Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd
[2014] VSCA 353
•22 December 2014
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2013 0180
S APCI 2013 0181
| COSMOPOLITAN HOTEL (VIC) PTY LTD (ACN 115 145 198) & ANOR | Applicants |
| v | |
| CROWN MELBOURNE LIMITED (ACN 006 732 262) | Respondent |
---
| JUDGES: | WARREN CJ, WHELAN and SANTAMARIA JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 3 March 2014 |
| DATE OF JUDGMENT: | 22 December 2014 |
| MEDIUM NEUTRAL CITATION: | [2014] VSCA 353 |
| JUDGMENT APPEALED FROM: | Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd & Anor [2013] VSC 614 |
---
APPEAL – Leave to appeal – Appeal on a question of law – Victorian Civil and Administrative Tribunal (‘VCAT’) Act 1998, s 148 – Question of law must in fact arise – Distinction between questions of law, questions of fact and questions of mixed law and fact discussed – Federal Commissioner of Taxation v Train Bros Steel & Plastics Pty Ltd (2010) 186 FCR 410 applied – Questions of law did in fact arise before trial judge.
CONTRACT – Lease – Collateral contract – Statement tenants would be ‘looked after at renewal time’ – Whether statement promissory – Parties’ intentions to be ascertained from totality of the evidence – Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 applied – VCAT found statement promissory on basis of form of words only – Error of law correctly found by trial judge.
CONTRACT – Lease – Collateral contract – Statement tenants would be ‘looked after at renewal time’ – Whether contract enforceable – VCAT concluded offer to renew under lease could be intentionally couched in terms tenant could not accept – Terms entirely at discretion of offeror – Obligation illusory and unenforceable – Error of law correctly found by trial judge.
CONTRACT – Lease – Collateral contract – Statement tenants would be ‘looked after at renewal time’ – Cl 2.3 of lease required landlord to notify tenants that it would take one of three specified steps – If collateral contract existed, choice of three steps reduced to obligation to take one – Collateral contract would ‘affect to alter’ the main contract – Maybury v Atlantic Union Oil Co Ltd (1953) 89 CLR 507 applied – Wright v Hamilton Island Enterprises Ltd (2003) QCA 36 distinguished – VCAT’s finding that there was no inconsistency an error of law.
ESTOPPEL – Equitable estoppel – Statement tenants would be ‘looked after at renewal time’ – Relevant principles on equitable estoppel discussed – Where ‘grey area’ in what is represented or promised, reasonable for representee to interpret it as extending at least to the ‘lower limit’ of that grey area – Sullivan v Sullivan [2006] NSWCA 312 applied – VCAT erred in making no finding as to the ‘lower limit’ of what was meant by the statement – Remitted for determination by VCAT.
---
| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr M Pearce SC with Mr R Haye | Mills Oakley |
| For the Respondent | Mr N Hopkins SC with Mr B Jellis | Minter Ellison |
WARREN CJ:
The applicants (‘the tenants’) are part of a group of companies controlled by Mr Nick Zampelis. The respondent (‘Crown’) operates the Melbourne Casino and Entertainment Complex in Southbank. Crown wanted the tenants to undertake significant refurbishment of two premises at the Crown Complex, and to rent out the premises for a period of five years. The tenants sought a longer period of tenancy in light of the substantial financial outlay in refurbishing the premises. Following lengthy negotiations the tenants signed, executed and returned the leases which set the length of each lease at five years.
Following the expiration of the leases, Crown did not renew and the tenants vacated the premises. The tenants sued Crown in the Victorian Civil and Administrative Tribunal (‘VCAT’) in two separate proceedings over the non-renewal of the leases. The tenants alleged that Crown had told them that, if they entered into the leases and completely refurbished the restaurants at their expense, then the respondent would give each of them a further five year term of the lease. On 24 February 2012, VCAT published reasons in which it held that Crown had breached a collateral contract with the tenants.[1]
[1]Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd (Retail Tenancies) [2012] VCAT 225 (‘VCAT Reasons’).
Pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (‘VCAT Act’), Crown sought leave to appeal from VCAT’s decision. A judge of the Trial Division of this Court granted leave, and allowed the appeal.[2] The trial judge set aside the orders of VCAT and dismissed the tenants’ claims.
[2]Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2013] VSC 614 (‘Reasons’).
The tenants appeal from his Honour’s decision and orders.
Background
Between 1997 and 2005 companies associated with Mr Zampelis operated two restaurants at the Crown Casino complex, one called Café Greco and the other called Waterfront.
The leases for these premises were due to expire in September 2005 and negotiations began in early 2005 for renewed leases with different companies, also associated with Mr Zampelis, as tenants. In these negotiations Crown told the tenants that it would only grant a five year lease term for each restaurant and that it required them to undertake a major refurbishment of each restaurant at their expense.
Mr Zampelis gave evidence at VCAT that these requirements would have made the leases uneconomic, as five years was too short a period in which to recover the capital expenditure on the refurbishments.[3]
[3]VCAT Reasons [40].
The leases provided by Crown to the tenants for execution contained terms to the effect set out in paragraph 6 above. They also contained a provision at cl 2.3 which required Crown to provide a notice to the appellants at least six months but no more than 12 months prior to expiry of the leases. That clause provided:
2.3 At least 6 months, but not more than 12 months before the Expiry Date [31 August 2010], the Landlord must give notice to the Tenant stating whether:
(a) the Landlord will review this Lease, and on what terms (this may include a requirement to refurbish the Premises or to move to a 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.
The tenants alleged that in order to induce the tenants to enter into the leases, a series of statements were made orally to Mr Zampelis by Crown’s employees and agents over a period between 1 September 2005 and 18 March 2006 amounting to a promise that Crown would offer renewed leases with terms of five years to the tenants if they entered into the leases on offer and undertook major refurbishments of the premises.[4] Mr Zampelis gave evidence that these statements were made to him by a number of different employees or agents of Crown. The tenants called other witnesses – Ms Popovic, a former employee of the appellants; Mr Craig, the appellants’ banker; and Mr Robertson, the appellants’ builder – who gave evidence supporting Mr Zampelis’ account. Mr Craig produced a copy of one of the leases, on which he had written a note by hand which he said he made at around the time of one of the relevant conversations. The note said:
Whilst this is a 5 year term this is standard for Crown and aligns with other venues. Have however been with Nick at several meetings when discussions have confirmed that further terms will be provided as they have in the past. David Boesley (Crown) was talking to Nick 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. Nick has also advised that he has had such conversation with Nick Williams and others so this should give bank comfort for longer term.[5]
[4]VCAT Reasons [8].
[5]VCAT Reasons [74]; (AB 1, 147)
Crown called to give evidence each of the employees and agents who were alleged by the tenants to have made representations to Mr Zampelis. Each of those witnesses denied making representations of the kind alleged by the appellants.
As I have already noted, Crown did not exercise its option to renew under cl 2.3 and the tenants were required to vacate at the end of August 2010.
VCAT Proceedings
On 30 July 2010 the tenants commenced proceedings in the Residential Tenancies List of VCAT alleging that Crown had engaged in misleading or deceptive conduct and unconscionable conduct or alternatively was estopped from not offering a renewal of the leases. The tenants sought injunctions, orders under s.109(1) of the Fair Trading Act 1999 (Vic) (‘FTA’) varying the leases so that they provided for further terms of five years commencing 1 September 2010, damages pursuant to s.159 of the FTA for misleading or deceptive conduct contrary to s.9 of the Act, damages based on unconscionable conduct pursuant to s.80 of the Retail Leases Act 2003 (Vic) and equitable compensation based on a claim for equitable estoppel.
A senior member of VCAT heard the matter over nine days and delivered his reasons on 24 February 2012. The senior member found in favour of the tenants and held two more hearings on the question of damages. There is an additional application in this Court for leave to appeal regarding the assessment of damages which has been adjourned pending determination of this appeal.
The central claim put forward at the hearing was that there was a collateral contract between the tenants and Crown that Crown would exercise its option to renew under cl 2.3(a).[6] The tenants conducted their case on the basis of a number of alleged representations made by employees or agents of Crown to Mr Zampelis. Crown contended that these representation were never made, and the lease document was clear as to the absolute discretion afforded to Crown in exercising its option to renew.
[6]All other claims having been abandoned (see VCAT Reasons [20]).
After assessing the conflicting evidence, the senior member held that a statement was made to Mr Zameplis by a Crown employee, Mr Boesley, that he would be ‘looked after at renewal time’:
Accordingly, I find that on a date which was probably 6 December 2005 at a place which was probably Crown’s project office Mr Boesley made statements to Mr Zampelis to this effect: that 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. [7]
[7]VCAT Reasons [84].
The Tribunal held that the statements set out in above were made based on the evidence given by Mr Craig, the banker, who the Tribunal found was present when the statements were made by Mr Boesley.[8] The Tribunal held that Mr Craig's evidence about the conversation was broadly accurate, to the extent that his roughly contemporaneous note supported it and that the note was likely to have been a reasonably accurate record of the substance of what Mr Boesley said to Mr Zampelis at that meeting.[9]
[8]Ibid [83].
[9]Ibid.
At the VCAT hearing, Crown contended that if VCAT were to find that certain representations were made, there were four defences available to it. First, Crown submitted that the representation was neither promissory nor sufficiently certain to give rise to an enforceable contract. Secondly, the alleged contract was inconsistent with the leases, specifically the discretion given under cl 2.3. Thirdly, the tenants did not rely on the representations. Fourthly, the collateral contract did not comply with the written requirement pursuant to s 126 of the Instruments Act 1958 (Vic).
On the issue of whether the statement was promissory. The senior member held that the statement made by Mr Boesley was a promise that gave rise to a collateral contract between the tenants and Crown being that at the conclusion of the five year lease term, Crown would fulfil its obligation under cl 2.3 of the leases to give a notice, within the time specified in cl 2.3, stating that it would renew the lease for a further five year term.[10]
[10]Ibid [176].
The senior member then analysed whether the statement was certain enough to create an enforceable contract. He noted that the term ‘looked after’ was, in isolation, a vague term. However, he held that the term had to be understood in the context of negotiations and also the requirement that the tenants spend a significant amount in refurbishing the restaurants. He stated, relying on the decision of the High Court in Toll (FGCR) Pty Ltd v Alphapharm Pty Ltd[11]:
What matters is how the phrase would be discerned objectively, in that context, by a reasonable person in the position of the party to whom the phrase was spoken, in the surrounding circumstances known to the parties.[12]
[11](2004) 219 CLR 165.
[12]VCAT Reasons [135].
The senior member went on further to hold:
In my opinion, a reasonable person with knowledge of those facts and circumstances would conclude that a promise that Mr Zampelis would be looked after at renewal time meant a promise that Crown would give a notice, when the time came, that it would renew each lease. Accordingly, I consider that the crucial statement was sufficiently clear and coherent to be capable of giving rise to a legal obligation upon Crown. [13]
[13]Ibid.
Crown contended at VCAT that even if the representations were promissory and sufficiently certain in isolation, when analysed in the context of the lease they were uncertain and inconsistent. Crown submitted that the promise did not set out the terms and conditions of the offered lease renewal. Further, Crown argued that finding such a collateral contract was inconsistent with the terms of cl 2.3 which gave it the sole discretion as to whether to exercise its option to renew. The tenants submitted that the effect of the terms of the renewed lease should be the same as the existing lease. However, in closing submissions, counsel for the tenants changed course and suggested for the first time the renewal should be on terms mutatis mutandis.
The senior member rejected both contentions. He held that a reasonable person having heard the representation from Crown to renew would have concluded that such a promise meant the terms and conditions of the renewed lease would be on the terms specified in the notice provisions in cl 2.3.[14] Therefore, the senior member found that the terms and conditions of the new lease would be at the sole discretion of Crown.
[14]VCAT Reasons [141].
