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Creditors' Promises to Forgo Rights

A Study of the High Trees and Tool Metal Cases

Published online by Cambridge University Press:  16 January 2009

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Extract

I. ProblemsCreated byTheseCases

TheHigh Trees and Tool Metal cases have this in common: both deal with rights that a creditor is said to confer on his debtor by gratuitously agreeing to suspend periodic payments. Beyond that, they present differences more striking than their similarities.

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Research Article
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Copyright © Cambridge Law Journal and Contributors 1963

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References

1 Central London Property Trust, Ltd. v. High Trees House, Ltd. [1947]Google Scholar K.B. 130; discussed fully post, p. 226.

2 Tool Metal Mfg. Co., Ltd. v. Tungsten Elec. Co., Ltd. (1950) 59 R.P.C. 108Google Scholar (first trial and first appeal): [1954] 2 All E.R. 28 (appeal in second action to Court of Appeal) [1955] 2 All E.R. 657 (H.L.). Discussed fully post, p. 249.

3 Mr. Wilson, J. F. in an article, “Recent Developments in Estoppel” (1951) 67 L.Q.R. 330Google Scholar, undertook to prove this claim, and Prof. Hanbury in his Modern Equity (7th ed.) considers that Mr. Wilson proved this: p. 91. It will be argued later herein that Mr. Wilson really proved the opposite of his claim.

4 (1854) 5 H.L.C. 185. There a creditor who had stated that she “abandoned” her rights under a bond and would never enforce it was held not to be estopped or bound by her promises.

5 (1884) 9 App.Cas. 605. There a judgment creditor agreed that if the debtor regularly made half-yearly payments on the judgment, no action would be taken to enforce this. The amount of the judgment was paid in this way, but the creditor then applied for leave to execute for interest on the judgment. The courts held that interest was recoverable, because the agreement never had legal effect.

6 The House of Lords and the Privy Council have each followed Jorden v. Money a number of times.

7 Denning, L.J. in his article “Recent Development of Consideration” (1952) 15 M.L.R. 1Google Scholar in effect conceded that in High Trees and in later cases he was seeking to assimilate the law of consideration to the Committee's recommendations.

Chitty on Contracts (General) (22nd ed.), p. 68 comments: “the principle of Foakes v. Beer itself remained unaffected until a means of evading it was suggested by Denning J. in 1947” (in High Trees). Anson on Contracts (21st ed.), p. 102, comes near to saying that Jorden v. Money was discredited by the High Trees concept of promissory estoppel. Cheshire & Fifoot on Contracts (5th ed.), p. 81 says: “While the rule [in Pinnel's Case, followed in Foakes v. Beer] cannot be abolished by judicial action, it can be neutralised by the exercise of a beneficient ingenuity” (as in High Trees); and they also refer to Foakes v. Beer as “a past error.” At p. 87 they say of that case: “although it has not been and cannot be overcome by direct assault its flank has been turned.” Wilson on Contracts, p. 62 says of High Trees: “The views expressed in this opinion were obiter, but if adopted they would clearly nullify the effects of Foakes v. Beer in circumstances where a person had been induced to alter his position on the faith of a representation unsupported by consideration.” (In Foakes v. Beer there was certainly as much if not more alteration of position than in High Trees.) Cheshire & Fifoot in an article on High Trees (1947) 63 L.Q.R. 283, 286Google Scholar referred to Jorden v. Money as “an unhappy decision,” and at p. 288 they admitted that High Trees was “a breach with the older law.”

It is probably the first time in legal history that legal writers have suggested that a trial judge's dicta (without even a decision) can override decisions of the House of Lords, directly or indirectly.

The writers quoted above who wrote after Tool Metal, in giving such startling weight to High Trees, strangely neglect to consider whether its theory was not discredited by Tool Metal.

8 Chitty on Contracts (General) (22nd ed.), p. 69 asserts that promissory estoppel has been “accepted by the courts.” citing for this assertion five of the cases named infra, note 10, and also Tool Metal. Anson on Contracts (21st ed.), p. 101 says: “The correctness of this dictum [in High Trees] has now been recognised and it has now been applied in a number of decisions,” citing four of those named infra, note 10, and also Tool Metal. The decisions cited by those two works do not at all justify the statements founded on them; they contain nothing but dicta to the same effect as High Trees, and in every instance (except in the Ledingham case) only dicta by Denning L.J. In five decisions of the Court of Appeal cited, the other lords justices would not concur in Denning L.J.'s invocation of High Trees. In his article referred to supra, note 3, J. F. Wilson claimed that the theory of High Trees was established law long before that case, but he fails to prove that claim (pace Prof. Hanbury). In his later book on Contracts (1957), p. 62Google Scholar, Mr. Wilson took a much more cautious view of how far High Trees was good law.

