Rae & Partners Pty v Shaw [2020] TASFC 14 (22 December 2020)

[2020] TASFC 14

CITATION: Rae & Partners Pty v Shaw [2020] TASFC 14

APPEALED FROM: Shaw v Hanlon [2020] TASSC 2

HEARING DATE: Written submissions: 15, 27 May, 12 June 2020

Estoppel - Estoppel by Deed or Convention - Estoppel by convention - Generally - Whether mutual assumption confined to a matter of fact or can be one of law - Whether assumption of law restricted to one relating to private legal rights.

Con-Stan Industries Pty Ltd v Norwich Winterthur Ltd [1986] HCA 14; (1986) 160 CLR 226; David Securities Pty Ltd v Commonwealth Bank of Australia Ltd [1992] HCA 48; (1992) 175 CLR 353; Bofinger v Kingsway Group Limited [2009] HCA 44; (2009) 239 CLR 269; TEC Desert Pty Ltd v Commissioner of State Revenue (WA) [2010] HCA 49; (2010) 241 CLR 576; Commissioner of Taxation (Cth) v Thomas [2018] HCA 31; (2018) 92 ALJR 746; Fischer v Nemeske Pty Ltd [2016] HCA 11; (2016) 257 CLR 615, considered.

Estoppel - Estoppel by Deed or Convention - Estoppel by convention - Particular cases - Claim for damages conducted by a party's lawyer using proceedings in which the court had no jurisdiction to determine the claim - Time limitation period expired - Assertion of mutual assumption of parties that claim properly being pursued in the existing proceedings - Finding that relevant assumption not adopted by each party because no real thought or due consideration given to the issue - Trial judge erred in that approach -Particular level of deliberation not a preliminary requirement for such a finding - No estoppel by convention in any event because evidence did not establish mutual adoption of assumption.

Third Respondents: Shaun McElwaine + Associates

Judgment Number: [2020] TASFC 14

RAE & PARTNERS PTY (ACN 109 423 645), ROSS HART

v LEE ANTHONY SHAW, BEVERLEY JOYCE HANLON, PHILLIP R PAGE

and DARRELL GREY trading as ZEEMAN KABLE & PAGE (a firm)

RAE & PARTNERS PTY (ACN 109 423 645), ROSS HART

v LEE ANTHONY SHAW, BEVERLEY JOYCE HANLON, PHILLIP R PAGE

and DARRELL GREY trading as ZEEMAN KABLE & PAGE (a firm)

1. I have had the advantage of reading the reasons for judgment of Porter AJ in draft form, for which I am very grateful.
2. Ground 1 in the notice of appeal concerns a passage in the decision of the High Court in Con-Stan Industries Pty Ltd v Norwich Winterthur Insurance Australia Ltd [1986] HCA 14; (1986) 160 CLR 226. The appellants contend that the learned trial judge was not bound by that case to proceed on the basis that conventional estoppel can only arise from a shared assumption of fact, as distinct from a shared assumption of law. I need not express a view as to that contention because, as Porter AJ explains, the cases in which it has been held that conventional estoppel can arise as a result of a shared assumption of law, or of mixed fact and law, relate only to assumptions concerning private legal rights. In this case the shared assumption asserted by the appellants should properly be characterised as a different sort of assumption - an assumption as to general or public law. Such an assumption cannot give rise to conventional estoppel. Thus, if the learned trial judge erred as asserted in ground 1, any such error was inconsequential.
3. I agree with the reasons of Porter AJ as to the other grounds of appeal, and with his conclusion that the appeal should be dismissed.

RAE & PARTNERS PTY (ACN 109 423 645), ROSS HART

v LEE ANTHONY SHAW, BEVERLEY JOYCE HANLON, PHILLIP R PAGE

and DARRELL GREY trading as ZEEMAN KABLE & PAGE (a firm)

1. I have had the advantage of reading the reasons for judgment of Porter AJ. His Honour has set out the facts and the relevant findings of Brett J at first instance: Shaw v Hanlon [2020] TASSC 2.
2. Subject to what follows I agree with his Honour's reasons.
3. Ground 1 should be dismissed. I otherwise agree with the orders his Honour proposes.
4. Ground 1 relates to the scope of the doctrine of conventional estoppel and arises from the debate about whether the doctrine is limited to shared assumptions of fact or extends to shared assumptions of law.
5. It begins with Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226 at [22]. There the High Court (Gibbs CJ Mason, Wilson, Brennan and Dawson JJ) limited the operation of the doctrine to mutual assumptions of fact:

"[22] Estoppel by convention is a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying ... just as estoppel by representation requires a representation of fact, so too estoppel by convention requires the assumed state of affairs to be an assumed state of fact: Greer v Kettle (1938) AC 156, at p 170; Spencer Bower and Turner, Estoppel by Representation (1977) 3rd ed, at pp 167-168 ... The state of affairs relied on by Con-Stan is that the parties conducted their business relationship on the basis that the broker was alone liable to the insurer for the premiums. That is clearly an assumption as to the legal effect of their conduct, and not an assumption of fact. The submission with respect to estoppel accordingly fails."

1. The comprehensive survey undertaken by Porter AJ reveals that some courts have sought to avoid the consequences of this statement in two ways: either to characterise the passage in Con-Stan as obiter and not binding, or to cast the subject matter of the mutual assumption as one of fact in order to bring it within the purview of the doctrine as expressed there.
2. As Porter AJ's survey shows, the weight of authority and academic writing is against confining the doctrine to assumptions of fact. The court's remarks in Con-Stan appear to be regarded as but one example of the doctrine, and not a complete statement of it.
3. Arguments for broadening the operation of the doctrine to include mutual assumptions with respect to matters of private law have a logicality because it seems irrelevant to the issue of reliance and detriment whether it arises from a shared assumption of fact or law.
4. All of that is beyond the jurisdiction of this Court.
5. Accordingly I decline to adopt an approach which avoids the scope of the doctrine as it is articulated in Con-Stan whether that course is considered open because it is obiter or because the weight of authority supports enlargement of the doctrine to include detriment arising from reliance upon mutual assumptions of law. I agree with the cautious approach reflected in Brett J's remarks at [49]. It is neither permissible nor desirable for this court to ignore obiter dictum of the High Court. I respectfully consider such approach to be wrong. For that reason the statement in Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22, 230 CLR 89 at [135] to the effect that Courts of Appeal should follow one another in appropriate circumstances, has no operation.
6. The dichotomy between private law rights and general law is relevant if the doctrine extends beyond matters of fact. The line of demarcation is not always clear, though there are examples which are obviously within one or other category. Contractual rights are plainly private law rights; tax obligations are plainly not. The basis for the differentiation, and the exclusion of matters of general or public law seems to lie in policy considerations: , at is a good example. In the language of that paragraph "the justice of an estoppel" would not permit the parties to proceed on a basis other than that required to be applied universally under the taxing statutes. What is less clear, at least to me, is the situation where a statutory right of general application is created, but the exercise of the right is a matter of personal choice. That is, there is a choice available in respect of a right conferred by general law. In my view the "justice of an estoppel" would permit parties to "create a private arrangement" not to prosecute such right, as the basis for their legal relationship, thereby placing it within the scope of this doctrine, if the doctrine extended beyond matters of fact. I perceive the dichotomy on matters of law, is actually between rights exercisable at will, whether arising under the general law or from private legal relations, and those which cannot be avoided by agreement and must be applied universally.

RAE & PARTNERS PTY (ACN 109 423 645), ROSS HART

v LEE ANTHONY SHAW, BEVERLEY JOYCE HANLON, PHILLIP R PAGE

and DARRELL GREY trading as ZEEMAN KABLE & PAGE (a firm)

1. This appeal is about estoppel by convention. The first appellant is an incorporated firm of solicitors, (R&P). The second appellant, Mr Hart, was a legal practitioner and director of that firm. The respondent, Mr Shaw, is a former client, but these proceedings do not directly involve an action by Mr Shaw against his former solicitors. The outcome of this appeal may, however, resolve three separate actions.
2. In August 2008, Mr Shaw entered into a contract for the purchase by him of a farming property. Beverley Hanlon was the vendor. The settlement date was 5 October 2008. About three weeks after the contract was signed, Ms Hanlon purported to terminate the contract, alleging a failure to pay the deposit, something which Mr Shaw denied. The firm of Zeeman Kable & Page (ZKP) acted for Ms Hanlon at that time. Ms Hanlon and that firm are also respondents to this appeal.
3. Ms Hanlon refused to complete the contract of sale. Acting for Mr Shaw, Mr Hart took proceedings as provided for in s 39 of the Conveyancing and Law of Property Act 1884 (the CLPA). Such a proceeding is commonly known as a vendor purchaser application. On 27 February 2009, Holt AsJ made an order for specific performance, and the sale was completed on 28 May 2009. Shortly before that, Mr Hart had written to ZKP claiming Mr Shaw had suffered financial loss due to the delay in completion.
4. After settlement, the "claim for damages" was then intermittently pursued by Mr Hart. After some initial correspondence with Mr Page of ZKP, in July 2012 the firm of Darrell Grey took over carriage of the matter from ZKP. (Mr Grey was then a sole practitioner, and had been at ZKP.) The lawyers made references to, and documents were filed in, the vendor purchaser proceedings: LDR No 984/2008 (the proceedings).
5. Mr Hart and Mr Grey engaged in sporadic correspondence about the claim. In 2015, Ms Hanlon changed solicitors, and instructed Mr Fairley of Fairley & Associates. In April 2015 after getting counsel's advice, Mr Fairley raised the question of whether the vendor purchaser proceedings could be used to pursue Mr Shaw's claim for damages against Ms Hanlon, and if not, whether the claim may be statute barred by virtue of the . of that Act provides that an action founded on simple contract cannot be brought more than six years after the accrual of the cause of action.

