THE NEW ZEALAND DEMOCRATIC PARTY FOR SOCIAL CREDIT INC v THE MINISTER FOR LAND INFORMATION [2021] NZCA 599

THE NEW ZEALAND DEMOCRATIC PARTY FOR SOCIAL CREDIT INC v THE MINISTER FOR LANDINFORMATION [2021] NZCA 599 [15 November 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA684/2020[2021] NZCA 599BETWEEN THE NEW ZEALAND DEMOCRATICPARTY FOR SOCIAL CREDITINCORPORATEDAppellantAND THE MINISTER FOR LANDINFORMATIONFirst RespondentTHE MINISTER OF FINANCESecond RespondentWESTLAND DAIRY COMPANYLIMITEDThird RespondentHONG KONG JINGANG TRADEHOLDING COMPANY LIMITEDFourth RespondentHearing: 27 October 2021Court: Cooper, Courtney and Collins JJCounsel: R A Kirkness and S W H Fletcher for AppellantN C Anderson and S J Jensen for First and Second RespondentsS V McKechnie and T J Bremner for Third and FourthRespondentsJudgment: 15 November 2021 at 9.30 amJUDGMENT OF THE COURTA The appeal is dismissed.B The orders made by the High Court are upheld.C The appellant must pay the respondents costs for a standard appeal on aband A basis, plus usual disbursements. Half of the costs shall be paid tothe first and second respondents. The other half of those costs shall bepaid to the third and fourth respondents. We certify for two counsel.____________________________________________________________________REASONS OF THE COURT(Given by Collins J)Introduction[1] Three issues are addressed in this judgment. The first asks if the OverseasInvestment Office (the OIO) and the High Court erred when they concluded two dairyprocessing plants (the processing plants) owned by Westland Dairy Co Ltd (WestlandDairy) were properly treated as "significant business assets" rather than "sensitive (butnot residential) land" for the purposes of the Overseas Investment Act 2005 (the Act).The parties agree that in order to be "sensitive (but not residential) land" the processingplants would need to fall within the definition of "farm land" in the Act, and, inparticular, be "land used exclusively or principally for agricultural purposes".1[2] The second issue is whether the OIO had sufficient information to make itsdecision, including whether it complied with a direction from the Minister of Finance,who instructed the OIO to "verify" the information submitted by Hong Kong JingangTrade Holding Co Ltd (Jingang) when it sought consent to purchase Westland Dairy.[3] The third issue is whether the High Court erred when ordering that theNew Zealand Democratic Party for Social Credit Inc (Social Credit) pay costs on ascale 2B basis when it lost its application to judicially review the consent decision thatled to Jingang purchasing Westland Dairy.1 Overseas Investment Act 2005, s 6(1).BackgroundWestland Dairy[4] Westland Dairy was established in 1937 as a cooperative. Its shareholders werefarmers who supplied Westland Dairy with raw milk. Westland Dairy developed intoa large producer of processed milk and dairy products with processing plants inHokitika and Rolleston. An indication of the size of the business may be gleaned fromthe fact Westland Dairy employs 643 full-time staff, with a further 20 part-time andcasual staff. It is the largest private employer on the West Coast.[5] The Hokitika Processing Plant is located on approximately 7.9716 ha in theindustrial/commercial zone of Hokitika. The Rolleston Processing Plant occupiesapproximately 8.9690 ha in the zoned industrial/commercial area of Rolleston.[6] The processing plants receive raw milk from approximately 429 farms, mostof which are located on the West Coast. The processing plants convert raw milk intoUltra High Treatment (UHT) pasteurised milk and a variety of other products, such as10-Star premium milk, A2 milk, whole whipping cream, butter, milk powder,buttermilk powder, yoghurt powder, infant milk formulas and milk-based proteinproducts.[7] In addition to milk processing facilities, the Hokitika Processing Plant has silosfor storage, retail packaging facilities, a warehouse, a laboratory, a boiler plant, a watertreatment facility, x-ray facilities to check infant milk products for foreign substancesand office buildings. There is a railway siding at the Hokitika Processing Plant, whichis used to send and receive goods from the Rolleston Processing Plant. The HokitikaProcessing Plant uses significant quantities of industrial chemicals, includingammonia that is used to cool products.[8] The Rolleston Processing Plant has a reverse osmosis plant that is used toreduce the water content of raw milk before it is transported to Hokitika. TheRolleston Processing Plant also has a UHT facility, a warehouse, offices and loadingareas.