A note on the element of ‘detrimental reliance’ in a claim for estoppel
I have written previously in this blog about the action for estoppel — particularly, in the context of discussing how a court may formulate an appropriate remedy where such action succeeds: see here.
Recently, a majority of the High Court in the decision in Kramer v Stone[1] clarified two key matters relevant to establishing the element of ‘detrimental reliance’ in an action for estoppel.
Key facts
A farm worker, sharing some of the costs and income derived from a farm, was made a promise by the owner of the farm that he would inherit the farm on the owner’s death. The farm worker later asserted that, were it not for that assurance, he would have terminated the working arrangement and would have sought (in a manner of speaking) greener pastures. Instead, the farm worker continued in the position for another 23 years, only to find that the owner had not left the farm to him in her will.
At trial, and again on appeal at the first instance, it was held that the circumstances gave rise to an estoppel in favour of the farm worker and that title to the farm was to be held for him on trust.
Questions regarding ‘detrimental reliance’
On appeal from the New South Wales Court of Appeal, the High Court was tasked with determining whether, in order to establish the element of detrimental reliance, it was necessary that:
after the promise, the owner perform some act of further encouragement of the farm worker to continue to carry out his role on the farm;
the owner have actual knowledge that the farm worker was relying on the promise which would be to his detriment if the promise were not fulfilled.
Answering those questions, a majority of the Court held as follows.
First, where a promise conveys some encouragement to a promisee, ‘there is no requirement for any further subsequent encouragement or actual knowledge of the acts of the promisee taken in reliance on the promise’.[2] (Justice Gleeson, dissenting, held that encouragement beyond the initial promise is required in order to establish detrimental reliance; ‘[i]t is not sufficient for an estoppel that an assurance is made that justifies “hope, or even ... a confident expectation” in its future performance’.[3])
Second, it is not necessary for a promisee to prove that ‘the promisor actually expected … that the promise would be relied upon by the promisee in the general (detrimental) manner in which it was relied upon’; it will suffice if ‘a reasonable person in the position of the promisor would have [so] expected’.[4]
Besides the determination of those questions, the majority commented on what seem to be myriad ways of describing an action in estoppel; their Honours wrote:
An estoppel arising from a promise upon which a plaintiff claims an entitlement to new property rights, such as a conveyance of land or ‘trust’, has been described as promissory estoppel, proprietary estoppel or, more generally, as estoppel by conduct and equitable estoppel. As in Giumelli v Giumelli, there is no occasion in this appeal to consider whether there is any difference between these descriptions or if there is any ‘single overarching doctrine’ of estoppel.[5]
Comment
Because, in the majority’s view, there is no need for a promisee to prove any encouragement beyond an initial promise, nor does the promisee need to establish that the promisor actually expected there would be detrimental reliance, this favours a promisee seeking to prove detrimental reliance and, more broadly, to establish an action for estoppel. That said, whether or not the action succeeds ultimately may depend on the question of where good conscience lies in all the circumstances of the case — even if proof of detrimental reliance could be a key factor in that analysis.
As to the question of whether there is a ‘single overarching doctrine’ of estoppel, perhaps the Court might one day have cause to determine that the various species of estoppel really are just, to borrow the expression from moral philosophy, ways of ‘climbing the same mountain on different sides’.[6]
[1]: [2024] HCA 48.
[2]: Ibid [34] (Gageler CJ, Gordon, Edelman and Beech-Jones JJ).
[3]: Ibid [68].
[4]: Ibid [35] (Gageler CJ, Gordon, Edelman and Beech-Jones JJ).
[5]: Ibid [32].
[6]: Derek Parfit, On What Matters (Oxford University Press, 2011).