Overseas investors who bought a property south of Auckland without Overseas Investment Office consent have to pay $539,914.47 to the Crown following a penalty judgement released by the High Court.
The penalty amount represents the amount of profit made on the sale of the property.
A statement from the OIO said in September 2016, the overseas investor Chor Ltd (as trustee of Chor Trust) entered an agreement to purchase 64 Derbyshire Lane in Karaka, south of Auckland.
The shareholders of Chor Ltd, Mr Bingyan Zhou and Mrs Xirong Zhou, first acquired the property in 2013 for $2.550 million. They later sold the property to Chor Ltd (as trustee of Chor Trust) for $3.2 million.
The statement said Chor Ltd required Overseas Investment Office consent in order to purchase the property as the property is sensitive land under the Overseas Investment Act - it is greater than 0.4 hectares and adjoins a reserve as well as the foreshore.
"Due to failures by Chor Ltd’s legal advisors, consent was not sought.
“Following an anonymous tip-off to the Overseas Investment Office, Chor Ltd admitted breaching the Act,” says Vanessa Horne, Group Manager of the Overseas Investment Office.
“The property has since been sold – with Overseas Investment Office approval – to an unrelated third party. Chor Ltd must now pay the net quantifiable gain from the sale as a penalty to the Crown. This is an amount of $539,914.47, plus $15,000 towards the Overseas Investment Office’s costs.”
“The High Court decision recognises that, from the time the property was first acquired by Mr and Mrs Zhou in 2013 until it was sold by Chor Ltd to a third party in late 2018, the property had been held for beneficiaries of Chor Trust.”
Horne said the OIO would continue to enforce New Zealand’s overseas investment law "and take strong action against anyone who breaks the rules".
"This includes trusts and corporate trustees used to acquire and hold property without consent being obtained under the Overseas Investment Act."
26 Comments
Sounds suspect to me. It took an "anonymous tipoff" to nip this in the bud. Questions are as follows:
How can anyone purchase before receiving OIO approval? Are there not any basic processes, balances and checks in place? I don't receive a drivers license before showing my ID.
Makes the CV look good for when you want to sell it into the non-related market.
Happens all the time.
A developer 'sells' the first unit off-the-plan, or onto the 'open market' ( to a related party), and sets the prices for the remainder.
"Look at what Unit 1 went for!" and the quietly sells Unit 1 after all the rest have gone....
So unless and untill authorities get a tip off nothing will happen. What happened to checks and balances that should have been in place to avoid/caught instead of waiting for a tipoff.
Just like BLT - How many have actually paid Tax. Seller too should also have a form to declare when selling a property if they own any other property, be it in joint name, independently or in trust / company just like OIO declaration for buyers.
If want BLT to be effective - why not.
Do investors from China contribute much if anything to the betterment of NZ?
Many / most of them seem to be self-interested tyre kickers.
Also the penalty seems light handed, confining it to the net quantifiable gain'. To send a message penalties need to be greater than simply the gains.
This is a good example of Chinese tyre kicking. I had some peripheral involvement a few years back. Has been through several masterplanned 'visions', but hardly anything has been built. I have seen other projects like this too.
Am I missing something here? The Chor people, being foreign buyers, are probably resident in China. How is the OIO going to extract the $539,914.47 from them, unless they have other assets in NZ?
It could be the Jenny Shipley-director of construction-firm-that-went-bust-case-while-fellow-Chinese-director-absconded-to China-with $60,000,000 all over again.
If they don't pay, then their 'legal advisers' who gave them "wrong advice"should be made to pay. But I can see the 'wet bus-tickets' being brought out in the end.
The penalty is nowhere near enough. If the purchase requires OIO approval but that is not gained then the sale/purchase is or should be invalid. The property should be forfeited to the Crown. If the would be purchaser has handed over money to the vendor he would have no right of redress. Only if such a penalty is mandatory will overseas purchasers and their NZ based " legal advisers" be deterred from taking the chance that OIO will not be too hard on them.
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