Winton Property Investments Limited v Minister of Finance
[2022] NZHC 638
•31 March 2022
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2021-485-519
[2022] NZHC 638
UNDER the Judicial Review Procedure Act 2016 IN THE MATTER
of an application for judicial review of a decision under s 25 of the Overseas Investment Act 2005.
BETWEEN
WINTON PROPERTY INVESTMENTS LIMITED
Applicant
AND
MINISTER OF FINANCE
First Respondent
AND
THE ASSOCIATE MINISTER OF FINANCE
Second Respondent
AND
MINISTER OF LAND INFORMATION
Third Respondent
AND
THE CHIEF EXECUTIVE OF LAND INFORMATION NEW ZEALAND
Fourth Respondent
AND
CDL LAND NEW ZEALAND LIMITED and CDL INVESTMENTS NEW
ZEALAND LIMITED
Fifth RespondentsAND
GRAEME LOWE PROPERTIES LIMITED, LOWE FAMILY HOLDINGS LIMITED
and ANDREW GRAEME LOWE, SARA MARY WHYTE and KATHERINE JOAN
LOWE STACE as Executors Sixth Respondents
Hearing: 21 and 22 February 2022 Appearances:
M G Colson QC and J Upson for Applicant
J Smith QC and D Watson for First, Second, Third and Fourth
WINTON PROPERTY INVESTMENTS LIMITED v MINISTER OF FINANCE [2022] NZHC 638
Respondents
A R Galbraith QC, T B Fitzgerald and L J McNeely for `Fifth Respondent
M Chen for Sixth Respondent
Judgment:
31 March 2022
JUDGMENT OF GENDALL J
Solicitors:
Russell McVeagh, Auckland Crown Law, Wellington
Bell Gully, Auckland
Chen Palmer New Zealand, Auckland Barristers:
M G Colson QC, Barrister, Wellington J Smith QC, Barrister, Wellington
A R Galbraith QC, Barrister, Auckland
Table of Contents Para No Introduction [1] Background [12] The parties [12] “Winton” [12] “CDL” [13] “Greenstone and Tumu” [19] “The Lowe interests” [20]
The overseas investment transaction [22]
Vendor Information Form [41]
OIO’s Assessment Report [42]
Ministers’ consent decision [47]
Legal principles [54]
Illegality [59]
The Overseas Investment Act 2015 [73]
The benefit to New Zealand test [77]
First Ground of Review — error of law — consent decision applied the wrong
legal test. [111]
Second Ground of Review — error of law — consent decision took into account
irrelevant considerations [114]
Third Ground of Review — error of law — consent decision applied the wrong
legal test [117]
Fourth Ground of Review — error of law — consent decision mistaken in fact
[126]
Fifth Ground of Review — error of law — consent decision failed to take into account relevant considerations [158]
Sixth ground of review — unreasonableness [180]
Relief sought [190]
Conclusion [191]
Costs [192]
Introduction
[1] In this judicial review proceeding the applicant, Winton Property Investments Limited, (Winton), challenges the decision of the second and third respondents (respectively the Associate Minister of Finance and the Minister of Land Information) together the (Ministers) dated 10 July 2021, (the consent decision) to grant consent (the consent) under the Overseas Investment Act 2005 (the Act) for the first named fifth respondent CDL Land New Zealand Limited (CDL) to acquire approximately 69 hectares of sensitive land near Havelock North (the Land).
[2] The Land is sensitive land under the Act because it includes residential land, non-urban land over 5 hectares in size and land over 0.4 hectares in size which is zoned open space. CDL required consent to its acquisition of the Land because it is an “overseas person”1 under the Act, being a wholly owned subsidiary of the second mentioned fifth respondent, CDL Investments New Zealand Limited (CDL Investments), itself majority owned by Millennium & Copthorne Hotels New Zealand Limited (Millennium), both overseas persons.
[3] The fifth respondents, CDL (and also CDL Investments) oppose the application. Essentially, they say the consent decision was made lawfully and that none of the grounds of review can be made out. This position is shared by the Ministers, and by the sixth respondents as vendors of the Land (the Lowe interests).
[4] Winton is a property development company which, along with Greenstone Land Developments Limited (Greenstone) and Tumu Merchants Limited (Tumu), was an unsuccessful tenderer for the Land when the Lowe interests offered it for sale. It appears to be the case that Winton has brought these proceedings seeking to obtain another opportunity to negotiate with the Lowe interests as previous owners of the Land to purchase it.2 Winton says that while it does not seek orders from this Court requiring the unwinding of the transaction, it acknowledges that outcome may well result if the orders it seeks are granted and that may in turn provide Winton with the opportunity to acquire the Land.
1 Overseas Investment Act 2005, s 7(2)(c)(i).
2 Memorandum of Counsel for the Applicant dated 15 September 2021 at [17] and see also affidavit in support of the application of Christopher Scott Meehan dated 15 September 2021 at [94].
[5] The purpose of the Act is generally to facilitate and regulate investment in New Zealand by overseas persons and generally not to discourage or prevent it. The Act does this by setting criteria for investment in sensitive assets such as the present. A central mandatory criterion for consent under the Act is that the relevant decision- makers are satisfied the proposed investment will, or is likely to, substantially and identifiably benefit New Zealand, (the benefit to New Zealand test).3 This and other criteria to be applied under the Act for consent have been described as “highly prescriptive” and “limiting”4, reflecting what is said to be Parliament’s express recognition of the privilege that it is for overseas persons to own or control sensitive New Zealand assets.5
[6] The Ministers as decision-makers in granting consent here relied on an Assessment Report (the Assessment Report) prepared by the Overseas Investment Office (the OIO) in respect of which the fourth respondent, the Chief Executive of Land Information New Zealand is named as a party to this proceeding. Winton’s position is that this Assessment Report did not represent a “fair and accurate picture of the matters” relevant to the Ministers’ decision6, including its analysis of the benefit to New Zealand test. Winton goes on to contend that the Ministers’ own assessments as outlined in their evidence did not cure or otherwise address the flaws in the Assessment Report here, but rather exacerbated them.
[7] So far as CDL’s argument is concerned, it says that whether the benefit to New Zealand test is satisfied is a decision for the Ministers to make based on a judgment specific to the context and individual facts of the proposed investment. Here CDL maintains the judgment of both Ministers was well-founded and in any event, it is not open to the applicant or to a Court to second-guess the substance of that judgment on review.
[8] Broadly, Winton’s statement of claim pleads six grounds of review. These are usefully grouped into three categories:
3 Overseas Investment Act 2005 s 16(1)(c).
4 Section 14(1)(a) and 4 - Coromandel Watchdog of Hauraki (Inc) v Minister of Finance [2020] NZHC 2345 at [57].
5 Overseas Investment Act, s 3.
6 Air Nelson Limited v Minister of Transport [2008] NZCA 26.
(a) Grounds 1, 2 and 3
The Ministers applied the wrong legal test and/or had regard to irrelevant considerations in:
(i)assessing the benefit to New Zealand that will, or is likely to, arise from CDL’s investment on a proportionate basis relative to the particular investment; and
(ii)treating the oversight and participation factor as “determinative” in deciding whether the benefit to New Zealand test was met.
(b) Grounds 4 and 6
The Ministers made errors of fact, or reached unreasonable conclusions, in:
(i)their analysis of the oversight and participation factor — in particular, in assessing the level of New Zealand ownership in CDL as “significant” (over 45 per cent); and
(ii)comparing (and ultimately distinguishing) CDL’s investment with the counterfactual of the alternative New Zealand purchaser (ANZP) in terms of:
(1) the jobs and the additional factors; and
(2) the length of time CDL was likely to hold the Land before selling it;
(c) Ground 5
The Ministers failed to consider mandatory relevant considerations, including matters relating to the shareholding of CDL, Winton’s
“status as an ANZP”, its plans for the Land if it acquired it, and Winton’s opinions on whether a development by an ANZP would be likely to result in more jobs and investment.
[9] The Ministers along with CDL and the Lowe interests reject these contentions. Generally they all agree that considering matters on an objective basis, Winton’s challenge here is largely focused on the merits of the decision, while the grounds of review pleaded attempt to depict the challenge as procedural in nature. In simpler terms they say that Winton here disagrees that CDL’s application properly met the benefit to New Zealand test. In response, Winton argues that CDL’s proposed investment is not likely to deliver a benefit to New Zealand over and above what will, or is likely to, occur without the investment, and so any benefit does not qualify as substantial and identifiable.
[10] As a second argument, Winton contends the consent decision made material errors in respect of, and gave disproportionate weight to, the expected extent of New Zealand participation and oversight in relation to the investment. It maintains the decision-makers used indirect share ownership of CDL as a consideration which was not correct in terms of the Act. Thirdly, and it says critically, Winton maintains that, with regard to the benefit to New Zealand test, neither the OIO nor the Ministers carried out a proper analysis of the ANZP relevant to the counterfactual analysis as mandated. As to this, Winton argues:
(a)as also a bidder for the Land, it is part of the Winton Group of companies which is an established, well-funded, and now listed New Zealand property development company. Winton says it has a demonstrable track record of over a decade of developments at least comparable to CDL;
(b)both Winton on the one hand, and Greenstone and Tumu, on the other, were potential New Zealand purchasers of the Land, and they each presented credible examples of the ANZP the Ministers were required to consider in their counterfactual analysis. A cursory investigation of either developer or the New Zealand residential development
market in general, it is argued, would have revealed that key assumptions made by the OIO about how an ANZP would proceed with a development on the Land (including critically that an ANZP would not itself build dwellings or show homes), were unsound; and
(c)finally, and in any event, Winton says the determination by the Ministers that CDL’s investment would create more jobs defies logic. Winton maintains that, as it was accepted both CDL and ANZP would undertake a similar volume of residential development, the CDL investment simply could not create additional jobs over and above those that would be created by an ANZP purchasing and developing the Land.
[11] As to remedies, Winton seeks by way of relief declarations that the Ministers’ decision was unlawful and unreasonable and an order setting aside that consent decision.
Background The parties “Winton”
[12] Winton, the applicant, was established in 2009 to carry out residential land development primarily in New Zealand. Winton claims from an independent assessment that as at August 2021 it had approximately $800 million in equity with minimal debt and a strong forward cash flow. Evidence before the Court appears to indicate that Winton is a substantial and well-funded developer in New Zealand. It is not an overseas person under the Act. Its current developments include a 167 hectare high-density residential development in Hobsonville, Auckland, a 179 hectare development at Te Kauwhata, a 55 hectare residential development near Cromwell and a 108 hectare community development near Wanaka.
“CDL”
[13] CDL and its parent company CDL Investments, as CDL Entities, have a core business of investing in and developing residential land in New Zealand.7 Both CDL and CDL Investments are New Zealand companies. with the latter company listed on the New Zealand Stock Exchange (the NZX).
[14] CDL says it has a long and successful track record in New Zealand having been in business here for more than 25 years. It seems it specialises in large scale green field residential developments ranging in size from five to 100 hectares. It is a competitor of Winton to the extent that both companies engage in residential property development. CDL has undertaken residential development projects all around New Zealand in the past, including in Havelock North.
