Wright v Hamilton Island Enterprises Limited
[2003] QCA 36
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- Notable Unreported Decision
- Wright v Hamilton Island Enterprises Limited[2003] QCA 36
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Wright v Hamilton Island Enterprises Limited[2003] QCA 36
Wright v Hamilton Island Enterprises Limited[2003] QCA 36
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | |
Court of Appeal | |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | |
DELIVERED ON: | 14 February 2003 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 5 August 2002 |
JUDGES: | McMurdo P, Jerrard JA and Mackenzie J Separate reasons for judgment of each member of the Court: In both appeals, McMurdo P and Mackenzie J concurring as to paragraph one of the orders made, Jerrard JA dissenting in part; Jerrard JA and Mackenzie J concurring as to paragraph two of the orders made, McMurdo P dissenting; McMurdo P and Jerrard JA concurring as to paragraph three of the orders made, Mackenzie J dissenting in part; McMurdo P and Mackenzie J concurring as to paragraph four of the orders made. |
ORDER: | In Appeal No 8981 of 1996:
(a) The first respondent/plaintiff confirm in writing within 14 days of the date of publication of this order the exercise of the right of renewal of the licence for the period following 31 December 2000; (b) Declare that the right of renewal referred to in para 1(b) of the order of Thomas J of 31 March 1998 is personal to the promisee and not assignable.
In Appeal No 8982 of 1996
(a) The first respondent/plaintiff confirm in writing within 14 days of the date of publication of this order the exercise of the right of renewal of the licence for the period following 31 December 2001; (b) Declare that the right of renewal referred to in para 1(b) of the order of Thomas J of 31 March 1998 is personal to the promisee and not assignable.
|
CATCHWORDS: | Estoppel – estoppel in pais – equitable estoppel – promissoRY estoppel – where representations made by appellant did not contain details of the method of licence renewal – where representations oral – where learned primary judge found that the appellants were estopped from denying the existence of agreements for renewal – whether representations were sufficiently unambiguous to found an estoppel REAL PROPERTY – LICENCES – GENERALLY – where appellant made oral promise to renew respondents’ licence – where learned primary judge found this promise to constitute a collateral contract to the main licence agreement – whether finding of collateral contract by learned primary judge was inconsistent with main licence agreements PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PRACTICE UNDER RULES OF COURT – PLEADING – DEFENCE AND CONTERCLAIM – where appellant’s application to amend its defence and counterclaim refused by learned judge below – where learned judge below viewed the application to amend as an attempt to add detail to the declarations made by the learned judge at first instance – whether appellant was prejudiced by reason of this refusal APPEAL AND NEW TRIAL – APPEAL-GENERAL PRINCIPLES – INTERFERENCE WITH DISCRETION OF COURT BELOW – IN GENERAL – where appellant sought a declaration from second learned primary judge in different terms to the orders made by the learned primary judge – where second learned primary judge made orders giving effect only to the earlier declarations of the learned primary judge – whether appropriate to alter the wording of the final relief declarations made by the learned primary judge Uniform Civil Procedure Rules (Qld), r 5, r 770 ACN 055 389 725 Pty Ltd & Ors v Hamilton Island Enterprises Ltd [1998] QSC 030; SC No 8982 of 1996, 17 March 1998, considered |
COUNSEL: | P A Keane QC, with D Logan, for the appellant M D Hinson SC for the respondents |
SOLICITORS: | Gadens Lawyers for the appellant O'Shea Corser & Wadley for the respondents |
[1] McMURDO P: Jerrard JA in his reasons, which I have had the benefit of reading, sets out the relevant facts and issues.
[2] The first ground of each appeal is that Thomas J (as he then was) in his orders of 31 March 1998 erred in finding collateral contracts existed because the terms of what was said to be the collateral contracts were inconsistent with art 14 of the respective licence agreements which constituted the main contracts.
[3] The learned primary judge's reasons were largely based on the estoppel issue; his Honour observed that it was therefore unnecessary to discuss the alternative claim of collateral contract,[1] briefly noting that art 14 would only operate if the licences were not renewed and under the oral collateral contracts found by him to exist, the appellant was not entitled to decline to renew the licences. His Honour declared a collateral contract to exist in para 1(a) of his orders of 31 March 1998.
[4] A collateral contract does not become part of the main contract but has its own existence separate from the main contract: Heilbut Symons & Co v Buckleton[2] and Hoyt's Pty Ltd v Spencer[3]. [4] In Australia, a promissory statement will not take effect as a collateral contract if it is inconsistent with the main contract: Hoyt's Pty Ltd v Spencer,[5] Knox CJ at 139-140 and Isaacs J at 146-148. This aspect of Hoyt's v Spencer has been the subject of criticism[6] because of the unfair consequences that may flow but, until the High Court determines otherwise, it remains the law in Australia.[7]
[5] Article 14 of the licenses is in the following terms:
"ARTICLE 14 – HOLDING OVER
14.1 On the expiration of this Licence and in the absence of any contract in writing binding the parties thereafter the Concessionaire if permitted by HIE to continue in possession of the Premises shall hold the same from HIE as Concessionaire on the basis that the new Licence may be cancelled at any time on the giving of six months written notice by either party to the other and otherwise on the terms and conditions of these presents."
[6] Essential elements said to constitute each collateral contract were the appellant's oral promises to renew the licences. Renewal can only occur after the licenses have expired;[8] on expiry of the licences art 14 applied. It seems to me that the oral agreements based on those promises and said to constitute the collateral agreements were inconsistent with art 14 of the licences in that they were not in writing. In those circumstances, under art 14 the licences continued only on the basis that they could be cancelled at any time on the giving of six months written notice by either party. The fact that the main licence agreement, (which includes art 14 but which cannot include any collateral agreement), was in writing, does not assist the respondents. The oral agreements based on the appellant's promises could not constitute collateral contracts as these agreements were inconsistent with the main contracts (the licences): Hoyt's v Spencer. His Honour's declaration as to the collateral contracts in paragraph 1(a) of the orders of 31 March 1998 should be set aside.
[7] The appellant's next contention is that the learned primary judge in his orders of 31 March 1998 erred in finding the appellant was estopped from denying the existence of the agreements for renewal of the licences because the representations made on behalf of the appellant were not sufficiently clear and certain to support such a finding. The appellant particularly emphasises the lack of clarity as to whether the promised rights of renewal were personal to the representees or assignable, whether the rights of renewal are also subject to the personal residence on Hamilton Island of the natural persons to whom the representations were made and the mechanism for exercising the right of election to renew the licences.
[8] The declarations made by his Honour, (that the appellant's representation that the respondents would be granted a renewal of their licences by the appellant for further periods of five years from the expiry of the term of the licence for so long as each respondent elected to have the licence renewed, provided each respondent was not in breach of the licence at the time of renewal), did not specifically deal with any of these matters. His Honour in his reasons, however, clearly found that the outer limit of the tenure of the licences was measured by a life rather than eternity.[9] His Honour reached this conclusion having regard to the licencees' personal residence requirements for individual concessionaires and similar requirements from designated persons in the case of a company concessionaire.[10] The personal nature of the licences does not suggest they were assignable and there is nothing in his Honour's reasons to encourage such an interpretation.
[9] An unambiguous representation is one which would not mislead any reasonable person and is not capable of being misinterpreted or misunderstood: see Legione v Hateley.[11] On the judge's findings, which were open on the evidence, those representations were of this kind. The fact that the representations here did not contain details of the method of renewal does not make them ambiguous. The representations were sufficiently unambiguous and clear as to found an estoppel.
[10] I agree with Jerrard JA that his Honour's finding in each case, that the renewal of the licence was to be on the same terms as the original written licence agreement, was plainly open on the evidence.[12]
[11] The appellant next contends that its oral promises cannot ground an estoppel against its assertion of rights when the promises are expressly contrary to art 14 of the licence agreements; the respondents cannot avoid by estoppel the consequences of the contract they entered into after the promises were made.
