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Bad legal advice lands firm in hot water

NZ NewswireNZ Newswire 14/04/2016

An Australian company has been fined $40,000 after its lawyer wrongly advised it on how to purchase a New Zealand property.

Carbon Conscious New Zealand Ltd, an Australian firm, bought a Taranaki property in 2012, and received poor legal advice on how to conduct the deal.

The company needed consent to buy and plant trees on the property, but had a New Zealand associate buy it first, with an aim to get consent and buy the property itself later.

Its lawyer incorrectly advised that arrangement did not breach the Overseas Investment Act.

However the Overseas Investment Office (OIO) investigated the purchase and took High Court action in 2015.

The court found that while the company had not intentionally broken the law, it was still responsible for complying with the Act and had to be penalised.

The purchase arrangement was a "deliberate circumventing of the Act's controls on overseas investment", the court said.

OIO spokeswoman Annelies McClure said the decision sent a strong message to lawyers that advise overseas investors.

"Giving poor advice can expose clients to significant legal liability, as they're responsible for complying with the law," she said.

"They can't hide behind their lawyer's advice if things go wrong."

The company was fined $40,000 and more than $6000 in costs.

The lawyer who provided it advice is no longer practising.

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