Doctrine of Estoppel - Notes from Prof Ramy\'s Lecture. Literally word by word. Consider yourself lucky. PDF

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Doctrine of EstoppelThe basic purpose of the doctrine of estoppel is to prevent injustice that results from a person repuditating the foundation of belief or assumption which he or she has induced when the repudiation will cause harm to the person holding that belief or acting on that assumption. In...

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Doctrine of Estoppel The basic purpose of the doctrine of estoppel is to prevent injustice that results from a person repuditating the foundation of belief or assumption which he or she has induced when the repudiation will cause harm to the person holding that belief or acting on that assumption. In simple terms, if you hold out the truth of a particular matter, and you state that truth or represent that truth by statement or by conduct of another person and that person depends on it and he does the conduct according to how he feels of what you have said to him, thus you cant afterwards turn around or turn back and say “You cant depend on that right”. Thus, when a man asserts the existence of a state of affairs, he cannot afterwards deny what he has asserted in fact. This was the principle in common law. However there are numerous applications of estoppel will apply

Introduction and the basis for doctrine of estoppel The basic idea of estoppel at common law is that where a man asserts the existence of a state of affairs, he cannot afterwards deny that which he has asserted. This has come to be adopted both in common law and equity. It is a flexible doctrine used by the courts to prevent injustice between the parties which results from a person repudiating the foundation of a belief or assymption which he or she has induced when the repudiation will cause harm to the person holding that belief Grounded in “unconscionability” and the prevention of injustice, the doctrine of estoppel is used in various circumstances and brances of law, including company law, civil procedure, contracts, assignments and others. The flexibility of the relief allows the courts to tailor the remedy to take into account the circumtances surrounding the relationship. Distinction between common law and equitable estoppal Common law estoppel operates upon a representation of existing facts whereas equitable estoppel operates upon representations or promises as to a future conduct, including promises about legal relations. Thus, it has been said that common law estoppels operate by referrence to an assumption of fact whereas equitable estoppels operate by referrence to an assumption of rights. Because one looks at existing facts and another looks at future conduct.

Estoppel existed in common law in which these are the nature in which you had estoppel in common law. (1) By deed or In writing =precludes any party from denying any fact made from the deed. If it was made in writing parties cannot deny of the terms agreed in the deed. The basis of estoppel by deed is either party to a deed when sued in respect to obligation under the operation of that deed he may defend himself by contending or by virtue of what was recited in the deed or by truth of which the parties have agreed to accept. That is the basis of that transaction, and he was excused from liability because it was something that they have agreed to or the other party has agreed to it thus now you cannot turn around and say “well I understood it as something different” or trying to bring an action againts another. Thus it must be in that deed it is umabigious statement of fact which has been relied on by the other party. (2) Judgement =also referred to estoppel by record, and sometimes applies to issue of estoppel meaning when there is action that prevents a party from a civil case from raising issues of fact or law which have already been a subject matter or that is determined by order of the court or by another judgement or by the judgement in a previous proceeding. You may have heard the word “res judicata” in some ways this has been distinguished in tort and it applies upon a final judgement between the parties one party is estopped from taking proceedings againts another in respect to a course of action where the subject of those previous proceedings or oter cause of action available in previous proceedings. In other words if it has gone to the court and It has been fully ventilated in the courts and it has been decided on and there was a final judgement made by the court between the persons or the former and the present parties then you cannot afterwards bring another action on exactly the same facts or exactly the same case, especially when the facts of the case are exactly the same. (3) By conduct =at common law it is talking about an estoppel to prevent an unjust departure by one party from an assumption that is adopted by another as a basis of some omission. Especially when there has been some representation by the conduct of one party that has been dependent upon. The assumption here in common law is that we must be looking at some kind of existing fact rather than depending on future conduct. In common law you are looking at some existing fact or and there has been some representation made by one party. Thus

estoppel is when it characterise or manifest itself through either representation by words than you say or by your conduct or you represent something or it may take the form of estoppel by convention. However both in terms of common law and equity, the conduct of a person may give rise to estoppel. Representation again is through existing facts that led the other person to believe and let the other to alter his/her’s position. Whereas by convention you are looking at another form of conduct in which we are looking at conduct of relations between the parties on the basis of an agreed or assumed state of facts which both will be prevented from denying. Thus both parties cannot deny the set of facts.