1. I will start with a brief description of estoppel by convention. Drawing from Spencer Bower: Reliance-Based Estoppel, 5th ed, 2017 at [8.2], it is an estoppel from denying a proposition established, not by representation or promise, but by mutual, express or implicit, assent. It is founded on a common assumption of a state of affairs as a basis of the parties' relationship. When the parties have so acted upon that shared assumption that it would be unfair for one party to resile from it, then the other will be entitled to relief. The question of whether the "state of affairs" includes assumptions of law is settled in the United Kingdom and New Zealand; matters of law are included. Whether in Australia the "state of affairs" includes assumptions of law is an issue in this appeal, as is a consequential point of what are relevant matters of "law".
2. In Australia, the key case - and the cause of much debate - is the High Court case of Con-Stan Industries Pty Ltd v Norwich Winterthur Ltd [1986] HCA 14; (1986) 160 CLR 226 (Con-Stan), in which at 244 the Court (Gibbs CJ, Mason, Wilson, Brennan and Dawson JJ) described estoppel by convention as a "form of estoppel founded on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying." Their Honours continued:

"[J]ust as estoppel by representation requires a representation of fact, so too estoppel by convention requires the assumed state of affairs to be an assumed state of fact: Greer v Kettle [1938] AC 156, at p 170; Spencer Bower and Turner, Estoppel by Representation (1977) 3rd ed, at pp 167-168. [T]hat the parties conducted their relationship on the basis that the broker was alone liable to the insurer for the premiums ... is clearly an assumption as to the legal effect of their conduct, and not an assumption of fact". [My emphasis.]

1. The brief description of the principle I have given is deceptively simple. There are a number of aspects which need elaboration. However, when further explained as follows, it suffices for immediate purposes. The trial judge referred to the summary of required elements set out in Sze Tu v Lowe [2014] NSWCA 462, 89 NSWLR 317 at [431], noting it had been accepted and applied in other courts. The summary was originally made by Brereton J in Moratic Pty Ltd v Gordon [2007] NSWSC 5 at [32], approved by the New South Wales Court of Appeal in Ryledar Pty Ltd t/as Volume Plus v Euphoric Pty Ltd [2007] NSWCA 65, 69 NSWLR 603 at [200], and repeated by that Court in Sze Tu.
2. The formulation is as follows:

(a) the plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant;

(c) both parties have conducted their relationship on the basis of that mutual assumption;

(d) each party knows or intends that the other will act on that basis; and

(e) departure from the assumption will cause detriment to one of them.

1. In this case, in reply to the limitation plea Mr Shaw pleaded the content of a number of letters passing between R&P and ZKP which related to the pursuit of "the claim for losses". This correspondence predates the completion date. Mr Shaw further pleaded that subsequent to the completion date, R&P and ZKP agreed that the claim for losses would be determined pursuant to the vendor purchaser proceedings, or conducted themselves as though that claim "would and could be determined" pursuant to those proceedings.
2. Particulars of the agreement between, or conduct of, the firms were provided in the following terms:

"i exchanged multiple letters about the nature and quantum of the claim for losses;

1. sought and provided discovery of documents relevant to the claim for losses;
2. R&P served a Notice of Intention to Proceed in [the vendor purchaser] proceedings on 23 June, 14 June 2012 and 10 March 2015;
3. the defendant filed and served a Notice of Change of Practitioner on 12 July 2012 and 3 February 2015;
4. the defendant's solicitor and R&P signed and filed a consent memorandum dated 17 August 2015 in [the vendor purchaser] proceedings to participate in mediation;
5. the Associate Judge made a consent order for mediation under the Alternative Dispute Resolution Act 2001."

1. I pause to note that in the reply there is no express pleading that R&P and ZKP acted as agents for the respective parties. There is only an assertion that Mr Shaw, by his solicitors, did certain things, including corresponding with Ms Hanlon's solicitors, ZKP. The trial was conducted on the implicit basis that Mr Shaw and Ms Hanlon were not only bound by the conduct of their respective solicitors as agents, but that the states of mind of the solicitors were imputed to them. That is, it was implicitly accepted that the doctrine of imputation extended to an upwards imputation - agent to principal - of the relevant beliefs and states of mind of the solicitors.
2. The only evidence in the trial was given by Mr Hart. His evidence-in-chief was provided by way of an affidavit, and he was cross-examined only by senior counsel for ZKP. I will have to return to his evidence in some detail, but note that the particulars of agreement and conduct, as set out in the reply, were established by documentary evidence. However, the essential factual question which remained was whether there was an agreed or mutually assumed state of affairs in which Mr Shaw's claim "would and could be determined" in the vendor purchaser proceedings.
3. During the trial, there was little if any discussion about the suggestion of an agreed position; the assertion was essentially one of a mutually assumed state of affairs. That state of affairs was given various descriptions, including that the claim for damages could be and was being dealt with in the existing proceedings, and that the claim was justiciable in those proceedings and, absent settlement, would proceed to trial in those proceedings.
4. As to the documentary evidence on which the appellants rely, I will set out a short summary. After Holt AsJ made the order for specific performance, Mr Hart wrote to ZKP in April 2009 under the heading "Shaw v Hanlon; Shaw - purchase from Hanlon", and set out particulars of the claimed loss in connection with the delayed settlement. An offer was sought. In May 2009, Mr Hart sent to ZKP an expert report as to the loss, and asked for an indication of Ms Hanlon's intentions "with respect to Mr Shaw's damages claim". Mr Page responded by letter of 13 May 2009 under the heading "L A Shaw v B J Hanlon - LDR No 984/2008". He raised a number of matters in relation to the damages claim.

1. There are five grounds of appeal. Ground 1 relates to the question of the trial judge's approach to Con-Stan Industries, and the present status of that decision. Paradoxically, ground 2 asserts that the alleged assumption was, in any event, a question of fact. Ground 3 asserts that the only finding reasonably open was that there was a common assumption adopted by the parties as the conventional basis for the conduct of their relationship, while grounds 4 and 5 concern issues of whether certain findings were reasonably open, and the proper approach to fact finding.
2. In their submissions, the appellants firstly address grounds 1 and 2 in that order. They say it is necessary to deal with the ground 1 issue because, although the trial judge's view was not determinative in light of his conclusions of fact, the view "leaves open questions which the Court might need to address if the appeal succeeds on any of grounds 3 to 5." (It seems to me however, that if ground 2 succeeds, the need to decide ground 1 becomes less acute.) The appellants then deal with grounds 4 and 5, with ground 3 - although "the crux of the appeal" - said to depend on the resolution of grounds 4 and 5. This is because, the appellants say, the identified errors in those grounds led to the trial judge failing to make the only finding reasonably open. I do not agree that the grounds operate in this way, but I will later deal with that issue. With that in mind, I will address the grounds in the same order.

1. The appellants assert that the trial judge erred in law in holding that he was bound by the passage in the judgment of the High Court in Con-Stan - set out above - to proceed on the basis that estoppel by convention can only arise from a shared assumption of fact, not of law. Although the terms of the ground might only raise the application of the precedent principle, the arguments concern the import of Con-Stan and the state of the current law in Australia. I should at once say that because of the view I have reached about grounds 3 to 5, a decision on this ground is not necessary to resolve the appeal. However, in the circumstances, as a matter of caution and in deference to the arguments I will examine them and express a view.

1. The trial judge, having set out the relevant passage in Con-Stan, observed that it seems beyond argument that the shared assumption which formed the basis of the asserted convention in this case was as to a matter of law; that is that the claim for damages could be conducted as part of the vendor purchaser proceedings: [2020] TASSC 2 at [41]. His Honour continued:

"[42] However, despite what appears to be a crystal clear statement of principle in the joint judgment of the High Court, it would seem that the question is not regarded as settled, at least in this country. In a number of subsequent cases, including some obiter comments by judges of the High Court, but more so by intermediate courts of appeal, the principle has been found to extend to assumptions of law, at least in respect of matters relating to private legal rights."

