New Zealand Democratic Party for Social Credit Incorporated v Minister for Land Information [2021] NZCA 599 (15 November 2021)

Last Updated: 23 November 2021

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA684/2020 [2021] NZCA 599

	BETWEEN	THE NEW ZEALAND DEMOCRATIC PARTY FOR SOCIAL CREDIT INCORPORATED Appellant
	AND	THE MINISTER FOR LAND INFORMATION First Respondent THE MINISTER OF FINANCE Second Respondent WESTLAND DAIRY COMPANY LIMITED Third Respondent HONG KONG JINGANG TRADE HOLDING COMPANY LIMITED Fourth Respondent

Hearing:	27 October 2021
Court:	Cooper, Courtney and Collins JJ
Counsel:	R A Kirkness and S W H Fletcher for Appellant N C Anderson and S J Jensen for First and Second Respondents S V McKechnie and T J Bremner for Third and Fourth Respondents
Judgment:	15 November 2021 at 9.30 am

JUDGMENT OF THE COURT

1. The appeal is dismissed.
2. The orders made by the High Court are upheld.

100. The appellant must pay the respondents costs for a standard appeal on a band A basis, plus usual disbursements. Half of the costs shall be paid to the first and second respondents. The other half of those costs shall be paid to the third and fourth respondents. We certify for two counsel.

____________________________________________________________________

REASONS OF THE COURT

(Given by Collins J)

Introduction

• [1] Three issues are addressed in this judgment. The first asks if the Overseas Investment Office (the OIO) and the High Court erred when they concluded two dairy processing plants (the processing plants) owned by Westland Dairy Co Ltd (Westland Dairy) were properly treated as “significant business assets” rather than “sensitive (but not residential) land” for the purposes of the Overseas Investment Act 2005 (the Act). The parties agree that in order to be “sensitive (but not residential) land” the processing plants would need to fall within the definition of “farm land” in the Act, and, in particular, be “land ... used exclusively or principally for agricultural ... purposes”.^[1]
• [2] The second issue is whether the OIO had sufficient information to make its decision, including whether it complied with a direction from the Minister of Finance, who instructed the OIO to “verify” the information submitted by Hong Kong Jingang Trade Holding Co Ltd (Jingang) when it sought consent to purchase Westland Dairy.
• [3] The third issue is whether the High Court erred when ordering that the New Zealand Democratic Party for Social Credit Inc (Social Credit) pay costs on a scale 2B basis when it lost its application to judicially review the consent decision that led to Jingang purchasing Westland Dairy.

Background

Westland Dairy

• [4] Westland Dairy was established in 1937 as a cooperative. Its shareholders were farmers who supplied Westland Dairy with raw milk. Westland Dairy developed into a large producer of processed milk and dairy products with processing plants in Hokitika and Rolleston. An indication of the size of the business may be gleaned from the fact Westland Dairy employs 643 full-time staff, with a further 20 part-time and casual staff. It is the largest private employer on the West Coast.
• [5] The Hokitika Processing Plant is located on approximately 7.9716 ha in the industrial/commercial zone of Hokitika. The Rolleston Processing Plant occupies approximately 8.9690 ha in the zoned industrial/commercial area of Rolleston.
• [6] The processing plants receive raw milk from approximately 429 farms, most of which are located on the West Coast. The processing plants convert raw milk into Ultra High Treatment (UHT) pasteurised milk and a variety of other products, such as 10-Star premium milk, A2 milk, whole whipping cream, butter, milk powder, buttermilk powder, yoghurt powder, infant milk formulas and milk-based protein products.
• [7] In addition to milk processing facilities, the Hokitika Processing Plant has silos for storage, retail packaging facilities, a warehouse, a laboratory, a boiler plant, a water treatment facility, x-ray facilities to check infant milk products for foreign substances and office buildings. There is a railway siding at the Hokitika Processing Plant, which is used to send and receive goods from the Rolleston Processing Plant. The Hokitika Processing Plant uses significant quantities of industrial chemicals, including ammonia that is used to cool products.
• [8] The Rolleston Processing Plant has a reverse osmosis plant that is used to reduce the water content of raw milk before it is transported to Hokitika. The Rolleston Processing Plant also has a UHT facility, a warehouse, offices and loading areas.
• [9] Westland Dairy also owns a small amount of residential land adjacent to the Hokitika and Rolleston sites. Those properties were acquired as a “buffer” between the processing plants and other properties and to provide scope for future expansion. The residential sites are car parks and some houses on those sites which are used to accommodate staff.
• [10] By 2017 it was apparent to the Board and management of Westland Dairy that it was in a dire financial situation. It was paying its suppliers of raw milk substantially less than other dairy cooperatives, such as Fonterra, and it had no capacity to take on additional debt. The Board and management appreciated that if it could not increase the price it was paying its raw milk suppliers, then it would lose suppliers to Fonterra, thereby increasing the debt that would be shared by the remaining shareholders. This in turn could trigger the exiting of more farmers. Left unchanged, this state of affairs would likely have caused the collapse of Westland Dairy.

