Central London Property Trust Ltd V High Trees House Ltd: Understanding Promissory Estoppel Essay.

Introduction to the High Trees Case

Discuss about the Central London Property Trust Ltd.

The High Trees case, or the case of Central London Property Trust Ltd v High Trees House Ltd[1], is considered as a landmark case in the decisions taken under the English contract law. This particular case has not only reaffirmed, but also extended the doctrine of promissory estoppel in the England and Wales’ contract law. In this particular case, Denning J defined what could be deemed as estoppel. He held that estoppel was a promise which was made, with intent of forming lawful association, and along with this, which was known or in the knowledge Management of the individual who was making the particular promise. Further, this promise was going to be acted upon by the individual to which such a promise was made, and in reality too, the individual acted upon the same[2]. The significance of this particular case with regards to the concept and rules of estoppel have been highlighted through the following parts of this essay.

Estoppel is the collective term which is used to define the legal doctrine in the legal system of the common law. As per this concept, an individual is restricted, prevented or prohibited from making such an assertion, which proves as being contradictory to their previous position on the matters which have been presented before the court of law. Due to the restrictions which have been placed on an individual, as a result of this principle, the individual is said to have been estopped[3].

Promissory estoppel is one of the doctrines under the concept of estoppel, as per which, an individual is stopped from withdrawing a promise which has been made by such an individual to another party, where this other party has made a clear reliance on the particular promise. Generally, a promise in the absence of consideration is deemed as unenforceable and the same is known as a gratuitous or bare promise[4]. Hence, when a salesman of a car makes a promise to the potential buyer that he would not sell a particularly identified car over the next five days, and still continues to do the same, the promise cannot be enforced. However, if even a single penny is accepted by such salesman of car from the potential buyer for the promise made, the same would become enforceable by a court of law, through the potential buyer. Through estoppel, the purview of the courts is increased to even such cases, where there is an absence of consideration, even though in general it is not a base of initiating a litigation claim Management.

Estoppel and Promissory Estoppel

The doctrine of promissory estoppel was born in the case of Hughes v Metropolitan Railway Co[6]. In this particular case, a landlord have given a notice of six months to his tenant for carrying out the repairs and a failure in doing so would have resulted in the lease being forfeited. Negotiations were carried on between the tenant and the landlord regarding the tenant purchasing the freehold of the landlord owned property. Both of the parties thought that a conveyance of the property would be undertaken. The tenant did not carry out any kind of repairs as he believed that he would be buying the freehold of the property, which would render the repairs required by the landlord as not necessary for his usage of property. Though, at the last moment, there was a break in the negotiations and a notice was given by the landlord to the tenant for quitting as the tenant had failed in carrying out the requisite repairs asked by the landlord[7].

The House of Lords, in this particular case held that the time limit which had been imposed over the tenant for carrying out the repairs was suspended when the negotiations took place. As per Lord Cairns CJ, this was the initial principle on which the Court of Equity would proceed. This would have been very clear notion that the time period was suspended when the terms were still being discussed and hence, they could not be used as a base for evicting the tenant. The verdict given in this particular case gave birth to the principle of promissory estoppel. However, this decision was lost with time. A resurrection of this decision was made by Denning J in the matter of Central London Property Trust Ltd v High Trees House Ltd, which proved out to be quite a controversial case[8].

In the case of Central London Property Trust Ltd v High Trees House Ltd, the defendant, i.e., High Trees had leased a block of flats from the plaintiff, i.e., Central London Property Trust Ltd., or CLP, at a ground rent of £2,500[9]. At the time the lease was taken, this block of flats was still new and had been brought out in the year of 1937. As difficulties were being faced by the defendant in attaining tenants for all of the flats in the block, the defendant could not make any profits, as it still had to bear the ground rent, payable to CLP. When due to the prevailing condition of the war, a number of flats remained vacant in 1940 it seemed to the defendant that the situation would never become positive. And hence, both the plaintiff and the defendant entered into an agreement to reduce the value of rent to 50%, which made the rent £1,250, instead of £2,500, during the years of war. From 1941, the defendant paid the reduced rent to the plaintiff after the agreement was put in writing[10]. Once the war conditions were over in 1945, and the flats become completely occupied, the plaintiff applied for returning to the originally agreed upon ground rent of £2,500, along with claiming the full rental costs from the year of June 1945 onwards[11].

The Birth of the Doctrine of Promissory Estoppel

Denning J, making an inference to the previous case of Hughes v Metropolitan Railway Co, stated that the full rent would be payable from the time when the flats became fully occupied, i.e., from the mid of 1945[12]. Though, Denning J made an obiter statement in this case, whereby he stated that in case CLP made an attempt to claim the full rent from the year of 1940 onwards, they would be unsuccessful in doing the same. The raison d’être behind this stems from the fact that in case a party makes the other party into believing or forming the view that the strict legal rights available to such party, would not be enforced by the first party, the Courts would stop the first party from carrying out the same at a later period of time or at a later stage. As this particular view was given under the obiter dicta, the remarks fail to have an actually binding precedent, and still, these are considered as crucial with regards to the creation of the doctrine of promissory estoppel[13].

When the case was presented before Denning J. in the court of law, he became aware about the equitable principle of promissory estoppel. Hence, he advocated this rule as it would have been grossly unfair on part of the plaintiff to apply for arrears on the grounds of equity, only to part ways from the promise that the curt interested the same as being serious as it was brought to action in form of a claim. The raison d’être behind taking this positing by Denning J stems from the contract agreement entered between High Trees and CLP which had major promissory wordings and actions, which were implemented in reality. This is the reason why Denning J faulted CLP from taking an advantage of the defendant‘s right as being the promisee.