In relation to the alleged inconsistency between the collateral contract and the leases, the senior member, relying on Maybury v Atlantic Union Oil Ltd,[15] noted that where a main contract confers onto a party an absolute discretion and a collateral contract arises which limits that discretion, the collateral contract will be void on the basis of inconsistency. In this case, however, the senior member held that the collateral contract here did not fetter the discretion of Crown to give notice. This was because cl 2.3 did not give Crown a discretion, it imposed an obligation to give notice within a specified time. The senior member noted:
The collateral contract for which the applicants have contended did not have the effect of removing from Crown a right of election or of fettering a discretion of Crown as to the giving of a notice. The lease did not create a right of election – Crown had that right, independently of the lease – and did not confer a discretion. The lease imposed an obligation: to give a notice within the required time range. So a collateral contract whereby Crown promised to give that notice with a specification of one only of the three possible things that it could do at the expiration of the lease in any event – i.e. a specification that it would renew the lease – did not impinge upon any right created by the lease, or contradict any part of the lease. [16]
[15](1953) 89 CLR 507 (‘Maybury’).
[16]VCAT Reasons [147].
Finally, the senior member rejected Crown’s submission that the collateral contract was void as it complied with the written requirements under s 126 of the Instruments Act 1958 (Vic). He noted that the collateral contract was not a contract for the disposition of an interest in land and, therefore, the section did not apply. Furthermore, if he was wrong, the senior member held that Crown was estopped from relying on the collateral contract.[17]
[17]VCAT Reasons [171] – [172].
After further hearings as to damages, VCAT ordered that the respondent pay the first appellant $467,505 plus interest of $124,267, a total of $591,772, and the second appellant $1,143,167 plus interest of $303,863, a total of $1,447,030.
Appeal to the Trial Division
Crown sought leave to appeal the decision of VCAT on a question of law pursuant to section 148(1)(b) of the VCAT Act . The tenants sought leave to cross-appeal against VCAT’s assessment of the damages. Further, the tenants lodged a notice of contention which sought to uphold the decision of VCAT in relation to the equitable estoppel.
The trial judge set out a number of issues that had to be decided on both the substantive appeal and cross appeal. The relevant questions to this appeal are:
· Were the statements made?
· Were the leases in force before the statements were made?
· Were the statements promissory in character?
· If promissory, what were the terms of any resulting collateral contract?
· Was any collateral contract sufficiently certain to be enforceable?
· If sufficiently certain, was the collateral contract consistent with the leases?
· If the collateral contract was unenforceable for any reason, was Crown nevertheless estopped from so contending?[18]
[18]Reasons [16].
In relation to whether the statements were made, and whether the leases were in force before the statements were made, his Honour refused leave on this ground because it was a factual decision of VCAT and not amenable to appeal under s 148 of the VCAT Act.
His Honour went on to assess whether the representations were promissory. He noted that the senior member looked at what an intelligent bystander would have taken from the representation. The trial judge noted that the tenants accepted this ground raised issues of mixed fact and law, but contended that there was no error in the senior member’s approach. His Honour explained the test on whether a statement was promissory as set out by Gibbs CJ in Hospital Products Ltd v United States Surgical Corporation,[19] called for an assessment of the ‘totality of the evidence’.
[19](1984) 156 CLR 41, 61.
In assessing the ‘totality of the evidence’ in this case, the trial judge held that a number of the factual findings of VCAT did not impact its findings that the representations were promissory. Namely, the nature of the negotiations, the approval in principle of the terms of the lease and the discussions over the return of the leases. His Honour stated:
In the context of hard-nosed commercial discussions, against the background of clear lease terms denying any option to renew, the statements were merely representational. They contained nothing which a reasonable businessman in Mr Zampelis’s position could reasonably understand as a promise to do anything certain. [20]
[20]Reasons [39] (citation omitted).
To reiterate, his Honour found no error.
If he was incorrect in his finding as to the promissory nature of the representation, the trial judge examined the terms of the alleged collateral contract. His Honour first found that the nature of the representation was too vague to give rise to any term which could then be relied upon by a party and meant no more than that Crown would act in good faith at renewal time.[21]
[21]Reasons [42].
His Honour then went on to assess whether the collateral contract was sufficiently certain to be enforceable. In the proceeding, Crown submitted that the terms of the collateral contract were too uncertain to be enforceable. The trial judge agreed. His Honour held that, on the basis of a number of High Court authorities[22] where a contract gives a party complete discretion as to one or more essential terms that contract will be void for uncertainty. The trial judge stated:
Based on my review of the High Court authorities, I am of the opinion that the general contention relied upon by the tenants is stated in terms which are too wide and is inconsistent with the authorities. I accept that a contract may give one of the parties a discretion as to the content of subsidiary terms, or as to how the contract is to be implemented, without necessarily rendering the contract unenforceable for uncertainty or incompleteness, or because it is illusory. But that principle does not extend to agreements which give one party a complete discretion as to one or more of the essential terms of the contract, at least in the absence of a contractual requirement that the discretion be exercised in accordance with criteria specified in the contract. In this case, there are no such criteria. It is no answer to say, as the Tribunal did, that it would have been a commercially ‘unrealistic scenario’ for Crown to have stipulated an unreasonable rent, or other unreasonable terms, which had no ‘reasonable correspondence’ with the rent and other terms of the existing leases. [23]
[22]Thorby v Goldberg (1964) 112 CLR 597; Godecke v Kirwan (1973) 129 CLR 629; Whitlock v Brew (1968) 118 CLR 445; Placer v The Commonwealth (1969) 121 CLR 353; see also Beatty v Fine [1925] VLR 363.
[23]Reasons [72].
The trial judge then turned to the issue of consistency. His Honour held that if the collateral contract was sufficiently certain it was inconsistent with the leases. He rejected the conclusion of the senior member that the collateral contract was not an attempt to limit the rights created by cl 2.3 of the leases. His Honour held:
Such inconsistency is clearly demonstrated by the fact that Crown would be in breach of the collateral contract if it provided a notice under clause 2.3(b) or (c), as it was expressly entitled to do under those terms. It matters not that Crown also held those rights independently to clause 2.3. By attempting to fetter Crown’s discretion, the collateral contract was inconsistent with the leases, and therefore unenforceable.[24]
[24]Reasons [80].
Finally, the trial judge considered the alternative claim by the tenants that if the collateral contract was unenforceable that Crown were estopped from so contending. The trial judge noted that this area was given limited review in the senior member’s decision on the basis of him finding that there was a collateral contract, however he was satisfied that VCAT had found that Crown would be estopped in the event the collateral contract was void. His Honour looked at the relevant authorities, noting in particular the decision of Brennan J in Walton’s Stores (Interstate) Ltd v Maher.[25] The trial judge held that these authorities emphasize that each case is to be determined on their own facts and that the representation must be sufficiently precise to support an estoppel.[26] Further his Honour explained that the Court must examine the way in which the representee understood the representation and determine, in the context of all the circumstances of the case, whether it was reasonable for the representee to understand and rely on that representation.[27]
[25](1998) 164 CLR 387 (‘Walton Stores’); see also Flinn v Flinn [1999] 3 VR 712 (‘Flinn’); Accurate Financial Consultants Pty Ltd v Koko Black (2008) 66 ACSR 325 (‘Accurate Financial’); Sullivan v Sullivan (‘Sullivan’) [2006] NSWCA 312.
[26]Reasons [35].
[27]Ibid.
The trial judge held that VCAT was in error on the basis that it had found that Crown was estopped from denying the collateral contract on the terms formulated by the senior member, in other words, that Crown would renew the lease but on terms decided upon by Crown. His Honour noted this representation was different to the representation that Mr Zampelis alleged. On the basis of such a disconformity, the trial judge held that the estoppel claim could not succeed. His Honour held:
Apart from expecting a further five year term, Mr Zampelis gave no evidence about the other terms and conditions of the renewed leases which he expected – for example as to rent or refurbishment. Nor was he cross-examined about that, as the pleaded case was that Crown represented and promised a renewed lease on the same terms. That case was not departed from until final submissions, when the tenants’ counsel changed the case from a promise to renew on the same terms to a promise to renew the lease for five years mutatis mutandis, with changed terms for rent and refurbishment at the very least. The Tribunal rejected this case, and thus Mr Zampelis’s evidence, as an unreasonable understanding of Mr Boesley’s statements. In the Tribunal’s view, the statements meant that Crown was representing or promising that it would serve a notice under clause 2.3(a) of the leases in which it offered to renew them for five years on such terms as it specified in its absolute discretion. For the reasons given above, I do not accept that Mr Boesley’s statements had that meaning for the purposes of determining the terms of any collateral contract. But, for present purposes, that does not matter. The sense in which Mr Zampelis said he understood the statements was wholly unreasonable – both for the reasons given by the Tribunal and for the reasons given above. So the estoppel case falls at the first hurdle.[28]
[28]Reasons [94] (citations omitted).
Notice of Appeal
At the hearing of this appeal, counsel for the tenants sought leave to file a Draft Amended Notice of Appeal. Because this was an application for leave to appeal there was some confusion as to whether leave was needed. As the application was heard with the appeal proper, it is my view that such leave is needed. Leave to amend a notice of appeal may be given under r 64.06 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic). Such leave is at the discretion of the Court.[29] The Court may grant leave where the amendments assist in determining the main question in controversy or where they affect the likelihood of the appeal succeeding.[30] Conversely, leave may be denied where it is oppressive to the respondent.[31] Counsel for the tenants informed the Court that the amendment was made after counsel had taken some time to look at the material and on reflection thought that the additional grounds should be added.
[29]Lexis Nexis Butterworths, Civil Procedure Victoria, vol 1 (at Service 280) [64.02.60].
[30]See Dalrymple v Prince of Wales and Bonshaw United Gold Mining Co (1894) 20 VLR 516, 519, 522; Perry v St Helens Land & Construction Co Ltd [1939] 3 All ER 113, 119; Burns v Grigg [1967] VR 871.
[31]Walton v Gardiner (1993) 177 CLR 378, 391.
The draft notice of appeal adds grounds 3 and 4, they are substantial grounds of appeal and in my view they assist in determining the main issues of controversy, regardless of the Court’s finding on each ground. Further the Draft Amended Notice of Appeal was served on Crown on 26 February 2014 some two months before this hearing. I do not see that the amendment would prejudice Crown, especially considering that Crown made extensive written and oral submissions on the grounds encapsulated in the Draft Amended Notice of Appeal. Therefore I would give leave to allow the tenants to amend their draft notice of appeal.
The tenants Amended Draft Notice of Appeal sets out eight grounds of appeal:
1. The Court erred in granting leave to appeal and in allowing the appeal.
2. The Court should have refused leave to appeal.
3. The Court erred in failing to identify any questions of law in respect of which leave was granted and the appeal was allowed.
4. In so far as the Court did identify questions:
(a) they were not questions in respect of which the respondent sought leave to appeal;
(b) the Court reformulated the respondent’s questions without giving the applicants an opportunity to be heard on them;
(c) The reformulated questions in respect of which the Court must be taken to have granted leave and allowed the appeal were not questions of law but rather mixed questions of law and fact.
5. The Court erred in holding, contrary to the Tribunal, that the statement made on behalf of the respondent to the appellants on 6 December 2005 was not promissory.
6. The Court erred in holding that the collateral contract held by the Tribunal to have been made between the appellants and the respondent arising from the 6 December 2005 statement was void for uncertainty.
7. The Court erred in holding contrary to the Tribunal, that the collateral contract was unenforceable because it was inconsistent with the leases dated 1 September 2005 between the appellants and the respondent.
8. Alternatively to 4 and 5, the Court erred in holding that the respondent was estopped from denying the collateral contract or from refusing to perform the promise contained in the 6 December 2005 statement.
There are five broad questions that encompass this appeal:
· Did the trial judge decide questions of law or question of mixed law and fact?
· Was the statement promissory?
· Was the alleged contract uncertain or illusory?
· Was the alleged contract inconsistent with the leases?
