Hedges v Chief Executive, Department of Natural Resources
[1998] QLC 157
•31 July 1998
|
BRISBANE
31 JULY 1998
Re: Appeals against Valuations
Valuation of Land Act 1944 -
Shire of Gatton.
(V97-181, AV97-182, V97-183, V98-13,
AV97-185 and AV97-186.)
Debra Julie Hedges
v.
Chief Executive, Department of Natural Resources
(Hearing at Gatton)
D E C I S I O N
These are six appeals against unimproved valuations determined by the respondent Chief Executive under the provisions of the Valuation of Land Act 1944 ("the Act") in respect of land held by the appellant in the Iredale district of the Gatton Shire. Two appeals are in respect of valuations made as at 1 January 1996, and four appeals are in respect of valuations made as at 1 October 1996.
Miss Debra Julie Hedges is the owner of an aggregation of land in the Parish of Terry, with a total area of 93.882 hectares. As at 1 October 1996, the respondent valued her land as four separate parcels, the details of which are as follows:
| Description | Area | Unimproved Value as at 1.10.96 | Appellant's Estimate | |
| Parcel A V98-13 | Lots 1 and 2 on RP 889166 and Lot 1 on RP 32758 | 55.46 ha | $85,000 | $60,000 |
| Parcel B | Lot 1 on RP 62843 | 18.135 ha | $47,500 | $40,000 |
| Parcel C | Lot 1 on RP 163885 | 16.24 ha | $45,000 | $40,000 |
| Parcel D | Lot 1 on RP 32756 | 4.047 ha | $36,000 | $25,000 |
| 93.882 ha | $213,500 | $165,000 |
Following unsuccessful objections against those valuations, Miss Hedges appealed to the Land Court, advising that her estimates of the unimproved values were as set out above.
Appeals have also been lodged against two valuations made as at 1 January 1996. These were in respect of Parcel B of 18.135 ha (Appeal V97-181), which at that date the respondent had valued at $50,000, and also in respect of what was, at that time, Lot 2 on RP 889166 and Lot 1 on RP 32758, with a total area of 31.98 ha (Appeal V97-183), which the respondent had valued at that time at $80,000. That land was later amalgamated with Lot 1 on RP 889166, to become what is referred to here as Parcel A. Miss Hedges' estimates of the unimproved values of those lands as at 1 January 1996 were $40,000 and $46,000 respectively.
It seems that Miss Hedges had also intended to appeal against the valuations made as at 1 January 1996, in respect of Parcel C and Parcel D. However, no notices of appeal had been filed in the Land Court Registry, so only the valuations of the two properties in respect of which appeals have been received could be dealt with.The grounds in respect of each of the six appeals are similar, although there are some individual differences. The principal arguments were to the effect that:
· the properties should be amalgamated for valuation purposes; and
· the properties should be valued as land used for purposes of
"farming" under the provisions of section 17 of the Act.
Background:
The subject lands, excluding Lot 1 on RP 889166, the southernmost 23.48 ha parcel, were part of a 114 ha aggregation owned by Kingston Bruce Hedges, the father of the appellant. The property had been used as a dairy farm, but in later years had been used for purposes of grazing beef cattle. The land has been in the Hedges' family for four generations, as Miss Hedges' great-grandfather had surveyed the area and taken up the property.
Following the death of their father in October 1995, each of the two Hedges sisters was left some land and purchased other land from their father's estate, with Nerida June Hedges owning two parcels and Debra Julie Hedges, the appellant, owning the balance, including the original homestead, which is situated on Lot 2 on RP 889166.
When held by their father, the lands had been included in one valuation. As at 1 January 1996, while still in the name of Kingston Bruce Hedges, the whole 114 ha had been included in one valuation and valued as land used for purposes of "farming", under the provisions of section 17 of the Act, at $109,000.
Mr Hedges' estate was finalised and the subject lands were transferred to Miss Hedges, but the transfers were not completed until well into 1996. Upon transfer of the land, the respondent made new valuations for the changed circumstances, valuing the lands in each of the sisters' names. Valuations of those lands held by Nerida June Hedges were also the subject of appeals and the decisions in those matters were delivered today. The matters were heard at the same sittings at Gatton and with the agreement of the parties, the evidence in all these cases was considered together.
When valuing the subject lands following the finalisation of Mr Hedges' estate, Lot 2 on RP 889166 and Lot 1 on RP 32758, with a total area of 31.98 ha, were included by the respondent in one valuation because they adjoined and were held by the same person. However, the respondent issued separate valuations in respect of the three other parcels of land because, although they were held by the same person, they are separated by public roads which are fenced on both sides.
