Hong Kong developer Far Eastern Consortium has been ordered to pay a property developer £2m for breaking a non-disclosure agreement when it bought Ensign House, Canary Wharf, for more than £28m in 2020.
FEC is currently redeveloping the property and has recently received planning consent to turn it from a six-storey office building into a 65-storey mixed-use skyscraper.
However, rival property developer John Downer had also been seeking to buy the property though his company Investin and had been in negotiations with FEC about selling it an interest.
Investin alleges that FEC used the confidential information from his company obtained through the NDA to cut him out of the deal and buy the property itself.
The case went to trial late last year, and in a ruling handed down last week, trial judge Mr Justice Leech agreed and ordered FEC to pay Downer’s company £2m in compensation.
Richard Spector, a partner at Spector Constant & Williams, who represented the claimant, said the ruling meant years of work negotiating the property deal by Downer and his team had not gone to waste.
“It’s a positive outcome that our client was successful and that the court found that FEC and others were liable for breach of contract, breach of fiduciary duty, misuse of confidential information and conspiracy,” he said.
“Our client, an SPV of a successful developer, had spent years obtaining the pieces of a complicated jigsaw needed to buy Ensign House. FEC and others conspired to take those pieces of the jigsaw, under the cover of an NDA, to buy the property themselves. The trial was long and hard-fought. The main witness was cross-examined for seven days. I am delighted the court found in favour of our client and damages were awarded to compensate our client.”
According to the ruling, Investin owned adjacent building Quay House and had been planning to develop them together. However, Ensign House was a complicated building to purchase because it was made up of 18 flats and all the owners had personal interests. This meant any potential purchaser needed to negotiate individual deals, including one that required permission from the Serious Fraud Office.
According to court papers, negotiations with the owners lasted from 2014 to 2019. Meanwhile, as part of its negations with FEC, Investin made all the information it had on the building available to FEC.
When FEC bought Ensign House, Investin sued, arguing that FEC had breached the NDA and conspired to use the information that had been given to it under the NDA to buy the property direct from the owners of the flats.
Investin also sued property agent Terence Alford for breach of fiduciary duty. Alford had worked on Investin’s negotiations with the flat owners, and then helped FEC do the same thing, according to court papers.
The judge ruled that Alford should pay Investin £800,000.
Ensign House Ltd v (1) Ensign House (FEC) Ltd (2) FEC Development Management
Ltd (3) John Connolly (4) Terence Alford
Business and Property Courts (Mr Justice Leech) 27 June 2023
