The Principle of Estoppel

ORION FINANCE LIMITED v. J D WILLIAMS and COMPANY LIMITED [1995] EWCA Civ 1

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This case relate to the principle of estoppel and is useful to
understand the principle. The plaintiffs is the assignees of a lease
of computer equipment. The defendants were the lessees. Clause 22 of
their contract provided that the lessor could assign the lease "with
the prior consent of the lessee, which shall not be unreasonably
withheld". No consent to the assignment was asked for, or given. The
defendant claimed that the purported assignment was invalid. the
plaintiff failed in the high court.

The dispute is a series of lease agreement made by Atlantic with other
companies. Orion, having purchased the equipment from IBM, then leased
it to Atlantic on hire purchase terms. Atlantic leased them/it to the
defendant. one of the clauses is wrote: "3. the Lessee acknowledges
that this is the entire Agreement in respect of the leasing of the
Machines and there are not and will not be other agreements which are
or may be binding on the Lessor unless they are in writing signed by
the Lessor."

The judge say:

1. No duty owed to orion. difference from the case submitted by the
defendent, there have been no direct dealings between the two parties.

2. No unequivocal representation.in my judgment the principle which
governs all kinds of estoppel by representation applies here also,
namely, that the party against whom the estoppel is alleged must be
proved to have made an unequivocal representation.The representation
may be made by words, or by conduct, or even by silence. The essence
of the estoppel is that the party who made the representation, if it
was intended to be acted upon and was acted upon by the other party,
to his detriment, cannot thereafter say that the facts were otherwise
than he represented them to be. silence may amount to a representation
when there was a legal duty to speak. Applying this test in the
present case, I would hold that the defendants' failure to acknowledge
the purported assignment could not properly be regarded as a positive
representation that they assented to it or that they would not seek to
assent against Orion the rights which they had obtained contractually
against Atlantic.

3. No reliance. for the causes given above, the judges dismissed the appleal.

In other words, to rely on the principle of estopel, the following
test must be applied:

1. there is an unequivocal representation made by the party.
2. the representation may be made by words, or by conduct, or even by silence.
3. specially, the representation is intended to be acted upon by the
other party.
4. to his detriment, the other party was acted upon the representation.

In brief on the case if there is no a duty of care to be aware of the
other party something true, merely silence cannot amount to a
representation. That is to say, the other party cannot rely on the
principle of estoppel.