THE OPERATION OF ESTOPPEL BY DEED
101The plaintiff asserts that the defendants are bound by the Loan Agreement, the Supplementary Loan Agreement and the Deed of Charge such that they are estopped from denying that the sum of $550,000 was advanced by Mr Isaac to the first defendant. It relies upon the concept of "estoppel by deed" which, by reference to Offshore Oil NL v Southern Cross Exploration NL (1985) 3 NSWLR 337 at 340-341, it characterises as a subset of the concept of "estoppel by convention".
102The plaintiff's case is predicated on five propositions which require notice, if not examination. First, that each of the Loan Agreement, the Supplementary Loan Agreement and the Deed of Charge is a deed. Secondly, even if they are not deeds the defendants are bound by those instruments as if they were deeds. Thirdly, upon their proper construction each of the deeds is capable (by reference to its terms, if not a recital) of supporting an estoppel against the defendants. Fourthly, the plaintiff is entitled to relief against the defendants on the basis that, as between it and the defendants, the defendants are bound by an estoppel by deed or, in the alternative, an estoppel by convention. Fifthly, estoppel by deed is a subset of estoppel by convention.
103An analysis of these propositions is necessary for several reasons. First, there is a disconnect between quantification of the first defendant's indebtedness in each of the Loan Agreement and the Supplementary Loan Agreement and the Deed of Charge (on the one hand) and (on the other) the amount in fact lent by Mr Isaac to the first defendant at the time of execution of the respective Agreements. Secondly, the plaintiff relies upon the existence of an acknowledgement of indebtedness, in the amount it claims in these proceedings, in the Supplementary Loan Agreement and the Deed of Charge. Thirdly, after the date of those two instruments Mr Isaac did, in fact, lend the first defendant additional moneys, taking her total indebtedness beyond the amount formally acknowledged in the instruments as having been received by her. Fourthly, the plaintiff took an assignment of Mr Isaac's rights under the instruments without notice of the disconnect between the documented and actual levels of indebtedness.
104Fifthly, the plaintiff took that assignment without prior notice to the defendants and in circumstances in which (but for the defendants' execution, and delivery to Mr Isaac, of the instruments) there is no evidence of any representation made to the plaintiff by the defendants, personally, about the existence or level of their indebtedness so that, unless their delivery of the instruments to Mr Isaac can be taken as having armed him to make representations to third parties about their obligations vis á vis him, the plaintiff cannot establish an estoppel against the defendants in its own right personally: Spencer Bower, Estoppel by representation (Lexis Nexis, UK, 4th ed, 2004), paras [VI.2.8]-[V.2.9] on pp 140-141 and paragraph [VIII.14.1] note 3 on p 203; cf, Norton on Deeds (2nd ed, 1928), p 213. Sixthly, Mr Isaac (assignor to the plaintiff) is not a party to these proceedings and the defendants have not sought any equitable relief calling into question the enforceability of the Loan Agreement, the Supplementary Loan Agreement or the Deed of Charge according to their terms.
105Estoppel by deed. The essential idea of estoppel by deed is that a party who, by entry into a deed, expresses a solemn intention to be bound by a particular proposition will, in proceedings against a party entitled to the benefit of the deed, be precluded (ie, stopped), by reason of entry into the deed, from denying the truth, or at least the operation, of that proposition: K.R. Handley, Estoppel by Conduct and Election (Thomson, Australia, 2006), ch 7; Spencer Bower, Estoppel by Representation (4th ed, 2004), ch 8, pp 201-208; R.F. Norton, A Treatise on Deeds (Sweet & Maxwell, London, 1928), pp 211-215, 225-228 and 626-627; P.W. Young, C. Croft & M.L. Smith, On Equity (Law Book Co, Sydney, 2009), para [12.80].
106Estoppel by convention. The essential idea of estoppel by convention is that parties who have conducted their relations with each other on an agreed or assumed state of affairs (adopted as the conventional basis of their relationship) will, in proceedings against one another, be estopped from denying that agreed or assumed state of affairs: Handley, Estoppel by Conduct and Election, ch 8; Spencer Bower, Estoppel by Representation (4th ed) ch 8, pp 179-201; Young, Croft & Smith, On Equity, para [12.100].
107Parties to an estoppel. The operation of an estoppel is not necessarily confined to the original parties to it; the benefit and burden of an estoppel may pass to third persons: Young Croft & Smith, On Equity, para [12.120]. An estoppel may be enforceable by or against a person (such as an assignee) who is "privy" to the estoppel: Partridge v McIntosh and Sons Ltd (1933) 49 CLR 453 at 462-463, 465 and 466-467; Effem Foods Pty Limited v Trawl Industries of Australia Pty Limited (1993) 43 FCR 510 (on appeal from Gummow J, (1992) 36 FCR 406) applying Ramsay v Pigram (1968) 118 CLR 271, implicitly following Coke on Littleton with reference to "privies of blood, of title and of interest".