[12] It is true that a voluntary promise will not generally give rise to an estoppel because the promisee may reasonably be expected to appreciate that he or she cannot safely rely upon it, especially if, as here, the subsequent written document is contrary to that promise: Amalgamated Investment & Property Co v Texas Commerce International Bank.[13]
[13] I am not persuaded, however, that the doctrine of promissory estoppel, which involves the concept of unconscionability, cannot extend to promises which are inconsistent with a later contract entered into between the parties because of those promises. The subsequent contract may well cause evidentiary problems for the promisee but where the necessary requirements of promissory estoppel are established, including unconscionability if the promise is not met,[14] then the subsequent inconsistent written contract will not preclude a finding of promissory estoppel: see SRA New South Wales v Heath Outdoor Pty Ltd.[15]
[14] It follows that declaration 1(b) in the order of 31 March 1998 was correctly made and the appellant is not entitled to the substituted orders it seeks.
[15] I turn now to the appeals from the orders of Mullins J of 30 May 2001 refusing in part leave to amend the appellant's defence and counterclaim. The facts pertinent to this part of the appeal are set out by Jerrard JA in [61]-[64] of his reasons. The appellant sought a determination as to first the form of election of the right of renewal of the licences, second whether the right of renewal was personal or assignable and third the terms of the renewed licences. Determinations of these three matters were not so inconsistent with the order of 31 March 1998 as to preclude their further consideration, especially as all issues relating to the appropriate final relief were to be left to the quantum trial.[16] It was in the interests of justice, finality between the parties and consistent with the spirit of the UCPR[17] to clarify these matters in issue at the final hearing and the respondents suffered no prejudice from the amendments sought.
[16] Whilst these matters seem to have been fully canvassed in the subsequent hearing and there is now little to be gained from allowing the amendments at this late stage, the appellant is entitled to succeed in this part of its appeals. I would allow the appeal in No 8981 of 1996 from the order of 30 May 2001 by deleting paragraph 2 of that order and substituting an order giving leave to amend the defence by adding the proposed paragraphs 12A, 12B, 12C, 12D and 12E and the counterclaim by adding proposed para (v). I would also allow the appeal in No 8982 of 1996 from the order of 30 May 2001 by deleting paragraph 2 of that order and substituting an order giving leave to amend the defence by adding the proposed paragraphs 14A, 14B, 14C, 14D and 14E and the counterclaim by adding proposed paragraph (vi).
[17] As the reasons for judgment of Mullins J of 15 November 2001 demonstrate, the hearing before her Honour turned, in any case, into an argument as to which orders should be made having regard to the relevant pleadings, reasons for judgment and orders of 31 March 1998.[18] Her Honour considered the three matters set out above.
[18] As to the last of these, I agree with Jerrard JA and the learned primary judge that Thomas J's order 1(b) of 31 March 1998 makes clear that what is renewed in each case is the original written licence agreement.[19]
[19] Determinations of the first two matters are not inconsistent with the order of 31 March 1998. I agree with Jerrard JA that the circumstances justified an order in each appeal in the terms set out in the last sentence of [73] of his reasons and an order declaring that the right of renewal promised to the respondent/plaintiff in each action as declared in para 1(b) of the order of Thomas J of 31 March 1998 is personal to the natural person promisee and is not assignable.
[20] I would make the following orders. In No 8981 of 1996:-
1.Allow the appeal from the order of Thomas J of 31 March 1998 only to the extent of setting aside para 1(a) of that order; otherwise appeal refused.
2.Allow the appeal from the order of 30 May 2001 by deleting paragraph 2 of that order and substituting an order giving leave to amend the defence by adding the proposed paragraphs 12A, 12B, 12C, 12D and 12E and the counterclaim by adding proposed para (v).
3.Allow in part the appeal from the order of Mullins J of 15 November 2001 by adding two further orders:
(a) The first respondent/plaintiff confirm in writing within 14 days of the date of publication of this order the exercise of the right of renewal of the licence for the period following 31 December 2000; and
(b)Declare that the right of renewal referred to in para 1(b) of the order of Thomas J of 31 March 1998 is personal to the natural person promisee and is not assignable.
4.Otherwise the appeal from the order of Mullins J of 15 November 2001 is refused.
In No 8982 of 1991:-
5.Allow the appeal from the order of Thomas J of 31 March 1998 only to the extent of setting aside para 1(a) of that order; otherwise appeal refused.
6.Allow the appeal from the order of 30 May 2001 by deleting paragraph 2 of that order and substituting an order giving leave to amend the defence by adding proposed paragraphs 14A, 14B, 14C, 14D and 14E and the counterclaim by adding proposed paragraph (vi).
7.Allow in part the appeal from the order of Mullins J of 15 November 2001 by adding two further orders:
(a)The first respondent/plaintiff confirm in writing within 14 days of the date of publication of this order the exercise of the right of renewal of the licence for the period following 31 December 2001; and
(b)Declare that the right of renewal referred to in para 1(b) of the order of Thomas J of 31 March 1998 is personal to the natural person promisee and is not assignable.
8.Otherwise the appeal from the order of Mullins J of 15 November 2001 is refused.
In each appeal I would allow the parties seven days to make submissions consistent with these reasons as to the appropriate costs orders here and at first instance.
[21] JERRARD JA: In March 1986 and December 1990 respectively, the respondents Louis Pherhad and Jacki Wright each made oral agreements with Hamilton Island Enterprises Pty Ltd that they would conduct respectively at Hamilton Island the restaurant business which traded as the Outrigger Restaurant, and a business which traded as the Airport Bar. Written agreements were later entered into, by both, and long after those businesses had begun trading. Those written agreements described the rights acquired by Mr Pherhad and Ms Wright as a licence, to which Hamilton Island Enterprises Pty Ltd was one party and the other party was described as “the concessionaire”. In Mr Pherhad’s licence the nominated concessionaire was the company through which he acted (the second respondent ACN 055 389 725 Pty Ltd).
[22] Hamilton Enterprises Pty Ltd has now become Hamilton Island Enterprises Limited, the appellant in two appeals heard together and involving the same essential facts. These are that prior to each of the respondents entering into their written agreements described as a licence, each had had promises made to them, firstly by the then managing director and controlling share holder of Hamilton Island Enterprises Pty Ltd, a Mr Keith Williams, and later also by Mr Williams’ CEO. Those later promises can be summarised as being that so long as the promisees had the interests of the resort at heart, provided a good restaurant (or bar), paid their accounts to Hamilton Enterprises Pty Ltd on time, and complied with the requirements of their respective written licence, that licence would be renewed at the licensee’s request and be ongoing. The written licence agreements themselves were expressed to be for finite period of a five year term in Ms Wright’s case, and five and a half years in Mr Pherhad’s. The written licence agreements said nothing about any renewal. Promises of an ongoing licence, subject to satisfactory performance, had been made by Mr Williams prior to each respondent commencing business, when the licence was purely oral.
[23] The promise of a continuing licence upon satisfactory performance was important to each respondent in the initial decision to undertake the business of the licence. The appellate company was in control of Hamilton Island, and when a private company under Mr Williams’ control, permitted businesses to be conducted there only on relatively strict terms. Those terms appear in the licence agreements. The learned judge found that Mr Williams took the view that his then private company’s interests were best served by not having its staff conduct the businesses it licensed, but instead having approved concessionaires do so, who would have the goal in common with his private company of attracting customers to the Island and providing satisfactory services to those customers. The judge found that Mr Williams was perhaps despotic in his practices, but acted honourably towards those with whom he dealt on the Island; and the evidence from Mr Williams supported the respective plaintiff’s pleadings and evidence that the promises they described had indeed been made to them by Mr Williams and his CEO.
[24] What occurred over time was that Mr Williams lost control of that company and it became a public company, controlled by entirely different share holders with different management plans. By January 1996 it was controlled by Bankers Trust Australia, a foreign corporation based in the United States, whose new management caused notices to be issued to the respondents in July 1996, giving them six months notice of termination of their licence agreement. Those notices accorded with Article 14 of each licence, which was in the following terms:
Holding Over
On the expiration of this licence and in the absence of any contract in writing binding the parties thereafter the Concessionaire if permitted by HIE to continue in possession of the Premises shall hold the same from HIE as Concessionaire on the basis that the new Licence may be cancelled at any time on the giving of six months written notice by either party to the other and otherwise on the terms and conditions of these [“presents” (or) “this licence”].
