Riddiford v Attorney-General HC Wellington CIV 2006-485-833
[2008] NZHC 969
•23 June 2008
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV 2006-485-833
UNDER the Land Valuation Proceedings Act 1948
IN THE MATTER OF a decision of the Land Valuation Tribunal at Wellington dated 9 December 2005
BETWEEN DANIEL THOMAS SPENCER RIDDIFORD AND YVONNE ADA RIDDIFORD
First Appellant
ANDDANIEL THOMAS SPENCER RIDDIFORD
Second Appellant
ANDTHE ATTORNEY-GENERAL Respondent
Hearing: 5 June 2008
Court:Ronald Young J Mr J P Larmer
Appearances: Appellant (DTS Riddiford) in person
M Parker for Respondent
Judgment: 23 June 2008 at 3.30 pm
JUDGMENT OF THE COURT
Introduction
[1] The appellants as trustees own a 6600 hectare property (known as Te Awaiti) on the southern coast of the Wairarapa. They subdivided a small section from the farm which in turn triggered the taking, for reserve purposes, of a 20 metre coastal
strip of 19.0060 hectares along 9.5 kilometres of the farm’s coastline. The Land
RIDDIFORD And Anor V THE ATTORNEY-GENERAL HC WN CIV 2006-485-833 [23 June 2008]
Valuation Tribunal, at a hearing seeking compensation by the trustees for the coastal strip, assessed compensation pursuant to s 290 of the Local Government Act 1974, at
$156,200. They awarded costs to the Crown of $100,000. The trustees, represented by Mr D Riddiford in this appeal, say the compensation was woefully inadequate and that the costs order should not have been made against them and in any event was too high.
[2] At the hearing before us the appellants identified six grounds of appeal against the compensation order. All other grounds in the notice of appeal were abandoned. The six grounds were:
(i)The Tribunal failed, or failed sufficiently, to take into account an offer by Mr Alan Jolly to buy a portion of the farm known as the “Heights” for $1 million in assessing compensation.
(ii)The Tribunal failed to adequately take into account the value of house trophy sites in assessing compensation.
(iii)The Tribunal failed to adequately take into account the evidence of unsolicited offers to purchase the farm in assessing compensation.
(iv)The Tribunal failed to assess or order compensation for the taking of lot 2 by River Cottage.
(v) The Tribunal approached the assessment of compensation incorrectly.
It should have assessed the value of the land taken and added to that an amount for the injurious effect on the remaining farm from the loss of the esplanade to reach a full compensation figure.
(vi)The Tribunal was wrong to accept the evidence of valuation by Mr Hawkins given it was based on inaccurate comparisons with other properties.
Background
[3] Section 290 of the Local Government Act as relevant provides as follows:
290. COMPENSATION IN RESPECT OF LAND ALONG AREAS OF WATER SET ASIDE AS RESERVES—
“(1) Where,—
(a)Pursuant to subsection (1) or subsection (2) of section 289 of this Act, a strip of land that—
(i)Is situated along the mean high-water mark of the sea or of any of its bays, inlets, or creeks or along the margin of any lake; and
(ii) Adjoins any allotment having an area of 4 hectares or more which, in the opinion of the Minister of [Conservation] is to be retained by the subdividing owner for a period of not less than 5 years from the date of deposit of the survey plan and, in the opinion of that Minister, is to be used for that period for any of the purposes specified in subsection (3) of that section,—
has been set aside as reserved for the purpose specified in subsection (1) of that section; and
(b)No part of that allotment is zoned for residential or commercial or industrial purposes under any operative or proposed district scheme at the date of deposit of the survey plan,—
there shall be paid, as compensation, to the subdividing owner, or, if he is deceased, to his personal representative, out of money appropriated by Parliament, an amount equal to the value, as at the date of deposit of the survey plan, of the land set aside, that amount to be determined by a valuation made by the Valuer-General.
(2)If the subdividing owner, or, as the case may be, his personal representative, is dissatisfied with the amount of any valuation made for the purposes of subsection (1) of this section, he may, within one month after notice of the valuation has been given to him by the Valuer-General, object to that valuation by delivering or posting to the Valuer-General a written notice of objection stating shortly the grounds of his objection and the value at which he contends the land should be valued. Sections 20 to 23 of the
Valuation of Land Act 1951, as far as they are applicable and with the necessary modifications, shall apply to the objection.
“(3) Where—
(a)Any payment is made to the subdividing owner or his personal representative under subsection (1) of this section; and
(b)Within 5 years after the date of the deposit of the survey plan the subdividing owner or, as the case may be, his personal representative or any successor in title of the subdividing owner subdivides the adjoining land or any part of it or transfers by way of sale or enters into an agreement to sell the adjoining land or any part of it,—
there shall be repayable to the Crown, by the subdividing owner or his personal representative or that successor in title, as the case may be, and charged against the land and recoverable as a debt, the amount of that payment to the extent that it has not already been repaid:
Provided that the Minister of Conservation whose decision shall be final, may, in his discretion, waive such a repayment or may direct that an amount less than the full amount shall be repaid.
[4] Compensation is therefore payable for the value of the land taken.