108An estoppel by deed can, generally, be relied upon by anyone who can sue on a deed against anyone who can be sued on it: Spencer Bower, Estoppel by representation (4th ed, 2004), para [VI.2.10] on p 142 and paras [VIII.14.1]- [VIII.14.2] on pp 203-204.
109Each of the three instruments constitutes both a contract (between Mr Isaac, on the one hand, and one or both of the defendants on the other) and property. The fact that the Loan Agreement and the Deed of Charge both expressly contemplate enforcement of the first defendant's obligation to pay a principal sum against real estate, and the lodgement of a caveat to "secure" performance of that and ancillary obligations, is indicative of the proprietary character of statements made in the Loan Agreement, the Supplementary Loan Agreement and the Deed of Charge as interlocking instruments. Statements made as to the first defendant's indebtedness were not intended to be for the benefit of Mr Isaac alone, incapable of assignment to a third party such as the plaintiff.
110If (as I find) Mr Isaac was at the time of his assignment of rights entitled to the benefit of an estoppel by deed, that entitlement was capable of transmission to the plaintiff as an incident of the assignment. The subject matter of the estoppel was a recognised form of property: a chose in action in the form of a debt.
111Independently of principles governing privies, an estoppel may have scope for operation beyond persons known or knowable where, for example, a representation is made to "all the world" and it is available to be, and is in fact, relied upon. An example of this is where a creditor has relied upon a search of the business names register in dealing with a "business name" and is, by reason of that reliance, entitled to sue a "registered user" of the name: Re Johnson; Ex parte Greendale Engineering & Cables Pty Limited (1967) 11 FLR 335; Aikman v Brown (1973) 1 ACTR 121. Cf, Pethybridge v Stedikas Holdings Pty Limited [2007] NSWCA 154.
112It is not necessary to determine the question whether, had Mr Isaac's entitlement to an estoppel by deed not passed to the plaintiff by assignment, the defendants (by their execution of deeds and their delivery of those deeds to Mr Isaacs) armed Mr Isaacs to hold them out, or held themselves out, to the world, including the plaintiff, as under an obligation to Mr Isaac (including an obligation of debt on the part of the first defendant) so as to ground a personal entitlement in the plaintiff to an estoppel by conduct.
113On the facts of this case I am satisfied that the plaintiff, as Mr Isaac's assignee, is entitled to rely upon an estoppel by deed against each of the defendants.
114Classification of estoppel by deed. In the absence of clear authority binding me to a contrary conclusion, I doubt the plaintiff's proposition that estoppel by deed is a subset of estoppel by convention. I accept that estoppel by convention developed by analogy with estoppel by deed (Saleh v Romanous (2010) 79 NSWLR 453 at 459 [53]; Handley, Estoppel by conduct and election, paras [8-002]-[8-003] on pp 116-117); but not that it subsumed it. Development of estoppel by convention as a species of estoppel with rules of its own did not affect estoppel by deed: Handley, para [7-001] on p 109 and para [7-0005] on pp 111-112.
115There is a general perception within the legal community that controversy, uncertainty or fluidity attach to classification of estoppels in the framework of modern Australian law. See, for example, Young, Croft and Smith, On Equity, para [12.80] at p 805, contrasting the judgment of Gummow J in Caboche v Ramsay (1993) 119 ALR 215 at 236-239 with that of Clarke J in Offshore Oil NL v Southern Cross Exploration NL (1985) 3 NSWLR 337 at 340G-341C; and Meagher Gummow and Lehane's Equity: Doctrines and Remedies (4th ed, 2002), para [17]-[005].
116One cannot but notice unresolved debate about whether Australian law embraces a "unified doctrine" of estoppel by conduct. Suggestions that it may (in Legione v Hateley (1983) 152 CLR 406 at 430-437, Foran v Wight (1989) 168 CLR 385 at 411-412 and 435, and Commonwealth v Verwayen (1990) 70 CLR 394 at 411 and 440) are counterbalanced by the High Court of Australia's express reservation in Giumelli v Giumelli (1999) 196 CLR 101 at 112-113 [7] of the question "whether the various doctrines and remedies in the field of estoppel are to be brought under what Mason CJ called 'a single overarching doctrine' or what Deane J identified as a 'general doctrine of estoppel by conduct'".
117Justice Handley's reasoned rejection of generalist theories of estoppel, and his elaboration of a particularist perspective, in Estoppel by conduct and election (ch 1, esp para [1-28] on pp 20-21) counsels caution against adoption of any form of overarching doctrine. It is not necessary for me to explore, further, in that direction.
