LORIMER vy STATE BANK OF NEW SOUTH WALES SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY P, PRIESTLEY and HANDLEY JJA 13 and 14 August 1990, 5 July 1991 [1991] NSWCA 176 ESTOPPEL — cotton farmer in financial difficulties discussion with bank officers — farmer proceeds to expand operations — bank provided funding for a time — thereafter terminates funds — farmer alleges (a) bank contractually bound to provide funding as promised; and (b) bank estopped from denying agreement to provide funds — trial judge (Brownie J) dismissed both claims — on appeal to the Court of Appeal — held: (by the Court) (1) Having regard to the findings of the trial judge, the conclusion that there was no binding contract could not be disturbed. Jones v Hyde (1989) 63 ALJR 349, Abalos v Australian Postal Commission (1990) 171 CLR 167 applied; (2) (per Kirby P (diss); Priestley and Handley JJA not deciding) The trial judge erred in holding that it was necessary for the parties to have a common mistaken assumption to found an estoppel. Thompson v Palmer (1933) 49 CLR 507 and Grundt v Great Boulder Pty Ltd Mines Limited (1937) 59 CLR 641 applied; (3) (per Priestley and Handley JJA: Kirby P dissenting) The findings made by the trial judge and the pleading and conduct of the trial precluded the establishment of an estoppel by silence on the part of the bank. Waltons Stores (Interstate) Limited vy Maher (1988) 164 CLR 387 applied; (5) Appeal, accordingly, dismissed. EQUITY — estoppel — distinction from estoppel in pais at common law — appropriateness and availability of a unified theory of estoppel — held: (per Kirby P (diss); Priestley and Handley JJA not deciding) The law of estoppel in Australia is in a stage of development. Although a single substantive doctrine of estoppel is favoured by some Justices of the High Court in The Commonwealth v Verwayen (1990) 170 CLR 394 and is desirable, it is not yet a binding rule and accordingly the distinction between common law estoppel in pais and equitable estoppel survives and should be applied subject to the operation of the Law Reform (Law and Equity) Act 1972 85. APPEAL — appellate review — conclusions based in part on impression of witnesses and of credibility — limited authority of an appellate court to disturb — held: (by the Court) A conclusion by a trial judge based in part upon the impression of witnesses and credibility that a binding agreement had not been made as alleged could not be disturbed in the circumstances. Warren v Coombes (1979) 142 CLR 531; Brunskill vy Sovereign Marine and General Insurance Co Limited (1985) 59 ALJR 842 applied. Observations by Priestley JA on the need to avoid procedural unfairness by permitting a different case to be advanced on appeal from that pleaded and fought at trial. Coulton and Ors v Holcombe and Ors (1986) 162 CLR 1 applied. Law Reform (Law and Equity) Act 1972, s5. Kirby P This appeal is concerned with whether there was an enforceable agreement, either in contract or by operation of the law of estoppel, between the appellant, a cotton farmer, and the respondent bank whereby the respondent undertook to finance a programme proposed by the appellant to overcome his financial difficulties. The trial judge (Brownie J) held against the appellant on both grounds. In this Court, the appellant challenges his Honour's conclusions. 2 UNREPORTED JUDGMENTS Two options for financial salvation: In 1985 Mr Patrick Lorimer (the appellant) grew cotton and grazed cattle on a property called "Balgarra" near Wee Waa. In January 1984 he lost his cotton crop in a flood. His crop for 1985 was also damaged by flooding. He was thus in a difficult financial position. He had already given a mortgage over his property to the State Bank of New South Wales (the respondent) in October 1984 to secure any moneys owing or payable by him to the respondent, at that time or thereafter. By April 1985 the appellant owed some $190,000 to the Primary Industry Bank of Australia and $40,000 to the Rural Industry Agency. Brownie J found that the appellant had borrowed these sums with the assistance of the respondent, which appeared in at least some respects to be the agent of those institutions. The appellant had also borrowed $60,000 from the respondent by way of a commercial bill facility. The appellant also operated a cheque account, which he opened with the respondent in 1984, and for which there was then no formalised overdraft facility. In the district in which the appellant's property was located, cotton was normally harvested by late May. It was prudent, soon after, for a cotton farmer to commence preparing the ground for sowing a crop in the following September. Mr Peter Board, who was a valuer employed by the respondent, visited the appellant's property at harvest time on 24 April 1985. According to the appellant, in their conversation he suggested to Mr Board that the best option for his financial salvation might be to sell the property while he could expect a reasonable surplus of capital from the sale. He said that Mr Board told him to finish the harvest, wait and think it over. At the trial before Brownie J the solution to the appellant's financial difficulties involving the sale of "Bulgarra'" was designated "Option 1". I will for convenience adopt the same description. Soon after the appellant finished harvesting on 26 May 1985, and was thus in a position to assess his likely income from the crop, the appellant met a Mr Pearce of Lehman Australia Pty Limited. For the price of $71,000, Mr Pearce offered to sell the appellant a piece of earthmoving equipment, a scraper fitted to a tractor with a front end loader ("'the scraper tractor"). As the appellant could not afford to pay this price, Mr Pearce suggested that the appellant might be able to obtain finance if a deposit of $10,000 were paid. He suggested that a financier might lease the equipment to the appellant, and take a security only over the equipment. Out of this conversation emerged what was termed at the trial, and I shall call, "Option 2". Option 2 was designed to meet the appellant's financial difficulties in this way. Part of the appellant's land, comprising five fields of approximately 210 acres, was already irrigated by April 1985. The appellant had in mind to use the scraper tractor to convert more land for irrigation in the hope that this would increase the productivity of his land and thus bring him greater income to help alleviate his difficult financial circumstances. The appellant decided to determine whether this option was financially viable. To this end, he had discussions with Mr Pearce and with his accountant, Mr Brown. Following the advice of Mr Brown, the appellant decided to proceed with Option 2. It was then that he initiated further discussions with the respondent, principally through Mr Board and Mr Len Jones, concerning the financing of this option. At that time Mr Jones was the manager of the Narrabri branch of the respondent. The appellant also had a discussion with Mr Kerry Thomas, who was the Regional Valuer of the respondent. It will be necessary to return to these conversations, and to examine them in some detail. Out of the detail emerges the case on which the appellant relied. URJ LORIMER v STATE BANK OF NEW SOUTH WALES (Kirby P) 3 On 17 July 1985, following a discussion with Mr Jones on the previous day, the appellant executed a lease agreement for the scraper tractor with Associated Midland Corporation Limited. He drew a cheque for $10,043 to pay the deposit. The respondent honoured the cheque when it was presented on 26 July 1985, even though this resulted in the appellant's cheque account being overdrawn by some $3,400. The size of the overdraft grew steadily over the next few months from almost $10,000 at the end of July to in excess of $50,000 by 14 October 1985. However, the equipment was duly delivered to the appellant on 27 July 1985. He began to use it immediately to prepare land for the 1985-1986 crop. Later, he began to develop the land proposed to be converted for irrigation, as envisaged by Option 2. On 14 October 1985, Mr Jones wrote to the appellant that a "temporary overdraft limit" of $60,000 had been established by the respondent on the cheque account. Following the appellant's protestations, Mr Jones, in a letter addressed to the appellant and dated 21 October 1985, wrote that the respondent was not prepared to provide any further financial assistance, and "no overdrawings in excess of $60,000 will be allowed under any circumstances." Mr Jones also "recommended" in the letter that the appellant take immediate steps to repay his total indebtedness to the respondent either by way of refinancing or by the sale of "Bulgarra". The issues at trial: contract and estoppel: In 1987, the appellant brought proceedings against the respondent in the Commercial Division. The matter came on for hearing before Brownie J on 1 February 1988. By his amended pleadings, the appellant alleged that the respondent had agreed that if (a) the appellant leased the scraper tractor on a deposit of $10,000 and annual instalments of rent, and used it to develop an additional 140 acres of irrigated land on his property, then (b) the respondent would fully fund, by a method to be determined by it, the payment of the deposit, the development of the additional land, and the planting and harvesting of the 1985-1986 crop, ie, that it would fund Option 2. It was also alleged that, in about August 1985, the respondent, in accordance with the agreement, determined that the amount necessary to fund fully Option 2 was $97,785, and that the advances were to be made by allowing the appellant to go into overdraft on his cheque account. The agreement was said to have emerged from a series of conversations between the appellant and Messrs. Board and Jones in June and July of 1985. The appellant alleged that the contract was concluded on 16 July 1985, the day before the lease was signed, in a telephone conversation with Mr Jones concerning the proposed execution of the lease agreement for the scraper tractor. It was said that the agreement was breached in October 1985 when the respondent informed the appellant that his overdraft was to be limited to $60,000, and by requiring him to repay his existing indebtedness to it. The appellant claimed damages for his inability to implement Option 2 on the basis either that the respondent was contractually bound to fund the option as it had agreed, or was estopped from denying that there was such an agreement. The respondent filed a cross-claim seeking monies owed to it by the appellant in the sum of $517,712 as at 25 January 1988, and an order for possession of "Bulgarra". Brownie J gave judgment on 3 February 1988. He found that there was no contract between the parties arising out of the conversation between the appellant and Mr Jones on 16 July 1985, or from what occurred subsequently. His Honour also found that the respondent was not estopped from denying the existence of an 4 UNREPORTED JUDGMENTS agreement because he was not satisfied that the parties had acted on any common basis as to what the respondent was to advance, or that the respondent had acted unconscionably. Accordingly, his Honour gave judgment for the respondent in both the appellant's claim and the cross-claim. From that judgment the appellant has appealed to this Court. The conflicting evidence of the witnesses: In the appeal, the appellant relied on four conversations which he had with the respondent's officers in order to establish the existence of a contract to finance Option 2. There is no dispute that these four conversations took place in some form or other. The dispute at the trial concerned precisely what had been said. The evidence of the appellant conflicted with that of the witnesses of the respondent in a number of important respects. The High Court of Australia has made plain the limited circumstances in which an appellate court in Australia may substitute its own findings of fact for those of the trial judge where the latter's findings depend, in part, on the forensic advantage which he or she is conventionally taken to enjoy from seeing and hearing the witnesses. See Warren v Coombes (1979) 142 CLR 531, 551; Brunskill v Sovereign Marine and General Insurance Co Ltd (1985) 59 ALJR 842, 844 (HC). Where a trial judge has made a finding which is based in part on an assessment of the demeanour or credit of a witness, this Court is justified in substituting its own conclusions only where the finding is "clearly wrong on grounds which do not depend merely on credibility; for example, on the ground that the evidence which was accepted was inconsistent with facts incontrovertibly established or was glaringly improbable". See Brunskill, at 844; Chambers v Jobling (1986) 7 NSWLR 1, 7ff, 19. Moreover, it is not necessary that the trial judge should have expressly adverted to the issue of credit or demeanour. As McHugh J said, with the concurrence of the other members of the High Court, in Jones v Hyde (1989) 63 ALJR 349, 351: "where a trial judge resolves a conflict of evidence between witnesses, the subtle influence of demeanour on his determination must not be overlooked". See also Abalos v Australian Postal Commission (1990) 171 CLR 167, 178. Bearing these familiar principles in mind, I turn to the four conversations upon which the appellant relies, and the findings made by Brownie J in relation to them. The first conversation occurred in early June 1985. The appellant telephoned Mr Board to inform him of the details of Option 2. According to the appellant's version of that conversation, he told Mr Board that the funding requirement for the programme over the next year was somewhere in the vicinity of $80,000, which included the $10,000 deposit on the equipment. He also indicated that he told Mr Board that