IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE	
CIV-2024-488-000031
[2025] NZHC 1468	

UNDER	the Land Valuation Proceedings Act 1948	
IN THE MATTER OF	an appeal from the Land Valuation Tribunal	
BETWEEN	MARSDEN CITY LIMITED PARTNERSHIP
Appellant	
AND	WHANGĀREI DISTRICT COUNCIL
Respondent	

Hearing:	3 March 2025	
Appearances:	M Casey KC for the Appellant
H Harwood and L Stevens for the Respondent	
Judgment:	5 June 2025	

JUDGMENT OF WALKER J AND MR JOHN CHARTERS

This judgment was delivered by me on 05 June 2025 at 4 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors:

Carson Fox Legal Limited, Auckland Simpson Grierson, Wellington

MARSDEN CITY LTD PARTNERSHIP v WHANGĀREI DISTRICT COUNCIL [2025] NZHC 1468 [5 June 2025]

[1]	This is an appeal from a decision of the Land Valuation Tribunal (Tribunal). It concerns an objection by Marsden  City  Limited  Partnership  (Marsden)  against  the 2018 rating valuations assessment for its properties at One Tree Point Road, Marsden, Whangārei.

[2]	The crux of the appeal is whether the properties should be valued as one rating unit. A rating unit is the unit of tax for the purposes of the district valuation rolls under the Rating Valuations Act 1998 (RVA).

[3]	Marsden’s position is that the properties should be valued on that basis because the properties were owned by the same entity, were used collectively as one farming operation and it was likely that the certificates of title would only be alienated as one farming operation. Whangārei District Council’s (Council) position is that the properties should be valued as 87 separate rating units matching the 87 certificates of title. The divergent views led to Marsden filing the objection heard by the Land Valuation Tribunal.

[4]	Valuation at the relevant valuation date of 1 August 2018 on each respective basis was agreed between the parties’ valuers after conferral at an expert conference and was not in dispute. Suffice to say that the differential is significant.

[5]	The Tribunal agreed with the Council’s position, held that the properties were correctly valued as individual rating units and dismissed the objection.1

[6]	The appeal is brought under s 26 of the Land Valuation Proceedings Act 1948 (LVPA). The LVPA provides that this Court sits with an additional member on appeals.2

Summary of outcome

[7]	We find that the Tribunal was correct to hold it was not likely that the certificates of title would be alienated as one farming operation on the valuation date.

1	Marsden City Limited Partnership v Whangārei District Council [2024] NZLVT 018. [Tribunal Decision].
2	Land Valuation Proceedings Act 1948, ss 3(1) and 13(1).

Therefore, the properties should be valued as 87 separate rating units matching the 87 certificates of title in accordance with s 5B(1) of the RVA.

[8]	Accordingly, we uphold the decision of the Tribunal and now set out our reasons. We begin with the background and summary of arguments.

Background

[9]	The site of 82.5951 hectares is near the intersection of One Tree Point Road with the Port Marsden Highway in the Ruakākā area about 32 kilometres south of Whangārei City. Annexure I is an aerial photograph of the properties. Annexure II is a plan of the properties (bordered in black). The plan shows an area directly to the south developed by Great Northern Land Company Limited. Currently there is some limited residential housing, a small retirement village, light industrial/commercial activities and vacant land.

[10]	Historically, the land had been farmed. It is surrounded by pastoral farmland zoned rural. In 2009 the Council adopted a Marsden Point-Ruakākā Structure Plan (Structure Plan) after identifying the area as having growth potential. This set out the policy framework for development in the area as an additional suburban centre for the district. The Council anticipated a satellite city of around 40,000 people. Under this Structure Plan the properties came within the Marsden Primary Centre with zonings for light industrial, mixed use and commercial purposes together with a town centre and some associated residential zones.3

[11]	The previous owner was granted subdivision consents resulting in 108 separate titles. Extensive development works were undertaken including roading with footpaths on both sides of the road; associated street lighting; water, stormwater and wastewater reticulation including pumping stations; mains water, power, telephone

3	To ensure the integrated development of the Marsden Primary Centre, a sequential “Master Plan” and “Precinct Plan” approach was formulated. This was known as the Marsden Primary Centre Chapter. The Master Plan covers the whole site and provides details of core infrastructure layout, reserves and open space pattern. The Precinct Plan provides assumptions on end land use, provides specific urban design elements to be applied within a defined “precinct” and ensures sufficient capacity will be provided within the infrastructure services. A Precinct Plan is given legal effect by relevant zone rules, while the division of the site into individual lots enables the actual built development of the Precinct Plan.

and internet cabling. Each property on a title is serviced by the sealed roads, water, stormwater and wastewater and, in theory, capable of being sold individually at the valuation date.4

[12]	In 2014, sections of the stormwater and wastewater piping failed due to a piping issue associated with low pH in the groundwater. At that stage, the infrastructure was vested in the Council. Remediation work took several years to resolve and repairs were complete by 2019.

[13]	The evidence from Marsden’s valuer before the Tribunal  was  that  there were 45 sales transactions (including those within the adjacent block of land forming part of the overall Marsden Primary Centre) between 2006 and August 2018. Most of those sales took place between 2006 and 2008. There were two sales in each of 2016 and 2017, aside from the sale to Marsden. There  were also  two sales in  2018  before 1 August 2018. One of those sales was for a small retirement village which involved several titles.