118Whatever may be the future course of Australian law, in its analysis of principles of estoppel the High Court has to date proceeded (as illustrated by Legione v Hateley (1983) 152 CLR 406 at 430) on the basis that the system of classification, involving three categories of estoppel, associated with the name of Sir Edward Coke (and Coke on Littleton) provides a convenient starting point: see Coke, The First Part of the Institutes of the Laws of England, or a Commentary upon Littleton (18th ed, corrected, 1823; reprinted by Law Book Exchange Limited, 1999); volume 2, pp 352a-352b.
119In Coke's terms, those three categories can be identified as, first, estoppel by record; secondly, estoppel by writing; and, thirdly, estoppel in pais. In modern terms, the same categories may be described as, first, estoppel by record; secondly, estoppel by deed; and, thirdly, estoppel by conduct.
120At least some of the confusion that attends analyses of estoppel appears to stem from four factors. The first is adherence to Coke's terminology for descriptive labels for the second and third of his categories despite long-expressed reservations such as those of JS Ewart (An Exposition of the Principles of Estoppel by Misrepresentation (Stevens & Sons, London, 1900), p 1) and Handley (Estoppel by conduct and election (2006), para [1-007] note 24 on p 4). The second is a focus on the concept of "estoppel" without due emphasis on the continuing importance (and, possibly, variations in meaning across jurisdictions) of the concept of a "deed" independently of the principles of estoppel. The third is a tendency to treat Coke's third category as something other than a residual category, the primary significance of which is that it relates to something other than an estoppel by record or an estoppel by deed distinct from a closed set of cases having some other distinctive, common characteristic. The fourth is a failure to appreciate the fact that, and the extent to which, the development of principles governing estoppel may have been affected by changes in the practice and procedure of courts called upon to consider the operation of an alleged estoppel.
121As Coke's Commentary upon Littleton is the current "good root of title" for Australian law, it warrants direct examination. The following extract is taken from the 18th (1823) edition. Although nothing turns on the point, an Australian lawyer might notice that that edition was current on 25 July 1828, the date appointed for the reception of English law in New South Wales by 9 Geo. IV c 83 (Imp), named the Australian Courts Act 1828 (Imp) by the Short Titles Act 1896 (Imp). As a practice book in common usage, the 18th edition of Coke's Commentary might fairly be taken as representative of law "received" by New South Wales by virtue of s 24 of the 1828 Act. A 19th edition was published in 1832.
122In extracting Coke's commentary, I omit passages specifically referable to the section in Littleton upon which Coke's statements of law were a commentary, footnotes which serve as a gloss on the commentary and the non-exhaustive "rules" governing estoppels (including the first, relating to "privies") which form part of the commentary and follow the passage extracted:
"'Estoppe'," commeth of the French word estoupe, from whence the English word stopped: and it is called an estoppel or conclusion, because a man's owne act or acceptance stoppeth or closeth up his mouth to alleage or plead the truth....
Touching estoppels, which is an excellent and curious kinde of learning, it is to be observed, that there be three kinde of estoppels. viz. by matter of record, by matter in writing, and by matter in paiis.
By matter of record, viz. by letters patents, fine, recoverie, pleading, taking of continuance, confession, imparlance, warrant of attorney, admittance.
By matter in writing, as by deed indented, by making of an acquittance by deed indented or deed poll, by defeasance by deed indented or deed poll.
By matter in paiis, as by liverie, by entry, by acceptance of rent, by partition, and by acceptance of an estate, as here in the case that Littleton putteth; whereof Littleton maketh a speciall observation, that a man shall be estopped by matter in the countrey, without any writing."
123Direct reference to Coke is important for several reasons. First, it offers explanations of the derivation of the word "estoppel" and, to some extent, the expression "estoppel in pais". Secondly, it demonstrates that Coke's second category, although described generally by reference to "writing", was particularised exclusively by reference to deeds. Thirdly, it shows that Coke's third category, illustrated by sundry examples, may be defined, at least in part, by a contrast with the second category insofar as an estoppel involving an absence of "writing" can fall within the third category. Fourthly, supplemented by knowledge that Sir Edward Coke was a leading exponent of the common law (as distinct from equity), it illustrates that, at common law, estoppel was once a rule of evidence rather than a substantive law concept.
124It must be remembered that Coke, a common lawyer, was writing at a time (in the 17th century, circa 1628) when the common law and equity were administered separately, and that the same state of judicial administration pertained at the time of publication (in 1823) of the work here extracted.
125At the time Coke wrote, deeds were the quintessential form of "writing", they constituted a distinctive essential element in an action in covenant, and they served an important evidentiary function in the conduct of a trial by jury: W. Holdsworth, A History of English Law (3rd ed, London, 1944), vol 9 at 130-131 and 144-170, especially 154-157; J.H. Baker, An Introduction to English Legal History (4th ed, London, 2002), pp 318-320; W.J.V. Windeyer, Lectures on Legal History (2nd ed revised, Sydney, 1957), pp 90-91 and 239. Coke's terminology should not be taken, today, as justification for extension of his second category to writing which is not in the form of a deed. Such an extension is apt to undermine clear points of distinction between the second and third categories and, possibly, also the distinctiveness of the concept of a deed under the general law. It may, in particular, cause unnecessary confusion upon a consideration of estoppel by convention.
