Facts: The Crown leased 2 premises to Cosmopolitan for 5 years on the understanding that Cosmopolitan would complete significant refurbishments and, allegedly, that in exchange for the refurbishment Cosmopolitan would receive an extension of the lease for another 5 years. After the leases expired, the Crown did not renew and the tenants vacated.
Held (Victorian Civil and Administrative Tribunal): A statement by the Crown that it would ‘look after’ the tenants regarding the renewal provided the renovations were of a high quality was enforceable as a collateral contract.
Held (Victorian Supreme Court): Rejected that conclusion, holding that the statement was not a promise and was too vague to be enforceable.
Held (Victorian Court of Appeal): Again rejected that conclusion. But also upheld Cosmopolitan’s appeal on the ground of promissory estoppel, holding that even though the collateral contract was void for uncertainty, promissory estoppel answered that defence.
Issue on appeal to HCA: Before the High Court, the Crown sought to challenge the VCA’s consideration of the requirements of promissory estoppel, and Cosmopolitan made a cross-appeal seeking to establish the existence of the collateral contract.
Held (HCA – majority; French CJ, Kiefel and Bell JJ, Keane J, Nettle J): Allowed appeal and dismissed the cross-appeal. VCA correctly concluded there was no collateral contract: Crown’s statement that the tenants would be ‘looked after at renewal time’ could not be understood to bind Crown to offer a further 5 year lease because ‘[i]t did not have the quality of a contractual promise of any kind’. Enforcing this alleged obligation was not so much a problem of the uncertainty of the terms than the lack of any terms at all: Crown clearly retained discretion to decide new terms at the renewal, and there was no evidence about Crown’s future conduct.
The VCA erred in remitting the issue of estoppel to VCAT for further determination because there was no possibility of making out the estoppel ground. Estoppel requires that a representation be clear, precise and unambiguous and understood in a particular sense by the person to whom it is addressed to ground an assumption on which that person acts to their detriment. The phrase ‘looked after at renewal time’ could not convey to a reasonable person that the tenants would be offered a further lease, and, in any case, the tenants had not shown that the assumption was acted upon.