[14]	The development was not successful. Receivers were appointed in May 2015. The debt owed to Westpac Banking Corporation exceeded $56 million. The receivers marketed the properties for over a year before Marsden purchased the 87 remaining titles as a block for $8.6 million in June 2017.

[15]	In early 2018, Marsden began working on a plan change in respect of the Marsden Primary Centre Chapter land to allow for a reduced industrial focus and increased provision of residential land.5

[16]	Shortly after purchase, Marsden divided the land into nine paddocks, cleared and fertilised and installed temporary electric fences, water troughs and cattle yards. It leased the land to an associated farming operation as a livestock grazing unit (one of three such properties used by the associated operation). The lease includes some

4	The parties described the sites differently. Counsel for the Council described the individual sites as small, urban sites. Counsel for Marsden described them as 2,000-5,000 square metre commercial and industrial sites. It is apparent that the subsequent plan change process was intended to render the sites more likely for residential development.
5	Known as Plan Change 150 (PC150) – Marsden City Limited Partnership Private Plan Change.

lots owned by third parties which are severable from the operation if Marsden wishes. Stock arrived from March 2018. It was still operating as a grazing unit by the time of the hearing and appeal hearing. Between 70 and 150 head of cattle are grazed there. It is common ground that farming on the land is a loss generating exercise with the marginal costs of operation exceeding the revenue generated.

[17]	The   Council’s   valuation   service   assessed    the    general    revaluation on 1 August 2018, following an inspection of the properties. It considered that the potential for industrial, commercial and residential use was driving their value. As Mr Casey KC, counsel for Marsden, put it this means that within the space of one year after purchase from the receivers, the Council assessed the value of the land at four times the receivership sale price.

[18]	It presented its plan change concept to the Council on 17 September 2018, and lodged its application on 20 March 2020. The plan change was notified during 2020. Submissions closed on 10 December 2020, and a hearing took place in October 2021. The Council accepted the recommendation of the hearing Commissioners (that the plan be adopted with some specified modifications) and gave notice of its decision on 1 June 2022. Following resolution of several related appeals the plan change became operative on 14 June 2023. This re-zoning is intended to generate approximately 1,500 residential lots and support the development of a sustainable and viable town centre.

[19]	Marsden filed an objection with the Tribunal on 11 September 2019. Jurisdictional issues were raised. The hearing was adjourned while Marsden applied to the High Court for declarations as to the correct interpretation of the RVA and the associated Rating Valuations Rules 2008 (the Rules) and their application to Marsden’s properties.6 Two  causes  of action were pleaded  when the proceeding  was issued  on 11 September 2020, each seeking declarations and other relief. By the time of the hearing before Gordon J there remained a single issue which the Tribunal had considered that it did not have jurisdiction to determine – whether the 87 properties comprise a “single rating unit”.

6	Marsden City Limited Partnership v Whangārei District Council ENV-2019-AKL-000182- 000269, 18 December 2019 (minute of the Land Valuation Tribunal).

[20]	The Court determined that the Tribunal had jurisdiction to determine that issue and that the Court should not embark on a determination of factual issues without having the benefit of a decision from the Tribunal.7

Tribunal Decision

[21]	The Tribunal Decision began by noting that the objection turned on the question of whether, despite being held in separate titles, the land should be valued as one rating unit based on the Rules made by the Valuer-General under s 5B of the RVA. The focus (and only disputed issue) was whether it is likely that the certificates of title will be  alienated  as  only  one  farming  operation,  satisfying  the  requirements  of r 2.4.1.2(d) of the Rules. That is, whether this exception to the starting position that the land comprised in the record of title constitutes a rating unit.8

[22]	In terms of the approach to determining whether the exception in r 2.4.1.2 is met, the Tribunal said

[14]	We heard the arguments before us as to the degree to which the highest and best use of the land is relevant to the decision whether the Marsden City property meets the exception in r 2.4.1.2 of the Rules. Without deciding this point finally for the future, we have concluded that in the circumstances of this case the appropriate course of action is to address whether or not this site meets the exception in r 2.4.1.2 of the Rules.

[15]	We say this because the parties have agreed on values. It is clear that there is a significant difference between the two approaches. We think there is some force in Mr Casey’s submission that the sole determinant under r 2.4.1.2 cannot be the highest and best use. That approach could have readily been put into the rules rather than the particular wording of r 2.4.1.2.

(Emphasis added).

[23]	The Tribunal went on to identify that determining what is relevant to the determination of the exception would address the core issues.9

7	Marsden City Limited Partnership v Whangārei District Council [2022] NZHC 2823 at [17] and [37].
8	[Tribunal Decision] at [2].
9	At [16].

[24]	Before setting out the history and context, the Tribunal recorded that it was agreed for the hearing that the properties are currently used as one farming operation.10

[25]	The Tribunal referred to the issues with sections of the stormwater and wastewater piping in 2014 which took many years to resolve. It recorded that few of the lots had been developed with only four residential lots sold and built on. It described the balance of the development, although ready for sale, as “blighted not only by the issues with piping but also the long period of vacancy.”11

[26]	The Tribunal visited the site and observed:12

(a)	There are no farm buildings or permanent fencing.

(b)	There is weed infestation in inferior pasture following the removal of peat and the introduction of sandy soil.

(c)	The majority of the existing fencing, the galvanised steel loading race and the yard’s water reticulation lines and troughs are not permanently affixed to the land and could be removed and used elsewhere.

