Estates Ltd own a large portfolio of business premises in Nottingham city center.
In January 2015, Travel-Hut Ltd, a company that runs a chain of hotels, leased a property from Estates under a 20 year lease that they then converted into a hotel.
The terms of the lease provide that Travel-Hut Ltd are to pay Estates Ltd an annual rent of £100,000, payable in January of each year.
In 2019, the City Council announced that they proposed to improve the public transport infrastructure in Nottingham, including the extension of the existing tram network. Part of the development required the construction a new tram station located right next to Travel- Hut Ltd’s hotel.
The construction work commenced in February 2019 and was due to be completed by February 2022.
The noise and disruption caused by the construction work significantly impacted on Travel- Hut Ltd’s business, with the occupancy rate dropping by about 50% since the start of the construction work.
In January 2020, Travel-Hut Ltd approached Estates Ltd and said they may have difficulties in paying the full rent due to the decline in bookings. Fearing that Travel-Hut Ltd would default on their payment completely, Estates Ltd promised that they would accept payment of £50,000 per year, so long as the construction work continued.
On the basis of this promise, Travel-Hut Ltd paid the reduced rent of £50,000 as it fell due. Travel-Hut Ltd then took out a loan with their bank to purchase another hotel located away from the city centre.
In December 2020, with the construction work still not to due be completed until February 2022, Estates Ltd approached Travel-Hut Ltd and demanded that they pay the full rent of £100,000 from January 2021 onwards and for the remainder of the lease.
Travel-Hut Ltd refused to pay the full rent as requested and Estates Ltd brought a claim seeking the full rent from of £100,000 from January 2021 onwards.
In the High Court, Estates Ltd’s claim was rejected on the grounds that Travel-Hut Ltd could rely upon the doctrine of promissory estoppel. Estates Ltd could not enforce their strict legal rights in accordance with the terms of their promise.
Estates Ltd appealed this decision. The Court of Appeal allowed their appeal on the grounds that following the approach in Tool Metal Manufacturing Co. Ltd v Tungsten Electric Co. Ltd [1955] 1 WLR 761, Estates Ltd could reinstate their right to claim the full rent as from January 2021 onwards.
Travel Hut-Ltd Ltd now appeals to the Supreme Court on the following ground:
1) Thedoctrineofpromissoryestoppeloperatesnotonlytosuspendthepromisor’s strict legal rights but can operate so as to prevent the enforcement of them should it be sufficiently inequitable to do so.
Questions from the Judge:
From the list of questions below, you are to respond to ANY TWO and incorporate your responses to these questions as part of your presentation ( Just choose 2 questions to answer ).
Question 1:
Are the principles established in Tool Metal v Tungsten Electric [1955] 1 WLR 761 binding on this court? Explain your reasoning.
Question 2:
How appropriate is it to apply the principles established in Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 to this appeal? Explain your reasoning.
Question 3:
Explain how the decision in Ajayi v RT Briscoe (Nigeria) Ltd [1964] 1 WLR 1326 may apply to this appeal.
Question 4:
What problems / positive developments may follow if the court were to recognise that the doctrine of promissory estoppel could prevent the enforcement of strict legal rights?
Sample Solution
