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Confronting the Forms of Action: the Emergence of Substantive Estoppel Introduction

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Confronting the Forms of Action: the Emergence of Substantive Estoppel Introduction Linda Kirk* CONFRONTING THE FORMS OF ACTION: THE EMERGENCE OF SUBSTANTIVE ESTOPPEL INTRODUCTION The fonns of action we have buried but they still rule us from their graves. 1 he deepest, most crucial problem facing the legal system today is embracing and understanding the significance and effects of the abolition of the forms of action.2 The challenge goes beyond simply an appreciation of the impact of the Judicature Acts on the T procedural features of the law, to an understanding of the role of the Acts in the evolution and development of its substantive doctrines. The passage of the Judicature Acts did little to enhance the development of the legal system. On the contrary, the interpretation of the Acts by the judges in the nineteenth century hindered its development by converting procedural restrictions into substantive doctrines of law. As a consequence, the substantive law became trapped within the interstices of procedure,3 procedure which had been made obsolete by the Acts. This article reveals how the High Court of Australia is taking up the challenge presented by Maitland's immortal words. It is engaged in a process of the further abolition of the fonns of action, beyond that effected by the Judicature Acts. The abolition of the forms of action was thought to have been effected by the Judicature Acts of 1873-1875. These Acts sought to fuse the administration of common law and equity, and to remove the fonns of * LLB (Hons) BEe. This is a modified version of a dissertation submitted in partial fulfillment of the requirement for an Honours Degree in the Faculty of Law, University of Adelaide, 1990 entitled "Burying the Ghosts of the Past: The Abolition of the Forms of Action. Maitland, The Forms of Action at Common Law (Cambridge, Cambridge University Press 1976) pl. 2 Detmold, "Australian Law: Freedom and Identity" (1990) 12 Syd LR 482 at 511. 3 Maine, Early Law and Custom (John Murray, London 1883) p389. 226 KIRK - CONFRONTING FORMS OF ACTION action. However, in fact, the effect of the Acts was simply to remove the procedural restrictions which the fonns imposed. They did not remove the requirement of establishing a cause of action in a substantive sense. Courts continued to require that plaintiffs establish a cause of action before a claim would succeed. However these causes of action were inextricably linked to the old common law forms of action in that the procedural requirements of the forms, such as consideration, still had to be satisfied before a claim could be successfully made out. To this extent, the forms of action continued to dominate the law, emerging as substantive requirements where they had previously been merely procedural limitations. The fusion of law and equity also played an important role in the development of the substantive law in the post-Judicature system. Prior to the passage of the Judicature Acts, law and equity existed side by side and developed their own rules for the enforcement of representations. At common law, in order for a promise or representation to give rise to legal consequences, it was necessary for the plaintiff to establish either contract or fraud fonn of action. However equity took a more lenient approach, and looked not so much to the requirements of the fonns, but to the substantive merits of the case when deciding whether the equitable jurisdiction could be invoked and equitable remedies provided. Equity's approach was reflected in its attitude to both contract and fraud forms of action. Its concept of consideration was more broadly based and it would enforce an agreement where the common law would refuse to do so. Furthermore, equity's approach to fraud was more sympathetic in that it did not require proof of actual dishonesty. The development of fraud in equity gave rise to a jurisdiction to make representations good, a jurisdiction which existed alongside contract and fraud forms of action as recognised by the common law. The fusion of the administration of the two jurisdictions of law and equity, as effected by the Judicature Acts, inevitably led to a collision of these two competing and sometimes inconsistent jurisdictions. There was a need to rationalise these two divergent streams if judges were to administer them both in the same court. Inevitably this required one of the two bodies of law to emerge triumphant in the post-Judicature system. It was the common law which was the victor in the field of promissory obligation. Common law concepts of consideration and fraud replaced the more flexible equitable doctrines, reinforcing the continued dominance of the fonns of action. This in turn led to a period of rationalisation