Analysis of Waltons Stores v Maher: Promissory Estoppel Case

This case study provides a comprehensive analysis of the landmark Australian contract law case, Waltons Stores (Interstate) Ltd v Maher (1988), focusing on the doctrine of promissory estoppel. The case revolves around negotiations between Waltons Stores and Maher for the lease of a property, whe...Read More

CASE ANALYSIS
Waltons Stores (Interstate) Ltd v Maher (1988)
STUDENT ID:
[Pick the date]

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

that the promisor must conduct in a manner so as to make the promisee believe that the
promise would be fulfilled or the contract would be enacted with regards to fulfilment of the
promise. Also, the conduct of the promisor during the performance of the action by the
promisee should be such that the promisor does not express the intention of not going ahead
with the promise due to which the equity needs to be established by the court despite non-
enactment of contract (Paterson, Robertson and Duke, 2015).
Analysis of case and legal arguments
Based on the underlying case facts, it is apparent that in the given case, the plaintiff is Maher
while the defendant is Walton Stores. The key allegation on part of the plaintiff was that the
act of demolishing the old building and erection of the new building was carried owing to
assurance on the part of the defendant that the lease would be executed. The defendant in
their defence cited the absence of enforceable contract owing to which there should not be
any liability.
According to Mason CJ and Wilson J, when the demolishment of the original building began,
the actual contract enforcement had not happened and this was known to the plaintiff as well.
Further, it was also apparent that the promise extended by the defendant was not upheld. In
relation to the application of promissory estoppel, the following commentary was given by
the two judges (Carter, 2012).
“But there are differences between a contract and an equity created by estoppel. A
contractual obligation is created by the agreement of the parties; an equity created by
estoppel may be imposed irrespective of any agreement by the party bound. A contractual
obligation must be supported by consideration; an equity created by estoppel need not be
supported by what is, strictly speaking, consideration. The measure of a contractual
obligation depends on the terms of the contract and the circumstances to which it applies; the
measure of an equity created by estoppel varies according to what is necessary to prevent
detriment resulting from unconscionable conduct.”
Thus, it is apparent that present of unconscionable conduct was considered as necessary.
Considering the case facts, it is apparent that unconscionable conduct on part of defendant
was present. This was established from the fact that even when the information about the
demolishment of the old building was extended to the defendant, there was no
communication to the plaintiff stating that there were certain reservations and hence the

plaintiff should not proceed with the demolishment. Despite developing reservations, the
defendant informed the plaintiff only after more than 2.5 months had already passed. Also,
the fact that plaintiff was convinced about the execution of lease was established from the
urgency of the action and also the settlement in relation to the lease agreement (Paterson,
Robertson and Duke, 2015).
The above stance taken by Mason CJ and Wilson J, was also extended support by Brennan J
who highlighted that promissory estoppel is required in order to prevent unconscionable
conduct and should not be aimed at compelling the promisor to fulfil the promise made. The
other judges i.e. Deane J and Gaudron J also concurred with the decision of the other judges
and therefore it was a unanimous decision to dismiss the appeal of the defendant (Taylor and
Taylor, 2015).
Summary of the Judgement
Based on the above discussion, it is apparent that the judges highlighted the fact that despite
the absence of an enforceable contract, it was possible for the plaintiff to have a remedy in
the form of promissory estoppel. In the given case, the plaintiff for favourable judgement
from the lower court but the defendant appealed to a higher court resulting in case being
landed in High Court. The judges presiding over the case were unanimous in rejecting the
plea of the defendant and thereby upheld the decision of damages being paid to the plaintiff.
An interesting aspect which came forward during the judgement was the fact that promissory
estoppel could not be used as a remedy to ensure that the promisor fulfils the promise made
but it is used as a tool to provide respite to the plaintiff when the unconscionable conduct on
the part of the defendant is present. In the given case, the presence of unconscionable conduct
on the part of the Walton stores is established owing to the excessive delay in communicating
the decision not to execute the lease despite knowing that plaintiff was acting under the belief
that the lease agreement would be executed in a prompt manner (McKendrick, 2013).

References
Andrews, N. (2011) Contract Law 3rd ed. Cambridge: Cambridge University Press.
Carter, J. (2012) Contract Act in Australia. 3rd ed. Sydney: LexisNexis Publications.
Davenport, S. and Parker, D. (2014) Business and Law in Australia 2nd ed.. Sydney:
LexisNexis Publications.
Gibson, A. and Fraser, D. (2014) Business Law. 8th ed. Sydney: Pearson Publications.
McKendrick, E. (2013) Contract Law 5th ed. Basingstoke: Palgrave.
Paterson, J. Robertson, A. and Duke, A. (2015) Principles of Contract Law 5th ed. Sydney:
Thomson Reuters.
Taylor, R. and Taylor, D. (2015) Contract Law. 5th ed. London: Oxford University Press