Central London Property Trust v High Trees House Ltd (High Trees Case)

Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 (High Trees Case): This case is concerned with consideration as an element of a contract. It is basically a party’s contribution to the contract. A party must have furnished consideration in a contract before he can enforce it. Where an agreement is gratuitous, there can be no enforcement for it if it is not made under seal.

In the case of Currie v Misa, Lush, J, stated that the exchange that occurs between parties to a contract does not only consist of benefits or profits, but also, of losses or detriments suffered. As long as these benefits and losses are accepted and agreed upon. Also, In Bainbridge v Firestone, where the defendant asked that he weighs the plaintiff’s boilers and the plaintiff obliged him as long as the boilers will be returned in the same condition, the defendant returned the boilers after he took them apart to weigh.

On being sued by the plaintiff, the defendant contended that the plaintiff furnished no consideration. It was held that his consideration consisted of his parting with his boilers for even a short period of time.

It is a principle of law that consideration need not be adequate. Where this inadequacy is gross, it could be evidence of fraud, but where fraud is not proved, inadequacy does not  affect the contract so made. The court will not compare the values of the consideration given by the parties to the contract and so inadequacy is a non-issue. Thus, in the case of African Petroleum Ltd v Owodunni, where an accommodation whose market price was #65,000 was let for #400, the court held that it was not in its place to inquire into the adequacy of the consideration.

However, a consideration must be sufficient. There are several issues that could crop up in determining sufficient consideration. The issue of whether consideration has value in the eyes of the law; whether one can perform an existing duty as a consideration and; the effect of a variation of contractual rights.

The concept of value in the eyes of the law has been deemed to be an elusive one. It is one whose definition has not been given judicial conclusion but which has, nevertheless, been subject to academic analysis. There has been debate as to whether or not consideration needs to be of economic value. In Faloughi v Faloughi, it was held that love and affection was not sufficient consideration as it had no economic value.

However, in the cases of Haigh v. Brooks, De la Bere v. Pearson and  Chappel & Co. Ltd. v Nestle, where a guarantee requested for, that turned out to be worthless was given; the plaintiff wrote to the defendant for financial advice on the defendant’s request; and there was a determination of whether three chocolate wrappings were sufficient consideration, respectively, the courts seemed to imply that consideration need not have any apparent economic value to be valid consideration.

From cases considered, it seems to be the position that consideration is sufficient where a party suffers a loss or refrains from exercising a right; where it is ascertainable; and it does not need to have an economic value.

Determining whether or not the performance of an already existing duty is sufficient consideration depends on the nature of the duty. Generally, where duty is imposed by law or by contract with the promisor, the consideration cannot be considered sufficient consideration unless the promisee acts in excess of the duty imposed by law or by contract.

However, in a case where duty is imposed by contract with a third party, such consideration has been held to be sufficient consideration. What this means is, where one is bound to do a thing in a contract with another, he can rely on that duty as consideration for a promise made by a person who is not a party to this contract.

Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 (High Trees Case)
Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 (High Trees Case)
How does one determine the sufficiency of consideration where there has been a variation of rights?

In deciding whether consideration is sufficient on the variation of rights, it is necessary to state that there has been an evolution of principles in that regard. In Pinnel’s case, it was decided that the payment of a lesser sum on the day of satisfaction of the greater sum cannot be a satisfaction of the whole. Exceptions were expounded that the payment of a gift of horse, hawk or robe in lieu of sum; the payment of parcel before the day the whole sum is due or the payment of parcel at a place other than the agreed place of payment would be sufficient consideration.

These exceptions have been contended in subsequent cases to escape the rule in Pinnel’s case until the case of D & C Builders v Rees where Lord Denning stated that there was no difference between a payment of a lesser sum by cash and a payment by cheque.

However, in the issue of variation of contractual rights, the issue of estoppel also arose. Although the doctrine was unsuccessfully resorted to in the case of Jorden v Money, as it was held to only apply to statements of facts, Lord St. Leonard in a dissenting view stated that the rule of estoppel prevented a party from enforcing a right where such party has induced another party to rely on his statement, whether that statement was a statement of fact or a statement of intention. This principle was adopted in the case of Hughes v Metropolitan Ry. Co.

In the case of Central London Property Trust Ltd. v High Tree House Ltd, this doctrine of equitable or promissory estoppel was considered again in light of sufficiency of consideration where there is variation of contractual rights.

Facts summary of High Trees Case
Facts summary of High Trees Case

Recommended: Boulton v Jones: Fact Summary, Issues and Judgment of Court

Facts of High Trees Case

Central London Property Trust, the plaintiffs, leased to the defendants, a block of flats for ninety- nine years. This was in 1937. However, the flats were not occupied fully as a result of world war II, as people left London. The parties agreed in writing that the rent which was £2500 be reduced to £1250, after negotiations. There was, however, no duration for this agreement and no consideration on the part of the defendant.

By the time a new management took over the plaintiffs’ company, the flats were fully let in 1945. The management wrote to the defendants requesting full payment for the blocks of flat and an arrears for the half payment previously made. The defendants contended that the plaintiffs had waived their right to the full rent of £2500 or alternatively, their right to the full rent had been waived from 1937 to 1945 before the time of revoking the agreement to receive reduced rent.

Also see: Smith v Selwyn: Facts, Issues and Judgment of Court

Issue determined in High Trees Case

Whether or not the defendant was to pay the full rent as demanded by the plaintiff from the time of commencement, thus, paying for arrears, or whether the plaintiff were estopped from demanding arrears.

Recommended: Exceptions to the principle of delegatus non potest delegare

Judgment of the court in High Trees Case

This case was tried in the King’s Bench Division of in the high court of England and Wales. It  held that the full rent will be paid from the time the agreement to receive the half rent was revoked.

Summary of High Trees Case with citation
Summary of High Trees Case with citation

What this means is that, although the plaintiffs could claim for the full rent from the time the flats became fully occupied, they could not claim for the arrears of the rent based on the principle of promissory or equitable estoppel.

Denning J. stated that if he was to consider the case without consideration to the recent developments in law, the plaintiff would have been entitled to the full rent from the commencement, regardless of the promise to reduce the rent. This is because the lease was under seal, and according to common law principles, cannot be varied by word or writing, but can only be varied by an agreement under seal.

According to him, if the doctrine of estoppel were to be applied as was decided in the case of Jorden v. Money, the promise for a future event would not induce the doctrine of estoppel, but that the law has developed since the case of Jorden v Money to take a fairer stand.

Also see: Exceptions to the rule in Pinnel’s case

The court stated that it might not go as far as making promissory estoppel a sword, but it will be a shield against the person who has made the promise. What this means is that, even though one can not bring an action based on promissory estoppel, one can raise a defense on it. The decision was described to be the ‘natural result of the fusion of law and equity‘.

This expounds the principle that consideration is sufficient where there has been an agreement to furnish such consideration even if that agreement is a variation of contractual rights, as equity will not allow a party go back on his promise.