Lane v Chief Executive, Department of Natural Resources
[1997] QLC 91
•12 June 1997
|
BRISBANE
12 JUNE 1997
Re: Appeal against Valuation
Valuation of Land Act 1944 -
Valuation Roll No: 14606
Local Government: Gold Coast-Albert.
(V96-216).
David G Lane
v.
Chief Executive, Department of Natural Resources
(Hearing at Coolangatta)
D E C I S I O N
Background:
The key issues in this case relate to the use of the land for farming purposes and the comparison of comparable sales. The appeal relates to a parcel of land at 69 Lanes Road, Wongawallen, Gold Coast, which has been used by the appellant for primary industry purposes for many years for the cultivation of fruit and nut trees, for the grazing of cattle, some potential harvesting of natural timber, and some minor use of bees as part of the orchard operations.
The land is located approximately 12 km north-west of the Oxenford Shopping Centre which is situated adjoining the Pacific Highway. The subject has access to Lanes Road, with about 100 metres of frontage to bitumen sealing of Lanes Road, while the balance of Lanes Road is formed gravel.
Generally, the access to the property is good. Electricity and telephone are connected to the subject, which is described as Lot 69 on Plan W311309, and has an area of 47.15 ha.
The land is zoned "Rural B" under the Albert Shire Town Planning Scheme of 24 February 1995, which was effective at the date of valuation at 1 January 1996. The zoning is used in conjunction with the Hinterland Density Regulatory Map 1 which allows for subdivision of parcels with a minimum area of 8 ha.
The subject is used for the cultivation of tree crops, the grazing of cattle, and as the home of the appellant and his family. There are two dwellings located upon the land, one occupied by Mr Lane and his family, and the other by Mr Lane's brother.
The subject is near rectangular in shape with a frontage to Wongawallen Creek on the western boundary and steep rugged forest hills on the eastern boundary. The subject is severed by Lanes Road near the western boundary, with old alluvial flat land west of Lanes Road, and cleared undulating ridges to the east of Lanes Road, upon which the dwellings are located. There is a tributary of Wongawallen Creek which traverses across the subject joining Wongawallen Creek near the south-west corner of the subject. The tributary is not permanently flowing water, but there is evidence of water seepage holes in various locations along the watercourse. A permanent water supply has been constructed to the side of the watercourse near the road frontage on the subject.
The property has two "waterworks licences" attached to the land, being Licence No G 56263 (a 25mm centrifugal pump from the tributary of Wongawallen Creek) and a Licence No G 56279 (a 40mm centrifugal pump) from the Wongawallen Creek. Works authorised under the licences include domestic supply, irrigation, stock watering and water harvesting. The licences restrict the amount of water that can be water-harvested from the creeks at the discretion of the Chief Executive. The irrigation system used by the appellants is mainly a trickle system, mainly from his permanent waterhole or seepage from the tributary of the creek.
The soils range from poor, stony soils on the steep ridges to patches of red volcanic soil along the tributary to Wongawallen Creek, to loam along Wongawallen Creek. The red volcanic soil, the loam and the soils on the lower ridges have good drainage and are suitable for tree crops. The current avocados and macadamia trees are approximately 16 to 18 years old, and are in full fruiting capability.
The areas of the property currently used for orchard-type activities include about 1.65 to 2.5 ha of macadamia nuts, and lychee trees, about 0.5 ha of avocado trees and 0.15 ha of lime trees. Cattle are grazing on the 5 ha of alluvial flat along Wongawallen Creek and about 15 ha of the cleared undulating ridges. The feed on this open cleared area shows good characteristics for cattle grazing.
The second dwelling, currently used by the appellant's brother, lies in the north-west corner of the subject, where there is also located stockyards and loading bays used by the appellant, together with a plantation of custard apple trees that are harvested by the appellant's brother but are not part of the farming activities of the appellant.
The Chief Executive, Department of Natural Resources, on 21 February 1996, issued a valuation on the subject to the extent of $210,000 as at 1 January 1996. Following objections, the Chief Executive on 13 May 1996, disallowed the objection and confirmed the valuation of the subject at $210,000.
