Key victory for flat buyers in legal battle with developer

Seven flat buyers have won a key dispute in a legal battle against a subsidiary of property giant Cheung Kong (Holdings) they accuse of failing to complete a luxury residential development in Kowloon Tong on time.

The buyers are seeking more than HK$1 million from Match Power Investment, which they claim breached the property purchase contract as it obtained the certificate of compliance from the Buildings Department in July 2004, five months after the scheduled completion date.

The Court of First Instance ruled that a letter the developer asked the buyers to sign when selecting a parking space should not serve as a settlement agreement over the delay in completing One Beacon Hill, although it contained a clause that the developer intended to settle all the rights of the buyers. All but one of the seven buyers signed the letter.

In her judgment on Christmas Eve, Madam Justice Carlye Chu Fun-ling said the developer offered the HK$1 parking spaces before the dispute over the delay in completion arose. When the developer invited the buyers to its office to sign the letter in August and September 2004, it informed them only that the purpose was to select their parking spaces.

'[The buyers] had not been told, and there was no indication that it was also an occasion to deal with their complaints about the delay in completion or demands for compensation,' Chu said.

The letter, which has a clause saying it would serve as 'the full and final settlement of all the purchasers' rights', is an acknowledgement of buying the parking space only and should not be taken as a settlement covering the delay claim, she said.

Match Power denies there was any delay and has not indicated whether it will appeal against the ruling. If no appeal is lodged in 28 days, the case will proceed to a trial.

The buyers paid HK$6 million to HK$8.6 million for their flats. Their compensation claim includes interest and rental income lost due to the alleged delay.

The Consumer Council helped the buyers initiate the writ, filed in the High Court in September 2005.

The writ says the delay was due to Match Power's violation of government regulations by 'felling, lopping, cutting or otherwise interfering with trees' on the site without seeking consent from the director of lands.

In November 2005, the District Court dismissed efforts by Match Power to quash the claims of four of the seven plaintiffs. In two separate judgments, Judge Stephen Chow Siu-hung dismissed Match Power's arguments and awarded costs to the plaintiffs.

The council welcomed the latest ruling and reminded consumers not to sign any contract they do not understand. Its chief executive, Connie Lau Yin-hing, said the court had confirmed its view regarding settlement agreements.

'The case reminds consumers that they should be careful when signing contracts and seek legal advice when they do not understand the terms,' she said.

The council will continue to support the seven buyers in the litigation.