Module 1 – What is equity?

Learning resources

Prescribed reading
M W Bryan et al, chapter 1

Further reading
M W Bryan et al, Sourcebook chapter 1

Essential cases
Chan v Cresdon Pty Ltd (1989) 168 CLR 242

Corin v Patton (1990) 169 CLR 540

Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298

Walsh v Lonsdale (1882) 2 Ch D 9

What is equity?
Equity is a body of legal principles as well as a manner of describing a jurisdiction. Equitable principles were
initially developed by the English Court of Chancery prior to 1873 and have subsequently been modified by
courts administering equitable jurisdiction.

As will be outlined below, equity’s earliest role was to supplement the deficiencies of the common law
system. Equity intervened to offer justice and remedies which might otherwise have been unavailable. In this
sense equity is often described as a gloss on the common law. The extent to which equity interferes with the
common law varies greatly, but it is overwhelmingly contract and real property law which have been most
affected. Indeed, it is likely that in your studies of these areas you have already become familiar with
equitable concepts such as estoppel, injunction and specific performance.

Today equity in Australia is still driven by the notion underpinning the early historical beginnings of
equitable doctrines and principles: the avoidance of unconscionability. This is illustrated in a series of cases,
including:

Australian Competition & Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51
Baumgartner v Baumgartner (1987) 164 CLR 137

Commonwealth v Verwayen (1990) 170 CLR 394.

A good understanding of the equitable principles which operate today should be underpinned by a firm grasp
of the origins of equitable principles and how they operate in concert with the common law. This topic is an
important one to understand.
The development of equitable principles: the Middle Ages to the modern
era

Distinguishing the origins of equity and common law

In order to begin to understand the role that equitable principles play in our legal system, it is important to
distinguish the origins of common law and equity. Common law is presumed to have existed since time
immemorial. The Statute of Westminster of 1275 fixed the commencement of time immemorial as the date
of King Richard I’s accession to the throne: 3 September 1189. Equity, however, is composed of principles
created much later by the Court of Chancery and subsequently modified by courts exercising equitable
jurisdiction. This concept of equity as ‘invented’ principle is well explained in the case of In re Hallett’s
Estate; Knatchbull v Hallett (1880) 13 Ch D 696 at 710 per Sir George Jessel MR:

[I]t must not be forgotten that the rules of Courts of Equity are not, like the rules of the Common Law,
supposed to have been established from time immemorial. It is perfectly well known that they have been
established from time to time – altered, improved, and refined from time to time. In many cases we know
the names of the Chancellors who invented them. No doubt they were invented for the purpose of
securing the better administration of justice, but still they were invented.

The King’s Council and the common law

In England in the Middle Ages, King Henry II determined that the King’s Council would be the central
governing authority responsible for legislative, executive and judicial functions. Over the next 200 years,
recognised forms of action, rules, principles and remedies were established and refined. In this period of
time, three common law courts developed from the King’s Council: Common Pleas, King’s Bench and
Exchequer. Writs became the focal point of the common law system. Writs laid down the accepted causes of
action. They determined which complaints could amount to a recognised claim which could be brought
before a court of common law. The writ determined acceptable procedure and available relief.

An important focus of the refinement of the common law system during this time was precision,
predictability and conformity with precedent and procedure. Those unable to bring their claims before the
court and those dissatisfied with their outcomes were able to circumvent the common law system and
petition the King for justice.

The Chancellor and petitions for justice

Towards the end of the 14th century, as the common law courts became more rigid and inflexible in their
approach to the law, petitions to the King for justice became more frequent. These petitions would have been
received on behalf of the King by the Chancellor as head of the King’s Council. The petitions increased to
such an extent that they were delegated to the Chancellor who would hear and decide the petition. Eventually
petitions for justice were made directly to the Chancellor. Later, the number of petitions required the
establishment of a separate court designed to deal with the petitions: the Court of Chancery.

The Chancellor already occupied the role of head of the King’s Council. The Chancellor was the head of
Chancery, which issued the King’s writs, and keeper of the King’s Great Seal, which was applied to the
King’s official documents. Until the establishment of the Court of Chancery, the Chancellor had heard the
petitions for justice as a delegated exercise of executive, not judicial power.

The Chancellors during this period were typically high-ranking clergy, often with legal experience in both
civil and canon law. While this experience certainly qualified them for dealing with petitions for justice, their
decision-making during this period has been described as being largely ‘according to conscience’ and having
scant regard to precedent. The Court of Chancery emerged in the 15th century, but it was not until 1557 that
the first published reports of decisions of this court emerged. It was the Chancellors of this court who were
responsible for the early development of equitable principles.

Equitable jurisdiction was not exclusively the province of Chancery. The Court of Requests exercised
equitable jurisdiction for a short time during the Tudor period commencing in the 15th century. The Court of
Exchequer also exercised a limited equitable jurisdiction until as recently as 1842.

Jurisdiction of the Court of Chancery

The Court of Chancery’s jurisdiction grew from the hearing of petitions for justice. Its jurisdiction was in
part auxiliary, as it enhanced the common law. For example, Chancery was able to provide remedies
unknown to the common law, such as injunctions and specific performance. Chancery was also able to offer
relief where the common law did not recognise a cause of action, for example the unconscionable insistence
upon strict legal rights in circumstances of fraud or duress.

Chancery also developed exclusive jurisdiction over uses and trusts. These devices played a key role in the
growth of Chancery’s jurisdiction and importance. Neither uses nor trusts were devices recognised by the
common law.

A use enabled a person, the feoffee to uses, to hold the title to land for the benefit or use of another, the
cestui que use. The common law recognised the feoffee to uses as the absolute owner of the land and refused
to recognise the rights of the cestui que use. However, Chancery not only recognised the rights of the cestui
que use, it was able to enforce them. Chancery did acknowledge the feoffee to uses’ legal title but also
considered the feoffee to uses as bound by conscience to use that right to legal title for the benefit of the
cestui que use.

Uses made it possible to avoid the payment of feudal dues payable to the King on land holdings. Uses proved
so effective in this regard that King Henry VIII passed the Statute of Uses 1535 to abolish uses. In response,
a new device of similar effect was developed. This new device was called a use upon a use, but such devices
remained unenforceable until the abolition of feudal dues in the 17th century. With feudal dues abolished,
any bars to the recognition and enforceability of the use upon a use were removed. The use upon a use
became known as the trust, which became a cornerstone of equitable jurisdiction.

One of the earliest uses of the trust was the marriage settlement. At common law a woman’s property was
transferred to her husband upon their marriage. However, prior to the marriage, it was possible for the parties
to enter into a marriage settlement where the woman’s property would be transferred to a trustee. This trust
arrangement circumvented the operation of the common law and enabled the woman to retain the benefit of
her own property even after her marriage. These early trusts were effectively used to circumvent the common
law rule until its abolition in 1882.

The Tudor and Stuart periods: defining equitable principles

The first common lawyer was appointed as Chancellor during the Tudor period commencing in 1485. This
appointment heralded a significant move away from the traditional appointments of high-ranking clergy to
the office in favour of prominent common lawyers with a greater focus on the development of a clearly
articulated body of equitable principles and precedent. This move toward the appointment of common
lawyers was so pronounced that ecclesiastical Chancellors were no longer appointed after the Stuart period
which ended in 1714.

The two most prominent Chancellors during the Tudor and Stuart periods were Thomas Egerton, Lord
Ellesmere (1596–1617), and Lord Nottingham (1672–1683), who is often referred to as the father of modern
equity.
Seventeenth century conflict with common law
Given that many petitions involved injustice afforded by the strict insistence upon common law rights, the
most significant discretionary remedy awarded by the Chancellor in the 16th and 17th centuries was the
common injunction. The common injunction was used to order a common law plaintiff to cease common law
proceedings or to prevent such a plaintiff from enforcing a verdict already obtained through the common law
system. This injunction was discretionary and was only available if the common law proceedings or
enforcement of the common law verdict would amount to an unconscionable insistence upon the plaintiff’s
strict legal rights. In focusing upon the conscience of the plaintiff, the Chancellor acted in personam while
still recognising the validity and existence of the plaintiff’s common law rights and entitlements. A common
law plaintiff who disobeyed or acted in contempt of the terms of the common injunction was imprisoned, a
further illustration of the remedy acting in personam.

The dispute with the common law arose when the common law courts claimed to prevent any party to
common law proceedings from seeking relief in other jurisdictions and used writs of habeas corpus to
release people imprisoned for contempt or disobedience of common injunctions. Both were attempts by the
common law courts to assert their supremacy over Chancery.

The conflict came to a head in The Earl of Oxford’s Case (1615) 1 Ch Rep 1, in which Lord Ellesmere
upheld at 6-10 the common injunction and the right of Chancery to set aside bad common law judgments on
the basis of conscience:

The office of the Chancellor is to correct men’s consciences for frauds, breach of trusts, wrongs and
oppressions, of what nature soever they be, and to soften and mollify the extremity of the law, […] when
a judgment is obtained by oppression, wrong and a hard conscience, the Chancellor will frustrate and
set it aside, not for any error or defect in the judgment, but for the hard conscience of the party […].

King James I, by royal decree, finally settled the long-running dispute between common law and equity
when he decreed that Chancery could set common law verdicts aside where they were against conscience. In
this sense, at least, equitable principles would prevail when they were in conflict with rules of law.

