WILLIAMS v ROFFEY BROS & NICHOLLS

The amendment of an existing contract underpins the argument between contracting parties, when a main building contractor secures a residential refurbishment project and accepts the tender of a carpentry subcontractor’s tender, despite the low value of his submission.

Having agreed to both first and second fix twenty-seven flats within a specified time for £20,000, the respondent carried out the work on the understanding that payments were made on an arbitrary basis; and so, after six months he had first-fixed all twenty-seven flats but second-fixed only nine, while having been paid £16,200 for the work performed.

Aware that his tender was now unprofitable, the respondent renegotiated to keep his business afloat and avoid the financial penalty clause applied to the appellants should the project overrun; whereupon, both parties agreed to continue working together on condition that a further £10,300 would be paid in incremental payments of £575 for each flat completed; however, when the respondent left the project, only £1,500 had been paid and only seventeen of the twenty-seven flats were substantially completed.

Initially seeking around £33,000 in damages, the respondent reduced his claim to around £11,000, citing that the appellants had breached the terms of their oral agreement, while the appellants argued that the agreement to pay the additional £10,300 was unenforceable due to non-completion and that no consideration had been given by the  respondent during revision of the original contract. 

First argued in the Kingston-Upon Thames County Court, the judge found that while the flats had not been completed, there had been sufficient consideration to allow calculable damages of around £11,800; and so, awarded accordingly.

Presented to the Court of Appeal, the issues around payment for incomplete performance of a contract and the argument for lack of consideration were given closer examination, before the Court noted how p.126, para.183 of Chitty on Contracts, stated that:

“The requirement that consideration must move from the promisee is most generally satisfied where some detriment is suffered by him e.g. where he parts with money or goods, or renders services, in exchange for the promise. But the requirement may equally well be satisfied where the promisee confers a benefit on the promisor without in fact suffering any detriment.”

Thus, the Court dismissed the appeal, on grounds that the respondent’s agreement to continue working toward completion of the flats provided a degree of benefit to the appellants, as failure to do so rendered them subject to the penalty clause, while the Court finally reminded the parties that:

(i) if A has entered into a contract with B to do work for, or to supply goods or services to, B in return for payment by B; and (ii) at some stage before A has completely performed his obligations under the contract B has reason to doubt whether A will, or will be able to, complete his side of the bargain; and (iii) B thereupon promises A an additional payment in return for A’s promise to perform his contractual obligations on time; and (iv) as a result of giving his promise, B obtains in practice a benefit, or obviates a disbenefit; and (v) B’s promise is not given as a result of economic duress or fraud on the part of A; then (vi) the benefit to B is capable of being consideration for B’s promise, so that the promise will be legally binding.”

HOLWELL SECURITIES v HUGHES

Conveyance of property and the requisite methods of notice when accepting an offer are clearly defined under section 196 of the Law of Property Act 1925, so when a buyer elected to take advantage of an option to purchase, they did so in a way that flirted with the prescribed method yet failed to secure the bargain, despite arguments to the contrary.

Having decided to sell his home, the respondent wrote to the appellants setting out an option to purchase, which expired within a six-month period, while the specific terms of the offer outlined in clause 2, stated clearly that:

“The said option shall be exercisable by notice in writing to the intending vendor at any time within six months from the date hereof…”

Contrastingly, section 196(4) of the Law of Property Act 1925, also explains that:

“Any notice required or authorised by this Act to be served shall also be sufficiently served, if it is sent by post in a registered letter addressed to the lessee, lessor, mortgagee, mortgagor, or other person to be served, by name, at the aforesaid place of abode or business, office, or counting-house, and if that letter is not returned through the post-office undelivered; and that service shall be deemed to be made at the time at which the registered letter would in the ordinary course be delivered.”

Law of Property Act 1925

And so, on this occasion the appellants solicitors drafted a written acceptance of the offer, before hand delivering it to the respondent’s solicitors, while noting within the correspondence that a copy of the written notice of acceptance and a deposit cheque had also been posted to the respondent’s home. 