(d)	The network of sealed roads and associated infrastructure are not directly usable by the farming operation. The cattle needed to cross or go along the road to new pasture.

(e)	There was no evidence from the site visit that this farming was intended to be an enduring use.

[27]	While acknowledging that it was not necessary for Marsden to establish any particular standard of farming to meet the exception, the Tribunal’s view was that the state of the pasture would not encourage utilisation as one farming operation.13 It said that the viability of the one farming operation carried out was relevant. It found:

10	At [18].
11	At [26].
12	At [31].
13	At [35].

[38] Viewing the matter the other way, we are satisfied that this site was  used as a runoff or extra feed area and is unlikely to be suitable for any permanent form of farming, sustaining animals throughout the year at any significant level. In part, this is because of the removal of the peat and the sand now present over almost all of the titles, excepting the residue title which was of non-productive soil and remaining materials.

[28]	It tentatively expressed the view that legislative intention in the descriptor “one farming operation” includes all the properties that make up the viable farming operation which would need to be included in the alienation, but this was not determinative of any issue.14 (In this instance, the farming operation also involved properties in Kinloch and Te Arai.) The Tribunal was easily satisfied that the land is unlikely to be suitable for any permanent form of farming.15

[29]	The Tribunal found it difficult to address how the presumption of separate title valuation would be rebutted where the market would clearly value the properties based on their future potential making it quite different from earlier cases.16 It concluded that the words “it is likely” required consideration of what would be in the mind of the reasonable vendor and purchaser as to how the property would be sold at the date of revaluation.17

[30]	The Tribunal considered that a reasonable prospective purchaser would consider the potential to improve the yield from the land by changing the mix of uses permitted taking into account the considerable investment in infrastructure.18 But conversely any purchaser would also consider whether the titles could be sold on the market. On that issue, it accepted that the market in Northland was particularly sluggish after the global financial crisis but pointed to evidence of sales of farmland, industrial, commercial and residential land, including in adjacent blocks and generally within the Ruakākā area, over the period.19 It noted that sales at that time were at a relatively slow rate but by 2018 there was more movement in the market, even if not

14	At [37].
15	At [38].
16	Valuer-General v Tepene Tablelands Limited [1993] 2 NZLR 336 (HC); Kent v Upper Hutt City Council [2014] NZHC 1958.
17	At [40].
18	At [42].
19	At [44].

at levels seen in Auckland.20 It noted that the subject titles were not put on the market by Marsden after the 2017 purchase.

[31]	The conclusion of the Tribunal is encapsulated in the following paragraphs:

[46]	In short, we conclude as a fact that a prospective vendor and purchaser would neither sell nor buy on the basis that this was a long-term farming opportunity. We consider that both would consider that within the next five to seven years the properties could be readied either under a plan change or as they were for sale on a rising market. In that regard, the prospective vendor and purchaser would probably consider that there might be some discount for the fact that there was still the piping and roads to be fully repaired and there need (sic) to be some form of trigger into starting development in this area.

[47]	Accordingly, we conclude as a fact that it is not likely that the property would have been sold as one farming operation. For the avoidance of doubt, we further conclude that it is unlikely that many purchasers would have purchased this land as including any form of farming operation given what we conclude would be a significant constraint to the pool of potential purchasers.

[32]	The essential reasoning then was driven by the factual findings: that Marsden’s stocking of the area in 2018 was a placeholder which did not constitute any long-term or final use; and of the site’s existing incontrovertible potential given the zoning, issue of resource consents and infrastructure implementation.21 Supporting the decision was the fact that the infrastructure was vested in the Council for which it accordingly had liability. We pause to note that we consider that this was an observation rather than an element of the ratio of the decision. It followed, in the Tribunal’s view, that the site should be valued taking into account its potential.

[33]	The Tribunal therefore concluded that the properties were correctly valued as individual units.22

Approach on appeal

[34]	An appeal under s 26 of the LVPA is by way of re-hearing. This Court is empowered to “confirm, discharge, or vary the order of the Tribunal, or direct that the matter be referred to the Tribunal for further consideration, as it thinks fit, and

20	At [45].
21	At [48], [51] and [52].
22	At [53].

generally may make such order as it considers just and equitable in the circumstances of the case.23

[35]	Neither party suggests that this case should be referred to the Tribunal and the power of an appellate body to remit a decision back to the trial court is generally exercised sparingly.

[36]	The approach on such an appeal is settled following the Supreme Court’s decisions in Austin, Nichols & Co Inc v Stitchting Lodestar and Kacem v Bashir.24

[37]	This Court has the responsibility as an appellate court of considering the merits of the case afresh but must be persuaded that the decision is wrong. The weight this Court gives to the reasoning of the Tribunal is a matter for this Court’s assessment.25 Those exercising a general right of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and entails a value judgment. If the appellate court’s opinion is different from the conclusion of the Tribunal appealed from, then the decision under appeal is wrong in the only sense that matters, even if it was a conclusion on which minds might reasonably differ.26

Legal framework

[38]	An objective of the RVA is “ensuring a nationally consistent, impartial, independent, and equitable rating valuation system.”27

[39]	Each territorial authority is required to prepare and maintain a district valuation roll in accordance with rules made under the RVA.28

23	Land Valuation Proceedings Act 1948, s 26(4).
24	Austin, Nichols & Co Inc v Stitchting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [13] and [16]; Kacem v Bashir [2010] NZSC 112; [2011] 2 NZLR 1 at [31]–[32].
25	At [13].
26	Austin, Nichols & Co Inc v Stitchting Lodestar, above n 24, at [16]; Kacem v Bashir, above n 24, at [32].
27	Rating Valuations Act 1998, s 4(1)(b).
28	Section 7.

