TUI rejects Polytex appeals, rules in favor of Pearl Horizon buyers in HKD91 million cases

[Photo: Renato Marques]

The Court of Final Appeal (TUI) has sided with the former Pearl Horizon buyers, denying several appeals by the former developer, Polytex, and ordering the company to pay compensation.

In total, the TUI issued rulings in 14 civil compensation cases involving acquisition contracts for the former development in Areia Preta, totaling HKD91.24 million.

In general terms, the higher court confirmed the company’s liability in the cases and awarded compensation equal to twice the amount initially paid by unit buyers at pre-sale.

In some cases, the compensation amounts were adjusted according to other specifics, such as buyers who exercised the preference given by the government in acquiring units from the current development, constructed by the government under the Macau Urban Renewal Company.

One of Polytex’s claims, which was rejected by the TUI, was that the company was prevented from performing the contracts due to issues related to the government.

On this matter, the TUI held that, given the lack of external enforceability of the obligations, Polytex could not, in principle, invoke the vicissitudes of another, distinct and autonomous legal relationship it maintained with the Macau SAR to exempt itself from the contractual liability it owed to prospective buyers.

The court emphasized that the Macau SAR established a legal relationship solely with the land concessionaire (Polytex); therefore, even if the administration’s conduct had affected Polytex’s ability to perform the contracts, this did not allow for the inference or proof that Polytex was not at fault in the contractual relationship it maintained with prospective buyers.

The collective court also noted that, in fact, when it signed the agreements with buyers, “Polytex was fully aware that the timeframe for utilizing the land concession was very limited; nevertheless, it undertook to construct and deliver the individual units.”

The same court also noted that, in 2014, the company admitted to the Macau SAR its fault for the delay in utilizing the land and paid the corresponding fine.

The TUI reaffirmed that the issues that occurred resulted from the company’s commercial decisions and not from force majeure, noting that Polytex’s claims could not be accepted.

The court also dismissed another appeal from the same company, which claimed that the agreements signed with buyers should not be considered “promissory purchase and sale contracts” but rather “contracts for the purchase and sale of future property” or “reservation contracts.”

This claim, which sought to reduce the compensation amounts, was also dismissed by the TUI, which noted that the agreements were clear in their classification and that the company received substantial sums in advance from buyers for specific units as down payments, a fact that Polytex also sought to deny.

The high court also rejected claims that the compensation amounts previously settled by lower courts were excessive, noting that they were not only legally protected but also took into account that buyers had been deprived for many years of the amounts they paid, having been unable to acquire the units they sought and having endured, throughout this period, the distress, anguish and stress inherent in filing and pursuing legal proceedings.

“Therefore, the payment of double the amount of the down payment was not considered manifestly excessive, and thus there was no basis for an equitable reduction of the amount determined under the law,” the court said.

Only in two cases did the court consider that there were special conditions to be taken into account, including the fact that Polytex had paid off the plaintiffs’ bank loans and that the plaintiffs would eventually receive replacement homes from the Macau SAR government. In those cases, the TUI also agreed with adjustments previously made by the Second Instance Court, which reduced the compensation amounts on the grounds of equity.

The court also rejected an appeal from some buyers who sought to apply a special article from the Commercial Code for the calculation of interest. In this case, the court noted that the surcharge provided for in Article 569(2) of the Commercial Code applies only to commercial claims and does not apply to the plaintiffs’ claims, which, as consumers, are not commercial in nature. The court ruled that interest must be calculated at the statutory rate.