Shaw v Hanlon - [2020] TASSC 2

[2020] TASSC 2

COURT: SUPREME COURT OF TASMANIA

CITATION: Shaw v Hanlon [2020] TASSC 2

PARTIES:  SHAW, Lee Anthony
  v
  HANLON, Beverley Joyce

FILE NO:  3729/2016
DELIVERED ON:  13 February 2020
DELIVERED AT:  Hobart
HEARING DATES:  8, 9 April 2019
JUDGMENT OF:  Brett J

CATCHWORDS:

Contracts – General contractual principles – Discharge, breach and defences to action for breach – Repudiation and non-performance – Delay and provisions as to time.

Aust Digest Contracts [133]

Contracts – General contractual principles – Discharge, breach and defences to action for breach – The limitation defence.

Aust Digest Contracts [145]

Estoppel – Estoppel by deed or convention – Estoppel by convention – Particular cases.

Aust Digest Estoppel [1041]

Limitation Act 1974 (Tas).

Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435; Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444; Thompson v Palmer (1933) 49 CLR 507; Hancock Family Memorial Foundation v Fieldhouse [2013] WASC 121; George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434, referred to.

Grundt v The Great Boulder Proprietary Goldmines Ltd (1937) 59 CLR 641, Con-Stan Industries Australia Pty Ltd v Norwich Winterthur Insurance Australia Ltd (1986) 160 CLR 226, Alpha Wealth Financial Services Pty Ltd v Franklin River Olive Co Ltd [2008] WASCA 119, 66 ACSR 594, National Westminster Finance New Zealand Ltd v National Bank of New Zealand Ltd [1996] 1 NZLR 548, Sze Tu v Lowe [2014] NSWCA 462, 89 NSWLR 317; Mineralogy Pty Ltd v Sino Iron Pty Ltd [2015] FCA 825, 329 ALR 1; Garcia v National Australia Bank Ltd (1998) 194 CLR 395; Commissioners for Her Majesty's Revenue and Customs v Benchdollar Limited [2009] EWHC 1310 (Ch); The Commonwealth v Verwayen (1990) 170 CLR 394; Forum v Whight (1989) 168 CLR 38; Queensland Independent Wholesalers Limited v Coutts Townsville Pty Ltd [1989] 2 Qd R 40, considered.

Kean v Holland [1984] 1 All ER 75; Bridgestart Properties Limited v London Underground Limited [2004] EWCA Civ 793, applied.

REPRESENTATION:

Counsel:
             Plaintiff:  S Taglieri SC, J Pedder
             Defendant:  C McKenzie
             Rae & Partners  P Jackson SC
             Zeeman Kable & Page  S B McElwaine SC
Solicitors:
             Plaintiff:  Pedder Schuh Lawyers
             Defendant:  McLean, McKenzie & Topfer
             Rae & Partners  Simmons Wolfhagen
             Zeeman Kable & Page  Shaun McElwaine + Associates

Judgment Number: [2020] TASSC 2
Number of paragraphs: 82

Serial No 2/2020
File No 3729/2016

LEE ANTHONY SHAW v BEVERLEY JOYCE HANLON

REASONS FOR JUDGMENT BRETT J

13 February 2020

On 6 August 2008, the plaintiff and the defendant entered into a contract of sale with respect to the defendant's farm. The completion date specified in the contract was 6 October 2008. After signing the contract and paying a deposit to the stakeholder, the plaintiff entered into certain business arrangements with others. According to the plaintiff, those arrangements were in expectation of, and dependent upon, settlement taking place on the due date.
On 22 August 2008, the defendant served a notice on the plaintiff purporting to terminate the contract on the basis of an alleged failure to pay the deposit. The plaintiff denied the alleged breach, and demanded completion of the contract. However, the defendant refused to complete on the due date. The plaintiff then brought an application pursuant to s 39 of the Conveyancing and Law of Property Act 1884 (the vendor purchaser proceedings) seeking specific performance of the contract and associated declarations. On 27 February 2009, Holt AsJ made declarations which included that the defendant was not entitled to terminate the contract on the basis of failure to pay the deposit, and ordered that the contract be specifically performed. The contract was completed pursuant to that order on 28 May 2009.
On 16 April 2009, the plaintiff's solicitor, Mr Hart, wrote to the defendant's solicitor setting out "draft particulars" of the financial loss which the plaintiff claimed had been sustained as a result of the delay in completion of the contract arising from the defendant's refusal to settle on the due date. The asserted loss was in the aggregate sum of $108,245.22. It was alleged to have resulted from the effect of the delay in completion on the business arrangements entered into by the plaintiff after signing the contract. The letter enquired as to whether the defendant "wishes to make a proposal with respect to our client's losses as a result of the delay in completion".
There was then ongoing correspondence between the solicitors for each party with respect to the claim for damages. The correspondence, which largely consisted of the exchange of information and debate about the justification of the claim, continued until, in August 2015, there was agreement to enter into mediation. This agreement was given effect by consent memorandum dated 13 August 2015 signed by each solicitor, referring the vendor purchaser proceedings to mediation pursuant to the Alternative Dispute Resolution Act 2001. On 17 August 2015, Holt AsJ made an order in accordance with the consent memorandum.
However, on 31 August 2015, the defendant's solicitor informed Mr Hart by letter that he had received advice from the solicitor acting for the professional indemnity insurer of the defendant's original lawyer, that the proposed claim for damages was barred by the Limitation Act 1974. The argument advanced was that the proposed claim could not be brought within the vendor purchaser proceedings, but rather must be the subject of a separate action commenced by writ. It was pointed out that no such action had been commenced within the limitation period of six years.
The plaintiff responded by seeking leave to amend the originating application in the vendor purchaser proceedings to include a claim for damages for breach of contract. On 25 May 2016, Holt AsJ refused the application on the basis that the Court did not have jurisdiction to determine the claim for damages within the vendor purchaser proceedings and, in any event, that the Court's jurisdiction pursuant to those proceedings was exhausted, having regard to the order which had been made in 2009. It was noted that the appropriate vehicle for the claim for damages was action commenced by writ. On 15 December 2016, the plaintiff commenced that action. The defendant has pleaded that the action is barred by virtue of the expiry of the limitation period. The plaintiff has pleaded in reply that the defendant is estopped from relying upon a limitation defence. The estoppel is said to arise by convention or, alternatively, in equity. An order has been made for the separate determination of the issues arising in respect of the asserted limitation defence and the responding claim of estoppel. The specific questions ordered to be tried separately are as follows:
"(i) On what date did the plaintiff's cause of action against the defendant accrue?
(ii)Was the plaintiff's writ filed more than 6 years after the date referred to in the answer to question 2(1)?
(iii)If the answer to question 2(ii) is 'Yes', is the defendant estopped from pleading and relying on section 4 of the Limitation Act 1974 (Tas)?"
Each party has now also brought an action against his or her respective solicitor at the time of the relevant events seeking damages for professional negligence. An order has also been made that the three actions be case managed concurrently with each other. This is because the professional negligence actions are dependent on the outcome of this action. One consequence of this is that the order for the separate trial includes provision for each of the defendants in the professional negligence action to be represented on the trial. That trial has proceeded before me and I have had the benefit of submissions from counsel for each of the four parties.

