Waiver by contract and wavier by estoppel: very Little to worry about

Tribeca Property borrowed some money from Olympian Homes, with personal guarantees given by Little and O’Shea. The loan was repaid, albeit late, by Tribeca who subsequently went into liquidation. Olympian served statutory demands against Little and O’Shea claiming via the guarantees the interest it said it was owed under the loan. Little and O’Shea applied to set aside the statutory demands. To do this they needed to show that there was no “genuine triable issue”. 

Little and O’Shea had two waiver arguments: 

1. waiver by contract
2. waiver by estoppel

Waiver by contract 

The court held for the waiver to be effective, there must be a clear request by one party that the other would not insist on contractual performance, to which that other then agrees. For the waiver to be contractual, the formalities for creating a contract must be present, including consideration. 

The ability to assert waiver by contract was severely curtailed by a clause—sometimes called a no oral modification clause—which stated that any waiver must be in writing. The most compelling evidence was oral. There was no clear request and acceptance in writing. 

Waiver by estoppel 

The court held that a waiver by estoppel—a type of promissory estoppel—requires: 

• a “clear or unequivocal statement, or alternatively clear conduct which objectively assessed indicates an intention or promise to give up, or not to enforce a right” 
• an intention by the promisor that the promisee will rely on the statement or conduct, and for the promise in fact so to rely
• it to be inequitable to allow the promisor to renege on the promise 

The court noted what had been said in Rock v MWB: if there is a no oral modification clause then, for an estoppel, there would need to be some words or conduct unequivocally representing that the variation was valid notwithstanding its informality and this would have to be more than the informal promise itself. 

Essentially, Olympian provided an incomplete deed of release to Little and O’Shea following repayment of the principal sum due under the loan. There was also an email suggesting that the matter of the loan was closed. In reliance on this conduct, Little and O’Shea did not enforce any interest on a separate loan to Olympian (the “change of conduct” required for reliance).  

The final aspect of promissory estoppel—the question of what was equitable—the court felt it did not need to decide since it was a textbook genuine triable issue.

Oddly both the parties thought that consideration was a requirement of waiver by estoppel, but the court was having none of this.  

Judgment: Little v Olympian Homes