· Was Crown estopped from denying the existence of a collateral contract?
Did the trial judge decide questions of law or question of mixed law and fact?
The tenants central contention on appeal was that the trial judge erred in allowing the appeal from VCAT as the tenants raised questions of mixed fact and law, which were not amenable to appeal. They submitted that his Honour failed in identify any questions of law which would give rise to an appeal from VCAT, that he impermissibly reformulated the questions on appeal and in doing so both denied the tenants an opportunity to respond. Further, they argued that his Honour mistakenly identified questions of law as questions of fact that were in fact questions of mixed fact and law and were therefore not open to appeal under the VCAT Act. The tenants submitted that s 148 of the VCAT Act requires that a valid appeal must require the notice of appeal to identify questions of law, and that the questions must originate solely from the notice of appeal.
Crown contended, and the tenants conceded, that the issue of mixed fact and law was not argued before the trial judge. Further, it appears that counsel for the tenants made a number of concessions in relation to the categorisation of the issues on appeal before his Honour. In relation to whether the collateral contract was uncertain, the tenants conceded it was a question of law.[32] On the issue of the inconsistency of the collateral contract, the tenants also accepted this was a question of law.[33] In relation to whether the representation was promissory (either in contract or estoppel), it was accepted by the tenants to be an issue of mixed fact and law but it appears that counsel agreed that this was sufficient for an appeal under the VCAT Act.[34]
[32]T. 100.12 (18/9/13).
[33]T.100.10 (18/9/13).
[34]T.101.9 (18/9/13).
While the tenants accepted that some of these concessions were made before his Honour, they contended that the nature of the trial, being a hearing of leave to appeal along with the substantive appeal under the VCAT Act, meant that their conduct in front of the trial judge and any concessions they made could not affect the error made by his Honour. In effect, the tenants submitted that whether or not they made a concession is irrelevant as the trial judge did not have jurisdiction to hear the appeal under s 148 of the VCAT Act because the questions raised were matters of fact alone.
The tenants submitted that there is clear authority that a question of law is the trigger for the appeal and, it is central that the question is identified exactly. In particular, the tenants relied on the decisions of Davies J in Nepean Country Club v Paterson[35] and Branson J in Comcare v Etheridge[36] to support the contention that the VCAT Act requires that an appeal must be on a question of law as opposed to a question of mixed fact and law. The tenants cited a number of authorities which
they submitted stand for the proposition that the legal effects of the facts decided is a question of mixed law and fact.[37]
[35][2009] VSC 436 (‘Nepean’).
[36]Comcare v Etheridge 2006 149 FCR 522, 527 (‘Comcare’); see also Commissioner of State Revenue (Vic) v STIC Australia [2010] VSC 608 [10].
[37]See for enforceability of contracts US Manufacturing Co Pty Ltd v ABB Security Pty Ltd [2008] NSWSC 705 [113]; Loudoun-Shand v Jadaso Investments Pty Ltd [2007] NSWCA 316; Rosebridge Nominees Pty Ltd v Commonwealth Bank of Australia [2005] WASC 132; Australian Finance Direct Ltd v Director of Consumer Affairs (Vic) (2006) 16 VR 131 [81], [151]; for estoppel see Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd (2005) 30 WAR 290 [28]; Commissioner of Taxation v Hornibrook (2006) 156 FCR 313, 323 [32]; Eastman v Commissioner for Social Housing [2010] ACTSC 71 [79]–[84].
On the basis of this, the tenants argued before this Court that a number of the questions the trial judge answered were mixed questions of fact and law. In particular they argued that whether the representation was promissory and whether or not an enforceable contract was made were questions of mixed law and fact.[38] Further, they submitted that the question of whether the respondent was estopped from not renewing the lease was also a mixed question of law and fact.[39] Thus, the tenants submitted on the leave to appeal application before this Court that leave should be granted.
[38]Reasons [36], [38], [39], [72], [80].
[39]Ibid [88]–[95].
In response, Crown submitted that each question was a question of law. First, in relation to whether the collateral contract was uncertain or illusory, Crown argued that the findings of the senior member were inconsistent with established High Court authority setting out the requirements for a certain agreement, and thus it demonstrated an error of law. Secondly, Crown submitted that the consistency of the collateral contract was a decision made in error by the senior member because the inconsistency was clearly demonstrated by the express rights under the primary contract. Thirdly, on the issue of the promissory nature of the representation both in contract and estoppel, Crown argued that the decision of the trial judge that it was not open to VCAT to find that the statement was promissory was an error of law. It submitted that the reasonableness of the assumption and the way in which it was received was assessed on the basis of a specific legal test which was applied incorrectly by the senior member.
In addition to these submissions on each question before his Honour, Crown also contended before this Court that a mixed question of fact and law may be amenable to appeal under s 148 of the VCAT Act. Relying on a decision of Croft J in Spirovski v Univest Asset Merchants Syndicators Pty Ltd,[40] Crown contended that the line between a pure question of law and a mixed question of law and fact is a fine one,[41] and the Court should take a broad interpretation of s 148(1).
[40][2014] V ConVR 54-845 (‘Spirovski’).
[41]See Transport Accident Commission v Lees [2002] VSC 397 [17].
The identification of a question of law, as noted by the High Court in Osland v Secretary, Department of Justice,[42] is not only a precondition of the right to appeal, it constitutes the subject matter itself.[43]
[42](2010) 241 CLR 320, 333 [21].
[43]See Hoe v Manningham CC [2011] VSC 37 [3]–[4]; J Pizer, Annotated VCAT Act (Melbourne, 2012), 74.
A number of points can be distilled from the authorities. While it is imperative to identify and define a question of law, courts will not read a notice of appeal narrowly so as to oust the appellate jurisdiction over a decision of VCAT.[44] Therefore if questions of law are not sufficiently identified in the notice, but are nonetheless identified the court will address them.[45] In Federal Commissioner of Taxation v Trail Bros Steel & Plastics Pty Ltd,[46] Dowsett and Gordon JJ set out a number of important propositions in identifying what is a question of law.[47] In particular their Honours explain that the following questions are questions of law:[48]
[44]See Hoe v Manningham CC [2011] VSC 37; Avetmiss Easy Pty Ltd v Australian Skills Qualification Authority [2014] FCA 314 [75]-[77].
[45]Scicluna v New South Wales Land and Housing Corporation [2008] NSWCA 277, [4]; See also Osland v Secretary, Department of Justice (No 1) (2008) 234 CLR 275.
[46](2010) FCR 410.
[47]Ibid [13].
[48]Ibid.
· whether the tribunal has identified the relevant legal test;
· whether the tribunal applied the correct legal test;
· whether there is any evidence to support a finding by the tribunal of a particular fact; and
· whether the facts found fall within a statute properly construed.
In examining the final proposition, the authorities explain that such a principle is also applicable to whether the factual findings of a tribunal can support the legal description given to them.[49]
[49]See Vetter v Lake Macquarie City Council (2001) 202 CLR 439; Lake Macquarie City Council v Vetter [1999] NSWCA 98 [44]; Amaca Pty Ltd v Frost (2006) 67 NSWLR 635 [55]; Shire of Derby-West Kimberley v Yungngora Association Inc [2007] WASCA 233 [38].
Importantly, the issue as to whether a question is one of law, mixed law and fact, or fact depends on the circumstances of each case.[50] This is why there are authorities for the question of enforceability of a contract being one of law, mixed fact and law, and one of fact.[51]
[50]Da Costa v The Queen (1968) 118 CLR 186.
[51]See Mrocki v Mountview Prestige Homes Pty Ltd [2010] VSC 624 [70]–[84]; Rosebridge Nominees Pty Ltd v Commonwealth Bank of Australia [2005] WASC 132 [15]; Pentelow v Bell Lawyers Pty Ltd [2013] NSWSC 111 [72]–[75].
Finally, the authorities uncover a division between the approach regarding whether a question of mixed fact and law is amenable to appeal under s 148 of the VCAT Act. As I have already observed, Croft J in Spirovski was alive to the difficulty in dividing issues of fact and law and gave a wide interpretation to the term ‘on a question of law’.[52] Davies J in Napean adopted the approach articulated in the Federal Court that only a pure question of law was open to appeal under the VCAT Act.[53] Ultimately it is unnecessary to decide between these two approaches as the questions articulated by his Honour were question of law not questions of mixed fact and law.
[52]Spirovski [2014] V ConVR 54-845.
[53]Nepean Country Club Ltd v Paterson & Roberts [2009] VSC 436 [2].
However, in examining the nature of the questions, it is necessary to clearly set out what questions were put to his Honour and then how these questions were framed in this Court. While the trial judge did not identify the questions with precision, this was no doubt a result of hearing both the leave to appeal and substantive appeal together. Having heard the submissions of both parties, it appears that the questions addressed by his Honour were:
· Did the senior member apply the correct legal test when deciding whether the statement was promissory?
· Was the statement of Mr Boesley, made on or about 6 December 2005, capable of giving rise to a contractual obligation to provide notice under cl 2.3(a)?
· Was the statement of Mr Boesley, interpreted by VCAT as a promise to give notice to renew on Crown’s own terms, sufficiently certain to give rise to contractual obligations?
· Was the senior member correct in holding that the collateral contract was not inconsistent with the terms of the leases?
· Was the representation of Mr Boesley, and the meaning attributed to it by VCAT, capable of giving rise to a claim in estoppel?
First, his Honour’s findings as to the nature of the representation did not seek to alter the factual findings of VCAT. The trial judge juxtaposed the relevant legal test, that VCAT had to ascertain the objective intention of the parties in the context of the totality of the evidence, with the factual finding of VCAT. In particular, his Honour noted that a number of findings were not taken into consideration. While the tenants are correct that the form of the statement was an integral factor, it was used by VCAT to ascertain what the objective intentions of the parties were.[54] In my view, VCAT failed to apply the legal test to its own factual finding, therefore his Honour was answering a question of law.
[54]Hospital Products (1984) 156 CLR 41, 62.
Secondly, the nature of the question of the terms and illusory nature of the collateral contract are questions of law. His Honour found that the senior member erred in his application of case law on the nature of terms that could be left to the discretion of one of the parties. After examining a number of authorities,[55] the trial judge noted a distinction between a contract that gives one party a discretion as to the content of a subsidiary term and a contract that gives one party complete discretion as to the essential terms. His Honour’s conclusion that VCAT erred in determining that this case fell into the former category was plainly a determination of a question of law.
[55]See Thorby v Goldberg (1964) 112 CLR 597; Godecke v Kirwan (1973) 129 CLR 629; Whitlock v Brew (1968) 118 CLR 445; Placer v The Commonwealth (1969) 121 CLR 353.
Thirdly, the trial judge’s determination that VCAT erred in it approach to estoppel was an error on a question of law. There was a difference between the representation relied upon by Mr Zampelis and the representation said to give rise to the estoppel. The senior member’s failure to take the disconformity into account meant that he erred in applying the correct legal test for estoppel. That failure gave rise to a question of law.
Having decided that his Honour was answering questions of law, the trial judge was within his jurisdiction under s 148 of the VCAT to dismiss the appeal.
Was the statement promissory?
The tenants contended that his Honour erred in disturbing the findings of VCAT regarding the promissory nature of the statement. They argued that it is a significant step of an appellate court which has seen a fraction of the evidence from trial to overturn such finding of VCAT. Moreover, the tenants submitted that the trial judge did not give sufficient weight to the nature of the commercial negotiations between the parties. Namely that these were intense commercial negotiations and that Mr Zampelis was a skilful negotiator who used delay in order to ensure a level of certainty from Crown. In effect that he had held out until he got the assurances he wanted from Crown. In this context it was submitted that the contemporaneous note which set out the fact that Mr Zampelis would be looked after and that ‘discussions have confirmed that further lease terms will be provided’ were enough to give rise to collateral contract.