[5] We take the description of the property Te Awaiti from the Land Valuation
Tribunal as follows:
[15] The land is about 53 km, or a drive of one hour, southeast of Martinborough, on the South Wairarapa coast. It is held in seven freehold titles. The total area is about 6,500 ha, with all but 50 ha being held in a single title. The remaining six small blocks are situated along the coast. The land forms an irregular diamond shape with its long sides following the coast a distance of 11.25 km, including the boundaries of three interspersed unfenced blocks of Mäori land occupying about 58 hectares within the farmed area of the Te Awaiti station. Deducting the coastal boundaries of the three Mäori land blocks leaves 9.47 km of coastal boundary of the station.
[16] The property is situated between the Oterei and Rerewakaitu rivers. The title includes the beds of all rivers and streams within the land area including part of the bed of the Oterei River. The bulk of the land is rugged and consists of strongly dissected ridges and incised valleys traversed by streams. The highest parts of the property are inland above the 450 metre contour, and the coastal hills are up to 250 metres in height.
[17] There is a distinctive coastal strip of about 200 metres wide from mean high water springs to the foot of the hills. The coastal strip is a raised gently sloping wavecut rock platform with scree and alluvium eroded from the seaface. The esplanade reserve comprises about 10% of this coastal strip. There is mixed pasture over large parts of the property, with other areas covered mainly in bush or indigenous regrowth. It is fenced into over
20 paddocks from over 20 hectares along the coast, to 800 hectares inland. Building development is confined to the southern area near the public road.
[18] The land is mainly clear of gorse and other pest plants due to careful long-term management. Some small areas have been planted for soil or river management purposes. It has an extensive network of four-wheel drive standard access tracks for management. A small deer hunting lodge and helipad is located inland in the Heights Bush. This provides the base for an independent recreational hunting concession operated by Chris Jolly. Feral deer and pigs are found in numbers throughout the property. The remoteness and size of the inland part of the property lends itself to “wilderness” recreational activity.
[19] There is no public access by land to the southeastern coastal area except by crossing Mäori owned land, particularly the Te Awaiti Mäori block located near the end of the country road. This block appears to be a key property, containing the boat Harbour, the Oterei river estuary, and the road used by Te Awaiti Station staff to access the coastal flat and undulating country. It is understood a fee is charged if members of the public wish to launch their boats within this area.
[20] The Coastal frontage is rugged and hazardous, but it is described as possessing a wild charm. There is evidence that the seawater is mainly free of suspended silt and clay, because there is no major river outflow and a deeply shelving seabed. It is probably indicative of the inclement climatic conditions that none of the station buildings have been erected facing the sea coast.
[21] The station supported approximately 18000 stock units, comprising sheep, cattle and a deer unit, however one of the claimant witnesses described the property as being marginally economic for pastoral farming.
[22] The applicants called as a witness Ms S A Allan, who is an experienced planning consultant. She noted a number of potential uses for which the Station could be utilised. They include sheep and cattle farming, beekeeping, aquaculture, deer farming, transient eco-tourism, luxury tourist accommodation, forestry and windfarming. Most of the existing and potential uses are not exclusive to Te Awaiti.
[23] Ms Allen [sic] described the coast as mainly rocky and generally exposed to the prevailing south east wave direction. The prevailing current is from south to north. There are a number of small sheltered sea areas behind outlying rock outcrops and submerged reefs. The coastline is relatively inhospitable from the sea with no natural harbours and few safe embayments. Sea traffic gives the area a generally wide berth for safety reasons. Ms Allan said that, as a traditional productive high-country station business, Te Awaiti would now be considered marginal. The cost of maintenance and management is likely to match the income yielded by traditional pursuits of sheep and beef farming. In addition, there is a
considerable sunk investment in the land itself. The station has, however, a range of attributes which could form the basis for further diversification to support the management of the land and yield income for its owners. These attributes are enhanced by relative proximity to Martinborough and to the full range of urban services in Wellington, only two hours away by road.
[24] The Riddiford family has held the property since 1843. Mr Daniel Riddiford gave evidence, on behalf of the Trustee owners, that until 1943, wool and stores were transported to and from the property by sea. A road was then constructed, giving vehicular access to the property. Mr Riddiford has attempted over a number of years to utilise the coastal margin for aquaculture, and has enlarged a tidal pool near the Hapukura stream, 80 metres by 20 metres, for which a coastal permit was issued in 1995. The pond is now almost completely located below mean high water springs, with part encroaching on to the reserve. Consents are also held for Stage 1 marine farming of two adjacent areas 100m x 200m below mean high water springs and north east of the aquaculture pond, generally known as the Okoroponga. These areas can be varied in extent and location at the consent-holders request under a condition of consent. They are not affected by the current Moratorium on new aquaculture activities. They expire in
2006 or 2008 but there is no impediment in law to their renewal on a non- notified application.
[25] At the time of valuation the tidal pool had been used for trialling production of Kina and Paua, and the production of Mabe pearls. No commercial quantities had been produced. By the date of this hearing, six years later, the aquaculture enterprise was still in an embryonic stage.
