Overseas investor fined $540,000 for buying Auckland property without Overseas Investment Office consent

10 June 2020

An overseas investor that purchased a property without Overseas Investment Office consent must pay $539,914.47 following a penalty judgment released by the High Court on 8 June 2020.

In September 2016, the overseas investor Chor Ltd (as trustee of Chor Trust) entered an agreement to purchase 64 Derbyshire Lane in Karaka, Auckland. 

The shareholders of Chor Ltd, Mr Bingyan Zhou and Mrs Xirong Zhou, first acquired the property in 2013 for $2.550 million. They later sold the property to Chor Ltd (as trustee of Chor Trust) for $3.2 million.

Chor Ltd required Overseas Investment Office consent in order to purchase the property as the property is sensitive land under the Overseas Investment Act - it is 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.

“Following an anonymous tip-off to the Overseas Investment Office, Chor Ltd admitted breaching the Act,” says Vanessa Horne, Group Manager of the Overseas Investment Office.

“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.”

“The High Court decision recognises that, from the time the property was first acquired by Mr and Mrs Zhou 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.”

Notes:

  • The Overseas Investment Office completed over 150 new compliance investigations and achieved 46 enforcement outcomes in 2019/20. This includes the highest civil penalty for a breach of the Overseas Investment Act (nearly $3 million) and the first ever criminal prosecution by the Overseas Investment Office.
  • 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.
  • In December 2019 the developers of a Birkenhead property were ordered to pay $123,000 for failing to get consent from the Overseas Investment Office.
  • In July 2019 the overseas owners of two rural properties at Warkworth were ordered to pay $2.95 million after an Overseas Investment Office investigation found they were bought without consent.
  • Under changes to the Overseas Investment Act - which come into force on 16 June 2020 - the Overseas Investment Office has been given stronger enforcement powers to act against investors.
Map showing 64 Derbyshire Lane, its location within Auckland, and its proximity to Manurewa and Papakura

Media enquiries

Email: media@linz.govt.nz or phone: 027 566 5251