[9] Westland Dairy also owns a small amount of residential land adjacent to theHokitika and Rolleston sites. Those properties were acquired as a "buffer" betweenthe processing plants and other properties and to provide scope for future expansion.The residential sites are car parks and some houses on those sites which are used toaccommodate staff.[10] By 2017 it was apparent to the Board and management of Westland Dairy thatit was in a dire financial situation. It was paying its suppliers of raw milk substantiallyless than other dairy cooperatives, such as Fonterra, and it had no capacity to take onadditional debt. The Board and management appreciated that if it could not increasethe price it was paying its raw milk suppliers, then it would lose suppliers to Fonterra,thereby increasing the debt that would be shared by the remaining shareholders. Thisin turn could trigger the exiting of more farmers. Left unchanged, this state of affairswould likely have caused the collapse of Westland Dairy.Jingang[11] Jingang is a wholly owned subsidiary of the Inner Mongolia Yili IndustrialGroup Ltd, a very large Chinese producer and marketer of dairy products, which islisted on the Shanghai Stock Exchange. It had previously acquired Oceania Dairy Ltd,a small dairy production company in the South Island.[12] In 2018, Jingang reached a provisional agreement with Westland Dairywhereby:(a) Jingang would acquire all of the shares in Westland Dairy at $3.41 pershare under a scheme of arrangement pursuant to pt 15 of theCompanies Act 1993.(b) Jingang would commit to accepting for 10 years raw milk from allWestland Dairy farm suppliers and pay a price that was at leastequivalent to that which Fonterra pays its raw milk suppliers.[13] The provisional agreement was conditional on the requisite majority ofWestland Dairy shareholders agreeing to the proposal. This was achieved on 4 July2019 when 93.79 per cent of those shareholders who voted approved the proposal.The proposal was also conditional on consent being obtained under the Act for Jingangto purchase Westland Dairy. That consent was given by the OIO on 16 July 2019.Under the Companies Act, the proposal also required approval from the High Courtunder pt 15. That approval was given on 18 July 2019.2[14] The scheme of arrangement took effect on 1 August 2019. Shareholders werepaid about $240 million for their shares. Many of the former shareholders ofWestland Dairy used the money they received from the sale to reduce their debts.Social Credit[15] Mr Leitch, the leader of Social Credit, has explained in an affidavit that SocialCredit is a political party that has contested every general election since it was formedin 1954:3One of Social Credit's objectives is for New Zealand to retain effective controlof its economic affairs, including in relation to overseas investment inNew Zealand.Mr Leitch reviewed the steps taken by the OIO and concluded that the decision toconsent to the proposal did not involve a proper consideration of the requirements ofthe Act, or the implications of Jingang acquiring Westland Dairy.[16] Social Credit considered seeking an injunction to try to prevent the scheme ofarrangement taking effect. It did not, however, seek an injunction. Nor did SocialCredit seek to be heard when the High Court considered the application for approvalunder the Companies Act. Instead, in October 2019, Social Credit commenced anapplication for judicial review in the High Court, in which it sought orders quashingthe OIO's decision to consent to Jingang's application under the Act.4 The applicationfor judicial review was dismissed by Dobson J, who said that the processing plants2 Re Westland Co-operative Dairy Co Ltd [2019] NZHC 1683.3 Affidavit of Christopher John Leitch, 29 June 2020 at [9].4 On appeal Social Credit abandoned its application for an order quashing the OIO's decision andinstead sought a declaration that the OIO's decision granting consent to Jingang's application wasunlawful."inarguably" were not "farm land" as defined in the Act.5 The Judge also saw no meritin Social Credit's arguments concerning the way the OIO had discharged itsresponsibilities.6 As we have noted at [3], Social Credit was ordered to pay costs on ascale 2B basis.7[17] Before we explain the steps that were taken leading up to the granting ofJingang's application under the Act, we shall describe the relevant provisions of theAct.Overseas Investment Act[18] The purpose of the Act is "to acknowledge that it is a privilege for overseaspersons to own or control sensitive New Zealand assets".8 That purpose is achievedby regulating the ability of an overseas person to acquire sensitive assets by requiringprospective overseas purchasers to