Equitable Estoppel

What equity did was to expand on the existing estoppel in common law to include not only representation of fact, but also representation of intent or promise (the future woohoo). Thus, when a representation or a promise is made and it is acted upon by another person, equity binds the conscience of the person and that is estoppel to the statement or promises made about the future. Equitable estoppel (or estoppel by conduct in equity) may be considered in two main forms (a) Promissory estoppel (b) Proprietory estoppel

Promissory estoppel The way equity or promissory estoppel may apply is it acts as a shield as regards to the other person rights. Meaning you cannot use it as a cause of action but you can use it as a defence if an action is brought againts you. The way you can say it is that “you made this promise, and I acted on it, and therefore you cannot bring an action againts a person. The doctrine of estoppel by representation is expanded in equity so as to include not only representation of fact but also representation of intention, or promise. The basic principle is that, a person who makes an unambigious representation by words or conduct or by silence of an existing fact and causes another party to act to his detriment in reliance on the representation will not be permitted subsequently to act inconsistently with that representation. Equity binds the holder of a legal right who induces another to expect that the right will not be exercised againts him. Elements : • Promisor makes a promise and encourages an assumption that a contract will come into existence or a promise will be performed- Central London Property Trusts Ltd v High Trees House Ltd • Promisee relies on this to his/her detriment; and-Muthiah v Lee Kor Fan • It is unconscionable, having regard to the promisor's conduct, for the promisor to ignore the promise.- Aw Yong Wqi Choo and Ors v Arief Trading Sdn Bhd & Anor Overall, these elements can be seen illustrated in the case of Walton Stores (Interstate) Ltd v Maher (1988) Cases  

Jordan v Money 23 LJ Ch 865 Central London Property Trusts Ltd v High Trees House Ltd (1956) 1 ALL ER 256 Facts: Due to the war, occupancy decreased in the land causing the defendant to unable afford the lease of the land. Plaintiff agreed to reduce the amount of rent from 2500 to 1250 during the war times (This is the promise). After the war, the flat saw higher occupancy. Plaintiff wanted the price to return to 2500 and they claimed the arrears of remainder of money when the rent was reduced to 1250 (because of this promise). Judgement: Where parties enter into an arrangement which is intended to create legal relations between them and in pursuance of such arrangement one party makes a promise to the other which he knows will be acted on and which is in fact acted on by the promisee, the court will treat the promise as binding on the promisor to the extent that it will not allow him to act inconsistently with it. Principle Intention to create legal relations is sufficient to allow a party to raise estoppel.

He was also bound by his promise (estoppel)

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Muthiah v Lee Kor Fan (1996) 1 MLJ 105 Facts: The plaintiff filed a complaint in the court of the senior inspector of mines for cancellation of sublease granted to the defendant on the ground that the defendant had committed a breach of clause of the sublease. The defendant in his defense set up the plea of estoppel urging that the plaintiff had agreed to the approved mining scheme, had accepted a copy of the approved mining scheme and visited the land to observe the construction and had represented to the permit holders and the defendant that he had no intention of taking action under clause 8(iii) of the sublease . Judgement One of the necessary elements of a valid estoppel by representation is that the representation should be of a nature to induce, and is made with the intention of inducing, the party raising the estoppel to alter his position to his detriment. Note Requires proof of detriment

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Bank Negara Indonesia v Phillip Hoalim (1972) 1 MLJ 233

