Central London Property Trust Ltd v High Trees House Ltd PDF

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Central London Property Trust Ltd v High Trees House Ltd, 1947 WL 9964 (1946)

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Central London Property Trust Ltd v High Trees House Ltd

Positive/Neutral Judicial Consideration

Court King's Bench Division Judgment Date 18 July 1946 Where Reported [1947] K.B. 130 [1956] 1 All E.R. 256 (Note) 62 T.L.R. 557 [1946] 7 WLUK 30 [1947] L.J.R. 77 175 L.T. 333 [1947-51] C.L.Y. 838 Subject Contracts Other related subjects Equity Keywords Promissory estoppel Judge Denning J

Case Digest Summary A promise which was intended to create legal relations and which was acted on was binding in law, despite the absence of consideration.

Abstract The plaintiff lessor (C) sought to recover rent from the defendant lessee (H). By a lease made in 1937, C had granted H a tenancy of a block of flats in London for a term of 99 years at a ground rent of £2,500 a year. The block of flats was a new one and was not fully occupied at the start of the Second World War owing to the absence of people from London. With war conditions prevailing, it was apparent to those responsible that the rent under the lease could not be paid out of the profits of the flats, and discussions took place between the directors of C and H which resulted in an written arrangement whereby the ground rent would be reduced as from the commencement of the lease to £1,250 per annum. H paid the reduced rent from 1941 to the beginning of 1945, by which time all the flats in the block were fully let, and continued to pay it thereafter. C sought to recover £625, being the difference between rent at the rate of £2,500 per annum and

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Central London Property Trust Ltd v High Trees House Ltd, 1947 WL 9964 (1946)

rent at the rate of £1,250 per annum for the last two quarters of 1945. By its defence H pleaded that there had been an agreement that the rent should be £1,250 only and that such agreement related to the whole term of the lease. In the alternative, H asserted that C was estopped from alleging that the rent exceeded £1,250 per annum.

Held Judgment for plaintiff. There had been a series of decisions over the last 50 years which, although they were said to be cases of estoppel, were not really such. They were 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 acted on. In such cases, the courts had said that the promise had to be honoured. 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 had not gone so far as to give a cause of action in damages for the breach of such a promise, but they had refused to allow the party making it to act inconsistently with it. It was in that sense, and that sense only, that such a promise gave rise to an estoppel. The time had now come for the validity of such a promise to be recognised. The logical consequence, no doubt, was that a promise to accept a smaller sum in discharge of a larger sum, if acted on, was binding notwithstanding the absence of consideration; and if the fusion of law and equity led to that result, so much the better. A binding promise had been made in the instant case. As to the scope of that promise, the evidence showed that C had agreed that the ground rent would 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. When the flats became fully let, early in 1945, the reduction ceased to apply. Rent was therefore payable at the full rate for the last two quarters of 1945.

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