The First Hearing
[25] Each of the respondents, and another concessionaire, brought action in this court seeking rectification of their licence agreements, to give effect to what were asserted to be warranties as to the renewal of those agreements, and asking alternatively for specific performance of a warranty for renewal, for an injunction restraining the appellant company from interfering with the respective plaintiff’s possession of premises or conduct of the business conducted from those premises, for a declaration that the appellant company was estopped from denying the existence of agreements for renewal, and in the alternative for compensatory damages by reason of either the estoppel or for breach of contract. Moynihan SJA made orders on 15 August 1997 that the trial of liability issues be heard separately in the three actions (and the actions heard together) from the trial of quantum issues. On 19 December 1997 Thomas J, as he then was, declared that the question as to which form of relief should be granted was an issue to be determined at the quantum trial. A fifteen day hearing on issues as to liability took place before His Honour in February 1998, and on 17 March 1998 he delivered his findings and reasons for judgment on those issues.
[26] In Ms Wright’s matter, his findings included that Mr Williams had told her in 1990 that the (then oral) licence period was “a five year period with extensions for as long as she required them”; and the learned judge accepted Ms Wright’s evidence that those representations induced her to establish that particular business, and to refrain from pursuing other activities open to her. He also accepted that nearly two years later the CEO of the then private company appellant had confirmed her understanding that the licence would be automatically renewed, when Ms Wright queried the written contents of the licence with its fixed five year term, prior to executing it in March 1992. She had been conducting the business by then since December 1990; and the CEO was then engaged in getting written agreements with the concessionaires the appellant had licensed on the island over the years.
[27] The findings relevant to Mr Pherhad are that what the learned judge described as the standard representations had been made to him in March 1986, which were to the effect that if he operated his business in an appropriate manner he could stay on as he wanted, and the licence would be an ongoing one. That representation was made by Mr Williams, and repeated in either late 1991 or early 1992 by the CEO, who assured Mr Pherhad that Mr Williams’ promises of permanent tenure would be upheld, and that the licence would be automatically renewed. These latter assurances were made prior to the execution of the written license agreement in 1991, by which time that business had been operating for five years. The learned judge found that both the relevant plaintiffs and the defendant company assumed that the company would act in accordance with a policy known to the company and the parties, namely that licensees would be extended over an indefinite term and renewed for further five year periods so long as the concessionaire was not in breach of the licence. The learned judge found that the assurance of an ongoing licence and of a long term venture was instrumental in the decision made by the Pherhad’s to sell their Melbourne interests, and commit themselves to a new career on Hamilton Island. This they would not have done except in reliance on that representation of secure tenure.
[28] Significant features of the licences entered into by both Ms Wright and the Pherhads included stringent requirements about the uniforms to be worn by the licensee’s staff, the behaviour and grooming of that staff, that licensees conduct the business personally and become a permanent resident of Hamilton Island within three months of commencing business, and that assignment of the licence occur only with the prior written consent of the appellant, such consent not to be arbitrarily or capriciously withheld in the case of a respectable, responsible and financially sound person, firm or corporation. A consideration of those licence conditions led the learned judge to the finding that:
“Having regard to the personal residence requirements for individual concessionaires and similar requirements from designated persons in the case of a company concessionaire, the outer limit of tenure would seem to be measured by a life rather than eternity, and of course such licence could always be brought to an end if a breach could be established.”
[29] The trial judge published a judgment common to all three actions in pages 1-35 thereof (record 291-326), and then as well specific reasons for judgment in each individual action. In the first of these judgments he gave more detailed consideration to his reasons than in the latter two further sets of individual reasons. In each action he found for the respective plaintiffs on a plea of estoppel against the respondent company based upon representations by it[20], while then finding it unnecessary to determine (until the hearing of the “quantum” issues) the appropriate remedy. The learned judge was sympathetic to the view that an alternative claim for what he described as estoppel by convention or common assumption had also been established, but found it unnecessary to determine it that question. He also found in each matter that a collateral contract had been established by each plaintiff, and rejected the submission that its terms were inconsistent with the terms of the main contract.
[30] After the publication of those and other findings and the reasons for them, the learned judge invited the parties to prepare draft orders. They were unable to agree on those. On 31 March 1998 orders were made after some further discussions, declaring that there existed between the first plaintiff Jacki Wright and the appellant, and between the appellant and the company through which Mr Pherhad conducted his business, a collateral contract, collateral to the written licence agreement into which each plaintiff had relevantly entered, and in the following terms:
“In consideration of the first plaintiff entering into the written licence agreement the defendant promised that it would renew the licence granted to the first plaintiff for further periods of five years from the expiry of the term of the licence on the 31st December [1995 in the case of Jacki Wright and 1996 in the case of Mr Pherhad] for so long as the first plaintiff elects to have the licence so renewed provided that the first plaintiff was not in breach of the licence at the time of each such renewal.”
[31] The learned judge also made declarations that the appellant was estopped from denying the existence of an agreement between it and [Ms Wright in her matter and each of Mr Pherhad’s company and Mr Pherhad in that matter] for renewal of the licence granted by the appellant to the [relevant plaintiff] by written licence agreement dated [20 March 1992 for Ms Wright, and 3 April 1992 for Mr Pherhad and his company], for further periods of five years from the expiry of the term of the licence on 31 December [1995 in one case and 1996 in the other], for so long as the relevant plaintiff elected to have the licence so renewed, provided that that plaintiff was not in breach of the licence at the time of each such renewal.
[32] In addition to those final orders made in each action, the learned judge in each made interim injunctive orders restraining the appellant from interfering with the conduct of the plaintiff’s business, or the use by the plaintiff of the premises from which the business was conducted. Final orders were also made dismissing the action brought by the company through which Ms Wright conducted her business, and actions by Mrs Pherhad and another company which the Pherhads used. Counter claims by the appellant were dismissed.
[33] The appellant company appeals the whole of the orders made on 31 March 1998 by the learned judge in each action. It complains the collateral contracts found were inconsistent with the provisions of the respective licence agreements, which granted set five year terms with a holding over provision applying thereafter. The appellant also submits that the (promissory) estoppel cannot operate to stop it relying on a term of the contract each respondent was induced to enter.
Matters Under Appeal from the First Hearing
The Collateral Contract
[34] The appellant submits that at the end of each five year term the relevant licence will expire, just as it would even if then renewed by agreement in writing.[21] The appellant contends that that necessarily occurring expiration must bring Article 14 into effect, and thus before any renewal of that licence can occur upon that expiration at the option of the licensee. The respondents accept as correct the view that each licence would expire at the end of the declared five year term, but argue that clause 14 deals with “holding over” at the expiration of the licence; and that the concept of “holding over” describes the position applicable when the source of the licensee’s right to continued occupation after the expiration of the licence is the licensor’s permission. They say that clause 14 does not deal with the situation provided by the collateral contract found, under which the source of the licensee’s right to continued occupation is the renewed licence. The respondents then submit that the words:
“and in the absence of any contract in writing binding the parties thereafter”
in article 14 present no obstacle to them, because the license agreement itself is a “contract in writing binding the parties thereafter”, in the event of renewal at the licensee’s option. They argue that it is not necessary that the licensor agree in writing to grant a further five year licence.
[35] The respondent’s argument treats the words last quoted as capable of meaning “and in the absence of any contract in writing binding the parties thereafter (such as this contract when renewed)”. That argument puts a strained construction on that part of article 14. However, the task the appellant has undertaken is to establish that there is inconsistency between the collateral warranty found by the learned judge, and the express terms of the license agreements including article 14.[22] Knox CJ, writing in Hoyt’s, held it necessary that any collateral contract, distinct from a written agreement between parties, be consistent with that written agreement to be valid and enforceable, and Isaacs J (at CLR 145) wrote that the main contract when utilised to form the consideration for the collateral contract must be taken exactly as it is:
“Its provisions do not change according as it is considered as an independent contract or as a consideration for the collateral contract. A principle that must govern the bargain of a contractual promise made in consideration of entering into the main contract is that the parties shall have and be subject to all (not some only) of the respective benefits and burdens of the main contract. When the collateral promise is truly consistent with the main contract, that principle has full play. The main contract is not then interfered with. The collateral contract alters, as every contract must, the contractual relations of the parties; but it does not alter, and from the simple statement of the bargain, is not intended to alter, the contractual relations which are established by the main contract.”
