Palmerston North City Council v Hardiway Enterprises Ltd

• Jurisdiction: New Zealand
• Judge: White J)
• Judgment Date: 16 April 2015
• Neutral Citation: [2015] NZCA 114
• Docket Number: CA78/2014
• Court: Court of Appeal
• Date: 16 April 2015

BETWEEN

Palmerston North City Council

Appellant

and

Hardiway Enterprises Limited

Respondent

[2015] NZCA 114

Court:

Ellen France P, White and French JJ

CA78/2014

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal against a High Court decision that remitted a claim for compensation under the Public Works Act 1981 (PWA) to the Land Valuation Tribunal — appeal concerned the value of a 70m2 piece of land that the appellant council sought to purchase — the land was strategically placed to block access from a road to another piece of land over which subdivision consent hadbeen granted — council wanted to extend the road over the subject land as it would allow the subdivision to proceed more expeditiously and economically than any alternative access option — Tribunal applied the “willing seller willing buyer” market value test to its assessment under s62 PWA (Assessment of compensation) — a willing buyer would include the acquiring authority for whom the land might have special value by reason of its unusual or unique features — however Tribunal said s62(1)(d) PWA expressly excluded the special suitability or adaptability of the land if it was a purpose to which it could only be applied pursuant to statutory powers — whether the special suitability of the land for use as a public roadhad to be disregarded because this use could only be achieved through the exercise of a statutory power, namely the vestingof the landas a road by the Council — whether there was a market forthe land other than as access to the subdivision.

Counsel:

J W Maassen and N Jesse n for Appellant

R J B Fowler QC and G J Hamlen-Williams for Respondent

A The questions are answered as follows:

Question 1

Did the High Court err when it reasoned that the Public Works Act 1981, s 62(1)(d) “limb one”, did not apply?

Answer: Yes.

Question 2

Did the High Court err when it held that the Public Works Act 1981, s 62(1)(d) “limb two”, did not apply because Lot 18 would retain its value as “access way or road extension to any prospective purchaser who appreciated the strategic value of Lot 18”?

Answer: Yes.

Question 3

Did the High Court err in suggesting that relief would incur difficulties under the Property Law Act 1952 rather than under the Property Law Act 2007?

Answer: It is unnecessary to answer this question.

B The appeal is allowed and the decision of the Land Valuation Tribunal is reinstated.

C The respondent must pay to the appellant costs for a standard appeal on a band A basis with usual disbursements.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given byWhite J)

White J)

Table of Contents

	Para No
Introduction	[1]
Background	[5]
The Public Works Act 1981	[14]
The Valuation Tribunal decision	[24]
The High Court decision	[28]
Submissions for the Council	[33]
Submissions for Hardiway	[39]
Reply submissions for the Council	[45]
The interpretation and application of s 62(1)(d)	[46]
Second limb	[48]
First limb	[77]
Result	[83]

Introduction

1 This case concerns the assessment of the compensation to be paid by the appellant, the Palmerston North City Council (the Council), to the respondent, Hardiway Enterprises Ltd (Hardiway) for a small piece of land (70m ²) owned by Hardiway which the Council seeks to acquire under the Public Works Act 1981 (the PWA) to enable a public road to be extended and a subdivision to proceed.

2 Faced with valuation evidence ranging from $350,000 for Hardiway to $2,000 for the Council, the Land Valuation Tribunal (the Tribunal) determined that the valuation of the land for compensation award purposesshould be $36,000. 1

3 On appeal by both parties the High Court decided that as the Tribunal had erred in its interpretation of the relevant provisions of the PWA the appeal by Hardiway should be allowed and the case remitted to the Tribunal to receive further evidence and to apply the principles set out in the High Court judgment. 2

4 The Council then obtained leave from the High Court to appeal to this Court on two questions relating to the interpretation of s 62(1)(d) of the PWA which governs the approach to the assessment of the compensation payable in this case. 3 Leave was also obtained to appeal in respect of a third question relating to the interpretation of the Property Law Acts 1952 and 2007, but the parties have now agreed that it is unnecessary for the Court to consider this question.

