"Equitable estoppel does not extinguish legal obligations. It only suspends them till the circumstances on which it is based return to normal. Then the entire obligation remains as it was. It does not matter whether the person relying on the statement has behaved worthily or not". Discuss.

[1]    Promissory Estoppel (PE) is the name given to the equitable doctrine, which has as its principal source the obiter dicta of Denning J (as he then was) in Central London Property Trust v High Trees House. PE is a type of equitable estoppel but the two terms are not inter-changeable because the latter also embraces Proprietary Estoppel which is a more certain and long established concept (a creature of land law).
 
-    Proprietary Estoppel provides that where a person expands money or effort on another's property in the mistaken belief that he has or will thereby acquire an interest in the property and the true owner encourages or acquiesces in the mistake, the latter is estopped / prevented from asserting his full title against the former. Proprietary Estoppel is permanent in effect and may create a positive right of action.

[2]    However at this juncture, one could consider the definition of PE as provided by Snell. It has been defined as, "where by his words or conduct, one party to a transaction makes to the other an unambiguous promise or assurance which is intended to affect the legal relations between them and the other party acts upon it - altering his position to his own detriment, the party making the promise or assurance will not be permitted to act inconsistently with it".

-    In relation to the doctrine of consideration, PE acts as an exception to it with the effect of legally stopping a party from rescinding his promise. The doctrine of PE, as stated above was propounded in the High Tree's case by Denning J and the effect of PE is to enforce a 'nudum factum' i.e. bare promises and this goes against the English Common Law principle of not enforcing gratuitous promise which relies on the bargain element in a contract.

[3]    Nonetheless PE is an equitable doctrine - whereby it has been submitted that whenever there is a conflict between common law and equity, the latter should prevail. This was clearly illustrated in Earl of Oxford's case. It should also be noted that there are certain requirements that need to be satisfied before the doctrine of PE could be relied upon successfully.
-    The requirements are:
    
(a)    This doctrine which prevents a promisor from enforcing his/her legal rights must firstly arise out of a contractual relationship. However this not essential as was held in Durham FG v Michael Jackson FG;

(b)    There must be a clear and unequivocal promise or representation that the existing legal rights will not be fully enforced - Woodhouse v Nigerian Produce Marketing;

(c)    This doctrine can only be used as a shield and not a sword. This means it cannot be invoked to commence an action - Combe v Combe;

(d)    There must have been reliance on the part of the promisee upon the promise made by the promisor - Alan v El Nasr;

(e)    The final requirement insisted by Lord Denning MR in D & C Builders v Rees is that the promisee must have acted equitably in order to rely on the doctrine.
[4]    However there is still an area which is unambiguous and unresolved. The ambiguity is whether the doctrine of PE applies in a suspensive or extinctive manner. If PE is applied in a suspensory manner, then the promisor can reassert his legal rights by giving the promisee reasonable notice. On the other hand, if it is applied in an extinctive manner, then this would totally extinguish the promisor's rights.
 
-    Facts of High Tree's Case
The defendants were paying £ 2500 per annum as rental to their flats and later it was reduced to £ 1250 during war time. Once the war ended, the plaintiff increased the rental to the pre-war amount of £ 2500 and the defendants refused to pay. It was held that the defendants were under a continuing liability to pay the rental annually.

Professor Treitel stated that, "… it is extinctive because the tenants would have used the rebate to modernize the flat so one cannot unmodernise the flat. This shows that the original position could not be obtained".

[5]    In considering the application of PE on the facts of High Tree's case, it could be submitted that in so far as the landlords are concerned they could insist on payments of full rent when the was over. Thus it was applied in a suspensory manner. On the other hand, the doctrine of PE was applied in an extinctive manner in relation to the arrears / rents owed during the period of war. Whether it is to be applied in a suspensory or extinctive manner, really depends on the circumstances of the case. Denning J held that they were forever estopped from claiming the arrears.

-    However the High Tree's case can be distinguished from the case of D & C Builders v Rees where the nature of the payment was single / lump sum. Although there was a lease in the High Tree's case, there was a continuing obligation to pay. Hence for this purpose in looking at the case of Foakes v Beer it could be suggested that PE applies in a suspensory manner and in relation to D & C Builders v Rees, this would mean that the balance can always be recovered at a later point in time by giving the other party a reasonable notice.

[6]    In Ajayi v Briscoe - it was stated by the Privy Council that if one want to retract, it could be done by giving a reasonable notice but the promise would become final and irrevocable if the party relying on it could not resume to his position.

-    However in considering whether the doctrine is suspensory or extinctive in nature - it really depends on the circumstance of the case or the nature of the payment. Prima facie it is not true to say that PE does not extinguish legal obligation. Nonetheless the view expressed in Ajayi v Briscoe to a certain extent confirm he ambiguity in this area of the law. The statement, if viewed in this light, is open to debate.