Chief Executive of Land Information New Zealand v Ramanaidu
[2025] NZHC 537
•17 March 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2025-404-000336
[2025] NZHC 537
BETWEEN THE CHIEF EXECUTIVE OF LAND INFORMATION NEW ZEALAND
Plaintiff
AND
SANTHARA KUMAR RAMANAIDU (also
known as DR EDMUND SANTHARA KUMAR RAMANAIDU)
First Defendant
CARLINE A JOHNSON D’CRUZ
Second Defendant
Hearing: 17 March 2025 Appearances:
S M Earl and J T Lowyim for Plaintiff M Heron KC and A Lear for Defendants
Judgment:
17 March 2025
ORAL JUDGMENT OF VENNING J
Solicitors: Meredith Connell, Auckland
Domain Legal, Auckland Counsel: M Heron KC/A Lear, Auckland
THE CHIEF EXECUTIVE OF LAND INFORMATION NEW ZEALAND v RAMANAIDU [2025] NZHC 537
[17 March 2025]
[1] Where land is deemed sensitive by the Overseas Investment Act 2005 (Act) overseas purchasers are required to obtain consent. Under s 42 of the Act it is an offence to give effect to the overseas investment in sensitive land without obtaining consent. For the purposes of these proceedings Dr Santhara Ramanaidu of Malaysia and his wife, Carline D’Cruz, now resident in Auckland, accept that they gave effect to overseas investment transactions contrary to s 42 of the Act by purchasing several lots in Hinamoki Estate, a development in the Kaipara Harbour. They accept that the Chief Executive of Land Information New Zealand (Regulator) is entitled to seek judgment and pecuniary penalties from them for their breaches of the Act.
[2] Section 48 of the Act provides for the penalties for such breaches. The parties have agreed on the appropriate penalties in this case. Dr Ramanaidu will dispose of one lot (Lot 6) and in relation to that will pay an end penalty equal to the quantifiable gain on the property. It is also agreed that Dr Ramanaidu will pay a further civil pecuniary penalty of $75,000 for his breaches in relation to the remaining land. Ms D’Cruz has accepted one breach of s 42 of the Act for her acquisition of two separate blocks of land and agrees to a penalty of $82,500. In each case, both have agreed to pay $10,000 in costs to the Regulator. The parties seek the approval of the Court to such orders as under s 48 ultimately it is for the Court to determine and fix the penalty.
Background
[3] From 29 November 2007 to 12 December 2013, the registered proprietor of the Hinamoki Estate development was Gracy-Anno Limited, whose director Andrew Fawcet undertook a staged residential development containing some 62 lots.
[4] The development proposal was for a gated community, landscaped with sea views over the Kaipara Harbour and significant community amenities such as swimming pools, tennis courts and the like. Mr Fawcet marketed the development to overseas parties, including the respondents who at the time were based in Malaysia.
[5] In July 2010, Dr Ramanaidu and Ms D’Cruz visited New Zealand to view the development. On 18 August 2010, Dr Ramanaidu entered an agreement for the sale
and purchase (ASP) for a total of nine future lots in the development (first ASP). The purchase included three adjoining lots, being lots 1, 8 and 9 with a combined land area of 4.748 hectares. On or about 18 August 2010, Dr Ramanaidu entered a further ASP for a fourth lot, being Lot 6 (second ASP). Combined lots 1, 6, 8 and 9 comprised the first Ramanaidu property. The first ASP included future lots 13, 14 and 19, with a combined land area of 3.120 hectares. The total purchase price for the land in the first ASP was $2,485,032. The purchase price for lot 6 was $420,000.
[6] Mr Fawcet had told Dr Ramanaidu that consent was not required for what he was looking at purchasing initially. Mr Fawcet provided Dr Ramanaidu with a letter from solicitors which set out some of the requirements of the Act. I accept Ms Earl’s point about the letter that it was a letter providing generic advice and not specifically directed at advising Dr Ramanaidu.
[7] The first Ramanaidu property had a total of 5.342 hectares. As such it was deemed sensitive land under the Act as it was non-urban land exceeding five hectares and it required the Regulator’s consent. Dr Ramanaidu did not obtain consent before entering the ASPs. Neither the first nor second ASPs were conditional on consent being obtained under the Act.
[8] In 2012, Dr Ramanaidu and Gracy-Anno agreed in principle to vary the ASPs with the purposes of providing additional funding for the development. It was during this time that the developer encountered financial difficulties and I accept that Dr Ramanaidu’s involvement and the future transactions were driven in a way by his attempt to support the development for himself and for others.