obtain consent under the Act from the relevantMinister(s) or the Minister(s)'s delegate. As this Court has previously explained in thecontext of purchases of farm land by overseas persons, "[t]he Act attempts to placesome controls on the acquisition of significant tracts of New Zealand farm land byoverseas persons, but also seeks to allow such persons to invest in farm land wherethey meet the relevant criteria".9[19] The Act identifies five categories of sensitive assets that require consent beforethose assets can be purchased by an overseas person. Those categories include:(a) "Significant business assets", which are defined in s 13 of the Act. Thedefinition includes securities for consideration that exceeds$100 million.(b) "Sensitive (but not residential) land", which is defined in s 6(1) and pt 1of sch 1 of the Act. We will explain that definition at [26] to [29].5 New Zealand Democratic Party for Social Credit Inc v Minister for Land Information [2020]NZHC 2816 [the High Court judgment] at [58].6 At [64]–[81].7 At [84].8 Overseas Investment Act, s 3.9 Tiroa E and Te Hape B Trusts v Chief Executive of Land Information New Zealand [2012] NZCA355, [2012] 3 NZLR 808 at [40].(c) "Residential (but not otherwise sensitive) land", which is defined ins 6(1) of the Act. One test for consent is the "incidental residential usetest" set out in cl 14 of sch 2 of the Act.[20] A consequence of an asset being a "significant business asset" is that anoverseas purchaser of such an asset must demonstrate they meet several criteria. Atthe relevant time, the overseas purchaser had to show they:(a) had relevant "business experience and acumen";10(b) had "demonstrated financial commitment" to the investment;11(c) were "of good character";12 and(d) were not a person referred to "in section 15 or 16 of the ImmigrationAct 2009 (which sections list certain persons not eligible for visas orentry permission under that Act)".13[21] More stringent criteria must be satisfied before consent is given under the Actwhere the asset is "residential (but not otherwise sensitive) land" or "sensitive (but notresidential) land".[22] The purchase by an overseas person of "sensitive (but not residential) land"can only be approved under the Act if:(a) the "investor test" (then under s 16(2) and now under s 18A of the Act)is met;14 and10 Overseas Investment Act, s 18(1)(a).11 Section 18(1)(b).12 Section 18(1)(c).13 Section 18(1)(d).14 Section 16(1)(a).(b) either—(i) the purchaser is a New Zealand citizen, ordinarily resident inNew Zealand or intending to reside in New Zealandindefinitely;15 or(ii) the "benefit to New Zealand" test under ss 16A and 17 of theAct is met.16[23] Incidental residential use of land occurs where the land is used for residentialpurposes "but only in support of the relevant business" and where "the residential landwill be, or is likely to be, acquired in the ordinary course of the business" of theoverseas person.17[24] As we have noted at [1], in the present case OIO officials determined that theprocessing plants were "significant business assets" and not "sensitive (but notresidential) land". We shall explain at [34] to [48] the steps taken by the OIO officialswhen reaching their conclusion.[25] Social Credit argues that the processing plants were misclassified by the OIOand that the application by Jingang should have been treated as a request for consentto purchase "sensitive (but not residential) land".[26] "Sensitive (but not residential) land" is defined in s 6(1) and pt 1 of sch 1 ofthe Act and includes "non-urban land" that is larger than 5 ha.[27] "Non-urban land" is defined in s 6(1) of the Act as:(a) farm land; and(b) any land other than land that is both—15 Section 16(1)(c)(i).16 Section 16(1)(c)(ii).17 Schedule 2, cl 14.(i) in an urban area; and(ii) used for commercial, industrial, or residential purposes.[28] The parties agree the processing plants are not covered by (b) of the definitionof non-urban land and that in order to qualify as "non-urban land" the processingplants would need to be "farm land" as defined in the Act.[29] The full definition of "farm land" is:18 land (other than residential (but not otherwise sensitive) land) usedexclusively or principally for agricultural, horticultural, or pastoral purposes,or for the keeping of bees, poultry, or livestock [30] The words in parentheses in the definition of "farm land" were added in 2018to reinforce the distinction the Act makes between residential and farm lands. Thewords in parentheses are, however, not important to the issues in this case which hingeupon whether or not the processing plants are used exclusively or principally foragricultural purposes.