Waltons Stores (Interstate) Ltd v Maher (1988) - Case Analysis

CASE ANALYSIS
Waltons Stores (Interstate) Ltd v Maher (1988)
STUDENT ID:
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Executive Summary
The given case relates to Walton stores (“Defendant”) and Maher (“Plaintiff”). There were
negotiations between the two parties which regard to lease of a premise owned by Maher.
One of the conditions for the lease as stated by Walton Stores was that the existing building
would be demolished and a new building would be constructed as per the lessee’s plan.
Having developed the rent and other conditions related to lease, Maher proceeded with the
demolishment of building so as to erect a new building on the premise that the lease would be
executed soon. However, there was a change of mind on part of Walton Stores and hence
subsequently after 2.5 months, Maher was informed about the same. The matter landed in the
Court of Appeals (NSW) since Maher claimed damages on account of promissory estoppel
doctrine. The Court of Appeal ruled in favour of plaintiff. However, owing to appeal by the
defendant, the matter was moved to High Court. The High Court unanimously dismissed the
appeal by the defendant. The key legal argument for the judges was that unconscionable
conduct was present on part of Walton Stores since there was significant delay in
communicating the decision not to enter into lease contract despite being aware of the actions
being undertaken by plaintiff. As a result, damage was suffered by the plaintiff which made
promissory estoppel applicable.
Facts and Issue
There were negotiations between Walton Stores and Maher in relation to property which was
owned by Maher and Walton Stores was interested in leasing so as to set up a department
store. They reached an understanding based on which the existing building on the property
had to be demolished and instead a new building had to be erected so as to suit the needs of
Walton Stores. Agreement had been reached between the two parties in relation to the
underlying rent and other terms although a formal contract had not been signed (Andrews,
2011).
Before starting to demolish the old building, the lease agreement had been finalised by the
contracting parties. Maher informed Walton Stores about the commencement of the old
building demolishment so as to erect a new building as per the requirement of Walton.
However, after the building demolishment had been commenced by Maher, Walton Stores
starting having reservations about the lease deal and hence asked the lawyers to slow down
the deal. But it took them another two months to convey their decision of not going ahead

with the lease to Maher. By this time, Maher had got 40% of the new building completed
(Taylor and Taylor, 2015).
The key issue in the given case is whether Maher can claim damages from Walton stores
even though a formal contract had not been enacted between the two parties. The initial
judgement in the Court of Appeal (NSW) was in favour of Maher and subsequently on appeal
by Walton Stores, the matter landed in the High Court (Paterson, Robertson and Duke, 2015).
Relevant Law
The useful principle in the given case is that of promissory estoppel. This comes into play
when even though a formal contract has not been enacted but still the promise made by the
promisor is held as enforceable if the promisee conducts actions acting the promise would be
enforced in the future. The significance of this principle has been outlined in the Crabb V.
Arun DC (1976) 1 Ch 179 case as stated below (Carter, 2012).
“equity comes in........ to mitigate the rigours of strict law.......... it prevents a person from
insisting on his strict legal rights.... when it would be inequitable for him to do so having
regards to the dealings which has taken place between the parties”
The promissory estoppel principle can be applied to situations where the following conditions
are complied with (Davenport and Parker, 2014).
 A promise is made by the promisor.
 The conduct of the promisor is that the promisee is led to believe that the promise
would be fulfilled in the near future.
 The promisee tends to rely on the promise which proves detrimental to the interest of
the promisee.
 The act of ignoring promise on the part of the promisor is unconscionable.
Also, in Australian context the traditional use of promissory estoppel has been primarily as a
shield for defensive purpose. An example of the defensive use of promissory estoppel is the
Central London Property trust Ltd V. High Tree House Ltd. (1974)1 KB 130 case. With
regards to promissory estoppel, it is imperative to note that mere violation of a promise on the
part of the promisor does not amount to unconscionable conduct. Hence, just on account of
detriment being suffered by the promisee on account of an unfulfilled promise would not
automatically bring into picture promissory estoppel (Gibson and Fraser, 2014). It is essential