The appellant appealed that valuation and submitted that the subject should not be classified as a rural residential homesite but was, and continues to be, a farming business under s.17(2) of the Valuation of Land Act, with a correct valuation of $81,000.
Mr DG Lane appeared for himself and Mr B O'Connor appeared for the Department, seeking evidence from Mr DT Treston, the Departmental registered senior valuer, who determined the valuation.
Evidence:
By agreement with both parties, I subsequently inspected the subject with both Mr Lane and Mr Treston.
Mr Lane gave evidence that the subject has been farmed for primary production purposes continuously since the land was purchased by Mr Lane in 1965. The land is part of the old family land that was settled last century by the appellant's forefathers, and has been used only for primary production ever since. As a descendant of the pioneer settlers in the area, the appellant has an ongoing desire to continue as a farmer as his only means of supporting his family. For some time he was involved in banana cultivation, but after the unfortunate experience of having his bananas destroyed accidentally by chemical spraying with 2-4D on nearby lands, he switched about 18 years ago to tree cropping. He now personally cultivates, processes and markets his crop of macadamia nuts, avocados, lychees and a variety of exotic fruits, by direct selling through "local" markets and agents. He has continued to graze cattle on the land since 1965. He also has an arrangement where a separate apiarist maintains beehives upon the subject which assists Mr Lane in pollinating his trees. However, the bees are not part of his personal farming business. There are 20 to 30 beehives which produce income for the apiarist in exchange for yearly free placement of the hives on the subject.
The timbered areas on the steep slopes are maintained and partly re-afforested by the appellant as part of his conservation farm management practices, and as a farmer he could harvest certain hardwood products to expand his primary industry activity in the future. At this time, the timbered ridges only form part of his forward strategy to expand his business.
In respect of the current areas of tree planting, Mr Lane felt that the total area was currently nearer to 3.4 ha than the 2.3 ha claimed by Mr Treston. During cross-examination, Mr Treston conceded that he had not personally inspected the whole of the cultivated areas of the subject, as at the time he felt the subject was possibly unlikely to meet the requirements as a primary producer under s.17(2) of the Act. On balance, and after a detailed personal inspection, I would be prepared to accept Mr Lane's estimate of 3.4 ha of trees.
In the matter of the potential to expand the tree planting, Mr Lane led evidence that he has plans to extend his avocados further up the tributary to the east into the approximately 3.2 ha where he formerly cultivated bananas. This area, together with the current avocado plantings, has access to several seepage springs, and waterholes, along the tributary. Mr Lane currently can pump from one waterhole in the avocado area to his "trickle" irrigation systems which he claims is the most efficient use of available water. Because of recent rains, and in view of his farm management practices over 18 years, his trees need little supplementary water from the sprinkler and depend virtually on natural moisture in the soil.
The current farm management practices are of particular note in that Mr Lane has adopted planting, cultivation and mulching practices which maximise his return per ha from his trees. For instance, evidence was led by Mr Treston that standard industry guidelines supplied by the Department of Primary Industries (DPI) indicate minimum acreage guidelines for the economic cultivation of crops for a family unit. These guidelines for avocados (10 ha), citrus (18 ha), lychees (7 ha) and macadamia (20 ha) all indicate that Mr Lane falls short in areas for his tree plantings.
However, as Mr Lane argued, because of his farm management practices, and the resulting crops which he personally manages, it is inappropriate to compare his operations with those guidelines. Mr Lane plants his trees at closer density to that normally suggested by the DPI, mulches heavily and he operates his cultivation, harvesting, processing and marketing of his tree products personally, together with his wife. Both Mr Lane and his wife work full-time on the "farm" for periods up to 12 hours per day for 7 days each week. This heavy commitment on his available time is the major reason why he has not yet undertaken an expansion of the business. He is also reluctant to seek bank loans to undertake the expansion, in view of the current uncertain nature of the Australian economy. Mr Treston conceded that there are always exceptions to the DPI guidelines.
