Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26 (20 July 2016)

Last Updated: 14 October 2016

HIGH COURT OF AUSTRALIA

FRENCH CJ,



KIEFEL, BELL, GAGELER, KEANE, NETTLE AND GORDON JJ

CROWN MELBOURNE LIMITED APPELLANT

AND

COSMOPOLITAN HOTEL (VIC) PTY LTD &



ANOR RESPONDENTS

Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd



[2016] HCA 26



20 July 2016



M253/2015

ORDER

Appeal allowed with costs.



Set aside orders 2 to 6 of the Court of Appeal of the Supreme Court of Victoria made on 8 April 2015, and in their place order that the appeal to that Court be dismissed with costs.



Special leave to cross-appeal granted, limited to ground 4 of the Notice of Cross-Appeal dated 24 December 2015.



Cross-appeal dismissed with costs.





On appeal from the Supreme Court of Victoria

Representation

B W Walker SC with N D Hopkins QC for the appellant (instructed by Minter Ellison Lawyers)

M R Pearce SC with R S Hay QC for the respondents (instructed by Mills Oakley Lawyers)

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd

Contract – Collateral contract – Where tenants held five year leases under which they operated two restaurants – Where clause of leases required landlord to give notice that leases were to be renewed or continued or the premises were to be vacated – Where in course of negotiations for further leases landlord made statement to tenants that they would be "looked after at renewal time" – Where landlord required tenants to vacate premises on expiration of leases – Whether statement gave rise to collateral contract – Whether statement promissory in nature – Whether obligation uncertain.

Estoppel – Whether statement to tenants that they would be "looked after at renewal time" could give rise to estoppel – Whether statement capable of conveying to reasonable person that tenants would be offered further lease – Whether expectation acted upon by tenants.

Appeals – Procedure – Where question whether statement amounted to binding contractual promise – Whether question of fact or question of law.

Words and phrases – "certainty", "collateral contract", "oral contract", "promissory estoppel", "proprietary estoppel", "question of fact", "question of law", "reasonable correspondence", "remittal".

Victorian Civil and Administrative Tribunal Act 1998 (Vic), s 148.

FRENCH CJ, KIEFEL AND BELL JJ. In proceedings brought by the respondents ("the tenants"), the Victorian Civil and Administrative Tribunal ("the VCAT") [1] [2] [3] The primary judge [4] [5] For the reasons which follow, the Court of Appeal was correct to conclude that there was no collateral contract but it was in error in remitting the issue of estoppel. The tenants could not succeed on that issue.

Background

Crown is the owner of the Melbourne Casino and Entertainment Complex. The tenants held leases of two areas in the Complex in which, after 1 September 2005, they operated two restaurants. Before 1 September 2005, other companies controlled by Mr Zampelis (director of the tenants) had operated those restaurants under leases from Crown which expired at the end of May. In early 2005 negotiations commenced between the tenants and Crown for new leases. It may reasonably be inferred from the discussions which followed that the representatives of both parties were experienced in negotiations of this kind. The new leases which were offered by Crown were limited to a term of five years and did not contain an option for renewal. Clause 2.3 of each lease provided only that Crown was to give at least six months notice to the tenants prior to the expiration of the lease stating whether:

"(a) the Landlord will renew this Lease, and on what terms (this may include a requirement to refurbish the Premises or to move to different premises ...);

(b) the Landlord will allow the Tenant to occupy the Premises on a monthly tenancy after the Expiry Date; or

(c) the Landlord will require the Tenant to vacate the Premises by the Expiry Date."

It was a condition of the leases that a major refurbishment of the premises be undertaken by the tenants. Mr Zampelis, the tenants' representative in the negotiations, was concerned about the cost of the refurbishment and sought to obtain a commitment from Crown to enable the tenants to continue to trade for a further five years. Crown, for its part, was unwilling to offer any further term on the lease. Leases in the terms offered by Crown, and limited to a term of five years, were signed by the tenants in November 2005 but were not delivered to Crown until March 2006 when Crown demanded them ("the 2005 leases"). In October 2008 Crown invited tenders for new leases of the premises and the tenants put in tenders in March 2009. In December 2009 Crown gave notice, pursuant to cl 2.3(c), requiring them to vacate the premises on the expiration of the 2005 leases, 31 August 2010. In July 2010 the tenants brought proceedings in the VCAT in which they alleged that a series of representations had been made by representatives of Crown to Mr Zampelis, to the effect that the tenants would be given a further term of five years following the expiration of the 2005 leases. These representations were said to amount to a promise that Crown would exercise its power under cl 2.3(a) of the 2005 leases and offer a renewal for a further five year term. The tenants claimed to have been induced by the representations to execute the leases and to carry out the refurbishments. Two, alternative, legal consequences were said to follow from the promise: a collateral contract, by which Crown was obliged to offer the tenants further five year leases, came into existence, or an estoppel arose which prevented Crown from denying that obligation. Importantly, the terms of the further leases were said to be the same (or the same, mutatis mutandis) as for the 2005 leases. The VCAT did not find [6] [7] [8] The decision of the VCAT was set aside on appeal to the Supreme Court of Victoria [9] [10]

The evidence and the VCAT's findings

Mr Zampelis gave evidence before the VCAT that in meetings with Mr John Williams and in a chance encounter with Mr Lloyd Williams, both representatives of Crown, Mr Zampelis had been assured that the 2005 leases would be renewed after their five year term. Mr Zampelis said that in a further meeting between himself and another Crown representative, Mr Boesley, in December 2005, at which others including Mr Zampelis' bank manager were in attendance, Mr Boesley gave him the same assurance. He said that Mr Boesley repeated this assurance in a telephone conversation following the meeting and in another conversation in February 2006, shortly prior to the executed leases being handed over to Crown. The VCAT did not accept Mr Zampelis' evidence of having received assurances in these terms. It considered [11] [12] [13] The VCAT preferred [14] [15]

"if Mr Zampelis spent the money that, under Crown's leases, the tenants were required to spend to achieve a major refurbishment to a high standard, he would be 'looked after at renewal time', and that the leases had been limited to a five year term only because they would thereby be aligned with other tenants' leases."

The VCAT made[16] a specific finding that Crown had not expressly stated that it would renew the 2005 leases, but that Mr Boesley had said only that Mr Zampelis (and therefore the tenants) would be looked after at renewal time.

The VCAT's reasoning

It is the process of reasoning which the VCAT then undertook which is in issue. It first determined [17] [18] Because the promise to renew was of an existing five year lease, the VCAT considered [19] [20] In the VCAT's view, the promise Crown made did not require Crown to offer any particular terms to the tenants, other than the five year term. The terms which Crown was to offer were at its discretion. The VCAT did not suggest that there was any criterion by which the discretion was to be exercised. The VCAT did not accept [21] The VCAT appears to have been of the opinion that commercial realities would produce acceptable terms. It accepted that the terms of the promise left Crown with the right to impose terms and conditions which were so onerous that the tenants could not accept them. However, it went on to say [22]

"No doubt that is an unrealistic scenario, because the stipulation of unreasonably onerous terms in notices of renewal would jeopardise Crown's tenancies generally. One would expect a notice of renewal to stipulate terms and conditions that had reasonable correspondence with terms and conditions that had appeared in the lease that Crown was proposing to renew."

The VCAT did not identify the basis for this view. No evidence was identified to support it.

The VCAT assessed the damages to which the tenants were entitled by reason of Crown's failure to renew the lease for a further five years on the basis of the profits the tenants would have made in that period. That was the measure of damages which the tenants had claimed, but of course on the basis of the collateral contract for which they contended. For reasons which are not entirely clear, the VCAT did not make orders for damages at the conclusion of its reasons. It had a further hearing [23] [24] The VCAT dealt with the issue of whether the statement could also be said to found a promissory estoppel as an alternative to the conclusion it reached concerning a defence raised by Crown that the collateral contract was unenforceable by reason of s 126(1) of the Instruments Act 1958 (Vic). That provision required that a disposition of an interest in land be in writing. The VCAT held [25] s 126 did not apply to the collateral contract because the collateral contract was not one for an interest in land, but for a notice that Crown would renew a lease. Alternatively, an estoppel [26] Waltons Stores (Interstate) Ltd v Maher [27]

A collateral contract?

In Hospital Products Ltd v United States Surgical Corporation Gibbs CJ explained [28] In the Supreme Court of Victoria, Hargrave J considered [29] [30] On the appeal before Hargrave J the tenants conceded that the question to which Gibbs CJ referred in Hospital Products was one of mixed fact and law. That is clearly correct. Whilst regard is had to the facts – what was said and done – questions as to what a representation objectively may be taken to convey, and whether it has the qualities which the law requires for it to amount to a binding contractual promise, are questions of law. In a passage in his speech in Heilbut, Symons & Co v Buckleton, Lord Atkinson said [31] [32] [33] [34] The tenants applied to this Court for special leave to cross-appeal on the ground that no question of law was involved in the question whether there was a collateral contract (or an estoppel) and therefore no appeal to the Supreme Court lay under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic). That application was heard with argument on the appeal and was refused. In the course of argument the tenants contended that any question respecting the construction of an oral contract is a question of fact and therefore questions as to the promissory nature of the statement made by Crown were only questions of fact for the VCAT. The tenants' submissions in this regard proceeded upon a misapprehension of what the authorities they relied upon actually say. It is certainly the case that the question as to what was actually agreed between the parties, which is to say the terms of the consensus reached, is a question of fact [35] [36] The statement found to have been made by Crown's representative, that the tenants would be "looked after at renewal time", could not possibly have been understood to bind Crown to offer a further five year lease. It did not have the quality of a contractual promise of any kind. It is possible that the statement could be understood as addressed to the tenants' concerns about whether they would not recoup the costs of the refurbishment that the 2005 leases, which they were about to enter into, required. Crown was aware of these concerns. But this was not the case the tenants pursued. Their case depended on a promise by Crown that it would do much more than ensure that the tenants were not out of pocket. Hargrave J also held [37] [38] [39] The problem regarding the enforceability of the obligation which the VCAT considered arose from the statement is not so much one concerning the uncertainty of its terms as the lack of them [40] [41] In their submissions on this appeal, the tenants sought to rely upon that part of the VCAT's reasons [42] [43] The views that the VCAT expressed about the terms of the renewed leases bearing a "reasonable correspondence" with the 2005 leases were mere conjecture, made in passing. As Whelan JA observed [44] [45] [46] It remains to add that the tenants' claim was not based upon an agreement whereby Crown would make an offer on terms at its discretion. No such agreement is identified in the VCAT's reasons. During argument on this appeal the tenants acknowledged that the agreement identified by the VCAT was not one in the nature of an agreement to make an offer, such as a right of pre-emption. The damages it awarded are not referable to such an agreement, as such damages could only have been nominal. It assessed damages for loss of profits on the basis of an enforceable agreement for the renewal of the leases for a further term of five years.

