Keeping Our Promises: Australian Courts deal with honouring our promises! Australia is very fortunate to have a strong equity practice in our Courts, led by a long tradition of equity decisions in NSW. Equity is an area of law that seeks to mitigate or soften the rough edges of the common law in favour of rulings that provide for natural justice and fairness. Equity is defined in a number of principle statements that the Courts use as governing rules. Another way to consider Equity is that it is an area of our jurisprudence that has developed to fill the gaps in our laws where it would be unjust to allow someone to claim a legal right when their own actions were unconscionable. In law, we use the term estoppel when we refer to the Courts forcing a party to keep his or her promise to another. In many property or contract law cases, one party often makes a promise to another party before the papers are signed. The second party acts on the promise and the trouble begins and it becomes a Court case when the promisor fails to follow through with his or her promise. It is worth noting that any Court of equity will focus on the damage or loss caused by the reliance on the broken promise. As a simple example, imagine that Andy wants Brenda to dig a hole on Andy’s construction site. Andy gives Brenda the keys to the site and tells Brenda to get started. Brenda relies on Andy’s promise and she buys the tools and hires the workers and moves onto the site to do the work. Another example may be if Doug promises Ellen to sell or give her a share of his house if she maintains it on a daily basis. Ellen gives up her job to stay on the property and maintain it and expects to have her name on the title. After years of doing so and giving up other opportunities, Doug changes his mind and tells Ellen that he is not giving her the home and that she must vacate. In the first instance, Brenda expects Andy to follow thorough with his promised behaviours – usually a payment. What if Andy then decides he does not want Brenda to dig the hole but he prefers Charles to carry out the work? Or what if Andy fails to make his payments and withdraws his promise to pay Brenda for digging the hole? He may claim that no contract was in place. Strictly speaking, Andy is right. No contract was assigned. Similarly with Doug and Ellen, what should happen given that she relied on his promise of ownership by keeping the property in good repair? The Courts will not generally allow parties to abandon promises that another party relies upon to his or her detriment. Those promises for land or title rights may well be in the absence of a contract and are therefore not legally enforceable. The question therefore is how can our Courts ensure that nothing unconscionable happens given the absence of a legal document? In a recent case of equitable estoppel and proprietary estoppel before the High Court , the justices had to deal with just such a ‘presumption of reliance’ that caused a loss to the person expecting a benefit from a promise. As is often the case in legal disputes, it was a promise made in a family/domestic situation where love and relationship issues played a significant role. The Court decided that upon proving that the woman in that case had indeed relied on the promise of the man – and done so to her detriment – that it would act to estop (halt or prevent) the promisor from withdrawing his agreement to place his property in her name. In short, the Court reminds us in this recent High Court case that if we make promises of money, land or other property or valuable consideration and others act upon those promises to their detriment, then we will be responsible for those losses, even in the absence of a contract. Equity is a fascinating area of law. Fortunately for us, our Australian Courts continue to be a rich legal resource for decisions in equity.
Posted on: Tue, 08 Jul 2014 03:29:42 +0000
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