In this question, after the completion of the MRT train station, the owner of a building is…

In this question, after the completion of the MRT train station, the owner of a building is attempting to raise the promised discounted rental fees back to the normal rate, as well as recover the accumulated discounted amount for the 3 years which he had promised Roy and other tenants, in order to deter them from moving out. So in essence, I will be discussing whether or not the owner is allowed to raise the rent back to the original amount, and also whether or not he can recover the accumulated discounted amount. Whether or not the owner of the building can do this, we will look at a principle called Promissory Estopple. Promissory Estopple refers to when a party is stopped from going back on his promise if that promise has been acted upon by the party whom the promise was made to. This is binding to the promising party so as to prevent the promisee from suffering any form of injustice. In the case before us, Roy is a rent-paying tenant in a condominium that is situated near a construction site for an MRT train station.

The second year into the construction, the level of noise and dust from the site increased to such an unbearable state that Roy and other tenants were looking to move out of the condominium. In a bid to prevent all these people from moving out, the owner of the building offered to halve the current rent all the tenants were paying, from $5, 000 to $2, 500. The MRT train station took another 3 years to complete, all the while with the tenants paying the rent of $2, 500. At this point of time, the owner of the building decided to raise the rent back to the original amount of $5, 000, as well as recover the total amount of the discounted rate all the tenants were offered during the period when the construction was still ongoing. This is where the principle of Promissory Estopple comes to play. Roy and the other tenants had every intention of moving out of the condominium due to the nuisances caused by the then ongoing construction of the MRT train station.

They only decided to continue staying the condominium because the owner made a very generous offer of lowering the rent by a rather substantial amount. As Roy and the other tenants acted upon the promise made by the owner of the building and continued staying in the condominium, Promissory Estopple substitutes for consideration and creates a binding contract. The principle can be seen in the case of Central London Property Trust v. High Trees (1947). In this case, the promisor also made an offer to the promisee that the rent would be lowered so as to increase the number of flats rented out during World War II. After the war, the promisor demanded the full amount of the original rent and also to be compensated for the amount of discounts he had given during the time of war.

The court held that the promisor was entitled to future rent but was not entitled to claim the discounted amounts from past rent, as to prevent injustice to be done to the people who rented the flat due to the promise of a discounted rate. Hence, in Roy’s case, the same principle applies. As he had acted upon the owner’s promise of a discounted rate to continue renting from him and not move out, the owner is not entitled to claiming the discounted amount from Roy. The owner, however, can demand to increase the rent back to the original amount of $5,000, should Roy choose to continue staying at the condominium, as this is the owner’s right as stated in the initial agreement.

Question 2 (a)

In this question, after the passenger cruise ship arrived at its destination, Hong Kong, the captain refused to honour his promise of paying A and the remaining crew the extra amount belonging to the two arrested crew members. So in essence, I will be discussing whether or not A can enforce the captain’s promise of extra wages for the voyage after the two crew members were arrested. Whether or not the promise can be enforced, I will discuss a rule of consideration, that being the Performance of Existing Duty to Promisor. This rule states that a promised performance of existing duty is not a good consideration if the promisee is merely doing what he is supposed to do which is to be the purported consideration. In the case before us, A is a seaman on board a passenger cruise ship from Singapore to Hong Kong. Two seamen were arrested while the ship was having a stopover at Vietnam. The ship then had to depart without the two arrested seamen and the captain had promised the crew to split the wages of those two seamen among the rest if they worked hard to bring the ship to its destination.

However, upon arriving at the destination, the captain went back on his word and refused to honour the promise he made to the crew. Now, to illustrate the point of performance of existing duty, let us look at a similar case to the one in question – Stilk v. Myrick (1809). Stilk was a seaman on a ship sailing from London to the Baltic. Two seamen deserted the ship halfway during the voyage and the captain promised the crew the wages of the two seamen would be split amongst the rest if they worked to bring the ship home. In the end, Stilk and the other seamen were unable to claim the wages as there was no consideration for the captain’s promise.

This is due to the work the crew did being contractually required, as desertion of crew was considered within the usual emergencies of such a voyage. With the above being explained, we would come to a conclusion that A is not able to enforce the captain’s promise, as losing the two seamen was also considered within the common emergencies of the voyage. That being said, the “extra” hard work put in by A and the rest of the crew was not substantial enough to be classified as something performing more than their existing duty, and so there is no consideration for a fresh promise.

Question 2 (b)

Had 10 seamen been arrested and detained, the situation would have rendered the passenger cruise ship unseaworthy. If this is the case, should the captain make a promise to pay the crew extra to continue and bring the ship to its destination, it would be asking the crew to perform a workload which far exceeds that of their existing duty, and would have to honour his promise, as it would have become sufficient consideration for the promise he made. Let us look at the case of Hartley vs Ponsonby (1857). In this case, the number of seamen who deserted was too many so that the ship became unseaworthy, and extra work was required to be performed by the remaining crew in order to bring the ship to its destination.

Here, there is sufficient consideration for the extra wages, as Hartley performed more than his contracted existing duty. Hence, with the above being said, my answer to this question would be a solid yes. As I have explained, the work that A and the crew has to perform if 10 seamen had been arrested and detained would be much more than the initial case of 2. Hence, in this case, A would be able to enforce the captain’s promise to the extra wages as he indeed performed an amount of work that exceeds what he was contracted to do.

References

1. Murdoch University, Business Law Study Guide, Mr Robin Peter Lange

2. http://answers.yahoo.com/question/index?qid=20071208063150AASvqyt

3. http://en.wikipedia.org/wiki/Consideration_in_English_law

4. http://www.mateoaboy.com/f6/blog_files/be9debe290ff9580bb8e5ba95217e33e-98.html

 

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