Almost immediately this position was harshly criticised. The only limit to equity’s jurisdiction appeared to
be what Chancery might decide to be unconscionable: a measure as arbitrary and uncertain as the length of
the Chancellor’s foot, a comparison which was made by John Selden, a Member of Parliament in the 1620s.

Equity faced further challenges later in the 17th century during the rule of Oliver Cromwell, who introduced
a bill to Parliament seeking to abolish both equity and the Court of Chancery. The bill was not passed.

During this period Chancery underwent significant changes. Under the leadership of the early common
lawyer Chancellors, increasingly more Chancery reports were published. Lord Nottingham (1672–1683) was
the first of a long line of Chancellors to lay down the rules and principles which today underpin equitable
jurisdiction. Lord Eldon (1801–1806 and 1807–1827) was the longest-serving Chancellor and the most
prolific writer of reports: 32 volumes of his reported judgments were published. As a direct consequence of
the proliferation of rules, principles and reported judgments, the Court of Chancery eventually became as
bound by precedent as the common law, with an equally well-defined jurisdiction.

By the early 19th century, the Court of Chancery began to experience problems similar to those in the
common law courts. Large numbers of cases and shortages of staff and judges all contributed to lengthy
delays. Matters became worse when the equitable jurisdiction of the Court of Exchequer was transferred to
the Court of Chancery. In 1851 it became possible to appeal decisions of the Court of Chancery with the
establishment of the Court of Appeal in Chancery.

While Chancery recognised the common law, it did not have power to decide common law legal rights and
interests. Chancery could award some forms of monetary compensation or restitution, but was not able to
award damages as relief. Common law courts did not recognise equitable rights and interests, could not
award equitable remedies and did not allow the pleading of equitable defences. Once proceedings were
 instituted it was not possible to transfer from the common law system to Chancery. Forum choice was a
difficult one for many prospective plaintiffs.

Piecemeal attempts to remedy these issues were made in a series of legislative efforts:

● s 61 of the Court of Chancery Procedure Act 1852 (Imp) gave Chancery the power to determine
incidental questions of law arising in equitable matters;
● Lord Cairns’ Act 1858 (Imp) gave Chancery power to award damages in lieu of or in addition to
remedies of specific performance and injunction;
● ss 48-51 of the Common Law Procedure Act 1854 (Imp) gave common law courts power to grant
injunctions and order discovery and interrogatories.

A new judicature system

A comprehensive review of the legal system addressed all these problems. The result was the English
Judicature Act 1873. This statute abolished the existing dual court systems of common law and Chancery,
replacing them with one court system: the High Court of Justice. The new High Court had five divisions,
including Chancery which heard cases involving equitable principles. A Court of Appeal heard appeals from
all five divisions. All of the divisions recognised equitable rights and interests and were able to provide
equitable remedies and entertain equitable defences. The common injunction was abolished.

The earlier decision of The Earl of Oxford’s Case (1615) 1 Ch Rep 1 was enshrined in s 25(11) of the
Judicature Act 1873, which provided that in the event of any conflict or variance between the rules of equity
and common law the rules of equity should prevail.

The impact of the reforms effected by the Judicature Act 1873 could be interpreted in two ways: the
orthodox interpretation or the ‘fusion fallacy’. Under the orthodox interpretation, separate bodies of legal and
equitable rules continued to exist despite the legislation. Support for this view lies in the s 25(11) stipulation
for a rule to apply in the event of a conflict between equity and common law. Under this view, the Act
brought about a fusion of administration: the one court system could administer both legal and equitable
principles. On the other hand, the ‘fusion fallacy’ supposed that the impact of the Act was to fuse the
principles of common law and equity into one coherent body of law, modifying the rules of each by
incorporating rules of the other. The result of this ‘fusion fallacy’ has been that some decisions have been
made that were simply not possible under the pre-Judicature Act system. These decisions fall into two
categories:

● where the award of a remedy not available in the pre-Judicature Act system at common law or in equity
was made;
● where the principles of one branch of the law were modified by the infusion of principles of the other
branch of the law.

The fusion fallacy

Walsh v Lonsdale (1882) 21 Ch D 9 is considered the most famous case exemplifying the fusion fallacy. In
that case, Sir George Jessel MR was considering the enforceability of a lease for a mill. His Honour appeared
to reason that the prevalence given to equity by the Judicature Act 1873 had removed all distinctions
between the common law and equity, saying at 14:

There is an agreement for lease under which possession has been given. Now since the
Judicature Act the possession is held under the agreement. There are not two estates as there
were formerly, one estate at common law by reason of the payment of the rent from year to year,
and an estate in equity under the agreement. There is only one Court and equity rules prevail in
it.
Other examples of decisions seen as evidence of the fusion fallacy at work include:

● Seager v Copydex Ltd [1967] 1 WLR 923, in which common law damages were awarded in an action for
breach of an entirely equitable obligation;
● Redgrave v Hurd (1881) 20 Ch D 1, in which damages were awarded for innocent misrepresentation. In
equity, innocent misrepresentation had previously only given rise to a right to rescind but no entitlement
to damages.

After considering argument based on the fusion fallacy, the New South Wales Court of Appeal in Harris v
Digital Pulse Pty Ltd (2003) 56 NSWLR 298 held by majority that exemplary damages were not an available
remedy in an action for breach of fiduciary obligation. In that case, exemplary damages had been sought for
a breach of fiduciary duty. The majority, Spigelman CJ and Heydon JA, rejected this argument on the basis
that it was a fallacy to suggest that the common law and equitable rules had become so inextricably linked or
fused that common law remedies should be available for breach of an entirely equitable obligation. Although
Mason P dissented, his Honour’s reasons at 335-9 offer a valuable analysis of the fusion fallacy concept,
describing it as ‘fallacious and historically unsound’.

Equity in Australia
The Supreme Court of New South Wales was established in 1823 by the Charter of Justice, letters patent
issued pursuant to the statutory authority of Imperial Act of 1823 4 Geo IV c 96. This law specifically
invested the Supreme Court with the equitable jurisdiction exercised by the Chancellor in Great Britain. This
power was continued by the Australian Courts Act 1828, 9 Geo IV c 83. Matters of equity and common law
were administered by the one court until the Administration of Justice Act 1840 (NSW) 4 Vict No 22
sanctioned the appointment of a judge to administer equitable matters separately from other court business.

Equity in Queensland
The equitable jurisdiction of the Supreme Court of Queensland was conferred by an Imperial Act passed in
1861 which established the court and was almost immediately reinforced by the Equity Act 1867 (Qld) and
the Supreme Court Act 1867 (Qld). The new judicature system in England was introduced in 1873 and
eventually all Australian colonies adopted the new system. Queensland adopted the system first, pursuant to
the Judicature Act 1876 (Qld). New South Wales eventually adopted the system pursuant to the Supreme
Court Act 1970 (NSW). Today, the basis of equitable jurisdiction in Queensland’s superior courts is found in
the Civil Proceedings Act 2011 (Qld).

Inferior courts also have an equitable jurisdiction: ss 68-70 of the District Court of Queensland Act 1967
(Qld); Barbagallo v J & F Catelan Pty Ltd [1986] 1 Qd R 245. Amendments to the District Court of
Queensland Act 1967 introduced in 1989 significantly enhanced that court’s equitable jurisdiction.

Maxims of equity

Significance of the maxims of equity

Equitable maxims express broad equitable concepts. They reflect the basic principles of equity and have
influenced its development. Akin to rules of thumb, they are of assistance to the court in determining
disputes but are not binding rules or principles of law.

The significance of the maxims was well put by Mason CJ and McHugh J in Corin v Patton (1990) 169 CLR
540 at 557 when considering the importance of one of the maxims:
 Like other maxims of equity, it is not a specific rule or principle of law. It is a summary statement of a
broad theme which underlies equitable concepts and principles. Its precise scope is necessarily ill-
defined and somewhat uncertain.

Important equitable maxims

(1) Equity acts in personam

This is one of equity’s oldest recorded maxims, dating back to The Earl of Oxford’s Case (1615) 1 Ch Rep 1.
Historically, equity’s orders and remedies were directed to the conscience of the parties rather than affecting
any particular property. Although the maxim remains relevant in a range of contexts, today many equitable
rights and interests are proprietary in nature. X v Twitter Inc [2017] NSWSC 1300.

(2) Equity will not suffer a wrong without a remedy

As illustrated above, historically equity was able to step in and provide an action or remedy where the
common law could not. Giumelli v Guimelli [1999] HCA 10.

(3) Equity follows the law

This maxim is true to the extent that equity has always recognised common law rights and interests. Motor
Terms Co Pty Ltd v Liberty Insurance Ltd (in liq) (1967) 116 CLR 177. Yet equity does not follow the law in
all things, with many equitable remedies designed to correct defects in the common law.

(4) When equities are equal, the first in time prevails

This maxim underpins the equitable principles of priorities, which will be studied later in this course through
relevant cases.

(5) One who seeks equity must do equity

A plaintiff seeking equitable relief must have satisfied his or her own legal and equitable obligations. This
maxim was applied in Maguire v Makaronis (1997) 188 CLR 449; Stern v McArthur (1988) 165 CLR 489.

