Asia Hotel Investments v Starwood: Breach of Contract & Lost Hotel Opportunity

In 2002, 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 (NCA). Asia Hotel Investments claimed damages for the lost opportunity to acquire the Grand Pacific Hotel (GPH) in Bangkok. The High Court initially dismissed the claim, but the Court of Appeal allowed the appeal, establishing causation for the loss of a chance. The High Court then assessed damages, ultimately awarding Asia Hotel Investments THB110,839,006, plus interest.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Asia Hotel Investments sued Starwood for breach of contract, alleging lost opportunity to acquire a Bangkok hotel. The court assessed damages.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
STARWOOD HOTELS & RESORTS WORLDWIDE, INCDefendantCorporationJudgment against DefendantLost
Asia Hotel Investments LtdPlaintiffCorporationJudgment for PlaintiffWon
Starwood Asia Pacific Management Pte LtdDefendantCorporationJudgment against DefendantLost

3. Judges

Judge NameTitleDelivered Judgment
Lai Siu ChiuJudgeYes

4. Counsels

Counsel NameOrganization
See Chern YangTan Kok Quan Partnership
Marina ChinTan Kok Quan Partnership
Eddee NgTan Kok Quan Partnership
Kannan RameshTan Kok Quan Partnership
Tan Kok QuanTan Kok Quan Partnership
Alvin YeoWong Partnership
Tay Peng ChengWong Partnership
Linda WeeWong Partnership
Linda LowWong Partnership

4. Facts

  1. Asia Hotel Investments sought to acquire the Lai Sun stake in Grand Pacific Hotel in Bangkok.
  2. Asia Hotel Investments signed a non-circumvention agreement with Starwood.
  3. Starwood negotiated with the Narulas, who ultimately acquired the Lai Sun stake.
  4. Starwood signed a management agreement with the Narulas to manage the Grand Pacific Hotel.
  5. Asia Hotel Investments sued Starwood for breach of the non-circumvention agreement.
  6. The Court of Appeal found that Starwood's actions helped the Narulas acquire the Lai Sun stake.
  7. The High Court assessed damages based on the lost chance to acquire the hotel.

5. Formal Citations

  1. Asia Hotel Investments Ltd v Starwood Asia Pacific Management Pte Ltd and Another, Suit 961/2002, [2007] SGHC 50

6. Timeline

DateEvent
Asia Hotel Investments Ltd incorporated
First memorandum of understanding signed between Siam Hotel Properties Co Ltd and Lai Sun Development Co Ltd
Confidentiality cum non-circumvention agreement backdated
Confidentiality cum non-circumvention agreement signed
First memorandum of understanding expired
Defendants forwarded first draft letter of intent to plaintiff
Defendants forwarded second letter of intent to plaintiff
Second memorandum of understanding concluded between Lai Sun and the Narulas
Defendants showed interest in assisting the Narulas to acquire the Lai Sun stake
Lai Sun extended the second memorandum of understanding indefinitely
The Narulas entered into an agreement with Lai Sun to purchase the Lai Sun stake
Defendants signed letter of intent with the Narulas and Pongphan to manage Grand Pacific Hotel
Transaction between Narulas and Lai Sun completed
Management contract executed between Westin Asia Management Company and the shareholders of PSD
Asia Hotel Investments Ltd commenced suit
Tan Lee Meng J dismissed the plaintiff’s claim
Grande Asset Development Public Company Ltd listed on the Stock Exchange of Thailand
Judgment reserved

7. Legal Issues

  1. Breach of Contract
    • Outcome: The Court of Appeal found that the first defendant had breached the non-circumvention agreement.
    • Category: Substantive
    • Sub-Issues:
      • Breach of non-circumvention agreement
      • Causation of loss
      • Assessment of damages
    • Related Cases:
      • [2005] 1 SLR 661
  2. Assessment of Damages
    • Outcome: The High Court assessed damages based on the plaintiff's lost chance to acquire the hotel, considering various factors and expert valuations.
    • Category: Substantive
    • Sub-Issues:
      • Loss of chance
      • Valuation of hotel
      • Discounted cash flow analysis
      • Weighted average cost of capital
      • Capital expenditure
      • Demolition costs
    • Related Cases:
      • [1996] 1 SLR 227
      • [2001] PNLR 7
  3. Causation
    • Outcome: The Court of Appeal found that the defendants' breach caused the plaintiff to lose a real chance of acquiring the Lai Sun stake.
    • Category: Substantive
    • Sub-Issues:
      • Intervening cause
      • Remoteness of damage
    • Related Cases:
      • [2005] 1 SLR 661

