Material facts

The given case represents the issue of breach of promise by the promisor. As per the details of case, Shrestha and her aunt Mrs. Moneypenny has agreed to enter into a lease contract for the lease of a premise. Both were agreed on the amount of consideration and other conditions of contract. Also Shrestha has spent her own money for the renovation of such premises for giving it the look of clothing store. Later on at the time of signing the lease, Mrs. Moneypenny refused to sign the lease by saying that she got a higher rental offer from another person. Due to the cancellation of lease, Shrestha caused an economic loss of amount incurred on renovation and also her plan for opening her own clothing store has been destroyed. 

Relevant laws and Rules 

As per the given scenario, the promisor has breached the promise to lease the premises to promisee which caused an economic injury to promisee. Therefore to provide a remedial action to promisee for recovery of amount of damages, the doctrine of promissory estopple shall apply. Also the matter of fact was related to the interest of proposed lessee in the property of lessor hence the principle of proprietary estopple shall also apply in the given case law.

v Doctrine of Promissory estopple: It is a principle which comprises the ingredient of promise and estopple. Generally the promise can be regarded as significant for the society and to meet the promise is a moral thing. In addition to this the doctrine of promissory estopple enforces a promise legally and bound the promisor to meet the conditions of promise. This rule is based on the principle of justice and good conscience. It is an equitable doctrine evolved to avoid injustice and enforce the legality of a promise which caused an injury to the promisee. The doctrine of promissory estopple is used to estop the promisor from going back on his promise. In certain cases the promisor refused to perform the promise by arguing the conditions of promise not legally binding. If the conditions of promise caused any loss or damage to the promisee then he could present his claim under the rule of promissory estopple. The doctrine of promissory estopple states that the innocent party should not suffer from any type of injury or damage in case of breach of a promise. However it is described under the law of contract that a contract made without any consideration paid or promised to be paid shall not be considered as valid and legally binding on the parties but in certain cases the promise initiated without having a consideration shall be regarded as legally binding on the promisor if his promise has resulted into an economic injury to the promisee. For example A promised B to give his old car after buying the new one and B by relying on the promise of A, spent $200 on the repair of such car. Later A purchased a new car and refused to give the old car to B. In that case B may present his claim under the rule of promissory estopple for the recovery of amount he spent on the repair of the car. Similarly in a case of “Thomas V Thomas (1842) 2 QB 851” Mr. Thomas expressed his wish to have a house for his wife before his death. After he died the executor of his will entered into an agreement with Mrs. Thomas to let her stay in the house of Mr. Thomas as per his wish against the consideration of £1 per year. As this is not valid to have a contract without consideration, the consideration of £1 has been determined by the executor and Mrs. Thomas. After some time of living in the house, the executor refused to complete the conveyance by stating that the contract was not enforceable as it did not comprises valid consideration. In this case the Court held that adequacy of consideration does not matter if the bargaining made between the parties is real. Mrs. Thomas was living in that house to fulfill the dying wish of Mr. Thomas and the motive of entering into contract was irrelevant in other aspects. Hence the consideration received from Mrs. Thomas was adequate for the reason to enter into contract. It is shown in this case that a contract made without or with any inadequate consideration can also be held valid if the bargaining made between the parties is real. It is not always necessary to receive the commercial consideration for entering into the contract. In addition to this for representing the claim under the rule of promissory estopple some essential elements are required to be proved by the claimant, which includes:

1. A promise or assurance made by the promisor
2. A damage or injury caused to promisee
3. The damage or injury was caused due to relying on the promise made by promisor.

Therefore to prove the claim under the principle of promissory estopple, these elements are necessary. When a promise is initiated or made by the promisor, it encourages expectations of promisee which also may cause a certain type of loss to him. 

v Principle of Proprietary estopple: This principle applies in the case where the promise to give an interest in the property of owner has been made but breached by the promisor. This interest can be promised in form of lease, easement, license or tenancy. This doctrine is concerned with the Australian law of lands which creates a legal right to claim an interest in the property promised by the promisor. For example A promised B to lease the premises for opening of his new office. By relying on the promise of A, B initiated the renovation of premises and furniture works for set up his office. For such purpose he spent approx. $50000 from his own account. Later at the time of signing the lease, A refused to sign it. In such scenario, B has suffered from the economic loss of $50000 and also his plan for opening the new office has destroyed. Hence B may request in the Court to enforce A for performing the contract of lease. Hence the concept of proprietary estopple is used to give the remedy to affected person from the unconscionable behavior of a promisor. This remedy includes the entitlement of right in the property of promisor who holds the legal title of property. To implement such principle and to prove the claim under this principle there are certain elements which are required to be proved by the claimant. These elements include the assurance made by the promisor for the interest in the property, breach of promise and damages caused to promisee due to such breach of promise. Also the loss caused to the promisee should be occurred due to his reliance on the promise of promisor. Thus the elements of this concept are similar to the rule of promissory estopple but provide different remedial actions. 

Relevant Case Laws

In a relevant case of “Central London Property trust Ltd V. High Tree House Ltd. (1974)1 KB 130”, a promise was made by the owner of house to his tenant that he will charge half of the rent during the war time but after the wartime he asked his tenant to pay the forgone amount of rent. In this case the Court held that it shall be regarded as breach of promise by the landlord and under the principle of promissory estopple, he is not entitled to receive the rent from the wartime period. 