[36] The main contract in this matter includes article 14, the terms of which assume that on the expiration of that main contract there may well exist an agreement in writing, by which the concessionaire is entitled to continue in possession of the premises. A collateral contract to renew the licence agreement itself, in the terms found by the learned judge, is therefore more consistent than inconsistent with that assumption made by the parties and contained in article 14. I consider that article 14 is capable of bearing the construction the respondents urge, although it is by no means an obvious one. What matters is that on that construction, the terms of the collateral warranty declared to exist by the learned judge are not inconsistent with the licence agreement. That licence agreement would sit more comfortably with a separate written agreement to renew on the same terms; but I consider it is consistent with a wholly oral agreement that provided the stipulated conditions were met, that license agreement would be renewed and bind the parties thereafter.
Equitable or Promissory Estoppel
[37] Recognising that last conclusion may not have universal appeal, I turn to the appellant’s submissions on the findings for the respondents that the appellant was estopped from denying in each case the existence of an agreement to renew (on conditions). The appellant’s submission was that in the absence of an enforceable collateral contract the respondents were attempting to override the main contract by a voluntary promise. Mr Keane QC put more than once and with force the submission that the respondents could not “get around” the fact that they were attempting to enforce a voluntary promise by invoking an estoppel, where in his submission what the respondents were doing were pleading that they were each induced to act to their detriment by making the written contract which entitled the appellant to do precisely what the appellant was doing. The appellant argued that the respondents were attempting to find some “equitable way around” the rule in Hoyt’s v Spencer; and the appellant’s submission was summarised by Mr Keane QC to be, that equity would not lend its assistance to the enforcement of a right which was distinctly contrary to a right contained in a contract which the respondents said they were induced to make by the appellant’s representation.
[38] He submitted that the respondents pleaded a representation in these terms:
“Enter this contract and we’ll ensure that we renew at the expiration of the term”;
whereas he submitted that if one looked at the contract
“It plainly says we’ve got the right, absent something in writing, to terminate you on six months notice.” (Cited from the transcript of the oral agreement).
[39] Mr Keane QC, took the court through a careful examination of Johnson Matthey Ltd v AC Rochester (1990) 23 NSWLR 190, and the observations cited therein of Kirby P (as he then was) in State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170; Waltons Stores (Interstate) Ltd v Maher (1988) 165 CLR 387; and Giumelli v Giumelli (1999) 196 CLR 101, and the observations therein of McPherson J (as he then was) in Rich v Hogben [1985] 2 Qd R 292 at 300. Reference was also made to other authorities.
[40] The estoppel found by the primary judge was the variety of estoppel described as promissory estoppel in the judgments of the High Court in Waltons v Maher. The learned judge adopted the appellant’s submissions as to the applicable principles for the determination that such an estoppel existed, which were those described in the judgment of Brennan J in Walton. These require that a plaintiff prove, to establish an equitable estoppel, that:
●The plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant, or expected that a particular legal relationship would exist between them, and in the latter case, that the defendant would not be free to withdraw from the expected legal relationship.
●The defendant had induced the plaintiff to adopt that assumption or expectation.
●The plaintiff acted or abstained from acting in reliance in the assumption or expectation.
●The defendant knew or intended the plaintiff to do so.
●The plaintiff’s action or inaction would occasion detriment if the assumption or expectation were not fulfilled.
●The defendant had failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.
[41] To those matters Thomas J added the further requirement of establishing that it would be unconscionable to permit the defendant to depart from the necessary assumption. Thomas J held that that requirement was well stated in the following passage from the judgment of Priestley JA (with whom Kirby P agreed on that point) in Austotel Pty Ltd v Franklins Self Serve Pty Ltd (1989) 16 NSWLR 582 at 610 wherein Priestley JA wrote:
“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 circumstances where departure from the assumption by the defendant would be unconscionable”.
[42] Thomas J found in each matter that the first four requirements described by Brennan J were fully established, and I do not understand that that is actually challenged on this appeal. He also found in each matter that the fifth and sixth requirements were established on the facts, and in each case that it was unconscionable for the appellant to terminate the licence as it did. Again, I do not understand that those findings are contradicted in the appellant’s submissions either. What the appellant says is that if it is correct in its submission that the collateral contract found is inconsistent with the licence agreement, then the respondents cannot rely upon an estoppel to avoid the consequences of there being no collateral contract.
[43] The learned judge held that the relevant detriment in each matter was that fact of the changing of the relevant plaintiff’s circumstances in reliance on the assurances received, and the difficulty for each plaintiff in re-establishing themselves elsewhere. His Honour considered it would be dishonourable and unconscionable for the appellants to “go back” on the expectation that it had actively promoted to the respondents.
[44] Turning to the merit of the appellants argument, the remarks in Johnson Matthey v AC Rochester relied on by the appellant warn of the dangers of substituting for a permanent written agreement the less reliable evidence of oral statements made during the course of negotiation. As to that, there seems no relevant contest in the evidence here about what was said to each respondent. The evidence of Mr Williams as to representations being made supported the respondents’ case. On his evidence, that was how he wanted to control the businesses he licensed on the Island, namely by permitting the renewal of those which were conducted in accordance with his own requirements. The assurances were deliberately given to entice quality concessionaires to the island, who would not let their businesses run down as the end of the five year period approached. The argument about the unreliability of reliance on oral statements made in Johnson Matthey really has no application here.
[45] What is more important is that in the judgments in Waltons Stores v Maher the judges of the High Court who decided that appeal on the basis of a promissory or equitable estoppel considered with care the objections likewise made in that case that:
“The principal objection to the enforcement of such a promise is that it would outflank the principles of the law of contract.”[23]
Mason CJ and Wilson J in their joint judgment agreed there was force in the objection that the doctrine of consideration was too firmly fixed to be overthrown by a side wind, but after consideration of a number of leading cases, described as a common thread in them the principle that:
“equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic assumption in relation to which the other party to the transaction has “played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it” (at CLR 404);
and that:
“Because equitable estoppel has its basis in unconscionable conduct, rather than in the making good of representations, the objection…that promissory estoppel outflanks the doctrine of part performance looses much of its sting.” (at CLR 405).
[46] Their Honours went on to hold that the doctrine of promissory estoppel:
“…extends to the enforcement of voluntary promises on the footing that a departure from the basic assumptions underlying the transaction between the parties must be unconscionable. As failure to fulfil a promise does not of itself amount to unconscionable conduct, mere reliance on an executory promise to do something resulting in the promisee changing his promise or suffering detriment, does not bring promissory estoppel into play. Something more would be required. (at CLR 406).
Their Honours added later that:
“…a voluntary promise will not generally give rise to an estoppel because the promisee may reasonably be expected to appreciate that he cannot safely rely upon it”. (at CLR 406).
[47] However, in that case a promissory estoppel was found because, as I read their joint judgment, it was determined that it was unconscionable for the appellant, knowing that the respondents in that case were exposing themselves to detriment by acting on the basis of a false assumption, to adopt a course of inaction which encouraged those respondents in the course they had adopted. Accordingly, it was held that the appellant was estopped from retreating from its implied promise (to complete a contract between the parties).
[48] In their judgment in Waltons, Mason CJ and Wilson J explained that promissory estoppel certainly extends to representations or promises as to future conduct, and when explaining (at CLR 406) a possible basis for the “something more” which would entitle a plaintiff to rely upon a promissory estoppel, referred to the principle distilled in the United States in the Restatement on Contract 2d§ 90, which requires a reasonable expectation on the part of the promisor that his promise will induce action or forbearing by the promisee. That last requirement or principle is certainly one of those described by Brennan J in Waltons, and relied on by the learned trial judge in this matter.
[49] Brennan J’s analysis of equitable or promissory estoppel focused, as did that of Mason CJ and Wilson J, upon the need to find unconscionable conduct in the failure of the party (who had induced the adoption of the assumption or expectation in the other party) to fulfil that assumption or expectation, which unconscionable conduct Brennan J described as being “the object of equity to prevent” (at CLR 423). Brennan J went on:
“The object of the equity is not to compel the party bound to fulfil the assumption or expectation; it is avoid the detriment which, if the assumption or expectation goes unfilled, will be suffered by the party who has been induced to act or to abstain from acting thereon.