one disadvantage of the programme was that the first instalment of $24,000 on the leased equipment would fall due in July 1986 at the same time as the final payment of $18,000 for a cotton picker. Mr Board testified that a conversation of this kind did occur, but he did not recall these two specific matters being mentioned. The second telephone conversation between the appellant and Mr Board occurred a few days later. The appellant alleged that Mr Board told him that he agreed with the appellant's reasons for the proposal, and that his figures came out much the same. Mr Board allegedly told the appellant that Option 2 was the best option, and that funding by the respondent would be no problem. It was also suggested to the appellant that he might need reliable labour to operate the machine, and that he should seriously consider selling the scraper component of the tractor as soon as new irrigated land had been developed so as to minimise URJ LORIMER v STATE BANK OF NEW SOUTH WALES (Kirby P) 5 annual lease repayments. Mr Board gave a briefer version of the conversation. But, significantly, he denied saying that the respondent would fund that programme. The third conversation occurred soon afterwards in the same month. This time the appellant telephoned Mr Jones. The appellant alleges that he was told that Mr Board had apprised Mr Jones of the details of the programme, that he agreed that it was the most sensible course, and that if the appellant could arrange finance on the equipment without disturbing the bank's securities, then funding would not be a problem. Mr Jones version, although similar, was that he told the appellant that he could not commit the bank until he had reviewed the appellant's annual budget. The fourth, and most crucial, telephone conversation occurred on 16 July 1985, the day before the appellant signed the lease agreement for the scraper tractor. The appellant telephoned Mr Jones to provide him with the details of the proposed lease. The appellant says that he told Mr Jones that he had obtained finance for the scraper tractor and that the lease would be signed the next day. He says that he told Mr Jones that he wished to be reassured that funding was available for Option 2 since "it would be pointless to develop more ground to find out that there was no money either for that work or for the farm." He says that he was told that, if he purchased the equipment and implemented Option 2, the respondent would fund it, and that the respondent would take care of the overdraft on his cheque account which would result if he drew the cheque for the $10,000 to pay the deposit. Mr Jones' version was that he expressly denied that he had the authority to commit the bank. After the appellant suggested that the whole exercise would be pointless unless funding were forthcoming, Mr Jones says that he told him that the purchase was a management decision that was the appellant's responsibility alone. As I have indicated, on 17 July 1985 the appellant signed the lease agreement. The cheque which he drew for the $10,000 deposit on the equipment was honoured by the respondent when it was presented. This was so despite the fact that it resulted in the appellant's cheque account being overdrawn. Brownie J accepted Mr Jones as the more credible witness. It is useful to set out in full his Honour's findings in this regard: "The plaintiffs says that in June he mentioned to Board a figure "in the vicinity of $80,000 or so". Board does not remember such a figure, and the amount which the plaintiff in fact needed seems to have been approximately $98,000. It is common ground now that there was no contract made in June, and the plaintiff's case that there was a contract to advance him a particular figure depends not on this more or less casual reference to about $80,000, but rather upon the conversation with Jones on 16 July, coupled with the calculation of $97, 795, thrown upon in Exhibit C. However, there is no mention in any of the defendant's documents of such an agreement, and I accept the submission put on behalf of the defendant that it really would be quite unlikely for an experienced Bank Manager, such as Jones, said words in July binding the defendant to advance a sum of money which could not then be ascertained. It is not suggested that Jones knew in July even of the figure of about $80,000. I think it likely enough that he said words to the effect that the defendant would meet a cheque or some cheques drawn by the plaintiff, to enable him to acquire the equipment, and perhaps to "carry on", pending receipt of Board's report concerning the plaintiff's financial affairs, and indeed the defendant's records indicate that there was an overdraft facility of $40,000 6 UNREPORTED JUDGMENTS prior to October 10, but to say that Jones agreed in July to fund Option 2 just does not seem to me to be right. Jones impressed me as a fairly careful man, and it is to be noted that it was Jones who seems to have initiated the chain of events which led the defendant refusing to fund Option 2." (emphasis added) Brownie J's findings are clearly based partly on his observations of the demeanour of Mr Jones. As that is a forensic advantage which this Court does not have, his Honour's findings must stand unless they he can be shown to have misused this advantage. I am not satisfied, on the material presented to this Court and applying the present authority of the High Court on this question, that the appellant has demonstrated that his Honour's findings were palpably wrong, glaringly improbable, or in conflict with incontrovertible facts. In addition to the four telephone conversations upon which the appellant places particular reliance, there was a meeting which assumed some significance at the trial. It occurred when Mr Board visited the appellant to discuss the appellant's likely cash flow for the remainder of the 1985-86 financial year. The meeting is of significance because it is said that the figure of $97,785 was then determined by the parties to be the amount necessary to fund Option 2 fully. As Brownie J pointed out, it is not necessarily fatal to the appellant's case that the total funding figure, or the method for advancing the sum, was not finalised until after the scraper tractor was acquired. I agree with his Honour that there could be a binding agreement if the facts justified the conclusion that the respondent had agreed to provide funding for the amount reasonably necessary to enable the appellant to achieve the objectives already agreed upon. See Paaan S.p.a. v Feed Products Ltd (1987) 2 Lloyds Law Rep 601, 619; Hawkins v Clayton (1988) 164 CLR 539, 571-573. Indeed, his Honour expressly found that "in the circumstances of this case, it would be easy to conclude that the plaintiff had effectively agreed to be bound by whatever funding mechanism the defendant might reasonably have stipulated, if there was an agreement otherwise concluded." The appellant placed the date of the meeting as one week after he leased the equipment (ie around 24 July 1985). Mr Board said that the meeting took place on 20 August 1985. Brownie J accepted Mr Board's evidence as to the date. His Honour found: "Where there is a conflict between the plaintiff and the defendant's witnesses as to dates, I prefer the evidence of the defendant's witnesses, partly because they are sometimes supported by contemporary documents, and partly because, whilst in my view the plaintiff was a truthful witness, his recollection seemed unreliable as to some details, such as dates, it being clear that he had little by way of contemporary records to enable him to fix dates." I should add that a finding that the appellant was generally truthful is not necessarily inconsistent with his Honour's having found that the appellant was not credible, or that another witness was more credible. A trial judge may find that the evidence of a witness is not credible based on a conclusion which falls short of determining that the witness is lying. The judge may find, as Brownie J did, that the witness' recollection seems faulty. This in turn may depend upon the impression that the trial judge forms after seeing and hearing the witness give evidence. At the meeting of 20 August 1985, the appellant and Mr Board discussed the appellant's likely income and outgoings or the rest of the financial year. Brownie J accepted Mr Board's evidence that Exhibit 2 was a contemporaneous note made by him about what was said at this meeting even where the appellant had no URJ LORIMER v STATE BANK OF NEW SOUTH WALES (Kirby P) 7 recollection of it. His Honour also found that Exhibit 2 was "plainly a draft of what later became another document, now Exhibit C." Exhibit 2 is a cashflow table calculated on a monthly basis for the period from July 1984 to July 1985. It contains no totals. Exhibit C is a cash flow table calculated on a monthly basis from July 1985 to June 1986. The appellant's version of the meeting was that Mr Board told him that the debt would "peak" just before the 1986 harvest (i.e. April 1986), and that, in the then current financial climate, neither the appellant nor the respondent had any other option but to implement Option 2. It was the appellant's evidence that Mr Board and he then arrived at a figure of $97,000 to finance the option until April 1986. According to the appellant, he was told that it would be up to the respondent as how the advance would be structured. It is to be noted that the debit figure of $97,785 appears in Exhibit C as the estimated closing Bank balance for April 1986. Mr Board's version of the conversation was that he said he would submit the cash flow to his superiors based on his work copy after totalling. He would send the appellant a copy. He said that he told the appellant that if the respondent looked favourably on the figures, it might grant a facility by way of commercial bills, as was the normal practice with cotton farmers. The appellant was duly sent a copy of Exhibit C on 23 August 1985. Brownie J found that Mr Board's account of the conversation was to be preferred, principally because it was consistent with contemporaneous documentary evidence. There was a great deal of debate in the hearing of this appeal as to whether his Honour was correct in making this finding. However, as I ultimately come to the conclusion that the appellant should succeed in this appeal on the basis of the findings of fact of the primary judge as they stand, it is not necessary for me to resolve this issue. There was no contract to fund Option 2. The gravaman of Brownie J's findings is that Mr Jones, who was the regional manager of the respondent, did not agree on 16 July 1985 to fund Option 2 fully. That conclusion is a finding based, in part at least, on his Honour's impression of Mr Jones as a "careful" witness. It cannot be impeached in this appeal as this Court lacks the forensic advantage conventionally attributed to the trial judge and pertinent to this conclusion. The appellant's case in contract therefore collapses because it asserts that a contract was concluded on 16 July 1985 in the telephone conversation between the appellant and Mr Jones. Yet, as I have indicated, Brownie J found that the appellant was truthful, although his recollection was unreliable (particularly as to dates). Significantly, his Honour found: "T think it is clear too that the plaintiffs understanding of what it is that in the eye of the law amounts to a legally enforceable contract is inaccurate. To say that is not to criticise a non-lawyer, and indeed I think that to the extent that the defendant's submissions criticised him because of his mistaken views as to when the contract was completed, those criticisms should be put aside, for it seems perfectly clear that in October 1985, the plaintiff felt outraged by what he regarded as the defendant's repudiation of its contractual obligation to him." (emphasis added). It is implicit in this last mentioned finding that the appellant had been labouring under a mistaken assumption that he had an enforceable agreement with the respondent that it would finance Option 2. Although it must be accepted that the respondent did not in fact agree to fund Option 2 on 16 July 1985, in such a way as to give rise to a concluded contract, the question remains whether the 8 UNREPORTED JUDGMENTS respondent, through its officers, played such a part in the appellant's adoption of this mistaken assumption that it is now estopped from denying that there is such an agreement. The developing law of estoppel In this appeal the appellant argued that the relevant mistaken assumption under which he laboured was that Option 2 would be funded by the respondent. This was an assumption as to future conduct. The appellant invoked authorities dealing with equitable estoppel to make out his case. Having regard to the pleadings, and the case as it proceeded before Brownie J, it is clear that this is not the basis upon which the case was presented at first instance. At trial, the estoppel which was pleaded, both in the appellant's amended summons and as a defence to the respondent's cross-claim, was that the the respondent was estopped from denying the existence of the agreement particularised in paragraph A3 of the amended summons. Paragraph A3 of that summons alleges that the respondent agreed to fund Option 2 fully in the terms to which I have referred. It is also clear from the judgment of Brownie J that this was the basis upon which he understood that the appellant's case had been conducted before him, although he does use the expression 'promissory estoppel' to described the estoppel alleged. The assumption that there was in existence an agreement to fund Option 2 fully is an assumption as to an existing state of affairs, rather than as to future conduct. Accordingly, an estoppel might be made out on the basis of the traditional doctrine of estoppel in pais enunciated Dixon J in Thompson v Palmer (1933) 49 CLR 507 and Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641. Formerly, it would not have been necessary to invoke the assistance of equity to secure the benefit of such an estoppel. However, following the recent decisions of the High Court in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, Foran v Wight (1989) 168 CLR 385 and The Commonwealth v Verwayen (1990) 170 CLR 394, it is clear that the law of estoppel in Australia is in a stage of development. Brownie J did not have the benefit of the decision in Verwayen at the time he delivered judgment. Indeed, Verwayen was handed down after this appeal was heard. The appellant in a written submission informed the Court that he sought to rely on the case. Equitable estoppel, unlike estoppel in pais at common law, can extend to assumptions as to future conduct. See Waltons Stores, 398-399, 415, 459. It is now recognised that common law estoppel in pais and equitable estoppel share the same rationale. This rationale is best expressed by Dixon J in Thompson, where he said at 547: "The object of an estoppel in pais is to prevent an unjust departure by one person from an assumption adopted by another as the basis of some act or omission which, unless the assumption is adhered to, would operate to that other's detriment. Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party. he may be required to abide by the assumption because it formed the conventional basis upon which the parties entered into contractual or other mutual relations, such as a bailment; or because he has exercised against the other party rights which would exist if the assumption were correct...; or because knowing the mistake he was labouring under, he refrained from correcting him when it was his duty to do so; or because his imprudence, where care was required of him, was the proximate cause of the other party's adopting and acting upon the faith of the assumption; or because he directly made representations upon which the other party founded the assumption. But, in each case, he is not bound to adhere to the assumption unless, URJ LORIMER v STATE BANK OF NEW SOUTH WALES (Kirby P) 9 as a result of adopting it as the basis of action or inaction, the other party will have placed himself in a position of material disadvantage if departure from the assumption be permitted." In Waltons Stores Brennan J said at 427 that these observations in relation to estoppel in pais applied, "mutatis mutandis, to the adoption of an assumption or expectation which founds an equitable estoppel". See also Gaudron J ibid., at 458. Similarly, in Verwayen Dawson J (at 453) indicated that Dixon J's use of the expression 'unjust departure... from an assumption' "may be taken as a reference to the unconscionable conduct required to found an equitable or promissory estoppel." See also McHugh J ibid at 500. The perception that there is an underlying unity of principle is supportable as a matter of history. As Mason CJ explained in Verwayen, 409-410: "At common law the principle of estoppel by conduct or representation (estoppel in pais) provided [protection against detriment] by preventing the party estopped from unjustly departing from an assumption of fact which his conduct had caused another party to adopt or accept for the purpose of their legal relations... The principle of estoppel by conduct or representation applied in equity, as at common law, though in equity the principle was known as equitable estoppel: Jordan v Money... And in equity it was also settled that the representation (or assumption) must be of existing fact or mere intention." See also Dawson J, at 453; McHugh J, at 499. However, it is now clear that equitable estoppel extends beyond the territory it originally shared with common law estoppel in pais as a rule of evidence. See Waltons Stores. It is now a source of substantive rights. The modern authorities on estoppel contemplate that equitable estoppel extends beyond assumptions as to facts to assumptions as to future conduct. This presupposes that (at page 20) equitable estoppel continues to have an area of operation in relation to an assumption as to an existing state of affairs. Indeed, Brennan J is explicit about this in Waltons Stores when, in stating what he conceives to be the elements of equitable estoppel, he says (at 428-429) that an assumption that a particular legal relationship existed might found an equitable estoppel. Contrast Corpers (No 664) Pty Ltd v NZI Securities Australia Ltd (1989) NSW ConvR 55-475, at pp 58,456 - 58,458, (Young J). Yet, it is also clear that an estoppel in pais at common law may be founded on an assumption that a contract exists between the parties. See discussion by Brennan J in Waltons Stores, at 415-416. This was the basis upon which this Court proceeded in its decision in Waltons Stores (Interstate) Ltd v Maher (1986) 5 NSWLR 407, 421, a view which the majority of the High Court rejected only because it adopted a different view of the facts. An assumption that a legally binding agreement existed is an assumption that a certain legal relationship existed between the parties. Accepting Brennan J's statement of the elements of equitable estoppel, and that common law estoppel in pais and equitable estoppel have a common purpose and elements, the same assumption could therefore conceivably found both an estoppel in pais at common law and an equitable estoppel. The present case is a good example of this. In the present state of authority, the remedy which the common law can give for an estoppel in pais is less flexible than that which equity can give upon proof of an equitable estoppel. This is because an estoppel in pais is said to be a rule of evidence. In Waltons Stores Brennan J said at 414; 10 UNREPORTED JUDGMENTS "The effect of an estoppel in pais is not to create a right in one party against the other; it is to establish the state of affairs by reference to which the legal relationship between them is ascertained." See also ibid, Gaudron J at 458-459; cf McHugh J in Verwayen, 500. The only remedy which the common law can give is to hold the party estopped to the assumed state of affairs. As Dawson J explained in Verwayen, 454: "The result of an estoppel at common law was, viewed as a separate and distinct doctrine from equitable estoppel, to preclude the party estopped from denying the assumption upon which the other party acted to his detriment. It followed that the party who acted to his detriment was, in effect, given the benefit of the assumption. It was all or nothing." However, equitable estoppel is not, simply, a rule of evidence. Instead, it is a source of enforceable equitable rights. Equitable estoppel creates an equity in the party who can successfully assert it. "The remedy granted to satisfy the equity... will be what is necessary to prevent detriment resulting from the unconscionable conduct" of the other party. See Silovi Pty Limited v Barbaro (1988) 13 NSWLR 466, 472, which was approved by McHugh J in Verwayen, at 501. (at page 21) I acknowledge that these developments in the law of estoppel leave the law in a somewhat unsatisfactory state. What remedy is a court to give where both an estoppel in pais and an equitable estoppel arise in the same case? What is to be done if the remedy required to satisfy the equity is something less than precluding the party estopped from denying the assumption? One solution might be to recognise that there is only one doctrine of estoppel in Australian law. Mason CJ expressed his support for a single substantive doctrine of estoppel in Verwayen, 413. This was also a view with which Gaudron J appeared to agree (ibid, at 487). Cf Foran, 411-412. Deane J first expressed such a view in Waltons Stores, 446 et seq, and repeated it in Foran, 431-437 and Verwayen, 434-436. Under this substantive doctrine of estoppel, the remedy which the law will furnish is what is necessary to prevent the detriment which the party proving the estoppel would suffer if the other party were free to ignore the assumption which forms the basis of the estoppel. This may, but need not always, involve holding the parties to the assumption. See Verwayen, 413. In this regard the substantive doctrine is like the doctrine of equitable estoppel. However, in Waltons Stores all of the members of the High Court, with the exception of Deane J, appear to have recognised a continuing distinction between estoppel in pais and equitable estoppel. In Foran, Mason CJ (at 411-412) was apparently prepared to recognise that common law estoppel could arise in relation to future conduct. Brennan J's analysis (at (at page 23) 420) is consistent with the views which he expressed in Waltons Stores. Dawson J implicitly accepts (at 449-450) that there is a distinction between common law estoppel in pais and equitable estoppel. Gaudron J says nothing (at 457) inconsistent with her analysis in Waltons Stores. Only Deane J (at 434-436) again advocated a single substantive doctrine of estoppel. Although in Verwayen Mason CJ, Deane and Gaudron JJ embrace a single doctrine of estoppel, Brennan J (at 428-429), Dawson J (at 453-546) and McHugh J (499-502) contemplate the continuation of the distinction between common law estoppel in pais and equitable estoppel. Having regard to the approach which he took, Toohey J did not deal with estoppel in his judgment. Because no clear majority has yet emerged in the High Court for a unified doctrine of estoppel and no holding of that Court so requires, this Court should for the moment observe the established distinction between common law URJ LORIMER v STATE BANK OF NEW SOUTH WALES (Kirby P) 11 estoppel in pais and equitable estoppel until a holding of the High Court requires otherwise. Clearly, the issue calls for an authoritative statement by the High Court to remove the confusion and uncertainty which have followed the divided opinions in Waltons Stores, Foran, and Verwayen. Were I free to do so, I would unhesitatingly follow the single substantive doctrine espoused by Deane J and more lately embraced by other members of the High Court. Whether justified by legal history or not, the single doctrine is conceptually simpler and easier of practical application. (at page 24) Nevertheless, there is a solution to the dilemma posed by cases such as the present one, at least in New South Wales. S5 of the Law Reform (Law and Equity) Act, 1972 (NSW) provides: "In all matters in which there was immediately before the commence of this Act or is any conflict or variance between the rules of equity and the rules of the common law relating to the same matter, the rules of equity shall prevail." If the same assumption gives rise to an estoppel in pais and an equitable estoppel in circumstances where the rules of equity require that the party asserting the estoppel be given an remedy different from that contemplated at common law, then the Court must, conformably with the statute, give the relief provided by the rules of equity rather than the common law relief. See generally discussion: Alec Leopold, "Estoppel: A Practical Appraisal of Recent Developments, " (1991) 7 Aust Bar Rev 47, 56; McHugh J in Verwayen, 500. Estoppel: detrimental reliance on an assumption: What I have said thus far is relevant only to the extent that it is established, on the evidence in this case, that the respondent is estopped from denying that there was an agreement to fund Option 2 fully and that such a conclusion is open to this Court despite the findings expressly made by Brownie J or inherent in his conclusions. It is convenient to determine whether an estoppel arises by application of the traditional doctrine of estoppel in pais since, for the reasons which I have given, if such an estoppel is made out, then in my opinion an equitable estoppel will also be made out in this case. Ihave already set out the passage from Thompson which contains the familiar test for the existence of an estoppel in according to Australian law. The two essential ingredients for an estoppel in pais which emerge from that test are: (i) a detrimental change of position in reliance on an assumption; and (ii) unfair or unjust (ie unconscionable) conduct on the part of the party against whom the estoppel is asserted. Dixon J emphasised these two elements in Grundt where he said, at 675-676: "The justice of an estoppel is not established by the fact that in itself that a state of affairs has been assumed as the basis of action or inaction into a detrimental change of position. Before anyone can be estopped, he must have played such a part in the adoption of the assumption that it would be unfair or unjust if he were free to ignore it. But the law does not leave the question of fairness or justice at large. It defines with more or less completeness the kinds of participation in the making or acceptance of an assumption that will suffice to preclude the party if the other requirements for an estoppel are satisfied. A brief statement of the recognized grounds of preclusion is contained in the reasons I gave in Thompson v Palmer... and it is convenient to repeat it..." His Honour then sets out the five grounds of preclusion in the passage from Thompson which I have already set out. Brownie J was not prepared to find an estoppel in the present case for two reasons. The first reason was that "the evidence does not establish that the parties acted on any common basis as to what it was that the defendant was to advance 12 UNREPORTED JUDGMENTS to the plaintiff'. With great respect, I consider that his Honour is wrong in his finding insofar as he is suggesting that it is necessary for both parties to labour under the same mistaken assumption. It is true that for there to be an estoppel by convention (which is the first sort of estoppel in pais contemplated in the passage from Thompson) the parties to a transaction must have adopted an assumed state of affairs as the conventional basis of their dealings. See Grundt, 674; cf Coghlan v SH. Lock (Aust) Ltd (1985) 4 NSWLR 158, 167. But Thompson contemplates that relevant assumptions might arise in other ways. Hence, it has been said that the existence of a representation is not, according to Dixon J's formulation of principle in Thompson a necessary ingredient to found an estoppel in pais. It is but one way in which a relevant assumption may arise. See Waltons Stores (Interstate) Ltd v Maher (1986) 5 NSWLR 407, 420 (per Priestley JA). As I have indicated, it is implicit in the finding of Brownie J in this case that he accepted that the appellant laboured under the mistaken assumption that the respondent was legally bound to fund Option 2 fully. It is upon this assumption that this Court must fix its attention. Handley JA, in his reasons, states that "there is no finding that [the appellant] actually believed during this period that such a contract was already in existence." However, with every respect, as I read Brownie J's reasons, his Honour clearly found that the appellant honestly believed that the respondent was contractually bound. I have already abstracted (above p16) one passage which supports this conclusion. Another, which expresses the precise nature of the mistaken assumption under which the appellant laboured, reads as follows: "[T]he plaintiff's attitude seems to have been to assume that, at least in the absence of some communication from the defendant that some other method of funding was to be adopted, that he could write cheques, which would be met on presentation, so as to achieve the practical result of an overdraft facility, but to enquire at times of Jones and Thomas that this was in order, from the defendant's point of view. He seems not to have directed his mind in any further detail to these technical matters, presumably assuming that the defendant would debit his account with appropriate fees and interest charges, as it in fact did. He said of these details: 'They would be the bank's prerogative." For the plaintiff reliance was placed upon the extent to which the defendant allowed the plaintiff's account to go into overdraft between July and October, to the extent mentioned above. The defendant's reply to this was that the defendant knew that the plaintiff had income coming in throughout this period, and that its security position was adequate [i.e. it was covered by the "all monies mortgage of October 1984], so that all that was done was that it chose to honour the plaintiff's cheques, although it was not obliged to. The defendant also pointed to the circumstance that, at the times when the plaintiff's case was that he had a binding agreement with the defendant to give him credit of $97,000 (or thereabouts), he telephoned Jones and Thomas to seek approval to write more cheques. The latter circumstance, in my view, is explained by the plaintiff's personality as I judge it: he wanted reassurance further reassurance, and I do not think that it can be said that he knowingly acted in a way inconsistent with what he understood to be the contractual position." (emphasis added). As the foregoing findings are clearly based on Brownie J's assessment on the appellant's credit, this Court will be slow to disturb them. It should accept them. It is therefore, in my respectful view, clear from Brownie J's findings, as from the evidence, that the appellant laboured under the mistaken assumption that the URJ LORIMER v STATE BANK OF NEW SOUTH WALES (Kirby P) 13 respondent was contractually bound to fund Option 2 fully, with the structure of the advances being left to the respondent to work out. The question which follows is whether the appellant "as a result of adopting [the assumption] as the basis of action or inaction, [placed himself] in a position of material disadvantage if departure from the assumption be permitted": Thompson, 547. The detriment is to be ascertained at the date at which the party allegedly estopped seeks to deny the correctness of the assumption upon which the other party acted. See Spencer, Bower and Turner, The Law Relating to Estoppel by Representation, 3rd ed, (1977), at p110. In the present case this means that the detriment must be assessed as at October 1985. It is necessary to show that the action or inaction of the party asserting the estoppel "be such that, if the assumption upon which he proceeded be shown to be wrong, and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act a source of prejudice": Grundt, 674-675. These matters are also made out on the facts as found by Brownie J. It is useful to set out his Honour's findings: "Jones himself seems to have become rather impatient with the plaintiff, categorising the plaintiff's activities as wanting the bank to make what Jones regarded as the plaintiff's own management decision, namely whether or not to acquire the equipment. This impatience is understandable on the part of a busy Bank Manager, but from the point of view of the plaintiff, he had to decide between Option 1, ie, selling up his farm, and Option 2, which involved a series of interrelated transactions, and so far as I can judge, he saw, whereas Jones did not see, that the undertaking of the defendant to fund Option 2 as a whole was critical - without bank funding, Option 2 was simply not available to the plaintiff." It is implicit in these findings that the appellant would not have entered the lease agreement for the scraper tractor but for his mistaken assumption. Moreover, he would not thereafter have incurred expenses in developing and preparing his land as envisaged by Option 2 but for the assumption. Accordingly, the correct inference to be drawn from all the circumstances is that the appellant acted on the mistaken assumption. He acted to his detriment after entering into the lease agreement for the scraper tractor. He began to use the equipment to implement the measures contemplated by Option 2. As a result, he incurred expenses which he would otherwise not have incurred if he had believed that the respondent had not undertaken to finance Option 2. In so doing he increased his indebtedness. His actions would therefore be a source of prejudice if he were held to be wrong to have assumed in October 1985 that he had contractual rights against the respondent. Estoppel: unconscientious conduct: The second reason which Brownie J advanced for rejecting the appellant's contentions as to estoppel was that, in his view, there was nothing in what the respondent did which was unconscionable. In this regard his Honour said: "I accept that the defendant promised the plaintiff an overdraft of $60,000 or an advance having the same effect and nothing more. Board and Jones gave the plaintiff general encouragement for his view that Option 2 was preferable to Option 1, but they did not promise on behalf of the defendant that the defendant would fund Option 2. Further by late August, when Board calculated the figure $97,785, the plaintiff had committed himself to Option 2, some five weeks earlier." 14 UNREPORTED JUDGMENTS Can it be said the respondent, to use the words of Dixon J in Thompson played such a part in the adoption of the assumption that it would be unfair or unjust if he were now free to ignore it? In this regard it is necessary to return to the five grounds of preclusion collected by Dixon J in Thompson. I am satisfied that, at the very least, the bank's imprudence was a proximate cause of the appellant's adopting and acting upon the assumption after he entered the lease. This is the fourth ground of preclusion expressed by Dixon J in Thompson. It was clear that the appellant could not have proceeded with Option 2 unless he was virtually certain that he had funding. Yet, he did proceed with Option 2. The respondent ought to have been aware from its knowledge of the appellant's financial predicament that there was a real possibility or likelihood that the appellant was acting as he did in the reasonable belief that the respondent was legally bound to fund Option 2. (Cf analysis of Gaudron J in Waltons Stores, ibid, 462). In such circumstances I consider that the respondent ought to have disabused the appellant of his mistaken assumption. Where prudence and clear and emphatic advice to observe caution were required of the respondent, they were not forthcoming. The following two matters point, in particular, to the bank's imprudence being a proximate cause of the appellant's adopting and acting upon the mistaken assumption that the respondent was legally bound to fund Option 2. First, the respondent continued to allow the appellant to draw cheques to implement Option 2 from the day on which he purchased the scraper equipment until 14 October 1985 when it purported to place an overdraft limit on the appellant's cheque account. It may be true that the appellant was told by Messrs. Jones and Thomas that they did not have the authority to commit the respondent to the agreement until the annual budget was examined. But this is a case where the affirmative actions of the respondent speak louder than the cautionary words of its officers. It undoubtedly began to fund the appellant's implementation of Option 2. It was fully aware of what the appellant was doing. It should have known that he was virtually totally reliant on the bank for the further financial commitments which he took on and which the bank by a simple, clear and emphatic warning (or timely negative action) could have prevented. Secondly, it was not until 14 October 1985, that it was made clear to the appellant that the respondent would not fully fund Option 2. In this regard it is necessary to return to the chronology of the dealings between the appellant and the respondent's officers. Brownie J found that, in late August 1985, the appellant had telephoned Mr Jones to see whether the respondent had determined how the loan was going to be structured. He had then asked how far he could go into overdraft to meet his expenses. He was told that Mr Jones was awaiting a response from Regional Office on the structuring of the loan, and that he should pay only what was urgent or necessary. On 13 September 1985, Mr Board had a conversation with the appellant during which a revised cash flow chart had been prepared. At the end of that conversation he told the appellant that he would give it as much support as he could. Yet, as Brownie J found, on the same day, in the report which he in fact submitted, he recommended to the respondent that: "there is no alternative but to recommend refusal of any further applications for assistance and that [the appellant] be given say a three month period at the end of which the bank requires repayment of its advances in full." URJ LORIMER v STATE BANK OF NEW SOUTH WALES (Kirby P) 15 On 23 September 1985 Mr Jones wrote to the appellant that the Regional Office had reviewed the cash flow estimates prepared by Mr Board, and that the Bank now needed to consider whether it could continue to provide assistance. The letter indicated that the appellant should call as soon as possible for a discussion on his financial position. It further said that "pending completion of the review it would be much appreciated if you will refrain from drawing any further cheques other than those for normal living expenses". Brownie J found that immediately upon receipt of the letter, the appellant telephoned Mr Jones to enquire whether the respondent was going to "renege on the deal". He was told that the Regional Office was concerned with the level of lending, and that the debt would peak before the 1986 harvest. He was the asked to bring in a complete update of all his assets and liabilities "to make sure no loose ends are lying around". The appellant called on Mr Jones a few days later with the information. He was given authority to write cheques for his outstanding debts. Brownie J also found that on 10 October 1985, the appellant telephoned Mr Thomas, the Regional Valuer of the respondent, to ask about when the Regional Office would decide on the structure of the new loan because he felt uneasy writing out cheques when he did not have a commitment on the limit of the facility. He was told that it would be in a few days. He was further told that Mr Jones would cover him to the tune of $20,000 pending the decision. Yet on 14 October 1985 the appellant was informed by Mr Jones that the respondent had imposed a temporary overdraft limit of $60,000. On 21 October 1985 he was told that this limit was to be made permanent. From the chronology, with its clear indications of prevarication and even duplicity, I have concluded that, between July and October 1985, the appellant was lulled into a false sense of security by the inaction of the respondent's officers and their failure to make clear to him as soon as practicable what they were writing behind his back to the Regional Office. The fact that the appellant repeatedly made enquiries of the respondent's officers to reassure himself that funding was available does not detract from this conclusion. Brownie J expressly found, in a passage which I have already set out (at pp. 27-28), that it was in the appellant's nature to seek reassurance even though he believed that the respondent was legally bound to fund Option 2. Preclusion of the fourth kind Since preparing these reasons, I have had the benefit of reading in draft the reasons of Handley JA. His Honour describes the appeal on this claim of relief as raising the question whether an estoppel by negligence or by silence is established where the bank had a duty to speak. He says that this kind of estoppel, as established by Waltons Stores, requires findings that the bank knew