Petridis carried on a restaurant business in premises leased from Shabinsky for a term due to expire on June 30, 1981. During the lease he had spent considerable sums on renovation. The lease contained an option to renew for two terms of five years, the first of such renewals to be granted upon notice in writing by Petridis on or before December 31, 1980. He wrote a letter to Shabinsky on February 11, 1981, which might have been construed as an exercise of the option "for another 10 years". Shabinsky made two offers of a five-year term at an increased rent, one on January 28, 1981, and another on February 24, 1981, the latter offer being repeated on April 15th. Although the parties' main dispute centred on the new rent for the premises, neither invoked an arbitration clause in the original lease. When the impasse continued, Shabinsky wrote to Petridis on June 2, 1981, revoking all previous offers and demanding vacant possession as of July 1, 1981. Shabinsky accepted an offer by a third party to lease the premises on June 4th. Petridis sought a declaration that the lease had been renewed according to its terms or through the application of the doctrines of waiver or promissory estoppel.
- Does promissory estoppel apply here, or is it being used as a "sword"?
Judgment for the plaintiff, lease renewed for five years.
Grange held that Petridis could not rely on the doctrine of promissory estoppel because the representation giving rise to the estoppel must be made at a time when a legal relationship exists, and here the option ceased to exist after December 31, 1980. However, Petridis could succeed on the basis of the doctrine of waiver. This is still not available as a cause of action, but as the landlord had given a notice to evict and then Petridis pursued the action in response to the eviction notice, it is essentially still being used as a defence. Shabinsky had recognized the continuance of the right of the tenant to renew and chose not to insist on the expiry of the option because he wanted to persuade Petridis to stay at an increased rent. As a result, it would be inequitable to permit him to terminate the negotiations without some reasonable notice to Petridis. Shabinsky should have reverted to his strict rights of enforcing it in accordance with an extended time limit, perhaps one of only a few days in the circumstances. Consideration was not necessary because the landlord could always reassert its strict right provided it was not inequitable to do so. The extension of time here was not a variation of the written contract but a waiver of a right under that contract.
Waiver exists where:
- a party has the right to rescind or repudiate upon the other party’s failure to do something;
- he may by word or deed waive or suspend that right; and
- if he does then equity will sometimes not permit him or will control him in the strict enforcement of those suspended or waived rights.