[9] Dr Ramanaidu agreed to loan Gracy-Anno approximately $1.7 million to provide cash flow to complete the development. Lots 1 and 13 were removed from the proposed purchase by Dr Ramanaidu. That was formalised on 31 July 2012. On 14 January 2013, Dr Ramanaidu and Gracy-Anno agreed in principle to a further variation. Dr Ramanaidu was to advance $1.2 million which, together with the previous $1.7 million loaned, would represent the discounted total purchase price for all the properties being purchased by him, now re-incorporating lots 1 and 13, along
with lot 17. Gracy-Anno agreed to transfer the titles in full and final settlement of the loan.
[10] The inclusion of lot 17, together with three lots already being purchased by Dr Ramanaidu, being lots 13, 14 and 19, comprised the second Ramanaidu Property. Those adjoining lots had a total land area of 6.088 hectares, and as such constituted sensitive land under the Act, which required the Regulator’s consent. Dr Ramanaidu did not obtain consent before entering the relevant deeds, and they were not conditional on consent being obtained.
[11] On 15 February 2013, Ciborium Limited was incorporated (with Mr Fawcet as a director and other individuals as shareholders). Ciborium purchased the development from Gracy-Anno. Dr Ramanaidu accordingly entered a further deed of loan in March 2013 with Ciborium, with the loan to be repaid by transfer of the titles to the properties to be purchased by Dr Ramanaidu, which included both the first and second properties.
[12] As a result of the above transactions Dr Ramanaidu gained an equitable interest in sensitive land without the necessary consent being obtained.
[13] On or about 20 February 2014, the previously single title for the Hinamoki Estate was cancelled and 62 new records of title were issued. On 19 April 2014, title to all of the Ramanaidu Properties was transferred to Dr Ramanaidu, with the exception of lot 6. On 23 April 2014, title to lot 6 was transferred. Dr Ramanaidu therefore obtained legal interests in respective properties without obtaining consent from the Regulator.
[14] In the meantime, in 2010, a Malaysian citizen (the original purchaser) had entered into ASPs for several lots in the development. Sometime prior to 10 April 2014, Patricia Mathan, a New Zealand citizen and acquaintance of Dr Ramanaidu and Ms D’Cruz, had been nominated to complete the sale and purchase of several of those original purchaser’s lots, including lots 11, 12, 20, 21 and 24.
[15] Separately, Cures Rau, another Malaysian citizen and another acquaintance of Dr Ramanaidu and Ms D’Cruz, was nominated to complete the sale and purchase of another of the original purchaser’s lots, namely lot 23.
[16] On or about 10 April 2014, title to those lots was transferred to Ms Mathan and Mr Rau respectively. On or about 18 December 2017, Ms D’Cruz agreed to purchase Mr Rau’s lot.
[17] The original purchaser owed Dr Ramanaidu and Ms D’Cruz a sum of money in relation to an unrelated transaction. Neither the original purchaser nor Ms Mathan no longer wished to own the lots so Ms D’Cruz agreed to purchase them by way of set-off of the debt owed to her and Dr Ramanaidu.
[18] On 9 February 2018, Ms Mathan and Ms D’Cruz executed a declaration of trust in respect of the nine lots held by Ms Mathan. It provided Ms Mathan held them on trust for Ms D’Cruz and would transfer them at her request.
[19] As a consequence Ms D’Cruz obtained equitable interests in lots 11 and 12 (the first D’Cruz Property) and lots 20, 21, 23 and 24 (the second D’Cruz Property). The first D’Cruz Property had a total land area of 4.257 hectares. The second D’Cruz Property had a total land area of 3.4885 hectares. Although neither were on their own sensitive land, they adjoined the first and second Ramanaidu Properties and together formed a contiguous block of land comprising 19.1755 hectares. Ms D’Cruz subsequently acquired legal freehold interests in lots 11, 12, 20, 21, 23 and 24, on the transfer of titles to her on 13 February 2018.
[20] Essentially the breach by Ms D’Cruz occurred because the Regulator is entitled to aggregate neighbouring land owned by an associated person for the purposes of determining whether the five hectare sensitive land threshold has been exceeded. As Ms Earl submitted, while accepting it was not suggested that Dr Ramanaidu and Ms D’Cruz were acting in an attempt to avoid the application of the Act, inferentially they were acting jointly in respect of the investments in the Hinamoki Development. Accordingly, in terms of s 8(1) of the Act they were “associates” and therefore the first and second D’Cruz properties were also sensitive land, forming part of a larger block
of adjoining, non-urban land exceeding five hectares. Ms D’Cruz did not obtain consent prior to acquiring either equitable or legal freehold interests in the land.