In the matter of the capacity of the business to expand, the appellant drew attention to the approximate 5 ha of available flats adjoining Wongawallen Creek which he claims would be suitable for further planting of macadamia or avocado trees. He has longer-term plans for excavating a large waterhole in the area to the south of this area, and beside the watercourse of the tributary. This would be larger than his current waterhole and further supplement the current waterhole to the east of the road, which has a capacity of about 500,000 gallons. These water storage areas would, in his opinion, support the ongoing "trickle" irrigation of further trees in that area. Based on his current farm management practices, these additional areas are likely to be viable. Mr Lane also advises that as the trees gain maturity, their dependence on supplementary watering declines, and his need to have access to the water licensed allocations tends to become more of an "insurance matter" for his business.
In respect of his grazing of cattle, Mr Lane gave evidence that the property supports on average a total of 45 head of cattle, including vealers and calves, turning off about 15 head a year depending on the state of the markets which are currently in a depressed state, returning only about 50% of prices obtained in good market conditions. He currently uses the flat alluvial land along Wongawallen Creek for fattening the cattle prior to sale. While the grazing of cattle is an ongoing supplement to his income, his major income is achieved from the cultivation of his trees unless, of course, the beef industry market improves considerably.
Because of the potential to expand his planting of trees, once he has access to either extra help (once his sons finish their education) or additional finance, he could at least double his income. He has a strategy to further develop the business and believes that the business will become more viable in the future.
In the matter of the farm income of the subject, Mr Lane gave evidence that his income for taxation purposes over three years was:
Year Gross Revenue Expenditure
1992-93 $ 15,498 $ 8,935
1993-94 $ 18,641 $11,859
1994-95 $ 21,169 $14,985
Mr Lane confirmed that this was his only form of income and gave evidence that his operating profit for the years 1995 and 1996 showed:
Year Taxable Income Non-cash Operating
Depreciation Profit
1995 $ 6,363 $ 2,324 $ 8,408
1996 $ 10,746 $ 1,940 $ 12,686
Mr Lane estimated his operating profit for 1997 at in excess of $15,000, revealing an improving economic return on his developing "farming" business, resulting from increases in mature bearing fruit. He has continued to support his family totally on these amounts, including the education of his children. Mr Lane claims that any primary industry business that currently provides income for the family, and provides a profit also, is a viable farming business. Many farmers in Australia, he contends, actually lose money on their primary business.
In his evidence, Mr Treston had doubts that the property could expand due to the constraints on the land, and his observations that irrigation was being achieved by "trickle" methods rather than spraying. Mr Treston understood such methods often reflected practices where water availability was restricted. Having now received the evidence of Mr Lane in respect of his reasons for applying "trickle" irrigation, he conceded that water may not be as big a problem as he had initially considered. Further, without the benefit of a detailed inspection of the subject, he had concerns about the stony nature of the soils, and their capacity to sustain further trees. Mr Treston emphasised that his valuation of the subject was made as at 1 January 1996, and he had to consider the facts that occurred at that time. If further developments were to occur, he would consider those at that time.
In considering the applicability of s.17(2) in respect of the subject, Mr Treston sought to draw comparison with the property in Peck v. Chief Executive, Department of Natural Resources (AV95-94) of 14 June, 1996, unreported, which is currently before the Land Appeal Court. In that case, Mr Peck had about 2.3 ha of orchard on a 4 ha site, but his income from the business returned lesser income than that of Mr Lane. Mr Lane was familiar with the Peck case, and had communications with Mr Peck who had sought Mr Lane's assistance in the marketing of Mr Peck's products. Mr Lane noted that Mr Peck was in fact a retired airline pilot who had invested in real estate in order to develop a business. Mr Peck had other income, and was not totally dependent upon the "farming" business. Mr Lane noted that Mr Peck "needed to supplement the pension income derived from a superannuation fund".