See also  

Combe v Combe (1951) 2 KB 215, Per Denning J =same principle William Teo’s House and Estate Agencies v Chan Eng Swee (1965) 2 MLJ 89 =In the high court, the general principle which refers to promissory estoppel, the high court justice hepworth made a statement “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 on 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 qualifications which he himself has so introduced. Even though it Is not supported in point of law by consideration, but only by his word.” -this is an exception to the rule when you have a contract you must have consideration for that contract but here you are looking at his word in which he gave his word. The principle does not create a new cause of action when non existed before, and it only prevents a party from insisting upon his legal rights when it would be unjust to allow him to enforce them, having regard to the dealings which have taken place between the parties. Thus prima facie the defendant of the present case can rely on an agreement as a

defence to the action for outstanding debts where the agreement was entered into in settlement of all claims by the plaintiff and even if the agreement is not supported by consideration. Thus this explains what was ment by promissory estoppel. 

Aw Yong Wqi Choo and Ors v Arief Trading Sdn Bhd & Anor (1992) 1 MLJ 166 Principle: Applied unconscionableness. Quoting Shaw v Applegate about the arising of a doctrine of equitable estoppel, that '... the real test, I think, must be whether upon the facts of the particular case, the situation has become such, that it would be dishonest or unconscionable for the plaintiffs or the person having the right sought to be enforced to continue to seek to enforce it” Note: While this case did not discuss clearly on detriment, It did recognize the need for unconscionableness in considering whether promissory estoppel can be invoked.

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Sinar Wang Sdn Bhd v Ng Kee Seng (2004) 5 AMR 642

(The real test is whether the circumstances if the case the situation has arisen where it is unjust and unfair for the plaintiff or the party with the rights to insist on his rights.) Gopal Sri Ram looked again at the jurisdiction of equity and how equity exercises its jurisdiction. We are not saying he does not have a right at law, he may have a right at law but he may have made a statement to say “I will not take an action againts you.” Or he made a statement that was relied on by another party so that the other party does not do anything based on the statement. Thus this is what was ment by reliance on a statement. 

Walton Stores (Interstate) Ltd v Maher (1988)

Principle To establish a) the plaintiff assumed that a particular legal relationship exists between the plaintiff and the defendant or that a particular legal relationship will exist between them and, in the latter case, that the defendant is not free to withdraw from the expected legal relationship b) the defendant has induced (either actively or by a failure to deny the correctness of the expectation relied on by the plaintiff knowing that detriment will be caused to the plaintiff if the expectation is not fulfilled) the plaintiff to adopt that assumption Elements

c) the plaintiff acts in reliance on the assumption or expectation; (d) the defendant knew or intended him to do so; (e) the plaintiff's action will occasion detriment if the assumption or expectation is not fulfilled, (f) the defendant has failed to act to avoid the detriment whether by fulfilling the assumption or expectation or otherwise Note: The elements of reliance and detriment attract equitable intervention on the basis that it is unconscionable for the promisor to depart from his promise, if to do so will result in detriment to the promisee.

Effect of promissory estoppel (a) The application of promissory estoppel is limited to a defence. It does not create a cause of action where none existed before. Cases: 

Liew Ah Hock v Malayan Railway (1967) 1 MLJ 53 =This was a case involving a TOL, there was no title to it but the malayan railway actually allowed him to use that land for a long time and he was given some kind of promise that he is allowed to stay on the land and use the land. Later on when he was moved out of the land he brought an action againts malayan railway that he cannot be evicted and that because there was a promissory estoppel in which “you promised me that you will let me stay on this land.” Eventhough the man had no title and only had TOL. The court held “yes you are allowed to stay on the land there was a promise that you could, but you cannot use it as a sword and insisted you had a right because you had no right.” All he could do was to use the promissory estoppel as a shield so that no action may be brought againts him or in other words if you have estoppel againts any action brought againts by the plaintiff you may use that as a defence. However you cannot use that as a cause of action.