(6) One who comes to equity must come with clean hands

Equity will examine the conduct of the plaintiff seeking equitable relief and may refuse relief if the plaintiff
is guilty of any pertinent legal impropriety. This maxim was relevant in Black Uhlans Inc v New South Wales
Crime Commission [2002] NSWSC 1060.

(7) Equity assists the diligent and not the tardy / Delay defeats equity

Undue delay can prejudice an equitable claim, although simple delay alone will not necessarily act as a bar to
relief. The best examples of this maxim at work are the equitable concepts of laches and acquiescence. Latec
Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265.

(8) Equity is equality

This maxim refers to equity’s tendency to distribute profits and losses in proportion to the parties’ claims and
liabilities. This maxim is well illustrated in the execution of trust powers and in partnerships. Chan v
Zacharia (1984) 154 CLR 178.

(9) Equity looks to the substance / intent and not the form

This maxim underpins the equitable doctrine of rectification. Essentially it refers to equity’s practice of
looking at the intent or substance of a contract or transaction rather than at its strict wording or at any failure
to comply with legal technicalities or formalities. Stern v McArthur (1988) 165 CLR 489.
(10) Equity regards as done that which ought to be done / Equity imputes an intention to fulfil an
obligation

Equity will occasionally regard an obligation as being fulfilled where a person is legally obliged to carry out
that obligation. This maxim is the basis of the doctrine in Walsh v Lonsdale (1882) 21 Ch D 9, the doctrine
of equitable conversion, equitable estoppel, and part performance.

(11) Equity will not assist a volunteer

Equity will not assist a party to a transaction who has provided no consideration. The most significant
exception to this rule arises in relation to the assistance provided by equity to beneficiaries of trusts, who are
usually volunteers. This maxim was discussed in the majority judgment in Corin v Patton (1990) 169 CLR
540 and is also relevant to equitable assignments.

Discussion Questions
1. Explain the role of the Chancellor in the 14th and 15th centuries.
2. What difficulties with the common law led to the establishment of the Court of Chancery?
3. What was the ‘use upon a use’ and what role did it play in the early development of equity?
4. Outline the circumstances leading to The Earl of Oxford’s Case in 1615. What was the eventual outcome
of the difficulties leading to this dispute?
5. What is the fusion fallacy? Your answer should refer to some modern examples of the fusion fallacy.
6. What role do the maxims of equity play in equitable doctrine? Identify some of the maxims which
remain relevant today.
Module 2 – Remedies

Learning resources

Prescribed reading
M W Bryan et al, chapters 2 – 6 & 23.

Further reading
M W Bryan et al, Sourcebook chapters 2 – 6 & 23.

Essential cases
Giumelli v Giumelli (1999) 196 CLR 101

Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298

Muschinski v Dodds (1985) 160 CLR 583

Redland Bricks Ltd v Morris [1970] AC 652

Jurisdiction to award equitable remedies

Refer to Module 1 to recap the historical availability of equitable remedies. Today, the basis of equitable
jurisdiction in Queensland’s superior courts is found in the Civil Proceedings Act 2011 (Qld). Queensland’s
inferior courts also have an equitable jurisdiction: see ss 68-9 of the District Court of Queensland Act 1967;
Barbagallo v J & F Catelan Pty Ltd [1986] 1 Qd R 245. Amendments to the District Court of Queensland
Act 1967 introduced in 1989 significantly enhanced that court’s equitable jurisdiction.

Equitable remedies are available in equity’s exclusive jurisdiction, where the right to relief arises in the
context of the protection of an equitable right or interest. Equitable remedies are also available in equity’s
auxiliary jurisdiction where the right to relief arises from a legal right or interest and damages would not be
an adequate remedy in all the circumstances of the case.

Equitable remedies are discretionary

Equity offers an extensive range of flexible remedies. Equitable remedies are not available as of right; they
are always awarded at the discretion of the court. This means that in determining whether or not the plaintiff
is entitled to a remedy the court will take into account all of the circumstances of the case, as in Giumelli v
Giumelli (1999) 196 CLR 101. A recent example is Plath v Plath & Anor [2020] QCA 43.
Personal and proprietary remedies
Personal and proprietary remedies are available in equity but equitable remedies all typically act in
personam. That is, equity directs a person to perform or abstain from performing a particular act or acts.
Personal remedies include injunctions, declarations, specific performance, equitable compensation and
accounts of profits. Proprietary remedies, or remedies in rem include equitable liens (charges / mortgages)
and constructive trusts.

Constructive trusts

What is a constructive trust?

A constructive trust is an equitable proprietary remedy. Unlike other trusts, constructive trusts arise by
operation of law irrespective of the intention of the parties. Constructive trusts arise where it would be
unconscionable for the party holding legal title to the property to deny the interest of another: Muschinski v
Dodds (1985) 160 CLR 583.

Equity imposes the trust, compelling the party with legal title to hold the property for the benefit of another.
A constructive trust effectively ‘obliges the holder of the legal title to surrender the property in question,
thereby bringing about a determination of the rights and titles of the parties’: Giumelli v Giumelli (1999) 196
CLR 101 at 112.

Imposing the trust prevents the party with legal title from retaining or asserting ‘beneficial ownership of
property to the extent that such retention or assertion would be contrary to equitable principle’: Muschinski v
Dodds (1985) 160 CLR 583 at 614 per Deane J. A constructive trust deprives the legal owner of its
beneficial interest in the property and has the potential to prejudice the rights of third parties.

Given the extreme nature of this remedy, it is ‘available only when warranted by established equitable
principles’ or by the legitimate extension of established principles: Muschinski v Dodds (1985) 160 CLR 583
at 615 per Deane J. Further, a constructive trust can only be imposed after the court has first considered
whether in all the circumstances of the case an alternative remedy exists which would resolve the matter
between the parties: Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566. For example,
where there has been a breach of fiduciary duty, other possible remedies might include an account of profits
or an equitable charge. In Giumelli v Giumelli (1999) 196 CLR 101, the High Court did not impose a
constructive trust as a remedy for equitable estoppel in circumstances where the minimum equity necessary
to do justice would be achieved through the payment of a monetary sum.

While it has been said that constructive trusts are not ‘a medium for the indulgence of idiosyncratic notions
of fairness and justice’, fairness and justice are notions that are important to informing unconscionability:
Muschinski v Dodds (1985) 160 CLR 583 at 615-6 per Deane J; see also Giumelli v Giumelli (1999) 196
CLR 101.

Constructive trust both a trust and a remedy

Since a constructive trust has all the qualities of a trust, it is by nature an equitable ‘institution’. Key
differences include the fact that it can arise irrespective of the intention of the parties and that it is imposed
by order of the court. These differences do not prevent the constructive trust from being a type of trust. Since
the purpose of constructive trusts is to prevent unconscionable insistence upon strict legal rights, a
constructive trust is also a remedy. In Australia it has been accepted that a constructive trust is both an
equitable institution and a remedy: Muschinski v Dodds (1985) 160 CLR 583. This may not be the case in
other common law jurisdictions.
When does a constructive trust arise?
Constructive trusts are imposed by the court. This does not mean to say that the constructive trust cannot
exist prior to the date of the court order recognising the trust. The trust may be recognised to have arisen well
before the date of the court order. For example, the constructive trust may be considered to have arisen when
the event occurs which gives rise to the claim for the constructive trust: Parsons v McBain (2001) 109 FCR
120.

Where will a constructive trust arise?

Constructive trusts may arise in many contexts including breach of fiduciary duty, unconscionable
transactions, equitable estoppel, breach of confidence and unconscionable retention of a beneficial interest in
property.

Constructive trusts are often an appropriate remedy for breach of fiduciary duty. Such a constructive trust is
likely to arise at the time of the breach of duty: Zobory v Federal Commissioner of Taxation (1995) 64 FCR
86.

Where a business is the product of the breach of fiduciary duty, the court may impose a constructive trust
over the whole of the business: Timber Engineering Co Pty Ltd v Anderson [1980] 2 NSWLR 448; c.f.
Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41, in which a fiduciary relationship
could not be established on the facts.

Where the trustee of a tenancy obtains a renewal of the lease, the trustee holds the lease on a constructive
trust for the beneficiaries of the trust. This is the rule in Keech v Sandford (1726) 25 ER 223. This rule raises
an irrebuttable presumption of a breach of fiduciary duty which in turn gives rise to the constructive trust:
Chan v Zacharia (1984) 154 CLR 178.

Constructive trusts are not considered to be an appropriate remedy for breach of fiduciary duty where the
benefit obtained from the breach is a loan of money. In such circumstances the amount of the loan would be
recoverable at law as a debt from the borrower: Daly v Sydney Stock Exchange Ltd (1986) 160 CLR 371

There is some uncertainty as to whether Australian courts will impose a constructive trust upon a bribe or
secret commission received in breach of fiduciary duty. In the old English case of Lister v Stubbs (1890) 45
Ch D 1, the court did not construe the facts as giving rise to a constructive trust imposed upon secret
commissions obtained in breach of fiduciary duty. However, the courts did so in Attorney-General for Hong
Kong v Reid [1994] 1 NZLR 1; [1994] 1 AC 324 and Grimaldi v Chameleon Mining NL (No 2) [2012]
FCAFC 6; (2012) 200 FCR 296. See also Black v S Freedman & Co [1910] HCA 58; (1910) 12 CLR 105 in
relation to stolen monies.

