Earlier this week, the Court of Appeal issued its decision in the Bushmere Trust v Gisborne District Council appeal, and confirmed Gisborne District Council’s approach to valuing land subject to licences to grow SunGold Kiwifruit.

Simpson Grierson’s Planning and Environment team, led by Senior Associate, Hamish Harwood and solicitor, Olliver Maassen, acted for Gisborne District Council in these proceedings.

In this article we briefly discuss the background to the proceedings the Court’s decision, and its impact.

Background

SunGold Kiwifruit is a highly valued orchard fruit, and so too is the land on which it grows, compared to that of green kiwifruit, oranges, avocados and feijoas - among other crops. The ability to grow SunGold Kiwifruit is enabled by a license issued to a landowner by Zespri. The licence is personal property.  

The key question for these proceedings was whether the value of that licence should be deducted from the capital valuations for SunGold orchards. The Land Valuation Tribunal found that a deduction should be made, which had the impact of reducing the Council’s valuation and the resulting rates levied to Bushmere for the property. The Council appealed, with the High Court overturning that decision, and a further appeal then filed in the Court of Appeal.

Court of Appeal decision

In addition to some technical findings about the relevant legislation, the Court took a practical approach, noting that if Bushmere were to sell the property, the price it would expect to obtain would reflect the reality that its orchard contains SunGold kiwifruit vines. The reasonable terms of any such sale would include a transfer of the licence. Even though the licence is personal property, the price Bushmere would expect to obtain would reflect the transfer of the licence to the purchaser. The approach reflects the historic and current market reality that SunGold vines sell for a significantly higher price than nearly any other vines. 

The Court found that if it were to agree with the approach advocated by Bushmere, this would result in a capital value which is representative of green kiwifruit rather than the more valuable SunGold kiwifruit present on the property. That approach would “not only be artificial, it would defeat the whole purpose of adopting a capital value approach to assessing rateable value, namely achieving a valuation that is generally similar to market value” (at [53]).

Impact of the decision

The Court of Appeal is the highest appellate court for valuation cases so the decision is final, and settles any dispute in this space. It creates a binding precedent for valuations of properties growing SunGold kiwifruit, and will be of interest (and potentially some significance) to growers of other crops that are managed via plant variety rights licences, as well as local authorities and valuation service providers.

Get in touch

If you would like to chat to our experts about any aspect of this decision or what impact it may have, please get in touch.

 

Special thanks to Grace Mohi for her assistance in writing this article.