[6] As to the circumstances under which the Crown came to take the esplanade reserve on the coast, the Land Valuation Tribunal described that in this way:
[3] The hearing occupied six days. Evidence was heard in relation to actual and potential business activities on the land, comparable sales of farmland, and the potential appropriate approach to be taken in valuing the reserve strip. A central part of the applicants’ case was to demonstrate the potential profitability of trough based aquaculture near the reserve, and the consequent effect on the value of the reserve.
[4] Although the scheme plan was approved by the council in September 1991 and signed by the surveyor the following year, it was not deposited until 1999 when the land finally vested as an esplanade reserve. There is some contradiction in the evidence whether the plan was deposited on 12 May 1999 or 9 July 1999. The value is to be assessed as at the date of deposit of the plan. The difference appears to be immaterial.
[5] The Trustees of Te Awaiti Station had delayed deposing the plan while negotiating a deed of management in order to preserve rights over the land for the purposes of aquaculture. The deed, signed on 7 March 1995, contained a right of free and unimpeded access to the station owners and staff. Mr Riddiford said that he deposited the plan once he could be confident that he had consent for an aquaculture pond and the deed of management was in place.
[6] On July 7 1993, the Resource Management Act 1991 was amended so that a subdivision could have proceeded without any reserve being granted other than a short strip in front of the cottage. The applicants could have withdrawn the existing plan and resubmitted it under the Resource Management Act. Mr Riddiford said he was not aware of that. In about December 1997 he began discussions with Crown officials about the compensation to be paid for the esplanade reserve.
[7] The applicants say that they were faced with legislation that would remove a right to compensation that had previously existed. Knowing the length of coastline that would be taken, they made a nominal subdivision to trigger their right to compensation under the then current law. That avoided a prospective confiscation of property.
[8] The Tribunal notes those matters. It is unnecessary to consider the motive for the subdivision in determining the valuation. But the way in which it proceeded tends to support the respondent’s argument that Mr Riddiford was able to secure, under the deed of management, all that he basically required for the conduct of his proposed aquaculture venture. Despite his evidence to the contrary, the Tribunal considers that it must have come to his notice in the six years between the passing of the Resource Management Amendment Act 1993 and the date of plan deposit, that there was a way of proceeding with the subdivision with a limited reserve under the amended legislation.
[7] Mr Riddiford’s case before the Tribunal was that, as well as its pastoral attributes, any valuation of the farm had to take into account its aquaculture, subdivisional potential for trophy house sites, the operation of a hunting lodge and hunting concession area, and the loss of riparian rights (or, as it was described, “blue water title”). Before us, Mr Riddiford abandoned any claim based on the actual or potential aquaculture development on or from the property. He made no submissions on any claimed loss of “blue water title” before us.
[8] As to the appellants’ approach to calculating proper compensation under s 290 the Tribunal said:
[72] Mr A R Calderwood, the valuer called by the applicants, measured the value of injurious affection due to the taking of the reverse as $9,546,600 calculated as 10% of total potential value of the land. He added that to a base value $3,801,200 for 19.006 ha at $200,000 per ha.
[9] The Crown called two valuers before the Tribunal, Mr Bulman and Mr Hawkins. Mr Bulman valued the esplanade strip at $120,000, assessed on the basis of valuing the farm before the esplanade was taken and after it was taken.
Mr Hawkins took the same approach and concluded the value of the strip was
$148,000.
[10] The appellants called Mr Calderwood to give evidence to support their claim for compensation. The Tribunal examined Mr Calderwood’s valuation in detail. We found Mr Calderwood’s valuation evidence difficult to understand. It contained self-evident arithmetical errors and did not seem to be based on solid valuation principles. His calculation as to the value of the farm property included a value for potential development such as for aquaculture, trophy house sites and hunting, together with the pastoral values. He assessed the total value of all such potential developments together with the pastoral value to be $9,500,000. He assumed a 10% injurious effect on the existing property as a result of taking the esplanade and thus reached a figure of $9.5 million for injurious effect. He concluded that the
19 hectares of esplanade taken had a value of $200,000 per hectare.
[11] Mr Calderwood valued Te Awaiti as at 1999 at $17 million. This, as the Tribunal said, was unsupported by any comparative sales evidence. We agree with the Tribunal that Mr Calderwood’s evidence was fundamentally flawed and gave no credible basis upon which to assess s 290 compensation as an assessment of the value of the land taken.
[12] We agree with the Tribunal that Mr Bulman and Mr Hawkins’ approach to the valuation of the land taken on a “before and after” basis was correct. Their approach was within established valuation principles. Their “before and after” approach included an assessment of the potential of the farm, its special features and any injurious effect from the loss of the esplanade. With that background and those findings, we turn to each ground of appeal.