Subsequently, the appellant purchased Lot 1 on RP 889166, containing an area of 23.48 ha from a Mr Fletcher, who owned the neighbouring property to the south. Mr Fletcher had agreed to subdivide that land from his property and sell it to the appellant's father, but when he died, Mr Fletcher approached the appellant to see if she was interested in continuing the arrangement. She agreed to do so, but requested that it be delayed until she had considered her financial position. The land was subdivided from the Fletcher property and sold to Miss Hedges, the transfer being completed in about June 1997. That subdivision and transfer were subject to the provisions of section 5.8(3) of the Local Government (Planning and Environment) Act 1990, and an agreement was entered into whereby the subdivided land was held in common with Lot 2 on RP 889166 and could not be disposed of separately.
When the respondent carried out the valuation as at 1 October 1996, that land was valued together with Lot 2 on RP 889166, and with Lot 1 on RP 32758 as one valuation, notwithstanding that it was separated from them by Paroz Road. That amalgamated property, now with an area of 55.46 ha, was valued at $85,000. That valuation was made under the "single dwelling house" provisions of section 17, which requires the respondent to exclude any enhancement in value because the lands are separately surveyed, if they are exclusively used for purposes of a single dwelling house.
At the time of Mr Hedges' death, the property was running about 60 head of cattle and about 10 horses. These comprised approximately 30 Droughtmaster cows and about 30 beef/dairy cross heifers and one bull. Miss Hedges purchased 21 cattle from the estate, comprising 10 Droughtmaster cows and 11 dairy/beef cross heifers. She also kept three of the horses. With other purchases of cattle and with natural increase, by 30 June 1996, she was running 49 head of cattle.
Between July 1996 and June 1997, Miss Hedges sold 20 head of cattle for approximately $8,900. In the same period she said that she purchased 42 cattle (but her figures show only 22 purchases) and there were twelve calves by natural increase and three deaths, making, she said, a total of 80 head of cattle on the property as at 30 June 1997.
Between July 1997 to the date of hearing, she sold 27 cattle, for approximately $11,400. She purchased five head and with a natural increase of eight calves, at the date of hearing she said that the property was running 66 head of cattle.
Prior to 1996 the area had been in the grip of severe drought. However, following heavy rain in May 1996, the property has enjoyed good seasons up to the date of hearing.
Overall the property comprises easy to moderately sloping sandstone scrub ridges, intersected by gullies, with three tributaries merging into a single gully flat running from south to north through Parcel A. Miss Hedges described the country as lantana scrub country. The scrub had been cleared many years ago and the whole area was improved with mainly green panic pasture. Miss Hedges was of the opinion that the aggregation would easily carry 80 head of cattle on a mixed herd basis. However, she felt that if she were to run only adult dry cattle, its economic carrying capacity would be more like 57 head.
She felt that breeding provided a better economic return than buying and fattening cattle. She hoped to build up to about 20 breeders, selling the progeny as fat steers at 18 to 24 months. She would also buy cattle if she felt the price was right, to fatten and sell. She said that she had 30 steers aged between 16 and 23 months, which she would sell next year. Steers sold last year had brought prices which ranged from $470 to $600 per head.
The aggregation is watered basically by two bores, one situated near the house and the other situated on Parcel B. Pipelines are run from the bore at the house to water Parcels C and D.
The Case for the Respondent
Evidence for the respondent was given by Mr DJ O'Connor, a registered valuer employed by the Department of Natural Resources. Mr O'Connor is a senior valuer of many years experience in the Gatton area. He explained that although he had not been responsible for the inspection of the area when the last general valuation had been undertaken in the mid 1980s, he had been responsible for the subsequent annual valuations. In undertaking annual valuations he did not inspect every parcel of land each year, but he examined the sales that had taken place and adjusted the valuations of each class of land in accordance with that sales evidence. When anomalies were drawn to his attention, Mr O'Connor would investigate and adjust those valuations if he considered it necessary.
When the lands formerly held by their father passed into the ownership of Miss Hedges and her sister, Mr O'Connor inspected the land and carried out the required interim valuations. In the case of the subject lands, he had valued them as separate parcels because he considered he was required to do so by the provisions of section 35(1)(b) of the Act. However, if the land had been used for purposes of "farming" as defined in section 17(2) of the Act, he would have included them in one valuation in accordance with the provisions of section 34(1)(b) of the Act.
