Equitable Estoppel PDF

Preview

Summary

summary on equitable estoppel and confidential information (week 12)...

Description

Equitable estoppel: estoppel is a doctrine designed to protect a party from the detriment that would flow from that [arty’s change of position if the assumption or expectation that led to it were to be rendered groundless by another - The Bell Group Ltd (in liq) v Westpac ● Estoppel prevents parties from insisting on their actual legal rights ● No Jorden v Money restriction on equitable estoppel - parties who make representations of future intention were estopped from denying them in situations where they had been reasonably relied upon by others ● Brennan J: Walton Stores (Interstate) Ltd v Maher: promissory estoppel the equity binds the holder of a legal right who induces another to expect that that right will not be exercised against him...in cases of proprietary estoppel, the equity binds the owner of property who induces another to expect that an interest in the property will be conferred on him - existing and future assertions of fact ok. Promissory estoppel ● Promisor is precluded from going back on their promise, even though the promise is not supported by consideration - is it unconscientious for the promisor not to keep their the promise? - Areas include: where during negotiations to enter into a contract, an offeree, believing that the offer will not be revoked, proceeds to act to their detriment upon that belief - Non compliance with statutory requirement of writing with respect to a contract involving land Proprietary estoppel ● This estoppel operates to restrict the legal rights of landowners if they have encouraged the belief in another, or at least acquiesced in that other’s belief, that he or she has some entitlement over the property and that belief has been acted upon - eg alterations or improvements having been made to the land - but not if there is contract - Barnes v Alderton ● Delaforce v Simpson-Cook: first step is encouragement - such an estoppel exists when an owner of property has encouraged another to alter their position in the expectation of obtaining a proprietary interest ● Ineffective conveyance of land - with fathers assent and approval - encouragement. ● Estoppel by acquiescence: Cransworth CJ: Ramsden v Dyson - it considers that when I saw the mistake into which he had fallen, it was my duty to be active and to state my adverse title (abstain from setting him right - cant assert title later) Need to prove: 1. That the person expending the money supposes himself to be building on his own land 2. Real owner at the time of expenditure knows that the land belongs to him and not to the person expending the money in the belief that he is the owner ●

The person needs to act to their detriment - not necessarily money - could be leaving job etc Walton Stores (Interstate) Ltd v Maher:

Facts: the Ms owned a commercial premises in Nowra, which W were interested in leasing - W wanted to relocate business to new premises and the Ms site was available - the agreement was that the Ms would demolish the existing premises and build a new building to meet the specifications of W - Ws solicitors acknowledged letter 2 months later, Ms began to demolish as time was critical - W knew what M was doing - W decided to not lease - M sued for breach of contract on the basis that W was estopped from denying the existence of the lease Majority: equitable estoppel (no pre-existing contract) Elements of Equitable Estoppel ● A plaintiff has acted to its detriment on the basis of a fundamental assumption where the defendants role in the adoption of that assumption by the plaintiff is such that it would be unconscientious to deny the plaintiff equitable relief - if having induced or acquiesced in the adoption or maintenance of the assumption with knowledge that it would be relied on, the defendant fails to fulfil the assumption or otherwise permit the plaintiff to avoid the detriment to which they have been exposed - But in Yeoman’s Row Management Ltd v Cobbe: no equitable estoppel in a legal relationship between commercial parties at arms length generally. - Sandri v O’Driscoll: execution of a formal agreement will ordinarily bar any attempt to turn pre contractual negotiations into equitable obligations Clear and unambiguous representation ● Promise of a sufficiently clear and unambiguous representation ● Can be express or implied - Legione v Hateley - implied by the words used/representation ● No promise or representation by mere silence ● Westpac v Bell Group: proprietary - ‘vague and imprecise conduct is enough’ not for promissory though. ● Drummond AJA’s in Closegate Hotel Development (Durham) Ltd v McLean: plea of promissory estoppel = clear and unequivocal statement ● Walton Stores: 1. P assumed that a particular legal relationship existed/would exist, 2. D had induced the P to adopt that assumption/expectation, 3. P acted or abstained from acting in reliance on the assumption, 4. Defendent knew or intended him to do so, 5. The P action or inaction will occasion detriment if the assumption or expectation is not fulfilled, 6. D had failed to act to avoid that detriment whether by fulfilling the detriment Assumption or expectation ● Equitable estoppel arises when there is an assumption that the representator will act in a particular way in the future - Brennan J: the relying party needs to show that they assumed that a particular relationship existed or could exist ● Relying parties assumption must be reasonable - in Salienta Pty Ltd v Clancy, the purchaser had spent money on improvements to the property, on the assumption that the expenditure would be credited to the purchase price in a contract to be entered into at a price lower than that which would have been set out in the earlier contract - this was unreasonable, terms of the contract in writing

