Date: Thu, 10 Apr 2003 11:16:33 -0400

From: Jason Neyers

Subject: Estoppel in the HL

Dear Colleagues,

Jason suggested that a reliance-based remedy could result from the application of estoppel. While I understand that this is possible in the USA (Jason may enlighten me about Canada), there is almost no support for it in England.

In response to Paul: there is little judicial support, for a reliance remedy view of estoppel in Canada. This has more to do with the doctrine's lack of use, than with any mature consideration of the doctrine by our appellate courts.

In response to the English position, I would argue that there is some sporadic support for the reliance-based view, see e.g., ROBERT WALKER LJ in Scottish Equitable plc v Derby.

But in any event, the more important question is which is the correct position for the law to take in the future: (a) continuing with an incoherent doctrine that posits a reliance-based harm and yet gives an expectation award; or changing to (b) a doctrine that posits a reliance-based harm and then gives a rationally related reliance-based award? In a recent paper/review (see "A Coherent Law of Estoppel?" in the newest Journal of Obligations and Remedies) I argue for B.

It also seems to me that such a move is available to the appellant courts on the tort rationale posited by Adam (based on Seavey) as an extension of the Hedley Byrne principle. In any event, to change the law in the way suggested would be no greater a change than Hedley Byrne itself and would have very few knock-on effects. The fact that this wasn't addressed in Actiondirect, was one of the reasons I was frustrated with the reasoning of their Lordships.

If this is correct and we assume that the courts will move to the tort understanding of estoppel, the only question that remains then is whether there is a residual role for the doctrine to play in the other situations posited by Adam, namely "Estoppel as contract" and "Estoppel as enforcing informal property transfers". In distinction to Adam, I would argue that there is no role to play for estoppel qua promise enforcement. Consideration is a necessary requirement for the formation and variation of contracts. A serious attack on consideration in variation cases, is a serious attack on consideration everywhere. [It is important to keep in mind that this does not mean that estoppel cannot operate when there is a contract but merely that when it does, it operates on the basis of the tort understanding, see the excellent decision of Cardozo CJ in Imperator Realty v. Tull or the PC decision in Ajayi v. Briscoe which provides for resiling upon reasonable notice--a tort application of the doctrine].

I find it surprising, given the general reticence of the English judiciary, that what was once thought to be necessary and sufficient for the enforcement of promises (i.e. consideration) is now being consistently attacked as either unnecessary and in some cases insufficient (see e.g., the wrongly decided Williams v. Roffey Bros. compare with Gilbert Steel Ltd. v. University Construction Ltd. (Ont. C.A.). The reason for this change, I would suspect is that very few judges can give any positive conceptual or logical reason why consideration should be necessary. For a compelling argument as to why consideration is a logical and necessary requirement for contract formation and hence expectation damages, see P. Benson, "The Unity of Contract Law" in P. Benson, ed., The Theory of Contract Law: New Essays (New York: Cambridge University Press, 2001).

For the reasons posited above, I also doubt that estoppel has any role to play in enforcing informal property transfers qua transfer/contract, as opposed to in its capacity as protecting from detrimental reliance.

Cheers,

Jason

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