London property trust v High tree house
Principle: the doctrine of promissory estoppel in contract law
Summary of Facts: High Trees House Ltd leased a block of flats in Clap ham, London from Central London Property Trust Ltd. The agreement was made in 1937 and specified an annual ground rent of £2,500. The outbreak of World War II in September 1939 led to a downturn in the rental market. High Trees struggled to find tenants for the property and approached Central London Property Trust in January 1940 to request that the rent be lowered. A reduction to £1,250 per year was agreed in writing, though the duration was not specified and no consideration was provided.
By 1945, the building was returning to full occupancy. On 21 September 1945, Central London Property wrote to High Trees to request a return to the full rent of £2,500 and claiming arrears of £7,916 for the period since 1940. They then brought a test action to recover part of the debt for the two quarters which had elapsed since June 1945.
Judgment: 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 and in a court of first instance this was doubly not a binding precedent, yet it essentially created the doctrine of promissory estoppel.
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