1. At [43], his Honour went on to explain that private legal rights are those which arise from contracts or other private legal relationships, a situation that can be distinguished from the effect of the general law, binding on all, as expressed by the common law or statute. His Honour noted that it was arguable that the pleaded mistaken assumption related to general or not private legal rights; that the assumption related to the effect of the CLPA, as well as the common law notion of cause of action.
2. At [44], his Honour observed that if consideration of the question was confined to statements by judges in the High Court "then the matter remains equally confused and uncertain". He said that despite the apparently clear statement in Con-Stan, a number of judges had expressed contrary views. His Honour referred to Foran v Wight [1989] HCA 51; (1989) 168 CLR 385 per Deane J at 435, and Commonwealth v Verwayen (1990) 170 CLR 394 at 413 per Mason CJ, and 445 per Deane J, noting that these statements suggested that estoppel by conduct (one way or another) included assumptions of law as well as fact.
3. In a passage which attracts criticism from the appellants, at [48] his Honour noted the respondents had pointed to High Court cases where the Court "would seem to have expressly eschewed the opportunity to expand the application of estoppel by convention beyond assumptions as to present fact". His Honour cited Bofinger v Kingsway Group Limited [2009] HCA 44, 239 CLR 269 and Commissioner of Taxation (Cth) v Thomas [2018] HCA 31, 92 ALJR 746. At [49], he concluded:

"If I was required to, then it would seem to me that the express statement in Con-Stan must be binding on a single judge of a lower court, in the absence of any clear authoritative subsequent alteration of that position by the High Court. Despite the confused jurisprudential position ..., I am not satisfied that there has been such an alteration. This is the view taken by single judges of the Western Australian Supreme Court in Hancock Family Memorial Foundation v Fieldhouse [2013] WASC 121 and George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434."[3]

1. In essence, the appellants say the trial judge was wrong to conclude that what the High Court said in Con-Stan still represents the law in Australia.

1. The appellants rely on statements made by High Court justices in cases after Con-Stan, and on commentaries in texts and articles which refer to those statements, along with decisions of intermediate appellate courts and at first instance. As to the commentaries, the appellants start with Equitable estoppel in Australia: The court of conscience in the antipodes (2007) 81 ALJ 638 at 645. In that article, Brereton J - speaking extra-judicially - quoted the critical passage from Con-Stan (above) and said that "any requirement that the assumption be a state of facts (as distinct from more) has been discarded." In support, he referred to Eslea Holdings Limited v Butts (1986) 6 NSWLR 175, Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, Foran v Wight (above), Commonwealth v Verwayen (above), Amalgamated Investment & Property Co Ltd (In liq) v Texas Commerce International Bank Ltd [1982] QB 84 (Texas Bank), which was referred to in Con-Stan, and MK & JA Roche Pty Ltd v Metro Edgley Pty Ltd [2005] NSWCA 39.
2. The appellants also refer to Meagher, Gummow & Lehane: Equity: Doctrines and Remedies, 5th ed, (2017) in which the present authors[4] note that the passage in Con-Stan appears to require the assumption to concern facts not law, but refer to Eslea Holdings where "such a requirement was immediately doubted". They go on to say it is widely thought that the doctrine of estoppel by convention extends to assumptions of law.

1. In Con-Stan the question was whether an insurer might recover outstanding premiums from an assured who had already paid them to his broker, but which the broker had failed to pass on to the insurer. The main issues were whether there was an implied term of the contract by virtue of industry custom or usage, or an implied term that payment to the broker discharged the assured's obligation to the insurer. Additional arguments included estoppel by convention. The assured's main arguments having been rejected, the court lastly dealt with the estoppel point. The reasons were short, and I have set out the relevant substance of them above.
2. A number of points can be made about this case. Most, if not all, have been made in cases and commentaries elsewhere. In support of the statement that the existence of an estoppel based on a convention has often been recognised, their Honours cited Thompson v Palmer [1933] HCA 61; (1933) 49 CLR 507 per Dixon J at 547, Grundt v Great Boulder Pty Gold Mines Ltd [1937] HCA 58; (1932) 59 CLR 641 at 657 (Latham CJ), 675-677 (Dixon J), and Texas Bank (above) at 121 (Denning MR), 126 (Eveleigh LJ) and 130-131 (Brandon LJ). In the identified passages from Thompson and Grundt, Dixon J drew no distinction between assumptions as to fact and law. In the former, his Honour simply referred to assumptions, while in the latter, he spoke of an assumption about "a state of affairs". In Grundt, Latham CJ spoke of "an assumed state of facts", but went on to quote with approval Dixon J's statement of principle in Thompson.
3. Moreover, in Texas Bank at 121, Denning MR said parties to a contract might be under a common mistake as to the meaning or effect of it, and if their affairs are conducted on that footing, they are bound by the conventional basis. At 122, his Lordship concluded that relevant underlying assumptions could be either of fact or law. Eveleigh and Brandon LJJ both referred to , , 3rd ed (1977) which stated the doctrine related to assumptions of fact. However, both identified the relevant assumption giving rise to an estoppel as being that a guarantee related to a particular loan. This would seem to be a matter of the legal effect of the guarantee.

"... provides that a court of common law equity may do what is required, but not more, to prevent a person who has relied upon an assumption as to a present, past or future state of affairs (including a legal state of affairs), which assumption the party estopped has induced him to hold, from suffering detriment in reliance upon the assumption as a result of the denial of its correctness."

1. In the same case, Deane J at 443-445 set out matters relating to the content and operation of estoppel by conduct, using enumerated paragraphs. In par 2, his Honour said the central principle of the doctrine is that the law will not permit unconscientious departure by one party from the subject matter an assumption which has been adopted by the other party as the basis of some relationship, course of conduct, act or omission, and which would operate to that other party's detriment if the assumption be not adhered to for the purposes of the litigation. In par 5, his Honour said that the assumption may be of fact or law, present or future. "That is to say it may be about the present or future existence of a fact or state of affairs (including the state of the law or the existence of a legal right, interest or relationship, or the content of future conduct)."
2. Next, there is David Securities. That involved a claim for restitution. The Court held that in relation to the law of unjust enrichment, no valid distinction was to be drawn between mistake of fact and mistake of law. Accordingly, a payer was prima facie entitled to recover monies paid under a mistaken belief of a legal obligation to pay, or that the payee was legally entitled to payment. Enrichment of the recipient is prevented only in circumstances where it would be unjust. This position has parallels with preventing a party from departing from a mutually agreed assumption as to the basis of their relationship.
3. In Kleinwort Benson Ltd v Lincoln City Council [1998] UKHL 38; [1999] 2 AC 349, the House of Lords arrived at the same conclusion in relation to a mistake of law within the law of restitution as did the High Court in David Securities. In the United Kingdom, this decision has been held to mean that a statement as to the law can give rise to an estoppel by representation: Brennan v Bolt Burdon [2004] EWCA Civ 1017; [2005] QB 303 per Maurice Kay LJ at [10], Bodey LJ at [26]; at [33]-[34]; at .

"The reference to an agreed or assumed state of facts (not of law) is significant. In any event, in the present case the agreed facts fall far short of what would be necessary to establish that the priority of the second mortgagee which is now asserted was the conventional basis of the transaction ...".[6]

1. Although, of course deserving of the highest respect, it is at least arguable that those remarks were again obiter. In Meagher, Gummow and Lehane (above) at [17-015], the authors discuss the High Court's judgment in Bofinger, and note that the words in parenthesis - "not of law" - were not expanded upon, saying "It is possible that a court wishes to reserve its position on the point". I would respectfully add that the use of the expression "in any event", immediately after commenting on the significance of the statement in Con-Stan, hardly compels the view it was accepted as correct.
2. Next, there is FCT v Thomas. The facts are a little complex but in short, the Court was asked to resolve two key questions. The first was whether a trustee of a discretionary trust could stream franking credits to beneficiaries of the trust separately from, and in different proportions to, the dividends distributed to the beneficiaries. The second was whether the Commissioner was bound by a decision of the State Supreme Court, in proceedings to which he was not a party, in carrying out duties under the tax law. Estoppel by convention was argued. The Full Court of the High Court (Kiefel CJ, Bell, Gageler, Keane, Nettle, Gordon and Edelman JJ) said:

[75] The taxpayers contended that because the Trustee and the relevant beneficiaries of the Trust were all present when the resolutions were passed, and then acquiesced in the tax returns being lodged with the Commissioner, the rights between the beneficiaries were fixed by the actions of the Trustee and the Commissioner was estopped by convention from administering the taxing acts according to law and, instead, had to 'assess in accordance with those rights'.

[76] That contention is flawed. Estoppel by convention is founded on the conduct of relations between identified parties on an agreed or assumed state of facts which the parties are estopped from denying. [Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14; (1986) 160 CLR 226 at 244. See also Fischer v Nemeske Pty Ltd [2016] HCA 11; (2016) 257 CLR 615 at 647 [87], 675 [196].]

[77] Moreover, the justice of an estoppel would not permit parties to create a private arrangement which produced an outcome contrary to law or produced an outcome which required a statutory officer to administer the taxing statutes [ss 3A and 4 of the TAA and s 8 of the 1936 Act] other than according to law. That was, in substance, the effect of the taxpayers' contention. That contention was flawed: the Commissioner is obliged to administer the taxing statutes according to law."