Mr O'Connor was of the opinion that the subject lands did not qualify for valuation as land used for purposes of "farming". He had seriously considered the question but had come to the conclusion, based upon the previous rulings of this Court and the Land Appeal Court, that the enterprise conducted by the appellant did not have a significant and substantial commercial purpose or character, as required by section 17(2) of the Act.
Having come to that conclusion, Mr O'Connor then looked at the sales of comparable lands in the area and arrived at his valuations of the subject lands as four separate parcels. He had concluded that the highest and best use of each of those lands was as a rural residential property and that there was a demand for such properties at higher values than would have been paid if they had been purchased solely for purposes of "farming".
The principal grounds of appeal are, first, that the lands should be included in one valuation and, second, they should be valued concessionally as lands used for purposes of "farming", under section 17 of the Act. Mr O'Connor has valued the land as four separate rural residential properties. Therefore, it is first necessary to consider whether he was correct in doing so, or whether the aggregation should have been valued as land used for purposes of "farming".
Are the lands used for purposes of "farming"?
Section 17 of the Act relevantly provides:
"(1) In making a valuation of the unimproved value of land ... used ... for purposes of farming, any enhancement in that value for that the land has been subdivided by survey or has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not ... that potential use is lawful when the valuation is made.
(2) In subsection (1) -
...
'farming' means -
(a)the business or industry of grazing, dairying, pig farming, poultry, farming, viticulture, orcharding, apiculture, horticulture, aquiculture, vegetable growing, the growing of crops of any kind, forestry; or
(b)any other business or industry involving the cultivation of soils, the gathering in or crops or the rearing of livestock;
if the business or industry represents the dominant use of the land, and -
(c)has a significant and substantial commercial purpose or character; and
(d)is engaged in for the purpose of profit on a continuous or repetitive basis."
In this case there is no argument that the land is used for the business or industry or grazing, or that grazing represents the dominant use of the land, or that grazing is engaged in for the purpose of profit on a continuous or repetitive basis. The only issue is whether that business or industry of grazing has a significant and substantial commercial purpose or character.
That matter has been considered by the Land Appeal Court on a number of occasions. In Chief Executive, Department of Lands v. Whackett (1995) 15 QLCR 311, the case involved the valuations of two adjacent parcels of land in the Cedar Creek area near Beenleigh which had areas of 54.8 hectares and 51.03 hectares, which were used together for grazing beef cattle. The Whacketts' land consisted of moderate to steeply sloping forest/scrub country which carried about 70 head of mixed cattle. In the relevant years, approximately 25 head of cattle were sold each year with an estimated gross return in the order of $5,000 per annum. Most of the income from the sale of cattle was spent on machinery and other expenses connected with the enterprise. In Mr Whackett's opinion it would be necessary to run more cattle to make any profit, but 70 head was the maximum carrying capacity. On occasions it had been necessary to buy in feed.
At page 328, the majority of the Land Appeal Court proposed the following test:"It is difficult and unnecessary, to state precise and compendious meaning of the expression 'significant and substantial commercial purpose' and 'significant and substantial character'. Bearing in mind the various connotations of the words 'significant' and 'substantial' it is perhaps sufficient for present purposes to say that for section 17(1) of the Act to apply to the subject land there must be evidence that:
(a)the business or industry is being carried on with a genuine and sizeable intention or desire that there will be reward, if not profit and is not being engaged in merely for recreational or some other purpose; or
(b)the qualities or distinguishing features of the business or industry demonstrate that it is being carried on in a way which (ordinarily, at least) will generate reward, if not profit."
At page 330, the majority found that neither the objective character, nor the subjective purpose of the grazing enterprise can be said to be significantly and substantially commercial. However, they expressly stated that they arrived at that conclusion on the evidence in that case and that there was insufficient evidence to find in favour of the landowners, as no trading figures of any kind were presented. They continued at page 330:
"We emphasize, however, that we arrive at this conclusion on the facts presented in this case. There is insufficient evidence to find in favour of the owners. No books of account or trading figures of any kind were presented. Before us both parties relied on the verbal evidence of Mr Whackett in the Court below that these lands carry 70 head of mixed cattle on a year to year basis but for the three years to 1992 they sold approximately 25 head of cattle per year and that he estimated their average recent gross returns at $5,000 per annum. He also stated that the maximum carrying capacity is 70 head of cattle and it would be necessary to run more cattle to make any profit.
