Crafar farm Chinese sale breaches NZ law, court told

UPDATED: Justice Forrie Miller has finished hearing the application to stop the sale of the Crafar farms to a Chinese company and has reserved his decision for up to a fortnight.

Lawyers seeking an interim injunction to stop the sale of the Crafar farms to subsidiary of Chinese company Shanghai Pengxin say representatives of that company do not have the relevant business experience or acumen to run dairy farms as required by New Zealand law.

Alan Galbraith QC told Justice Forrie Miller, representing a Sir Michael Fay-led consortium that placed a rival bid with the Crafar farms receiver, argued in the Wellington High Court that Overseas Investment Office erred in approving the sale on the basis of state-owned Landcorp’s involvement as the relevant legislation required the experience to be held by representative of the company that is making the purchase.

Mr Galbraith said there is "not the slightest indication" any individuals from that company do have that experience.

“They are simply going to put the money up, sit back, and let Landcorp run it”

He said the company's role was that of a financier and passive investor.

However, that claim was refuted by Hamish Hancock, from the Crown Law Office, who represented the chief executive of Land Information New Zealand Colin MacDonald, Associate Minister of Finance Jonathan Coleman and Minister of Land Information Maurice Williamson.

Submissions supplied to the court by Mr Hancock said the application to stop the sale was “ill-founded” and just an attempt by an unsuccessful bidder to reduce the price of assets they wanted to buy.

The documents said the sections of the Overseas Investment Act relied on by Mr Galbraith is his argument were not intended to be used that way by Parliament.

The Shanghai Pengxin purchase met all the necessary requirements of New Zealand legislation for an overseas investment in a large scale business operation, such as the Crafar farms, the submissions said.

“Ministers are entitled to hold the view in a major agricultural business acquisition running into tens or hundreds of millions of dollars that relevant business acumen and experience can require evidence of a different kind of acumen and experience that would enable the owner or shareholder on a far smaller operation to farm successfully,” the submissions said.

The law required Mr Coleman and Mr Williamson to determine “using their particular experience and judgment and having regard to their electorate accountability, whether the application before them provides a substantial and identifiable benefit to New Zealand,” they said.

“This the Ministers have clearly done in the present application.” 

The judge is expected to reserve his decision.