Crafar appeal approach 'artificial and unduly narrow'

"One can't simply substitute Landcorp's expertise for the lack of business experience and acumen of the individual directors," court told.

UPDATED: Ministers and officials were entitled to view the Landcorp involvement with Crafar farms deal as a substitute for expertise of the buyers themselves, the Court of Appeal heard this afternoon.

Land Information New Zealand Queen's counsel David Goddard says the provisions of the Overseas Invesment Act should not be interpreted too narrowly.

To require directors of buyers of land to have expertise in the particular industry – as the appellants argued – is "artifical and unduly narrow", Mr Goddard says.

The requirements of the legislation should be viewed broadly and from the general approach of the act and the policy behind it, as they had been in the past, he says.

What ministers and officials need to do is satisfy themselves that overseas buyers of land "bring something to the mix".

That "something" need not be, as in this case, experience in running dairy farms, but rather the relevant business acumen and experience which would help put together a successful business venture.

In this case, the key question is not that buyer Shanghai Pengxin can afford to hire the relevant expertise, but that it had the acumen to sign up a reputable and experienced joint venture partner such as Landcorp to run the farms.

The test is not that the directors have experience "in" the industry they are buying into, but that they have expertise "relevant to" this particular buisness venture," he said.

        


Officials did not take the lack of dairying experience of Shanghai Pengxin directors into account when they approved the Crafar deals, the Court of Appeal heard earlier today.

The controversial approval of the deal by the government in March hinged on the deal between Shanghai Pengxin and government-owned farm company Landcorp and was justified, in part, because of the experience and acumen Landcorp would bring.

However, Alan Galbraith QC told the Court of Appeal in Wellington today the Overseas Investment Act clearly stipulated the business experience and acumen of the directors of the purchaser are what needs to be taken into account, not of the company and not of any business partners the company might have.

The hearing is considering a challenge to the deal by rival bidder, the Sir Michael Fay-backed Tiroa E and Te Hepe B Trust.

Taking the court through the CVs of the five directors of the purchasing company, Mr Galbraith said most were engineers or had expertise in financial management and that while they had owned farming ventures the nature of those enterprises was soy bean growing or sheep farming, not dairying.

The Overseas Investment Offices recommendation to Land Information Minister Maurice Williamson had no analysis of the business experience or acumen test contained in the law and whether it was adequately met on this case.

"One can't simply substitute Landcorp's expertise for the lack of business experience and acumen of the individual directors," Mr Galbraith told the court.

The case is proceeding.