Jingang

• [11] Jingang is a wholly owned subsidiary of the Inner Mongolia Yili Industrial Group Ltd, a very large Chinese producer and marketer of dairy products, which is listed on the Shanghai Stock Exchange. It had previously acquired Oceania Dairy Ltd, a small dairy production company in the South Island.
• [12] In 2018, Jingang reached a provisional agreement with Westland Dairy whereby:

(a) Jingang would acquire all of the shares in Westland Dairy at $3.41 per share under a scheme of arrangement pursuant to pt 15 of the Companies Act 1993.

(b) Jingang would commit to accepting for 10 years raw milk from all Westland Dairy farm suppliers and pay a price that was at least equivalent to that which Fonterra pays its raw milk suppliers.

• [13] The provisional agreement was conditional on the requisite majority of Westland Dairy shareholders agreeing to the proposal. This was achieved on 4 July 2019 when 93.79 per cent of those shareholders who voted approved the proposal. The proposal was also conditional on consent being obtained under the Act for Jingang to purchase Westland Dairy. That consent was given by the OIO on 16 July 2019. Under the Companies Act, the proposal also required approval from the High Court under pt 15. That approval was given on 18 July 2019.^[2]
• [14] The scheme of arrangement took effect on 1 August 2019. Shareholders were paid about $240 million for their shares. Many of the former shareholders of Westland Dairy used the money they received from the sale to reduce their debts.

Social Credit

• [15] Mr Leitch, the leader of Social Credit, has explained in an affidavit that Social Credit is a political party that has contested every general election since it was formed in 1954:^[3]

One of Social Credit’s objectives is for New Zealand to retain effective control of its economic affairs, including in relation to overseas investment in New Zealand.

Mr Leitch reviewed the steps taken by the OIO and concluded that the decision to consent to the proposal did not involve a proper consideration of the requirements of the Act, or the implications of Jingang acquiring Westland Dairy.

• [16] Social Credit considered seeking an injunction to try to prevent the scheme of arrangement taking effect. It did not, however, seek an injunction. Nor did Social Credit seek to be heard when the High Court considered the application for approval under the Companies Act. Instead, in October 2019, Social Credit commenced an application for judicial review in the High Court, in which it sought orders quashing the OIO’s decision to consent to Jingang’s application under the Act.^[4] The application for judicial review was dismissed by Dobson J, who said that the processing plants “inarguably” were not “farm land” as defined in the Act.^[5] The Judge also saw no merit in Social Credit’s arguments concerning the way the OIO had discharged its responsibilities.^[6] As we have noted at [3], Social Credit was ordered to pay costs on a scale 2B basis.^[7]
• [17] Before we explain the steps that were taken leading up to the granting of Jingang’s application under the Act, we shall describe the relevant provisions of the Act.