(i) Hunting concession
[13] Some three to four kilometres from the coast, is a block of land of about
1,000 hectares covered in forest with deer and other feral animals available for hunting. It is known as the “Heights”. Mr Chris Jolly has built a hunting lodge,
helicopter pad and accommodation for guests there. He guides guests on hunting trips. As to his evidence the Tribunal said:
[45] He gave evidence that 30% of visitors are international and 80% are repeat visitors. He offered one million dollars for purchase of the heights for red deer hunting. He said he would never find a comparable block. The stock of red deer hinds was reduced from 2000 to nothing following a 1080 poison drop in 2001, but is regaining by colonisation from neighbouring blocks. He said that the turnover can greatly be increased, but will be harder to achieve without absolute privacy from the coast. The unique attraction is the proximity of the coastline to the wild deer hunting in the hills. Guests use the coastal flats. They return to enjoy an experience of which part is hunting.
[14] As to incorporating this feature into the value of the property the Tribunal said:
[145] The Tribunal does not accept the appellants’ argument that Castlepoint and Glenburn are not comparable sales. The essence of the market value of Te Awaiti is that it is a large and attractive coastal Wairarapa property. A premium may be found in the market for the deer hunting land just as a premium may be found for other aspects of the comparison properties. In about 1996 Mr Jolly offered $1,000,000 to Mr Riddiford to purchase what he referred to as the Heights Block at the centre of the station. It is reasonable to accept that deer hunting, as a recognised leisure pursuit, would add value in a way similar to suitability of another property for game fishing, diving or boating. The value of an established camping ground at Castlepoint is another example. We accept that hunting is a special feature of the property, but we do not think that the hunting potential puts Te Awaiti in a special class or that removal of the esplanade reserve affects that value.
[15] Mr Riddiford submitted that Mr Bulman and Mr Hawkins’ valuations of Te Awaiti should have been increased by $1 million to reflect the offer from Mr Jolly. He said in turn that the Tribunal should have increased their assessment of the value of the farm by $1 million. He submitted that Mr Jolly’s offer should have been treated by the Tribunal as an “unsolicited offer” which should have been taken into account in valuing the property: see Inland Revenue Commissioner v Clay [1914]
3 KB 466.
[16] Mr Riddiford submits that the Tribunal should have understood that these hunting rights were unique to Te Awaiti and therefore comparisons with other properties and their hunting opportunities were inappropriate.
[17] The Tribunal, in our view, correctly approached Mr Jolly’s evidence. These hunting rights were properly taken into account as a significant feature of the value of Te Awaiti and were compared with other properties by the Tribunal at [14].
[18] As the Tribunal illustrated, other similar coastal properties had different premiums. Glenburn had hunting potential but not as valuable as Te Awaiti’s. Glenburn and Castlepoint, however, had other premier features that Te Awaiti did not enjoy. This was all part of the comparative sales analysis undertaken by Mr Bulman and Mr Hawkins and by the Tribunal.
[19] The Tribunal concluded as it was entitled to that the hunting potential of Te Awaiti was not in such a special class of its own, or was not the only property with a special feature, whether for hunting, fishing, dividing or a camping ground, such that it could not be valued on a comparable sales analysis.
[20] Mr Calderwood’s valuation approach to Mr Jolly’s evidence was incorrect. He simply added the $1 million it was claimed Mr Jolly would pay for the “Heights” onto the pastoral value of the property. This was not an appropriate approach to valuation. It is inappropriate to identify the value of a premium feature of a property and add it to a valuation to get a total value. The proper approach was to assess the value of the property overall taking account of all special features including the hunting concession and any other special features.
[21] We therefore reject the appellant’s claim that the valuations by Mr Bulman and Mr Hawkins failed to reflect the hunting concession value of the property. We reject the suggestion the Land Valuation Tribunal failed to take this aspect into account when valuing the property. It clearly did so but not in the way in which the appellant thought it should. The Tribunal, in our assessment, took the hunting concession value into account appropriately as a particular feature of the property.
[22] The other difficulty for the appellant in this aspect of his appeal is that there was no evidence before the Tribunal, nor before us, that the value of the hunting concession was itself somehow reduced by the taking of the esplanade land, and so resulted in a lessening of the value of Te Awaiti.
[23] Mr Calderwood’s evidence was that the value of the hunting concession was
$1 million both before and after the taking of the esplanade strip. There was therefore no evidence on a “before and after” valuation approach that there was any loss of value to the property through diminution of hunting rights or concessions.
[24] Mr Riddiford suggested that the value of the concession would be affected because of the loss of privacy for hunters on the land. This was hardly credible. The area used for hunting is 3-4 kilometres from the coast, although the lodge itself has a view of the sea. In any event, given the extreme difficulty of public access to the esplanade reserve, public visits will obviously be very rare. In our assessment, there could be no loss of privacy as a result of the taking of the esplanade which would in any way affect the hunting concession.
[25] We reject this ground of appeal.
(ii) Trophy house sites
[26] Mr Riddiford had a surveyor mark on a plan of Te Awaiti 20 possible sites for houses around the coastal area near the esplanade reserve. The Land Valuation Tribunal described it in this way:
[38] Part of the potential of Te Awaiti station is for so called “trophy house sites” along the coastal hills with section sizes under 5 hectares and separation to achieve a sense of isolated rural environment. Subdivision of the land would probably be necessary to create security of ownership. The proposed location of 15 of the house sites is within the Coastal Protection Area. A subdivision of greater than 5 hectares would normally be a discrete activity. Only 4 allotments can be accessed off a shared access strip. Separate access strips would be needed and the subdivision would be a non- complying activity. Water supply could be from roof or spring. For domestic purposes, no consents are required. Wastewater treatment would be either permitted or controlled status.