Mr Lane considered that it was inappropriate to compare Mr Peck's case with the subject, in view of Mr Lane's totally different farm management practices, and his economic dependence on the "farm". Mr Treston agreed with the appellant that if the owner did all the operations of the business personally, the farm expenses would vary considerably. In the Peck case, there was no profit and large expenses. In Mr Lane's case, the expenses are less and the profit is greater.
While Mr Treston agreed that individual lifestyles may require varying incomes to remain viable, the Chief Executive has to ensure that consistent standards are applied in the interests of fairness to the community. In assessing whether the subject met the standards of s.17(2) in respect of whether it was a "farming" business, and in particular, as outlined in s.17(2)(c), whether the business had a "significant and commercial purpose or character", Mr Treston sought direction in Chief Executive, Department of Lands v. KW Whackett 3 March, 1995 (AV93-163/64) to be reported. In that case, the majority decision of the Land Appeal Court determined that in seeking to satisfy s.17(2)(c), Mr Whackett had failed to demonstrate that his business was "significant" or had a "commercial purpose" within the meaning of the Act.
Mr Lane was familiar with the Whackett case and noted its dissimilarity with his property in that, Mr Whackett had conceded that while he had made genuine efforts over a long period on difficult country to make his grazing business viable, a limited financial return would only be possible even in reasonable seasons. Mr Lane's "farming" business was less dependent upon his grazing of cattle, and is more diversified into tree crops as well.
Mr Treston agreed that the determination whether this case meets the more stringent requirements of s.17(2)(c) was in fact difficult in respect of the subject, particularly for the appellant whose very existence depended upon his farming endeavours. Mr O'Connor confirmed in evidence that Mr Treston believed the subject satisfied the criteria in:
• s.17(2)(a) -
The business involves grazing and orchards.
• s.17(2)(b) -
The business is involved in the gathering of crops and the rearing of animals.
•s.17(2)(d) -
The business is used for the purpose of profit on a continuous or repetitive basis.
It is only in respect of meeting the requirements of s.17(2)(c) that Mr Treston has any doubts about the subject, as he sees the subject as a "modest" operation which, while it may not be the intention of the Act to restrict access for the subject to s.17(2)(c), has to be done in the interests of consistency. Mr Treston agreed that in his opinion the subject was very close to satisfying the criteria of s.17(2), but he felt clearer guidelines should be provided by the Court in such matters. Mr Lane argued that where there was an element of doubt, the benefit should be given to the appellant under the normal principles of law.
Mr Treston had also considered Crawford v. The Valuer-General (1990-91) 13 QLCR 138, and noted that the Land Appeal Court in the Whackett case said at p.7:
"A tendency had developed to include the element of 'scale of operations' in the Walker test as an end in itself in determining whether or not an activity is a 'business' of primary production, to give it a greater level of importance than was intended. "
Mr Treston also noted that the Peck case, is currently under appeal to the Land Appeal Court which should provide further clarification in respect of s.17. Mr Treston conceded that, in his view, the Pecks had a weaker case for consideration than Mr Lane in his case, particularly in respect of Mr Lane's greater diversity of income, but Mr Treston considered that, in view of the other similarities of the area of orchard, the type of tree crops, and the type of machinery, comparison with Peck was a reasonable conclusion. However, having heard the arguments of both parties in respect of comparability between Peck and the subject, I believe the differences outweigh the similarities between the cases.
In respect of the balance of evidence supporting s.17, Mr O'Connor drew attention to the requirements of s.14(b) of the Acts Interpretation Act 1954, which requires that consideration must also be given to the purpose of the relevant legislation. In the matter of the amendments in 1991 to the Valuation of Land Act 1944, it is noted that the intention of the Government in amending s.17 was to "raise the hurdle" for primary producers to qualify for the concessions afforded by the Act, so as to remove the "speculators" who sought gain from other than genuine farming activities. Mr Lane concluded his evidence by seeking clarification as to "Why he is not considered a primary producer?" as he has not changed the operations of his farm over recent years, other than to improve its operations in order to increase its productivity. Mr Lane argued that his business should only be compared with like-type properties.