A constructive trust cannot be imposed over property the subject of a contract entered into in breach of
fiduciary duty unless and until the contract is rescinded. If rescission is not available, a constructive trust
cannot arise: Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd (1996) 39
NSWLR 143

A constructive trust may be imposed where there is an unconscionable retention of a benefit: Muschinski v
Dodds (1985) 160 CLR 583. The constructive trust is a remedy imposed to prevent the party with legal title
from retaining or asserting ‘beneficial ownership of property to the extent that such retention or assertion
would be contrary to equitable principle’: Muschinski v Dodds (1985) 160 CLR 583 at 614 per Deane J;
Baumgartner v Baumgartner (1987) 164 CLR 137.

In Muschinski v Dodds (1985) 160 CLR 583 at 615, Deane J stipulated that while a constructive trust will not
be imposed to indulge ‘idiosyncratic notions of fairness and justice’, notions of fairness and justice are
relevant to informing whether or not conduct has been unconscionable. Deane J further explained at 620 the
circumstances in which equity would give relief from unconscionable conduct identified through the
application of equitable principles:
 Those circumstances can be more precisely defined by saying that the principle operates in a case where
the substratum of a joint relationship or endeavour is removed without attributable blame and where the
benefit of money or other property contributed by one party on the basis and for the purposes of the
relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it
was not specifically intended or specially provided that that other party should so enjoy it. The content of
the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit
of the relevant property to the extent that it would be unconscionable for him so to do.

The High Court subsequently applied this principle in Baumgartner v Baumgartner (1987) 164 CLR 137. In
that case financial resources had been pooled by partners in a de facto relationship. Mason CJ, Wilson and
Deane JJ explained the application of the principle in this way at 149-50:

[I]n circumstances where the parties have lived together for years and have pooled their resources and
their efforts to create a joint home, […] they should share the beneficial ownership equally as tenants in
common, subject to adjustment to avoid any injustice which would result if account were not taken of the
disparity between the worth of their individual contributions either financially or in kind. The question
[…] is whether any such adjustment is necessary […] to avoid any injustice which would otherwise
result by reason of disparity between individual financial contributions.

Their Honours then proceeded to apply the principle to the facts before them:

Their contributions, financial and otherwise, to the acquisition of the land, the building of the house, the
purchase of furniture and the making of their home, were on the basis of, and for the purposes of, that
joint relationship. In this situation the appellant’s assertion, after the relationship had failed, that the
Leumeah property, which was financed in part through the pooled funds, is his sole property, is his
property beneficially to the exclusion of any interest at all on the part of the respondent, amounts to
unconscionable conduct which attracts the intervention of equity and the imposition of a constructive
trust at the suit of the respondent.

These fundamental principles have subsequently been raised in other cases such as:

Carson v Wood (1994) 34 NSWLR 9

Parij v Parij (1997) 72 SASR 153

West v Mead [2003] NSWSC 161

c.f. earlier case of Allen v Snyder [1977] 2 NSWLR 685 (in relation to ‘common intention’ constructive
trusts, where the evidence was insufficient)

Property disputes arising in de facto relationships are now the subject of legislation in all Australian
jurisdictions to adjust the rights of the parties, taking into account what is ‘just and equitable’ in the
circumstances of the case.

General equitable principles remain relevant to relationships not falling within the ambit of any relevant
legislation.

Specific performance

What is specific performance?

Specific performance is an equitable remedy where the court compels a party to a contract to perform his or
her contractual obligations.
Specific performance, in its proper sense, applies to executory contracts, and in its narrow sense applies to
executed contracts - J C Williamson Ltd v Lukey and Mullholland (1931) 45 CLR 282.

Key elements of specific performance

A party seeking to bring an action for specific performance must be able to establish that a valid and binding
contract for valuable consideration exists between the parties: Re Cook’s Settlement Trust [1965] Ch 902. A
deed under seal is not sufficient: Jefferys v Jefferys (1841) 41 ER 443. Specific performance is not available
where common law damages would amount to an adequate remedy: Loan Investment Corp of Australasia v
Bonner [1970] NZLR 724.

Common law damages have never been considered an adequate remedy where the property is unique, as is
the case with land: Adderley v Dixon (1824) 57 ER 239; Pianta v National Finance (1964) 38 ALJR 232.
The test is whether common law damages provide a sufficient remedy. While this will generally be the case
in relation to contracts for the sale of personal property, specific performance has been awarded where the
contract was for the sale of a specific and unique chattel:

Duke of Somerset v Cookson (1735) 24 ER 1114

Aristoc Industries Pty Ltd v R A Wenham (Builders) Pty Ltd [1965] NSWR 581

Contracts for the advancement of money are not specifically enforceable as damages will typically provide
an adequate remedy: The South African Territories Ltd v Wallington [1898] AC 309. There are a number of
exceptions to this general rule. For example, agreements to grant annuities are specifically enforceable and
the order may also confer a benefit on a 3rd party if the conditions are met: Keenan v Handley (1864) 46 ER
384; Beswick v Beswick [1968] AC 58.

Specific performance has also been ordered where commercial necessity provides the justification – Behnke
v Bede Shipping Co Ltd [1927] 1 KB 649, 661; Sky Petroleum Ltd v VIP Petroleum Ltd [1974] 1 All ER 954.

When is the court likely to refuse to grant specific performance?

Specific performance is granted at the discretion of the court. The court will consider all the circumstances of
the case in determining whether or not to grant the decree. Certain factors act as a bar to a decree of specific
performance. For example, specific performance is unlikely to be awarded where:

● the contract can be set aside for misrepresentation or mistake: Tamplin v James (1879) 15 Ch D 215;
● the contract has been procured through unconscionable conduct: Blomley v Ryan (1956) 99 CLR 362;
● specific performance would inflict great hardship on any of the parties to the contract - Dowsett v Reid
(1912) 15 CLR 695; Patel v Ali [1984] 1 Ch 283; ANZ Executors and Trustees Ltd v Humes Ltd [1990]
VR 615 or to a third party: Thomas v Dering (1837) 48 ER 488;
● the plaintiff is in breach. Exceptions arise here where the defendant’s conduct has contributed to the
breach (Legione v Hateley (1983) 152 CLR 406) or where the breach is a trivial breach of an
intermediate term or a breach of warranty: Mehmet v Benson (1965) 113 CLR 295. This reflects the
maxim that ‘one who comes to equity must come with clean hands’;
● the plaintiff is not ready, willing and able to perform his or her contractual obligations. This reflects the
maxim that ‘one who seeks equity must do equity’;
● specific performance is only sought in relation to part of the contract. The court will not grant specific
performance unless it could have compelled specific performance of the whole contract: Ryan v Mutual
Tontine Westminster Chambers Association [1893] 1 Ch 116;
● the contract, if specifically enforced, would required the continued supervision of the court: J C
Williamson Ltd v Lukey and Mullholland (1931) 45 CLR 282; Co-operative Insurance Society Ltd v
Argyll Stores (Holdings) Ltd [1998] AC 1;
● the contract is for personal services or specific performance would compel the parties to continue a
personal relationship: J C Williamson Ltd v Lukey and Mullholland (1931) 45 CLR 282; Patrick
Stevedores Operations No 2Pty Ltd v Maritime Union of Australia [1998] HCA 30;
● there is a lack of mutuality at the time of the contract: Boyd v Ryan (1947) 48 SR (NSW) 163; Price v
Strange [1978] 1 Ch 337. If the court is to compel performance of the defendant’s obligations under the
contract, the remedy must be mutual in that the plaintiff’s obligations to the defendant must equally be
able to be specifically enforced. For this reason specific performance is not generally available where the
plaintiff is a minor.
● performance would be futile or impossible: MI Designs Pty Ltd v Dunecar Pty Ltd [2000] NSWSC 996
● the contract is unenforceable at law for failure to comply with statutory requirements of writing and the
circumstances do not perpetuate a fraud: Halloran v Mins Administering National Parks and Wildlife Act
1974 [2006] HCA 3. The statutory requirements of writing originated in the Statute of Frauds 1677 and
today have been encapsulated in the following statutes:
Property Law Act 1974 (Qld): s 59
Conveyancing Act 1919 (NSW): s 54A
Law of Property Act 1936 (SA): s 26
Conveyancing and Law of Property Act 1884 (Tas): s 36
Instruments Act 1958 (Vic): s 126
Property Law Act 1969 (WA): s 34.

However, the court may grant an order for specific performance where these writing requirements have
not been fulfilled if the party seeking the decree has undertaken sufficient acts of part performance in
reliance upon the contract. The acts of part performance must be ‘unequivocally and in their own nature,
referable to some such agreement as that alleged’: Maddison v Alderson (1883) 8 App Cas 467 at 481 per
Lord Selbourne; McBride v Sandland (1918) 25 CLR 69; Regent v Millett (1976) 133 CLR 679; Pipikos
v Trayans [2018] HCA 39.

