The size of the property at 64 Derbyshire Ln, Karaka, near Auckland which was sold without OIO consent. Image / Supplied
The size of the property at 64 Derbyshire Ln, Karaka, near Auckland which was sold without OIO consent. Image / Supplied
An overseas investor has been ordered to pay more than $500,000 in penalties after buying a property without approval from the Overseas Investment Office.
The High Court today released its judgment regarding Chor Ltd and its shareholders Bingyan Zhou and Xirong Zhou, who bought 64 Derbyshire Lane, in Karaka, Auckland,for $2.55 million in September 2016.
The shareholders of Chor Ltd, Zhou and Zhou, first bought the property in 2013 for $2.55m.
However, Chor Ltd required OIO consent to buy the property as it is classed as sensitive land under the Overseas Investment Act - it's greater than 0.4 hectares and adjoins a reserve as well as the foreshore.
Due to "failures by Chor Ltd's legal advisors, consent was not sought", Vanessa Horne, group manager of the OIO, said.
Following an anonymous tip-off to the Overseas Investment Office, Chor Ltd admitted breaching the Act.
This property on Derbyshire Lane, Karaka, was sold without Overseas Investment Office approval. The buyers now have to fork out more than $500,000. Image / Google Maps
"The property has since been sold – with Overseas Investment Office approval – to an unrelated third party. Chor Ltd must now pay the net quantifiable gain from the sale as a penalty to the Crown. This is an amount of $539,914.47, plus $15,000 towards the Overseas Investment Office's costs."
Horne said the High Court decision recognised that, from the time the property was first acquired by the Zhous in 2013 until it was sold by Chor Ltd to a third party in late 2018, the property had been held for beneficiaries of Chor Trust.
"The Overseas Investment Office will continue to enforce New Zealand's overseas investment law and take strong action against anyone who breaks the rules. This includes trusts and corporate trustees used to acquire and hold property without consent being obtained under the Overseas Investment Act."
It's not the first or largest breach that the OIA has investigated the past 12 months.
The OIA has carried out more than 150 new compliance investigations with 46 cases getting prosecuted.
That includes the highest civil penalty for a breach of the OIA, nearly $3m, and its first ever criminal prosecution.
In February 2020 an overseas investor was convicted and fined $100,000 for misleading the Overseas Investment Office during an investigation into a property transaction.
While in December 2019 the developers of a Birkenhead property were ordered to pay $123,000 for also failing to get consent.
In July 2019 the overseas owners of two rural properties at Warkworth were ordered to pay $2.95m after an Overseas Investment Office investigation found they were bought without consent.
Come June 16, the OIO will have even stronger powers under the Overseas Investment Act due to changes coming into effect.
