Auckland Council v Greenmccahill Holdings Ltd

JurisdictionNew Zealand
CourtCourt of Appeal
JudgeEllen France P
Judgment Date11 Mar 2015
Neutral Citation[2015] NZCA 20
Docket NumberCA307/2013

[2015] NZCA 20

IN THE COURT OF APPEAL OF NEW ZEALAND

Ellen France P

Harrison

Wild JJ

CA307/2013

BETWEEN
Auckland Council
Appellant
and
Green McCahill Holdings Limited
Respondent
Counsel:

R B Lange for Appellant

A R Galbraith QC and J G Collinge for Respondent

  • A The questions of law posed on the appeal are answered “no”. The High Court was correct in its approach to the determination of compensation under s 62 of the Public Works Act 1981. Accordingly, when determining whether the value of the land was increased by the public work or the prospect of the work, the Land Valuation Tribunal should not have assumed the work was completed. The appeal is dismissed.

  • B The appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements. We certify for second counsel.

Table of contents

Para No

Introduction

[1]

Factual background

[5]

Green McCahill applies for compensation

[9]

The High Court judgment

[17]

Application for leave to appeal on questions of law

[18]

The statutory scheme

[20]

Decision

[28]

Result

[44]

JUDGMENT OF THE COURT
REASONS OF THE COURT

(Given by Ellen France P)

Introduction
1

This appeal raises questions about the approach to the assessment of compensation following the acquisition of non-marketable land under the Public Works Act 1981 (the Act). The issue arises because the road access provided on the completion of the public work, the Penlink Road, could increase the value of the respondent's remaining land despite the reduction in size of its landholding following acquisition under the Act. However, whether or not the Penlink Road would proceed has been a matter of some debate. The question before us is how the likelihood of completion of the Road should be treated in assessing the compensation payable to the respondent, Green & McCahill Holdings Ltd (Green & McCahill).

2

The Land Valuation Tribunal (the Tribunal) rejected the claim brought by Green & McCahill against the appellant, the Auckland Council, for compensation. 1 The Tribunal did so on the basis the betterment or increase in value to Green & McCahill's land occasioned by the Penlink Road exceeded the value of the land being taken. 2 In reaching that conclusion, the Tribunal said that s 62(1)(e) of the Act which requires any such increase in value to be deducted from the amount of compensation otherwise payable, required the Tribunal to proceed on the basis that the Penlink Road would be completed.

3

Green & McCahill appealed to the High Court on the basis the Tribunal had not correctly applied the Act. The appeal was successful and the claim for compensation was referred back to the Tribunal for reconsideration. 3

4

The Auckland Council sought and was granted leave to appeal to this Court on a number of questions of law. 4 The questions can be addressed by considering whether or not betterment under s 62(1)(e) is to be assessed on the assumption that the Penlink Road has been completed. We deal with this issue after setting out the factual background and the history of Green & McCahill's claim for compensation.

Factual background
5

The facts are set out in some detail in the High Court judgment. 5 For present purposes, we need only note the following. The Rodney District Council, one of the Auckland Council's predecessors, compulsorily acquired 33.3526 ha of Green& McCahill's much larger block of land, over 888 hectares, in 2003. The land acquired was from one of Green& McCahill's three titles comprising this block of land. The land was acquired to build an east-west road between the Auckland Northern Motorway and the Whangaparoa Peninsula called the Penlink Road. Construction of the Penlink Road is not likely to get underway before 2024.

6

The land acquired included a narrow tongue linking Green & McCahill's land and State Highway 1A. That link was lost but the construction of the Penlink Road will enhance road access.

7

The acquisition also severed two small parcels of land from the remaining parts of Green& McCahill's land. Road access to the severed areas will also follow from the Penlink Road. The map attached as an appendix illustrates the lay-out of the land and proposed road.

8

It is common ground that the land acquired, effectively shaved off the north-western boundary of Green & McCahill's land, is not marketable on its own.

As we shall explain, this is significant in terms of the statutory scheme for valuing land and assessing compensation. Green & McCahill's land is subject to a forestry right running for 27 years from 1990 and, in the case of 20 ha, 35 years. Green & McCahill intends to subdivide the land and we were advised some lots have now been sold.
Green & McCahill applies for compensation
9

In 2004 Green & McCahill applied to the Tribunal for compensation under the Act. Green & McCahill sought compensation for the land acquired and for injurious affection to its remaining land.

