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PRINCIPLESRULES

By Monica Bell,2014-07-29 05:27
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PRINCIPLESRULES

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    NOTE: PRINCIPLES/RULES, OBITER, IMPORTANT FACTS

Topic 7 Equitable Estoppel

1. The Estoppel Concept

    ? When an estoppel is raised, someone who has spoken certain words is precluded from

    going back on what they represented

    ? Estoppel binds people to a falsehood; it precludes people from speaking what is the truth

    in court for that reason can be considered an iniquitous concept

    ? PRINCIPLE = Estoppel acts to prevent harm that would otherwise befall a representee

    who has relied on a representation by the representor 2. At Common Law and Equity

    ? Equity = body of rules/principles that form appendage to common law;

    ? How applied to case? - Courts may come upon set of facts that reveals general

    principles of law will not do justice SO applies exception to general rule of law or

    establish brand new set of rules to apply to that set of facts latter solution is EQUITY th? Judicature Acts (late 19 century) fused courts of common law and equity, but not rules;

    rules exists side by side, not compete BUT if rule of common law competes with rule of

    equity, equity will prevail

    ? Common law estoppel explained:

    o Representor makes representation that causes representee to adopt assumption

    of fact for purposes of their legal relations

    o estoppel arises where representee has changed his/her position on faith of

    assumption so that he/she will suffer detriment if representor does not adhere to

    assumption provided

    o EFFECT = deny representor ability to resile on representation

    ? Distinguishing characteristics of common law estoppel: (2)

    o = evidentiary doctrine, NOT substantive

    ? governs what evidence counts in court; not speak to legal rights of parties

    ? indirect substantive effect (on rights of parties) by altering facts

    o operate only on representations of existing fact; if representation about future

    then common law doctrine of estoppel not apply because concerned about facts

    NOT promises

    Jorden v. Money stands for principle that common law estoppel only apply to statements of

    existing fact and not to promises; estoppel NOT apply to promises because if did, would do

    away with doctrine of consideration; M trying to enforce promise with insufficient consideration

Grundt v Great Boulder Mines (1937) 59 CLR 641: ‗[The purpose of common law estoppel] is

    to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment.‘ Waltons Stores v Maher (1988) 164 CLR 387: ‗A party who induces another to make an assumption that a state of affairs exists, knowing or intending the other to act on that assumption, is estopped [at common law] from asserting the existence of a different state of affairs as the foundation of their respective rights and liabilities if the other has acted in reliance on the assumption and would suffer detriment if the assumption were not adhered to.‘

     Equitable Estoppel emerged and developed two lines of authority to contradict Jorden v. Money;

    RESULT = estoppel limited to statements of existing fact limited to common law estoppel;

    statements as to future can be estopped under equitable estoppel:

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    ? Proprietary estoppel remedy which grants right of access; representation of township

    that there is a right of access is NOT a representation of existing fact

    ? Promissory Estoppel origins in Hughes v. Metropolitan Railway and High Trees

? Hughes v. Metropolitan Railway (SM)

    Facts:

    ? landlord serves notice to repair to tenant; if in six months repairs were NOT completed

    then Landlord can forfeit lease

    ? Tenant response to notice that willing to do repairs but willing to hold off because

    landlord may want to buy off remainder of lease; landlord and tenant begin negotiations

    ? Landlord NOT respond to comment by tenant that would to refrain from doing repairs

    during negotiations; landlord served notice of ejectment (because repairs not done by six

    month deadline on notice of repair)

    ? LANDLORD suing to enforce notice of ejectment; TENANTS arguing to estopp from

    ejectment by arguing landlords ―lulled the tenants to sleep‖ – led them to believe that did

    not have to repair while negotiations were ongoing so would be in position to not able to

    make repairs under six month notice

    Decision/Facts: HELD FOR MR (tenant)

    ? representation by landlord = by entering into negotiations, implicitly saying notice of

    repair in abeyance; BUT not representation of existing fact; = promise to not enforce

    right to evict tenant after six months

    ? HOLDING = estoppel raised; REASONING = IF have contractual right against someone

    and promised not to enforce it on its terms, and IF promise acted upon to detriment of

    representee THEN representee (landlord) cannot enforce strict legal rights in contract;