Denning J supported the doctrine of promissory estoppel as per which both the defendant and the plaintiff were bound. Hence, he made the later on drawn promise as binding, even in absence of consideration. Moreover, Denning J held that this particular agreement was important in itself and so, the plaintiff had to be stopped from going back on his promise. It was even held that CLP wanted to use the law as being its sword, instead of a shield. And Denning J knew that even when a promise is made by an individual to not enforce the legal rights available to them, and yet the agreement is given effect to, an order can still be made by the court for this particular agreement to be properly honored, without having any regards to the issue of consideration[14].

The Central London Property Trust Ltd v High Trees House Ltd Case

In this case, the effects of promissory estoppel over the need for consideration in the particular contract was based on the promise of CLP regarding the rent to be reduced by their tenant High Trees and the same was acted upon by the parties. Hence, CLP had to be prohibited from going back on their promise. This is due to the reason that when the argument was made by them, that they had not specified the duration of the reduced rent and that they were merely trying to bring forward a new dimension to the collection of the outstanding rent[15]. 

It was held by Denning J that all promises are not required to be expressed in a verbal manner and that the actions are also counted as being promises, as was established in the case of Hughes v Metropolitan Railway Co. It has to be established by the promisee that by revoking the promise, they would be placed in a detrimental position, in comparison to such situation where they had not entered into the contractual agreement earlier. And merely showing the individual has abandoned the promise is not enough[16]. The significant part which acts as the proof is that the promisee is completely unsuccessful in going back to the originally drawn initial contract through the outright abandoning of the position. So, in case it is possible for the promisee to go back to the position of the originally drawn initial contract, by providing a notice in a timely manner, then the interpretation becomes legal, as long as there are not other chances in the future of backtracking, as was held in Central London Property Trust Ltd v High Trees House Ltd[17].

A last promise was made by Denning J, through which the promissory estoppel would become enforceable. On the side of the promisee, the fact that the agreement looked as being a reliable one could not be considered as being presence of equity. There will be a presence of inequity when the new terms, which did not form a part of the initially drawn contract, were introduced into the present agreement. However, the inequity would be deemed to have been interpreted in a correct manner, when the same was used in the agreement to attain favor through deception, as was highlighted in the legal matter of D & C Builders Ltd v Rees[18].

Hence, the present principle of the promissory estoppel was laughed at by Denning J in the High Trees case, with a specific reference to the doctrine of consideration. In this matter, the consideration was on the legal stance of the promisee. And in the views of Denning J, a serious promise was made by the defendant, which required to be enforced through a judicial order. Broadly, the implications of this principle do not give rise to a cause of particular action and even does not provide the rights to sue to the promisee. Though, through the use of this doctrine, a promisor can be prohibited from denying the applicability of the previously drawn contract and the rights associated with it to the promisee. In other words, this doctrine protects, but fails to provide an action[19].

Denning J's Ruling on Promissory Estoppel

Moreover, the applicability of this doctrine is only present in such cases where a previous contract, having proper legal backing, is present and that this previously drawn contract had provision for consideration. With regards to the question on the need of consideration, the consequences of promissory estoppel, applied in this case, prove helpful, and have to be applied in addition to the effect on promisor. In such situations, the promisor does not have the right of taking a step back over the action of the agreement, as per their own convenience, even in case where the requirement for giving the notice have been made, as was held in Emmanuel Ayodeji Ajayi v RT Briscoe (Nigeria) Ltd[20].

The raison d'être for requiring a consideration in the contract is due to the need of protecting the debtor or an individual in similar position, from any unfairness. But this particular doctrine only suspends the legal privileges of the promissory and does not take them away completely, as was seen in the case of Tool Metal Manufacturing v Tungsten[21]. Once a valid consideration has been made, and it is deduced that the following conditions or the steps are not attainable, the best which can be done through this principle is the extinguishment of rights. However, in the view of Denning J, these rights have been taken out for the betterment only and it remains irrespective if the agreement is revitalized. For an action to be successfully made under the High Trees case, the same has to be preceded by a promissory estoppel[22]. Another issue in this was the Denning K supported in a strong manner on the promise which was made earlier, and disregarded the circumstances, which were in terms of the prevalent war, which ultimately led to the new contract being drawn[23].

To conclude this entire discussion, the doctrine of promissory estoppel depicts the reasons why a consideration is needed in the contract, and this is in terms of strengthening the legal position of the individual who is the receipt of a promise made by the promisor. It also estops an individual from going back on the promise which has been made and suspends the legal rights of the promisor in this regard. So, in case a promise is made between two parties, which are likely to have a lawfully binding implication amid them, then the promising party should be aware that such an agreement would have to be implemented by the promisor.

Implications for Contract Law

In the High Trees case, the defendant had claimed the amount which had been promised by under the original contract, when the conditions improved after the war was over. The decision was given in the favor of CLP and the court ordered both the parties to go back to the original contractual consideration. However, the obiter dicta given in this case by Denning J made it famous. This statement of Denning J, estopped CLP from claiming the amount of the period from where the second contract was drawn, till the time the conditions of war subsided. This was due to the doctrine of promissory estoppel, which was revitalized in this case, after being originally formed in the case of Hughes v Metropolitan Railway Co. And even though, due to the reasons of being obiter dicta of the High Tress case, this notion cannot be used as a precedent, but it continues to provide guidance in the cases of promissory estoppel.

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