Questions 1 and 2 – the limitation defence

The limitation defence is founded on s 4 of the Limitation Act. That section, insofar as it is relevant, provides that an action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued. It is not admitted on the pleadings that the action is statute barred and the questions for determination on the separate trial do not include that issue. However, questions 1 and 2 deal with findings which might be relevant to its determination.
It is common ground between the parties that the cause of action did accrue before this date. The parties agree that the action is "founded on simple contract", and, accordingly, is complete and therefore accrues on the date of the occurrence of the breach. This is because an action for breach of contract does not require proof of loss.
The defence pleads that the cause of action accrued on or about 28 May 2009. This is the actual date of completion of the contract, pursuant to the order for specific performance. All parties agree that the date of accrual of the cause of action was not later than this date. This, in itself, is sufficient to dispose of question 2, that is that the action was commenced more than six years after the date of accrual of the cause of action. However, it may be that the date of accrual was earlier. Counsel for the plaintiff, Ms Taglieri SC, submits that I ought determine the specific date because this question may be relevant to the assessment of damages. It is contended that the date is either 22 August 2008 when the notice of termination was given by the defendant, or 6 October 2008, which is the date provided for completion by the contract.
As pleaded in the statement of claim, the cause of action arises from the defendant's alleged failure to perform the contract in accordance with its terms, and in particular within the time stipulated in the contract. I am satisfied on the basis of facts admitted in the pleadings, and the evidence presented to me, that the cause of action did not arise on 22 August 2008. The wrongful notice of termination amounted to a repudiation by the defendant of her obligations under the contract. However, a repudiation or anticipatory breach of the contract will not, of itself, give rise to an entitlement of the innocent party to damages. It will only have that effect if the promisee elects to terminate the contract on the basis of the anticipatory breach. The termination is an essential prerequisite of the right to claim damages for the breach: Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444. Of course, in this case, the plaintiff did not accept the repudiation. On the contrary, he affirmed the contract and demanded its completion in accordance with its terms. It follows that the repudiation constituted by the wrongful notice of termination did not give rise to the cause of action asserted in these proceedings.
Of course, the position is different in respect of an actual, as opposed to an anticipatory, breach of the contract. It is admitted on the pleadings that the date of completion provided by the contract was 60 days from the date of the contract, which was 6 August 2008. Hence, the agreed date of completion was 5 October 2008. It is further admitted by par 9 of the defence that the defendant did not complete on this date or within a reasonable time thereafter. It is, in fact, established on the evidence that the defendant did not complete until 28 May 2009, and then only did so because of the order for specific performance. On the basis of these facts, I am satisfied that the cause of action arose on the day following the time limited by the contract for completion, 6 October 2008. The right to damages for loss arose upon the alleged breach of this term, irrespective of whether the date of completion was an essential term of the contract. The defendant has not pleaded any fact which would establish that the failure to perform on the agreed date did not amount to an actionable breach of the contract eg, a variation of the completion date.
Of course, this finding says nothing about the causation of loss arising from the breach. It is simply a finding as to the accrual of the cause of action.
Accordingly the answers to questions 1 and 2 will be as follows:
(i)6 October 2008
(ii)Yes.

Question 3 – estoppel

As already noted, the plaintiff contends that the defendant is estopped from reliance on the limitation defence. The claim asserts an estoppel by convention or, alternatively, equitable estoppel.
The former is historically a remedy provided by the common law which, in effect, operates as a rule of evidence, which precludes the leading of evidence contrary to a shared assumption which has formed the conventional basis of the relationship between the parties. It was traditionally relevant to and based upon a contractual relationship. It is a form of estoppel by conduct (in pais), and can be distinguished from the other form of such an estoppel, estoppel by representation.
Equitable estoppel is a wider and more flexible concept. That flexibility translates to the remedy available which will be framed to prevent the party claiming the benefit of the estoppel from suffering detriment. The effect of modern jurisprudence has tended to blur and conflate these concepts, so that the application of an estoppel by convention can give rise to the flexible remedies offered by equity. Equitable estoppel can arise on the basis of conduct, including representation. The distinction which is relevant to the determination of this case is the factual requirement necessary to give rise to the estoppel in question. In particular, of relevance to this case, is the distinction between a shared assumption upon which both parties conduct their relationship (the basis of estoppel by convention), and a representation, including as to rights or future conduct, emanating from the party against whom the estoppel will operate, upon which the other party relies to his or her detriment (the basis of estoppel by representation, which in equity may include a representation as to future conduct).
In submissions in reply on behalf of the plaintiff, Ms Taglieri said that, although her client relied primarily upon estoppel by convention, he did not abandon reliance in the alternative on equitable estoppel. However, Ms Taglieri did not elaborate on the basis upon which an equitable estoppel was asserted. Further, at no point during the written and oral submissions of any party, nor in the pleadings, has any claim been made that the defendant made a promise or representation, or expressly agreed with the plaintiff, that she would not rely on the limitation period in respect of an action for damages arising from the breach of contract, which, in the circumstances of this case, is the only realistic basis for an equitable estoppel. As will be demonstrated, this is not a case such as that in The Commonwealth v Verwayen (1990) 170 CLR 394, in which there is clear evidence of an express promise on the part of the defendant not to rely upon the limitation defence. Indeed, Mr Jackson SC, who appeared on behalf of the insurer of the former solicitor of the plaintiff, submitted bluntly this was not a case in which there was any such representation, express or implied. To the contrary, his submission, which also reflects the basis of Ms Taglieri's submissions, is that there was no such representation because neither party realised or believed that the limitation period was running. Hence, Mr Jackson submits that a shared, albeit mistaken belief in this regard, formed the assumption or convention upon which the parties conducted their relationship. This is the basis of the claim of estoppel by convention. Hence, that claim, in the circumstances of this case, would seem to preclude any claim based upon promissory or representational estoppel. In any event, there is no evidence to support such a claim. I will, accordingly, limit further consideration to the claim of estoppel by convention.

Estoppel by convention

This form of estoppel was described by Dixon J in Thompson v Palmer (1933) 49 CLR 507 as a sub-category of estoppel in pais. His Honour said:
"The object of estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption be adhered to, would operate to that other's detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. He may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as bailment; or because he has exercised against the other party rights which would exist only if the assumption were correct, as in Yorkshire Insurance Co v Craine; cp Cave v Mills; Smith v Baker; Verschures Creameries Ltd v Hull and Netherlands Steamship Co; and Ambu Nair v Kelu Nair; or because knowing the mistake the other laboured under, he refrained from correcting him when it was his duty to do so; or because his imprudence, where care was required of him, was a proximate cause of the other party's adopting and acting upon the faith of the assumption; or because he directly made representations upon which the other party founded the assumption. But, in each case, he is not bound to adhere to the assumption unless, as a result of adopting it as the basis of action or inaction, the other party will have placed himself in a position of material disadvantage if departure from the assumption be permitted." [Footnotes omitted.]
His Honour recited this passage, and provided some further clarification, in Grundt v The Great Boulder Proprietary Goldmines Ltd (1937) 59 CLR 641:
"The justice of an estoppel is not established by the fact in itself that a state of affairs has been assumed as the basis of action or inaction and that a departure from the assumption would turn the action or inaction into a detrimental change of position. It depends also on the manner in which the assumption has been occasioned or induced. Before anyone can be estopped, he must have played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it."
In Con-Stan Industries Australia Pty Ltd v Norwich Winterthur Insurance Australia Ltd (1986) 160 CLR 226, Gibbs CJ, Mason, Wilson, Brennan and Dawson JJ described the principle of estoppel by convention in the following terms:
"Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying."
In Alpha Wealth Financial Services Pty Ltd v Franklin River Olive Co Ltd [2008] WASCA 119, 66 ACSR 594 at [164], Buss JA (with whom Steytler P agreed) approved, with one reservation, the following statement of the elements of an estoppel by convention as summarised by the Court of Appeal of New Zealand in National Westminster Finance New Zealand Ltd v National Bank of New Zealand Ltd [1996] 1 NZLR 548:
"(1)The parties have proceeded on the basis of an underlying assumption of fact, law, or both, of sufficient certainty to be enforceable (the assumption).
(2)Each party has, to the knowledge of the other, expressly or by implication accepted the assumption as being true for the purposes of the transaction.
(3)Such acceptance was intended to affect their legal relations in the sense that it was intended to govern the legal position between them.
(4)The proponent was entitled to act and has, as the other party knew or intended, acted in reliance upon the assumption being regarded as true and binding.
(5)The proponent would suffer detriment if the other party were allowed to resile or depart from the assumption.
(6)In all the circumstances it would be unconscionable to allow the other party to resile or depart from the assumption."