1. It is interesting that in Fischer v Nemeske (referred to in the footnote to that passage), Kiefel J (as she then was) noted an argument based on estoppel by convention, and at [86] explained that the "necessary state of affairs" in the case was the creation of a debt. In relation to the quoted words, her Honour referred to Con-Stan. At [196] Gordon J adopted a similar neutral expression, stating that estoppel by convention operated in relation to "an agreed or assumed state of affairs (adopted as the conventional basis of [the] relationship)". Her Honour cited Con-Stan as the authority for this proposition, along with Labracon Pty Ltd v Cuturich (above) at [106] where Lindsay J used the quoted expression.
2. As to the High Court cases, there is also TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (above), a case noted in Meagher, Gummow and Lehane as appearing to support the proposition that the doctrine extends to assumptions of law. The case concerned a sale agreement relating to items of plant and equipment, and the grant of licences to use other items. Some of the assets disposed of were situated on freehold land owned by the vendor; other assets were on land not owned by the vendor but were the subject of mining leases. The agreement contained a warranty by the vendor that it had title as the owner of the fixtures on the freehold land as distinct from title to the land "notwithstanding the affixation". The sale agreement was assessed for stamp duty as an agreement for the sale of property which consisted in whole or in part of the interest in land.
3. In allowing the appeal in favour of the purchaser, the Court (French CJ, Gummow, Heydon, Crennan and Kiefel JJ) said at [49] that the warranty "provided an agreed hypothesis or convention upon which [the vendor and purchaser] conducted their reciprocal affairs, ...". Con-Stan was cited as authority. The Court went on to say that the agreed assumption the vendor had a distinct title to the relevant fixtures provided consideration for particular payments identified in the agreement. Accordingly, it held that the sale agreement did not involve an agreement by the vendor to vest in the purchasers an estate or interest in land. The agreed state of affairs would seem to relate to the legal effect of the warranty. The limitation to assumptions of fact in to ones of fact passed without comment.

1. Notwithstanding Con-Stan, there is a considerable body of authority endorsing the proposition that an assumption for the purposes of estoppel by convention extends to matters of law, although what are relevant matters of law will need to be considered. As to the essential proposition, there are quite a few cases in which it has been expressly accepted. In some cases resolution of the point was necessary; in others, not so. I have put them in a first category of case. As a second category, there are further cases in which the concept of a matter of fact has been given a rather high degree of flexibility so that, for instance, the existence of a binding agreement is said to be a question of fact. In very large part, what is central to the reasoning processes in all cases are the observations about Con-Stan, and what is to be made of the later High Court cases.
2. As to the following, I do not claim my lists are exhaustive. I have included the cases referred to in the article and texts relied on by the appellants. I should also say that some of the later cases, as would be expected, follow or build on earlier ones, particularly within the one jurisdiction. I will note the primary cases, and footnote those which follow earlier decisions without detailed analysis.
3. In the first category of case are: Eslea Holdings Limited v Butts (above) at 185-189 per Samuels JA, Kirby P agreeing, (McHugh JA dissenting); Farrow Mortgage Services Pty Ltd v Hogg (1995) 64 SASR 450 at 459-460 per Olsson J, Mohr and Bollen JJ agreeing; Falinski v Commonwealth Bank of Australia [1998] NSWCA 76 at 16-17 per Sheller JA, Mason P and Cole JA agreeing; Santos v Delhi Petroleum Pty Ltd [2002] SASC 272 at [489] per Lander J, [644] per Williams J, (Besanko J dissenting); Whitehouse v BHP Steel Ltd at - per Tobias JA, Giles and McColl JJA agreeing; (above) at [71] per Hodgson JA, Beazley and Ipp JJA agreeing; (above) at [194]-[200] per Tobias JA, Mason P and Campbell JA agreeing; (above) at [49]-[52] per Doyle CJ, [108]-[112] per Duggan J (Anderson J at [231]-[236] tacitly agreeing); at - per Pullin JA, [158]-[164] per Buss JA, Steytler P agreeing; , at per Vanstone J, Doyle CJ and Layton J agreeing; at per McLure P, Buss and Newnes JJA agreeing; at per Whelan, Niall and Ashley JJA.

1. Mention of the George 218 case brings me to a point about the trial judge's reasons. In taking the view he did, his Honour seems to have taken comfort from two first instance decisions of the Western Australian Supreme Court. They are The Hancock Family Memorial Foundation v Fieldhouse [No 5] [2013] WASC 121 (Le Miere J) and George 218 Pty Ltd v Bank of Queensland [2015] WASC 434 (Mitchell J). That both decisions went on appeal to the Court of Appeal was not mentioned.
2. In the Hancock case at first instance, Le Miere J referred to Con-Stan, Meagher, Gummow and Lehane, 4th ed, and to Bofinger before at [130] concluding that estoppel by convention cannot be constituted by an agreed or assumed state of law. On appeal - The Hancock Family Memorial Foundation v Lowe [2015] WASCA 38 - McClure P with whom Newnes JA and Beech J agreed assumed that the decision was wrong, but said that in the circumstances of the case there was no need to decide the point.
3. In the George 218 case at first instance, although Mitchell J said he would proceed on the basis of Con-Stan and Bofinger, at [210] he concluded that an assumption about the effect of guarantees, insofar as it involved a mixed question of fact and law, would be an assumption about a state of facts for the purposes of the doctrine of conventional estoppel. His Honour also observed that in any event, the plaintiff did not contend that the assumption was an assumption of law which could not give rise to an estoppel [209]. It was in that context that the Court of Appeal expressed the views as I have set out above.
4. Staying with first instance cases for the moment, there are several in which it was held the operation of the doctrine extends to assumptions of law. Some of the earlier ones were influential in later appellate decisions. The judgments are: ; at 238 (Gummow J); at 242-244 (Ipp J); CJ at CL); , at - (Austin J); , at (Finn J); J); , at (Brereton J); , 39 WAR 1 at [3464]-[3469] (Owen J); at (Blue J); J); J).

1. In Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22, 81 ALJR 1107 at [134], the Court warned about intermediate courts of appeal too readily departing from its pronouncements. It went on to say though, that intermediate appellate courts and trial judges in Australia should not depart from decisions of intermediate appellate courts in other jurisdictions on the interpretation of non-statutory law, as there was "a common law of Australia rather than of each Australian jurisdiction".
2. As I have shown, there is a very considerable body of decisions of intermediate appellate courts that supports the proposition that an assumption for the purposes of estoppel by convention can include matters of law. I have not been able to find any case where a majority has embraced the notion that a relevant assumption is restricted to simple matters of fact. Some have extended the notion of a matter of fact to what are arguably matters of law, or at least are mixed questions of fact and law. I note the above analysis of the High Court cases after Con-Stan. In relation to the first category of intermediate appellate decisions, I find the reasoning processes about Con-Stan and the matter of general principle to be highly persuasive. For those reasons, subject to what follows, I am comfortable in accepting that the law in Australia is that the doctrine extends to assumptions of law.
3. What is quite clear from an overall perspective however, is that the extension of the scope of relevant assumptions to include matters of law is restricted to the legal effect of the parties' conduct, arrangements or relationship, or the legal complexion of facts. The assumption of law must relate to the parties' private legal rights, as distinct from matters of "general" or public law: see for instance Eslea Holdings Ltd at 188; Santos v Delhi Petroleum Pty Ltd at [474]; Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Co Ltd at [164]; GEC Marconi Systems at [426].[11] There is no support for any extension beyond that point.

1. The ground complains that the trial judge erred in holding the asserted assumption was a matter of law. It is said his Honour ought to have held that the shared assumption which formed the basis of the asserted convention was an assumption of fact; that is, the parties were litigating the question of damages in the existing vendor purchaser proceedings, and as a matter of fact the damages question would be resolved in that litigation. "It was not an assumption as to the legal effect of the parties' conduct."
2. The appellants argue that the mutual assumption on which the lawyers based the conduct of their clients' relationship was not that as a matter of law they could conduct the claim for damages in that proceeding, but they were in fact doing so. They do not argue that the asserted assumption comes with an extended meaning of a matter of fact. They argue that all of what the lawyers did in the pursuit of their clients' interests was based on an assumption, which they consciously and mutually adopted, that the damages claim was being pursued and would be pursued to resolution within the existing proceedings.
3. The written submissions continue:

"But there was never any mutual assumption that there was a proper legal basis for that. That is, there was never any mutual assumption as to a 'purely legal state of affairs' (Verwayen per Mason CJ at 413) or as to 'the state of the law' (Foran v Wight per Deane J at 435), because no one ever turned their minds to that." [Original emphasis.]

1. Further, the appellants argue that the mutual assumption was that as a matter of fact Mr Shaw's claim for damages was being pursued, and would be resolved, within the existing proceeding, both sides failing to appreciate that the approach involved a clear departure from the strict legal position; that whatever they might purport to do within the framework of that proceeding, the claim could not be judicially determined in that context. To again quote from the submissions:

"That does not alter the character, or diminish the force, of their mutual assumption of a factual state of affairs in which the lawyers on both sides were conducting the legal relationship between their respective clients within the existing proceeding, making ill-considered and misconceived use of the Court's processes for that purpose."