[39] Section 105(2A) of the Resource Management Act requires either that the activity has adverse effects which are no more than minor, or that the activity is not contrary to objectives and policies of a relevant plan or proposed plan. Ms Allan thought that the activity may not pass the second alternative test but could be managed in a way that adverse effects would be no more than minor. The dwellings would be spread at approximately equal intervals along a 12 km length of coast, and nestled at the base of the steeply rising hill flanks of the seaface, out of sight of all but passing users of the esplanade reserve or the coastal marine area.
[40] The activity would then have to meet the NZ Coastal Policy Statement, and the provisions in the Regional Policy Statement. It would have to be shown to be not “sprawling or sporadic” or “inappropriate” in the coastal environment. At the very low density proposed, given the scale of the landscape and the ability to mitigate visual and amenity effects, the development would not be intensive enough to be “sprawling” and would be at a scale and intensity where it would not be perceived as “sporadic development”, and would not be “inappropriate” given the mitigation possibilities. An ownership structure which did not rely on subdivision would add to the case.
[41] An access proposal would need to be able to demonstrate a satisfactory and clear permanent management and maintenance provision. Overall, Ms Allan considered that the proposed housing development should be able to obtain consents.
[42] Dr Stewart agreed with Ms Allan, that if the residential allotments were established by subdivision they would be considered a non-complying activity due to the requirement for an access strip servicing more than four allotments. If they were established as a company with a single title, the application would be considered to be a multi-unit development and would be discretionary activity under the plan. But the arrangement could be caught as a subdivision under s 218(1)(a)(iii) of the Resource Management Act 1991.
[43] He considered that a proposed development of fourteen dwellings along the Te Awaiti coast may be acceptable under both the non-complying and the discretionary use tests, because the proposed sites are set well back from the coast and against the base of the sea cliff. The separation of the dwellings is sufficient that they do not constitute a “ribbon development”. The acceptability of the development would however be dependent on the detailed nature of the siting, design and materials of the dwellings. A development proposal, that involved considerably more dwellings or siting dwellings in the coastal marine area, would not easily gain resource consent.
[27] Mr Calderwood valued these sites at $15 million, being 20 sites at $750,000 each. Mr Riddiford said that the cost of developing such sections was modest, although no actual figures were provided. He submitted that Mr Bulman’s and Mr Hawkins’s valuations failed to take this potential into account in assessing a value for the property and that their valuations of the farm should have been increased accordingly.
[28] Before us, Mr Riddiford resiled from Mr Calderwood’s assessment that each section was worth $750,000. Mr Riddiford said $300,000 was a more appropriate figure although there is no basis in the evidence for the lesser amount. There is no evidence where Mr Riddiford got the lesser figure from.
[29] As we understand Mr Calderwood’s evidence, he considered that the taking of the esplanade would result in a 10% diminution in value of these sections and therefore the “after” value of the farm would be decreased by 10% of the $15 million value of the sections being $1.5 million.
[30] The Land Valuation Tribunal in our view correctly rejected that approach to valuation. It said:
[143] For example, at Wharekauhau the coastal foreshore is an exposed shingle beach with a road between the beach and the cliff face, whilst the bulk of the value lies in the flat to undulating terraces behind. In such a situation the loss of the foreshore to an esplanade would be expected to have little effect upon the residual value. Activity along the foreshore would not generally be visible from the top. Some of the many aspects to take into consideration when assessing coastal reserves will include vehicular access, proximity to centres of population, boat launching potential, climatic and sea conditions, contour, and pedestrian accessibility. Valuation practitioners need to examine all the evidence at their disposal, and give as much weighting to each element as the circumstances dictate.
[144] In attributing value to special aspects of the land, no better means has been devised than an interview with the purchasers in order to determine their perception of value, what they bought, why they bought it, and what they considered they paid for it. An optimistic vendor’s opinion is less useful. In that context, the large amount of evidence relating to the potential of Te Awaiti, both marine and land based, provided little assistance to the Tribunal in determining the value of the esplanade strip. It is useful in measuring any special loss to the owner of the remainder, but we do not find that any significant loss occurred. We would reach that view on the evidence alone, but we are fortified in it by the fact that Mr Riddiford could have arranged his affairs to avoid the taking of the esplanade reserve, but did not do so.
[31] In addition, the Tribunal found the potential for luxury house sites was unaffected by the taking of the strip in any event. There was no credible valuation evidence to justify the claim that there were 20 house sites on the coastal part of the property which would fetch either $750,000 each or $300,000 each. The fact that Mr Riddiford at this appeal was prepared to drop the claimed value of the sections by more than half illustrates the point.
