Central London Property Trust ltd

vs.
High Trees House Ltd
Court King's Bench Division

Decided 18 July 1946

Citation(s) [1947] KB 130; [1956] 1 All ER 256; 62 TLR 557; [1947] LJR 77; 175

LT 333

Judge(s) sitting Denning j

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 CONTENTS

SERIAL NO TOPIC PAGE NO

01 ACKNOWLEDGEMENT 02-02

02 INTRODUCTION 03-03

03 HEADNOTE 04-04

04 JUDGEMENT 05-05

05 CONCLUSION 08-08
 Introduction

Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 (or the High Trees
case) is an English contract lawdecision in the High Court. It reaffirmed and extended the
doctrine of promissory estoppel in contract law in England and Wales.
Denning J held estoppel to be a promise was made which was intended to create legal relations
and which, to the knowledge of the person making the promise, was going to be acted on by the
person to whom it was made and which was in fact so acted on. The landlords let a block of flats
to the tenants on a ninety-nine years' lease under seal in 1937 at a ground rent of £ 2,500, which
in view of war-time conditions and without consideration they agreed in writing in 1940 to
reduce to £ 1,250. Early in 1945 the flats became fully occupied and in September, 1945, the
landlords claimed that rent was payable at the full rate of £ 2,500 and they also claimed arrears in
respect of earlier years. They brought a test action for the recovery of the full rent for the two
quarters ending on Sept. 29, 1945, and Dec. 25, 1945. The tenants contended that the reduced
rent was payable for the whole term of the lease, or alternatively that it was payable up to
September, 1945, on the ground that the landlords were estopped from now claiming the
additional rent or alternatively that they were bound by their promise of a reduction in the rent,
which was made with the intention that it should be binding and should be acted on and which
was, in fact, acted on by the tenants.
HEADNOTE
Landlords let a new block of flats in 1937 to H. Ltd. (called "the tenants"), on a ninety-nine
years' lease at a ground rent of £ 2,500 a year. Few of the flats had been let at the outbreak of war
in 1939, and, in view of the tenants' difficulty in paying the rent out of profits in prevailing
conditions, the landlords agreed in writing in 1940 to reduce the rent to £ 1,250. No duration of
the reduction of rent was specified and there was no consideration for it. The tenants paid the
reduced rent. By early in 1945 the whole block of flats was let. On Sept. 21, 1945, the landlords
wrote asking that the full rent of £ 2,500 should be paid and claiming arrears of £ 7,916. They
subsequently brought a test action to recover the balance of rent for the quarters ending Sept. 29
and Dec. 25, 1945. Held: (i) the promise of a reduction of rent, being intended to be legally
binding and to be acted on, and having been acted on by the tenants, was binding on the
landlords to the extent that they would not be allowed to act inconsistently with it, although it
was not the subject of estoppel at common law; but (ii) the promise was for a reduction of rent
which was temporary and was to endure so long only as the block of flats was not substantially
let, and, since the block of flats was substantially let early in 1945, the landlords were entitled to
the full rent for the quarters ending Sept. 29 and Dec. 25, 1945.
 FACT
In 1937, High Trees House Ltd leased a block of flats in Clapham, London, for a rate £2500/year
from Central London Property Trust Ltd. Due to the conditions during the beginning of World
War II occupancy rates were drastically lower than normal.
In January 1940, to ameliorate the situation the parties made an agreement in writing to reduce
rent by half. However, neither party stipulated the period for which this reduced rental was to
apply. Over the next five years, High Trees paid the reduced rate while the flats began to fill, and
by 1945, the flats were back at full occupancy. Central London sued for payment of the full
rental costs from June 1945 onwards (i.e. for last two quarters of 1945).
Judgement
Based on previous judgments as Hughes v Metropolitan Railway Co, Denning J held that the full
rent was payable from the time that the flats became fully occupied in mid-1945. However, he
continued in an obiter statement that if Central London had tried to claim for the full rent from
1940 onwards, they would not have been able to. This was reasoned on the basis that if a party
leads another party to believe that he will not enforce his strict legal rights, then the Courts will
prevent him from doing so at a later stage. Being obiter dicta, this remark was not actually a
binding precedent, yet it essentially created the doctrine of promissory estoppel.
If I were to consider this matter without regard to recent developments in the law, there is no
doubt that had the plaintiffs claimed it, they would have been entitled to recover ground rent at
the rate of £2,500 a year from the beginning of the term, since the lease under which it was
payable was a lease under seal which, according to the old common law, could not be varied by
an agreement by parole (whether in writing or not), but only by deed. Equity, however stepped
in, and said that if there has been a variation of a deed by a simple contract (which in the case of
a lease required to be in writing would have to be evidenced by writing), the courts may give
effect to it.Equitable doctrine, however, could hardly apply in the present case because the
variation here might be said to have been made without consideration. With regard to estoppel,
the representation made in relation to reducing the rent was not a representation of an existing
fact. It was a representation, in effect, as to the future, namely, that payment of the rent would
not be enforced at the full rate but only at the reduced rate. Such a representation would not give
rise to an estoppel, because, as was said in Jorden v. Money (1854) 5 H. L. C. 185, a
representation as to the future must be embodied as a contract or be nothing.
But what is the position in view of developments in the law in recent years? The law has not
