TFG Society Incorporated v Chief Executive of Land Information New Zealand

[2014] NZHC 604

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2013-485-3581 [2014] NZHC 604

BETWEEN

TFG SOCIETY INCORPORATED

Applicant

AND

THE CHIEF EXECUTIVE OF LAND INFORMATION NEW ZEALAND First Respondent

AND

BAYWA AKTIENGESELLSCHAFT Second Respondent

AND

TURNERS & GROWERS LIMITED Third Respondent

Hearing:	17 March 2014
Counsel:	I T F Hikaka and F Whyte for Applicant K G Stephen and S S Eccles for First Respondent J B M Smith QC and G M Richards for Second Respondent S P Pope and E L Rae for Third Respondent
Judgment:	2 April 2014

JUDGMENT OF SIMON FRANCE J

What the case is about

[1]      The  Overseas  Investment  Act 2005  (“the  Act’)  establishes  a  regime  for controlling  overseas  investment  in  “sensitive  business  assets”  and  in  “sensitive land”.   Responsibility for managing the regime rests with the Chief Executive of Land Information New Zealand (“the regulator”).   The regulator, as regards this function, operates through the Overseas Investment Office (“OIO”).

[2]      Where  the  nature  of  an  intended  investment  in  New Zealand  brings  the investment within the Act, the overseas investor must seek consent.  The regulator

receives  and  processes  the  application,  and  makes  recommendations  to  the

TFG v LAND INFORMATION NZ [2014] NZHC 604 [2 April 2014]

responsible Ministers.  Any consent will be accompanied by the general statutory conditions applicable to all consents, and  may also be accompanied by specific conditions.  The general statutory condition is found in s 28 of the Act which says that a consent holder must comply with any representation or plan that was put forward by an applicant and which was taken into account when the application was assessed.

[3]      The second respondent Baywa sought consent to acquire all of the shares in an established New Zealand company, Turners and Growers.1   Permission was given and so in accordance with s 28 certain representations and plans identified by Baywa in its application became conditions of the consent.  There were a number of these, but the one in issue in this case is:

… improved relationships with growers.

[4]      In addition to the general statutory condition, a specific condition of Baywa’s consent was that it report annually on progress with its investment plan, and in particular it was to give details of:

…

g)   any measures taken to improve relationships with growers and other third parties.

[5]      On  22 March 2013  Baywa  presented  its  first  report  which  the  OIO  has considered and with which it appears to be content.  However, the applicant is not.

[6]      The applicant is a group of Bay of Plenty kiwifruit growers who have been unhappy with how Turners and Growers have dealt with them since Baywa obtained its majority shareholding.   They have been expressing these concerns in different ways and at different meetings but are not satisfied with the response they have received.

[7]      In relation to the report Baywa has provided, the applicant’s complaint is that

the applicant and its discontentment are not mentioned in the section of the report dealing with improving relations with growers.   The applicant argues that Baywa

1      Ultimately it was to purchase 73 per cent.

was obligated to include this information and that the regulator was obligated to be aware of and take account of it.   The applicant says the regulator’s acceptance of Baywa’s report as fulfilling Baywa’s consent condition to report is therefore a reviewable error.

Legislative scheme

[8]      The regulator’s functions, set out in s 31 of the Act, include receiving and processing consent applications, making recommendations to the responsible Ministers, issuing guidelines, keeping statistics concerning applications and consents and monitoring compliance with consents.  As regards this latter function, the Act provides numerous powers, none of which are constrained by particular times or events, to:

(a)       require the consent holder to provide information (s 38); (b)   require other persons to provide information (s 39);

(c)       require  the  consent  holder  to  provide  information  by  way  of  a statutory declaration (s 40); and

(d)require any person suspected of an offence to provide information and documents (s 41).

[9]      Then, concerning enforcement, the Act creates offences punishable either by fine or sometimes imprisonment, and also provides for civil penalties.  The range of civil penalties includes the ability to require the disposal of property such as interests in securities.  Finally, by way of enforcement, the regulator may also ask the Court to compel a consent holder to comply with a condition or refrain from breaching it.

[10]     As noted, none of these powers or provisions are limited by specific events. They can be exercised at any time.  Indeed, the present case provides an example. A Bay of Plenty kiwifruit grower wrote to the OIO detailing concerns with Turners and Growers since Baywa’s acquisition of the majority shareholding.   The letter was brought to the attention of a Member of Parliament who raised the matter with the

OIO.  It seems that around the same time a national newspaper also made inquiries of the OIO as to personnel changes happening at Turners and Growers, and whether that was consistent with the consent.

[11]   These inquiries caused the OIO to write to Baywa forwarding the correspondence and seeking comment on the matters raised.  Baywa did so through its solicitors.   Ultimately the OIO wrote to the kiwifruit grower advising that the grower’s concerns, and Baywa’s response, had been considered and the regulator was of the view no further action was required.

[12]     The relevance of this is to highlight that the obligation to comply with the conditions of the consent, and the OIO’s ability to monitor that, is continual.  The reporting obligation fixes a point in time when information must be provided, but that is all.   Consistent with this, there is no statutory procedure attaching to the provision or receipt of the report.  It is just something Baywa must do as part of its consent.

