Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd

The High Court of Australia heard an appeal from the Court of Appeal of the Supreme Court of Victoria concerning a dispute between Crown Melbourne Ltd (Crown) and Cosmopolitan Hotel (Vic) Pty Ltd and another tenant (the tenants). The tenants operated restaurants within Crown's entertainment complex under five-year leases. The core of the dispute revolved around a statement made by a Crown representative to the tenants during lease negotiations, which the tenants alleged constituted a promise of a further lease term upon renewal. Crown subsequently required the tenants to vacate the premises at the expiration of their leases.

The legal issues before the High Court were whether the statement made by Crown's representative gave rise to a collateral contract obliging Crown to offer a further lease, and whether the statement could give rise to a promissory or proprietary estoppel preventing Crown from denying such an obligation. The tenants argued that they were induced to enter into the leases and undertake significant refurbishments based on these assurances. A further question arose as to whether the determination of whether the statement amounted to a binding contractual promise was a question of fact or law.

The High Court, in allowing the appeal, found that the Court of Appeal had correctly concluded there was no collateral contract. However, it erred in remitting the estoppel issue, as the tenants could not succeed on that ground. The Court determined that the statement, "you would be looked after at renewal time," was too uncertain to form the basis of a collateral contract. While the VCAT had found this statement was made, it did not find that Crown had expressly promised to renew the leases. The High Court agreed with the reasoning that the statement did not create a contractual obligation inconsistent with the terms of the lease, but rather operated in harmony with the lease's notice provisions.

The High Court allowed Crown's appeal, setting aside the orders of the Court of Appeal regarding the remittal of the estoppel issue. It also granted special leave to cross-appeal on the ground that a collateral contract had been formed, but ultimately dismissed the cross-appeal, reinstating the Court of Appeal's finding that no collateral contract existed. Consequently, the tenants' claims based on both collateral contract and estoppel failed.