that the appellant was acting to his detriment on the assumption that a contract to fund Option 2 existed, that the respondent knew that this assumption was incorrect, and that it failed to either correct or fulfil the appellant's assumption. Handley JA, as I read his reasons, says that this estoppel is not made out on the facts because: (a) There was no finding that Mr Jones or Mr Board knew that the appellant was acting on that assumption. I accept that this is so, and my reasons have proceeded on that basis; (b) There was no finding that the appellant actually believed that the Bank was contractually bound. As I have demonstrated, this is not so; (c) There was no promise or assurance that Option 2 would be funded. This is true. My reasons also proceed on this assumption; and 16 UNREPORTED JUDGMENTS (d) That there was no relevant detriment occasioned by the appellant's reliance on the assumption. Waltons Stores, being a case concerning equitable estoppel, involved an assumption about future conduct. This present case is, however, concerned with an assumption about an existing state of affairs. It is for this reason that I have felt it necessary to discuss both the common law doctrine of estoppel in pais and equitable estoppel, and to examine the inter-relationship between them. As I have sought to demonstrate in these reasons, one of the ways in which an estoppel in pais may arise is by a representation. However, this is not the only way that a mistaken assumption may be engendered in another party. See Thompson v Palmer (above); Waltons Stores (Interstate) Ltd v Maher (1986) 5 NSWLR 407, 420 (per Priestley JA). Thompson (at 547) lists five ways in which an assumption may relevantly arise. For the purposes of this case, only the third and fourth are relevant: "[3] because knowing the mistake he was labouring under, he refrained from correcting him when it was his duty to do so; [4] or because his imprudence, where care was required of him, was the proximate cause of the other party's adopting and acting upon the faith of the assumption." I base my conclusion of the entitlement to relief in this case on the fourth ground of preclusion because it is a less stringent requirement than the third. Gaudron J said of this fourth ground in Waltons Stores at 462-463: "That test requires no knowledge as to the other's state of mind. Nor does the test require that imprudence should have caused the assumption to be made. It is sufficient that imprudence is 'a proximate cause of the assumption being adopted and acted upon'." (emphasis added). Accordingly, even if one accepts to the fullest, as Ido, Brownie J's finding that neither Mr Jones nor Mr Board knew that the appellant was acting on the assumption in issue, this does decide the matter. Moreover, imprudence need be only a proximate cause rather than the proximate cause of the appellant's adopting and acting upon the assumption as he did, regardless of whatever may have caused the appellant to make the assumption. Finally, the fourth ground of preclusion speaks only of a want of prudence where prudence was required. This may be compared to the third ground which speaks in terms of a duty to disabuse someone of a mistake of which the other party knew. It follows that the fourth test contemplates something less than a duty such as would be required to make out an entitlement to relief for negligent conduct, to which Handley JA refers. It also explains fully why the appellant chose to rely on estoppel and not to sue in the tort of negligence although with each head of relief it is relevant to show a want of prudence on the part of the respondent, by its officers. With every respect, it is not enough to lament the bank's conduct or its effect on the appellant. The fourth ground of preclusion in Thompson re-affirmed in Waltons Stores, provides the appellant with an entitlement to claim relief in this case. It does so within the four walls of Brownie J's findings, including those as to credit. It turns laments, which derive from the same sense of injustice which propelled the appellant to protest to the respondent. into a legal remedy - which is what the appellant seeks. The requirements of procedural fairness: After the foregoing was written, I have had the benefit of reading also Priestley JA's reasons in draft. I acknowledge that the appellant did not, in precise terms, plead an estoppel by imprudence on the part of the respondent Bank. As I have said, the failure to plead a claim in tort for negligent advice is irrelevant. No relief is sought on that ground. However, the appellant pleaded estoppel in general URJ LORIMER v STATE BANK OF NEW SOUTH WALES (Kirby P) 17 terms. The case was fought on the issue of estoppel. All the evidence considered by the parties to be relevant to estoppel was adduced by them. I am alive to the need to avoid the procedural unfairness that may arise by permitting a case to be fought on appeal in a way different from the way it was conducted at trial. See Coulton and ors v Holcombe and ors (1986) 162 CLR 1, 7; University of Wollongong v Metwally [No. 2] (1985) 59 ALJR 481, 483. I am also fully appreciative of the reasons which require adherence on appeal to a case as pleaded. See Banque Commerciale SA en Liquidation v Akhil Holdings Limited (1990) 169 CLR 279, 287, 303. However, the tests of estoppel are complex and still in the process of development and elaboration. There is an increasing tendency towards a single doctrine of estoppel and away from the traditional classification of estoppel in terms of a number of discrete categories. An insistence, at trial or on appeal, of undue precision of pleading may work a serious injustice. By accident, one head of estoppel may not be pleaded which the facts, as they emerge at the trial, will fully justify. The appellant clearly pleaded and relied on estoppel. This necessarily required an examination of the elements of the respondent's activity said to amount to unconscionable conduct. One presentation or manifestation of that conduct as unconscionable was that the respondent, knowing what it did of the appellant's financial position, imprudently caused or contributed to his adopting and acting upon his mistaken assumption to his ultimate detriment. In all the circumstances, I consider that this issue was adequately raised by the pleading of estoppel. This Court may proceed to apply the proper legal tests to the facts as found or proved. The appellant's entitlement to relief should not be denied on the ground that, in this Court, he has fought a different fight. In my view he has not. The appropriate remedy: repairing the detriment: But what is that remedy? If all of the elements necessary to make out a common law estoppel in pais are established, the respondent is precluded from denying that there was in existence a contractual agreement whereby it undertook to fund Option 2 fully. For the reasons which I have given, the facts also give rise to an equitable estoppel. The appropriate remedy, therefore, is to provide that which is necessary to prevent detriment resulting to the appellant from the unconscientious conduct of the respondent. This principle appears simple enough to state in the abstract. However, the reasoning of the several members of the High Court in Verwayen illustrate the fact that there is no clear and authoritative view as to what is the kind of detriment which equity seeks to prevent. The decision merits close examination. Of the judges of the majority in that case, two came to their conclusion on the basis of estoppel and two on the basis of waiver. However, it is possible to extract guidance from the decision concerning the relief to be provided for an established estoppel. In my view, the following propositions emerge: 1. The onus is cast on the party who asserts the estoppel to prove a relevant detriment for which the court can provide a remedy. See Mason CJ (at 416); Brennan J (at 429); McHugh J (at 504); semble Dawson J (at 454); cf Deane J (at 442 ff). 2. The following are relevant detriments which a court may remedy: (a) expenses or costs of a pecuniary nature which have already been incurred as a result of reliance upon the assumption. See Mason CJ (at 416); Brennan J (429-430); Deane J (at 148); Dawson J (at 461); McHugh J (at 504). 18 UNREPORTED JUDGMENTS (b) detriment of a non-pecuniary nature which has already been suffered, such as anxiety, loss of a chance. See Dawson J (at 462); Deane J (at 448); semble, if affirmatively proved, Mason CJ (at 416); McHugh J (at 504); contra Brennan J (at 429). 3. A court will give a remedy which will satisfy the minimum equity. This need not therefore involve making good the assumption which gave rise to the estoppel. See Mason CJ (at 416), Brennan J (at 429); Dawson J (at 454); McHugh J (at 501); cf Deane J (at 441-443). However, it may be necessary to make good the assumption at least where there has been reliance on an assumption for an extended period, or where this is substantial and irreversible detriment suffered in reliance on the assumption or from detriment which cannot be satisfactorily compensated or remedied. See especially Mason CJ (at 416). What is the appropriate remedy depends in each case on a close examination of the detriment occasioned to the party successfully invoking the estoppel by the unconscientious conduct of the party estopped. In the present case, the appellant suffered relevant detriment. He increased his indebtedness in reliance on the assumption that the respondent was legally bound to fund Option 2. It is possible that, as the appellant appeared to submit, the appropriate remedy in these circumstances is to prevent the respondent from enforcing its mortgage to recover the debt incurred during the period between 17 July 1985, when the appellant first acted on the assumption, until at least 21 October 1985 when the appellant was denied further financial assistance (and possibly thereafter). However, I would be reluctant to determine the appropriate relief without the benefit of detailed findings on the question of detriment. Brownie J did not have to make such findings in relation to the nature and extent of the detriment, if any, involved in this case because of the conclusion that the appellant had failed to establish an estoppel. For the reasons which I have given, this conclusion is wrong. It is therefore necessary to consider the relief which follows. This Court cannot safely do so. Accordingly, the appropriate course to take is that the case should be remitted to the Commercial Division to determine the detriment suffered by the appellant, and to give relief accordingly. Conclusions and orders: I would propose the following orders: 1. Appeal allowed; (at page 43) 2. Set aside the orders of Brownie J entered on 6 April 1989 that there be judgment for the respondent on the appellant's claim and judgment for the cross-appellant in its cross-claim against the cross-respondent; 3. In lieu thereof, order that the proceedings be returned to the Commercial Division to determine the appropriate relief to be given to the appellant in his claim based on estoppel and to the cross-appellant in its cross-claim; and 4. Order that the respondent pay the appellant's costs of these proceedings in the Court of Appeal. Costs in the proceedings before Brownie J to abide the determination of the matters returned to the Commercial Division. Priestley JA As is shown in the account of the facts by the other members of the Court in this case, the non acceptance by the trial judge of the appellant's account of what was said in the telephone conversation of 16 July 1985 between him and Mr Jones is one of the factual matters of central importance in the contest between the parties. Indeed, that conversation, in light of the detailed analysis made in the appeal of the whole set of events, was probably the pivotal one in the appellant's case. Brownie J made it clear that had he accepted the appellant's account of that URJ LORIMER v STATE BANK OF NEW SOUTH WALES (Priestley JA) 19 conversation as substantially correct, he would have found that the appellant had proved the making of a contractual promise of the kind he had alleged, and would have gone on to consider the further disputed question of Mr Jones' authority. Other conversations were relied on by the appellant as relevant to the contractual question. Brownie J reviewed the whole of the evidence of conversations, and the documentary evidence, in his reasons. He then stated the overall issue in the case as "whether the [Bank] agreed to fund Option 2, either to the extent of some specified number of dollars, or the extent of the reasonable cost of some defined activities." He stated his findings precisely. He rejected the former conclusion; he was not satisfied the latter was established. This meant, put in the way most favourable to the appellant, that the judge was not satisfied on the probabilities that he could accept the appellant's recollection of the conversation of 16 July (and some other conversations) in regard to the most important matter in the case. Put more directly, as it is necessary to do to explain an opinion I express later, Brownie J, although he did not think the appellant was deliberately trying to deceive him, did not believe him on the vital issues. Simply judging by the written record alone, there is a good deal to be said in favour of accepting the appellant's version of the conversation of July 16. The conclusion of the trial judge, who showed a full understanding of the appellant's situation, was nevertheless quite firm that his account of the conversation was unacceptable. Brownie J's opinion was that "... to say that Jones agreed in July to fund Option 2 just does not seem to me to be right". The various findings of Brownie J relevant to the conclusion he reached