High Court freezes brothel brothers' venture

John Chow (left) and his brother Michael Chow of the Chow Group. Photo / Paul Estcourt

The High Court has frozen a Chow brothers' venture without notice after a dispute between the Wellington brothel owners and their architects.

In an August 12 decision in the High Court in Wellington and published yesterday, Judge Stephen Kos ordered Michael and John Chow be restrained from dealing with or disposing of assets in Portfolio NZ Ltd. until further court orders.

He also ordered the Chows be restrained from making payments using Portfolio funds.

Portfolio was set up as a joint venture between the Chows and Flax Design Group in May to provide "certain architectural and project management services" for the property investors.

Flax, which is owned by architects Stephen White and Sharon Vanesse, were to pay some $123,000 for their share in the venture, but the Chows cancelled the deal after the first two instalments of almost $89,000 was paid.

"There had been some correspondence between the parties concerning disagreement as to direction (in particular as to whether Portfolio should sub-lease space from one of the Chow companies at a rental level some 50 per cent higher than had been budgeted for)," Kos said in his judgement.

"But it appears the termination of the joint venture by the Chows came without notice and without significant prior discussion," he said.

Flax protested the Chows' decision to terminate the deal and asked Portfolio's funds be left undrawn until matters could be settled, though they didn't receive a response. When White last saw the bank accounts, they held some $220,000 in cash, most of which was the equity contribution from Flax.

Judge Kos said he was satisfied by a "narrow margin" that the order on a without notice basis was justified, as there "a seriously arguable case of breach of contract is demonstrated on the papers."

The Chows' action "raises a necessary concern as to what further action they might take in their capacity as persons holding the funds, shares and governance powers of the joint venture company," he said.

Portfolio is owed "something in excess of $125,000" by the Chows for work undertaken on their property empire.

Judge Kos ordered papers be served on the Chows regarding the dispute.