Injunctions

What is an injunction?
An injunction is an order of the court which either compels a party to perform or prohibits it from performing
a certain act. Injunctions are a flexible and powerful remedy which can take various forms:

● a prohibitory injunction is an order of the court restraining a person from doing a particular act;
● a mandatory injunction is an order of the court compelling a person to perform a particular act;
● an interlocutory injunction can be sought before the trial of a matter to preserve the status quo between
the parties until there can be a full trial of the issues;
● a final injunction stands as a final remedy of the matter between the parties.

Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1.
Jurisdiction
Module 1 explored the historical origins of equity and outlined the history of the court’s power to award
equitable remedies. Today, the power to award injunctions is enshrined in statute. When it appears to the
court that it is just or convenient to do so, the court can grant final or interlocutory injunctions on the terms
and conditions it thinks fit. These statutory provisions found in Australian jurisdictions, are generally
considered to reflect but not expand the court’s power to grant injunctions at common law or in equity:
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380.

Injunctions awarded in equity’s exclusive jurisdiction protect purely equitable rights such as a right to
confidentiality (Argyll v Argyll [1967] 1 Ch 302) or the rights of a beneficiary under a trust to due
administration: Park v Dawson [1965] NSWR 298. In order to obtain an injunction in equity’s exclusive
jurisdiction, a plaintiff must first establish an equitable right: Argyll v Argyll [1967] 1 Ch 302. Common law
damages are not available for equitable wrongs, so any inquiry as to the adequacy of damages as a remedy
would be irrelevant.

Injunctions are awarded in equity’s auxiliary jurisdiction to defend common law or statutory rights. In order
to obtain an injunction in equity’s auxiliary jurisdiction, the plaintiff must establish a legal or statutory right
recognised by equity: J C Williamson Ltd v Lukey and Mullholland (1931) 45 CLR 282; Australian
Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199. An injunction will not be
granted in equity’s auxiliary jurisdiction if damages or another common law remedy would be adequate:
Aristoc Industries Pty Ltd v R A Wenham (Builders) Pty Ltd [1965] NSWR 581.

Quia timet injunctions

A quia timet injunction can be sought where it is anticipated that rights may be threatened or breached:
Redland Bricks Ltd v Morris [1970] AC 652.

Interlocutory injunctions
Interlocutory injunctions seek to maintain the status quo between the parties until there can be a full trial of
the matter which finally determines the rights of the parties. The court must be satisfied that there is a serious
question to be tried, that the balance of convenience favours the granting of an injunction and that the
plaintiff ‘will suffer irreparable injury for which damages will not be an adequate compensation unless an
injunction is granted’: Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153 per Mason
ACJ; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199. See also:

Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
American Cyanamid Co v Ethicon Ltd [1975] AC 396

Murphy v Lush (1986) 60 ALJR 523

Queensland Industrial Steel Pty Ltd v Jensen [1987] 2 Qd R 572.

In determining whether or not there is a serious question to be tried, the court will look to the evidence to
determine whether there is a probability that the plaintiff will be held entitled to relief after a full trial of the
action:

Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148

Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199.

In determining where the balance of convenience lies, the test as stated in Beecham Group Ltd v Bristol
Laboratories Pty Ltd (1968) 118 CLR 618 at 623 is
 whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were
refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were
granted.

The plaintiff will typically be required to give an undertaking to pay the damages of the defendant flowing
from the granting of the injunction if it is later established that the interlocutory injunction should not have
been granted:

Ansett Transport Industries (Operations) Pty Ltd v Halton (1979) 25 ALR 639
Cambridge Credit Corporation Ltd v Surfers’ Paradise Forests Ltd [1977] Qd R 261.

Injunctions to enforce negative covenants

A prohibitory injunction may be awarded to restrain a breach of a negative covenant in a contract. See, for
example:

Dalgety Wine Estates Pty Ltd v Rizzon (1979) 141 CLR 552

This form of injunction was explained by Lord Cairns LC in Doherty v Allman (1878) 3 App Cas 709 at 720
as amounting to the specific performance of a negative bargain made by the parties ‘with their eyes open,
between themselves’:

If parties, for valuable consideration, with their eyes open, contract that a particular thing shall not be
done, all that a Court of Equity has to do is to say, by way of injunction, that which the parties have
already said by way of covenant, that the thing shall not be done; and in such case the injunction does
nothing more than give the sanction of the process of the Court to that which already is the contract
between the parties.

The negative covenant must be negative in substance but may be either express or implied:

Administrative & Clerical Officers’ Association (Commonwealth Public Service) v Commonwealth

(1979) 53 ALJR 588
Wolverhampton and Walsall Railway Co v London and North Western Railway Co (1873) LR 16 Eq 433.

The adequacy of damages is largely irrelevant as the court is essentially sanctioning that which has already
been agreed by the parties. However, if the negative stipulation arises in a contract for the sale of chattels,
equity will not grant the injunction if damages would provide an adequate remedy:

Aristoc Industries Pty Ltd v R A Wenham (Builders) Pty Ltd [1965] NSWR 581
Sky Petroleum Ltd v VIP Petroleum Ltd [1974] 1 All ER 954.

The effect of enforcing the negative covenant is a question of fact and so will involve a consideration of the
circumstances of each case. An injunction will not be granted where the order would be akin to awarding
specific performance of a contract for personal services or a contract requiring the continued supervision of
the court for which equity would not otherwise grant specific performance: J C Williamson Ltd v Lukey and
Mullholland (1931) 45 CLR 282; c.f. Hill v C A Parsons & Co Ltd [1972] Ch 305.

An injunction to compel performance of a negative covenant will not lie if enforcing the negative covenant
would leave the defendant with little choice other than to remain idle ‘and starve’ or perform the positive
covenants in a contract for personal services.

Lumley v Wagner (1852) 42 ER 687; Warner Bros Pictures Inc v Nelson [1937] 1 KB 209
Page One Records Ltd v Britton [1967] 3 All ER 822

Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337

Injunctions enforcing statutory rights
Injunctions may be conferred to protect a private right arising under a statute: Bradley v Commonwealth
(1973) 128 CLR 557; King v Goussetis (1986) 5 NSWLR 89. Where a public right arising under a statute is
threatened, the court may in its discretion grant an injunction to enforce the statutory right in order to protect
the public interest: Cooney v Council of the Municipality of Ku-ring-gai (1963) 114 CLR 582.

Ordinarily the proper plaintiff is the Attorney-General, but statute may confer standing on a private
individual even where no private right of the individual has been infringed. At general law, a private
individual may seek an injunction to restrain a public wrong if the plaintiff has had a private right infringed
or suffered special damage by virtue of the public wrong: Boyce v Paddington Borough Council [1903] 1 Ch
109.

Ordinarily equity is unable to confer an injunction to prevent a crime, since equity does not have a criminal
jurisdiction. However, an injunction may lie in equity to prohibit a crime if the act would also constitute
contravention of a statutory public right or in an emergency:

Attorney-General v Huber (1971) 2 SASR 142

Attorney General v Chaudry [1971] 3 All ER 938.

Mandatory injunctions
Mandatory injunctions compel performance of a positive act. Mandatory injunctions can compel a party who
has committed a wrong under a contract or statute to undo or repair the consequences of his or her wrong.
This restorative type of mandatory injunction can only be conferred at the discretion of the court where
damages are not an adequate remedy and the plaintiff can show ‘a very strong probability upon the facts that
grave damage will occur to him in the future’: Redland Bricks Ltd v Morris [1970] AC 652 at 665.

A mandatory injunction can also compel a party to perform a positive contractual obligation and in this
respect is akin to specific performance.

Mareva injunctions
A Mareva injunction / order is an interlocutory injunction used to preserve assets until trial. Mareva
injunctions specifically prevent the defendant from dissipating assets in a manner which may render
ineffective any ultimate judgment in the matter:

Mareva Compania Naviera SA v International Bulkcarriers SA [1975] 2 Lloyd’s Rep 509

Jackson v Sterling Industries Ltd (1987) 162 CLR 612.

While the jurisdictional basis for these injunctions is enshrined in statute, the court has inherent jurisdiction
to prevent abuse of process: Cardile v LED Builders Pty Ltd (1999) 198 CLR 380.

A plaintiff seeking a Mareva injunction must demonstrate a prima facie cause of action; that is, that there is a
real risk that the defendant will dissipate assets such that any judgment eventually obtained by the plaintiff
could not be satisfied: Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319. Before the court
makes an order for a Mareva injunction, the plaintiff must first provide an undertaking as to damages.

Anton Piller orders

An Anton Piller order is an interlocutory mandatory injunction used to preserve evidence until trial. An
Anton Piller order compels the defendant to allow the plaintiff to enter its premises, inspect evidence, make
copies or remove certain documents, objects or other property: Anton Piller KG v Manufacturing Processes
Ltd [1976] 1 Ch 55.

The order has been described as an extraordinary remedy, designed to obtain and preserve vital evidence
pending the final determination of the plaintiff’s claim in a proceeding: Long v Specifier Publications Pty Ltd
(1998) 44 NSWLR 545 at 547. Anton Piller orders are designed to avoid the destruction of evidence and
assist in ensuring that all the evidence is available upon a full trial of the matter: Rank Film Distributors Ltd
v Video Information Centre [1982] AC 380.

The plaintiff must make out all the requirements of an interlocutory injunction and, in addition must
demonstrate a very strong prima facie case and provide clear evidence that the defendant possesses
incriminating or damaging evidence and that there is a real risk that that evidence might be destroyed by the
defendant before an application can be brought between the parties: Anton Piller KG v Manufacturing
Processes Ltd [1976] 1 Ch 55.