After receiving the letter, the solicitors telephoned the respondent to advise him they had received the notice and that a copy of it was on its way to him, whereupon he explained that he had already made travel plans; and so, having been instructed by his solicitors to leave despite the expected letter, he vacated his home for a number of days.

After being franked and handed to the post-office, the letter failed to arrive at the respondent’s home; hence, the appellants sought legal action to secure the property, on grounds that a contract for both sale and purchase had been executed, irrespective of whether the posted letter had arrived, while it was also argued that the oral communication between the solicitors and the respondent further confirmed acceptance of the offer, when factoring in the solicitors possession of the letter.

In the first instance, the appellants relied upon Henthorn v Fraser; in which, the Court of Appeal held that:

“Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted.”

Henthorn v Fraser

However, the court ruled against them, before the Court of Appeal overruled and distinguished Henthorn in light of an absence of expressed postal methods expressed within the purchase option.

And so, dismissing the appeal on grounds that failure of the respondent to physically take receipt and read the notice became fatal to any claim of right to buy, the court reminded the parties that:

“If a notice is to be of any value it must be an intimation to someone. A notice which cannot impinge on anyone’s mind is not functioning as such.”

CENTRAL LONDON PROPERTY TRUST v HIGH TREES HOUSE

Equity regards as done that which ought to be done’ while in this instance, the maxim is perfectly suited to the exploitative coloration of a business agreement; when in September 1937, a parent company and subsidiary entered into a written lease agreement concerning a newly built block of flats.

Shortly after the outbreak of World War II, the buildings became partially occupied due to the risk of bombing; and so, in order to keep the relationship profitable and fair, the claimants agreed to reduce the rent from 2500l to 1250l per annum.

Yet, while the rent reduction was put in writing, it failed to express the end of the revision, despite the original lease agreement running for a period of ninety-nine years.

Although the defendants enjoyed the reduced rent up to December 1945, despite the buildings now enjoying full occupancy with many tenants now paying higher rents than those initially agreed; the death of the parent company’s owner revealed the oversight before the claimant and surviving business partner sought to recover rent arrears to the sum of 625l for the period between 29 September 1945 and 25 December 1945, while the defendants argued that the letter containing the reduced rent constituted a legally binding and thus enforceable contract for the remainder of the lease.

Referring to the binding effects of a promise, the court of the King’s Bench quickly balanced the probability of a breach where an agreement to reduce rents was challenged.

However, on this occasion the court upheld the claim on grounds that when agreeing to the reduce the rent, it had been undertaken with mind to the onset of war, therefore no reasonable person would have entered into an arrangement where one party would unlawfully profit at the expense of another, while reminding the parties that:

“[A] promise intended to be binding, intended to be acted on and in fact acted on, is binding so far as its terms properly apply.”

BRISTOL AND WEST BUILDING SOCIETY v MOTHEW

A potential breach of fiduciary duty proves central to a solicitor’s misgivings, when for atypical reasons a lender sought recovery of their loss through equitable principles after other options failed.

In the late 1980s, the respondents entered into a mortgage arrangement with a couple looking to secure a second property for £73,000; however, due to market instability, the respondents expressed that the £59,000 loaned was subject to the mortgagors paying the balance of the property purchase from existing capital to reduce the risk of default; after which, the acting appellant solicitor knowingly agreed to undertake the conveyance and provide a full report as contained in their contract. 

Prior to completion of the purchase, the mortgagors took out a small charge against their existing property for £3,350 in order to raise the funds needed to secure the mortgage and aware that the debt would be secured against the new house; and yet, the appellant continued with the purchase without reporting the change in financial circumstances.

Following a successful transaction, the mortgagors honoured only a handful of repayments before lapsing into default; whereupon, the new house was sold as part of the repossession process; however, the property crash had diminished the property’s value short of satisfying the debt by £6,000, therefore the respondents sought equitable damages from the solicitor on grounds of breach of fiduciary duty through non-disclosure of the loan terms.