In another case of “Waltons Stores (Interstate) Ltd v Maher HCA 7, (1988) 164 CLR 387” a contract was established between a company and builder for the construction of a premises which they would use for the purpose of lease. Both the parties signed the lease contract and the builder initiated the construction of new building. Maher, the builder has destroyed the existing construction at that location for the construction of new building. At the time when approx. 40 percent construction was completed, the company Waltons decided to cancel the lease for construction and refused to Maher for further continuation of lease. In this case the Court has stated that Maher has the right to estop Waltons Ltd from the breach of contract. Also he can claim for the compensation for his damages in the contract or may enforce the Waltons for the specific performance of the contract. To enforce both the claims Maher may represent his argument before the Court and prove the elements under the rule of promissory estopple. 

The case of “Dillwyn v Llewelyn 1862 4 De G. F. & J. 517” represents the rule of proprietary estopple. In this case a son was encouraged by his father to construct a house on his father’s land. By relying on the statement of father and to satisfy the wish of his father, son has constructed the house on his father’s land and spent an amount of £14,000 for the construction purpose. Later the father died without completing the legal formalities for the transfer of land and left no will for the transfer of his property. In this case the Court held that if a property is merely transferred to someone as gift or paternal property then Court will not assist the completion for the donee’s title on the property. Hence the land will automatically transfer to the son as he has the interest in the property. In a similar case of “Sidhu v Van Dyke [2014] HCA 19”, Sidhu and his wife rented an Oak cottage to Miss Van Dyke and after some time Sidhu entered into a love relationship with Miss Van. Due to this reason the marriage of Sidhu with his wife also broken up. After the separation with his wife Sidhu promised Miss Van that he would transfer the Oak Cottage to her and by believing on him, Miss Van has renovate the cottage by on her own expenses. Later on the cottage has burned down and Sidhu refused to compensate the amount of damages to Miss van Dyke. In this case the Court has held that Miss Van spent the amount on renovation by relying the assurance given by Sidhu hence she may file her claim under the principle of proprietary estopple to prove her interest in the property. In this case she may enforce Sidhu to perform his promise by transferring the cottage but the cottage was burned down and not able to be transferred. Hence she could claim for the amount which she spent on the renovation of the cottage. 

In an important case of doctrine of promissory estopple i.e. “Glasbrook Bros v Glamorgan County Council [1925] AC 270” it was held by the court that a public servant may also estop another contractual party from going back on conditions of contract. In this case a mining company requested to police for establishing a remote petrol in the mine campus during the worker’s strike to avoid the conflicts for which the consideration of £2200 was offered by the company. The police accepted the offer of company and established remote petrol in the mine campus to provide safety. After the completion of strike, the company refused to pay the consideration to police by stating that it was the duty of police to serve the people and provide them safety hence they are not entitled to get any extra remuneration for such purpose. In this case the Court held “although the police has the responsibility to provide safety to public but they established remote petrol in the mine campus on the request of company therefore they provide special safety to the company for which they are entitled to get the pre-determined consideration. 

Application 

In the given scenario Shrestha wanted to open her new clothing store for which she asked to her aunt for help and Mrs. Moneypenny promised her to lease the premises for her store. They also agreed on the term of rent. Hence both Shrestha and Mrs. Moneypenny entered into a legal promise in which the consideration is also involved. Afterwards Shrestha spoke to Mrs. Moneypenny about her intention to renovate the premises for giving it a look of clothing boutique and started the work of renovation on her own expenses. While the renovation work is running, Shrestha has noticed the interruption of her aunt into the renovating building. Later on the time of signing the lease, Mrs. Moneypenny refused to sign the lease by expressing her reason that she has a higher rental offer for the same premises hence she did not want to carry on the lease contract. 

However there was no written contract between Shrestha and Mrs. Moneypenny and also there is no written assurance given by Mrs. Moneypenny regarding the lease of premises hence Shrestha has no right to present her claim against Mrs. Moneypenny. But as per the doctrine of promissory estopple Shrestha may estop Mrs. Moneypenny from going back on her promise or may enforce her to pay the amount of renovation spent by Shrestha on the promised premises. Also she may prove her claim before the Court under the principle of proprietary estopple to claim her interest in the property. All the elements of both principles are involved in the given scenario. Mrs. Moneypenny made a promise to Shrestha for the lease of premises which gave an encouragement to the expectations of Shrestha and made her believe on the statement of Mrs. Moneypenny. Due to which she spent $65000 on the renovation of premises and gave her extra efforts for the opening of her new store. The cancellation of promise resulted into an economic injury to her and also destroyed her plan for opening of new clothing boutique. Hence the promise of Mrs. Moneypenny caused damages to Shrestha.

Conclusion

The entire analysis of relevant rules, case laws and given scenario reveals that Shrestha has the right to recover her amount of damages under the doctrine of promissory estopple which enforces the promisor to compensate the economic injury of promisee which is caused due to the reliance of promise on his promise. Similarly she may also claim her interest in the premises under the rule of proprietary estopple proving her intention of having interest in property and by showing her loss due to the breach of promise. If the Court deems it fit then it may enforce Mrs. Moneypenny to complete and perform the contract of lease or compensate the amount of loss to Shrestha.