Case: Plimmer v Mayor of Wellington (1884) 9 AC 699
Outcome: referred to
The amendment adding Schedule 4, provides as follows:- Month Allocated Monthly TEU January 17624 February 20444 March 21431 April 21446 May 22054 June 19665 July 21166 August 21583 September 21895 October 22472 November 24005 December 21795 578 As with Schedule 2 in the March draft, the maximum TEU may be increased by 10% if the Rail Operator provides written notice, however a critical difference is contained in the amendments to subsection (ii) of Schedule 2(a), which I shall set out:- "(ii) The aggregate Allocated Monthly TEU of 20,830 referred to in paragraph (i) above Schedule 4 as at the date of this agreement may be permanently increased by up to 10% in any particular month by the Rail Operator by giving the Terminal Manager written notice at least 2 months prior to seeking that increase. Once the Rail Operator has given such a notice, the increased figure will be deemed to be the figure for the aggregate Allocated m Monthly TEU in the relevant month for the purposes of paragraph (i) above, and will also be deemed to be the figure for the aggregate Allocated m Monthly TEU referred to in paragraph (b) (i) below. However, the Allocated Monthly TEU for each month may only be increased under this paragraph (ii) by a maximum of 10% above the TEU for that month listed in Schedule 4 as at the date of this agreement . Any other increase will be dealt with under clauses 7.5 and 7.6 of this agreement ." 579 Reference is also made in Schedule 2(a)(i) to cl 7.5 and 7.6, which have been added to the July draft. Clause 7.5 relates to additional monthly throughput, and provide as follows:- "7.5 Additional Monthly Throughput (a) Upon written request by the Rail Operator given prior to 1 July each year during the Term (but not more than once in each calendar year), the Rail Operator may request the Terminal Manager provide Terminal Services for Additional Monthly Throughput for the remaining months of the Term commencing 1 January of the following year or such later date nominated by the Rail Operator. For the avoidance of doubt , a written request by the Rail Operator may not seek to reduce the Allocated Monthly TEU . The rights under this clause 7.5 are in addition to the rights to increase the Allocated Monthly TEU in paragraph 1(a)(ii) of Schedule 2. (b) If, in the Terminal Manager's reasonable opinion when having regard to: (i) the existing capacity of the Terminal; (ii) the Terminal Manager's existing or likely future commitments to other users of the Terminal (including Queensland Rail and its Related Bodies Corporate); (iii) the Additional Monthly Throughput requested by the Rail Operator; and (iv) the extent to which the Terminal Services and the Terminal Manager's other operations in the Terminal can be carried out efficiently; an Expansion is required in order to enable the Terminal Manage to provide Terminal Services for the Additional Monthly Throughput, clause 7.6 shall apply . (c) If, in the Terminal Manager's reasonable opinion having regard to: (i) the existing capacity of the Terminal; (ii) the Terminal Manager's existing or likely future commitments to other users of the Terminal (including Queensland Rail and its Related Bodies Corporate); (iii) the Additional Monthly Throughput requested by the Rail Operator; and (iv) the extent to which the Terminal Services and the Terminal Manager's other operations in the Terminal can be carried out efficiently, an Expansion is not required in order to enable the Terminal Manage to provide Terminal Services for the Additional Monthly Throughput requested, the Terminal Manager will agree to provide Terminal Services for the Additional Monthly Throughput . (d) If the Terminal Manager does agree to provide Terminal Services for Additional Monthly Throughput pursuant to clause 7.5I the Allocated Monthly TEU for the remaining months of the Term will be deemed to be permanently increased by the relevant Additional Monthly Throughput for the purpose of this agreement, including paragraphs 1(a)(i) and 1(b)(i) of Schedule 2. However, paragraph 1(a)(ii) of Schedule 2 will no longer apply to any Allocated Monthly TEU that has been increased under clause 7.5(c)." (emphasis added) 668 I will enumerate the propositions as follows:- (1) The object of estoppel in pais is to prevent an