Social Credit has prevailed in the first round of its High Court challenge to the Overseas Investment Office decision to grant Chinese owned company Hong Kong Jingang permission to take over New Zealand’s second largest milk processing company, Westland Milk Products in August last year.

Lawyers acting for Westland Milk and its new owner, China’s Hong Kong Jingang Ltd, sought an order from the Court that would have required Social Credit to deposit $40,000 into a lawyer’s trust account as security for any costs awarded against it in the event that it lost the case.

The application claimed that Social Credit had little chance of success in its High Court judicial review, and wanted the party to stump up with $20,000 surety for each company ($40,000 in total) to cover their clients’ legal costs, even though the same lawyers are acting for both companies.

Crown Law, representing the Overseas Investment Office initially applied for costs as well but subsequently withdrew that application.

The application was dismissed by Justice Clark, and costs of that hearing awarded to Social Credit.

In her decision Justice Clark noted that “Social Credit has standing to bring the proceeding. It is not a ‘mere busybody engaged on a fruitless exercise’. There is public interest in having the issues raised by the claim be heard and determined”.

“This was simply an attempt to derail Social Credit’s case for a judicial review of the Overseas Investment Office decision on the sale of Westland Milk by putting a significant financial roadblock in our way in the hope that we would abandon the case” said party leader, Chris Leitch.

“We will not be put off by such hurdles in matters as important as this”.

“Given the role of OIO as the ‘gatekeeper’ to acquisition of New Zealand assets by overseas entities, we believe it must ensure that it applies the proper legal test, that it has sufficient information to determine which test should be applied to a particular application for consent, and that all necessary matters are taken into consideration”.

“In our view the OIO failed to properly make its decision to consent to the Westland Milk takeover, hence our application for a judicial review which we lodged last September”.

Social Credit has a long standing policy of opposing foreign takeover of land and businesses by overseas buyers and would seek to reinstate New Zealand ownership of strategic assets.

The Party is seeking financial support in its fight. Donations can be made to this account - Kiwibank 38-9000-0601245-02 or made on the Give-A-Little page set up for the legal challenge (Westland Milk Sale Judicial Review).

Background

The judicial review challenges the Overseas Investment Office handling of the decision to approve the sale of Westland Milk Products to Hong Kong Jingang, a company wholly owned by Chinese conglomerate Inner Mongolian Yili.

Our contention is that the ‘test’ applied by the OIO in making the decision was incorrect.

The judicial review, to be heard by the Court in September, seeks to have the decision overturned and sent back to the OIO for the correct test to be applied.

That test would require the appropriate ministers to make the decision whether to approve the application for the takeover, not the OIO under delegated powers.

Inner Mongolian Yili is the largest milk processor in China and is 25% owned by the Chinese government. The takeover has left Fonterra the only significant New Zealand owned processor of milk products.

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