Overseas Investment Act

• [18] The purpose of the Act is “to acknowledge that it is a privilege for overseas persons to own or control sensitive New Zealand assets”.^[8] That purpose is achieved by regulating the ability of an overseas person to acquire sensitive assets by requiring prospective overseas purchasers to obtain consent under the Act from the relevant Minister(s) or the Minister(s)’s delegate. As this Court has previously explained in the context of purchases of farm land by overseas persons, “[t]he Act attempts to place some controls on the acquisition of significant tracts of New Zealand farm land by overseas persons, but also seeks to allow such persons to invest in farm land where they meet the relevant criteria”.^[9]
• [19] The Act identifies five categories of sensitive assets that require consent before those assets can be purchased by an overseas person. Those categories include:

(a) “Significant business assets”, which are defined in s 13 of the Act. The definition includes securities for consideration that exceeds $100 million.

(b) “Sensitive (but not residential) land”, which is defined in s 6(1) and pt 1 of sch 1 of the Act. We will explain that definition at [26] to [29].

(c) “Residential (but not otherwise sensitive) land”, which is defined in s 6(1) of the Act. One test for consent is the “incidental residential use test” set out in cl 14 of sch 2 of the Act.

• [20] A consequence of an asset being a “significant business asset” is that an overseas purchaser of such an asset must demonstrate they meet several criteria. At the relevant time, the overseas purchaser had to show they:

(a) had relevant “business experience and acumen”;^[10]

(b) had “demonstrated financial commitment” to the investment;^[11]

(c) were “of good character”;^[12] and

(d) were not a person referred to “in section 15 or 16 of the Immigration Act 2009 (which sections list certain persons not eligible for visas or entry permission under that Act)”.^[13]

• [21] More stringent criteria must be satisfied before consent is given under the Act where the asset is “residential (but not otherwise sensitive) land” or “sensitive (but not residential) land”.
• [22] The purchase by an overseas person of “sensitive (but not residential) land” can only be approved under the Act if:

(a) the “investor test” (then under s 16(2) and now under s 18A of the Act) is met;^[14] and

(b) either—

(i) the purchaser is a New Zealand citizen, ordinarily resident in New Zealand or intending to reside in New Zealand indefinitely;^[15] or

(ii) the “benefit to New Zealand” test under ss 16A and 17 of the Act is met.^[16]

• [23] Incidental residential use of land occurs where the land is used for residential purposes “but only in support of the relevant business” and where “the residential land will be, or is likely to be, acquired in the ordinary course of the business” of the overseas person.^[17]
• [24] As we have noted at [1], in the present case OIO officials determined that the processing plants were “significant business assets” and not “sensitive (but not residential) land”. We shall explain at [34] to [48] the steps taken by the OIO officials when reaching their conclusion.
• [25] Social Credit argues that the processing plants were misclassified by the OIO and that the application by Jingang should have been treated as a request for consent to purchase “sensitive (but not residential) land”.
• [26] “Sensitive (but not residential) land” is defined in s 6(1) and pt 1 of sch 1 of the Act and includes “non-urban land” that is larger than 5 ha.
• [27] “Non-urban land” is defined in s 6(1) of the Act as:

(a) farm land; and

(b) any land other than land that is both—

(i) in an urban area; and

(ii) used for commercial, industrial, or residential purposes.

• [28] The parties agree the processing plants are not covered by (b) of the definition of non-urban land and that in order to qualify as “non-urban land” the processing plants would need to be “farm land” as defined in the Act.
• [29] The full definition of “farm land” is:^[18]

... land (other than residential (but not otherwise sensitive) land) used exclusively or principally for agricultural, horticultural, or pastoral purposes, or for the keeping of bees, poultry, or livestock ...

• [30] The words in parentheses in the definition of “farm land” were added in 2018 to reinforce the distinction the Act makes between residential and farm lands. The words in parentheses are, however, not important to the issues in this case which hinge upon whether or not the processing plants are used exclusively or principally for agricultural purposes.
• [31] Under s 32 of the Act, the relevant Minister or Ministers may delegate to the OIO ministerial powers and functions under the Act. Ministers have not delegated to the OIO decisions concerning consent for the purchase of “sensitive (but not residential) land”. Thus, if the processing plants are “farm land” and therefore “sensitive (but not residential) land”, then only Ministers could have given consent to Jingang’s application.
• [32] Section 34 authorises the Minister to issue a Directive Letter to the OIO. When such a letter is issued, the OIO must comply with the Ministerial Directive. In this case, the Ministerial Directive issued under s 34 of the Act required officials in the OIO to, amongst other tasks:

... seek sufficient information through the application and assessment process to verify the information provided by applicants, and where appropriate involve third parties (including government agencies) and third party resources to achieve this goal;

• [33] Section 33(5) of the Act authorises Ministers to “call in” decisions concerning applications that might otherwise have been delegated to the OIO.

