2003] NSWCA 328, [36].
^[109] Ibid [237]
^[110] It is not possible within the scope of this paper to comprehensively review the law applying Ramsden v Dyson. However, by way of example, Ramsden v Dyson has recently been held to apply to expectations that an interest in land would be granted in the future in Harbour Port Consulting Pty Ltd v NSW Maritime [2011] NSWSC 813, applying the statement of principle to the same effect as set out in Evans v Evans [2011] NSWSC 92 (where the Court of Appeal accepted the principles as stated at trial by Brereton J) and Delaforce v Simpson-Cook [2010] NSWCA 666 at [63] per Handley JA.
^[111] [1965] EWCA Civ 4; [1965] 2 QB 29.
^[112] Ibid, 34-35.
^[113] (1884) 9 App Cas 699.
^[114] [1965] EWCA Civ 4; [1965] 2 QB 29, 37.
^[115] Ibid.
^[116] Ibid, 38 (per Danckwerts LJ) and 39 (per Salmon LJ).
^[117] The case has been given a broader construction in Australia. In Vinden v Vinden [1982] 1 NSWLR 618, 624 per Needham J, Inward v Baker was described as a case where there was “no contract, but an expectation, fuelled by the father's acquiescence in and encouragement of the son's expenditure, that the son would be able to live in the house for as long as he wished, which was held to raise an equity which the court would protect.”
^[118] [1976] Ch 179.
^[119] It is beyond the scope of this article to consider fully the issues with respect to estoppel claims against public authorities. However, for a recent consideration of the issues, see for example: G Weeks, ‘Estoppel and Public Authorities: Examining the Case for an Equitable Remedy’ (2010) Journal of Equity 247.
^[120] Ibid 185 per Lord Denning MR, 196 per Scarman LJ.
^[121] Ibid
^[122] Ibid 196
^[123] Ibid 188
^[124] Ibid 189
^[125] Ibid 194
^[126] Ibid 193.
^[127] Gillett v Holt [2001] Ch 210, 228.
^[128] In Cobbe v Yeoman’s Row Management Ltd [2008] 1WLR 1752, 1782 Lord Walker discussed the contextual differences between the two classes of case at [68]. No disagreement is here intended with any of those distinctions drawn, rather the use of them to justify a different legal test is questioned.
^[129] [2006] NSWSC 1154 [39] per Young CJ in Eq.
^[130] [2008] NSWSC 107 [58].
^[131] In Weeks v Hrubala [2008] NSWSC 162, [34] Young CJ in Eq observed that, “without the detailed evidence that one would expect given by both Mrs McDonald and the second plaintiff of the actual terms of the promises and of them saying that had they not believed the promises, they would not have continued to work and that they considered the promises to be irrevocable, the case is very flimsy.”
^[132] Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55; [2008] 1 WLR 1752, 1782 [66].
^[133] [2001] Ch 210.
^[134] Gillett v Holt [2001] Ch 210, 227.
^[135] Gillett v Holt [2001] Ch 210, 228.
^[136] [1998] 1 FLR 806.
^[137] Gillett v Holt [2001] Ch 210, 227 citing William Swadling [1998] RLR 220.
^[138] Ibid 228.
^[139] Ibid 229.
^[140] Ibid.
^[141] [2003] EWCA 873.
^[142] Ibid [61].
^[143] White J referred to Gonthier v Orange Contract Scaffolding in EK Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172 [265].
^[144] [2009] UKHL 18; [2009] 1 WLR 776.
^[145] This issue and other differences between the decisions of the House of Lords in Cobbe v Yeoman’s Row Management Ltd and in Thorner v Major are analysed in more detail by Nick Piška in “Hopes, Expectations and Revocable Promises in Proprietary Estoppel” (2009) 72(6) Modern LlawReview 984.
^[146] Thorner v Major [2009] UKHL 18; [2009] 1 WLR 776.
^[147]Ibid, 795 [59].
^[148] [2009] UKHL 18; [2009] 1 WLR 776, 795 [60], [65].
^[149] Ibid [30], the other being whether if the other elements for proprietary estoppel are established, the claimant must fail if the land to which the assurance relates has been inadequately indentified or has undergone a change.
^[150] [2009] UKHL 18; [2009] 1 WLR 776, 802 [89].
^[151] See Rt Hon the Lord Neuberger of Abbotsbury MR, “Thoughts on the Law of Equitable Estoppel” (2010) 84 Australian Law Journal 225, 232.
^[152] N Piška, “Hopes, Expectations and Revocable Promises in Proprietary Estoppel” (2009) Modern Law Review 998, 1011.
^[153] B Macfarlane, A Robertson, “The Death of Equitable Estoppel” [2008] Lloyd’s Maritime and Commercial Law Quarterly 449, 454, discussing Crabb v Arun District Council [1976] Ch 179 and Jennings v Rice [2002] EWCA Civ 159.
^[154] Ibid 404.
^[155] Thorner v Major [2009] UKHL 18; [2009] 1 WLR 776, 804 [98].
^[156] Taylor’s Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] QB 133, 148.
^[157] Referred to by White J in EK Nominees Pty Ltd v Woolworths Ltd [2006] NSWSC 1172 at [254].
^[158] Attorney General (Hong Kong) v Humphreys Estate (Queens Gardens) Ltd [1986] UKPC 58; [1987] AC 114.
^[159] [2010] NSWSC 1352.
^[160] [2008] UKHL 55; 2008] 1 WLR 1752 [81]; applied in BBB Constructions Pty Ltd v Aldi Foods Ltd [2010] NSWSC 1352 by McDougall J at [281].
^[161]See for example, Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582, 586 per Kirby P.
^[162] [2010] NSWSC 776 [31]-[40]
^[163] Attorney General (Hong Kong) v Humphreys Estate (Queens Gardens) Ltd [1986] UKPC 58; [1987] AC 114, 128.
^[164] [2008] UKHL 55; [2008] 1 WLR 1752, 1762.