Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd & Anor

[2016] HCATrans 103

[2016] HCATrans 103

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M253 of 2015

B e t w e e n -

CROWN MELBOURNE LIMITED ACN 006 973 262

Appellant

and

COSMOPOLITAN HOTEL (VIC) PTY LTD ACN 115 145 198

First Respondent

FISH AND COMPANY (VIC) PTY LTD ACN 115 145 134

Second Respondent

FRENCH CJ
KIEFEL J
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 5 MAY 2016, AT 10.16 AM

Copyright in the High Court of Australia

MR B.W. WALKER, SC:   May it please the Court, I appear with my learned friend, MR N.D. HOPKINS, QC, for the appellant.  (instructed by Minter Ellison Lawyers)

MR M.R. PEARCE, SC:   If the Court pleases, I appear with my learned friend, MR R.S. HAY, QC, for the respondents, who are applicants for the cross‑appeal.  (instructed by Mills Oakley Lawyers)

FRENCH CJ:   Yes, Mr Walker.

MR WALKER:   May it please the Court.  May I commence by taking your Honours to the heart of the matter concerning what might be called the legal relation to which the estoppel, if any, would speak.  In the appeal book, page 79, clause 2.3 appears at about line 30.  It appears immediately after 2.2, which stipulates an expiry date, and by reference to that expiry date in a stipulated period beforehand, requires – the word is “must”:

the Landlord [to] give notice . . . stating whether –

(a), (b) or (c).  Subparagraph (c) is what might be called the usual or ordinary or default position of any expiry date, namely, the landlord is entitled to retake possession.

FRENCH CJ:   This is a dispute under a retail lease because it impacts upon the exercise of those choices?

MR WALKER:   Yes, it is, and this is a form of covenant adapted from and going slightly further than what a statute requires.  That is of no moment to the analysis that we put forward about the estoppel.  Working backwards, (b) was within the landlord’s option in this required notice, namely to permit might what once have been called a holding over on a monthly basis.  Then (a), I stress an option not required to be taken, but one of the three choices from which one had to be taken was to, what is called, renew this lease.

It turns out from the words immediately following that that is an extremely bald and uninformative way of describing the content of the notice in that regard.  In ordinary commercial negotiations renewing a lease by dint of needing to identify the subject matter, namely the lease, will usually be saying something about continuation of terms, for example.  But one sees from the words that follow in 2.3(a) that that was not so, that renewing the lease is a concept which, between these parties, as a matter of inexorable reading of their language, left it to the landlord to stipulate in this notice on what terms the renewal would follow and one finds nothing in that provision to distinguish between some terms and other terms.  In some terms it might be commercially more important than others, such as for example, rent.

In short, all terms were at large in 2.3(a) as to how they would be stipulated in this 2.3(a) notice if the landlord chose option (a).  One sees as well some significance, bearing in mind the commercial way in which the tenants put their case in the Tribunal, that the non‑exhaustive examples of the terms that might be stipulated under 2.3(a) notice included a requirement to refurbish premises and, of course, that would include the terms upon which that refurbishment must proceed, such as, for example, replicating or even rendering more stringent, the requirement that it proceed according to the landlord’s requirements and approval.

But, one finds also – oddly, in relation to a lease which is, of course, that which creates an estate in particular land or premises – one finds that the terms of the so‑called renewal of the lease might also be stipulated in such a notice as applying to different premises altogether.  That is the state of affairs – the pre‑existing relationship, to use the language of the jurisprudence of a promissory estoppel – against which is to be measured the contentions which have produced the rather striking outcome in the Court of Appeal to which I will come but not immediately.

I stress that these are terms which, as your Honours have seen from the facts found, were agreed to by a process that began in early 2005, then looking forward to the expiry of the previous terms, which was due on 7 May 2005.  There was what I will call commercial negotiation which fixed upon the new leases to commence on 1 September 2005 on stipulated terms which include those you see at page 79 of the book.  On 22 July 2005, that position was accepted by Mr Zampelis on the part of the tenants “unconditionally”. 

The forms of lease were not only – were executed by the tenants in November 2005 but were not actually returned until later.  In between their execution and their return to Crown, first Crown was informed of the fact that they had been executed, and second, there was made the statement which assumes the capital “S” in the reasons below upon which the whole of the case which I am addressing in my case in‑chief in this Court turns.  May I take you immediately ‑ ‑ ‑

KIEFEL J:   Just before you do, Mr Walker, in the period up till March when the leases are returned executed has it been accepted throughout that the possibility for a representation to operate and for detrimental reliance to operate throughout that period - I gathered that there was some issue about whether or not ‑ ‑ ‑

MR WALKER:   There was.

KIEFEL J:   ‑ ‑ ‑ because of the email unconditionally accepting that the contractual position had been completed at the particular point.

MR WALKER:   That is right.

KIEFEL J:   But thereafter there seems to be a tacit acceptance that it was open for a representation to operate.

MR WALKER:   I do not think it was tacit acceptance.  It was contested but I am bound by findings of fact that there was not a binding – let me backtrack and this is, as it were, against my client.  There were dealings after my client was informed that the forms of lease had been executed which included the delivery of what is plainly a commercial ultimatum:  “Return the leases or you’re out!”  No doubt, that is the basis upon which it has been held against us factually, thus not open for me to revisit in this Court.

That it was possible for the capital “S” statement made when it was to have induced the conduct of returning the executed leases so as provide the footing for an estoppel argument, we had argued what I might call the impossible temporal sequence, that you cannot be induced to do something when then thing you have done preceded the alleged inducement.  But it is not open to us now in this Court, as I apprehend the findings of fact against us concerning those dealings including that ultimatum.

It is a matter I think at most for raised eyebrows rather than an issue which I am permitted to raise in the complaint we have about the Court of Appeal’s dealing with Justice Hargrave’s conclusions about the questions of law involved on the facts fully found.

GAGELER J:   Is the only detrimental reliance with which we are concerned the returning of the lease so as to enter into the lease contract?

MR WALKER:   Yes.

NETTLE J:   Is it not also the expenditure on the refurbishment work?

MR WALKER:   Yes, but that is encompassed in the return of the lease which obliged the refurbishment to go through.  No more the expenditure on refurbishment, your Honour, than the payment of rent or the performance of any other covenant on the part of the tenant.

GORDON J:   Is that right?  Is it not the position that they obtained finance to secure the refurbishment in addition to the payment of rent?

MR WALKER:   Unquestionably so, but the ‑ ‑ ‑

GORDON J:   Is that not additional detriment?

MR WALKER:   No, it is part and parcel of the performance of the covenants required on the part of the tenant which included the refurbishment.  That was no doubt commercially what I might call a headline item but it is not additional in any relevant sense.  It all just came about because of the covenants accepted on the part of the tenant.

NETTLE J:   I just noticed some of the evidence given by the fellow, I cannot remember his name, Zampelis, that said he would have spent many less millions of dollars that in fact he did had he known he was only to have a five‑year term.

MR WALKER:   I think one has to be careful, with respect, about those matters on two grounds.  The first is that Mr Zampelis’ evidence is by no means all accepted in the Tribunal.  That is the first thing.  The second thing is that the refurbishment is to landlord’s specification, not at the whim of the tenant and so ‑ ‑ ‑

FRENCH CJ:   When was the refurbishment work commenced?