Decision

[13]     Against this statutory background the applicant’s case cannot succeed.  The applicant has focussed on the decision of the OIO to “accept” the report in the sense of accepting that Baywa has met its consent obligation to provide a report.   In framing it this way, the plaintiff makes a similar claim to those which were unsuccessful in Greenpeace v Environmental Protection Authority2  and AgResearch

Ltd v GE Free NZ in Food and Environment.3

[14]     In Greenpeace an oil exploration permit holder was required to submit an environmental impact assessment.   The challenge was to the decision of the Environmental Protection Authority to accept what was submitted as fulfilling that obligation.  There are statutory criteria prescribing the matters an assessment must cover.     MacKenzie J  concluded  that  receipt  of  the  report  was  essentially  an administrative act and the Court’s power to review such administrative actions was

limited.

2      Greenpeace v Environmental Protection Authority [2013] NZHC 3482.

3      AgResearch Ltd v GE Free NZ in Food and the Environment Inc [2010] NZCA 89.

[15]     In AgResearch Ltd, the challenge was to a decision of the Environmental Risk Management Authority to accept an application by AgResearch for permission to import a hazardous substance.  The effect of accepting the application was that the statutory  process  for  determining  the  application  thereby  began.    The  Court  of Appeal  noted  there  was  no  express  statutory  power  to  reject  an  application, something which held against it being reviewable.  The Court was of the view that the statutory scheme was such that the only task of the Authority at this stage was to assess if the application was one capable of obtaining approval in the sense that it was  properly brought  under the scheme.   Again  the process  of “accepting” the application was essentially mechanical.

[16]     That is more so in the present case.  The consent condition must be seen in its proper context which is a requirement on the consent holder to provide the regulator with information.  It is for the regulator to receive that information and assess which response, if any, it wishes to make and when.

[17]     There is no evidence that a decision to “accept” the report was ever made. Certainly it was received and the evidence makes it clear that its contents have been considered by the OIO.  The applicant seeks to infer from this a formal decision to accept the reporting condition has been fulfilled but that is not necessarily so.  There are no statutory criteria that the report must comply with and no process dependent solely on it or initiated by it.  It is just a prescribed step in the information gathering and monitoring role.  There is no definition of “a report” and no reason to consider the regulator must formally and separately determine that what it receives is a report fulfilling the consent condition.

[18]     If it were a decision, I consider it could only be reviewable, if at all, on the narrowest of grounds such as bad faith.  The lack of any measureable criteria as to content, other than broad obligations such as the present one to say something about the measures being taken to improve relationships, tells against a supervisory role for the Court.  So too does the statutory scheme which both visits the regulator with this on-going task and grants ample powers for it to do so at any point in time.  In terms of the regulator being charged with this role, I accept Mr Smith’s general point that it would be inconsistent with the statutory scheme for the Court in its supervisory role

to be engaging in the level of detail proposed here. The adequacy or otherwise of the report is eminently a matter for the regulator and it is certainly not the Court’s role to assess whether a particular item concerning one small sector needed to be included in that report, or not.

[19]     It is also unclear that the applicant’s grievance is a matter that falls within the terms of Baywa’s reporting obligation.   It is, as noted, a requirement to provide information about the measures Baywa is taking to improve relations with growers. It is a stretch to suggest the existence of a dispute with one small group of growers is a topic encompassed by that reporting obligation.

[20]     Related to this, in the context of a claim based on alleged ignoring of a mandatory relevant consideration, the applicant’s evidence failed by a margin to establish the relevance or significance of the dispute.  There was no evidence as to the scale of the dispute.   It appears that the applicant represents almost all the growers in the Bay of Plenty of a particular type of kiwifruit, but may number no more than 10.  It is unclear whether that is a significant proportion of Bay of Plenty growers, let alone of “growers” as the term was used in the application for consent.

[21]     Responding  to  questions  of  the  applicant  by  me  during  the  hearing, Mr Smith QC made inquiries and was able to advise from the bar that there are around 1,400 growers (of various fruit) nationally encompassed by the concept as used in the application.  I do not consider, even if there was a decision and it was reviewable, that the applicant established its dispute was something Baywa was obligated to include.

[22]     Finally, I note the question of relief was always fraught.  First, by the time of the hearing Baywa had already provided its second annual report so there could be no purpose in telling the regulator it should reconsider whether the first report was adequate.  Second, as discussed, the statutory scheme also makes the relief sought pointless because the existence of the applicant’s grievance is information the regulator can receive at any time.   The statement of claim provided the regulator with the information, although in that regard a letter would have been equally effective.  Third, and related to the last point, the purpose of the relief sought by the

applicant is simply to require Baywa to include mention of the applicant’s grievance in its report so the regulator knows about it.  If that was done, the applicant agrees the regulator could then “accept” the report.  So what is being suggested is that the Court require the regulator to send the report back to Baywa for the sole purpose of Baywa adding a reference to information the regulator is already aware of.

[23]     Essentially for the reasons advanced by the respondents the applicant’s claim must  fail  and  is  dismissed.    The  first  respondent,  and  the  second  and  third respondents together but in addition to the first respondent, are entitled to costs.  If

agreement cannot be reached, memoranda may be filed.

Simon France J

Solicitors:

LeeSalmonLong, Barristers & Solicitors, Auckland