[31] Under s 32 of the Act, the relevant Minister or Ministers may delegate to theOIO ministerial powers and functions under the Act. Ministers have not delegated tothe OIO decisions concerning consent for the purchase of "sensitive (but notresidential) land". Thus, if the processing plants are "farm land" and therefore"sensitive (but not residential) land", then only Ministers could have given consent toJingang's application.[32] Section 34 authorises the Minister to issue a Directive Letter to the OIO. Whensuch a letter is issued, the OIO must comply with the Ministerial Directive. In thiscase, the Ministerial Directive issued under s 34 of the Act required officials in theOIO to, amongst other tasks: seek sufficient information through the application and assessment processto verify the information provided by applicants, and where appropriateinvolve third parties (including government agencies) and third partyresources to achieve this goal;18 Section 6(1).[33] Section 33(5) of the Act authorises Ministers to "call in" decisions concerningapplications that might otherwise have been delegated to the OIO.Steps taken by OIO officials[34] On 12 December 2018, Mr Petersen, a partner at Bell Gully with considerableexperience in transactions involving overseas investors in New Zealand, had adiscussion with Ms Knewstubb, a senior official in the OIO. Bell Gully were, at thattime, acting for Westland Dairy.[35] The meeting was referred to as a "pre-application meeting" and was arrangedto provide the OIO with an overview of the proposed application from Jingang and toidentify any particular issues that might have to be addressed by Jingang and the OIO.At that meeting Mr Petersen provided the OIO with a table setting out the land ownedby Westland Dairy and an aerial photograph of the Hokitika Processing Plant.Mr Petersen provided the OIO with an outline of the nature of the business conductedby Westland Dairy and the proposal that was being developed for the sale of the sharesin Westland Dairy. Mr Petersen advised the OIO that the proposed scheme ofarrangement required consent as it involved "significant business assets" and becausethe residential properties that abutted the processing plants were sensitive land.[36] It is apparent from her affidavit that Ms Knewstubb thought the key issue forthe OIO would be how it should treat that part of the proposed application for consentthat involved the residential properties that joined the processing plants.Ms Knewstubb had further communications with Mr Petersen during the course ofDecember 2018, after which Mr Morris, a solicitor and senior official within the OIO,became responsible for managing communications between the OIO and Mr Petersenduring the next phase of the OIO's processes. Mr Morris played a pivotal role indetermining whether or not the OIO should accept for consideration Jingang'sapplication for consent, which was filed on 21 March 2019.[37] The steps taken by Mr Morris included:(a) reviewing and assessing the materials provided by Mr Petersen;(b) consulting with other officials within the OIO;(c) seeking from Mr Petersen further information about the rationale forWestland Dairy acquiring the residential properties adjacent to theprocessing plants;(d) assessing the responses provided by Mr Petersen; and(e) reaching a provisional conclusion that the processing plants were not"farm land", as they were not used for agricultural, horticultural orpastoral purposes.[38] Mr Morris participated in a quality assurance meeting conducted by OIOofficials on 2 April 2019. At that meeting officials cross-checked the application byJingang against a checklist. Mr Morris prepared "triage notes" for that meeting, which"summarised key information about the application and recorded [his] preliminaryviews on key criteria and elements of the assessment process".19[39] Those present at the quality assurance meeting included Mr Appleyard, whowas a senior manager in the OIO and the official who ultimately granted Jingang'sapplication.[40] Mr Morris recommended that Jingang's application should be accepted forassessment and that further information should be sought by the OIO from Jingang.The further information sought related to ownership, control and documentsconcerning the proposed scheme of arrangement.[41] On 12 April 2019, the OIO issued a media release regarding Jingang'sapplication. That statement was issued because there had been media interest in thepossible sale of Westland Dairy. The OIO media statement said that Jingang'sapplication did not engage the "benefit to New Zealand criteria" because the onlysensitive land involved in the application was residential.19 Affidavit of Andrew James Morris, 21 July 2020 at [29].