Steps taken by OIO officials

• [34] On 12 December 2018, Mr Petersen, a partner at Bell Gully with considerable experience in transactions involving overseas investors in New Zealand, had a discussion with Ms Knewstubb, a senior official in the OIO. Bell Gully were, at that time, acting for Westland Dairy.
• [35] The meeting was referred to as a “pre-application meeting” and was arranged to provide the OIO with an overview of the proposed application from Jingang and to identify any particular issues that might have to be addressed by Jingang and the OIO. At that meeting Mr Petersen provided the OIO with a table setting out the land owned by Westland Dairy and an aerial photograph of the Hokitika Processing Plant. Mr Petersen provided the OIO with an outline of the nature of the business conducted by Westland Dairy and the proposal that was being developed for the sale of the shares in Westland Dairy. Mr Petersen advised the OIO that the proposed scheme of arrangement required consent as it involved “significant business assets” and because the residential properties that abutted the processing plants were sensitive land.
• [36] It is apparent from her affidavit that Ms Knewstubb thought the key issue for the OIO would be how it should treat that part of the proposed application for consent that involved the residential properties that joined the processing plants. Ms Knewstubb had further communications with Mr Petersen during the course of December 2018, after which Mr Morris, a solicitor and senior official within the OIO, became responsible for managing communications between the OIO and Mr Petersen during the next phase of the OIO’s processes. Mr Morris played a pivotal role in determining whether or not the OIO should accept for consideration Jingang’s application for consent, which was filed on 21 March 2019.
• [37] The steps taken by Mr Morris included:

(a) reviewing and assessing the materials provided by Mr Petersen;

(b) consulting with other officials within the OIO;

(c) seeking from Mr Petersen further information about the rationale for Westland Dairy acquiring the residential properties adjacent to the processing plants;

(d) assessing the responses provided by Mr Petersen; and

(e) reaching a provisional conclusion that the processing plants were not “farm land”, as they were not used for agricultural, horticultural or pastoral purposes.

• [38] Mr Morris participated in a quality assurance meeting conducted by OIO officials on 2 April 2019. At that meeting officials cross-checked the application by Jingang against a checklist. Mr Morris prepared “triage notes” for that meeting, which “summarised key information about the application and recorded [his] preliminary views on key criteria and elements of the assessment process”.^[19]
• [39] Those present at the quality assurance meeting included Mr Appleyard, who was a senior manager in the OIO and the official who ultimately granted Jingang’s application.
• [40] Mr Morris recommended that Jingang’s application should be accepted for assessment and that further information should be sought by the OIO from Jingang. The further information sought related to ownership, control and documents concerning the proposed scheme of arrangement.
• [41] On 12 April 2019, the OIO issued a media release regarding Jingang’s application. That statement was issued because there had been media interest in the possible sale of Westland Dairy. The OIO media statement said that Jingang’s application did not engage the “benefit to New Zealand criteria” because the only sensitive land involved in the application was residential.
• [42] Following the quality assurance meeting, Jingang’s application was transferred to Mr Curry, a senior solicitor in the OIO, who conducted a review and assessment of Jingang’s application. Mr Curry has explained in his affidavit that after reviewing all of the information provided to him, he “thought it was clear ... that the sites were each used for processing, manufacturing and warehousing of Westland’s dairy products”. This conclusion was “verified” by Mr Curry referring to relevant district plans for the two sites. Mr Curry “was satisfied then that each of these blocks of land containing the processing plants in Hokitika and Rolleston [were] not ‘non-urban land’ because they [were] clearly not ‘farm land’”.
• [43] On 11 June 2019, Mr Curry emailed Mr Appleyard and advised that he had completed the assessment and recommended that the application for consent be granted.
• [44] At Mr Appleyard’s request, Mr Morris conducted a peer review of Mr Curry’s report. That peer review was completed on 8 July.
• [45] Mr Appleyard reviewed Mr Curry and Mr Morris’s reports and authorised a request for statutory declarations in support of Jingang’s application. The statutory declarations sought by the OIO are a requirement of s 23 of the Act. Mr Appleyard explained in his affidavit the OIO places significant weight on the contents of statutory declarations made by applicants. The OIO also sought “sensitive land certificates”. Mr Curry explained in his affidavit:^[20]