In the event of the subject not qualifying for concession under s.17, Mr Treston led evidence on an analysis of sales of comparable vacant sites in the vicinity of the subject, which indicated that the subject should be valued as a rural residential site to an extent of $210,000. Mr Lane did not query that amount in respect of possible use for rural residential purposes but contended that the land should be valued only as a primary production site at a value of $81,000. Mr Treston agreed that in the event of the subject being accorded the s.17 concession as a primary production site, then he would not argue with a value of $81,000 for that purpose.
In respect of relativity with comparable primary production sites in the vicinity of the subject, Mr Lane drew attention to a parcel at Lot 25 on Plan W31427, which lies about 2 km south-east of the subject, has an area of about 40.6 ha, with an unimproved value of $57,000. Mr Treston was aware of the property which he knows is run as a dairy farm. Mr Lane queried the relativity between Lot 25 and the subject, but did not pursue the matter, and agreed that $81,000 would be a fair figure for the subject under s.17 concessions.
Mr Treston, in agreeing at a valuation of $81,000 for the subject, noted that this represented $1,700 per ha which was a very conservative estimate of the land. He had estimated that figure on the basis of 60% of the land as stony ridges, and 2.3 ha of trees along the creek beds. He confirmed that he had not inspected the stockyards at the north-west corner of the property in his valuation, but would accept $81,000 as the s.17 value of the land.
Decision:
In the matter of the appropriate valuations to apply to the subject, there is agreement between the parties in respect of the quantum to be applied, depending upon the purpose of use of the land. Both parties agree that if the subject is used for rural residential purposes, the subject has a value of $210,000. If used for primary industry purposes, as defined under s.17(2), the value would be $81,000. I accept these values as appropriate.
This then leads to the assessment of whether the subject satisfies all of the conditions of s.17 of the Act which states:
"Exclusive use for single dwelling house or farming
17.(1).
In making a valuation of the unimproved value of land exclusively used for purposes of a single dwelling house or 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, in case of potential use as aforesaid, that potential use is lawful when the valuation is made.
(2)
'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 of 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 the matter of whether the land is used for the purposes of the business or industry of a type specified (s.17(2)(a)), or as any other business or industry involving an activity of a specified type (s.17(2)(b)), it is agreed by both parties that the subject is being used for the business or purpose of grazing and orcharding, and there is some use for apiculture and forestry. The subject therefore satisfies those criteria.
In the matter of whether the use of the land for "farming" is the dominant use of the land, it is also agreed that the property is used exclusively for the purpose of "farming". The use of the first dwelling, which is the residence of Mr Lane and his family, is incidental to the farming process. The use of the second dwelling, which is the residence of Mr Lane's brother, has not been considered as part of Mr Lane's business activities. The subject therefore satisfies this criterion required of s.17(2).
In the matter of whether the use of the land for the purposes of the farming business undertaken on the subject is engaged in for the purpose of profit on a continuous or repetitive basis (s.17(2)(d)), the evidence supports the appellant's claim that he has continuously and consistently undertaken farming since 1965. The respondent does not challenge that view, and in evidence, Mr Treston confirmed that in his view he believes that Mr Lane is obviously a genuine primary producer, and not a "Queen Street farmer". He acknowledges that Mr Lane has farmed the land in this area for 52 years and in particular on the subject since 1965. Mr Treston responded that he saw Mr Lane's farming business as neither token, illusory or ephemeral in its pursuit. The subject therefore satisfies this criterion.
The key issue therefore is whether the subject has a significant and substantial commercial purpose or character (s.17(2)(c)). In this matter I note that Mr Treston agrees that there is some question as to whether Mr Lane's business does qualify under this criterion and is, in his view, "in the grey area" in which he seeks further clarification from the Court. Both parties are familiar with recent decisions in respect of determinations about "farming" under s.17(2), but have differing opinions about the comparability of some of those cases to the subject.