[40]	Section 9 of the RVA requires that a territorial authority must undertake a general revaluation at least every three years. The revaluation must comply with rules made by the Valuer-General for that purpose.

[41]	Rates are generally charged against each rating unit. The key section for present purposes is s 5B which, as relevant, provides:

5B	What constitutes rating unit if there is record of title

(1)	For land for which there is a record of title, the land comprised in the record of title constitutes a rating unit.

(2)	However, the Valuer-General may make rules under section 5(1)(c) for the purposes of determining whether particular land comprised in the following constitutes a rating unit:

(a)	2 or more records of title:

(b)	part of a record of title.

(3)	The Valuer-General may make rules—

(a)	under subsection (2)(a) only for land—

(i)	that is owned by the same person or persons; and

(ii)	that is used jointly as a single unit; and

(iii)	that is contiguous or separated only by a road, railway, drain, water race, river, or stream; and

…

[42]	The default position for rating valuations is accordingly that the land comprised in each record of title is a separate rating unit and should be valued individually, but the Valuer-General is empowered to make rules for determining whether two or more records of title constitute a single rating unit if the circumstances meet the conditions in s 5B(2) and (3).29 The rules have the status of regulations.

29 Mr Casey criticised the section of the [Tribunal Decision] headed “The presumption towards individual titles”.  He submitted that there is no such presumption when the criteria common to  s 5B RVA and r 2.4.1.2 apply. This may be a distinction without a difference. Whether characterised as a presumption or starting point, the rules provide criteria for exceptions in respect of particular land only where the Valuer-General has made such Rules and the making of the Rules is discretionary.

[43]	The operative Rules are those dated 1 October 2010.30 Rule 2.4 is headed “What constitutes a rating unit”. In respect of land where there is a certificate of title, subrule 2.4.1.2 reads:

Two or more certificates of title

Two or more certificates of title constitute a single rating unit where the land is owned by the same person or persons, is used jointly as a single unit, and is contiguous or separated only by a road, railway, drain, water race, river or stream, and:

(a)	a substantial improvement straddles certificate of title boundaries, or

(b)	certificates of title are legally required to be alienated together, or

(c)	in the case of a large holding such as a reserve, airport, port, or rail yard, it is unreasonable to treat each separate certificate of title as a rating unit, or

(d)	the land is used as one farming operation and it is likely that the certificates of title will be alienated as only one farming operation.

(Emphasis added):

[44]	The relevant effect of r 2.4.1.2(d) is that land contained in more than one certificate of title may be amalgamated for rating purposes if:

(a)	the land is owned by the same person or persons;

(b)	is used jointly as one single unit;

(c)	is contiguous or separated only by a road, railway, drain, water race, river or stream; and

30 Issued under the Rating Valuations Act 1998 (RVA) in the interests of ensuring a nationally consistent, impartial, independent, and equitable rating valuation system that can be monitored and audited. The purpose of the Rules as described in the introduction is to “provide clear requirements that territorial authorities must meet when carrying out rating valuations and recording and updating rating valuation information in the [district valuation roll] and its supporting registers.” Territorial authorities are required to comply with the Rules when maintaining and updating the district valuation roll. There have been revisions to the relevant rule. The relevant rule in Version 2.0 (effective 7 July 2000) read “...used as one farming operation and where it is unlikely that the operation will be alienated as other than one farming operation.” Version 3.0 (effective from 9 August 2002) and Version 3.1 (effective 30 June 2003) read “…used as one farming operation and it is likely that the operation will be alienated only as one farming operation”. Rating Valuations Rules 2008 Part One Rules 1 to 8 (effective from 31 March 2009) read “…used as one farming operation and it is likely that the certificates of title will be alienated only as one farming operation”.

(d)	is used as one farming operation and it is likely that the certificates of title will be alienated as only one farming operation.

[45]	It was common ground between the parties before the Tribunal that (a), (b) and
(c) are satisfied along with the first part of the composite criteria in (d); that the land is used as one farming operation. It is therefore the second part of the composite criteria —– whether it is likely that the certificates of title will be alienated as only one farming operation —– which is in issue. Unlike the first part of the test this has a forward-looking focus.

[46]	Former provisions for rates postponement for farmland with potential for some kind of non-farming development were repealed on 31 March 2002.31 This removed what had been a gradually evolving parliamentary intent to protect the owners of farming properties from the impact of rates levied by territorial authorities which reflected something more than the value of the farm as a productive unit and home for someone who uses the property principally for farming purposes.32

[47]	As the leading text in the area described the policy:33

Prior to 2002, the valuation system provided for a number of prescriptive additions to the system in an endeavour to improve equity or fairness in the rating system. The farmland roll constituted a significant provision. The roll required a supplementary valuation to take into account the measure to which the potential use of the land could be put for residential, commercial, industrial or other non-farming development. The lesser valuation discounted the potential for use for non-farming purposes to become the basis for rating. The difference between the full market value and the farmland roll value would be written off provided no change of activity proceeded within a five-year period with no income test or motive for ownership applied. The rates postponement values for farmland were replaced in 1993 through a system of postponement of rates in special areas. This concession was repealed in 2002.