been standing still since Jorden v. Money (1854) 5 H. L. C. 185. There has been a series of
decisions over the last fifty years which, although they are said to be cases of estoppel are not
really such. They are cases in which a promise was made which was intended to create legal
relations and which, to the knowledge of the person making the promise, was going to be acted
on by the person to whom it was made and which was in fact so acted on. In such cases the
courts have said that the promise must be honored. The cases to which I particularly desire to
refer are: Fener v. Blake [1900] 1 Q. B. 426, In re Wickham (1917) 34 T. L. R. 158, Re William
Porter & Co., Ld. [1937] 2 All E. R. 361 and Buttery v. Pickard[1946] W. N. 25. As I have said
they are not cases of estoppel in the strict sense. They are really promises - promises intended to
be binding, intended to be acted on, and in fact acted on. Jorden v. Money (1854) 5 H. L. C. 185
can be distinguished, because there the promisor made it clear that she did not intend to be
legally bound, whereas in the cases to which I refer the proper inference was that the promisor
did intend to be bound. In each case the court held the promise to be binding on the party making
it, even though under the old common law it might be difficult to find any consideration for it.
The courts have not gone so far as to give a cause of action in damages for the breach of such a
promise, but they have refused to allow the party making it to act inconsistently with it. It is in
that sense, and that sense only, that such a promise gives rise to an estoppel. The decisions are a
natural result of the fusion of law and equity: for the cases of Hughes v. Metropolitan Ry.
Co. (1877) 2 App. CA’s. 439 , 448, Birmingham and District Land Co. v. London & North
Western Ry. Co. (1888) 40 Ch. D. 268 , 286 and Salisbury (Marquess) v. Gilmore [1942] 2 K. B.
38 , 51, afford a sufficient basis for saying that a party would not be allowed in equity to go back
on such a promise. In my opinion, the time has now come for the validity of such a promise to be
recognized. The logical consequence, no doubt is that a promise to accept a smaller sum in
discharge of a larger sum, if acted upon, is binding notwithstanding the absence of consideration:
and if the fusion of law and equity leads to this result, so much the better. That aspect was not
considered in Foakes v. Beer (1884) 9 App. Cas. 605. At this time of day however, when law and
equity have been joined together for over seventy years, principles must be reconsidered in the
light of their combined effect. It is to be noticed that in the Sixth Interim Report of the Law
Revision Committee, pars. 35, 40, it is recommended that such a promise as that to which I have
referred should be enforceable in law even though no consideration for it has been given by the
promise. It seems to me that, to the extent I have mentioned, that result has now been achieved
by the decisions of the courts. I am satisfied that a promise such as that to which I have referred
is binding and the only question remaining for my consideration is the scope of the promise in
the present case. I am satisfied on all the evidence that the promise here was that the ground rent
should be reduced to £1,250 a year as a temporary expedient while the block of flats was not
fully, or substantially fully let, owing to the conditions prevailing. That means that the reduction
in the rent applied throughout the years down to the end of 1944, but early in 1945 it is plain that
the flats were fully let, and, indeed the rents received from them (many of them not being
affected by the Rent Restrictions Acts), were increased beyond the figure at which it was
originally contemplated that they would be let. At all events the rent from them must have been
very considerable. I find that the conditions prevailing at the time when the reduction in rent was
made, had completely passed away by the early months of 1945. I am satisfied that the promise
was understood by all parties only to apply under the conditions prevailing at the time when it
was made, namely, when the flats were only partially let, and that it did not extend any further
than that. When the flats became fully let, early in 1945, the reduction ceased to apply.
In those circumstances, under the law as I hold it, it seems to me that rent is payable at the full
rate for the quarters ending September 29 and December 25, 1945.
If the case had been one of estoppel, it might be said that in any event the estoppel would cease
when the conditions to which the representation applied came to an end, or it also might be said
that it would only come to an end on notice. In either case it is only a way of ascertaining what is
the scope of the representation. I prefer to apply the principle that a promise intended to be
binding, intended to be acted on and in fact acted on, is binding so far as its terms properly apply.
Here it was binding as covering the period down to the early part of 1945, and as from that time
full rent is payable.
I therefore give judgment for the plaintiff company for the amount claimed.
CONCLUSION
We conclude that Attempts have been made to utilize the doctrine of promissory estoppel
after High Trees to create a new inroad into the rule in Pinal’s case that an agreement to accept
part payment of a debt in full satisfaction of it is unenforceable for want of consideration. In
the High Trees case Lord Denning commented, that such an agreement should now be
enforceable under the doctrine of promissory estoppel. However, the courts have traditionally
been reluctant to overrule cases like Pinnel's case and Foakes v Beer as they have formed part of
the common law for so long. Lady Justice Arden in Collier v P & MJ Wright (Holdings)
Ltd[1] accepted in principle that High Trees could be used to extinguish a creditor's right to full
payment of a debt in such circumstances.
In Amalgamated Investment Co v Texas Bank[2] it was held that the doctrine could act as a sword
and not merely as a shield (that is, it could be used as a cause of action rather than merely
providing a defence to an action).