Estoppel?

It has long been recognised that for a representation to found an estoppel it must be clear [47] Low v Bouverie, it was said [48] [49] In submissions on this appeal the tenants for the first time sought to characterise the estoppel for which they contended as a proprietary estoppel. The tenants may have been encouraged to do so by the reasons of Warren CJ [50] [51] The tenants conceded that a consideration of the requirements of proprietary and promissory estoppels might require the resolution of a question, as yet unresolved, as to whether there is a single, unified doctrine of estoppel [52] This is not the case to consider these questions. Whether the estoppel claimed is proprietary in nature has never been an issue in these proceedings and has not been the subject of any substantial argument. It has never been the tenants' case that the estoppel in question was proprietary rather than promissory. It is to be inferred from the VCAT's decision [53] s 126(1) of the Instruments Act that it was the tenants' submission that the subject matter of the promise in question was not an interest in land. In any event, the tenants' case fails at another level. Not only must the representation be such as to be able to create the assumption or expectation in question, it must be shown that that assumption was in fact acted upon [54] [55] The expectation the VCAT said Crown engendered in the tenants was that they would be offered further five year leases at renewal time on terms to be decided by Crown. But that is not what the tenants submitted that Mr Zampelis was led to believe. They submitted [56]

Remittal?

Whelan JA [57] His Honour did not suggest that either of the parties had been denied procedural fairness; rather his Honour seemed to think that the tenants' case could be regarded as encompassing Crown being estopped from resiling from whatever representation it was found to have made [58] His Honour considered [59] Mr Zampelis did not have an expectation of the kind to which the VCAT's findings refer. The tenants could never make out an estoppel unless they were given the opportunity to alter Mr Zampelis' evidence. There was no utility in the order for remittal. It should not have been made.

Conclusion and orders

The appeal from the Court of Appeal should be allowed. We agree with the orders proposed by Keane J.

GAGELER J. Substantially for the reasons given by Gordon J, I would grant special leave to cross-appeal on the ground that there was a binding and enforceable collateral contract between Crown and each Tenant as found by VCAT, allow the cross-appeal on that ground, and make consequential orders reinstating the decision of VCAT. That disposition of the cross-appeal operating to remove the substratum of the appeal, I would dismiss the appeal accordingly. The collateral contract found by VCAT comprised a promise made by Crown to each Tenant in consideration of the Tenant entering into that Tenant's lease with Crown for a term of five years. Crown's promise was that, at least six but no more than 12 months before the expiry date of the lease, Crown would give the Tenant a notice under cl 2.3(a) of the lease. The notice would state that Crown would renew the lease, which in the context of a notice under cl 2.3(a) would mean that Crown would renew for a further term of five years. The notice would go on to state the terms on which Crown would renew the lease. The choice of the terms to be included in the promised notice was to be left to Crown [60] Crown's promise under the collateral contract was therefore a promise to make an offer on terms which, if accepted by the Tenant, would result in a new agreement for lease for a further term of five years. Crown's argument that the collateral contract was inconsistent with the lease was accepted by the primary judge [61] [62] [63] [64] Hoyt's Pty Ltd v Spencer [65] Maybury v Atlantic Union Oil Co Ltd [66] The critical point of distinction between the present case and each of those cases is that cl 2.3 of the lease did not operate to confer a contractual discretion which is circumscribed by the collateral contract. The clause operated instead to impose a contractual obligation on Crown to give notice of a decision to be made by Crown outside the terms of the lease. Crown's obligation to give notice under the collateral contract did not conflict with its obligation to give notice under the lease. To the contrary, the two obligations operated in harmony: performance of the obligation to give notice under the lease was necessary to constitute performance of the obligation to give notice under the collateral contract; giving one notice would satisfy both obligations. Crown's separate and logically anterior argument denies the existence of the collateral contract. Crown's grounds of appeal from VCAT to the Supreme Court articulated the argument in terms that "the 'promise' [found by VCAT to have been made by Crown] was uncertain and/or incomplete and/or illusory". That argument too was accepted by the primary judge [67] [68] [69] Blurred from the outset, the various strands of Crown's argument denying the existence of the collateral contract are related, but conceptually distinct [70] [71] Crown's assertion of want of contractual certainty is in substance an assertion that what was said by Mr Boesley, as agent for Crown, to Mr Zampelis, as agent for the Tenants, was so obscure or imprecise as to be incapable of supporting attribution to Crown and to the Tenants of any particular contractual intention [72] What the words of Mr Boesley and the conduct of Mr Zampelis would have conveyed to a reasonable person who had the background knowledge reasonably available to Crown and to the Tenants is a question of fact [73] Whatever view might be taken were VCAT's conclusion of fact to be the subject of a hypothetical appeal by way of rehearing, I do not consider VCAT's conclusion to have been flawed in any way which would make that conclusion susceptible to being overturned on an appeal to the Supreme Court on a question of law under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic). That the finding was open on the evidence before VCAT is demonstrated by the reasoning of Gordon J [74] [75] Before recording its findings of primary fact, in particular its findings as to exactly what Mr Boesley said and exactly what Mr Zampelis subsequently did, VCAT acknowledged that there were features of the evidence which would support a view that it was "improbable" that Crown promised to renew the leases [76] [77] Crown's conceptually distinct assertion of want of contractual completeness is an assertion which necessarily attempts to build on the incontestable understanding that a contract can arise only if parties have reached a present agreement "upon all the terms which they regarded or the law requires as essential for the formation of legally binding relations" [78] in praesenti and not merely that it is hoped or expected that they will meet in futuro" [79] Consistently with that understanding [80]

"It is established by authority, both ancient and modern, that the courts will not lend their aid to the enforcement of an incomplete agreement, being no more than an agreement of the parties to agree at some time in the future. Consequently, if [a] lease provided for a renewal 'at a rental to be agreed' there would clearly be no enforceable agreement."

Crown's assertion of want of contractual completeness seems to be that, if the law will not recognise an agreement to agree, the law will not recognise an agreement to make an offer.

I cannot accept that to be so. There is a material difference between an agreement to agree and an agreement to offer. To agree to agree is to defer the whole or some part of an agreement to the future. To agree to offer is to enter into a present agreement to propose terms capable of resulting in a further future agreement if accepted. The agreement to make an offer is an agreement that is complete in itself. So much has been recognised in numerous cases in which a right of first refusal or pre-emption has been recognised as enforceable [81] That leaves just one of the three conceptually distinct strands of Crown's argument remaining to be considered: the assertion that the collateral contract found by VCAT is illusory because it leaves the choice of the terms on which Crown will renew the lease to Crown. It is important to be clear about the root principle sought to be invoked. The principle, as classically stated, is as follows [82]

"wherever words which by themselves constituted a promise were accompanied by words which showed that the promisor was to have a discretion or option as to whether he would carry out that which purported to be the promise, the result was that there was no contract on which an action could be brought at all. The doctrine was an old one. In Leake on Contracts, 3rd ed, p 3, it was expressed thus:—'Promissory expressions reserving an option as to the performance do not create a contract.'"

The principle is thus one which has application where parties have reached a present agreement but where their present agreement has "left to the option of one party not only the mode of performance but whether there shall be any performance at all" [83] [84] [85] What the illustration demonstrates is that, in order to determine whether or not an agreement has left a party with a choice as to whether or not to perform a promise, it is first necessary to be quite clear about the content of the promise in question. Where, as here, the promise is no more and no less than a promise to make an offer, the promisor cannot be said to be left with a choice as to whether or not to perform the promise merely because the terms of the offer to be made are left to the promisor. The orthodoxy of that ultimate proposition can in turn be given concrete illustration by reference to the facts and outcome of a first instance English decision noted by Gordon J [86] [87] Crown's obligation under the collateral contract found by VCAT was to give each Tenant a notice amounting to an offer which the Tenant would be able to accept. That was the long and the short of it. The fact that the choice of the terms on which Crown would make that offer was left to Crown did not render the obligation to make an offer illusory: that Crown could choose the terms did not contradict its obligation to make an offer. Finally, it is necessary to note two potentially important issues which were not raised in the appeal or the cross-appeal to this Court and to which no argument has been directed. One issue concerns whether Crown might have been constrained by an implied obligation to act honestly or honestly and reasonably in choosing the terms on which it would offer to renew the leases [88]