If this object is kept steadily in mind, the concern that a general application of the principle of equitable estoppel will make non contractual promises enforceable as contractual promises can be allayed. A non contractual promise can give rise to an equitable estoppel only when the promisor induces the promisee to assume or expect that the promise is intended to affect their legal relations and he knows or intends that the promisee will act or abstain from acting in reliance on the promise, and when the promisee does so act or abstain from acting and the promisee would suffer detriment by his action or inaction if the promisor were not to fulfil the promise.”
[50] Brennan J added at CLR 424 that when those elements were present equitable estoppel almost wore the appearance of contract, for the action or inaction of the promisee looks like consideration for the promise on which, as the promisor knew or intended, the promisee would act or abstain from acting. His Honour then referred to passages in a number of leading cases, in support of that observation.
[51] These citations from Waltons v Maher make clear that all three of the judgments in that case which relied upon a promissory or equitable estoppel in dismissing the appeal in that case considered with care and dismissed the argument that reliance upon such an estoppel, to enforce what was described as a voluntary promise and particularly about future conduct, undermined the settled principles of consideration, and alternatively were inconsistent with Hoyt’s v Spencer. (The judgements of Deane J and Gaudron J principally dismissed the appeal in Waltons v Maher upon a finding by those two judges that an estoppel by conduct (Deane J at CLR 443) also called an estoppel by convention, (Gaudron J at CLR 458), existed).
[52] Returning to the appellant’s argument in these matters, the fact of unconscionable conduct by it made crucial in the judgments of Mason CJ, Wilson J, and Brennan J to the existence of, or right to rely upon, an equitable estoppel, appears conceded in argument by the appellant. The judgment of the majority in Waltons v Maher clearly provides for the enforcement of voluntary promises (at CLR 406 and CLR 416, 426 and 427), when reliance by the promisee as intended by the promisor on an expectation or assumption deliberately created by the promisor makes it unconscionable for the promisor to depart from that basic assumption underlying the transaction between the parties.
[53] The appeal record establishes that there was a basic assumption underlying the transaction occurring between the appellant and both sets of respondents, at the times when the parties entered into their written licence agreement. That assumption, common to all parties, was that the licence would be renewed upon performance satisfactory to the standards set by Mr Williams. I consider the appellant misses, or overly narrows, the point in its argument that entry into a contract which contradicted that basic assumption should not be regarded as a “detriment” experienced by the promisee. The detriment here is of a different nature. This is because the respondents to these appeals geographically relocated themselves, or in Mr Wright’s case refrained from going elsewhere, and set up businesses on Hamilton Island in the expectation and on the assumption that the appellant would act as it represented it would, first when each respondent began business and then later when written agreements were to be executed. Those later representations promised non-enforcement of the contractual rights upon which the appellant now relies. The judge found that each respondent would experience significant detriment if the appellant was allowed to act contrary to the expectation that was deliberately created. The judge also found that the expectation was created so that the respondents would act as they did. These findings are not challenged.
[54] I consider in those circumstances all the requirements for an equitable estoppel were made out, and that the position would be the same if each relevant agreement expressly forbade any renewal of the specified finite term, and expressly provided that there would be none. Had that been the position, it would simply have been more obvious that it would be unconscionable to allow the appellants to depart from the expectation it deliberately created that it would act very differently in the future exercise of non-contractual rights, and not enforce its contractual rights. I note in that regard that Mason CJ and Wilson J (at CLR 399) in Waltons and Maher described promissory estoppel as being:
“So far … mainly confined to precluding departure from a representation by a person in a pre-existing contractual relationship that he will not enforce his contractual rights whether they be pre-existing or rights to be acquired as a result of the representation[24]”.
[55] That also seems to be the position here. In these circumstances I am satisfied that the learned judge was correct in finding that the appellant was estopped from denying the existence of an agreement between it and the relevant plaintiff for the renewal of the license granted by it for further periods of five years, for so long as each plaintiff elected to have that license so renewed, provided that each plaintiff was not in breach of the license at the time of such renewal.
Other Matters in Issue
[56] The appellant also argues that the representations relied upon by the respective plaintiffs were not sufficiently clear, precise and unambiguous to give rise an estoppel which would bind the appellant.[25]The appellant points to the fact that the representations found did not specify whether the promised rights of renewal would be assignable by the representee, and further that the findings by the learned judge did not describe whether the rights of renewal were also subject to continuing personal residence on the Island. Nor did those findings say anything about the mechanism by which the respondents were to exercise their rights of election to renew the agreement.
[57] I consider, with respect, that the fact that the representations were limited to particular matters does not mean that they were not clear or precise. All it means is that there were no representations made about any other matters. The representations found by the learned judge to have been made by both Mr Williams and his CEO Mr Brown are clear enough, and there is actually no complaint to the contrary. Indeed, it was not in contest at the hearing that representations of that character were made. That argument fails too.
[58] The appellant complains that the finding of the learned judge, that the renewed licences were to be on the same terms as those of each original written license agreements, was against the weight of the evidence. This is said to be so because there were a number of different forms of the appellant’s license agreement, entered into between it and various concessionaires. As to that, the evidence seems to have been that there was a standard form licence agreement of which different forms were current at different times, but I do not see that that makes the findings of the learned judge erroneous. Those findings were that it was warranted and represented to the relevant plaintiff that the licence agreement with that plaintiff would be an ongoing one, at the plaintiff’s choice.
[59] The appellant then complains that the declarations made by the learned judge were not supported by the findings made, and nor were they sufficiently clear and certain to inform the parties of their effective rights. The appellant argues that there were a number of matters not dealt with in those declarations, including whether the rights of renewal were assignable, whether those rights of renewal were limited by personal residence requirements, were limited to the life of the original representee, whether the terms of the renewed licence were the same, and whether the declared right of election had to be exercised in writing. Once again it is what is absent from the declaration which is the subject of complaint, just as with the representations found to have been made. Obviously, the declarations are limited by the contents of the representations found. I do not see how the appellant loses anything because the declaration, like the representation, says nothing about assignability of the warrant and promise to renew. There is no evidence that either respondent has asked for the appellant’s consent to an assignment of their licence, with or without any right of renewal.
[60] On the other matters, the personal residence requirements of the licence must continue to apply. It is a term of the licence. It follows from the unchallenged findings of the learned judge as to the nature and reasons for these representations being made, and his observation that the outer limit of tenure would “seem to be measured by a life rather than eternity”, that the relevant warranty and representation was personal to the original representee. This is because these representations were made in the context of Mr Williams’ determined control of a good deal of what happened on Hamilton Island, and what the learned judge described as his idiosyncratic practices and paternal approach to those with whom he dealt. It is consistent with those findings to hold that the promises and warranties made were intended to be and were personal to the recipient. There was no promise of assignability of those promises to renew, and renewal seems to have depended upon conduct which satisfied Mr Williams’ known standards. The collateral warranty and representation made to each promisee seems to have depended for its proffering upon personal approval of them by Mr Williams. None of the declarations made by the learned trial judge are inconsistent with these observations. The declarations made by the learned judge are supported by the findings he made, and I think the parties should understand quite clearly from those declarations, and from their license agreements, what their rights are.
The Second Hearing
[61] On 1 May 2001 these matters came before a different judge of this court. The application then made by the current appellants was for leave to amend their defences in the Wright and Pherhad actions. The proposed amendment recited the fact of the declarations earlier made on 31 March 1998 as to the existence of a collateral contract, and to the defendant being estopped from denying the existence of an agreement to renew. The amending pleadings admitted the existence of that contract and the fact of that estoppel, (subject to the defendant’s right to appeal against the orders), and the proposed pleadings then pleaded that on the proper construction of that agreement those rights of renewal:
●Might only be exercised by the relevant plaintiff while that plaintiff continued to be personally involved in the supervision and conduct of the plaintiff’s business;
●Subsisted only during the life of the plaintiff;
●Would exist only while the relevant plaintiff remained a permanent resident of Hamilton Island;
●Were subject to the entitlement of the defendant to enter into the standard form of the defendant’s written licence agreement current at the date of renewal;
●Were personal and not assignable.