No explanation was given as to why an enterprise running 70 head of cattle, 40 of which were breeders, had such a small return for the last three years. It may well have been because of the drought conditions which have affected so much of the State, but no evidence of that was forthcoming.
We are of the opinion that an enterprise which can run 70 head of cattle may be shown to have a significant or substantial commercial purpose or character. However, that has not been demonstrated to our satisfaction in this case. It may well be that at some future time, when the details of the Whacketts' business activities are presented in more detail, the matter could again be considered, with quite different results. "
The matter was also considered by the Land Appeal Court in the case CH and MC Peck v. Chief Executive, Department of Natural Resources, an unreported judgment of the Land Appeal Court delivered on 1 August 1997. In that case the Pecks had a property of just over 4 hectares upon which they were conducting an intensive orchard comprising macadamia, lychee and other tree types, which they purchased in 1986 and from which they expected to make quite extensive returns. However, despite their best efforts, such returns were not forthcoming and in each of the financial years from 1987 to 1994, the farming operations ran at a loss.
At page 7 of the reasons for judgment, the Land Appeal Court said:"The third condition concerns one purely objective matter, the commercial character of the business or industry. The commercial purpose of the business or industry is a matter which requires consideration of a subjective matter, again the genuineness of the purpose, but the use of the adjectives 'significant' and 'substantial' to qualify the expression 'commercial purpose' in our view calls for consideration of objective criteria when assessing that purpose. The use of both adjectives leads us to the conclusion, but, of the two, 'significant' is the more important leading to that result.
So whereas paragraph (d) makes the genuineness of the purpose alone a condition and so concerns an exclusively subjective matter, paragraph (c) requires assessment of that purpose by reference to objective facts to determine if it can properly be described as significant and substantial. In making such an assessment it is permissible - and necessary in our view in a case like this in which a business has been established for some time - for consideration to be given to the results achieved by the business after a reasonable interval has elapsed following its establishment. Full allowance must, of course, be made for such things as the uncertainties of the weather, the vagaries of markets, and fluctuations in exchange rates. Having given those factors proper weight, one may conclude that an owner, though genuinely pursuing profits, is engaged in such an unpromising enterprise that it could not be said, in accordance with any ordinary or reasonable standard, to have a significant and substantial commercial purpose. Such a conclusion was clearly open in this case, as was a conclusion that the appellants' business lacked the requisite significant and substantial commercial character. Where a business or industry is in the process of being established objective criteria other than results, such as a credible business plan, will of course be appropriate."
In my opinion the observations of the Land Appeal Court in those two cases are helpful in deciding the present matter. In Whackett's case the Court questioned how an enterprise running 70 head of cattle and with a turn-off of 25 head per year could make a gross return of only $5,000 per annum. They were clearly of the opinion that an enterprise which can run that many cattle may be shown to have a significant and substantial commercial purpose or character, but they were not satisfied on the evidence such was the case. They expressly left open the possibility that if such evidence was forthcoming, the appellants may have succeeded.
In this case there is evidence that in good seasons the property can run up to 80 head of mixed cattle (57 dry cattle equivalents) and has demonstrated in the last two trading years better gross returns than from the Whacketts' enterprise. There are presently 30 head of steers for sale next year. While evidence was given of purchases and sales of cattle, there was no evidence of the costs of running the property.
The Peck case makes it quite clear that gross returns are not the only thing to be considered. The cost of producing those returns must also be taken into account to determine whether the enterprise has made a profit. In the early stages, as in the present circumstances, when a business or industry is in the process of being established, other objective criteria, such as a credible business plan, will be considered.
It is well established that in such cases, this Court has jurisdiction to consider only that evidence which is relevant to the matter only up to the date of issue of the valuations. This is in accordance with the authority of Walker v. The Valuer-General (1978) 5 QLCR 128 at 131:" As it is relevant to my consideration of the evidence I should at this stage mention that my jurisdiction as to the use to which the subject lands are put is confined to the period commencing with the date as at which the value has to be found (31st March 1975) and finishing on the date as at which the Notice of valuation issued (28th October 1976). If a business of primary production commenced later than 28th October 1976 its effect, if any, on the unimproved value of the land is properly a matter for an application for revaluation in terms of section 13 of the Valuation of Land Act"
This reasoning was endorsed by the Land Appeal Court on appeal. ((1978) 5 QLCR 47 at 349).
In these cases I have no evidence of the actual dates of issue of the valuations, but those valuations as at 1 October 1996 must have issued prior to 30 June 1997. I will have regard to the evidence of the use of the land up to that date.