9 Foot Clinics (1943), Ltd. v. Cooper's Gowns, Ltd. [1947] K.B. 506Google Scholar; Robertson v. Minister of Pensions [1949] 1 K.B. 227Google Scholar; Perrott & Co., Ltd. v. Cohen [1950] 2 All E.R. 939Google Scholar; Charles Rickards v. Oppenhaim [1950] 1 K.B. 616Google Scholar; Combe v. Combe [1951] 2 K.B. 215Google Scholar; Mitas v. Hyams [1951]Google Scholar 2 T.L.R. 1216; Wallis v. Semark [1951] 2 T.L.R. 22Google Scholar; Dean v. Bruce [1952] 1 K.B. 11Google Scholar; Lyle-Mellor v. Lewis & Co. (Westminster), Ltd. [1956] 1 All E.R. 247.Google Scholar In the Foot Clinics case, Combe v. Combe, and Dean v. Bruce, Denning J. (or L.J.) conceded that High Trees could not apply to the facts.

10 Perrott & Co., Ltd. v. Cohen, supra; Charles Rickards v. Oppenhaim, supra; Mitas v. Hyams, supra; Wallis v. Semark, supra; and Lyle-Mellor v. Lewis, supra. In Ledingham v. Bermejo [1947] 1 All E.R. 749Google ScholarAtkinson, J., and in Beesly v. Hallwood Estates, Ltd. [1960] 2 All E.R. 314Google Scholar Buckley J. restated the High Trees theory without disapproval, but entirely obiter.

11 Chitty on Contracts (General), p. 69; Anson on Contracts (21st ed.), p. 103 (“some measure of tacit support”).

12 In Lyle-Mellor v. Lewis & Co. (Westminster), Ltd. [1956] 1 All E.R. 247, 251.Google Scholar

13 Pearson, J. in [1955] 2 All E.R. 657, 683.Google Scholar

14 Lord Simonds, ibid, at p. 660, speaking of a passage in Combe v. Combe [1951] 1 All E.R. 767, 770Google Scholar which restated the High Trees theory with elaborations.

15 Hughes v. Metropolitan Ry. (1877) 2 App.Cas. 439.

16 Birmingham, etc., Co. v. L. & N.W. By. (1888) 40 Ch.D. 268.

17 [1947] K.B. 130, 134, per Denning J.

18 Supra, note 5.

19 Lyle-Mellor v. Lewis & Co. (Westminster), Ltd. [1956] 1 All E.R. 247, 250Google Scholar; Robertson v. Minister of Pensions [1949]Google Scholar K.B. 227, 230; Combe v. Combe [1951] 2 K.B. 215, 220.Google Scholar

20 Lyle-Mellor v. Lewis, etc., supra at p. 250; Perrott & Co., Ltd. v. Cohen [1950] 2 All E.R. 939, 943.Google Scholar

21 Charles Rickards, Ltd. v. Oppenhaim [1950] 1 K.B. 616 at 623.Google Scholar

22 (1865) L.R. 1 H.L. 129.

23 See supra, note 3.

24 67 L.Q.R. at p. 333.

25 Lyle-Mellor v. Lewis, etc., supra at p. 250.

26 Dean v. Bruce [1952] 1 K.B. 11, 14.Google Scholar

27 Hughes v. Metropolitan Ry. (1877) 2 App.Cas. 439.

28 Birmingham, etc., Co. v. L. & N.W. Ry. (1888) 40 Ch.D. 268.

29 (1876) 1 C.P.D. at p. 134.

30 Ibid. at p. 135.

31 Ibid., pp. 135, 136.

32 (1877) 2 App.Cas., p. 448.

33 Ibid. p. 448. Italics added.

34 Ibid. p. 449. Italics added.

35 Ibid. p. 452. Italics added.

36 (1887) 36 Ch.D. 650, 651.

37 (1888) 40 Ch.D. 268, 270.

38 (1887) 36 Ch.D. at p. 653.

39 Ibid.

40 (1888) 40 Ch.D. at p. 277.

41 Ibid. p. 281.

41a Ibid. p. 287.

42 ibid. p. 286.

43 10 Halsbury (3rd ed.), 623 (Equity, by Hanbury & Fox) observes that: “Analogous to relief against forfeiture is the rule of equity that time is not [in general] of the essence of a contract…. ”

44 “Recent Developments in Estoppel” (1951) 67 L.Q.R. 330, 348, 350.

45 Ibid, at p. 1.

46 In a passage quoted at p. 243 Mr. Wilson explains at length how he relates his concept to Hughes and Birmingham, though those cases say nothing of estoppel.

47 67 L.Q.R. at p. 333.

48 Mr. Wilson in his article was an exception. At least the first part clearly recognised that forfeiture was the predominant factor in Hughes though later the article lost sight of this, as will be seen.

