In the decision, which follows a hearing in Auckland in June, Justice Campbell ordered a caveat be removed from prime lakefront land in Homestead Bay, overlooking Lake Whakatipu.
The decision is the first to emerge from two years of High Court proceedings pitting Aucklanders Brian Chen and Cassie Xiao against Andrew Guest, a lawyer and property entrepreneur, best known as co-founder of North Shore-based commercial property services company Viranda Holdings.
In 2014, the trio were directors of Murphy’s Development Ltd (MDL) when they decided to buy a 190ha chunk of Remarkables Station spanning from the lake to the Kingston Highway.
Homestead Bay Trustees Ltd (HBT) was incorporated as the development company, and after settling the purchase in 2016, Guest touted a $100million development with a marina, apartments and a 130-section residential subdivision.
Today, the land remains bare except for a few luxury homes built on 12 lakefront sections sold in 2018 and 2019 for about $2m each.
However, the High Court decision relates to HBT’s agreements with Fiordland Experience Group Ltd (FEG), which it engaged to manage the sale and marketing, or the underwriting — the point remains in dispute — of the sections.
Chen and Xiao alleged that from 2014 until 2021, Guest earned "secret commissions from apparently arm’s-length transactions" between HBT and FEG as a result of an undisclosed beneficial interest in FEG through his friendship with its former shareholder and director, Roy Toms.
The transactions were HBT’s payments to FEG, totalling over $1.5m, for its services relating to the sections.
In a second agreement, in 2016, FEG surrendered what it claimed were its underwriting rights to the sections in exchange for an option to buy 12 other lots, in a future subdivision, elsewhere on the Homestead Bay land.
In 2021, when Chen and Xiao learned Viranda Holdings had been invoicing FEG for half of HBT’s payments, they declared the agreement "null and void and unenforceable" and began legal proceedings.
During June’s hearing, FEG argued HBT’s sole shareholder at the time of the 2016 agreement was Viranda Nominees Ltd — of which Guest was one of two directors — and therefore Guest’s interests in FEG were known to HBT.
Last September, after hearing HBT had put 163ha of the land on the market, FEG lodged a caveat on the land to protect its option rights from the 2016 agreement.
However, in a highly complex decision, Justice Campbell ruled the 2016 agreement had ended, and ordered the caveat be removed.
Apart from a 27ha lakefront site retained by HBT, the Homestead Bay land was bought earlier this year by Australian-based RCL Group, which is developing the nearby Hanley’s Farm residential subdivision.