Crown countered this submission in a number of ways. First, it contended that the decision of his Honour took into account the important nature of the negotiations, but that it was open to him to find that it was not reasonable for a person in Mr Zampelis position to have taken the statement as a promise to do anything certain. Further Crown argued that Mr Zampelis’ skill as a negotiator was irrelevant; it submitted the issue before the trial judge was about how the representation could reasonably be interpreted. Secondly, it submitted that the note by the banker, Mr Craig, regarding the statement ‘discussion confirmed that further lease terms will be provided’ was neither contemporaneous nor was it relied on at VCAT to prove the truthfulness of the representation.
The trial judge’s finding on this ground was correct. First, as I have noted already, the test stated by Gibbs CJ in Hospital Products requires the court to determine the objective intention of the parties by analysing the totality of the evidence. The senior member impermissibly relied on the representation in isolation without fully grappling with the countervailing factual findings. These were set out by his Honour in his judgment and included:
· an email between Mr Boesley and the tenants enquiring about their intentions to enter new leases and providing terms upon which Crown would allow for a holding over; and
· Mr Boesley expressly rejecting, in an email to the tenants, the suggestion that Crown had represented to the tenants that they would have a further term under the lease; and
· Mr Zampelis, via email, confirming the tenants accepted the lease offers ‘unconditionally’.[56]
[56]Reasons [38].
VCAT’s decision focused on what the representation indicated about Crown’s intention for the future. Instead, the central issue is about what the parties intended their legal obligation to be. When understood in the context of negotiations between Crown and the tenants, the totality of the evidence undermines the claim that the representation was intended to be promissory.
Secondly, the process by which VCAT determined the nature of the representation and the subsequent contract was in error. The senior member appeared to held that the representation was promissory and contractual and then worked backwards to identify the terms. In order to determine if the parties sought to impose contractual obligations, the obligation imposed had to be sufficiently identified.
Was the alleged contract uncertain or illusory?
The tenants submitted that his Honour erred in holding that the collateral contract was void for uncertainty. They relied on the statement of Rogers J in Banque Bruxelles Lambert SA v Australian National Industries[57] which sets out that statements used to induce people into a contract should not easily be voidable on the basis of uncertainty.[58] They argued that VCAT was clear in what the collateral contract would entail, that an extension under cl 2.3(a) would be forthcoming and that it would be on Crown’s own terms.
[57](1989) 21 NSWLR 502.
[58]Ibid 531.
Crown relied on the trial judge’s findings on the distinction in the authorities between cases where a subsidiary term is left to the discretion of one party, and cases where an essential term of a contract is left to the discretion of one party.[59]
[59]Reasons [72].
His Honour’s reasoning regarding the illusory point was correct. First, the trial judge found that the representation that Mr Zampelis would be ‘looked after’ could be met by Crown giving notice under cl 2.3 in terms that could not be accepted by the tenants. This analysis is entirely inconsistent with the tenants being ‘looked after’. Furthermore, it is conceivable that the tenants could be looked after not just through cl 2.3(a) but could be looked after by allowing the tenants to remain in occupation on a monthly tenancy (cl 2.2(b)) or requiring the tenants to vacate but compensating them tenants for fixtures or for a percentage of the refurbishment cost. Secondly, the terms of the contract that VCAT found are illusory. An agreement to make a contract is not recognised as a contract,[60] thus logically an agreement to make an offer that has no specification as to the terms of the offer cannot be a binding agreement. The response that the terms were at the sole discretion of Crown was answered by the clear authority relied upon by his Honour that such a term is void for uncertainty.[61]
[60]See Thorby v Goldberg (1964) 112 CLR 597; Brooker Industries Pty Ltd v Wilson Parking (Queensland) Pty Ltd (1982) 149 CLR 600, 604; Australian and New Zealand Banking Group Ltd v Frost Holdings Pty Ltd [1989] VR 695, 700–701.
[61]Ibid; see also Reasons [72].
Was the alleged contract inconsistent with the leases?
The tenants submitted that his Honour erred in conflating the promise with the method of implementation. They argued that there are a number of ways to give effect to the promise, and giving notice under cl 2.3(a) was only one of them. Further, the tenants argued that this case was similar to the decision of the Queensland Court of Appeal (McMurdo P, Jerrard JA and MacKenzie J) in Wright v Hamilton Island Enterprises Ltd,[62] where a representation to renew licenses for restaurateurs on Hamilton Island was enforced.
[62](2003) Q ConvR ¶54-588 (‘Wright’).
Crown responded by noting that such an argument was wholly inconsistent with both the tenant’s pleaded case at VCAT and the finding of the senior member. In the senior member’s decision he determined that the promise was that Crown ‘would fulfil its obligations under clause 2.3 to give notice.’[63] Finally, Crown contended that the tenant’s submission ignored the wording of cl 2.3, which sets out that Crown must issue a notice, but gives Crown the discretion as to whether that is a notice of renewal (cl 2.3(a)), a notice allowing a monthly tenancy (cl 2.3(b)), or a notice to vacate (cl 2.3(c)).
[63]VCAT Reasons [176].
The senior member’s determination to distinguish this case from the ratio of Maybury was in error. The senior member distinguished the case on the basis that the clause did not specify what Crown could do, but what would be the position in any event. Clause 2.3 of the leases required Crown to give notice that it would make one of three determinations: to renew, to allow a monthly tenancy, or to require the tenants to vacate. The collateral contract as determined by VCAT removed two of those options and effectively forced Crown to exercise its power under cl 2.3(a). The trial judge did not err in applying Maybury to this case.
Further, the tenants’ reliance on the decision of Wright is misconceived. In that case, the appellants were licensees of restaurants on Hamilton Island and had been given assurances that if they paid their accounts and provided a good restaurant their licence would be renewed at the licensee’s request and be ongoing. Importantly, the trial judge held that the licenses would be renewed on the same terms as the original license. On appeal, the majority in Wright (McMurdo P and MacKenzie J) held that the collateral contract was inconsistent with the main contract, which required any renewal to be in writing. [64]
[64]Wright Q ConvR ¶54-588, 60,932.
Importantly, the argument in favour of consistency in Wright was stronger than in this case as renewal of the collateral contract would have been on the same terms as the original licence. While the whole Court allowed the estoppel claim, it is clear that the decision in this case supports the reasoning of the trial judge.
It follows that subject to the estoppel ground I would refuse leave to appeal on the basis that the decision is otherwise not attended by sufficient doubt.[65]
[65]Niemann v Electronic Industries [1978] VR 431.
Was Crown estopped from denying the existence of a collateral contract?
The tenants contended that even if the representation was not promissory, it could still give rise to an estoppel. They relied on the decision of Brooking JA in Flinn v Flinn.[66]
[66][1993] 3 VR 712.
Therefore the tenants argued that the estoppel claim was not barred on the basis of it failing for uncertainty in contract. The tenants argued that his Honour erred in two key areas in his decision. First that there was no correlation between Mr Zampelis’ subjective understanding of the promise and the promise found by VCAT; and that even if there was, Mr Zampelis’ understanding was not reasonable. The tenants submitted that Mr Zampelis’ subjective understanding was irrelevant, rather the question for a court is whether the expectation induced the recipient of the representation, objectively determined.[67] Further, they contended that his Honour’s finding on reasonableness was simply a repetition of the reasoning regarding uncertainty and did not justify his finding.
[67]See Accurate Financial (2008) 66 ACSR 325, 350.
Crown argued that his Honour’s decision is consistent with the decision of Brennan J in Walton’s Stores.[68] It submitted that the issue of estoppel gave rise to consideration of the reasonableness of the assumption, Crown submitted that the Court assess whether the representation was uncertain or illusory and then assesses how the representation was understood and whether it was reasonable to rely upon it. On the issue of subjective understanding, Crown submitted that subjective understanding is only examined when analysing the assumption Mr Zampelis adopted after the statement, once that had been established the Court then assessed whether it was an objectively reasonable understanding. Further, Crown submitted that the evidence provided by Mr Zampelis about his assumption indicated that there was no estoppel. This is because VCAT rejected his assumption that he would be offered a renewal on the same terms or terms mutatis mutandis. Thus, Mr Zampelis made a different assumption as to what the respondent would do after expiry of the term and which was an unreasonable assumption objectively determined.
[68](1998) 164 CLR 387.
In assessing this ground it is important to set out the basic premise of promissory estoppel. Priestley JA in Austotel Pty Ltd v Franklins Self Serve Pty Ltd[69] provided a helpful summary of promissory estoppel:
For equitable estoppel to operate there must be the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed or an interest granted to the plaintiff by the defendant, and reliance on that by the plaintiff, in the circumstances where departure from the assumption by the defendant would be unconscionable.[70]
[69](1989) 16 NSWLR 582.
[70]Ibid 610.
The first issue to consider is the nature of the assumption, in effect what did Mr Zampeli’s assume the relationship was in the context of the representation of Mr Boesley.
The senior member held that Mr Boesley told the tenants that if they refurbished the leased properties they would be looked after at the time of renewing the leases.[71] The senior member also held that the correct and reasonable assumption to be drawn from this representation was that Crown would renew the lease on terms that Crown was to determine.[72] This was in contrast to the tenants’ assumption that the lease would be renewed on the same terms as the existing lease. In the context of the estoppel claim, VCAT did not analyse the claim on the basis of the tenants’ assumption, but on the assumption it found, namely that the lease would be renewed on terms decided upon by Crown. [73]
[71]VCAT Reasons [118].
[72]Ibid [141].
[73]Ibid.
His Honour was correct in rejecting this approach.[74] The High Court has held that estoppel will be established where ‘the plaintiff assumed that a particular legal relationship existed’,[75] and that there must be ‘an assumption which has been adopted by the other party’.[76] Once the court has established what assumption the representee subjectively held, the court should then consider whether adopting that assumption was reasonable.[77] This is in contrast to VCAT’s approach which was to consider what was a reasonable assumption to be drawn from the representation and then consider whether this was a sufficient basis for the estoppel claim. Therefore, the senior member should have considered the sense in which the tenants understood the representations and whether it was reasonable for them to rely upon them.[78]
[74]Reasons [88].
[75]Walton Stores (1988) 164 CLR 387, 428.
[76]Commonwealth v Verwayen (1990) 170 CLR 394, 444 (‘Verwayen’).
[77]Standard Chartered Bank Aust Ltd v Bank of China (1991) 23 NSWLR 164, 180.
[78]Reasons [88].
Having established the nature of the assumption, the next step is to then assess whether it was reasonable for the tenants to rely on the assumption from Crown that they would renew the lease on similar terms, as opposed to renewal on Crown’s own terms.
Whether an assumption is reasonable involves consideration of whether it is certain.[79] In Sullivan v Sullivan[80] Hodgson JA stated:
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.[81]
[79]For example, in Legione v Hateley (1983) 152 CLR 406, 435 Mason and Deane JJ held that ‘it has long been recognised that a representation must be clear before it can found an estoppel’.
[80](2006) 13 BPR 24,755.
[81]Ibid, 24,768.
The trial judge held that this requirement of certainty and reasonableness was not satisfied because the representations were not promissory and, further, because the senior member held that the tenants’ assumption was incorrect and unreasonable.[82] With respect, I disagree with his Honour’s finding for the following reasons.
[82]Reasons [94].
First, while his Honour held that the assumption was not certain as the statements were merely encouraging, this is not an impediment to a claim for estoppel.[83] Dodds-Streeton JA went further in Accurate Financial Consultants Pty Ltd v Koko Black Pty Ltd[84] when her Honour stated that there are ‘a wide variety of apparently vague, imprecise and incomplete representations which have been construed in context and given effect’ by the courts.[85]
[83]Sullivan (2006) 13 BPR 24,755, 24,768.
[84](2008) 66 ACSR 325.
[85]Accurate Financial (2008) 66 ACSR 325, 343.
In light of the authorities, the vague nature of the representation that the tenants would be ‘looked after’ does not prevent the estoppel claim from being made out.