[42] Following the quality assurance meeting, Jingang's application was transferredto Mr Curry, a senior solicitor in the OIO, who conducted a review and assessment ofJingang's application. Mr Curry has explained in his affidavit that after reviewing allof the information provided to him, he "thought it was clear that the sites were eachused for processing, manufacturing and warehousing of Westland's dairy products".This conclusion was "verified" by Mr Curry referring to relevant district plans for thetwo sites. Mr Curry "was satisfied then that each of these blocks of land containingthe processing plants in Hokitika and Rolleston [were] not 'non-urban land' becausethey [were] clearly not 'farm land'".[43] On 11 June 2019, Mr Curry emailed Mr Appleyard and advised that he hadcompleted the assessment and recommended that the application for consent begranted.[44] At Mr Appleyard's request, Mr Morris conducted a peer review of Mr Curry'sreport. That peer review was completed on 8 July.[45] Mr Appleyard reviewed Mr Curry and Mr Morris's reports and authorised arequest for statutory declarations in support of Jingang's application. The statutorydeclarations sought by the OIO are a requirement of s 23 of the Act. Mr Appleyardexplained in his affidavit the OIO places significant weight on the contents of statutorydeclarations made by applicants. The OIO also sought "sensitive land certificates".Mr Curry explained in his affidavit:20The OIO does not accept applications for assessment unless they areaccompanied by a sensitive land certificate prepared by a person withexperience in assessing sensitive land under the Act (such as a lawyer) unlessthe requirement to supply a certificate has been waived. These certificatesstate what sensitive land is involved in the proposed transaction and thereasons for that sensitivity.[46] Mr Appleyard prepared briefings for Ministers and met with Ministers on 20June. One of the issues Mr Appleyard discussed with Ministers was whether or notthey should "call in" the consent decision. Ministers raised questions about the OIO's20 Affidavit of Nelson James Paul Curry, 21 July 2020 at [13].provisional assessments and notified Mr Appleyard on 10 July that the consentdecision could be made by the OIO.[47] Mr Appleyard then reviewed all of the information that had been compiled byOIO officials and the materials filed in support of the application. Mr Appleyard hasexplained that he was satisfied that the processing plants were not "non-urban land"and that his team had undertaken a robust assessment of the application.[48] On 16 July, Mr Appleyard approved the application and notified Jingang of hisdecision.First ground of appealHigh Court decision[49] After characterising the definition of "farm land" as the "determinativeissue",21 Dobson J said that the definition of "farm land" was "lexical" as opposed to"stipulative".22[50] "A lexical definition is one that does not stretch meaning. It is one that iswithin the ordinary understanding of the word."23 Conversely, a stipulative definition"takes the meaning of a word beyond its ordinary meaning. It in fact gives it anartificial meaning. There is thus an element of creation in a stipulative definition."24[51] When adopting the approach he took, Dobson J explained that "farm land"should be interpreted in accordance with the "common usage of that phrase", whichhe said was "land on which primary production occurs",25 in contrast to the "activities[that take place] in commercial/industrial zones".2621 High Court judgment, above n 5, at [29].22 At [38] and [40].23 Ross Carter Burrows and Carter Statute Law in New Zealand (6th ed, LexisNexis, Wellington,2021) at 562.24 At 562.25 High Court judgment, above n 5, at [40].26 At [56].[52] The approach taken by the Judge to the meaning of "farm land" drew him tothe conclusion that the processing plants were not used for agricultural purposes andtherefore were not within the definition of "farm land".Social Credit's case[53] In the submissions in support of Social Credit's appeal, Mr Kirkness said:(a) The approach taken by Dobson J was predicated on the assumption thedefinition of "farm land" in the Act was clear, whereas, whenconsidered in context, the definition of farm land is far from precise.(b) The binary distinction between "lexical" and "stipulative" is not helpfuland risks avoiding interpreting legislation in accordance with its textand purpose.(c) The Judge's assumption that his approach to interpretation to themeaning of "farm land" accorded with common sense was misplaced.