David 2
29 Apr 1991
23 May 1996
03 Feb 2005
B.Com. (Hons), LLM.
Legalbrief sm
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Reliance - Whose Onus?

Van Dyke v Sidhu [2013] NSWCA 198

Earlier this year I appeared in a proprietary estoppel case: Rau v Rau [2014] VCC 175. Final addresses were made on 6 February 2014, judgment was given on 3 March 2014. One of the issues that arose was whether the plaintiff had relied on alleged promises to his detriment or whether his life would have been much the same in any event. Reference was made to the New South Wales Court of Appeal decision in Van Dyke v Sidhu [2013] NSWCA 198 and the Victorian Court of Appeal decision in Flinn v Flinn [1999] VSCA 109[1999] 3 VR 712. At the time of the trial the High Court  had granted the respondent in Van Dyke v Sidhu special leave to appeal but the appeal had not then been heard.

On 2 April 2014 the High Court heard Mr Sidhu’s appeal. The appeal did not concern any doctrinal divergence between the two state Courts of Appeal but whether both of those decisions were consistent with High Court’s earlier decision in Gould v Vaggelas (1985) 157 CLR 215.  In particular, the issue was whether a “presumption of reliance” arises once a promise is established.

In Van Dyke v Sidhu the New South Wales Court of Appeal held that in order to prove detrimental reliance a plaintiff claiming proprietary estoppel does not have to prove that “but for” the promise he/she would not have acted in the way he or she did. The Court of Appeal said that to impose such a requirement would be to deny the plaintiff the benefit of the “presumption of reliance”. The content of this presumption is that inducement by the promisor’s conduct may be inferred from the plaintiff’s conduct - thus  the onus of proof shifts to the defendant to establish that the plaintiff did not rely on the promise.

Similarly in Flinn v Flinn relevant promises to bequeath a farm by will were said to have been made in 1988 and in 1993 but there was no explicit evidence of reliance upon the 1993 promise. Brooking JA said it would be remarkable if the promise was not an inducement and that was all that was necessary. He also said that in considering inducement “one should not forget the commonsense and rebuttable presumption of fact that may arise from the natural tendency of a promise”, but cryptically added “compare Gould v Vaggelas”.

It is a rather critical comparison. In Gould v Vaggelas the appellants brought an action in deceit regarding representations about the profitability of the South Molle Island tourist resort in Queensland. The High Court held that whilst an inference may be drawn that a plaintiff acted upon a representation as part of ordinary common sense, and that it was up to the defendant to lead evidence to rebut such an inference, it is necessary to distinguish a mere evidentiary onus from an ultimate onus. In short, the ultimate onus of proving reliance upon the representation still lies with the plaintiff.

It follows that when the High Court gives judgment in Sidhu v Van Dyke, it must resolve whether to affirm its previous reasoning in Gould v Vaggelas or state that the reasoning in the two Courts of Appeal should now apply. I’m tipping that Gould v Vaggelas will carry the day. Watch this space.