[48]	In Valuer-General v Tepene Tablelands the Court described the historical rates postponement and special rateable value scheme in the following terms:34

In brief, [s 25A of Valuation of Land Act 1951] authorises the Valuer-General on his or her own motion, or on application by the territorial authority or by an owner or occupier of any land to determine the rates postponement value

31	Local Government (Rating) Act 2002, s 137(1).
32	See the discussion in Valuer-General v Tepene Tablelands, above n 16, at 344-346.
33	K. Palmer Local Government Law in Aotearoa New Zealand (2nd ed), Thomson Reuters at [11.7].
34	Valuer-General v Tepene Tablelands, above n 16, at 338.

of the land. The section applies to farmland whose value is in some measure attributable to the potential use to which the land may be put for residential, commercial, industrial or other non-farming development. The rates postponement value excludes the potential value that the land may have for these purposes or uses. Once it has been determined, s 25G provides for it to be deemed to t be entered in the valuation roll for the district in which the land is situated. The land then has, for rating purposes, a deemed value which is lower than the value which would otherwise be attributed to it. Consequently the rates on the property are lowered.

[49]	Relatedly, the Office of the Valuer-General has provided ‘best practice’ guidelines in the form of a Rating revaluations handbook (the Handbook) based on their experience of significant issues from revaluations since 1998.35 Section 3 is headed “Rating unit compliance” and states that the correct rating unit should be determined before [the land] is valued. Under a heading “Exceptions to rating unit compliance testing” the Handbook states in respect of the farming operation exception, as relevant:

(a)   This exception applies where land is used as one farming operation    and it is likely that the certificates of title will be sold as one farming operation to obtain the maximum value.

…

Grounds of appeal

[50]	Ten inter-related pleaded grounds of appeal are pleaded.

[51]	We distil those grounds to the following:

(a)	The extent to which, if at all, the viability and permanence of the farming operation are relevant factors.

(b)	Whether the Tribunal erred in treating the considerable investment represented in the roading and other infrastructure as counting against Marsden’s objection: its perception of the limits to existing constraints on immediate development and that a purchaser on the valuation date would not be likely to continue, in some form, the farming operation

35	Rating revaluations handbook, LINZG30700, 31 March 2011.

while it either waited for market conditions to change, or undertook a redevelopment or rezoning of the property.

(c)	Whether the Tribunal erred in its conclusion that there was a market which would value the property based on its future potential when any prospective purchaser would regard the property as only having development potential several years in the future.

[52]	Each has a number of sub-issues.

Arguments

[53]	Mr Casey submitted that the only reasonable conclusion on the objective evidence is that a purchaser in August 2018 would not have bought the land for immediate or even short-term development or on-sale as commercial/industrial/town centre sites, because there was no demand at that time within the existing zoning. He described the land as not yet developable and marketable so use other than as a farming unit was a long-term and uncertain possibility only. He contended that for the Tribunal to reach the decision it did, it had to be satisfied on the balance of probabilities that the counter-factual (development of the land) is more likely than not (and imminently realisable) contrary to the evidence.

[54]	In his oral submissions, Mr Casey accepted that the potentiality for future development drives the value of the land but submitted that this does not render the land something other than what it is. He also pointed to the three year revaluation cycle as the lens through which the assessment should be made.

[55]	He submitted that to value this land in August 2018 as being already capable of being sold as something other than farmland, would offend the principle that like parcels of land are to be valued on a like basis to ensure equity and consistency. Further, he argued that Marsden’s long term ambition for the land is not the relevant test. It would still have purchased the land for use as a single farming operation in the meantime and for the foreseeable future (certainly within the timeframe of the three yearly rating valuation cycle) given the lack of demand at the time and the requirement

that to be saleable as anything other than a farming unit required extensive changes to the zoning provided for in the Structure Plan and a market for alternative uses. He also submitted that it was incongruous that the value of the properties purchased as a block by Marsden for $8.6 million could be valued by the Council at nearly four times this sum within a very short time later.

[56]	Mr Harwood, for the Council, submitted that neither the fact the properties were grazed nor that they were selling slowly are factors determining that the properties would sell as a “single farming operation”. He contended that the properties are not a viable working farm, nor valued as such, and have characteristics rendering them unsuitable to any meaningful farming operation. He relied on expert evidence from Mr Martin (senior consultant of a nationwide agribusiness consultancy business) about the constraints on use of the properties for grazing and submitted that in any case where the properties might be leased to a farmer, it would only be as part of another farming operation rather than as a single farming operation.

[57]	Mr Harwood maintained that the Tribunal’s articulation of the test was correct and that while the relevant Rule does not expressly say so, the only logical reason why a collection of properties may or may not be alienated as only one farming operation turns on whether such an alienation would achieve maximum value. Where the value of the composite parcels of land is considerably higher than comparable farming land, it suggests that the land would not be sold as “only one farming operation”.

[58]	He relied on the Handbook published by the Valuer-General which states in relation to r 2.4.1.2(d) that:36

(a)	This exception applies where land is used as one farming operation and it is likely that the certificates of title will be sold as one farming operation to obtain the maximum value.

(b)	When applying this exception, the valuer should clearly identify the general market localities where lifestyle predominates over farming operation areas and vice versa.

(c)	The highest and best use approach should be used for each separate title and the property category should be consistent with this approach. This means that lifestyle rating units cannot be combined into a single rating unit regardless of common ownership or use.