[32] The valuers for the Crown, and the Land Valuation Tribunal in its judgment, correctly said that any special features of the farm, such as the development of trophy house lots, are to be absorbed as a feature of the property within the assessment of the overall value of the land. We also agree with the Tribunal that
there was no evidence that the taking of the esplanade would affect these values in any event. The esplanade reserve is not marked or fenced off in any way from the farm. As we have previously observed, in our view, few, if any, members of the public will ever go on to the esplanade reserve. Diminution of any value of these sections from the creation of the esplanade seems, therefore, improbable.
[33] This ground of appeal is rejected.
(iii) Unsolicited offers
[34] The third ground of appeal relates to unsolicited offers. The appellant says he gave evidence of a number of unsolicited offers to buy Te Awaiti but the Crown valuers and the Land Valuation Tribunal failed to take these offers into account in valuing the property.
[35] This submission can be simply dealt with. The only actual unsolicited offer (we do not consider the Jolly offer here) was from a person saying he had $9.6 million from the sale of his business and he would not mind buying a part of Te Awaiti. This was not an offer to buy some or all of the farm for a premium. This so-called unsolicited offer was not one at all. It seemed to us little more than a casual conversation. In any event, the kind of attributes that the wandering millionaire may pay a premium for, such as the isolation of the property, the availability of hunting and fishing, were all attributes acknowledged and taken into account in assessing the value of the land by the valuers and the Tribunal.
[36] Nor is there any evidence that the value of the property from this perspective would be reduced by the creation of the esplanade and therefore there is no evidence of reduction in value.
(iv) Lot 2 valuation
[37] When the appellant subdivided the River Cottage lot, which triggered the taking of the esplanade reserve, it also triggered the taking of land between the
Cottage and the river described as Lot 2 of the subdivision and consisting of 900m2
of land.
[38] The appellant says he should have been compensated for the loss of this land. The Land Valuation Tribunal did not consider this issue in its judgment. It seems that Mr Bulman was told not to value this land because it was considered no compensation was payable in law. Mr Calderwood did not directly value Lot 2, but said in his valuation report that his methodology made it clear what value he assigned to it. Mr Hawkins did assess compensation for Lot 2.
[39] Mr Riddiford argued that the plain words of s 290 of the 1974
Local Government Act meant the 900m2 of land taken for the river reserve should be the subject of a compensation payment.
[40] We agree that in law Lot 2 was eligible for a compensation assessment. The then relevant statutory provisions are ss 289 and 290 of the Act. As relevant, s 290 is at [3] and s 289 provides:
289 RESERVES ALONG AREAS OF WATER—
(1)On every scheme plan submitted to the council under this Part of this Act, unless the council, with the consent of the Minister of [Conservation], considers it unnecessary to do so, there shall be set aside as local purpose reserves [for esplanade purposes] under the Reserves Act 1977 for the purpose of providing access to the sea, lake, river, or stream, as the case may be, and to protect the environment, within the land proposed to be subdivided, a strip of land not less than 20 metres in width along the mean high-water mark of the sea and of its bays, inlets, or creeks, and along the margin of every lake with an area in excess of 8 hectares, and along the banks of all rivers and streams which have an average width of not less than 3 metres (not being rivers or streams or parts of rivers or streams exempted from this subsection pursuant to subsection (7) of this section):
Provided that the council, with the consent of the Minister of [Conservation], may approve the reduction of the width of the strip of land to a width of not less than 3 metres if in its opinion the reduced width will be sufficient to give members of the public reasonable access to the sea, lake, river, or stream.
(2) Where—
(a)A strip of land less than 20 metres in width along the mean high-water mark of the sea or of any of its bays, inlets, or creeks, or along the margin of any lake, or along any bank of any river or stream has either—
(i)Been reserved for the purpose specified in subsection (1) of this section, or for public purposes pursuant to section 29(1) of the Counties Amendment Act 1961 (as in force before the commencement of this Part of this Act); or
(ii) Been set aside or reserved for recreation purposes pursuant to any other enactment (whether passed before or after the commencement of this Part of this Act and whether or not in force at the commencement of this Part of this Act); or
(iii) Been reserved from sale pursuant to section
58 of the Land Act 1948 or the corresponding provisions of any former Act; and
(b)A scheme plan of subdivision of land contiguous to that strip of land is subsequently submitted to the council under this Part of this Act,—
then, notwithstanding that under subsection (1) of this Section or under any former enactment the Minister of [Conservation] had consented to the setting aside of the strip of land of less than 20 metres in width the council may, as a condition of its approval of the scheme plan, require the owner to set aside as reserved for the purpose specified in subsection (1) of this section a strip of land contiguous to the strip of land previously set aside and of a width determined by the council, being not more than the difference between the width of the strip of land previously set aside and 20 metres.
(3)Nothing in subsection (1) or subsection (2) of this section shall require a strip of land to be set aside as reserved [for the purposes specified in the said subsection (1) or subsection (2), as the case may be,] along the banks of any river or stream where that land adjoins any allotment having an area of 4 hectares or more and, in the opinion of the council, that allotment is intended to be used, or will continue to be used, wholly or principally in a manner conforming with accepted farming or management practices, for agricultural or horticultural or silvicultural or pastoral purposes or the keeping of bees or poultry or other livestock.