In this instance, the court ruled in favour of the respondents and awarded damages to the effect of £59,000, less the funds raised from the sale; whereupon, the appellant challenged the judgment in the Court of Appeal.

Here, the court upheld the appeal on grounds that appellant’s oversight did not constitute a breach of fiduciary duty to either party as they had been consciously acting in good faith toward both throughout the disposition.

This translated that any lapse of skill or appreciation was accidental and not premeditated, as required under the rules of equity, while the Court also reminded the parties that:

“[I]f a fiduciary is properly acting for two principals with potentially conflicting interests he must act in good faith in the interests of each and must not act with the intention of furthering the interests of one principal to the prejudice of those of the other…”

R v G

Reckless culpability and the innocence of youth, cross swords in a case that both rewrote the powers of legislation and allowed subjective reasoning to prevail, after two young boys aged just eleven and twelve spent the night outside, before playing in the rear storage yard of a Co-operative store.

What began as tomfoolery with matches and newspaper, wound up as criminal damage and arson totalling over £1m in damages; however, with equal consideration of English criminal law and precedent relating to the facts, it also became a matter destined to reach the House of Lords.

Having decided to camp out underneath the stars, the two appellants trespassed into the refuse area of the store and began reading discarded newspapers; after which, they set alight to a bundle of newspapers, before placing them beneath a large plastic dustbin. Without staying to watch the flames extinguish, the defendants later left the yard and presumably returned home. 

Unfortunately, as is the nature of fire, the flames ignited the bin, which subsequently ignited the adjacent bin, until the fire spread to the roof and beyond; and so, when first heard at trial, the judge rightly relied upon the exacting terms of section 1(1) of the Criminal Damage Act 1971, which reads that:

“A person who without lawful excuse destroys or damages any property belonging to another intending to destroy or damage any such property or being reckless as to whether any such property would be destroyed or damaged shall be guilty of an off­ence.”

Criminal Damage Act 1971

While the term ‘reckless’ remains subjectively difficult to ascertain, the application of this measure failed to discriminate between the range of comprehension created through age, disability, or intelligence.

This absence of evaluation forced the jury to determine the boys’ guilt on the objective reasoning of an adult, as established in R v Caldwell and earlier in R v Cunningham (albeit a case more reliant upon maliciousness than ignorance).

In Caldwell, the defendant had been intoxicated prior to choosing to set fire to his employer’s hotel, thereby putting the guests and staff in great danger, while noting that he had paid little mind to the consequences when starting the fire; hence, it was this case that led to an objective reasoning test that whilst applicable to most mature adults, offered little consideration for children or vulnerable adults in similar circumstances.

Having deliberated on the certainty of a fair conviction, the judge and jury were left finding guilt, although not without concern for the limitations of the  1971 Act; and so, with their challenge dismissed by the Court of Appeal, the appellants were granted leave to present to the House of Lords, where greater attention was placed upon the disparity of the Criminal Law Act 1977 and article 40(1) of the European Convention on Human Rights (Public hearings and access to documents), which expressed that:

“States parties recognise the right of every child alleged as, accused of, or recognised as having infringed the penal law to be treated in a manner consistent with the promotion of the child’s sense of dignity and worth, which reinforces the child’s respect for the human rights and fundamental freedoms of others and which takes into account the child’s age and the desirability of promoting the child’s reintegration and the child’s assuming a constructive role in society.”

European Convention on Human Rights

It was then with appreciation of the narrowness that recklessness previously enjoyed, that the House examined the relevance of continuing to broaden the scope of reckless behaviour, in order to avoid the need for deliberate and considered forethought to the mindset of those accused.

Upon revisitation of the case history preceding the Criminal Damage Act 1971, it became clear that overlooking the objective test had prevented fair and reasoned judgment; and that this particular case was the perfect vehicle upon which to amend that error, thus the House (by majority) declared the boys’ innocence and upheld the appeal, while clarifying that:

“[I]f the law is to operate with the concept of recklessness, then it may properly treat as reckless the man who acts without even troubling to give his mind to a risk that would have been obvious to him if he had thought about it.”