Miss Hedges has been running cattle on the aggregation since early 1996. She bought some cattle from her father's estate and with other purchases of cattle and natural increase of 18 calves, she was running 49 head of mixed cattle at 30 June 1996. However, she had made no sales. She purchased an additional 23.48 hectares in about May 1997 to increase the viability of the property. With that property came 15 steers apportioned in the contract at $250 per head, 12 of which she sold immediately at an average of about $440 per head. That could be regarded as a windfall profit which would be unlikely to be repeated. If they are excluded from her trading figures between July 1996 and June 1997, she purchased seven head for $1,275 and sold eight head for $3,500. The figures for the following year are outside the period in which I have jurisdiction. Even though they look more promising, it would be necessary to consider the income from sales against the expenditure incurred in producing that income. No evidence of that expenditure was provided.
Mr O'Connor said that in arriving at his opinion that the property did not have a significant and substantial commercial purpose or character, he had relied heavily upon the previous decisions of this Court and the Land Appeal Court. In addition to the Whackett and Peck cases, he referred me to recent decisions of this Court in PR and BM Whalan v. Chief Executive, Department of Natural Resources, Land Court, 7 June 1996 (not reported) and RE and ME Chippendale v. Chief Executive, Department of Lands, Land Court, 7 June 1996 (not reported).
Whalan's case concerned the application of s.17 of the Act to the valuation of 28.14 ha of land at Bethania, which carried between 50 and 70 head of mixed cattle. Between 1990 and 1994 the enterprise made losses of between $537 (1994) and $9193 (1992). Applying the tests proposed by the majority in Whackett, the learned Member could not find in the evidence in that case that the business had a real prospect of producing reward or profit and therefore did not have a significant and substantial commercial purpose or character.
Chippendale's case concerned the valuation of a property of approximately 73 hectares, the carrying capacity of which was between 100 and 120 mixed cattle. The learned Member noted in his judgment that during the four years in question, although gross proceeds were trending upwards and costs trending downwards, there were no real signs that a net profit was emerging. The owner admitted that he made a small loss, but by continuing to improve the quality of his stock and with the benefit of a better market, he believed it may be possible to break even, or to make a small profit.
At page 6 of his reasons for judgment, the Member said:" The difficulty I have is forming a view that the enterprise currently being carried out on the subject lands will ever make a profit, a doubt apparently shared by the appellants...While there is evidence that the appellants are breeding their herd up, I am uncertain about the type of enterprise actually involved: that is, what else does the business plan involve apart from simply improving the quality of the stock and selling off young calves? "
The Member went on to conclude that he had no doubt that a property with such a carrying capacity could be shown to be used for a significant and substantial commercial purpose or character, but the evidence before him did not demonstrate that.
Miss Hedges referred me to the case of Dolley v. Chief Executive, Department of Natural Resources, Land Court, 22 May 1998 (not reported), where a property in Gatton Shire was held to qualify for valuation as land used for purposes of "farming". However, that case involved a mango orchard with about 1,000 trees in the early stages of establishment, but with a potential income of up to $60,000 per annum. The owner was also conducting a pig farming enterprise with income for the relevant period of between $8,000 and $11,000 per annum, but with only minor profits. It is clear from the Member's decision that if it had not been for the mangoes, the concessional valuation would not have been made.
In the present cases Miss Hedges has shown that she has a clear intention of making a profit from the property. She has taken every opportunity to maximise the returns from the purchase and sale of stock. She has purchased additional land, acquiring the cattle which came with that land at windfall prices. I do not doubt that with favourable seasons and prices she will continue to purchase stock as the opportunity presents, as well as continue her breeding regime. She has indicated she has no intention of selling any of the lands and I accept that she intends to try to make it a profitable enterprise.
However, Mr O'Connor is doubtful that the aggregation could continue to make a profit, having regard to the fluctuations of seasons and prices. There is no dispute that since May 1996, the area has enjoyed the best seasons for many years and he feels that only time will tell if Miss Hedges' grazing enterprise will be profitable.
Having regard to the decisions of the Land Appeal Court in Whackett and Peck, I cannot find on the evidence before me that during the period in which I have jurisdiction, the grazing enterprise conducted on the aggregation had a significant and substantial commercial purpose or character. I do not doubt Miss Hedges' sincerity or dedication to making a profit or that, as the word is used in ordinary language, the property is a "farm". At this stage it simply does not qualify for valuation as land used for purposes of "farming", as that word is defined by section 17(2) of the Act. It might do so in time, but evidence of both gross returns and the costs of obtaining those returns would need to be produced.
