9 August 2002

Young Nick’s Head protected

“Young Nick’s Head will be protected and the cliffs, pa site and peak of Te Kuri gifted into public ownership as part of a purchase deal for Young Nick’s Station,” Finance Minister Michael Cullen and Associate Minister for Land Information Paul Swain announced today.

The key historic, iconic and culturally significant sites on Young Nick’s Head will remain in New Zealand hands in perpetuity.

The purchaser, New York financier John Griffin, has also agreed to establish an open covenant through the Queen Elizabeth II Trust to protect the remainder of the headland area from commercial development.

Mr Griffin has offered to set up a trust with Ngai Tamanuhiri to preserve and protect the cultural and historical values of the property.

Access rights will be preserved.

These commitments are enforceable by the Overseas Investment Commission.

“Ironically, it is only because the property is being sold to an overseas buyer that we were able to impose conditions upon the sale. That would not be the case were it being bought by a New Zealander,” the Ministers said.

“We believe this is a constructive solution, entered into in good faith by Mr Griffin, which recognises the iconic importance of this site to both Maori and Pakeha and we urge all parties with an interest in the headland to work constructively together.”

Mr Griffin came into the picture after an attempt by Ngai Tamanuhiri last year to buy the property for $4 million failed through lack of finance.

The Ministers said every effort had been made to accommodate Ngai Tamanuhiri’s concerns, including the exploration by the Department of Conservation last month of an option whereby the headland would be subdivided off and bought by the Crown.

But the advice to the Ministers was that the farm was already a marginal economic proposition and that this would make it unviable.

“The station needs investment to restore its production and conservation value. Mr Griffin plans to upgrade it, landscape and plant it. He will also restore the manager’s house and build a home for himself.

“These improvements will be of benefit to the local economy,” the Ministers said.

Attached:

Timeline.

Letter from the Ministers to the Overseas Investment Commission outlining the reasons behind their decision.

TIMELINE

Date Event/Action

November 2000 Property listed for sale with Wrightson’s Real Estate

7 March 2001 Tu Wyllie entered into an (unsigned) agreement to purchase the property subject to the agreement of Ngai Tamanuhiri trustees and to obtaining finance for $4 million

7 June 2001 Sale offer to Ngai Tamanuhiri lapsed

30 January 2002 Sale and Purchase contract entered into by Griffin to purchase the property for $4 million

1 February New OIC farm land rules came into force (substantial and identifiable benefits and advertising requirements)

18 February Griffin lawyers wrote to Ngai Tamanuhiri inviting them to participate in the development of Griffin’s plans for Nick’s Head Station - including the landscape plan.

8 March Griffin’s lawyers meet with Ngai Tamanuhiri to discuss how Griffin can address aspirations of Ngai Tamanuhiri in respect of Nick’s Head - particularly, access to wahi tapu and the foreshore

Ngai Tamanuhiri propose to Griffin that he sell the headland to them and lease it back

15 March Tu Wyllie phones OIC to enquire about process

20 March Tu Wyllie indicates to OIC that Ngai Tamanuhiri will be making a submission to the OIC opposing the sale of Nick’s Head Station to Griffin

22 March Griffin indicates that the Ngai Tamanuhiri proposal is not acceptable via a letter.

Griffin’s lawyers give Tu Wyllie a draft copy of the landscape plan and ask Ngai Tamanuhiri for input

2 April OIC application made

16 April Submission made to OIC by Ngai Tamanuhiri

9 May Meeting between Griffin lawyers and Ngai Tamanuhiri

21 May Trust proposal given to Ngai Tamanuhiri by Griffin’s lawyers

31 May Telephone conversation - Griffin/Tu Wyllie

6 June 2nd Ngai Tamanuhiri submission to OIC - continuing to oppose application

19 June OIC notified that the Historic Places Trust had received a proposal to register a wahi tapu area on Young Nick’s Head

20 June OIC report to Ministers

28 June Ministers announced 6 week extension for further dialogue between Griffin and Ngai Tamanuhiri

30 June Original contract expiry date

3 July Griffin lawyers wrote to Ngai Tamanuhiri seeking dialogue

6 July Ngai Tamanuhiri replied indicating not prepared to discuss Trust proposal or other matters unless the issue of Ngai Tamanuhiri owning the headland was addressed first

7 July Griffin’s lawyers indicate by email a desire to still meet with Ngai Tamanuhiri

15 July Occupation of Nick’s Head

21 July Dr Cullen announces involvement of DOC

25 July Hikoi departs Muriwai

5 August Hikoi arrives at Parliament

9 August Contract expiry date. Final OIC report to Ministers.

9 August 2002.

Mr S. Dawe,

Secretary,

Overseas Investment Commission,

P O Box 2498,

Wellington.