For further reading around both this case and a brief history of recklessness, please read the paper below.

SHEVLIN-CARPENTER CO. v. STATE OF MINN.

The constitutionality of statute drafted and designed to preserve the interests of a State, coupled with the presumption that such laws are irrelevant to the needs of commerce, provide the basis of a case, where those later prosecuted, are left arguing that word of mouth is sufficient grounds upon which to acquire property.

Having operated as a timber merchant under State licence, the plaintiff in error corporation found themselves in need of a second licence extension, following the recent expiration of their previous reissue.

And so, instead of applying through the proper channels, chose to rely upon verbal declarations of State officials as to their ability to continue removing trees from government land.

For clarity, at the time of the offence § 7 of the Laws of Minnesota 1895 stated that:

“If any person, firm or corporation, without a valid and existing permit therefor, cuts or employs, or induces any other person, firm or corporation to cut, or assist in cutting any timber of whatsoever description, on state lands, or removes or carries away or employs, or induces or assists any other person, firm or corporation to remove or carry away any such timber, or other property, he shall be liable to the state in treble damages, if such trespass is adjudged to have been willful; but double damages only in case the trespass is adjudged to have been casual and involuntary….”

And so, when the plaintiff in error’s activities were discovered, the defendant in error brought charges in the District Court of St. Louis County on grounds of wilful trespass, thus claiming treble damages as prescribed.

Here, the court found for the defendant in error and awarded damages of around $44,000, whereupon the plaintiff in error challenged the judgment in the Minnesota Supreme Court, who upheld the judgment, while holding that:

“The Legislature may declare that a willful trespass upon the lands of another shall constitute a criminal offense and fix the limits of punishment therefor, either by fine or imprisonment, or by compensating the injured party in damages to be recovered in a civil action, or by both, as its judgment may dictate.”

After which, the plaintiff in error appealed on grounds that it had acted in good faith and reliance upon the statements made by those with apparent authority, while in response the court referred to State v. Shevlin-Carpenter Co., in which it had earlier held that:

“Where the defendant is a willful trespasser, the measure of damages is the full value of the property at the time and place of demand; but, if he is only an unintentional or mistaken trespasser,-that is, where he honestly and reasonably believed that he had a legal right to take the property,-then the measure of damages is the value of the property at the time and place and in the condition it was taken.”

State v. Shevlin-Carpenter

Before partially reversing their previous judgment and remanding the matter back in keeping with a significant reduction in damages, thus the plaintiff in error challenged the decision under writ of error in the U.S. Supreme Court, on grounds that the statue was violative of the Fourteenth Amendment to the U.S. Constitution when denying due process, and that as such, no damages were due.

Having reexamined the facts and constitutional argument, along with the right to protect State property through appropriate statute, the Court reasoned that at no point was the questioned legislation hidden from view, nor remotely difficult to understand, while also noting that at no point in history had trespass ever been considered a harmless act.

In closing, the Court also noted that despite the harshness of its construction, the State had proscribed the offence within constitutional bounds, and were therefore sound in their enforcement; after which, it upheld the previous judgment in full, while holding that:

“[I]nnocence cannot be asserted of an action which violates existing law, and ignorance of the law will not excuse.”

GREINER v. GREINER

Inducement of consideration on the part of a promisee to a contract, whether written or oral, is an action that while not seemingly of benefit to the promisor, requires completion of the gesture by lawful means should natural justice be seen to be done.

In 1926, the appellant inherited a substantial amount of land from one of her sons, after which she aimed to use it to make amends for her late husband’s death, whose own will had disinherited four of his children, while the remaining four became beneficiaries to portions of his estate.

By way of reparation, the appellant sought the counsel of a number of those children, while on a number of occasions, explaining that she intended for the respondent to relocate from his home in Logan County, to a plot estimated at around 80-97 acres in size.

