Four Chinese nationals were penalised $891,000 following the purchase of
a $5.1 million Auckland residential property which proved to be in breach of
the Overseas Investment Act. Net profits
on resale were liable for confiscation.
In 2013
Wenbing Tang purchased a Riddell Road property in Glendowie on behalf of a
consortium of three Chinese investors: Xianghua Huang, Binyan Zhou and Binzhi
Ouyang. This amounted to a purchase of
‘sensitive land’ as defined by the Overseas Investment Act: the property exceeds
0.4 hectares and has a sea frontage. No
government consent was sought.
The High
Court was told Mr Tang is an experienced property investor. Neither the real estate agent nor his lawyer
raised the issue of Overseas Investment consent being required. Mrs Huang, Mr Zhou and Mr Ouyang were also in
breach of the Act.
The
Overseas Investment Act imposes civil penalties for any breach. Mr Tang was fined $110,000. He is an experienced businessman, said Justice
Lang. The ‘OIA consent’ tickbox on the
front of sale and purchase agreements should have raised questions. The three Chinese purchasers made a net
profit of just over $806,300 after selling Riddell Road for $6.15 million. This amounted to a profit of just under $269,000
each. Justice Lang ruled against
confiscation of the entire net profit. Their
co-operation merited a reduction. They
admitted liability after learning they had breached the Act. Mrs Huang and Mr Ouyang were each ordered to
pay $229,500; Mr Zhou $243,000. Mr Zhou
did not appoint a local lawyer. This
caused increased legal costs for the Overseas Investment Office having to apply
for alternative service of legal proceedings.
Land Information v. Tang – High Court (12.03.18)
18.052