Failing to complete agreed joint venture capital contributions for a Tauranga residential subdivision meant investor Jinho Kwon did not share in development profits or get his money back.
Mr Kwon alleged joint venture partner Mingon Kang diverted elsewhere initial cash contributions of $250,000.
The High Court was told the two joined forces in 2018 to develop 7.5 hectares of land. Their agreement envisaged formation of a special purpose company called Rockwell Two Ltd, with Mr Kang to transfer land to Rockwell and Mr Kwon to put in nearly $4.4 million in staged payments. Mr Kwon pulled out after contributing only $250,000, alleging Rockwell Two was not seeing the benefit of money paid. He sued, demanding both return of his $250,000 and a share of development profits.
Evidence was given that the land was held in the name of Mr Kang’s company Astoria Development Ltd at time of their 2018 agreement. The project was already underway, with invoices due for payment. Mr Kwon’s initial $250,000 payment was used to pay these Astoria invoices. Mr Kang copied in Mr Kwon on the payments and provided copies of invoices. Mr Kwon stopped making further instalment payments, complaining his money was being used for purposes other than their agreed joint venture. On Mr Kang’s side, he did not progress transfer of the land to their joint venture company: Rockwell Two.
Associate judge Lester said there was nothing underhand in using the $250,000 to pay Astoria creditors. These payments related to the development. Mr Kwon had no grounds to demand repayment of his $250,000; it was used for the purpose intended. And Mr Kwon cannot have it both ways, Judge Lester ruled, by both stopping capital contributions and claiming their joint venture agreement is at an end while saying simultaneously it still stands and he is entitled to share in profits.
Mr Kwon was told his best remedy was to cancel his joint venture agreement under the Contract and Commercial Law Act and then seek compensation.
Rockwell One Ltd v. Astoria Development Ltd – High Court (11.11.21)
22.001