Central London Property Trust Ltd v High Trees House Ltd [1947]

English Contract Law

Central London Property Trust Ltd v High Trees House Ltd [1947]
‘Crescent of Houses’ by Egon Schiele

‘Equity regards as done that which ought to be done’ while in this instance the maxim is perfectly suited to the exploitative coloration of a business agreement, when in September 1937 a parent company and subsidiary entered into a written lease agreement concerning a newly built block of flats.

Shortly after the outbreak of World War II the buildings became partially occupied due to the risk of bombing, and so in order to keep the relationship profitable and fair the claimants agreed to reduce the rent from 2500l to 1250l per annum, yet while the rent reduction was put in writing it failed to express the end of the revision despite the original lease agreement running for a period of ninety-nine years.

Although the defendants enjoyed the reduced rent up to December 1945 despite the buildings now enjoying full occupancy with many tenants now paying higher rents than those initially agreed, however the death of the parent company’s owner revealed the oversight, whereupon the claimant and surviving business partner sought to recover rent arrears to the sum of 625l for the period between 29 September 1945 and 25 December 1945, while the defendants argued that the letter containing the reduced rent constituted a legally binding and thus enforceable contract for the remainder of the lease.

Referring to the binding effects of a promise, the court of the King’s Bench quickly balanced the probability of a breach where an agreement to reduce rents was challenged, however on this occasion the court upheld the claim on grounds that when agreeing to the reduce the rent it had been undertaken with mind to the onset of war, therefore no reasonable person would have entered into an arrangement where one party would unlawfully profit at the expense of another, while further reminding the parties that:

“[A] promise intended to be binding, intended to be acted on and in fact acted on, is binding so far as its terms properly apply.”

Author: Neil Egan-Ronayne

Author, legal scholar and foodie...

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