126The principal differences between estoppel by deed and estoppel by convention are threefold.
127First, estoppel by deed is governed by the existence, and content, of writing recognised by law as having the status of a deed by virtue of compliance with formalities confirmatory of a solemn intention. Estoppel by convention is not dependent upon the existence of writing, let alone a deed. The facts of a particular case might be analysed in terms of an estoppel by convention, albeit that the conventional basis upon which parties have conducted their affairs is embodied in a deed, but a finding of estoppel by convention is not pre-conditioned on the existence of a deed.
128Secondly, estoppel by deed does not (whereas estoppel by convention does) require a person claiming an entitlement to rely on an estoppel, as a primary party to the alleged estoppel, to prove, as a fact, that the parties adopted (or that he, she or it relied, to his, her or its detriment, on) the agreed or assumed conventional basis upon which the parties' affairs have been conducted: Young, Croft and Smith, On Equity, p 805.
129In MK & JA Roche Pty Limited v Metro Edgley Pty Limited [2005] NSWCA 39 at [72] (recently applied by Ward J in Painaway Australia Pty Limited v JAKL Group Limited [2011] NSWSC 205; 249 FLR 1; 91 IPR 298 at [246]-[251]) the Court of Appeal rejected a submission that reliance and detriment are not essential for the existence of conventional estoppel. On the basis of references to Thompson v Palmer (1933) 49 CLR 507 at 547 and Grundt v Great Boulder Proprietary Gold Mines Limited (1937) 59 CLR 641 at 674-675 (which remain central to an understanding of Australian law), and Commonwealth v Verwayen (1990) 170 CLR 394 at 444, Hodgson JA (with whom Beazley and Ipp JJA agreed) held that "common law estoppel by representation or conventional estoppel still requires that the party relying on the estoppel must have 'placed himself in a position of significant disadvantage if departure from the assumption be permitted'".
130A qualification on that statement of principle - more apparent than real - may be that estoppel by convention can arise in circumstances in which parties adopt a convention as the basis of a transaction they are about to enter. When they have acted in their transaction on the basis of the convention then, as regards that transaction, they will be estopped, vis á vis one another, from questioning the truth of the convention. In that class of case, the convention cannot be disputed without destruction of the very basis of the transaction: Dabbs v Seaman (1925) 36 CLR 538 at 548-550.
131Thirdly, the law of deeds is idiosyncratic: eg, Halsbury's Laws of Australia, (Lexis Nexis, Australia), Title No 140: "Deeds and Other Instruments"; Norton on Deeds; Odgers' Construction of Deeds and Statutes (Sweet & Maxwell, London, 5th ed, 1967), Part I; Needham, "Deeds - Formalities" (1985) 1 Aust Bar Rev 3; Mirzikinian v Waterhouse Pty Ltd [2009] NSWCA 296; 400 George Street (Qld) Pty Ltd v BG International Ltd [2010] 2 Qd R 302; Segboer v AJ Richardson Properties Pty Ltd [2012] NSWCA 253; Commentary on Conveyancing Act 1919 , s 36C, Part 3(ss 38-51A) and ss 116-118, together with reference to Real Property Act 1900 NSW, s 36(11), in Peter Young, Anthony Cahill and Gary Newton, Annotated Conveyancing and Real Property Legislation, NSW (Lexis Nexis, Australia, 2012) .
132Estoppel by deed, like an agreement under seal in contract law, derives legal force from the solemnity of a deed. A finding of contract by deed can be made notwithstanding the absence of consideration necessary to support the finding of a simple contract: Roxborough v Rothmans of Pall Mall Ltd (2001) 208 CLR 516 at 556, citing Cannon v Hartley (1949) Ch 213 at 223-224. An estoppel by deed can be found notwithstanding the absence of detrimental reliance on the existence, or provisions, of a deed.
133Estoppel by convention may straddle Coke's concepts of "estoppel by writing (deed)" and "estoppel in pais (estoppel by conduct)" because "an agreed or assumed state of facts ... adopted by ... parties as the conventional basis of their relationship" (Con-stan Industries of Australia Pty Limited v Norwich Winterthur Insurance (Australia) Limited (1986) 160 CLR 226 at 244-245 citing, inter alia, Dabbs v Seaman (1925) 36 CLR 538 at 549) may, or may not, be embodied in a deed.
