Tuesday 13th March 2018
|Text too small?|
Four Chinese investors who bought a cliff-top mansion in Auckland without getting Overseas Investment Office permission were failed by both their New Zealand legal adviser and real estate agent, according to a High Court judgment highlighted by the OIO today.
Issued on March 12, the judgment of Justice Graham Lang upheld $847,000 of penalties to be paid by the four Chinese nationals, effectively eliminating the gain on resale achieved by three of them and imposing a $110,500 penalty on the other, although all four were granted discounts on their penalties of between 10 and 15 percent, reflecting the circumstances of the breach.
At issue was the purchase in June 2013 of a cliff-top mansion with harbour views in Auckland's Riddell Rd, by Wenbing Tang, for $5.128 million. Google Earth shows the property is a large two-winged home with tennis court, swimming pool and tiered lawns leading down to the cliff-top looking out to Rangitoto Island.
In August that year, Tang arranged for Xianghua Huang, Binyan Zhou, and Binzh Ouyang to take ownership of the property, which they later sold for $6.15 million. All were experienced businesspeople with interests in both China and New Zealand and Tang had previously bought New Zealand property, the judge noted.
However, neither their legal adviser nor real estate agent advised them that the property, with its boundary on the sea-front, fell clearly into the category of 'sensitive land' under the Overseas Investment Act and would require permission before the Chinese nationals, who were not resident in New Zealand, could purchase the property.
Justice Lang said Tang "undoubtedly received poor legal advice", without naming his lawyer, but said his business experience "ought to have alerted him to the consent requirement".
He noted all parties had acknowledged liability and wished to remedy the situation, and that the subsequent group of three sellers claimed to have made a net loss of around $1.5 million on the home, despite selling it for around $1 million more than they had paid for it.
The OIO welcomed the decision, saying the judgment was a "timely reminder that overseas people must get consent under the Overseas Investment Act if they want to buy sensitive land in New Zealand".
No comments yet
Govt leaves door open for higher emissions price cap
Methven shares halted pending material transaction
Housing market continued cooling in November
ComCom nudges Fonterra towards greater transparency
Infratil forecast unaffected by delayed return from Longroad asset sale
December 14th Morning Report
NZ dollar trades in tight range as ECB confirms end to quantitative easing
MARKET CLOSE: NZ shares rise as optimism over US-China trade deal lingers; Fletcher gains
NZD under pressure against Aussie as investors cheered by easing of trade jitters
PFI properties’ valuation rises 5.5% to $1.32 billion