    ? PRINCIPLES = by promising NOT to enforce legal rights loose them AND if right

    suspended, creates obligation to give notice that right has restarted

    NOTE: same moral grounding operates at common law to preclude people from raising truth

    when already uttered falsehood and at equity to hold people to their promises when have

    induced reliance

3. The High Trees Case = HIGH WATER MARK of promissory estoppel

    ? Central London Property Trust Ltd. V. High Trees House Ltd. (222) Facts:

    ? C leased block of flats to H for 99 years; Flats not fully let at beginning of war SO original

    arrangement modified in writing and ground rent reduced

    ? Flats begun to be filled when war ended C wrote to H saying wanted full payment and

    payment in arrears; C brought cause of action against H to recoup discount from two

    previous quarters (payment in arrears)

    NOTE: at common law, case not be successfully because Foakes v. Beer stands directly in way

    of H promise to accept less by H would not be binding because no consideration

    Decision/Analysis: HELD FOR H (tenant)

    ? REASONING = Promise made on assumption that flats not let; BUT as soon as situation

    changes and flats let, promise looses basis because scope not include discount for fully

    let apartments

    ? DENNING says NOT case of estoppel; BUT sits on same grounds as estoppel ? just as

    law does not appreciate inconsistency as to facts which can cause harm, it also does not

    appreciate inconsistencies with promises as to future

    ? DENNING alludes to possibility (in obiter) that can end estoppel on notice because to

    give notice seems to do quite enough to prevent harm due to detrimental reliance

    ? tension in estoppel - Does C extinguish right to full rent by promising to decrease right

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    OR does C suspend right to full rent in circumstances? in this case rights would be

    suspensory rather than extinguished

     High Trees DENNING - ‗cases in which a promise was made which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be

     acted on by the person to whom it was made and which was in fact so acted on. In such cases the courts have said that the promise must be honoured…As I have said they are not cases of

    estoppel in the strict sense. They are really promises - promises intended to be binding, intended

    to be acted on, and in fact acted on….In each case the court held the promise to be binding on the party making it […] [the courts] have refused to allow the party making it to act inconsistently with it. It is in that sense, and that sense only, that such a promise gives rise to an estoppel.‘

Ratio: ―a promise intended to b

e binding, intended to be acted upon and in fact acted on, is binding so far as its terms properly

    apply‖

    ? promise as to future relied upon can be binding even without consideration SO LONG

    AS promise made to vary existing contractual right ? estoppel not apply to brand new

    contract, merely to a variation on a contract

    4. The Kind of Representation Required - What kind of conduct harmful in realm of estoppel? ? John Burrows Ltd. v. Subsurface Surveys Ltd. (226) Facts:

    ? S purchased business from J for prince in excess of $127,000

    ? Part of purchase secured by promissory note that provided for monthly installments

    and contained acceleration clause permitting creditor to claim entire amount due if

    default of more than 10 days on any monthly payment

    ? 18 months after note signed, 11 of payments had been made BUT on no occasion did j

    object to late payments, NOR invoke acceleration clause creditor accepted late

    payments without protest and NOT invoke clause

    ? After disagreement, J sued for whole amount when S late with payment (invoked clause)

    Issue: does defense of equitable estoppel or estoppel by representation apply to case at bar?

    Decision/Analysis: HELD FOR J (creditor)

    ? ―Estoppel‖ defense by S = J lulled then into sense of security SO J estopped from

    insisting on strict legal rights in contract

    ? Estoppel NOT apply; policy reason = if court held J to its representation then are saying

    creditors must always enforce strict legal rights or loose them

    ? Court will NOT enforce estoppel in case of ―indulgences‖ because would put creditors in

    bad position ? [If a mere indulgence were sufficient to estop a commercial creditor] it

    would mean that holders of such notes would be required to insist on very letter being

    enforced in all cases for fear that any indulgences granted and acted upon could be

    translated into a waiver of their rights to enforce the contract according to its terms

    ? RESULT = Equitable estoppel defense cannot be invoked UNLESS there is some

    evidence that one of parties entered into course of negotiation which had effect of

    leading other to suppose that strict rights under contract would not be enforced

    Ratio: for equitable estoppel defence to apply plaintiff must have known or should have known

    (by implication) that his action or inaction was being acted upon by defendant and that

    defendant changed legal position; conduct must have amounted to promise/assurance intended

    to affect legal relations of parties ? need clear, unambiguous promise to extinguish right

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    Owen Sound Public Libraries (CDN case) If someone relies on conduct or representation to

    significant detriment, THEN inference is strong that conduct/representation was promise

