Asia Hotel v Starwood: Breach of Contract & Loss of Chance in Hotel Share Acquisition

Asia Hotel Investments Ltd. sued Starwood Asia Pacific Management Pte Ltd in the Court of Appeal of the Republic of Singapore on 20 September 2004, alleging breach of a non-circumvention agreement (NCA). Asia Hotel claimed Starwood's actions caused them to lose the chance to acquire shares in PS Development Ltd (PSD), which owned the Grand Pacific Hotel in Bangkok. The Court of Appeal allowed Asia Hotel's appeal, finding Starwood's breach did cause Asia Hotel to lose a real chance to acquire the shares, and ordered damages to be assessed.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal allowed.

1.3 Case Type

Civil

1.4 Judgment Type

Final Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Asia Hotel sued Starwood for breach of contract, alleging Starwood's actions caused them to lose a chance to acquire shares in a hotel. The appeal was allowed.

1.7 Decision Date

19 September 2004

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Asia Hotel Investments Ltd	Appellant, Plaintiff	Corporation	Appeal allowed	Won	Alvin Yeo of Wong Partnership Tay Peng Cheng of Wong Partnership Linda Wee of Wong Partnership
Starwood Asia Pacific Management Pte Ltd	Respondent, Defendant	Corporation	Appeal dismissed	Lost	Marina Chin of Tan Kok Quan Partnership Tan Kok Quan of Tan Kok Quan Partnership
Starwood Hotels and Resorts Worldwide, Inc	Respondent, Defendant	Corporation	Appeal dismissed	Lost	Marina Chin of Tan Kok Quan Partnership Tan Kok Quan of Tan Kok Quan Partnership

3. Judges

Judge Name	Title	Delivered Judgment
Chao Hick Tin	Justice of Appeal	Yes
Judith Prakash	Judge	No
Yong Pung How	Chief Justice	No

4. Counsels

Counsel Name	Organization
Alvin Yeo	Wong Partnership
Tay Peng Cheng	Wong Partnership
Linda Wee	Wong Partnership
Marina Chin	Tan Kok Quan Partnership
Tan Kok Quan	Tan Kok Quan Partnership

4. Facts

Asia Hotel sought to invest in the Grand Pacific Hotel in Bangkok.
Asia Hotel entered into a non-circumvention agreement (NCA) with Starwood Asia.
Starwood Asia negotiated with the Narulas to manage the Grand Pacific Hotel.
Lai Sun refused Asia Hotel's request to extend the deadline under the MOU.
The Narulas purchased the Lai Sun stake in PSD.
Starwood offered the Narulas a US$5m renovation loan.
DBS Thai Danu Bank's loan to the Narulas was conditional on the hotel being managed by Westin.

5. Formal Citations

Asia Hotel Investments Ltd v Starwood Asia Pacific Management Pte Ltd and Another, CA 143/2003, [2004] SGCA 37
Asia Hotel Investments Ltd v Starwood Asia Pacific Management Pte Ltd, , [2003] SGHC 289

6. Timeline

Date	Event
2001-11-07	Asia Hotel entered into a Memorandum of Understanding (MOU) with Lai Sun for share acquisition.
2001-12-04	Asia Hotel and Starwood Asia signed a confidentiality and non-circumvention agreement (NCA).
2001-12-14	Expiry date of the MOU between Lai Sun and Asia Hotel.
2001-12-15	Lai Sun turned down Asia Hotel's request to extend the deadline under the MOU.
2002-01-18	Pongphan wrote a letter to Lai Sun to formally waive his right of first refusal to the Lai Sun shares in favour of the Narulas.
2002-02-05	Lai Sun entered into an MOU with the Narulas.
2002-02-15	Starwood Asia was first approached by the Narulas’ agent with regard to the management of the Grand Pacific.
2002-02-19	Lai Sun agreed to extend the expiry date of its MOU with the Narulas indefinitely.
2002-03-22	Lai Sun and the Narulas signed a sale and purchase agreement for the shares.
2002-03-25	Letter of intent signed between Starwood Asia and the Narulas.
2002-05-15	Management agreement signed between Starwood Asia’s affiliate and the shareholders of PSD.
2002-05-22	Sale and purchase of the Lai Sun shares in PSD to the Narulas were completed.
2004-09-20	Judgment reserved.

7. Legal Issues

Breach of Contract
- Outcome: The court found that Starwood Asia breached the non-circumvention agreement.
- Category: Substantive
- Sub-Issues:
  - Circumvention of agreement
  - Failure to abide by terms and conditions
- Related Cases:
  - [2004] SGCA 37
Causation
- Outcome: The court initially found that the breach did not cause Asia Hotel's loss, but the appeal court overturned this, finding that the breach did cause the loss of a chance.
- Category: Substantive
- Sub-Issues:
  - Effective cause of loss
  - Remoteness of damage
- Related Cases:
  - [1995] 1 All ER 16
  - [2002] 3 All ER 750
Loss of Chance
- Outcome: The court initially found that Asia Hotel did not have a real or measurable chance of securing the Lai Sun shares, but the appeal court overturned this, finding that Asia Hotel did lose a real chance.
- Category: Substantive
- Sub-Issues:
  - Real and substantial chance
  - Speculative chance
- Related Cases:
  - [1911] 2 KB 786
  - [1995] 1 WLR 1602
  - [2003] EWCA Civ 215

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
Galoo Ltd v Bright Grahame Murray	Unknown	Yes	[1995] 1 All ER 16	England and Wales	Cited for the principle that a breach of contract must be an 'effective' or 'dominant' cause of the loss for damages to be claimed.
Chaplin v Hicks	Court of Appeal	Yes	[1911] 2 KB 786	England and Wales	Cited as a key authority on claims for loss of chance, establishing that damages are recoverable for the loss of an opportunity, even if the outcome is uncertain.
Bank of Credit and Commerce International SA v Ali (No 2)	Unknown	Yes	[2002] 3 All ER 750	England and Wales	Cited for the principle that causation must be proved on the balance of probabilities in loss of chance cases.
Allied Maples Group Ltd v Simmons & Simmons	English Court of Appeal	Yes	[1995] 1 WLR 1602	England and Wales	Cited for its framework for analyzing causation in loss of chance situations, particularly where the loss depends on the actions of a third party.
Sykes v Midland Bank Executor & Trustee Co Ltd	English Court of Appeal	Yes	[1971] 1 QB 113	England and Wales	Cited to contrast with Allied Maples, where nominal damages were awarded because the plaintiffs could not establish that they would probably not have entered into the lease had they been properly advised.
Normans Bay Ltd v Coudert Brothers	English Court of Appeal	Yes	[2003] EWCA Civ 215	England and Wales	Cited for its application of the Allied Maples framework and its emphasis on proving causation in loss of chance scenarios.
Bank of Credit and Commerce International SA v Ali (No 2)	Unknown	Yes	[1999] 4 All ER 83	England and Wales	Cited for the principle that the chance which was lost was real or substantial.

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
Loss of chance
Key money
Renovation loan
Hotel management agreement
Right of first refusal
Memorandum of Understanding
Lai Sun stake
Grand Pacific Hotel
Westin

15.2 Keywords

breach of contract
loss of chance
hotel investment
non-circumvention
Starwood
Asia Hotel
Grand Pacific Hotel

17. Areas of Law

Area Name	Relevance Score
Breach of Contract	90
Loss of Chance	80
Contract Law	70
Causation	70
Nominal damages	60
Commercial Disputes	50
Evidence	40
Misrepresentation	30
Measure of Damages	30
Estoppel	20

16. Subjects

Contract Law
Hotel Investment
Commercial Dispute