The qualification was explained as follows:
"The qualification is that, to the extent the proponent relies upon an assumption of law or an assumption of mixed fact and law, the assumption of law must relate to private legal rights. Relevantly, for present purposes, a common assumption as to 'private legal rights' includes a common assumption as to the effect of contracts or agreements."
This statement has been accepted and approved by a number of Australian courts. Other courts have accepted and applied the summary of required elements set out by the New South Wales Court of Appeal in Sze Tu v Lowe [2014] NSWCA 462, 89 NSWLR 317 at [431], as follows:
"(a)the plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant;
(b)the defendant has adopted the same assumption;
(c)both parties have conducted their relationship on the basis of that mutual assumption;
(d)each party knows or intends that the other will act on that basis; and
(e)departure from the assumption will cause detriment to one of them."
Although these summaries are substantially consistent, an important difference concerns the need to demonstrate that it would be unconscionable to allow the other party to resile from the assumption (point 6 of the summary from National Westminster Finance). This point was noted by Edelman J in Mineralogy Pty Ltd v Sino Iron Pty Ltd [2015] FCA 825, 329 ALR 1. His Honour suggested that unconscionability is "not a separate requirement", and cited authority which included a statement by the plurality of the High Court in Garcia v National Australia Bank Ltd (1998) 194 CLR 395 to the effect that "... the statement that enforcement of the transaction would be 'unconscionable' is to characterise the result rather than to identify the reasoning that leads to the application of that description".
In the circumstances of this case, that distinction is not significant and does not require resolution. For the purposes of analysis, it is sufficient to adopt the statement of requirements expressed in Sze Tu.

The asserted convention

Ms Taglieri, submitted that the estoppel arises because the parties adopted a common assumption which she articulates as follows:
that both parties' solicitors mistakenly assumed and acted as though the claim for damages could and was being dealt with in the summons proceedings.
Mr Jackson's submissions take the claimed convention slightly further. He asserts that the convention shared by the parties was constituted by the following elements:
(a)the claim was justiciable in proceedings that had already been commenced between the parties and were continuing (the vendor purchaser application);
(b)absent settlement of the claim it would proceed to trial on those proceedings; and
(c)in the meantime the parties would, in those proceedings, pursue conventional interlocutory processes including discovery, delivery of expert witness proofs or statements, delivery of particulars of loss, and mediation.
It is common ground that subpar (a), if it was in fact a shared assumption of the parties, was legally incorrect. Accordingly subpar (b) was impossible. However, there would not seem to me to be any reason why the parties could not, as they were doing, take the interlocutory steps referred to in subpar (c), which were really limited to the sharing of information and attempts to settle the dispute. This did not require the framework of a validly constituted action, because it was all happening by agreement. It follows that the mutual participation in those steps did not necessarily rely upon nor, of itself, establish the existence of the shared assumption as to the claim for damages being justiciable within the vendor purchaser application. It is existence of this shared assumption, therefore, which is fundamental to the claim of estoppel by convention.
The plaintiff's assertion is that the shared convention gives rise to the remedy of estoppel because a departure from it will cause detriment to the plaintiff. The claimed detriment is that because the parties could not, and therefore would not, pursue a trial in the extant proceedings, and Mr Hart did not commence other proceedings within the limitation period because he believed that the existing proceedings meant that the cause of action was on foot, if the defendant relies upon the limitation defence, the plaintiff will be deprived of his remedy. Accordingly, it is submitted, it would be unconscionable for the defendant to rely upon this defence in the action. The minimum equity required to render justice requires the defendant be estopped from such reliance.
Mr McElwaine SC, who represents the defendant's former solicitors, and whose submissions were adopted by the defendant, raises the following arguments:
·     The evidence does not permit findings which would be essential for the Court to apply estoppel by convention. There are a number of aspects to this argument, but at its core is the assertion that the evidence does not establish that the parties mutually adopted a convention that the damages claim would or even could be litigated in the vendor purchaser proceedings as the basis of their relationship in respect of the resolution of that claim.
·     It is argued that the claimed common assumption related to the nature of the parties as litigants in respect of a dispute. It is not asserted to form the conventional basis of their conduct of a contractual relationship, and it is submitted that this is a necessary precondition for the application of estoppel by convention.
·     If such a shared assumption existed, then it was one of law not fact. Mr McElwaine asserts that a shared assumption of law cannot give rise to an estoppel by convention.
·     The shared assumption was about the future conduct of the parties. Leaving aside for a moment that the proposed conduct was legally impossible, Mr McElwaine submits that an estoppel by convention cannot arise in respect of future conduct, but can only relate to an assumption about an existing state of fact.
It is convenient, before dealing with the foundational question as to whether the parties mutually adopted the shared assumption as the conventional basis of their relationship, to consider the remaining issues raised by Mr McElwaine.

Is an extant or pending contractual relationship a prerequisite of estoppel by convention?