MR WALKER:   They were ‑ ‑ ‑

NETTLE J:   January.

GORDON J:   On 8 January, I think.

MR WALKER:   Yes.  They were commenced before the statement.

FRENCH CJ:   That is what I wondered, yes.

MR WALKER:   Yes.

FRENCH CJ:   Because the statement was 6 December, was it not, on the findings?

MR WALKER:   Yes.  Could I go to the statement?  I am sorry, I have just misspoken.  The statement precedes the commencement of the work ‑ ‑ ‑

NETTLE J:   By about a month.

GORDON J:   By a month, is it not?

MR WALKER:   Yes, by a month.  The businesses closed down for refurbishment.

FRENCH CJ:   Yes.

MR WALKER:   The statement was made, according to the Tribunal, page 196, paragraph 84, probably on 6 December 2005.

FRENCH CJ:   Yes.

MR WALKER:   Could I take you to that, page 196, paragraph 84, about line 30 of the Tribunal’s findings.  Mr Boesley on behalf of Crown:

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” –

Now, the use of quotation marks there reflects what I will call the survival of a witness statement version after cross‑examination.  Continuing:

and that the leases had been limited to a five year term only because they would thereby be aligned with other tenants’ leases.

Then the Tribunal, not accepting the whole of the tenant’s evidence, goes on:

not satisfied that Mr Boesley spelt out specifically a phrase like “the further lease term” or “a further term”, because Mr Craig’s note –

the bank’s note –

did not include such a phrase.  Nor am I satisfied that Mr Boesley said anything about the Williams family or about “boys at the top”, in Mr Robertson’s words.

Then in paragraph 85, what might be called rather strongly, corroborative evidence offered by Mr Zampelis was rejected.

Could I then go, in the same reasons, to page 206.  At the foot of that page in paragraph 133 and following, the Tribunal turns to the question of the promissory character of the crucial statement as it is there called for the purposes of a collateral contract argument, which is obviously not itself in terms part of what we are aiming at in my address in‑chief but there is significance obviously in the consideration by the Tribunal of clarity or certainty for the purposes of a contractual question, for the purposes of the Legione v Hateley proposition upon which our estoppel argument very largely turns.

In paragraph 134 on page 207 of the appeal book, the much more difficult question of clarity and coherence so as to be capable of contractual force is turned to by the Tribunal that immediately adds, in amplification of that difficulty:

For I have not found that he expressly stated that Crown would renew the leases, or would give notice to the applicants that Crown would renew the leases.

That is obviously a reference to 2.3:

I have found only that he said that Mr Zampelis would be looked after at renewal time.

In 135, understandably, the Tribunal starts by finding that that phrase considered in isolation is vague, but of course, it is not to be considered in isolation.  Then, just selectively reading:

The leases to which the applicants were being asked to bind themselves specified a fixed term of five years . . . contained the “major refurbishment” clause that created a very significant obligation . . . if they committed themselves –

Clause 2.3, the obligation to give the notice that I have taken you to, and then the finding at line 30:

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.

So that, of course, is a promise, which is obviously inconsistent with the option given to the landlord by clause 2.3 itself.  Options (b) and (c) are eliminated, and option (a) is no longer an option, but is a compulsion.  The Tribunal then says, having so reasoned, that:

Accordingly . . . the crucial statement was sufficiently clear and coherent ‑ ‑ ‑

NETTLE J:   Why is it inconsistent with the options conferred by 2.3?  After all, it gives the landlord the options to do 1, 2, or 3 – or (a), (b) and (c), to be more precise.  Why is a collateral promise to exercise option (a) inconsistent with there being three options?

MR WALKER:   The terms between the parties oblige the landlord to notify which of (a), (b) or (c) will apply ‑ ‑ ‑

NETTLE J:   I follow that.

MR WALKER:   ‑ ‑ ‑ which gives a right to the landlord to choose (b) or (c), and not to be bound to (a).

NETTLE J:   Can he not collaterally promise that “I will exercise (a)”?

MR WALKER:   By variation, yes.

NETTLE J:   Why variation?  Why is it not “I will exercise the power that I have under (a)”?  Why is that inconsistent with it?

MR WALKER:   In a contractual analysis, in our submission, your Honour, that is because the collateral contract, in consideration of my agreeing to enter into the contract which gives me (a), (b) or (c), I will promise not (b) or (c), only (a).  That, in our submission, is self‑evidently inconsistent because under the main contract there is a choice of (a), (b) or (c), and under the collateral contract there is no choice of (a), (b) or (c).  That is plainly, both commercially and logically, inconsistent.

FRENCH CJ:   Do you say that is the same kind of inconsistency as in Hoyt’s?

MR WALKER:   Yes, precisely so.  The way in which such a cutting back of option, removal of option, and a sole possibility which would be translated in commercial terms to a guaranteed right of first refusal - it is not an option, obviously, because the terms are left to the landlord’s choice; it is a right of first refusal - that, of course, could be created by a variation of the contract and the way in which inconsistent promises can be – one promise inconsistent with another promise can be substituted is by a variation. 

The difficulty with applying it by way of a collateral contract where the consideration is the entry into the main contract and that is the only way it could be construed here is that from the outset, not by way of a subsequent variation, but from the outset the promise contradicts that for which it is given in consideration. 

Now, that is the principle in Hoyt’s v Spencer.  It is a simple principle.  It is a robust and sensible one.  It drives analysis to an equally robust and sensible area of discourse, particularly in commercial life, but in any contractual dealings that where it is accepted that there was a state of affairs where the promises were in a particular form that that may be altered contractually by a variation for which, as this Court has pointed out in its discussion of waiver in ARF v Gardiner, you will look in the ordinary case for consideration in the ordinary way which, of course, is how, as your Honours I am sure appreciate from practice, that is how people conduct themselves, they vary contracts.

This is a case where there is no suggestion of anything that resembled a variation of a contract.  Rather there was an ultimatum delivered:  deliver the executed lease in the form where 2.3 appears with options (a), (b) or (c).  It is said, in a case that I am now arguing but as I said it is not really part of my address in‑chief, it is said in the application for special leave to cross‑appeal that the courts below were wrong in rejecting a collateral contract. 

No, we say, and this is, if you like, an anticipatory answer to special leave application, they applied ordinary doctrine in a plain case for its application in a way that does not show any error at all.  The inconsistency is clear.  The case not being a variation, in our submission, falls away. 

For the estoppel purposes, I stress, I am going to this collateral contract part of the Tribunal reasons which did not survive the challenges we mounted before Justice Hargrave.  I am going to that simply because of what it says about the certainty and what it says incidentally about what might be called the reasonable understanding of the statement – the crucial statement, the representation. 

FRENCH CJ:   I suppose the logical point underlying Justice Nettle’s question, but it goes to Hoyt’s and so forth, is whether it is truly inconsistent to have a collateral contract which says you will exercise a power or a choice under the main contract in a particular way.

MR WALKER:   Quite.  I accept that where an option – that is an unfortunate word given the kind of dealings we are talking about – where a choice is stipulated between contracting parties to be given to one of them, I accept that it is certainly not inconsistent in a Hoyt’s v Spencer sense for one of them to say I promise I will exercise that choice in the following way.  It may be very early, as an announcement of a choice but it would not be inconsistent, it would be to carry out the executory promises between the parties.  I have this choice.  I promise you I will exercise it thus. 

