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High Court backs NZ Immigration Service

High Court backs NZ Immigration Service

Immigration Minister Lianne Dalziel today welcomed a recent High Court decision, which she says confirms that an investment scheme, involving the borrowing of a million dollars by a Chinese businessman seeking New Zealand residence, does not meet government business residence policy.

“It was always just a matter of time before one of the cases ended up in court and I am pleased that the NZ Immigration Service’s rejection of this scheme has been upheld,” Lianne Dalziel said.

The High Court found that the substance of the scheme designed by Pacrim International Capital Inc (Pacrim) was “the plaintiff ‘buying’ or even literally ‘borrowing’…a qualifying investment in New Zealand nominally in his name, rather than effectively making an investment himself”.

The plaintiff was a client of Pacrim International Capital Inc (Pacrim), however it was indicated to the court that Pacrim did not want to become a party to the proceeding.

“The effect of this scheme would have circumvented the policy requirements that the investment funds be linked directly to specific nominated foreign assets (which must have been lawfully acquired) and that applicants must retain full ownership and control of their investment funds. These requirements are intended to ensure that applicants seeking residence through the business investor category are prepared to commit their foreign capital to New Zealand.”

The High Court noted that the nub of the plaintiff’s argument “was that the NZIS had erred in looking at the substance rather than the form of the transaction”.

“That is perhaps something of a concession that, in substance, the transactions did not comply with the policy”. The High Court accepted that this particular investment scheme was uncommercial and/or unusual in several respects.

Regarding criticism of the NZIS’s processes in dealing with the application the Judge stated that the NZIS “went to some considerable lengths to outline its concerns to the plaintiff, and subsequently to his solicitor and to give plaintiff the opportunity to satisfy it that he complied with the policy”.

The Judge held that “the NZIS’s approach was lawful and legitimate, and that it took into account relevant factors and excluded irrelevant ones”.

Lianne Dalziel said that the case set an important precedent, and that it would assist in the consideration of other investor applications based on schemes of this nature or with similar characteristics.

“Applicants will still be given the opportunity to meet the NZIS’ requirements of the investor category as confirmed by the High Court, however, if they are effectively ‘buying’ or ‘borrowing’ their investment funds as in this case, they will not satisfy the policy requirements,” she said.

The investor category has been under review over the past several months, and the Minister indicated that the government would be considering adjustments to the policy this year.


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