Seeking to enforce a claimed ten per cent interest in a west Auckland property development, it was not clear whether Chunhong Xie was part-owner of the land or shareholder in a company owning the land.
Confusion followed a failure to have any clear written agreement, Associate Judge Bell said. A 2.5 hectare property on Waimumu Road, Massey, was purchased in November 2016 for $1.6 million. Some $666,000 was lent on mortgage by FM Custodians; the balance funded by an ever-changing rota of investors. The High Court was told status of identified investors changed over time as some contributed money by instalments and several investors bought out the interests of existing investors. Ms Xie contributed $79,000. In early 2017, resource consent was granted for subdivision. Title was held in the name of a corporate: 126 Waimumu Ltd. By 2019, a company called Luffy Home Ltd had bought out all investors, bar Ms Xie. She was listed on the company register as a ten per cent shareholder of 126 Waimumu Ltd.
The High Court was told of a December 2019 meeting with Luffy Home where Ms Xie took exception to its development plans and to its proposed management fees. No agreement could be reached on a price to buy her out. She lodged a caveat over the land. This had the effect of preventing 126 Waimumu from refinancing the project, or from selling. Judge Bell ruled the caveat should stand. Ms Xie had an arguable case that she was a part-owner of the land, owning ten per cent with 126 Waimumu owning the balance. She never signed any documentation agreeing to be a shareholder of 126 Waimumu Ltd. Her name on a list of supposed shareholders in a shareholders’ agreement was unsigned. A full court hearing is needed to determine whether she is in fact part-owner of the land or a shareholder in 126 Waimumu.
While the caveat remains, Judge Bell ordered Ms Xie to sign off on any reasonable refinancing or sale negotiated by Luffy Home. Ten per cent of any sale price is to be held in trust pending a decision on her status as part-owner.
Xie v. 126 Waimumu Ltd – High Court (25.05.20)
20.088