8 Aug 2012

Court rejects challenge to Crafar farms purchase

7:40 pm on 8 August 2012

The Court of Appeal has rejected a challenge to a Chinese company's purchase of 16 dairy farms, rejecting a claim that the buyers do not have enough business experience.

The farms, formerly owned by the Crafar family, are in receivership and have been conditionally sold to a company backed by a huge conglomerate, the Shanghai Pengxin Group.

The sale was endorsed twice by the Overseas Investment Office and twice approved by government ministers.

But it was challenged in the High Court and again in the Court of Appeal by a Maori group along with the merchant banking pair Sir Michael Fay and David Richwhite.

In its finding the Court of Appeal says that while the Chinese managers did not come from a milk-producing background, they had entered into arrangements with groups such as Landcorp to provide industry-specific experience.

The court finds the criteria for business experience and acumen are broadly worded and flexible, and can be applied to a wide range of situations.

It says any further delay would be prejudicial to the interests of third parties such as creditors.

A spokesperson for the buyers, Cedric Allan, says they are eager to complete the sales process now that the court has ruled.

"We are itching to get on the properties," he says, "and start making the improvements that we've planned for so long."

Mr Allan says they're taking legal advice with a view to settling the deal as soon as possible.

Bitter disappointment

The Sir Michael Fay-led group of investors who wanted to buy the Crafar Farms say they are bitterly disappointed with the Court of Appeal decision.

Spokesperson Alan McDonald says the decision sends a message that New Zealand land can easily be bought by foreigners with deep pockets.

He says many of the investors will now put the failed deal behind them, however the two iwi members of the group may still be interested in acquiring parts of the land.

Mr McDonald says many New Zealanders have significant concerns about the sale to a foreign company and those concerns remain.

He says if New Zealand law does not protect New Zealanders, then many more farmers are going to be left disenfranchised in the future.

Chinese embassy welcomes deal

The Chinese Embassy says the Crafar farms deal shows that there is confidence in New Zealand from international investors.

Earlier this year, the embassy said Beijing was taking a special interest in the Crafar deal and that China's future investment in New Zealand hinged on it.

The embassy's political counsellor Cheng Lei told Checkpoint the decision to invest in New Zealand demonstrates international investors have confidence in the New Zealand people.