KEANE J. Two issues are presented for determination by the Court. The issue on which special leave was granted to appeal to this Court from the Court of Appeal of the Supreme Court of Victoria is whether an assurance given by the appellant landlord ("Crown") that the respondent tenants ("the tenants") would be "looked after at renewal time" could lead to further leases by way of estoppel. The second issue, which arises only on the tenants' cross-appeal, but which is logically anterior to the issue raised on appeal, is whether an enforceable collateral contract came into force between Crown and the tenants whereby Crown was obliged, on the expiration of the leases, to grant the tenants a new lease on terms having a reasonable correspondence with the terms of the original leases. This issue was resolved in favour of the tenants by the Victorian Civil and Administrative Tribunal ("the Tribunal"), but against the tenants by the primary judge in the Supreme Court of Victoria and then by the Court of Appeal. The tenants require a grant of special leave to raise this issue [89] The second issue is so closely related to the first that it would be distinctly unjust to determine the first issue without also determining the second [90] The tenants also sought to cross-appeal to argue that the appeal by Crown to the Supreme Court from the decision of the Tribunal was not "on a question of law" as required by s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ("the VCAT Act"). This argument had not been raised before the primary judge; it was raised for the first time in the Court of Appeal and resolved against the tenants unanimously in that Court [91] Haritos v Federal Commissioner of Taxation [92] Haritos [93] [94]

The proceedings

The tenants commenced proceedings in the Tribunal [95] [96] The tenants also claimed that Crown had engaged in misleading or deceptive conduct or unconscionable conduct in contravention of the Retail Leases Act 2003 (Vic) or the Fair Trading Act 1999 (Vic) ("the statutory claims"). It is common ground that the statutory claims were not the subject of separate consideration in the Tribunal, in the Supreme Court or in the Court of Appeal. They were not agitated in this Court. The tenants sought to recover the loss of profit that they would have made during the term of the further leases which they contended Crown was obliged to grant them. The tenants did not pursue any claim based on their inability to recoup expenditure made on refurbishments under the original leases, and in this Court expressly disavowed such a claim. The relief they sought was that sum of money necessary to put them in the position they would have been in had Crown kept what was advanced as a promise having contractual force [97] The Tribunal upheld the tenants' claim based on collateral contract [98] [99] Crown appealed to the Supreme Court. The primary judge (Hargrave J) granted leave to appeal and overturned the decision of the Tribunal [100] [101] The Tribunal upheld the tenants' claim on the basis of lost profits, finding an enforceable collateral contract between the parties that Crown would offer further leases to the tenants, and then assessing their loss on the basis that the offers would have led to leases on the terms assumed by the Tribunal. For the reasons which follow, the primary judge and the Court of Appeal were correct to conclude that the Tribunal erred in law in failing to appreciate that the contract by reference to which it assessed damages was illusory. The cross-appeal should be dismissed. As to the estoppel issue raised on the appeal to this Court, the parties were at odds as to whether the tenants had invoked promissory estoppel or proprietary estoppel as the alternative basis for their claim. Their dispute was driven by the apprehension that the requirement of certainty of the promise relied upon by the representee is less stringent in the case of proprietary estoppel than in the case of promissory estoppel. The dispute as to taxonomy need not be resolved in order to determine the estoppel issue in this case. On the findings of fact made by the Tribunal, the tenants' refurbishment of the premises was not, in fact, induced by an expectation of the grant of further five year leases on terms corresponding to the original leases. The statement found to have been made by Crown was not that which Mr Zampelis said he relied upon; and the statement which was found to have been made could not reasonably have engendered the expectation on which he claimed to have acted. Accordingly, the claim made by the tenants is not made out. They did not seek to establish any lesser claim, and so the Court of Appeal erred in remitting for further consideration by the Tribunal a claim that had not been advanced or litigated by the tenants. Crown's appeal should be allowed. In order to explain these conclusions more fully, it will be necessary to examine in some detail the reasons of the Tribunal, the primary judge and the Court of Appeal. Before turning to consider those reasons, it is desirable to set out the relevant background.

Background

Crown owns the Melbourne Casino and Entertainment Complex. From 1 September 2005 to 31 August 2010, the tenants each operated a restaurant at the Complex. Mr Zampelis was a director of each of the tenants. Prior to 1 September 2005, other companies controlled by Mr Zampelis operated the two restaurants as the lessees of the restaurant premises. The leases in respect of the restaurant premises were due to expire in May 2005, and so negotiations began at the start of 2005 in respect of new leases between Crown and the tenants. The tenants each entered into a deed of lease, expressed to operate from 1 September 2005. Each lease provided for an expiry date of 31 August 2010. Clause 2.3 of each lease provided:

"At least 6 months, but no more than 12 months before the Expiry Date, the Landlord must give notice to the Tenant stating whether:

(a) the Landlord will renew this Lease, and on what terms (this may include a requirement to refurbish the Premises or to move to different premises ...);



(b) the Landlord will allow the Tenant to occupy the Premises on a monthly tenancy after the Expiry Date; or



(c) the Landlord will require the Tenant to vacate the Premises by the Expiry Date."

Clause 3.1 of each lease provided that:

"If the Landlord gives the Tenant a notice under clause 2.3(a) and the Tenant wishes to renew this Lease, the Tenant must, within 60 days of that notice, give notice to the Landlord that the Tenant agrees to renew this Lease and accepts the Landlord's terms."

Part N of each lease concerned the tenants' obligations to undertake work, repairs, maintenance and refurbishment of the restaurant premises. Clause 85 of each lease, titled "Major Refurbishment", provided:

"85.1 The Tenant must complete a Major Refurbishment of the Premises, at it's [sic] own cost and to the full satisfaction of the Landlord, before 1st December 2005

85.2 The Major Refurbishment must be undertaken in full compliance with Part N of this Lease including all necessary approvals by the Landlord."

"Major Refurbishment" was defined in cl 1 of each lease to mean a comprehensive renovation of the restaurant premises in accordance with the tenants' design concept. The refurbishment of the restaurant premises was intended to be completed before the Commonwealth Games were held in Melbourne in March 2006. The works were carried out by the tenants and completed shortly after the commencement of the Commonwealth Games at a cost of approximately $4.65 million. During the negotiations for the leases, the tenants proposed that the leases should be for a term of 10 years or, alternatively, that they should contain an option in their favour to renew for a further five year period. The incorporation of one of those options was said by Mr Zampelis, who conducted the negotiations on behalf of the tenants, to be necessary to ensure that the tenants would have sufficient time to recover the capital expenditure on the refurbishment of the restaurant premises. What was said in these negotiations was controversial, and will be discussed in relation to the decision of the Tribunal. The leases were signed by the tenants in November 2005. The tenants did not deliver the signed leases to Crown until March 2006. It is to be noted that a period of four months elapsed between the signing of the leases by the tenants and the delivery of the leases to Crown. This period was occupied by the tenants' continuing attempts to obtain Crown's agreement to a lease term that extended beyond the expiry date or an option to renew. Crown declined to amend or include a provision in the leases to reflect the tenants' concerns, and in March 2006, at Crown's insistence, the tenants returned the signed leases, unaltered, to Crown. In October 2008, Crown commenced a tender process for new leases of the restaurant premises. The tenants submitted a tender. In December 2009, Crown informed the tenants that their tender was unsuccessful and provided the tenants with notice, in accordance with cl 2.3(c) of the leases, requiring them to vacate the restaurant premises at the expiration of the leases.

The decision of the Tribunal

Before the Tribunal, the tenants' case was that representatives of Crown made statements to Mr Zampelis which amounted to a promise that Crown would offer new leases to the tenants for a further term of five years by giving notice under cl 2.3(a) that it would renew the leases [102] [103] [104] The Tribunal did not accept Mr Zampelis' evidence in its entirety, observing that "Mr Zampelis was prone to embellish and exaggerate when giving evidence about statements or conduct of Crown." [105] [106]

"whilst this is a 5 yr term this is standard for Crown and aligns with other venues. Have however been with [Mr Zampelis] at several meetings when discussions have confirmed that further terms will be provided as they have in the past. [Mr Boesley] (Crown) was talking to [Mr Zampelis] one time and intimated that fit out should be high quality as this would reflect well and not to worry as he would be looked after at renewal time. So he should complete fit-out with this in mind and not scrimp on finishing to save a few dollars just because of the lease term."

The Tribunal concluded that, given Mr Craig's role as the tenants' banker and the context in which the note was made, the note was likely to be a "careful and reasonably accurate record of the substance of what Mr Boesley said to Mr Zampelis" [107] The Tribunal did not accept Mr Zampelis' evidence that Mr Boesley gave the tenants an assurance of a further lease term. The Tribunal found that the statement that Mr Boesley actually made to Mr Zampelis was to the effect that [108]

"if Mr Zampelis spent the money that, under Crown's leases, the tenants were required to spend to achieve a major refurbishment to a high standard, he would be 'looked after at renewal time', and that the leases had been limited to a five year term only because they would thereby be aligned with other tenants' leases."

The Tribunal concluded that the statement found to have been made by Crown through Mr Boesley was "promissory in character" [109] Mr Zampelis' evidence of the expectation upon which the tenants acted did not reflect the statement found to have been made on behalf of Crown. That evidence was that the tenants acted upon the expectation that Crown would renew each lease on the same terms and conditions as the original lease. The Tribunal noted that at the hearing the tenants' case as to the assurance given by Crown moved from that starting position to the position that the promise was to renew each lease on the same terms and conditions as the original lease, mutatis mutandis [110] [111] The Tribunal did not regard the promise as lacking sufficient certainty to give rise to an enforceable collateral contract [112]

"the way in which terms and conditions of a renewed lease could be ascertained with certainty was by Crown stipulating in its notice given under clause 2.3 what they were to be."

The Tribunal held [113] [114]

"[a] reasonable person would have concluded that the promise ... carried with it the consequence that the terms and conditions of the renewed lease would be those specified in the notice, whatever they were."

