14 April 2016

Court penalises investor after OIO investigation

The Overseas Investment Office (OIO) has welcomed the High Court’s order that Australian-owned Carbon Conscious New Zealand Ltd pay a $40,000 penalty – and more than $6,000 in costs – for breaching the Overseas Investment Act 2005.

OIO Group Manager Annelies McClure says the decision sends a strong message to the lawyers that advise overseas investors.

“Giving poor advice can expose clients to significant legal liability, as they’re responsible for complying with the law. They can’t hide behind their lawyer’s advice if things go wrong,” she said.

The penalty relates to the purchase of a Taranaki property in 2012. Carbon Conscious needed consent to buy, and plant trees on, the property but had a New Zealand associate buy it instead.

Carbon Conscious planned to obtain consent and buy the property later – a plan its lawyer incorrectly advised was not in breach of the Act.

The OIO learned of the purchase in 2013, and began an investigation that resulted in the OIO taking High Court action last year. The Court described the arrangement as a “deliberate circumventing of the Act’s controls on overseas investment”.

“The Court found that Carbon Conscious hadn’t intentionally broken the law – having acted on legal advice – but Carbon Conscious was still ultimately responsible for complying with the Act and, therefore, had to be penalised.

“The lawyer who acted for Carbon Conscious is no longer practising, and the OIO is pursuing action against him for his role in the Carbon Conscious matter,” Ms McClure said.

For more information, visit the LINZ website or read the full High Court judgment.

Ends

© Scoop Media