Secondly, a representation that is not certain enough to amount to a contract can support a claim in estoppel.[86] There are a number of cases where a claim for estoppel has been successful where a representation would be too uncertain to give rise to a contract.[87] This is because equity focuses on substance over technical form.[88]
[86]Flinn (1999) 3 VR 712, 743.
[87]See Giumelli v Giumelli (1999) 196 CLR 101, 121; Evans v Evans [2011] NSWCA 92 [121]; Sullivan (2006) 13 BPR 24,755, 24,768.
[88]See Roxborough v Rothmans of Pall Mall Australia Ltd; Baltic Shipping Co v Dillon (1993) 176 CLR 344, 376; Burke v LFOT Pty Ltd (2002) 209 CLR 282, 318–9.
The trial judge analysed the certainty of the assumption in the same terms as he analysed the collateral contract claim, and by referring to his findings in relation to the collateral contract.[89] The authorities state that 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.
[89]Reasons [88].
Thirdly, estoppel can be established notwithstanding that a promise is lacking in detail. In Giumelli v Giumelli[90] the High Court held that the representor should be estopped from resiling from a promise to give a portion of land notwithstanding the boundaries of the proposed land were not precisely defined.[91]
[90](1999) 196 CLR 101 (‘Giumelli’).
[91]See also Legione v Hateley (1983) 152 CLR 406, 439 where Mason and Deane JJ held that it is not ‘necessary that a representation be clear in its entirety. It will suffice if so much of the representation as is necessary to found the propounded estoppel satisfies the requirement.’; Flinn (1999) 3 VR 712, 741.
In the somewhat analogous case of Wright mentioned already, the Queensland Court of Appeal considered a promise to renew a licence for further periods of five years. It was held that the absence of specific details of the promise such as the mechanism and timing of exercise of the right to renew were not fatal to the estoppel claim as the court could determine these details by reference to what would be reasonable in the circumstances.[92] Likewise, the New South Wales Court of Appeal (Mason P, Ipp and Tobias JJA) in Australian Crime Commission v Gray[93] held that a promise may be clear notwithstanding it falls ‘within a discretionary range and its determination was by no means a simple matter.’[94]
[92]Wright Q ConvR ¶54-588, 60-946-947.
[93]Australian Crime Commission v Gray [2003] NSWCA 318
[94]Ibid [192].
In applying the facts of this case to these principles, the fact that the terms of the renewed lease were yet to be determined or were ambiguous would not mean necessarily, the assumption was unreasonable or unclear. Crown had represented that Mr Zampelis would be looked after when it came to renewal time what the tenants might be entitled to in equity as a result is yet to be determined.
Fourthly, considering the representation in all the circumstances leads me to conclude that the representation was sufficient to give rise to a claim of estoppel. [95] Relevant circumstances in this case include VCAT’s findings that the director of the tenants sought assurances from directors of Crown about the renewal of the leases on several occasions, which ‘was encouraging enough to give rise to Mr Zampelis’ belief that if such a promise happened to be made thereafter it would have their approval and the approval of Crown’.[96] On several occasions the tenants made it clear that they were concerned to secure a renewal of their lease and had expressed their concerns about spending a lot of money on refurbishment for a five year lease. In these circumstances, the representations that money should be spent to refurbish the premises and that the tenants would be looked after were in response to their concerns and intended to give them comfort that they would obtain the renewal.
[95]Verwayen (1990) 170 CLR 394, 445 where Deane J outlined the importance of assessing an estoppel claim by reference to the circumstances of the cases.
[96]VCAT Reasons [119]–[120].
Fifthly, while his Honour was correct to outline the disconformity between the interpretation of the representation by the tenants and VCAT, that does not mean that the assumption was not reasonable. In Low v Bouverie[97] it was held that the requirement that a representation be unambiguous ‘does not necessarily mean that the language must be such that it cannot possibly be open to different constructions.’[98]
[97](1891) 3 Ch 82; this was cited with approval in Western Australian Insurance Co Ltd v Dayton (1924) 35 CLR 355, 375.
[98]Ibid 106.
Furthermore, in Walton Stores Deane J held that the fact that there were differences between the trial judge and Court of Appeal’s interpretations of the assumption was unimportant. It was sufficient that both the trial judge and Court of Appeal had found that the respondents acted on the basis of a mistaken belief.[99] I accept that the representation from Mr Boesley that the tenants would be looked after come renewal time is open to different interpretations. It may have meant that Crown would offer a complete renewal, or that Crown would offer Mr Zampelis a smaller extension or even that Crown would offer compensation for fixtures and fittings left behind.
[99]Walton Stores (1988) 164 CLR 387, 437.
Having found that the assumption was reasonable, the third issue is whether Crown induced the tenants to adopt the assumption. In Commonwealth v Verwayen,[100] Deane J discussed the importance of the role of the representor in the doctrine of estoppel:
That party must have played such a part in the adoption of, or persistence in, the assumption that he would be guilty of unjust and oppressive conduct if he were now to depart from it.[101]
[100](1990) 170 CLR 394.
[101]Ibid 444.
A party can induce an assumption by express or implied representation.[102] When assessing the surrounding circumstances of the negotiation, it is clear that the tenants had sought multiple assurances from Crown as to its position after the first lease concluded. Further, Crown knew and encouraged the tenants to spend money refurbishing its restaurants in full knowledge of the representation given. In light of the authorities and the nature of the negotiations, Crown induced the tenants to adopt the assumption.
[102]Ibid.
The final element to consider is whether the tenants placed reliance on the assumption of Crown and thus acted to their detriment.[103] It is uncontroversial that the expenditure of funds to improve a property is sufficient to prove reliance.[104]
[103]See Standard Chartered Bank Aust Ltd v Bank of China (1991) 23 NSWLR 164, 180; Verwayen (1990) 170 CLR 394, 445.
[104]See Walton Stores (1988) 164 CLR 387, 424 citing New South Wales Trotting Club Ltd v Glebe Municipal Council (1937) 37 SR (NSW) 288, 308 and Ramsden v Dyson (1886) LR1HL 129, 170.
The tenants expressed their reluctance to sign the lease and agree to carry out the refurbishment works for a lease of five years. However, as VCAT found, following the representations made by Mr Boesley the tenants sought finance for the refurbishment and carried out these works, thereby changing their position in reliance on the assumption.[105]
In summary, the trial judge was correct in finding that VCAT considered the wrong assumption as it should have considered the tenants’ subjective assumption. However, with respect, his Honour erred in finding that the assumption was unreasonable and uncertain in light of the standard of certainty set by the authorities. It follows that I would grant leave and allow the appeal on the estoppel ground.
[105]VCAT Reasons [153].
Disposition
In granting leave and allowing the appeal, it is necessary to consider
disposition.
In accordance with equity, the appellants would be entitled to the minimum equity.[106] Hence, they would need to establish what was the lower limit of the representation made to them and then, what they are entitled to in order to achieve equity. Such an approach is consistent with the position of the High Court in Giumelli in fashioning the remedy to achieve the minimum equity required.[107]
[106]Walton Stores (1988) 164 CLR 387, 423, 427; Verwayen (1990) 170 CLR 394, 411.
[107]Giumelli (1999) 196 CLR 101, 120-125; see also Donis v Donis (2007) 19 VR 577, 582-3.
Conclusion
I would grant leave to appeal and allow the appeal on ground 8.
WHELAN JA:
In 2005 and early 2006 the two applicants (the ‘tenants’) were negotiating with the respondent (‘Crown’) over leases for two restaurants. Crown wanted the tenants to undertake major refurbishments of the two restaurants and to agree to leases which each had a five year term. The tenants wanted 10 year terms given the expenditure involved in the refurbishments. The leases which were eventually executed and exchanged contained the terms that Crown wanted. But, according to a determination in the Victorian Civil and Administrative Tribunal (‘VCAT’), a collateral contract was entered into between the tenants and Crown based upon a statement by a Crown employee to the principal representative of the tenants that they would be ‘looked after at renewal time’. Crown required the tenants to vacate the premises at the expiration of the leases. VCAT found that Crown thereby breached the collateral contract.[108]
[108]Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Ltd (Retail Tenancies) [2012] VCAT 225 (‘VCAT Reasons’).
Crown sought leave to appeal pursuant to s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (the ‘VCAT Act’). Under s 148 a party may appeal an
order of VCAT on a question of law if given leave. A judge in the trial division of this Court gave Crown leave, allowed its appeal, set the VCAT orders aside, and in lieu ordered that the tenants’ proceedings in VCAT be dismissed.[109] He did so on the basis that errors of law had been made by VCAT in deciding that what was said was promissory, in deciding the meaning of what was said, in deciding that that meaning was sufficiently certain to be enforced and was not illusory, and in deciding that the alleged collateral contract was not inconsistent with the leases.
[109]Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2013] VSC 614 (‘Judgment’).
The tenants now seek leave to appeal the orders made by the judge in the trial division pursuant to s 17A(3A) of the Supreme Court Act 1986.
In both the trial division and in this Court the parties made all of the submissions they wished to make on the substantive appeals in the course of addressing the applications for leave on the basis that if leave were granted the appeals would then be determined instanter. That is what occurred in the trial division and is the basis upon which we are also proceeding.
It is not contested that if the orders made in the trial division are wrong the tenants will have suffered substantial injustice. Crown submits there is insufficient doubt as to the correctness of the trial judge’s judgment to warrant the granting of leave.
Before turning to the judgment in relation to which leave to appeal is sought it is necessary to review certain aspects of the proceedings before VCAT.
Review of relevant aspects of the proceedings before VCAT
Each of the tenants brought a proceeding in VCAT against Crown and against four other respondents alleged to be employees, agents or servants of Crown. One of those respondents was a man named David Boesley.
By further amended points of claim the tenants alleged that a series of representations had been made to their representative, Nicholas Zampelis, by Crown’s representatives in and between September 2005 and December 2005. The representations allegedly made were that if each of the tenants entered into their respective leases with a five year term they would be given a further five year term at the expiration of those leases. It was alleged that each tenant entered into its lease in reliance upon those representations and that each tenant’s entry into its lease in reliance upon the representations constituted acceptance of a promise. The promise was alleged to be that Crown would exercise a power it had under cl 2.3(a) of each of the leases and offer to renew the lease for a further five year term.
It was alleged that as a consequence of Crown’s failure to make that offer each tenant was entitled to equitable compensation or damages for unconscionable conduct. It was alleged that the representations were as to future matters made without reasonable grounds which were accordingly misleading and deceptive. It was alleged that a collateral contract had been made and breached as a result of which loss and damage had been suffered.
The provisions of cl 2.3 of each of the leases are important. Clause 2.3 reads as follows:
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 – see clauses 44 and 54);
(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.
In each VCAT proceeding Crown denied making the representations alleged and, amongst other things, alleged that the collateral contract (which it denied) was void for uncertainty.
A VCAT hearing on issues of liability was held in November 2011. A senior member delivered thorough and comprehensive reasons on 24 February 2012, finding in favour of each of the tenants in an amount to be assessed. The senior member conducted two further hearings and delivered two further sets of reasons in relation to damages. For present purposes, the reasons in relation to liability are the relevant ones. There is an application for leave to appeal the damages orders but that application has been deferred pending determination of this application.
The tenants’ pleaded cases were based on a number of grounds but, according to the senior member, the cases they conducted at VCAT were ‘based entirely on the alleged collateral contract’.[110] The senior member proceeded on the basis that all the other causes of action pleaded had been abandoned.[111]
[110]VCAT Reasons [20].
[111]VCAT Reasons [20].
The major refurbishments of the two restaurants was a critically important background issue to the disputed factual questions. The senior member accepted Mr Zampelis’ evidence that he believed in 2005 that the tenants needed a longer trading period than five years to recover the cost of those refurbishments and to make a profit. The senior member found that that belief was justified.[112]
[112]VCAT Reasons [40].