Although the parties in this case had been in a contractual relationship, the asserted convention relates to their relationship as parties to a dispute after the termination of the contract. Mr McElwaine submits that, at least in Australia, the estoppel will only operate in respect of an existing or pending contractual relationship between the parties. It will not arise in a "course of dealing" case such as this.
As already noted, the principle evolved at common law in the context of contractual disputes. Mr McElwaine argues that there are English cases which support the proposition that a concluded agreement is not an essential requirement of estoppel by convention, but that there is no Australian case which would suggest that the principle has such application. He submits that I should be "very cautious in accepting the invitation to extend the principle in this way".
Mr McElwaine further submits that the English cases dealing with estoppel by convention arising out of non-contractual dealings prescribe a more stringent test for its application, than that which applies to cases based upon an extant or pending contractual relationship. A case which directly discusses the point is Commissioners for Her Majesty's Revenue and Customs v Benchdollar Limited [2009] EWHC 1310 (Ch). That case related to proposed proceedings by the Revenue to recover, from many thousands of employers, insurance contributions on behalf of employees. The proceedings were governed by a six year time limit. However, the proceedings could not be determined until other litigation affecting the liability of the employers to pay the charges had been resolved, and this was not likely to be finalised prior to the expiration of the time limit. Rather than commence thousands of proceedings and adjourn them, and as an alternative to entering into a formal agreement concerning non-reliance on the time limit by the proposed defendants, the Revenue devised its own scheme for extending time, which involved an acknowledgement of debt. It was accepted in the proceedings that this scheme did not, as a matter of law, achieve the desired effect of postponing the time limit. The Revenue relied upon the contract, but the court held that the employers had not entered into a contract with it in relation to the time limit. In the alternative, the Revenue claimed that the employers were estopped by convention in relation to what were, in effect, non-contractual dealings. The court was satisfied that such an estoppel could arise in these circumstances, but stated the relevant principles as follows at [52]:
"i)It is not enough that the common assumption upon which the estoppel is based is merely understood by the parties in the same way. It must be expressly shared between them.
ii)The expression of the common assumption by the party alleged to be estopped must be such that he may properly be said to have assumed some element of responsibility for it, in the sense of conveying to the other party an understanding that he expected the other party to rely upon it.
iii)The person alleging the estoppel must in fact have relied upon the common assumption, to a sufficient extent, rather than merely upon his own independent view of the matter.
iv)That reliance must have occurred in connection with some subsequent mutual dealing between the parties.
v)Some detriment must thereby have been suffered by the person alleging the estoppel, or benefit thereby have been conferred upon the person alleged to be estopped, sufficient to make it unjust or unconscionable for the latter to assert the true legal (or factual) position."
Although counsel cannot locate an Australian case with a similar "non-contractual" factual context, I do not think that the decision in Benchdollar and, in particular, the statement of the test, is inconsistent with the principles expressed and relied upon by Australian (and New Zealand) courts. Indeed, the judge in Benchdollar was referred to and relied upon the classic statement by Dixon J from Thompson v Palmer, recited in Grundt, as "a valuable guide". The application of conventional estoppel in "course of dealing" cases, where there is no pending or existing concluded contract, is consistent with the underlying principle of justice upon which estoppel of this and related categories are founded. This was explained by Dixon J in Grundt as follows:
"The principle upon which estoppel in pais is founded is that the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations. This is, of course, a very general statement. But it is the basis of the rules governing estoppel. Those rules work out the more precise grounds upon which the law holds a party disentitled to depart from an assumption in the assertion of rights against another. One condition appears always to be indispensable. That other must have so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption."
His Honour then explained that the necessary consequence of this principle of justice is that the person to be held to the assumption "... must have played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it". It is apparent that these fundamental principles are common to all categories of estoppel in pais. Estoppel of this type is essentially concerned with applying a remedy where the conduct of the party being held to the estoppel has resulted in or substantially contributed to the assumption adopted by the party claiming the estoppel. A promise, a representation of existing or future fact, or the shared adoption of an underlying assumption as the conventional basis of the relationship will each give rise to a different category of estoppel, but the rationale of each can be found in these basic notions of justice. Of course, there are common to each category of estoppel, further elements needed to activate a remedy. These elements can be summarised as reliance and detriment, sufficient to support a conclusion of unconsionability if the defendant is permitted to resile from the state of affairs relied upon by the plaintiff.
The identification of the various forms of estoppel as different expressions of the foundational principle of justice encapsulated in the comments of Dixon J, formed the basis of the discussion by Mason CJ (and other judges) in The Commonwealth v Verwayen (above), concerning the development of a single doctrine of estoppel. At 409, his Honour said:
"That brings me to estoppel, a label which covers a complex array of rules spanning various categories. There are the divisions between common law and equitable estoppel, between estoppel by conduct and estoppel by representation, and the distinction between present and future fact. There are titles such as promissory estoppel, proprietary estoppel and estoppel by acquiescence. Yet all of these categories and distinctions are intended to serve the same fundamental purpose, namely 'protection against the detriment which would flow from a party's change of position if the assumption (or expectation) that led to it were deserted': Waltons Stores, per Brennan J See also per Mason CJ and Wilson J; Grundt." [Footnotes omitted.]
And at 453, Dawson J said:
"But, as was recognized in Waltons Stores (Interstate) Ltd v Maher, the basic considerations underlying both common law estoppel and equitable estoppel have always been the same. The only thing standing in the way of their parallel development has been the persistence of the view at common law that to succumb to a doctrine of promissory estoppel would be to undermine the foundations of the law of contract. Yet the description of estoppel by conduct given by Dixon J in Thompson v Palmer and Grundt v Great Boulder Pty Gold Mines Ltd is equally applicable to common law estoppel and equitable estoppel." [Footnotes omitted.]
When regard is had to the underlying rationale of the doctrine, it must, as a matter of logic, follow that estoppel by convention can be applied to relationships other than those defined by a pending or extant contract. Of course, there must be some form of relationship between the parties. It is inherent in the concept of estoppel by convention that the party to be estopped must have shared in the adoption of the convention in order to regulate or define that relationship. There is no reason in principle why the relationship must be confined to a contractual one. To the extent that there is a more stringent test expounded in the passage from Benchdollar, the additional stringency can be explained by the need to ensure that the shared convention is sufficient to justify the remedy of estoppel, in circumstances where the parties have not already entered into, or are contemplating a contractual relationship. This might also account for the subtle expansion of the basis of unconscionability in point 6, which includes the circumstance where the party to be estopped has gained some benefit (without detriment to the party claiming the estoppel) from the convention.

Can an assumption as to law give rise to an estoppel by convention?

Mr McElwaine's submission that the claim of conventional estoppel must fail because it can only apply to a shared assumption of fact, not of law, derives from the decision of the High Court in Con-Stan Industries Australia Pty Ltd v Norwich Winterthur Insurance Australia Ltd (above). In its joint judgment, the Court said:
"... just as estoppel by representation requires a representation of fact, so too estoppel by convention requires the assumed state of affairs to be an assumed state of fact: Greer v Kettle (1938) AC 156, at p 170; Spencer Bower and Turner, Estoppel by Representation (1977) 3rd ed, at pp 167-168. The state of affairs relied on by Con-Stan is that the parties conducted their business relationship on the basis that the broker was alone liable to the insurer for the premiums. That is clearly an assumption as to the legal effect of their conduct, and not an assumption of fact. The submission with respect to estoppel accordingly fails."
It would seem beyond argument that the shared assumption which forms the basis of the asserted convention in this case was as to a matter of law, that is that the claim for damages could be conducted as part of the vendor purchaser proceedings. Accordingly, on the basis of the passage set out above, Mr McElwaine's submission would seem to be on firm ground.
However, despite what appears to be a crystal clear statement of principle in the joint judgment of the High Court, it would seem that the question is not regarded as settled, at least in this country. In a number of subsequent cases, including some obiter comments by judges of the High Court, but more so by intermediate courts of appeal, the principle has been found to extend to assumptions of law, at least in respect of matters relating to private legal rights.
For example, in Mineralogy Pty Ltd v Sino Iron Pty Ltd (above), Edelman J at 759 cited numerous cases where intermediate courts of appeal and single judges had extended the principle to assumptions about matters of law. Of course, the suggestion in some of those cases that the extension to assumptions of law relates only to private legal rights creates a further point of differentiation: see, for example, the qualification stated in the passage already quoted from National Westminster Finance. Private legal rights are those which arise from contracts or other private legal relationships. An assumption forming a convention about such could be expected to relate to the legal effect of contracts or other legal relations entered into between individuals, as it applies to those individuals. This can be distinguished from the effect of the general law, binding on all, as expressed by the common law or statute. In this case, it is arguable that the mistaken assumption related to general law and not private legal rights. The assumption was in respect of the effect of the statute which created and regulated the vendor purchaser proceedings, as well as the common law notion of a cause of action.
If consideration of this question is confined to statements by judges in the High Court, then the matter remains, it seems to me, equally confused and uncertain. Despite the apparently clear statement of the High Court in Con-Stan, a number of judges have expressed contrary views. In Forum v Whight (1989) 168 CLR 385, Deane J said:
"In any event, I am now prepared to take the step which I refrained from taking in Waltons Stores ... and to accept that the doctrine of estoppel by conduct extends, as a matter of general principle, to a representation or induced 'assumption of fact or law, present or future'."
In Commonwealth v Verwayen (above), his Honour repeated this view when discussing what he termed "the general doctrine of estoppel by conduct".
In the same case, Mason CJ, when discussing his contention that there should be "but one doctrine of estoppel", said:
[36] ... The result is that it should be accepted that there is but one doctrine of estoppel, which provides that a court of common law or equity may do what is required, but not more, to prevent a person who has relied upon an assumption as to a present, past or future state of affairs (including a legal state of affairs), which assumption the party estopped has induced him to hold, from suffering detriment in reliance upon the assumption as a result of the denial of its correctness.
[37] The assumption may be one as to a legal as well as to a factual state of affairs. There is simply no reason to restrict the assumption to a factual matter as there was at the time when the rules of estoppel by conduct were evidentiary. It has already been recognized that an equitable estoppel may relate at least to a matter of mixed fact and law (see Waltons Stores, at pp 415-416, 420-421, 452; Foran v Wight, at p 22; p 448 of ALR). Moreover, the distinction between assumptions as to fact and assumptions as to law is artificial and elusive; see the discussion of Oliver J in Taylors Fashions Ltd v Liverpool Trustees Co, at pp 150-151. So it would be productive only of confusion and arid technicality to restrict the operation of the doctrine so as to exclude from its scope an assumption as to a purely legal state of affairs."