[62] The defendant also sought leave to delete portion of its existing pleading, which was that either damages or equitable compensation would suffice to reverse the claimed detriment to the relevant plaintiffs from the appellant’s attempts to breach its collateral warranty[26], and thereby to reduce the matters in issue between the parties. The learned judge hearing the application for leave to amend thought it was neither proper nor appropriate for the appellant to seek to amend its defence in order to raise matters which had, as their starting point, an admission of the matters disposed of by the declarations made on 31 March 1998. The judge hearing the application for leave to amend considered that the defendant was really seeking to air concerns about the interpretation and application of the orders already made, rather than using pleadings to raise matters actually in issue between the parties. Accordingly, on 30 May 2001 the judge dismissed the application for leave to amend the defence and counter claim, whilst granting leave to amend the defence by the deletion of the paragraphs the defendant asked for leave to delete.
Matters Under Appeal from the Second Hearing
[63] The appellants have appealed against the dismissal of the application for leave so to amend. They contend that assignability of the collateral warranty, tenure limitations on the right to renewal, and the terms of the renewed licences, were all matters in dispute between the parties. That is undoubtedly so, but that dispute could not be resolved by construction of the collateral contract and representations found in the reasons for judgment of 17 March 1998 and orders of 31 March 1998. Those orders reflected the specific warranties found and representations described, which were silent on topics on which the dispute existed.
[64] The appellant says that refusal of leave failed to give effect properly to the philosophy of the UCPR set out in Rule 5(1) and (2). The appellant was entitled to ask that the court rule upon the construction of each licence agreement and collateral warranty read together as a whole, such that all parties and the court could better judge the commercial value of the respondents’ licences on the matters in dispute between the appellant and respondents. However, the respondents say that the reality is that the appellant agitated those matters on 30 October 2001, when these matters were once again before this court. That was on the final hearing of the quantum claims. By reason of the deletion by the appellant of the described portions of its own defence that final hearing was somewhat circumscribed, and limited to arguments as to the terms of the final orders, and whether injunctive relief should continue.
The Third Hearing
[65] The final orders argued for by the appellant on 30 October 2001, as the respondents’ outline of argument makes clear, corresponded exactly with the defences it had sought to raise. The appellant thus had the opportunity to agitate those matters, and it adduced evidence at the hearing on 30 October 2001. It did not argue that it was deprived of any fuller opportunity on 30 October 2001 to raise or argue those matters that it would have been if leave to amend had been given.
[66] The learned judge who heard the proceedings on 30 October 2001 published reasons and orders on 15 November 2001. The orders made discharged the interlocutory injunctions of 31 March 1998, and made orders as to costs. No other relevant orders were made. The appellant appealed the whole of those orders.
Matters Under Appeal from the Third Hearing
[67] The grounds are that the learned judge making the orders on 15 November 2001 erred in giving effect to the earlier declarations made 31 March 1998. As was observed on 15 November 2001, the declarations on 31 March 1998 were final orders, and it was necessary to give effect to those on 15 November 2001.
[68] The orders which the appellant contends ought to have been made on 15 November 2001, if not orders dismissing the claim by the plaintiff, were orders in the form of the draft orders it had sought on 30 October 2001. Those asked firstly, for example in respect of Ms Wright, that when exercising her right of renewal “for a period following 31 December 1995”, she provide notice of that election within 14 days after the date of the orders. The learned judge declined to make that order, because it proceeded on the assumption that there had not already been an election made to exercise the right of renewal. I consider it is appropriate to allow the appeal against the refusal to make at least an order in these terms:
“The first plaintiff confirm in writing within 14 days hereof its exercise of the right of renewal for the period following (in the matter of Wright 31 December 2000, and in the matter of Pherhad 31 December 2001)”.
[69] The other orders sought included orders that only the balance of any current licence agreements might be assigned, which draft order is really a declaration as to the respective rights of the appellant and respondents on the assumption the promise of renewal is not attainable. Because that matter is apparently in issue between the parties, and because the answer is in the appellant’s favour, an order by declaration in similar terms should be made. The learned judge declined to make that order on 15 November 2001, because of the view that to do so would be a revisiting and tinkering with the wording of the declaration already made, a view with which I respectfully disagree. In any event, I consider it is an order which should be made now.
[70] Orders were sought that any renewed licensed agreement be in the standard form of the defendant’s written licence agreement current at the date of the relevant election by the relevant plaintiff, which order the learned judge declined to make. This was because of inconsistency between those orders applied for and the findings by the court on 17 March 1998. I consider with respect that those findings were properly made, and are inconsistent with the orders asked for.
[71] Orders were sought entitling the appellant to refuse to renew the licence if the relevant plaintiff ceased to be personally involved in the relevant business, was dead, or no longer a permanent resident of Hamilton Island. The first and third of these are conditions of the licence in its original and renewed form. Orders in those terms are unnecessary, and likewise if the promisee is dead.
[72] Accordingly, I would allow the appeal against the orders made on 15 November 2001 to the extent already indicated herein.
[73] I would order as follows:
●That the appeal against the orders made 31 March 1998 be dismissed, and the appellant pay the respondent’s cost of an incident to the appeal, to be assessed on the standard basis.
●The appeal against the orders of 30 May 2001 be dismissed, with a like order as to costs.
●That the appeal against the orders made 15 November 2001 be allowed to the extent that the orders made therein in each of actions numbered 8981 of 1996, and 8982 of 1996 be varied as follows:
1. In action numbered 8981 of 1996 by the addition of an order in the following terms namely that the first plaintiff confirm in writing within 14 days of the date of publication of this order the exercise of the right of renewal for the period following 31 December 2000.
2. In action number 8982 of 1996 by the addition of an order in these terms namely that the first plaintiff confirm in writing within 14 days of the date of publication of this order the exercise of the right of renewal for the period following 31 December 2001.
3. By the addition of orders in the following terms, namely that:
It is declared hereby that the right of renewal warranted and promised to the plaintiff as declared herein on 31 March 1998 is personal to the promisee and not assignable.
●That the appellant pay four fifths of the respondents’ costs of and incidental to the appeal against the orders made 15 November 2001, such costs to be assessed on the standard basis.
[74] MACKENZIE J: The historical background of these protracted proceedings is set out succinctly and accurately in paragraphs [21] to [33], [61] and [62], and [65] and [66] in Jerrard JA’s reasons for judgment.
[75] Thomas J’s reasons for judgment in the first hearing focus principally on the question of estoppel, which he found had been made out after an exhaustive analysis of the evidence. In the principal set of reasons he said it was not necessary for him to discuss the alternative claim based on collateral contract, but said he considered that the case for it had been made out. He said that the statements relied on were promissory and that he rejected the submission that they were “truly inconsistent with the main contract”. The reasons were that a promise of renewal was not inconsistent with a five year term and that the Holding Over provision in Article 14 would only operate if the licence was not renewed. Article 14 is as follows:
“On the expiration of this Licence and in the absence of any contract in writing binding the parties thereafter the Concessionaire if permitted by HIE to continue in possession of the Premises shall hold the same from HIE as Concessionaire on the basis that the new Licence may be cancelled at any time on the giving of six months written notice by either party to the other and otherwise on the terms and conditions of these presents.”
[76] After further argument had been heard as to the appropriate orders to be made a declaration was made in the following terms in the case of Wright with regard to the issue of collateral contract:
“there exists a collateral contract between the first plaintiff and the defendant, collateral to the written licence agreement dated the 20th March 1992, whereby in consideration of the first plaintiff entering into the written licence agreement the defendant promised that it would renew the licence granted to the first plaintiff for further periods of five years from the expiry of the term of the licence on the 31st December 1995 for so long as the first plaintiff elects to have the licence so renewed provided that the first plaintiff was not in breach of the licence at the time of each such renewal;”
The declaration in the case of Pherad is similar in principle.
[77] In the course of submissions the need for the orders to define clearly the extent of the right to elect to renew the licence was discussed. Thomas J expressed the view that the orders proposed, read in conjunction with the reasons for judgment, achieved that purpose. The declaration with regard to estoppel is, in the case of Wright, in relation to that aspect of the matter, identical. (In the case of Pherad, it is similar in principle). It states:
“the defendant is estopped from denying the existence of an agreement between it and the first plaintiff for renewal of the licence granted by the defendant to the first plaintiff by a written licence agreement dated the 20th March 1992 for further periods of five years from the expiry of the term of the licence on the 31st December 1995 for so long as the first plaintiff elects to have the licence so renewed provided that the first plaintiff is not in breach of the licence at the time of each such renewal.”
