Equitable Estoppel

ESTOPPEL

Estoppel is a doctrine which is designed to protect a

reliant party from the detriment which may flow
where another party denies the truth of an
assumption or expectation which they have
encouraged the reliant party to believe.
 TYPES OF ESTOPPEL
5 Types:
Common Law
i. Estoppel by record ( Res Judicata)
ii. Estoppel by deed
iii. Estoppel by representation (In Pais)
Equity
i. Promissory Estoppel
ii. Proprietary Estoppel
 Equitable Estoppel

i. Promissory Estoppel
ii. Proprietary Estoppel
 Promissory Estoppel
Is one strand in a broader equitable principle
whereby parties to a transaction who have
conducted their dealings in reliance on an
underlying assumption as to a present, past or
future state of affairs, or a promise or
representation by words or conduct of one that
strict legal rights will not be insisted upon will not
be allowed to go back on that assumption,
promise or representation when it is unfair or
unjust to do so. (Ansons Law of Contract)
 DEFINITION
(Combe v. Combe [1951] 1 All ER 767)
where one party has, by his words or conduct, made to
the other a promise or assurance which was intended to
affect the legal relations between them and to be acted
accordingly, then, once the other party has taken him at his
word and acted on it, the one who gave the promise or
assurance cannot afterwards be allowed to revert to the
previous legal relations as if no such promise or assurance
has been made by him, but he must accept their legal
relations subject to the qualification which he himself has
so introduced, even though it is not supported in point of
law by any consideration, but only by his word.
 Definition (cont)
Estoppel is based on E.g. A promise not to
fairness and will not enforce his strict legal
favour a person who right against B, and B
having made a promise acted on it, then the
promise by A can be a
to relieve another of his defence for B in equity
legal obligation, tries to despite the lack of
go back on the promise. consideration from B to
A.
 Requirements
1. There must be a clear an unequivocal promise on the
part of the promisor, either expressly or as a matter of
inference.
2. It must be inequitable for the promisor to go back on
his promise and insist on his strict legal right in law.
Among the considerations that may be relevant are
the voluntariness of the promise on the part of the
promisor, whether the promise had improperly taken
advantage of the promisors difficult financial
position, and whether threats were utilised so as to
coerce the promisor.
3. The promisee has altered his position in
reliance on the promise so that it would be
inequitable to allow the promisor to act
inconsistently with it . (Note that no
requirement of detriment on the part of the
promisee is needed here)
4. Promissory estoppel normally suspends and
does not extinguish rights, the promisor may
enforce his strict legal rights by giving due
notice.
 Requirements
1. There must be a clear and unequivocal promise on the part of
the promisor, either expressly or as a matter of inference.

Hughes v Metropolitan Railway Co (1877) The landlord

gave his tenant 6 months to repair the property, else risk for
forfeiture. Within the 6 months, negotiation for the sale of the
lease was opened between landlord and tenant. The
negotiation failed after 6 months and the tenant failed to repair.
The landlord sought to enforce for forfeiture. It was held that the
landlord had led the tenant by his conduct to believe that the
landlord would not enforce forfeiture.
2. It must be inequitable for the promisor to go back on his
promise and insist on his strict legal right in law.

Among the considerations that may be relevant are the

voluntariness of the promise on the part of the promisor,
whether the promise had improperly taken advantage of the
promisors difficult financial position, and whether threats were
utilized so as to coerce the promisor.

D & C Builders Ltd v Rees (1966) Lord Denning expressed

that the promisor would not be allowed to revert to his strict
legal rights and that the promissory estoppel will be final if
promisee understood the promise to mean final extinguishing of
promisors strict legal rights.
3. The promisee has altered his position in reliance on the promise
so that it would be inequitable to allow the promisor to act
inconsistently with it.

Hughes v Metropolitan Railway Co (1877) The requirement of

detriment on the part of the promisee was not specifically
required.

Boustead Trading (1985) Sdn Bhd v Arab-Malaysia Merchant

Bank Bhd (1995) Gopal Sri Ram JCA explained, We take this
opportunity to declare that the detriment element does not form
part of the doctrine of estoppel. In other words, it is not an
essential ingredient requiring proof before the doctrine may be
invoked.
4. Promissory estoppel normally suspends and does not
extinguish rights, the promisor may enforce his strict legal rights
by giving due notice.

Tool Metal Manufacturing Co Ltd v Tungsten Electric Co

Ltd (1955) Generally, promissory estoppel will merely
suspend legal rights rather than extinguish them. However,
where periodic payment are involved and a promise has been
made to reduce the payments because of pressing
circumstances which are not likely to persist, promissory
estoppel can be used to extinguish legal rights.

Central London Property Trust Ltd v High Tree House Ltd

(1947)
Promissory estoppel, operates as a shield and not a sword; it gives right to
no cause of action.

Combe v Combe (1951) The Court held that promissory estoppel does
not create a cause of action and as such the requirement of consideration
in formation of contract is still relevant.

Nevertheless, the promisee may appropriately bring an action if he has an

independent cause of action.