Now, if there is a consideration for that promise, it will be enforceable itself as a contract.  There may be other modes including, as it happens, estoppel, to which I will come, that might have supported that analysis.  This is how I will exercise that choice.  The difficulty, of course, is first that that is not how the case was mounted, and there are not findings of fact to that effect – I will have to come to that – but there is a substantive difficulty, impossibility for the tenants in this case that at no stage did the crucial statement say how option (a) would be exercised. 

Option (a) is not – I stress it is not an option.  It is a right of first refusal of terms to be stipulated.  You do not perform choice (a) – you do not make choice (a) unless you stipulate terms.  That is how you exercise choice (a).  That was never done and ‑ ‑ ‑

KEANE J:   If one had written in to this lease document near, or indeed, far from clause 2.3, a provision that said “At renewal time the tenant will be looked after” that would not mean that the landlord was obliged to give the notice.

MR WALKER:   No.  No, absolutely not.  If you look at the commercial possibilities covered by choices (a), (b) and (c), they do not exhaust the ways in which a tenant might be looked after.  Commercial opportunities elsewhere, for example, obviously excited as a possibility by the very reference – non‑exhaustively in choice (a) – of moving to other premises, that could, of course, be off‑site as well, for example.  So there are many ways in which a tenant might be looked after in commercial terms.  A tenant might be looked after in commercial terms by a landlord stipulating for a new incoming tenant to make a premium payment on account of still valuable refurbishment, for example.

KEANE J:   Or to reimburse ‑ ‑ ‑

MR WALKER:   Quite so.

KEANE J:    ‑ ‑ ‑ for the refurbishment that had not yet been recovered.

MR WALKER:   Sorry, that is what I meant – that a landlord could look after a tenant by saying if you do not get to use this refurbishment because I would really rather prefer to have a superior operator in a revamped set of premises, that is, revamping of the whole mix of tenancies, then one might look after a person in that position by extracting from the incoming tenant a payment that could be passed on to the outgoing tenant on account of what I might call unrecovered expenditure.  I do not want the spectre of unrecovered expenditure to play any real part of this argument. 

KEANE J:   Well, your client – sorry, your opponent ‑ ‑ ‑

MR WALKER:   There is no finding of it.

KEANE J:   Your opponents did not pursue it?

MR WALKER:   No, no, quite.  Findings of fact for the purpose of the damages matters, which is not before this Court, do not support any such proposition.  So those are matters which, when these leases were entered into, were available to the landlord and they included the capacity, I accept, to tell the tenant this choice I am given by 2.3, I promise you I will exercise it in a particular way.  That did not happen.

That is why, when one looks at 2.3, the true character, correctly understood by the Tribunal and courts below, of the somewhat changeable case made by the tenants is not that choice (a) was being exercised – they could never say that because no terms were put – but rather that choices (a), (b) and (c) were, as it were, comprehensively substituted by a promise for a five‑year further term on the same terms.  I will come to that.

As you know, that was modified somewhat in response to what might be called the pressure of reality to the alternative, a further five‑year term – and I stress a five‑year term; not four, not three but a five‑year term – on the same terms but mutatis mutandis.  Now, the difficulty with the Latin is that the gerundive begs the question, well, what needs to be changed - start dates and expiry dates, yes, but what else?  Refurbishment obligation?  We know that is something that, according to choice (a) was open to, was explicitly recognised as being among the terms “open to stipulation unilaterally by the landlord” and then there is the obvious one upon which all questions of financial return will no doubt depend and that is rent. 

What does “mutatis mutandis” mean in relation to rent?  Does it mean you go back to the rent level at the first year of the expiring term or does it mean that you have a review to mark it?  Does it mean that the landlord can set the lease rent, because after all that is what the landlord did the first time around.  They just set the rent; they did not submit the rent to a valuer to set the rent at the beginning of the expiring term. 

So would “mutatis mutandis” mean the landlord is entitled to set it at whatever the landlord likes or does it mean that you take the result of the fourth six per cent escalator stipulated in the expiring lease and treat that as a start point or do you add another six per cent?  None of that was of course covered or even suggested in terms of being covered in commercial or legal terms by the so‑called crucial statement.

It is for those reasons that when one considers 2.3 and sees that it stipulates for this notice to be given not more than 12 months before the expiry date that the idea that this was a promise as to how that choice would be made is dismissed because it did not say how it would be made, but it is also impossible to see the crucial statement as one which was consistent with a right of the landlord to consider which of (a), (b) or (c) the landlord would choose and, if (a), what terms the landlord would stipulate at a period then lying four years in the future.

FRENCH CJ:   So, the inconsistency arising here between the statement and 2.3 is, on your contention, closer to the core meaning of that term than the sort of case that applied in Hoyt’s, where it was “we will not terminate”.

MR WALKER:   That is right; quite so.

FRENCH CJ:   That was a promise not to do something, which was clearly delineated under the contract.

MR WALKER:   That is right.  I accept that inconsistency requires an analysis which focuses attention on what is the content of the rights and obligations in what I will call the main contract, and what is the effect on those rights and obligations by the putative collateral contract.  If they are altered in a way that is material – and in this case, detrimental to one of the parties, the landlord – then it is obviously open to the landlord to say, and a court should find, that there is an inconsistency.

The materiality, of course, is obvious in this case, if one takes the height of the case against us in collateral contract.  Now, that is a case that failed and is not yet before this Court, it requires special leave, and I will not say more about the collateral contract case as a case.  In terms of the nature of the statement, however, it is important then to come to the way in which the Tribunal understood the matter.  A transitional position is in paragraph 137 at the foot of appeal book 207.  You will see there recorded that the collateral contract was to renew each term:

on the same terms and conditions –

and then in final address, a movement somewhat away:

on the same terms and conditions, mutatis mutandis –

recognising what might be called “commercial reality” about dropping the rent.  Then, can I come to paragraph 139 on page 208 of the book.  The Tribunal points out:

the noteworthy thing . . . is the freedom that Crown had to dictate the terms and conditions . . . out of the tenant’s power to agree to anything other than –

that is, the only offer to be made would be the landlord’s offer:

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 stipulation of unreasonably onerous terms . . . would jeopardise Crown’s tenancies generally.

Whether or not that is true or matters, then it can be passed over in this Court.  Then, there are statements which are difficult to reconcile with other statements by the Tribunal, to which I will come:

One would expect –

and I think this probably should be read as nearly predicative, rather than finding of a legal stipulation:

a notice of renewal to stipulate terms and conditions that had reasonable correspondence with terms and conditions that had appeared in the lease –

because 2.3(a) does not say any such thing ‑ ‑ ‑

KEANE J:   This is sort of imputing some sort of standard, quite independently of any representation that is made.

MR WALKER:   Yes, which the Tribunal, to be fair to the Tribunal, really is at pains to point out, in passages to which I am coming.  The point is that the way in which terms could be ascertained with certainty – and here, there is, with respect, a true but trivially true proposition, because what follows shows the Tribunal is saying certainty can be given by the stipulation.  You will know what it is when you know what it is.  But, of course, the relevant time for certainty to be adjudged is at the time where the so‑called “crucial statement” is made, and the crucial statement does not say anything about the terms.

