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| 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 in monthly installments 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 the title to the property in
trust for the JIL Church.
The JIL Church is also entitled to recover the
security deposit for the property paid to 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 the existing encumbrances, along with an
order to indemnify the defendant for whatever it pays to discharge the lien. If again this is not possible, plaintiff should pay damages to the defendant.
Defendant JIL Church was also awarded costs and
interests
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| 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) against each other
Sy Sr. was chief executive officer of the Bel Trade
group of companies, which acquired JIL Investments in September 2003, prior to
the execution of the LPA.
Bel Trade was also the company that was sued by the Department of Foreign Affairs in the Philippines in June 2015 after failing to turn over ownership of the 14th floor of United Center Building in Admiralty at the end of their lease-purchase agreement more than a year earlier.
(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 furnished the court showed neither Brother
Eddie nor his wife were in Hong Kong at the time of the supposed board meeting.
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| 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. The two sides presented opposing versions of the events that transpired before the
LPA took effect on Dec 15, 2003, and after it expired on Dec 14, 2015.
Judge Wong said in his decision that no one among the witnesses was entirely truthful. "I have evaluated the witnesses' evidence and have come to the view that none of the witnesses is so reliable that I can accept his/her evidence in full," he said.
However, this did not prevent him from deducing from the evidence what actually transpired during the material times.
In his testimony that lasted more than a day, 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 a 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 him and Brother Eddie, but the High Court held otherwise.
Judge Wong also dismissed claims that Brother Eddie
should have known about Sy Senior’s resignation and bankruptcy.
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, and of continuing to carry out business talks with Brother Eddie.
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 said he 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 the lending company.
Ultimately, Sunny accepted that the plaintiff is now
unable to repay the LSH loan, and as a result, could no longer 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 the return of the security deposit it 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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