10

The Tribunal delivered three decisions. In its initial decision, of 25 January 2006, the Tribunal considered the potential rezoning of Green & McCahill's land for subdivision and the effect the acquisition had on any residential development. 6 The Tribunal proceeded on the basis its task was to apply a “before and after” approach to the valuation of compensation, that is, taking the market value of the whole of the land and deducting the market value of the land after the taking and acquisition. 7 Importantly, for the present appeal, the Tribunal said that in the “before” situation, the “existence or prospect of the Penlink project must be ignored. In the ‘after’ situation, the Penlink project must be regarded as being in existence.” 8

11

The next decision of the Tribunal was delivered on 19 October 2011. 9 By that time the delays in the progress of the Penlink Road were apparent. Green & McCahill argued betterment could only accrue, and therefore could only be deducted from compensation, once the Penlink Road was constructed. Green & McCahill presented valuation evidence based on an alternative methodology. The Tribunal rejected this approach.

12

The Tribunal attributed the delay since its initial decision to Green & McCahill. 10 The Tribunal confirmed that the approach foreshadowed in its initial decision applied. In particular, the Tribunal said betterment and the value of injurious affection to the remainder of the land could only be “coherently” ascertained by using a “before and after” method. 11

13

The Tribunal said it could not, in embarking on a valuation exercise, consider hindsight or speculative views about whether and when the Penlink Road would be built. 12 The Tribunal continued:

[16] While no doubt the betterment occasioned to [Green & McCahill]'s land by construction of Penlink will only be physically realised when the construction is completed, it is wrong in principle to conclude from that that betterment, and injurious affection, arising from the public work cannot or should not be assessed at the date of taking. As counsel for the [Auckland Council] points out there are numerous instances where compensation taking into account both betterment and injurious affection has been assessed and paid well before the public works for which the land was taken has been completed, or even in many cases commenced. The most proximate example of that having been done is that of the arbitration concerning the taking of part of the adjacent Green Group land for the Penlink development which decision [Green & McCahill] cites and relies upon in other respects elsewhere in its argument.

14

The Tribunal's conclusion was that no compensation was payable to Green & McCahill because there was betterment to the balance of its land that exceeded the value of the land taken.

15

The Tribunal's final decision related to costs. 13

16

Green McCahill appealed to the High Court against both the decision relating to compensation and as to costs.

The High Court judgment
17

In allowing the appeal, the High Court considered that a two phase approach to the determination of compensation was appropriate. First, on a “before and after” basis (if that method was appropriate in the circumstances) the Tribunal had to assess the value of the land. Secondly, the Tribunal was required to assess any increase in the value of the land resulting from betterment caused by the public work or the prospect of the work. In that part of the exercise, the Court said, the Tribunal was not to assume the Penlink Road would be completed. Rather, the Court said “[t]here has to be a proven causative connection arising out of the public work or prospect of the work that results in betterment.” 14 The Court found the Tribunal erred by assuming the existence of the Penlink Road.

Application for leave to appeal on questions of law
18

Wylie J granted leave to appeal to this Court on the following questions: 15

  • (a) Did this Court wrongly determine:

    • (i) that s 62(1)(b)(ii) [of the Act] requires that the market value of the balance of the owner's land be assessed “after the taking or acquisition”, and not after the public work the subject of the taking or acquisition has been carried out?; and

    • (ii) that the Tribunal fell into error when it held that the after valuation in this case had to proceed on the basis that the Penlink Road had been built?

  • (b) Did this Court wrongly determine that betterment can only be assessed separately pursuant to s 62(1)(e) of the Public Works Act (by reference to the prospect of the public work as at the specified date), and not as part of an after valuation pursuant to s 62(1)(b)(ii)?;

  • (c) Did the Court wrongly conclude that:

    • (i) The Tribunal erred in not following the approach set out in [85](d) and (e) of the judgment and instead, holding that the existence of the Penlink Road was to be presumed in the after valuation under s 62(1)(b)(ii)?; and

    • (ii) The...

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