These additional safeguards exist due to the extraordinary nature of the remedy: Columbia Picture Industries
Inc v Robinson [1987] 1 Ch 38.

Equitable Damages under Lord Cairns’ Act

Lord Cairns’ Act expanded equity’s power to award damages by conferring on courts the capacity to award
damages in addition to or in lieu of an injunction or specific performance: s 2 of the Chancery Amendment
Act 1858 (Imp). This provision enhanced the court’s powers by allowing it to ‘do “complete justice” between
parties by awarding damages in those cases in which it had formerly refused equitable relief in respect of a
legal right and left the plaintiff to sue for damages at common law’: Wentworth v Woollahra Municipal
Council (1982) 149 CLR 672 at 676.

The court’s jurisdiction to award damages under Lord Cairns’ Act was explored in Wentworth v Woollahra
Municipal Council (1982) 149 CLR 672. Jurisdiction arises when ‘Chancery has jurisdiction to entertain the
application’. Damages under Lord Cairns’ Act would be available only if the court could have awarded
specific performance or an injunction by way of relief. Relief is discretionary, but there has been some
emergence of general rules outlining the circumstances in which relief should be awarded. These general
rules have been criticised as unnecessarily fettering the discretion of the court. See, for example, the ‘good
working rule’ espoused in Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 and considered in
Emprja Pty Ltd v Red Engine Group Pty Ltd [2017] QSC 33.

These provisions have been enacted in Australian jurisdictions for example, Equity Act 1867 (Qld) s 62.
Although the Queensland legislation was subsequently repealed, s 62 is considered to have remained in force
due to savings provisions in the repealing statutes: Barbagallo v J & F Catelan Pty Ltd [1986] 1 Qd R 245 at
250-1. See now Civil Proceedings Act 2011 (Qld) s 8.

Waltons Stores v Maher [1988] HCA 7; (1988) 164 CLR 387; Giller v Procopets (2008) 24 VR 1.
Johnson v Agnew [1980] AC 367; Break Fast Investments Pty Ltd v PCH Melbourne Pty Ltd (2007) 20 VR
311.

Account of profits
An account of profits is a discretionary equitable remedy for equitable wrongs. The general Australian
position is that an account of profits is not awarded for breach of contract, unlike the English position in
Attorney General v Blake [2001] 1 AC 268. The objective of an account of profits is to have the defendant
account to the plaintiff for the net gain made by the defendant pursuant to the breach. It is essentially a
profit-stripping remedy. An account of profits is not punitive: Harris v Digital Pulse Pty Ltd (2003) 56
NSWLR 298. Rather, an account of profits ensures that the defendant is not unjustly enriched: Dart
Industries Inc v Decor Corporation Pty Ltd (1993) 179 CLR 101. A plaintiff may seek an account of profits
or equitable compensation but not both: Warman International Ltd v Dwyer (1995) 182 CLR 544.

In assessing the profit, the court will be guided by standard accounting practices but is entitled to make
reasonable approximations. Revenue and capital gain are both taken into account, making allowances for
expenses, personal skills and exertion of the defendant. Apportionment may be appropriate where profits can
be attributed to more than one source, only one of which is the breach of the defendant.

Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544
Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd [2018]
HCA 43; (2018) 360 ALR 1

Victoria University of Technology v Wilson (2006) 68 IPR 597

Equitable compensation
Equity in its inherent jurisdiction can in its discretion award equitable compensation to a plaintiff: Day v
Mead [1987] 2 NZLR 443. A plaintiff may seek an account of profits or equitable compensation but not
both: Warman International Ltd v Dwyer (1995) 182 CLR 544.

The objective of equitable compensation was well explained by Street J in Re Dawson (dec’d) (1966) 84 WN
1 (NSW) 399 at 404-5 in relation to a trustee who was required to restore assets to the trust of which the trust
had been deprived as a result of misappropriation by the trustee:

[T]he trustee is liable to place the trust estate in the same position as it would have been in if no breach
had been committed. Considerations of causation, foreseeability and remoteness do not readily enter into
the matter. […] The principles embodied in this approach do not appear to involve any inquiry as to
whether the loss was caused by or flowed from the breach. Rather the inquiry in each instance would
appear to be whether the loss would have happened if there had been no breach.

See also:

O’Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262

Nocton v Lord Ashburton [1914] AC 932.

While the objectives of equitable compensation are restitutionary rather than compensatory, the result is
likely to be the same.

Re Dawson (dec’d) (1966) 84 WN 1 (NSW) 399

Target Holdings Ltd v Redferns [1996] AC 421

Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46

Equitable compensation should not include any exemplary award: Harris v Digital Pulse Pty Ltd (2003) 56
NSWLR 298; Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46; (but c.f. Aquaculture Corporation
v NZ Green Mussel Co Ltd [1990] 3 NZLR 299).

Considerations that a court should take into account in considering whether or not to exercise its discretion to
award equitable compensation were considered in Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165.

Factors usually relevant to a determination of damages at common law have sometimes been taken into
account in determining equitable compensation (for example, Day v Mead [1987] 2 NZLR 443), although the
High Court has not been inclined to adopt this approach:
 Maguire v Makaronis (1997) 188 CLR 449
Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165.

Declarations

Jurisdiction
Equity’s historical jurisdiction to give relief in the form of a declaration was limited to situations where some
other equitable relief was also granted. A declaration could not be made as an exclusive form of final relief
until the reforms brought about by the Judicature Act 1873. Today, declarations are awarded pursuant to
statute. Declarations are often sought in public law: NSW Fish Authority v Phillips [1970] 1 NSWR 725

When can the court award declaratory relief?

The court’s power to award discretionary relief is broad: Ainsworth v Criminal Justice Commission (1992)
175 CLR 564; Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421. Locus standi needs to be
established as a threshold requirement: Australian Conservation Foundation Inc v Cth (1980) 146 CLR 493;
Onus v Alcoa of Australia Ltd (1981) 149 CLR 27

A declaration can be made even where another remedy is available: Ainsworth v Criminal Justice
Commission (1992) 175 CLR 564.

A court can refuse to give declaratory relief where the issue is merely hypothetical or academic: University
of New South Wales v Moorhouse (1975) 133 CLR 1; cf. Commonwealth v Sterling Nicholas Duty Free Pty
Ltd (1972) 126 CLR 297.

The court’s power to award declaratory relief can be restricted by statute. This restriction can be express or
implied from clear and unambiguous language in the statute: Telstra Corporation Ltd v Australian
Telecommunications Authority (1995) 133 ALR 417

While the court’s broad power to award declaratory relief does extend to criminal law, the court is only
likely to exercise its discretion to order declaratory relief where extraordinary circumstances exist and where
criminal proceedings have not yet commenced: Crouch v Commonwealth (1948) 77 CLR 339; Sankey v
Whitlam (1978) 142 CLR 1; Csidei v Anderson [1977] 1 NSWLR 747.

Discussion Questions
Question 1

Catherine and Finn are employees of D2L, a business selling software packages to large corporations. D2L’s
head office is in Sydney. Catherine is the general manager of the Queensland division and Finn is a
salesperson in the Brisbane office.

For some time now Catherine and Finn have been fraudulently skimming funds from D2L. Catherine and
Finn decide that they will incorporate a new company to take their fraud to a new level: they are going to
divert new business enquiries to their new company, which they decide to call Secret Software Solutions.
They use the funds that they have fraudulently diverted from D2L to set up the new business.
Secret Software develops a thriving trade based entirely on the diversion of new business enquiries at D2L.
All Secret Software business is conducted from D2L premises. While continuing to masquerade as diligent
employees of D2L, Catherine and Finn use D2L’s phones, photocopiers, computers and office furniture to
run the Secret Software business. They employ D2L’s marketing techniques, customer lists and their
knowledge of what those customers might be interested in ordering in future to further develop the business.
Secret Software was doing so well that Catherine and Finn decided to legitimately expand the business by
setting up a new division on the Gold Coast. The set-up of the Gold Coast operation is funded in part by the
profits of Secret Software and in part by Catherine’s and Finn’s personal savings. Finn in particular has
worked very long hours to get this business up and running and eventually the Gold Coast division has
become far more profitable than the business run out of the Brisbane offices of D2L.

D2L has discovered the extent of Catherine and Finn’s fraud and deception and seeks a remedy.

Assuming (because we have not studied Module 7 on Fiduciary Duties) that Catherine and Finn are in
breach of fiduciary obligations to D2L, advise D2L on its prospects of success in a claim for a constructive
trust over the whole of the business of Secret Software.

Question 2

Discuss the bars to equitable relief, including those relating to equitable maxims. Please provide case
examples.
Module 3 – Estoppel in equity

Learning resources

Prescribed reading
M W Bryan et al, chapters 7 & 8.

Further reading
M W Bryan et al, Sourcebook, chapters 7 & 8.