In my view, it is clear that in these comments, their Honours were contemplating categories of estoppel which included the traditional common law form of estoppel by convention. This would seem clear from their joint judgment in Legione v Hateley (1983) 152 CLR 406 at 430:
"It is customary to recognize three general classes of estoppel, namely, of record, of writing and in pais (see, eg, Coke's Littleton, 352a). Estoppel in pais includes both the common law estoppel which precludes a person from denying an assumption which formed the conventional basis of a relationship between himself and another or which he has adopted against another by the assertion of a right based on it and estoppel by representation which was of later development with origins in Chancery. It is commonly regarded as also including the overlapping equitable doctrines of proprietary estoppel and estoppel by acquiescence or encouragement."
On the other hand, Mr McElwaine has pointed to cases where the High Court would seem to have expressly eschewed the opportunity to expand the application of estoppel by convention beyond assumptions as to present fact. See, for example, Bofinger v Kingsway Group Limited [2009] HCA 44; 239 CLR 269 and FCT v Thomas [2018] HCA 31, 92 ALJR 746.
What is obscured by the confusion engendered by these conflicting judicial statements, is the question of what is binding on a trial judge in respect of questions such as those which arise in this case. In view of the conclusion which I have reached in this case for other reasons, it is unnecessary for me to resolve this question. If I was required to, then it would seem to me that the express statement in Con-Stan must be binding on a single judge of a lower court, in the absence of any clear authoritative subsequent alteration of that position by the High Court. Despite the confused jurisprudential position set out above, I am not satisfied that there has been such an alteration. This is the view taken by single judges of the Western Australian Supreme Court in Hancock Family Memorial Foundation v Fieldhouse [2013] WASC 121 and George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434.
On the other hand, if I were free of such authority and required to apply general principle, then it seems to me that the statements of Mason CJ and Deane J in Commonwealth v Verwayen are entirely in accordance with the fundamental principle of justice upon which estoppel rests, as described by Dixon J in Grundt and other cases, and discussed earlier in these reasons. If the parties in this case have adopted a shared assumption as the conventional basis of their relationship, albeit based on a mistaken view of the law, that the dispute was capable of and would in fact be resolved by the conduct of litigation within the existing vendor purchaser proceedings, then in my view each ought be estopped from taking any step which places the other party at a disadvantage as a result of reliance on the shared assumption, once their mutual error had been appreciated. This, of course, is the basis of the plaintiff's argument. This conclusion would also resolve Mr McElwaine's argument concerning the application of the principle to an assumption about future conduct.
It follows that the determinative issue remains whether there was a common assumption about this question, and, if so, whether it was in fact adopted by both parties as the conventional basis of their relationship. The initial step in the resolution of this question is an assessment of the evidence.

The evidence

The evidence before me consisted of one witness only, Mr Hart, who was the solicitor for the plaintiff during the relevant events. His evidence consisted of an affidavit, which annexed relevant correspondence between the solicitors for each party, as well as court process and reasons for decision of Holt AsJ. He was cross-examined by Mr McElwaine, although the credibility and reliability of his testimony was not subject to challenge. I accept Mr Hart as a credible and reliable witness.
A brief summary of the relevant events, which is derived from Mr Hart's evidence, is as follows. The parties entered into the contract on 6 August 2008. Completion was due on 5 October 2008, but of course on 28 August, the defendant served the notice of termination. The plaintiff filed the originating application commencing the vendor purchaser proceedings on 7 November 2008. The application sought the determination of certain questions, in particular whether the defendant had validly terminated the contract and associated matters. It also sought relief in the form of declarations, culminating in the declaration that the contract remained on foot. It did not seek any other order or form of relief and, in particular, did not seek damages for breach of contract.
The next relevant event was the resolution of those proceedings by Holt AsJ on 27 February 2009. His Honour determined that the contract had not been validly terminated. His orders are set out in a record of proceedings sheet relating to that day. In addition to an order for specific performance, his Honour granted "to the parties liberty to apply for such directions or consequential orders as may be convenient or necessary".
It would seem from the evidence that the first time that the plaintiff raised the question of damages was in a letter from Mr Hart to the defendant's solicitor, Mr Page, on 16 April 2009. That letter was written before the contract had been completed in accordance with the order for specific performance. The letter dealt with matters relevant to that conveyance. It also raised and asserted particulars of loss "in connection with the delay in settlement". It asked the defendant's solicitor to seek instructions as to compromise of the claim for costs and "whether your client wishes to make a proposal with respect to our client's losses as a result of the delay in completion".
There then followed two further letters from Mr Hart on 24 April and 5 May, enclosing a report supporting the claim of loss. One of the letters enclosed such material by way of "informal discovery". The letter requested a response as to the defendant's intentions with respect to the claim.
The defendant's solicitor replied to these letters, for the first time, by letter dated 13 May 2009. Counsel for the defendant relies on the fact that the letter was headed with the title and matter number of the originating application. The letter is headed "Without Prejudice". It raises matters which have the effect of questioning and disputing the basis and calculation of the claim, and requests further information. It concludes with the statement that the defendant will respond to the claim once there is a response to the letter.
The contract was completed on 28 May 2009. On that day, Mr Hart forwarded a letter to the defendant's solicitor dealing with matters relevant to the conveyance, but also noting that the plaintiff would settle "this matter today on the basis that his claim for damages with respect to the failure to complete in accordance with the contract is reserved". It was also noted that a claim by the defendant arising from the failure to complete on 25 May "will fall to be determined in the same action". Mr Hart noted that if there was any requirement that settlement proceed "on an unconditional basis", he would relist the vendor purchaser summons. Presumably, this was a reference to the reservation of the question of consequential relief contained in the order for specific performance, and related to giving effect to that order. It would seem from the terms of that letter that, at this point in time at least, Mr Hart contemplated that an action might be necessary in order to recover damages, and that the vendor purchaser summons was primarily concerned with the specific performance of the contract.