unjust or unconscionable departure by one person from an assumption adopted by another as the basis of an act or omission which, unless the assumption is adhered to, would operate to the other's detriment: Thompson v Palmer [1933] HCA 61 ; (1933) 49 CLR 507 (" Thompson ") at 547 per Dixon J; Grundt v Great Boulder Pty Limited (1937) 59 CLR 640 (" Grundt ") at 674 per Dixon J; Legione at 430 431; Waltons at 413 per Brennan J; Verwayen at 409 per Mason CJ and at 500 per McHugh J. (2) Whether a departure from an assumption is unjust depends upon the part taken by the person sought to be estopped in occasioning the adoption by the other party of the assumption: Thompson at 547 per Dixon J; Grundt at 675-676; Legione at 431 432; Waltons at 404 per Mason CJ, Wilson J; Verwayen at 444 per Deane J and at 500 per McHugh J. (3) Accordingly, the reference to an "unjust" departure is not a charter for idiosyncratic concepts of justice and fairness: Legione at 431. That is to say, it requires the party asserting the estoppel to prove that the other party caused him or her to adopt the assumption. (4) The party asserting an estoppel must establish that he or she has relied upon the assumption and that detriment flows from the reliance; that is to say, if the assumption were not adhered to: Grundt at 674 675; Waltons at 413 and Verwayen at 415. (5) It may be possible to divide detriment into the "narrower" and "broader" sense, although this approach, which was stated by Mason CJ in Verwayen at 415, really points to the distinction between reliance and detriment. The narrower sense is reliance on the assumption, whilst the broader sense is the detriment which flows from reliance on the deserted assumption. It is avoidance of the broader or "real detriment" flowing from reliance, from which the law seeks to protect the party who has changed his or her position: Grundt at 674 per Dixon J; Verwayen at 415 per Mason CJ. (6) It is only when the party sought to be estopped wishes to disavow the assumption that an estoppel arises and the question of detriment then falls to be considered: see P Feltham et al (2004) Spencer Bower's Law Relating to Estoppel by Representation (4 th ed) Butterworths, London at [V5.9] and Grundt at 674-675. (7) Although detriment in the broad sense is required to found an estoppel, the remedy the law provides will often be closer in scope to the detriment suffered in the narrower sense, that is to say, reliance: Verwayen at 415 416 per Mason CJ. (8) Avoidance of the detriment may require the party estopped to make good the assumption but this will depend on all the circumstances including the consideration that no more may be required than is necessary to avoid the detriment: see the discussion of Verwayen in Giumelli at [40] [48]. (9) The burden of proof of reliance and detriment lies upon the person asserting an estoppel: Thompson at 549 per Dixon CJ and Verwayen at 416 per Mason CJ. Dixon J's reference in Thompson at 549 to the shift of the burden of proof cannot have been intended to negate the principle stated by his Honour later in that paragraph, ie that the burden lies with the plaintiff. It can only have been intended to be a reference to the shifting evidentiary burden once some evidence of detriment is established: see J D Heydon (2004) Cross on Evidence (7 th ed) LexisNexis Butterworth, Sydney at [7205], [7225]. (10) Estoppel by convention requires proof of an assumption adopted by the parties as the conventional basis of their relationship: Thompson at 547; Con-Stan Industries of Australia Pty Limited v Norwich Winterthur Insurance (Australia) Limited [1986] HCA 14 ; (1986) 160 CLR 226 (" Con-Stan ") at 244. (11) The proposition that the necessary foundation for an estoppel by convention must be an assumed state of facts presently in existence, as stated by the High Court in Con-Stan at 244 245, has been qualified by later authority. The assumed state of affairs may extend to an assumption of law: Eslea Holdings Limited v Butts (1986) 6 NSWLR 175 at 186-189 per Samuels JA; Waltons at 415 and Verwayen at 413 per Dixon J, 445 per Deane J, and at 501 per McHugh J. (12) An estoppel by convention, unlike estoppel by representation, depends upon mutual assumptions. It is consensual in nature and is founded upon an agreed or mutually assumed state of facts (or law): Con-Stan at 