The Tribunal held that the collateral contract was not inconsistent [115] [116] In the upshot, the Tribunal held that the representation gave rise to a collateral contract obliging Crown to give a notice to the tenants that it would renew each of the leases [117] [118] The Tribunal then proceeded to assess the damages recoverable by the tenants on the basis that Crown "probably would have offered terms and conditions that had reasonable correspondence with those that had been in the expired lease." [119] [120] The Tribunal's view as to the terms of renewal that Crown would probably have stipulated was not a finding of fact based on evidence of Crown's likely attitude. Moreover, the assumption on which the Tribunal proceeded was inconsistent with cl 3 of each lease, which entitled Crown to act in its own interests in setting the terms of the new leases. In light of the circumstance that Crown did not wish to renew the tenants' leases, it is likely that it would have stipulated onerous terms as the price of surrendering its commercial preference to terminate its relationship with the tenants. The tenants might well have found such terms unacceptable. Be that as it may, given that Crown was not obliged to be "reasonable" in stipulating the terms of the further leases, it is, at best for the tenants, entirely speculative whether the terms of the offer would have been acceptable to, and accepted by, the tenants. On no view of the Tribunal's findings of fact was there a sufficient basis in law for the assessment of damages which the Tribunal proceeded to make. The Tribunal seems to have imposed upon the parties a "reasonable" solution to their unresolved differences in order to measure the damages to which the tenants were entitled. In proceeding in this way, the Tribunal was not engaged in an exercise in fact-finding. The solution which the Tribunal imposed did not reflect the Tribunal's finding of fact as to the assurance that was actually given by Crown to the tenants. An assurance that Crown would offer each tenant a lease on terms acceptable to Crown which might be so onerous that the tenants would not accept them, even if contractually binding, would hardly be of any value at all. In any event, perhaps not surprisingly, the tenants did not seek damages measured on this basis. It was simply no part of the tenants' case that they were entitled to damages representing the value of the opportunity to consider an offer of further leases. It is also to be noted that the award of damages was not calculated by reference to any suggestion that the tenants were worse off because they entered the leases with Crown and carried out the refurbishments than if they had walked away from the negotiation. No comparison was made between the tenants' financial position at the expiration of the leases and their position had they not obtained the leases and traded under them. The tenants did not seek to show, for example, the value of expenditure on refurbishment the cost of which had not been recouped during the term of the leases. The Tribunal also noted that if its conclusion as to the existence of a collateral contract were wrong, it would accept the tenants' alternative submission based on estoppel. The Tribunal said that it would hold that Crown was "estopped in equity from denying the existence of the collateral contract." [121] Relevant to an aspect of Crown's argument in this Court is the Tribunal's rejection of a submission by Crown that the tenants could not succeed in the proceedings because the collateral contract was not in writing. Such a requirement is imposed on contracts for the sale or other disposition of an interest in land by s 126(1) of the Instruments Act 1958 (Vic) ("the Instruments Act"). The Tribunal held that the collateral contract was not for the disposition of an interest in land, but rather for an option to renew [122]

The appeal to the primary judge

As the Tribunal was not constituted by its President or a Vice President, it was uncontroversial that Crown could appeal from the orders of the Tribunal to the Trial Division of the Supreme Court with leave of the Trial Division pursuant to s 148(1)(b) of the VCAT Act.

Collateral contract

The primary judge held that the Tribunal's conclusion in favour of the existence of a collateral contract advanced by the tenants did not accommodate its factual findings relating to the negotiations between the parties [123] [124] [125]

"too vague to found any objectively reasonable understanding to the effect found, and Mr Zampelis did not give evidence that he understood the statements in that sense."

The primary judge concluded that the putative collateral contract that obliged Crown to make an offer to the tenants to renew the leases was not sufficiently certain to be enforceable [126] [127]

Estoppel

On the estoppel issue, the primary judge addressed [128] Waltons Stores (Interstate) Ltd v Maher [129] [130]

"the meaning which the Tribunal attributed to the statements was not that which a reasonable person in the position of the parties in the relevant surrounding circumstances would have understood the statements to mean".

His Honour said that [131]

"In determining whether a representation is sufficiently precise to support an estoppel, the Court examines the sense in which the representee understood the representation and relied upon it, and then determines whether, in the context of the facts of the particular case, it was reasonable for the representee to understand and rely upon the representation in that sense."

On the issue of the tenants' understanding of the representation, the primary judge observed that [132]

"An analysis of the evidence and the Tribunal's findings demonstrates that there was a disconformity between Mr Zampelis's evidence of his understanding of the statements and the meaning which the Tribunal gave to those statements."

The primary judge held that this "disconformity" meant that the sense in which Mr Zampelis said he understood the statement was "wholly unreasonable ... [s]o the estoppel case falls at the first hurdle." [133]

The decision of the Court of Appeal

The Court of Appeal granted leave to appeal from the decision of the primary judge, and allowed the appeal.

Collateral contract

Warren CJ accepted that the primary judge was right to hold that the collateral contract was illusory and unenforceable for want of certainty as to the terms of the renewed leases [134] [135] Whelan JA, with whom Santamaria JA agreed, held that the Tribunal failed to conduct an objective assessment of the parties' intentions from the totality of the evidence, and so incorrectly applied the legal principles relevant to a determination of what the parties' intentions were [136] [137] [138] [139]

Estoppel

As to whether Crown was estopped from denying the existence of a collateral contract, Warren CJ held that the primary judge was correct to hold that the Tribunal did not analyse the claim on the basis of the meaning attributed to the statement by the tenants, but on the basis of the meaning that the Tribunal attributed to the statement [140] [141] [142] In this regard, Warren CJ referred to observations by Hodgson JA in Sullivan v Sullivan [143] Warren CJ stated [144]

"there is a lower standard of certainty for estoppel than in contract law and therefore the fact that the representation was not sufficiently certain to establish a collateral contract does not mean that it is not sufficiently certain for estoppel."

Her Honour concluded that, while the promise was open to different interpretations, it was sufficiently certain to give rise to an estoppel [145] [146] It may be said immediately that there is a twofold difficulty with applying her Honour's approach in this case: first, there is the disconformity between the finding of fact as to what was actually said to Mr Zampelis and the expectation which he claimed was engendered by Crown; and secondly, there is no identification of any basis for a lesser entitlement than that which the tenants claimed. On this issue, Whelan JA took a somewhat different approach from that taken by Warren CJ. Whelan JA held that the primary judge's analysis of the Tribunal's approach to estoppel was correct in that the disconformity between the promise that the Tribunal found and the understanding of the promise on which the tenants claimed to have relied was "irreconcilable" [147] [148] His Honour held that the Tribunal and the primary judge had failed to analyse the tenants' claim by reference to the "lower limit" of what was meant by "looked after". On the basis that neither party had made submissions "by reference to the 'lower limit' of what was meant by 'looking after' the tenants at renewal", his Honour held that the matter should be remitted to the Tribunal for further consideration of "the claim formulated in that way" [149] [150]

"The issue of what the representation was has been determined. Crown has resiled. The issue to be determined on remittal is what equitable relief, if any, should be granted."

On the face of these observations, it might be said, and Senior Counsel for Crown did say, that the order for remittal to the Tribunal proceeded upon the unorthodox basis that the mere resiling from a representation is enough to establish an estoppel of some kind. It is apparent, however, that Whelan JA recognised the need for the tenants to establish detrimental reliance. In this regard, Whelan JA went on to say [151]

"to require Crown to provide a renewed lease would be to do more than is necessary to avoid the detriment. ... [The] enquiry would involve an analysis of what Crown should do to relieve [the tenants] from the detriment they have suffered because Crown resiled from its representation. ... It would not involve some surrogate for such a renewed lease such as the profits that might have been earned under a renewed lease."

The difficulty with this approach is that the only detriment ever identified by the tenants was the loss of the profit that would have been earned under the renewed leases; there was no attempt to show that the tenants were prevented from recovering expenditure on refurbishment which they would not have incurred but for the statement Crown was found to have made. The only case made by the tenants failed, and so the litigation was concluded, there being no contention which might be the subject of further litigation. It is significant in this regard that while Whelan JA explained what the further enquiry would not involve, his Honour did not positively identify the basis on which Crown "should do" something to relieve the tenants from "the detriment they have suffered". Nor is there an identification of that detriment, save that it is something other than "the profits that might have been earned under a renewed lease." As already noted, the primary judge and the Court of Appeal also rejected the tenants' collateral contract case on the ground that the collateral contract contended for would be inconsistent with the terms of the leases, and, in particular, cl 2.3 [152] Hoyt's Pty Ltd v Spencer [153] It is convenient now to deal with the issue as to collateral contract raised by the tenants' cross-appeal.