1. As to these arguments, there is merit in the respondent's point that so framed, the appellants' case is different than that advanced in the pleadings and in the trial. As I explained in the introduction, the alleged assumption was that the parties conducted themselves as though the claim for damages would and could be determined in the vendor purchaser proceedings. An alternative expression was that the claim was justiciable in those proceedings, and absent settlement would proceed to trial. The appellants now seek to limit the assumption to one involving the mere fact that the damages claim was being pursued to resolution within the existing proceedings.
2. This ground was argued on both sides by way of asserted characterisations, and without reference to the evidence. As far as Mr Hart is concerned the starting point must be what he said his state of mind was. As far as Ms Hanlon's lawyers are concerned, the matter is one of inference. As to Mr Hart, in his affidavit he explains all of the steps he took and exhibits the relevant correspondence with Ms Hanlon's various solicitors. The affidavit and the letters show that he was corresponding about a claim for damages. Mr Hart says that in April 2009, after the order for specific performance, he wrote two letters to ZKP in relation to the claim for damages. The second was on 24 April 2009 by which he sent a report from an agricultural consultant regarding the valuation of the loss of use, and invited a proposal to settle the claim for damages.
3. In the affidavit, Mr Hart does not directly speak of his state of mind. In a paragraph that was taken de bene esse, but ruled to be inadmissible in the trial judge's reasons, Mr Hart said he believed Ms Hanlon's various lawyers "also understood that the plaintiff's claims for damages could be pursued pursuant to the originating application". No further evidence-in-chief was led. (The ruling is not challenged in this appeal.)
4. Counsel for the present respondents cross-examined on the point. The relevant passages are as follows:

"Now, in March or April 2009, were you of the view that any damages claimed as a result of delay could be prosecuted in the vendor and purchaser summons proceeding?......I hadn't considered the point.

As at 24th April 2009 had you formed a view about how, and if so, by what mechanism the delay claim could be prosecuted?......No.

That advice, at least the last two paragraphs on the first page [in the letter to ZKP of 28 May 2009], was consistent with the advice Mr Stanton had given you, is that right?.....Well it's certainly not inconsistent with it.

Yep. So, had he advised as at 28 May 2009, whether the delay claim could be prosecuted on the vendor and purchaser summons?.....No he hadn't advised me.

Had you formed that view by then, that is by 28 May 2009?.....No I hadn't.

You were at least aware though were you not, that a limitation period at least potentially applied to the delay claim, weren't you?.....Yes.

You must have formed the view, I suggest to you, that as at 23 June 2011, the delay claim was open in that proceeding?.....I can't explain as to whether I had specifically formed a view as to that. I do know that I delivered the notice of intention to proceed in the only proceedings that were on foot - that was the vendor and purchaser summons.

Well, there was nothing left to be done in the vendor and purchaser summons but for what you believed, I suggest to you, was the prosecution of the delay file?.....I now know that to be the case.

So is it a fair summary, and if I'm being unfair, no doubt you'll tell me, but at all material times between the 23rd of June 2011 and the day the Associate Judge made his second decision, that is, 25 May 2016, your state of mind was that it was open to Mr Shaw to bring the delay claim as a component, or an additional component, of the vendor and purchaser summons proceeding?.....Yes.

And you formed that view because you assumed that that procedure, that is, the vendor and purchaser summons procedure, permitted a subsequent claim for damages for delay, didn't you?.....Yes.

And did you research that question at any time between 23 June 2011 and the time the Associate Judge published his second decision, that is, 25 May 2016?.....No, I didn't.

Is it fair to say that you simply made an assumption without investigating the question?.....No. I don't think it's fair to say that.

Well, at no stage did Mr Page [of ZKP] say or correspond to you, 'Yes, we accept the damages claim can be brought on the vendor and purchaser's summons', did he?.....I accept that."

1. After questioning about Mr Hart's knowledge of the limitation laws and confirming that he intended to advance the damages claim within the vendor purchaser proceedings, the following exchange occurred:

"It's fairly clear, I suggest to you Mr Hart, that as at 21st November 2012 you had the honest belief that that damages claim could be prosecuted in the vendor and purchaser summons?......That it could be, yes.

And that's a view that you formed unilaterally, that is entirely by yourself, isn't it?......I don't know whether anybody else held that view, specifically Mr Grey, but certainly that was a view that I held.

Did you believe at that time [when specific performance was ordered] that your client's claim for damages was still something that had to be resolved in that proceeding?.....I don't believe I addressed my mind to it at that stage. I can recall having been surprised by the fact that an order had been made for specific performance in the proceedings and I put it to one side with a view to completing the transaction. I did, in the context of the completion of the matter, refer to the necessity to potentially relist the matter if Mr Page had placed any conditions on completion or had otherwise refused to complete but I didn't address that issue."

1. Mr Hart agreed that he took out the formal order after Holt AsJ's judgment in February 2009, and agreed that he was then aware that once the formal order was taken out, that was the end of the proceedings. The questioning continued:

"So how did you come to the view that after February 2009, you could revisit that proceeding and claim damages?.....I can't explain that.

Is it fair to say that you just made an error or a mistake?.....I think I can acknowledge that now.

Now, despite that you and Mr Fairley ... agreed to attend mediation?.....Correct.

Was it your view in March 2015 that people could attend mediation in Tasmania, whether or not they were disputants to a legal proceeding?.....That is court-ordered mediation?

Yes?.....If I had turned my mind to it I would have realised that there needed to be proceedings extant for there to be‑

1. The appellants' characterisation of the assumption is selective and ignores the evidence. Mr Hart was pursuing the damages claim within the vendor purchaser proceedings. That is not an assumption in itself; it is a simple statement of fact. Inserting the word "properly" into the appellants' characterisation gives rise to a much more accurate description. To excise from the description his state of mind about the efficacy of the pursuit results in artificiality. Mr Hart said he believed the damages claim could be prosecuted in the vendor purchaser proceedings. That was the relevant assumption.
2. Accepting for the moment a mutual assumption implicit from their conduct, the lawyers were dealing with the claim within the framework of the proceedings mistakenly assuming, as it was originally pleaded, that the Court had jurisdiction to determine that claim. The only thing about which a mistake was made was whether the claim was justiciable in the proceedings. As an assumption that the claim was justiciable in the existing proceedings, it is not just a mere matter of fact. It at least relates to the legal effect of what they were doing. As I have noted, the appellants do not argue that the legal effect of conduct or an arrangement is a matter of fact. That is sufficient to dispose of the ground as framed and argued. There is no need to say any more. Ground 2 fails.

1. Ground 4 complains that the trial judge erred in finding that the parties' conduct of relations between them was limited to the sharing of information, and attempts to settle the damages dispute outside the framework of the existing proceedings. They say the conduct should not have been characterised merely as attempts to settle the claim outside the proceedings. The ground asserts the only finding reasonably open was that the evidence established demonstrable acceptance by both parties, as the foundation for their dealings, that the claim for damages was being pursued, and would as a matter of fact be resolved, within the existing vendor purchaser proceedings.
2. Ground 4 is specifically mentioned in an overview of the appeal, but is not addressed separately from ground 5 in the detailed submissions. With ground 5, it is part of a wider attack on the trial judge's approach. In the overview, the appellants argue the parties' conduct should not have been characterised merely as attempts to settle the question of damages outside the existing proceedings.
3. Ground 5 is in the following terms:

"His Honour's assessment of the evidence proceeded on the erroneous basis that conventional estoppel can only be made out if the parties' lawyers had:

whether the Court would have jurisdiction to determine the question of damages in the existing vendor purchaser proceedings, and neither had done so."

1. In this ground, the appellants provide seven pinpoint references to the trial judge's reasons where the issue is said to arise. They appear in parts of the judgment that deal with different subject matters. The first part is where his Honour discusses the evidence. The next parts are where his Honour makes findings about whether either party adopted the asserted assumption, and if each party did, whether they conducted their relationship on the basis of that mutual assumption and knew or intended that the other would so act. The last part concerns "Reliance and detriment".
2. In essence, the appellants' argument is that the trial judge wrongly approached the matter on the basis that for there to be a finding of assumption as the basis of a convention, the subject matter of the assumption must have been given proper consideration. They say the erroneous approach affects his Honour's approach to a number of the requirements. Those requirements relate to whether each party adopted the assumption, whether there was a mutual assumption, and to the question of whether it would be unjust to permit a departure from the mutual assumption. They say the fact that no real thought or significant consideration had been given to the issue is irrelevant, and that the trial judge has wrongly introduced a qualitative element to the notion of adopting an assumption, which hence called for a comparative exercise in relation to whether there was a mutual assumption. Subsumed within that argument is the ground 4 complaint.

1. As to ground 4, the first relevant comment is that if in fact there was a shared assumption of the parties that the claim was justiciable in the proceedings, it was legally incorrect: [29]. His Honour went on to say that there would not, however, seem to be any reason why the parties could not, as they were doing, take the interlocutory steps of discovery, delivery of expert proofs, particulars of loss, and mediation, which were really limited to the sharing of information and attempts to settle the dispute. "This did not require the framework of a validly constituted action, because it was all happening by agreement."
2. What follows is relevant to both grounds. At [63], when considering the evidence, the trial judge noted Mr Grey's letter of 7 February 2013 in which mutual discovery was proposed. His Honour said it seemed clear both parties were contemplating further steps in the litigation, and as the only proceedings on foot were the vendor purchaser proceedings, presumably the interlocutory steps referred to would be taken in those proceedings. His Honour continued:

"However, it is also clear that neither of these experienced litigation lawyers had given any real thought to the jurisdiction of the Court to determine the claim within those proceedings. ... The most probable explanation [for thinking the claim might be pursued by virtue of the liberty to apply for directions or consequential orders granted by the Associate Judge] is that neither lawyer had given any real consideration to the question of jurisdiction. Up to this point, they had been debating the question of resolution and considering mediation as an appropriate tool of resolution. Of course, mediation did not require extant proceedings, although the proposed order under the Alternative Dispute Resolution Act did require that vehicle. It is probable that the reference to interlocutory steps was a threat employed as part of the process of negotiation. Of course, at this point in time, there was no real need for either solicitor to consider in a detailed way the question of jurisdiction of litigation. " [My emphasis.]