    (relaxes John Burrows req‘mnt BUT not disagree with decision) ? GENERAL PRINCIPLE = when there is reliance there is a promise

5. One Who Seeks Equity Must do Equity (= maxim)

    ? D. & C. Builders Ltd. v. Rees (228)

    Facts:

    ? R employed D to do work; D did work and rendered accounts; D owed money by R

    ? D wrote R asking to pay remainder but R NOT reply

    ? R‘s wife offered to pay less in settlement

    ? D said would accept lesser sum and give them year to find balance

    ? D brought action for balance; R set up defense of bad workmanship and that there was

    a binding settlement

    Issue: whether R can estopp D from claiming balance owing; whether there was true accord

    Decision/Analysis: HELD for D; no true accord b/c wife of R put undue pressure on D to accept

    ? Foakes v. Beer principle applies at first blush SO D entitled to balance owing BUT paid

    by cheque so Foot v. Rawlings would apply and consideration provided so R off hook

    ? Denning faced with argument of consideration HOLDS mode of payment irrelevant to

    consideration and leaves Foakes v. Beer fully intact

    ? INJECTS ―qualification‖ – Foakes will not operate where would be inequitable to allow

    promisor (D) to resile BUT not inequitable to allow D to resile (ie: insist on legal rights)

    because accord made under duress, SO no true accord

    ? PRINCIPLE = creditor is barred from legal rights only when would be inequitable to

    insist on them; creditor only bound if there is a true accord Ratio: If promise made to accept less in satisfaction of debt and if acted upon by lesser sum

    being paid then cannot demand outstanding payment because would be inequitable; makes

    ―qualification‖ to Foakes - will not operate where would be inequitable to allow promisor to resile

6. Giving Notice to Resile

    ? Saskatchewan River Bungalows Ltd. v Maritime Life Assurance Co. (231) Facts:

    ? Maritime issues life insurance policy on life of Fikowski to SRB (transferred to F‘s wife)

    ? SRB mails cheque to Maritime for annual premium (July); NOT received

    ? CORRESPONDENCE = Maritime sends letter requesting payment of July premium

    (―late payment offer‖); Maritime sends subsequent letter advising F‘s wife premium from

    July unpaid and policy ―technically out of force‖ and require immediate payment;

    Maritime then sends notice of policy lapse

    ? SRB NOT pick up mail often in winter and did not all receive letters until April

    ? SRB sends cheque for 1984 premium and 1985 premium

    ? Fikowski dies SRB claims benefits, Maritime denies based on policy lapsed

    Issue: Whether Maritime waive right to compel timely payment under policy? If so, did it give

    notice when time requirement reinstated?

    Decision/Analysis: HELD FOR M no estoppel because no reliance

    ? SRB ARGED estoppel defense - through its conduct, Maritime waived right to compel

    timely payment under policy; none of its actions sufficient to reinstate time requirements

    ? alleged representation made by Maritime = November letter; SRB ARGED use of word

    ―technically‖ means that it is not out of force in reality

    ? since SRB NOT pick up mail until April, NO evidence of reliance on November letter

    ? If SRB did rely on promise to waive right, it was unreasonable

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    ? PRINCIPLE = person asserting estoppel must show that relied and reliance must be

    reasonable in order to be protected by the law Ratio: estoppel NOT extinguish rights, merely supensory; rights raised by estoppel can be

    terminated by estopped party if give sufficient notice (NOTE: court not actually say suspensory)

    NOTE: Court decided case based on ―waiver‖; not discussed in class, see case brief

    ? International Knitwear Architects Inc. v. Kabob Investments Ltd. (231) Facts:

    ? Plaintiff (IKA) = tenant of parent company; defendant = (Kabob) under five year lease

    ? May - tenant in financial difficulty so requrests reduction in rent; landlord agrees; Tenant

    NOT pay on December 1

    ? December 13 landlord operates right of distress (right to seize property located on

    premises to secure landlord‘s claim to rent; limits as to what can be seized); December

    24 landlord demands whole rent over whole lease; wants arrears in rent back to May

    ? Tenant sues for unlawful distress; counterclaim by landlord for arrears (FOCUS)

    Issue: whether landlord estopped from claiming arrears (resiling on promise to reduce rent)?