The collateral contract

The tenants submitted that the focus of the courts below on Crown's freedom to stipulate whatever terms it chose in the renewal notices paid insufficient regard to the promise to "look after" the tenants at renewal time. It was said that the courts below incorrectly discerned a dichotomy between Crown's freedom and the promise to "look after" the tenants, concluding on that basis that the promise was not capable of bearing the meaning attributed to it by the Tribunal [154] The formulation of the tenants' case in their pleadings is instructive. There, it was asserted that the collateral contract obliged Crown to make an offer of a lease. But to say that the collateral contract was to make an offer of a lease, and no more, is distinctly not to identify a basis for the approach to the assessment of damages adopted by the Tribunal. No objective standard by which the terms of such an offer might be fixed was alleged or proved. That deficit in the tenants' case could not be made good by the legally unorthodox approach adopted by the Tribunal, which gave the tenants the benefit of a contract that was never made between the parties. The Tribunal had no authority to force upon Crown such terms as might seem to the Tribunal to be reasonable. The Tribunal erred in law in its appreciation of the legal effect of the facts as to what actually passed between Mr Boesley and Mr Zampelis. On one view, it might be said that the terms of the putative renewed leases were left to further agreement so that there is no binding agreement at all as to the renewal [155] On another view, it might be said that the indication of a willingness to "look after" Mr Zampelis at the end of the leases could reasonably be understood as an indication of an intention to reimburse the tenants for any enduring disadvantage enuring to the tenants as a result of the refurbishment. What that might involve could range from some form of monetary recompense to favourable consideration in relation to new opportunities. In the case advanced by the tenants, none of these possibilities was litigated. To say either of these things, however, is merely to emphasise that because Crown was left legally free to act in its own interests in negotiating the terms of any further lease, and indeed free to stipulate for rent and other terms which might be unacceptable to the tenants, no agreement had been concluded. On either view of what might be involved in Crown's "looking after" the tenants at renewal time, the terms on which an agreement might be made could never be more than unresolvable speculation. Accordingly, even if the assurance that the tenants would be "looked after" by Crown at the expiration of the leases had actually been incorporated as a term of the leases signed by the tenants, it would not have been sufficiently certain to be enforceable as a promise of the grant of further leases. It has been noted that the Tribunal's error was not an error of fact. Where the terms of an oral representation have been established as a fact, its construction is a question of law [156] Horton v Jones [157] [158] For these reasons, the primary judge and the Court of Appeal were right to conclude that the collateral contract for which the tenants contended was illusory.

Estoppel

Contract and equity

The tenants submitted that they have always contended that their claim that Crown is estopped from denying the existence of the collateral contract was founded upon proprietary estoppel because performance of the collateral contract would have secured further five year leasehold interests for the tenants. They argued that it was only in the reasoning of the Court of Appeal that their claim was categorised as one of promissory estoppel. It was said that this occurred only because the Court of Appeal attributed an artificially narrow meaning to the statement made by Crown. It may also be noted here that the tenants' argument proceeded on the assumption that promissory and proprietary estoppel are distinct doctrines. The argument between the parties proceeded upon this assumption, which was not challenged by any suggestion that proprietary estoppel is a doctrine which is, or ought to be, subsumed within promissory estoppel [159] Crown submitted that it was not open to the tenants to assert that they have always grounded their claim in proprietary estoppel. In this regard, Crown argued that the tenants denied that s 126 of the Instruments Act applied to the contract, and the Tribunal expressly accepted that the collateral contract was not a contract for the disposition of an interest in land. On that basis, it was said that it cannot now be said that the estoppel for which the tenants contend is a proprietary rather than a promissory estoppel. There is force in this contention. There is also force in Crown's contention that the tenants' case was litigated as a matter of promissory estoppel, as is evident from the Tribunal's conclusion that Crown was estopped "from denying the existence of the collateral contract." Further, the Tribunal's conclusion echoes this Court's conclusion in Waltons Stores, a case identified by Mason CJ and Wilson J as an example of promissory estoppel [160] It is important here to observe the differences between Waltons Stores and the present case. The most important difference for present purposes is that in Waltons Stores there was no question as to the certainty of terms of the agreement between the parties; the dispute was as to whether the parties were bound to those terms. In Waltons Stores, the parties had been negotiating the terms of a lease from the Mahers to Waltons. The Mahers proposed to demolish existing buildings on the land to be leased and to construct a new building to suit Waltons' purposes. Waltons' solicitor assured the Mahers' solicitor that the terms of the proposed lease were agreed and the Mahers executed the final form of the lease, sent it to Waltons and began the construction work. Waltons did not sign the lease but said nothing to the Mahers about its reluctance to do so even though it knew that the demolition work had begun. Waltons did not inform the Mahers that it did not want to complete the transaction until the new building was 40 per cent complete. At trial, and in the Court of Appeal of the Supreme Court of New South Wales, it was held that Waltons was estopped from denying that there was a contract of lease between the parties. In this Court, a majority held that Waltons had not represented that it had, in fact, executed the lease, but was nevertheless estopped from resiling from its promise to execute the lease [161] [162] [163] In addition, in the present case, in contrast with Waltons Stores, the issue whether the tenants would have been left worse off at the end of the leases depends on findings of fact that were not made by the Tribunal and which it was not invited to make. Most importantly, the tenants did not seek to litigate the contention that the original leases were not long enough to enable them to recoup, with or without profit, their outlays on refurbishment or, more precisely, the outlays they would not have made but for the statement Crown was found to have made to Mr Zampelis. It is difficult to see that the case of estoppel advanced by the tenants in the Tribunal and the courts below could fairly be said to be other than a case of promissory estoppel given that it was advanced as an alternative to the collateral contract case, that it was concerned to bind Crown to a promise to make an offer, and that the tenants argued that they were not seeking to establish an interest in land. That having been said, however, it is not necessary to resolve the taxonomical dispute between the parties. In Giumelli v Giumelli [164] [165] Grundt v Great Boulder Pty Gold Mines Ltd [166]

"The principle upon which estoppel in pais is founded is that the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations."[167]

Dixon J described the "basal purpose of the doctrine" as being [168]

"to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting."

It is because the "opposite party" is responsible for creating the assumption on which the party asserting the estoppel acted that the estoppel comes into play to prevent that party suffering a detriment. For the purposes of the present case, it may be accepted that the separate categories of promissory and proprietary estoppel allow for different approaches to the determination of whether the "opposite party" is responsible for creating that assumption in different contexts [169]

Promises and property interests

Crown relied upon the proposition affirmed by Mason and Deane JJ in Legione v Hateley [170] that a representation must be "clear", "unequivocal" and "unambiguous" before it can found a promissory estoppel. Nothing in the subsequent decisions of this Court has detracted from that requirement, which addresses the concern that a doctrine which is apt to preclude a party to a contract from relying upon its terms should not be so broad in its operation as to deny the party the benefit of its bargain by dint of representations which are so equivocal [171] [172] Legione [173] Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [174]

"it would really be an astonishing thing if, in the case of a genuine misunderstanding as to the meaning of an offer, the offeree could obtain by means of the doctrine of promissory estoppel something that he must fail to obtain under the conventional law of contract. I share the feeling of incredulity expressed by Lord Denning MR in the course of his judgment in the instant case when he said[175]:

'If the judge be right, it leads to this extraordinary consequence: A letter which is not sufficient to vary a contract is, nevertheless, sufficient to work an estoppel – which will have the same effect as a variation.'"

It would tend to reduce the law to incoherence if a representation, too uncertain or ambiguous to give rise to a contract or a variation of contractual rights and liabilities, were held to be sufficient to found a promissory estoppel. Practical considerations such as the need of commerce for certainty, both as to the terms to which parties have agreed to be bound, and as to whether their bargaining process has concluded, also provide strong support for this approach. The decision in Waltons Stores was coherent with the law of contract. Indeed, the result which was reached in Waltons Stores by the application of equitable principles fully accords with the result which might have been reached by a contractual analysis, so far as the making of a binding contract is concerned where no question of uncertainty of terms arises [176] Brogden v Metropolitan Railway Co [177] [178] Brogden was a decision to which very great chancery judges in Lords Cairns, Hatherley and Selborne were party, along with Lord Blackburn, the greatest common law judge of his time. The principal practical difference between promissory and proprietary estoppel arises from the circumstances in which each is deployed: the former operates in relation to contracts, whereas the latter is concerned with the recognition of interests in property by way of relief against unconscionable conduct [179] Proprietary estoppel affords relief against unconscionable conduct where departure from an assurance means that the representor's conduct is to be regarded as contrary to good conscience. In proprietary estoppel, it is necessary to consider both the subjective reliance of the representee and the extent to which the representor can, in good conscience, be held to be responsible for the representee's actions. The representor is not acting contrary to good conscience in refusing to conform its conduct to the predicament produced by the representee's unreasonable misunderstanding of a representation made to it.

Certainty and conscience

Where a contractual right or liability is to be altered, coherence in the law requires that the representation which is said to bring about that alteration should be no less certain in its terms than would be required for an effective contractual variation. Accordingly, Warren CJ erred in holding that "there is a lower standard of certainty for estoppel than in contract law" in so far as her Honour was dealing with a claim of promissory estoppel. Her Honour erred in treating what was said by Hodgson JA in Sullivan as applicable to such a case. In Sullivan, Hodgson JA said [180]

"Generally, a promise or representation will be sufficiently certain to support an estoppel if it was reasonable for the representee to interpret the representation or promise in a particular way and to act in reliance on that interpretation, thereby suffering detriment if the representor departs from what was represented or promised. Generally, if there is a grey area in what is represented or promised, but it was reasonable for the representee to interpret it as extending at least to the lower limit of the grey area and to act in reliance on it as so understood, I see no reason why the court should not regard the representation or promise as sufficiently certain up to this lower limit."

Hodgson JA made these observations in relation to a claim for proprietary estoppel where, although the representee's understanding that she was being promised accommodation for life was an unreasonable understanding of the representation made to her, it was reasonable of her to understand that she would be no worse off by altering the circumstances of her accommodation. It is apparent that Hodgson JA proceeded on the basis that the terms on which the representee was to occupy the house offered by the representors were to be no less favourable to her than the representee's current arrangements, which she gave up in reliance on the representation made to her. His Honour concluded that the representee's action "was what the [representors] intended she should do, and it was reasonable for her to do it." [181] The concern that estoppel should not operate incoherently with the law of contract does not arise where proprietary estoppel is invoked precisely because there is no charter of contractually based rights and obligations governing the parties' relationship. Even in such cases, however, as Hodgson JA held, the assurance or representation on which the party claiming the benefit of the estoppel relies must be sufficiently clear that the expectation which that party asserts was both actually, and reasonably, engendered by the assurance or representation. In Giumelli [182] In Low v Bouverie [183]

"an estoppel, that is to say, the language upon which the estoppel is founded, must be precise and unambiguous. That does not necessarily mean that the language must be such that it cannot possibly be open to different constructions, but that it must be such as will be reasonably understood in a particular sense by the person to whom it is addressed."

