Green & McCahill Holdings Ltd v Williams & Ors - [2025] NZHC 2581

This case relates to the subdivision development of a 900-hectare block of coastal land at Weiti Bay just south of the Whangaparaoa Peninsula, north of Auckland. The initial landowner was Green & Mccahill Holdings Ltd. That company, along with its land, was purchased by a Taiwanese family company in 1991. One of the senior directors of that company was Mr Tong-Kuang Liu.

In 2005, Mr Evan Williams, a qualified lawyer and experienced property developer, showed interest in acquiring the land to develop it. Subsequently, Williams Land Ltd (one of Mr Williams' companies) entered into "Call" and "Put" option agreements with GMHL giving WLL the option to purchase the land for an agreed price under a formula (which depended on the number of consents obtained for development on the land). GMHL could also require the purchase of the land. Despite several extensions and a fresh option, the option agreements came to an end by mid-2010.

However, Mr Williams was still interested in some form of arrangement to develop the land. And Mr Liu, for the landowner, was still interested in selling. A series of agreements were executed allowing the development of the land and its purchase in stages upon the release of developed titles to purchasers. Mr Williams' companies were not to receive any return until agreed prices had been paid to GMHL.

In June 2012, a limited partnership (the Weiti Development Limited Partnership (WDLP)) was formed to be the development entity. The general partner was an entity controlled by Mr Williams. There were two limited partners. Mr Liu controlled the 60 per cent limited partner. Mr Williams controlled the 40 per cent limited partner. This entity became the development entity from that point onwards. An 18-year development period was envisaged. Under an amended development agreement WDLP took on the rights and obligations previously held by one of Mr Williams' companies in respect of the development including payments to GMHL for its land.

From December 2012, WDLP then entered into a series of loans to fund the development. The first loan was a small loan from GMHL itself. However, in August 2013 WDLP entered into its first commercial loan which was secured by a mortgage over part of GMHL's land. This loan was for predevelopment work and was replaced by another one in 2014.

Crucially, in August/September 2015, WDLP entered into a major loan to fund the construction of the first 150 lots within the development. This loan was provided by two separate lenders, and GMHL again agreed to mortgage part of its land to secure the loans. The arrangements between the parties were documented as a quadripartite deed. There were a total of three, successive quadripartite deeds, each swapping out the junior lender. Under the second quadripartite deed, GMHL agreed to mortgage a further part of its land. Under the third quadripartite deed, the senior lender remained the BNZ and the junior lender was Lambton Quay.

By early 2019, most of the initial, first stage, 150-lot subdivision development was complete and many of the lots had been sold. However, insufficient revenue had been generated to pay off the loans and it had become clear that GMHL would not be able to be paid the agreed payment for the first section of its land. At this stage, the relationship between Mr Williams and Mr Liu irretrievably broke down.

GMHL refused to co-operate and effectively "tanked" the development.

In June 2019, Lambton Quay bought out the BNZ's debt to strengthen its own position. It then undertook mortgagee sale action. GMHL confidently expected there would be no interest in that part of its land which was mortgaged. Its strategy was to buy back the land from the mortgagee at a much-reduced price.

The mortgaged land was advertised for mortgagee sale but (as expected by GMHL) no satisfactory offers were received from the wider public.

Ultimately, Lambton Quay accepted an offer from Mr Williams funded by an overseas financier, Clearwater. The proposal involved Mr Williams incorporating three new companies (the second through fourth defendants) which respectively purchased the mortgaged land. It also purchased the residual debt left owing by GMHL after the purchase price of the land was deducted from the debt.

GMHL smelt a rat and suspected shady dealings by the mortgagee.

GMHL brought four causes of action. The first and second alleged negligent misstatement and misleading conduct under the Fair Trading Act 1986 respectively against Mr Williams personally. The third alleged that Lambton Quay had breached its mortgagee sale duties when selling the mortgaged properties. Consequential relief was sought against Mr Williams' new companies and Clearwater.

Finally, the fourth cause of action sought an equitable contribution by Mr Williams to GMHL under a personal guarantee Mr Williams had provided for $1.5 million under the BNZ loan.

The fourth defendant, Ara Weiti Investments Ltd also brought a counterclaim for a judgment sum in respect of the residual debt.

HELD: All four of GMHL's causes of action were unsuccessful.

Under the negligent misstatement cause of action, all of the alleged misstatements were properly characterised as opinions/predictions or forecasts as to future events. For GMHL to establish they were misstatements it had to be shown that they were not reasonably based at the time. However, all of the financial forecasts (as to the development's success) were reasonably based (and honestly held) and and could not be shown to be misrepresentations. In any case, Mr Williams did not owe a personal duty of care to GMHL in the circumstances of the complicated contractual arrangements between the parties. It was also unclear whether any misstatement was causative of loss. Finally, the proper measure of that loss was in dispute, given that GMHL had incorrectly claimed for contractual expectation loss rather than tort based reliance loss.

Under the Fair Trading Act misleading conduct cause of action, a similar conclusion was reached. None of Mr Williams' conduct, properly characterised, was misleading or deceptive; and if it had been it was not causative of loss.

Under the mortgagee sale cause of action, Lambton Quay had shown that it complied with its duty under s 176 of the Property Law Act to take reasonable care to obtain the best price reasonably attainable through the mortgagee sale. Lambton Quay had also complied with all of its equitable duties including the requirement to act for a proper purpose.

Under the guarantee cause of action, GMHL could not claim a contribution from Mr Williams' because its own dirty hands had triggered the mortgagee sale. The doctrine of contribution is equitable and equity will not assist one with dirty hands.

The counterclaim succeeded. The main issue under the counterclaim was the value of the residual debt. Specifically the question was whether Lambton Quay had been entitled to charge interest up and until a law change in January 2020, because it had for some time not been registered under the Financial Service Providers (Registration and Dispute Resolution) Act 2008. It was held that Lambton Quay was entitled to charge interest for this period. Judgment was given for the full amount of the residual debt plus interest. This was because the particular lending arrangement here meant the loan fell within a regulatory exemption to the section of the Credit Contracts and Consumer Finance Act 2003 that would otherwise have prevented interest being charged.