The case conducted on behalf of the tenants was that a series of specific representations were made to Mr Zampelis to the effect that he would be given an additional five year term. The case for Crown was that no such representations had been made at all. The senior member did not accept either of those respective positions. He found that a relevant representation was made to Mr Zampelis by one of Crown’s representatives, Mr Boesley, but that it was a representation much less specific than those asserted by Mr Zampelis. The basis for the senior member’s finding in this regard was a diary note made by a bank officer.[113] The relevant finding was as follows:
Accordingly, I find that on a date which was probably 6 December 2005 at a place which was probably Crown’s project office Mr Boesley made statements to Mr Zampelis to this effect: that 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.[114]
[113]VCAT Reasons [74].
[114]VCAT Reasons [84]. See also VCAT Reasons [118].
The senior member set out some of the applicable principles of law concerning collateral contracts. He then set out the defences Crown relied upon in addition to attacking the factual foundation of the claims. He said they were the following:
(a) The statements relied upon were not promissory, and did not result in sufficient certainty to be an enforceable contract.
(b) The alleged collateral contract was inconsistent with the leases and so was unenforceable.
(c) The tenants did not rely upon the promise that they alleged.
(d) The collateral contract was not in writing as was required by s 126 of the Instruments Act 1958.[115]
[115]VCAT Reasons [131].
The issue of whether the statements relied upon were promissory was dealt with by VCAT in the following passage:
I think it is clear that the crucial statement that I have found that Crown, through Mr Boesley, made was promissory in character. In part, the statement was that Mr Zampelis would be looked after when the time came for Crown to consider renewing the leases. It was not a statement of present fact, or of present intention, or of opinion. It was a statement about what Crown would do in future. It was a promise.[116]
[116]VCAT Reasons [133].
The senior member observed that the question of whether what Mr Boesley had said was sufficiently clear and coherent to create legal obligations was much more difficult.[117] He said that the phrase ‘looked after’ in isolation was vague but that it should not be considered in isolation.[118] The senior member said that what mattered was how the phrase would be discerned objectively by a reasonable person in the position of the party to whom the statement was made, citing in that respect Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd[119] and McMahon v National Foods Milk Ltd.[120] The senior member referred to the fact that the tenants were being asked to bind themselves for five years, that an explanation had been given for that circumstance by reference to a wish to align the leases with other tenants’ leases, that the leases contained an obligation to undertake major refurbishments, and that the leases contained cl 2.3, which I have quoted. The senior member concluded:
In my opinion, a reasonable person with knowledge of those facts and circumstances would conclude that a promise that Mr Zampelis would be looked after at renewal time meant a promise that Crown would give a notice, when the time came, that it would renew each lease. Accordingly, I consider that the crucial statement was sufficiently clear and coherent to be capable of giving rise to a legal obligation upon Crown.[121]
[117]VCAT Reasons [134].
[118]VCAT Reasons [135].
[119](2004) 219 CLR 165, 461–2.
[120](2009) 25 VR 251, 273 (‘McMahon v National Foods’).
[121]VCAT Reasons [135].
The senior member then referred to the submission Crown had made that a promise in those terms was too uncertain to be enforced because it was impossible to know what the terms of the offered lease renewal were to be.[122] The senior member referred to submissions by the tenants to the effect that the terms should be the same as in the existing leases or perhaps the same mutatis mutandis.[123]
[122]VCAT Reasons [136].
[123]VCAT Reasons [137].
The senior member set out the terms of cl 2.3 and then went on:
For present purposes the noteworthy thing about those clauses is the freedom that Crown had to dictate the terms and conditions of the renewed lease. It was out of the tenant’s power to agree to anything other than the terms and conditions that Crown specified in its notice stating that it would renew the lease. Crown would even have the right to stipulate terms and conditions which, intentionally or unintentionally, were so onerous that the tenant would be compelled not to accept them. No doubt that is an unrealistic scenario, because the situation of unreasonably onerous terms and 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 point, however, is that the way in which terms and conditions of a renewed lease could be ascertained with certainty was with Crown stipulating in its notice given under cl 2.3 what they were to be. There is only one qualification to the freedom that Crown would have in stipulating them. A notice that it would ‘renew’ a lease, as cl 2.3 empowered it to give, implied as a matter of law that the renewed lease would be for the same term (five years) as the lease being renewed.[124]
Turning to the submissions made on the substantive issues it was submitted on behalf of the tenants that VCAT had correctly applied the applicable legal principles.
On the issue of whether the statement was promissory the tenants relied upon a passage from the judgment of Nettle JA in McMahon v National Foods[197] where his Honour observed that business people are ‘not infrequently’ inclined to trust one another and not insist on promises being reduced to writing, and that, looked at objectively, an honest and reasonable observer might not hesitate to conclude that a deal had been done.
[197](2009) 25 VR 251, 273.
In relation to uncertainty, observations of Rogers CJ Comm D in Banque Brussels Lambert SA v Australian National Industries Ltd were relied upon.[198] In substance, Rogers J emphasised the importance of giving effect to commercial transactions and observed that for that reason uncertainty, which he described as a concept ‘so much loved by lawyers’, had fallen into disfavour as a basis for striking down commercial bargains. The tenants also relied upon the judgments in Flinn[199] and Accurate v Koko Black[200] in support of a submission that even if there was uncertainty Crown should be estopped from denying a binding obligation.
[198](1989) NSWLR 502, 523.
[199][1999] 3 VR 712.
[200][2008] VSCA 86.
In relation to inconsistency, the tenants particularly relied upon Wright v Hamilton Island Enterprises Ltd.[201] It was submitted that that case, which concerned renewal of a licence, was in fact ‘on all fours’ with this one.
[201](2003) QCA 36 (‘Wright’).
Ground 8 of the tenants’ proposed Notice of Appeal is that the trial judge erred in holding that Crown was not estopped from denying the collateral contract[202] ‘or from refusing to perform the promise contained in the 6 December 2005 statement’. In oral submissions the tenants’ counsel placed particular reliance upon estoppel and extensive reference was made to Flinn[203] and to Australian Crime Commission v Gray.[204] In this respect it was submitted that VCAT’s findings on estoppel, although made in the context of the Instruments Act, were expressed in terms of broader significance. It was submitted that VCAT’s legal analysis was ‘orthodox’ and that the tenants were entitled to succeed on that ground.
[202]There is a typographical error in the proposed draft which reads: ‘The Court erred in holding that the respondent was estopped from denying the collateral contract’. This presumably should read: ‘the respondent was not estopped’ (my emphasis).
[203][1999] 3 VR 712.
[204][2003] NSWCA 318 (‘ACC v Gray’).
Before turning to Crown’s submissions, it is necessary at this point to observe that the tenants’ submissions repeatedly mischaracterised what the VCAT finding was as to the terms of the collateral contract. The submissions stated that VCAT had found that the promise made was that Crown would give the tenants a notice under cl 2.3(a) offering to renew the leases ‘on terms bearing a reasonable correspondence to the existing leases’.[205] That is not what VCAT found. VCAT found that the promise made was to give a notice under cl 2.3(a) on such terms as Crown might determine in its unfettered discretion. It was precisely because Crown could specify the terms that VCAT found that there was sufficient certainty. Observations were made by VCAT to the effect that the probabilities were that such an offer would be on terms having a reasonable correspondence to the existing leases but that was not part of the collateral contract as found by VCAT.[206]
[205]Applicants’ Outline of Submissions (16 December 2013) [6], [14].
[206]VCAT Reasons [84], [118], [135], [139], [141].
On the issue of questions of mixed fact and law, Crown submitted that before the trial judge counsel for the tenants had conceded that some questions of law were raised, and that the questions posed did raise questions of law. In respect of the estoppel issue, Crown also submitted that it was not necessary to identify a question of law as the issue had been raised by the tenants’ Notice of Contention.
Crown submitted that, even if the questions raised on appeal were not questions of law but mixed questions of fact and law, an appeal under s 148 of the VCAT Act allows such questions to be considered. Crown relied upon the judgment of Croft J in Spirovski v Univest Assett Merchants Syndicators Pty Ltd who, adopting a broader approach than that taken in Nepean[207] and Comcare,[208] suggested that questions of mixed fact and law ‘are … susceptible of appeal’.[209] Crown relied upon the fact that the line between questions of law and mixed questions is notoriously difficult to draw,[210] and upon observations by commentators that it is not clear that the Victorian Parliament intended the right of appeal to be confined in this way.[211]
[207][2009] VSC 436.
[208](2006) 149 FCR 522.
[209][2013] VSC 728 [20] (‘Spirovski’).
[210] Transport Accident Commission v Lees [2002] VSC 397 [17].
[211] Jason Pizer, Annonated VCAT Act (JNL Nominees Pty Ltd, 4th ed, 2012) 743.
Crown submitted that the trial judge had not engaged in any reformulation of the questions.
On the substantive issues, Crown in substance supported the conclusions of the trial judge for the reasons which he gave.
Questions of law and mixed fact and law
Section 148 of the VCAT Act allows a party to a proceeding before VCAT to appeal ‘on a question of law’.
Identification of a question of law not only enlivens the right to appeal but also constitutes the subject matter of the appeal itself.[212]
[212]Osland No 2 (2010) 241 CLR 320, 333 [21]; Hoe v Manningham City Council [2011] VSC 37 [3]–[4] (‘Hoe v Manningham’); Commissioner of State Revenue v STIC Australia Pty Ltd [2010] VSC 608 [9]; Youd-Holmes v Milford Hall Pty Ltd [2004] VSC 183 [16] \.
The authorities underscore the importance of identifying the questions of law in issue.[213] The importance lies in the legislature’s determination to confine challenges to VCAT decisions to questions of law.[214]
[213]Osland No 2 (2010) 241 CLR 320, 333 [21]; Hoe v Manningham [2011] VSC 37 [4]; Commissioner of State Revenue v STIC Australia Pty Ltd (2010) VSC 608[9]; Nepean [2009] VSC 436, [3]; Comcare (2006) 149 FCR 522, 527 [13]–[17]; Birdseye v Australian Securities and Investments Commission [2003] FCAFC 232 [11]–[18];
[214]Commissioner of State Revenue v Frost [2011] VSC 232 [5].
Although precisely defined questions of law are what ought to appear in every notice of appeal, that does not always happen.[215] Fairness dictates that the notice of appeal not be read narrowly so as to eschew the supervisory jurisdiction of the court.[216] In identifying whether questions of law are raised and what they are, it may be necessary to have regard not just to the parts labelled ‘questions of law’ but also to the notice as a whole and perhaps even the surrounding circumstances.[217]
[215]Avetmiss Easy Pty Ltd v Australian Skills Qualifications Authority [2014] FCA 314 [76] (‘Avetmiss’); Hoe v Manningham [2011] VSC 37 [7]; Kowalski v Chief Executive Officer of Medicare Australia (2010) 185 FCR 42, 51 [38].
[216]Avetmiss [2014] FCA 314 [75].
[217]Ibid [77].
Despite the importance of the identification process, if questions of law are identified the court will address them even if the relevant notice fails to identify the questions of law in dispute with sufficient precision. In Osland No 2, despite the ‘uninformative’ framing of the questions of law in the Notice of Appeal, this Court’s reformulation of the questions of law was not impugned by the High Court.[218] The focus of the enquiry is therefore on whether a question of law does in fact arise. The failure to precisely identify a relevant question of law is not a fatal objection in itself although it places an applicant/appellant ‘at peril’.[219]
[218]Neither was the issue addressed in the first related appeal: Osland v Secretary, Department of Justice (2008) 234 CLR 275.
[219]Scicluna v New South Wales Land and Housing Corporation (2008) 72 NSWLR 674, 677 [4].
