An Australian owned company - Carbon Conscious New Zealand Ltd – has been ordered to pay $40,000 in penalties plus costs for a purchase involving sensitive land without consent under the Overseas Investment Act (OIA).

The order was made by the High Court on the application of Land Information New Zealand.  It is the first case of its kind under the Act.

The facts

Carbon Conscious New Zealand (CCNZ) is an overseas person under the OIA as it is a subsidiary of Australian firm Carbon Conscious Ltd.  Both companies plant forests for the carbon credits. 

CCNZ had a contract with Origin Energy to plant 225 carbon lots in both 2011 and 2012.  To meet its 2012 planting obligations, it wanted to buy a property deemed to contain sensitive land under the Act but the time involved in the consenting process would have pushed the purchase out beyond the planting schedule.  

What to do?

The "solution"

CCNZ sought legal advice and, based on that advice, set up a separate company (Katey LR Investments Ltd) in the name of a friendly party to buy the land. 

Under the terms of the deal CCNZ would fund the purchase by fronting up $335,000 for the forestry rights and Katey LR would grant it an option to acquire the land at some later stage in consideration for this already paid money, provided the sale was approved under the OIA.  These arrangements made Katey LR an "associate" of CCNZ and, as such, subject to the Act.

On 24 April 2013, CCNZ's nominee applied for consent, a decision on which is still pending.


The maximum penalty available was $300,000 but the Court found that, although the circumvention of the Act was deliberate, the fact CCNZ had been acting on legal advice put its culpability at the lower end of the range.

Other factors were that any commercial gain from the ploy was difficult to quantify and that there were no identifiable costs in remedying the breach or identifiable losses sustained in relation to it.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.