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Combe v Combe (1951) 2 KB 215 Facts: There was an agreement between husband and wife during the divorce process that the husband must pay maintenance to wife. Wife was aware husband was not financially stable and did not claim for the payment until several years later when she brought an action to claim for arrears. Judgement:

Lord Denning clarified his judgment in High Trees on appeal that the principle does not create any new cause of action where none existed before; so that, where a promise is made which is not supported by any consideration, the promisee cannot bring an action. There was no consideration for husband’s promise and wife does not have cause of action Principle   

Equitable estoppel can only be used a shield not a sword. Promissory estoppel does not create a new cause of action. It only prevents a party from insisting upon his strict legal rights

Nevertherless, promissory estoppel may have the effect of enabling a person to insist on his right based on the assumption by both parties, where without the estoppel, that right would not have existed. In other words if there was no estoppel, you would not have assumed any rights or they would not have been any rights at all. This can arise in a number of situations Cases 

Amalgamated Investment & Property Co Ltd Texas Commerce International Bank Ltd (1982) QB 84 at 105 = a clear illustration on the effect of promissory estoppel Cheng Hang Guan (Penang) Sdn Bhd & Ors v Perumahan Farlim (1993) 3 MLJ 352; (1994) 1 AMR 201 1) The reliance of the claimant is based on the encouragement of the other party 2) The claimant must have acted to his detriment in reliance on the belief that he would obtain an interest Facts: In penang, the plaintiff and his family was living in a land that was swampy, however they worked on the land and turned it in into a productive land. This land belonged to the ku kongsi. However one of the representatives of the plaintiff said they can continue living on the land as long as they need to. Thus there were on that land for almost 100 years but they never had a title to the land. However, most of the promise that was made to them, the representation that was made to them, they did a number of things on the land to make it cultivatable and even built some shelters and houses on the land. Thus the question now was whether they assumed that they had the right because of the promise that was made to them, and the court did recognize that they had a right although the extent of that right was not that they had own any title to the land, its just they had some proprietary rights to the land. And once you say something has a proprietary right meaning it gives it some value. Thus this case referred to the amalgated investment in texas, where the judge lord denning made a statement “the doctrine of estoppel is one of the most flexible and useful in the armory of the law, but it has become overly overloaded with cases. That’s why I havent gone through each of the judgement. It has grown in the last 150 years. It includes proprietary estoppel by representation of fact and estoppel by acquiscene and promissory estoppel, these are various types of estoppel. At the same time it has been sought to be limited by a series of maxims. Estoppel is only a rule of evidence and it cannot give rise to cause of action. We

have already done that. That estoppel cannot do a way with the need of consideration and so forth. All these can now be seen to much into one general principle shawn of limitations, when the parties to a transaction proceeds on the basis of an underlying assumption, either of fact or law, whether due to misrepresentation or due to mistake it makes no difference. In which they have conducted dealings between them. Neither of them are allowed to go back on that assumption when it would be unfair and unjust to allow him to do so. If one of them does seek to go back on it, the courts will give the other such remedy as equity of the case will demand”. This is an old case but the principles are quite relevent and have been applied quite liberally till this day. It may give rise to estoppel in many different situations, but it can only be used as a shield. The promise that you make and is relied upon can only be used as a shield and both in cheng huan case as well as amalgamated investment case its made really particularly there. In this case, it was believed by the plaintiff based on defendant’s words that they could continue staying and cultivating the land as long as they paid rent. - Where a party improves the land knowing who is the true owner of the land, equity may still rise if landowner led the party to believe they would be allowed to stay

Proprietary estoppel Proprietary estoppel can operate to prevent an owner of an interst in property from asserting his or her rights againts another party whom he or she has allowed or encouraged to deal with that interest, or in relation to the property, as if the latter had rights to the said property. This doctrine applies where the owner of a property behaved in ...