Can the subject lands be valued as one parcel?
Mr O'Connor came to the conclusion that the provisions of section 35 of the Act required him to value the lands as separate parcels because they are separated by public roads. That section relevantly provides:
"(1) Unless the chief executive otherwise directs -
(a)several parcels of land which are owned by the same person, but which are separately let to different persons, shall be separately valued;" and
(b)lands which do not adjoin or which are separated by a public road, or are separately owned, shall be separately valued; ”
On the other hand, the situation would be different if the land was used for the purposes of "farming", because then the provisions of section 34(1)(b) would apply. That section relevantly reads:
"(1)Unless the chief executive otherwise directs, there shall be included in one valuation -
(a) ....
(b).... several parcels of land in the same area which do not adjoin but which are worked as one holding and used exclusively for the purposes of farming, and are owned by the same person and which, if let, are all let to one person.
(2) However, any such parcels of land shall be valued separately if buildings are erected thereon which are obviously adapted to separate occupation and which may respectively be lawfully held under separate ownerships."
It is well established that this Court and the Land Appeal Court are competent to review the exercise of a discretion vested in the chief executive under the Act. See Valuer-General v. Reinke (1969) 36 CLLR 178; Colonial Sugar Refining Co Ltd v. The Valuer-General (1970) 37 CLLR 176; and more recently the majority judgment in the Land Appeal Court in RM and AJ Beanland v. The Valuer-General (1990) 13 QLCR 113.
In the present cases the provisions of section 34 are not relevant unless the land was used exclusively for the purposes of "farming" and I have found that it was not. Turning to section 35, the subject lands are owned by the same person and they are not let to different persons. However, in terms of section 35(1)(b), the parcels are separated by public roads. That would be an end to the matter, except that the Chief Executive has a discretion to "otherwise direct". But how extensive is that discretion to so direct and when should it be reviewed? In delivering his judgment in the Full Court in Reinke v. Banana Shire Council (1968) Qd.R. 453, Stable J. concluded at page 458 that the words in section 15 (the predecessor of the present section 35), "unless the Valuer-General otherwise directs", are equivalent to "unless the Valuer-General otherwise rules".
In Beanland's case, the Land Appeal Court considered the power of the Valuer-General to otherwise direct under section 14 of the Act (the predecessor to the present section 34). The matter had previously come before the Land Appeal Court in a case involving the same parties (R and A Beanland v. Valuer-General (1986-87) 11 QLCR 131). In that earlier case the Land Appeal Court had said at p.133:"The Legislature has not used words which make it mandatory for the Valuer-General in the circumstances set out in the new provision to value separate parcels in one Local Authority area as one parcel. On the contrary the command is to do so `unless the Valuer-General otherwise directs'. Simply put the position as we see it is that the Legislature has given the Valuer-General an unfettered discretion which ... he may exercise subject only to legal requirement that it must not be exercised capriciously or unreasonably ... "
On the evidence before it in that case, the Land Appeal Court did not find that the Valuer-General had acted arbitrarily or capriciously.
In the later Beanland case at page 118, the majority of the Land Appeal Court felt that the tests applied by the Court in the earlier case had stated too widely the ambit of review available to that Court. They felt that the tests were more closely aligned to the statement of principles upon which an Appeal Court reviews the exercise of a discretion by another tribunal within the judicial process, rather than the tests which concern the review by courts of exercises of power by statutory officials. They held that a review of a "direction" given by the Valuer-General under section 14 was subject to the principles of administrative law, rather than those of appellate review.
After considering some authorities, the majority went on to say at pages 119-120:"It is true that the valuation in question is founded upon the direction to value as two parcels, but such a direction is not itself a matter as to which an appeal lies on the merits. It is in this respect it would seem that some of the observations in Beanland v. Valuer-General (above) as to the degree of review available in relation to such a direction may have been stated too widely. In particular the statement that the discretion may be exercised subject to a requirement that it not be exercised unreasonably implies a wider basis of review than the authorities permit ... By the same token we agree in general with the observation of Mr Dodds in relation to the predecessor of section 14 in Colonial Sugar Refining Co Ltd v. Valuer-General (Shire of Hinchinbrook) (1970) 37 CLLR 176, 187, that the section -
'... give(s) him such power only after he has directed himself, as it were, on the facts available to any piece of land. The duties conferred on the Valuer-General by the Acts are essentially practical ones involving examination of all the facts relating to an area of land before deciding how it should be valued for the purposes of the Acts. If these facts satisfy him that part of such an area should be valued as a separate piece of land then he may so direct and that result follows. But if the facts do not support such a direction and the Valuer-General still values any part of an area of land as a separate piece of land then, in my view, his direction can be subjected to review and may be set aside. '
These comments were made under earlier legislation, but we think they are pertinent to section 14 to the extent that they draw attention to the need that some positive basis exist before the Valuer-General 'otherwise directs' Section 14(b) sets out prescribed criteria, and if they are met an owner is entitled to the benefit of a single valuation, and may be deprived of it only by a specific and proper exercise of a power entrusted to the Valuer-General.
