Creative Development Solutions Limited (Creative) consults on the provision of telecommunications services.  As part of discussions on a potential collaboration with Chorus New Zealand Limited (Chorus), Creative required Chorus to execute a confidentiality agreement before supplying it with information relating to its Smart Services Infrastructure initiative (SSI).

Funding for rural broadband services was available through a Crown entity called Crown Infrastructure Partners (CIP).  Chorus confirmed to Creative that it had withdrawn from further participation in the bidding process.  Following this confirmation Creative provided the SSI information to Chorus.

However, Chorus was subsequently invited to re-enter the tender process for a further round of CIP funding.  Creative alleged that Chorus used confidential information supplied by Creative in this process.  As it happens, neither company succeeded in the tender process.

Creative brought proceedings against Chorus for breach of fiduciary duty, breach of contractual and equitable obligations of confidentiality and estoppel.  These claims were unsuccessful at the High Court.

Creative appealed in respect of the causes of action in breach of the contractual obligation of confidentiality and equitable estoppel.

Legal Issues

The Court of Appeal upheld the findings of the High Court that Chorus had not breached the confidentiality agreement.  The remaining issue which attracted extensive discussion in both courts was the claim in equitable estoppel.

The essence of this claim was that:

  • By confirming to Creative that it had withdrawn from bidding for CIP funding, Chorus created a belief and expectation that it would not bid for further funding
  • Creative reasonably relied on Chorus’ statement when it provided the SSI information to Chorus
  • Creative suffered detriment due to its reliance on Chorus’ statement
  • It was unconscionable for Chorus to depart from the belief and expectation it created

High Court Decision

Justice Dobson cited the elements of equitable estoppel as set out in Wilson Parking New Zealand Ltd v Fanshawe 136 Ltd [2014] NZCA 407:

  • A belief or expectation by [the plaintiff] has been created or encouraged by words or conduct by [the defendant]
  • To the extent an express representation is relied on, it is clearly and unequivocally expressed
  • [The plaintiff] reasonably relied to its detriment on the representation
  • It would be unconscionable for [the defendant] to depart from the belief or expectation

His Honour accepted that in the context of discussions between Creative and Chorus there had been an implied representation that Chorus would not be bidding on the further funding round, sufficient to found an estoppel in circumstances where it was reasonable for Creative to rely on it.

However, the Judge then went on to find that Creative failed to establish any material detriment which arose from its reliance.

Court of Appeal Decision

The Court of Appeal provided further guidance on the first and third elements of equitable estoppel.

It held that where the alleged representation is implied in what is expressly stated, the question for the Court was to consider what a reasonable person would have inferred was being implicitly represented by the representor’s words and conduct in their context.

The context in this situation was a focus on funding going forward, so a reasonable person in Creative’s position would have taken from Chorus’ statement an implied representation as to future conduct, in this case essentially a promise that Chorus would not participate in the next funding round.

In relation to detriment, Creative sought to argue that, as the High Court hearing only addressed liability and not quantum, proof of detriment was not required at the liability trial.

The Court of Appeal disagreed and confirmed that the existence of detrimental reliance – a change of position to the representee’s detriment, in reliance on the representation – remains an essential component of equitable estoppel and is a pre-requisite to a determination of liability.

Creative was required to establish that in reliance on Chorus’ representations it changed its position in a manner that left it worse off than it would have been absent such reliance.

Creative asserted that it had suffered detriment because it was deprived of the opportunity to request a fee which Chorus would hypothetically have paid to be released from the obligations it had assumed to Creative.  The hypothetical fee was the basis for its damages claim against Chorus.  The Court of Appeal held Creative’s argument was circular – it could only get damages or compensation by establishing its cause of action, and not having a chance to be paid such damages could not be the basis for the alleged detriment necessary to found the cause of action.

Further, the Court held, citing Doig v Tower Insurance Limited [2019] NZCA 107, that the plaintiff’s actions in reliance on the representation was the proper foundation for unconscionability.  In this case, the Court had found no breach by Chorus of the confidentiality agreement, and Creative’s lack of success in CIP bidding was not caused by Chorus’ participation.  This meant no actual detriment had arisen from Creative providing the SSI information to Chorus in reliance on the representation.


The Court confirmed that a factual statement as to present conduct could, in the right context, be taken as an implied promise as to future conduct and qualify as a representation founding an equitable estoppel.  This is a further reminder following Dodds of the need for precision and to take care in communications between negotiating parties.

The Court also reemphasized the requirement for actual detriment in equitable estoppel claims, following its own previous decisions in Wilson Parking and Doig.  A disappointed expectation without evidence of actual loss will not amount to detriment.

If you would like more information about this decision please contact Kiri Harkess or Linda Hui

This publication is intended as a general overview and discussion of the content dealt with. It should not be used in any specific situation, in which case you should seek specific legal advice.