    Decision/Analysis:

    ? Landlord estopped from making claim to arrears from May 1989 until December 1991

    ? Looks at conduct to determine what period of notice representor must give to revert to

    full rights under contract ? reasonable notice must be given to revive obligations and

    notice need not be dated

    ? What amounts to reasonable notice? = question of fact

    NOTES on suspension of rights and revocability of promise

    ? View that estoppel ought to be suspensory only attractive because it helps reconcile

    promissory estoppel with Foakes v. Beer because means that

    o Estoppel does not render promise to accept less binding PERIOD, it merely

    expends right of creditor to insist on full payment right away

    o If NOT inequitable to do so, creditor should be able to request full payment later

    ? View estoppel is prima facie suspensory only stated in Emmanual Ayodeji Ajay v. RT

    Briscoe [1964] 3 All ER 556 - promissory estoppel […] subject to the qualification […]

    promisor can resile from his promise on giving reasonable notice, which need not be a

    formal notice, giving the promisee a reasonable opportunity of resuming his position

    Charles Rickards v. Oppenheim = example of when promise becomes final and irrevocable

    b/c promisee cannot resume position

    ? Buyers request delivery to be put off and sellers agree; BUT sellers deliver on date

    requested and buyers say too late so in breach of contract

    ? Sellers claim estoppel (using as ―sword); Buyers defense is contract – sellers not follow

    terms so in breach; sellers ARGUE estoppel obliterates defense

    HOLDING = buyers abandoned right to deliver on original date for forever more; after reliance

    taken place (by buyers) promise becomes binding

    RATIO = promise becomes final and irrevocable because promise cannot resume position if

    promisor resiles

    ? TEST of revocability of promise = inequity; look for where equities lie (must look at

    who effected by resiling on promise, including promisor, promisee and third parties); also

    consider limits of promise in fact b/c promise may not be intended to cover all situations

7. Reliance

    ? DEFINED = action; something someone does in response to promise/assurance

    ? Controversial whether reliance must be detrimental to create estoppel

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    ? Detrimental reliance DEFINED as reliance such that promisee would be worse off after

    breach than was before promise made (usually expenditure/outlay of money)

    ? Was there detrimental reliance in High Trees? - Reliance = promisee paid portion of full;

    facially NOT detrimental b/c tenants getting benefit by paying less; BUT possible to

    argue detriment consists of having to pay arrears in lump sum than in instalments

    ? According to Denning, need not have detrimental reliance; all need are facts that show

    that resiling on promise would be inequitable

    ? promissory estoppel = doctrine of equity SO litmus test is whether would be inequitable

    to rely on promise

    ? PRINCIPLE = detrimental reliance sufficient, BUT not necessary to generate estoppel

    ? W.J. Alan & Co. v El Nasr Export & Import Co. (236) Facts:

    ? Buyers purchased 500 tons of coffee from sellers, in 2 separate contracts

    ? Price in contract in Kenyan shillings; payment to be made by confirmed, irrevocable

    letter of credit

    NOTE: letter of credit = document with specific instructions to bank located near port of delivery

    that instructs bank to deliver to seller certain sum of money upon presentation of certain docs

    ? Letter of credit in sterling; NO difficulty in practice with difference in currency initially;

    BUT in November pound devalued and currencies became inconsistent with each other

    ? Sellers claimed for excess that loss as result of devaluation of pound

    Issue: Whether sellers can be estopped from claiming loss due to devaluation because

    acquiesced from enforcing strict terms of agreement

    Decision/Analysis:

    Two arguments by buyers:

    ? Variation on contract (accepted by MEGAW)

    o Promise to modify made by buyers; accepted by sellers

    o Consideration by buyers to sellers? buyers promising that if pound decreased

    in value against sterling than sellers would reap profits

    ? Estoppel argument (accepted by DENNING)

    o Even if NO variation, sellers estopped from insisting on original currency

    o Representation = sellers did NOT object when letter of credit extended in sterling

    AND presented invoices and requested payments in sterling

    ? DENNING - Maybe no consideration moving from him who benefits by waiver; maybe

    no detriment by acting on it; maybe nothing in writing; BUT one who waives strict

    rights cannot afterwards insist on them

    ? Seller‘s ARGUE NOT estopped - buyers NOT detrimentally rely on seller‘s acquiescence

    ? DENNING REJECTS It is not a detriment, but a benefit to him, to have an extension of

    time or to pay less, or as the case may be. Nevertheless, he has conducted his affairs

    on the basis that he has that benefit and it would not be equitable now to deprive him of

    it…." I know that it has been suggested in some quarters that there must be detriment.

