Promissory estoppel: need for certainty

In Chekiang First Bank Ltd v Sino Legend International Enterprise Ltd ([2002] HKEC 264) a mortgagee sought possession of various properties over which it had a charge. The mortgagors claimed that a manager of the mortgagee had assured the mortgagors that they could handle the sale of the properties themselves provided the proceeds of sale were paid into the borrower’s account. They argued that as they had gone to the time and trouble of looking for buyers in reliance on this promise, the mortgagee was estopped from obtaining possession. This argument failed. The promise in promissory estoppel must be precise, clear, unambiguous. There was a lack of precision or certainty here. The limits on the price to be obtained and the length of time available to the borrowers to find buyers were not known (ie it was not clear how long the mortgagors were entitled to hold out in the hope of getting a better price than the mortgagee might obtain).

It is possible for a mortgagee to be bound by a collateral contract not to enforce its remedies but any conditions in this agreement must be strictly complied with. Even if the alleged promise had been made, the mortgagors had not complied with its terms since they had received deposits but not paid them into the borrower’s account.

The borrower also argued that the court had a discretion to postpone making an order for sale for a short time if there was a prospect that the indebtedness would be paid off in full. There was, however, no cogent evidence here to show that the loan could soon be paid off in full.

The borrower was concerned that the mortgagee would not get a good price for the properties but the court pointed out the mortgagee’s duty to get the best price reasonably obtainable.

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