A few of the investors, who have had their Auckland properties turned into slums by the infamous developer Augustine Lau, appear to be walking away from their creditors.
Westpac earlier this month put ads in the NZ Herald calling for two of its clients to remedy the defaults on their mortgages, before the bank seized their properties. Interest.co.nz wrote about this here.
Now a finance company and two individuals are chasing three companies with the same director, Jiawen Mao, for an outstanding $2.149 million.
Their ads in the Herald say the borrowers have until November 13 to pay their debts, before the mortgagees take possession of their properties.
The common denominator is that Augustine Lau, through his company Jesus (2016) Company Ltd, has managed and developed all the properties involved - seriously breaching environmental standards in the process.
Augustine Lau has earned himself somewhat of a reputation with Auckland Council and the Environment Court for illegally modifying properties to cram more tenants into them.
'Evasive, recalcitrant and inadequate'
One of the mortgages that has been defaulted on is over an Otahuhu property that has recently been at the centre of an Environment Court case.
Auckland Council brought forward the case against Augustine Lau and Jesus (2016) Company Ltd, as well as Jiawen Mao and the company she’s a director of that owns the property, Chen Hong Co Ltd.
A judgment issued on September 4 said illegal earthworks were done at 88 Fairburn Road to create a dangerous fill on a steep slope, close to a stream and the Tamaki Estuary.
The judge said: “The best possible interpretation of the work undertaken on the Property is that the respondents deliberately undertook or deliberately allowed the undertaking of the construction of buildings as well as substantial destabilizing and unsafe earthworks with total disregard for recognised resource management, engineering and building practices.
“The Respondents' compliance with the orders which were made to remedy the situation created by them was evasive, recalcitrant and inadequate.”
The Court ordered the group to reimburse Auckland Council $127,500 for the costs it incurred.
Default on mortgage over Fairburn Rd property
Chen Hong Co Ltd’s creditors - Best Capital Ltd, Hyun Bin Kim and Duck Young Lee - are now after $331,947, under a mortgage written as recently as July.
Their notice in the Herald also says Chen Hong Co Ltd “failed to comply with the non-compliance notice served on 11 August 2017 requiring payment of $320,000 from the sale of 403 Ormiston Road, Flat Bush”.
This property was sold to another company Jiawen Mao is the director of, Big Fresh Orchid Flowers Vegetable (NZ) Ltd.
The Fairburn Road property has been on the market since August. Barfoot & Thompson is marketing it as an ideal place for an investor or someone with an “eye for the future potential development”.
Interest.co.nz understands Augustine Lau is trying to organise the sale of the property, adding to the narrative the owners of the properties he manages don’t have much to do with them.
Defaults on mortgages over Greenhithe properties
The other two notices in the Herald are in relation to mortgages over two Greenhithe properties.
One orders Yuxuan Co Ltd to pay Best Capital Ltd $760,807. This mortgage was written in August 2016 and is over a property at 21 Chester Avenue.
The other orders Yintian Co Ltd to pay the two individuals (Lee and Kim) $1.056 million. This mortgage was written in July 2016 and is over a property at 31 Chester Avenue.
The interest charged on both these loans is 20%, while the interest charged on the mortgage in the first notice is 8.99%.
Environment Court judge has ‘utmost sympathy’ for tenants
While these two properties haven’t featured in the Environment Court, Jiawen Mao has, in relation to another property her father (Liansen Mao) owns and Augustine Lau manages.
As her father’s power of attorney, the Environment Court saw her as liable as he was.
A December ruling explained the 387 Ormiston Road property, which was only allowed to accommodate one household, had been transformed into eight. The pre-existing house and barn had been subdivided into additional tenancies, and two converted classroom buildings and a relocated house had been brought on site.
An illegal sewerage system had also been set up. Auckland Council said this was overloaded and effluent from a “soakage field” had poured down a bank on the property into a nearby stream.
The judge said: “We wish to note immediately that there is no evidence that any of the tenants, perhaps beyond the first and second respondents [Jiawen and Liansen Mao] who may have lived on this site from time to time, were aware of the illegality of the establishment of the residences or the wastewater systems.
“We have the utmost sympathy for their position, particularly in the constrained circumstances of housing in Auckland.
“Mr Lau suggested that we should allow the illegality to continue, because of the potential effects on the residents.”
He went on to say: “None of the respondents have demonstrated any conviction towards complying with the Court's orders. Mr Lau continues to maintain that the septic tank system is perfectly adequate and that he is being victimised by the Council.
“He suggests that particular Council staff seek revenge against him. I wish to make it quite clear that there is no evidence to support that allegation.”
The Court essentially ordered the group to get the property back in line with the law and pay Auckland Council $90,000 to cover the costs of proceedings.
'Lawyer doing everything, we don’t know anything'
What about the creditors?
The director of Best Capital Ltd, Woo Young Kwak, is also the director of a company that’s written Augustine Lau’s other associates short-term mortgages in the past.
While the resource consent conditions of these properties have been breached, the two mortgages interest.co.nz is aware of have been repaid.
Best Capital is registered as a “Non-Bank Non-Deposit Taking Lender” with the Department of Internal Affairs, which oversees its compliance with the Anti-Money Laundering/Countering the Financing of Terrorism Act.
Woo Young Kwak directed interst.co.nz to his lawyer when asked for comment.
Another one of the lenders, Duk Young Lee, said: “Lawyer doing everything, we don’t know anything.”
Asked if he knew the whereabouts of Jiawen Mao, he said: “I don’t know any information. I never talked to him, I never met him. I don’t know.”
Duk Young Lee also owns a number of Bruce Lee Sushi & Roll shops around Auckland.
Interest.co.nz couldn’t get hold of the other lender, Hyun Bin Kim, for comment.
Casting the radar out a little further, Jiawen Mao’s father has provided short term mortgages to another of Augustine Lau’s associates who’s been reprimanded in the Environment Court.
He provided three short-term mortgages to Qiufen Lu in 2013 and 2014 over a property at 32 Weranui Road, Waiwera. These have all been repaid