The OIO does not accept applications for assessment unless they are accompanied by a sensitive land certificate prepared by a person with experience in assessing sensitive land under the Act (such as a lawyer) unless the requirement to supply a certificate has been waived. These certificates state what sensitive land is involved in the proposed transaction and the reasons for that sensitivity.

• [46] Mr Appleyard prepared briefings for Ministers and met with Ministers on 20 June. One of the issues Mr Appleyard discussed with Ministers was whether or not they should “call in” the consent decision. Ministers raised questions about the OIO’s provisional assessments and notified Mr Appleyard on 10 July that the consent decision could be made by the OIO.
• [47] Mr Appleyard then reviewed all of the information that had been compiled by OIO officials and the materials filed in support of the application. Mr Appleyard has explained that he was satisfied that the processing plants were not “non-urban land” and that his team had undertaken a robust assessment of the application.
• [48] On 16 July, Mr Appleyard approved the application and notified Jingang of his decision.

First ground of appeal

High Court decision

• [49] After characterising the definition of “farm land” as the “determinative issue”,^[21] Dobson J said that the definition of “farm land” was “lexical” as opposed to “stipulative”.^[22]
• [50] “A lexical definition is one that does not stretch meaning. It is one that is within the ordinary understanding of the word.”^[23] Conversely, a stipulative definition “takes the meaning of a word beyond its ordinary meaning. It in fact gives it an artificial meaning. There is thus an element of creation in a stipulative definition.”^[24]
• [51] When adopting the approach he took, Dobson J explained that “farm land” should be interpreted in accordance with the “common usage of that phrase”, which he said was “land on which primary production occurs”,^[25] in contrast to the “activities [that take place] in commercial/industrial zones”.^[26]
• [52] The approach taken by the Judge to the meaning of “farm land” drew him to the conclusion that the processing plants were not used for agricultural purposes and therefore were not within the definition of “farm land”.

Social Credit’s case

• [53] In the submissions in support of Social Credit’s appeal, Mr Kirkness said:

(a) The approach taken by Dobson J was predicated on the assumption the definition of “farm land” in the Act was clear, whereas, when considered in context, the definition of farm land is far from precise.

(b) The binary distinction between “lexical” and “stipulative” is not helpful and risks avoiding interpreting legislation in accordance with its text and purpose.

(c) The Judge’s assumption that his approach to interpretation to the meaning of “farm land” accorded with common sense was misplaced.

(d) The Judge also erred when saying his approach to the meaning of “farm land” aligned with Parliament’s intention to protect productive lands.

• [54] Mr Kirkness submitted that “land used for the pasteurisation, homogenisation and processing of raw milk is land used for an agricultural purpose”. He supported this argument with the proposition that it was wrong to juxtapose “industrial” and “agricultural” uses of land because, “[a]s a matter [of] ordinary English or ‘common usage’, people speak of ‘factory farms’”, and modern farms use complex machinery and industrial facilities. To support this proposition Mr Kirkness drew our attention to the definition of “agriculture” in the online edition of the Merriam Webster Dictionary:^[27]

Definition of agriculture

: the science, art, or practice of cultivating the soil, producing crops, and raising livestock and in varying degrees the preparation and marketing of the resulting products

(Emphasis added.)

• [55] It was also submitted by Mr Kirkness that the Act does not distinguish between agricultural and industrial uses of land and the fact that different steps in the production of dairy products “can be undertaken on a dairy farm or off-site in industrial facilities is not determinative of whether the land is used for an agricultural purpose”.
• [56] Social Credit did not seek to argue that the residential properties owned by Westland Dairy did not meet the “incidental residential use test” we have summarised at [23]. That was an appropriate position to adopt as it is clear those particular properties were used for incidental residential purposes within the meaning of sch 2, cl 14 of the Act.

