Case: Waltons Stores (Interstate) Limited v Maher [1988] HCA 7 ; (1988) 164 CLR 387
Outcome: discussed
relies upon promissory estoppel as a 'sword', that is, as a source of substantive rights enforceable as a cause of action in its own right. Counsel referred to Waltons Stores (Interstate) Limited v Maher [1988] HCA 7 ; (1988) 164 CLR 387 at 416 per Brennan J; Commonwealth v Verwayen [1990] HCA 39 ; (1990) 170 CLR 394 at 430 per Brennan J; News Corporation Ltd v Lenfest Communications Inc (1996) 21 ACSR 553 at 569; and Gray (As Administrator of the Estate of Gray) v National Crime Authority [2003] NSWSC 111 at [153] [159] (cf Australian Crime Commission v Gray (As Administrator of the Estate of Gray) [2003] NSWCA 318 per Mason P at [40], agreed to by Tobias JA at [313]). Counsel for Pan submits that this claim is misconceived and that equitable estoppel can not be used as a sword otherwise than in equity. Counsel submits that Waltons Stores (Interstate) Ltd v Maher does not establish that equitable estoppel is a cause of action in itself capable of sounding in damages (legal or equitable) although it may assist in establishing a recognised cause of action such as breach of contract (as in that case). There is much to be said for that submission. However, the question is controversial (KR Handley, Estoppel by Conduct and Election, Sweet &amp; Maxwell, London, 2006, Ch 13). As I have a clear view that the integers of promissory estoppel are not established, I need not deal further with this fundamental question. It should be noted that the claim for estoppel by convention is not pursued. The estoppel case pleads the assumption that Pan was, and would continue to be, the exclusive supplier of soft gel goods and the supplier of the whole or the majority of the other therapeutic goods sold by Naturalcare for at least the term of the Manufacturing Agreement, including any renewed term. The case pleads an expectation by Naturalcare that Pan would continue to be its exclusive supplier of soft gel goods and the supplier of the whole or the majority of the other therapeutic goods sold by Naturalcare and that Pan would not be free to, or would not, withdraw from that expected relationship for at least the term of the Manufacturing Agreement, including any renewed term. That assumption and that expectation are said to have arisen from the same course of conduct as was alleged to have given rise to the Supply Contract, together with some allegations of a general kind as to the relationship between the parties, also relied upon to establish a duty of care. Counsel for Naturalcare referred, in particular, to parts of a conversation between Schadel, Davis and Selim, which took place in 1995. The next problem is in identifying an appropriate subject matter for the assumption or expectation. Counsel for Naturalcare referred to the passage from the judgment of Brennan J in Waltons Stores (Interstate) Ltd v Maher where his Honour said, amongst other things (at 428): '... 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;' Mason CJ and Wilson J referred to 'basic assumptions underlying the transaction between the parties' (at 406). They went on to point out that the failure to fulfil a promise does not, of itself, amount to unconscionable conduct and mere reliance upon an executory promise to do something does not bring promissory estoppel into play (also at 406). It is submitted by counsel for Naturalcare that the legal relationship in question was as supplier of Naturalcare's soft gel business and of the majority of Naturalcare's tablet business. In my opinion, that does not amount to a relevant assumption or expectation. It only illustrates a continuing commercial relationship. The next problem is that Naturalcare has to establish that the estoppel in the terms alleged was operative in 2003. I have no difficulty in rejecting that contention. Such an assumption would be inconsistent with the course of dealings between the parties up to that time. Naturalcare had acquired soft gel products from non Pan sources and the majority of tablets from non Pan sources. Counsel for Naturalcare was only able to argue that Naturalcare gave Pan almost all of its soft gel business between January 2000 and April 2003, being 89 per cent by value and 48.2 per cent of its tablet products by value and Naturalcare acquired 58.25 per cent of its tablet products (by value) from Pan in the period January 2000 to April 2003, rather than 48.2 per cent but only if Healthy Joints figures are excluded. Next, it is not at all clear how it is alleged that the assumption and expectation were unconscientiously departed from. The failure to supply products was not the kind of deliberate unconscientious departure from a state of affairs which might found a promissory estoppel. It was the result of action by the TGA pursuant to statute.