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
High Court orders reinvestigation of Chinese steel imports
Govt needs to consider ratepayer burden in 3 waters policy, Mahuta says
Heartland needs access to wholesale funding to grow Australian reverse mortgages
NZ annual current account deficit widest in nine years
Synlait Milk almost doubles annual profit on high value product growth
Consumer confidence falls to six-year low in September quarter
Near-record throughput at Marsden Point
September 19th Morning Report
NZ dollar falls vs Aussie on early signs of moderation in US-China trade war
Pyne Gould restarts $22M Perpetual Trust litigation five years after sale