Inducement ● Assumption that is induced by the promise or the representation which is the basis for estoppel ● This must be induced by the conduct of the representator ● Promise can be implied: Walton Stores - silence and acquiescence on the part of the Ws gave rise to an implication that it had promised to complete its transaction with the Ms Reliance ● The relying party must act or refrain from acting in reliance on the assumption ● Action or conduct undertaken must be reasonable - Commonwealth Bank of Australia v Carotino (Australia) Pty Ltd - 1. Must be reasonable for the relying party to adopt the assumption in question 2. The action taken by the relying party in reliance upon the representation must be itself reasonable ● Is the relying party well resourced and used to dealing with commercial transactions, are they legally represented? - Walton Stores: both Ms and their solicitors were encouraged so doesnt stop estoppel here. Knowledge or Intention ●

Brennan J in Walton Stores - the representator must actually know or intend, that the relying party will act or refrain from acting in reliance on the assumption or expectation

Detriment ●

● ●

The relying party must suffer,or stand to suffer detriment if the assumption made is noot fulfilled - in Thompson v Palmer: Dixon J: relying party must suffer detriment in the sense that, ‘as a result of adopting the assumption or expectation as the basis of action or inaction, the relying party will have placed himself in a position of material d/a if departure from the assumption is permitted Walsh v Walsh: detriment does not have to be financial - but needs to be ‘material, substantial or significant’ In Delaforce it was reiterated that it is ‘reliance loss’ in Australia - reliance loss in Walton was the wasted expenditure incurred in demolishing the building, the ‘expectation’ loss was the Ms loss of rent.

Failure to avoid detriment ● Resprentator must have failed to act to avoid the relying party suffering detriment fulfilling the assumption does this Relief - Relief is based on the expectation generated by the promise or representation - In proprietary estoppel: a court will usually give expectation based relief \ - Giumelli v Giumelli: parents promised their son that if he continued to live with them they would subdivide it and give him the portion containing the house in which he lived because of this, the son stayed and gave up a career opportunity that would have taken

him away from the property. They refused to transfer him the property when he entered into a relationship that they disapproved of HC: gave him monetary compensation for his expectation loss CONFIDENTIAL INFORMATION ● ●

Equity prevents the unauthorised use of information - people may disclose info to others with the intention that the info only be used for particular purposes Private confidences, confidences relating to government secrets and commercial confidences

Property origins - Eg trade secrets, written but unpublished descriptions of inventions - Right in rem but could be in personam - Treat the equitable right of action and not the information itself as property - Phipps v Boardman: if the information has been acquired in such circumstances that it would be a breach of confidence to disclose it to another then courts of equity will restrain the recipient from communicating it to another - information has been described as property of the donor, in OBG Ltd v Allan: not property - if its not property it cant be assigned - Trade secrets: often sold in commercial transactions - indicative of property characteristics Contract origins - Many obligations of confidence arise between parties who are in a contractual relationship - usually this is in contract - can equitable obligation co exist? - Optus Networks Pty Ltd v Telstra Corp Ltd: O and T had an agreement about telecommunication traffic generated by their customers on each other’s networks - when one interconnected they had info about each others customers. O said T used for marketing purposes without knowledge or consent of O - O said breach of confidential info. Trial judge: dismissed intitially due to contract provisions, no claim in equity. CA: contractual term does not exclude equitable obligations - so O can choose (damages or account of profits) - Streetscape, Barret J: opposition - if there is a contractual term dealing with confidential info then no equitable claim - Duties of confidence are not dependent on contractual obligations - Seager v Copydex Ltd: P accidently told D about a new invention she had not patented, P sought an injunciton. D = breach of confidence - equity: those who have recieived information in confidence should not be allowed to take unfair adv of it Unjust enrinchement - Professor Gareth Jones: breach of confidence is a restitutionary claim to make good any profits obtained from wrongful use of confidential info Equitable origins