This is the significance of the inconsistency that we identify because an obligation to state terms and whatever you choose them to be is obviously different from a choice to have nothing to do with such a negotiation and simply to put them on a monthly tenancy or to ask them to leave.  That is the inconsistency.

The qualification that is expressed by the Tribunal is, with respect, we think a dead letter now in this Court.  I may be wrong but it is, on any view of it, a mark of error.  The qualification expressed is that:

A notice that it would “renew” a lease, as clause 2.3 empowered it to give, implied as a matter of law –

it is not clear what jurisprudence is being employed here, the notice is not a contract:

that the renewed lease would be for the same term (five years) as the lease being renewed.

That, with respect, may be good for a commercial negotiation to and fro between businessmen but it has got nothing to do with that which is stipulated by clause 2.3(a) with the liberty it gives, as otherwise recognised by the Tribunal, to stipulate the terms.

NETTLE J:   Does it not just come out of the words “renew this lease” in 2.3(a)?

MR WALKER:   Yes, it does and that is why I was at pains earlier to point out that “renew lease” is immediately given a special meaning between these parties because the words that follow show that all those things that make a lease, which is the grant of an estate over land, even that is not guaranteed because it could be different land.  The terms – and it does not exclude rent or duration.  It does not exclude the covenants that would be cost recovery.  It does not exclude refurbishment.  All of those things are – to use the colloquialism – “up for grabs” at the unilateral choice of the landlord.

The Tribunal, with respect, does not explain why of all of that one, the duration, would not be.  It just does not say so at all.  Bearing in mind that one of the possibilities was a monthly tenancy holding over, it stands to reason, commercially, that something less than five years – or something more than five years – of course, might be on the cards by a landlord who had earlier explained their position for these leases as being driven by the external circumstance of wanting to have the termination of several tenancies coincide.  In other words, market dynamic future conditions in relation to how one is exploiting these overall premises – obviously, the purpose of the landlord having the wide discretion given by 2.3(a).

GAGELER J:   Mr Walker, is the result then that the words spoken to the effect that the landlord would look after the tenants at the time of renewal are to be read – or to be understood as a promise in terms recorded at page 207, line 30 to the effect that a notice would be given by the landlord?

MR WALKER:   We say, no. 

GAGELER J:   I see.

MR WALKER:   We say it does not mean that.

GAGELER J:   But, you accept that finding of fact, I understand.

MR WALKER:   I accept the finding of fact – not that finding of fact.

GAGELER J:   You do not accept that finding of fact?

MR WALKER:   No.  It is not open, as a matter of law, to say that a reasonable of person could reach that position.

GORDON J:   Is that because on a question of estoppel one looks at it from the subjective understanding of the person who is the recipient of the representation?

MR WALKER:   Now, partly, yes.

GORDON J:   What is the other part of it?

MR WALKER:   Because we know that Mr Zampelis never said any such thing.

GORDON J:   No, no.  I understood that one of the first questions was what is the subjective understanding of – yes.

MR WALKER:   Yes, and your Honour asked me to jump to the estoppel matter.

GORDON J:   No, I was trying to understand why it was that in this context you do not accept that finding.  Is that in the estoppel question?

MR WALKER:   In the estoppel question there is no finding that Mr Zampelis understood that at all.  We know what he understood and that the courts below dealt with that and I will be coming to that.  In short form, it was five years and, according to his counsel, on the same terms or mutatis mutandis.  We say, as a matter of law, those words are incapable of conveying to a reasonable person that meaning.

GAGELER J:   I am not asking about that, I am really just asking about the finding of fact in the second last sentence at paragraph 135 to which you drew our attention.  Do you accept that as far as it goes?

MR WALKER:   No, we say that is not open as a matter of law, that the crucial statement cannot bear that meaning “you will be looked after”.

NETTLE J:   Even in the context in which it was uttered?

MR WALKER:   Even in the context in which it was uttered.  Now, if it bore that meaning it would go no further than what 2.3(a) says, and 2.3(a) says you need to set out the terms.

GAGELER J:   But it would go this far, would it not, it would go to the point of saying 2.3(a) will be exercised.

MR WALKER:   That is why earlier in answer to Justice Nettle, in particular, I accept that there would not be Hoyt’s v Spencer inconsistency with a promise between parties about one of them having choices, that one of them agrees that the choice will be exercised in a particular way.  Far from being an inconsistency that is, as it were, an anticipatory performance of the position.  But that is not what happened in this case.  That is, there was no exercise – you cannot exercise 2.3(a) without stipulating terms and there is nothing which a tenant can accept by a landlord that says I will do 2.3(a) – I have 2.3(a), (b) or (c) and four years from now I have to exercise that.  I cannot exercise it now because we have agreed between us it cannot be done more than 12 months before the date.  But I tell you that come the time that is how I will exercise it.

That does not mean, obviously, that there will be any particular terms as to duration, rent, refurbishment or, indeed, even premises.  It is for those reasons, in our submission, that it goes nowhere as a collateral contract – I really should not be talking about that now ‑ but, in particular, it goes nowhere as an estoppel because it does not provide any of the terms which, according to the difficult to understand remitter that we have suffered ‑ ‑ ‑

NETTLE J:   I suppose that is right, if we are confined to Legione v Hateley estoppel, but what if it were a Ramsden v Dyson estoppel, it would not matter too much.

MR WALKER:   Well, it never was argued as a Ramsden v Dyson estoppel.  That is a controversy between the parties but that is our simple statement and we have shown in our written submissions why that is so.  That is the first thing.  The second thing is that doctrinally, with respect, your Honour is correct – different - and there is a reason in principle why that is so. 

Promissory estoppel operates in the same zone as variations of contract operate and, for the reasons well brought out by the authorities quoted by Justices Mason and Deane in Legione in the famous passage, it is just not possible, without suffering a crippling incoherence in the law, to suppose that that which could not vary can have the effect of varying, whereas on the other hand, proprietary estoppel - Ramsden v Dyson and Dillwyn v Llewellyn, for example, involve dealings which include the engendering of assumptions about a piece of land in a way where, as decisions in this Court and in courts below this court in this country show, over the last 50 years, there is a wide range of nuanced possibilities, very rarely, only one uniquely correct as a matter of decision, by which the equity can be satisfied.

That is because we are not there talking about an estoppel to support what might be called a proto‑contract to create an interest in land but rather assumptions which may be of a general kind, such as you can live here forever, which can be satisfied in a number of different ways in light of circumstances that obtain at the time of the remedial decision. 

So that there are differences, large differences in principle which support the care that most judges in this country that have looked at the matter, as we have sought to review in our written submissions, which supports the care that is the subject of self‑directions by their Honours to identify what the case is:  what kind of estoppel is being talked about, not least because promissory estoppel, for the reasons that Justice Handley has pointed out in the authorities we have cited in our written submissions, ought to be understood as preternaturally or, in its paradigm application, and probably always, I do not need to go to the last point, as being negative in substance and not capable of conveying something positive.  In other words, it requires a constraint to be applied by the court on the exercise of a right, query a liberty, by a person by reason of dealings that person has had with another which have an effect in conscience.

KIEFEL J:   I know that you may view the matter on the basis that there is a need to distinguish between proprietary estoppel and promissory estoppel because some of the cases which were referred to below are not promissory estoppel cases ‑ ‑ ‑

MR WALKER:   That is right.

