Sidhu v Van Dyke Case Summary PDF

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Case Summary – Estoppel Sidhu v Van Dyke [2014] HCA 19 Judges: French CJ, Kiefel, Bell, Gageler and Keane JJ

Background Facts: The respondent and her husband moved into “Oaks Cottage” in 1996, a house situated on a block of land owned by the appellant and his wife. In 1997, the respondent and the appellant became romantically involved and the appellant gave assurances that he would subdivide the property and transfer a portion of land, including Oaks Cottage, in to the respondent’s name. The respondent continued living on the property, performing work on the property and on the cottage and did not seek full-time employment. The respondent and her husband separated. The appellant advised the respondent that she need not seek a property settlement from her husband as the Oak Cottage was hers. In both 2000, and 2006 the appellant wrote and signed notes stating his intention to gift her Oaks Cottage. In 2006, the appellant refused to transfer the property to the respondent. They’re relationship came to an end and the respondent moved away.

Procedural History In the NSW Supreme Court, the primary judge dismissed the respondent’s claim on the basis that the respondent had not established that she did, in fact, rely to her detriment on the appellant’s promises. The primary judge held that, thought the respondent’s decision not to seek a property settlement from her former husband was induced by the appellant’s promises, it was not “objectively reasonable” for her to rely on the promise, given that the promise was ultimately dependent on the subdivision of the land. The Court of Appeal allowed the respondent’s appeal. They found that the primary judge had erred in holding that it was “objectively unreasonable” for the respondent to have relied upon the appellant’s representations. Controversially, the COA adopted an English concept, “presumption of reliance”, which holds that where inducement by the promise may be inferred from the claimant’s conduct, the onus of proof shifts to the defendant to establish that the claimant did not rely on the promise. This created a presumption that the respondent had relied upon the appellant’s promises to her detriment and required the appellant to provide evidence to the contrary. The COA found that the appellant had failed to rebut that presumption. The appellant appealed to the High Court by grant of special leave.

Relevant Issues: 1. Did the Court of Appeal err in their adoption and application of “presumption of reliance”? 2. Was there sufficient proof of detrimental reliance to give rise to a sound claim for relief based on proprietary estoppel. Submissions: [45] The Appellant argued that the application of the ‘presumption of reliance’ and reversal of the onus of proof was contrary to the decision made in Gould v Veggelas. [47] The Respondent argued that the ‘presumption of reliance’ is consistent with the approach in Gould v Veggelas,applied in Flinn v Flinn. Both approaches have the same effect, namely, to give rise to an evidentiary onus to rebut the inference of reliance that arises where a promise is made, and the tendency of that promise is to induce relevant conduct.

Judgement and Reasoning: 1. On the matter of presumption of reliance: onus of proof and inference The High Court rejected the Court of Appeal’s adoption and application of “presumption of reliance” [50]. They note that nothing in the judgement of Gould v Vaggelas suggest that the onus of proof in relation to detrimental reliance shifts to the defendant in any circumstances [55]. The line of English authority on which Barret JA relied upon was founded on a statement by Lord Denning MR in Greasely v Cooke [56]. The High Court say that the approach suggested by Lord Denning should not be applied in Australia. At [61], To speak of shifting onus of proof is both wrong in principle and contract to authority.” [58] The High Court state that deploying a presumption of reliance in the context of equitable estoppel fails to recognise that it is the conduct of the representee induced by the representor which is the very foundation for equitable intervention. Reliance is a fact to be found; it is not to be imputed on the basis of evidence which falls short of proof of the fact.” [61] “The respondent at all times bore the legal burden of proving that she had been induced to rely upon the appellant’s promises.

2. On the matter of sufficient detrimental reliance The question here is whether the court is satisfied on the balance of probabilities that the appellant’s promises contributed to the respondent’s conduct in deciding to commit to her relationship with the appellant and remain working on the property for eight and a half years [66]. The primary judge found that the respondent had not discharged the onus of proving that she would not have “remained on the property

and done what she had done in any event” [29]. The High Court dismissed this, stating that a review of all the evidence showed that the respondent had made out a compelling case of detrimental reliance [67]. They gave 4 reasons for this: i) [69] “The appellant’s promises were objectively likely to have had a significant effect upon the decision-making of a person in the respondent’s position.”

ii) The primary judge found that the appellant’s promises “played a part in her willingness” to spend time and effort in the maintenance and improvement of the cottage. [71] This finding warranted the conclusion that the respondent had discharged the onus she bore on the basis that to establish estoppel by encouragement it is not necessary that the conduct of the party estopped should be the sole inducement operating on the mind of the party setting up the estoppel. See Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd & Sterie Ltd v Hutchison

iii) The primary judge also accepted that the respondent displayed concern from time to time that the appellant honour his promises. [74] The fact that the respondent exhibited that concern, and the fact that the appellant sought to allay that concern by giving her written assurances that the property would be transferred to her, tend to confirm that the appellant's promises were material to the respondent's conduct.

iv) Appellant’s principle argument, that the cross-examination of the respondent showed that the appellant’s promises were not a real inducement which contributed to the respondent’s decision to conduct herself as she did, is not compelling. [76] The answers given by the respondent during crossexamination were to the effect that the extent of her involvement in maintaining Oaks Cottage was induced by the appellant’s assurances of security. The promises in question were a vital aspect of the security which the appellant plainly understood was of concern to her.

[78] “In summary, on all the evidence, it should be found that the respondent was induced to remain at the property and to continue to work for the appellant and his wife by the assurances which he made. It is unconscionable for the appellant now to resile from his assurances.”

Outcome: Appeal dismissed with costs...