The SUN Hong Kong
The disputed property, which used to be a standalone cinema in Sham Shui Po The High Court has declared the Jesus is Lord Church in Hong Kong as the rightful owner of a former cinema in Sham Shui Po, Kowloon that it has been using as a place of worship since 2003. The decision stemmed from a 10-year legal dispute that centered on whether the Church had exercised its option to seal ownership of the property by offering the nominal fee of $1 at the end of a 12-year lease-purchase agreement (LPA) it had with JIL Investments Limited. The High Court affirmed JIL Church’s ownership; however, its continuous possession has been put in doubt because the disputed property is now encumbered with a HK$30 million loan secured by JIL Investments seven months before the LPA was due to end. Under the LPA, JIL Church undertook to pay HK$2 million upfront for the property valued at HK$18.5 million. The remaining HK$16.5 million was to be paid monthly over 12 years, with interest. In his decision handed down on March 31, Deputy High Court Judge Jonathan Wong found that JIL Church had indeed exercised its option to secure ownership of the property, a former cinema attached to the Nam Cheong Commercial Building in Sham Shui Po. As such, Judge Wong said the defendant is entitled to a declaration that the plaintiff has been holding title to the property in trust for the JIL Church. The JIL Church is also entitled to recover the security deposit for the LPA from the plaintiff in the total sum of HK$332,591.94. The judge ordered JIL Investments to transfer the legal title and ownership of the property to JIL Church free from all encumbrances. But if this not be possible, the premises should still be turned over to JIL Church with existing encumbrances, along with an order to indemnify the defendant for whatever it pays to discharge the encumbrances. If again this is not possible, plaintiff should pay damages to the defendant. Defendant JIL Church was also awarded costs and interests Brother Eddie said he was assured that the transfer of ownership was mere formality The suit pitted erstwhile friends and “compadres” Eduardo Villanueva (Brother Eddie), founder and spiritual leader of the Philippines-based JIL Church; and JIL Investments’ former director Stephen Sy Chin-mong (Sy Senior). Sy Sr. was chief executive officer of the Bel Trade group of companies, which acquire JIL Investments in September 2003, prior to the execution of the LPA. Bel Trade was the same company that entered into an earlier lease-purchase agreement with the Department of Foreign Affairs for the acquisition of the 14 th floor of United Center Building used by the Philippine Consulate General in Hong Kong . The DFA sued Bel Trade in June 2015 after BelTrade failed to transfer ownership, more than a year after their LPA expired. (see story here: https://www.rappler.com/moveph/96812-dfa-dfa-ownership-ph-consulate-hk/ ) Brother Eddie and his wife Dory were initially named directors of JIL Investments but were removed in June 2015 during a board meeting chaired by Sy Senior’s son, Sunny, which they claimed to have no knowledge of. Nor did they acknowledge attending another board meeting at Bel Trade’s office in Hong Kong much earlier, or on March 16, 2014 during which Sy Senior purportedly resigned and was replaced by his daughter, Sandy. About two months after this board meeting, Sy Sr was declared bankrupt and his son, Sunny, replaced Sandy as director. Records shown to the court showed neither Brother Eddie nor his wife were in Hong Kong at the time of the supposed board meeting. The Nam Cheong property has 1,000 seating capacity Both Brother Eddie and Sy Sr testified in court during hearings held in May and August last year, along with their key officers, with the two sides presenting opposing versions of the events that transpired before the LPA took effect on Dec 15, 2003, and after it expired on Dec 14, 2015. During his testimony that lasted for days, Brother Eddie repeatedly told the court that he trusted Sy Sr so much that he did not doubt his assurances that acquiring the property at the end of the LPA was just a formality. But after reading about the DFA’s suit against BelTrade, Brother Eddie and his officers at JIL Hong Kong got worried about JIL Investments reneging on its promise to hand over the Nam Cheong property at the end of their LPA later that year. Brother Eddie said he sought a meeting with Sy Sr in the Philippines on Oct. 15, 2015,during which he handed over a written notice informing the plaintiff of JIL Church’s intention to exercise its option to take ownership in December that year. At the time, Brother Eddie said he was not aware that his friend had already resigned as director of the plaintiff, and was subsequently declared bankrupt. Sy Sr denied receiving the written notice of intent by JIL Church, saying the October 2015 meeting was a mere social interaction between them, but the High Court held otherwise. Judge Wong also dismissed claims that Brother Eddie should have known about Sy Senior’s resignation and bankrupty. The judge noted evidence by the plaintiff, specially its officer Ahmed, that Sy Senior remained as the boss of Bel Tade at least up to 2021. Sy Senior even admitted being involved in the DFA litigation which only commenced in mid- 2015. In the meantime, Sunny Sy even before being appointed director of JIL Investments had approached Lei Shing Hong for a loan. As a result, LSH on May 9, 2015 granted plaintiff a general credit facility in the sum of HK$30 million for a term of one year, with the property as guarantee. Subsequently, after taking over as director on May 15, 2015, Sunny Sy issued notice for an EGM to be held on June 17, 2015 to vote on a resolution removing Brother Eddie and Sister Dory as directors of the company. The Villanueva couple denied receiving notice about this meeting. In court, Sunny accepted that the removal of the couple was meant to minimize any potential obstacles in JIL Investment’s use of the LSH Loan. Sunny, however, said LSH was made aware of the LPA with JIL Church, a claim that was denied by LSH. In sum, Sunny accepted that the plaintiff is now unable to repay the LSH loan, and as a result, is unable to transfer the property to the defendant free from encumbrances. JIL Investments initiated legal action in October 2016 (or 10 months after the LPA) expired, to recover possession of the property from the defendant JIL Church, claiming it failed to exercise its option under the terms of the LPA. The plaintiff also asked for lost profits, and for the de-registration of the LPA with the Land Registry which was preventing it from recovering possession. On the other hand, defendant JIL Church asserted it had exercised the option to acquire the property by tendering the $1 nominal payment so that it should be declared as the rightful owner. It also demanded the transfer of the property without encumbrances and for return of its security deposit paid at the start of the LPA. As a side comment, the High Court noted that on Oct. 15, 2003, while the negotiation was ongoing between the parties on the LPA, the property was bought by a company linked to JIL Investments for HK$14.5 million, “well below the purchase price of HK$18.5 million stated in the provisional agreement.” On top of the purchase price, JIL Church also spent about HK$9.5 million renovating the premises, “engaging a contractor recommended by BelTrade. By the end of the 12-year LPA, JIL Church was said to have paid a total of over HK$23 million to JIL Investments for the property. Two senior counsels represented the opposing parties in the suit. Jenkin Suen, SC, appeared for JIL Investments while Ambrose Ho, SC represented JIL Church. .
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