Zhuhai Grand Bay View Hotel Project Transfer Dispute (2006)
Basic facts:
Grand Bay View Hotel is a hotel project developed by the Zhuhai Office of the Working Department of Guangzhou Military Command (GMC). The project was transferred in whole in its existing condition to China Grand Enterprises (CGE) during construction due to the central government’s prohibition on military involvement in business undertaking. The transfer contract stipulated that Zhuhai Office is obligated to procure approval for converting government-allocated land into commercial land in order to reduce land transfer fee. CGE paid the total price before February 1996. Subsequently CGE procured the registration for converting government-allocated land into freely transferable land in April 2004. CGE was in arrear with the payment of project transfer fee of more than RMB 34 million, and accordingly GMC (the plaintiff represented by our firm) brought a lawsuit with the competent court moving for an order that CGE pays the remaining price of RMB 34 million and a penalty. CGE claimed that it has the right to refuse paying the remaining amount because the total building area delivered by GMC was 27,600 square meters, which were a substantial deviation from the 29,000 square meters as agreed in relevant contract and GMC’s case was time-barred.
The points at issue in this case are: 1. whether or not CGE has the right to refuse paying the remaining amount by reason of that the building area delivered deviated from the agreed area by 1,300 square meters; 2. whether or not the claim made by GMC against CGE for the payment of RMB 34 million was time-barred.
Lawyers’ statement:
Firstly, CGE had no contractual basis or legal basis to refuse paying the remaining amount by reason of insufficient building area delivered. Specifically: 1. the transfer involved a whole project in its existing condition instead of the exact building area completed, and the parties were clearly aware of the fact that project had not been completed at that time. 2. Considering the transfer price agreed in contract, the transfer price was not related to building area to be transferred. 3. The area covered by relevant land-use right of the project was not insufficient, and the deficit in building area transferred was only less than 5% and there was not any provision in the contract stipulating that the plaintiff must guarantee the building area to be finally delivered. 4. There was not any contractual provision concerning the liability for breach which stipulated that CGE has the right to pay less than agreed in case the completed building area falls short of the agreed area, and there was not any provision stipulating that the transfer price may be increased or reduced in case the actual completed building area is different from the agreed area. 5. On condition that the property was transferred in whole in its existing condition, the plaintiff had made full disclosure to CGE concerning the design and construction status of the project, there was not any concealment or fault on the part of the plaintiff concerning the difference in building area. Accordingly, the plaintiff needs not assume any liability for negligence in contracting.
Secondly, the plaintiff’s case was not time-barred. The case involved the transfer of the use-right of a government-allocated land, and the plaintiff had the obligation to obtain approval for converting government-allocated land into a freely-transferable land as agreed in the contract, otherwise CGE would have the right to postpone the payment. The limitation of action should have run from the date on which the land involved in this case was registered as a freely-transferable land, namely Aug. 12, 2004, accordingly, the plaintiff was not time-barred when it brought the lawsuit in April 2006. ”$pager
Judgment of court:
The court of first instance ruled in favor of the plaintiff by supporting all its claims, in the second instance, CGE moved for amicable settlement and the court also inclined to a settlement. Considering that the case was not without dispute, an amicable settlement is more favorable for recovering the remaining sum and avoiding difficulty in execution. Our firm recommended that the plaintiff accepts settlement. The court of second instance eventually ended the case with settlement, the plaintiff successfully recovered the remaining sum and all parties were satisfied with the outcome.
Lawyers’ remarks:
This case involved a real estate project transfer dispute between the military and a local company. Due to the fact that a long time had elapsed since project transfer, the plaintiff was not confident about winning the case and therefore could not resolve to bring the lawsuit. After accepting the client’s request, our lawyers conducted a careful study of case documents and concluded that the client had sufficient legal bases to win the case, in the end, a satisfactory judgment was obtained through action.
