The Law of Equity in Australia

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Equity – Assignment Question 3 Introduction As described by Sir Frank Kitto, Justice of the High Court of Australia from 1950 to 1970, the law of equity is ‘the saving supplement and complement of the Common Law….’ which prevails over the Common law in case of conflict between both the laws and thus by repairing the deficiencies of the Common Law.[1] An estoppel is a principle whereby a party is prevented from asserting a contrary position to any fact which has already been established.[2] Points of distinction regarding Law of Estoppel in common law and equity: As to definition:

  • Estoppel in common law occurs where the relying party acted upon an assumption of an existing fact only as confined by the decision of House of Lords in Jorden v Money [1843–60] All ER Rep 350. [3] For instance, when the party represented induced the relying party to believe that he has signed a contract.[4]
  • Whereas, an Estoppel in equity is an equitable claim that prevents someone from denying the existence of a state of affairs in circumstances in order to protect and prevent a party from departing from an assumption encouraged by the other party’s conduct, representations or promises, where to do so would be unconscionable and would cause loss and injury to the party who acted upon that assumption.[5] Equitable estoppel also occurs in case of a representation of future conduct where the relying party acted upon an assumption as to the future conduct of the representor. For instance, the representor induced the relying party to believe he will sign the contract in the future. [6]

Thus from here, it is derived as per Priestley JA in Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466, at 472, that common law estoppel operates when certain conditions are fulfilled, establishes a state of affairs by reference to which the legal relation between the parties is to be decided. It does not itself create a right against the party estopped. The right flows from the court’s decision on the state of affairs established by the Estoppel. Whereas, equitable estoppel operates upon representations as to future conduct, including promises about legal relations. When certain conditions are fulfilled, this kind of estoppel is itself equity, a source of legal obligation.[7] As to nature: The common law estoppel is a rule of evidence and a device used merely to determine the facts upon which the legal rights of the parties will then be determined by the court, whereas estoppel in equity may confer substantive rights which flow directly from the operation of estoppel in equity.[8] As to form The common law estoppel can only act as a shield not as a sword as it is only a way to establish evidence, not a cause of action. Whereas, the equitable estoppel can act as both a sword and a shield because it does not only determines evidence,

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