Collateral Contract
[78] Since Thomas J did not engage in an extended discussion of principle in concluding that a case of collateral contract had been made out, because he did not find it necessary to do so because of his decision favourable to the plaintiffs on estoppel, it is necessary to examine his broadly stated conclusion in light of the arguments addressed for the appellant. The starting point is the principle in Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133. Stated in its simplest form it is that an alleged agreement will not be enforced as a collateral contract if its terms are inconsistent with the contract to which it is alleged to be collateral.
[79] Broken down into its components, Article 14.1 envisages the following situation:
(a) the licence contained in the written agreement has expired;
(b) there is not a contract in writing binding the parties thereafter; and
(c) the applicant has allowed the concessionaire to continue in possession of the premises.
If those three circumstances existed, there was to be a new licence under which the concessionaire held the premises on the terms and conditions of the original licence, except that the new licence might be cancelled on either party giving six months notice.
[80] The licence which comes into effect in those circumstances is a new licence and instead of the licence enduring for a fixed term, it may be cancelled by either party on six months notice. In the present cases, the original licence has expired. There is no contract in writing binding the parties after the expiry relation of the original licence. All that is alleged is an oral agreement, in effect, that the new licence would run for the same period as the expired licence, on the same terms and conditions as the expired licence. The remaining question is whether the applicant has allowed the respondent concessionaires to continue in possession, within the intent of the agreement or whether the alleged creation of a fresh lease under which possession given orally, does not fit description.
[81] The essence of the argument on behalf of the respondents was that Article 14 was not an exhaustive and complete agreement as to what would happen at the end of the term. Its operation was, in effect, limited to a case where the term of the licence expired and no other agreement (of which renewal of the licence was one example) having been made by the parties, the concessionaire was allowed to remain in the premises. The original agreement was silent as to renewal of the licence, as opposed to the situation where there was merely a continuation of the existing arrangement by virtue of the occupation of the premises not being terminated by the licensor at the end of the fixed term.
[82] This argument may have had greater attraction had the terms of Article 14 not specifically referred to a contract in writing binding the parties after the expiration of the fixed term. It seems to me that the inclusion of this qualification recognizes that it was open to the parties to agree upon terms which would apply subsequent to the expiry of the term of the licence and that provided for the mode of expressing or recording such agreement. If it has that effect and is not followed, the respondents’ argument loses its force.
[83] In my view the answer to the argument that there was an oral collateral contract is that it is incompatible with the principle in Hoyt’s. The provisions of the written licence agreement, and those in the agreement which is said to constitute a collateral contract are incapable of operating together and in those circumstances the operative agreement is that in Article 14.1.
Estoppel
[84] The starting point with regard to the findings that equitable estoppel and estoppel by convention had been made out is that the representations must be clear and precise (Legione v Hateley (1983) 152 CLR 406, 435, 437) or as it is also put, precise and unambiguous (Discount & Finance Ltd v Gehrig’s NSW Wines Ltd (1940) 40 SR (NSW) 598, 603; see also Queensland Independent Wholesalers Ltd v Coutts Townsville Pty Ltd [1989] 2 Qd R 40, 46). The main focus of the appellant’s argument was that the representation found by Thomas J lacked the necessary clarity, precision and ambiguity to support the declaration quoted above in para [4].
[85] This declaration contains the following elements:
(a) an estoppel from denying the existence of an agreement for renewal of the licence for further periods of the same length as the original agreement from expiry of the original agreement;
(b) that one event which will terminate the agreement is the non-exercise of the right to renew by the licensee; and
(c) a proviso that the licensee was not in breach of the licence at the time when a renewal was to occur.
[86] It can be gleaned from the passage of Thomas J’s reasons quoted below that he regarded the provisions in the agreement concerning personal participation of certain individuals as marking the outer limits of tenure. The references to “a life” and breach of the terms of the licence point to this conclusion. The passage is as follows:
“Having regard to the personal residence requirements for individual concessionaires, and similar requirements from designated persons in the case of a company concessionaire, the outer limit of tenure would seem to be measured by a life rather than eternity, and of course such licences could always be brought to an end if a breach could be established.”
[87] Several arguments were addressed to the issue of whether there was insufficient certainty in the representation found by Thomas J. It was submitted that the representation found did not deal with whether the right of renewal (as opposed to the agreement, once renewed) was personal to the representees, or could be assigned by them. The basic proposition of this argument, in my view, lacks substance, since, in my view (which accords with that of Mullins J in the second phase of the proceedings), Thomas J’s declarations, read in the context of the findings made, delimit the nature of the representees’ rights. The absence of specific reference to the mechanism and timing of exercise of the right to elect are not fatal. In the absence of specified times, reasonableness would be the criterion. That is an objective criterion not an uncertain one. The nature of disentitling breaches are to be found in the original agreement, which forms, also, the basis of the renewed licences. It is clear from Thomas J’s reasons and declarations that being in breach at the time of renewal, and committing a breach that entitled the licensor to terminate the agreement during its currency are both events which may terminate it.
[88] An argument was addressed that, since there was evidence that there were a number of forms of agreement from time to time, it was against the evidence to find, if indeed Thomas J had so found, that a renewal was on the same terms and conditions as the original licence. Mullins J rejected this view in the second phase proceedings. Viewed in the context of the evidence of what was said to the representees at the time when the representations were made, there is no reason, in my view, to think that the terms and conditions of subsequent licences were intended to be ambulatory or, in the absence of further agreement, to depart from the terms of the original licence.
[89] In my opinion, the argument that Thomas J was wrong in concluding that there was an estoppel cannot be sustained and the grounds relating to this fail.
Appeal against Decision of Mullins J – Amendment of Defence and Counterclaim
[90] This was a rather sterile issue, since it was conceded that notwithstanding the refusal of Mullins J of the application to amend the defence and counterclaim the appellant had suffered no actual prejudice. Refusal of the application did not restrict what was argued by the appellant, and, since it was treated essentially as a matter where no additional evidence on the issues was necessary, no question of improper rejection of evidence arose (as to which see UCPR 770(2)).
[91] Before Mullins J an application had been made to amend the defence and counterclaim by inserting additional paragraphs 12A to 12E. The purpose of these was to raise a contention as to the interpretation of the lease agreement, the collateral contract, and the agreement giving a right to renewal. The proposed paragraph 12A recited the orders made by Thomas J. Proposed paragraph 12B stated that, subject to the right of appeal, the defendant admitted the collateral contract and estoppel but said that upon the proper construction of them, they provide that such rights of renewal:
(i) may only be exercised by the plaintiff while the plaintiff continued to be personally involved in the supervision and conduct of the business in accordance with the requirements of the licence agreement;
(ii) subsist only during the life of that plaintiff;
(iii) continue to exist only while the that plaintiff remained a permanent resident of Hamilton Island in accordance with the licence agreement;
(iv) are subject to the entitlement of the defendant as licensor to require the plaintiff to enter into the standard form of the defendant’s written licence agreement current at the date of renewal;
(v) are personal and not assignable; and
(vi) alternatively to sub paragraph (v), if the rights of renewal are assignable, the right of any assignee to elect to renew the licence is subject to the conditions set out in sub paragraphs (i) to (iv).
[92] The proposed paragraphs 12C and 12D summarise correspondence in which different views of the effect of Thomas J’s judgment, viewed in the context of his reasons, were exchanged. Proposed paragraph 12E is to the effect that there is therefore a dispute between the parties as to whether the collateral contract and agreement conferring the rights of renewal provides, as alleged in paragraphs (i) to (vi), quoted above. The defendant also sought to amend the relief claimed by counterclaim to claim a declaration that, upon the proper construction of the licence agreement the collateral contract and the agreement conferring the rights of renewal, the rights of renewal were in accordance with paragraphs (i) to (vi) above.