(d) The Judge also erred when saying his approach to the meaning of "farmland" aligned with Parliament's intention to protect productive lands.[54] Mr Kirkness submitted that "land used for the pasteurisation, homogenisationand processing of raw milk is land used for an agricultural purpose". He supportedthis argument with the proposition that it was wrong to juxtapose "industrial" and"agricultural" uses of land because, "[a]s a matter [of] ordinary English or 'commonusage', people speak of 'factory farms'", and modern farms use complex machineryand industrial facilities. To support this proposition Mr Kirkness drew our attentionto the definition of "agriculture" in the online edition of the Merriam WebsterDictionary:2727 "Agriculture" Dictionary by Merriam-Webster <merriam-webster.com>.Definition of agriculture: the science, art, or practice of cultivating the soil, producing crops, andraising livestock and in varying degrees the preparation and marketing of theresulting products(Emphasis added.)[55] It was also submitted by Mr Kirkness that the Act does not distinguish betweenagricultural and industrial uses of land and the fact that different steps in the productionof dairy products "can be undertaken on a dairy farm or off-site in industrial facilitiesis not determinative of whether the land is used for an agricultural purpose".[56] Social Credit did not seek to argue that the residential properties owned byWestland Dairy did not meet the "incidental residential use test" we have summarisedat [23]. That was an appropriate position to adopt as it is clear those particularproperties were used for incidental residential purposes within the meaning of sch 2,cl 14 of the Act.The respondents' position[57] We can briefly summarise the respondents' position. They contended that thephrase "farm land" in the Act should be given its plain meaning and that there wasnothing in the purpose or the scheme of the Act to suggest that Parliament intended toextend the meaning of agricultural purposes and the definition of "farm land" beyondits normal meaning.[58] The respondents say that, as the processing of raw milk is an industrial and notan agricultural procedure, the processing plants did not come within the definition of"farm land" under the Act.Analysis[59] In ascertaining the meaning of "farm land", and in particular, the concept of"agricultural purposes" within that definition, we shall consider the text andpurpose of the definition in light of its legislative context.2828 Interpretation Act 1999, s 5; and Commerce Commission v Fonterra Co-operative Group Ltd[2007] NZSC 36, [2007] 3 NZLR 767 at [22].[60] We start with the plain meaning of "farm land" and "agriculture".[61] "Farm land" is defined in the online Merriam Webster Dictionary as meaning"land used or suitable for farming".29 The same dictionary says that the meaning of"farm" includes "a tract of land devoted to agricultural purposes" and "a plot of landdevoted to the raising of animals and especially domestic livestock".30[62] Similar definitions appear in the Shorter Oxford English Dictionary, whichdefines a "farm" as "[a] tract of land held under one management for the purposesof cultivation or the rearing of certain animals (for food or fur etc.) ".31[63] "Agriculture" is defined in the Shorter Oxford English Dictionary as meaning:"The science or practice of cultivating the soil and rearing animals; farming;[occasionally] tillage."[64] The slightly broader definition of "agriculture" in the Merriam WebsterDictionary does not advance Social Credit's case in any meaningful way. This isbecause "the preparation and marketing of resulting products" in that dictionary'sdefinition of "agriculture" can be reasonably understood to mean the preparation andmarketing of products before those products leave the farm gate.[65] We are satisfied that the natural and ordinary meaning of the term"agricultural" as it is used in the definition of "farm land" relates to the growing ofcrops and the raising of stock and the harvesting or extraction of primary productsfrom those crops and animals on a farm.[66] Where primary products are transported from a farm and processed elsewhereinto other products, then the processing of those products beyond the farm gate doesnot come within the natural and ordinary meaning of an agricultural purpose. Forexample, as Mr Kirkness conceded during the hearing, where wool is shorn fromsheep, transported to a mill and manufactured into woollen products, the productionof those woollen products away from the farm is not an agricultural or pastoral activity.29 "Farmland" Dictionary by Merriam-Webster <merriam-webster.com>.30 "Farm" Dictionary by Merriam-Webster <merriam-webster.com>.31 Shorter Oxford English Dictionary (6th ed, Oxford University Press, Oxford, 2007).