UPDATED: Crafar farm bidders Shanghai Pengxin "surprised" by High Court ruling setting aside the consent for the sale that was granted by Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman.
The government has been ordered by the high court to reconsider its decision to allow the sale of the Crafar farms to a subsidiary of Chinese company Shanghai Pengxin.
In a judgment released this afternoon by the Wellington High Court, Justice Forrie Miller has set aside the consent for the sale that was granted by Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman.
The ministers announced on January 27 that they had accepted the recommendation of the Overseas Investment Office (OIO) to grant consent to Milk New Zealand Holding, a subsidiary of Shanghai Pengxin Group, to acquire the 16 farms. NZ government-owned Landcorp was to manage the farms.
Mr Williamson said then that it was clear the bid met the relevant sections of the Overseas Investment Act.
In Parliament’s question time, Prime Minister John Key this afternoon faced a barrage of questions from opposition MPs over the ruling.
Mr Key said the Crown was unlikely to appeal the decision but that Justice Miller’s ruling had defined a different interpretation of the Overseas Investment Act than had previously been used.
“We now have new jurisprudence,” the PM said.
The test of whether a purchase would bring economic benefit to the country was now required to show a foreign owner brought addition benefits over and above those that could be provider by a domestic owner, he added.
“That is the opinion of the Judge. The OIO will have to go back and reconsider the application."
The Prime Minister said the OIO could well come back with the same recommendation to approve the sale to Shanghai Pengxin.
The Crafar Farms Purchase Group - a Sir Michael Fay-led consortium that submitted an unsuccessful lower bid to buy the farms – claims the court decision confirms its view that Shanghai Pengxin’s purchase brings no additional economic benefit to New Zealand.
“It was not in the best interests of New Zealanders. It is reassuring that a High Court judge has come to a similar conclusion and set aside the Ministers approval,” group spokesman Alan McDonald said.
He said the Purchase Group and its legal team would now take some time to "fully consider" the details of the court decision.
The group cited its Bell Gully lawyer David Cooper as saying the judgment “confirms that the Ministers and the OIO misapplied the Overseas Investment Act and materially overstated the benefits to New Zealand arising from the transaction."
Cedric Allan, spokesman for Chinese Crafar farms bidder Shanghai Pengxin, said the High Court ruling was unexpected.
"We're really surprised. We did not read the requirement of the OIO as meaning we had to compare that benefits we could bring to New Zealand with the benefits a New Zealand farmer buying the farms would bring," he said.
Mr Allan said he was "hopeful" of a swift resolution to the matter - by the OIO reconsidering its recommending and Ministers making a decision on it - given it is more than a year since Shanghai Pengxin announced it was interested in buying the properties.
"We're required to bring benefits - to lift productivity and improve the quality of farms - there's no guarantee, or requirement, that a New Zealand farmer would do that," Mr Allan said.