about the conversations and his inability to accept the appellant's account in critical respects, are matters, additional to the record of oral and written evidence in the appeal papers, which this court is bound to take into account in considering the submissions of the appellant. The appeal, by s75A(5) of the Supreme Court Act 1970, is an "appeal... by way of rehearing". These were the words considered in the English line of cases of which Coghlan v Cumberland (1898) 1 Ch 704 is an early example and which includes, amongst many others, Powell v Streatham Manor Nursing Home (1935) AC 243. The approach to be taken by appellate courts in appeals of the present kind described in the English line of cases was accepted as correct by the High Court in one of its earliest decisions: McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) (1904) 1 CLR 243, at 277. That same approach is accepted by the present High Court, two recent examples being Jones v Hyde (1989) 63 ALJR 349 and Abalos v Australian Postal Commission (1990) 65 ALJR 11. All these cases make the point that on an appeal by way of rehearing the appellate court is not only considering the printed record of evidence, but, in doing so, "is, and must be, guided by the impression made on the judge who saw the witnesses" (Coghlan at 705). The cases also all make clear that the impression made by the witnesses on the first instance judge is not always the final word on the matter, because "other circumstances, quite apart from manner and demeanour,... may show whether a statement is credible or not" (ibid at 705). If the other circumstances are sufficiently powerful, they "may warrant the court in differing from the judge, even on a question of fact turning on the credibility of witnesses whom the court has not seen" (ibid at 705). In Jones and Abalos the High Court referred to the influence that manner and demeanour inevitably have on the impressions formed by a trial judge of the credibility of witnesses, whether or not the judge directly refers to them in his reasons. Lord Wright made this same point at greater length in Powell v 20 UNREPORTED JUDGMENTS Streatham Manor Nursing Home. There, after saying that it was not desirable to do more than state principles which will guide the appellate court in the majority of cases where it is asked to find facts differently from the way they were found at first instance, Lord Wright went on to say: "The problem in truth only arises in cases where the judge has found crucial facts on his impression of the witnesses: many, perhaps most cases, turn on inferences from facts which are not in doubt, or on documents: in all such cases the appellate Court is in as good a position to decide as the trial judge. But where the evidence is conflicting and the issue is one of fact depending on evidence, any judge who has had experience of trying cases with witnesses cannot fail to realize the truth of what Lord Sumner says: as the evidence proceeds through examination, cross-examination and re-examination the judge is gradually imbibing almost instinctively, but in fact as a result of close attention and of long experience, an impression of the personality of the witness and of his trustworthiness and of the accuracy of his observation and memory or the reverse. He will not necessarily distrust a witness simply because he finds him inaccurate in some details: he can give such inaccuracy its proper place, particularly if he sees that the witness is tired, or antagonized, or confused, or perhaps impatient, and especially if the matter of the inaccuracy is of minor or collateral importance. But such inaccuracies may appear in a very different light when pointed to as isolated passages in the shorthand notes and abstracted from the human atmosphere of the trial and from the totality of the evidence. The judge will form his impression from the whole personality of the witness: he can allow for the nervous witness, standing up in a crowded Court or worried by the strain of cross-examination. The judge may be deceived by an adroit and plausible knave or by apparent innocence: for no man is infallible; but in the main a careful and conscientious judge with his experience of Courts is as likely to be correct in his impressions as any tribunal, unless perhaps, as some would say, a jury of twelve members is preferable. Yet even where the judge decides on conflicting evidence, it must not be forgotten that there may be cases in which his findings may be falsified, as for instance by some objective fact; thus in a collision case by land or sea the precise nature of the damage sustained by the colliding objects or their relative or final positions may be determinant and indisputable facts, and the same may be true of some conclusive document or documents which constitute positive evidence refuting the oral evidence of the witness;..." (at 267-268) In the present case there are no indisputable facts or conclusive documents constituting positive evidence refuting the oral evidence of Mr Jones about the conversation of 16 July. Indeed, as the trial judge pointed out, the written records tend to fit better generally with the memories of Mr Jones and Mr Board than of the appellant. Further, the trial judge's observation that he thought the appellant was truthful, is heavily outweighed by his further statements that he preferred the Bank's witnesses when there was any conflict as to dates, he thought the appellant's recollection seemed unreliable as to some details, he explicitly preferred Mr Board's account of one conversation to the conflicting version of the appellant, he was of opinion that that finding was significant in relation to disputed accounts of other conversations, and he did not accept the appellant's account of the conversation of 16 July, on what was the most important disputed fact in the case. URJ LORIMER v STATE BANK OF NEW SOUTH WALES (Priestley JA) 21 Upon reviewing the foregoing matters in light of the record of evidence I cannot see any evidence of sufficient strength to justify this court in saying the trial judge was wrong in the estimate at which he arrived of the comparative reliability of the witnesses. In these circumstances, it does not seem to me to be open to this court to approach the appeal on any basis other than that there was nothing in the critical conversation of July 16 or any other conversations amounting to a promise or representation that the Bank would finance Option 2. It further seems to me that this means the appellant cannot persuade this court to reverse the result of the trial on the substantial case he there presented, for the case he litigated, as I understood it, involved the assertion that the Bank had made some such promise or representation. That this was so in regard to the estoppel claim as well as that in contract seems relatively clear to me from pars 11-14 of the allegations in the appellant's amended summons of 4 February 1988 and the way Brownie J dealt with the estoppel claim in his reasons (p 30, appeal papers p 389). On the case as litigated, the factual situation became embodied in a record "frozen", to use Llewellyn's word, by the trial judge's findings of fact, in a way which, in my opinion, prevents this court from taking a different view of the critical facts in the case from that arrived at by Brownie J. In this court, counsel for the appellant sought to put forward a somewhat different estoppel case. One argument, which I quote from the written submissions, was: "Tf the actions of Jones and Board do not constitute a representation or promise as to the bank's future conduct, including a promise about the legal relationship between L and the bank, then their conduct clearly created, or encouraged, in L an expectation or assumption that a binding contract to fully fund option II would come into existence or would at least be performed by the bank. It was unconscionable of the bank to decide in September 1985 (based on external world economic factors and other matters unrelated to L's performance of his obligations to discontinue its funding of option II." Apart from the problem caused by the fact that this case does not seem to have been litigated at the trial, it depends on an assertion in the first paragraph that is in my opinion inconsistent with Brownie J's factual findings. This argument in my opinion fails in this court. The following excerpts from the appellant's written submissions show the way in which another argument was there put: "Even if Jones is believed and he did not give L the assurance which he sought, the bank, through Jones, had a duty to advise L not to proceed with the acquisition of the tractor/scraper until the bank had committed itself to fully funding option II. The bank assisted L in his efforts to obtain finance to acquire the tractor/scraper. They provided him with credit references. Jones was fully aware that these credit references were being used by L to obtain finance for the acquisition of the tractor/scraper. The bank provided the credit references without any advice to L that it would not fully fund option II. The bank knew that the acquisition of the tractor/scraper would be a useless waste of time if option II were not fully funded. There exists a clear relationship of proximity between L and the bank... L's damages were clearly foreseeable. The bank assumed responsibility by: (i) advising L to adopt option II, not option I, (ii) assisting him to acquire the tractor/scraper and to commence the works. 22 UNREPORTED JUDGMENTS (This responsibility should extend to advising L not to proceed until the bank gives its final approval)" Several things need to be said about this argument. It reads as if the cause of action relied on were negligent advice. There is no trace at all of such a case having been made at trial, and on the ordinary rules concerning appeals it would not be open in this court. However, in the oral argument counsel did not seek to develop it in that way. He said that primarily it was based on the doctrine of estoppel that would have required the Bank, if it knew that the appellant thought he had the Bank's assurance of finance for Option 2 and was acting on that footing, to let him know the true position. When the argument is put on that basis, it runs into the same difficulties as the previous one I have dealt with: apart from not having been litigated at the trial (so far as I can see) it is essentially inconsistent with Brownie J's factual findings. One illustration of this is that the assertion that "the Bank knew... the acquisition of the tractor/scraper would be... useless... if Option 2 were not fully funded", " is at odds with Brownie J's specific finding that at the time of the July 16 conversation, the appellant saw, 'whereas Jones did not then see, that the undertaking of the [Bank] to fund Option 2 as a whole was critical" to the appellant's decision to commit himself to that option. My conclusion is that none of the estoppel arguments put for the appellant can succeed. However, having had the advantage of reading the President's reasons in draft form, I have thought I should consider the possibility that, notwithstanding that this court must accept Brownie J's view of the facts and the reliability of the witnesses, it is nevertheless proper to conclude from the evidence (1) that the appellant assumed the Bank had contracted to fund Option 2, (2) that his making that assumption was caused or contributed to by the Bank's imprudence and (3) that the appellant, as a result of acting on that assumption placed himself in a position of material disadvantage if departure from the assumption by the Bank were permitted. For two reasons, I do not see how I can reach conclusion (2). The first is that I do not see that the evidence gives any support to the view that the Bank knew or should have known the appellant was assuming the Bank had contracted to finance Option 2. Brownie J decided the case on the footing, which for the reasons I have explained, this court must accept, that neither contractual promise nor estoppel-founding representation had been made. On such a footing, why should the Bank be treated as either knowing, or being in a position where it should know, that the appellant thought that the Bank had said things to him which it had not said? This question particularly arises when, as far as I can see, there is no evidence to support such a view. In the circumstances of the present case, the question whether the Bank was "imprudent" in the sense used by Dixon J in Thompson v Palmer (1933) 49 CLR 507 at 547, seems to me to be bound up with the idea that it knew or should have known of the appellant's assumption. If the Bank neither knew nor had reason to know of the appellant's assumption, I do not see how what it did by lending him money, pending its decision upon his request for finance for Option 2, can be said to be imprudent. On the facts found by Brownie J, it was the appellant who should have known a vital fact, that is, that the Bank, when the appellant committed himself to his onerous obligations on 17 July, had not finally decided to finance Option 2. Lending him money, in those circumstances, and at his request, after that date was not, in my opinion, relevantly imprudent. URJ LORIMER v STATE BANK OF NEW SOUTH WALES (Handley JA) 23 Further, it seems to me the Bank's "imprudence" would have to be shown as operating as at 17 July, because, for all practical purposes, that is when he suffered the detriment relied upon, by committing himself to the financial obligations of Option 2. "Imprudence" after that date would not be causally connected to the obligation which the appellant asserted lay on the Bank. It seems to me to follow from the trial judge's findings of fact that the only inference in this area that can be drawn is