[15] Throughout its business life, CDL has been an “overseas person” in terms of the Act. It therefore requires consent under the Act to acquire most of its development sites. This has occurred in the past. The evidence of Mr. Jason Adams (Mr Adams)8 in support of CDL’s position is that this has resulted in CDL being acutely aware of the requirements of the Act, and in particular the need for CDL to deliver benefits to New Zealanders.9 This means, according to Mr Adams, that CDL is always searching for new ways to add value or to deliver additional benefits to New Zealanders. The OIO conditions of its consent for transactions are such that it cannot be a land banker nor can it wait for the optimal time for a development. Conditions are and will be imposed on any acquisition by CDL requiring it to develop its land within a strict timeframe to deliver residential homes to New Zealanders as quickly as possible.
[16] As a result, CDL says it does not have the freedom that other developers have of being able to adjust or delay plans. It is accountable to the OIO for delivering its projects, with key aspects of CDL’s plans tending to be conditions of its consents under the Act.
7 Affidavit of Jason Adams dated 2 November 2021 at [6]–[10].
8 Mr. Adams is CDL’s Executive Director and a General Manager.
9 Mr. Adams affidavit at [11].
[17] Further, CDL says that because of its designation as an “overseas person” in terms of the Act, it has been and continues to be careful to maintain a strong compliance record. It differentiates itself in two ways, first from the position of a wealthy foreigner looking to buy a second single property, and secondly from a foreign-based entity who has options later of withdrawing its assets and exiting New Zealand.
[18] CDL emphasises it is a well-established New Zealand company that is owned by an NZX-listed entity with a substantial New Zealand shareholding. It maintains it has a reputation for delivering benefits and for regulatory compliance, all of which it depends upon to remain in business in this country. As a corollary, if CDL is unable to obtain consents from the OIO to acquire development sites, it simply will not be able to undertake new developments and the ongoing benefits it brings to New Zealand directly and through its competition in the market will be lost.
“Greenstone and Tumu”
[19] Tumu and Greenstone in a joint venture made a joint offer to the Lowe interests for the Land. Greenstone is a residential land developer in the Hawkes Bay. Tumu is a locally-owned property development company (part of the wider Tumu Group) based in Hawkes Bay specialising in residential development.10
“The Lowe interests”
[20] The Lowe interests say they have an extensive family history in, and an ongoing strong connection to, Havelock North. They say most of the family live in the area and their parents they say have made significant contributions to the region.11
[21] Various members of the Lowe family and their associated entities previously have owned large tracts of land in Havelock North.
10 Affidavit of Hamish Frame dated 22 November 2021 at [7].
11 Affidavit of Andrew Lowe dated 26 October 2021 at [17] and [13].
The overseas investment transaction
[22] In 2020 approximately 42 hectares of a large land holding in Havelock North owned by the Lowe interests was made available for sale through Bayleys Real Estate agents (Bayleys). That initial 42 hectares of land had been zoned for residential development as part of the Iona Special Character Zone.12
[23]Bayleys completed a market valuation of the initial 42 hectares in July 2019 at
$42,350,000 plus GST (if any) (the Bayleys valuation).
[24] On 10 June 2020 CDL made an offer for that initial land of $38,251,704.85 plus GST (if any).
[25] A few weeks later on 6 July 2020 Tumu/Greenstone made an offer for this 42 hectares at $35 million plus GST (if any).
[26] CDL then made an increased conditional offer for the initial land of $42 million plus GST (if any). Tumu/Greenstone made a second offer a short time later around October 2020 at $39,500,000 plus GST (if any). The two purchaser parties were reasonably close to each other in price but below the Bayleys’ valuation, which by that time was a year old.
[27] It seems too that the conditions in the Tumu/Greenstone offer were more onerous than the conditions in CDL’s offer, in particular relating to easements and other land instruments.13
[28] At this time Winton also made offers to purchase the initial land. It seems however that they were materially different both in type and price to those made by CDL and Tumu/Greenstone. Winton’s first offer was for a joint venture proposal which the Lowe interests said they were not interested in. A second offer, made on 8 October 2020, was for either $30 million (on a conditional basis) or $25 million (unconditional) for the 42 hectares. This was some $10 million or more below the
12 Affidavit of Andrew Lowe at [8]–[10].
13 At [48].
first offers (and even further behind the second offers) made by CDL and Tumu/Greenstone and the Bayleys’ valuation.
[29] On 8 September 2020, the Lowe interests accepted CDL’s second offer at $42 million plus GST for the initial 42 hectares of land. That offer was conditional on various matters including CDL’s due diligence, board approval and compliance with the requirements under the Act (including in relation to farmland advertising).
[30] As an aside at this point, Winton contend that at the outset Bayleys had informed Winton that the Lowe’s were investigating the option of developing the 42 hectares in partnership with a property developer on the basis of a form of joint venture.14 Winton claims that, as it had been looking for suitable development land in Hawkes Bay for a number of years, around 10 June 2020 it submitted a joint venture development proposal for the 42 hectares through Bayleys. It says the proposal included building show homes, dwellings and a retirement village.
[31] As noted however, the Lowe interests declined Winton’s joint venture proposal.15
[32] After 8 September 2020, CDL conducted due diligence on the initial 42 hectares of land under its signed conditional purchase agreement. A stormwater disposal issue apparently had arisen. Problems with this could be solved however if the Lowe interests included in the sale a further 27 hectares of their adjoining land. This issue was accepted by the Lowe interests and on 22 October 2020 they entered into a new conditional sale and purchase agreement with CDL in relation to the enlarged 69 hectares parcel of land (this is the “Land” previously referred to). The purchase price was $58 million plus GST (if any). On this aspect it does seem that four more offers for the new 69 hectare parcel of land were received, not only from CDL but also from Winton and Greenstone/Tumu. Greenstone and Tumu had made their third and final offer now for the 69 hectares of land on about 26 November 2020 at a price of $49 million plus GST (if any). Around the same time Winton presented two signed purchase agreements for the 69 hectares. The first offer, which was
14 Affidavit of Christopher Meehan at [36].
15 As Christopher Meehan confirms in his affidavit at [41].
conditional, was at a price of $32 million. The second offer was unconditional and was at a price of $25 million. Winton says that as it had done previously, it also offered to meet with both Bayleys and the Lowe interests and was clearly prepared to negotiate on these offers.
[33] The Lowe interests declined the November 2020 offers from Winton, even though Winton maintains that through this process they were always prepared to negotiate.
[34] Greenstone/Tumu as I have noted had offered $49 million for the new 69 hectare parcel of land. CDL’s offer however, under its conditional sale and purchase agreement at the time, was for a price of $58 million. The conditions on this offer related to advertising and that “no better offers” were obtained in the meantime.
[35] Significantly it seems, Mr Andrew Lowe in his affidavit16 goes to some lengths to explain the appeal of CDL’s proposition beyond price. That price however was at a figure of $58 million in comparison with the much lower offers from Winton and Tumu/Greenstone. Clearly there is some disagreement, with Mr Lowe’s further contentions in his affidavit that Winton’s last offers were “offensive”, in part because they had not engaged with the Lowe interests nor had they made meaningful attempts to visit the Land or meet with the Lowes. It does seem that the Lowe’s agents, Bayleys, at one point had told Winton there was “no point” travelling to Hawkes Bay presumably because their offers were so far away from other offers particularly on price. The claim is also made by Mr Lowe that Winton’s offers were not serious.17 Winton rejects this and in its reply says:
“……it in fact made the only unconditional offer and there was no basis at all for discounting Winton’s proposition as an actual ANZP and a capable and well-funded developer of residential subdivisions”.
[36] In any event, CDL proceeded to take steps to satisfy the conditions in its $58 million purchase agreement with the Lowe interests. On 23 December 2020 CDL submitted to the OIO its application for consent to acquire the Land as a sensitive New
16 Affidavit of Mr. Lowe at [45]
17 At [71].
Zealand asset under the Act. CDL goes on to maintain that the application was assessed by the OIO in accordance with its usual processes.18
[37] In its OIO application CDL set out what it said were the substantial benefits that its investment in the Land would bring to New Zealand. It did so by reference to two counterfactuals:
(a)the status quo (that is, the Lowe interests retaining the Land and continuing to use it for small grazing operations simply to maintain the Land) (the status quo counterfactual); or
(b)that an ANZP would purchase the Land and carry out the development in stages (the ANZP counterfactual).
[38] Although CDL considered the status quo counterfactual was the more likely, it seems this was not accepted or applied by the OIO.19
[39] The focus before me therefore was necessarily on the ANZP counterfactual. CDL had explained to the OIO that when its plans were compared to the ANZP counterfactual there was much greater certainty the Land would be developed into residential sections in a timely manner and the development would result in a better outcome, providing amongst other things a greater housing yield. It would also introduce and produce a special and alternative form of housing being of a significantly more intensive nature to what had been historically developed in the Havelock North area.20
[40] In its Investment Plan (the Investment Plan) which formed part of the December application to the OIO, along with the required vendor information form, CDL set out in detail the main benefits of its proposal in six broad areas:
(a) Oversight and participation by New Zealanders;21
18 Affidavit of Daniel John Mumford dated 22 November 2021 at [24]–[32].
19 At [76], [79]–[80] and the Assessment Report at [45]
20 Affidavit of Mr. Adams at [51].
21 Affidavit of Mr. Adams at [53] and Investment Plan at [127]–[137].
(i)CDL’s core business is clearly New Zealand residential property development. Both CDL and CDL Investments are New Zealand companies with established offices in Auckland. The investment company has been listed on the NZX for over 20 years. CDL claims too that its residential property developments do not target overseas purchasers but rather actively seek purchasing interest from New Zealand residents.
(ii)With CDL Investments being listed on the NZX, New Zealanders can purchase shares in this company at any time. As a result, they would have a partial ownership or control stake in CDL itself. New Zealanders could also participate indirectly through acquiring a shareholding in Millennium Hotels’ group of companies.
(iii)If consent to the transaction was obtained, initially the Land would be owned by CDL and then promptly developed. This would be for the purpose of achieving prompt sales of the completed residential sections to New Zealanders. The land effectively would likely revert to New Zealand ownership with minimal delay.
(b) Previous investments by CDL22
CDL in its Investment Plan noted what it says was its strong track record of land purchases all with OIO consent. Five examples of significant New Zealand residential developments it had carried out were listed. The success of these and the benefits that flowed to New Zealand from these developments in terms of jobs, section yield and financial investment were emphasised.
(c) Jobs23
22 Affidavit of Mr. Adams at [58] and Investment Plan at [104]–[114].
23 Affidavit of Mr. Adams at [57] and Investment Plan at [84]–[90].
(i)CDL assessed that its development of the Land here would create 39.5 full-time equivalent (FTE) jobs. Additional jobs it said would also be created from construction of the planned show homes at the development.
(ii)Given that CDL contended an ANZP was likely to develop significantly fewer sections24 than CDL’s development and was also likely to sell its sections as bare lots rather than constructing show homes, CDL maintained a development by the ANZP would likely create fewer jobs.
(d) Additional investment for development purposes25
(i)CDL said that it intended to invest between [suppressed] across the development timeline, with a further [suppressed] in relation to the [suppressed] show homes and approximately [suppressed] in developing the [suppressed] retirement community complex [suppressed]. CDL also said it committed to spend around [suppressed] on the master plan, memorandum of agreement and infrastructure provision agreement process for the properties over a period of [suppressed]. All of this, it said, was to be funded through CDL’s retained earnings.