1. After making further comment that the course of events had reached the point at which Mr Fairley started to act for Ms Hanlon, at [64] his Honour said:

"The next written correspondence was on 14 October 2014, when Mr Hart wrote to Mr Fairley advising that he still intended to provide discovery, and suggesting that thereafter the parties confer with respect to mediation. By this time, of course, the limitation period had expired. I infer from Mr Hart's evidence, from the fact that the defendant employed a new solicitor in substitution for Mr Grey, and from the absence of any correspondence or other action by the parties, that the lawyers simply did not give any significant consideration to the matter at all, and certainly not to the question of jurisdiction or limitation periods." [My emphasis.]

1. The more critical parts come within the fact finding exercise. At [69], his Honour said:

"... I am satisfied that, while Mr Hart may have had a superficial belief that the issue of damages could be litigated within the vendor purchaser proceedings, this was not a matter to which he had given any real thought and certainly had not conducted any research into the question. In other words, he had not formed a concluded view. It is apparent that he was focused on resolving the dispute by negotiation, and utilised the extant proceedings simply as a framework within which to conduct those negotiations. In my view, it is apparent that he had not reached the stage of formulating or preparing for litigation, and had not given any real thought to the proper vehicle for the litigation. It is inconceivable that an experienced litigation practitioner, as Mr Hart certainly was, would simply rely upon uninformed assumptions about jurisdiction if he had decided to pursue the issue through litigation. Because he did not give any thought to this process, he did not give any thought to jurisdiction, nor to the question of the limitation period applicable to the claim. Accordingly, his superficial assumption, arrived at for the purpose of providing a framework within which to discuss settlement of the dispute, cannot be regarded as the adoption of an assumption about jurisdiction intended to provide the basis of the relationship between the parties, if the dispute required resolution by litigation." [My emphasis.]

1. As to Ms Hanlon's lawyers, at [70], the trial judge noted that Mr Grey was not called as a witness, and said, "... there is little support in the objective evidence for the proposition that he made any assumption about the question of jurisdiction, nor that he adopted any such assumption as a basis of the relationship with the plaintiff". His Honour said the same thing can be said about the other lawyers who acted for Ms Hanlon, and that "the evidence established no more than that each of them responded to the threatened claim by participation in negotiation." His Honour added the following comments. Mr Grey's reference to the proceedings in early 2013 seemed, in all probability, an offhand reference made without consideration to the underlying issues, and did not support a conclusion that Mr Grey had, on behalf of his client, adopted an assumption about jurisdiction as the basis of the relationship. The last evidence of any involvement on his part was the letter of 7 February 2013. At this time, there was no real need for him to consider the question of litigation.
2. In relation to Mr Fairley, the trial judge said by the time he was engaged, the limitation period had already expired. There was no need for him to consider how the proceedings would be resolved if litigation became necessary, at least until he received the advice from counsel. Taking the approach he did, the trial judge said that in the circumstances, he was "not satisfied that either party adopted the asserted assumption in respect of the disputed damages claim": [72].
3. At [73], his Honour then referred to the third and fourth elements as set out in Sze Tu (above), being requirements that both parties conducted their relationship on the basis of the mutual assumption, each knowing or intending that the other will so act. At [74], his Honour held that even if a case could be made that each party adopted the relevant assumption, the evidence did not support a conclusion as to those requirements. His Honour said that, as he had already noted, the evidence overwhelmingly supported a finding that none of the lawyers involved had given any real consideration to the question of jurisdiction in the event that the negotiations were unsuccessful and the matter required resolution by litigation.
4. He added that "it would be extremely unjust to hold [Ms Hanlon] to a superficial assumption made by [Mr Shaw's] lawyer in circumstances where that lawyer had taken no significant step to press litigation, apart from making threats, simply because [Ms Hanlon's] lawyer did not himself research the question, arrive at a conclusion and then correct the [opposing] lawyer's apparent incorrect assumption."

1. As shown by what I have set out, the trial judge first considered the issue of whether each party had adopted the assumption as the basis of the relationship. That is, each party individually. His Honour found that they did not, but went on to consider mutuality of adoption, and reliance and detriment on the basis that a case could be made that they had. For the purposes of resolving these grounds, I will confine the discussion to that first point.
2. To begin with, the appellants' argument is based on the premise that they are correct in their characterisation of the assumption, as set out in relation to ground 2. That is, the parties assumed the damages claim was being pursued in the proceedings. As I have said, that is correct up to a point, but the relevant assumption extends to the legal effect of what they were doing. That does not mean these grounds immediately fail. The arguments can be considered in light of what I see to be the proper characterisation of the asserted assumption. The criticisms the appellants make of the trial judge's approach and the assessment of the evidence are retained, but to a modified degree.
3. As to ground 4, to the extent that it needs separate consideration my view is that essentially what the trial judge said is not, in strict terms, incorrect. His Honour did say that sharing information in an attempt to settle the dispute did not require the framework of a validly constituted action, but did not say or imply that the parties were attempting to settle the matter outside the proceedings. On the contrary, his Honour acknowledged that Mr Hart, although focused on settlement, was using the proceedings as a framework. At the same time however, he did say Mr Hart's "superficial assumption" was arrived at for the purpose of providing a framework within which to discuss settlement.
4. It is clear that the trial judge's characterisation of the conduct of the parties affected the view he took of the extent to which the lawyers turned their minds to the jurisdictional point. It is that degree of deliberation where the real issue arises but in my respectful view, the trial judge understated the relationship between the steps being taken and the requirements of the prosecution of an action. I think the following things need to be considered.
5. Case management is provided for in Pt 14, Div 1 of the SCR. The stated purpose of that "is to ensure the proceedings are conducted and resolved justly and efficiently": r 414A. One of the things a judge may do to ensure that outcome is to refer the matter to mediation: r 415(4A)(e). Further, r 544 of the SCR provides that, unless dispensed with, the parties to an action are to file a certificate of readiness if the action has reached the stage at which the parties are able to certify to the court a number of things including that a compulsory conference has been held in accordance with r 541. Rule 541 requires the parties to confer on specified matters, including the possibility of settlement. It is not at all uncommon in proceedings, for the usual interlocutory steps to be taken towards trial, but at the same time efforts towards settlement pursued, even with those efforts given priority. In this case, discovery and the provision of particulars were the subjects of communications between the parties, and various notices were filed.

1. The assumption or belief must be subjectively held, and in terms of proof, the making or formation is a fact like all other facts. It can be proved by direct evidence or be inferred from conduct and surrounding circumstances: LCY Pty Ltd v Ma [2017] VSCA 383 at [45]- [46]. I can accept that at a basic or threshold level, a party's thought processes might be relevant to proof that they made an assumption. It would be problematic to say a person has made an assumption about an aspect of a transaction or relationship where the person has no involvement in, or knowledge of that transaction or relationship, and no need to advert to any aspect. Much beyond that point, I have difficulty in seeing how the extent to which a party has considered the issue is relevant to whether the assumption was made or not.
2. There is nothing in the ordinary use of language or in any authority to suggest that before a relevant assumption can be made, there needs to be a particular degree of deliberation. There is nothing in any authority to suggest that a superficial assumption or mistaken belief is not an operative assumption. The difficulty in thinking otherwise is illustrated by the appellants' submission that the impugned approach to the question of making a relevant assumption manifests itself in relation to the issue of mutuality. The argument is that the approach adopted results in an unnecessary comparison of the circumstances and merits of each party's adoption of the assumption. That must be correct. If one party were to adopt a "superficial" assumption, while the other adopted the same assumption after real thought or due consideration, or just a greater degree of deliberation, it could not matter for the operation of the doctrine. That is, provided there is a mutual adoption of the assumption as a convention on which the relationship is thereafter based.
3. With respect, I take the view that the trial judge has introduced an unnecessary requirement into the fact finding exercise as to whether an assumption was made by a party. There is no requirement that the adoption be an "informed" one, or that real thought or due consideration be given to the issue. Accordingly, the trial judge's approach to the question of whether relevant assumptions were made was flawed. It follows from what I have said that these grounds are made out, although the consequences of that need to be considered. The flawed approach relates not only to Mr Hart, but to the Ms Hanlon's lawyers. It underpins the findings that relevant assumptions were not in fact made. It was at that first hurdle that Mr Shaw fell, although the trial judge went on to consider the further elements of estoppel by convention. I accept, as the appellants assert, that the trial judge's approach to whether a relevant assumption had been made flowed through to his consideration of these other elements.

