Assignor of reversion’s informal promise of an option to renew: binding on successor in title?

In Best Honour Investment & Development Ltd v Best Sonic Ltd ([2006] HKEC 1100, CFI) T refused to leave the demised premises at the end of the lease term. L obtained an order for possession and was awarded rent arrears and mesne profits as a result of a summary judgment.

T argued that L’s predecessor had (before the assignment to L) assured T that it could have an extension of its lease for a further two years at a rent that would not increase by more than 20% as compared with the rent payable under the prior lease. On this understanding, T had granted a sub-lease to H which had spent HK$6 million renovating the property. T argued that L was estopped from recovering possession as a result of this assurance.

This failed. There was nothing to suggest that L knew of the alleged representation. Nor was any factor present which would make it inequitable for L to disregard its predecessor’s assurance.

Even if there were a complete agreement for lease, it had to comply with section 3(1) of the Conveyancing and Property Ordinance since the alleged lease did not take effect in possession (Reyes J. at [16]).

Michael Lower

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