The issue in this case is to evaluate the chances of Coronet Casino with respect to refusing the lease provided to Loire.
As per the parole evidence rule when a written contract has been made and all the terms of the negotiation has been documented a party cannot rely on the terms which were discussed during the negotiation and have not been added to the written contract as per the case of
Collateral contract are contracts which act as a defense to the parole evidence rule. A collateral contract is a subsidiary contract which is made in relation to entering into the primary contract. however as provided by JJ Savage & Sons Pty Ltd v Blakney the terms of the collateral contract cannot be inconsistent with the primary contract.
In the case of Van den Esschert v Chappell it was held by the court that as the statement made by the defendant was promissory in nature and not inconsistent with the main contract a collateral contract is formed.
In the case of Crown Melbourne Limited v Cosmopolitan Hotel (VIC) Pty Ltd & Anor decided by the high court the issue which the court had to identify was in relation to the when a term is said to be incorporated into a contract. In this landmark case the court provided the importance of documenting a provision in relation to the renewal of a lease and the consequences of not doing so. The facts of the case provide that the defendant had made a statement to the plaintiff which stated that he would be taken care upon at the time of renewal but the contract did not contain a term related to renewal. The two question which the court had to analyze in the case was whether there was a collateral contract between the parties in relation to the statement of renewal and whether promissory estoppel would intervene in this case and make the defendant to renew the lease. The court provided that there was no collateral contract as a reasonable person would not be induced by such terms was is vague encouragement to get into a contract. In addition the court provided that promissory estoppel would not intervene as the statement cannot be regarded as a promise.
In the case of Austotel v Franklins Selfserve Pty Ltd Kirby P, ruled that where a party has expressly refused to provide its commitment in relation to a term of the contract in a deliberate manner, it would not account to unconscious ability on the part of one of the parties to the contract to repudiate the contract. in addition it was provided by Rogers AJA that it is not correct for the court to determine the settlement of a term which the parties to the contract left open intentionally.
In the given scenario it has been provided that Coronet Casino have leased one of its premises to the hotel named Loire for a period of two years. According to the lease the hotel had to undertake refurbishment in relation to the building which has been leased. The lease did not provide any right to other party to renew the lease. However it had been provided by Sophia who was an agent of Coronet that “You don’t need to worry, it is in our interest for you to be operating this hotel. We are in this for the long haul. You will be looked after at renewal time.”
Firstly as per the provisions related to promissory estoppel provided through the recent crown case which has almost same facts when compared to the facts of the present case in had it can be stated that the Loire would not have the right to claim promissory estoppel against the promise made by Coronet which stated that Loire would be “looked after at renewal time”. This is because a reasonable person would have not considered the assurance provided by Coronet as a promise because not only it is unclear and vague but also can be easily identified as being a merely an encouraging representation as it was held in the crown case.
In addition it can be stated as per the principles of the above discussed cases that there was no collateral contract which had been formed between Coronet and Loire hotel. This is because no reasonable person would be induced by the vague assurance provided by Coronet to get into a contract. Thus there is no collateral contract also in relation to the renewal of lease.
Conclusion
Lorie does not have the right to renew the lease depending upon the assurance provided by Coronet.
In this section of the paper the issue is to evaluate whether Lorie can renew the lease in relation to the facts of the case.
In the famous case of Sargent v ASL the court had to address an issue related to the termination of a contract. According to the facts of the case the defendant who was also the land lord had specified in the lease that the lease would be terminated if it is found that the the land is affected due to its use. The defendant had the knowledge that the land had been affected but did not send any notice for the termination of the lease. After two and a half years he had been suggested by a their person that he is entitled to end the lease as the term has been violated. The court in this case ruled that as no notice of termination had been sent by the defendant for a period of two and a half years and in addition the defendant continued to take rent from the plaintiff he waived the right to terminate the lease as his actions unequivocally affirmed the lease.
In another case Waltons Stores (Interstate) Ltd v Maher the court had to determine whether the doctrine of promissory estoppels can be claimed by the plaintiff or not against the defendant. In the case the plaintiff and the defendant were negotiating a deal in where a building had to be demolished by the plaintiff. The defendant did not sign the lease and the plaintiff thinking that only formalities are left demolished the building. Latter the defendant did not approve the lease. The court in this case ordered according to the provisions of equality and promissory estoppel that the defendant would be stopped from rescinding the contract.
According to the facts of the case it has been provided clearly that provided that Loire had the right to renew the lease but for that they had to company with the additional terms provided in the lease. According to that additional term Coronet was supposed to provide accommodation to the high rollers along with other corporate guests in the hotel for a minimum of 20 nights a week. However after three months have been passed in relation to the lease Lorie complained that the minimum amount of night were not been booked by Coronet for the accommodation of the guests as agreed by the lease. the shortfall had then been deducted by the hotel in form of the fourth month. Even through the decision was not expressly agreed by Coronet they did not raise the issue any further.
Through the application of the provisions provided in the ASL case relation to this scenario it can be said that Coronet have waived the right to claim that the condition of the lease had not been fulfilled as the plaintiff has not given the fourth month rent because they did not raise the issue any further and thus affirmed the contract. This can be said because in the same way in the ASL case even when the defendant had the knowledge that the term of the lease has been violated they did not take any action and continued to receive the benefits of the lease which made them unequivocally affirm the contract even after the breach. The same thing has been done by Coronet in this case as knowing that the hotel has not paid the rent for the fourth month as such rent has been deducted upon the mistake on the part of Coronet itself, they did not raise the issue any further and continuing to keep the lease is operation they lost their right to make a claim for breach.
In addition as per the principle of the Maher case discussed above not signing a lease and keeping the other party under the apprehension that the deal is on gives right to the other party to bring in force the doctrine of promissory estoppel against the first party not to repudiate the contract. In the same way in the present case even where Coronet disagreed to the reduction their right was waived in relation to not renewing the lease.
Conclusion
Therefore it can be concluded that as per the facts of this case Coronet lost its right of not renewing the lease by not raising the issue in relation to the fourth month’s rent and continuing to receive the benefit under the lease.
References
Austotel v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582
Crown Melbourne Limited v Cosmopolitan Hotel (VIC) Pty Ltd & Anor [2016] HCA 26
Esschert v Chappell [1960] WAR 114
JJ Savage & Sons Pty Ltd v Blakney (1970) 119 CLR 435
Sargent v ASL [1974] HCA 40
Waltons Stores (Interstate) Ltd v Maher[1988] HCA 7
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