1. By its terms, this ground acknowledges that the trial judge correctly identified "the determinative issue"; that is, whether there was a common assumption that the damages claim could be resolved in the proceedings and if so, whether it was in fact adopted by both parties as the conventional basis of their relationship. The complaint is that the only finding reasonably open on a proper assessment of the evidence was that there was a common assumption adopted by the parties as the conventional basis for the conduct of their relationship. The ground requires an examination of each of the elements considered by the trial judge, bearing in mind what I have said about the erroneous approach to the concept of making an assumption.
2. Accepting for the moment that the appellants can succeed in establishing a convention on which the relationship was based, for them to succeed in the appeal they would need to overcome the problem arising from grounds 1 and 2. Ground 2 has failed; the asserted assumption was not one of fact. The broad issue raised in ground 1 of whether the doctrine extends to assumption of law might be decided in the appellant's favour. But even if it were, such assumptions must relate to private legal rights. It will be recalled that the trial judge said it is arguable that the mistaken assumption in this case related to general law and not private legal rights. Although the case ultimately fails on the facts relating to the mutuality of adoption issue, I observe that for the following reasons, the appellants would also fail on this point.
3. Of course, limitation laws such as the relevant Tasmanian provisions operate to extinguish the remedy and not the substantive right: G E Dal Pont, Law of Limitation, 2016, at [2.3]-[2.4] and the cases cited. Reliance needs to be specifically pleaded. There is presently no doubt that parties may enter into binding arrangements about the applicability of such limitation laws: see Law of Limitation at [2.32]; Verwayen per Mason CJ at 404-406, Brennan J at 426; HM Revenue and Customs v Benchdollar [2009] EWHC 1310; [2010] 1 All ER 174 at . An analogous situation may possibly exist in relation to an understanding reached about the personal service of court process: per Lord Goff at 127.

Was the relevant assumption made by each party?

1. As far as Mr Hart is concerned, my view is that the trial judge's findings of a "superficial belief", a "superficial assumption" and a "mistaken view" are sufficient; Mr Hart in fact made a mistaken assumption albeit made without any real thought. But the evidence is of greater import than that. Mr Hart's unequivocal evidence was that he honestly believed that the damages claim could be prosecuted in the proceedings. That was the view he held as at 21 November 2012. That was the view he said he held "at all material times" between 23 June 2011 (when he filed a notice of intention to proceed referring to "this action") and 25 May 2016, the date of the second decision of the Associate Judge. He said specifically it was his view as at 21 November 2012 when he sent particulars and suggested mediation in relation to the litigation. On that basis, there should be an unqualified finding that Mr Hart made a relevant assumption for the purposes of the operation of the doctrine.
2. As to Ms Hanlon's lawyers, as have I pointed out, the exercise involves the drawing of an inference from the circumstances. The nature of that exercise in a civil case is discussed in Langmaid v Dobsons Vegetable Machinery Pty Ltd [2014] TASFC 6, 24 Tas R 18 at [119]- [122], [124]-[126]. In short, although a court is not authorised to choose between guesses, even on the ground that one seems more likely than another, it is entitled to draw inference from slim circumstantial facts so long as it goes beyond speculation. That said, the court must be "satisfied" in the sense of reaching an affirmative conclusion, or an actual persuasion: s 140 of the Evidence Act , , at - .

Was there a mutual adoption of the assumption?

1. As to the required elements, I note the third and fourth points of the propositional formulation of the doctrine set out in Ryledar and Sze Tu. There are other such formulations. There is that adopted by the Court of Appeal of New Zealand in National Westminster Finance New Zealand Ltd v National Bank of New Zealand Ltd [1996] 1 NZLR 548 - referred to by the trial judge, and adopted in Alpha Wealth Financial Services (above) with the qualification that the assumption must relate to private legal rights. That contains the following:

"... (2) Each party has, to the knowledge of the other, expressly or by implication accepted the assumption as being true for the purposes of the transaction.

(3) Such acceptance was intended to affect their legal relations in the sense that it was intended to govern the legal position between them.

(4) The proponent was entitled to act and has, as the other party knew or intended, acted in reliance upon the assumption being regarded as true and binding."

1. Further, Spencer Bower, 5th ed, at [8.6] contains the following propositions taken from the judgments of Briggs J in HMRC v Benchdollar Ltd (above) and Stena Line Ltd v Merchant Navy Ratings Pension Fund Trustees Ltd [2010] EWHC 1805:

"i) It is not enough that the common assumption upon which the estoppel is based is merely understood by the parties in the same way. It must be expressly, or implicitly by words or conduct from which the necessary sharing can be properly be inferred, shared between them.

ii) The expression of the common assumption by the party alleged to be estopped must be such that he may properly be said to have assumed some element of responsibility for it, in the sense of conveying to the other party an understanding he expected the other party to rely upon it.

iii) The person alleging the estoppel must in fact have relied upon the common assumption, to a sufficient extent, rather than merely upon his own independent view of the matter."

1. Two essential components of that formulation are described by the authors of Spencer Bower as "communication" and "inducement". It is convenient to discuss the present issue by reference to those components.

1. Estoppel by convention depends on mutual assent, not representation. Assumption of the relevant matter must be expressly or impliedly communicated between the parties. There must be some statement or conduct by the party alleged to be estopped on which the other party was entitled to rely, and it is not enough that each of the parties acts on an assumption merely made independently and not communicated to or shared with the other: K. Lokumal & Sons (London) Ltd v. Lotte Shipping Co Pty Ltd [1985] 2 Lloyd's Rep 28 at 34-35; Republic of India v India Steamship Co Ltd (No 2) [1997] UKHL 40; [1998] AC 878 at 913, HMRC v Benchdollar Ltd (above) at [52]. There must be a mutuality such that each party understands that the other party agrees that they deal with each other in a particular manner.
2. Putting it another way, there must at least be "a demonstrable acceptance of a particular state of things, as the foundation for the dealings of the parties"; a need for the evidence to establish that the parties accept as the basis of their relations the assumption contended for: Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd [1989] 2 Qd R 40 at 46 per McPherson J. See also Thompson v Palmer (above) at 547, National Westminster Finance New Zealand Ltd v National Bank of New Zealand Ltd (above) at 550.
3. This brings me to the argument carried over from the previous grounds. The appellants say the trial judge wrongly took the view that there is a requirement - to quote from the submissions - that the parties "expressly undertook and pursued their dealings on the basis of an express mutual adoption of that position". This is said to arise from his Honour's statements in [69] and [70], the relevant parts of which are set out above. As stated in the formulation above, mutual adoption can be implied. Communication of the assumption need not be express; it may consist of conduct from which the necessary sharing can be properly inferred: at 46_; Stena Line Ltd_ (above) at [137]. Where it might be established by a course of conduct, there must be a point at which adoption and mutuality arise, and the relationship is thereafter conducted on the established convention.

1. As the trial judge pointed out at [75], the requirement of mutual adoption of the assumption as the conventional basis of the relationship is closely linked to the concept of reliance and consequent detriment. There is no doubt, as his Honour has said, that when one considers the underlying rationale for the estoppel, particularly in light of the statements of Dixon J in Grundt, it is clear that reliance must be established, to the extent that the party claiming estoppel has acted in reliance on the assumption as binding. The other party must know or intend that the first party has so acted.
2. As is apparent from proposition ii) in the formulation set out in Spencer Bower, one party, A, may actually intend to induce B to act on the convention, but A may presumptively have that intention because of the circumstances of the formation of the common assumption. The question is whether B actually or as reasonably understood by A, intended that A rely on the subscription of B to the common view, as opposed to each being self-reliant. It is by reference to their subsequent dealings on that basis that B will be answerable to A: Spencer Bower at [8.26] and the cases cited.
3. This causal element was in fact referred to by Dixon J in Grundt at 675-676 where his Honour observed that before anyone can be estopped, the person must have played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it. Those remarks were applied to an estoppel by convention in Coghlan v SH Lock (Australia) Pty Ltd (above) at 165-166. The causation question was raised by the respondent in the context of grounds 4 and 5, the submission being that the trial judge had correctly understood the point.
4. As noted by Edelman J in the Mineralogy case, it is implicit in the requirement that the parties conduct their relationship on the basis of the mutual assumption, or at least that the proponent has acted in reliance upon the assumption, that there must be a causative link. At [775] his Honour said the implicit requirement could mean that a plaintiff must prove that the assumption was a contributing, but not a necessary, fact of the action, without which the detriment would not have been suffered. Or it could mean that the assumption was necessary for the action, without which the detriment would not have been suffered. At [776] his Honour referred to , at . There, French CJ, Kiefel, Bell and Keane JJ quoted with approval from Neuberger LJ in at where his Lordship said it was sufficient for the representee to show that "the representation was a significant factor which he took into account when deciding whether [to act as he did]".

1. When dealing with ground 2 I set out a passage of Mr Hart's cross-examination. Part of that is relevant to this issue. There, it was put to Mr Hart that as at 21 November 2012 he had the honest belief that the damages claim could be prosecuted in the proceedings. He agreed. It was put that this was a view he had formed unilaterally, "that is, entirely by yourself". He answered "I don't know whether anybody else held with that view, specifically Mr Grey, but certainly that was the view that I held." [My emphasis]
2. Later, there was the following exchange:

"Until 31st August 2015 your state of mind was despite what you told me about the formal order that it was still open to your client to prosecute the delayed claim on the vendor and purchaser's summons and it didn't have an issue with limitation?.....Yes.