49 Ante, p. 223. In Williams v. Stern (1879) 5 Q.B.D. 409 a chattel mortgagee gratuitously agreed to extend the time for a payment, but almost at once seized and sold the chattels. The court held he had the right though Hughes was cited for the mortgagor.

50 Central London, etc. v. High Trees, etc. [1947]Google Scholar K.B. 130, 134; Combe v. Combe [1951] 2 K.B. 215, 220, 225Google Scholar; Beesly v. Hallwood Estates, Ltd. [1960] 2 All E.R. 314, 324.Google Scholar

51 [1947] K.B. 130, 135. Italics added.

52 In Lyle-Mellor v. Lewis & Co. (Westminster), Ltd. [1956] 1 All E.R. 247, 250.Google Scholar

53 “Recent Developments in Estoppel” (1951) 67 L.Q.R. 330.

54 Modern Equity (7th ed.), p. 91. The 8th ed. is silent on this point.

55 Hughes v. Metropolitan Ry. (1877) 2 App.Cas. 439.

56 Birmingham, etc., Co. v. L. & N.W. Ry. (1888) 40 Ch.D. 268.

57 [1900] 1 Q.B. 426.

58 [1937] 2 All E.R. 361.

59 (1937) 34 T.L.R. 158.

60 (1945) 174 L.T. 144.

61 [1942] 2 K.B. 38.

62 67 L.Q.R. 330.

63 Ibid. p. 342.

64 [1942] 2 K.B. 38.

65 67 L.Q.R. at p. 340.

66 Landlord and Tenant Act, 1927, s. 18.

67 (1854) 5 H.L.C. 185. This case held that legal estoppel can only arise from representation of present fact, not of intentions. MacKinnon L.J. in Salisbury v. Gilmore suggested a distinction between present and future intentions, and concluded that the landlord there was representing present intentions. But Jorden v. Money showed that this attempted distinction was without meaning; for Mrs. Jorden (a creditor) had not only stated that she “would never enforce payment of the debt,” but also that she “abandoned” all claim to this. Her debtor expressly argued that Bhe had thus not only made promises as to future conduct, but had also represented present fact. But the Lords declined to draw fine distinctions based on the exact words used, since she was obviously referring each time to the future.

68 [1917] 2 K.B. 473.

69 Article on High Trees (1947) 63 L.Q.R. 283, 290Google Scholaret seq.

70 [1947] K.B. 506.

71 [1952] 1 K.B. 11.

72 [1951] 2 K.B. 215.

73 Ibid, at p. 225.

74 [1955] 2 All E.R. 657, 660. The passage is quoted post, p. 241.

75 [1949] K.B. 227.

76 Ibid. at p. 230.

77 [1950] 2 All E.R. 939.

78 Ibid. at p. 943.

79 [1950] 1 K.B. 616.

80 Ibid. at p 623.

81 [1951] 2 T.L.R. 1215.

82 [1951] 2 T.L.R. 22.

83 [1956] 1 All E.R. 247.

84 Ibid. at p. 250.

85 Ibid. at p. 255.

86 [1949] 1 K.B. 227.

87 [1955] 1 All E.R. at p. 255.

88 [1947] 1 All E.R. 749.

89 [1960] 2 All E.R. 314.

90 Ibid. at p. 324.

91 [1951] A.C. 688.

92 (1947) 63 T.L.R. 394.

93 [1959] 1 Ch. 129, 145.

94 [1951] 2 K.B. 215, 225: “It is unnecessary to express any view as to the correctness of that decision.”

95 Ante, pp. 224, 225.

96 [1955] 2 All E.R. at p. 660.

97 [1956] 1 All E.R. 247.

98 [1950] 2 All E.R. 939, 943.

99 [1950] 1 K.B. 616.

1 [1951] 2 T.L.R. 1215.

2 [1951] 2 T.L.R. 22.

3 (1854) 5 H.L.C. 185.

4 Ante, p. 232.

5 67 L.Q.R. at p. 333. Italics added.

6 67 L.Q.R. at pp. 333, 334. Italics added.

7 Ibid. at p. 337. Italics added.

8 Ibid. at p. 344.

9 [1949] 1 K.B. 227.

10 67 L.Q.R. at p. 347.

11 [1951] 2 K.B. 215.

12 [1950] 2 All E.R. 939, 943.

13 [1951] 2 T.L.R. 1215.

14 Ibid. p. 22.

15 [1956] 1 All E.R. 247, 250.

16 15 M.L.R. 1, 5.

17 Ante, p. 225; post, p. 254.

18 (1888) 40 Ch.D. 268, 286; quoted ante, p. 231. See also remarks of Lord Simonds in Tool Metal [1955] 2 All E.R. 657, 660.

19 Chitty on Contracts (General) (22nd ed.), at p. 137 supports this view, but cites for it two cases, already considered, which are not in point.