(ii)By way of contrast, CDL suggested the ANZP would likely need to rely on bank debt to develop the Land. Such an ANZP development would not be introducing any additional investment for its purposes.
(e) Advance significant Government policy or strategy26
24 Assessed at between [suppressed] sections less than CDL.
25 Affidavit of Mr. Adams at [54] and Investment Plan at [63]–[67[.
26 Affidavit of Mr. Adams at [59] and Investment Plan at [115]–[119].
(i)The Investment Plan noted New Zealand Government policy is to increase the housing supply and availability. The National Policy Statement on Urban Development, adopted in 2020, had the intention of supporting additional housing growth in high growth areas such as the Hastings area, (which included Havelock North) and Napier. It recognised that sufficient opportunities for development for both housing and business were needed to provide for the well-being of a community, especially in high growth areas.
(ii)There also seemed little dispute that more generally present Government policy was to increase housing supply to make housing more affordable to New Zealanders.
(iii)CDL suggested its development of the Land was uniquely placed to achieve the objects set out in (i) and (ii) above. By way of example it said:
(1) as to timing there is a greater risk that the ANZP would not develop the properties either at all or within the short timeframes which had been proposed by CDL; and
(2) even if the properties were developed by the ANZP (and in a timely manner) would result in less residential sections (having a likely magnitude of [suppressed] less than CDL’s) than on CDL’s proposal. CDL maintains this is a “substantial and identifiable difference” for the Havelock North and Hawkes Bay region generally.
(f)Added market competition27
27 Affidavit of Mr. Adams at [55] and Investment Plan at [68]–[75].
(i)CDL says its plan would add competition in relation to the residential section market in Havelock North, a market which has inadequate supply at present. CDL would combat this through a higher density model (involving a number of smaller sections) than the region was accustomed to.
(ii)Preventing overseas purchasers from developing land itself limits competition in the residential marketplace, and ultimately will result in higher residential section prices.
(iii)CDL maintains an ANZP was unlikely to develop the Land as quickly as CDL could, due on the one hand to likely funding constraints and on the other to their likely desire to create a standard subdivision with standard lot sizes in order to keep subdivision costs to a minimum. CDL estimates that the ANZP would create approximately [suppressed] fewer houses than CDL would (based on the top end of the ANZP’s estimated number of houses developed).
(g) Greater efficiency or productivity in New Zealand28
Again, CDL referred to its higher density section model and the substantial difference that this would make to housing supply in the Havelock North area. It again repeated its claim that an ANZP would also take longer to develop the sections and was therefore less efficient and productive.
Vendor Information Form
[41] The Vendor Information Form which accompanied CDL’s application to the OIO was completed by the Lowe family. Amongst other things it set out that:
28 Affidavit of Mr. Adams at [56] and Investment Plan at [76]–[80].
(a)The Lowe family was not willing to take on the risk of developing the land themselves. They had no wish however to hold up (or be seen to hold up) new opportunities for further residential development in Havelock North. Their alternative, as they saw it, was to simply sit on the Land until they could obtain a better value.29
(b)Bayleys had prepared two reports in relation to the advertising campaigns for the initial 42 hectares and later the Land (itself). These reports showed that, in relation to the 27 October – 26 November 2020 advertisement for the Land, there were over 8,000 “internet interactions”, 601 internet views, 11 enquiries and five Information Memorandums being sent out.
(c)Other offers for the Land as I have noted were submitted by the two New Zealand entities — Tumu/Greenstone from the Hawkes Bay and Winton from Auckland.30
OIO’s Assessment Report
[42] The Assessment Report prepared by the OIO and provided to the Ministers on 10 June 2021 contained a detailed analysis of CDL’s application for consent. The affidavit of Mr Mumford set out in some detail the thorough process that the OIO undertook when it prepared, updated and produced its report.31
[43] The Assessment Report identified the OIO’s assessment of the four benefits to New Zealand that would result from CDL’s proposed development of the Land [at 54] and concluded:
29 Vendor Information Form at (5). Mr Mumford in his evidence noted also that given the vendor’s stated intention for sale of the Land he did not consider a joint venture should form part of the counterfactual — Affidavit of Mr. Mumford at [74].
30 Vendor Information Form at (17) and Bayleys’ letters of 14 and 15 December 2020.
31 Affidavit of Mr. Mumford at [58]–[81].
Factor Indicative strength
(a)Oversight and participation (regulation 28(j))
High relative importance Strong
(b)Previous investment
(regulation 28(e)) Moderate
(c)Job opportunities (s 17(2)(a)(i))
High relative importance Weak
(d)Additional investment for development purposes
(s 17(2)(a)(v)) Weak
[44] The Assessment Report assessed the criteria for consent in ss 16 and 16A of the Act as having been met here in the sense that the overseas investment will, or is likely to, benefit New Zealand and that the benefit will be, or is likely to be, substantial and identifiable.32 The OIO also noted that it took a proportionate approach to the assessment of the benefits in this case. In the round, it seems the application by CDL, an entity that had been making similar applications to the OIO for some 25 years previously, was viewed as being a very attractive one. The reports saw the development as one certainly likely to proceed, and importantly with the sensitive land in question ultimately returning to New Zealand ownership by way of the sale of residential sections.
[45] In the Assessment Report a link was made too between the more intensive development proposed by CDL here with the significant number of show homes to be built, contrasting this with a traditional form of subdivision development which had historically been more prevalent in this country.33
[46] At this point it is useful to record that all parties accept there was an error in the Assessment Report. This error related to the shareholding of CDL which the report recorded as being over 45 per cent New Zealand owned. This was not correct. The actual recorded shareholding of CDL alone through CDL Investments showed a New
32 Assessment Report at [64] and [71]–[73].
33 At [35]-[36] and [41]-[42]
Zealand component of only 23.77 per cent, although the respondents all note the “effective” percentage local share in CDL, taking into account New Zealand shareholding interest in a subsidiary shareholder, Millennium, was about 40 per cent.
Ministers’ consent decision
[47] Consent to CDL’s acquisition of the Land was granted on 10 July 2021 and notified to CDL on 12 July 2021.
[48] The Ministers in their affidavits described the process that led to them each making the decision to grant consent. It is clear from those affidavits that the reasoning of the individual ministers was somewhat broader than the analysis in the Assessment Report. To that extent I accept that the conclusions and logic of the Assessment Report do not represent the full extent of the reasoning adopted in support of the final consent decision.
[49] Broadly, in reaching their decisions the respective Ministers it seems were satisfied:
(a)the “investor test” in s 16 of the Act, as it applied to CDL and its directors had been met;
(b)in relation to “the benefit to New Zealand test”, the criteria for consent in ss 16 and 16A were met, namely that:
(i)the investment would, or was likely to be, of substantial and identifiable benefit to New Zealand; and
(ii)the conditions to be imposed on consent would be, or were likely to be, met;
(c)the criteria for farmland advertising had been met; and
(d)the transaction was not one of national interest under ss 20A or 20B of the Act.
[50] In making their decision that the proposed investment would, or was likely to be of substantial and identifiable benefit to New Zealand, the Ministers took into account:
(a)the fact New Zealanders will be, or are likely to be, able to oversee or participate in the overseas investment and CDL generally because:
(i)there was a significant level of New Zealand ownership or percentage of shareholding in the relevant companies. This meant a number of New Zealanders had invested in those companies and would derive a benefit from the proposed investment by way of their shareholding;
(ii)CDL Investments and Millennium were both NZX listed companies; and
(iii)all the directors of CDL and three of six directors of CDL Investments were New Zealand citizens.
(b)the proposed investment was likely to create new job opportunities and clearly more than under the counterfactual;
(c)CDL had undertaken many other residential property developments that had been of benefit to New Zealand; and
(d)the proposed investment would result in the introduction of additional funds for development.
[51] The Ministers also considered CDL’s proposed development was positive in that it was likely to encourage higher density living with more modest-sized sections available. This benefit was also seen to include the construction of novel and educative show homes, which themselves demonstrated these more compact living arrangements.
[52] And, as the OIO had recommended in its Assessment Report, consent was granted here subject to certain special conditions which included:
(a)specifying the timeframes within which CDL had to obtain all necessary resource consents required to begin development on certain parts of the Land (special condition 1);
(b)specifying the timeframes within which CDL had to have certain parts of the Land rezoned from Plains Production into an urban residential zone capable of residential development (special condition 2);
(c)providing staged [suppressed] for CDL to reach in order to achieve its cumulative [suppressed] of capital expenditure (special condition 3);
(d)designating a time scale and ratio for sale of sections per year that CDL had to meet (special condition 4);
(e)imposing certain on-sale and ownership requirements and restrictions on CDL (special condition 5); and
(f)imposing restrictions on who could occupy the Land for residential purposes (special condition 6).
[53] Once consent was granted, the sale agreement between the Lowe family and CDL became unconditional. In reliance on the consent decision, settlement of the Land sale occurred on 21 July 2021 and the Land was transferred to CDL. Since that time, as I understand it, CDL has been progressing its subdivision development on the Land.
Legal principles
[54] In its present application for judicial review, Winton relies on six grounds, all of which generally fall under the head of illegalities.
[55] On this the respondents all accept that decisions to grant consent under the Act are amenable to review. Such decisions to grant consent clearly are a statutory decision. The underlying purpose of judicial review is to ensure that the decision- maker in question has exercised statutory powers lawfully, that is in accordance with the powers conferred by Parliament.
[56] An application for judicial review however is not of course an appeal. It is not the role of the Court to consider the Ministers’ decision de novo or to substitute its own judgment for the Ministers. As this Court has recently confirmed:
Where a decision followed a factual evaluative investigation and Parliament had entrusted a decision-maker to make the assessment and judgment, it was not for the Court to substitute its own view.34
[57] This concept of judicial restraint is of particular importance, as I see it, in the present case. Many of Winton’s arguments seem to be an invitation to this Court to begin or end its analysis with a de novo re-assessment or rebalancing of the decisions made by the Ministers. It invites this Court to ask itself whether it would have made a different decision or whether it would have asked different questions or interpreted the facts in a different way to the Ministers. I am satisfied that is not the correct approach to judicial review. Judicial review is not a means of appealing a decision itself and it is not part of this Court’s role to consider what decision should have been made.35
[58] Likewise it is clear that, while this Court may determine whether a consideration is relevant or material to a decision, the weighing of considerations and factors relevant to that decision is a matter for the decision-maker and not within the “province” of a reviewing court.36 This principle has also been embodied in the governing statute itself at s 17(1)(c).
Illegality
[59]The ground of illegality can take a number of forms.