That state of mind was reached without any representation to that effect by the defendant's legal practitioners was there?......I disagree with that proposition. It was maintained by the fact that I had corresponded with the other practitioners in those proceedings. There was no - nothing that they had done initially to create that impression but certainly was maintained by them.

That's the point I think you want to make at par47* of your affidavit; is that right?......Yes.

It could be the case that you made a mistake and they made the same mistake, couldn't it Mr Hart?......I don't know whether that's in fact the case but I concede that that's possible.

Well, you're speculating at 47; it's equally probable that two practitioners made the same mistake for a period of time is it?......Yes.

And made that mistake independently?......I concede that.

And that's - if I could draw your attention to par41 of your affidavit, would you accept also that all of this communication that you refer to up to 31 August 2015 could simply be the result of a mistake made by two lawyers?......Yes.

Because even after Mr Fairley's letter of 31 August 2015, you didn't accept that proposition did you? You went to [counsel], you got his advice?......Yes."

*[The reference to par 47 is a reference to the paragraph ruled to be inadmissible that I previously mentioned in the context of ground 2. In that paragraph, Mr Hart said that, given his experience with the lawyers involved, he would have expected them to let him know if they considered that the claim for damages could not be pursued in the proceedings.]

1. In his reasons, the trial judge said this evidence supported the conclusion he had already noted: that Mr Hart had reached the mistaken unilateral view about the capability of the proceedings supporting the damages claim "albeit it that the view he reached was unresearched and ... arrived at without due consideration". His Honour continued:

"[81] This evidence falls well short of establishing a shared assumption as the conventional basis of the relationship and of establishing that Mr Hart relied on that shared assumption in not commencing the appropriate proceedings within the time limited by law. It, of course, says nothing about whether Mr Grey had formed any view about the question. In any event, I am not satisfied that the possibility that Mr Grey may have made the same mistake had any real impact on Mr Hart's actions. I am satisfied that Mr Hart acted, or did not act, unilaterally, and not because the parties had reached the type of shared assumption that would be needed to support estoppel by convention. As I have already noted, it is highly improbable that an experienced and competent litigation practitioner who had determined to proceed with a litigious claim would rely simply on the type of superficial assumption about jurisdiction and a lack of demur from the other side, in determining that question, particularly when the expiry of the limitation period was imminent. Mr Hart did not place any reliance on the attitude of the defendant because he had not given any real thought to this question, nor had he reached the stage of pressing forward with the litigation."

1. In that passage, the trial judge referred to levels of thought and deliberation in deciding that Mr Shaw had not established a mutual assumption and reliance on the convention so established. As I alluded to earlier, I am not persuaded that the degree of thought given to the situation in general is not relevant to these issues. More particularly, I am not persuaded that his Honour's factual conclusions were wrong. Mr Hart's evidence and the evidence from which any necessary inferences can be drawn, does fall short of establishing a shared assumption in the required sense. It is at least equally probable that each party independently took the same view, and proceeded on the basis of that independent view. It perhaps does not need to be said, but in my view the evidence is also insufficient to prove Mr Hart in fact relied on the established convention as Ms Hanlon's lawyers knew or intended he would. In short, the requirements for a mutual adoption of an assumption as a basis for a transaction or relationship, as discussed above, are not satisfied.
2. Ground 3 fails.

1. In the first instance proceedings, Mr Shaw sought to have the court remedy the detriment caused by reliance on the common assumption by preventing Ms Hanlon from relying on the limitation defence. Of itself, the inapplicability of the limitation was not the alleged assumption, although as I have noted, it may be implicit in it. The alleged assumption was that the claim for damages was capable of being resolved in the proceedings. As all parties acknowledge, because of the law that is not a situation that the court can bring about.
2. Mr Shaw and the appellants argued that equity would intervene to fashion the appropriate remedy. Before the trial judge, they placed great weight on the comments of Mason CJ and of Deane J in Verwayen. Those comments have been much discussed. They urge the simplification and unification of the law of estoppel. It seems accepted that this process of simplification and unification has not come about. See Giumelli v Giumelli [1999] HCA 10, 196 CLR 101 at [7], and generally Meagher, Gummow and Lehane at [17-050].
3. My point is that I do not want anything I have said, or at least my silence, to be taken as endorsing the correctness of the submissions of Mr Shaw and the appellants. Estoppel by representation as to existing fact, and estoppel by convention, are common law estoppels by conduct. They operate to preserve particular states of affairs between parties. On the other hand, equitable estoppels are themselves a source of rights and obligations that arise upon satisfaction of necessary elements, albeit subject to equitable discretion: see J Hudson, The Price of Coherence in Estoppels [2017] SydLawRw 1; (2017) 39 Syd LR 1 at 4-8.

"The first matter to be considered is whether there is still an all-or-nothing common law estoppel, distinct from the equitable estoppel under which the appropriate relief is the minimum relief required to do equity and avoid unconscionable conduct. In my opinion, having regard to the comments in Giumelli ... it is appropriate for this Court to proceed on the basis that there is still an all-or-nothing doctrine of common law estoppel by representation and conventional estoppel."

1. I can see nothing to suggest that does not remain the law. See for instance G E Dal Pont_, Equity and Trusts in Australia,_ 7th ed at [10.50]. The question of whether estoppel by convention is a common law or an equitable doctrine was expressly left open in Franklins Pty Ltd v Metcash Trading Ltd (fn 7 above) at [34], [577]. But this issue is not before this Court, and I do not express a concluded view about it.

1. In summary, the asserted mutual assumption is not one of fact; ground 2 fails. It is not necessary to resolve ground 1. Even accepting that the doctrine extends to assumptions of law, such assumptions must relate to the parties' private legal rights. The asserted assumption does not. On those bases, the appeal would fail. Grounds 4 and 5 are made out, but the erroneous approach, when corrected and applied in the context of ground 3, has no impact. Notwithstanding the flawed approach, the outcome would inevitably have been the same. Whatever view is taken about the nature of the asserted assumption, there was no mutuality of adoption. The "crux of the appeal" - ground 3 - fails. It follows the appeal should be dismissed.

[1] His Honour followed Hargreaves and Thompson's Contract [1886] UKLawRpCh 133; (1886) 32 Ch D 454 per Linley J at 459 in which it was held that an equivalent provision did not allow the disposition of what would be the subject of an action for damages, but such damages as interest and expenses of investigating the title, although called damages, are matters rather for computation and taxation than for inquiry. Holt AsJ said the assessment for the claim for damages for breach of contract by late completion was not a mere matter of computation and taxation, but plainly a matter for full inquiry in the ordinary way.

[2] The appellants have standing because of the definition of "party" in s 3(1) of the Supreme Court Civil Procedure Act 1932, which includes "every person attending any proceeding, although not named on the record or in the process." Section 42(1)(a)(i) of that Act gives a right of appeal to any "party" to the cause or matter.

[3] For completeness, I note his Honour did go on to say that if he were free of such authority and required to apply general principle, then it seemed that the statements of Mason CJ and Deane J in Verwayen, "are entirely in accordance with the fundamental principle of justice upon which estoppel rests". On that basis, if the parties adopted a shared assumption, albeit a mistaken view of the law, then each ought be estopped from taking any step which placed the other party at a disadvantage.

[4] J D Heydon, M J Leeming and P G Turner.

[5] In the fourth edition of this text, 2002, it was stated "It is now clear (as suggested in the previous edition of this work [1992]) that the doctrine extends to assumptions of law ... ." This was said to be as a result of observations made in Waltons Stores, Foran v Wight and Verwayen, along with identified decisions of intermediate appellate courts and at first instance.

[6] The appellants point out that Heydon J was a member of the court in Bofinger, but as an author has subscribed to the views set out in Meagher, Gummow and Lehane, 5th ed and his own text on contracts, as set out earlier in these reasons.

[7] Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407, 76 NSWLR 603 at [573] per Campbell JA, Allsop P and Giles JA agreeing; TMA Australia Pty Ltd v Indect Electronics & Distribution GmbH [2015] NSWCA 343 at [115] per Meagher JA, Macfarlan JA and Bergin CJ in Eq agreeing; Miller Heiman Pty Ltd v Sales Principles Pty Ltd [2017] NSWCA 106, 94 NSWLR 500 at [42] per Macfarlan JA, McColl JA and Sackville AJA agreeing.

[8] The Court endorsed the approval given by Buss JA in Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98, 40 WAR 91 at [194], to the analysis of estoppel by representation and convention carried out by Owen J in The Bell Group Ltd (in liq) v Westpac Banking Corporation [No 9] [2008] WASC 239, 39 WAR 1 at [3464]-[3469].

[9] Bannon v Nauru Phosphate Royalties Trust [2019] VSCA 303 at [72] per Emerton and Osborn JJA, Kennedy AJA.

[11] The landmark cases of David Securities and Kleinwort Benson - earlier referred to in the discussion of High Court cases- both involved a mistake about the law as it affected the parties' contractual arrangements.

[12] Given the relief sought by Mr Shaw it would not be unjust to depart from the convention, (the mutual assumption that the damages claim was being properly pursued in the proceedings), if it was established after time had expired.