A recent Scout video purported to be a peek inside the home of Julie Christie, one of the most powerful people in New Zealand media. But the house was built on land obtained at a bargain price, and Christie admits that she never lived there – raising questions about the nature of the transaction, writes Duncan Greive.
“Inside Julie Christie’s Mansion,” the headline beckons. Who wouldn’t want to poke around in the home of “the queen of media”, as the accompanying video (update: page has now been taken down – here is a link to the Google cache) describes her? But a mansion? Scout reporter Dan News appears out front of what can only be described as a house. It is not, however, without an intriguing backstory.
“The secret fifth house on The Block,” says News. He walks towards the North Shore section, which sits alongside the four houses that made up the second series of the hit renovation franchise, and admires Christie’s car: “lovely Porsche – that only means there’s someone pretty wealthy living inside.”
The reporter knocks on a flash set of double doors, which open to reveal the smiling face of Christie, long-time head of reality TV juggernaut production studio Touchdown, and latterly an executive at MediaWorks. She welcomes him inside, as though it’s the most normal thing in the world for a man in a bowtie to wander through your home with a camera and microphone.
But while he plays the curious guest and she the gracious host, nothing about the clip feels remotely real.
The Companies Office lists Christie’s address as a vast apartment on Customs St in the city, which she’s owned since 2006 – the same year she sold Touchdown, her production company, to Eyeworks, a Dutch conglomerate, for a reported $40m.
The inescapable impression is that this is not, and never has been, Christie’s home: the shelves are empty, the cupboard bare. The cedar spa? “No one’s ever been in it.”
When contacted by The Spinoff, she admitted that she never lived there. So what was the point of this video, which says it offers a private tour before “she packed everything up and moved to her new property”? It all seemed very mysterious. I decided to try and figure out whether this was really as artificial as it appeared. What I uncovered suggests that the story of 1G Eversleigh Terrace is even stranger than the deeply weird video (update: page has now been taken down – here is a link to the Google cache) :
- The house is built on land which was part of a number of properties acquired by Eyeworks New Zealand Limited in January and February 2013 for use on the second season of The Block NZ.
- It was, as Christie says in the video, used as a site for the temporary production offices for the show, before, in December of 2013, she “bought what was left… a very small section on the corner.”
- Eyeworks sold the 451 square metre section for just $380,000 (all sales and value information from realty site QV).
- In July 2014, the land alone was revalued at $580,000 – implying a paper gain of over 50% in just eight months.
- The transaction was recorded as occurring not between Eyeworks and Christie, but between Eyeworks and MACA Trustees No. 1 LTD, a company with a single share held by a single shareholder: Brian Patrick Molloy – Christie’s brother.
The information raised many further questions, beyond the motivation behind the ridiculous video, principally to do with the nature of the transaction:
- Why would Eyeworks – a huge international production company which was months away from being sold to Warner Brothers for US$273m – seemingly sell an asset so far below market value?
- Did Eyeworks pay fringe benefit tax on the difference between the sale price and market value? If so, how was that value arrived at?
- And, if the land was bought for development, was income tax paid on the capital gain from the sale?
I called Christie to put the question to her directly. We spoke for 12 minutes. It was quite tense. I asked her whether the house was her home, as implied by the video. She admits it was not. “It was my house,” she says. “I built it. It hadn’t been lived in.” She went on to say that while Brian Molloy is listed as sole shareholder of MACA Trustees No. 1 LTD, it was her property. “The land was sold to me. He is my accountant.”
How was the price of $380,000 arrived at?
“I made an offer for the land,” she said initially. “I don’t know how that price was arrived at. I made an offer for the land – a very small section on a very busy road.”
She later remembered a valuation, and sent it through to The Spinoff. It was completed by Sheldons, “registered valuers and property consultants” of Takapuna, and makes note of some downsides to the site, including irregular shape, and a relatively small buildable area. It is indeed for $380,000. But its existence alone doesn’t alter the facts: that Eyeworks sold a property to its former Chief Executive for a price which had appreciated by over 50%, according to its 2014 Capital Valuation, mere months later.
On the question of taxation, she asked “What relevant tax? Why would it be eligible for Fringe Benefit Tax?” That question is answered below. A few minutes later, she hung up, saying she would get to work finding the relevant documentation.
