Summary Notes on Law of Trust & Equity : Doctrine of Estopple

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Notes on Law of Trust & Equity : Doctrine of Estopple

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è    DOCTRINE OF ESTOPPEL.

ü   CONCEPT :

v  It is a doctrine to estop someone from going back from the promise that he had done via act / words, as it is very unconscionable to go back from the words.

v  In general, when A, by act/ words, gives B reason to believe a certain set of facts upon which B takes action, A cannot later, to his benefit, deny those facts or say that his earlier act was improper.

è    DISTINCTION BETWEEN THE COMMON LAW & EQUITABLE ESTOPPEL :

Ø  Common law estoppel operates upon a representation made of existing facts. – Assumption of facts.

Ø  Equitable estoppel operates upon the representation / promises as to future conduct, including promises about legal relation. - Assumption of rights.

Ø  Equitable estoppel may exist in 2 forms :

1)    PROMISSORY ESTOPPEL

Ø  It is a doctrine that prevents a party from acting in a certain way because the promisor promised not to n the promisee relied on that promise, & acted upon it.

Ø  Besides, if the promisor know certain facts but keep silence on such facts, he cannot later disagree upon what had occurred or done by the promisee. (Silence is waiver to right over the property.)

ü  CENTRAL LONDON PROPERTY TRUST LTD v HIGH TREES HOUSE LTD

·         FOC : The claimant let a block of flats to D. They agreed to reduce the rent during World War II, & this promise was unsupported by consideration. After the end of war, the claimant demanded the full rent, plus arrears for the period of war.

·         PRINCIPLE : The claimant was only entitled to the full rent after the end of war. They were estopped from going back on their promise, as it would have been inequitable for them to do so. 3 requirements:

                           i.            An unequivocal promise by words/ conduct.

          ii.            A change in position of the promisee on reliance of the promise (not necessarily to their detriment.

Ø  It is inequity if the promisor go back the promise.

Ø  Estoppel is ‘a shield not a sword’. It cannot be used as the basis of an action on its own. It does not extinguish rights.

Ø  Estoppel is an equitable construct n is therefore discretionary

ü  BANK NEGARA INDONESIA v PHILIP HOALIM

·         PRINCIPLE : In rental matter, you can stay in such prop. so long as you in the possession of such property.

ü  AW YONG WAI CHOO v ARIEF TRADING

·         PRINCIPLE : The real test is that whether the circumstances of the case is unjust for the pf, if yes then this doctrine may be established.

ü  COMBE v COMBE

·         FOC : A husband had promised his wife to allow her L100 a year free of tax. On his failing to pay, the wife sued on the promise.

·         PRINCIPLE : The promise could not be used as a sword by the wife to extract funds from the husband. It does not create new causes of action.

ü  COLLIER v WRIGHT LTD

·         FOC & PRINCIPLE : Where a debtor offered to pay part of the amount he owed (debtor pay only part of debt with an agreement such payment satisfied the whole debt), & the creditor voluntarily accepted that offer. The debtor relied on the acceptance n paid the part of the amount, the creditor would be bound to accept that sum in full & final satisfaction of the whole debt.

ü  LIEW AH HOCK v MALAYAN RAILWAY

·         FOC : Liew has the TOL land. He had been promised for years for that land. Df took away the land, and now the Liew claimed money as he had been evicted from the land.

·         PRINCIPLE : Promissory estoppel doesn’t give you a room to start the cause of action but it merely acts as defence.

è  However, promissory estoppel may have effect of enabling a person to insist on right based on the assumption by both parties, where without this estoppel that right could not been existed. (In another word, in some cases, it can be used as a base for cause and action.)

ü  AMALGAMATED INVESTMENT v TEXAS BANK

·         PRINCIPLE : Equitable estoppel is one of the most flexible. It could be used as a sword (a cause of action); rather merely as a shield (providing a defence).

2)    PROPRIETORY ESTOPPEL

Ø  It arose in relation to rights to use the land / prop. of the owner & in connection with disputed transfers of ownership.

Ø  This type of estoppel may arose in 2 ways :

      i.            Estoppel by encouragement – The representor encouraged on his / her prop. by some representation / benefits.

       Eg : When A had placed a reliance on the Z’s encouragement by way of expending money on Z’s prop., Z later cannot deny that right.

Ø  ELEMENT OF ENCOURAGEMENT :

1.     The reliance of pf is based on the encouragement of the other party.

ü  BOUSTEAD TRADING v ARAB-MALAYSIAN MERCHANT BANK

·         PRINCIPLE : The doctrine of estoppel is a flexible principle by which justice is done according to the circumstances of the case. Several principles are laid down:

a)      Estoppel may be used as a shield

& a sword.

b)      It does not confine to representation of facts (act) alone, but is also applicable to representation of law (term of the contract).

c)      Representee’s conduct was influenced by the encouragement, that it would be unconscionable for the representor to enforce his strict legal rights.

d)      Detriment element does not form part of the doctrine. All that need be shown is that, it would be unjust for the representor to insist upon his strict legal rights.

2.     The reliance gives rise to detriment.

       Detriment here could in the form of loss of expenditure or payment in working hour.

ü  GREASELEY v COOKE

·         FOC : House helper didn’t received any working payment as she was promised to stay in the house as long as she wanted to do so.

·         PRINCIPLE : There is detriment on the pf part as she was now loss of working payment as she relied on such promise.

    ii.            Estoppel by acquiescence – The representor PASSIVELY acquiesced (agreed) to the expenditure.

       Eg : A silent on B payment on the value of a land. Later, A cannot deny such payment.

ü  DILLWYN v LLEWELYN

·         FOC : The son was promised by his father for taking possession of a house. The son spent £14000 to improve the property. The father never transferred the house to the son even until death.

·         PRINCIPLE : The administrator was estopped from denying the son’s proprietary interest. The son was given the rights on the land by court via the doctrine of proprietary estoppel.

3)    NEW DEVELOPMENT ON ESTOPPEL

ü  WALTONS STORES v MAHER

·         FOC : Maher got into arrangement with Walton to build a shopping mall. Here, there is no agreement / contract used but merely arrangement. But later Walton breached such arrangement. As there is no contract, specific performance cannot be granted.

·         ISSUE : Can the doctrine of estoppel be applied here as the base is only arrangement not any agreement / contract.

·         PRINCIPLE : 3 MODIFICATIONS ON THE ESTOPPEL CONCEPT :

                  i.            There is no need for the parties to be in re-existing legal relationship in order for this doctrine to be applied in the case.

                ii.            Promissory estoppel can be used as a cause of action rather than a mere defence.

               iii.            The criteria upon which the court exercised it jurisdiction was unconscionable.

ü  BOUSTEAD TRADING v ARAB-MALAYSIAN MERCHANT BANK *Principle had been discussed before this.

ü  CHOR PHAIK HAR v CHOONG LYE HOCK

·         PRINCIPLE : Estoppel is a very flexible doctrine & it cannot be used literally. The court will look in depth the facts available and answer the case on whether there is unconscionable issue & detriment caused.