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The High Court decision followed a case being brought to the Land Valuation Tribunal over objections that the capital value of a Gisborne-based grower’s orchard had increased from $2.8 million to $4.1m. (File photo)
Gold kiwifruit growers could face steeper council rates than their green grower counterparts, following a High Court decision.
Gold variety growers require a special licence, which can cost hundreds of thousands of dollars a hectare, from Zespri Group Ltd.
In 2020, the Gisborne District Council included licence costs for the higher selling G3 gold kiwifruit, also known as “SunGold”, in rating valuations for orchards.
This saw significant rate increases for some growers, including Tim Tietjen, of Bushmere Trust, whose 5.9-hectare orchard with a licence to grow G3 gold kiwifruit was assessed as having a capital value of $4.1 million.
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Bushmere objected, estimating the property’s capital value, without the licence, to be closer to $2.8m.
HENRY COOKE/STUFF
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The trust, backed by NZ Kiwifruit Growers Incorporated (NZKGI), brought a case to the Land Valuation Tribunal, which found in its favour in February.
However, this decision was appealed by the council with support from the Valuer-General, leading to the hearing in the High Court at Gisborne in June.
The market value of SunGold kiwifruit orchards per canopy per hectare alone (excluding land) was considered to be worth $800,000 to $900,000 – almost three times as much compared to mature green kiwifruit orchards ($300,000 to $450,000) and almost 20 times that of crops such as oranges, avocados and feijoa.
PLANT & FOOD RESEARCH/Stuff
The decision means growers of the lucrative gold kiwifruit – worth up to three times as much as green varieties – face steeper rates from council. (File photo)
Hamish Harwood, representing the council, said the tribunal erred by valuing the land “based on a position that cannot lawfully exist”, describing the vines and licence as “functionally inseparable”.
Tiho Mijatov, for Bushmere, said the tribunal had correctly articulated the legal position that capital value of land comprises land value and improvements only.
“The SunGold licence is neither land nor an improvement to the land and therefore does not contribute to the capital value of the land,” he said. “It is a profit-making mechanism for the benefit of the grower, not an improvement to land.”
In a decision released this month, the judge noted the council was the first to take this approach and it was a test case.
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Compared to green kiwifruit varieties, gold kiwifruit vines are worth up to three times as much according to September 2020 figures. (File photo)
The appeal was upheld on the basis the licence was “intrinsically part of the land asset which gives the ability to grow and sell this variety of fruit”, which meant it should be included in its capital value for rating purposes.
“While the licence does not necessarily run with the land in a legal sense, in practice it is associated with the property to such an extent that its value is priced into the market value of the property,” the decision read.
“We hold that the capital value of the property, a proxy for fair market value, includes the value of the land as enhanced by the licence, which in practice runs with the land.”
The judge also ordered separate judicial review proceedings, brought by NZKGI, be stayed pending an application by either party for the stay to be lifted.
Tietjen said the decision was “incredibly disappointing”, but had not decided .