34 New Zealand Steel Ltd v Minister of Commerce and Consumer Affairs [2021] NZHC 966 at [61].
35 New Zealand Fishing Industry Assn Inc v Minister of Agriculture and Fisheries [1988] 1 NZLR 544 (CA) at [552].
36 Te Rangi v Jackson [2015] NZCA 490 at [28].
The decision-maker must correctly construe and apply a statutory test
[60] In its most basic form, illegality involves a decision-maker asking the wrong question.37 Where the decision is made under a statutory power, determining what the “right” question is involves interpretation of the power in light of its purpose, having regard to context.38
The decision-maker must have necessary, but not all conceivable information
[61] A statutory decision-maker must obtain the information necessary for it to take account of all relevant considerations and reach a reasonably informed decision.39 The decision-maker however is not expected to be in possession of all conceivable information or the views of everyone who may have an opinion on the point.40
[62] Given that context is everything, the sufficiency of the information held and the lengths to which any decision-maker is required to go in order to verify or add to that information depend on “what is reasonable in all the circumstances”, and must be assessed in the context of the decision being made and the regime established under the relevant statute. In CRA 3 Industry Association Inc. v Ministry of Fisheries,
McGechan J elaborated on the meaning of “reasonable” in this area as follows:41
“What is “reasonable” will also depend on circumstances prevailing at the time. Matters such as time available, resources to hand, existing knowledge and expertise, and reliability or apparent reliability of sources, all can have a bearing, along with all else.”
[63] So far as decisions under the Act are concerned, independent research of all details relating to an application for consent is not required. Rather, judgment must be used to determine if further information is needed. In this court’s decision in New Zealand Democratic Party for Social Credit v Minister for Land Information, Dobson J recognised that the OIO can rely on information provided and certified in an application given that an applicant has an obligation as to the correctness of such
37 Counsel of Civil Service Unions v Minister for the Civil Service [1985] AC 374 at [410] and Ye v Minister of Immigration [2009] NZSC 76 at [45].
38 Commerce Commission v Fonterra Co-operative Ltd [2007] NZSC 36 at [22].
39 Auckland City Council v Minister of Transport [1990] 1 NZLR 264 (CA) at [285].
40 CREEDNZ Inc v Governor General [1981] 1 NZLR 172 (CA) at [200].
41 CRA 3 Industries Association Inc v Ministry of Fisheries HC Wellington CP 317/99, 24 May 2000 at [60].
information.42 There is a real impracticality of checking simply every detail, especially where there are many documents filed and hundreds of factual assertions made which are difficult to properly check. It is also impractical to decide in advance what information might be reasonably required.
Only a failure to consider a mandatory relevant consideration will invalidate a decision
[64] Decision-makers are required to turn their minds to all mandatory relevant factors and to disregard irrelevant factors. Beyond that, decision-makers are free to consider any other matters that are consistent with the statutory test, scheme and purpose of the Act (permissible relevant considerations).
[65] Only a failure to consider a mandatory relevant consideration will invalidate a decision.43 It is not enough that a decision-maker fails to consider a matter that could properly or reasonably be taken into account. Mandatory relevant considerations are the constraints on the exercise of power that Parliament has expressly provided or must necessarily have intended. These are identified from the statutory power itself and the scheme and purpose of the relevant legislation.44
[66] The test is a high one in that the duty to consider “mandatory relevant considerations” extends to facts so plainly relevant to those considerations that Parliament would have intended them to be taken into account and thus it was expected a reasonable decision-maker would not fail to do so.45
[67] However, while disputed points of evidence or opinions may well be permissible considerations, it is only where facts are settled and incontrovertible that they can be elevated to mandatory relevancies.46
42 New Zealand Democratic Party for Social Credit v Minister for Land Information [2020] NZHC 2816 at [78]–[79].
43 CREEDNZ Inc, above n 40, at [183].
44 New Zealand Fishing Industry Assn Inc v Ministry of Agriculture & Fisheries, above n 35, at [552].
45 Above n 35, at [552].
46 CREEDNZ Inc General, above n 40, at [200].
Matters which cut across the purpose of the Act are impermissible considerations
[68] Matters that cut across or thwart the purpose of the Act amount to impermissible considerations and it is unlawful for a decision-maker to consider them.47 Here, “the consent and conditions regime in Part 2 of the Act is not only clear but unusually prescriptive”.48
[69] The Act clearly prescribes the matters a decision-maker is permitted to take into account in deciding an application for consent. There is no room under the Act for decision-makers to have regard to criteria and factors that are not specified. However, the Act does not expressly limit the factual matters that may be considered in determining the criteria and factors that are relevant to a particular decision and the weight to be given to any factor in the context of decisions. Permissible and impermissible factual considerations must be identified in light of the scheme and purpose of the Act.
Factual errors must be uncontentious and material to amount to an error of law
[70] Two matters need to be made out for an applicant to be successful in arguing that a mistake of fact amounts to a reviewable error of law:
(a)First, the fact underpinning the applicant’s challenge must be uncontentious, established and objectively verifiable.49 Where there is room for reasonable persons to disagree (for example, where there is a credible conflict on the evidence) the ground will not be met. It is not a mistake simply to adopt “one of two different points of view of the facts, each of which may reasonably be held”.50
(b)Secondly, the relevant error “must be sufficiently material to be described as the basis or the probable basis for the decision.51
47 Unison Networks Limited v Commerce Commission [2007] NZSC 74 at [53].
48 Coromandel Watchdog of Hauraki Inc above n 4 at [40], [46] and [57].
49 New Zealand Fishing Industry Association Inc, above n 35, at [552].
50 New Zealand Fishing Industry Association Inc, above n 35, at [552].
51 Glaxo Group Limited v Commissioner of Patents [1991] 3 NZLR 179 (CA) at [184].
Mistakes “not grave enough to undermine the basis of a multi-faceted decision” will not vitiate that decision.52
[71] Factual error can also blend into unreasonableness as a ground of review, if the factual error results in flawed reasoning. This is the case in that the conclusion reached is seen as one entirely unsupported by the evidence, or the “true and only reasonable conclusion” had not been reached.53 According to the Supreme Court, an applicant who alleges such an error of law “faces a very high hurdle”.54
Unreasonableness is a high threshold
[72] Unreasonableness arises only where a decision-maker comes to a decision that no reasonable decision-maker could have reached, a decision which lies “outside the limits of reason”,55 is “so outrageous in its defiance of logic or of accepted moral standards”56 or “so absurd that [the decision-maker] must have taken leave of his senses”. This is a high hurdle to meet.
The Overseas Investment Act 2015
[73] The Act, as I have noted, regulates investment by “overseas persons” in certain land and assets in New Zealand. The purpose of the Act is expressly to acknowledge that it is a privilege for overseas persons to own or control sensitive New Zealand assets by requiring overseas investments in those assets to meet criteria for consent and imposing conditions on those overseas investments.57
[74] It is clear however that the purpose of the Act is not “to protect sensitive New Zealand assets from foreign investments that do not benefit New Zealand”. Rather the
52 R v Independent Television Commission, ex parte Virgin Television Limited [1996] EMLR 318 (QB) at [342].
53 Bryson v Three Foot Six Limited [2005] NZSC 34 at [26].
54 Above n 53, at [27].
55 Criminal Bar Association of NZ Inc v Attorney-General [2013] NZCA 176 at [136].
56 Wellington City Council v Woolworths NZ Ltd (No 2) [1996] 2 NZLR 537 at [455].
57 Section 3
Act both facilitates and regulates overseas investment in New Zealand assets.58 As the Court of Appeal has recently confirmed:59
As this Court has previously explained, in the context of purchasers of farmland by overseas persons, “the Act attempts to place some controls on the acquisition of significant tracts of New Zealand farmland by overseas persons, but also seeks to allow such persons to invest in farmland where they meet the relevant criteria”.
[75] The relevant criteria for sensitive land consent (which the Ministers considered here as I note at [49] above) included:
(a)the “investor test” required by s 16(1)(a) which is set out in s 18A of the Act (the investor test);
(b)the “benefit to New Zealand test” required by s 16(1)(e) which is set out in s 16A of the Act; and
(c)the requirement in s 16(1)(f) to advertise farmland on the open market to persons who are not overseas persons according to the Overseas Investment Regulations 2005. (the Regulations)
[76] Winton’s case here focuses on the interpretation and application of the benefit to New Zealand test adopted by the OIO and the Ministers relating to CDL’s application.
The benefit to New Zealand test
[77] Insofar as it applies here, the benefit to New Zealand test60 has three limbs. The Ministers need to be satisfied that:
(a)the overseas investment would, or would be likely to, benefit New Zealand (or any part of it or group of New Zealanders) as determined by the relevant Ministers under s 17; and
58 Coromandel Watchdog of Hauraki (Inc) above n 4.
59 New Zealand Democratic Party for Social Credit Inc v The Minister for Land Information & Ors
[2021] NZCA 599.
60 As defined in s 6 of the Act.
(b)the benefit would be or is likely to be substantial and identifiable; and
(c)the Ministers are satisfied that the conditions that will be imposed on the consent will be or are likely to be met.
[78] Turning now to factors which are relevant to the Ministers’ assessment of the test, the Act does prescribe how those Ministers are to assess whether the investment would be likely to have a “substantial and identifiable benefit to New Zealand (or any part of it)”. On this the Ministers:
(a)must consider the specified factors in s 17(2) of the Act to determine which of them (or parts of them) are relevant to the overseas investment (s 17(1)(a));
(b)must determine whether the criteria in ss 16A(1)(a) and (b) of the Act are met after having regard to those relevant factors (s 17(1)(b)) (that is must assess whether there is likely to be a substantial and identifiable benefit) (s 17 (1)(b)); and
(c)may, in doing so, determine the relative importance to be given to each of the specified factors (s 17(1)(c)).
[79] The s 17(2) factors for assessing the benefit of overseas investments in sensitive land include whether the overseas investment will, or is likely to, result in:
(a)the creation of new job opportunities in New Zealand or the retention of existing jobs in New Zealand that would or might otherwise be lost;
(b)added market competition, greater efficiency or productivity, or enhanced domestic services in New Zealand; and
(c)the introduction into New Zealand of additional investment for development purposes.
[80] The s 17(2) factors also include those incorporated from reg. 28 of the Regulations. These include:
(a)where granting the application for consent will, or is likely to, result in the owner of the relevant land undertaking other significant investment in New Zealand (Regn. 28(d));
(b)whether the relevant overseas person has previously undertaken investments that have been, or are, of benefit to New Zealand (Regn. 28(e));
(c)whether the overseas investment will, or is likely to, give effect to or advance a significant Government policy or strategy (Regn. 28(f));
(d)whether the overseas investment will, or is likely to, enhance the ongoing viability of other overseas investments undertaken by the relevant overseas persons (Regn. 28(g));
(e)the extent to which persons who are not overseas persons (defined in the Act as “New Zealanders”) will be, or are likely to be, able to oversee, or participate in, the overseas investment and any relevant overseas person. This includes the extent to which New Zealanders have or will have any partial ownership or controlling stake in the overseas investment or in a relevant overseas person. (Regn. 28(j)).