134Writing extra-judicially, in his essay Concerning Judicial Method, Dixon CJ confirmed that an estoppel by convention (governed by the general principles of estoppel by conduct that he had articulated in Thompson v Palmer (1933) 49 CLR 507 at 547, Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723 at 734-735 and Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674-677) may be found "with or without consideration [,] writing or a seal": (1956) 29 ALJ 468 at 475; O. Dixon, Jesting Pilot (Law Book Co, Australia, 1965), pp 164-165.
135If the category of "estoppel by deed" depends for its application upon the existence of a "deed" (however defined), an "estoppel by convention" not involving a deed must either fall within the category of "estoppel by conduct" or call for expansion of the concept of "estoppel by deed" by analogy. "Estoppel by conduct" is capable of absorbing the concept of "estoppel by deed" - whether or not it be regarded as a subset of "estoppel by convention" - but only at the price of reducing Coke's distinction between "estoppel by deed" and "estoppel by conduct" to next to nothing and, to some extent at least, reducing the significance of the concept of a "deed" under the general law.
136Entry into a deed is, of itself, "conduct" but, in an age of writing, and moreover, electronic media, writing in the form of a deed (which, ultimately, depends for its existence as such on the intention of parties that it operate as a deed) might not strike utilitarian minds as a rational necessity of a modern legal system, particularly as some of the bare formalities historically, customarily required of a deed (such as the affixing of a "seal" in fact or in pretence) lose their connection with everyday life. Nevertheless, deeds continue to have idiosyncratic functionality that underwrites their continued existence.
137In distinguishing estoppel by convention from estoppel by deed a practical point worthy of notice may be that a finding of estoppel by convention may typically require consideration of a broader range of conduct relating to the parties' transaction than estoppel by deed, where the transaction is evidenced by a deed and the only evidence extrinsic to it that might be required is confined to evidence about delivery of the deed.
138There remains utility in working within the analytical framework of Coke's three categories of estoppel.
139The concept of "estoppel by record" is distinguishable from the other two classes because of the centrality to it of a judgment, or the like, in adversarial proceedings. Its central, modern manifestations are probably res judicata (cause of action estoppel) and issue estoppel, distinguished in Blair v Curran (1939) 62 CLR 464 at 531-533. Cf, Jackson v Goldsmith (1950) 81 CLR 446 at 466-467 and Rogers v The Queen (1994) 181 CLR 251. At its periphery are concepts such as the elaboration of Henderson v Henderson (1843) 3 Hare 100; 67 ER 313 in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589; and, possibly, the concept of abuse of process developed by reference to Reichel v Magrath (1889) 14 App Cas 665 in Haines v Australian Broadcasting Corporation (1995) 43 NSWLR 404 at 410B, Rippon v Chilcotin Pty Limited (2001) 53 NSWLR 198 and other cases.
140Continued resort to a distinction between estoppel by deed and estoppel by conduct probably depends upon the continued utility, or otherwise, of deeds. The formal requirements of a "deed" may vary over time, and between jurisdictions, but the essence of a deed is a formal document recording a solemn intention: Manton v Parabolic Pty Limited (1985) 2 NSWLR 361 at 366-369.
141Provided the requisite formalities are complied with, legal consequences may attend the making of a deed without compliance with other requirements of the general law. In the current proceedings, the fact that the Loan Agreement and the Supplementary Loan Agreement both took the form of a deed means that there is no necessity, at law, to consider whether the first defendant's promise to pay the principal sum was, in whole or part, supported by consideration; if they did not take the form of a deed, a question may have arisen as to whether loan advances made before execution of the agreement constituted "past consideration" and accordingly no consideration at all to support a contractual bargain.
142Because a deed derives effect, at law, from the solemnity attaching to compliance with requirements of form it is capable of adaptation to a wide variety of circumstances. It might embody little more than a declaration, an agreement or (by gift, declaration of trust or otherwise) a transfer or reconfiguration of property. The law of deeds, because of its focus on form, permits deeds to straddle, or to stand at the intersection of, substantive law concepts like "contract" and "property". A promise, under seal, to pay a liquidated sum is enforceable as a debt (Alexander v Ajax Insurance Co Limited [1956] VLR 436 at 445) and, at least to the extent that it is capable of assignment, constitutes property.
143The concept, and adaptability, of a "deed" has endured in Anglo-Australian law despite evolutionary changes to legal procedure and substantive law. The tenacity with which it has endured counsels caution against any assumption that "estoppel by deed" can be subsumed in some other category of estoppel.
144Continued use of the expression "estoppel in pais" may explain some of the blurred edges around current deployment of Sir Edward Coke's scheme for distinguishing various types of estoppel. The expression "in pais" may be accepted as literally meaning "in the country": Young, Croft and Smith On Equity (Law Book Co, Sydney, 2009) at para [12.90]. Its application to the concept of "estoppel" might be, one suspects, a reflection of Sir Edward Coke's learning as a common lawyer and the common law origins of "estoppel" as a "rule of evidence": Greer v Kettle [1938] AC 156 at 171.
