The High Court has now for the second time awarded extensive civil penalties for breach of the Overseas Investment Act.
Four Chinese investors who purchased sensitive land without Overseas Investment Office consent were ordered by the High Court to pay penalties ranging from NZ$115,000 to NZ$243,000 each. One investor had entered into a sale and purchase agreement for residential property, then entered into a deed of nomination to effectively pass ownership of the property to the other three investors. These three investors on-sold the property for profit.
Whilst the Court did not find the breach was deliberate, the defendants were negligent in not obtaining the necessary OIO approval. All four investors were experienced in doing business in New Zealand and the Court found they should have been aware of the need for consent. The Court noted that the legal advice the investors had received was poor, and discounted the penalties on the basis that the defendants had acknowledged liability, co-operated with the authorities and expressed remorse.