There then seems to have been some years of inaction. There was no further substantive correspondence until 21 November 2012. However, on 23 June 2011, and again on 14 June 2012, Mr Hart filed a notice of intention to proceed in the vendor purchaser proceedings. There is no reference in those documents to the step or steps he intended to take in the proceedings. In cross-examination, Mr Hart acknowledged that the only outstanding issue as at the date of delivery of the notice on 23 June 2011 was the damages claim. He agreed that he was aware that such a claim could be prosecuted by writ. This is not a surprising concession. Mr Hart was at that time and still is an experienced litigation practitioner. When questioned as to whether he had formed a view that he could prosecute the delay claim in the vendor purchaser proceedings, the effect of his answer was that he had not addressed his mind to or formed a view with respect to that question when he delivered the notice, but delivered the notice because the only proceeding then on foot was the vendor purchaser summons. Of course, at this point in time, the plaintiff was well within the limitation period applicable to the commencement of a separate action by writ.
After Mr Hart had filed the second notice of intention to proceed, a legal practitioner, Daryl Gray, filed a notice of change or appointment of practitioner in the vendor purchaser proceedings. There is no evidence to explain that step but, given its temporal connection to the notice of intention to proceed, it can be comfortably inferred that it was simply a step taken in response to that notice.
On 21 November 2012, Mr Hart forwarded a letter to Mr Gray advising that he had been instructed to proceed with the damages claim arising from the delay in completion. It is made clear that the proposed cause of action is based on breach of contract. The letter encloses material in support of the claim, and proposes "resolution by mediation". It requests that Mr Gray advise as to whether his client will consent to an order for mediation and to obtain instructions "as to what interlocutory steps your client intends to take with respect to this litigation".
Mr Gray responded by correspondence seeking further information and disputing aspects of Mr Hart's reasoning. There then followed an exchange of correspondence between the solicitors in which they discuss and debate the merits of the claim and its particulars. There is no reference to any form of litigation in that correspondence, although it is clear that the purpose of the correspondence is an attempt at resolution of the issue which would otherwise be resolved by litigation. The next express reference to court proceedings is in a letter from Mr Hart to Mr Gray on 30 January 2013. In that letter, after further debate concerning the merits of the claim, Mr Hart again proposed mediation. He also stated that if the matter could not be resolved by mediation, then his client "is quite prepared to proceed to a trial as to the necessary facts to establish damages for breach of contract". He also indicated that his client would give consideration to whether "an offer of compromise should be filed".
Mr Gray responded on 7 February 2013. In his letter he proposed "mutual discovery". It would seem clear that, at this point, both parties were contemplating further steps in the litigation. The only proceedings on foot were the vendor purchaser proceedings, and presumably the interlocutory steps to which they refer would be taken in these proceedings. However, it is also clear that neither of these experienced litigation lawyers had given any real thought to the jurisdiction of the Court to determine the claim within those proceedings. Mr Hart conceded this during the course of cross-examination. It is obvious in any event. Even if the lawyers believed that the vendor purchaser proceedings could be used as a vehicle for the determination of the claim for damages, such a claim was not raised in the originating application, and it was arguable in any event that the Court's jurisdiction had been exhausted by the orders made by Holt AsJ on 27 February 2009. It may well be that it was thought that the claim could be determined under the reservation by Holt AsJ of the right to apply for consequential orders concerning specific performance, but such a view would be extremely ill-considered, and quickly debunked by even superficial research. The most probable explanation is that neither lawyer had given any real consideration to the question of jurisdiction. Up to this point, they had been debating the question of resolution and considering mediation as an appropriate tool of resolution. Of course, mediation did not require extant proceedings, although the proposed order under the Alternative Dispute Resolution Act did require that vehicle. It is probable that the reference to interlocutory steps was a threat employed as part of the process of negotiation. Of course, at this point in time, there was no real need for either solicitor to consider in a detailed way the question of jurisdiction of litigation. Although the expiration of the limitation period was looming, it had still not been reached. The earliest possible date of expiry of that period was 22 August 2014. This correspondence was taking place in early 2013. It is probable that when that correspondence took place, neither solicitor had given any real thought to jurisdiction and was still primarily focussed on a negotiated resolution of the underlying issue.
In his affidavit, Mr Hart says that for the balance of 2013, he attended to preparing a list of documents for the purposes of discovery. I infer that this was an extended process and had not been completed by the time there was further communication between the solicitors for each party. This did not take place until 10 October 2014, when Mr Hart received a telephone call from Mr Duncan Fairley, then a legal practitioner, who advised that he was now acting for the defendant. The next written correspondence was on 14 October 2014, when Mr Hart wrote to Mr Fairley advising that he still intended to provide discovery, and suggesting that thereafter the parties confer with respect to mediation. By this time, of course, the limitation period had expired. I infer from Mr Hart's evidence, from the fact that the defendant employed a new solicitor in substitution for Mr Gray, and from the absence of any correspondence or other action by the parties, that the lawyers simply did not give any significant consideration to the matter at all, and certainly not to the question of jurisdiction or limitation periods.
There then followed further correspondence and discussion between Mr Hart and Mr Fairley, primarily concerned with the question of mediation. There was little, if any, reference to litigation in that correspondence, and the only steps taken were a further notice of intention to proceed by Mr Hart, and a notice of appointment filed by Mr Fairley. Both documents, of course, were filed in the only extant proceedings, the vendor purchaser application. Eventually, on 13 August 2015, well after the expiration of the limitation period for an action, both solicitors signed a consent memorandum in the vendor purchaser proceedings, referring the matter to mediation under the provisions of the Alternative Dispute Resolution Act. The document was submitted to Holt AsJ who made the order on 17 August 2015. However, on 31 August 2015, Mr Fairley wrote to Mr Hart and conveyed advice from Mr McElwaine to the effect that the plaintiff was barred from pursuing the damages claim by virtue of the expiry of the limitation period. He advised that the "proceedings currently before the Court cannot be utilised to pursue loss and damage allegedly arising from ... delay in completing the contract". Mr Hart then brought an application on behalf of the plaintiff to Holt AsJ seeking an amendment of the originating application to permit the determination of the claim for damages. His Honour refused the application on the basis that the claim was not amenable to determination within those proceedings because it involved a matter for enquiry "rather than a matter of mere computation and taxation".