Penalty
[21]Section 48(2) of the Act provides for the basis for the imposition of a penalty:
(2)The court may order A to pay a civil pecuniary penalty not exceeding the highest of the following:
(a)$500,000 in the case of an individual or $10 million in any other case:
(b)3 times the amount of any quantifiable gain (for example, the increase in the value since acquisition) by A in relation to the property to which the consent, exemption, exemption certificate, direction order, interim direction order, prohibition order, or disposal order relates or for which a consent should have been obtained:
(c)the cost of remedying the breach of condition:
(d)the cost of remedying the breach of a term of a prohibition order or a direction order:
(e)the loss suffered by a person in relation to a breach of a term of a condition.
Approach to the imposition of penalties
[22] In cases under the Act the Court has generally adopted the method for determining the quantum of pecuniary penalties imposed for breach of the provisions of the Commerce Act 1986. That approach is also consistent with the general criminal sentencing approach of:
(a)determining the maximum penalty;
(b)identifying aggravating or mitigating factors of the contravening conduct to determine an appropriate starting point; and
(c)adjusting the starting point in light of factors specific to the defendant that would warrant either an uplift or reduction from that starting point.
[23] In addition to those general considerations, the cases also recognise there is a significant public benefit in defendants acknowledging wrongdoing, thereby avoiding the costs of litigation. Also in some cases it has been acknowledged the Court has a role in promoting resolution by accepting a responsible penalty promoted by the parties provided it is within an appropriate range.
[24] In this case on the second cause of action the parties have agreed that Dr Ramanaidu will pay a penalty under s 48(2)(a) of $75,000. The Regulator’s position is that the breach is moderately serious and the overall penalty reflects this was a significant investment for predominantly commercial purpose, while balanced against the fact it was accepted Dr Ramanaidu was entitled to make such investments provided the overall parcel of land was within the five hectare limit. As Mr Heron KC noted, while that limit was exceeded it was not significantly so in comparison to other cases.
[25] In the absence of disposal the quantifiable gain cannot readily be ascertained but Dr Ramanaidu has obtained a non-quantifiable benefit by gaining and retaining an interest in the land without the appropriate consent. The Regulator accepts the breaches were not deliberate but Dr Ramanaidu was aware of the legal restrictions on overseas persons buying certain categories of land in New Zealand and that the restrictions might have applied to his transactions. Dr Ramanaidu accepts he should have taken greater care to ensure he was not in breach of the Act. The Regulator accepts Dr Ramanaidu’s New Zealand based lawyers did not specifically raise with him the need for compliance.
[26] By reference to the cases of Chief Executive of Land Information New Zealand v Carbon Conscious New Zealand Ltd, Chief Executive of Land Information New Zealand v Tang, Chief Executive of Land Information New Zealand v HK Search Limited, and Chief Executive of Land Information New Zealand v Trinity Green Estate Partnership,1 the Regulator suggests the appropriate starting point for Dr Ramanaidu
1 Chief Executive of Land Information New Zealand v Carbon Conscious New Zealand Ltd [2016] NZHC 558 (Carbon Conscious); Chief Executive of Land Information New Zealand v Tang [2018] NZHC 382, (2018) 19 NZCPR 460 (Tang); Chief Executive of Land Information New Zealand v HK Search Limited [2022] NZHC 444 (HK Search); and Chief Executive of Land Information New Zealand v Trinity Green Estate Partnership [2023] NZHC 2330 (Trinity Green).
for his breach in relation to the second property was $100,000. There are no aggravating factors personal to Dr Ramanaidu. By way of mitigation the Regulator considers 25 per cent discount from that starting point is appropriate and taking account of all mitigating factors, including Dr Ramanaidu’s cooperation, leads to the penalty of $75,000.
[27] In Carbon Conscious Carbon Conscious purchased a forestry property through a proxy company but had relied entirely on erroneous legal advice.2 The starting point for the penalty was $80,000. In Tang, Mr Tang had acquired an equitable interest for
$5.128 million in a residential property.3 Again the Court considered Mr Tang was poorly served by his advisors. The starting point of $130,000 was held to be at the upper end of the available range.
