Promissory Estoppel
Promissory Estoppel
The High Trees doctrine taken from Halsbury’s Laws of England.
Similar to waiver is the doctrine of promissory or equitable estoppel, whereby a party who has represented that he will not insist upon his strict rights under the contract will not be allowed to resile from that position, or will be allowed to do so only upon giving reasonable notice. This principle is derived from a case where a lease was entered into in 1937 in respect of a new block of flats in central London. The tenant experienced difficulty in sub-letting the flats due to war-time conditions and so the parties agreed that, whilst war-time conditions remained, the landlord would accept only half the ground rent. After the war, the landlord successfully claimed the other half of the ground rent in respect of the period after war-time conditions had ceased, but the judge said that, if the landlord had claimed the other half of the rent in respect of the period whilst war-time conditions persisted, he would have failed. This became known as the High Trees doctrine and the judge substantially based it on the grounds of estoppel and equity.
It is well settled that the doctrine of common law estoppel only applies to statements of existing facts and not to representations of future intention or promises. However, the High Trees doctrine differs from common law estoppel in that: (1) it applies to promises, not representations of fact; (2) it is generally only suspensory in operation; and (3) it is not clear to what extent the representee need have changed his position to his detriment in reliance on the representation. With the above in mind, as regards the common law, the High Trees doctrine has more in common with waiver than estoppel.
The High Trees principle usually arises where there is a contract between A and B, and B subsequently grants to A a concession, not supported by consideration, that he will not enforce a particular provision of their contract. Whilst the principle is not confined to concessions in respect of pre-existing contractual rights, it only applies where there is some contractual relationship between the parties. Where there is the required pre-existing relationship between the parties, it seems that the High Trees doctrine cannot be used as a cause of action, but only by way of defence . Within that context, the doctrine requires an unambiguous representation of intention by B and a reliance on that representation by A in circumstances where it is inequitable for B to go back on his concession. Even then, the effect of the concession is usually only temporary. A modern explanation of the doctrine may be in terms of good faith dealings.
The High Trees principle may have been too widely stated in some of the cases and its limits are not yet finally settled. However, it should be distinguished from two other types of estoppel: namely proprietary estoppel and estoppel by convention. Proprietary estoppel is restricted to claims by A of an interest in property where he has acted to his detriment; and whereas the High Trees doctrine is concerned with the legal effect of a promise made by B, estoppel by convention prevents B denying that a promise has been made, or from disputing its terms.
[RM1]It was introduced (obiter) by lord Denning in the Central London property Trust ltd V High trees house ltd (1947) where the owners of a block of flats had promised to accepted reduced rents in 1939. There was no consideration for their promise, but lord Denning nevertheless stated that he would estop them from recovering any arrears. He based his statement on the decision in Hughes V Metropolitan railway (1877)
[RM2]The doctrine of promissory estoppels used as a ‘shield not sword’.
There isn’t much to know about promissory Estoppel other than what is mentioned above.
(Taken from Revision notebook: Promissory Estoppel)
Estoppel only applies to the modification or discharge ofan existing contractual obligation. it cannot create a new contract (Combe V come 1951). However it was used to create a new right of action in the Australian case of Waltons V Maher (1988).
The promise not to enforce rights must be clear and unequivocal. In the Scaptrade (1983), the mere fact of not having enforced one’s full rights in the past was not sufficient.
It must be inequitable for the promisor to go back on his promise. (D & C Builders V Rees 1966)
The promise must have acted in reliance on the promise, although not necessarily to his detriment (Alan & Co ltd V El-Nasr Export and import Co 1972).
Requirements for promissory estoppel to operate
(A) clear and unequivocal representation
The doctrine operates only where there is a clear and unequivocal representation that strict rights will not be enforced. In woodhouse A.C Israel Cocoa SA V. Nigerian produce marketing Co. (1972) AC 741, local Hailsham said
The meaning is to exclude far-fetched or strained, but still possible, interpretations, while still insisting on a sufficient precision and freedom from ambiguity to ensure that the representation reasonably understood in the particular sense required.
It seems that what is required is that only one reasonable meaning should be apperant from the representation made. In Baird Textiles holdings ltd V Marks & spencer plc (2001) EWCA Civ 274, (2002) 1 All ER (comm) 737, a claim based on estoppel failed because the alleged representation was considered to be no more than a bare assurance and insufficiency certain.
Nevertheless, it is apparent from Hughes V Metropolitan Railway Co. (1877) 2 App Cas 439 that if there is a sufficiently clear and unequivocal representation it need not be express, since in that case the representation was implied from the conduct of the lessor.
(B) The doctrine operates as a defence and not as a cause of action
The major limitation on the promissory estoppel doctrine in english law is it can not be used to found a cause of action; that is; it may not be used in legal proceedings brought to force someone to uphold a promise. It can only be used to prevent someone going back on their promise and insisting on enforcement of their strict rights.
In Combe V Combe (1951) 2 KB 215, during divorce proceedings the husband had promised to pay the wife a certain sum by way of maintenance. The wife gave no reciprocal promise to refrain from applying to the court for maintenance, so that (unsually) the husband’s promise was not supported by consideration. The wife attempted to enforce the promise on the basics of “promissory” estoppel, but her claim was refused by the courts of Appeal.
(1) Promissory estoppel does not give ruse to a cause of action
This limitation is sometimes expressed in the maxim that equitable or promissory estoppel is “a shield not a sword”. As an image the expression makes the point quite well, but it should not lead to the mistaken belief that the doctrine is available only to defendants and not to claimants. Promissory estoppel cannot found a cause of action where none would otherwise exist, but it may be used by a claimant in support of a cause of action which has an independent existence.
(2) Promissory estoppel applies only in the context of alteration promises and does not do away with the need to establish consideration to support formation promises.