Estoppel - Reliance-based Estoppels

Reliance-based Estoppels

Reliance-based estoppels (at English law) include:

  • by representation of fact, where one person asserts the truth of a set of facts to another;
  • promissory estoppel, where one person makes a promise to another, but there is no enforceable contract; and
  • proprietary estoppel, where the parties are litigating the title to land.

Both Halsbury's and Spencer Bower (see below) describe these three estoppels collectively as estoppels by representation. More simply, one party must say or do something and see the other party rely on what is said or done to change behavior.

All reliance-based estoppels require the victimised party to show both inducement and detrimental reliance, i.e.:

  • there must be evidence to show that the representor actually intended the victim to act on the representation or promise, or
  • the victim must satisfy the court that it was reasonable for him or her to act on the relevant representation or promise, and
  • what the victim did must either have been reasonable, or
  • the victim did what the representor intended, and
  • the victim would suffer a loss or detriment if the representor was allowed to deny what was said or done — detriment is measured at the time when the representor proposes to deny the representation or withdraw the promise, not at the time when either was made, and
  • in all the circumstances, the behavior of the representor is such that it would be "unconscionable" to allow him or her to resile.

Simply put, promissory estoppel has four necessary elements which the plaintiff must prove:

  • there was a promise
  • that was reasonably relied upon
  • resulting legal detriment to the promisee
  • justice requires enforcement of the promise

Estoppel by representation of fact and promissory estoppel are mutually exclusive: the former is based on a representation of existing fact (or of mixed fact and law), while the latter is based on a promise not to enforce some pre-existing right (i.e. it expresses an intention as to the future). A proprietary estoppel operates only between parties who, at the time of the representation, were in an existing relationship, while this is not a requirement for estoppel by representation of fact.

The test for unconscionability in the English and Australian courts takes many factors into account, including the behavior, state of mind and circumstances of the parties. Generally, the following eight factors are determinative (Michael Spence, Protecting Reliance: The Emergent Doctrine of Equitable Estoppel, Oxford: 1999, pp60–66):

  • how the promise/representation and reliance upon it were induced;
  • the content of the promise/representation;
  • the relative knowledge of the parties;
  • the parties' relative interest in the relevant activities in reliance;
  • the nature and context of the parties' relationship;
  • the parties' relative strength of position;
  • the history of the parties' relationship; and
  • the steps, if any, taken by the promisor/representor to ensure he has not caused preventable harm.

But in Cobbe v Yeoman's Row UKHL 55, Lord Scott of Foscote stated the following:

the ingredients for a proprietary estoppel should include, in principle, a proprietary claim made by a claimant and an answer to that claim based on some fact, or point of mixed fact and law, which the person against whom the claim was made could be estopped from asserting. To treat a “proprietary estoppel equity” as requiring simply unconscionable behaviour was a recipe for confusion. The remedy to which, on the facts as found by the judge, the claimant was entitled could be described neither as based on an estoppel nor as proprietary in character. His Lordship’s present view was that proprietary estoppel could not be prayed in aid to render enforceable an agreement declared by statute (s 2 of the Law Reform (Miscellaneous Provisions) Act 1989) to be void. A claim for the imposition of a constructive trust to provide a remedy for a disappointed expectation engendered by a representation made in the course of incomplete contractual negotiations was misconceived and could not be sustained by reliance on unconscionable behaviour. The claimant was, however, entitled to a quantum meruit payment for his services in obtaining the planning permission.

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