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Kiwifruit growers have won their court battle to stop Gisborne District Council from including valuable kiwifruit licences in rating assessments.
A test case brought by Gisborne kiwifruit grower Tim Tietjen's Bushmere Trust, supported by the NZ Kiwifruit Growers Incorporated (NZKGI), was heard by the Land Valuation Tribunal in Gisborne last November and the decision was released this week.
The case challenged Gisborne District Council's 2020 three-yearly rates revision decision, in which the 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.
The decision to include the Gold kiwifruit G3 licences as an "improvement" — that is "all work done or for the benefit of the land" — followed a meeting between the council's newly contracted valuation service providers Lewis Wright and valuer-general Neill Sullivan.
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Advertise with NZME.The capital valuation on Tietjen's 5.85ha Bushmere Rd, Gisborne, property shot from $1.65 million to $4.1m.
About 3.11ha of the property is orchard canopy, which was converted from the green to gold variety prior to 2018.
The council's move angered kiwifruit growers and caused NZKGI to fear other councils might follow suit.
The NZKGI said the council, having identified what it might have considered a "cash crop", was attempting to leverage the commercial decisions of successful growers to increase their rates revenue.
The tribunal's decision this week in favour of the growers, while not strictly a binding precedent, is expected to strongly deter other councils from trying to apply a similar rating methodology in future as it is a judicial decision on the illegality of the inclusion of G3 licences for rating valuation purposes.
The tribunal found 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.
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Advertise with NZME.Ultimately the tribunal concluded the Gold kiwifruit licence solely represents another aspect of the value of the orchard business (such as staff, plant and machinery) and was therefore incapable of being included for the purposes of land rating valuations.
It concluded the capital value for Tietjen's property for the district revaluation under the Rating Valuations Act as being $2,800,000 - none of which should include the value of his kiwifruit licence.
NZKGI chief executive Colin Bond said "that a council singled out Gold orchardists for the purpose of levying significantly higher rates against their private intellectual property contracts smacked of unfairness and appeared to be local government targeting successful businesses based on their performance rather than the value of their land".
He said the kiwifruit sector had had much to deal with recently.
"The sector has grappled in recent years through Covid-19 restrictions and related labour shortages and shipping delays. Growers are continuing to adapt to requirements regarding increased regulation of growing, labour, reporting, monitoring, and spraying requirements for their orchards," he said.