There has been a ‘huge amount’ written on the distinction between questions of law and questions of fact.[220] Notwithstanding the attention given to the topic the issue remains a difficult one, particularly at the margins. But some propositions can be stated with confidence. In this respect I would adopt the list set out by Dowsett and Gordon JJ in Federal Commissioner of Taxation v Trail Bros Steel & Plastics Pty Ltd.[221] The following issues fall within the phrase ‘on a question of law’:
[220]Australian Finance Direct Ltd v Director of Consumer Affairs (Vic) (2006) 16 VR 131, 145 [77] (‘Australian Finance Direct’).
[221]Federal Commissioner of Taxation v Trail Bros Steel & Plastics Pty Ltd (2010) 186 FCR 410, 415 [13] (‘Trail Bros Steel’).
(a) whether a tribunal has identified the relevant legal test;
(b) whether a tribunal has applied the correct test;
(c) whether there is any evidence to support a finding of a particular fact;
(d) whether the facts found fall within a statute properly construed.
This list is not exhaustive.
In this particular case the explanation of the final proposition set out above by Gleeson CJ, Gummow and Callinan JJ in Vetter v Lake Macquarie City Council is important.[222] They said:
[222](2001) 202 CLR 439 (‘Vetter’).
Whether facts as found answer a statutory description or satisfy statutory criteria will very frequently be exclusively a question of law. To put the matter another way, indeed, as it was put by Priestley JA in his judgment, whether the facts found by the trial court can support the legal description given to them by the trial court is a question of law. However, not all questions involving mixed questions of law and fact are, or need to be susceptible of one correct answer only. Not infrequently, informed and experienced lawyers will apply different descriptions to a factual situation. That is why the test whether legal criteria have been met has been expressed in language of the kind used by Jordan CJ in The Australian Gas Light Co v Valuer-General:
[I]f the facts inferred ... from the evidence ... are necessarily within the description of a word or phrase in a statute or necessarily outside that description, a contrary decision is wrong in law.[223]
[223]Ibid 450 [24] (citations omitted).
As is clear from the judgment in Vetter, the principle articulated is not confined to whether the facts as found answer a statutory description or satisfy statutory criteria, but extends to whether the facts as found can support the legal description given to them. In Amaca Pty Ltd v Frost, a common law negligence case, Spigelman CJ held that:
Although the identification of the place of the tort is not a statutory formulation of the kind considered in Vetter, the issues are cognate.[224]
[224](2006) 67 NSWLR 635, 646 [55].
Whether an issue to be decided on appeal is a question of law as opposed to a question of fact or mixed law and fact may depend upon the circumstances in which the question arises.[225] Consequently, cases concerning whether a contract is enforceable have been considered to pose questions of law,[226] questions of mixed law and fact,[227] and questions of just fact.[228] Similarly, a number of cases involving findings of estoppel have been held to give rise to questions of mixed law and fact.[229]
[225]Da Costa v The Queen (1968) 118 CLR 186, 194.
[226]Mrocki v Mountview Prestige Homes Pty Ltd [2010] VSC 624 [70]–[84].
[227]Rosebridge Nominees [2005] WASC 132 [15].
[228]Pentelow v Bell Lawyers Pty Ltd [2013] NSWSC 111 [72]–[75].
[229]Eastman v Commissioner for Social Housing [2010] ACTSC 71 [81]; Wiltrading (2005) 30 WAR 290, 302 [28]; Commissioner of Taxation v Hornibrook (2006) 156 FCR 313, 323 [32].
Whether questions of law under s 148 of the VCAT Act include questions of mixed law and fact has yet to be decided by this Court. Two approaches have been adopted in the case law to date. The first approach relies on the absence of any ‘bright line’ between questions of law and mixed law and fact to give a broad reading to the phrase ‘on a question of law’.[230] The second approach is more narrow.[231] For present purposes it is unnecessary to decide the matter because, in my view, the questions in this case fall within the ambit of the list in Trail Bros Steel and the quoted passage from Vetter.
[230]Spirovski [2013] VSC 728 [20].
[231]Nepean [2009] VSC 436 [2].
Questions of law addressed by the trial judge
The trial judge did not identify questions of law in the way the authorities suggest should be done. It seems to me that that was entirely a result of the way in which the case was argued before him, in particular the conflation of the leave applications and the substantive appeals, and the concessions made (or at least the assumption adopted) that questions of mixed fact and law did raise questions properly to be determined under s 148.
The precise identification of the questions of law now having been raised, it seems to me that the questions of law the trial judge addressed were these:
· Did VCAT apply the correct legal test in determining that the statement was promissory? Put another way, did VCAT objectively ascertain the parties’ intentions on the totality of the evidence in concluding that the statement was a promise?
· Was the statement — ‘you will be looked after at renewal time’ — capable of constituting a contractual obligation to give a notice under cl 2.3(a) on such terms as Crown saw fit?
· Was a promise to give a notice under cl 2.3(a) on such terms as Crown saw fit capable of constituting a sufficiently certain contractual obligation and one which was not illusory?
· Was VCAT correct in finding that the collateral contract found by it did not impinge upon, or affect to alter the provisions of or the rights created by, the leases?
· Were VCAT’s findings as to the representation made, with the meaning VCAT attributed to that representation, capable of founding an estoppel given VCAT’s finding as to Mr Zampelis’ understanding of the representation he relied upon?
It seems to me that the trial judge answered each of these questions ‘no’. In my view, he correctly identified a number of errors made by VCAT on these questions of law.
Promissory
The first and most obvious error concerns the issue of whether the statement made was promissory. In VCAT’s reasons this issue is treated as being determined by the characterisation of the statement itself. The issue is dealt with in one paragraph, which I have quoted in full earlier. There is no reference to the requirement to ascertain the parties’ intentions on the totality of the evidence and no analysis which purports to do so. The issue is treated as being determined by characterisation of the form of the statement — not a statement of present fact, or present intention or of opinion, but a statement about what Crown would do in future.
It was submitted that the trial judge approached this issue erroneously by undertaking an analysis of the evidence himself. Apart from the obvious departure from the consideration of a question of law that such an approach would involve, it was submitted that the trial judge did not have the totality of the evidence before him and that he was in no position to make his own assessment of what a consideration of the totality of the evidence would have revealed.
I do not think that his Honour was purporting to consider the totality of the evidence. Rather, he quoted in full the section of the VCAT reasons where this issue was addressed and then quoted the relevant passage from Hospital Products which sets out what ought to have been done. He observed that VCAT did not ‘appear’ to have ‘factored into’ the analysis a number of its own factual findings. He then said that those findings ‘include at least’ seven matters which he then set out.
The trial judge may have been undertaking his own analysis of the evidence. If so, that was not his task and the tenants’ submissions that he should not and could not have done that is correct. I do not think that is what he was doing. I think he was demonstrating that VCAT had found that the statement was a promise because of the form of words used, whereas what the law required was an objective ascertainment of the parties’ intentions from the totality of the evidence.
As Hospital Products makes clear, the form of a statement is a relevant matter,[232] but it is relevant only in the context of a determination of what the parties’ intentions were, as objectively ascertained from the totality of the evidence. The issue is not whether the statement is ‘about what Crown would do in the future’. The issue is whether the parties intended that a legal obligation would be imposed. That question cannot be answered merely by characterising what kind of statement it was. VCAT failed to undertake the enquiry which the law requires.
[232](1984) 156 CLR 41, 62 (Gibbs CJ).
A related error, which is a consequence of this first error, is that a conclusion was reached that the statement was a promise, and that it was sufficiently clear and coherent to create legal obligations, before VCAT determined what the content of the promise was. It is impossible to determine whether the parties intended a particular statement to impose a contractual obligation without identifying what obligation it was that was being imposed. Yet that is what the VCAT decision does.
To the extent that the trial judge reached his own conclusion as to the parties intentions, in my view he went beyond addressing any question of law. If this were the only error of law by VCAT the matter ought to have been remitted back to VCAT to be determined applying the correct legal principle. It is not the only error, however.
Meaning, certainty and illusory
The statement which VCAT found was made is not capable of bearing the meaning VCAT attributes to it.
The statement made was that the tenants would be ‘looked after at renewal time’. According to VCAT, that meant Crown was obliged to make an offer under cl 2.3(a). VCAT specifically found that that offer under cl 2.3(a) could be intentionally couched in terms which the tenant could not accept. Such a meaning cannot be given to a statement that the tenant would be ‘looked after’. A tenant might be ‘looked after’ by an offer under cl 2.3(a) or it might not. It depends entirely upon the terms of the offer. Indeed, the exclusive association with cl 2.3(a) in itself is unwarranted. A tenant might be ‘looked after’ by a notice under cl 2.3(b) if the period of occupation was long enough, or even under cl 2.3(c) if the tenant was, for example, offered compensation for fixtures and fittings left behind.
Further, the legal obligation as defined by VCAT is illusory. All Crown is obliged to do is to make an offer, which can be on any terms. If the law will not recognise an agreement to make a contract, it cannot recognise an agreement to make an offer in the absence of some specification or agreement as to the terms of the offer. If the absence of any specification or agreement on the terms of the offer is said to be met by a conclusion that the terms are entirely at the discretion of the offeror, the obligation is illusory.
The argument before VCAT and before the trial judge appears to have proceeded on the basis that authorities concerning contracts alleged to be uncertain because of discretions or options granted to one of the contracting parties were applicable. On one view, if one gives to Mr Boesley’s statement the meaning attributed to it by VCAT there is no element of uncertainty in this sense. All Crown has to do is give a notice under cl 2.3(a). That notice can be on any terms at all. On that approach the problem is not certainty, the problem is that that cannot be a contractual obligation. That promise is illusory. The trial judge correctly concluded that a collateral contract as found by VCAT was necessarily illusory and unenforceable.
Inconsistency
While it does not affect the outcome, I also agree with the trial judge that VCAT made an error on a question of law on the inconsistency issue.
Clause 2.3 required Crown to give notice that it would take one of the three specified steps. If the collateral contract existed, that choice of three was reduced to an obligation to take one. The trial judge was correct in deciding that the principle in Maybury v Atlantic applied to this situation.
VCAT distinguishes Maybury v Atlantic on the basis that cl 2.3 only provides for what would be the position in any event. In my view that is not a valid basis for distinguishing Maybury v Atlantic.The collateral contract would still affect to alter the provisions of the main contract even if that were so, but I do not consider that that is the position in any event. The steps provided for in cl 2.3 are not the only steps that would have been open to Crown had cl 2.3 not existed. They probably represent the principal steps Crown might have taken, but to suggest that they comprehensively cover the field of all alternatives which would have been open to Crown had cl 2.3 not existed is not correct. To take some obvious examples, a different overholding arrangement to that provided for by cl 2.3(b) might have been offered, or the tenant might not have been required to immediately vacate without any new lease or specific overholding arrangement being offered, or the tenant might have been required to vacate but not on the ‘Expiry Date’ as defined.[233]
[233]In this respect I do not overlook the obligation placed on landlords by s 64 of the Retail Leases Act 2003 to provide notice of a landlord’s intentions concerning renewal.
On the inconsistency issue, the authority said by the tenants to be ‘on all fours’ with this case, being the decision of the Court of Appeal of Queensland in Wright, does not assist them. In that case representations were made that licences would be renewed. Unlike here, the trial judge held there that the representations were that they would be renewed on the same terms. The written licences contained an overholding clause. Two of the three judges of that Court of Appeal held that the alleged collateral contract was inconsistent with the written licence agreement.[234] The third judge concluded that it was not.[235] The third judge’s conclusion was expressed, in my view, with some diffidence. The argument for consistency was stronger there than here. All members of the Court upheld the licencees’ estoppel claims, and two of the judges specifically rejected the argument that allowing estoppel claims in such circumstances subverted the principle in Hoyt’s Pty Ltd v Spencer.[236] As Jerrard JA observed, such arguments had been made and rejected in Waltons Stores v Maher itself.[237]
[234]Wright (2003) QCA 36 [6] (McMurdo P), [83] (MacKenzie J).
[235]Ibid [36] (Jerrard JA).
[236]Ibid [13]–[14] (McMurdo P), [45]–[55] (Jerrard JA).
