Statement on behalf of Minaret Station

MINARET STATION
17 August 2009

Statement on behalf of Minaret Station

The owners on Minaret Station, Lake Wanaka, want to clarify issues arising from the decision of the Land Valuation Tribunal a fortnight ago regarding the rental valuation of their property.

Owner Jonathan Wallis says he has asked the family’s barrister, Nick Davidson QC, to explain the decision, by way of background, in response to the recent distribution of misinformation to the public.

Mr Davidson says the decision of the Tribunal simply reflects the nature of the contract under a Pastoral Lease. The Tribunal has done what the law requires and applied the legislation in that context.

“The Pastoral Lease was created to encourage pastoral production on sensitive lands. It places very significant constraints on stocking and farming activity. It bases the rent on the land without improvements, which is a very difficult farming prospect, made harder by the restrictions on what works may be carried out under the lease and planning regimes.

“The encouragement to invest in improvements, and to provide security of tenure, is reflected in the renewable nature of the lease, as explained by the Minister of Lands when the legislation setting up these leases was originally put before parliament in the 1940s.

“The Crown knows this. In fact, in the latest rent review for Minaret, issued in early 2004 the valuation reflected the particular pastoral attributes of Minaret based on the land without any improvements. The so-called amenity value – recognised as non pastoral – was excluded.

“Then the Crown changed its position for extraneous reasons which were put before the Tribunal and by a second valuation sought a rent based in part on non pastoral values, the antithesis of the contract of lease.

“Minaret has reserved its position as to the process adopted by the Crown in that regard. The Crown sought an increased rent excluding the amenity values, which drew an objection, then asked Minaret to await a review of the rent setting process. It then sought a new rent twice that first advised, this time telling the valuers the principles they should apply.

“In particular, the Crown told the valuers that the economics of the farming opportunity are irrelevant, thus confounding the essence of the lease contract and removing an element of valuation for rent setting which has been used by valuers and upheld by the Tribunal for many years. The economics are reflected in the market for pastoral properties according to their pastoral attributes, a fact reflected in the evidence for the Crown and the lessee before the Tribunal.

“Beyond that, the decision reflects expert determination of scientific and valuation issues which will have application for other leases.

“This form of tenure was created 60 years ago for a purpose which remains as valid today as it did then. The high prices paid to acquire some pastoral leases do not undermine that purpose.

“It is instructive to apply the Crown contention to a lease such as St James Station sold to the Crown for a figure far in excess of the Crown’s own valuation and contemplate the rent which is derived from that sort of value. It means that rents would be struck for the same pastoral opportunity for different properties at vastly different figures – penalising all those who want only to carry out the intent of their lease and farm as productively as they can.

“Despite what might be said in some quarters, the lessees for their part consider the principles established in the decision will be of ready application to other leases. In an important respect the Crown is returned to a fundamental element of its own valuation which began this process.”

[ends]

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