t6pr.com - Soundwill Holdings Limited (878)

Hong Kong, October 17, 2004 - Soundwill Holdings Limited (Stock Code: 878) is pleased to announce a high court judgment on 14 October 2004 for its wholly owned subsidiary Pacific Well Realty Limited ("Pacific Well") in relation to its purchase of a commercial building in Yuen Long (the "Suit Premises"). According to the judgment, the plaintiff, Chung To Chinese Products Company Limited ("Chung To"), was entitled to forfeit the deposit of HK$20 million out of the total HK$65 million paid by Pacific Well to Chung To, but Chung To's claim for damages in the event that proceeds of sale may fall short of the original contract price was dismissed by the High Court. It was therefore ruled that Chung To was not entitled to retain the HK$45 million part payment of the purchase price and these moneys must be repaid to Pacific Well together with interest in respect for the moneys from 8 May 1998 to 14 October 2004 at 1% above prime rate.

Pacific Well, Soundwill Holdings Limited's wholly owned subsidiary, entered into an agreement with Chung To in June 1997 for the sale and purchase of the Suit Premises at Kwong Wah Centre for a purchase price of HK$200 million. As the agreement was rescinded, it was Pacific Well's contention that the deposit of HK$20 million, which had been paid to Chung To, should be treated as liquidated damages. During the period, Pacific Well had paid to Chung To HK$20 million as deposit and HK$45 million in part payment of the purchase price.

In March 2003, Chung To sold the Suit Premises to a BVI company (the "Sale") for HK$100 million and claimed Pacific Well for damages of HK$35 million. However, as the property was sold to the BVI company with Alvin Lam, son of Chung To's majority shareholder Lam Kam Tei behind it, the judge concluded that it was not an arms length transaction.

According to the High Court's judgment, the plaintiff did not make any serious attempt to sell the property after the sale to Pacific Well fell through. No reliance can be properly placed upon the Sale to the son of Chung To's major shareholder, and it was evident that after the Sale the plaintiffs' business was continued to be operated from the Suit Premises. The judge concluded that it was from the outset of the intention of the plaintiff to retain the premises. Pursuant to the sale and purchase agreement, the deposit should be treated as liquidated damages in the event that the plaintiff chose to retain the property.

Pursuant to the judgment of the High Court, Chung To was ordered to return to Pacific Well the previous paid part payment of the purchase price of HK$45 million and interest. Soundwill Holdings has already made full provision for the total sum of HK$65 million being deposit and part payment, thus, the Group is expected to record a write-back of HK$45 million.

Issued by :
Soundwill Holdings Limited

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