Identifying the Harm Done: A Critique of the Reliance Theory of Estoppel

Abstract

Equitable estoppel affords a cause of action in Australian law, but the nature of the wrong that generates an action in estoppel is much disputed. Theorists fall into roughly two camps: those according to whom an action in estoppel is an action on a promise, and those according to whom the action springs from the breach of a duty to prevent harm due to reliance. Both theories enjoy scholarly support, although the reliance thesis is clearly favoured among Anglo-Australian commentators.

The cases do not speak with a single voice as to which is the correct view of estoppel. Judicial pronouncements abound in support of the reliance thesis, but only rarely does detrimental reliance define the relief granted in estoppel. Virtually all successful pleas of estoppel in Australian courts result in the promisor being compelled to render performance of the promise or its equivalent. In this paper I argue that the authorities are equivocal as to which theory is correct because neither tells the complete story. Estoppel seeks to prevent harm to those who rely on others, but that harm is defined as much by the promise as by the reliance it induces.

Keywords: Estoppel, Australian Estoppel, Promise, Reliance