It was a game of high stakes poker. Interests associated with Annie Shui and her much litigated attempts to develop a residential subdivision at Pokeno south of Auckland were on the hook for late settlement interest running at $3830 per day when taking out a short term loan to complete a $12.5 million purchase. A call option imbedded with the loan saw South Island-based investors seize control of the entire project which now has a reputed value of $150 million.
Ms Shui was convicted on two charges of fraud and ruled to be in breach of the Fair Trading Act in separate civil litigation as she worked to combine several land holdings in Pokeno West for an intended 1600 lot subdivision. By 2022 she was left with a one per cent stake in CSR Pokeno Ltd, with Andrew Shui as a named director. The High Court was told CSR committed in January 2017 to paying $12 million for its Pokeno purchase. After failing to settle the purchase in May 2022, settlement was deferred to the following August at an increased price of $12.5 million. Part payment was then made. This left default interest running at $3830 per day with CSR still nine million dollars short.
Evidence was given of a deal subsequently struck with Yes Investment NZ Ltd, getting money in the door completing the purchase. Companies Office records show Yes Investments owned primarily by investors based in Christchurch and Dunedin. Yes put up some four million cash for a thirty per cent stake in the project, coupled with a $4.9 million two year loan. A call option was attached to the loan; Yes Investment could call for transfer of CSR’s seventy per cent stake in Pokeno West at no cost other than forgiveness of the $4.9 million loan. Yes Investment exercised this option in August 2022 when the two year loan fell due, unpaid.
In the High Court, CSR challenged exercise of this option. It claims seizing control amounts to a penalty; taking assets valued well in excess of the unpaid $4.9 million loan. There was evidence of a third party conditional offer to buy Pokeno West’s assets for $150 million. CSR also claims Yes Investments improperly blocked attempts to refinance the loan.
Justice Jagose refused to block the call option. At best, CSR is entitled to damages if successful following a hearing of its claims at a later court hearing, he ruled. CSR should not be allowed to tie up Pokeno West’s valuable resources pending trial, he said.
Companies Office records show Yes Investments assuming full ownership of Pokeno West twelve days after the High Court ruling. Andrew Shui resigned as director the day of the ruling.
CSR Pokeno Ltd v. Yes Investments NZ Ltd – High Court (16.09.22)