In the provided case law, Shrestha Tailor was a fashion designer who wanted to open her own fashion stores for the sale of her designed clothes. She was not financial able to start the business alone hence she asked her aunt Mrs. Moneypenny for helping her. Mrs. Moneypenny has several properties in Sydney hence she offered to lease one of her premises to Shrestha at half of the rent which she normally receives for that property. Shrestha found the premises very simple for her purpose and told her aunt to make some alterations as per her requirements. She was also agreed to pay the renovation charges of $65,000 if her aunt would give her certain consent to Shrestha. After few time Shrestha spoke to her aunt and began the renovation project. Later Mrs. Moneypenny refused to lease her property to Shrestha when the renovation project was almost completed by saying that she received an offer for higher rent from Mr. Rich. In this entire event of promise and acceptance, Shrestha has spent $65000 on the renovation of premises.
The issue revealed in the given scenario is related to the validity of promise given by Mrs. Moneypenny due to which Shrestha caused an economic injury of $65000.
Relevant Rules and Case Laws
As per the details given in the case law, the rules of Australian Contract Law and land law apply in the circumstances of case. Shrestha is eligible to file the case under the principle of promissory estopple prescribed in the Contract law. Also she can protect her interest in the property promised for the lease under the rule of proprietary estopple in the laws of land.
As per the contract law, an offer or promise made by a promisor will be considered as complete if the promisee has given his consent on this. Similarly a contract is regarded as complete or valid if all the essential elements of contract are involved. These elements include a complete promise i.e. an offer and acceptance, consideration, legal capacity and intent of parties. Hence a contract made without any of these elements shall not be considered as valid. The element of consideration is very much important for the creation of a legal contract. It is prescribed in the law of contract that an agreement held without the exchange of any consideration cannot be held valid and legally binding on the parties. A contract can only be enforced by the parties if they can prove that they have provided any consideration or promised to pay some valuable things against the performance of contract to each other. For example Peter promised to Henry to give his bicycle cannot be held as a valid contract because Henry has not promised or provided any consideration for the bicycle. In a case of “Roscorla v. Thomas, (1842) 3 QB 234”, Thomas gave a horse to Roscorla and no consideration was promised or provided for the purchase of horse. While giving the horse to Roscorla, Thomas has claimed that the horse was sound but it was ferocious thus Roscorla sued against Thomas for the breach of contract. In that case it was held by the Court that Roscorla has no right to make a claim as no consideration was paid or promised by him for the purchase of horse and horse was given by Thomas merely on the request hence the contract was not enforceable.
However this rule of having consideration in a contract has given benefits to several contractual parties to estop a contract without performing it. Hence in the order to prevent the parties from going back on a contract, the rule of promissory estopple was introduced. To remove the harsh consequences of common laws, the equitable doctrine of promissory estopple has been established. This rule prevents the promisor from going back on his promise. The main objective of this principle is to provide a legal right to the injured parties due to the non-completion of promise. In some cases, the promisor tries to prove that the underlying offer or promise cannot be enforced legally to avoid his liability on the promise. Therefore to stop protect the interest of promisee, the concept of promissory estopple has created. This rule provides the right to promisee to get the compensation for his losses. However to present a claim under the rule of promissory estopple, certain relevant elements are required to be proved by the promisee such as there must be a promisor and promisee and an injury or loss must be occurred in real to the promisee. Also the injury or loss should be resulted from the reliance of promisee on the promise made by promisor. In the case of “Central London Property trust Ltd V. High Tree House Ltd. (1974)1 KB 130”, a landlord promised to his tenant that he will charge half of the rent till the end of wartime period but later he asked the tenant to pay the forgone amount of rent by him during the wartime. The Court held in this case that the landlord promised to his tenant to receive only half of the rent during wartime hence he has no right to breach his promise or receive the forgone half amount of rent by the tenant.
In another case of “Glasbrook Bros v Glamorgan County Council  AC 270”, a mine company requested to police for settling a remote petrol in the premises of mine until the completion of worker’s strike. For such purpose the company offered a consideration of £2200 to police for providing extra protection to employees of mine. By considering the matter of protection, police accepted the offer but later on the company refused to pay the consideration to police by stating that to protect the public is basic duty of police hence they are also liable towards the protection of company’s employees and worker. In this case the Court held, although the duty of police is a public duty of providing protection to all but by establishing a remote petrol in the campus of mine on the offer of company, police has provided extra protection to the company for a specific period hence for providing such additional protection to company, police is entitled to recover the amount of consideration from company.
The concept of estopple is generally used to enforce the terms of contract or agreement. For such purpose, in the land laws of Australia, the rule of proprietary estopple was introduced. This rule provides protection against unconscionable dealings in the contract. It creates the interest in property of owner in form of license, lease or easement. The rule applies on the non-compliance of conditions of contract by the promisor. It provides right to the claimant to sue against the promisor for proving his right in the property or to recover the loss occurred due to the promise made by promisor. For example A promised B to transfer his old Car after buying the new one. By relying on the words of A, B has spent some amount on the repairing of such car. Later A bought a new car but refused to give the old car to B. In this case B can claim for the amount which he spent on the repairing of car. In a famous case of “Dillwyn v Llewelyn 1862 4 De G. F. & J. 517” a father promised to transfer his land to son and ask him to construct a house on such rent. However they have not done any legal compliances and formalities for the transfer of land at that time. Also by relying on the words of father, son spent an amount of £14,000 for the construction of house but before completing the legal requirement of transfer of land, the father passed away. In this case the Court held that a voluntary transfer or contract cannot be entertained by the court of equity and the right of donee automatically arises on the merely received gift of property. Hence the son will automatically get entitled for the ownership of such land because the land belonged to his father. However the donee may claim for the recovery of right which is involved in the property but he did not receive them.
