Sidhu v Van Dyke

Katy Barnett, ‘Estopped from Denying the “Love Shack”: Sidhu v Van Dyke‘ (21 May 2014).

The High Court has unanimously dismissed an appeal against the decision of the NSWCA in Van Dyke v Sidhu. Van Dyke rented a house from Sidhu which lay on the same block as Sidhu’s property. After Van Dyke and Sidhu became engaged in a sexual relationship, Sidhu made promises or representations that he intended to subdivide the block and give the house to Van Dyke, conditional on the consent of Sidhu’s wife. After Sidhu and Van Dyke’s relationship ended in 2006, Sidhu expressly repudiated his earlier promises, and his wife refused consent to the subdivision.

The trial judge found that Van Dyke had relied on Sidhu’s promises when she did not seek a property settlement from her former husband, but also held that that reliance was not objectively reasonable. The NSWCA allowed Van Dyke’s appeal, applying the ‘presumption of reliance’ and finding that she had detrimentally relied on Sidhu’s promises, and ordered equitable compensation (but refusing to order proprietary relief in the form of a constructive trust over the house).

Before the High Court, the appellant contended that the NSWCA erred, first, in presuming reliance and reversing the onus of proof, and, secondly, in granting equitable compensation measured against the value of the appellant’s promises. The Court accepted the appellant’s first argument, holding that the NSWCA had erred in applying the approach taken by Lord Denning in Greasley v Cooke [1980] 1 WLR 1306: a promisee need not prove that she acted to her detriment or prejudice and is presumed to rely on the promise.  Holding that the respondent at all times bore the burden of proving that she had been induced to rely upon the promises, the Court stated, at [58], that:

to speak of deploying a presumption of reliance in the context of equitable estoppel is to fail to recognise that it is the conduct of the representee induced by the representor which is the very foundation for equitable intervention. Reliance is a fact to be found; it is not to be imputed on the basis of evidence which falls short of proof of the fact.

The Court accepted the respondent’s contention that, on the balance of probabilities, the appellant’s promises contributed to the respondent’s conduct (in this case, deciding to remain involved in the relationship with the appellant and remain on the property). The Court held that the evidence did support that finding, and it would be unconscionable for the appellant to now resile from that assurance. Because the unconscionable conduct consisted of resiling from a promise that induced the respondent to act to her detriment, the necessary relief was the value of the promised property.

High Court Judgment [2014] HCA 19 16 May 2014
Result Appeal dismissed
High Court Documents Sidhu v Van Dyke
Full Court Hearing [2014] HCATrans 68  2 April 2014
Special Leave Hearing [2013] HCATrans 312 13 December 2013
Appeal from NSWCA [2013] NSWCA 198 1 July 2013
Trial Judgment, NSWSC
[2012] NSWSC 118 23 February 2012