[81] So far as relevant factors listed in the preceding paragraphs are concerned, on 28 November 2017 the Finance Minister issued a directive letter under s 34 of the Act (the Ministerial Directive).61 In relation to Government policy towards overseas investment, this Ministerial Directive:
(a)acknowledges not all overseas investments provide high levels of benefits to New Zealand and that overseas investments can result in
61 Section 34(1) of the Act states: “(1) The Minister may direct the regulator by a Ministerial directive letter, and the regulator must comply with it”.
the loss of New Zealand ownership and control of important productive assets such as farmland and strategic infrastructure;
(b)recognises that while economic goals are important, so too are environmental, social and cultural goals. It is a privilege, not a right, for overseas persons to own or control sensitive New Zealand assets and that privilege must be earned and maintained; and
(c)records that the Government’s overall policy approach is to achieve a balance between the need for highly beneficial overseas investment and the need for New Zealand to maintain ownership and control of sensitive New Zealand assets, and also to ensure that the benefits from overseas investments in rural land are “genuinely” substantial and identifiable.
[82] This Ministerial Directive also makes the “jobs” factor (s 17(2)(a)(i)) and the oversight and participation by New Zealanders factor (Regn 28(j)) of “high relative importance” for investments in rural land. 62
The “benefit to New Zealand” must be assessed by reference to a likely counterfactual
[83] This Court in Tiroa E and Te Hape B Trusts v Chief Executive of Land Information63 made clear that the OIO and relevant Ministers are required to conduct their analysis of the relevant s 17(2) factors by reference to a hypothetical counterfactual. That is, here the OIO and the Ministers must consider what would be likely to happen without the overseas investment. More recently this Court in the Coromandel Watchdog of Hauraki Inc case64 said:
“The important point that emerges from Tiroa is that when Ministers consider the factors in s 17(2)(a), the Act requires that they do so by assessing what would happen “with and without” the overseas investment they are being asked to approve, rather than applying a “before and after test”.
62 At 16.
63 Tiroa E and Te Hape B Trusts v Chief Executive of Land Information [2012] NZHC 147.
64 Coromandel Watchdog of Hauraki, above n 4, at [22].
[84] This requires in relation to each of the claimed benefits under s 17(2) of the Act “a consideration of the likely consequences of the [overseas] investment not proceeding.65
[85] This exercise is intended to be a hypothetical enquiry as the High Court confirmed in Tiroa E and Te Hape B Trusts:66
“The Act does not require that benefits be quantified, however only that the Ministers be satisfied, for farmland, that substantial and identifiable benefits are likely to flow from the overseas investment. It is a matter of enquiring, for each claimed economic benefit, whether it is likely to happen absent the overseas investment and is substantial and identifiable. The weighing of economic benefits among themselves and against non-economic benefits requires not calculation but Ministerial judgment”.
[86] The counterfactual analysis is not required in terms of the mandatory factors set out in regulation 28, which I note above. This is because they “deal for the most part, with benefits only an overseas buyer could provide or what may be loosely described as strategic considerations”.67
A proportionate approach to the “benefit to New Zealand” assessment
[87] A key issue in this proceeding has been whether in applying the “benefit to New Zealand” test, the Ministers were entitled to take into account the size, nature and proposed use of the land to be acquired, when considering whether they were satisfied that there is likely to be a “substantial and identifiable benefit to New Zealand” (that is, a “proportionate approach”). To put this another way, are the Ministers entitled to take into account the characteristics of the particular transaction when considering whether a benefit “is substantial or identifiable”, or does the benefit to New Zealand test impose a single, universal, objective “amount” of benefit that must be met regardless of the characteristics of the transaction? The OIO clearly applies a longstanding policy to determine the level of benefit required for the “benefit to New Zealand” test in each case. Details of this policy and how it is to be applied are published on the OIO website.68 This guidance published by the OIO together with
65 Coromandel Watchdog of Hauraki, above n 4, at [47].
66 Tiroa E and Te Hape B Trusts, above n 63 at [39].
67 Tiroa E and Te Hape B Trusts, above n 63, at [36].
68 Affidavit of Mr Mumford at [49].
the current Ministerial Directive I am satisfied has led to a general market understanding over time as applying a proportionate approach.
[88] A number of matters can be relevant to determining the characteristics or nature of the asset involved as part of this proportionate approach. A non-exhaustive list is included on the OIO website. These matters include:
(a)the nature of the interest (temporary or permanent);
(b)the degree of ownership or control of/over the interest;
(c)the size and monetary value;
(d)public interest in the asset;
(e)whether the land includes or adjoins features like a marine and coastal area or a historic heritage site;
(f)infrastructure present (including strategically important infrastructure);
(g)the business being one on the land; and
(h)the number of sensitivity factors under the Act that apply.
[89] These matters as part of the policy are not determinative and each investment is assessed on its own facts.
[90] Notwithstanding these comments, Winton nevertheless considers the Ministers were wrong to apply a proportionate approach here.
[91]The respondents disagree, generally arguing that a proportionate approach is:
(a)consistent with the policy underpinning the Act;
(b)permitted by the text of the Act and its plain meaning; and
(c)consistent with High Court comment, OIO practice and the Ministerial Directive.
[92] Winton claims the Assessment Report completed for the OIO describes the benefit to New Zealand test as having a “proportional nature”, and therefore it took into account criteria and factors outside those mandated in the Act and Regulations. These included the characteristics of the land, the nature of the interest CDL was acquiring, the size and zoning of the land and the likelihood it would be used for residential development, and also the fact that the level of benefit required to meet the substantial and identifiable threshold should be lower.
[93] Winton suggests the Assessment Report found the benefit to New Zealand test was one that was only “finely balanced” in this case. It follows therefore Winton says, that the report’s conclusion as to the level of benefit required being at the lower end of a sliding scale is significant, and perhaps a critical factor in the OIO’s recommendation that otherwise the Ministers grant consent.
[94] Considering Winton’s arguments here, I turn first to the policy of the Act. In doing so, I need to say at the outset, that I find the approach advocated by Winton before me has no merit as a matter of policy. Nothing in the Act suggests that Parliament had in mind that some objective universal measure of benefit had to be met before Ministers were entitled to grant consent. There cannot, as I see it, be a fixed threshold applicable to every application for consent under the Act. That threshold required to be met for the benefit to New Zealand test to be made out will vary between individual cases. The level of benefit required therefore needs to be assessed on a proportionate basis relative to the nature of the particular investment. If a proportionate approach were not to be permitted, issues over the nature, location, or any other characteristic of the land in question would not arise and it would mean too that Parliament intended to require the same degree of benefit for the purchase of a five hectare lifestyle block as it would require for the purchase of a 100,000 hectare rural station.
[95] Such an approach would be inconsistent with the purpose and policy of the Act.
[96] The OIO applies a longstanding policy to determine the level of benefit required for the benefit test to be met in each particular case. Details of the policy and how it is to be applied are found on the OIO website.69 Under the proportionate approach the OIO considers whether the test is sufficiently met relative to the characteristics of the investment, including the nature of the sensitive New Zealand assets to be acquired under the investment.
[97] Turning now to the text of the Act itself, I am satisfied the proportionate approach is an available one when reading the words of the Act. The scheme the Act adopts is to allow for the exercise of Ministerial judgment within defined parameters. It is for the Ministers to make the judgment when or in what circumstances a benefit will be “substantial and identifiable”. The Ministers’ assessment of all aspects is important here.
[98] This makes sense as I see it because “substantial and identifiable benefit” is not an objective universally assessable concept in this context. There is no one objective measure by which the Ministers might test what constitutes a “substantial and identifiable benefit”. No fixed number of jobs or financial benefit can be said to meet the test in every case. Rather, the question must be considered by reference to the particular details of the acquisition under consideration.
[99] This is also reflected in the factors the Ministers must take into account, including those set out in Reg 28 of the Regulations.
[100] I conclude that it is for the Ministers and not the Court to judge whether New Zealand’s interests will be promoted to a substantial extent in the particular context of an application before them.
[101] By way of example, in a recent decision of this Court, the Coromandel Watchdog decision, the Court recorded:
69 At [49].
“The OIO concluded that [the applicant] met the benefit test: when examined together the benefits of the investment were likely to be substantial and identifiable taking into account the size and nature of the land to be acquired.”70
[102] In that case, as with many other recent decisions of this and other Courts, there was no real suggestion by the applicant or the Court that the proportionate approach adopted was inconsistent with the statutory regime.
[103] Mr Mumford in his evidence also confirmed that the proportionate approach is the OIO’s usual practice when he said:71
“The OIO assessment whether the benefit to New Zealand claimed by an applicant is sufficient to meet the benefit test is one to be assessed on a proportionate basis relative to the specific investment”.
[104] This approach has also been publicised on the Land Information website under the heading “benefits to New Zealand” since around April 2019.
[105] All this too is consistent with the Ministerial Directive, which amongst other things provides:
(a)Under the heading “general matters relating to the regulator’s functions, powers or duties” the Minister directs the OIO, as regulator, to “adopt a risk based and proportionate approach to application assessment” (para 32.7); and
(b)that certain factors will generally be of high relative importance for overseas investments in rural land (the rural land directive) (para 16). These include:
(i)the “jobs” factor … and
(ii)the “oversight and participation by New Zealanders factor …”.
70 Coromandel Watchdog of Hauraki, above n 4, at [24].
71 Affidavit of Mr Mumford at [49].
[106] Finally, I turn to the issue argued before me as to whether the proportionate approach available under the Act in the present case is consistent with the approach that has recently been taken in the Overseas Investment Amendment Act 2021 (the Amendment Act).
[107] The Amendment Act was to apply from 24 November 2021. Therefore it was not in force at the time of consideration of the current application. Amongst other things, the Amendment Act replaced s 16A(1) of the Act with a new s 16A(1AA), which codifies the “proportionate” approach to the benefit to New Zealand test. It expressly provides for the weighing of the benefits to New Zealand against (i) the sensitivity of the land and (ii) the nature of the overseas investment transaction (including “whether the interest in the land is temporary or permanent”).72
[108] Before me, Mr Colson, counsel for Winton, presented this as a change to the law to permit the proportionate approach which did not apply earlier. He suggests that therefore the Ministers here erred in applying this change too soon.
[109] With respect I disagree. As I see it, the Amendment Act codified the application of the current law in this area. I reach this conclusion for two reasons. First the relevant Select Committee report clearly described the Amendment Act as “clarifying” the operation of the benefit to New Zealand test.73 And, secondly, the approach taken by the Amendment Act, as I see it, showed generally that Parliament’s intention was consistent with the Select Committee’s understanding that the Amendment Act was clarificatory on this issue and not revolutionary.
[110] I turn now to consider Winton’s pleaded six grounds of review broadly outlined at [8] above.
First Ground of Review — error of law — consent decision applied the wrong legal test.
[111] In this ground of review Winton challenged the Assessment Report’s and the Ministers’ application of the proportionality test because it says it effectively lowered
72 Amendment Act s 9..
73 Overseas Investment Amendment Bill (No 3) 2020 (265-2) (Select Committee Report) at [8].
the threshold CDL was required to meet in order to satisfy the Ministers that the benefit to New Zealand test was met. Winton contends this was an error of law by applying the wrong legal test or misinterpreting the statutory requirements. I disagree. The benefit test under the Act at least implicitly requires a proportionate approach to be taken. Winton’s assertion that the proportionate approach results in a “lowering of the threshold” must mean there needs to be one universal threshold applicable to every consent application under the Act. This cannot be right. Otherwise as I see the position, it would amount to the imposition of an unlawful policy which required an inflexible standard which did not admit of discretion in individual cases.