-

-

Moorgate Tobacco (page 184): a general equitable jurisdiction to grant such relief has been long asserted, and should, in my view, now be accepted. It lies in the obligation of conscience.. Equitable obligation = unconscientious conduct - established relation of trust

Breach of Confidence Test - Coco v A N Clark (Engineers) Ltd, Megarry J: 1. Information itself must have the ‘necessary quality of confidence about it’ 2. Information must have been imparted in circumstances importing an obligation of confidence. 3. Unauthorised use of that info to the detriment of the prty communicating it - Quality of confidence: Streetscape:Barrett JA: need for specificity comes from the fact that the court must make an assessment of the quality of that information (the confidential nature) - requirement of secrecy - not public knowledge - eg publication of a patent = no claim to confidence if there was no ancillary secret surrounding the patent, if patent does not cover the entirety of the trade secret - duties of confidence will survive in relation to the unpublished info - Copyrighted designs - lost their confidential nature when films were released - Johns v ASC: personal info (documents) used for royal commission, MD said breach of confidence, HC: no, public domanin - Publications that are unlikley to be remebered will not destroy duties of confidentiality Aus Footbal League v Age Company Ltd: 3 AFL players who had tested positive for drugs where named in online forum - piublication on online newspaper - Kallam J: information still had not entered the public domain - Personal information: Prince Albert v Strange: Queen Victorias consort sought to restrain publication private etchings made by him and the Queen - Prince gave these etchings to royal printer - employee sold to third party, defendent sought to display - trial: cant do this, prevent unauthorised use (copyright in unpublished works?) and equitys power to restrain breach of trust/confidence - In a modern day version: Prince Charles was able to claim breach of confidence over the publication of extracts from his personal diairies by a former employee - not been published, by employee circulated it around - also contractual obligation existed - Argyll v Argyll: Duchess of A was able to prevent ex-husband publishing intimate details of her martial behaviour in a newspaper - Stephens v Avery: equity will protect a persons sexual preference if such details have been communicated in confidence, outside of marriage - Details of sexual relationships are confidential ,bare fact of the existence of one is not (or familiar relationship eg having a second child) - A v B plc: unsuccessful in preventing publication stories of women he had an affair with not the same requirements of confidentiality as marriage/de facto - Medical info: usually protected if the dislosure of the persons medical condition would be subject to ridicule - need to balance with public interest - Commerical information: ‘trade secrets’ or ‘commerical knowledge’ - Vestergaard Fransden A/S v Besnet Europe Pty Ltd: trade secrets v not unreasonably limiting competition in the marketplace