[67] Mr Kirkness endeavoured to draw a distinction between the example we havegiven in [66] and the pasteurisation and homogenisation of raw milk, which hesubmitted constituted the creation of an agricultural product.[68] There are three reasons why we do not accept the distinction Mr Kirknessendeavoured to draw:(a) As Ms McKechnie, counsel for Westland Dairy and Jingang explained,it was very difficult to see why a bright line should be drawn at theprocessing of raw milk into milk. While processed milk is an importantpart of Westland Dairy's products, as we have noted at [6] it is only onepart of its business.(b) There is no logical basis for distinguishing the activities that take placein the processing plants and those that take place, for example, in anabattoir, a tannery or a woollen mill. All involve the industrialconversion of primary products into other items. If, as Mr Kirknessaccepted, the manufacturing of woollen products in a mill is not anagricultural or pastoral activity, it is very difficult to see why theproduction of dairy products in one of Westland Dairy's processingplants is an agricultural activity.(c) Key to the interpretation exercise is the fact the processing andmanufacturing of dairy products by Western Dairy takes place onlyafter raw milk is transported from farm gates to one of Western Dairy'sprocessing plants.[69] For the sake of clarity, we record we are not in this judgment addressingsituations in which, for example, artisan dairy or woollen products are produced by afarmer on his or her farm. As we have explained at [68(c)], it is significant thatWestland Dairy's business involves the processing and production of products fromraw milk that has been transported from the farm gate.[70] We now turn to consider whether there is anything in the purpose or context ofthe Act that suggests that Parliament intended the processing plants would be coveredby the definition of "farm land".[71] There are two reasons why we are satisfied Parliament did not intend the verybroad and artificial meaning of "agricultural purposes" and therefore "farm land",advocated by Social Credit:(a) As Mr Jensen submitted on behalf of the Ministers, had Parliamentintended activities not ordinarily associated with farming to beencompassed by the definition of "farm land", then it would haveexpressly said so. This is particularly so in the context of the Act, whichhas clearly been drafted with considerable care.(b) Parliament did provide for certain types of dairy processing plants tobe covered by the Act when those businesses meet the definition of"significant business assets". There is nothing in the legislative historyor elsewhere in the Act to suggest Parliament intended the processingplants would be both "significant business assets" and "sensitive (butnot residential) land", particularly when treating the processing plantsas "sensitive (but not residential) land" would involve adopting anunnatural meaning of "farm land" and "agricultural purposes".[72] We are satisfied therefore that Dobson J reached the correct conclusion whenhe held that the processing plants did not come within the definition of "farm land".Second ground of appeal[73] Social Credit argues that the OIO:(a) failed to comply with the Ministerial Directive to "verify" theinformation filed on behalf of Jingang in support of its application forconsent; and(b) did not have sufficient information to consent to Jingang's application.[74] Dobson J did not consider it necessary to refer to the Ministerial Directive, thekey paragraph of which we have set out at [32]. Instead, the Judge focused uponwhether or not the OIO had sufficient information to consent to Jingang's application.After reviewing the evidence Dobson J was satisfied the OIO did have sufficientinformation to grant Jingang's application.[75] The Ministerial Directive obliged OIO officials to seek sufficient informationthrough the application and assessment process to satisfy themselves of the correctnessof the information presented in support of Jingang's application. If it was appropriateto do so, officials could seek information from third parties to comply with theMinisterial Directive.[76] There are three reasons why we are satisfied the OIO did comply with theMinisterial Directive and why it had sufficient information to consent to Jingang'sapplication.