[112] I keep in mind that the Act is concerned with facilitating and regulating rather than preventing overseas investment.74
[113] And also for the reasons I outline above at [86]–[111], I conclude the Ministers here were entitled to apply a proportionate approach to assessing benefits under the Act. No error of law occurred in this regard. The first ground of review is dismissed.
Second Ground of Review — error of law — consent decision took into account irrelevant considerations
[114] This ground of review also relates to the application in the Assessment Report of the proportionality approach. Winton says this report applied the allegedly erroneous proportionate approach by taking into account a range of factors said to be irrelevant to lower the threshold against which to assess the level of benefit CDL’s investment was required to establish. These factors were outlined as:
(a)the characteristics of the Lowe land;
(b)the nature of the interest being acquired;
(c)the size and zoning of the Lowe land;
(d)the likelihood that the Lowe land will be used for residential property development, whether by the applicant or the ANZP; and
74 Coromandel Watchdog of Hauraki Inc, above n 4, at [46].
(e)the likelihood that CDL will only own the Lowe land for a certain period before it is sold.
[115] On this aspect again, like their position with respect to the first ground of review, there can be no question that the Act permits the Ministers to take a proportionate approach overall. Further, I am satisfied the Ministers are entitled to consider the factors listed above, as they did in making their consent decision, regardless of whether a proportionate approach was adopted or otherwise. They are not irrelevant considerations. I am assuming here that Winton is saying these considerations outlined above, if not irrelevant per se, in any event rather are only irrelevant to the extent the Ministers’ adopted a proportionate approach. That being so, Winton’s argument under this second ground of review must also fall away. Those factors are clearly relevant considerations here. Applying a rational approach requires that they be taken into account.
[116]On this basis Winton’s second ground of review must also fail.
Third Ground of Review — error of law — consent decision applied the wrong legal test
[117] In this ground of review Winton challenges the approach taken by the Assessment Report and the Ministers in considering under Reg. 28(j), in relation to the benefit to New Zealand test, “the extent to which persons who are not overseas persons (New Zealanders) will be, or are likely to be, able to oversee, or participate in, the overseas investment and any relevant overseas person”.
[118] This third ground of review seems also effectively to be premised on Winton’s pleaded allegation that the Ministers decided the only “substantial and identifiable benefit to New Zealand” was the “oversight and participation by New Zealanders in the overseas investment” (the oversight and participation factor).
[119] To recap on this aspect, the Assessment Report had assessed CDL through its parent company, CDL Investments, as having a little over 45 per cent New Zealand ownership. This was a clear mistake as all parties before me accepted.
[120] As I note at [46] above, the actual recorded direct percentage shareholding by New Zealanders in CDL through CDL Investments was at 23.77 per cent. The respondents noted however, as I have outlined, that the “effective” percentage local shareholding in CDL, taking into account also the New Zealand shareholding interest in the CDL subsidiary shareholder company Millennium, amounted to a total of about 40 per cent.
[121] At para [43] above, I note at (a) that the OIO Assessment Report assesses this oversight and participation benefit factor as “strong”. Winton notes it was the only benefit afforded that weighting by the OIO in the Assessment Report.
[122] On this aspect both Ministers in their evidence depose however that the oversight and participation factor was not the sole or primary basis of their decision:
(a)Minister O’Connor expressly acknowledges that his decision was guided by all relevant benefit factors.75 He rejects the assertion by Winton that oversight and participation were determinative here,76 and notes that he considered the benefits of CDL’s investment additional to those set out by the OIO:
“I also considered the proposed residential development would be positive for the region. Notwithstanding the OIO’s assessment of this aspect, I am generally aware of the shortage of housing and restricted capacity and capability in New Zealand to meet the demand and I was interested in and supportive of CDL’s innovative proposal for higher density housing development in this case. Traditionally, such developments have not been common in New Zealand, but it is my view that we need to look to grow up rather than grow out, particularly given the ongoing utilisation of highly productive land.”
(b)Associate Minister Woods also deposes that her decision to grant consent was guided by all of the relevant factors and not just the oversight and participation factor.77 She specifically rejects the
75 Affidavit of Minister O’Connor 1 November 2021 at [21].
76 [15] and [19].
77 Affidavit of Associate Minister Woods 1 November 2021 at [25].
assertion by Winton that the oversight and participation factor was determinative of her decision:78
“… in making my decision on CDL’s application I did not consider the Oversight and Participation by New Zealanders was a “Determinative Factor”. I considered all the factors noted in the Assessment Reports.”
[123] Importantly, the level of effective shareholding ownership in CDL in any event was regarded as only one factor here. Matters noted in the Assessment Report included CDL’s previous New Zealand investments and its long history and track record in residential development in this country, the presence of its head offices in New Zealand, the NZX listings for some of the companies involved, and the long directorships held by New Zealanders in both CDL and CDL Investments. All these matters in my view were clearly regarded in the decision taken here as of some significance as well when considering this oversight and participation factor.
[124] As the comments from the Ministers noted above at [122] make clear, it is also correct to conclude that the oversight and participation factor in any event was not the sole or primary basis of the Ministers’ decision. Although seen as significant, as the Ministers have confirmed again, it was not determinative.
[125] No error of law occurred in this area, and on this basis Winton’s third ground of review must also fail.
Fourth Ground of Review — error of law — consent decision mistaken in fact
[126] In this fourth ground of review, Winton pleads that in making the consent decision, the Ministers took into account three mistakes of fact:
(a)CDL has a “significant” level (being over 45 per cent) of New Zealand ownership;
78 At [22]–[23].
(b)the counterfactual was likely to result in fewer new or retained FTE jobs, including because the ANZP is unlikely to build show homes; and
(c)the counterfactual was likely to result in less additional investment, including because the ANZP is unlikely to build show homes.
[127] Winton says the consequence of these three factual mistakes being made was that the Ministers erred in law in making the consent decision here.
[128] The availability of mistake of fact as a separate ground of review seems to be an unsettled issue in New Zealand. But in any event the law in this country has set a high bar for review based on a mistake of fact.
[129] In Bryson v Three Foot Six Limited79 the Supreme Court held that the relevant question to ask in this area is whether “(the decision) is so insupportable — so clearly untenable — as to amount to an error of law; or in other words, whether proper application of the law require a different answer …”.80 The Supreme Court indicated that this will be the position only in the rare case where:
(a)there is no evidence to support the determination; or
(b)the evidence is inconsistent with and contradictory of the determination; or
(c)the true and only reasonable conclusion contradicts the determination.81
[130] In its decision the Supreme Court warned that this was a “very high hurdle” and reiterated that:
79 Bryson v Three Foot Six Limited, above n 53 at [26].
80 At [26].
81 At [26].
[27] … it is important that appellate Judges keep this firmly in mind. Lord Donaldson MR has pointed out in Piggott Brothers & Co Limited v Jackson
the danger that an appellate Court can very easily persuade itself that, as it would certainly not have reached the same conclusion, the Tribunal which did so was certainly wrong:
“It does not matter whether, with whatever degree of certainty, the appellate Court considers that it would have reached a different conclusion. What matters is whether the decision under appeal was a permissible option …”82
[131] In the recent decision of this Court in ANZ Sky Tours Limited v New Zealand Tourism Board 83, this Court also confirmed that the mistake of fact must have played a “material part” in the decision-maker’s reasoning in order to form a basis for review, and The Court there added:
“Consequently … the courts retain only a residual discretion over demonstrable errors of fact. Only where “on the totality of the evidence, something has gone wrong or an injustice has been done” will the decision be open to rectification”.
[132] I now turn to deal with each of the three mistakes of fact alleged by Winton here.
A. Level of New Zealand ownership
[133] Winton, as I note, contend that the Ministers made a mistake of fact when concluding that CDL had a “significant” level (over 45 per cent) of New Zealand ownership.
[134] All the respondents before me accepted that CDL’s level of New Zealand ownership at the time of this application was at least slightly less than 45 per cent but they suggested it was effectively around 40 per cent. The direct shareholding ownership as Winton points out here is only some 23.77 per cent and represents a large
82 Above n 53, at [27] (emphasis added) – a similar approach was applied by the Supreme Court again in Vodafone New Zealand Ltd v Telecom New Zealand Ltd [2011] NZSC 138.
83 ANZ Sky Tours Ltd v New Zealand Tourism Board [2019] NZHC 925 at [71]–[77].
number of small minority holdings in CDL Investments. Effective shareholding ownership however I accept when looked at overall was around the 40 per cent advanced by the respondents.
[135]But, in any event, all the respondents here argue:
(a)there is no material error in the conclusion as to CDL’s New Zealand ownership as it did in fact have a “significant” level of effective New Zealand shareholding; and
(b)in any event the relevant conclusions of the Ministers were that the acquisition of the Land by CDL was likely to provide benefits to New Zealand that were substantial and identifiable and this conclusion is correct and supported by facts other than the exact calculation of CDL’s New Zealand shareholding.
[136] Returning to an actual assessment of CDL’s New Zealand ownership this is addressed in Mr Adams’ affidavit. On this Mr Adams explains:
(a)CDL is 100 per cent owned by CDL Investments;
(b)Both CDL Investments and Millennium were and are listed on the NZX. When the application was filed:
(i)23.77 per cent of CDL Investment shares were owned by minority New Zealand shareholders;
(ii)Millennium owned 65.87 per cent of CDL Investments shares; and
(iii)24.75 per cent of Millennium shares were owned by minority New Zealand shareholders.
(c)in its original application CDL erroneously aggregated CDL Investments New Zealand minority shareholding percentage with
Millennium’s minority shareholder percentage, whereas the calculation should have been by reference to 24.75 per cent of Millennium’s shareholding in CDL Investments. This error was carried through to the Assessment Report which referred to CDL being 46.9 per cent indirectly owned by New Zealanders;
(d)the correct figure as at December 2020 would have been around 40.07 per cent.
[137] On these aspects, as I see the position overall, the 40.07 per cent ownership interest noted above does not show any material difference for the purposes of considering whether there is a “significant” level of New Zealand ownership here.
[138] I am satisfied therefore there was a proper evidential foundation for the view that CDL had a “significant” level of effective New Zealand ownership. This is addressed specifically in the Ministers’ affidavits in that they both make clear that in any event the shareholder percentage figure was not determinative of their assessment of the benefits under the oversight and participation factor.84
[139] I conclude therefore that there was no mistake made here in the view that CDL had a significant level of New Zealand ownership despite the inaccuracy in the shareholding figures recorded in the assessment report. And I note too that in Minister O’Connor’s affidavit he said that even if the shareholding figure in this case had been 25 per cent (as alleged by Winton) that would not have motivated him to decline the consent application.85
[140] Overall then, I note again this question of CDL’s shareholding and ownership arose in the context of the oversight and participation factor. As I have outlined above, there was ample evidence before the Ministers on which they concluded this was a factor in favour of the application, regardless of the exact percentage level of New Zealand shareholding in CDL. On this aspect I repeat also that both CDL entities are New Zealand incorporated companies, they both have Head Offices in Auckland, all
84 Affidavit of Minister O’Connor at [18] and Affidavit of Associate Minister Wood’s at [23].
85 O’Connor affidavit at [18].
of CDL’s directors are New Zealanders, three of CDL Investments’ directors are New Zealanders, three of Millennium’s directors reside in New Zealand and there were also a number of New Zealanders who had invested in CDL Investments and Millennium who would benefit from the investment in the Land through their shareholding.86
[141] To conclude, I accept that the oversight and participation factor was merely one element of the Ministers’ overall assessment of whether the benefit to New Zealand test had been met in this case. The decision to grant consent was based on a number of factors as the Ministers have confirmed. And I accept that even if the conclusion on CDL’s shareholding was to be taken as a standalone factual finding, any error in that assessment was immaterial to the final consent decision made to the Ministers’ final consent decision as a whole.