This became problematic for the respondent, as he was indebted by way of mortgage and could not just ‘up sticks’ and move; at which point, the appellant took steps to reassign the mortgage to herself to allow the respondent to take up residence on the land set aside for him.

This was duly executed until around a year later, when the respondent was served with a notice to quit by one of his brothers, whereupon he sought remedy by way of a conveyance from the appellant to support his right to title.

Given that the appellant was illiterate, it became apparent that she had not taken the steps needed to complete such a disposition, but had instead relied upon her own insistence that she would bequeath him the land by way of a will, which was yet to be drafted.

When heard at the district court, the judge ruled in favour of the respondent, whereupon the appellant contested it within the Supreme Court of Kansas. Here, reference was made to s.32 of the Restatement Law of Contracts which reads:

“In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses.”

While s.90 of the same document reads:

“A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise.”

Which translated that despite a failure to endorse her intentions through written expression, the appellant had by virtue of her repeated declarations, created an enforceable contract of disposition that by extension, had led to the relocation of the respondent on the pretence that title was both implied and ultimately due through either deed or testamentary powers.

It was this irreversible fact that led the Court to uphold the previous decision and dismiss the appeal outright on grounds that financial remedy would not be sufficient to the cause in hand, while reminding the parties that:

“A promise for breach of which the law gives a remedy, or recognizes as creating a legal duty, is a contract. The promise need not be in any crystallized form of words: “I promise,” “I agree,” etc. Ritual scrupulousness is not required and, generally, any manifestation, by words or conduct or both, which the promisee is justified in understanding as an expression of intention to make a promise, is sufficient.”

BROKAW v. FAIRCHILD

Life tenancy and title to a freehold estate are two distinct modes of occupation, however the latter is absolute in its effects, while the former includes limitations and covenants where directed by the transferor.

On this occasion, a sizeable dwelling in an enviable part of New York was subject to possible demolition plans when the relatives of the new owner challenged it within the courts.

In 1886, the deceased had purchased land in Manhattan for the purposes of building his own private residence. Having designed the home to his own specifications, the property was bequeathed to one of his sons in a will drafted in 1907, which read:

“By the Fourth clause of my Last Will and Testament, dated and executed on the 20th day of April, 1907, upon the death or remarriage of my wife I gave and devised my residence, situated at the northeasterly corner of 79th Street and Fifth Avenue, in the City of New York, to my son, George Tuttle Brokaw…”

However, the deceased then further explained that:

“I now hereby modify that provision of my Will and after the death or remarriage of my wife I give and devise my said residence to my son George Tuttle Brokaw for and during the term of his natural life…”

Which in effect reduced the powers granted to those answerable to the principles of life tenancy as prescribed by state law. Here, it was held that any alteration of a property resided in under inheritance as a life tenant, must be proven as non-injurious to the value and aesthetic appearance of the property when passed to those due under the terms of the original testator.

The issue in hand was one where the claimant had proposed the demolition and rebuilding of the home to enjoy increased revenue from the leasing of multiple apartments over that of a single, albeit ornately furnished home.

In fierce objection, a number of siblings sought reference to the terms contained within their own terms of inheritance, which while providing clear stipulations as to individual use, were not applicable to the terms in which the claimant had acquired use of this particular home.

Therefore, by use of existing precedent, the New York Supreme Court drew attention to Winship v. Pitts, in which Chancellor Walworth remarked:

“I have no hesitation in saying, that by the law of this state, as now understood, it is not waste for the tenant to erect a new edifice upon the demised premises; provided it can be done without destroying or materially injuring the buildings or other improvements already existing thereon. I admit he has no right to pull down valuable buildings, or to make improvements or alterations which will materially and permanently change the nature of the property, so as to render it impossible for him to restore the same premises, substantially, at the expiration of the term.”

