SunGold/G3 licences- Investment or Rateable land improvement?

Topics covered in this article: Business Owners, Farming & Horticulture

Rachael Zame

Senior Associate

Senior Associate

Phone: +64 7 927 0522


Bachelor of Laws, Bachelor of Science, University of Otago 

Kate Stubbing

Senior Associate

Senior Associate

Phone: +64 7 927 0595

LLB / BCom, University of Otago


Orchardists growing crops under exclusive licences will be carefully watching a rating valuation case heading to the High Court in June.

In 2021, as part of their three-yearly district ratings revaluation, Gisborne District Council (GDC) introduced the value of kiwifruit licences (SunGold/G3) within the ‘land improvements’ part of a property’s capital valuation (CV).

The increase in CV, and accordingly the rates increase, was significant for growers of this variety. In their submission on the GDC long term plan, the New Zealand Kiwifruit Growers Institute (NZKGI) provided some examples of increases experienced by growers in the region:

NZKGI has brought judicial review proceedings against GDC in the High Court challenging the inclusion of G3 licences for the purposes of setting the rateable value of the land, and accordingly the rates.  Two claims are advanced by NZKGI:

1. That G3 Licences are not within the value of the land in accordance with the definition in the Rating Valuations Act 1998 (RVA).  On that basis they are irrelevant to the assessment of the value of the land and the Council is alleged to have erred in adopting valuations that included the value of the licences; and

2. There has been a breach of natural justice because GDC’s policy was adopted on the basis of a January 2021 statement by the Valuer-General that the value of G3 licences should be included in rating valuations.  It is alleged the improper process was followed by Council because growers were not given the opportunity to be heard. 

One Gisborne grower, the Bushmere Trust, also lodged an objection to its valuation to the Land Valuation Tribunal (Valuation Tribunal).  The NZKGI High Court judicial review proceedings were placed on hold, pending a determination by the Tribunal on the Bushmere Trust objection to its valuation.

The Bushmere Trust property is a relatively modest size, with approximately 3.11 hectares of orchard canopy, and includes planted G3 and rootstock for future planting of Zespri red.  But it has come to represent a ‘test case’ for not only the other 49 growers with G3 licences in the Gisborne district, but will likely also be watched with a keen eye by other G3 growers throughout New Zealand, including in the Bay of Plenty and Northland. 

The ultimate question before the Valuation Tribunal was whether the value of the G3 licence (as opposed to rootstock or other improvements) is an improvement to the land under the Rating Valuations Act definition of ‘improvements’, and can be rated accordingly. 

The Valuation Tribunal has recently released its decision  and concluded that the G3 licences were not ‘an improvement to or for the benefit of the land’ (and therefore shouldn’t be included within the rateable value); with the Valuation Tribunal concluding:

1.  The licences represent a ‘speculative investment’ by the owner with a prospect of increasing income from the orchard business;

2.  The licence cannot be transferred with the property and requires a new contract with Zespri; and

3.  The licence can, and has in certain cases, been transferred and the cultivars removed from the rootstock.  Rootstock is still available          to be utilised by other non-licenced species or licenced species of kiwifruit. 

We understand that GDC, supported by the Valuer-General has appealed the Valuation Tribunal’s decision to the High Court; and that the Valuer-General will be joining the proceedings as an interested party.  A statement on Council’s website advises that the Valuer General considers the Valuation Tribunal’s decision is, “inconsistent with past case law decisions and the Rating Valuations Act 1998 requirement to value established vines as improvements. Removal of the gold kiwifruit vine value due to the existence of a licence creates an inequitable outcome for ratepayers, unfairly reducing the rating valuation and rates burden for some property owners and increasing the rates burden for others.”

The High Court proceedings are currently scheduled to be heard in early June. 

If you would like further information on this ‘test case’ or how it might affect your orchard, please feel free to contact a member of our team.



Updated: 13 April 2022

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