145Osborn's Concise Law Dictionary (Thomson Reuters, 11th ed, 2009) defines the word "pais" by reference to the expression "in pais" which, in turn, it defines in the following terms:
"[In the Country.] Without legal proceedings or documents. Trial per pais means trial by the country, ie. trial by jury."
146To define the expression "in pais" as "in the area" (by reference to the word "pays" in modern French), as Justice Handley does in Estoppel by conduct and election, para [1-001] on p 1, may be to pass over something significant. The expression "in pais" certainly conveyed to earlier generations the idea of a fact notorious in a community served by the law, but it may have meant more. It may also have conveyed the idea of a question of fact determinable by a jury.
147Historically, the common form of procedure for a party to appeal to a jury to decide facts in dispute was for a party to "put himself upon his country": AKR Kiralfy, Potter's Historical Introduction to English law and its institutions (4th ed, London, 1958) at p 328 note 63; W Blackstone, Commentary on the Laws of England (1st ed, 1765-1769; 9th ed, 1783, reproduced in modern English by Cavendish Publishing, edited by W Morrison, 2001). A jury spoke with the voice of, and for, "the country": W.J.V. Windeyer, Lectures on Legal History (Law Book Co, Sydney, 2nd ed, revised 1957), pp 60-62 and 68 note 28.
148In his treatment of estoppel in A History of English Law (3rd ed, London, 1944), vol 9, at pp 144-146, Sir William Holdsworth made the following observations that may bear upon the close connection between the expression "estoppel in pais" and trial by jury:
"In the 12th and 13th centuries cases were decided [in English law], not by a process of reasoning from evidence offered to the court, but by modes of proof selected by the parties or ordered by the court. In those days the matters relied upon to create an estoppel were regarded as operating as modes of proof which settled the case in much the same way as battle compurgation or ordeal. Probably the earliest way of proving one's case by means of an estoppel, and therefore the earliest form of estoppel, is that which is known as estoppel by matter of record; and it is a direct result of that machinery for the enrolment of pleas which was instituted in the 12th century. In the 13th century statements made by a person under his seal were allowed an effect very similar to the statements contained in a record; and at the close of the medieval period, certain acts, such as the giving of livery of seisin, entry on property, or acceptance of an estate - acts of which the pays or jury might be expected to know something - were given the same effect as statements in a deed. They created an estoppel 'by matter in pais'....
[By the time of Coke] we can see that the modern ideas as to the nature of a trial, which were coming with the development of the jury system, were introducing the modern conception of the nature of an estoppel. Lawyers were ceasing to regard the facts which created the estoppel as a mode of proof, and were beginning to regard them as a conclusive presumption which was raised either by a statement in a record, or by the parties' own words or acts. It was becoming clear that estoppels of the latter sort - estoppels by deed and by matter in pais - depended ultimately on the words or acts of the parties; and, since a trial was coming to be regarded as an adjudication upon the facts in issue by the light of the evidence offered, they were regarded as operating, not as modes of proof, but as conclusive presumptions which precluded the necessity of offering further evidence.
The growth of this modern view of the nature of an estoppel comes out clearly enough in Coke's well-known description - 'it is called an estoppel or conclusion because a man's own act or acceptance stoppeth or closeth up his mouth to alledge or plead the truth'. In other words, it is an admission which creates so conclusive a presumption that no further evidence is admissible, even though that evidence could prove that the real truth was contrary to the presumption. But, when this point had been reached, it was inevitable that the principle should be further developed. There are signs of this development in the common law during the medieval period and later. But at common law the doctrine long continued to be involved in the technicalities which had gathered round it in the Middle Ages, and to be applied mainly in a sphere of the land law. It was developed and broadened mainly by equity, and by its application in a sphere of mercantile law. As the result of these new applications, the common lawyers began to see that the doctrine depended on the fact that the party estopped had so conducted himself that another, in reliance on that conduct, had acted in a manner in which, but for that conduct, he would not have acted. But it was long before the principle in this generalised form found expression. It was not till 1837 that Lord Denman, CJ, stated it in this way in the case of Pickard v Sears, and so rendered possible the development of the modern doctrine of estoppel by conduct. ....
Thus the doctrine of estoppel has accommodated itself to the gradual changes of men's ideas as to the nature of a trial. Originating in an age where the main interest of the trial centred around the modes of proof, it was at first regarded simply as a mode of proof. But, now that the main interest of the trial centres round the evidence produced to prove the issues, it is, in its most important modern form, simply a rule of evidence." [Footnotes omitted].
149The gravitational pull of practice and procedure on substantive law has not ceased to operate since Holdsworth, in 1944, was content to describe the "modern law" of estoppel as "a rule of evidence".
