Estoppel And Waiver Casebook Component Notes

Sargent v ASL Developments Ltd (1974) 13 CLR 634

Mason J:

• Whether the result of doctrines of estoppel, waiver and election are ascribed to (in cases where a party is precluded by their acts from exercising the right of rescission) is not of much importance – the three cases can be conveniently regarded as instances of election

• He referred to Lord Wright in Ross T Smyth for the vagueness of the term “waiver”

Legione v Hateley (1982) 152 CLR 406 - Estoppel

Relevant Facts: Under a contract of sale dated 14/7/78 the Hateley’s (H – the purchasers) agreed to purchase land from the Legione’s (L – the vendors). The purchase price was $35k, $6k deposit and the balance with an interest rate of 8% on 1/7/79. On payment of the deposit, the H’s entered into possession. Without knowledge of the L’s they built a house on it. SC 5 stated that time was of the essence and provided that parties couldn’t enforce rights/remedies under the contract unless written notice was given specifying the default and the intention to enforce the rights/remedies unless the default is made good within a period of not less than 14 days of notice and the party failed to remedy that default. It also provided that (if stated in the notice) the contract would be rescinded if the default was not remedies at the expiration of the period.

The purchasers expected to raise the balance on the sale of another property but that sale fell through. On 29/6, H informed L and requested a three-month extension. On 12/7 L’s solicitors declined. On 26/7 a notice was sent stating that if the balance and interest were not paid L’s would rescind. The time for payment expired on 10//8. On 9/8 H’s solicitor phoned L’s solicitor and told the secretary that they had arranged bank finance and would be ready to settle on 17/8. The secretary intimated “I think that’ll be all right but I’ll have to get instructions”. On 14/8 L claimed the contract had been rescinded in consequence of the notice and refused a tender of the purchase price.

Case History: The H’s unsuccessfully sought an order for specific performance in the VSC, the vendor’s counterclaim for a declaration of rescission was successfull. H appealed to the FCA and L’s appealed to the HCA.

Issue: Would the vendors be estopped from denying the assumption fostered by Ms Williams

Gibbs CJ and Murphy J:

• An estoppel will be established if:

  1. Ms Williams, by stating she would get instructions, induced the solicitors to believe that the vendor’s right to rescind would be kept in abeyance until the instructions were communicated and intended them to act on this

     • The statement being made in a context where both parties knew that the time fixed by notice of rescission were to expire and the fact that Ms Williams “thought it would be alright” made the H’s solicitors entitled to believe the right was in abeyance until instructions were given. The evidence of their belief is shown by the fact that they didn’t transfer payment on that or the following day.

  2. The vendors were bound by the conduct of Ms Williams

     • This was established by agency – Williams was an agent for the solicitors who were agents for the Ls

  3. The solicitors, acting in the faith of the inducement, desisted from paying the balance within the time specified

  4. That it would be inequitable to allow the vendors to rescind without informing that no extension would be granted and then giving them reasonable opportunity to make payment

Mason and Deane JJ were of the contrary view. While they accepted that the solicitor’s acted on the representation (though hesitantly) they found issue with the fact that the conduct must be “a clear representation”. They thought the fact that Gardiner intimated the bank would be “ready to settle” (not will settle), and that William’s statement was in reply meant that there was no representation of a time extension. They thought the fact that she was to get instructions was intimation that she was not in a position to agree on what was being put to her. This, for them, was insufficient to found a promissory estoppel.