Significance of Central London Property Trust Ltd V High Trees House Ltd - Assignment Example

Question The significance of Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130. The decision in Central London Property Trust Ltd. v High Trees (1947) has been characterized as “the best known common law decision” that accepts detrimental reliance as a basis for enforcing modification of a contract.1 High Trees is significant because it represents revision of the previously firmly established duty rule in Foakes v Beer (1884) which relied on the legal concept of consideration and held that part performance of a debt could not represent a discharge of the whole debt.2 High Trees is also credited with extending the acceptance and application of promissory estoppel in the law of contract.3 On the facts of the High Trees case, a landlord agreed with the tenant that rent due under a lease would be reduced during the Second World War period. However, once the war came to an end, the landlord attempted to recover the full assessment of payments to made in the future, as well as the deductions agreed to with respect to previous payments on the basis that the duty rule exempted enforcing modifications.4 Lord Denning agreed that there was no consideration to support the promise made by the landlord with respect to the rent reduction. However, Lord Denning went on to state that the promise could nevertheless be enforced with respect to the war period because the: Promise to accept a smaller sum in discharge of a larger sum, if acted upon, is binding notwithstanding the absence of consideration: and if the fusion of law and equity leads to this result, so much the better. 5 Thus, the ruling in the High Trees case not only provided an exception to the Foakes v Beer case, but also to Pinnel’s Case which was affirmed by Foakes v Beer. Sir Edward Coke had ruled in Pinnel’s Case that partly discharging a debt would not operate to satisfy the whole of the debt.6 Lord Denning clarified his interpretation and application of the doctrine of promissory estoppel in Combes v Combes (1951). In this case, following a divorce decree, a husband via his solicitors agreed to pay the wife 100 pounds annually. The wife in turn, promised that pursuant to the husband’s undertaking, she would forego legal action. When the husband failed to pay, the wife sued him for arrears. Lord Denning then defined the parameters for the High Trees doctrine: The principle stated in the High Trees case...does not create a new cause of action where none existed before. It only prevents a party from insisting upon his strict legal rights, when it would be unjust to allow him to enforce them.7 What can be gleaned from the ruling in High Trees and Lord Denning’s explanation of the ruling in Combes, is that promissory estoppels permits a defence of detrimental reliance in the UK for the purpose of suspending a previous commitment. However, it will not be available as a defence in respect of a new action where consideration does not exist. Put another way, the High Trees significance is that it accommodates a detrimental reliance defence for suspending previous contractual commitments. The ruling in High Trees was adopted by the Supreme Court of South Australia in Je Maintiendrai Pty. Ltd. v Quaglia [1980] 26 SASR 101. In this case, the court held that in order for the doctrine of promissory estoppel to succeed it must be shown that the promise could or would “result in some detriment and therefore some injustice” to the complainant.8 Clearly, the High Trees case opened up a method by which the doctrine of promissory estoppel could be used to prevent unconscionable avoidance of commitments. In Waltons Stores (interstate) Ltd v Maher (1988), another Australian case, the court took the High Trees doctrine a step further. In this case, the limitations to the use of the doctrine of promissory estoppel established by the High Trees case were both removed on the grounds of injustice. High Trees established that in order for a promissory estoppel defence to be successful there must be a pre-existing legal relationship between the parties.9 Secondly, the relief sought could not stem from a new cause of action.10 In Waltons Stores (interstate) Ltd v Maher (1988) Maher negotiated with Walton Stores for the lease of land to Waltons who wanted a building on the land demolished and replaced by a new building. Relying on these representations, Maher destroyed the existing building and commenced the construction of a new building. However, the contract was never formed as Waltons never signed the negotiated lease.11 The court characterized Waltons’ conduct as unconscionable and decided that in order to overcome the detriment to Maher as a result of this unconscionable conduct on the part of Waltons, promissory estoppel would arise to protect reliance and expectation interests. In both cases the court would look upon the negotiated contract as completed. The court went on to state: The creation or encouragement by the party estopped in the other party of an assumption that a contract will come into existence or a promise will be performed and that the other party relied on that assumption to his detriment to the knowledge of the first party.12 Despite these developments in the Australian courts, English courts continue to apply the High Trees exception that promissory estoppel does not give rise to its own