In the matter of Mr Lane’s request that any element of doubt as to whether the subject meets the test of s.17(2)(c), and should therefore receive a concessional valuation, should be resolved in his favour, I note that the Courts have sought direction in such matters. I note that in respect of the determination of valuations, the High Court found in Commissioner of Succession Duties (SA) v. Executive Trustee and Agency Company of South Australia Limited and others (High Court) 74 CLR (1946-47) 358, where Dixon J. said at p.373:
“I have had the advantage of reading the judgement prepared by Williams J. and agree in it. I should like, however, to add for myself that there is some difference of purpose in valuing property for revenue cases and in compensation cases. In the second the purpose is to ensure that the person to be compensated is given a full money equivalent of his loss, while in the first it is to ascertain what money value is plainly contained in the asset so as to afford a proper measure of liability to tax. While this difference cannot change the test of value, it is not without effect upon a court’s attitude in the application of the test. In a case of compensation doubts are resolved in favour of a more liberal estimate, in a revenue case, of a more conservative estimate.”
In seeking assistance in this matter, I note the findings of the Land Appeal Court in Chief Executive, Department of Lands v. KH Whackett, supra, which is similar to the current case in as much as it was agreed that Mr Whackett had satisfied the requirements of s.17(2)(a)(b)(d). However, in that case, the Court found that Mr Whackett did not satisfy the requirements of a "significant or substantial commercial purpose or character", at that time. However, the Court left some avenue for the matter to be reconsidered at p.18:
"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 inference from this decision is that each case involving s.17 applications needs to be dealt with on a case-by-case basis, certainly in respect of the interpretation of what does constitute a "significant or substantial" business. In this regard I have also considered the direction of the Land Appeal Court in the Whackett case, where the Court found at p.14:
"So for the business or industry to have a commercial purpose there must be some intention or desire on behalf of those engaged in the business or industry to pursue commercial goals rather than merely to be engaged in the enterprise for recreational or some other purpose. "
In Mr Lane's case, I believe it has been demonstrated that Mr Lane engages in his "farming" business for the sole purpose of pursuing commercial goals, and the business is not an enterprise for recreational or some other purpose. It is also noted in the Whackett case at p.16 that:
"(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. "
In the current case, Mr Lane has demonstrated that his business does make a profit, even in current adverse economic conditions, and that "ordinarily" his current farm management practices would ensure the business viability. It would seem to me, bearing in mind the special farm management techniques of Mr Lane, including his higher productivity per hectare methods involving heavy mulching and water retention practices, that he has an ongoing expectation of generating increased reward or a profit.
While I am bound by the majority decision in the Whackett case, I also note the words of the minority decision, where Ambrose J. said at p.7:
"In my view, upon its face, the object of the exception created by s.17(1) to the general rule that land valued under the Act is to be valued for its highest and best use is to benefit the owners of land used for the purpose of farming where that use amounts to a real and bona fide business of farming. The definition in s.17(2) is intended to exclude land used for the purpose of farming from the protection given by s.17(1) where:
(a) that use for farming is not the dominant use made of the land; and
(b) where the 'business of' farming is not a real business but may properly be characterised as nominal, token, illusory or insubstantial. "
It was agreed by the respondent that Mr Lane's business was neither "token, illusory or ephemeral", and would therefore have the characteristics outlined by the learned Judge. Mr Lane argued that the Whackett case was dissimilar to his appeal in respect of the major type of "farming" business, as his land is predominantly orcharding with some grazing, and Mr Whackett's business was entirely grazing. However, the principles established in respect of determining the "substantial and significance" of the commercial activities have a common thread. For this reason I am bound to consider the commercial activities of Mr Lane in the context of that decision.
As outlined by the Whackett case on p.15:
"...for s.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. "
I believe as a result of the extent and continuous nature of Mr Lane's business of "farming", he has demonstrated that he has successfully, over many years, sustained his family only by the income from the subject. He has, in my view, shown the characteristics which the Whackett case determined were essential to qualify as a "farmer" within the Act.
In seeking direction from other cases of like manner to the subject, I have also examined Peck supra, and am aware that an appeal is currently before the Land Appeal Court.
