Q (A Pseudonym) v E Co (A Pseudonym)

The appeal concerned a claim of proprietary estoppel brought by the plaintiffs against E Co. The dispute arose from representations allegedly made by E Co that encouraged the plaintiffs to expect they would acquire an interest in certain property. The primary judge found that proprietary estoppel had been established and made orders granting relief. E Co appealed this decision to the Court of Appeal of New South Wales.

The central legal issues before the Court of Appeal were whether the primary judge had erred in characterising the estoppel as one by encouragement or acquiescence, particularly given the absence of specific words forming the basis of the encouragement. The court also considered whether the nature of the promise was sufficiently established, especially concerning property acquired after the initial encouragement and reliance, and whether the plaintiffs' detrimental reliance was correctly assessed, including the weight given to hypothetical counterfactual behaviour and the relevance of countervailing benefits. Finally, the court examined the appropriateness of the relief granted, specifically the imposition of conditions on the constructive trust declared by the primary judge.

The Court of Appeal held that the primary judge’s finding of estoppel by encouragement was not erroneous, even in the absence of specific words, as the judge had correctly emphasised E Co’s knowledge of the plaintiffs’ expectations. The court found that the relief granted, which encompassed property acquired after the initial encouragement and reliance, was permissible because the detrimental reliance by the plaintiffs was ongoing. The court also determined that the primary judge had not erred in giving significant weight to the plaintiffs’ counterfactual evidence, nor in considering the countervailing benefits received, as these were relevant to assessing the substantial detriment the plaintiffs would suffer if their expectations were not met. The court found that the condition for payment of rent imposed by the primary judge was conceptually inconsistent with the recognition of a constructive trust and therefore should not be imposed.

The Court of Appeal directed the parties to attempt to agree on short minutes of order giving effect to the court's reasons within 14 days. If agreement could not be reached, the parties were to exchange written submissions on the outstanding orders within a further 14 days, after which the final orders would be determined on the papers.