To present the claim under the rule of proprietary estopple, certain elements are needed to be proved. For such purpose the plaintiff is required to prove that an assurance or promise was made by the promisor and by relying on that promise, promisee suffered from an economic injury or loss. He also needs to prove that the promise or assurance made by the promisor has encouraged the expectation of promisee and an actual loss has occurred to the promisee. In a relevant case of “Waltons Stores (Interstate) Ltd v Maher HCA 7, (1988) 164 CLR 387” the principle of estopple was used by the claimant. In this case a lease has been executed between Waltons Stores Ltd and Maher who was a builder for the purpose of constructing premises. Both the parties agreed and signed a lease. Further the existing building was demolished for the construction of new premises. Afterwards the Waltons refused to carry on the lease for further when almost 40 percent construction work was completed. The Court assumed the principle of promissory estopple in this case and held that Mehar started the construction work and demolished the existing building by relying on the basis of contract established between him and Waltons. Thus it shall be regarded as unconscionable to ignore the terms of contract by the Waltons. The Court held that Mehar is entitled to estop the Waltons from going back on contract and to recover the damages occurred due to the cancellation of lease. Also the court may enforce the Waltons for specific performance of contract.
If the claimant succeeds to prove his claim under the rule of proprietary estopple, then the Court may ascertain his entitlement in the property of conflict or may order the defendant to pay the damages to plaintiff. For example Mr. X Promised to Mr. Y that he house would transfer his house to him after his death and he may renovate the house according to his choice. By relying on the promise of Mr. X, Mr. Y spent a huge amount on the renovation of such house. But after the death of Mr. X, no will has been found to prove the transfer of ownership of that house. In that case Mr. Y may present his claim to get the right over the house or to recover the amount he spent on the renovation of house. Similarly in the case of “Sidhu v Van Dyke  HCA 19”, Mr. sidhu and his wife rented an Oak cottage to Miss Van Dyke with whom Sidhu has made love relationship afterwards. Due to his relationship with Miss Van, Sidhu’s marriage was breakdown with his wife. Sidhu promised to Miss Van that on the separation of property, he would give the oak cottage to her and by relying on his statement, Miss Vak renovate the cottage with her own money. Later Sidhu refused to meet the promise and Miss Van represents her claim before the Court. The Court stated that Miss Van caused an economic injury due to the detriment reliance on the promise of Sidhu hence he is liable for the damages of Miss Van. However it is recommended by the decision of a similar case that estopple may include the performance of promise or meeting of expectations hence the Court may also enforce Sidhu to give the entitlement of cottage to Miss Van but the cottage was burned down and could not be transferred to her hence she is entitled to receive the amount which she spent on the renovation work of cottage.
It is given in the case law that Mrs. Moneypenny offered the lease of her premises to Shrestha for the opening of her clothing store and Shrestha accepted the offer of her aunt. Also a rent of the premises was agreed between Shrestha and her aunt which Shrestha promised to pay after the beginning of lease. Hence the major elements of contract i.e. promise, acceptance and consideration were there in the contract for making it legally binding on the parties. Also Shrestha has spent $65000 on the renovation work of premises for giving it a layout of clothing store. For such purpose she talked with her aunt and on the ascertainment of her consent, started the renovation work. Later at the time of signing of lease, Mrs. Moneypenny refused to lease the premises to Shrestha because she received a higher offer of rent for the same premises from Mr. Rich. Hence Shrestha is eligible to prove his claim under the rule of promissory estopple which may estop Mrs. Moneypenny from going back on her promise. However Shrestha cannot enforce Mrs. Moneypenny to provide the premises on lease to her but may recover the amount spent by her on the renovation of premises and other damages which she caused due to the promise of Mrs. Moneypenny. It is prescribed in the law of contract that doctrine of promissory estopple has been established to protect the promisee from the economic injury which is occurred due to the unconscious behavior of the promisor and to remove the harsh consequences of these acts. Hence Mrs. Moneypenny is liable for paying the damages to Shrestha.
In the contrary of that Shrestha can also represent her claim under the rule of proprietary estopple. In this rule, she can establish her interest in the premises of Mrs. Moneypenny which she promised to lease to Shrestha for opening of clothing store. She can prove her claim before the Court by stating that by relying on the promise of Mrs. Moneypenny her expectations were increased and she made additional efforts to meet the requirement of opening of new store. Also she managed to earn the cost of renovation by working additionally. It is prescribed in the land laws of Australia that to prove a claim under the principle of proprietary estopple, it is required to have some elements such as assurance, an actual economic loss and loss shall be occurred due to relying on the promise. In the given scenario all these element are present hence Shrestha may file her claim before the Court to get the entitlement in the property. She can argue to prove her claim that she spent a huge amount and lots of efforts to renovate the premises and also made the arrangement to start her new store but the cancellation of lease destroyed all her plans and expectations and also caused an economic loss to her. Hence she could request the Court to enforce Mrs. Moneypenny to lease the premises to Shrestha or to pay her the renovation amount spent by her.
It could be concluded after analyzing the relevant laws and case laws in context to the given scenario that Shrestha has the right to recover her amount spent on renovation on premises by representing her claim under the doctrine of promissory estopple. Further she may argue before the Court to prove her claim under the rule of proprietary estopple to enforce her interest in the premises proposed for lease.
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