In the present case the alleged basis of exercise of the power has been laid out before the Court. In the absence of evidence it would have been unreviewable (see s.21(3)), but once there is evidence of the manner in which the determination has been reached, such a direction cannot be regarded as valid simply upon the fact that there has been an arbitrary declaration equivalent to 'I say so'."
Beanland's case involved an "otherwise direction" where all the requirements of section 14(b) were present, but the Valuer-General had "otherwise directed" that two parcels of land which did not adjoin, but which were worked as one holding, and used exclusively for the purposes of a single business of primary production, were owned by the same person and where no part of that land was let, should be valued separately. In the circumstances of that case the Court found that the "otherwise direction" by the Valuer-General was reviewable, as it was founded on considerations that were shown to be irrelevant and that there was no positive rational basis upon which it could be justified. Therefore, the Court found the "otherwise direction" to be invalid and that there should be a single valuation for the two parcels.
In the present case the situation is somewhat different. Here, quite clearly, were it not for the power to "otherwise direct", the parcels must be separately valued under the provisions of section 35(1)(b), as they are each separated from the others by public roads. However, the discretion to direct otherwise cannot be ignored. It is clear that the Chief Executive has turned his mind to the question and has directed otherwise when the newly acquired Lot 1 on RP 889166 was amalgamated with the other two lots to form Parcel A. It is separated from them by a public road and, unless the Chief Executive had directed otherwise, it would have been valued separately. No doubt the Chief Executive was influenced by the agreement that the land could not be disposed of separately, but the fact remains that it required an "otherwise direction" to include those lands in one valuation.
In my view, the Chief Executive should have gone further and considered whether all the subject lands should have been included in one valuation. If he had done so he would have been confronted with considerations such as the fact that Miss Hedges had purchased most of the former family farm after being left the homestead lot by her father. She had purchased more land in an attempt to establish a cattle grazing enterprise, but the aggregation does not yet qualify for valuation as land used for purposes of "farming". It has to be valued at its highest and best use. But because the aggregation has the misfortune to be severed by a number of public roads, it has been valued as four separate rural residential properties, even though there is only one house on it. If the lands had adjoined, they would have been included in one valuation and there is little doubt that the Chief Executive would have valued them as one large rural residential property.
Section 35(1) prescribes criteria which, if met require that lands be separately valued. However, the subsection gives the Chief Executive the discretion to depart from that requirement and direct otherwise on appropriate occasions.
In Minister for Aboriginal Affairs v. Peko-Wallsend Ltd (1985-1986) 162 CLR 24 at pp.39 to 42, Mason J expressed the view that the exercise of an administrative discretion is reviewable when the decision maker fails to take into account a relevant consideration, but only where the decision maker fails to take into account a consideration which he is bound to take into account in making that decision. He went on to say that if the statute conferring the discretion does not expressly state the factors that the decision maker is bound to consider in making the decision, the relevant factors must be determined by implication from the subject matter, scope and purpose of the Act.
The majority of the Land Appeal Court in Beanland took this approach. They pointed out that the preamble to the Act indicates the purpose of the legislation, that is, to make better provision for determining the valuation of land for rating purposes. They also discerned within section 14 an intention to protect bona fide farmers who run a single farm business upon properties that are not adjacent. Section 14 is the predecessor of the present section 34. From the other provisions of section 34, there is also clearly an intention to protect the owners of adjoining parcels of land which are held by the same person (except where part of it is leased) from multiple valuations. Those lands are required to be included in one valuation, except that the Chief Executive is given the administrative discretion to direct otherwise.
But while section 34 requires that such lands be included in one valuation, it says nothing about how they should be valued. The general principles of valuation require that those lands must be valued at their highest and best use, usually as separately surveyed parcels, with the valuation being the sum of their individual values (with perhaps some allowance for multiple holding), except where the statute provides for exceptions.