Winship v. Pitts

And Kidd v. Dennison, in which the court held that:

“[I]f the tenant materially changes the nature and character of the buildings, it is waste, although the value of the property should be enhanced by the alteration. The tenant has no authority to assume the right of judging what may be an improvement to the inheritance. He must confine himself to the conditions of his lease.”

Kidd v. Dennison

So, with an appreciation of not only the financial opportunities but the limitations of the tenancy and wishes of the testator, the Court held that under no circumstances did the claimant have any express rights to enjoy the benefits of his inheritance beyond those powers conferred, and that to do otherwise was abjectly unlawful and subject to obvious penalty, while holding that:

“[T]he life tenant may do whatever is required for the general use and enjoyment of his estate as he received it.”

ATTORNEY-GENERAL FOR HONG KONG v REID

The phrase ‘two wrongs do not make a right’ is virtuous to the truth that misdeeds can never amount to anything more than loss, yet when adopted for equitable purposes, the exact opposite can be found.

After rising through the ranks of Hong Kong administration, a solicitor turned Director of Public Prosecutions positioned himself to where he was able to accept sporadic bribes in exchange for his obstruction of justice through the failed convictions of known criminals.

Having taken over HK $12m in payments, the respondent in this matter invested the funds into three properties, two of which were in title to himself and his wife and the third to his solicitor.

The discovery of his fraudulent behaviour and subsequent criminal prosecution raised the question of whether by his breach of fiduciary duty as a servant of the Crown, the sums paid were now held upon constructive trust for his former employers, and that any monetary gain following the purchase of the homes was composite to that trust.

Common law principles surrounding fiduciary breach and profit from such breaches have been long held to apply in favour of the trust beneficiary, despite the illegality on the part of the fiduciary when in receipt of bribes from third parties.

This is because when acting beyond the remit of the trustee, and in a manner that is dishonest, the action itself becomes legitimate, if only for the benefit of those the fiduciary/trustee was appointed to serve.

This translates that although the respondent allowed himself to selfishly receive bribes in exchange for personal profit, equity would ascribe that his deceit was immediately converted into a positive gesture conferring direct gain to his employers, as no fiduciary can be seen to profit from his breach as previously mentioned.

This, by virtue of the fact of those principles, altered the manner in which the respondent not only executed his plans, but provided the Crown with privilege to acquire beneficial interest in the properties purchased, along with any increase their value since initial conveyance.

When considered by the Privy Council, it was quickly agreed that any conditions imputed by the respondents upon the entitlement of his employers to seek recovery of the debts through the homes, failed to override the fundamental obligations owed to him while serving and acting under fiduciary capacity, despite any notion of separateness or mixed investment on his part; and so dismissed his appeal, while holding that:

“[A] fiduciary acting dishonestly and criminally who accepts a bribe and thereby causes loss and damage to his principal must also be a constructive trustee and must not be allowed by any means to make any profit from his wrongdoing.”

ESTOPPEL

Estoppel‘ is a legal source of remedy often used in connection to land or property related matters, but is readily used in numerous fields of dispute.

The concept behind this intervening doctrine is one that prevents a miscarriage of justice where through discourse and action, a party is found to suffer at the expense of another’s profit.

Because this approach often falls outside of common law rules, it frequently requires equity to redress the balance in favour of a fair and reasoned settlement where proven as fact, while to date, there are distinct and overlapping forms of estoppel and so the list below (while no means definitive) aims to cover the more familiar (and unfamiliar) versions used within domestic and international law.

Promissory Estoppel (or Equitable Estoppel)

Founded within contract law, this form of estoppel relies upon the promise of one party to another that is later revoked and proven detrimental to the promisee.

Naturally circumspect of the rules of contract, the essence remains equitably valid, and was best witnessed in Central London Properties v High Trees Ltd, where Denning J remarked:

“The logical consequence, no doubt, is that a promise to accept a smaller sum in discharge of a larger sum, if acted upon, is binding notwithstanding the absence of consideration.”