20 Tool Metal seems to be against that view. There was some evidence that the suspension of payments was until a new agreement was reached. This never was reached; but the courts all held that the creditors could change their minds on giving notice, which they conceded they must give.

21 (1879) 5 Q.B.D. 409. See Re Venning (1947) 63 T.L.R. 394Google Scholar; discussed ante, p. 240.

22 In Foakes v. Beer (1883) 11 Q.B.D. 221, 224 Brett L.J. speaking for the Court of Appeal said of the creditor: “she might at any time have changed her mind and was not bound by the agreement for there was no consideration for it.”

23 [1947] K.B. 130, 135.

24 Ledingham v. Barmejo Estancia Co., Ltd. [1947] 1 All E.R. 749Google Scholar; Be Venning, supra.

25 [1947] K.B. 130, 135.

26 (1854) 5 H.L.C. 185. A debtor under a bond whose creditor had often promised never to enforce it, sued for a declaration that the debt had been “abandoned” and for an order that the creditor release it. The action was dismissed on appeal.

27 (1884) 11 Q.B.D. 221; 9 App.Cas. 605. A judgment creditor agreed that if the debtor made uniform half-yearly payments on the judgment no proceedings would be taken to enforce this. Payments in the amount of the judgment were made in this way; but the creditor then applied for leave to execute for interest on the judgment. The courts held this recoverable, since the agreement never was binding.

28 (1950) 59 R.P.C. 108 (first trial and appeal) [1954] 2 All E.R. 28 (appeal in second action) [1955] 2 All E.R. 657 (H.L.).

29 [1955] 2 All E.R. at pp. 672, 680.

30 (1950) 59 R.P.C. 108, 112 et seq.

31 Ibid. p. 108 et seq.

32 [1955] 2 All E.R. at p. 675.

33 [1954] 2 All E.R. at p. 44.

34 Ibid. at p. 41.

35 Pearson J.: [1955] 2 All E.R. at p. 683.

36 Ibid. at p. 660.

37 Ibid. at p. 675.

38 See Williams v. Stern (1879) 5 Q.B.D. 409, 413.

39 Jorden v. Money was decided by the lords on appeal from the Court of Appeal in Chancery. In High Trees [1947] K.B. at pp. 134, 135Google Scholar Denning J. hinted that in deciding Foakes v. Beer the lords had overlooked the fusion of law and equity. This 11 years after the Judicature Act!

40 Lords Selborne and Blackburn had sat in both Foakes v. Beer and in Hughes. In Williams v. Stern, supra, the Court of Appeal held that a chattel mortgagee was not bound by a gratuitous promise to give time but could seize at any time. Hughes was cited to the court, but did not affect the decision, and Cotton L.J. (p. 413) stated expressly that there was no ground for relief in equity.

41 (1950) 59 R.P.C. 108, 115.

42 Ibid, at p. 116.

43 [1955] 2 All E.R. 657, 675. At p. 674 Lord Tucker hinted at general doubts about the first Court of Appeal's decision, which could not be appealed.

44 Post, p. 260.

45 In Jorden v. Money the debtor had married as a result of the creditor's having promised to forgive his debt; yet that was held to create no equity.

46 (1950) 59 R.P.C. 108. 112.

47 Ibid, at p. 110. Italics added.

48 [1955] 2 All E.R. at p. 682. Italics added.

49 [1954] 2 All E.R. at p. 41. Italics added. Lord Simonds ([1955] 2 All E.R. at p. 661) said that the debtor, on getting notice that forbearance was at an end, was “bound to put bis house in order,” but did not suggest that he was entitled to time to do this.

50 [1954] 2 All E.R. at p. 41.

51 (1880) 40 Ch.D. at p. 286.

52 [1954] 2 All E.R. 28, 40, 41, quoted ante, p. 255.

53 [1955] 2 All E.R. 657, 686, quoted ante, p. 255.

54 Ante, p. 255.

55 [1955] 2 All E.R. 657, 682, Lord Simonds (p. 660) and Lord Tucker (pp. 674, 675) may well be thought to have taken a different view. But they were far from explicit. All views aired on this point were unnecessary for the decision, because of TMMC's concessions, and the Lords had only to decide whether TBCO could complain of the notice given.

56 In Jorden v. Money the debtor had married on the strength of his creditor's promise to forgive a debt; but the lords gave no weight to that. In Williams v. Stern (1879) 5 Q.B.D. 409 a chattel mortgagee had agreed to wait for payment; but seized and sold the chattels almost at once.

57 Ante, p. 222.

58 [1947] K.B. 130, 134, 135.

59 Law of Contract (5th ed.), p. 81.

60 Article on High Trees (1947) 63 L.Q.R. at p. 285.Google Scholar Italics added.

61 (1951) 15 M.L.R. 1, 5.

62 21st ed., p. 103.