Dear Mr Dawe,

Application no. 200210091: Nick’s Head Station.

On 20 June you reported to Ministers on the above application, and have submitted a number of supplementary analyses and reports while we have been considering it. Given the intense public interest in this particular case, we feel that it would be appropriate to set out our reasoning in reaching our decision in writing.

We have assessed the application in terms of the criteria set out in S14A of the Overseas Investment Act. In respect to S14A (2)(a) -(c) we find that there is a small, but demonstrably positive net national benefit under the criteria. If the purchase is approved, there will be additional investment on the farm, through fencing, planting, landscaping, the application of fertiliser and an upgrading of the farm manager’s house. The construction of a new dwelling for the owner will have positive employment impacts. The farm management plan will result in improved conservation and a positive lift in production.

The complications with the application arose with respect to our considerations under S 14 A (2) (e) which requires us to have regard to “such other matters as (the Ministers), having regard to the circumstances of the particular overseas investment, think fit”.

In its report to us, the Overseas Investment Commission drew our attention to the fact that part of the farmland was “a unique piece of land and a significant landmark for New Zealand”, and that it “has great cultural significance to Maori”. We do not need to rehearse the precise nature of that significance because the reasons have been well canvassed in the media.

The Overseas Investment Commission and various Ministers have received a number of comments and submissions on these historic and cultural matters, and on how the proposal might impact on them, both positively and negatively it has to be said.

There is no formal provision in the Act that allows for such “third party” representations, or that defines how they ought to be processed and assessed. It is simply a matter of good administrative practice that submissions ought to be given the consideration that they warrant. At the end of the day, though, relevance and weight are determined by what the Ministers “think fit”.

The representations raise “other matters” that can be placed in one of five categories:

- Protection of historical and culturally significant sites.

- Retention of public access to those sites.

- Retention of the sites in New Zealand ownership.

- Vesting of ownership of the land covering the sites with the Tangata Whenua (Ngai Tamanuhiri) on behalf of all New Zealanders.

- Enhancement and restoration of the environmental values of the headland and adjacent areas.

Protection of sites.

As a general rule, the protection of sites - for example by prohibiting certain developments like golf courses and tourist lodges - cannot be achieved by decisions made under the Overseas Investment Act. That is more a matter for other statutes like the Historic Places Act and the Resource Management Act.

If Ministers declined the application, the status quo prevails: the land is owned by an Australian resident who wishes to sell it. There are risks associated with that. If the land is marginal as a commercial farming venture, a prospective purchaser might seek to secure a better return by other forms of commercial development which could compromise the heritage values of the sites.

Ironically, it is only sale to a foreigner that can give legal certainty that the sites will be protected if the foreigner offers, and Ministers accept as a condition of sale, that various protections and covenants on use of the sites will be developed.

Protection of access.

Again, the OIA cannot be used to protect public access to private land. A New Zealand owner would be perfectly entitled to limit access to the land, and there is very little the law could do about it.

Crown ownership might be seen as a mechanism by which greater certainty of continued access might be achieved, but declining this application will not necessarily lead to Crown ownership. The Crown might not decide that purchase is a viable or priority option, and the owner might find another buyer.

Again, ironically, it is only through a sale to a foreigner, and if reasonable public access is offered and made a condition of approval that this objective can be achieved.

New Zealand ownership.

Ministers can ensure that ownership of the land remains in New Zealand hands by declining applications by foreigners to purchase. That in itself does not do much: it doesn’t ensure continued public access, restoration of environmental values or protection of heritage sites.

Ministers are aware that the current owner is resident abroad and has indicated that she has no intention to return. This inclines Ministers to the view that leaving ownership in current hands is unlikely to result in renewed investment to reclaim environmental values, and is more likely to result in some overgrazing of the farm, with attendant risks to native bush and erosion.

Tangata Whenua ownership.

Representation of this issue as a relevant “other matter” has come from Ngai Tamanuhiri itself.

Ministers do not pass any judgement on the claims and counter-claims made in correspondence on the issue. Declining the application would leave matters where they had been for fifteen months: the land being on the market and Ngai Tamanuhiri having thus far been unable to conclude a contract to purchase it. In theory, a sale to a foreigner would not prevent the Tangata Whenua from buying the land off the foreigner at a later date, but Ministers do consider that such an action would significantly diminish the prospects of such a purchase. They have given this matter consideration and due weight in reaching their final decision.

Restoration of the environment.

The key aspect of any protection of native bush, landscaping and planting of areas at risk of erosion is not necessarily the nationality of the owner but the intentions of any owner and the resources at their disposal.

