The High Court has ordered an overseas-owned company – BCH Investments – to pay a maximum civil penalty plus costs for buying five hectares of Auckland land without the approval of the Overseas Investment Office (OIO).
The maximum penalty is $300,000, and the costs have come to a total of $288,000.
The company brought the properties on Gills Road, Albany for $12.95 million in 2013, but the land is situated next to a reserve, making it sensitive under the Overseas Investment Act. BCH had planned to develop the land into 117 residential properties and work was already underway when the breach was discovered in 2014.
BCH has now been ordered to sell the Albany properties within two years, and will be selling through subdivision to protect the interests of contractors and purchasers.
The Court heard that BCH will not make a profit on the sale of the properties despite the development not being complete, so a penalty based on financial gain will not be imposed.
“Given the size, scope and nature of the development proposed BCH should have undertaken explicit enquiries as to its obligations under the Act,” Justice Grant Powell stated in his judgement.
“This case shows the importance for investors to seek the right advice when making overseas investments,” Land Information New Zealand Group Manager, Overseas Investment Office, Vanessa Horne added.
“This includes choosing a suitably qualified lawyer and asking the right questions. The OIO has an important role in protecting our sensitive land, and we will continue to pursue cases where people have bought land illegally.”
Earlier this month, two Chinese businessmen were ordered to pay almost $3 million in penalties after buying land in Warkworth without the consent of the Overseas Investment office, leaving them approximately $600,000 in the red.