Fringe Benefit Tax is defined by the IRD as a “tax on benefits that employees receive as a result of their employment”. And while the valuation helps provide a defence, the IRD can and does challenge valuations where they think they don’t reflect a fair value. So it’s not simply a clearcut case of her having scored a bargain. A spokesperson from the IRD, speaking generally rather than specifically, told me via email that “property transfers may have implications on a taxpayer’s GST liability, along with potential income tax and fringe benefit tax liabilities to consider.” This view was expanded upon by Craig Elliffe, law professor specialising in tax at the University of Auckland.
“The Income Tax Act provides that transactions must occur at market value, particularly in circumstances where parties are associated,” he told me, “and if they don’t occur at market value – when they occur between a company and an associated person… then there can be fringe benefit taxes payable on that transaction or deemed dividend consequences if the relationship is not one of employment.”
Despite her 2012 resignation as Eyeworks Chief Executive, both Christie and Brian Molloy still qualify as interested parties, due to their sibling relationship with their brother Michael Molloy, then as now an Eyeworks Director. The Financial Markets Authority’s “A Guide for Director’s” states that:
- “Where you have an ‘interest’ in a transaction, you need to be able to show how your company (or your parent company if your constitution allows this) benefits and gets fair value from it.
- Check if your company constitution allows related party transactions (transactions between related companies). If so, do any special conditions apply and are they in the best interests of your company?”
The transaction seems potentially problematic on both points. Eyeworks would have wanted to get the maximum possible return on the remaining land, yet rather than go to auction, sold it to the company’s former longtime Chief Executive privately. The investment’s sale price and subsequent performance suggests they got the worse end of the bargain.
This was born out by its revaluation to $580,000 the following July. By way of comparison a similar – though smaller – section around the corner at 311 Lake Rd sold for $521,000 in July of 2013, suggesting that the market for freehold bare land in Belmont in late 2013 would have started at $500,000.
When it came to market this year, the newly constructed house at 1G Eversleigh Road was marketed by Bayleys’ agent Victoria Bidwell, who described it to the Herald in early August as having a “Ralph Lauren-inspired interior” and being “the same standard of some which sell for around $4 million”. It sold, not long after, for a reported $1.458 million.
That transaction might potentially be taxable too, on the capital gain which has arisen from it. As Prime Minister John Key said in May of this year, when announcing the just-introduced capital gains tax, “anyone buying property with the intention of selling for a gain is liable for tax on that gain.”
It stretches belief that Christie ever intended to live there. A house down a right of way alongside the relics of a reality TV franchise doesn’t seem quite her style. As a North Shore real estate agent put it: “she doesn’t want to live in Belmont with all the families and the kids.”
Her current downtown apartment is exactly twice the size of the property at 1G Eversleigh Rd. Christie admits to never having spent the night there; the video suggests staging much more than living.
There may well be an innocent explanation for all this – Christie may have simply fallen in love with this piece of land down a shared drive alongside a North Shore thoroughfare. We cannot know what curious desires exist in another beating human heart.
But the above questions, particularly around Eyeworks’ motivation for the sale, remain pertinent, if only to ensure that Christie – who sits on the MediaWorks board, was Government-appointed to that of New Zealand Trade and Enterprise, and was a member of the Flag Panel to boot – remains beyond reproach in her dealings.
There is one other fascinating, if perhaps trivial question: why on earth was she showing off the place off in an online video for Scout?
Update: Wednesday October 7, 4pm:
The Spinoff has received a complaint from Christie. The above story has been updated to reflect that we inadvertently suggested that she – and not Eyeworks – would be liable for Fringe Benefit Tax. The Spinoff apologises for the error. She also asked that some of the negative aspects of the section highlighted in the report be made clear, particularly its small buildable area.
Christie also asked that further facts be emphasised. We list them below and trust that the reader can draw their own conclusions.
– She says that the build was not for capital gain: “It was built for my children to live in so I have every right to call it ‘my home’.”
– She goes on to say: “It was prudent of Eyeworks to get a valuation done to be sure that the amount paid represented market value (and that accordingly no FBT is payable). In this case that is exactly what Eyeworks did therefore there is no FBT liability on their part.”
– We called the eight months which elapsed between sale and revaluation “mere months”. Christie objected to this: “You refer to “mere” months between the valuation and the QV when it is actually 10 months. Again you are deliberately deceiving your readers.”
Update Two: Thursday October 8, 9am:
The Spinoff has received a further complaint from Christie, reiterating her desire for the valuation’s existence to be made more prominent. We believe that it was very clear, but have amended the copy above to make it even more explicit.
She also asked that it be noted that she is no longer a board member of New Zealand Trade and Enterprise.