Central London Properties v High Trees Ltd

Proprietary Estoppel

As founded and used most in property law, there are three main elements to qualifying action in proprietary estoppel; namely (i) that the landowner leads the claimant to believe he will accumulate some proprietary right, (ii) the claimant acts to his own detriment in reliance of the aforementioned right, and (iii) those actions are demonstrably in reliance of the expected right, where otherwise different choices might have been made.

This was explained by Lord Scott of Foscote in Cobbe v  Yeoman’s Row Management Ltd, who said:

“An estoppel bars the object of it from asserting some fact or facts, or, sometimes, something that is a mixture of fact and law, that stands in the way of some right by the person entitled to the benefit of the estoppel. The estoppel becomes a proprietary estoppel – a sub-species of a promissory estoppel – if the right claimed is a proprietary right, usually a right to or over land but, in principle, equally available in relation to chattels or choses in action.”

Cobbe v  Yeoman’s Row Management Ltd

Estoppel within Public Law

This is often used where a member of a public body has issued assurances that (i) an action can be undertaken by  member of the public, or (ii) that the specific body will exercise its power to the benefit of the person enquiring.

Where either fact has been proven correct, the designated department or authority is held liable to follow through on that action where reasonable, and in line with public interest, as discussed in Southend-on-Sea Corporation v Hodgson (Wickford ) Ltd, although the applicable claim was never upheld after it was stressed by Lord Parker CJ  that:

“[I]t seems to me quite idle to say that a local authority has in fact been able to exercise its discretion and issue an enforcement notice if by reason of estoppel it is prevented from proving and showing that it is a valid enforcement notice in that amongst other things planning permission was required.”

Corporation v Hodgson (Wickford ) Ltd

Estoppel by (unjust) Conduct

This phrase is largely self-explanatory, but can be best surmised as visibly manipulative or unreasonable behaviour by one party toward another; for example when securing an annulment, as was explored in Miles v Chilton, where the groom falsely induced his fiancée into a marriage that was by all accounts, illegal, as the bride-to-be was in fact still married to her previous husband, despite his misleading her that the annulment had succeeded.

The destructiveness of this self-created dilemma was explained by Dr. Lushington, who despite awarding in favour of the claimant, warned that:

“[H]ere the averment of marriage is made by the party having an opposite interest, and we well know that every one is bound by his admission of a fact that operates against him.”

Miles v Chilton

Estoppel by Per rem Judicatam (or issue estoppel)

This is another family law approach, which translates that a judicial decision to grant nullity cannot be overturned after the fact, except in circumstances where the annulment is proven invalid, after which any party aside from the divorcing couple, can challenge the direction of the court.

This form of estoppel can also be found in criminal law cases, as was seen in Hunter v Chief Constable of the West Midlands Police and Others, where Lord Diplock commented that:

“The abuse of process which the instant case exemplifies is the initiation of proceedings in a court of justice for the purpose of mounting a collateral attack upon a final decision against the intending plaintiff which has been made by another court of competent jurisdiction in previous proceedings in which the intending plaintiff had a full opportunity of contesting the decision in the court by which it was made.”

Hunter v Chief Constable of the West Midlands Police and Others

Estoppel through Acquiescence (or Laches or Silence)

As used in a number of fields, there are requisites that the party claiming estoppel has had their hand forced into complying with matters that they had in fact not been properly consulted upon, as was argued in Spiro v Lintern, where a husband was held to agree to the sale of his co-owned property, despite not having consented to his wife’s putting it up for sale, and the purchaser proving able to enforce the contract in his name through her individual representation.

It is also applied in cases where a secondary party to a contract or notice, fails to challenge it within a reasonable period; after which, estoppel of acquiescence can be used to deter any claim to the contrary, as was used in Kammins v Zenith Investments, where Lord Diplock again explained:

“[T]he party estopped by acquiescence must, at the time of his active or passive encouragement, know of the existence of his legal right and of the other party’s mistaken belief in his own inconsistent legal right. It is not enough that he should know of the facts which give rise to his legal right. He must know that he is entitled to the legal right to which those facts give rise.”