In Woodhouse [184]

"far-fetched or strained, but still possible, interpretations, whilst ... insisting on a sufficient precision and freedom from ambiguity to ensure that the representation will (not may) be reasonably understood in the particular sense required."

Observance of this limit on the operation of estoppel in equity ensures that it is not allowed to operate to underwrite unrealistic expectations or wishful thinking. Such an operation would be especially pernicious in a commercial context; but even in a non-commercial context estoppel should not be allowed to operate as an instrument of injustice. The tenants, in their argument invoking proprietary estoppel, submitted that the Tribunal found as a matter of fact that Crown's statement meant that an interest in land would be granted. The tenants emphasise that the Tribunal found that they "expected that there would be an offer of a renewed lease, at renewal time, that they would be free to accept." [185] In truth, this finding of the Tribunal highlights the flaw in the tenants' case. That is that the expectation found by the Tribunal was not of a grant of an interest in land but of an offer on terms which they would be "free" to accept. The obvious problem is that such an offer might well come to nothing because Crown was entitled to give full effect to its own self-interest in setting the terms of the offer. And any interest in land to be granted to the tenants necessarily depended on reaching an agreement upon the terms of an enforceable agreement for a lease [186] Mr Zampelis' evidence was that he was assured of the grant of further five year leases and that it was this assurance that he acted upon. This evidence was not accepted. The tenants' case, based on Mr Zampelis' evidence, was that they were induced to act by the assurance of five year leases on the same terms as the original leases. That case was rejected as a matter of fact by the Tribunal; as was the tenants' alternative case, adopted late in the day, that the assurance was of five year leases on the same terms mutatis mutandis. In addition, no one in Mr Zampelis' position could reasonably have understood the statement found to have been made to him as an assurance of such an outcome. One thing that was unequivocally clear from the course of negotiations as found by the Tribunal was that Crown was refusing to bind itself to such an outcome. No other basis was suggested as the basis for holding that Crown was conscience-bound to hold its title subject to an interest in favour of the tenants. As to the Court of Appeal's reliance on Sullivan [187] Senior Counsel for Crown said of the observations by Warren CJ and Whelan JA that their Honours did not identify what the "grey area" or "lower limit" was, or, indeed, that the tenants had any expectation within the "grey area" or the "lower limit". No case had been advanced by the tenants of a "grey area" or a "lower limit" of what was meant by "looked after". These submissions should be accepted. In none of its manifestations does estoppel operate by imputing to the party asserting the estoppel an expectation or reliance which might be thought to be a proportionate or fair response to the statement of the opposite party [188] Sidhu v Van Dyke [189]

"Reliance is a fact to be found; it is not to be imputed on the basis of evidence which falls short of proof of the fact. It is actual reliance by the promisee, and the state of affairs so created, which answers the concern that equitable estoppel not be allowed to outflank Jorden v Money[190] by dispensing with the need for consideration if a promise is to be enforceable as a contract[191]. It is not the breach of promise, but the promisor's responsibility for the detrimental reliance by the promisee, which makes it unconscionable for the promisor to resile from his or her promise. In Giumelli v Giumelli[192], Gleeson CJ, McHugh, Gummow and Callinan JJ approved the statement of McPherson J in Riches v Hogben[193] that:

'It is not the existence of an unperformed promise that invites the intervention of equity but the conduct of the plaintiff in acting upon the expectation to which it gives rise.'"

The tenants placed substantial reliance upon the decision of the Victorian Court of Appeal in Flinn v Flinn [194] [195] [196] Flinn the expectation that was held to ground the estoppel that the Court of Appeal enforced was informed by explicit descriptions of the property to be granted under the will and articulation of the conditions on which the grant would be made [197]

Conclusion

In summary, in the course of the negotiations, a promise of a renewal of the leases had been explicitly rejected. It was clear beyond reasonable misunderstanding that Crown refused to bind itself to renew the leases on terms acceptable to the tenants, or, indeed, at all [198]

Orders

Special leave should be granted in respect of ground 4 of the Notice of Cross-Appeal dated 24 December 2015; otherwise, special leave should be refused. The cross-appeal should be dismissed. The tenants should pay Crown's costs of the cross-appeal. Crown's appeal should be allowed. Paragraphs 2 to 6 of the orders of the Court of Appeal should be set aside, and in their place the tenants' appeal to the Court of Appeal should be dismissed. The tenants should pay Crown's costs of the appeal and of the appeal to the Court of Appeal.

NETTLE J. This is an appeal from a judgment of the Court of Appeal of the Supreme Court of Victoria [199] Before they entered into the leases, the tenants were apprehensive of being unable to recover the costs of the refurbishments within the term of five years. Accordingly, they attempted to persuade the appellant ("Crown"), the lessor, to include in the leases a right of renewal for a further term of five years. Crown refused to do so. Nevertheless, after the tenants had executed the leases but before they delivered the executed leases to Crown, and shortly before they began to outlay funds on the refurbishments, Crown represented to the tenants that, if they spent the money, they would be "looked after at renewal time". Acting in reliance on that representation – in the belief it meant that, when renewal time came, Crown would offer to renew the leases for a further term of five years on the same terms and conditions as the existing leases – the tenants delivered the executed leases to Crown and carried out the refurbishment works at a total cost of some $5 million. When it came to renewal time, however, Crown did not offer to renew the leases for five years or at all and the tenants were not otherwise looked after. The tenants immediately became insolvent due to write-downs of more than $2 million in the value of the refurbishments. The principal question in this appeal is whether the Court of Appeal were correct to remit the matter to the Victorian Civil and Administrative Tribunal ("VCAT") on the basis that Crown was estopped from departing from the tenants' assumption or expectation that Crown would offer to renew the leases for a further term of five years. Due to the way in which the tenants put and conducted their case before VCAT, that question should be answered, no. There is also an application for special leave to cross-appeal. The principal question in that application is whether the Court of Appeal should have found that Crown's assurance constituted an enforceable collateral contract to renew the leases for a further term of five years. That question should also be answered, no.

The facts

Crown owns the Melbourne Casino and Entertainment Complex. Between 1997 and 2005, two companies associated with Mr Nicholas Zampelis leased and operated two restaurants in the complex, called respectively "Cafe Greco" and "Waterfront". Each lease was due to expire on 7 May 2005. Early in 2005, Mr Zampelis began negotiations on behalf of the tenants with Crown for the grant of new leases of the restaurants. Crown signalled that it was prepared to grant a new lease of each restaurant but only for a term of five years with no option for renewal, and only on condition that the tenants undertake major refurbishment works on each restaurant premises. In May 2005, Crown sent Mr Zampelis comprehensive summaries of the terms and conditions of the proposed new leases. On 29 June 2005, Crown gave in principle approval to the tenants' refurbishment concept plans for the restaurants and stated that the new leases would start on 1 September 2005, and that the refurbishments would have to be completed and trading would need to commence by 1 December 2005. On 22 July 2005, Mr Zampelis replied by email to Crown confirming "our acceptance of your offer unconditionally". On 2 September 2005, Crown sent unexecuted leases to the tenants which accurately reflected the summary documents ("the Leases"). In November 2005, each tenant executed its Lease, and informed Crown that it had done so, but the tenants did not then deliver the executed Leases to Crown. Clause 2.3 of each Lease required Crown to give notice to the tenant at least six months, but not more than 12 months, before the expiry of the Lease, stating whether Crown would:

(a) renew the Lease, and if so on what terms (cl 2.3(a));



(b) allow the tenant to occupy the premises on a monthly tenancy after expiry (cl 2.3(b)); or



(c) require the tenant to vacate the premises on expiry (cl 2.3(c)).

Being concerned that the tenants might not recover the refurbishment costs within the term of five years, Mr Zampelis made a further attempt to persuade Crown to extend the term of the Leases to 10 years or to include in each Lease an option to renew for a further term of five years. Once again, however, he met with resolute resistance. Crown was keen to have the executed Leases and for the refurbishments to be completed ahead of the approaching Commonwealth Games in Melbourne, and it put considerable pressure on Mr Zampelis to deliver the Leases and to get on with the refurbishment works. But Crown also made clear that the only basis on which it would deal was on the basis of the executed Leases. The only concession was that at a meeting on 6 December 2005, Mr Boesley of Crown said to Mr Zampelis that the Leases had been limited to a term of five years so that they would align with other Crown leases and that, if Mr Zampelis spent the money required to refurbish the restaurants to a high standard, he would be "looked after at renewal time" ("the assurance"). The tenants began the refurbishment works just over a month later, and the refurbishments were completed two months after that in March 2006. At much the same time, Mr Boesley gave Mr Zampelis an ultimatum that, if he did not deliver the executed Leases to Crown, he would not be allowed to trade. On 7 March 2006, the tenants delivered the executed Leases to Crown. In October 2008, Crown put out a tender for the grant of leases of the restaurants following the expiration of the Leases and sent the tenants a "request for proposal". The tenants each submitted a proposal but were unsuccessful. In December 2009, Crown gave notices pursuant to cl 2.3(c) of the Leases requiring the tenants to vacate the leased premises upon the expiration of the Leases.

