Asia Hotel v Starwood: Breach of Non-Circumvention Agreement & Loss of Chance in Hotel Acquisition
Asia Hotel Investments Ltd sued Starwood Asia Pacific Management Pte Ltd and Starwood Hotels & Resorts Worldwide Inc in the High Court of Singapore, alleging breach of a non-circumvention agreement and other claims related to Asia Hotel's attempt to acquire a stake in a Bangkok hotel. Asia Hotel claimed Starwood breached the agreement by contracting with parties introduced by Asia Hotel. The court (Tan Lee Meng J) found Starwood in breach but ruled that Asia Hotel failed to prove their alleged losses were a direct consequence of Starwood's breach, awarding only nominal damages. Asia Hotel dropped all claims against Starwood Hotels during the trial.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Judgment for Plaintiff; nominal damages awarded
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Asia Hotel sued Starwood for breach of a non-circumvention agreement related to a hotel acquisition. The court found a breach but awarded only nominal damages due to remoteness.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Asia Hotel Investments Ltd | Plaintiff | Corporation | Nominal damages awarded | Partial | |
| Starwood Hotels and Resorts Worldwide, Inc | Defendant | Corporation | Claims dropped | Dismissed | |
| Starwood Asia Pacific Managment Pte Ltd | Defendant | Corporation | Nominal damages awarded against | Partial |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Tan Lee Meng | Judge | Yes |
4. Counsels
4. Facts
- Asia Hotel wanted to invest in the Grand Pacific Hotel in Bangkok.
- Asia Hotel entered into a Memorandum of Understanding with Lai Sun for the acquisition of shares in PSD.
- Asia Hotel signed a Confidentiality/Non-Circumvention/Non-Disclosure Agreement with Starwood.
- Lai Sun rejected Asia Hotel's request to extend the deadline under their MOU.
- The Narulas entered into an MOU with Lai Sun and subsequently acquired the Lai Sun shares.
- Starwood's affiliated company entered into a management agreement with the shareholders of PSD.
- Starwood offered a renovation loan of US$5m to the shareholders of PSD.
5. Formal Citations
- Asia Hotel Investments Ltd v Starwood Asia Pacific Managment Pte Ltd and Another, Suit 961/2002/C, [2003] SGHC 289
6. Timeline
| Date | Event |
|---|---|
| Asia Hotel entered into a Memorandum of Understanding with Lai Sun for the acquisition of shares in PSD. | |
| Asia Hotel signed a Confidentiality/Non-Circumvention/Non-Disclosure Agreement with Starwood. | |
| Lai Sun rejected Asia Hotel's request to extend the deadline under their MOU. | |
| Asia Hotel sought a US$5m renovation loan and an ex gratia payment from Starwood. | |
| Kirin Narula had discussions with Lai Sun. | |
| Starwood sent Asia Hotel a draft letter of intent, including an offer of US$6m for a renovation loan. | |
| The Narulas entered into an MOU with Lai Sun. | |
| Lai Sun extended the expiry date of the MOU with the Narulas indefinitely. | |
| The Narulas received preliminary proposals from other hotel operators. | |
| The Narulas entered into an agreement with Lai Sun for the sale and purchase of the Lai Sun shares. | |
| The Narulas paid Lai Sun US$1.2m. | |
| Westin Asia Management Co entered into a management agreement with the shareholders of PSD. | |
| The sale of the Lai Sun shares was completed. | |
| Decision Date |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that Starwood breached the non-circumvention agreement.
- Category: Substantive
- Sub-Issues:
- Non-circumvention agreement
- Failure to prevent affiliated companies from breaching agreement
- Remoteness of Damage
- Outcome: The court held that Asia Hotel's alleged loss of profits was too remote a consequence of Starwood's breach.
- Category: Substantive
- Sub-Issues:
- Loss of a chance
- Causation
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
11. Industries
- Hospitality
- Real Estate
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Shell UK Ltd v Lostock Garages Ltd | N/A | Yes | [1976] 1 WLR 1187 | England and Wales | Cited regarding the implication of terms in a carefully drafted written contract. |
| Robinson v Harman | N/A | Yes | (1848) 1 Exch 850 | N/A | Cited for the principle that damages should place the innocent party in the same position as if the contract had been performed. |
| Bank of Credit and Commerce International SA (in liquidation) v Ali and Others (No 2) | N/A | Yes | [2003] 3 All ER 750 | England and Wales | Cited to distinguish between causation of damage and assessment of damage in cases involving loss of a chance. |
| Chaplin v Hicks | English Court of Appeal | Yes | [1911] 2 KB 786 | England and Wales | Cited as a case where damages were awarded for loss of a chance. |
| Bank of Credit and Commerce International SA v Ali (No 2) | N/A | Yes | [1999] 4 All ER 83 | England and Wales | Cited to emphasize that Chaplin v Hicks does not offer a free pass to claims that the loss of practically any chance will be sufficient to found a claim to recoverable loss. |
| Allied Maples Group Ltd v Simmons & Simmons ( a firm) | N/A | Yes | [1995] 1 WLR 1602 | England and Wales | Cited for the principle that a plaintiff claiming damages for loss of a chance must establish that he had a real and measurable chance. |
| Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd | N/A | Yes | [1951] All ER 873 | England and Wales | Cited regarding the position of a plaintiff who has only been awarded nominal damages and the issue of costs. |
| Hilborne KE v Tan Tiang Quee | N/A | Yes | [1972-74] SLR 85 | Singapore | Cited to reiterate that each case must depend on its own facts when considering the issue of costs. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Non-circumvention agreement
- Lai Sun shares
- Grand Pacific Hotel
- PSD
- Renovation loan
- Loss of a chance
- MOU
- Key money
15.2 Keywords
- breach of contract
- non-circumvention
- hotel acquisition
- loss of chance
- damages
- Starwood
- Asia Hotel
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Non-circumvention agreement | 95 |
| Breach of Contract | 90 |
| Contract Law | 85 |
| Remoteness of damage | 75 |
| Damages | 70 |
| Commercial Disputes | 60 |
16. Subjects
- Contract Law
- Hotel Management
- Mergers and Acquisitions