Essential cases

Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1

Commonwealth v Verwayen (1990) 170 CLR 394

Giumelli v Giumelli (1999) 196 CLR 101

Je Maintiendrai Pty Ltd v Quaglia (1980) 26 SASR 101

Priestley v Priestley [2017] NSWCA 155

Sidhu v Van Dyke (2014) CLR 505

Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

What is estoppel?
A party can be estopped from exercising its strict legal rights in certain circumstances. Estoppel arises both
at law and in equity. The various categories of estoppel at law and in equity are complex and can often
overlap. Broad explanations of the doctrine tend to oversimplify the complex forms estoppel can take both at
common law and in equity.

Brief mention is made here of common law estoppel for the purpose of ensuring your understanding of
equitable estoppel.

Distinguishing estoppel at common law and in equity

While estoppel at common law and estoppel in equity have some similarities and can even overlap, there are
also important differences.
Defence or cause of action
Estoppel at common law is used as a defence, not a cause of action: a shield, not a sword. Essentially it is
used as a rule of evidence to prevent one party from denying certain facts. Yet it is possible in equity to use
estoppel as a cause of action.

Remedies
Relief for estoppel at common law is usually narrowly confined. Equity, however, will seek to do the
minimum necessary to result in justice between the parties: Waltons Stores (Interstate) Ltd v Maher (1988)
164 CLR 387. Equity seeks to accomplish this by focusing upon the unconscionable insistence on strict legal
rights.

Subject of the representation

Not all forms of estoppel at common law involve representations. Yet most estoppels arise where a party
insists upon enforcement of her or his strict legal rights in circumstances where that party had earlier made a
representation to the other party causing the other party to assume that those strict legal rights wouldn’t be
enforced against it.

At common law, where the estoppel involves a representation, the representation must be a representation as
to a presently existing fact. Equity takes a broader approach. In equity, the representation can relate to a
present or future state of affairs.

Estoppel at common law and in equity

Estoppel by deed
Parties to a deed are estopped at common law from denying facts stipulated in the deed, especially those
facts set out in the preamble of the deed. Preambles often contain a concise summary of the pertinent facts
leading to the deed.

This form of estoppel can only be raised by the parties to the deed.

Estoppel by judgment
Here the parties will have already litigated a dispute between them with judgment being handed down. If the
parties are subsequently involved in litigation, they are estopped at common law from denying anything
decided between them in the judgment of that earlier litigation.

Estoppel in pais
Estoppel in pais seems to exist in both legal and equitable jurisdictions, yet often the distinction is unclear.
To better understand estoppel in pais, you are encouraged to read the High Court decisions that have sought
to explain and develop this complex doctrine:

Grundt v Great Boulder Gold Mines Pty Ltd (1937) 59 CLR 641
 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.

Estoppel in pais consists of three forms of estoppel arising either at common law or in equity: common law
estoppel, estoppel by representation and estoppel by convention.

Common law estoppel

A party will be estopped at common law from denying an assumption where:

● the assumption arose because of an act of that party;

● the relationship between that party and another has been formed on the basis of the assumption;
● the other party accepted the assumption;
● the other party will suffer detriment if the assumption is not fulfilled.

See further Legione v Hateley (1983) 152 CLR 406, particularly Mason and Deane JJ at 430.

Estoppel by representation
Estoppel by representation has equitable origins but found a place in the common law during the 19th
century.

The elements of estoppel by representation were stated by Jordan CJ in Franklin v Manufacturers Mutual
Insurance Ltd (19365) 36 SR (NSW) 76 at 82:

In order that this type of estoppel may arise, it is necessary that (1) by word or conduct (2) reasonably
likely to be understood as a representation of fact, (3) a representation of fact, as contrasted with a mere
expression of intention, should be made to another person, either innocently or fraudulently, (4) in such
circumstances that a reasonable man would regard himself as invited to act upon it in a particular way,
(5) and that the representation should have been material in inducing the person to whom it was made to
act on it in that way (6) so that his position would be altered to his detriment if the fact were otherwise
than as represented.

In Jorden v Money (1854) 10 ER 868, the House of Lords clearly stated that estoppel was limited to
representations of existing facts rather than intention or a future matter. Since the statement was possibly
intended to extend to all forms of estoppel, the decision has posed continuing difficulties. In practice, it
became the workable distinction between common law and equitable estoppel: estoppel at common law was
confined to representations of present fact. See Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR
387.

Estoppel by convention
Estoppel by convention involves a mutual assumption adopted by the parties as forming the usual basis of
their dealings together. Unlike estoppel by representation, it is not based on representation. The parties are
estopped from denying between themselves the truth of assumptions adopted by them and underlying their
dealings together. This form of estoppel is only recognised at common law.

Con-Stan Industries of Australia Pty Ltd v Norwich Winterhur Insurance (Australia) Ltd (1986) 160
CLR 226
Hawker Pacific Pty Ltd v Helicopter Charter Pty Ltd (1991) 22 NSWLR 298

Corumo Holdings Pty Ltd v Itoh Ltd (1991) 24 NSWLR 370

Promissory estoppel
Denning J in Central London Property Trust Ltd v High Trees House Ltd [1947] 1 KB 130 at 134-5 stated:

The law has not been standing still since Jorden v Money. There has been a series of decisions over the
last fifty years which, although they are said to be cases of estoppel are not really such. They are cases
in which a promise was made which was intended to create legal relations and which, to the knowledge
of the person making the promise, was going to be acted on by the person to whom it was made, and
which was in fact so acted on. […] In each case the court held the promise to be binding on the party
making it, even though under the old common law it might be difficult to find any consideration for it.
The courts have not gone so far as to give a cause of action in damages for the breach of such a promise,
but they have refused to allow the party making it to act inconsistently with it. It is in that sense, and that
sense only, that such a promise gives rise to an estoppel. The decisions […] afford a sufficient basis for
saying that a party would not be allowed in equity to go back on such a promise. In my opinion, the time
has now come for the validity of such a promise to be recognised.

This reasoning underpins the modern doctrine of promissory estoppel to such an extent that the doctrine is
often called High Trees estoppel. Subsequently, in Combe v Combe [1951] 2 KB 215 at 220, this form of
estoppel was explained as follows:

[W]here one party has, by his words or conduct, made to the other a promise or assurance which was
intended to affect the legal relations between them and to be acted on accordingly, then, once the other
party has taken him at his word and acted on it, the one who gave the promise or assurance cannot
afterwards be allowed to revert to the previous legal relations as if no such promise or assurance had
been made by him, but he must accept their legal relations subject to the qualification which he himself
has so introduced, even though it is not supported in point of law by any consideration but only by his
word.

This form of estoppel sought to prevent a party from insisting upon her or his strict legal rights in
circumstances where it would be unconscionable to do so. In Legione v Hateley (1983) 152 CLR 406, the
High Court recognised that promissory estoppel operated to prevent a party from unconscionably insisting
upon a strict contractual right. However, the High Trees formulation of promissory estoppel need not be
confined to contractual promises and may even extend to voluntary promises not otherwise binding: see
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.

Promissory estoppel as a purely equitable form of estoppel has now been subsumed into the formulation of
equitable estoppel arising from the High Court’s decision in Waltons Stores (Interstate) Ltd v Maher, which
will be considered below. However, see Ashton v Pratt 92015) 88 NSWLR 281 for a conservative view of
the majority on the ‘enforcing’ capacity of promissory estoppel.

Unified doctrine of equitable estoppel

The High Court’s decision in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 revolutionised
estoppel in Australia. In the wake of that decision, debate raged as to whether or not estoppel at common law
had merged with equitable estoppel. The extent of this debate will be discussed further below. What was
certain was that a general principle of equitable estoppel based on unconscionable conduct had subsumed the
separate categories of estoppel arising in equity such as proprietary and promissory estoppel. Under the new
formulation of equitable estoppel in Waltons Stores (Interstate) Ltd v Maher, the focus is upon
unconscionable conduct. Unconscionable conduct gives rise to the right to relief in equity and determines the
nature and extent of the remedy. See Waltons Stores (Interstate) Ltd v Maher, particularly Mason CJ and
Wilson J at 404-5 and Brennan J at 428-9.
The following elements of equitable estoppel were stated by Brennan J in Waltons Stores (Interstate) Ltd v
Maher at 428-9:

In my opinion, to establish an equitable estoppel, it is necessary for a the plaintiff to prove that

1. 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;
2. the defendant has induced the plaintiff to adopt that assumption or expectation;
3. the plaintiff acts or abstains from acting in reliance on the assumption or expectation;
4. the defendant knew or intended him to do so;
5. the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not
fulfilled; and
6. the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or
expectation or otherwise.

In Commonwealth v Verwayen (1990) 170 CLR 394, the High Court affirmed the unified doctrine of
equitable estoppel laid down in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.

The elements of equitable estoppel have subsequently been discussed, considered or applied in a number of
cases, including:

Je Maintiendrai Pty Ltd v Quaglia (1980) 26 SASR 101

Austotel Pty Ltd v Franklins Selfserve Stores Pty Ltd (1989) 16 NSWLR 582.

Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247

Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1

Proprietary estoppel
A party is estopped in equity from strict insistence upon a proprietary right where that person has made a
representation or encouraged another party, either actively or by acquiescence, to make an assumption and
act to his or her detriment on the basis of that assumption. The estoppel is only successfully raised where the
party is aware that the other party was acting under a mistaken assumption. In these circumstances, equity
considers the conscience of the party who made the representation to be bound.

