PageStatus: Positive or Neutral Judicial Treatment ATTORNEY GENERAL AND ANOTHER v HUMPHREYS ESTATE (QUEEN'S GARDENS) LTD.Judicial Committee of the Privy Council11 December 1986Case AnalysisWhere Reported[1987] HKLR 427; Case DigestSubject: Contract lawSummary: Contract law; Contract; estoppel; agreement in principle "subject to contract"; whether because of actions parties were estopped from withdrawing from an agreement in principle; principles of estoppel.Abstract: The appellant and the respondent entered into negotiations for an exchange whereby the appellant would acquire a number of flats in a building owned by the respondent and the respondent would take from the appellant a crown lease of property, known as Queen's Gardens, together with the right to develop that property and an adjoining property owned by the respondent. The terms were agreed in principle but subject to contract. The respondent purported to withdraw from the negotiations. The appellant argued that by virtue of the respondent's action in allowing the appellant possession of the flats and in taking possession of Queen's Gardens and demolishing the buildings thereon, it was unconscionable for the respondent to withdraw from the agreement in principle and the respondent was estopped from so doing.Held:1. In order to found an estoppel it was not sufficient to show merely that a party has acted to its detriment and, to the knowledge of the other party, in the hope that that other party will not withdraw from an agreement in principle. He must show first that the other party created or encouraged a belief or expectation on his behalf that that other party would not withdraw from the agreement in principle and, secondly, that he relied on the belief or expectation. (See p. 432F.)2. On the facts the appellant failed to establish either ground. (See p. 432G.)Obiter:It was possible, but unlikely, that, in circumstances at present unforeseeable, a party to negotiations set out in a document expressed to be "subject to contact" would be able to satisfy the Court that the parties had subsequently agreed to convert the document into a contract, or that some form of estoppel had arisen to prevent both parties from refusing to proceed with the transactions envisaged by the document. (See p. 435G.)Appeal dismissed.

Direct History Court of AppealHUMPHREY'S ESTATE (QUEEN'S GARDENS) LTD v ATTORNEY GENERAL & ANOTHER[1986] HKLR 669, [1986] HKLY 171 (Civil Appeal No 92 of 1985) Affirmed by Judicial Committee of the Privy CouncilATTORNEY GENERAL AND ANOTHER v HUMPHREYS ESTATE (QUEEN'S GARDENS) LTD.[1987] HKLR 427 (Privy Council Appeal No. 26 of 1986) Cases Citing this CaseConsidered by BEAUTILAND CO LTD v COMMISSIONER OF INLAND REVENUE[1990] 1 HKLR 480 (Inland Revenue Appeal No. 1 of 1989) ; HC 2012 Thomson Reuters Hong Kong Limited