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Contract Disputes

11. Industries

  • Hospitality
  • Real Estate

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Asia Hotel Investments Ltd v Starwood Asia Pacific Management Pte LtdHigh CourtYes[2003] SGHC 289SingaporeThe High Court's initial decision dismissing the plaintiff's claim for damages was overturned on appeal.
Asia Hotel Investments Ltd v Starwood Asia Pacific Management Pte LtdCourt of AppealYes[2005] 1 SLR 661SingaporeThe Court of Appeal allowed the plaintiff's appeal, establishing causation for the loss of a chance to acquire the Lai Sun stake.
Straits Engineering Contracting Pte Ltd v Merteks Pte LtdCourt of AppealYes[1996] 1 SLR 227SingaporeCited for the principle of evaluating the quantum of chance, even when the chance is small (2.5%).
Bank of Credit and Commerce International SA v Ali (No 2)N/AYes[1999] 4 All ER 83N/ACited to illustrate that not every lost chance gives rise to a remedy; the chance must be real and substantial.
Harrison v Bloom CamillinEnglish High CourtYes[2001] PNLR 7EnglandCited for the methodology of applying different discounts to different factors or elements in assessing damages for loss of chance.
Tatung Electronics (S) Pte Ltd v Binatone International LtdCourt of AppealYes[1991] SLR 204SingaporeCited for the principle that a Singapore court may make an award of damages in a foreign currency in an appropriate case.
Miliangos v George Frank (Textiles) [LtdN/AYes[1975] QB 487United KingdomA Singapore court in an appropriate case may make its award of damages in a foreign currency.
Indo Commercial Society (Pte) Ltd v EbrahimN/AYes[1992] 2 SLR 1041SingaporeSummarizes the law on awarding damages in a foreign currency, stating that the plaintiff has no right of election between the foreign currency and the Singapore dollar.
Cheong Ghim Fah v Murugian s/o RangasamyN/AYes[2004] 1 SLR 628SingaporeCited regarding drawing adverse inferences from a witness's absence.
Jet Holding Ltd v Cooper Cameron (Singapore) Pte LtdCourt of AppealYes[2006] 3 SLR 769SingaporeCited regarding the admissibility of documents in evidence and the need to prove the truth of their contents.
Jet Holding Ltd v Cooper Cameron (Singapore) Pte LtdN/AYes[2005] 4 SLR 417SingaporeDocuments in the damages bundle had not been properly admitted in evidence.
Vita Health Laboratories Pte Ltd v Pang Seng MengN/AYes[2004] 4 SLR 162SingaporeDiscusses the integrity and independence of expert witnesses.
Kaufman, Gregory Laurence v Datacraft Asia LtdHigh CourtYes[2005] SGHC 174SingaporeDeals with the issue of an expert witness's connection with one of the parties and its effect on the weight of the evidence.
Field v Leeds City CouncilN/AYes[2000] 1 EGLR 54EnglandWhere an expert witness has a connection with one of the parties or otherwise has an interest in the outcome of the proceedings, then, although such interest does not automatically render his evidence inadmissible, the interest may nevertheless affect the weight of the evidence.
Armchair Passenger Transport Limited v Helical Bar PlcN/AYes[2003] EWHC 367 (QB)EnglandWhere an expert witness has a connection with one of the parties or otherwise has an interest in the outcome of the proceedings, then, although such interest does not automatically render his evidence inadmissible, the interest may nevertheless affect the weight of the evidence.
Macro v Thompson (No 3)N/AYes[1997] 2 BCLC 36N/AIt is actual partiality, rather than the appearance of partiality, that is the crucial test in deciding whether the evidence of an expert witness should be discounted.
Lee Cheng Kang v Lee Tian KaiCourt of AppealYes[1996] 2 SLR 252SingaporeEndorses the approach of taking the average of valuations from multiple experts.