actionable case. The court in Baird Textile Holdings Ltd. v Marks and Spencer Plc [2001] however, did acknowledge that there might be a remedy in equity although there was none in the law of contract. The court also noted that the law relative to promissory estoppel was not fully developed in English law.13 Therefore, it is quite possible that eventually, promissory estoppel might develop in England and Wales to follow the position taken by Australia in Baird. After all, it was the High Trees case that influenced these developments in Australia. In short, High Trees case provided a remedy for avoiding a detriment to the party relying on a promise. The time will likely come when the English courts may consider enforcing the promise as the only method for avoiding the detriment. Question 2 Issues: Aside from the obvious legal issue of negligence and the duty of care purportedly owed by Peter and the Golf Club to John, there are two other legal issues arising out of John’s proposed claim in negligence against Peter and the Golf Club. The first of these incidental issues is whether or not Peter’s warning relative to the inaccurate shot of the golf ball was sufficient to exempt Peter’s liability in negligence. The second issue is whether or not the Golf Club’s exclusion clause is capable of exempting the Golf Club of liability in respect of the head/eye injury sustained by John as a result of Peter’s missed shot. Relevant Law: 1. Negligence By virtue of Section 9 of the Civil Liability Act 2003 (QLD), a duty of care is defined as situations in which there is a risk of harm accompanied by a duty to take precautions in respect of anyone in harm’s way. The duty of care however, will only arise if the risk of harm is reasonably foreseeable, the risk of harm is “not insignificant” and: In the circumstances, a reasonable person in the position of the person would have taken precautions.14 Section 9(2) of the 2003 Act provides further guidance with respect to the duty to take precautions against a risk of harm. In this regard, assessing whether or not there was a duty, the court is at liberty to take into account, whether or not harm was probable had precautions not been taken; the likelihood that there would be serious harm; the difficulties involved in taking precautions to prevent harm; and “the social utility of the activity that creates the risk of harm”.15 Sections 13 and 15 of the Civil Liability Act 2003 are likewise relevant to the case for discussion. Section 15 establishes that there is “no proactive duty” to warn the plaintiff of an obvious risk.16 Section 13 defines an obvious risk as a risk that “would have been obvious to a reasonable person in the position of that person.”17 However, the risk will remain obvious even if “it has a low probability of occurring.”18 The relevant sections of the Civil Liability Act 2003 were discussed by the Queensland Supreme Court-Court of Appeal in Pollard v Trude [2008] QCA 421. In this case, a defendant hitting an inaccurate golf shot when the plaintiff was on the course ahead of the defendant was not negligent in failing to use the traditional “fore” warning.19 Instead the defendant had simply used the words “watch out”.20 Chesterman J. ruled that the plaintiff in the circumstances where the defendant was a part of the group playing golf, “expected the defendant to take his shot notwithstanding he knew the plaintiff was in front of him.”21 As a result no warning was necessary, particularly since going in front of a golfer who was about to take a shot was to assume an obvious risk. Therefore no warning was necessary and the warning used instead of “fore” sends the same message that the traditional warning sends. Chesterman J. went on to state that although the risk that the plaintiff would be hit by the ball was no insignificant, the reasonable man in the defendant’s position would have acted the same way.22 While the ruling in Pollard is quite different from the ruling in Ollier v Magnetic Island where one golfer was held liable in negligence for damages sustained when he teed off and his ball hit another golfer on the course, the facts of these cases can be distinguished. In Ollier, the negligence was founded on the basis that the golfer teeing off had not followed the rules placed in the Golf Club’s safety manual and the golfer hit by the ball was not a part of the offending golfer’s playing group.23 2. Exclusion Clause Pursuant to Section 68B of the Trade Practices Act 1974 (Federal Law) persons who run recreation activities may limit liability.24 Even so the exemption clauses, although permitted by statute must meet standards established by the common law. In general an exemption clause may not operate to exclude liability if it does not clearly and unambiguously state that liability for negligence is exempted.25 In White v John Warwick and Co. Ltd. an exclusion clause read: Nothing in this agreement shall render the owners liable for any personal injuries to the riders of the machines hired.26 It was held that the exclusion clause did not use words clear enough to indicate that liability with respect to negligence was excluded. Had the clause stated that liability for any personal injuries was excluded, or that loss or damages of any description were excluded it would have been sufficient.27 Another important legal requirement is that the exclusion clause be brought to the attention of those