(b) Jobs and (c) Investments
[142] Turning now to the show homes issue, Winton maintains first, it was a mistake in the consent decision to conclude that an ANZP would not build show homes here, and secondly, regardless of the correct counterfactual, it was illogical to conclude that building show homes would result in additional investment or jobs when it was simultaneously accepted under the counterfactual that a development of a similar size would result anyway. In other words, it is Winton’s position that dwellings (including show homes) would be built with or without CDL’s investment. This, Winton says, clearly has an effect on the issue of increased jobs resulting from CDL’s proposal.
[143] I leave to one side here the argument advanced before me by CDL’s counsel that this contention from Winton is legally untenable because any conclusions by the Ministers about the future must be hypothetical only, and simply cannot be a mistake of fact.
[144] Instead I turn to consider the basis for Winton’s argument here. On this aspect I need to say that this jobs and investment argument advanced by Winton must also
86 See affidavit of Minister O’Connor at [17]; affidavit of Associate Minister Woods at [23]; affidavit of Mr Mumford at [90]–[92]; and the Assessment Report at [54].
fail. The Ministers in my view did not make any factual errors when considering that the counterfactual was likely to result in:
(a)fewer new or retained FTE jobs including because the ANZP is unlikely to build show homes; and
(b)less additional investment as a result.
[145]On this aspect it is useful to repeat that the Assessment Report records:
(a)CDL intends to develop the Land into a unique residential subdivision with a large number of lots;
(b)CDL intends to construct something approaching [suppressed] show homes which will demonstrate higher density living on smaller sections along with a [suppressed] unit retirement living complex;
(c)the third-party submission from Greenstone/Tumu submits that a similar dwelling yield to that of CDL was proposed;
(d)the ANZP is likely to develop residential lots but generally not to build houses on them, instead allowing each purchaser to separately engage a builder to construct a house on the lot;
(e)CDL’s proposed investment is likely to result in more jobs and additional investment than under the counterfactual as the ANZP is also unlikely to build show homes;
(f)the investment is likely to result in more jobs (relating to planning and obtaining consent, subdivision and construction of show homes and the retirement complex and at a likely faster pace) than the counterfactual;
(g)the level of benefit under the jobs and additional investment factors is regarded as low and the weight ascribed to these factors by the OIO is weak.
[146] The required counterfactual analysis involves the consideration of what is likely to happen with the land if the proposed investment does not go ahead. The OIO approaches this on the basis of a rebuttable presumption that the most likely counterfactual is acquisition of the land by an ANZP as a hypothetical entity.
[147] CDL also proposed a status quo counterfactual in its application. The alternative for the Lowe interests as vendors as they confirmed in their evidence was to “sit on the Land as they have been since 2018 until they can get better value”. I repeat that Mr Lowe in his evidence proposed that if the Lowe interests did not receive an acceptable offer that reflected the true value of the Land they were prepared to continue holding it as they have done for over 50 years.
[148] On this, however, the OIO considered the ANZP was the most likely counterfactual here and the analysis in the Assessment Report was based on this.
[149] The main source of information for the assessment of the present consent application, like others, was CDL as the applicant and the Lowe interests as the vendors of the sensitive land. So far as the counterfactual analysis is concerned, any submissions from third parties relating to the application relating to the application were also able to be made. The OIO then, as here, tests its information insofar as it is necessary and reasonable to do so in the circumstances.
[150] Here, the March 2021 joint submission provided by Greenstone/Tumu claimed that Greenstone could deliver a similar level of benefit to CDL, including construction of 350–400 residential sections on the initial land, 200 sections on the further land zoned Plains Production and a retirement village. It is clear however, as noted by Mr Frame in his evidence, that the joint Greenstone/Tumu submission did not refer to the building of show homes, nor did it state that they intended to construct housing in the
medium-higher density areas of the proposed development, which Mr Frame now claims in his evidence was always the intention.87
[151] So far as the issue concerning building of show homes was concerned, Winton’s position here asserts that all residential property developers build show homes or dwellings. However, on the basis of the evidence that was before the OIO and the Ministers, none of this indicated that all residential property developers will necessarily build dwellings or show homes in all cases. There is no reference to building show homes in Greenstone/Tumu’s submissions to the OIO.88
[152] In addition, so far as Winton is concerned, despite it being expressly offered several opportunities to do so,89 Winton chose not to put before the OIO or the Ministers what specific plans it might have for the land by way of subdivision, building of show homes and the like. Winton’s only communication with the OIO that it chose to make here about this acquisition, was an oblique and anonymous one which did not explain its concerns in any real way. I am satisfied it had every opportunity to engage with the OIO in the same way that Greenstone/Tumu had but it chose not to do so. It is not open to Winton now to seek to have the consent decision set aside on the basis that the Ministers failed to take into account information that Winton chose not to provide.
[153] As to the information which was before the OIO at the relevant time, in my view that simply did not lead to the conclusion that an ANZP would certainly build dwellings or show homes on a number of the subdivided sections, as CDL proposed to do. And, in any event, the OIO and the Ministers would have been well aware of CDL’s intention that many of the show homes it proposed to construct would be unique new compact-living examples used to help educate people in the Hawkes Bay area on the real possibilities and advantages of greater density residential developments and improved land use.
87 Reply affidavit of Mr Frame at [61], [91] and [93].
88 Reply affidavit of Mr Frame at [91] and [93].
89 See affidavit of Mr Mumford at [64.1] and [64.2].
[154] Moreover, the job opportunities factor and the additional investment issue were described in the Assessment Report as having an indicative strength in each case which was “weak”. It is also true that special conditions on CDL’s consent were imposed to ensure that the promised jobs benefit was being met.
[155] Winton appears also to complain that the Assessment Report which was put to the Ministers did not include sufficient detail of the Tumu/Greenstone submission here. I reject this. The Assessment Report did disclose the fact of the Tumu/Greenstone submission and the reason for it, expressing a view on the weight that could be put on the submission.
[156] The Assessment Report as I see it, fairly put to the Ministers the fact and nature of the Tumu/Greenstone submission. Obviously it could not put to the Ministers matters now raised by Winton, which Winton had chosen not to divulge to the OIO at the time. It does seem that Winton’s true concern here appears to relate to the weight that the Ministers as decision-makers should place on the Tumu/Greenstone submission. That is a matter for the Ministers and I am satisfied they properly considered it here.
[157] On the building of dwellings and show homes issue, I find that Winston has simply not demonstrated that the Ministers took into account any factual error here. The Ministers’ conclusion the ANZP was unlikely to build show homes was therefore as I see it one reasonably open to them on the available evidence. In any event, CDL’s plan to construct specialist show homes here (in part for educative purposes) was only one factor considered in the context of what the Ministers confirmed was a multi- faceted decision. For all these reasons Winton’s fourth ground of review must fail.
Fifth Ground of Review — error of law — consent decision failed to take into account relevant considerations
[158] In this fifth ground of review Winton alleges that the Ministers erred in law by failing to take into account two sets of allegedly relevant considerations, the first relating to the oversight and participation by New Zealanders factor, the second, addressing the counterfactual analysis.
[159] In relation to the oversight and participation by New Zealanders factor Winton maintains:
(a)neither the Assessment Report nor the Ministers took account of what is said to be the diverse and fragmented nature of the New Zealand shareholding interests in CDL Investments. To give proper effect to Reg. 28(j), Winton says this was required to be taken into account. It maintains the level of influence by New Zealand ownership is likely to be appreciably different, where for example on the one hand, there is a direct and single New Zealand owned shareholding of around 45 per cent, as opposed on the other hand, to first, an indirect (that is through a parent) New Zealand shareholding of this figure, or secondly, a direct single New Zealand-owned shareholding which is less than 25 per cent, or finally where there is a total New Zealand shareholding, again of less than 25 per cent, spread among a number of small individual shareholdings; and
(b)the Assessment Report did not take account of Millennium’s effective control over CDL, in particular with the power to appoint and remove CDL and CDL Investments’ directors. Winton complains therefore that participation of New Zealanders at a governance level in these companies is at the whim of Millennium which has substantial majority overseas owners.
[160] So far as pleaded failures relating to the counterfactual analysis are concerned, Winton contends these stem from the inadequate counterfactual analysis by the OIO reflected in the Assessment Report. In particular this complaint revolves around the fact that the OIO, despite being aware of another New Zealand developer’s interest in and offers to purchase the Land, it is said did nothing to investigate that developer’s (that is, Wintons’) plans and capability except to make a general invitation to provide a submission on CDL’s application. This is claimed to be contrary to the Ministerial Directive to “seek sufficient information through the application and assessment
process to verify the information provided by applicants, and where appropriate involve third parties … and third party resources to achieve this goal”.90
[161] Winston says that, instead of the general invitation to make a submission, the OIO could simply have asked Mr Chesterman, the lawyer at the time acting for Winton, to have his client describe its plans and make any comments it wished on the matter the OIO was considering for its decision-making process. This could have included its views over the construction of show homes, Winton’s status as an ANZP and its plans for the Land as an unsuccessful tenderer.
[162] Winton maintains OIO similarly failed to ask questions of Tumu/Greenstone. Had this been done it would have led the OIO and also the Ministers to take into account what Winton says are the likely additional job opportunities and investment resulting from a development through the construction of show homes undertaken by an ANZP. In failing to take into account these relevant considerations, Winton says the Ministers therefore erred in law when making their decisions.
[163] To recap, s 17(1) of the Act provides that the Ministers must consider all of the factors in s 17(2) as mandatory relevant considerations to determine which factors are relevant to the overseas investment and they must determine whether the benefit to New Zealand test is met after having regard to these factors. Here, Winton asserts the OIO and the Ministers erred specifically by not putting to Winton and/or Tumu/Greenstone the specific considerations they were taking into account in their assessment, so that their response could be considered when assessing the benefit to New Zealand test.
[164] No authorities cited to me have provided for such a far-reaching enquiry. The highest the issue can be put is that a decision-maker must not be misinformed as to “established and material facts”. The emphasis here must be on what is reasonable in the circumstances. There is no obligation to ascertain and consider the views of anybody that may have an opinion.91
90 Ministerial Directive at 32.6
91 CREEDNZ Inc, above n 40 at 200
[165] In CRA3 Industry Association Inc v Ministry of Fisheries,92 McGechan J summarised the position well in holding:93
“… a decision-maker must not only ask the right question, but must “take reasonable steps to acquaint himself with the relevant information to enable him to answer it correctly … The obligation is to take “reasonable” steps to self-inform. The criterion of reasonableness always depends very much upon the facts and circumstances of individual situations……
There is a duty on a Minister charged with exercising a statutory power to inform himself to a reasonable extent commensurate with what he must do and what is at stake. What is “reasonable” will also depend on circumstances prevailing at the time. Matters such as time available, resources to hand, existing knowledge and expertise, and reliability or apparent reliability of sources all can have a bearing, along with all else. In principle, exhaustive information of course is desirable. In practice, that happy state is rarely obtainable. I say that with some feeling. Many decisions, and reasonably, must be made on the basis of information to hand or practicably obtainable within an available timeframe. The false wisdom of hindsight, which nearly always will point to additional information and say it would have been useful, needs severe restraint.”