that officers of the bank may, if they thought about it, have known or inferred that the appellant was hoping for Bank support for Option 2; on the same findings those officers could not know that the appellant could rationally be assuming it had already been promised by the Bank. On those findings, they knew the contrary. As well as being unable to find any relevant imprudence either in regard to its own affairs or the appellant's in what it did after the appellant committed himself to Option 2 on July 17, I can see nothing in what the Bank did which has any element of the unconscionable about it. Its eventual decision not to finance Option 2 seems to have been foolish from its own point of view, and damaging from the appellant's, but the timing of this event makes it irrelevant to the issues in the case, no matter how widely they are described. The Bank's refusal to go on with Option 2 would have been unconscionable if it had promised or represented to the appellant that it would finance Option 2, but that unconscionability cannot be fastened on it when it was found not to have done either of those two things. The other reason for not thinking conclusion (2) is open is that there is no indication of the appellant ever having alleged the kind of imprudence involved in it, in his pleadings, in his evidence, or in his argument at first instance. It was not an issue at the trial. The trial was fought on the appellant's claim of actual promise or representation, and it was the appellant's misfortune to lose that fight. I do not think he can win a different fight in this court on materials not specifically directed to the issues that different fight may have raised. On the footing that the court must approach the appeal in the manner I have outlined, I agree with the way in which Handley JA has dealt with the facts of the case, and with his conclusion that on the matters litigated between the parties at first instance and argued in this court on the appeal, the appeal fails. I agree with the orders proposed by Handley JA. Handley JA This is an appeal by Mr Patrick Lorimer, a cotton farmer at Wee Waafrom the judgment of Brownie J in the Commercial Division who dismissed his action against the bank for damages for breach of a contract for loan allegedly entered into during July 1985. Mr Lorimer had become a customer of the State Bank at its Narrabri branch during 1984, having transferred his accounts from the National Australia Bank. He owned a farm of some 890 ha situated on both sides of the Namoi River. He grew cotton on 200 acres of irrigated land, raised cattle on the balance, and undertook contract picking. In this district cotton is normally harvested in April and May each year. The appellant's 1984 crop had been badly damaged by flood in January that year and the 1985 crop had also been adversely affected. In April 1985 while harvesting was still in progress Mr Board, a valuer employed by the Bank, visited the appellant's farm and discussed with him his future prospects. The appellant told Mr Board that the results of the harvest to date had been disappointing, and it looked as if he would have to borrow more money just to plant the same acreage to cotton for the next season. He said he was considering selling the farm while he could still realise a capital surplus. 24 UNREPORTED JUDGMENTS At the time the appellant was indebted to the Primary Industry Bank and the Rural Industries Agency under loans for $190,000 and $40,000 and owed the Bank $60,000 under a commercial bill facility. All these debts were secured by a mortgage over the farm given to the Bank which also acted as agent for the other lenders. The appellant considered he had two choices. The first was to sell his farm and the second, described as Option 2, was to increase his acreage under cotton. He had 150 acres of suitable land and a sufficient irrigation quota for this purpose. However the area in question would have to be levelled to make it suitable for irrigation and he did not have a tractor-scraper which would be required for this purpose. Option 2, therefore, involved the acquisition of such plant, the replanting of his existing acreage for the 1985-6 season and the preparation of the additional acreage for planting in the 1986-7 season. Between April and July 1985 the appellant discussed Option 2 with Mr Board, with his own accountant, with Mr Len Jones the Manager of the respondent's Narrabri branch, with farm machinery suppliers and with finance companies. The conversations with Mr Board and with Mr Jones were of a preliminary and exploratory nature, and the appellant did not rely upon them as establishing a contract for loan. The appellant's case as pleaded and litigated was that a contract by the Bank to fund Option 2 came into existence as a result of his telephone conversation with Mr Jones on 16 July. He had selected a suitable tractor-scraper which could be acquired on acceptable hire-purchase terms involving a deposit of $10,000. He was not able to fund payment of the deposit out of his own resources and was looking to the Bank for this purpose. The appellant knew that the three parts of Option 2 were interdependent and that there was no point in acquiring the tractor-scraper unless he could complete the other parts. He knew that he needed funding for the whole of Option 2 and would be dependent on the Bank for this. Otherwise the acquisition of the tractor and the preparation of the additional acreage would increase his liabilities but not his income. Income from the additional cotton acreage could not received until the harvesting of the 1986-7 crop in May 1987. The appellant telephoned Mr Jones on 16 July. There was no dispute that such a conversation took place and substantial parts of it were common ground. However the evidence of the two men differed in some critical respects. According to the appellant he said "Len, the finance for, the scraper has been approved, and I have to sign the agreement tomorrow, is everything still OK at your end?". Jones said "Yes I assured you of that before". The appellant said "Just making sure as I have to commit myself to that machine tomorrow. It would be pointless to develop more ground to find out that there was no money either for that work or for the farm". Jones said "Bill you have discussed this with your accountant and with Peter Board and with me and we all agree that is the sensible direction for you to take. You have agonised over this long enough. I can only repeat, if you wish to purchase the machine and undertake that programme, then your funding for it by the Bank will be no problem." The appellant said "Fine Len, but the cheque for the deposit will overdraw my account". Jones said "Don't worry, we'll take care of that." Jones denied a conversation in those terms. According to him he said "Bill, as I indicated before, I can't commit the Bank. I don't have that sort of delegation." The appellant said "But I need some sort of assurance that funding will continue, otherwise this whole exercise is pointless." Jones said "Bill I can't give you that URJ LORIMER v STATE BANK OF NEW SOUTH WALES (Handley JA) 25 assurance. The decision to purchase the scraper is a management decision that you alone will have to make." The following day the appellant entered into the hire-purchase agreement and paid the deposit. The cheque for the deposit was debited to his account on 26 July taking it approximately $3,000 into overdraft. Thereafter the appellant proceeded to implement Option 2. The 200 acres were prepared and planted for the 1985-6 season and work commenced on preparing an additional 140 acres. In the meantime Mr Board, the Bank's valuer, was in touch with the appellant from time to time to prepare budgets and cash flow projections initially for the 1985-6 season and later for the following season as well. From time to time the appellant spoke to Mr Jones to be reassured that he could continue to overdraw his account. Until sometime after 23 September banking business between the appellant and the Bank proceeded, to all outward appearances, as if the appellant had overdraft arrangements for funding Option 2. At this stage the appellant received a letter from Mr Jones dated 23 September. The letter stated, so far as relevant: "A review of your accounts has been requested by our regional office following receipt of Cash Flow estimates of Income and Expenditure for 1985-86 and 1986-87 seasons. The position has been reached where the Bank needs to consider if it can continue to provide assistance. Please call as soon as possible for a discussion. When you call bring with you details of your present financial position (liabilities and assets) together with a list of all commitments (payments) due during the next twelve months. Pending completion of the review it would be appreciated if you will refrain from drawing any further cheques other than those for normal living expenses." At the date of that letter the appellant's overdraft had reached $31,510.00. The appellant immediately protested to Mr Jones about the foreshadowed withdrawal of funding. Discussions and negotiations followed with Mr Jones, Mr Board, and the Bank's Regional Office. At this time the Bank had apparently authorised for the appellant an overdraft of $40,000. He was not aware of this, and signed no documents for this purpose. After 23 September he was able to secure an increase in his authorised overdraft limit to $60,000. However in a letter dated 14 October the Bank refused funding beyond $60,000 and thereafter, despite the appellant's continuing protests, it adhered to this attitude. The appellant's case is that the funding of Option 2 through to the harvest in May 1986 required a loan of up to $97,000 which was the figure he settled on with Mr Board during August and September 1985. The appellant's case based on an express contract depended on the disputed conversation of 16 July. The appellant relied upon subsequent events as confirming his account of that conversation, and as performance by the Bank of the oral contract, but he did not claim that Mr Jones make any express promise after 16 July. Furthermore he did not claim that the conduct of the parties after 16 July gave rise to an implied contract of loan to that effect. The Bank claimed that on the appellant's own version the conversation of 16 July could not constitute a legally binding contract for loan. It disputed the authority of the Bank Manager to enter into such a contract, and claimed that any apparent agreement was provisional and uncertain until appropriate documentation was signed and agreement reached on the level, duration and type of funding. 26 UNREPORTED JUDGMENTS The judge held, correctly in my opinion, that the Bank Manager "had actual authority to grant overdraft facilities" and he was "inclined to think that he had ostensible authority to grant financial accommodation to the plaintiff, at least up to a figure of the general order of $98,000". He also held that the absence of express agreement as to the level and duration of funding and the manner in which it would be provided were not fatal to the agreement sued upon. In this connection he referred to and relied upon Pagnan S.p.a v Feed Products Limited (1987) 2 LI. Rep 601, 619, and Hawkins v Clayton (1988) 164 CLR 539 at 569-574. The appellant said that the manner of funding was within the Bank's "prerogative". This was also the attitude of Mr Board and Mr Jones. The Bank held a registered first mortgage which contained an "all moneys" clause. The appellant already had a bill facility with the Bank and it was matter of relative indifference to him whether the accommodation was provided by overdraft or by an increase in the bill facility. In these circumstances I am of the view that the trial judge was correct in rejecting the Bank's claim that the agreement was not enforceable because it was provisional and because its terms were not sufficiently certain. Banks and pastoral companies commonly enter into informal arrangements with their rural customers to "carry" them until the next harvest or wool clip. I would not readily find that such agreements were uncertain either in general or unless some specific limit was agreed upon. I would also be reluctant to hold that such arrangements depended solely on the continuing good will and discretion of the Bank or pastoral company. This seems to be a situation which calls for the application of the principle stated by Lord Tomlin in Hillas and Co Limited v Arcos Limited [1932] 147 LT 503 at 512 that: "\.. the dealings of men may as far as possible be treated as effective and that the law may not incur the reproach of being the destroyer of bargains." See also Foley v Classique Coaches Limited [1934] 2 KB 1 especially at 9-10 per Scrutton LJ. The trial judge held that no agreement for the funding of Option 2 was reached with Mr Jones on 16 July 1985. He said that where there was a conflict between the plaintiff and the defendant's witnesses as to dates he preferred the evidence of the defendant's witnesses. He held that while the plaintiff was "a truthful witness" his recollection seemed unreliable as to some details. He preferred the evidence of Mr Board to that of the appellant in relation to the events of 20 August when Mr Board was given information to enable him to prepare the first budget and cash flow projection. His Honour then considered the criminal questions of reliability and credibility in relation to the terms of the disputed conversation of 16 July. He said that the critical question was whether the Bank agreed to fund Option 2 either to the extent of some specified number of dollars, or to the extent of the reasonable cost of some defined activities. On the whole of the evidence he felt compelled to reject the former conclusion and was not satisfied