Cameron v Murdoch (1986) 63 ALR 575

Riches v Hogben [1986] 1 Qd R 315

Commonwealth v Verwayen (1990) 170 CLR 394

Giumelli v Giumelli (1999) 196 CLR 101

Sidhu v Van Dyke (2014) 251 CLR 505

Early cases shaping the development of this equitable doctrine include Dillwyn v Llewelyn (1862) 45 ER
1285 and Ramsden v Dyson (1866) LR 1 HL 129. See also Willmott v Barber (1880) 15 Ch D 96.

Proprietary estoppel has arisen for example where a person, A, has made improvements on the land of
another party, B, under a mistaken belief encouraged by B that A had some interest in the land. The estoppel
could only succeed in circumstances where A could establish that B knew of the mistake. Here equity would
focus on B’s encouragement of A. Yet proprietary estoppel has also arisen by acquiescence. The leading case
in this area is Ramsden v Dyson (1866) LR 1 HL 129, in which Lord Cranworth explained at 140-141:

If a stranger begins to build on my land supposing it to be his own, and I, perceiving his mistake, abstain
from setting him right, and leave him to persevere in his error, a court of equity will not allow me
afterwards to assert my title to the land on which he had expended money on the supposition that the
land was his own.

See also Priestley v Priestley [2017] NSWCA 155 for an illustration of how Australian courts have received
the principle.

Proprietary estoppel has also arisen to perfect imperfect gifts in limited circumstances. Here the focus is not
upon one party’s knowledge of the other’s mistaken belief but on whether that party has encouraged the
other party to act upon that mistaken belief. See Svenson v Payne (1945) 71 CLR 531. As Kitto J stated in
Olsson v Dyson (1969) 120 CLR 365 at 376:

[S]ome subsequent conduct of the intending donor, encouraging the intended donee to act to his own
prejudice on the footing that the property or some interest in it has become his, may make it
unconscionable for the donor to withhold the property or interest from the donee, and equity may on that
ground hold the donee entitled to the property.

Relief is determined by taking into account the nature of the mistake and the extent of the knowledge and
encouragement of the legal owner of the land. The court’s goal in fashioning relief is the minimum equity
necessary to do justice between the parties:

Ramsden v Dyson (1866) LR 1 HL 129

Shaw v Applegate [1977] 1 WLR 970

Commonwealth v Verwayen (1990) 170 CLR 394

Giumelli v Giumelli (1999) 196 CLR 101

Sidhu v Van Dyke (2014) 251 CLR 505

In cases involving imperfect gifts, relief in equity has often extended to perfecting the gift: Dillwyn v
Llewelyn (1862) 45 ER 1285.

Remedies for equitable estoppel

In Commonwealth v Verwayen (1990) 170 CLR 394, the High Court reiterated that a central element of
equitable estoppel is ‘that there must be a proportionality between the remedy and the detriment which is its
purpose to avoid’: per Mason CJ at 413. It follows that the remedy for equitable estoppel is the ‘minimum
equity’ necessary to do justice between the parties.

The minimum equity necessary to do justice between the parties may extend to granting a proprietary interest
or a financial remedy. Difficulties arise in considering what amounts to the minimum equity necessary to do
justice between the parties. This may not always extend to fulfilling the expectation. The interests of third
parties may also be taken into account in shaping the remedy: Giumelli v Giumelli (1999) 196 CLR 101.
The question that remains: extent of unification achieved by equitable
estoppel
The High Court’s decision in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 endorsed a fresh
approach to estoppel in Australia. In the wake of that decision, debate raged as to whether or not estoppel at
common law had merged with equitable estoppel.

Deane J in Waltons Stores (Interstate) Ltd v Maher had proposed that the merger go even further and include
estoppel in pais, creating an overarching doctrine of estoppel by conduct. The different approaches taken by
the various judges in Waltons Stores compounded the debate over the extent of the merger of the doctrines
into an overarching doctrine of equitable estoppel.

Deane J continued his argument for a unified doctrine of estoppel by conduct in Commonwealth v Verwayen
(1990) 170 CLR 394. Deane J’s argument found support from Kirby P in the New South Wales Court of
Appeal in the case of Lorimer v State Bank of NSW (5 July 1991, unreported). The extent of the unification
debate was noted in Giumelli v Giumelli (1999) 196 CLR 101, but it was not considered necessary on the
facts of that case to resolve the issue.

It was also unclear whether a general principle of equitable estoppel based on unconscionable conduct had
subsumed the separate categories of estoppel arising in equity such as proprietary and promissory estoppel.
Giumelli v Giumelli (1999) 196 CLR 101 suggests that this is not the case. See also Delaforce v Simpson-
Cook (2010) 78 NSWLR 483, and Thorner v Major [2009] 1 WLR 776

Discussion Questions
Question 1:

Doug operates a second-hand book shop. He is currently leasing shop premises at Taringa in Brisbane but is
unhappy with the existing parking arrangements for his customers. A new shopping centre is opening nearby
offering extensive parking for customers and in a much handier position to pick up trade from commuters
using the local train station. If Doug terminates his existing lease now, he would be required to pay 3
months’ rent for early termination.

The owner of the new centre, Rex Silver, is keen to have Doug as a tenant. Aware of the expenses Doug will
face for early termination of his existing lease, Rex has offered Doug a very attractive 10-year lease. The
first 12 months will be rent-free if Doug is open for business on the opening day of the new shopping centre.

All the terms of the lease have been negotiated to the satisfaction of both parties. Doug is keen to take
possession but is concerned that opening day is fast approaching and the lease agreement has not yet been
put into writing and signed. In order to get the shop ready to open, Doug will need to install extensive
shelving and begin to accumulate more trading stock than he usually carries.

Doug was assured by Rex that putting the agreement into writing was a ‘mere formality’. When Doug told
Rex of his concerns, Rex told him:

‘Just get on with it, mate. Move in, put up your shelves and fill them with books. We’ll deal with all the
paperwork later. Don’t worry about your early termination fee – you get a year’s free rent with me. That
should more than make up for it’.

Taking Rex at his word, Doug terminated his existing lease, incurring an early termination fee of $3000.
Doug spent $500 moving all his trading stock into storage while he fitted out the new shop. The fit-out cost
Doug $55,000. Doug also ordered trading stock at a cost of $20,000.
The week before the store was due to open, Doug arrived to find that the locks on the shop had been
changed. Rex tells him he has found a better tenant who has already signed a lease for the shop at a higher
rent with no rent-free period. When Doug protests, Rex tells him that they had nothing in writing and Doug
should find other premises.

Would equitable estoppel provide Doug with a remedy in this situation? Explain. Your answer should
include references to the leading authorities of Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387,
Commonwealth v Verwayen (1990) 170 CLR 394 and Giumelli v Giumelli (1999) 196 CLR 101.

Question 2:

Elizabeth Bell is the daughter of Susan Bell. Susan is an 80-year-old woman who lives by herself in a property
in Clayfield, Brisbane (the Clayfield property) of which she is the sole legal owner. Between June 2015 and
July 2017, Elizabeth lived in the Clayfield property with her mother. Elizabeth has instructed that the
circumstances in which she came to live with her mother were as follows. In February 2015, during a telephone
conversation with her mother, Elizabeth told Susan that she was unhappy with her job in Sydney and was
thinking of moving back to Brisbane. She also told her mother that she was worried that she would not find
any work in Brisbane and that it would be difficult to find work in the future if she left the advertising industry.
In response, Susan said, “Why don’t you come and live with me. You can live here rent-free. We will build
you a separate apartment annex so you have some privacy and you can claim a carer’s pension from the
Government. I am getting to the stage where I might have to move into a home. I don’t want that. If you
come to Brisbane and look after me, I can stay in the house until I die. And it is in your interest for the house
not to be sold because I am leaving it to you in my will”.

Elizabeth had always suspected that her mother would leave her the Clayfield property in her will because
Elizabeth’s sister Alison, her mother’s only other child, was estranged from Susan and Susan had no other
close relatives. Elizabeth thought about it and in March 2015 she agreed to move to Brisbane. She quit her
job, sold her house in Western Sydney and spent $150,000.00 building a separate apartment annexed to the
Clayfield property. Susan contributed $50,000.00 to the improvements. Elizabeth began residing at the
Clayfield property in June 2015 and began collecting the carer’s pension and looking after her mother from
that time onward. This arrangement continued happily for about 2 years. In July 2017, Elizabeth and Susan
had a falling out. It was about this time that Alison moved back to Brisbane and reconnected with Susan.
Alison confronted Elizabeth and Susan about Susan’s will and Susan agreed that the Clayfield property would
be given to each of her daughter’s equally in her will. Following this, Susan and Elizabeth had an argument,
as a result of which Susan asked Elizabeth to leave the Clayfield property. Elizabeth has now been forced to
find alternative accommodation which she rents for $400.00 per week in Clayfield. Elizabeth began looking
for work to replace the carer’s pension, but she has not been interviewed. A recruiter has advised Elizabeth
that since she has been out of the advertising industry for 2 years now, it is unlikely that anyone will employ
her. In December 2017, Elizabeth’s savings had dwindled to a point where she was in financial distress. She
seeks advice as to any legal options available to her.

Would Elizabeth have a successful claim based on either equitable or proprietary estoppel? Please advise,
including a discussion on remedies that may be available to her.