The proceedings in VCAT

On 30 July 2010, the tenants commenced a proceeding in VCAT seeking, inter alia, interlocutory relief to restrain Crown from re-entering the premises. Crown re-entered the premises on 31 August 2010, before the application for an interlocutory injunction was heard. The proceeding continued, however, to a final hearing and, on 24 February 2012, VCAT found that the assurance constituted a collateral contract that, as consideration for the tenants entering into the Leases and carrying out the refurbishment works, Crown would offer to renew the Leases for a further term of five years on such terms and conditions as Crown might choose pursuant to cl 2.3(a) of the Leases [200] VCAT also held that, by reason of the tenants having acted in reliance upon the collateral contract to their detriment, Crown was estopped from denying the existence of the collateral contract and thus that the collateral contract was enforceable notwithstanding that it was not evidenced in writing as was thought might otherwise have been required by s 126(1) of the Instruments Act 1958 (Vic). VCAT found that by failing to offer a further term of five years in accordance with the collateral contract, Crown caused the tenants loss and damage by way of the loss of profits which it was anticipated would have been generated during the further term of five years. VCAT quantified those losses of profits, in the case of the first respondent, in the amount of $467,505 plus interest and, in the case of the second respondent, in the amount of $1,143,167 plus interest.

The appeal at first instance

From that decision, Crown appealed successfully to the Supreme Court of Victoria [201] in limine.

The appeal to the Court of Appeal

The Court of Appeal upheld the primary judge's finding that there was no collateral contract but allowed the appeal in relation to the estoppel claim. Warren CJ agreed with the primary judge that the supposed collateral contract was so uncertain as to be illusory and unenforceable. Her Honour took a different view, however, concerning estoppel. She referred to authorities supporting the view that a lower standard of certainty is required to establish an equitable estoppel than is necessary to establish the existence of a contract [202] [203] Whelan JA, with whom Santamaria JA agreed, concurred with the primary judge that the supposed collateral contract was so uncertain as to be illusory and unenforceable. Whelan JA was also at one with the primary judge in observing that there was an "irreconcilable disconformity" between the representation which Crown had been found in fact to have made – "to make a renewal offer under cl 2.3(a) on whatever terms Crown chose" [204] [205] [206] As Whelan JA noted, however, although a claim couched in those terms may have been within the case as pleaded and, in that sense, as put at VCAT, it had not been adjudicated upon by VCAT. Thus, in his Honour's view, it was necessary for the matter to be remitted to VCAT "for this aspect of the tenants' case to be ruled upon and determined" [207] [208]

The appellant's contentions

Before this Court, Crown contended that all members of the Court of Appeal erred in holding that the assurance was capable of founding a promissory estoppel. Crown submitted that it was established by the judgment of Mason and Deane JJ in Legione v Hateley [209] Legione and should continue to be adhered to, especially given that the tenants did not challenge VCAT's finding that the assurance was objectively ambiguous and did not seek to re-open Legione. Crown further contended that the Court of Appeal erred in treating the arguably lower level of certainty required to found a proprietary estoppel as if it were applicable to promissory estoppel. In Crown's submission, the Court of Appeal were in error in following what Crown characterised as the relatively small number of recent decisions in New South Wales and Victorian courts which have treated the lower standard of certainty applicable to proprietary estoppel as if it were applicable to promissory estoppel. In any event, in Crown's submission, the notion of some "lower limit" of the "grey area" [210]

The respondents' contentions

By way of their application for special leave to cross-appeal, the tenants contended that the primary judge and the Court of Appeal were in error in failing to uphold VCAT's decision that there was a binding collateral contract that Crown would offer a further term of five years on the same terms and conditions as the existing Leases, and that the tenants were entitled to damages for breach of the collateral contract equal to the profits which it was said they had forgone. The tenants further contended that VCAT was correct in holding that Crown was estopped from denying that it promised to offer further leases of five years' duration, and right to award equitable compensation equivalent to the profits which it said were forgone as the result of Crown's refusal to grant a further term of five years to each tenant. According to the tenants, Crown's reliance on the difference between the degrees of certainty required for promissory estoppel and proprietary estoppel was also misplaced. Crown had not invoked any such distinction when before VCAT or the primary judge or the Court of Appeal, and, in any event, it was submitted, in the circumstances of this case, there was no relevant difference. Properly characterised, the estoppel for which the tenants contended was a proprietary estoppel. The tenants embraced Warren CJ's conclusion that VCAT was correct in finding that the tenants took the assurance to mean that they would be offered new leases of five years' duration on the same terms and conditions as the existing Leases, and her Honour's finding that the tenants acted in reliance on that assumption to their detriment. But, contrary to Warren CJ's reasoning, the tenants contended that it followed that Crown was estopped from denying that it had agreed to grant new leases of five years' duration on the same terms and conditions as the existing Leases. On that basis, it was submitted, the tenants were entitled to equitable compensation equal to the profits forgone and there was no occasion to consider whether any lesser measure of relief was appropriate or, therefore, to remit the matter to VCAT. Alternatively, the tenants contended, if the meaning that Crown would offer new leases of five years' duration on the same terms and conditions as the existing Leases or on the same terms and conditions mutatis mutandis was not a meaning that could reasonably be attributed to the assurance, the fact remained that that was the way in which the tenants had construed the assurance and the basis on which they had acted to their detriment, and thus, as Whelan and Santamaria JJA had held, the matter should be remitted to VCAT for determination of the relief to be accorded to the tenants having regard to the meaning which a reasonable person in the position of the tenants would have attributed to the assurance.

The collateral contract

It is a remarkable feature of this matter that, although the tenants' claim before VCAT was essentially one for damages for breach of collateral contract, the claim ultimately upheld in the Court of Appeal was a claim in equitable estoppel for relief not previously sought. It is no less remarkable that, in this Court, the tenants demonstrated very little interest in supporting the Court of Appeal's reasoning or conclusion regarding estoppel and instead devoted the bulk of their submissions to an attempt to establish that the primary judge and the Court of Appeal were wrong to reject their claim for damages for breach of collateral contract, or alternatively in holding that the tenants were not entitled to equitable compensation in the same amount.

No binding promise

As has been noticed, VCAT decided the collateral contract claim on the basis of what it perceived to be the objective or reasonable meaning of the assurance that, if Mr Zampelis spent the money required to refurbish the premises to a high standard, he would be "looked after at renewal time". VCAT found that a reasonable person in Mr Zampelis' position would have understood that to be a promise that, if the tenants delivered the executed Leases and paid the costs of the fit out works, Crown would make an offer to grant a further term of five years on such terms and conditions as Crown might choose in its discretion. VCAT also held that the assurance was a sufficiently certain promise that, once accepted by the delivery of the executed Leases and payment of the fit out costs, it gave rise to a binding and enforceable collateral contract. The primary judge took the opposite view. His Honour held that VCAT had erred in law in reaching its conclusion by failing to take the following relevant considerations into account:

(1) In October and November 2004, before the expiry of the previous leases, Mr Boesley wrote to Mr Zampelis to enquire about his intentions to enter new leases, and specifying terms on which Crown would allow a holding-over.



(2) When, by email in reply dated 8 November 2004, Mr Zampelis' personal assistant suggested that Crown had represented to Mr Zampelis that there would be a further term under the previous leases, Mr Boesley expressly denied any such representation by email dated 10 November 2004.



(3) On 11 May 2005, when the time came to negotiate the terms of the Leases, Mr Boesley sent "comprehensive summaries of the terms and conditions of proposed new leases" [211]



(4) On 29 June 2005, Mr Boesley informed Mr Zampelis by email that his concept proposals for refurbishment of the restaurants had been approved "in principle" [212]



(5) Mr Zampelis replied by email to Mr Boesley on 22 July 2005, confirming the tenants' "acceptance of your offer unconditionally" [213]



(6) By email dated 3 November 2005, Mr Zampelis' personal assistant advised Mr Boesley that the Leases had been signed.



(7) On 23 November 2005, Mr Boesley sent an email to the tenants demanding that the executed Leases be returned to Crown and threatening to lease the restaurants to other restaurateurs if this was not done.

The primary judge reasoned, and the Court of Appeal agreed, that those and other matters revealed a background of commercial negotiations between parties experienced in commercial leasing, in which important matters were documented, against which a reasonable person in Mr Zampelis' position would have understood the assurance as being no more than "some vaguely encouraging words from Mr Boesley about the strength of the parties' relationship and Crown's willingness to see the restaurants prosper beyond the end of the five year term" [214] Before this Court, the tenants attacked the primary judge's reasoning at a number of levels but principally on the basis that it was not correct that VCAT failed to have regard to the listed matters. It followed, it was said, that the judge was wrong in holding that VCAT erred in law and thus wrong in substituting his own view of the facts for VCAT's findings. That argument should be rejected. VCAT did not have regard to at least some of the listed factors and did not give adequate consideration to any of them. Whether VCAT had regard to factors (1) and (2) is perhaps debatable. They are described in VCAT's reasons as "features of these cases that would support a view that it is improbable that Crown made the alleged promise to renew for a further term" [215] [216] [217] [218] [219] When proper regard is had to each of those factors, it is apparent that the primary judge and the Court of Appeal were correct in holding that a reasonable person in the position of Mr Zampelis could not have construed the assurance as a binding promise to offer a further term of five years. To adopt and adapt the words of Lord Wright in Scammell (G) and Nephew Ltd v Ouston (H C and J G), the parties did not "in intention nor even in appearance" [220] [221] That is sufficient to dispose of the proposed cross-appeal on the collateral contract claim. But, given the way in which the matter was argued, it is appropriate also to mention something of the primary judge's and the Court of Appeal's further reasoning that, in the event that the assurance could objectively be regarded as a promise to offer a further term of five years, the promise was not made in sufficiently certain terms to be contractually binding.