that the latter had been established. He subsequently added: "To say that Jones agreed in July to fund Option 2 just does not seem to me to be right. Jones impressed me as a fairly careful man... I conclude therefore that the plaintiff has not established the making of a contract as at the time of the July conversations with Jones." Mr Lever for the appellant took us to passages in the cross-examination of Mr Jones which he submitted were destructive of his credit on the vital question of the conversation of 16 July. He also relied upon passages in the URJ LORIMER v STATE BANK OF NEW SOUTH WALES (Handley JA) 27 cross-examination of Mr Board, and in particular his admission that he had lied to the appellant on one occasion during September. He particularly relied on the subsequent conduct of the Bank between 16 July and late September in lending over $30,000 on overdraft and creating internally an authorised limit of $40,000. Mr Jones in cross-examination said that it was just a "coincidence" that the Bank's conduct during this period was consistent with its performance of the contract alleged by the appellant. Mr Lever however submitted that these matters strongly supported Mr Lorimer's version of the conversation of 16 July. Mr Lever submitted that the trial judge had erred in three of his specific findings which were relevant to this issue and that these errors vitiated his ultimate conclusion adverse to the appellant. The trial judge said that the appellant realised, but Mr Jones did not, that the undertaking of the Bank to fund Option 2 was critical and that without bank funding the option was simply not available to the appellant. Mr Lever referred us to passages in the cross-examination of Mr Jones in which he was driven to admit that on 16 July he knew that the three parts of Option 2 were interrelated. However in my opinion that evidence does not vitiate the judge's finding that Mr Jones did not then see that the Bank's undertaking to fund Option 2 was critical to the appellant's decision to proceed with that option. Indeed this finding supported the appellant's case on the probabilities. If the appellant appreciated that the Bank's undertaking to fund Option 2 was vital, but Mr Jones did not, his decision to proceed would support his version of this conversation. It is unlikely that the appellant would have proceeded without obtaining what he regarded as an undertaking from Mr Jones, while the latter, who did not appreciate how vital the Bank's undertaking really was, may have used unguarded language capable of being understood by the appellant as conveying such an undertaking. The second alleged error related to a figure of $17,960 for outstanding accounts shown on Ex C. The trial judge concluded that the sum of $97,785 required to fund Option 2 was not worked out between Mr Board and the appellant at the meeting of 20 August, but was worked out by Mr Board at a later stage after receiving further information from the appellant. This submission turns on inferences to be drawn from the rough draft cash flow (Ex 2), and the later, final, cash flow projection (Ex C). Mr Lever submitted that Ex C which discloses a closing overdraft at June 1986 of $39,520, and a peak overdraft at April of $97,785 could have been worked out by Mr Board without using the figure of $17,960. Accordingly Board must have realised during or immediately after the meeting of 20 August that Option 2 involved a peak overdraft in the order of the $97,785 worked out some time later. He then relied upon the absence of any reaction from either Mr Board or the Bank until the letter of 23 September as confirming the existence of a contract to fund Option L made with Mr Jones on 16 July which extended to that figure. This submission breaks down on the facts. The $17,960 forms part of the $215,248 for projected expenses for the twelve months ended 30 June 1986. Ex C shows that Mr Board used that figure to arrive at the closing overdraft of $39,528. It follows that Mr Board could not have appreciated that the funding requirement for option 2 would be the $97,785 shown on Ex C until some time after 20 August when he obtained the figure of $17,960 for outstanding accounts from the appellant. The third finding relied upon as erroneous related to the uncertainty of the Bank's obligation to fund option 2. His Honour said that it was difficult to say just what it was, on the appellant's case, that the Bank had agreed to fund. Mr Lever 28 UNREPORTED JUDGMENTS submitted that Ex C was the best evidence of what the Bank had agreed to fund, and since this included allowances for living expenses, school fees, and payment of outstanding accounts the difficulties which apparently troubled the judge on this issue did not arise. Although in my opinion this submission should be accepted I have not been persuaded that the judge's concerns on the question of uncertainty in any way vitiated his findings as to the conversation of 16. July. Passages in the cross-examination of Mr Jones and Mr Board relied upon by Mr Lever and the surrounding circumstances such as the conduct of the Bank until its letter of 23 September supported the appellant's case. The Australian dollar and the price of cotton on world markets had both fallen after 16 July. Mr Jones' memo to his Regional Office of 3 October showed that he knew of these developments and was concerned about their effect on Mr Lorimer's position. These matters were highly relevant for the consideration of the trial judge and no doubt they were properly and skilfully pressed in address. On the printed word alone I would have been inclined to find in favour of the appellant on the critical issue of fact, but that is not sufficient to entitle this Court to interfere. The trial judge saw and heard the witnesses and his assessment of them must have been a major factor in his decision. The matters relied upon by Mr Lever, although important, cannot be decisive in this Court and do not establish that the trial judge's decision was wrong. In my judgment this Court is not entitled to interfere with the findings in relation to the critical telephone conversation and is not entitled to substitute contrary findings in favour of the party bearing the onus of proof. See Dearman v Dearman (1908) 7 CLR 549 at 553. These conclusions dispose of the appeal in so far as it was based upon contract. The appellant had an alternative case based on estoppel but the findings on the contract issue are also fatal to the case on estoppel. The rejection of the appellant' s evidence as to the conversation of 16 July leaves no basis for any finding that Mr Jones then made a representation which could ground a promissory or other estoppel. The appellant did not claim that any later conversation with Mr Jones or some other bank officer conveyed a promissory or other relevant representation. The appellant relied on the conduct of the Bank prior to the letter of 23 September as conveying a representation that a contract to fund Option 2 had been made with the Bank. However while this conduct was consistent with such a contract having been made it was not unequivocal. It did not necessarily convey a representation to that effect. If it had done so the appellant must have succeeded on the facts on the contract issue. On the findings all that happened was that within the framework of an existing relationship of banker and customer the Bank honoured the appellant's cheques and permitted the overdraft to increase. There remains the question of estoppel by negligence or by silence where the Bank had a duty to speak. See generally Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387. This type of estoppel depends upon findings that the Bank knew that Mr Lorimer was acting to his detriment on the assumption that a contract to fund Option 2 existed, that the Bank knew that this assumption was incorrect, and that it failed to either correct or fulfil Mr Lorimer's assumption. In my opinion that case breaks down at practically every point. There is no finding that Mr Jones or Mr Board knew that Mr Lorimer was acting on any such assumption. URJ LORIMER v STATE BANK OF NEW SOUTH WALES (Handley JA) 29 Moreover there is no finding that Mr Lorimer actually believed during this period in the existence of facts which in law would establish that such a contract was already in existence. The trial judge said "I think it is clear too that the plaintiff's understanding of what it is that in the eye of the law amounts to a legally binding contract is inaccurate". I see no reason to treat mistakes of law by one party, known to the other as outside the proper scope of the law of estoppel. Waltons Stores v Maher (above) would seem to establish as much. Mr Lorimer may have honestly but mistakenly believed either that the facts as deposed to by him were the true facts (mistake of fact) or that what must be taken to be the true facts constituted a contract binding the Bank to fund Option 2 (mistake of law). A mistake of either kind cannot found an estoppel against the Bank unless the relevant Bank officers were aware or should have been aware of Mr Lorimer's mistake. On their own evidence Jones and Board had made it clear that they could not commit the Bank and that they were giving no assurance that it would fund Option 2. The Bank officers therefore did not know or suspect that Mr Lorimer was labouring under a mistake. How then can the honouring of the customer's cheques, without more, constitute negligence or imprudence? The lie told by Mr Board on 13 September cannot found any estoppel. In terms It did not establish or tend to establish the existence of a binding contract. In fact it demonstrated that Mr Board and the Bank were then acting as if there was no such contract. It is clear that Mr Lorimer acted to his detriment in signing the hire purchase agreement and paying the deposit. However on the findings he did so without having received any promise or assurance for the funding of Option 2. Accordingly the detriment which arose from his actions on 16 July cannot be relevant to any case of estoppel. It does not appear either from the evidence or from the findings that Mr Lorimer thereafter changed his position or acted to his detriment in reliance upon any representation, assurance or silence on the part of the Bank. It is true that he overdrew his account but this was for the purpose of paying his living expenses and conducting his farming and grazing business. I am not satisfied that he suffered any relevant detriment after he had committed himself to the hire purchase agreement or that any further change of position took place. Accordingly the basis for an ultimate finding that the Bank has acted or attempted to act unconscionably in the matter is lacking. Indeed the trial judge said that "I do not think one can properly categorise anything done by the defendant... as unconscionable". On the findings of fact by the trial judge I must agree. In my opinion therefore the appeal fails. I agree with the trial judge that this is a tragic case for the appellant and for that reason I have carefully and earnestly reviewed the evidence and the submissions. In the end however I have not been persuaded that the appellant has established any basis for legal redress against the Bank. I have had the benefit of reading in draft form the reasons for judgment of the President. It is possible that Mr Jones was imprudent or even negligent on 16 July in failing to give Mr Lorimer clear and unequivocal advice about the risks he would run if he proceeded with Option 2 at that stage. In particular it is possible that Mr Jones was negligent in telling Mr Lorimer that he was faced with a management decision which was for him to take. A bank owes a duty of care to its customers in relation to any advice that it chooses to give them. However in my opinion in the circumstances of this case any negligence in giving or failing to give advice is incapable of founding an estoppel. The advice given, and any 30 UNREPORTED JUDGMENTS failure to give further advice did not convey any promise or representation that a contract to fund Option 2 already existed or would come into existence. Bad advice of the kind relevant here cannot of itself found an estoppel. In fairness to Mr Jones and the Bank, I must make it quite clear that no case based on negligent advice was ever pleaded or litigated. It may be that any such claim would have failed along with the claims in contract and estoppel or for other reasons as well. The case is also an unfortunate one for the Bank because its failure to support the appellant through to the end of the 1986 harvest appears to have cost it dearly. The appellant, after some delay, was able to obtain additional funding from the Namoi Cotton Co-Operative Limited on the security of a crop lien. In the meantime however valuable time had been lost which the appellant was never able to make up. It seems the Bank did not consider the alternative of funding the balance of Option 2 on the basis of such security or the risk that if they did not do so someone else would. In the result its refusal to fund the balance of Option 2 in 1985-86 to the extent of $37,780 has cost it many times more in the long run. As at 3 March 1989 judgment was entered in favour of the Bank for $619,008.50 and the debt would be much larger today. On the information before the Court it appears that the Bank has been penny-wise but pound-foolish. However the appellant has failed to establish that the Bank committed any legal wrong in refusing to fund the balance of Option 2 in 1985-6. In my opinion therefore the appeal should be dismissed with costs. Counsel for Appellant: F G Lever and J S Manvell Solicitor for Appellant: Everingham Solomons and Co Counsel for Respondent: P Hallen Solicitor for Respondent: P W Kearns, State Bank