A consortium of wealthy of Australians and superannuation funds are suing a New Zealand district council, saying they were "dudded" in the sale of a 19,000 hectare dairy farm.

New Plymouth District Council in New Zealand dairy rich Taranaki region owns Australia's biggest and oldest dairy operation, Van Diemen's Land Company, in north-western Tasmania.

Tasmania-based Van Diemen's Land is the country's largest single volume dairy production asset. Credit:Louie Douvis

Earlier this month it had signed a $250 million sale agreement with ASX-listed TasFoods – the share register of which includes several wealthy Australians, including Monadelphous chairman John Rubino, and superannuation funds.

But late on Friday Van Diemen's Land said it had rejected the bid in favour of another from an unnamed foreign buyer.