Most Read Contributor in New Zealand, September 2016
An Australian owned company - Carbon Conscious New Zealand Ltd
– has been ordered to pay $40,000 in penalties plus costs for
a purchase involving sensitive land without consent under the
Overseas Investment Act (OIA).
The order was made by the High Court on the application of Land
Information New Zealand. It is the first case of its kind
under the Act.
Carbon Conscious New Zealand (CCNZ) is an overseas
person under the OIA as it is a subsidiary of Australian firm
Carbon Conscious Ltd. Both companies plant forests for the
CCNZ had a contract with Origin Energy to plant 225 carbon lots
in both 2011 and 2012. To meet its 2012 planting obligations,
it wanted to buy a property deemed to contain sensitive land under
the Act but the time involved in the consenting process would have
pushed the purchase out beyond the planting
What to do?
CCNZ sought legal advice and, based on that advice, set up a
separate company (Katey LR Investments Ltd) in the name of a
friendly party to buy the land.
Under the terms of the deal CCNZ would fund the purchase by
fronting up $335,000 for the forestry rights and Katey LR would
grant it an option to acquire the land at some later stage in
consideration for this already paid money, provided the sale was
approved under the OIA. These arrangements made Katey LR an
"associate" of CCNZ and, as such, subject to the Act.
On 24 April 2013, CCNZ's nominee applied for consent, a
decision on which is still pending.
The maximum penalty available was $300,000 but the Court found
that, although the circumvention of the Act was deliberate, the
fact CCNZ had been acting on legal advice put its culpability at
the lower end of the range.
Other factors were that any commercial gain from the ploy was
difficult to quantify and that there were no identifiable costs in
remedying the breach or identifiable losses sustained in relation
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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