The respondents’ position

• [57] We can briefly summarise the respondents’ position. They contended that the phrase “farm land” in the Act should be given its plain meaning and that there was nothing in the purpose or the scheme of the Act to suggest that Parliament intended to extend the meaning of agricultural purposes and the definition of “farm land” beyond its normal meaning.
• [58] The respondents say that, as the processing of raw milk is an industrial and not an agricultural procedure, the processing plants did not come within the definition of “farm land” under the Act.

Analysis

• [59] In ascertaining the meaning of “farm land”, and in particular, the concept of “agricultural ... purposes” within that definition, we shall consider the text and purpose of the definition in light of its legislative context.^[28]
• [60] We start with the plain meaning of “farm land” and “agriculture”.
• [61] “Farm land” is defined in the online Merriam Webster Dictionary as meaning “land used or suitable for farming”.^[29] The same dictionary says that the meaning of “farm” includes “a tract of land devoted to agricultural purposes” and “a plot of land devoted to the raising of animals and especially domestic livestock”.^[30]
• [62] Similar definitions appear in the Shorter Oxford English Dictionary, which defines a “farm” as “[a] tract of land held ... under one management for the purposes of cultivation or the rearing of certain animals (for food or fur etc.) ...”.^[31]
• [63] “Agriculture” is defined in the Shorter Oxford English Dictionary as meaning: “The science or practice of cultivating the soil and rearing animals; farming; [occasionally] tillage.”
• [64] The slightly broader definition of “agriculture” in the Merriam Webster Dictionary does not advance Social Credit’s case in any meaningful way. This is because “the preparation and marketing of ... resulting products” in that dictionary’s definition of “agriculture” can be reasonably understood to mean the preparation and marketing of products before those products leave the farm gate.
• [65] We are satisfied that the natural and ordinary meaning of the term “agricultural” as it is used in the definition of “farm land” relates to the growing of crops and the raising of stock and the harvesting or extraction of primary products from those crops and animals on a farm.
• [66] Where primary products are transported from a farm and processed elsewhere into other products, then the processing of those products beyond the farm gate does not come within the natural and ordinary meaning of an agricultural purpose. For example, as Mr Kirkness conceded during the hearing, where wool is shorn from sheep, transported to a mill and manufactured into woollen products, the production of those woollen products away from the farm is not an agricultural or pastoral activity.
• [67] Mr Kirkness endeavoured to draw a distinction between the example we have given in [66] and the pasteurisation and homogenisation of raw milk, which he submitted constituted the creation of an agricultural product.
• [68] There are three reasons why we do not accept the distinction Mr Kirkness endeavoured to draw:

(a) As Ms McKechnie, counsel for Westland Dairy and Jingang explained, it was very difficult to see why a bright line should be drawn at the processing of raw milk into milk. While processed milk is an important part of Westland Dairy’s products, as we have noted at [6] it is only one part of its business.

(b) There is no logical basis for distinguishing the activities that take place in the processing plants and those that take place, for example, in an abattoir, a tannery or a woollen mill. All involve the industrial conversion of primary products into other items. If, as Mr Kirkness accepted, the manufacturing of woollen products in a mill is not an agricultural or pastoral activity, it is very difficult to see why the production of dairy products in one of Westland Dairy’s processing plants is an agricultural activity.

(c) Key to the interpretation exercise is the fact the processing and manufacturing of dairy products by Western Dairy takes place only after raw milk is transported from farm gates to one of Western Dairy’s processing plants.

• [69] For the sake of clarity, we record we are not in this judgment addressing situations in which, for example, artisan dairy or woollen products are produced by a farmer on his or her farm. As we have explained at [68(c)], it is significant that Westland Dairy’s business involves the processing and production of products from raw milk that has been transported from the farm gate.
• [70] We now turn to consider whether there is anything in the purpose or context of the Act that suggests that Parliament intended the processing plants would be covered by the definition of “farm land”.
• [71] There are two reasons why we are satisfied Parliament did not intend the very broad and artificial meaning of “agricultural ... purposes” and therefore “farm land”, advocated by Social Credit:

(a) As Mr Jensen submitted on behalf of the Ministers, had Parliament intended activities not ordinarily associated with farming to be encompassed by the definition of “farm land”, then it would have expressly said so. This is particularly so in the context of the Act, which has clearly been drafted with considerable care.