244. (13) Conventional estoppel does not extend to assumptions concerning future matters. But an assumption as to a future right may found an equitable estoppel, in particular a promissory estoppel: Waltons at 398 399 per Mason CJ and Wilson J and 459 per Gaudron J and Verwayen at 499 500 per McHugh J. (14) The necessary elements of equitable or promissory estoppel are stated in the following passage from the judgment of Brennan J in Waltons at 428 429:- "In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise." (15) In order to found an estoppel between parties who are in contractual negotiations, it is necessary for the party asserting the estoppel to prove that the other party induced him or her to believe that the other's freedom to withdraw has gone; that is to say, there must be an expectation that the other party is bound to proceed. This is reflected in the first of the six principles stated by Brennan J above and in the decision of the Privy Council in Attorney-General (Hong Kong) v Humphreys Estate (Queen's Gardens) Limited [1987] 1 AC 114 (" Humphreys "). (16) The adoption of any assumption or expectation by the party asserting the estoppel must be reasonable in all the circumstances: Waltons at 406 per Mason CJ and Wilson J, Verwayen at 414 per Mason CJ and at 445 per Deane J and Standard Chartered Bank Aust Limited v Bank of China (1991) 23 NSWLR 164 at 180 per Giles J. (17) A representation or conduct relied upon as founding an estoppel must be clear and unambiguous: Legione at 435 437, Foran v Wight [1989] HCA 51 ; (1989) 168 CLR 385 at 410 411 per Mason J, and Mobil Oil Australia Limited v Wellcome International Pty Limited (1998) 81 FCR 475 (" Mobil Oil ") at 513 per Lockhart, Lindgren and Tamberlin JJ; see also Spencer Bower's Law Relating to Estoppel by Representation at [V111.4.1]. (18) A corollary of the requirement of certainty is that it is a necessary element of the principle that the defendant has created or encouraged an assumption that "a particular legal relationship" or "interest" would arise or be granted: Mobil Oil at 513. (19) A pre-existing contractual relationship is not, under Australian law, a prerequisite to the application of the doctrine of promissory estoppel: Waltons at 399 403 per Mason CJ and Wilson J and 428 429 per Brennan J and Verwayen at 455 per Dawson J. (20) A person who is led to believe that he or she will be granted an interest in land and who acts to his or her detriment in that belief will be entitled to an interest in the land in accordance with the following statement of principle enunciated by Lord Kingsdown in his dissenting judgment in Ramsden v Dyson at 170:- "If a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing, under an expectation created or encouraged by the landlord that he shall have a certain interest, takes possession of such land with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the landlord and without objection by him, lays out money upon the land, a Court of equity will compel the landlord to give effect to such promise or expectation." (21) Lord Kingsdown's statement of principle was approved by the Privy Council in Plimmer v Mayor of Wellington (1884) 9 AC 699 (" Plimmer") at 710 and again in Humphreys at 121: see also the analysis of the authorities by Priestley JA in Austotel Pty Limited v Franklins Selfserve Pty Limited (1989) 16 NSWLR 582 (" Austotel ") at 604 610. Priestley JA's distillation of the principles has been accepted as cogent: Mobil Oil at 512. (22) Subject to a qualification stated below, it is not necessary that the interest to the secured under the Ramsden v Dyson or Plimmer principle be expressly stated or that the terms of the arrangement or understanding to secure that interest be sufficiently certain to be enforceable as a contract. The Court must look at the circumstances of each case to determine the form of relief: Plimmer at 713 714, Inwards v Baker [1965] 2 QB 29 at 37, and Austotel at 607 610 per Priestley JA. (23) The qualification is that where the parties have not reached agreement as to the contractual terms necessary to establish the interest in the land, the Court will exercise caution in coming to a conclusion that it would be unconscionable to prevent a party from insisting upon its strict legal rights: Austotel at 585 586 per Kirby JA and at 620 621 per Rogers AJA.