of the case law in the now fused system. This was an inevitable result of the common law emerging (1991) 13 ADEL LR 227 victorious in the post-Judicature system. Precedents which were inconsistent with common law conceptions and doctrines had to be over-ruled if the system was to operate efficiently and effectively. The result was the over­ ruling of the line of cases which established a jurisdiction to make representations good. This was the only way that the sanctity of contract fonn of action could be preserved. The result· was to guarantee, in a substantive sense, the dominance of the common law forms of action. This was the state of the law until recent times. However, the High Court case of Waltons Stores (Interstate) Ltd v Maher4 provided a fundamental challenge to this historical development of the law. Through the development of a 'new' fonn of action in promissory estoppel, the case opens up the possibility of regulation of relationships presently untouched by the law. Promissory estoppel as a fonn of action has the potential to resurrect equity from the grave dug for it by the Judicature Acts, and in doing so, to deny the place of the fonns of action in the modern system of law. However the decision did not go so far as to remove the forms of action from the legal system. This is because the Court was trapped within a legal system which is so inherently fonn-bound that its substantive principles cannot be stated independently of the forms of action. As Maine said, "the substantive law is secreted in the interstices ofprocedure".5 However, in Commonwealth v Verwayen,6 Chief Justice Mason indicated his willingness to confront the nineteenth century precedents which guaranteed the continued role of the fonns of action. His Honour's judgment is a classic example of the flexibility which can arise from burying the fonns of action. The case also exposes the rigidity and inconsistencies which result from a continued adherence to the forms of action. The challenge which Waltons Stores and Verwayen present to the law is the task of determining how, once the substantive restrictions of the forms are removed, rights and duties will be determined and remedies provided. Once the shackles of the past have been cast off, it will be possible to develop the substantive law behind the forms of action. 4 (1988) 164 CLR 387. 5 Maine, Early Law and Custom p389. 6 (1990) 95 ALR 321. 228 KIRK - CONFRONTING FORMS OF ACfION ESTOPPEL Before the passage of the Judicature Acts, there was in equity a well developed jurisdiction to 'make representations good' which existed alongside the jurisdiction at common law to enforce 'contracts'. The two jurisdictions were, at the time the Acts were passed, quite divergent and inconsistent in their approach to the enforcement of agreements. The collision brought about by the Judicature Acts required one to emerge victorious. It was the common law which triumphed and the sanctity of a contract form of action was preserved. The jurisdiction to 'make representations· good' emerged as a result of equity's approach to fraud. At common law, from the earliest times, where a representation of fact falsely made was relied on by another, an action lay in the tort of deceit. The leading case was Pasley v Freeman.7 The action for deceit held a person responsible for the truth of an assertion made. When the person making the statement knew it to be false and made the statement with the view of thereby inducing the other to do an act, whereby that person received an injury, an action would lie at his or her suit against the person who made the statement, although he or she may have derived no profit or advantage from it. 8 As the cause of action was fraud in these cases, equity had a concurrent jurisdiction.9 In 1801 in Evans v Bicknell10 Lord Eldon expressed the view that the action in Pasley v Freeman could have been maintained in equity as an obligation to make good a representation known to be false. However in 1805 this principle was applied in equity, where there was no allegation of fraud, in Burrowes v Lock.11 In this case the plaintiff had taken an assignment of the interest of X in a fund of which the defendant was trustee. To the knowledge of the defendant, X had made a prior assignment to Y, yet in response to an enquiry by the plaintiff the defendant, honestly but carelessly, asserted in unambiguous language that the interest of X was unencumbered. 12 7 (1789) 3 Term Rep 51. 8 Dawson, "Making Representations Good" (1982) 1 Cant LR 329 at 330. 9 Hill v Lane (1870) LR 11 Eq 215 at 220-221. 10 (1801) 6 Yes 174. 11 (1805) 10 Yes 470. 12 Today such a case would be characterised as one ofnegligent misrepresentation. (1991) 13 ADEL LR 229 In this jurisdiction, equity went further than the common law and did not enquire whether the person making the statement knew that it was false.
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