-

Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd: Gowans J: 1. Extent to which the info is known outside of business 2. Extent to which employees and others know 3. Extent of measures taken by him to guard the secrecy of the information 4. Value of info to him and his competitors 5. effort/money used by him in developing info 6. ease/difficulty with which the info could be properly acquired by others - When it is highly technical and acquired with effort, or product of a special relationshop - Eg ideas for TV shows which have developed to the stage they could become a reality bare obvious idea not protected - Trade secret or employee ‘know how’ - employees leave their jobs and set up businesses in competition with their former employees - employees free to use ‘knowhow’ (accumulated skill etc) but also need to protect masters interests - trivial info not protecrted, highly confidential trade secrets will be ever after termination of employment (breach of confidence) could be info that must be treated confidentially until termination (restrait of trade clause) - When ex-employees seek ex businesses clients - Faccenda case: if they have done this with aid of client lists etc then breach of confidence, if dishonest: eg memorised lists cant do this - Del Casale v Artedomus (Aust) Pty ltd: when they left the company, the Ds afreed that they would keep any sensitive commerical info they had obtained confidential for 3 years - appellants established competitor which began to import the same stone - trial judge: yes confidential, CA: no, Hodgson JA: where it is hard to discern - will err in favour of allowing ex employee to use the info - esp if the info was ascertainable Duty of obligation or confidence - Coco v A N Clark: P entered into negotiations with D regarding a joint venture ro manufacture a moped designed by P - access to designs granted to P, D started designing using some of Ps desiigns - P sought an interlocutory injunction to prevent the manufacture and sale of the moped. Meggary J: if the circumstances are such that a reasonable man standing in the shoes of the recipient of the information would have realised that upon reasonable grounds that the info given to him in confience, then this should suffice to impose upon him the equitable obligation of confidence. Injunction not granted but notional royalty. Fullar J: accepted than an objective, reasonableness test is appropriate for determining whether communication was confidential - Duties of confidence commonly found in fudiciary duties or joint enterpise - Prince Jefri Bolkiah v KPMG: KPMG acted for BIA and on behalf of the companys chairman in relation to private litigation of his own. The Brunei Gov wanted to engage KPMG to do work on an investigation into the affairs of BIA - former chairman sought an injunction - House of Lords gave injunction - because the info that KPMG had about the financial affairs of the former chairman was or might be relevant to the proposed investigstion, an injunction would be granted against them unless they could show the effrctive memasures taken to ensure no disclosure - eavesdroppers:Malone v Metropolitan Police Commissioner: those who communicate confidential info to others accept the risks of 3rd parties being able to overhear that communication

-

Third parties: equity will not hesitate to act against third parties who recieve info knowing it was in the subject of a breach of obligation - all that is necessary is actual or constructive notice of the breach - objective

Breach of confidence - establishing a breach - Once a P has established a duty of conficdence owed by the D, P must prove that the Ds actions were in breach of that duty - was the information disclosed for a limited purpose? - Smith Kline & French Laboratories (Australia) Ltd v Secretary, Dept of Community Services and Health: P (drugs company) had supplied detailed info relating to the performace of one of its drugs to the gov for the purpose of extending its patent another drug company opposed extension of patent and sought approval to market a generic version of the drug - P sought an injunction to prevent the gov from using the info it supplied to assess the competitors application - Full Court: while info was confidential there was no breach of duty - was there unfair adv in taking the info? - no breach unless the court concludes that a confidence reposed has been abused, that unconscientous use has been made of the info - Detriment not a necessary element Defences - Public interest - Available to private citizens, whereby a breach of confidence can be excused if it can be proven to be in the public interest - Attorney General for the UK v Wellington Newspapers Ltd: public interest is meant something more than that which catches one’s curioristy or merely raises the interest of the gossip - must be a real societal concern - Defence can also be used to expose danger to public safety or health - Public interest and admin of justice - employees of manufacturers of drug breath testing - exposed - ok because being used to convict people - Public figures and the woodward defence - Forced disclosure: a cofidant may be forced to disclose info by legal compulsion Remedies - Injunctions: primary remedy for breach of confidence - Springboard doctrine: confidant must not be in a better positi9on for having breached a commercial confidence by getting ‘ a head start’ on competitors , equity will prevent a defaulting confidant from being able to use the info, even after it has entered public domain - Terrapin ltd v builders supply co (hayes ltd) - manufacture of a pre fabricaed structure which had been put on the market and was thus suscepitable to reverse engineering defendent used designs of the plaintiff and breached confidence - got a headstart on competitors - the purpose of the springboard order is to prevent the D from taking unfait adv of their wrongdoing - Equitable compensation: muast be done on a compensatory basis - Account of profits - Constructive trust: easy when the confidential info is property...