[77] The first reason relates to the carefully calibrated processes put in place by theOIO. Those processes commenced before Jingang filed its application and continuedup to the moment when Mr Appleyard decided to consent to the application. Insummary, those processes were:(a) The pre-application meeting: Although this meeting predated the filingof Jingang's application for consent under the Act, it provided the OIOwith the opportunity to identify possible issues that might need to beaddressed by the OIO and Jingang if an application was made.(b) Pre-acceptance assessment: Mr Morris explained the pre-acceptanceassessment he undertook, which culminated in the quality assurancemeeting on 2 April. The steps taken by Mr Morris during this phase ofthe OIO's processes included an examination of the information filedon behalf of Jingang and the seeking of further information fromMr Petersen.(c) Post-acceptance assessment: After the OIO decided to accept Jingang'sapplication for assessment, Mr Curry undertook a comprehensivereview of all the information that had been provided to him andevaluated that information against his understanding of therequirements of the Act.(d) Peer review: Mr Curry's recommendations to Mr Appleyard were thenpeer reviewed by Mr Morris.(e) Decision: Mr Appleyard has explained in his affidavit the steps he tookin evaluating the application, the recommendations from Mr Curry andMr Morris and his responses to questions raised by Ministers before heconcluded the OIO had properly assessed the application and that hewas satisfied the processing plants had been properly characterisedunder the Act by the OIO.[78] Mr Appleyard was entitled to rely upon the aerial photographs of theprocessing plants and the land use classifications of the Selwyn and Westland DistrictCouncils, which confirmed that the processing plants had been built on landdesignated for commercial and industrial purposes.[79] Second, before making his final decision, Mr Appleyard sought statutorydeclarations verifying the key elements of the application and "sensitive landcertificates" from Mr Petersen. Mr Appleyard was entitled to believe Jingang andMr Petersen would take seriously their responsibilities to accurately complete thestatutory declarations and sensitive land certificates.[80] Third, it was reasonable for the OIO to be assured by the fact Mr Petersen wasacting for Jingang. Mr Petersen was well known to OIO officials. He had engagedwith them on many applications on behalf of overseas purchasers and had alwaysprovided accurate information to the OIO.[81] We do not accept that any criticism can be properly levelled against theprocesses followed by the OIO, or that Mr Appleyard lacked sufficient information togrant Jingang's request for consent.Third ground of appeal[82] Rule 14.7(e) of the High Court Rules 2016 confers a discretion on a High Courtjudge to refuse to make an order for costs or to reduce the costs otherwise payable ifthe proceeding concerned a matter of public interest and the party opposing costs actedreasonably in the conduct of the proceeding.[83] Social Credit has called in aid a pre-trial decision of Clark J, who decided notto make an order for security for costs and concluded that Social Credit's claim wasarguable and that there was a public interest in having issues raised by the applicationfor judicial review heard and determined.32[84] Clark J's decision in relation to the security for costs application does not trumpthe conclusions reached by Dobson J, who, unlike Clark J, had the benefit of hearingfull argument and evidence when deciding the application for judicial review. Clearly,Dobson J was unimpressed by Social Credit's arguments. He found there was notenable basis for asserting error by the OIO and that the processing plants were"inarguably" not "farm land".[85] Having undertaken the same evaluation as Dobson J, we concur with hisconclusion that the arguments put forward by Social Credit lacked merit. In thesecircumstances, the arguments advanced by Social Credit cannot be shielded by thecloak of public interest; it being axiomatic that it can never be in the public interest toplace unmeritorious arguments before the courts.32 New Zealand Democratic Party for Social Credit Inc v Minister for Land Information [2020]NZHC 1104.Result[86] The appeal is dismissed.[87] The orders made by the High Court are upheld.[88] The appellant must pay the respondents costs for a standard appeal on a bandA basis, plus usual disbursements. Half of the costs shall be paid to the first and secondrespondents. The other half of those costs shall be paid to the third and fourthrespondents. We certify for two counsel.Solicitors:Woods Fletcher, Wellington for AppellantCrown Law Office, Wellington for First and Second RespondentsSimpson Grierson, Wellington for Third and Fourth Respondents