36	Located under a heading “Exceptions to rating unit compliance testing” in the Handbook.

(d)	Actual use is not relevant when assessing individual titles for rating valuations.

[59]	Mr Harwood contended that the assessment is not to be restricted to the properties’ current use because the test is prospective. He highlighted the case of Kent v Upper Hutt City Council where the Court did not restrict itself to the properties’ current use of configuration but instead applied the test prospectively, taking the approach that in all likelihood if the land were to be sold it would be to enable commercial and/or residential developments on multiple sections.37 He contended that Kent is distinguishable only insofar as Marsden’s land was even further along the path of its development potential.

[60]	He submitted that properly construed, the use of the term “single” in the relevant Rule connotes that the land must be a self-sufficient farming operation. (We apprehend by this Mr Harwood means not part of a larger farming operation.)

[61]	As to the length of time for a development to be sold down, he contended that predictions about the period do not determine whether the land would sell as a “single farming operation”. That is to introduce a speculative and subjective factor into the equation since different developers may approach the exercise in different ways and at different paces.

[62]	In relation to the first step in the valuation exercise, Mr Harwood accepted that this is to identify the rating unit to ensure the proper boundaries of the land to be valued. However, he maintained that this does not mean that a valuer cannot assess what is driving the value of the land as part of the consideration of whether r 2.4.1.2(d) applies.

37 Kent v Upper Hutt City Council, above n 16. In this case the land (six separate titles across which the owner operate a nursery business) was situated in the middle of a very substantial residential area, was zoned “Business Commercial” and had immediate development potential for both commercial and residential use. The land owner argued that, because he was operating multiple properties as a single farming operation (the nursery), it should be alienated as a single operation.

Expert evidence

[63]	Mr Smithies, a valuer engaged by Marsden, gave evidence that the market at the revaluation date had no appetite for the 87 separate titles. He acknowledged that at some date well into the future it is quite likely that some or all of the existing titles will be alienated on their own or in smaller parcels than exist at present. He opined that the rating value should reflect the highest and best use of the land, which is the likelihood that at the revaluation date of 1 August 2018, the properties would be combined and sold as one rating unit albeit with a price level of value that recognised the longer term probability that market demand would support opportunity for a sell down of individual titles. He considered that to be a long time hence because the zoning was not appropriate, and the 87 titles were not in a configuration to meet the market at the valuation date. His opinion is that a configuration suiting commercial or industrial development is of no value if there is no market for commercial and industrial development. Further, that there was no immediate prospect of the separate titles being sold down or some other development of the land for the next ten years.

[64]	Mr Smithies noted that even if you take sales after the valuation date into account, the rate of sales was 4.25 per annum suggesting it would take approximately 20 years for a sell down of 87 individual sites.

[65]	Mr Gibbard, the Council’s valuer, 38 opined that the value of the properties was driven by their potential for industrial, commercial and residential development consistent with the direction provided for under the relevant Council zoning plan. He explained that the Handbook required an assessment of whether a rural property in common ownership would sell for a higher price at the date of valuation as a collection of titles rather than the sum of the individual titles. In other words, that the highest and best use is as a collective farming operation. He stated that the highest and best use is often different from the actual use of the land where land is being “banked” awaiting future development.

38 Mr Gibbard conducted the revaluation exercise for the Council but gave evidence as an expert in accordance with the code of conduct for expert witnesses under sch 4 of the High Court Rules 2016.

Site visit

[66]	At the invitation of counsel, we each conducted a drive-through site visit. Our site inspection confirmed the Tribunal’s description of the subject land. The most striking impression was of the relative proximity to the main highway, the predominantly flat contour, grassed areas, temporary fencing, developed roadways and street lighting and few buildings. We understand that there is more development now in the surrounding area compared to what existed at the valuation date. The retirement village to the south is the most significant building or group of buildings in the wider area but had not been developed at the valuation date.

[67]	The relatively few livestock seen on the day of the visit were sparsely spread out. All paddocks were not stocked. The land on the block immediately south of the subject block has some developed commercial, industrial and residential uses. The latter block with these uses is closer to and better visually exposed to Port Marsden Highway (State Highway 15), but also being like the subject block having access to One Tree Point Road to the western border. In this southern block we observed a variety of development with occupiers Bream Bay (retirement) Village, Plumbing World, Marsden Child Care Centre, a fitness centre, Vanori Caravans, Marsden Tyres and others. For this southern block, its location, zoning, and site sizes, has found a more ready market relative to the subject block in the interim.

Discussion

[68]	The nub of the contest between the parties is whether it is more probable than not that the land would be  alienated  as  a  single  farming  operation,  rather  than the 87 titles being alienated separately or collectively for some other use if hypothetically transacted on the valuation date.39 The RVA does not explicitly identify the factors to be taken into account in this assessment but it is self-evidently a factual enquiry. As secondary legislation, the interpretation of r 2.4.1.2(d) must be ascertained

39 Mr Casey submitted that the question was whether, on the balance of probabilities, the property would be alienated as a single farming operation rather than the 87 titles being alienated separately (and for some other use).

from its text in light of its purpose and context, consistent with the overall framework of the legislation.

Preliminary

[69]	There are two preliminary points. We accept that the logically required first step in a rates valuation is to identify what constitutes the rating unit before carrying out the valuation. The weight of authority supports this proposition as does the Handbook.40 It also logically flows from the scheme of the legislation and the objective nature of the exercise.

