Renee Ji paid $2.3 million upfront prior to settlement of a $2.9 million Auckland purchase only to later find her money had disappeared and the property sold elsewhere under pressure of a forced mortgagee sale. The High Court ordered Zhaohai Ding, sole director of vendor Annecy Holding Ltd, to reimburse her.
Wenjun Ji, also known as Renee, signed up in April 2022 to buy a Dominion Road property in Mt Eden owned by Annecy Holding Ltd for $2.9 million. Settlement was due in six months. She paid Annecy a $1.3 million deposit, followed up some four weeks later with a further one million dollar payment described as an instalment on the purchase price.
On settlement date, Annecy’s lawyers said the vendor could not complete the sale; it did not have the funds to pay off a mortgage registered against title to Dominion Road. By settlement date, Ms Ji had only a further $600,000 to pay.
The High Court was told Annecy Holding is a property investment company having previously owned twelve properties. Dominion Road was the last remaining property in its portfolio, purchased four months before being onsold to Ms Ji.
With the sale cancelled and Annecy in liquidation insolvent, Ms Ji sued Mr Ding personally seeking to recover her lost $2.3 million.
As a general rule, directors are not personally liable for company debts; it is a company debt and the company is liable. Directors do become personally liable if they commit to contracts knowing their company will be unable to perform; a breach of Companies Act director duties.
Associate judge Brittain ruled Mr Ding had no reasonable grounds to believe clear title to Dominion Road could be given to Ms Ji at the time she made advance payments totalling $2.3 million.
Mr Ding was ruled personally liable to make good her loss. He did not attend court to defend the claim.
Ji v. Ding – High Court (29.09.23)
23.172