Synlait Milk off to Supreme Court in new Pokeno site dispute

Synlait Milk off to Supreme Court over Pokeno land dispute.

Synlait Milk has taken its fight to get covenants removed from its new Pokeno site to the Supreme Court.

The listed infant milk powder producer's move follows the Court of Appeal last month overturning a High Court decision to remove the covenants on land hosting the company's $280 million near-completed processing plant.

Chief executive Leon Clement said the filing of an application for leave to appeal to the Supreme Court was "really just the next step in the process as we continue to progress all our options".

"We are also still in continued conversations with all parties and we remain confident of a positive outcome," he said.

Synlait reiterated its plans for the Pokeno site have not changed.

"We will continue to work towards the existing project timetable including the build, commission and production," Clement said.

"We remain committed to Pokeno as well as our shareholders and other stakeholders in Pokeno, such as our farmers, suppliers and staff."

Its contested new factory at Pokeno may have got in the way of a neighbour's plans for a 1000-section housing development.

Last month's Court of Appeal judgment has thrown Synlait's plans to start processing at Pokeno imminently into confusion by upholding restrictive covenants on the land.

The court's ruling that the restrictive convenants stay noted that neighbouring land owner Karl Ye, who sought the court ruling, wants his land rezoned residential for a big subdivision.

Further inquiries by the Herald showed Ye, also known as Qing Ye, made a submission to the Waikato District Council in October to rezone his 148ha properties residential. His land is currently farmed.

The council's proposed district plan wants to rezone Ye's land rural and the land Synlait has built on to heavy industrial.

Two 200-year covenants on the Synlait land restrict its use to grazing, lifestyle farming and forestry.

Ye owns the benefits of the covenants, which have only run for 20 years.

Synlait bought the 28ha Pokeno site in February last year for a powder processing plant conditional on seller Stonehill Trustee Ltd getting the covenants removed.

But shortly after Synlait started earthworks and in November the High Court removed the covenants and Synlait settled the deal.

But Ye appealed the High Court decision and Stonehill Trustee filed a cross appeal.

The Court of Appeal on May 9 ruled the previous High Court decision was wrong and reinstated the covenants.

On May 10 Synlait chief executive Leon Clement told the NZX the company intended to continue with its plans at Pokeno and was "confident the covenants issue should be able to resolved".

Synlait's factory was due to be commissioned this dairy season which officially started on June 1.

Ye, who will only talk through a spokesman, is also behind a plan for a large agri-tourism development on his land, which borders Waikato River. The plan provided for a 250-room hotel and a showcase farm, and earthworks for the project were due to start next month, the spokesman said. He previously told the Herald that Ye's investment on the land could add up to $1 billion over time.

Synlait has said it was not able to comment on Ye's plans for his land.

On May 21 Synlait told the NZX it had received a cease and desist letter from Ye's lawyers.

Ye's spokesman said the letter had a Friday, May 24, 5pm deadline. The spokesman said "Synlait's response indicated that they would keep to their construction as planned".

The Court of Appeal decision said after signing the conditional sale agreement with Synlait, Stonehill unsuccessfully tried to negotiate removal of the covenants with Ye.

Ye's company NZ Industrial Park had complained in June last year that Synlait was starting construction and asked for building to stop. Stonehill had not acknowledged the complaint. Stonehill then went to court.

Synlait shares rose 25c to $9 today.