182 THE ADVOCATE
VOL. 79 PART 2 MARCH 2021
After 6th Aunt died, Wai refused to treat any of the money as being held
in trust for Kam. Kam sued. The court held that, at common law, 6th Aunt
had not made a valid gift to Wai as trustee for Kam because the exact subject
of the trust (which was to include an unspecified amount of money) was too
uncertain.
However, the court held that Wai was prevented by estoppel by convention
from denying that he held the money in trust for Kam. First, the court
held that the parties had entered into a transaction or legal relationship on
the basis of an assumption that was shared by or common to them both—
namely, there was a valid gift of money from 6th Aunt to Wai and Kam.14
Second, the court held that Wai and Kam had acted on the basis of the
same shared assumption, in the form of Wai providing various amounts
of money to Kam and Kam receiving them over a substantial period of
time.
Third, the court held that it would be unfair to allow Wai to resile from
the common assumption. Wai had given Sim money to buy real estate, but
in a separate lawsuit he argued that she held the property in trust for him.
The court held that Wai had departed from the common assumption held
with Kam by asserting that his payments to Sim and Kam were out of generosity,
not pursuant to 6th Aunt’s gift. This departure was unjust because,
in Wai’s action against Sim, he denied that the payment of the money to her
for the purchase of the property was part of the gift from 6th Aunt. By Wai’s
making a claim to Sim’s property, he was seeking to deprive Kam and Sim
of what truly belonged to Kam under 6th Aunt’s gift.
WHAT IF THE PARTIES KNOW THE CONVENTION IS NOT TRUE?
The above discussion of the need for the estopping party to prove reliance
leads to the key point of this article. At least one U.K. textbook has suggested
that if there must be actual reliance by the party seeking to raise the
estoppel by convention, then the estoppel cannot arise when that party
knew that the convention was untrue (because if that party knew it were
untrue, then that party would not or should not have relied on it).15 In my
opinion, this is not the law and misconceives the nature of estoppel by convention.
That estoppel is based on parties agreeing to proceed on the basis
of a certain set of facts or legal principles. The estoppel does not arise by
reason of the parties’ having agreed that those facts are true or legal principles
are correct; it arises merely because the parties have agreed to proceed
on the basis that those facts or principles will be taken to be true for the purposes
of the particular transaction. The truth of those facts or correctness
of those principles is self-evidently irrelevant to the parties, or else they