Hensley v The Valuer-General

[1990] QLC 13

[1990] QLC 13

 

  LAND COURT,

BRISBANE

25th May, 1990

Re:      Appeal under s. 27(1D) of the Local
  Government Act 1936 (as amended).
  VC89-540.

K.M. Hensley and C.V. Smyth
  v.
  The Valuer-General

D E C I S I O N

(Hearing at Cairns)

This is an appeal under s. 27(1D) of the Local Government Act 1936 (as amended) against the decision of the Valuer-General upon an objection made by the appellants against the category in which Lot 2 on RP 728465, parish of Mona Mona, containing 60.7 hectares was included for the purposes of making and levying differential general rates by the Mareeba Shire Council for the year commencing 1st July, 1989.  The relevant rate notice issued on 1st August, 1989.  In the notice, the subject land was included in Category 4B.  The appellants contend that the land should have been included in Category 4G on grounds that the land is used for the business of primary production.
  Mr K.M. Hensley appeared on behalf of the appellants.  He said that the appellants purchased the land in 1988 and that they have plans to develop a cattle stud on the property.  Since the land was purchased, he has grazed up to 22 heifers on the block and has harvested macadamia from a plantation comprising about 100 trees.  Accounts prepared by Price Waterhouse for the year ending 30th June, 1989, were tendered.  In the period, farm income comprised the sum of $1300 from macadamia.  Expenditure totalled $13,646.  Mr Hensley said that in the current fiscal year income from macadamia to date is $2600.  No sales have been made of cattle.  He said it would take some time to develop the stud as he intended to breed from the latest imports of tropical cattle which are based at Rockhampton.  It is his submission that an activity may be classified as a business notwithstanding that it may not show a profit for some years.
Evidence was given on behalf of the Valuer-General by Mr P.J. Haydon, registered valuer in his employ. He said that he inspected the area in April 1989 following an application by the owners for consideration under s. 11(1)(vii) of the Valuation of Land Act. He said that at the time there were 14 head of cattle on the block and 90 macadamia trees. The appearance of the macadamia trees gave him the impression that they had not been fertilized or tended properly for some years. In his opinion, the scale of the operation was not sufficient to classify the activity as a business within the meaning given to the term by the Land Appeal Court in G.A. and B.H. Walker v. The Valuer-General (1978) 5 Q.L.C.R. 347.
  Category 4G covers properties which are "exclusively used for the business of primary production".  It has been held by this Court (Werner R. Arnold and Eberhard P. Arnold v. The Valuer-General (VC87-1158) 5th May, 1988), that the appropriate test to apply in determining an issue of this nature is that contained in the Walker case. The Land Appeal Court held that the word "business" in the legislation was meaningful and could not be ignored.  The relevant test is set out at p. 354 of the report.  What is required under the test is that a business of some substance and viability must exist at the relevant date - one by which substance and viability can be determined by a consideration of profit and loss accounts or that "the actions or operations in train ... must be such that given favourable seasons and conditions they are of such magnitude that they will, in the fullness of time, by maturity or further activity reasonably be expected to develop into a viable venture".  In A.I. MacAdam and Another v. The Valuer-General (18th September, 1981) (V80-298), the Land Appeal Court in dealing with the alternative said -

"We stress that intentions, hopes and aspirations, however sincere, are not sufficient to constitute a business of primary production.  They must be supported and affirmed by substantial and positive actions of a type and magnitude which are approaching or may be reasonably certain to reach commercial viability.  "

In so far as the first limb of the test is applicable to the evidence in this case it could not be held on a consideration of the accounts tendered that the business in the relevant period - 1st July, 1989, to 1st August, 1989 - constituted a viable business.  In terms of the alternative, there is evidence that the gross returns from macadamia may reach $5000 per annum within the next few years.  The formation of the stud was still in the initial stages assuming that the heifers on the block are intended as recipients.  This part of the activity had not advanced to a stage where, in my opinion, it could be held that it was approaching or may reasonably be certain to reach commercial viability.  I remain of that conclusion when the activities are considered in conjunction.
  Accordingly, the appeal is dismissed.

Member of the Land Court