[166] With this in mind, I am satisfied therefore there was no obligation here on the Ministers to go further and put to Winton and Greenstone/Tumu for comment their conclusions on each aspect of the benefit to New Zealand test. That was both unnecessary and unreasonable in all the circumstances. I reach that view given that the issue involved a judgment about a hypothetical counterfactual, and it goes well beyond what is reasonable in the circumstances for the OIO to be expected to meet such requests in every case such as this where it receives input from third parties. The OIO and the Ministers had other information available here on which they could make their own assessment.
[167] This Court should not under this ground of review enquire into questions of weight or into a decision-maker’s conclusions about mandatory considerations where a decision-maker has genuinely turned their mind to the relevant considerations, which I am satisfied has occurred here.
[168] In relation to the oversight and participation issue, Winton at para [73](a) of its statement of claim, alleges that the Ministers failed to take into account:
92 CRA 413 Industry Association Inc, above n 41.
93 Above n 41, at [60].
(a)“the diverse and fragmented nature of the shareholding interests in (CDL Investments) held by non-overseas persons”; and
(b)“Millennium’s effective control over the CDL entities”.
[169] I am satisfied none of these factors are mandatory relevant considerations. Regulation 28(j) of the regulations which assesses this requires the Ministers to consider:
“the extent to which persons who are not overseas persons (New Zealanders) will be, or are likely to be, able to oversee, or participate in, the overseas investment and any relevant overseas persons.”
[170] The Ministers here both gave evidence of their consideration of this factor. Associate Minister Woods explained that the oversight and participation factor “was informed by a range of factors”. She said that it was not a numerical test in her mind but rather was the interaction between a range of relevant matters. The fact that first, CDL’s parent company CDL Investments and its majority shareholder Millennium, were both NZX listed companies which meant the level of shareholding by New Zealanders could go up or down over time, and secondly that all CDL directors and half of the CDL Investments directors were New Zealanders, were relevant matters.
[171] Minister O’Connor too said that his assessment included noting that both CDL and CDL Investments were companies both incorporated and based in New Zealand with a range of New Zealand citizens as directors.
[172] Both Ministers also referred to the Assessment Report which gave details of these factors, albeit with the slight numerical error, noted above, in the actual shareholding of CDL. Clearly, the Ministers considered all these relevant factors. The essential concern which Winton appears to express here relates to the conclusions the Ministers drew from all those considerations, rather than whether the mandatory relevant factors were considered at all. Effectively, Winton is inviting the Court here to replace the Minister’s decisions as to the weight to be given to all factors here with its own assessment as to weight. As I see the position, it is simply the type of merit- based challenge that is not available under this head of review. So far as this ground of review is concerned, it must be dismissed.
[173] It is also incorrect here for Winton to claim that it has “status as an ANZP” in this case. I am satisfied unsuccessful tenderers for the asset to which the application for consent relates are not the ANZP. The ANZP is a hypothetical person. I note also that notwithstanding Winton was offered opportunities to provide to the OIO relevant information on the application, it did not at any time disclose its identity as one of the underbidders for the land, or provide a third-party submission detailing its normal approach to residential development, or its specific plans for the land. Accordingly, there was simply no way for the OIO to know that Winton was an unsuccessful tenderer for the land or to consider any information about Winton’s usual development approach or specific plans for the Land. Nothing was provided therefore which would assist the OIO in assessing CDL’s application beyond indicating that the ANZP counterfactual was likely the correct one to consider, given correspondence had confirmed the fact there had been other offers on the Land from two property developers.
[174] Also, as I have indicated above and acknowledge, the resources of the OIO are finite. It is not possible for it to spend unlimited time and resource in assessing every application for consent. Neither is it feasible or practical for the OIO to undertake its own investigations on all matters in assessing all the applications it is required to consider. Here, it seems to follow from Winton’s suggestion that the OIO should have canvassed residential property developers operating in New Zealand to determine what the likely counterfactual would be, and to consider, the track records of other developers and potential plans for the Land to determine a hypothetical counterfactual here. In a perfect world that might be achievable. In a case such as this it is not.
[175] It is important to note too that Winton, having made the decision not to take up opportunities to provide to OIO certain information, cannot after the event as I see it, put that information before this Court to complain it should have been considered earlier.
[176] I turn now to the second allegedly relevant mandatory consideration. This is set out in s 17(2)(a)(i) and (v) of the Act which, I repeat, require the Ministers to consider whether the overseas investment will or was likely to result in:
(a)the creation of new job opportunities in New Zealand or the retention of existing jobs in New Zealand that would or might otherwise be lost; and
(b)the introduction into New Zealand of additional investment for development purposes.
[177] In making that assessment as I have noted the Ministers are required to undertake a counterfactual analysis.
The Ministers, as I see it, from their affidavit evidence clearly gave this factor specific consideration. The Assessment Report too addressed these considerations in some detail. Of particular relevance, the report noted that CDL intended to build [suppressed] show homes within various stages of the subdivision, to demonstrate unique, compact, liveable homes on smaller sections, which was an innovation in the Hawkes Bay area, and perhaps also in New Zealand generally. A [suppressed] retirement complex of [suppressed] standalone units, [suppressed] and commercial premises were also to be built.
[179] To impugn the Ministers’ analysis relating to additional investment for development purposes and new and retained jobs insofar as it rested on the consideration the ANZP would be unlikely to build show homes, or other houses, Winton is required to show here that there was no evidence on which this conclusion could be reached. It has not been able to do so in my view. For reasons I have outlined above there was sufficient evidence to support this conclusion. The decision made by the Ministers was reasonably open to them and properly made in good faith after considering mandatory relevant matters. No question arises here of the Ministers having a closed mind or of any relevant consideration as a whole having been overlooked. This is a complete answer to this ground of review which also must be dismissed.
Sixth ground of review — unreasonableness
[180] In this ground of review Winton directly challenges the substance of the consent decision and alleges that “no reasonable decision-maker could” have made that decision because, in summary:
(a)there was “no rational basis” for the findings in the Assessment Report as to the level of New Zealand participation and oversight in CDL’s proposed investment; and
(b)there was “no rational basis” for distinguishing between CDL and a hypothetical ANZP with respect to:
(i)the FTE jobs to be created or retained by the investment;
(ii)the additional investment likely to result from the construction of show homes as a result of the investment; and
(iii)the relevance of the limited length of time for which CDL would hold the Land.94
[181] This ground of review significantly overlaps the first to fifth grounds of review (all dismissed as noted above).
[182] Winton must pass a high threshold to establish that the consent decision here was unreasonable in an administrative law sense. That concept of “unreasonableness” has its origins in the decision in Associated Provincial Picture Houses Limited v Wednesbury Corp.95 The test that case established is whether the decision was “so unreasonable that no reasonable authority could ever have come to it”.96
[183] The ultimate enquiry in considering this “unreasonableness” ground must be into the Ministers’ consent decision as a whole. The question for the Court is whether
94 Statement of Claim at [77](a) and (b).
95 Associated Provincial Picture Houses Limited v Wednesbury Corp [1948] 1 KB 223 (CA).
96 At [230].
that decision itself is unreasonable, rather than whether any individual finding that led to the decision is unreasonable.
[184] This Court in Smith v Attorney-General97 explained this rule and the justification for it in this way:
“The focus is on the unreasonableness of the outcome itself, rather than the unreasonableness of its reasons. Whether the decision-maker acted unreasonably, as opposed to whether the decision itself was unreasonable, is covered by other judicial review grounds, such as error of law, mistake of fact and illegality.
[185] It is well-established too that the Court should be particularly slow to make a substantive assessment of decisions such as the present that have a high policy content. In Jeffries v Attorney-General,98 Ronald Young J made the following comment when considering standing to review a decision made under the then Overseas Investment Act 1973, (emphasis added):
“Neither the appellant nor indeed any member of the public has any role in the functioning of the Commission unless they are directly involved in an application for overseas investment consent. Members of the public have no role in a process which considers and either grants or rejects an overseas investment application, or once such an application is granted, the monitoring and enforcement of the regime. Given the power of Government direction, there is a high policy content in the operation of the Act …”.
[186] In my view, the Ministers’ findings here, as explained in their affidavit evidence, and as I comment on above, were factual, supported by the evidence, and must be considered as beyond dispute. The Ministers in their consideration also relied on the Assessment Report and again, with the exception of the arithmetical error in the calculation of the shareholding in that report, I am satisfied its findings were generally factual and supported by evidence.
[187] It would seem the essential complaint from Winton is that the Ministers ought to have interpreted this evidence in a different way and taken into account matters which Winton now produces but which it failed to put before the OIO at the relevant time. I am satisfied Winton is effectively asking this Court to substitute its judgment
97 Smith v Attorney-General [2017] NZHC 136 at [114].
98 Jeffries v Attorney-General HC Wellington CIV-2006-485-2161, 20 May 2008 at [15].
for the judgment of the Ministers as decision-makers. The issue here is not whether Winton’s complaints may have some merit, but as I see it the true issue is whether there was a rational factual basis for the Ministers’ decision. I find there was.
[188] Lastly, I address a complaint relating to the relevance of the limited length of time CDL would hold the land here relative to any counterfactual. In my view this factor had a clear factual foundation supported by the circumstances of CDL’s application, its history and its acquisition of the specific Land here. The Ministers, in my view, were entitled to take these factors into account.
[189] In all the circumstances prevailing in this case, and for the reasons I outline above, I conclude too that this sixth ground of review cannot succeed. The Ministers’ decision was well-supported by evidence and could not be seen to be in any way unreasonable in administrative law terms. This sixth ground of review is also dismissed.
Relief sought
[190] Given my conclusions and the outcome here, which effectively dismiss Winton’s application for review, it is unnecessary to review the many arguments put to me on the forms of relief that otherwise may have been appropriate had the grounds for review been made out.
Conclusion
[191] For all the reasons I have set out above, I am satisfied none of Winton’s grounds of challenge to the consent decision can be made out. The present application is dismissed.
Costs
[192] No submissions on costs were made before me from any counsel. I am satisfied here that costs ought to follow the event. My provisional view therefore is that each group of respondents ought to be entitled to an award of costs on some appropriate basis.
[193] I urge the parties to liaise with a view to endeavouring to settle the issue of costs. If they are unable to do so I will receive memoranda from each of the respondents, limited to five pages, which are to be filed within 20 working days of delivery of this judgment. Winton will then have a further 20 working days in which to file a reply, also limited to five pages. The respondents will then have a further 5 working days for any brief reply strictly on new matters raised in Winston’s submissions. I will then give my decision on costs based upon the memoranda filed and all material before the Court unless any party indicates they wish to be heard on the matter.
Gendall J
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