TORDIS KATHARINA FLATH, STEPHEN BRENT MACKAY AND SAS CORPORATE TRUSTEES LTD s AND MINISTER FOR LAND INFORMATION
[2025] NZCA 40
•6 March 2025 at 10.30 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA478/2024 |
| BETWEEN | TORDIS KATHARINA FLATH, STEPHEN BRENT MACKAY AND SAS CORPORATE TRUSTEES LTD |
| AND | MINISTER FOR LAND INFORMATION |
| Court: | Ellis and Cooke JJ |
Counsel: | C M Stevens and C M McCracken for Applicants |
Judgment: | 6 March 2025 at 10.30 am |
JUDGMENT OF THE COURT
A The application for leave to appeal is declined.
BThe applicants must pay the respondent costs for a standard application on a band A basis and usual disbursements.
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REASONS OF THE COURT
(Given by Cooke J)
By application dated 25 July 2024, the applicants seek leave to appeal the decision of the High Court substantively upholding a decision of the Land Valuation Tribunal.[1] The High Court concluded that the applicants were entitled to total compensation of $71,000 in relation to the taking of part of their land for construction of the Mackays to Peka Peka Expressway.[2] The application is opposed by the respondent. The High Court earlier declined leave to appeal.[3]
Background
[1]Flath v Minister for Land Information [2024] NZHC 36, [2024] 2 NZLR 325 [High Court judgment] and Flath v Minister for Land Information [2022] NZLVT 30 [Tribunal judgment].
[2]High Court judgment, above n 1, at [181].
[3]Flath v Minister for Land Information [2024] NZHC 1739 [application for leave judgment].
The applicants’ property comprised 1.084 hectares at Raumati South. 1,917 m2 of the eastern back end of this land was taken for the Expressway. The front of the property was zoned residential but the land taken was in low-lying land zoned rural. The taken land had sheds and a buffer strip, beyond which existed the old State Highway 1 and the main trunk railway line. Following its construction, the Expressway now runs closer to the rear boundary of the block than the old State Highway.
Both the Tribunal and the High Court assessed compensation for the taking under ss 60 and 62 of the Public Works Act 1981 (the Act) on the basis of the notional market value of the land taken as a section subdivided away from the main block, together with additional compensation for the injurious affection to the main block arising from the taking.[4] The compensation was assessed by the High Court as follows:
(a)$38,000 for the market value of the land being taken;[5] and
(b)$33,000, being the injurious affection to the balance of the land.[6]
[4]See High Court judgment, above n 1, at [97]–[114] and [181]; and Tribunal judgment, above n 1, at [40] and [55].
[5]At [181]. $38,000 is derived from $130,000 (being the notional value of that land as a subdivided section) less $92,000 (being the cost of that subdivision) — see [119]–[120].
[6]At [175] and [181].
These amounts were effectively the same as those awarded by the Tribunal, although the High Court concluded that the Tribunal had made some mathematical errors in its calculation of injurious affection.[7]
[7]At [175].
The applicants say that this award is inadequate. In particular they say that the subdivision costs of $92,000 should not have been deducted, and that the provisions of the Act have been misinterpreted in doing so.
Approach to the grant of leave
Section 18A of the Land Valuation Proceedings Act 1948 provides:
18A Appeal to Court of Appeal in certain cases
(1)Notwithstanding anything in any enactment, any party to any proceedings before the court who is dissatisfied with any award or order of the court may, with the leave of the court or of the Court of Appeal, appeal to the Court of Appeal; and section 56 of the Senior Courts Act 2016 shall apply to any such appeal.
(2)In determining whether to grant leave to appeal under this section, the court to which the application for leave is made shall have regard to the following matters:
(a)whether any question of law or general principle is involved:
(b)the importance of the issues to the parties:
(c)the amount of money in issue:
(d)such other matters as in the particular circumstances the court thinks fit.
…
The approach to the grant of leave was described in Chief Executive of Land Information New Zealand v Luke in the following terms:[8]
[17] The four criteria specified under s 18A(2) should be evaluated as a whole. Not every question of law which is important to one of the parties and which involves a lot of money should be given leave. The application for leave must be considered in light of this court’s function on second appeals. …
[8]Chief Executive of Land Information New Zealand v Luke [2008] NZCA 43.
The function of the Court on second appeals was described in the following way in Waller v Hider:[9]
Upon a second appeal this Court is not engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below. It is not every alleged error of law that is of such importance, either generally or to the parties, as to justify further pursuit of litigation which has already been twice considered and ruled upon by a Court.
[9]Waller v Hider [1998] 1 NZLR 412 (CA) at 413.
That approach should be applied in light of the mandatory considerations set out in s 18A(2).
