Setting up a trust structure to work around Overseas Investment Act rules controlling purchase of land by offshore residents cost Auckland lawyer Andrew James Jarvis $275,000; a civil penalty imposed following his assistance in having two Singaporean residents purchase forestry assets in New Zealand without first getting overseas investment approval.
The forestry blocks were purchased in 2011 and 2014, with Jarvis acting for two separate clients. The High Court was told Jarvis had no specific expertise at the time in dealing with Overseas Investment Act issues. He responded to one client’s query about compliance with the Act by stating ‘on the face of it’ the deal he set up did not contravene the Act.
The arrangement he recommended saw formation of a New Zealand incorporated company for each deal, with a New Zealand national as controlling shareholder. Each investor then lent money to this company for purchase of forestry assets.
Jarvis took the view that each investor was simply a creditor; Overseas Investment Act rules on purchase did not apply.
Evidence was given of a back-up understanding that the controlling shareholder in each case would be answerable to the creditor/investor who would later take full control of ‘his’ company and with it, full control of the forestry asset. This trust arrangement amounted to an offence; evading or circumventing operation of the Act.
Land Information New Zealand enforces the rules.
The High Court approved an agreed settlement between Jarvis and Land Information with Jarvis admitting liability and paying a $275,000 penalty.
Land Information New Zealand v. Jarvis – High Court (20.02.25)
25.068