150Some changes in the principles governing estoppel may be causally connected with the decline in the use of trial by jury in civil proceedings, and the commensurate rise in the conduct of judge-alone trials, associated with the operation of Judicature Act systems of judicial administration in Anglo-Australian law. The tendency has been towards recognition of estoppel as a substantive law principle rather than a rule of evidence (The Laws of Australia (Thomson Reuters), "Unfair Dealing: Estoppel", para [35.6.10]; Handley, Estoppel by conduct and election, para [1-007] note 24 on p 4, and paras [1-010]-[1-014] on pp 6-9; Young, Croft and Smith, On Equity, p 809 note 97), and towards acceptance that estoppel can operate in relation to a question of law rather than in relation only to a question of fact (Handley, Estoppel by conduct and election, para [2-013]; Heggies Bulkhaul Ltd v Global Minerals Australia Pty Ltd (2003) 59 NSWLR 312 at 348 [149]-[154]). Distinctions between adjectival and substantive law, and between questions of fact and law, do not have the practical utility for a judge-alone trial that they can have in a jury trial where a judge is charged with supervision of the fact finding functions of laymen. Some perceived changes in the law governing estoppel may be but, or largely, adaptations of the same underlying concept(s) to changes in procedure.
151Development of the modern tendency to treat principles of estoppel as part of our substantive law rather than merely as a rule of evidence may, in particular, be traced, at least in part, simply to the practice of courts: Spencer Bower, The Law relating to estoppel by representation (4th ed, London, 2004) at paras [1.4.4]-[1.4.6], on pp 14-16. A rule of evidence is generally regarded as determining the admissibility of evidence that may be adduced in support of findings of fact, to which substantive law might be applied, to produce an outcome in adversarial proceedings. As a matter of practice, courts (more particularly, courts constituted by a judge sitting without a jury) have for many years not uncommonly proceeded on the bases that: first, the availability or otherwise of an estoppel can, as a matter of convenience, be determined upon publication of a final judgment, after receiving not only evidence said to ground an estoppel but also evidence which, if an estoppel were to be applied as a rule of evidence, could have been ruled to be inadmissible; and, secondly, all the facts relied upon as establishing, or refuting, a claim to estoppel should be pleaded. Before courts were prepared to characterise estoppel as a principle of substantive law the legal profession at large first ceased treating it simply as a rule of evidence. Theory sometimes follows practice, rather than precedes it.
152In an era in which trial by jury has all but been abolished in civil proceedings, the expression "in pais" is foreign to the vernacular, and some at least of the estoppels in vogue have their origins in equity, continued use of the expression "estoppel in pais" is a remarkable example of the persistence of language in the law if not an impediment to its understanding.
153Estoppel by conduct is capable of embracing a wide variety of more particularly described forms of estoppel, one only of which is "estoppel by convention". Estoppel by deed is not one of them if deeds are to retain their distinctive character. Estoppel by deed has a lineage all of its own which continues to shine through other legal categories to which it may, from time to time, be subordinated: eg, Spencer Bower, The Law relating to estoppel by representation (4th ed, London, 2004), para VIII.12 on pp 203-208.
154The character of the security instruments as deeds. There is no dispute in these proceedings that the Loan Agreement, the Supplementary Loan Agreement and the Deed of Charge were duly executed by the parties or that they appear, on their face, to be entirely regular. As each of the instruments is expressed to be a "deed" and to have been "signed, sealed and delivered" by each party it follows, I believe, that there is no serious challenge to the character of the security instruments as deeds.
155Section 38(3) of the Conveyancing Act 1919 NSW provides that every instrument expressed to be an indenture or a deed, or to be sealed, which is signed and attested in accordance with that section is deemed to have been sealed.
156In accordance with a requirement of section 38(1) of the Act, each of the Loan Agreement, the Supplementary Loan Agreement and the Deed of Charge was attested "by at least one witness not being a party to the deed". It matters not that the defendants' execution of the latter two instruments (by a person purporting to have executed them as an attorney) is not attested by a non-party witness. Section 38(1) does not, in terms, require each and every signature to have been attested by a non-party witness: Ellison v Vukicevic (1986) 7 NSWLR 104 at 112D-G (read with 107G-108D), affirmed in Vukicevic v Alliance Acceptance Co Limited (1987) 9 NSWLR 13.
157Even if the defendants' mode of execution of the instruments was defective, in equity a party who knowingly takes the benefit of a deed may be bound by it even without execution of it: Lady Nass v Westminster Bank Limited [1940] AC 366 at 373. The defendants took the benefit of the instruments in that they allowed Mr Isaac to continue to lend money to the first defendant (beyond the amount formally acknowledged in the instruments as having been received) on the faith of their purported execution of the instruments.