[237]Ibid [45].
Finally, I turn to the issues of estoppel.
Estoppel
In my view the trial judge was correct in his analysis of the estoppel issues in the terms in which they were analysed by VCAT. There was an irreconcilable disconformity between the promise which VCAT found was made (to make a renewal offer under cl 2.3(a) on whatever terms Crown chose) on the one hand, and the understanding of the assurances he had been given upon which Mr Zampelis said that he relied (that he would be ‘looked after’ and would get a ‘further lease term’ of five years after the initial term) on the other.
The trial judge’s analysis of estoppel, in the terms in which VCAT had approached the issue, was correct. VCAT made an error of law because it failed to analyse or consider what the Tribunal had found as to what had been said to Mr Zampelis and as to what that meant.
But that is not the end of the matter. It is necessary to address the estoppel issue more widely than the narrow terms of VCAT’s conclusion on estoppel: the tenants’ pleaded case before VCAT alleged estoppel in wider terms; the VCAT finding was, in my view, expressed in wider terms; ground 8 of the proposed Notice of Appeal is also expressed in wider terms; and the trial judge permitted the tenants to rely on a Notice of Contention asserting that the VCAT orders should be upheld on the basis of estoppel.
The relevant VCAT finding was as follows:
The applicants have proved the matters which, in accordance with Brennan J’s well known formulation in Walton’s Stores (Interstate) Ltd v Maher, must be proved before a promissory estoppel arises. The applicants expected that there would be an offer of a renewed lease, at renewal time, that they would be free to accept. Crown’s collateral promise induced them to expect that. In reliance upon the expectation created by the promise, the applicants entered into five year leases with the ‘Major Refurbishment’ clause. Crown intended that they should so rely, because Mr Boesley made the crucial statement in the course of urging Mr Zampelis to return signed leases to Crown. The applicants suffered detriment when the expectation was not fulfilled, because they were required to vacate the lease premises and the value of the refurbishment was minimised. Crown failed to act to avoid that detriment. Instead it required the applicants to vacate.[238]
[238]VCAT Reasons [172].
The senior member said that all claims other than those based on the collateral contract had been abandoned. But it is clear that the estoppel claim was not abandoned. The claim was couched in terms of Crown being estopped from denying the collateral contract. This is the same as saying that Crown was estopped from resiling from the representation it had made, if that representation was not contractually enforceable.
Relevant findings made by VCAT in relation to estoppel are that Mr Zampelis held a reasonable belief that the costs of the refurbishments and a profit could not be recovered in five years, that a representation was made to him that he would be ‘looked after at renewal time’, and that he held off exchanging the leases hoping to obtain written confirmation that he would obtain a further five year term but that he eventually did exchange relying on the assurance which he had been given and realising that he was not going to get the written confirmation of a further five year term he had been hoping for.
The trial judge dealt with the relevant authorities on estoppel at some length and set out the applicable principles. I will briefly restate them. So far as they are relevant here, the relevant principles are as follows:
(a) A representation which is too uncertain to constitute a contractual obligation may found a proprietary or promissory estoppel.[239]
[239]Accurate v Koko Black [2008] VSCA 86 [178]; Flinn [1999] 3 VR 712 [80]–[95].
(b) It is essential to show that the statement was of such a nature that it would have misled any reasonable man (assuming it is later resiled from) and that the person to whom the statement was made was in fact misled by it.[240]
[240]Low v Bouveries [1891] 3 Ch 82, 106, 113 cited in Accurate v Koko Black [2008] VSCA 86 [133].
(c) 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 that ‘grey area’ and to act in reliance on it as so understood, the Court should regard the representation or promise as sufficiently certain up to this lower limit.[241]
[241]Sullivan [2006] NSWCA 312 [85] quoted and adopted by the trial judge: Judgment [91].
(d) Particular care needs to be taken to ensure that business people pursuing their commercial interests, who are fully aware of what is contractually agreed and what is not, do not have judges’ views of what is required by good conscience imposed upon their negotiated bargains.[242]
(e) Where a representation is made and relied upon so that it is unconscionable for the representor to resile, prima facie equity will give relief which compels the representor to perform or make good what was represented. This is not because equity is concerned to ‘enforce’ a non-contractual promise. Equity is not concerned to ‘enforce’ such a promise. Equity’s concern is with the unconscionable actions of the representor in resiling and with the detriment to the representee as a consequence of that unconscionable conduct. But this prima facie position is subject to the qualification that it is also necessary to do justice to the representor and to third parties who might be affected. The relief granted where promissory or proprietary estoppel is established must not operate so as to adversely affect third parties and must not exceed what can be justified by the requirements of conscientious conduct on the part of the representor. In each case the relief must be fashioned by reference to the particular circumstances of that case.[243]
[242]Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582, 585–6 (‘Austotel’).
[243]Giumelli v Giumelli (1999) 196 CLR 101, 120–25 [34]–[48]; Flinn [1999] 3 VR 712, 749–50 [119]; Sullivan [2006] NSWCA 312 [14]–[15], [18]–[37].
Here, Crown told the tenants that they would be looked after at renewal time. Neither VCAT nor the trial judge have addressed estoppel on the basis of the factual findings which VCAT made but by reference to the ‘lower limit’ of what was meant by ‘looking after’ the tenants at renewal. A claim couched in those terms is within the case that was pleaded and put at VCAT but has never been adjudicated upon. This is because neither party at VCAT contended for, or made submissions based upon, the limited representation which VCAT eventually found was made, and because the trial judge confined his analysis of estoppel to the terms in which VCAT had addressed the issue.
As no submissions have been heard upon the claim formulated in that way, it seems to me that the matter must be remitted to VCAT for this aspect of the tenants’ case to be ruled upon and determined.
Issues on remittal
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.
In Waltons Stores v Maher, the Court held that equitable estoppel yields a remedy in order to prevent unconscionable conduct on the part of the party who, having made a promise to another who acts on it to his detriment, seeks to resile from the promise.[244] The remedy is not designed to enforce the promise, although in some cases, the minimum equity[245] will not be satisfied by anything short of the enforcement of the promise.[246] In Waltons Stores v Maher ‘an estoppel was enforced by a landowner against an intended tenant in circumstances where there was no dispute as to the terms of the proposed lease agreement. There was no binding agreement because there had not been any exchange of executed counterparts of the contract. The assumption or expectation relied on was ‘directed to the completion of that exchange’.[247]
[244](1988) 164 CLR 387, 404–5 (Mason CJ and Wilson J), 419, 423, 427 (Brennan J).
[245]The expression ‘the minimum equity to do justice’ comes from Crabb v Arun District Council [1976] 1 Ch 179, 198 (Scarman LJ).
[246]Commonwealth v Verwayen (1990) 170 CLR 394, 428–9 (Brennan J).
[247]DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728, 738 [40] (Meagher JA).
In the present case, the facts are quite different. During the negotiations between the tenants and Crown, the tenants were seeking a further five year term at the expiration of the five year term that the parties had agreed to. Crown refused to agree. Further, we have held that the trial judge was correct to conclude that there was no contract collateral to the main contract that the tenants would be given a renewed term. In some ways, the case is analogous with Austotel.[248] In that case, the Court found that the parties had failed to agree on rental and, thus, held that there was no binding agreement for a lease. The Court (Priestley JA dissenting) also dismissed a claim that the landlord was estopped from denying the existence of an agreement for lease. As Kirby P said:
We are not dealing here with ordinary individuals invoking the protection of equity from the unconscionable operation of a rigid rule of the common law. Nor are we dealing with parties which were unequal in bargaining power. Nor were the parties lacking in advice either of a legal character or of technical expertise. The Court has before it two groupings of substantial commercial enterprises, well resourced and advised, dealing in a commercial transaction having a great value. As has been found, they did not reach the point of formulating their agreement in terms which would be enforced by the law of contract. This is not, of itself, a reason for denying them the beneficial application of the principles developed by equity. But it is a reason for scrutinising carefully the circumstances which are said to give rise to the conclusion that an insistence by the appellants on their legal rights would be so unconscionable that the Court will provide relief from it.[249]
[248](1989) 16 NSWLR 582.
[249]Ibid 585. Rogers A-JA said: ‘The deliberate gamble that the plaintiff had embarked on failed and it is not for equity to put the plaintiff into the position it would have been in had it never embarked on its gamble. The magnitude of the risk may not have been manifest but that is not the point. There is, in my view, a fundamental difference between a situation where the parties simply fail to address a question necessary for a complete and concluded agreement and the present, where there is a deliberate and conscious decision to refrain from coming to agreement on the term’: ibid 620.
However, it remains the case that the representative of Crown said to Mr Zampelis that, if the money was spent under the leases to achieve a major refurbishment to a high standard, he would be ‘looked after at renewal time’. In Giumelli v Giumelli,[250] Gleeson CJ, McHugh, Gummow and Callinan JJ discussed the fashioning of the remedy where there was an equitable estoppel. In particular, they referred to the principles that govern the remedy necessary to avoid the detriment. The flexibility available to a court in equity in fashioning a remedy in equitable estoppel was discussed by this Court in Donis v Donis.[251] In that case, Nettle JA (with whom Maxwell P and Ashley JA agreed) spoke of the need to ensure that the remedy did not go beyond what is required for conscientious conduct and should not do injustice to third parties. He said:
As the more recent decision in Giumelli v Giumelli shows, however, there is no such restriction in cases where the expectation which is encouraged is the acquisition of an interest in property. In such cases the remedy relates to the understanding of the parties and the expectation that has been encouraged. Prima facie the estopped party can only fulfil his or her equitable obligation by making good the expectation which he or she has encouraged. The estopped party, having promised to confer a proprietary interest on the party entitled to the benefit of the estoppel, and the latter having acted upon the promise to his or her detriment, is bound in conscience to make good the expectation. It follows that the detrimental reliance that supports the estoppel need not constitute in any sense a consideration moving to the party bound. It is a unilateral element of the estoppel and not the price paid for it.
The prima facie position will yield to individual circumstances. Principle and authority compel the view that where a plaintiff’s expectation or assumption is uncertain or extravagant or out of all proportion to the detriment which the plaintiff has suffered, the court should recognise that the claimant’s equity may be better satisfied in another and possibly more limited way. Thus, as was also said in Giumelli v Giumelli, before granting relief the court is required to consider all of the circumstances of the case, including the possible effects on third parties, and to avoid going beyond what is required for conscientious conduct or would do injustice to others. But that does not mean that the court is required to be “constitutionally parsimonious” or that it is necessary for there to be substantial correspondence between expectation and the monetary value of the detriment suffered, or which but for the relief to be accorded would be suffered. The object of the exercise is to do equity and for that purpose ‘detriment’ is no narrow or technical concept. It need not consist of expenditure of money or other quantifiable financial disadvantage so long as it is something substantial. The requirement must be approached as part of a broad inquiry as to whether departure from a promise would be unconscionable in all the circumstances.[252]
[250](1999) 196 CLR 101.
[251](2007) 19 VR 577.
[252]Ibid 582-3 [19]-[20] (citations omitted).
In the present case, to require Crown to provide a renewed lease would be to do more than is necessary to avoid the detriment. However, VCAT failed to consider the least that could be done for the tenants consistently with the representation that they would be looked after at renewal. That enquiry would involve an analysis of what Crown should do to relieve them from the detriment they have suffered because Crown resiled from its representation. It is not for this Court to determine what that might be.[253] It would not require the entry into a renewed lease, the right to which was expressly refused in the negotiations for the original lease. It would not involve some surrogate for such a renewed lease such as
the profits that might have been earned under a renewed lease.
[253]Osland No 2 (2010) 214 CLR 320, 332-3 [20].
Conclusion
I would grant the applicant leave to appeal but dismiss the appeal on all grounds save for ground 8. I would order that the estoppel claim be remitted for determination by VCAT.
SANTAMARIA JA:
I agree with Whelan JA.
13
55
0