Promissory estoppel: property owned by company controlled by the promissor

In Hong Kong Hua Qiao Co Ltd v Cham Ka Tai ([2013] HKEC 1182, CFI) L gave C (the unmarried partner with whom he co-habited) the title deeds to a property owned by a company controlled by him. At the same time, he told her that he would give her the property when he had redeemed the mortgage over it and that he would give her 300 shares in the company that owned the property. He had a transfer form prepared in respect of the shares. He died intestate as a result of an accident a year or so later.

C claimed to be entitled to the property and the shares. She based her claim on proprietary estoppel. The court dealt with the case as being one of promissory estoppel. It referred to the Court of Final Appeal’s decision in Luo Xing Juan v Estate of Hui Shui See and adopted the same approach.

The necessary pre-existing relationship was present in that L had sufficient control over the company that owned the property to cause it to exercise its ownership rights in a manner adverse to C (to evict her) ([92]). L made a clear promise to C that he would give her the property and shares ([101]). C had relied on the promise by remaining with L and separating from her husband ([105]). It would now be unconscionable for L (or his estate) to act inconsistently with that promise ([106]).

The court ordered that legal title to the property and the promised shares should be transferred to C ([118]).

It is interesting to note that the shares were also dealt with using promissory estoppel though there was no reason why proprietary estoppel could not be invoked.

The fact that the property was owned by the company and not L was held to be fatal to a claim based on a common intention constructive trust ([110]).

C also claimed to be entitled to another property owned by L. This too was considered under the promissory estoppel analysis but it was found that the promise made was equivocal and did not give rise to an estoppel. The facts did not support C’s common intention constructive trust claim in respect of this second property owned by L personally ([114]).

Michael Lower

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2 Responses to “Promissory estoppel: property owned by company controlled by the promissor”

  1. avocawho Says:

    Just wondering how easy/difficult can an oral promise be substantiated particularly when the promissor is dead?

    If the promissor is still alive, he may still defend by way of ‘undue influence’ or ‘unconscionable conduct’?

    • Michael Lower Says:

      You are right to make the point that claims made in this situation need careful treatment. The court made the same point in this case. It was satisfied, though, that there was adequate evidence to corroborate the claim.

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