[70]	However, we agree with the Council’s position that this does not mean ignoring consideration of what is driving the value of the land when identifying the relevant rating unit. That would be unrealistic. Common sense suggests that orthodox valuation principles, including the highest and best use principle, informs the question of future land use.

[71]	The Tribunal did not determine the degree to which the highest and best use of the land is relevant but acknowledged Mr Casey’s submission that the sole determinant under r 2.4.1.2 cannot be the highest and best use.41 We agree. Had that been the intended test the rule would have been framed accordingly. However, a hypothetical purchaser and vendor are assumed to act rationally so the concept of highest and best use, which underpins valuation approaches, is indeed a consideration in the assessment.42 Relatedly, the parties’ valuation experts agree that the existence of the farming operation would not influence the price a purchaser would pay for the properties and the price far exceeds the ordinary value of land used for farming purposes. That common position also tells against the proposition that value considerations do not have any significant role in identification of the rating unit.

40 Rongotai Investments Ltd v Wellington City Council [2022] NZHC 1667 [2015 Rating Valuation Appeal] at [97]; Franklin District Council v Cryer [2011] NZLR 529 at [62].
41 [Decision] at [14]–[15].
42 International Valuation Standards adopted by the New Zealand Institute  of  Valuers  defines “highest and best use” as “[t]he use, from a participant perspective, that would produce the highest value for an asset.” It states that “the highest and best use must be physically possible (where appliable), financially feasible, legally allowed and result in the highest value. If different from the current use, the costs to convert an asset to its highest and best use would impact the value.” See International Valuation Standards Council International Valuation Standards 2017 (31 January 2022) at [140.1]–[140.2].

[72]	However, we do not consider as Mr Casey submitted, that even though the Tribunal explicitly disavowed the approach that it is the value of the land which determines whether it should be treated as a single rating unit, it nonetheless took this approach. In our opinion the Council did not rely on highest and best use as the sole determinant in its assessment under r 2.4.1.2 and therefore did not err in this aspect of its decision.

[73]	The second preliminary point is the suggestion that findings about the unsuitability of the land for, or its use as, a single farming operation were contrary to the parties’ agreed position. We do not understand that the Council’s arguments represented a change in position after agreement that the property was being operated as one farming unit. The bare acceptance that it was currently operating as one farming unit did not preclude the broader viability issue. Further, the Tribunal’s tentatively expressed view that the intention of the Rules is to identify that all the properties that make up the viable farming operation would need to be included in the alienation, did not form part of the reasons for its determination.

Substantive issues

[74]	We turn to the more substantive points which sufficiently overlap that it is convenient to deal with them collectively. We note at the outset that the special circumstances of this case raise some novel issues.

[75]	Mr Casey properly acknowledged in oral submissions that it is routine to see valuation of farmland at higher than farmland value because of its potential. He advanced two related propositions in support of the submission that the Tribunal erred in its approach to market considerations.

[76]	The first proposition is that if operating as a farm (as was the common position for the purposes of the appeal) the land remains a farm until the point is reached that it is at least imminently a development project. He says that in Marsden’s case, prospect of development was too far in the future and the more remote timeframe should be considered in the assessment of whether there is a market. The nearer the

prospect of development and more imminent the market demand, the lower the likelihood of alienation as a single unit.

[77]	We do not accept the proposition that, in isolation, the mere existence of a farm operation at the point of valuation says much about the likely form of alienation as a single farming operation. Neither does an intention to sell down individual titles in the future in response to better market conditions mean that it is likely that a purchaser would have bought the land at the requisite date for use as a single farming operation.43 Further, we do not consider it helpful to consider the counter-factual and say that it is only if the counter-factual is more likely that the exception criterion is not satisfied.

[78]	Even if a farming operation is maintained in fact as an intentional longer term “holding measure” it is artificial to say that it is alienated as a single farming operation. As noted, the presence of farming activity is unlikely to have any effect on the value a potential purchaser would place on the land and it is inconceivable that Marsden would market the land as a farming operation. We therefore agree with the Tribunal that while no standard of farming is required to meet the exception, viability of the farming operation informs the assessment.

[79]	We accept that the potential for development requires some consideration of time frame. However, the analysis cannot be too granular or based on a particular developer’s approach to yield because that injects elements of subjectivity based on developer ambition which do not sit easily within the scheme of the rule. Subjective considerations are neither part of the assessment nor workable. We are not persuaded that the three year revaluation cycle necessarily informs what is the foreseeable future.44 Rather it is the realistic possibility of potential use which could occur in the foreseeable future which guides the assessment.

[80]	There is no question that potential existed in respect of these properties. This is the approach the Tribunal took when it concluded that a prospective vendor and purchaser would anticipate that within the next five to seven years the properties could

43	We do not see anything in the distinction Mr Casey makes about the use of “as” rather than “for” in r 2.4.1.2.
44	Rongotai Investments Ltd v Wellington City Council, above n 40.

be readied either under a plan change or as they were for sale on a rising market, notwithstanding the need for a trigger into starting development and some discount for still outstanding piping and road repairs.45 We are not persuaded there is any error in this conclusion or that it is not supported by the expert evidence.

