16 May 2017

Joint Venture: Lam v. Mo

Wellington property developer David Mo was ordered to account for a 35 per cent share in a Plimmerton residential subdivision to brother-in-law Tony Lam after a protracted High Court hearing punctuated with allegations that lies and false evidence were used to fabricate the extent of their business relationship.
Justice Williams said Mr Mo maintained a certain informality and ambiguity around arrangements with his potential business partners.  He used that ambiguity to keep the Lam family in the game, having them bank him for free until he was ready to incorporate their money into a particular venture, he said.
The High Court was told David Mo and Tony Lam are linked by marriage, having married sisters Lily and Betty.  Their business relationship spanned several proposed Wellington property developments.  No formal business records were kept of ongoing business deals operated through the Sunlink Group of companies.  A vacant lot in Dixon Street, central Wellington, used as a car park was sold in 2006 at a capital gain of some $2.4 million after being held undeveloped for ten years.  A Cuba Street property was held for four years before being sold in 2001 at a capital gain of nearly $600,000.  At various times, Mr Mo worked with investors other than the Lam family.   In November 1996, a Sunlink company purchased 9.6 hectares of subdividable land in Plimmerton.  A decade later, 52 lots had been sold, with only four remaining.  Mr Mo was by then the sole director and shareholder of the Plimmerton Sunlink company.  The Lams claimed it was a joint venture project and they were entitled to between 35 and 50 per cent of the profits.  Mr Mo agreed they were entitled to a share, but no more than six per cent based on his calculation of the extent of their capital contribution.
The Lam family withdrew from the joint venture in June 2013, complaining of poor returns on their investment.  They sued to recover a share of profits allegedly due.
The lack of formal documentation hampered an assessment of who owned what share of what.  Justice Williams said both Mr Mo and Mr Lam proved to be less than truthful witnesses.  He said Mr Mo’s modus operandi was to maintain a certain fuzziness about financial arrangements and entitlements for investment partners.  Mr Mo created and then exploited ambiguity in the arrangements where it was to his advantage to do so, he said.  But there was sufficient evidence that by 2007 all were agreed that the Lam family had a 35 per cent stake in the Plimmerton project.
Justice Williams ordered the appointment of an investigative accountant to determine the profits generated by the Plimmerton development and the amount to be deducted for Mr Mo’s time and expertise in managing the project.        
Lam v. Mo – High Court (16.05.17)

17.045