KIEFEL J:   ‑ ‑ ‑ but the findings here do not take us into the realm of proprietary estoppel at all.

MR WALKER:   No, they do not.  We might be at fault here, historically, because the Statute of Frauds was invoked but there was no question relevantly, certainly the crucial statement is not one which purports to dispose of an interest in land.  As I say, the commercial term for it is that according to the tenants, they were promised a right of first refusal.  They were promised a first refusal and the first refusal obviously is not plainly something that in itself creates an interest in land.  That follows next in the sequence, that is, whether it is accepted.

So it is for those reasons that probably notions of proprietary estoppel may have been raised later in argument, but as Justice Kiefel has pointed out, there is in fact no element of the dealings here which give rise to anything recognisable from the principles discussed in Ramsden v Dyson.  There is no element of an interest in the land, which, in any of the broad senses that may be understood remedially in proprietary estoppel, was at question in this case.

KIEFEL J:   But do you say that there is an aspect of the reasoning in the Court of Appeal which assumes an obligation to make good a promise so that there is a kind of crossover between the two?

MR WALKER:   Yes, I do, very much so.  If I may refrain at the moment from going to that very passage – I will be there fairly soon.

NETTLE J:   Could I just clarify that last point about Ramsden v Dyson, why it does not apply.  It is because the expectation of the tenant was not that he be granted a further term but simply a right of first refusal.

MR WALKER:   That is correct and on any view that is how – there has been a bit of revisionism in the way in which the tenants put the case.  I do not want to dwell on that but it suffices to say at no point do you see a Ramsden v Dyson plea.

KEANE J:   It would be a large thing – it would be a large step to have the conscience of the lessor being bound otherwise than by a promise to grab the term because one would not have to have an equity established in favour of a lessee ready, willing and able to perform the obligations of the lease.

MR WALKER:   That is right.

NETTLE J:   But it is not lack of certainty at the end of the day that you nail your colours to the mast to on Ramsden.  It is because the expectation was not one of a further term but simply a right of first refusal.

MR WALKER:   That is right.  If this had been a Ramdsen v Dyson case, would we have relied or would I now be relying upon lack of certainty?  The answer is yes, but I would dress it up differently – that is, it would be not a Legione v Hateley doctrinal point, which has a principled core because of the operation vis‑à‑vis a contract or a pre‑existing relationship.  That is why in principle that rule, the first that Sir Anthony and Sir William talk about, is so important.

If this was a Ramsden v Dyson question, it would be rather whether the promise was such as to have justified the depth or scope of assumption or expectation presumably relied upon in such a hypothetical case.  So it would still be looking to what I will call vagueness, but it would not be couched in Legione v Hateley terms.  But the answer to Justice Nettle’s question remains no, this is not a Ramsden v Dyson case because it was not and could not be a case about an interest in land.

And although I have said there is a controversy at the Bar table about whether this case was ever argued as proprietary estoppel ‑ we say this by way of, as it were, challenge from the Bar table to our friends – it is not possible to show that the case was ever presented as a Ramsden v Dyson case.  It is possible to show, for the reasons that I think Justice Kiefel has raised with me, that there creep in some elements of conceptualising in particular the consideration of a remedy that might be seen to derive from proprietary estoppel cases rather than from promissory estoppel cases.  I will come to that when it comes to this explanation for the remitter by the majority in the Court of Appeal.

Your Honours, I need then simply to point out paragraph 140 at the foot of page 208 in the Tribunal.  The “agreement” that the Tribunal puts in inverted commas is that which would have, on this false reasoning, the requisite certainty or clarity.  Again, it comes down to the true, but trivially true, proposition that if somebody states certain terms, then they have stated certain terms.  One thing that is clear is the statement did not do so.  The Tribunal is illegitimately looking ahead to a notice stipulating terms as envisaged by 2.3(a).  Paragraph 141 is noteworthy for the self‑destruction it practises by its last three words:

reasonable person would have concluded that the promise (to give a notice . . . carried with it the consequence that the terms and conditions . . . would be those specified in the notice, whatever they were.

That is a mark, of course, of the complete lack of certainty with respect to what I will call future relations between the parties – that is what promissory estoppel is concerned with.

GAGELER J:   Mr Walker, this is probably just rephrasing a question I asked before, but do you accept that statement in the sentence you have just read as a finding of fact, so far as it goes?

MR WALKER:   No.  The finding of fact is what the words were - “you will be looked after”.

NETTLE J:   …..

MR WALKER:   Exactly.

KEANE J:   On any view, this is not a finding about what the parties did.  This is an attribution or an imputation of a reasonable basis on which matters might proceed.

MR WALKER:   That is right.

KEANE J:   Whatever else it is, it is not an inference of fact.

MR WALKER:   No, no, no.  It is then a question of law as to what that is capable of bearing – that is a question for the judge as a matter of law as to what that is capable of bearing, in precisely the same way as one looks at conversations supposed to create a contract, and asks whether, for example, there is correspondence, offer and acceptance, sufficient certainty, et cetera.

So, “looked after at renewal time” is, in our submission, too vague to amount to anything which conscience required to constrain the landlord in the options it had to make the choices between (a), (b) and (c), and the choices within (a), which were the terms being agreed to and had been notified as accepted unconditionally by the tenant.  For the reasons we have argued in our written submissions, I do not need further to elaborate.

If they are treated – as at times, it seems, in the Court of Appeal they are treated – as words capable of constraining the landlord, then it invites rather than answers questions along the lines of “constrains the landlord to do what?” because in negative terms it appears that the height of the case against us would be that choices (b) and (c) were precluded.  It does not say that, of course, but that is the height of the case against us.  What cannot be then obtained is what would happen because there is no content to the terms of any notice under 2.3(a) which conscience would require the landlord to be held to because there was no discourse about that between the parties at all. 

Your Honours, could I touch briefly on the way in which the question of estoppel appeared in the Tribunal?  You will find that in the appeal book at page 216 and the concluding paragraph of that section of the reasons is 172 and you will see that so far as the Tribunal was concerned - and the Tribunal has been criticised for understanding the case too narrowly in the Court of Appeal - but so far as the Tribunal was concerned the estoppel was there to answer the Statute of Frauds. 

The Statute of Frauds does not apply for the reasons I have already put.  If it had applied, we would simply flag, it is not for today, that it is highly doubtful whether one simply can have an estoppel against the Statute of Frauds because the application of the Statute of Frauds would prevent the enforcement of the contract which the Statute of Frauds says must not be enforced.  You cannot have an estoppel simply by the promise being made to which the Statute of Frauds would speak. 

I stress this is not a Statute of Frauds case because the promise was not of the kind caught by section 126 but I draw it to attention because the “promissory estoppel”, line 30, that is the expression you see, is considered by the Tribunal only in that context.  To put the matter shortly, without needing to dwell on it, in the appeal the tenants benefited from an understanding of their case as run before the Tribunal and on the appeal and what might be called a judicially invited and permitted amendment of their notice of contention so as to require estoppel to be considered on its merits in that appeal on the basis of the facts found by the Tribunal.  That is what I will take you to now at page 338 in the book. 

The forensic history I have just summarised will be found in paragraphs 84 and 85 going over to page 339.  I do not need to dwell on them.  Your Honours might like to note that the notice of contention at line 10 on page 339 is found at page 302 and was overtaken by the events that his Honour both narrates and creates in paragraph 85.  But can I then come to the way in which the matter was dealt with by Justice Hargrave, with respect, correctly? 