(b) Parliament did provide for certain types of dairy processing plants to be covered by the Act when those businesses meet the definition of “significant business assets”. There is nothing in the legislative history or elsewhere in the Act to suggest Parliament intended the processing plants would be both “significant business assets” and “sensitive (but not residential) land”, particularly when treating the processing plants as “sensitive (but not residential) land” would involve adopting an unnatural meaning of “farm land” and “agricultural ... purposes”.

• [72] We are satisfied therefore that Dobson J reached the correct conclusion when he held that the processing plants did not come within the definition of “farm land”.

Second ground of appeal

• [73] Social Credit argues that the OIO:

(a) failed to comply with the Ministerial Directive to “verify” the information filed on behalf of Jingang in support of its application for consent; and

(b) did not have sufficient information to consent to Jingang’s application.

• [74] Dobson J did not consider it necessary to refer to the Ministerial Directive, the key paragraph of which we have set out at [32]. Instead, the Judge focused upon whether or not the OIO had sufficient information to consent to Jingang’s application. After reviewing the evidence Dobson J was satisfied the OIO did have sufficient information to grant Jingang’s application.
• [75] The Ministerial Directive obliged OIO officials to seek sufficient information through the application and assessment process to satisfy themselves of the correctness of the information presented in support of Jingang’s application. If it was appropriate to do so, officials could seek information from third parties to comply with the Ministerial Directive.
• [76] There are three reasons why we are satisfied the OIO did comply with the Ministerial Directive and why it had sufficient information to consent to Jingang’s application.
• [77] The first reason relates to the carefully calibrated processes put in place by the OIO. Those processes commenced before Jingang filed its application and continued up to the moment when Mr Appleyard decided to consent to the application. In summary, those processes were:

(a) The pre-application meeting: Although this meeting predated the filing of Jingang’s application for consent under the Act, it provided the OIO with the opportunity to identify possible issues that might need to be addressed by the OIO and Jingang if an application was made.

(b) Pre-acceptance assessment: Mr Morris explained the pre-acceptance assessment he undertook, which culminated in the quality assurance meeting on 2 April. The steps taken by Mr Morris during this phase of the OIO’s processes included an examination of the information filed on behalf of Jingang and the seeking of further information from Mr Petersen.

(c) Post-acceptance assessment: After the OIO decided to accept Jingang’s application for assessment, Mr Curry undertook a comprehensive review of all the information that had been provided to him and evaluated that information against his understanding of the requirements of the Act.

(d) Peer review: Mr Curry’s recommendations to Mr Appleyard were then peer reviewed by Mr Morris.

(e) Decision: Mr Appleyard has explained in his affidavit the steps he took in evaluating the application, the recommendations from Mr Curry and Mr Morris and his responses to questions raised by Ministers before he concluded the OIO had properly assessed the application and that he was satisfied the processing plants had been properly characterised under the Act by the OIO.

• [78] Mr Appleyard was entitled to rely upon the aerial photographs of the processing plants and the land use classifications of the Selwyn and Westland District Councils, which confirmed that the processing plants had been built on land designated for commercial and industrial purposes.
• [79] Second, before making his final decision, Mr Appleyard sought statutory declarations verifying the key elements of the application and “sensitive land certificates” from Mr Petersen. Mr Appleyard was entitled to believe Jingang and Mr Petersen would take seriously their responsibilities to accurately complete the statutory declarations and sensitive land certificates.
• [80] Third, it was reasonable for the OIO to be assured by the fact Mr Petersen was acting for Jingang. Mr Petersen was well known to OIO officials. He had engaged with them on many applications on behalf of overseas purchasers and had always provided accurate information to the OIO.
• [81] We do not accept that any criticism can be properly levelled against the processes followed by the OIO, or that Mr Appleyard lacked sufficient information to grant Jingang’s request for consent.