[93] Mullins J refused to allow this amendment. To paraphrase her reasons her Honour viewed it as an attempt to add detail to the declarations made by Thomas J. The question to be determined in relation to the disputed amendments was whether it was possible or appropriate that the defendant be allowed to pursue the issues raised by the proposed amendments by amending its defence and counterclaim. Her Honour went on to point out that it did not follow from the fact that the solicitors for the parties were unable to agree on the interpretation or application of the order of Thomas J that the declarations were not capable of precise interpretation or application. Her Honour said that they must be interpreted in the context and against the background of the pleadings and the reasons for judgment in each action (relying on Australian Energy Limited v Lennard Oil NL (No 2) [1988] 2 Qd R 230).
[94] Mullins J said that the factual issues raised on the pleadings in each action had been disposed of by the findings made by Thomas J. In particular the defendant’s case that the representations were too uncertain to ground an estoppel and that the representations were inconsistent with the existing licence agreement were rejected by Thomas J. Thomas J had also considered that the issue of tenure and operation of the collateral contract in conjunction with the terms of the existing licence agreement had been disposed of by his foreshadowed declarations of right and reasons for judgment. Mullins J concluded that it was neither proper nor appropriate in the proceedings for the defendant to seek to amend its defence in order to raise matters which had as their starting point an admission of the matters disposed of by the declarations made by Thomas J. The defendant was not using that pleading to raise facts in issue between the parties. It was simply an attempt by the defendant to air its concerns about the interpretation and application of the orders made by Thomas J. Her Honour also held that a concern on the part of the defendant that it wished to avoid the kind of estoppel discussed in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 was misconceived because the matters which the defendant sought to raise followed from the final determination by Thomas J of the matters in issue, which were resolved by the declaration as to rights made in each action.
[95] On behalf of the appellant it was submitted that UCPR 5(1) and 5(2) had not been given full effect. In refusing the appellant leave to amend its pleading to raise those matters so as to have finality in the litigation and to enable the parties to be aware of their rights under the orders of Thomas J was not consistent with the philosophy of UCPR 5(1). It was submitted that even if Mullins J’s characterisation of what the appellant was attempting to achieve was correct, it was still a proper step for the appellant to take to attempt to clarify in the same proceedings those matters which Thomas J did not expressly address. It was submitted that an unduly technical approach to the rules relating to amendments had been adopted and in her Honour’s decision of 15 November 2001 she had adopted an erroneously narrow approach to the court’s vow to make orders giving effect to declarations previously made. For reasons which are elaborated on in the section that follows I am not persuaded that Mullins J erred in refusing the application to amend. In any event, as I have explained above, there was no prejudice to the appellant by reason of the refusal. Mullins J’s treatment of the issues referred to in the following section demonstrates that this is so.
Appeal against Mullins J’s Decision of 15 November 2001
[96] The appellant’s argument in relation to this judgment is that her Honour relied on Thomas J’s reasons as the basis for her judgment. For reasons expressed previously in these reasons I am of the view that the finding that there was a collateral contract cannot stand but that the finding of estoppel by Thomas J should not be disturbed. Since one basis of Thomas J’s judgment remains unaffected by the appeal this ground must fail.
[97] However, it is necessary to refer to matters elaborated on by Mullins J since they are of some importance. Firstly, her Honour said that as it was critical for the parties to know whether the right of renewal was personal or assignable the issue must have been disposed by Thomas J’s findings. Because the form of the declarations made by Thomas J was final relief, there was no jurisdiction to revisit and tinker with the wording of the declaration. In making these findings her Honour dealt with paragraphs (v) and (vi) referred to in paragraph [92] above. Secondly, her Honour said that the terms of the renewed licence had been resolved by Thomas J’s declaration. What was renewed was what existed. In making this finding her Honour disposed of (iv) above. Thirdly, her Honour found that the requirements of personal residence and involvement in the business followed from the terms of the renewed agreement found by Thomas J. That the outer limit was life was also determined by Thomas J. These findings referred to paragraphs (i), (ii) and (iii) above. It is therefore the case that refusal of leave to amend the defence and counterclaim did not prejudice the appellant’s since firstly, the issues were, argued before and elaborated on in any event by Mullins J and, secondly, had the amendment been allowed, they would have been resolved adverse to the submissions of the appellant.
Orders
[98] I would therefore allow the appeal with regard to the ground in paragraph 2.1(a) of the notice of appeal but otherwise dismiss the appeal. Since the appellant has been successful on one matter of principle, but not one which affects the practical outcome of the proceedings, I would give leave to the parties to make written submissions as to costs within 7 days of delivery of this judgment.
Footnotes
[1] Wright & Anor v Hamilton Island Enterprises Ltd No 8981 of 1996, 17 March 1998, 6-7 and ACN 055389725 Pty Ltd & Ors v Hamilton Island Enterprises Ltd Appeal No 8982 of 1996, 17 March 1998, 10.
[2] [1913] AC 30.
[3] (1919) 27 CLR 133, 139.
[4] Compare the consequences of an oral statement of a promissory nature which is incorporated in the main contract: Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41.
[5] Ibid.
[6] See, for example, Nicholas Seddon Á Plea for the Reform of the Rule in Hoyt's Pty Ltd v Spencer (1978) ALJ 372 and Wilmot Christensen Butler Contract Law Oxford University Press 2001, 229-230 and compare City & Westminster Properties (1934) Ltd v Mudd [1959] Ch 129.
[7] Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1; Esanda Ltd v Burgess (1984) 2 NSWLR 139.
[8] Cf the position with leases: Friedman v Barrett; ex parte Friedman [1962] Qd R 498, 507-508; Mercantile Credits Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326, 344-345.
[9] Grace v Hamilton Island Enterprises Ltd No 8976 of 1996, 31-32, incorporated into Wright & Anor v Hamilton Island Enterprises Ltd No 8981 of 1996 and ACN 055389725 Pty Ltd & Ors v Hamilton Island Enterprises Ltd No 8982 of 1996, all delivered 17 March 1998.
[10] Art 18.6 and 18.7.
[11] (1983) 152 CLR 406, 435, 436.
[12] See, for example, Grace & Anor v HIE Ltd No 8976 of 1996, 34-35, incorporated into the reasons of these cases.
[13] [1982] QB 84 discussed in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, 403-407; see also the observations of Kirby P (as he then was) in State Rail Authority of New South Wales v Heath Outdoor Pty Ltd (1986) 7 NSWLR 170, 177 and Johnson Matthey Ltd v A C Rochester Overseas Corp (1990) 23 NSWLR 190, 195-196.
[14] See Waltons v Maher, 399-408, esp 406-408.
[15] (1986) 7 NSWLR 170, McHugh J 193-194.
[16] Order of Thomas J, 19 December 1997, para 8.
[17] See r 5(1) and (2).
[18] At [11].
[19] See Mullins J's reasons in Wright v Hamilton Island Enterprises Ltd (No 2) [2001] QSC 424 and ACN 055389725 Pty Ltd v Hamilton Island Enterprises Ltd (No 2) [2001] QSC delivered 15 November 2001, [34].
[20] Described by the learned judge as an equitable estoppel, and the component elements of which were those described by Brennan J (as he then was) in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428, 429.
[21] Friedman and Barrett; ex parte Friedman [1962] Qd R 498 at 507-508; and Mercantile Credit Ltd v Shell Co of Australia Ltd (1976) 136 CLR 326 at 344-345 per Gibbs J.
[22] Hoyt’s Proprietary Ltd v Spencer (1919) 27 CLR 133 at 139 and 146, 147.
[23] Judgment of Mason CJ and Wilson J at CLR 400 in Waltons v Maher.
[24] Their Honours cited, inter alia, from McHugh JA in SRA v Heath Outdoors Pty Ltd (1986) 7 NSWLR 170 at 193, wherein His Honour wrote that a promise not to enforce a contractual right can give rise to an estoppel, if certain conditions are fulfilled. Mc Hugh JA cited the judgments in Legione v Hately (see below) as authority.
[25] Legione v Hateley (1983) 152 CLR 406 at 435-437; and Woodhouse Ltd v Nigerian Produce Ltd [1972] AC 741 at 755, 756.
[26] Waltons v Maher at CLR 149 per Brennan J; The Commonwealth v Verwayen (1990) 170 CLR 394 at 429 per Brennan J.