In the Peck case the Land Court accepted that the property had been purchased as a primary production unit, and was being continuously developed under a structured planning process that involved “substantial sums of money on plant and equipment”. The Pecks also sought to diversify their crops in order to avoid overdependence on any one product. However, in spite of their efforts, the property had failed, over a period of years, to show a financial return on the enterprise, and usually ran at a loss, with productivity each year falling far short of the estimated potential yields. The Court also found at p.22:
“Although the size of the area under cultivation is not itself determinative, it is a factor in ascertaining the potential of an enterprise to have a substantial and significant commercial purpose or character.”
In Mr Lane’s case, I suggest the differences with the Peck case are quite significant. The planning of the enterprise, and the types of crop and the areas under tree planting have some similarity. However, the farm management practices, the potential to expand, marketing and distribution approaches, and the financial outputs from the two properties are quite dissimilar. Mr Lane has developed the closer planting of his trees which has resulted in greater productivity per hectare, and he clearly has the potential to expand his tree planting considerably. From the evidence, Mr Lane’s marketing of his products has already been recognised by Mr Peck who has sought to learn from Mr Lane’s experience. Mr Lane also regularly makes an income solely from the property. On balance, the dissimilarities between the Peck case and the subject far outweigh the similarities, and the decision as yet to be handed down from the Land Appeal Court should not impact this case.
In the matter of whether the actual income received from the "farming" business reflects a level which can be considered as "significant and substantial", I seek further guidance from AR Thomason v. Chief Executive, Department of Lands 3 March (AV93-103) LAC, to be reported, at p.18, which supported the view of Whackett p.15 above.
The Thomason decision went on to say at p.19:
"It is the use of the land for the relevant purposes which is important, rather than the identity of the person or persons using it. "
This statement leads us to an examination of the actual outcomes being achieved by the process, rather than focussing on whether the process is undertaken by a usual, or accepted, method of operation. In Mr Lane's case, I suggest that his farm management practices have a certain originality, but that the results being achieved suggest that they are effective. As a result of his personal involvement in all aspects of his business, he has minimised his overheads and maximised his returns, albeit it requiring considerable personal effort which, by his own admission, Mr Lane notes that he does not include his wages as an outgoing in his financial return from the business.
The view is held by Mr Lane, that in primary production, it is not the normal course of events for farmers to charge out their time engaged in the activity of farming. The literature in the matter of primary industry activity is likely to support the view that "farming" requires a dedication to the land which is often not replicated in other forms of activity. It would be a fair statement that Australian farmers see their livelihood as a way of living, and not just a job to which effort must be given for a normal financial profit from the business. Few farmers charge out their time as do other workers, when they operate a family business. The average hourly rate for income derived from farming activities is likely to be low by any standard in Australian society. It would not, for interest, compare favourably with the hourly rate for, say, those of the building industry, or manufacturing sector.
Philosophically if we are to consider the rules of income generation for the purpose of primary production, then we need to understand that some of the normal principles of business operations are often different. That is to say that the hours worked, the net income received, and the financial benefits obtained from a primary production, or "farming", operation, often include standards which are peculiar to farming activities. That is why many farmers work their land.
If then under s.17(2) of the Act we seek to determine eligibility in terms of income received, we need to challenge the normal rules which dictate that personal effort must be charged as an outgoing for the business. Farmers do not work that way.
Turning now to Mr Lane's case, we have his statement that his operating profit for the year 1996 was $12,686, and he has estimated he will make more in succeeding years. To a farmer, I suggest such a return represents that he is succeeding in his enterprise and is improving his farm. The fact that this is being achieved in other than favourable economic conditions strengthens that view.
In further considering the significance and substantial commercial purpose or character, I am drawn also to GT & BG Taylor v. Chief Executive, Department of Lands (1993) 14 QLCR 477, where it was said at p.489 that:
"Each of the words used in the phrase 'significant and substantial commercial purpose or character’ are capable of a number of meanings as a perusal of the Shorter Oxford Dictionary will show, but in combination they appear to me to require a trading or business activity of important or considerable size. "
Any understanding of the words "important" or "considerable" again are open to interpretation, but should, in my view, relate directly to the type of industry in which the Act is referring. As we are seeking to determine whether the subject meets the definition of "farming", then I suggest "importance" should be seen in the context of that purpose.