[28] In HK Search the second defendant entered a $3 million sale and purchase agreement for a property at Helensville.4 The property was non-urban land with a total area of 18.5531 hectares. Again the purchaser relied on incorrect legal advice but only after receiving and disregarding contrary advice from another lawyer. A starting point of $140,000 was taken.
[29] In Trinity Green the land was purchased by a partnership which included an overseas corporate person.5 It acquired land in Cambridge for $6.1 million, being
8.5 hectares of non-urban land. A starting point of $130,000 to $140,000 was taken.
[30] On behalf of the defendants Mr Heron submitted that the defendants’ situation was most similar to that of the defendants in Trinity Green Partnership, and while accepting that overseas investors must be taken to know the Act applies and therefore a lack of knowledge is not itself a mitigating factor, where they relied on professional assistance in formalising transactions, their particular culpability may be thought to be low which is relevant in assessing the starting point.
2 Chief Executive of Land Information New Zealand v Carbon Conscious New Zealand Ltd, above n 1.
3 Chief Executive of Land Information New Zealand v Tang, above n 1.
4 Chief Executive of Land Information New Zealand v HK Search Limited, above n 1.
5 Chief Executive of Land Information New Zealand v Trinity Green Estate Partnership, above n 1.
[31] Mr Heron accepted the Regulator’s reasoning in terms of comparisons with previous cases although submitting to categorise the case as a moderately serious breach in this case was unfair and was unnecessary to support the recommended fine in this case. He emphasised the 1.088 hectare excess in the case of the second cause of action was relatively modest. Further the land was not farmland but rather lifestyle property which was to be used principally for residential development.
[32] Mr Heron accepted that in relation to Ms D’Cruz’s case the slightly higher penalty of $82,500 was appropriate because the combined property under the associated land provisions totalled 19.1755 hectares.
[33] I accept it is also a relevant consideration in mitigation that the input of Dr Ramanaidu and Ms D’Cruz has enabled the development to be progressed for the benefit of not only them but a number of other purchasers who apparently are mainly New Zealanders.
[34] In the case of Ms D’Cruz the Regulator submits again her breach is moderately serious but does accept the fact that her parcels of land did not individually breach the Act and that both she and Dr Ramanaidu were entitled to have some degree of investment was a relevant factor in assessing the starting point. However the Regulator submits there was a clear commercial element to the purchases and her acquisition of the land. She was generally aware of the legal restrictions on overseas persons buying certain categories of land in New Zealand and should have taken greater care. For that reason the starting point of $110,000 was taken. As Ms D’Cruz is ordinarily resident in New Zealand and has been for a significant period of time, in this case the Regulator does not seek disposal of any of the lots.
[35]Again applying the 25 per cent discount for her breach the end penalty is
$82,500.
[36] Mr Heron made the point that Ms D’Cruz’s acquisition of the land initially would not have required consent but Dr Ramanaidu’s investments triggered the associate provisions in s 8. Ms D’Cruz was effectively caught in that way. However, he did accept the higher penalty was appropriate given the combined property under
the associated land provisions totalled 19.1755 hectares. Again, Mr Heron made the point it is lifestyle land rather than farmland. Ms D’Cruz has also had the obligations of the ongoing cost of the land which has been difficult to sell. He noted that in relation to that point generally, lot 17 had just been transacted for a $1 sale price.
Result
[37] Having regard to the nature of the breach, although perhaps towards the higher end of the range for the circumstances of this case, taking account of counsels’ submissions and previous authorities I accept the starting points were within range. In any event, a discount of 25 per cent is also at the higher end and appropriately balances the starting point. The 25 per cent is appropriate for the cooperation and the early resolution of these proceedings. I also note that the agreement for costs of $10,000 in each case is relatively modest.
[38] For those reasons I accept that the penalties proposed by the parties are appropriate.
Orders
[39]I make orders in accordance with the parties’ proposal, namely:
(a)Dr Ramanaidu is to dispose of lot 6 with the penalty hearing in respect of that property to be referred back to a Judge by 31 March 2026. Leave is reserved for the parties to seek to have the matter listed before a Judge before then. For the Registrar’s benefit if counsel file a joint memorandum the Registrar should refer the memorandum to me in the first instance to deal with the matter.
(b)Dr Ramanaidu is to pay a civil pecuniary penalty under s 48(2)(a) of
$75,000;
(c)Dr Ramanaidu is to pay costs of $10,000 to the Regulator;
(d)Ms D’Cruz is to pay a civil pecuniary penalty under s 48(2)(a) of
$82,500; and
(e)Ms D’Cruz is to pay costs of $10,000 to the Regulator.
Venning J
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