At paragraph 92, page 342, one sees his Honour dealing at line 12 with the Tribunal’s holding about the estoppel in the face of the Statute of Frauds which, as I say, has fallen away somewhat.  Then, his Honours says, surely correctly, at line 18:

To find an estoppel in those terms, the Tribunal needed to consider the sense in which Mr Zampelis understood Mr Boesley’s statements –

because estoppel is not, how shall I say, purely objective.  There must be an effect in conscience.  To go on:

and whether it was reasonable for him –

to do so – there is the objective element:

and rely upon them in deciding that the tenants should enter into the leases.  But the Tribunal did not undertake that analysis.

All we know is what I have taken you to in the Tribunal’s reasons about “looked after at renewal”.  Then, in paragraph 93, his Honour refers to the evidence and the findings.  The evidence is that which follows at line 41 in that same paragraph:

Mr Zampelis said simply that Mr Boesley told him he would be ‘looked after and will get the further lease term’.  Later, when dealing with reliance, Mr Zampelis said he understood Crown’s assurances were ‘about a further five year term’ and that he delayed handing over the signed lease documents in the hope of ‘written confirmation of the additional five year term’.

Those hopes were dashed.  There was no written confirmation of an additional five‑year term.  The Tribunal finding is against any statement being made about a five‑year term of any setting in which five years was, in any sense, assured.  So, in 93, his Honour – returning further at about line 30:

The tenants did not plead or seek to prove that Mr Boesley’s statements induced them to assume or expect that Crown would make an offer to them to renew the leases for a further five years on whatever terms Crown saw fit to stipulate, and that they entered into the leases in reliance upon that . . . The tenants’ case at trial was that Crown had represented and promised to offer to renew the leases on the same terms.

As you know, that was adjusted to same terms, mutatis mutandis.  So the irreconcilable inconsistency between that which was said and which was understood and was available reasonably to be understood, on the one hand, and the relief being sought under the rubric of estoppel on the other was clear.  We can go to the Court of Appeal now to make that good.  Before leaving those paragraphs 92 and 93, we would invite your Honours to characterise paragraph 92, as it were, the compressed reasoning sufficient to dispose of the estoppel case and ‑ ‑ ‑

GORDON J:   Is that because the last lines in 94 - is that what you are drawing attention to, that is when Justice Hargrave says:

The sense in which Mr Zampelis said he understood the statements was wholly unreasonable ‑ ‑ ‑

MR WALKER:   Yes, and there is no finding by the Tribunal that the statement could possibly have been understood, the statement found by the Tribunal.

GORDON J:   But that is because the Tribunal approached it from the wrong angle.  It never started at the right point.

MR WALKER:   No, quite so, but having made the finding about what the statement was that was made and rejecting the other evidence about other things, saying that the dealings did not take place wholly as Mr Zampelis testified, so the crucial statement is just a part.  Mr Zampelis and, with respect, as Justice Gordon has pointed out, if you start at the wrong place and head in the wrong direction you are not likely to reach the right place and that is what happened in the Tribunal.  There is no consideration, as Justice Hargrave points out in the last sentence of paragraph 92, of how that statement (a) actually, and (b) could reasonably have operated on Mr Zampelis. 

Mr Zampelis in particular never said anything about anything less than five years.  It was all about hanging on to get five years.  But there was an ultimatum given, return the lease or you are out and the lease says nothing about the promise of a further five years.

BELL J:   Just for a moment, before you go to the Court of Appeal, the Tribunal, apart from the passing reference to estoppel in dealing with the Statute of Frauds point said at paragraph 20 of its reasons that after the Fair Trading Act allegations disappeared the only course of action being pursued - I am sorry, I think I may have misread it, but I understood the Tribunal to be saying the only cause of action was the collateral contract.

MR WALKER:   Well, that is what is said in that sentence to which your Honour is drawing attention but ‑ ‑ ‑

BELL J:   Yes.

MR WALKER:   I do not want to ‑ ‑ ‑

BELL J:   You do not rely on it and ‑ ‑ ‑

MR WALKER:   The way Justice Hargrave dealt with it is not one about which we complain.

BELL J:   Yes.

MR WALKER:   I have drawn to attention, now look, it may be that there was an element of charity or indulgence but we are not here to complain about that.

BELL J:   All right.

MR WALKER:   His Honour said justice required that they be able to put their estoppel argument and he devises, as it were, a notionally amended notice of contention as a vehicle for doing that so that is not an appeal point here.  I am not complaining.

NETTLE J:   Did Zampelis ever say in evidence “I believed it meant I would get another term of five years”?

MR WALKER:   The answer is, I think, really, yes to that and that is what has been referred to in paragraph 93, the passage I have just taken your Honour to, starting at about line 41.  The particular passage, I think, and I think it is the only one - I apologise to my friends if I misstate that.  If you go to pages 59 and 60 of the appeal book, you will see paragraph 30 starting at the foot of page 59 which has, I think, the biblical three references to an additional further five‑year term.

GORDON J:   He also refers to - there is a reference to it on page 58 at the end of paragraph 24 where he says:

These emails contributed to my understanding that Crown wanted me to perform a high quality fit out at a premium cost and that in return I would be granted an additional lease term.

MR WALKER:   Yes, and that is in the context of that line 8 to 17:

“paint and paper” type renovation if I was not given a lease that contained a second 5 year term.

GORDON J:   Then again at paragraph 47 on page 63.

MR WALKER:   Yes, and so they all seem to be summarised in Mr Zampelis’ evidence by the compendious reference beginning paragraph 30:

the assurances referred to above about a further 5 year term –

So his evidence was tied to a further five‑year term.

NETTLE J:   To come back to the question about Ramsden v Dyson, why is that not an expectation, put aside whether it was reasonable, that if he went into this lease and spent the money on the refurbishments he would be granted a further term of five years?

MR WALKER:   Because it is lacking all the terms of that lease.

NETTLE J:   But Ramsden v Dyson, put aside the terms and all the rest of it, his expectation was that he would be granted some further term of five years.

MR WALKER:   I think the short answer is ‑ and I think the Tribunal has dealt with this and Justice Hargrave has dealt with this in the passage I have already taken you to - in the Tribunal the tenant was not prepared to take a pig in a poke.  In the Tribunal they said “same terms, five years”, and then, confronted with how odd that looked in relation to rent, “same terms, mutatis mutandis, five years”.

NETTLE J:   Yes, because that was the argument that was put but concentrating on Zampelis’ evidence, he said, “I thought I was going to get a further term of five years.”

MR WALKER:   And sub silentio on the same terms.  Nowhere does he ‑ ‑ ‑

NETTLE J:   He does not say it.

MR WALKER:   Nowhere does he contemplate on whatever terms ‑ ‑ ‑

KEANE J:    But he certainly did not expect to get it for free.  He certainly did not expect to get it without doing something, without paying something more than just doing the refurbishment, unlike the Ramsden v Dyson stuff.

MR WALKER:   Quite.

KEANE J:   “If you do this, you’ll have it for the rest of your life.”

MR WALKER:   Exactly.

NETTLE J:   Ramsden v Dyson was a further term of the lease.  That is exactly what it is about.

