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An Auckland couple and their companies have been ordered to pay nearly a million dollars in penalties after buying residential properties on behalf of overseas buyers without consent.
Real estate agent Jin Ouyang and her husband, Jie Xie, as well as companies owned by Xie - New Life Group Ltd and Hermosa Casa Ltd - have been found in breach of the Overseas Investment Act for concealing overseas buyers' involvement in the purchase of three residential properties in Auckland.
Ouyang bought a property on behalf of her mother, while Xie invested in two blocks of residential land for development with an overseas-based business partner, according to regulator Toitū Te Whenua Land Information New Zealand.
Judge James Alexander MacGillivray at the Auckland High Court has ordered Ouyang to pay $67,500, Xie to pay $157,500, New Life to pay $37,500 and Hermosa Casa to pay $709,100, totalling $971,600, plus legal costs of $12,478 to the regulator.
A penalty against a third company, Bella Casa, which was also owned by Xie, was yet to be determined as a residential development on a property owned by this company was being completed and the penalty would be assessed early next year after this property was sold.
A transaction required consent if it resulted in an overseas investment in "sensitive land", which includes residential land, according to the legislation.
However, the couple admitted that they had failed to seek consent.
In January 2019, Ouyang and her Shanghai-based mother, Liping Ouyang, agreed that Ouyang would purchase an apartment on Burton Street in Grafton in her own name.
The mother would contribute the total purchase price for the property, which was $219,500, while Ouyang and Xie would pay the costs of recladding before renting out or selling the apartment, and any profit would be split evenly between Ouyang and her mother.
Ouyang admitted she gave effect to the overseas investment in the property without obtaining consent.
She still owned the Burton Street property.
In early 2019, Xie and Ling Ngai Lok, who is a Chinese national residing in Hong Kong, agreed on a joint investment that they would purchase properties in New Zealand for residential development.
Xie would purchase the properties through a company in which he would be the sole shareholder and director.
Lok would contribute 60 percent and Xie 40 percent of the funds for the development, and any profits would be shared evenly.
In October the same year, Xie and Lok agreed to purchase a property on Norman Lesser Drive in St Johns.
Xie's company, Hermosa Case, acquired legal title to the property after being nominated as purchaser by New Life Group, which entered into an agreement for sale and purchase of the property earlier.
Lok contributed $416,000 and Ouyang's mother contributed $597,700 to the purchase price of it and the balance of funds came from a bank loan guaranteed by Xie.
In January 2022, Hermosa Casa sold the Norman Lesser Drive property for $3.5 million.
In October 2019, Xie and Lok agreed to buy a property on Codrington Crescent in Mission Bay.
New Life entered into an agreement for sale and purchase of the property before nominating Bella Casa, a third company started by Xie, to buy the property.
In June 2020, Bella Casa acquired legal title to the property, with Lok contributing $540,000 and the balance coming from a bank loan guaranteed by Xie.
Bella Casa still owned the Codrington Crescent property and was close to completing a residential development of the property, according to the court decision.
Ouyang's lawyer, Gregory Thwaite, argued that Ouyang's knowledge of the law was "problematic" given that changes to the law were enacted not long before the purchase of the Burton Street property and the statue may be difficulty for a layperson to follow, particularly one who does not speak English as her first language.
However, judge MacGillivray said Ouyang knew from her training and experience that the legislation restricted the ability of overseas people to invest in properties in New Zealand.
"I accept the regulator's submission that Ms Ouyang's experience as a real estate agent, her knowledge of the act and her decision not to take legal advice makes her breaches reckless if not intentional," he said.
The judge has also ordered Ouyang to dispose of the Burton Street property and Bella Casa to dispose of the Codrington Crescent property by 31 March 2026.