(4)Where, in the opinion of the council, it is in the public interest that a road or part of a road be dedicated within the area required to be set aside as reserved for the purpose specified in subsection (1) of this section, then, with the consent of the Minister of [Conservation] the dedication of that road or part of that road which lies within the area set aside may be accepted in satisfaction of and in substitution for the area or part of the area, as the case may be, that would otherwise be required to be set aside under this section.
(5)Where a strip of land is set aside as required by subsection (1) or subsection (2) of this section, and any land below the mean high water mark of the sea or of its bays, inlets, or creeks, or, as the case may be, any part of the bed of the lake or river or stream is vested in the person in whom the land shown in the scheme plan is vested, the council may require, as a condition of its approval of the scheme plan, that the owner shall execute, or obtain the execution of, and register, a transfer to Her Majesty of the whole or a specified part of the land below the mean high-water mark or, as the case may be, of the bed of the lake or river or stream which is vested as aforesaid.”
(6)No land set aside as a reserve or transferred to Her Majesty pursuant to this section shall be taken into account for the purposes of section 285 or section 286 of this Act, except to such extent (if any) as the council allows.
(7) The Minister of [Conservation] may from time to time on the application of the council declare that subsection (1) of this section shall not apply with respect to the banks, or any specified bank, of any specified river or stream or part of any specified river or stream, or may on the application of the council revoke any such declaration, in whole or in Part. In making his decision under this section, the Minister of [Conservation] shall have regard to the provisions of any proposed or operative district scheme for the locality in which the river or stream is situated.
(8)Every decision of the Minister of [Conservation] under this section shall be final.
(9)In this section a reference to bays, inlets, or creeks of the sea includes those that are artificial as well as those that are natural.
[41] Section 290 provides that where a strip of land which is situated beside a creek which runs to the sea (subs (1)) and which land adjoins a lot which is 4 hectares or more, and the owner intends to retain the larger property for five years or more and continue farming it, then compensation is payable.
[42] The key word is “adjoin” and its meaning. Here, Lot 2 is a rectangular shaped piece of land. Its two larger boundaries are with the river and Lot 1, the subdivided River Cottage section. However, Lot 2’s two shorter boundaries are in common with the larger farm block, which easily exceeds 4 hectares. As relevant here, “adjoin” means “in contact with or contiguous to” (Shorter Oxford Dictionary). There is no doubt, therefore, that the remaining farm block and the two shorter boundaries of Lot 2 adjoin. There is nothing in the statutory regime which suggests that all of the boundaries of Lot 2 need adjoin the larger farm before compensation is payable. If that is what was intended, it could easily have been said.
[43] On balance, therefore, we consider that the appellant was entitled to an assessment of compensation (if any) under s 290. We say “if any” because Mr Hawkins in his valuation of Lot 2 said:
Its value has been assessed within the compensation value of the total property.
[44] While Mr Calderwood did not directly value the land, he said that the Tribunal could calculate his assessment of value based on the figures in his valuation report. We agree with the Tribunal that Mr Calderwood’s approach to valuation was wrong.
[45] We have considered whether we should simply adopt Mr Hawkins’ approach given his assessment overall is based on the methodology we and the Tribunal approve. However, given the Tribunal did not expressly focus on this question, and given we have taken a different view than the Tribunal (that is, that compensation should be assessed) it is appropriate we let the Tribunal settle the amount, if any, payable. We therefore allow this aspect of the appeal and send the question of the value of Lot 2 back to the Tribunal to consider.
(v) Valuation of property approach
[46] The appellant submitted that the proper approach to compensation by the Tribunal in this case was to value the 19.0060 hectares of esplanade reserve and add to that figure the injurious effect on Te Awaiti after the loss of the esplanade land.
The appellant submitted the “before and after” basis for valuation approved by the Tribunal and used by Mr Bulman and Mr Hawkins did not reflect Te Awaiti’s unique features which should not be confused with other properties.
[47] We disagree. Section 290 of the Local Government Act requires compensation to be assessed on the basis of the value of the land to be taken. Mr Riddiford spoke of concepts such as “full” compensation for all losses, and a “liberal” approach to compensation assessment. However, s 290 defines what is to be compensated for: the value of the land taken. Often a direct value of such land taken, such as an esplanade reserve, can be difficult by itself to value. In this case the land is a 20 metre strip of land, 9.5 kilometres long, on a difficult coastline. It is a piece of land which is hardly likely by itself to come onto the market for sale. The approach that has traditionally been taken to such valuations is the “before and after” approach. This basis of assessing the value of the land includes a loss of value of the existing land as a result of a compulsory taking.
[48] Mr Riddiford’s suggested approach does not reflect established valuation principles. More importantly, it does not follow the statutory regime. Section 290 makes it clear that compensation is to be the value of the land taken. Mr Riddiford’s claim was for a value of the land taken plus a 10% diminution of the value of the existing property. This approach flies in the face of what the statute permits. None of the valuation principles Mr Riddiford sought to invoke can change the words of the statute.
[49] We accept there was proper comparative sales evidence available, as identified by Mr Bulman and Mr Hawkins, upon which those valuers undertook a “before and after” valuation of the property. That approach to valuation took into account, in assessing the value of the land taken, the effect of taking that land on the farm property itself.