    But I can find no support for it in the authorities…‘ Ratio: detriment not required to invoke equitable estoppel so long as the promisee altered its position in reliance on the representation or promise; all required is that one ―acted on belief

    induced by the other party‖

? The Post Chaser (242)

    Preliminary Notes: on international sale of goods

    ? majority of traders are intermediate traders (trade ―in strings‖)

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    ? declaration of ship/notice of appropriation required; sellers try to make declaration as

    quickly as possible; declaration allows buyers in string to balance books and sell to sub-

    buyers; transfer of paper work in the international sale of goods is very important

    ? Traders attach great importance to speedy transfer of the notice of appropriation

Facts:

    Kievet ? Plaintiff (Sellers) ? Defendant (Buyers - 792) ? Conti ? Lewis & Peat ? I.C.C. ? NOGA

     ? ? ? ? ? ? ? ? ?

     Third Party (605)

    ? declaration of ship to be made by sellers to buyers ASAP after vessel‘s selling thth; plaintiff/sellers received on 16, but held ? Kievet declared to plaintiff on December 16th; on to notice until January 10defendant/buyers requested notice several times

    ? declaration was sent up the string, but NOGA objected to its lateness; then sent back

    down string; Conti sends it back to buyers

    ? plaintiff/sellers sue defendant/buyers for difference in price between what buyers should

    have paid and what sellers got from third party in distress sale

    Issues:

    1. Whether seller‘s failure to make timely declaration sufficient to give buyers right to reject?

    (Or were they compelled to accept goods and sue for damages for lateness?)

    2. If it was sufficient to give rise to a right to reject, had they waived that right? Were buyers

    (defendants) estopped from relying on invoking that right?

    Decision/Analysis: HELD FOR DEFENDANT (buyers)

    NOTE: plaintiff (sellers) raised an estoppel argument as shield, not as sword (defence)

    ? What was representation?

    ? sellers acquiesced in delivery of papers indicating were okay with arrangements th? note sent January 20 by buyers asking for transfer documents from Kievit = clear

    indication wanted to complete sale

    ? HELD that receiving declaration without protest NOT unequivocal representation by

    buyers that waived their rights th? HOWEVER, action (letter) on January 20 estopped the buyers from going back

    because it was a sufficiently clear waiver of right to reject

    Post Chaser - ‗I do not find it possible to conclude that the mere fact of receiving the declaration without protest or reserve constituted an unequivocal representation by the buyers that they

    waived their rights.‘ However the buyers‘ message of Jan. 20 […] was a representation by the

    buyers that they were prepared to accept the documents, thus waiving any defect in the prior

    declaration of shipment. In my judgment, this was a sufficiently unequivocal representation for the purposes of waiver.

    ? What reliance did sellers place on buyer‘s waiver of right to reject ?

    ? Promise acted on by Kievet by producing documents for Conti

    ? TEST = whether it would be inequitable for the buyers to resile - YES ‗impossible therefore…to decide the present case by saying that the sellers acted to their

    detriment […] sellers did (through Kievit) present the documents; and it can therefore be said

    that they did conduct their affairs on the basis of the buyers' representation.‘

     Post Chaser - To establish such inequity, it is not necessary to show detriment; indeed, the representee may have benefited from the representation, and yet it may be inequitable, at least without reasonable notice, for the representor to enforce his legal rights. […] But it does not follow

     that in every case in which the representee has acted…in reliance on the representation, it will be

    inequitable for the representor to enforce his rights; for the nature of the action, or inaction, may be

    insufficient to give rise to the equity, in which event a necessary requirement stated by Lord Cairns

    for the application of the doctrine would not have been fulfilled.‘

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NOTE: Detrimental reliance required in estoppel, but how define detriment (strong vs. weak)

    determines whether gives rise to estoppel

    Case presents two definitions of detrimental reliance:

    Weak Definition promise induces promisee to alter his position such that he would be worse off

    upon the breaking of promise than he was before promise was made; includes lost opportunity

    EXAMPLE = High Trees - If tenant had put money saved into an investment where he couldn‘t recover the money; making of the promise not decreased bank account of promisee, but has

    reordered his affairs and locked away money that he wouldn‘t have done except for promise; If promise is broken he may suffer financial penalties for removing his funds; SO breaking of promise causes him detriment

Strong Definition The promise induces the promisee to alter his position such that he is worse

    off upon the making of the promise than he was before the promise was made.