158Physical delivery of a deed is not necessary; delivery is a matter of intention: Xenos v Wickham (1866) LR 2 HL 296 at 312-313; Macedo v Stroud [1922] 2 AC 330 at 337; Federal Commissioner of Taxation v Taylor (1929) 42 CLR 80 at 85 and 87. Prima facie, execution imports delivery and there is, in this case, no evidence to rebut a finding of delivery: Hooker Industrial Developments Pty Limited v Trustees of the Christian Brothers [1977] 2 NSWLR 109 at 116F, 118D-119B and 119E-F.
159Construction of the deeds as supportive of an estoppel. Not every statement made in a deed is capable of supporting an estoppel. It is generally said that a statement capable of supporting an estoppel must be precise, clear and unambiguous, read in the context of the deed as a whole. That seems to be an abiding requirement: Coke on Littleton, para [352b], second rule. More technical requirements of earlier times appear largely to have melted away. The law appears no longer to confine an estoppel to statements of fact as distinct from statements of law; express as distinct from implied statements; and statements contained in a recital, as distinct from an operative part, of a deed: Spencer Bower, Estoppel by representation (4th ed, 2004), para [VIII.17.1] on pp 2005-2007; Handley, Estoppel by conduct and election (2006), para [7-002] on pp 109-110. It is, perhaps, a measure of the evolution of the concepts of a deed, and estoppel by deed, that contrary views of the law on such basic topics can be found in reputable works, with a consensus apparently emerging but slowly.
160For present purposes, it is not necessary to dwell on points of disagreement in the authorities. The Loan Agreement, the Supplementary Loan Agreement and the Deed of Charge jointly and severally contain statements in which the first defendant's indebtedness is acknowledged, and particularised as arising from a request for the provision of money by way of loan, an agreement to lend and an agreement to repay moneys lent, and an acknowledgement of receipt of moneys lent. The Deed of Charge, to which the Mr Isaacs and both defendants are parties, contains a clear statement (in a preliminary section entitled "Introduction" which bears the character of recitals) that "[the] total amount outstanding under the Loan Agreement and the Supplementary Loan Agreement is $550,000".
161That statement provides a bedrock for a finding that the instruments, on their proper construction, are capable of supporting an estoppel by deed.
162Enforceability of a "Receipt" clauses in a deed. Law and equity may have different fields of operation in the context of an estoppel by deed. A classic example of that, required to be considered in these proceedings, relates to the refusal of equity to countenance enforcement of an estoppel arising from a receipt clause in a deed if money acknowledged to have been received has not in fact been paid: Greer v Kettle [1938] AC 156 at 170-172; Cousens v Grayridge Pty Limited [2000] VSCA 96 at [58].
163Neither a receipt in the body of a deed, nor a receipt indorsed on a deed, was, in equity, conclusive that moneys recorded as having been received were in fact paid: Norton on Deeds (2nd ed, 1928), pp 226-228, and p 213 (para 4); Conveyancing Act 1919 NSW, ss 39-40; Reliance Finance Corporation Pty Ltd v Heid [1982] 1 NSWLR 466 at 483C-484B, affirmed in Heid v Reliance Finance Corporation Pty Ltd (1983) 154 CLR 326. Equity's divergence from the common law was founded upon the availability, on the facts of a particular case, of an equitable remedy (such as rectification or rescission precluding the enforcement of an estoppel that would otherwise arise from the terms of the particular deed).
164The rationale for the difference between law and equity is important here because, as between the original parties to the Loan Agreement, the Supplementary Loan Agreement and the Deed of Charge, a question may have arisen as to the enforceability of any estoppel arising from the acknowledgement of receipt of a precise principal sum (namely, $450,000 in the Loan Agreement and an additional $100,000, bringing the sum to $550,000 in the Supplementary Loan Agreement and the Deed of Charge) in circumstances in which, at the date the particular deeds were made, lesser sums had been paid.
165However, on the facts established by the evidence the plaintiff took an assignment of Mr Isaac's rights under the deeds without notice of any (temporary) deficiency in the amounts paid, compared with the amounts acknowledged as having been received, at the time the deeds were made.
166The consequence is that the defendants are unable to set up as against the plaintiff any equity which they may have against Mr Isaac arising from mis-statements in the deeds as to the quantum of the first defendant's indebtedness and the plaintiff is entitled to a judgment in debt in the sum of $550,000 and ancillary relief: Odgers' Construction of Deeds and Statutes (5th ed, 1967), pp 165-167.
167Should Mr Isaac and the defendants hereafter engage in litigation - assuming that they are not precluded by the passage of time, their conduct or compromise of earlier proceedings from doing so - equitable principles may require that adjustments be made so as to ensure that the defendants do not bear the burden of having to pay (to Mr Isaac and his assignee, the plaintiff) more than the total amount of moneys actually advanced by Mr Isaac. An equitable principle against double recovery may operate to protect the defendants: cf, Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 at 455-456 [101] note 92.