Kammins v Zenith Investments

And in the U.S case Georgia v South Carolina, where it was held that:

“South Carolina has established sovereignty over the islands by prescription and acquiescence, as evidenced by its grant of the islands in 1813, and its taxation, policing and patrolling of the property. Georgia cannot avoid this evidence’s effect by contending that it had no reasonable notice of South Carolina’s actions. Inaction alone may constitute acquiescence when it continues for a sufficiently long period.”

Georgia v South Carolina

Estoppel through Encouragement

Similar to acquiescence, this form of estoppel was discussed in Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd,  where Oliver J defined it in the following passage:

“The fact is that acquiescence or encouragement may take a variety of forms. It may take the form of standing by in silence whilst one party unwittingly infringes another’s legal rights. It may take the form of passive or active encouragement of expenditure or alteration of legal position upon the footing of some unilateral or shared legal or factual supposition. Or it may, for example, take the form of stimulating, or not objecting to, some change of legal position on the faith of a unilateral or a shared assumption as to the future conduct of one or other party.”

Taylors Fashions Ltd v Liverpool Victoria Trustees Co Ltd

Estoppel by Convention

Often used in contract law, this principle comes into effect when two parties have relied upon an assumed true statement of fact, only to learn otherwise after the actions undertaken have been shown as unreasonable or unlawful.

Any wrongful decision to then undo the damage is by definition, estopped on those grounds, as was discussed in Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd, where Denning LJ  concluded that:

“When the parties to a contract are both under a common mistake as to the meaning or effect of it – and thereafter embark on a course of dealing on the footing of that mistake – thereby replacing the original terms of the contract by a conventional basis on which they both conduct their affairs, then the original contract is replaced by the conventional basis.”

Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd

Estoppel by Representation (or Pais)

Again found in many contractual matters, this doctrine is bought into effect when a party that has agreed to a change in the terms of the relationship (often supported by a promise of trusted representation of their own) later chooses to renege on that statement, despite the other party altering their position to accommodate that express arrangement.

This was found in Royal Bank of Scotland v Luwum, where Lord Justice Rimer outlined that:

“[T]he clear sense of the arrangement was that Mr Le Page was making a representation or promise to Mr Luwum that the Bank would hold its hand on enforcing its rights for three months, and Mr Luwum changed his position in reliance upon that by borrowing £260 from friends and family in order to make a payment to the credit of the account, which was the very purpose of the arrangement that was made. In my judgment those circumstances had the consequence of estopping the Bank from reneging on its promise and starting the proceedings it did before the expiry of the three-month period.”

Royal Bank of Scotland v Luwum

Estoppel by Deed (or Agreement)

This doctrine is applied when two parties agree to contract with each other for intended gain or purpose, in the knowledge that the terms of the contract (or in these instances deeds) are based upon fraudulent fact, and nothing more.

It is suggested that the motivation for such covenants is one of singular gain on the pretence that should the truth out, those facts will remain unchallenged. It is this kind of clandestine deception that was explored in Prime Sight Ltd v Lavarello, where Lord Toulson JSC mused:

“If a written agreement contains an acknowledgement of a fact which both parties at the time of the agreement know to be untrue, does the law enable on of them to rely on that acknowledgement so as to estop the other from controverting the agreed statement in an action brought on the agreement?”

Prime Sight Ltd v Lavarello

Estoppel by Contract

Again, the terms of the contract can themselves prevent enforcement between disputing parties, as was discussed in Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd, where it was said:

“Where parties express an agreement…in a contractual document neither can subsequently deny the existence of the facts and matters upon which they have agreed, at least so far as concerns those aspects of their relationship to which the agreement was directed. The contract itself gives rise to an estoppel…”

Peekay Intermark Ltd v Australia and New Zealand Banking Group Ltd

In closing, it must be iterated that the doctrine of estoppel exists as a rule of evidence and not a cause of action, therefore any idea that this principle can and should be wielded as a defence or prosecution, falls outside the intended design and usurps its undiluted use.

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