MR WALKER:   Yes, and my point is that you do not find any of the statements by Mr Zampelis – I talk about statements in evidence, but really what matters is findings by the Tribunal to the effect of anything other than the lease, as his counsel put it, “on the same terms or mutatis mutandis and for five years”, whereas 2.3(a) obviously permitted shorter or longer terms or less onerous terms in relation to all the covenants including rent and refurbishment and location.

NETTLE J:   I do hope we are not at cross‑purposes.  I completely understand your submission about Legione v Hateley estoppel in those respects, but when it comes to Ramsden v Dyson, those respects are not necessarily determinative, are they?

MR WALKER:   No, quite so, and my point is that at no stage was this case ever run as one which amounted to, “Give me something in order to alleviate the injustice and that something may be less than five years and may be on terms radically different from the terms of the expiring lease”.  At no stage was that put.  The point about a Ramsden v Dyson ‑ take the classic case of a choice at the remedial stage between the imposition of a charge and the transfer of an interest, they are radically different in terms of enjoyment of possession because the only possession you will get under the charge is for the purpose of sale.

In our submission, that highlights why there is a principal difference as to certainty between Legione v Hateley and Ramsden v Dyson, or I should say I suppose Hughes v Metropolitan Railway and Ramsden v Dyson.  It is because in the Ramsden v Dyson case it is accepted that conscience may call for something to be done, though there was never anything like a contract, let alone a promised conveyance, that supplies the content of that which is necessary to satisfy conscience; that it is the detriment suffered and in particular often the benefit by way of improvement of the defendant’s estate that calls in conscience for some recognition, but it is then recognition which is tailored and to nothing which resembles a promise.

A promise that you may live here as long as you like does not dictate that the remedy must be a life estate or a life tenancy because, for example, the amount of expenditure or trouble will be critical matters in relation to that, and the intervention of third party interests will be critical.  This was a case that – I will take your Honours to the way in which it was pleaded; page 7 of the book.  In 7B, the promise is alleged, and you see that it is a further five‑year term ‑ ‑ ‑

NETTLE J:   And it is an offer.

MR WALKER:   Yes, it is an offer.  At page 9, that is part of the matters which in paragraph 10 is alleged to render it unconscionable to deny that there is an obligation to offer.  I come back to the original answer I gave to Justice Nettle’s question about why is not this Ramsden v Dyson.  It is because that is not the way they put it, which remains, with respect, a complete and robust reason not to entertain it.

Your Honours, can I then go to the way in which the majority of the Court of Appeal – that is, in Justice Whelan’s reasons – deals with the matter.  As your Honours know, from the way we put it at special leave, the proof of the pudding comes in the way in which the order of remitter is justified.  It starts at page 429 in paragraph 191, and continues for about five pages.  You will see it starts and, with respect, correctly, by reference at about line 18 to the:

irreconcilable disconformity between the promise [the Tribunal] found was made (to make a renewal offer under cl 2.3(a) on whatever terms Crown chose) . . . 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 –

Then in 192, Justice Hargrave’s analysis of estoppel, to which I have taken you, was correct, in the Court of Appeal.  The Tribunal:

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.

Paragraph 193:

But that is not the end of the matter –

and our position began to crumble, in the next sentence:

It is necessary to address the estoppel issue more widely than the narrow terms of VCAT’s conclusion –

and, let me interpolate, we, I stress, do not complain about the way in which Justice Hargrave at first instance dealt with that.  There is a reference to:

the tenants’ pleaded case . . . alleged estoppel in wider terms –

That is correct, we think, because it is a reference to the narrow deployment of estoppel against the Statute of Frauds, as the Tribunal had understood it and, yes, the pleading was wider than that:

the VCAT finding was –

that is in paragraph 172 at appeal book 216 that his Honour is referring to:

in my view, expressed in wider terms –

and, with respect, that is a fair reading after you depart from the first few sentences of 172 – yes, the language does lend itself to the wider terms.  Then, there is a reference to what might be called “the pleadings”.

Then the finding that your Honours are now familiar with is recited in 194.  In 195, in further answer to Justice Bell, the Tribunal’s misunderstanding of the confinement of the case is spelled out and we are not concerned, as it were, to be taking pleading points, whatever doubts may at another time and place have been raised about the last sentence of his Honour’s paragraph 195.

We then come to paragraph 196 which introduces, as it were, the reasoning for the relief the Court of Appeal eventually grants.  So, there is a reference to what might be called some commercial considerations and you will see that they are not matters that have been induced, nor is anybody suggesting that they had been induced, by Crown.  That is a commercial judgment for a restaurateur, no doubt:

he held off exchanging the leases hoping to obtain written confirmation . . . he eventually did exchange relying on the assurance –

that is looked after at renewal time:

realising that he was not going to get the written confirmation –

Then, there is a dealing with authorities which include, in particular, a reference to the grey area matter which comes from Sullivan v Sullivan to which reference has been made in our written submissions.  In paragraph 198 following, as it were, the direction by his Honour to himself concerning the cardinal feature of relief that it “must not exceed what can be justified by the requirements of conscientious conduct”, his Honour then turns to give concrete form to that requirement:

There is no rigidity or denial of the flexibility of commercial people’s dealings, they were just as flexible at the beginning of the 20th century as now, in any of this because promissory estoppel, older than Hoyt’s v Spencer is, of course, available if dealings later mean that there must be constraint upon the exercise of some right, for example, bestowed by the main contract.

My learned friend drew to attention the reliance in the Tribunal upon an authority cited by him to it, namely, Lewis v Stephenson.  That is in the appeal book, page 208 at the foot of paragraph 139.  I do not have to take you to it.  The first observation, of course, is that the argument my learned friend advanced I think below but certainly here, based on that is obviously refuted by what the Tribunal goes on to hold in that paragraph 141.  But, it is also refuted by what I drew to attention in‑chief about 2.3(a) itself.  It obviously cannot be read as the same terms because 2.3(a) contemplates that the terms may differ fundamentally, including as to the premises.  That is, the land in relation to which there may be, what might be called, a continued estate.  There will not be a continued estate if the premises differ.

So, there is no possibility, on the basis of an authority, about an implication from a particular set of instruments before the Court in Lewis v Stephenson.  There is absolutely no way in which that can be used, as my learned friend tried to today in relation to his notion – to use his expression – of the lease just rolling on.  The Tribunal held that it was not reasonable for anyone to think that that was the case.

BELL J:   Did not the Tribunal hold that with one exception, relying on Lewis v Stephenson respecting the length?

MR WALKER:   I think that is right.  But, Lewis v Stephenson ‑ ‑ ‑

BELL J:   This is at 139.

MR WALKER:   Yes, quite.  But, Lewis v Stephenson relied upon by my learned friend today for the same terms.

BELL J:   Yes, yes.

MR WALKER:   He said that that was a course of dealing that implied all the terms.  And, I think I opened my reference to this in‑chief this morning by pointing out that normally if one looks at the idea of renewing a lease, the very nature of a lease is a bundle of rights which include the creation of an estate and it is defined by its terms.  And, it is a different lease if it is not the same terms, for example.  But the force that the language of renewal and lease – the renewal of the lease – might have had in isolation is immediately altered, reversed by the language that follows in 2.3(a), as I pointed out this morning.