    EXAMPLE = Post Chaser - If sellers had to pay significant fees to deliver documents, THEN

    would have shown strong detrimental reliance (bank account down)

? Estoppel as a Sword or Shield?

     Phrase that ―estoppel is not a sword‖ NOT mean cannot be used by a plaintiff

    ? The Post Chaser - Plaintiff/Seller uses estoppel

    ? Rickards v. Oppenheim:

    o Selling of widgets, buyers tell sellers to deliver late, buyers refuse the widgets

    o Plaintiff are the sellers, who are using estoppel as a mine-sweeper (estoppel)

    NOTE: When estoppel is used by a plaintiff it is used as a minesweeper

8. Swords, Shields, and Minesweepers

    ? It is NOT true that estoppel only used by defendant; can be used by plaintiff to clear

    away defense to claim of estoppel (in Post Chaser and Rickards v. Oppenheim)

    ? If estoppel can be used as shield (defense) and mineswepper (clear away defense), why

    can it not be used as sword? What does mean that estoppel cannot be used as sword?

    ?Combe v Combe (249)

    Facts:

    ? just before divorce, husband promised to provide 100 per year; immediately breaches

    ? after about 7 years wife claims damages for 675 in arreas

    ? TRIAL HELD judgment to plaintiff for 600 on basis of doctrine in High Trees (=

    unequivocal promise intended to be binding and intended to be acted upon)

    Decision/Analysis:

    ? Promise by wife impliedly = if you give me this maintenance, I promise NOT to go to

    court under Family Law scheme (promise to forebear)

    ? Court HELD NO consideration - although may suffer detriment by her forbearance, NOT

    requested by husband

    ? Estoppel NOT applied b/c NOT stand alone as cause of action (= dependent on some

    other cause of action) NOT action in and of itself; ONLY support another legal reason

     Combe DENNING - ―It is important that it [principle from High Trees] should not be stretched too far, lest it should be endangered. […] That principle does not create new causes of action where

     none existed before. It only prevents a party from insisting upon his strict legal rights, when it

    would be unjust to allow him to enforce them. […] It may be part of a cause of action, but not a

    cause of action in itself.‘ […] It can never do away with the necessity of consideration when that is

    an essential part of the cause of action‖

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    ? Why should NOT be able to use estoppel as sword? - Concern = undermining

    consideration; if use estoppel as claim than do not have to have consideration

    NOTE: rule followed more in theory than in practice; sometimes Cdn courts will use estoppel as

    sword without actually saying so

?Petridis v. Shabinsky (245) landlord = mall owner; tenant = owner of restaurant in mall

    Facts: st ? Lease included option to renew must be exercised by tenant in writing by December 31

    ? Plaintiff (tenant) mentioned to defendant (landlord) in mid-December need to get

    together about renewal of lease; defendant see you after holidays

    ? negotiations in writing and in person for five months but unable to agree on rent st? defendant gave one month notice to vacate by July 1 and accepted another lease

    ? plaintiff SUED for injunction and declaration that lease had been renewed stIssue: whether landlord estopped from insisting upon December 31 deadline to renew option?

    NOTE: highlighted section is how all issue statements in estoppel cases are formed

    Decision/Analysis: HELD FOR PLAINTIFF (NOT based on promissory estoppel)

    ? NOT case of promissory estoppel as doctrine commonly understood (assurance by

    one party that will not enforce legal rights with intention that assurance be acted upon by

    other party)

    ? Representation MUST be at time when a legal relationship exists; option = legal

    relationship; representation = negotiations that began on January 28

    ? Requirement of promissory estoppel = must have a pre-existing legal relationship b/w

    parties (b/c if did NOT have then would be using estoppel as sword)

    ? RATIONALE: Estoppel applies to preclude party A from asserting certain legal rights A

    had against B, in cases where A has promised NOT to assert rights and B has relied to

    potential prejudice on that promise presumes that there must be a preexisting legal

    relationship so that A can make promise NOT to assert right against B

    ? Since representation made AFTER option terminated, promise by landlord to give

    tenants option to renew = promise to create a brand new right (or revive old right)

