Lying to Hong Kong investors about the financial status of his business led to Xin Zhou being held personally liable to repay a HKD 24.6 million loan poured into one of his Auckland property developments.
The High Court was told Mr Zhou met with representatives of Time Rich Asia Investment Ltd first in 2018 and later in 2019. After a May 2019 meeting in Hong Kong, Time Rich agreed to support Mr Zhou’s completion of a central city apartment construction called the ‘Epsom project.’
Time Rich was told only nine residential apartments remained unsold in the 37 unit block.
Evidence was given of Mr Zhou talking up his three current projects as all being in superb locations where the properties would be well-sought after on completion. The Time Rich loan was needed to accommodate some temporary ‘financial stress’ with the Epsom project, he said. Comfort was provided with a promise to repay Time Rich, if necessary, out of funds totalling some $15 million shortly expected from sales at another project in the neighbouring suburb of Remuera.
The truth was that the Epsom project was in dire financial difficulty. There was a risk apartment buyers would cancel. At the time, Epsom was being propped up with related party loans; cash was being moved from project to project as needed.
The Time Rich loan fell due for repayment in May 2020. No payment was made. Time Rich representatives found work on the Epsom project had been suspended. Cash generated from Remuera sales had been used elsewhere by Mr Zhou.
While the loan had been made to one of Mr Zhou’s companies, Justice O’Gorman ruled Mr Zhou was personally liable under the Fair Trading Act for false and misleading statements made to Time Rich at time of the loan about the financial viability of his business. He was ordered personally to repay the HKD 24.6 million his business borrowed from Time Rich; about NZD 4.75 million.
Mr Zhou did not appear in court. He was barred from defending the case after repeatedly failing to comply with earlier court orders governing progress of the impending hearing.
Time Rich Asia Investment Ltd v. Zhou – High Court (8.02.24)
24.051