My learned friend, for reasons we think to do with either jurisdiction or with what is a proper outcome in this Court concerning supposed error in the Court of Appeal hearing an appeal from Justice Hargrave, relied upon the fact that we did not raise estoppel questions in the notice of appeal before Justice Hargrave.  We did not because the Tribunal did not hold any estoppel, and certainly not the estoppel that Justice Hargrave, as I say, liberally permitted the tenants to argue and ruled against, and then the Court of Appeal seems in a curious sense to have kind of held subject to, as it were, the next instalment in the Tribunal as to whether the words “if any” mean of course that there might be no estoppel at all.

But of course estoppel was not before Justice Hargrave on our account.  It was on the notice of contention by the tenants.  I drew to attention the forensic course by which the Tribunal’s so‑called narrow understanding of the estoppel argument was somewhat expanded in favour of the tenants by Justice Hargrave.  It is utterly irrelevant that we did not raise it in our appeal and it goes nowhere in the argument in this Court.

Lest there be misunderstanding, I tried to make it clear that we would, were there to be a Ramsden v Dyson case to answer, of course oppose it – that is, your Honours will recall me saying I would answer Ramsden v Dyson in relation to what might reasonably have been engendered and what conscience required to be recognised as the different way of casting the same kind of consideration as would be cast simply as uncertainty or lack of clarity in a promissory estoppel case.  It is not true that if this were a proprietary estoppel case, we would throw the towel in.

My learned friend said in relation to certainty that it is a quality that turns, among other things, on consideration of matters of detriment, or indeed of the mode of resiling.  In our submission, it is a concept that has nothing whatever to do with any of those matters, and they are both temporally in the logical sequence involved in an estoppel argument, as well as, as a matter of their character, quite distinct from the criterion of certainty.

Neither does the expression “equity of the case” assist in relation to matters of certainty.  The equity of a case is raised, crucially, by reason of something being sufficiently clear to have reasonably brought about a state of affairs driven by an actual subjective state of mind in the part of the affected person – I will call it the plaintiff – so as in turn to affect the conscience of the defendant and lead to consideration of a remedy. 

That is why cases about what might be called the tailoring of remedy to the equities of the case – that is, to the circumstances and the calls in conscience that constitute and stem from the dealings between the parties – that is why they have nothing whatever to do with issues of certainty.  Certainty precedes them, rather than is affected by them.  To put it another way, ad misericordiam is not a way of lowering the standard of requisite certainty.

The reliance on York Air Conditioning, particularly Justice Dixon’s approach, is in our submission fallaciously to accord a supposed precedential effect to a completely particular factual position.  It is enough - it really suffices simply to say those were dealings where there was an officer, a particular personage, the Director‑General of Finance, et cetera, designated for the purposes of what is called checking a price.  That is a million miles away from the notion of leaving it to one party or other to signify by unilateral dictate a substantive and critical element of a bargain. 

The phrase “on terms acceptable to the tenant” we think has its provenance in the twin notions in our learned friend’s argument that the making of an offer would result in a grant because they would accept it ‑ I suppose that means they would like the offer to be acceptable – and the notion of “reasonable correspondence” seen in paragraph 139 of the Tribunal’s reasons, about which I have said enough already.

As to the first of those elements, in our submission, it is completely circular and lacks any foundation in principle either as a matter of contract or the estoppel.  There is simply no way for a court to give content to this notion of terms acceptable to a tenant except as it were to watch the rats in the laboratory, see whether the tenant eats it.  How else would you say something is acceptable to a tenant?  It is absurd to say it should have been acceptable to you though you refused it.  That does not answer the description of something acceptable to the tenant. 

The idea of being acceptable to the tenant lacks all sensible meaning if you remove all subjectivity.  How is a court to know subjectivity?  More to the point, this means that there is a neat and absurd reversal of the position of economic or commercial power or advantage given by 2.3(a) even if there was an obligation to make an offer because everyone agrees and the Tribunal found that it was for Crown, the landlord, to dictate the terms, certainly as to rent, certainly as to other covenants, certainly as to escalators, for example, in the rent. 

Yet this idea of terms acceptable to the tenant would mean that that is actually subject to whether the tenant would say that is a bit expensive, I would really rather make a fatter profit.  That, in our submission, the whole edifice collapses.  There is no reason whatever to regard that phrase which has come into this case without any factual foundation or justification in principle, there is no way in which that can evade the obvious problem of lack of certainty.

Finally, in relation to Hoyt’s v Spencer, I have said enough about the parol evidence point.  In relation to the objective theory, Taylor v Johnson, though it seems, to me at least, a long time ago, is relatively recent in the history of this Court, but it was not saying anything recent in the legal history of contract law; did not represent a sea change at all.  It represented an emphatic vindication of a state of affairs which was perfectly fresh and well established - fresh in the sense of being current and well established at the time of Hoyt’s v Spencer. 

That is no reason to revisit a case which has enjoyed, in our submission, in court repeated support and which as a matter of common sense for the reasons I have already put, ought not to be departed from.  We, in‑chief, I think, accepted matters which are similar to those that the Chief Justice put to my learned friend at the end of my learned friend’s submissions.  Yes, in many a case it will be critical to ascertain whether or not what is said to be an inconsistency truly is an inconsistency. 

There may be statements that may or may not be promissory, that may or may not form a contract or may or may not found an estoppel in relation to future conduct with respect to what in this case were the choices left open by 2.3(a).  As I said in answer in particular to questions from Justice Nettle in‑chief that is not to be understood as a case to which we say Hoyt’s v Spencer would apply.  May it please the Court.

FRENCH CJ:   Thank you, Mr Walker.  The Court will reserve its decision.  The Court adjourns until 10.15 on Tuesday, 10 May.  Sorry, yes, Mr Pearce.

MR PEARCE:   Do I have a right of reply on my cross‑appeal?  I am sorry, it will be very brief.

FRENCH CJ:   Yes, yes, very well, go ahead.

MR PEARCE:   Thank you, really, just a couple of very short points.  A lot of reliance on 141 of the Tribunal’s reasons should be read in conjunction with paragraph 35 of the later reasons at appeal book 251, explaining what was meant in 141.  It is said that we did not plead a wider case of estoppel.  We only pleaded in answer to section 126 Instruments Act point.

That is not so.  Your Honours can see that.  Well, my learned friend has withdrawn that.  I am pretty confident I heard him say that.  Paragraph 18 in any event makes it clear that there is no restriction in the estoppel case that we pleaded in the Tribunal.  I am not making a case now that we say the terms that had to be stipulated had to be terms acceptable to the tenant. 

What I am saying to your Honours is to understand the finding about reasonable correspondence, what that meant, you had to bear in mind that the promise was to look after the tenants and the reasonable correspondence ties in with that idea and supplies an alternative path of reasoning to get to the proposition that what they were obliged to do was give a notice with reasonable correspondence.

Just very briefly, I am troubled by what your Honour Justice Gageler said about me misstating Haritos.  I certainly did not mean to do that but if I invite ‑ ‑ ‑

GAGELER J:   I think it is too late now.  You have lost that point anyway.

MR PEARCE:   If your Honour pleases, I will not take the matter any further.  If the Court pleases.

FRENCH CJ:   Yes, I think it is safe to adjourn now.  The Court will adjourn until 10.15 on Tuesday, 10 May. 

AT 4.19 PM THE MATTER WAS ADJOURNED