Illusory promise

As has been seen, the primary judge concluded, and the Court of Appeal affirmed, that, assuming the assurance were a promise, it was illusory and unenforceable because, apart from the term of five years, it left the selection of the terms and conditions of the renewed leases entirely to Crown's discretion. That conclusion was correct. Although a lease which leaves the determination of the rent to a nominated third party, or provides for a reasonable rent, may be sufficiently certain to be enforceable [222] [223] In this case, the assurance did not provide for the rent to be determined by a third party. Nor was it a case of a right of first refusal in which the requisite certainty is said to be provided by the terms on which the promisor is prepared to deal with a third party [224] [225] The primary judge appears to have accepted a submission by the tenants that, because the supposed promise was to offer to "renew" the Leases, it could be inferred that the offer would be to renew the Leases for a term of five years. That was thought to follow from the decision in Lewis v Stephenson [226] Trade Practices Commission v Tooth & Co Ltd [227] Although it makes no difference to the outcome of this matter, it is to be observed that the principle which informs Lewis v Stephenson and Tooth & Co applies to written contracts. Consistently with the precept that courts should endeavour to construe a formal legal document in order to avoid frustrating the parties' intentions, and therefore should be loath to hold that a written condition is bad for uncertainty, it can often be inferred that parties intended that a provision for "renewal" of a lease on unspecified terms and conditions is a provision for renewal on the same terms and conditions as the existing lease. But that principle has little if any application to the objective interpretation of oral assurances. The latter depends on the words of the assurance and the circumstances in which the assurance is given. If the assurance had been given in terms that Crown would grant a renewal, it might have been inferred that what was intended was a renewal for the same term as the Leases. But, since the assurance was no more specific than that the tenants would be looked after at renewal time, it was not open to infer that it meant a further term of no less than the existing term.

No inconsistency

The primary judge also held that, if the assurance could reasonably be construed as a promise to grant a further term of five years, the promise would be inconsistent with cl 2.3 of the Leases, and therefore unenforceable because of the rule in Hoyt's Pty Ltd v Spencer [228] and the decision in Maybury v Atlantic Union Oil Co Ltd [229] Certainly, as was earlier noticed, cl 2.3 of the Leases provided for Crown to give notices at a set period before the expiration of the Leases in one of three possible forms:

(a) in the form of an offer to renew;



(b) in the form of an offer to allow the tenant to remain in possession as a tenant from month to month; and



(c) in the form of a notice to quit.

But Crown's rights to offer to renew the Leases or to permit occupation on a monthly tenancy or to require the tenant to vacate the demised premises, and Crown's discretion to choose between courses, were not created by the Leases. Those rights arose by operation of law as rights in reversion upon the expiration of the Leases [230] [231]

Estoppel

When this matter was before VCAT, the tenants put their claim in estoppel as an alternative to their claim in collateral contract. So put, it was that because Mr Boesley gave the assurance and the tenants acted in reliance upon it to their detriment, Crown was estopped from denying that it was bound to offer to renew the existing Leases for a term of five years on the same terms and conditions as the existing Leases, or at least on the same terms and conditions mutatis mutandis as the existing Leases. By contrast, VCAT's conclusion on estoppel was that Crown was not so estopped but estopped only from denying that it was bound to offer to renew the Leases for a further term of five years on such terms and conditions as it might choose in its discretion. As will be recalled, the primary judge held that the claim of estoppel failed because, on the facts as found by VCAT, the assumption or expectation which a reasonable person in Mr Zampelis' position would have formed on the basis of the assurance was that Crown would offer to renew the Leases on such terms and conditions as Crown might choose in its discretion, as opposed to the same terms and conditions as the existing Leases, and because there was no evidence or determination by VCAT of whether Mr Zampelis would have been induced to act as he did if he had understood that the assurance meant no more than that Crown would offer to renew the Leases on such terms and conditions as Crown might choose in its discretion. Each member of the Court of Appeal held that that was not correct, although for different reasons. Warren CJ reasoned that the primary judge was in error in approaching the matter on the basis of what the assurance would have meant to a reasonable person in Mr Zampelis' position. Her Honour considered that the claim was to be determined by a process of four steps. The first was to ascertain what Mr Zampelis took the assurance to mean. The second was to ascertain whether it was reasonable for Mr Zampelis to have interpreted the assurance in that fashion. The third was to determine whether the tenants had acted in reliance on the assurance to their detriment. The fourth was to determine the minimum equity. Her Honour accepted that Mr Zampelis took the assurance to mean that Crown would offer to renew the Leases for a term of five years on the same terms and conditions as the existing Leases. Her Honour also found that, although the assurance was capable of a range of meanings, it was not unreasonable for Mr Zampelis to construe it as he did. Her Honour further found that the tenants had acted in reliance on the assurance and suffered detriment by incurring expenditure on the fit out works. On that basis, Warren CJ held that the matter should be remitted to VCAT for determination of the measure of relief to be accorded to the tenants, which her Honour posited should be at the "lower limit of the representation" [232] Whelan and Santamaria JJA considered that the primary judge was correct in holding that VCAT made an error in failing to "analyse or consider what [VCAT] had found as to what had been said to Mr Zampelis and as to what that meant" [233] [234] [235] [236]

Certainty of the representation

Crown attacked the Court of Appeal's reasoning at a number of levels. Its starting point was to contend that the tenants had put their estoppel claim in VCAT as a claim of promissory estoppel and that, because the assurance lacked contractual certainty, the claim was bound to fail. Counsel for Crown called in aid Mason and Deane JJ's statement in Legione that "[t]he requirement that a representation must be clear before it can found an estoppel is ... applicable to any doctrine of promissory estoppel" [237] Woodhouse AC Israel Cocoa Ltd SA v Nigerian Produce Marketing Co Ltd [238] Woodhouse AC, Lord Denning stated that was so because it was clear from Low v Bouverie [239] Canada and Dominion Sugar Co Ltd v Canadian National (West Indies) Steamships Ltd [240] Crown's contention should not be accepted. The notion that it takes a representation of contractual certainty to found a promissory estoppel is misplaced. As Warren CJ observed, what is determinative in cases of promissory estoppel is whether the party sought to be estopped has played such a part in creating an assumption or expectation in the mind of a claimant, in reliance on which the claimant has acted to the claimant's detriment, that it would be unconscionable for the estopped party to depart from the assumption or expectation before allowing the claimant reasonable time in which to revert to the status quo ante or, in some cases, at all [241] Mason and Deane JJ's statement in Legione that the requirement that a representation must be clear before it can found an estoppel is to be understood in that sense. So are Lord Denning's references in Woodhouse AC to Low v Bouverie and Canada and Dominion Sugar Co. Neither of the latter cases supports the proposition that a statement must be objectively unambiguous in order to found a promissory estoppel, still less that it must be more certain in terms than is required to found an agreed variation of contract [242] Low v Bouverie [243] Derry v Peek [244] [245]

"[I]n order to entitle the Plaintiff to relief, we must find here such an estoppel as would justify a claim for relief based upon the hypothesis that the Defendant is precluded from denying the truth of the fact which he is supposed to have asserted. Now, an estoppel, that is to say, the language upon which the estoppel is founded, must be precise and unambiguous. That does not necessarily mean that the language must be such that it cannot possibly be open to different constructions, but that it must be such as will be reasonably understood in a particular sense by the person to whom it is addressed. ... I have come to the conclusion that the Defendant did not make any clear statement of the character which the Plaintiff alleges. I think that his language would be reasonably understood as conveying an intimation of the state of his belief, without an assertion that the fact was so apart from the limitation of his own knowledge; and therefore that no relief here can be granted." (emphasis added)

Canada and Dominion Sugar Co [246] Low v Bouverie [247] [248] [249] [250] Additionally, whatever degree of certainty might be necessary to found a promissory estoppel of the kind considered in Legione – and it is to be observed that, although the representation in that case was not certain, it was held by a majority to be sufficient to estop the vendor from rescinding – proprietary estoppels of the kinds exemplified in Dillwyn v Llewelyn [251] Ramsden v Dyson [252] [253] [254] Cobbe v Yeoman's Row Management Ltd, proprietary estoppel is a sub-species of promissory estoppel [255]

"The estoppel becomes a 'proprietary' estoppel – a sub-species of a 'promissory' estoppel – if the right claimed is a proprietary right, usually a right to or over land but, in principle, equally available in relation to chattels or choses in action."

Arguably, the present was a case of proprietary estoppel, because what was alleged was in effect that the tenants had acted to their detriment in carrying out the refurbishment works to a high standard on the faith of an assurance that, if they did so, they would be granted a further term. But, in any event, as Brennan J observed in Waltons Stores (Interstate) Ltd v Maher [256] [257] The foundational principle on which equitable estoppel in all its forms is grounded is that equity will not permit an unjust or unconscionable departure by a party from an assumption or expectation of fact or law, present or future, which that party has caused another party to adopt for the purpose of their legal relations [258] a priori distinction between the degree of objective certainty required to found a promissory estoppel compared to a proprietary estoppel runs counter to principle. The idea of "one overarching doctrine of estoppel rather than a series of independent rules" [259] [260] [261] Finally on this aspect of the matter, as Warren CJ emphasised, since the object of equitable estoppel in all its forms is to prevent the detriment which a representee would suffer if the representor were unjustly or unconscionably to depart from the assumption or expectation created in the mind of the representee, relief should be accorded only to the extent of the minimum content of the assumed state of affairs from which it would be unjust or unconscionable for the representor to depart [262] [263] [264]

Correspondence of the assumption or expectation with the representation

Crown next contended that the claim in estoppel was bound to fail because of the disconformity between what VCAT found to be the objective meaning of the assurance and Mr Zampelis' subjective understanding of the meaning of the assurance. That contention cannot be accepted in the broad terms in which it was stated. It follows from what has already been said about contractual certainty that it was not necessarily inimical to the tenants' claim in estoppel that VCAT found that Crown's representation could not reasonably have been taken to mean more than that Crown would offer the tenants a further term of five years on such terms and conditions as Crown might choose in its discretion in accordance with cl 2.3 of the Leases. Certainly, as has been explained, bef