Facts: Maher owned commercial premises which it planned to demolish and build a new building on to lease to Waltons Stores. Solicitors for the parties settled documents to effect the transaction. Amendments were called for. Waltons' solicitors wrote to Maher's solicitors: "We believe that approval will be forthcoming. We shall let you know tomorrow if any amendments are not agreed to." Some days later, Maher's solicitors, having heard nothing about the amendments, submitted executed documents "by way of exchange". There were no communications for nearly 2 months but during that time, Waltons was reconsidering its position in the light of changes it had made to its business operations. Meanwhile, to meet a time for occupation nominated by Waltons, Maher had demolished the old premises and construction of new premises was well advanced. Waltons subsequently refused to proceed with taking the lease from Maher. Maher sued Waltons for specific performance and/or damages.
Issue: Was there a binding lease?
Outcome (HCA): The majority found for Mahers on the basis of equitable estoppel; the minority found for Mahers on the basis of CL estoppel.
Held (Mason CJ and Wilson J): "One may therefore discern in the cases a common thread which links them together, namely, the principle that equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has "played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it": per Dixon J in Grundt, at 675; see also Thompson, at 547. Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption."
"The foregoing review of the doctrine of promissory estoppel indicates that the doctrine extends to the enforcement of voluntary promises on the footing that a departure from the basic assumptions underlying the transaction between the parties must be unconscionable. As failure to fulfil a promise does not of itself amount to unconscionable conduct, mere reliance on an executory promise to do something, resulting in the promisee changing his position or suffering detriment, does not bring promissory estoppel into play. Something more would be required.[That "something more"]...may be found, if at all, in the creation or encouragement by the party estopped in the other party of an assumption that a contract will come into existence or a promise will be performed and that the other party relied on that assumption to his detriment to the knowledge of the first party..."
Held (Brennan J):
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;
The defendant has induced the plaintiff to adopt that assumption or expectation; o "a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs."
The plaintiff acts or abstains from acting in reliance on the assumption or expectation;
The defendant knew or intended him to do so;
The plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and
The defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.