Case Commentary on Central London Property

Lord Denning’s judgment in Central London Property v High Trees is a case which played a significant role in establishing the doctrine of promissory estoppel within the English courts.

One year into the Second World War, tenants in London were scarce, thus resulting in the plaintiffs, Central London Property Trust Ltd halving the original rent on the lease from £2 500 to £1 250 a year. For the next five years, the defendants (High Trees House) paid this reduced sum for their tendency. However circumstances soon favoured the plaintiffs since most of their flats were now let (post-war boost) and so it becoming more profitable for the rent to be raised back to the original £2 500 on the lease. The plaintiffs furthermore demanded rent for the last two quarters of 1945.

The plaintiffs claim was held by Denning J as he was then, in the High Court. However it was what he said in obiter dicta that gave significant rise to the controversial doctrine of promissory estoppel:

“… in any event the estoppel would cease when the conditions to which the representation applied came to an end…”

This suggests that if the plaintiffs were to sue for the full rent, during the war (the period covered in their 1940 agreement) the claim would have failed in the courts, since they would have been estopped from doing so. Lord Denning also cited that the defendants need not to provide consideration in support of the promise to accept less money, as the promise had already been acted upon.

It can be said that Denning J intended to correct what he believed to be unfairness, arising from previous judgements in cases such as Foakes v Beer [1] and Jorden v Money [2] . In Foakes v Beer, the House of Lords gave precedent to Pinnel’s Case [3] (and the first to do so), in that a promise to accept less with no new consideration from the debtor was unenforceable. This decision had been upheld in several cases since, including Re Selectmove [4] , Ferguson v Davis [5] and Collier v P. &M.J. Wright (Holdings) Ltd [6] . The principle effect of Jorden v Money was to limit the doctrine of estoppel both at common law and equity to representations of existing fact for fear that any extension would erode the doctrine of consideration [7] . Therefore, by abstaining from the House of Lords’ grounded decision in leading case, Foakes v Beer, Lord Denning was opening his counter rule to Pinnel’s case, to wide criticism.

Elizabeth Cooke [8] argued that the use of the ‘equitable waiver’ approach to the facts of the case i.e. the non-payment of rent appeared to contradict the House of Lords’ decision in Foakes v Beer. Furthermore, Cooke claimed that Denning’s judgment, in one single motion had ‘seemed to destroy the doctrine of consideration’, by implying no fresh consideration was needed to accept a reduced sum of money. This went against the House of Lords’ decision in Hughs v Metropolitan Railway Co [9] , where it was held that equitable estoppel was not intended to apply to variations of price unsupported by consideration.

The House of Lords in Jorden v Money, concluded that estoppel applies only to misrepresentations of existing fact- not to promises of future conduct, as mentioned by Denning in his judgment. But the fact that this was not taken into account in Hughs v Metropolitan Railway Co., but should have done because of the existence of a promise for future conduct from the lessee, is a submission to the idea that Hughs is an exception to this principle. So for that reason High Trees can be viewed as an exception also. But Denning rebutted with the expression, ‘fusion of law and equity’, signalling that it should be disallowed, in the legal sense, for a party to revert on a promise thus being an equitable measure known coming to be known as Promissory estoppel.

Nonetheless, even with Lord Denning’s pivotal judgment the House of Lords are yet to give their approval on the doctrine of promissory estoppel. The doctrine was left in the grey in both Tool Metal Manufacturing Co. Ltd v Tungsten Electric Co. Ltd [10] and Woodhouse A.C Israel Cocoa Ltd v Nigerian Produce Marketing Co. Ltd [11] . Martin Hogg asserted that the High Trees principle was interpreted in later cases simply as a form of estoppel rather than a substantive obligation. [12] This could be because grounding cases such as Pinnel’s case and Foakes v Beer have set precedent in English law for 408 years that it becomes difficult to withdraw from these decisions and further risking the elimination of the consideration doctrine – despite Denning’s judgment in High Trees. However in recent case Collier v P & MJ Wright (Holdings) Ltd Lady Arden, in the Court of Appeal, acknowledged that High Trees could be used to quench a creditor’s right to full payment of a debt, in these conditions. Thus being an example of slow steps in the path to establish the doctrine.

The Australian legal system, however, has already firmly incorporated promissory estoppel within its’ courts. It was held in Waltons Stores v Maher [13] that the appellant was estopped from denying that a promise was not legally binding because of the detriment on the respondent. Thus the judgment is found upon preventing detrimental reliance, so cannot be applied to High Trees where the defendants did not act on their detriment, but simply paid the lower rent. With Australian courts recognising the full extent of promissory estoppel, it can be hoped that it soon will not be long before England and Wales soon begin to follow- either by precedent or statutory power.

To conclude a deviation from these House of Lords’ decisions, by Lord Denning changed the way in which English contract law viewed estoppel. The High Trees case acted as a vessel in which the doctrine of promissory estoppel was reinstated, in the English and Australian legal systems. It may not have been followed by all House of Lords’ decisions, but Denning definitely set the ball rolling, and who is to say that in the near future promissory estoppel will not be concreted into law of England and Wales.