Does an estoppel by convention arise on the facts?

As already noted, the convention relied upon by the plaintiff is the shared assumption by the solicitors that the claim for damages could be determined in the vendor purchaser proceedings. Although this assumption was legally incorrect, it is common ground that estoppel by convention will operate to hold the parties to a convention based on an incorrect assumption. However, it is clear, and no party argues to the contrary, that an estoppel will not operate to confer jurisdiction on a court where jurisdiction does not exist: Kean v Holland [1984] 1 All ER 75.
The first question arising from the list summarised in Sze Tu, is whether both parties adopted the said assumption as the basis of their relationship. In this case, the relationship in question is that relevant to the resolution of ongoing issues relating to the terminated contract, in particular the question of damages arising from the delayed settlement. As I have already concluded, such a relationship is amenable to a claim of estoppel by convention.
In respect of the plaintiff, there is support for the proposition that Mr Hart assumed that the damages claim could be litigated within the vendor purchaser proceedings. He was questioned directly about this during the course of cross-examination by Mr McElwaine. I set out some of his evidence on this question:
"All right. Now, in March or April 2009, were you of the view that any damages claimed as a result of delay could be prosecuted in the vendor and purchaser summons proceeding?……I hadn't considered the point.
...
As at 24^th April 2009 had you formed a view about how, and if so, by what mechanism the delay claim could be prosecuted?……No.
You obtained a report from an agricultural consultant, annexure G1, on the 15^th April 2009; had you taken advice from counsel prior to then about formulating the delay claim?.....Yes.
That was Mr Stanton was it?.....Yes.
Did he give you advice prior to completion of the transaction on the 28^th of May 2009, that your client could complete it and reserve the rights to claim damages?.....Yes.
...
That advice, at least the last two paragraphs on the first page, was consistent with the advice Mr Stanton had given you, is that right?.....Well it's certainly not inconsistent with it.
Yep. So, had he advised as at 28 May 2009, whether the delay claim could be prosecuted on the vendor and purchaser summons?.....No he hadn't advised me.
Had you formed that view by then, that is by 28 May 2009?.....No I hadn't.
You were at least aware though were you not, that a limitation period at least potentially applied to the delay claim, weren't you?.....Yes.
...
You must have formed the view, I suggest to you, that as at 23 June 2011, the delay claim was open in that proceeding?…..I can't explain as to whether I had specifically formed a view as to that. I do know that I delivered the notice of intention to proceed in the only proceedings that were on foot – that was the vendor and purchaser summons.
Well, there was nothing left to be done in the vendor and purchaser summons but for what you believed, I suggest to you, was the prosecution of the delay file?…..I now know that to be the case.
But you knew then that there was nothing else left to be done in proceeding 984 of 2008, didn't you?…..I had not addressed my mind to that issue. I now know that to be the case subsequent to the decision of the associate justice.
So is it a fair summary, and if I'm being unfair, no doubt you'll tell me, but at all material times between the 23^rd of June 2011 and the day the associate judge made his second decision, that is, 25 May 2016, your state of mind was that it was open to Mr Shaw to bring the delay claim as a component, or an additional component, of the vendor and purchaser summons proceeding?…..Yes.
And you formed that view because you assumed that that procedure, that is, the vendor and purchaser summons procedure, permitted a subsequent claim for damages for delay, didn't you?…..Yes.
And did you research that question at any time between 23 June 2011 and the time the associate judge published his second decision, that is, 25 May 2016?…..No, I didn't.
Is it fair to say that you simply made an assumption without investigating the question?.....No. I don't think it's fair to say that.
Well, at no stage did Mr Page say or correspond to you, 'Yes, we accept the damages claim can be brought on the vendor and purchaser's summons', did he?.....I accept that.
...
So if we turn to your letter to him of 21^st November 2012, which is annexure L page 83, in the second sentence you say, 'We are instructed to proceed with this claim'. You intended to convey the vendor and purchaser's summons proceeding, didn't you?.....No. This was a claim for damages. When I made a reference to the claim I was making reference to a claim for damages.
Right. So was it your state of mind on 21^st November 2012 that the client had to be brought, for example, by writ?.....I understood that the claim could be brought by writ, yes.
Did you understand on 21^st November 2012 that the limitation period was ticking away with the filing of the writ?.....I hadn't addressed my mind to that question.
But you nonetheless understood the legal proposition that for a breach of contract claim six years commences running from the date of breach, didn't you?.....Yes.
You must have understood that the date of breach occurred shortly after the passing of the note of completion of the contract. You understood that?.....I hadn't considered the particular date but your proposition is correct.
So when you wrote to Mr Gray on 21^st November 2012 you particularised the claim at about $144,100 and then you propose on the second page that you were instructed to seek a timetable to facilitate the holding of a mediation?.....Yes.
A timetable in what proceeding?.....Well, the only proceedings I [indistinct word(s)] for whether vendor and purchaser proceedings.
And when you refer to subpar(b), 'Obtain instructions as to what interlocutory steps your client intends to take with respect to this litigation,' was that also intended to be a reference to the vendor and purchaser summons?……Yes.
And the request, 'Will your client consent to mediation?' that was in the context of the vendor and purchaser summons?……Yes, it was.
It's fairly clear, I suggest to you Mr Hart, that as at 21^st November 2012 you had the honest belief that that damages claim could be prosecuted in the vendor and purchaser summons?……That it could be, yes.
And that's a view that you formed unilaterally, that is entirely by yourself, isn't it?……I don't know whether anybody else held that view, specifically Mr Gray, but certainly that was a view that I held.
...
Had you ever brought a damages claim for delay in a conveyance, as a component of the vendor and purchaser summons proceeding before?.....No.
...
Is that what you were seeking to do within this time period? Just resolve it? Without proceedings in court?.....No. My view was and it had been expressed in a prior correspondence, that this was a plain case of breach of contract and that it would resolve in the proceedings that are currently on foot.
...
Did you believe at that time that your client's claim for damages was still something that had to be resolved in that proceeding?…..I don't believe I addressed my mind to it at that stage. I can recall having been surprised by the fact that an order had been made for specific performance in the proceedings and I put it to one side with a view to completing the transaction. I did, in the context of the completion of the matter, refer to the necessity to potentially relist the matter if Mr Page had placed any conditions on completion or had otherwise refused to complete but I didn't address that issue.
...
So how did you come to the view that after February 2009, you could revisit that proceeding and claim damages?…..I can't explain that.
Is it fair to say that you just made an error or a mistake?…..I think I can acknowledge that now.
...
Yes?.....If I had turned my mind to it I would have realised that there needed to be proceedings extant for there to be‑
That was your view?.....Yes."

Having regard to this testimony, and considering it in the context of the course of correspondence and events described above, I am satisfied that, while Mr Hart may have had a superficial belief that the issue of damages could be litigated within the vendor purchaser proceedings, this was not a matter to which he had given any real thought and certainly had not conducted any research into the question. In other words, he had not formed a concluded view. It is apparent that he was focused on resolving the dispute by negotiation, and utilised the extant proceedings simply as a framework within which to conduct those negotiations. In my view, it is apparent that he had not reached the stage of formulating or preparing for litigation, and had not given any real thought to the proper vehicle for the litigation. It is inconceivable that an experienced litigation practitioner, as Mr Hart certainly was, would simply rely upon uninformed assumptions about jurisdiction if he had decided to pursue the issue through litigation. Because he did not give any thought to this process, he did not give any thought to jurisdiction, nor to the question of the limitation period applicable to the claim. Accordingly, his superficial assumption, arrived at for the purpose of providing a framework within which to discuss settlement of the dispute, cannot be regarded as the adoption of an assumption about jurisdiction intended to provide the basis of the relationship between the parties, if the dispute required resolution by litigation.
The situation in relation to the defendant's lawyers is even more apparent. The lawyer representing the defendant at the time that the limitation period expired, and indeed for the majority of the relevant period, was Mr Gray. Mr Gray was not called as a witness, and there is little support in the objective evidence for the proposition that he made any assumption about the question of jurisdiction, nor that he adopted any such assumption as a basis of the relationship with the plaintiff. The same can be said about the other lawyers who acted for the defendant from time to time, including Mr Fairley. In my view, the evidence establishes no more than that each of them responded to the threatened claim by participation in negotiation. Mr Gray's reference to the proceedings in early 2013 seems to me, in all probability, an offhand reference made without consideration to the underlying issues. It does not support a conclusion that he had, on behalf of his client, adopted an assumption about jurisdiction as the basis of the relationship. The last evidence of any involvement on his part is the letter of 7 February 2013. At this time, there was no real need for him to consider the question of litigation. The negotiations were still on foot and Mr Hart had taken no step to pursue litigation either by amendment of the originating application or the filing of a writ. There was no reason to consider the limitation period because, on any view of the matter, there was still 18 months remaining before its earliest possible expiry.
Of course, that 18 month period was critical from the point of view of the expiry of the limitation period. However, during that time it would seem that Mr Hart turned his attention only to preparation of an affidavit of documents on the part of his client, and otherwise did not avert to the proceedings. There is no evidence that Mr Gray took any further step. He had received nothing from Mr Hart and, accordingly, there was nothing to which to respond. In relation to Mr Fairley, by the time that he was engaged, the limitation period had already expired. Again, there was no need for him to consider how the proceedings would be resolved if litigation became necessary, at least until he received Mr McElwaine's communication.
In these circumstances, I am not satisfied that either party adopted the asserted assumption in respect of the disputed damages claim.
The third and fourth elements in the Sze Tu list relate to the mutual adoption by the parties of their individual but common assumption as the conventional basis of their relationship. In relation to this question, McPherson J in Queensland Independent Wholesalers Limited v Coutts Townsville Pty Ltd [1989] 2 Qd R 40, said at 46:
"To produce that consequence the acts or conduct relied upon must point plainly, if not unequivocally, to the assumption put forward as the conventional basis of relations. A course of dealing that is explicable by reference to some other equally plausible assumption inevitably falls short of establishing that the parties accept as the basis of their relations the particular assumption contended for."
Even if a case could be made that each party adopted the relevant assumption, the evidence simply does not support a conclusion that both of them conducted their relationship on the basis of that mutual assumption and knew or intended that the other would act on that basis. As I have already noted, the evidence overwhelmingly supports a finding that none of the lawyers involved had given any real consideration to the question of jurisdiction in the event that the negotiations were unsuccessful and the matter required resolution by litigation. In the defendant's case, there was simply no need for the defendant's lawyer to give consideration to this question. It would be extremely unjust to hold the defendant to a superficial assumption made by the plaintiff's lawyer in circumstances where that lawyer had taken no significant step to press litigation, apart from making threats, and otherwise seemed content to resolve the matter by negotiation, simply because the defendant's lawyer did not himself research the question, arrive at a conclusion and then correct the plaintiff's lawyer's apparent incorrect assumption. The defendant could only have been expected to consider her substantive response to litigation if that litigation were pressed. If that happened, the lawyers would have been required to turn their minds to the question of jurisdiction, and this may then have led to consideration of questions of limitation. If there had then been an unequivocal adoption of an assumption that the litigation could be resolved within the vendor purchaser proceedings, and that had prevailed at the time of expiry of the limitation period in respect of a separate action, there may well have been a basis for the claim of estoppel by convention. However, the evidence falls far short of establishing those matters.