Third ground of appeal

• [82] Rule 14.7(e) of the High Court Rules 2016 confers a discretion on a High Court judge to refuse to make an order for costs or to reduce the costs otherwise payable if the proceeding concerned a matter of public interest and the party opposing costs acted reasonably in the conduct of the proceeding.
• [83] Social Credit has called in aid a pre-trial decision of Clark J, who decided not to make an order for security for costs and concluded that Social Credit’s claim was arguable and that there was a public interest in having issues raised by the application for judicial review heard and determined.^[32]
• [84] Clark J’s decision in relation to the security for costs application does not trump the conclusions reached by Dobson J, who, unlike Clark J, had the benefit of hearing full argument and evidence when deciding the application for judicial review. Clearly, Dobson J was unimpressed by Social Credit’s arguments. He found there was no tenable basis for asserting error by the OIO and that the processing plants were “inarguably” not “farm land”.
• [85] Having undertaken the same evaluation as Dobson J, we concur with his conclusion that the arguments put forward by Social Credit lacked merit. In these circumstances, the arguments advanced by Social Credit cannot be shielded by the cloak of public interest; it being axiomatic that it can never be in the public interest to place unmeritorious arguments before the courts.

Result

• [86] The appeal is dismissed.
• [87] The orders made by the High Court are upheld.
• [88] The appellant must pay the respondents costs for a standard appeal on a band A basis, plus usual disbursements. Half of the costs shall be paid to the first and second respondents. The other half of those costs shall be paid to the third and fourth respondents. We certify for two counsel.

Solicitors:
Woods Fletcher, Wellington for Appellant
Crown Law Office, Wellington for First and Second Respondents
Simpson Grierson, Wellington for Third and Fourth Respondents

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^[1] Overseas Investment Act 2005, s 6(1).

^[2] Re Westland Co-operative Dairy Co Ltd [2019] NZHC 1683.

^[3] Affidavit of Christopher John Leitch, 29 June 2020 at [9].

^[4] On appeal Social Credit abandoned its application for an order quashing the OIO’s decision and instead sought a declaration that the OIO’s decision granting consent to Jingang’s application was unlawful.

^[5] New Zealand Democratic Party for Social Credit Inc v Minister for Land Information [2020] NZHC 2816 [the High Court judgment] at [58].

^[6] At [64]–[81].

^[7] At [84].

^[8] Overseas Investment Act, s 3.

^[9] Tiroa E and Te Hape B Trusts v Chief Executive of Land Information New Zealand [2012] NZCA 355, [2012] 3 NZLR 808 at [40].

^[10] Overseas Investment Act, s 18(1)(a).

^[11] Section 18(1)(b).

^[12] Section 18(1)(c).

^[13] Section 18(1)(d).

^[14] Section 16(1)(a).

^[15] Section 16(1)(c)(i).

^[16] Section 16(1)(c)(ii).

^[17] Schedule 2, cl 14.

^[18] Section 6(1).

^[19] Affidavit of Andrew James Morris, 21 July 2020 at [29].

^[20] Affidavit of Nelson James Paul Curry, 21 July 2020 at [13].

^[21] High Court judgment, above n 5, at [29].

^[22] At [38] and [40].

^[23] Ross Carter Burrows and Carter Statute Law in New Zealand (6th ed, LexisNexis, Wellington, 2021) at 562.

^[24] At 562.

^[25] High Court judgment, above n 5, at [40].

^[26] At [56].

^[27] “Agriculture” Dictionary by Merriam-Webster <merriam-webster.com>.

^[28] Interpretation Act 1999, s 5; and Commerce Commission v Fonterra Co-operative Group Ltd [2007] NZSC 36, [2007] 3 NZLR 767 at [22].

^[29] “Farmland” Dictionary by Merriam-Webster <merriam-webster.com>.

^[30] “Farm” Dictionary by Merriam-Webster <merriam-webster.com>.

^[31] Shorter Oxford English Dictionary (6th ed, Oxford University Press, Oxford, 2007).

^[32] New Zealand Democratic Party for Social Credit Inc v Minister for Land Information [2020] NZHC 1104.