Described as repugnant commercial conduct, Cong Liu’s Little Hen Ltd was censured in the High Court for improperly forcing a property developer into liquidation and allegedly forging contracts; all part of a scheme to recover a commercial debt.
Liquidation of GLZJ Ltd was invalidated with control restored to Christchurch investor Binbo Ge. Justice Becroft signalled Little Hen should pay compensation for wasted liquidation costs to date, estimated at about $50,000.
The High Court was told Little Hen sold land in 2022 at Onehunga in Auckland earmarked for property development to GLZJ Ltd for $8 million. Little Hen left in $2.6 million as vendor finance on a two year term loan. It registered no mortgage; mortgage security went to another financier funding the proposed development.
GLZJ’s plans fell through. Insufficient pre-sales killed the project.
It on-sold the land, finding a buyer at $6.47 million with $1.6 million left by GLZJ as vendor finance.
A scrap developed over this $1.6 million, being GLZJ’s only remaining asset after its foray into the Onehunga project.
Construction company Chimbusco, owned by Tingsong Qui wanted a slice, while Little Hen was increasingly nervous about recovery of its $2.6 million term loan.
Little Hen was instrumental in pushing GLZJ into liquidation.
Eighteen months elapsed before GLZJ challenged Little Hen’s actions, complaining no debt was due and that Little Hen was ‘motivated by ill will’ when it forced GLZJ into liquidation.
The High Court was told of an earlier flurry of emails in July 2023 in which Little Hen and GLZJ bargained over how to split repayments to be received by GLZJ’s on its $1.6 million vendor finance.
Justice Becroft ruled they agreed at that time that the two year $2.6 million term loan owed by GLZJ to Little Hen was to be cancelled, replaced by a ten year $800,000 term loan with payment of the reduced amount now personally guaranteed by Mr Ge.
This deal went beyond being simply an agreement to agree, Justice Becroft ruled. Agreed terms were clear. Little Hen, as promised, immediately withdrew a caveat otherwise blocking GLZJ’s onward sale of the Onehunga property.
Little Hen later improperly forced GLZJ into liquidation for supposed default on a two year term loan that no longer existed, Justice Becroft ruled. The two year loan had been replaced by a new ten year term loan for a lesser amount.
Mr Ge’s promise to personally guarantee the reduced loan was an extra benefit, making the varied contract enforceable.
It came out in evidence that a critical part of negotiations on behalf of Little Hen was supposedly conducted by Chimbusco’s Mr Qui, rather than by owner of Little Hen, Mr Liu.
This formed part of an unsuccessful argument that the July 2023 email negotiations amounted to no more than an agreement to agree, rather than a binding contract.
Justice Becroft questioned the credibility of both Mr Qui and Mr Liu as regards both their evidence about the 2023 negotiations and the validity of a September 2022 contract in which GLZJ supposedly sold some of its Onehunga land back to Little Hen.
The court was not asked to rule on validity of this 2022 contract, but Justice Becroft queried how a contract dated September 2022 came to be recorded on an Auckland District Law Society contract template that was not available for use prior to May 2023.
Ge v. Francis – High Court (22.04.26)
26.141