Assessment
The applicants’ key argument is that the Tribunal and High Court have misinterpreted the Act in deducting subdivision costs. They say that such costs should not be deducted, particularly when subdivision was found to be uneconomic. They argue that this approach unjustifiably whittles away full and fair compensation under the Act.
We accept that this argument potentially involves questions of law having application beyond the present case. We have concluded that leave to appeal should not be granted, however.
Although the applicants may not accept the factual assessments of the Tribunal or High Court, the amount in dispute is limited to the $92,000 found to be required to be deducted for the cost of subdivision. This is a comparatively small amount of money in dispute in terms of s 18A(2)(c). We do not consider there is any other point of importance to the applicants in terms of s 18A(2)(b). The costs of litigation to both parties, and more generally, count against the grant of leave given the amount in issue. We consider that there would need to be significant questions of law or general principle involved in the proposed appeal before leave would be justified in those circumstances.
We do not consider that sufficiently significant questions of law or general principle arise with this proposed appeal. This is for two related reasons.
First, the way in which the case has been presented limits what can be properly addressed on appeal. The parties agreed before the High Court that compensation should be calculated on the notional subdivision approach under s 62(1)(b), and that the exception in sub-para (ii) did not apply.[10] The exception in sub-para (ii) arises when only part of the land is taken, and because of its size, shape or nature there is no general demand or market for that land. When sub-para (ii) applies, compensation is based on the market value of the whole of the applicant’s land after the taking, compared with the value of the whole of the land before the taking.[11]
[10]High Court judgment, above n 1, at [70].
[11]Before the Tribunal the Crown argued for this approach, but they did not pursue this argument before the High Court.
If subdivision costs mean that the notional subdivision would be uneconomic, then the highest and best use of the land may not be as a subdivided section. The High Court observed that, if subdivision was uneconomic the value of the land would need to be assessed without it having subdivision potential.[12] Moreover, in those circumstances, it may be that there is not a general demand or market for this parcel of land so that s 62(1)(b)(ii) applies, with compensation assessed on the before and after approach described above. The High Court expressly called for submissions on this alternative basis for compensation, but both parties submitted the exception did not apply.[13] These alternative ways of assessing compensation would not be before the Court on any appeal, and the evidential basis for them may not be available. For these reasons we do not consider that the potential points of more general importance would be able to be fully argued. The way the issues have been addressed limits the appeal to a more confined question.
[12]High Court judgment, above n 1, at [114].
[13]At [140].
The second point is that, on the more confined question — whether subdivision costs should be excluded — we do not consider the applicants’ arguments are strong. The land taken was not subdivided away before the taking, but assessing it as subdivided land was considered by the Tribunal and the High Court to be its highest and best use.[14] The High Court referred to a number of cases where it was held that costs associated with obtaining the highest and best use of the land needed to be taken into account in the compensation assessment.[15] We do not consider the applicants’ arguments distinguishing these cases are strong ones. We accordingly consider that any appeal would likely be directed to the particular facts and circumstances rather than questions of wider principle.
[14]Tribunal judgment, above 1, at [28] and [32]; and High Court judgment, above n 1, at [114]: “the hypothetical subdivision assessment is undertaken to ensure the full value of the property is recognised. In this case there was some value added by factoring in a potential for subdivision.”
[15]At [107]–[113] citing Re Whareroa 2E Block, Maori Trustee v Ministry of Works [1959] NZLR 7 (PC); Green & McCahill Holdings Ltd v Auckland City Council [2013] NZHC 507; State Bank of New South Wales v Blacktown City Council [1994] NSWLEC 158; Nutsford-Cumming v Minister of Lands LVT Auckland LVP 20/01, 30 April 2002; Chief Executive of Land Information New Zealand v James LVT Auckland LVP 02/05, 3 May 2006; and Minister of Lands v Wech LVT Auckland LVP 71/03, 21 September 2005.
Ultimately, the argument that subdivision costs make subdivision uneconomic does not mean that these costs should be ignored, but may mean that the notional subdivided value is not the highest and best use of the land, and accordingly is not the proper measure for compensation under the Act. But as we say, alternative approaches to assessing compensation were not argued in the High Court and are not being raised as issues on the proposed appeal. Nor are any of the other criticisms of the approach to compensation referred to by the applicants of sufficient importance to justify the costs of a second appeal.
In light of the views we have just expressed, we agree with Grice J that leave should not be granted.[16]
Result
[16]Application for leave judgment, above 3, at [54].
The application for leave to appeal is declined.
The applicants must pay the respondent costs for a standard application on a band A basis and usual disbursements.
Solicitors:
Hazelton Law, Wellington for Applicants
Crown Law Office | Te Tari Ture o te Karauna, Wellington for Respondent
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