Lee Cheng Kang v Lee Tian Kai alias Lee Tian KhaiHigh CourtYes[1995] SGHC 36SingaporeEndorses the approach of taking the average of valuations from multiple experts.
Lie Kie Siang v Han Ngum Juan MarcusN/AYes[1992] 1 SLR 476SingaporeA normal measure of damages for breach would be the market value of the property at the time of the completion less the contract price.
Johnson v AgnewN/AYes[1980] AC 367N/AWhile the general principle for an assessment of damages is compensatory and damages is normally assessed as at the date of breach, this is not an absolute rule: if to follow it would give rise to injustice, the court has power to fix such other date as may be appropriate in the circumstances.
Re Colt Telecom Group plc (No 2)N/AYes[2003] BPIR 324N/AThe purpose of the percentage discount was part of the process to bring the value of the plaintiff’s loss back to 2002, after determining the full 100% value.
P M Sulcs & Associates Pty Ltd v Daihatsu Australia Pty LtdN/AYes[2001] NSWSC 636AustraliaThe purpose of the percentage discount was part of the process to bring the value of the plaintiff’s loss back to 2002, after determining the full 100% value.
Browne v DunnN/AYes(1893) 6 R 67N/AIf a party does not cross-examine a witness on a point, it is not procedurally correct for the court to accept the party's complaint as it had not been put to the witness.
Official Administrator Federated Malay States v State of SelangorN/AYes[1939] MLJ 226N/AThe court may, if there is no definite expert evidence to the contrary, agree with the expert.
Re Choo Eng Choon, decdN/AYes(1908) 12 SSLR 120N/AThe court must not blindly accept the evidence merely because there is no definite opinion to the contrary.
Muhammad Jeffry bin Safii v PPN/AYes[1997] 1 SLR 197N/AThe role of the court is restricted to electing or choosing between conflicting expert evidence or accepting or rejecting the proffered expert evidence, though none else is offered.
Sek Kim Wah v PPN/AYes[1987] SLR 107N/AThe court is not obliged to accept expert evidence by reason only that it is unchallenged, if the court finds that the evidence is based on sound grounds and supported by the basic facts, it can do little else than to accept the evidence.
The Bwllfa and Merthyr Dare Steam Collieries (1891), Limited v The Pontypridd Waterworks CompanyN/AYes[1903] AC 426N/AIf the question goes to arbitration, the arbitrator’s duty is to determine the amount of compensation payable. In order to enable him to come to a just and true conclusion it is his duty, I think, to avail himself of all information at hand at the time of making his award which maybe laid before him. Why should he listen to conjecture on a matter which has become an accomplished fact? Why should he guess when he can calculate? With the light before him, why should he shut his eyes and grope in the dark?

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 38 r 2(1)
Evidence Act (Cap 97, 1997 Rev Ed) s 116(g)
Evidence Act s 32(b)
Rules of Court (Cap 322, R 5, 2005 Rev Ed) O 40A r 2(1)

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Non-circumvention agreement
  • Lai Sun stake
  • Grand Pacific Hotel
  • Loss of chance
  • Weighted average cost of capital
  • Discounted cash flow
  • Capital expenditure
  • Debt service coverage ratio
  • Mezzanine loan
  • Sponsor cash equity

15.2 Keywords

  • breach of contract
  • hotel management
  • damages
  • loss of chance
  • non-circumvention
  • Starwood
  • Asia Hotel Investments
  • Grand Pacific Hotel
  • Bangkok

17. Areas of Law

Area NameRelevance Score
Breach of Contract75
Contract Law60
Commercial Disputes50
Valuation45
Damages40
Hotel Management35
Business Litigation30
Real Estate20
Collections20

16. Subjects

  • Contract Law
  • Damages
  • Hotel Management
  • Commercial Litigation