    ? BUT finds in favour of plaintiff based on doctrine of waiver - people with rights can

    waive/suspend rights and during waiver/suspension rights may be either lost or not

    permitted to be enforced strictly without NOTICE (W.J. Alan)

    ? BUT distinction b/w waiver and estoppel NOT convincing - In waiver one party precluded

    from terminating where would be inequitable to allow party to terminate; seems to be

    referring to estoppel under another name in order to rule in favour of plaintiff

    ? HOLDING for tenant confers NEW RIGHT on tenant; since would be equitable to do so,

    nature of right is to allow exercise option within few days of negotiations breaking down

    Ratio: must have pre-existing legal relationship b/w parties that promisor promises to alter (b/c if

    NOT, then using estoppel as sword)

    ? Robichaud c. Caisse Populaire de Pokemouche Ltée (248) Facts:

    ? Plaintiff‘s judgment unpaid to bank so bank enters into accord with plaintiff to remove

    judgment IF pay $1000

    ? Board of bank refuses to ratify agreement and cash cheque

    ? Plaintiff suing for specific performance cash cheque; remove judgment from registry Decision/Analysis: HELD FOR PLAINTIFF (defendant estopped from resiling on promise)

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    ? Bank had promised to release judgment on payment of $1000 and in doing so KNEW

    plaintiff would rely to his detriment

    ? Defendant asserting estoppel can be used as defense ONLY and not by a plaintiff

    ? Court REJECTS general rule that estoppel invoked as ground of defence and not as

    ground for action: ―this principle invoked as rule of evidence only against applicant

    [defendant] because, as in case at bar, would be unjust to allow him (bank) to retract

    promise as result of which plaintiff had made commitments to his detriment‖

    ? HOLDS in favour of plaintiff on basis of estoppel ? Plaintiff merely asking that bank

    respect promise made to him and on which he relied to his detriment

    ? TWIST IN CASE = DEBTOR (not creditor) SUING to get judgment debt extinguished;

    NO difference b/w defendant or plaintiff bringing forth claim b/c EFFECT is same (ie:

    promisor estopped from resiling on promise because promisee relied to detriment)

    Ratio: to say estoppel cannot be used as a sword does NOT mean it cannot be used as plaintiff;

    can be used by both plaintiff and defendant to stop promisor from resiling on promise

    NOTE: to say estoppel not be used as sword MEANS not used to create new cause of action

? Waltons Stores v Maher (252) - High Court of Australia (PERSUASIVE)

    Facts:

    ? Proposed in negotiations of lease that M demolish existing stores on site and erect new

    buildings; target date created sense of urgency

    ? Main issues of agreement determined SO W‘s solicitor‘s sent agreement to M‘s solicitors

    ? M‘s solicitor‘s sought minor changes to lease; W‘s agreed to terms but not W

    ? M‘s solicitors told W‘s solicitors agreement need to be completed soon to meet

    construction deadline; W‘s solicitors said would inform tomorrow if any terms not agreed

    ? M had solicitors execute lease and sent to W‘s ―by way of exchange‖; M begins

    demolishing (rely)

    ? W had doubts; BUT no correspond for ~ 3 mos when W‘s solicitors sent letter to M‘s

    solicitors saying NOT continuing with deal

    ? When arrived all of existing structures developed and 70% of new structures made

    ? M suing for declaration of binding contract and for breach of contract

    Issue: Whether W estopped from denying existence of binding contract that it would take lease

    of M‘s premises

    Decision/Analysis: HELD for M estoppel used as ―sword‖

    ? If seeking declaration in contract law ONLY, then b/c W not provide formal acceptance

    (Myers v. Davies) W clear NOT want to be bound until is formality

    ? Statute of Frauds applied in case (required memorandum in writing)

    ? Promissory estoppel (High Trees) NOT seem to apply:

    o NO preexisting legal relationship b/w the parties (contract NOT concluded)

    o M trying to use equity and create ―contract‖ through estopping W from deying

    contract came into existence

    o using estoppel as sword to create new contractual rights

    GAUDRON J and DEANE J

    ? used common law estoppel instead of equitable estoppel to find in favour of M

    ? interpreted facts as showing W led M to believe contract already came into existence

    ? BUT Walton‘s never made promise to complete contract

    ? implied promise = through W‘s acquiescence; stood by and watched as M relied to

    significant detriment; express promise = W‘s solicitors saying that if don‘t hear from us

    presume everything okay with our clients

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