[81]	Relatedly, we pause to note that while we agree that the Tribunal’s observations that the present circumstances are different from those in Kent v Upper Hutt City Council on our reading of the Tribunal Decision, it did not distinguish the principles in Kent (or Valuer-General v Tepene)  but the facts. In Kent there was clear development potential for land comprising six titles, then operated as a nursery business. The lots were in the middle of a very substantial residential area and the court found that in all likelihood if the nursery land was sold, it would be to enable commercial and/or residential developments on multiple sections. While this use could not occur until consents were obtained and physical works completed it was nonetheless considered feasible and cost efficient. Here, Marsden’s land had already been developed and subdivided into lots with expenditure on the creation of separate titles, roads formed, reticulated water, stormwater, wastewater, power, cabling and street lighting. In short, as Mr Harwood put it, Marsden’s land was further still along the development path.

[82]	Mr Casey’s second proposition is that the Tribunal’s finding that there was a market, was contrary to the evidence.

[83]	Mr Casey criticised the Council’s expert evidence. He submitted that the expert (Mr Gibbard) did not take into account the state of the market, ignoring in effect the spectacularly unsuccessful development, and instead focused on a number of sales after the valuation date (within a year).46

[84]	We do not accept this submission. The Tribunal was entitled to rely on sales in the wider Marsden City development, including sales post-dating the valuation date. Courts have not precluded consideration of post-dated sales where they are

45	[Tribunal Decision] at [46].
46	Mr Smithies, Marsden’s valuer, also challenged Mr Gibbard’s reliance on post-dated sales.

particularly relevant in respect of value ascribed to a property. 47 On the contrary, a valuer may rely on all relevant facts including subsequent sales. While those authorities relate more specifically to assessment of value, the same principle applies by analogy. Post-dated sales close in time may be even more relevant to the question of the slightly different question of whether there is a market at all.

[85]	As mentioned above at [13], Mr Smithies’ evidence identified transactions before and after the valuation date, including transactions within the adjacent land block forming part of the overall Marsden Primary Centre Precinct. His related suggestion, above at [64], that the overall rate of sales at 4.25 per annum48 would suggest approximately 20 years for a complete sell down of the 87 individual units lacks nuance since we doubt that the rate of sale would be a constant.

[86]	Mr  Smithies’  evidence  also  referenced  sales  in  the  Ruakākā  area  after  1 August 2018, of which there were a further eight in the remainder of 2018 alone and a total of 23 sales post valuation date up until early 2022.

[87]	Mr Gibbard, too, pointed to demand for vacant land in the wider Marsden City precinct at values commensurate with the underlying zoning. This included two open market sales in June 2018 before the valuation date and a further seven sales in August through to November 2018.

[88]	The evidence of both experts demonstrates that the fact that Marsden set about investigating what else could be done with the land after purchase does not mean that there was no market for the development as it then existed. The land was objectively clearly developed. When Marsden purchased it did so at approximately $104,000 per hectare while farmland in the area generally sells somewhere between $14,000 to
$25,000 per hectare.49  It was sold as a development block in 2017 with its value driven
by the potential for commercial, industrial and residential use. While Marsden’s own development  plan  involved  a  plan  change  would  increase  gross  realisation  if

47 Rongotai Investments Ltd and Rongotai Estates Ltd v Wellington City Council, above n 40, at [47] and [48] citing Melwood Units Pty Ltd v Commissioner of Main Roads [1979] AC 426 (PC) at 436.
48 Based on a total of 68 transactions between 2006 and 2022.
49 Farmland values as per evidence of Mr Gibbard.

successful it does not mean that another developer would adopt the same course of change.

Observations

[89]	It has not been necessary to decide whether the reference to a single farming operation in the rule precludes the land’s use as part of another single farming operation. In short, whether the land in question must itself be a self-sufficient farming operation or whether the application of r 2.4.1.2(d) requires consideration of how all the properties held by owner (and which make up the viable farming operation) would sell if they were to be sold at once.

[90]	We  consider that the practical effect of Marsden’s argument amounts to a    de facto postponement of rates through reliance on the “farm” exception despite the repeal of the previous concessionary system. This is not the intent of the exception. Nor is it supported by the policy rationale which underpinned the previous scheme, namely, incentivising farming production and capital expenditure directed at preserving or increasing levels of production given that the New Zealand economy depends very substantially on farm production.50

[91]	We disagree that any apparent disparity between the rating valuations for surrounding farmland zoned as rural and used as farmland points to inequity in the rating system. Conversely, the three non-Marsden owned properties within the vicinity of Marsden’s holdings are valued individually.51 For example, one such property52 is 0.4498 hectares and has a valuation of $418,000 which equates to a per hectare rate that is 5.2 times greater than that which Marsden seeks on a block approach.53 We note too that the Council rated the properties in the same way that it had done so prior to Marsden purchasing the block.

50	Valuer-General v Tepene Tablelands, n 16, at 344.
51	We understand that these three properties are also part of the grazing operation via leasing operations.
52	Property 160662 on Theodore Drive.
53	Marsden’s approach would see its 87 properties valued on a block basis at $178,084.63 per hectare basis.

[92]	In sum, we are not persuaded that any material error has been identified in the Tribunal’s approach or determination. On the contrary, we have come to the same conclusion as the Tribunal.

[93]	We dismiss the appeal.

Costs

[94]	The Council is entitled to costs of the appeal.54 If costs are not agreed counsel are to file memoranda of no more than three pages within 20 working days of this judgment.

............................................................
Walker J

54	Land Valuation Proceedings Act 1948, s 37A.

 ANNEXURE 1

 ANNEXURE 2