Lawyers trying to block the sale of Crafar Farms to Chinese firm Shanghai Pengxin have told the High Court at Wellington the move would not benefit New Zealanders as required by law.
A consortium of farmers led by Sir Michael Fay is challenging ministerial approval for the $200 million sale of the 16 North Island farms.
Alan Galbraith, acting for the consortium, said the Overseas Investment Office, which advised ministers to accept the Chinese bid, applied the wrong test by taking into account improvements Pengxin might pay for at the properties, when these might be made by any buyer.
He also told the court that at least one of the individuals controlling Pengxin personally needed to have business expertise and acumen relevant to the investment for it to be legal.
Galbraith said they instead intended to be passive investors.
He said the Overseas Investment Office, had said state-owned farmer Landcorp, which has proposed to operate the farms for Shanghai Pengxin, would provide the "required specialist dairying experience".
Galbraith said all Pengxin was bringing to Crafar Farms was money, not experience or acumen.
If the sale went unchallenged, any overseas firm, such as Microsoft, could buy sensitive New Zealand land, he said.
"All they would need to do is hire a local manager and you are away."
Justice Forrie Miller said the argument appeared to rely on a "strict concept" of what relevant experience might entail, noting it had been suggested Pengxin could help sell more New Zealand dairy products into China.
However, Galbraith said there was also no evidence Pengxin had experience importing foodstuffs into China, which he said was a "difficult business".
Hamish Hancock, from the Crown Law Office, said Pengxin had significant agricultural interests in South America and China.
"The goodwill to be obtained from non-discriminatory and even-handed treatment for non-New Zealand nationals was of substantial benefit to New Zealand," he said.
Galbraith said ministers signed an affidavit on February 1 that said they were particularly influenced by the commitments Pengxin had made to improve walking access and protect heritage sites and the environment.
But Galbraith said such considerations had not been listed as factors of high importance when ministers issued a directive to the OIO in December 2010.
Galbraith said that if the sale was blocked, farmers belonging to Sir Michael's consortium would be likely to individually acquire the 16 farms, which he said had a combined land area of 5990 hectares.
He noted the farms had not been offered for sale individually before they were offered to overseas buyers.
He said that made "no sense at all" given the status of rural land was well-reflected in New Zealand legislation and that its purchase by foreigners was "a privilege".
Adam Ross acting for Pengxin subsidiary New Zealand Milk Holdings, said the company was seeking clarification on the conditions of ministerial approval for the purchase before making its offer to buy the farms unconditional.
The hearing will resume at 2.15pm. Justice Miller is expected to reserve his decision.
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