Apex Horizon compensation hopes dashed
Buyers in cancelled hotel development will not get increased payout, says Cheung Kong
Sandy Li and Yvonne Liu
Cheung Kong (Holdings) says it will not increase compensation for buyers of its cancelled hotel suites.
Buyers' hopes of seeking extra compensation were dashed when Cheung Kong said in a statement that there was no condition offering refunds of double the deposits in the preliminary and formal sale-and-purchase agreements for the Apex Horizon hotel in Kwai Chung.
Some Apex Horizon buyers intend to see if they can claim double what they put down as a deposit as compensation after the property giant terminated the sales.
On Monday, Cheung Kong said it would refund deposits and cancel the sales after a Securities and Futures Commission probe found the deals breached the law as unauthorised investments.
The sales drew scrutiny because the developer appeared to participate in a collective investment scheme - a project involving a group of small investors. To do this legally, Cheung Kong must seek approval for promotional documents and ensure they disclose all investment features and risks before any sales.
Cheung Kong said it would refund the deposit and any part payments, along with interest at 2 per cent per annum above the prime rate from the time of payment to the end of this month. It will offer buyers HK$10,000 in legal and other expenses.
However, more than 27 buyers who resold their properties to a third party through confirmor transactions might suffer more losses than other buyers.
A manager at a major property agency said: "We have handled several confirmor sales. Some of these sub-sale agreements have included a term of 'the parties must complete the sales and purchase'. We helped the buyers to seek advice from lawyers but they hold different views in terms of seeking compensation."
According to some lawyers, the sellers of the confirmor sale would have to return the 10 per cent deposit plus an extra 10 per cent of the property price to buyers as compensation.
"They also have to foot the legal bill. Their gains from the sub-sale may be wiped out after taking into account the compensation and the legal expenses," the manager said.
But some lawyers gave different advice, arguing sellers could cancel the sub-sale deal because of the ownership problem.
A property agency source said that many agents who handled the deals were questioned by the SFC in March and had to explain the sales procedures and how Cheung Kong promoted the project.
Additional reporting by Paggie Leung and Patsy Moy