New Zealand resident Nicholas Liu lied, cheated and used forged documents to fool China-based joint venture partner Yuchen Zhou into thinking he was part owner of property developments across Auckland. High Court orders for compensation exceeding eight million dollars are now hampered by the fact Mr Liu remains in control of companies owning these properties and his present whereabouts are unknown.
Mr Liu did not appear in court to defend claims against him. His spouse says he is in China.
The High Court was told of two joint venture property deals now in dispute: a 2017 agreement intending purchase and redevelopment across three neighbouring sites on Arran Street in Avondale; and a 2019 agreement for purchase of a commercial building on Kitchener Road in Milford.
A common thread across both projects was Mr Liu’s behaviour in lying about the purchase prices (having the effect of increasing the cash contribution put in by Mr Zhou), failing to have ownership recorded in agreed proportions (giving Mr Liu complete control), and borrowing against the joint venture properties (both to provide funds for his share of the purchase prices and to generate cash used for his own purposes).
In addition, Mr Zhou was encouraged to provide loan capital for supposed development of townhouses at the Arran Street site on the pretext that debt capital was expensive to raise in New Zealand. No development ever started. What Mr Liu has done with this six million dollar loan is unknown.
In the High Court, Mr Zhou said he had relied on Mr Liu to negotiate purchase of the properties plus set-up and manage legal structures to own and operate the joint ventures.
He rarely visited New Zealand. Travel was further hampered by covid-19 pandemic restrictions.
Mr Zhou said he only became aware of lack of progress at the Arran Street site after viewing Google Earth mapping. Mr Liu had previously sent him photographs showing earthmoving equipment on site, supposedly ready to start.
By mid-2024, Mr Liu had stopped responding to requests for information. Mr Zhou sued to gain control of the projects and to recover money due.
Mr Liu was held to be in breach of their joint venture agreements and in breach of fiduciary duties owed his joint venture partner.
Justice MacGillivray ordered sale of the Arran Street properties to repay Mr Zhou’s six million dollar loan plus interest and also repay the extra $2.1 million extracted from Mr Zhou through use of false purchase prices entered on forged agreements for sale and purchase.
Mr Liu controls companies owning the Arran Street sites.
Justice MacGillivray signalled he is sympathetic to putting these companies into receivership in an initial step to force a sale. Overseas Investment Office clearance is first required since sale proceeds would be going to Mr Zhou as an overseas resident.
The Kitchener Road property is owned by a chain of companies ultimately under control of Mr Lui.
As with the Arran Street project, Mr Liu bumped up the supposed purchase price for Kitchener Road when asking Mr Zhou to remit his ‘share’ of the purchase price. He then mortgaged their joint venture asset for his own personal benefit.
Justice MacGillivray ruled all shares in the company owning Kitchener Street are now held in trust for Mr Zhou.
Mr Liu and his spouse were invited to put before the court evidence of any financial contributions they may have put towards the properties.
Zhou v. Liu – High Court (29.07.26)
26.210