• Restaurants Brands Properties Ltd was fined $30,000 for breaching foreign investment rules in an Auckland land purchase. 
• The company failed to obtain necessary consent for the $2.65 million deal for a KFC site. 
• Law firm Meredith Connell did not provide guidance on the need for Overseas Investment Office consent. 

A major fast food company has been fined $30,000 for breaching foreign investment rules when it purchased Auckland land for a drive-through KFC restaurant. 

And one of the country’s top law firms has been caught up in the dispute, accused of failing to provide “any advice or guidance” about the need to obtain consent when drafting a sale and purchase agreement for the $2.65 million deal. 

Documents released to the Herald under the Official Information Act show Restaurants Brands Properties Ltd (RBPL) purchased a 2ha site on Massey Rd, Māngere East, in March 2023. 

It had resource consent to transform the commercial boarding house then operating on the site into a drive-through KFC restaurant. 

However, the company is foreign-owned and needed Overseas Investment Office (OIO) consent before settling on the deal because the residential land was considered sensitive under the Overseas Investment Act. 

RBPL is 75 per cent Mexican-owned. It is described as the property holding company for the Restaurant Brands Group, which operates a suite of big fast food chains, including KFC, Carl’s Jr, Pizza Hut and Taco Bell. 

RBPL is owned by Restaurant Brands New Zealand Ltd, which is listed on the New Zealand stock exchange. 

The documents show that RBPL entered into a sale and purchase agreement on March 10, 2023, with vendor Massey Road Ltd to acquire the land for $2.65m. The agreement was subject to due diligence conditions but was not conditional on the purchaser obtaining OIO consent. 

The contract eventually went unconditional, meaning the company had “acquired an equitable interest in sensitive land” in breach of the Act. 

RBPL realised the error prior to the contract’s settlement date and alerted the watchdog before obtaining legal title. 

Restaurant Brands Properties Ltd is 75 per cent Mexican-owned and should have sought Overseas Investment Office consent before purchasing the Māngere East land. Photo / Alex Burton 

A memorandum to OIO enforcement manager Simon Pope in October 2023 from a compliance investigator outlined how the breach occurred and discussed enforcement options. 

The document said neither RBPL nor its conveyancing legal advisers, Meredith Connell, identified the need for consent prior to signing the contract. 

“Neither party correctly identified that the land was residential under the Act. 

“The RBPL staff handling the purchase transaction appear to have had insufficient knowledge concerning the overseas investment rules and incorrectly concluded that the land was commercial. 

“Meredith Connell drafted the ASP [agreement for sale and purchase] for RBPL but did not appear to provide any advice or guidance about the need for consent.” 

RBPL self-reported the “inadvertent” breach after becoming aware of the error and co-operated with the OIO investigation. 

The memorandum recommended imposing a $30,000 administrative penalty, which was not considered “unduly harsh or oppressive” given the circumstances of the case and amount paid for the land. 

The site on Massey Rd, Māngere East, was formerly a commercial boarding house. Photo / Alex Burton 

“RBPL has co-operated with our investigation and has advised us about changes they are implementing to their processes and procedures to ensure appropriate checks are done/advice sought prior to entering into agreements. 

“Meredith Connell will also provide updated training to RBPL and its staff.” 

RBPL was fined $30,000 and granted retrospective consent in November 2023. 

It eventually obtained legal title for the land and a KFC drive-through is now operating on the site. 

Restaurant Brands told the Herald the property was marketed, zoned and used for commercial purposes at the time the contract was signed. 

The company only realised the land had a residential rating on Auckland Council records after the contract became unconditional. 

“This meant that even though it was a commercial property and intended for commercial use, OIO consent was nevertheless required.” 

The company self-reported the breach and worked closely with the OIO, “who dealt with the matter efficiently and appropriately”. 

Meredith Connell declined to comment, saying “we never comment on commercial client matters”. 

A Land Information NZ spokeswoman said OIO staff were satisfied the matter had now been appropriately dealt with. 

Lane Nichols is Deputy Head of News and a senior journalist for the New Zealand Herald with more than 20 years’ experience in the industry.