In respect of whether Mr Lane can reasonably be expected to expand his "farming" business, I am drawn to his forward planning, albeit it not in a documented business plan, but then few farmers plan that way, for his future expansion of his trees further up the tributary into the old banana area, and along the alluvial flats adjoining Wongawallen Creek.
I have no doubt his farm management practices will allow him to proceed, not limited by the current water licence restrictions. I believe his future farming income will increase. He has already doubled his farm equipment sheds with a larger second shed which provides for his tractor, nut sorting, drying and processing for sales of his products. It is also noted that, in view of Mr Lane's decision not to include any "farming" income from the custard apple trees adjoining the second house, occupied by his brother, in the north-west corner of the subject, he has in fact supplied evidence of only a minimal income, and certainly not a maximum return from the subject at this time.
In the matter of the impact of s.14(b) of the Acts Interpretation Act 1954, I am drawn to the Committee stage of the debate in the Queensland Parliament of 14 November 1991, in respect of the second reading speech by the Minister on the intention of the proposed "Lands Legislation Amendment Bill", and where in respect to a question from the Member for Warrego that "there is a possibility that this clause will destroy the Queensland hobby farmer", the Minister offered the following explanation at p.2952:
"Mr Eaton: The main reason for this clause - and what the member has said about the old method is quite correct - is the result of a court case known as Crawford v. Valuer-General in which the court put a different interpretation on it. This clause was inserted in this amending legislation as a result of that interpretation. This will bring it into line with modern-day procedures."
This intention of the Act was noted in GT & BGTaylor v. Chief Executive, Department of Lands (AV93-389) 14 QLCR 477 at p.489:
"The purpose of this amendment would seem to be to avoid the effect of the decision of the Land Appeal Court in Crawford's case by making more stringent the requirements for land to qualify for valuation under the protective provisions as being used for purposes of farming. "
However, I also note the minority decision in the Whackett case, where Ambrose J. said at p.8:
"It is most unlikely that the legislative intent to be found in s.17 is to value land of the size and carrying capacity of this land so that the owner who has used it for many years to breed and sell cattle by working on it as he does at present for 5 days every fortnight and working the other 9 days as an employee elsewhere will be required to pay greater rates which no doubt will make his farming venture even more marginal than it is at present. Indeed, there is reason to suspect that persons in the position of the owners in this case are of the very class of farming rate-payers which s.17(1) is designed to protect and benefit. If significance or substantiality (under s.17(2)) does connote a relativity to be found by comparison with some standard, the question which must be decided is what is that standard? "
In the subject matter I believe Mr Lane would be such a "farmer" that the legislation sought to protect from escalating market forces that could well lead to his "farm" becoming unviable over time.
In the matter of the value of the land to be applied in the event of the subject satisfying s.17(2) of the Act, I note that the parties agree that $81,000 is a reasonable figure for that purpose.
Summary:
In determining amendments or alterations to the valuation, the onus of proof rests upon the appellants under s.33 of the Valuation of Land Act 1944:
"Any and every valuation, or alteration of the valuation, of any land made, or purporting to be made, under this Act by the chief executive shall be deemed to be correct until proved otherwise upon objection or appeal or until altered or further altered. "
In summarising, I believe that the appellant has successfully demonstrated that the subject satisfies the conditions of s.17, and that the subject qualifies for "farming" purposes under the Act.
Conclusion:
After having considered the whole of the evidence, I am persuaded that the appellant has proved his case. The appeal is allowed, the Chief Executive's valuation is set aside, and the unimproved value of Lot 69 on Plan W311309 is determined at Eighty-one thousand dollars ($81,000).
DR N G DIVETT
MEMBER OF THE LAND COURT
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