Investors in WatchFund luxury timepiece scheme sue S’porean founder and his Hong Kong firm
Source: Straits Times
Article Date: 20 May 2023
Author: Selina Lum
They are suing its Singaporean founder and his Hong Kong-registered company for more than $2.9 million and claimed that The Watchfund Limited, had breached their respective investment agreements and made misrepresentations.
Five investors in a scheme that buys luxury watches with their money and offers profits from selling the timepieces to others are suing its Singaporean founder and his Hong Kong-registered company for more than $2.9 million.
The plaintiffs are four businessmen and professionals from Hong Kong, and a company registered in the territory.
They had invested in a scheme known as WatchFund, founded by high-profile watch expert Dominic Khoo.
In a case heard in the High Court, they claimed Mr Khoo and his company, The Watchfund Limited, had breached their respective investment agreements and made misrepresentations.
Mr Khoo is a former professional photographer who turned his passion for watches into a business when he launched WatchFund in 2013.
Mr Ben Wong, Mr Edmund Liew, Mr Gary Wong, Mr Wong Nga Kok and finance company MCA are seeking sums of two million yuan (S$383,800), HK$13 million (S$2.24 million) and about US$206,000 (S$277,000) from Mr Khoo and the fund.
The plaintiffs had entered into various investment agreements with the fund between September 2018 and August 2019.
Under the agreements, the money they invested was used to buy luxury watches, which were then held by the plaintiffs. Within a year, the fund was to “repurchase” the watches to sell them at a profit to watch collectors and buyers.
Each plaintiff invested in between two and six watches.
The 17 timepieces they paid for included a Hautlence Moebius that cost HK$1.46 million, a Girard Perregaux that cost HK$1.56 million, and a De Bethune Kind of Blue that cost 1.24 million yuan.
WatchFund earned investment fees when the agreements were signed, and sale fees when the watches were repurchased.
The scheme has two repurchase options. One offered to buy back the watch at a sale price of at least 11 per cent above the investment cost, with investors paying 5 per cent of the sale price as a fee.
The other option offered to buy back the watch at a guaranteed price computed based on the investment cost plus a premium of 10 per cent per annum over the one-year investment period.
In their lawsuit, the plaintiffs alleged that the defendants failed to carry out their contractual obligation to repurchase the watches and pay the sales proceeds due to them.
The plaintiffs also alleged that they had been induced to enter into the investment agreements as a result of misrepresentations by the defendants.
The purported misrepresentations were stated in the fund’s investment proposals in 2016 and 2018, its website, various interviews with Mr Khoo by media outlets such as The New York Times, and Mr Khoo’s curriculum vitae.
The proposals stated that Mr Khoo has connections to buy watches at “unparalleled prices”, and that the watches were purchased for them at below 50 per cent of recommended retail prices.
The plaintiffs said they later learnt that the values of the watches in their possession were in fact lower than the amount they had paid, after photographs of the timepieces were sent to auction houses for valuation.
Their lawyer, Mr Raymond Lye of Union Law, said in his opening statement that the plaintiffs would not have agreed to invest, were it not for the misrepresentations reinforcing and affirming their view of Mr Khoo as a reputable watch expert with connections who can obtain luxury timepieces at less than half their recommended retail prices.
The defendants, represented by Mr Low Chai Chong and Mr Zhulkarnain Abdul Rahim of Dentons Rodyk, said Mr Khoo had indeed used his connections to buy watches at prices lower than their recommended retail prices, or which were otherwise not for sale.
They denied making misrepresentations.
Even if the representations were made, they were made by Innovest Financial Group, a financial services company in Hong Kong that represented the plaintiffs in the negotiations of the respective investment agreements, they said.
They said Innovest had created its own version of the scheme’s proposal and presentation slides, and then presented that version to its clients, including the plaintiffs.
The defendants said that an offer to repurchase a watch is deemed accepted only when the investor makes full payment of the sale fee and returns the timepiece.
WatchFund had made offers to two of the plaintiffs within their respective investment periods, and had made offers to the other three outside of the respective investment period, they said.
To date, the applicable sale fee has not been paid by the respective plaintiffs and the timepieces have not been returned to WatchFund, they said.
Accordingly, the plaintiffs have failed to accept the offers made by the fund, said the defendants.
Source: Straits Times © SPH Media Limited. Permission required for reproduction.
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