The current proposal envisages a more extensive and expensive farm development/environmental protection programme than would be undertaken by the current owner (i.e. if the application is declined). It is not possible to speculate about the intentions or resources of any possible future owner.

Issues not considered relevant.

Representations and comments were made about three aspects of the proposal that Ministers did not regard as relevant “other matters” under the provisions of the OIA.

(a) whether the land had been on the market, advertised and available for New Zealanders to purchase for sufficient time;

(b) whether approval could be conditional on a subdivision of the property and the sale of part of it (containing the sensitive sites) either to Ngai Tamanuhiri or to the Department of Conservation;

(c) the risk that the vendor might sue the Crown for damages if the sale falls through.

Marketing of the land.

The land had been marketed by Wrightson Real Estate as a sole agent for fifteen months prior to when the agreement for sale and purchase was reached with the applicant. During that time the estate agents contacted a number of possible buyers, and arranged for them to inspect the Station. Three of the potential buyers decided not to make an offer. Two made offers that were not acceptable to the owner.

Ngai Tamanuhiri reached an agreement subject to approval of the Ngai Tamanuhiri Whaanui Charitable Trust trustees, and finance. On 7 June 2001 the estate agents were advised that the trust “would not be proceeding any further”. The agents prompted the representatives of the iwi to bring other tribes into the agreement, but without success. The agreement with Mr Griffin was reached seven months later.

We do not consider that there has been inadequate opportunity for local interests to negotiate a purchase.

Subdivision

The idea of part of the station being subdivided and sold and/or leased back was floated by the iwi and the Minister of Finance asked the Minister of Conservation to have her officials investigate the option.

This has come to nothing. Advice to Ministers is that the farm is a marginal commercial proposition, and removing a third of its capacity would make it unviable. The buyer is not prepared to accept a condition that purchase is approved subject to on-selling a part of the farm because does not think that such arrangements are tidy enough, or certain enough into the future. The commercial viability of his investment could be undermined at any unpredictable time in the future. Our legal advice is that we cannot impose this as a condition of approval. Attempting to do so would result in Mr Griffin not going ahead with the purchase and under these considerations has the same effect as our declining the application.

Given that any attempt to impose a sell-down is the same as a decision to decline, we have decided that the transparent option would be to decline, rather than pretend that sub-division is a condition of approval. This issue formed no part of our consideration of “other matters”. We evaluated the application without having sub-division as a possible condition of approval.

Damages.

A vendor might or might not sue the Crown if a sale to a foreigner was vetoed under the OIA. A case may or may not succeed. This cannot be a consideration that Ministers take into account. All sales must comply with the law of the land, and if a sale involves sensitive land and a foreign buyer, OIA approval is required. Potential buyers and sellers know that, and Ministers have to approach each application on the basis that there are criteria that have to be applied without fear or favour.

Basis of our decision.

It is clear from the above that there is no simple solution that would meet the submissions and expectations of all parties that have made representations to the government on this application.

We have discussed more complex options with the applicant in an attempt to develop a solution that would meet all of the reasonable expectations of the New Zealand people. These expectations cover all of the matters raised in submissions: access, promotion of historic and cultural values, environmental and conservation restoration, a role for the tangata whenua and a protection of key sites in perpetuity.

The package that secures this would involve the following:

- Gifting the cliffs, (and a chain back from them) along with the culturally sensitive pa site and mountain peak, to the people of New Zealand so that these historical iconic landmarks remain in New Zealand ownership in perpetuity.

- Establishing an “open covenant” under the Queen Elizabeth II Trust over the headland. The terms of the covenant can ensure that there is no commercial development of headland through lodges, golf courses etc. This protects the sites from degradation by foreign or domestic owners, in perpetuity.

- Retaining current access rights.

- Offering to establish a trust to preserve and protect the cultural and historical values on the site. A trust with representatives of the landowner and Ngai Tamanuhiri allows a full involvement of all perspectives, Maori and Pakeha, landowner and general public, in a collaborative and cooperative way.

- Implementing a conservation plan to restore the environmental value of the area.

Mr Griffin has offered, and Ministers have accepted, these arrangements as a condition of approving the application to purchase Young Nick’s Station. Because they are a condition, continued ownership requires compliance with them.

Ministers believe that this is a constructive solution that meets the needs of all parties. We hope all of those with an interest in the headland will work constructively together. We can open doors. We cannot force people to walk through them.

Accordingly, we approve the application subject to the conditions outlined in your report.

Yours sincerely,

Hon Dr Michael Cullen Hon Paul Swain

Minister of Finance Associate Minister for Land Information

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