Waltons Stores (Interstate) Ltd v Maher (1988)

the doctrine of promissory estoppel extends to the enforcement of
voluntary promises on the footing that a departure from the basic
assumptions underlying the transaction between the parties must be
unconscionable this 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.
 Cases
Hughes v. Metropolitan railway Co. [1877];
Birmingham and District land Co. v. London &
North Western Railway Co. (1888);
Central London Property Trust Ltd. v. High
Trees House Ltd. [1947];
Boustead Trading (1985) Sdn. Bhd. v. Arab
Malaysian Merchant Bank Berhad [1995] 3
MLJ 331 FC
 Hughes v. Metropolitan railway Co. [1877]
Landlord gave his tenant in October 1874 six months notice to repair
the premises. If the tenant failed to comply with it, the lease could
be forfeited. In November, the landlord started negotiations with the
tenant for the sale of the reversion but this was broken off in 31
December. Meanwhile the tenant had done nothing to repair the
premises. On the expiry of six months from the date of the original
notice, the landlord claimed to treat the lease as forfeited and
brought an action for ejectment.
The HOL held that the opening of negotiations amounted to a
promise by the landlord that, as long as they continued, he
would not enforce the notice, and it was in reliance upon this
promise that the tenant had remained quiescent. The six
months allowed for repairs were to run, therefore, only from
the failure of the negotiations and consequent withdrawal of
the promise, and the tenant was entitled in equity to be
relieved from forfeiture.
it is the first principle upon which all Courts of Equity
proceed, that if parties who have entered into definite
and distinct terms involving certain legal results-certain
penalties or legal forfeiture-afterwards by their own
act or with their own consent enter upon a course of
negotiation which has the effect of leading one of the
parties too suppose that the strict rights arising under
the contract will not be enforced, or will be kept is
suspense, or held in abeyance, the person who
otherwise might have enforced those rights will not be
allowed to enforce them where it would be inequitable
having regard to the dealings which have thus taken
place between the parties.
 PROPRIETARY
ESTOPPEL
This doctrine is applicable where one party knowingly
encourages another to act, or acquiesces in the others actions,
to his detriment in the belief that he has or will have some
property rights against the first party. The latter may be required
to make good the expectation which he encouraged in the other
party.
(Hanbury and Martin, Modern Equity)
 PROPRIETARY ESTOPPEL
Purpose: is to estop one party from enforcing his
rights at law in respect of land when to do
so would be unconscionable in the
circumstances.

Situation :
When A stands by while his rights is being
infringed by B.
 DEFINITION
A typical situation in which proprietary estoppel claims arise is
where promises are made by the absolute owner of land to another
person that the other person will acquire an interest in the land if
they perform acts which would, otherwise, be detrimental to them.
Typically, then, the person making the promise dies without
transferring any right in the property to that other person.

Walton Stores v Maher (1988) The object of the equity is not to

compel the party bound to fulfill the assumption or expectation: it is
to avoid the detriment which, if the assumption or expectation goes
unfulfilled, will be suffered by the party who has been induced to
act or to abstain from acting thereon.
Cases of proprietary estoppel have often
involved improvements to specific property in
the mistaken belief that the improver has or will
be given ownership with the owner positively
encouraging this detrimental reliance or by
standing by and acquiescing in it. Not all cases,
however, involve such improvements; in some,
service were rendered in the belief that
ownership would be given.
 REQUIREMENTS
Wilmot v Barber (1880) This case set out the classic statement of the
circumstances in which proprietary estoppel will grant rights in property:
1. The plaintiff must have made a mistake as to his legal rights; B must be mistaken
as to his own legal rights; if he is aware that he is infringing the rights of another, he
takes the risk of those rights being asserted;
2. The plaintiff must have expanded some money or done some act on the faith of
his mistaken belief; B must expand money, or do some act, on the faith of his
mistaken belief; otherwise, he does not suffer by As subsequent assertion of his legal
rights; (not necessarily detrimental to him)
3. The defendant must know of the existence of his own right which is inconsistent
with the right claimed by the plaintiff; A must be aware of his own rights;
4. The defendant must know of the plaintiffs mistaken belief in his right; A must
know of Bs mistaken belief; with that knowledge it is inequitable for him to keep
silence and allow B to proceed on his mistake; and
5. The defendant must have encouraged the plaintiff in the expenditure of money,
or in the other acts which he has done, either directly or by abstaining from
asserting his legal right; A must encourage B in his expenditure of money or other
act, either directly or by abstaining from asserting his legal right.
 Thorner v Major (2009) The main principles of law accepted by
the House of Lords in relation to proprietary estoppel:

1. A representation or assurance made to the claimant would need

to be sufficiently clear and unequivocal;
2. The reliance by the claimant would need to have been reasonable
in all the circumstances; and
3. The detriment would need to have been sufficiently substantial to
justify the intervention of equity.
 DIFFERENCES BETWEEN
PROMISSORY ESTOPPEL AND
PROPRIETARY ESTOPPEL
Thorner v Major (2009)
1. Promissory estoppel must be based on an existing legal relationship
(usually a contract, but not necessary a contract relating to land);
2. Proprietary estoppel need not be based on an existing legal relationship, but
it must relate to identified property (usually land) owned (or, perhaps, about
to be owned) by the defendant.

The requirement of detriment?