Background

5 The 70m ² piece of land the subject of the appeal came into existence in 1992 following a 1991 subdivision of a rural site into ten rural residential lots at Valley Views Road, Palmerston North. The 70m ² piece of land, described as Lot 18 on Deposited Plan DP73932 (Lot 18), is located at the end of Valley Views Road which is a public road adjacent to one of the ten residential lots (Lot 7) and another rural site (Lot 51) which is the property the subject of the proposed new subdivision.

6 The relationship between the various Lots and Valley Views Road is shown in the following diagram:

7 By acquiring Lot 18, the Council will be able to extend Valley Views Road to Lot 51 thereby enabling the proposed new subdivision of that Lot to proceed more expeditiously and economically than any alternative access option.

8 One alternative access option would involve a subdivision of Lot 7 which is also adjacent to Lot 51 and is owned by the same person. That alternative is shown as proposed Lot 3 in the diagram. One difficulty with this alternative is that Lot 7, like the other Lots created by the 1991 subdivision, is subject to a number of restrictive covenants. These covenants gave rise to the third question relating to the two Property Law Acts which no longer requires to be answered.

9 The reason for the creation of Lot 18 by the developer of the 1991 subdivision has not been able to be ascertained. 4 Whatever the original reason may have been, however, there is no doubt that Lot 18, which is now owned by Hardiway, is strategically located as far as the proposed new subdivision is concerned.

10 As the Tribunal put it: 5

Lot 18 is what was referred to at the hearing before the Tribunal as a “link” strip, or “spite” strip. There is a reference in some of the cases to the same being known as a “ransom” strip. This is because Lot 18, being at the end of the claimant's subdivision, blocks the logical continuation of the existing road (Valley Views Road) onto Lot 51. The sensible use of Lot 18, because of its small size and inability to be used as land for any other purpose, is as a road, enabling rational progress of Valley Views Road in a southerly direction upon the proposed development of Lot 51 for rural residential purposes.

11 To enable the subdivision of Lot 51 to proceed, the Council in December 2004 issued a notice of desire to take Lot 18 under s 18 of the PWA. In September 2005 a notice of intention to take the land was issued by the Council. As the parties were not able to agree on the amount to be paid for Lot 18, Hardiway applied on 16 March 2007 for compensation under s 80 of the PWA. The application required the Tribunal to assess the amount of compensation in accordance with the requirements of s 62 of the PWA.

12 The parties accepted that the date at which the assessment of compensation was to be made was 16 March 2007 being the date of Hardiway's application. In terms of s 62(2) of the PWA this was the “specified date”.

13 It is convenient to refer to the relevant provisions of the PWA before summarising the decisions of the Tribunal and the High Court and the submissions for the parties on appeal in respect of the two remaining questions.

The Public Works Act 1981

14 Under s 60 where land is acquired for “any public work” the owner of the land is entitled to “full compensation” from the Crown or local authority for the acquisition.

15 There is no dispute that, in acquiring Lot 18 for the purpose of extending Valley Views Road, the Council is acquiring the land for a “public work”, namely a public road. 6

16 Nor is there any dispute that Hardiway is entitled to “full compensation” for the compulsory acquisition of its land. 7

17 Under s 62(1) the amount of compensation in this case is to be assessed in accordance with the following provisions:

• (a)subject to the provisions of sections 72 to 76, no allowance shall be made on account of the taking of any land being compulsory:

• (b)the value of land shall, except as otherwise provided, be taken to be that amount which the land if sold in the open market by a willing seller to a willing buyer on the specified date might be expected to realise, unless—

  • (i) the assessment of compensation relates to any matter which is not directly based on the value of land and in respect of which a right to compensation is conferred under this or any other Act; or

  • (ii)only part of the land of an owner is taken or acquired under this Act and that part is of a size, shape, or nature for which there is no general demand or market, in which case the compensation for such land and the injurious affection caused by such taking or acquisition may be assessed by determining the market value of the whole of the owner's land and deducting from it the market value of the balance of the owner's land after the taking or acquisition:

• (c)where the value of the land taken for any public work has, on or before the specified date, been increased or reduced by the work or the prospect of the work, the amount of that increase or reduction shall not be taken into account:

• (d)the special suitability or adaptability of the land, or of any natural material acquired or taken under section 27, for any purpose shall not be taken into account if that purpose is a purpose to which it could be applied only pursuant to statutory powers, or a purpose for which there is no market apart from...