against whom it will be used. This means that the exclusion clause must be readily viewable and must be a part of the contract in the sense that it must be visible prior to the conclusion of the contract. The customer must know in advance that liability for negligence is excluded.28 Application to Facts: A close reading of the Civil Liability Act 2003 as applied by the ruling in Pollard indicates the Peter’s duty of care is offset by John’s assumption of the risks inherent in voluntarily engaging in recreation. It would appear that Section 9 is nullified in that while Peter may owe a duty of care, he is not required to take precautions since John is expected to assume that risks. Although the risk of harm is reasonably foreseeable, a reasonable person playing golf in a golf course will not be expected to take precautions. Put another way, the golfer aware that another golfer is ahead of him, while he may be expected to take precautions against hitting that other golfer, cannot be said to be negligent if he misfires and the other golfer is hit. Aside from the obligatory warning, there is very little else the golfer could have done in terms of taking precautions. Moreover, the fact that golf is properly described as a social event, it will be a factor negating the duty of care.29 The fact is, risk involved in the case for discussion are obvious and as such there was no duty to take precautions per se. In this regard, Section 15 directs that where a risk is obvious there is no duty to warn of the risk. Additionally a risk is obvious when it would have been obvious to the reasonable man in the plaintiff’s position. In this regard, John, who is a golfer and is in a position to know that golfers will often misfire and that golf balls are airborne most of the time, would have been expected to know of the risks involved. Moreover, in Pollard it was suggested that where persons are playing golf in a group, they would expect the other golfers to take shots regardless of where the other golfers in the group were situated on the course. In this regard, no warning or precaution was necessary. It therefore follows from the decision in Pollard and the provisions of the Civil Liability Act 2003, that John will not succeed in a claim of negligence against Peter. John may have a better case against the Golf Club however. The exclusion clause is effective pursuant to the ruling in White v John Warwick and Co. Ltd in that it clearly and unambiguously exempts liability for negligence in stating that it is not liable for any injuries “whatsoever”. Moreover, liability can be limited by recreational service providers.30 The difficulty for the Golf Club however, arises out of the fact that the exclusion clause did not meet the common law requirement that it be brought to the attention of John prior to his engaging in the contract to use the Golf Club.31 Not only was the exclusion clause in small print, it was on the back of a score card which would have been disclosed upon completion of the contract. Secondly, the score card was only given to one member of the group. It is therefore safe to assume that the score card was not seen by John and he was not giving an opportunity to see it before assuming the risk associated with playing golf on a golf course. Although, the Golf Club will not be able to rely on the exclusion clause, John still has to prove that his injury was a result of negligence on the part of the club. Arguably, the club could have distributed safety rules. However, the ruling in Pollard basically establishes that the circumstances in which John found himself is not a case where negligence will be established. In this regard, John will not likely succeed in a claim against the Golf Club. Conclusion: Based on the authorities cited, John will not be able to prove a case of negligence against Peter or the Golf Club. The Civil Liabilities Act 2003 clearly establishes that where a risk is obvious, no duty of care will arise. Moreover, Pollard specifically establishes that when individuals engage in golf they assume the risk associated with the sport in relation to persons forming part of a playing group so that a duty of care is not owed in the usual play of the game. Therefore John will not succeed in a claim against Peter. Likewise, although the exemption of liability clause used by the Golf Club cannot function to exclude the Golf Club from liability because it was not conspicuous enough, John will not be able to establish negligence. Bibliography Textbooks Teevan, K. Promises on Prior Obligations at Common Law. (Greenwood Publishing Group 1998). Articles/Journals Cartwright, J. ‘Extinguishment of Obligations by Estoppel: “High Trees” Again.’ (Mar. 1990) The Cambridge Law Journal 13-15. Table of Cases Baird Textile Holdings Ltd. v Marks and Spencer Plc [2001] EWCA Civ 274. Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130. Combes v Combes [1951] 2 KB 215. Foakes v Beer [1884] 9 App. Cas. 605. Interfoto Picture Library Ltd. v Stiletto Visual Programmes Ltd. [1988] 2 WLR 615. Je Maintiendrai Pty. Ltd. v Quaglia [1980] 26 SASR 101. Ollier v Magnetic Island [2004] QCA 137. Pinnel’s Case [1602]5 Co. Rep. 117a. Pollard v Trude [2008] QCA 421. Waltons Stores (interstate) Ltd v Maher [1988] 164 CLR 387. White v John Warwick and Co. Ltd. [1953] 1 WLR 1285. Table of Statutes Civil Liability Act 2003 (QLD). Trade Practices Act 1974 (Federal Law). Read More