One such exception is found in section 17(1), where land exclusively used for purposes of a single dwelling house must be valued disregarding any enhancement in value because the land is subdivided by survey. Clearly, that demonstrates an intention to protect owners of such land from higher valuations as separately saleable parcels.
Such factors clearly influenced the Chief Executive when he exercised his discretion to direct that, notwithstanding that it is separated from them by the public Paroz Road, the parcel acquired by Miss Hedges in mid 1997 should be included with the other two lots to form Parcel A. Mr O'Connor's statement shows that it was valued as one large rural residential property and given the protection of the single dwelling house concession of section 17 and "The fact that the property comprises three separately saleable surveyed parcels has been disregarded." (V98-13 Exhibit 2). That valuation is therefore a combination of the "otherwise direction" under section 35(1) and a concessional valuation under section 17(1).
In other words, the Chief Executive considered that these matters were relevant considerations when exercising his discretion to direct that the parcels be amalgamated. Since they were not expressly stated, he must have determined them by implication from the subject matter, scope and purpose of the Act. However, it would seem from the evidence of Mr O'Connor, that such matters were not considered in relation to the other Parcels B, C and D.
If those factors were relevant considerations in directing that Lot 1 on RP 889166 be included in one valuation with the other two lots, then they are relevant considerations which he should have taken into account in considering whether to value the other three lots separately. If he had done so, he would have concluded that for the same reasons that he directed that Lot 1 on RP 889166 be valued with the other lots, then the other parcels of the aggregation should be valued with them as one valuation.
In directing that the three lots comprising Parcel A be included in one valuation and valuing them under the single dwelling house concessional provisions of section 17, the Chief Executive must have concluded that the three lots were exclusively used for the purposes of a single dwelling house. He could have done so by reasoning that in a rural environment, use for purposes of a single dwelling house could be extended to rural residential properties. Part of rural residential use includes some agricultural or livestock activity, but on a scale smaller than qualifies the land for valuation as used for purposes of "farming", as defined by subsection (2) of that section.
If those were relevant considerations, then they were ones he should have taken into account in deciding how to value the other three parts of the aggregation. They too are used as part of the appellant's rural residential activities. There are no houses on them, they are used with Parcel A and they are not used for purposes of "farming". If the three lots comprising Parcel A could be considered to be used for purposes of a single dwelling house (that is, for purposes associated with rural residential use), then Parcels B, C and D must be used for the same purpose.
Therefore, in the present cases, there are relevant considerations which the Chief Executive failed to take into account in deciding that Parcels A, B, C and D should be valued separately. If he had done so he would have directed that, notwithstanding the fact that they are separated by public roads, they should be included in one valuation. If he had so directed, he would then have adopted an approach consistent with that adopted in respect of the three lots comprising Parcel A. He would have concluded that they were used for purposes associated with rural residential activities and valued them as one parcel under the single dwelling house provisions of section 17. Obviously, the Chief Executive did not see the running of cattle as disqualifying Parcel A from the single dwelling house concessional valuation.
I am of the opinion that in respect of the valuations made as at 1 October 1996, Parcels A, B, C and D should have been included in one valuation and that valuation given the single dwelling house concession under the provisions of section 17. After considering the sales relied upon by Mr O'Connor for his valuations as at that date, and after having regard to the relativity of valuations in the area, I have come to the conclusion that an unimproved value of $140,000 would be appropriate. In arriving at that conclusion I have had particular regard to Sale No. 3 and also to the valuation of $84,000 applied to the neighbouring property owned by Miss Hedges' sister.
The same principles apply to the valuations made as at 1 January 1996. However, there have been appeals against only two of those valuations. In respect of those valuations, I find that if the Chief Executive had had regard to relevant considerations, he would not have valued the two parcels separately, but would have "otherwise directed" that they be included in the one valuation and valued under section 17(1). Having regard to the relevant sales and to the relativity of valuations, particularly the valuation of $88,000 applied at that date, to the neighbouring property, I feel that the amalgamated valuation should be valued at $100,000.
Accordingly, in the case of Appeal V97-181 and Appeal V97-183, the appeals are allowed, the valuations of the respondent are set aside and those two parcels of land should be included in the one valuation and that valuation determined at $100,000.
In respect of Appeals V98-13, AV97-182, AV97-185 and AV97-186, the appeals are allowed, the valuations of the respondent are set aside and those four parcels of land should be included in the one valuation and that valuation determined at $140,000.
PRESIDENT OF THE LAND COURT
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