[50] We reject this ground of appeal.
(vi) Mr Hawkins’ comparative value
[51] Mr Riddiford submitted that Mr Hawkins’, and by implication Mr Bulman’s valuation should have been rejected because they had used inaccurate comparisons between particular properties and Te Awaiti. In particular, Mr Riddiford said that the Glenburn property could not be compared with Te Awaiti - especially not in terms of the hunting available. He said that the hunting available in Te Awaiti was clearly superior to Glenburn. Secondly, he submitted that the relative assessment undertaken by Mr Hawkins between Glenburn and Te Awaiti failed to reflect the true differences of these farms and the unique features of Te Awaiti. He stressed that Mr Hawkins’ valuation of Te Awaiti failed to adequately take into account non- pastoral attributes of the farm.
[52] For understandable reasons, the Tribunal rejected Mr Calderwood’s comparative sale evidence given it was not typically based on properties near the Wairarapa coast, nor did the comparative evidence he gave seem to have much in common with the subject property. As to this, the Tribunal said:
[100] He had not inspected or analysed any sales on the Wairarapa coastline. His sales evidence was largely derived from coastal sales located North of Auckland. He had not inspected those properties, nor had he analysed any non-coastal sales in the same vicinity in order to separate the coastal influence from that pertaining to general locality influence.
And they said:
[115] The Tribunal agrees that the comparisons for Castle Point [sic] and Glenburn are of outstanding importance in this valuation. In most areas of New Zealand, coastal properties have been tightly held either by Mäori or family concerns, and it is extremely rare to find one sale, let alone two, in a particular period and locality. It is unfortunate that Mr Calderwood chose to omit the Glenburn and Castlepoint sales from his investigations.
[53] At [14] the Tribunal identified why they accepted Castlepoint and Glenburn farms were comparable sales. As we have previously said, each property has its particular special features. They are not, of course, identical. But they are generally similar properties, each with their strengths and weaknesses, between which legitimate comparisons can be made. It is also clear from a reading of the valuation
reports in evidence from Mr Bulman and Mr Hawkins that they took into account the relative features, strengths and weaknesses of the three properties. Their analysis included a consideration of the land and pastoral use and the different classes of country in each property. They took into account the special features of each property. We are satisfied that the approach was comprehensive, and that both Glenburn and Castlepoint station were proper comparators in assessing the value of Te Awaiti.
[54] This ground of appeal is therefore rejected.
Appeal against costs
[55] The Tribunal awarded costs against the appellant of $100,000, consisting of a fee content of $30,000 and disbursements of some $70,000, being a significant contribution towards the expert evidence called by the Crown. The basis of an award in favour of the Crown arose from the Crown’s offer to settle the case before the hearing by paying compensation of $142,000 and that the decision of the Tribunal was almost exclusively based on the Crown evidence. The appellant’s valuation evidence was understandably rejected. In those circumstances, an award of costs was both inevitable and appropriate in favour of the Crown.
[56] Mr Riddiford made the following points in support of his appeal against costs:
(i)He said that the courts were obliged to award him full compensation and given he had to pay costs he had not received full compensation for the value of his land.
We have previously remarked that the obligation on the Crown by virtue of the Local Government Act is to pay compensation for the value of the land. Whatever Mr Riddiford means by full compensation, the only compensation he is entitled to is in terms of the statutory regime. The question of costs was entirely separate from the question of compensation. The question of costs appropriately
followed a traditional analysis of liability. The Crown had offered compensation to Mr Riddiford prior to trial based on what the higher of their valuers had said. At trial, the Crown’s position was almost completely vindicated. The appellant’s position, seeking compensation of millions of dollars, was rejected. Understandably, therefore, costs were awarded against the appellant.
(ii)Mr Riddiford submitted that the Crown were $16,000 short in their offer from that ultimately awarded by the Tribunal and therefore no costs should have been awarded to the Crown.
Costs are of course at the discretion of the Tribunal. There is no suggestion the Tribunal took into account any irrelevant matter or failed to take into account any relevant matters in deciding to award costs in favour of the Crown. In the circumstances, such an award was inevitable given that, save for a modest adjustment, the Crown case was virtually accepted in its entirety.
(iii)Finally, Mr Riddiford said that this was a “test” case and therefore the parties should each meet their own costs given the public interest factor.
This was a compensation case based on the particular facts relevant to this particular farm. It is difficult to see what, if any, public interest or test case aspect this case illustrates.
[57] Mr Riddiford suggested the costs award was too high. However, in his counsel’s costs memorandum he sought costs of $263,000. It is difficult, therefore, for him now to complain about a costs award that was significantly less than half of the costs he was himself seeking. The costs award was appropriate.
[58] We reject this ground of appeal.
[59] In summary, all grounds of appeal have failed save the valuation of Lot 2. We refer this question to the Tribunal to hear whatever evidence they consider appropriate and give a decision.
Costs
[60] The respondents may file memoranda seeking costs within 14 days. The appellant has a further 14 days in which to respond.
“Ronald Young J” “J P Larmer”
Solicitors:
Crown Law Office, Wellington
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