Reliance and detriment

The requirement of the mutual adoption of the common assumption as the conventional basis of the relationship is closely linked to the concept of reliance and consequent detriment. In the formulation of elements stated in the New Zealand and Western Australian cases, it is required that the party claiming the estoppel "has, as the other party knew or intended, acted in reliance upon the assumption being regarded as true and binding". When one considers the underlying rationale for the estoppel, particularly in light of the statements of Dixon J in Grundt, it is clear that reliance to this extent must be established. Justice requires the estoppel, not because there has been a mutual mistake, but because the mutual mistake has become the shared basis of the conduct of relations, to the knowledge of both parties. This was the conclusion reached by the English Court of Appeal in Bridgestart Properties Limited v London Underground Limited [2004] EWCA Civ 793, CA in a case where estoppel by convention was claimed as a means of avoiding the operation of the limitation period. In that case, the claimed convention related directly to the limitation period. The Court said at [23]:
"[23] It is, of course, true that both parties seem to have been unaware of the statutory limitation period until well after it had expired. In that sense there is a plausible argument that one can find here an estoppel by convention, on the ground that there was here a shared assumption, albeit one of law. I entirely accept that one can have an estoppel by convention arising from a shared assumption of law in appropriate circumstances. But here the shared assumption took the form simply of a mutual unawareness of the applicability of the Limitation Act. In that respect the case is similar to Hillingdon No 2, where this court gave careful consideration to the principles of estoppel by convention in such circumstances, and where it emphasised the need for the assumption to have been communicated between the parties: see paragraph 50. At paragraph 60, Arden J, giving the judgment of the court, stated:
'The evidence simply does not establish a shared assumption communicated one to the other that limitation was not a defence to be relied on as a basis on which negotiations proceeded post April 1988 … Where parties are acting on the basis of some generally assumed view of the law, which turns out to be wrong, more is needed than simply an assumption as to the legal position if a party is to be estopped from taking a defence which he then discovers is available to him'."
Counsel suggested during argument that the Australian and English cases differ as to what is required in respect of the sharing and communication of the assumption. I disagree. As the above analysis demonstrates, a mutual mistake, without more, will not answer the requirements of the principle of justice underlying the estoppel. In my view, reliance is essential in order to establish the estoppel.
In any event, in a case such as this, it is impossible to establish detriment without establishing mutual adoption and reliance on the common assumption. In order for the plaintiff to have suffered the requisite detriment, it would be necessary for him to establish that his failure to commence the appropriate action within the limitation period resulted from the shared adoption of the claimed convention. As the claimed convention related only to the fact that the claim could be made within the vendor purchaser proceedings, it would be necessary to show that had it been possible to resolve the claim within those proceedings, the limitation period would not have been applicable. This is unlikely because it was always clear that the claim for damages would require an amendment of the relief claimed in the application, even if the proceedings were capable of accommodating that claim. It is probable, in my view, that assuming that the proceedings were able to be brought within the vendor purchaser proceedings, the expiry of the limitation period could still have been raised as an objection to the amendment. It is strongly arguable that an application which seeks an order for the payment of damages for breach of contract, is a different cause of action for the purposes of the application of the limitation period to the claim for specific performance, irrespective of it being contained in the same proceedings. If that is the case, then no detriment flows to the plaintiff from the defendant's reliance on the limitation period in the separate proceedings commenced by writ.
Further, the evidence does not support a conclusion that Mr Hart relied on a shared assumption concerning the claim being conducted within the vendor purchaser proceedings. In his written and oral evidence, Mr Hart did not claim that he had relied upon any mutually accepted or shared assumption as a reason for his failure to either apply for an amendment of the originating application, or to commence separate writ proceedings. At par 46 of his affidavit, he said that until Holt AsJ's determination on 25 May 2016, he did not appreciate "that the plaintiff's claim for damages against the defendant could not be pursued pursuant to the originating application". However, this statement is qualified by some of his answers in cross-examination, in particular:
·     That he had not as at 28 May 2009 formed a view as to whether the delay claim could be prosecuted in the vendor purchaser summons, nor had he received advice from counsel about that question.
·     That he was not sure whether he had specifically formed a view as to whether the delay claim was open in the vendor purchaser proceeding when he gave notice of intention to proceed on 23 June 2011. He stated that he delivered the notice in those proceedings because they were the only proceedings then on foot.
·     At all relevant times between 23 June 2011 and the decision of Holt AsJ on 25 May 2016, his state of mind was that it was open to bring the delay claim as a component of the vendor purchaser proceedings.
·     This was an assumption that he had made. However, he had not researched the question.
·     He also understood that the claim could be litigated in an action commenced by writ.
·     He had not addressed his mind to the question of the limitation period, notwithstanding that he was aware of the legal existence of the limitation period.
·     He was not aware as to whether anybody else, specifically Mr Gray, held the view that the claim for damages could be prosecuted in the vendor purchaser summons proceedings.
·     That he had never brought a damages claim for delay in a conveyance as a component of the vendor purchaser summons proceeding before.
·     Given that, as at February 2009, he had not considered whether the proceedings could be brought in the vendor purchaser summons, he could not explain how he had come to that view at a later time.
At par 47 of Mr Hart's affidavit, he expressed his belief that Mr Page, Mr Gray and Mr Fairley also shared his view that the damages claim could be pursued in the vendor purchaser proceedings. He said he formed that belief on the basis that he would have expected that they would have advised him if they had formed the view that he misunderstood that position. This evidence was the subject of objection and permitted by me to be adduced on a de bene esse basis. On reflection, it is clearly inadmissible having regard to the opinion rule, and should not be admitted. However, Mr McElwaine cross-examined Mr Hart about this evidence as follows:
"Well, you're speculating at 47; it's equally probable that two practitioners made the same mistake for a period of time is it?……Yes.
And made that mistake independently?……I concede that."
This evidence supports the conclusion which I have already noted that Mr Hart reached a mistaken view about the availability of the claim proceedings in the vendor purchaser summons unilaterally, albeit that the view he reached was un-researched and, in my view, arrived at without due consideration. The only evidence which he gave concerning the contribution of the defendant's solicitors was in the following question and answer:
"That state of mind was reached without any representation to that effect by the defendant's legal practitioners was there?……I disagree with that proposition. It was maintained by the fact that I had corresponded with the other practitioners in those proceedings. There was no – nothing that they had done initially to create that impression but certainly was maintained by them."
This evidence falls well short of establishing a shared assumption as the conventional basis of the relationship and of establishing that Mr Hart relied on that shared assumption in not commencing the appropriate proceedings within the time limited by law. It, of course, says nothing about whether Mr Gray had formed any view about the question. In any event, I am not satisfied that the possibility that Mr Gray may have made the same mistake had any real impact on Mr Hart's actions. I am satisfied that Mr Hart acted, or did not act, unilaterally, and not because the parties had reached the type of shared assumption that would be needed to support estoppel by convention. As I have already noted, it is highly improbable that an experienced and competent litigation practitioner who had determined to proceed with a litigious claim would rely simply on the type of superficial assumption about jurisdiction and a lack of demur from the other side, in determining that question, particularly when the expiry of the limitation period was imminent. Mr Hart did not place any reliance on the attitude of the defendant because he had not given any real thought to this question, nor had he reached the stage of pressing forward with the litigation.

Conclusion

It follows that I am not satisfied that the plaintiff has made out his claim that the defendant is estopped from relying on the limitation period. In particular, the evidence does not support a basis for the application of a conventional estoppel. Accordingly, the answer to the third question is "No".