Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387

Facts

• Maher, the owner of a parcel of land, and Walton Stores, a retail company, engaged in negotiations concerning the lease of Maher’s land.
• The contemplated agreement involved Maher demolishing an existing building and constructing a new one to Walton Stores’ specifications.
• Although no formal contract was executed, Maher began demolition and construction in expectation of a formal lease.
• Walton Stores later withdrew from negotiations, leaving Maher without a contract and having incurred significant expenses in reliance on Walton Stores’ assurances.
• Maher initiated legal proceedings, alleging Walton Stores should be estopped from withdrawing after his detrimental reliance.

Issues

1. Whether promissory estoppel could operate as a cause of action in the absence of a formal contract or pre-existing legal relationship.
2. Whether it was unconscionable for Walton Stores to withdraw after Maher undertook substantial work in reliance on their assurance.
3. Whether the requirements of promissory estoppel—clear promise, reliance, and detriment—were satisfied in this case.

Decision

• The High Court of Australia ruled in favor of Maher, holding that Walton Stores was estopped from retreating from their promise to enter into a contract.
• The Court found it unconscionable for Walton Stores to resile from their assurance after Maher acted to his detriment based on that assurance.
• Promissory estoppel was recognised as providing an independent basis for legal relief, not merely a defence, where there was unconscionable conduct.
• The Court affirmed that promissory estoppel could apply even in pre-contractual negotiations and without a pre-existing contractual relationship.

Legal Principles

• Promissory estoppel prevents a party from retracting a promise relied on by another to their detriment, even without formal consideration.
• The doctrine can provide an independent cause of action, not just a defence, where one party relies to their detriment on another’s assurance and it would be unconscionable for the promisor to withdraw.
• The case established the necessity of a clear promise, reliance by the promisee, and detriment suffered as a result of that reliance.
• Unconscionability is fundamental when determining whether promissory estoppel applies.
• The decision marked a departure from traditional common law limits, extending promissory estoppel beyond defensive use.
• The approach in Walton Stores v Maher was not adopted in all jurisdictions; for example, English law in Baird Textile Holdings Ltd v Marks & Spencer [2001] EWCA Civ 274 maintains a more restrictive approach, keeping promissory estoppel as predominantly defensive.

Conclusion

Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 significantly expanded the scope of promissory estoppel in Australian law, permitting it to function as a cause of action and provide remedies for detrimental reliance in the absence of a formal contract, with the doctrine grounded in considerations of unconscionability.