Gisborne Rating decision
The challenge was brought to the Gisborne District Council’s 2020 rates revision decision. In that decision the Gisborne District Council departed from long standing and accepted practice by including, for the first time in New Zealand, the value of G3 Gold Kiwifruit Licences in all rateable values for gold kiwifruit licences going forward.
New Zealand Kiwifruit Growers Incorporated (NZKGI) on behalf of the Gisborne kiwifruit growers saw this as an instance of Council identifying what the Council may have considered to be a ‘cash crop’ in their region and attempting to leverage the commercial decisions of successful growers to increase their rates revenue.
NZKGI disagrees with the Council’s new approach because a rate is a land tax. Gisborne District Council’s decision in 2020 to levy rates was not based on the value of land, but on the perceived value of a private intellectual property agreement between a grower and Zespri.
The test case of Bushmere Trust’s Gold kiwifruit orchard rates was brought to the Land Valuation Tribunal by NZKGI. Mr Tietjen and NZKGI succeeded on all grounds of objection against Gisborne District Council. The Tribunal agreed that the Council was wrong to include the value of gold kiwifruit licences in its assessment of capital value.
The Tribunal concluded that the Zespri Gold kiwifruit licence is not lawfully able to be included in rating valuations as it is not an improvement to, or for the benefit of, the land. Rather, the licence is a speculative investment by the grower – the profits are not guaranteed and there are historical instances of kiwifruit disease crippling the industry. Further, any new owner requires a new licence, and where the licence has been transferred and the Gold vines removed the remaining rootstock can be used to grow other non-licenced species. Ultimately the Tribunal concluded that the Gold kiwifruit licence solely represents another aspect of the value of the orchard business (such as staff, plant and machinery) and so was incapable of being included for the purposes of land rating valuations.
This test case is of great importance to other Gold kiwifruit orchards in the Gisborne region, and has wider national implications regarding future rating methodology decisions. The decision can be read here.
NZKGI has succeeded in its first step in appealing the High Court decision to include the value of the SunGold licence in the rateable value. NZKGI has also received the decision that we have been granted leave to appeal the High Court decision. We now turn our focus to our Court of Appeal application to challenge the High Court decision in 2023. We will keep you all updated as we go through the Court process.