Lyon & Michael v Chief Executive, Department of Natural Resources
[1997] QLC 75
•30 May 1997
|
BRISBANE
30 MAY 1997
Re: Appeal against Valuation
Valuation of Land Act 1944 -
Valuation Roll No: 1841/50000
Local Government: Pittsworth (V96-542).
Kenneth W Lyon and Ann P Michael
v.
Chief Executive, Department of Natural Resources
(Hearing at Toowoomba)
D E C I S I O N
Background:
Appeal V96-542 relates to a property described as Lot 2 on RP 867529, situated on the eastern side of Beauaraba Road about 6 kms south of the small township of Biddeston and approximately 31 kms west of Toowoomba. The key issues relate to the comparison of sales of comparable land, and the use of the land for farming purposes. The subject is situated on the northern rim of the Linthorpe Valley, which is a broad alluvial depression within the basalt uplands of the eastern Darling Downs. The lot has an area of 41.88 ha, and is zoned “Rural B” under the Planning Scheme of the Shire of Pittsworth, of 3 December, 1993, and effective at the date of valuation 1 January, 1995.
Access to the subject is via Beauaraba Road which is gravel formed past the subject, and provides all weather access to the property. Access to Biddeston and Toowoomba is via about 3 kms of formed gravel and thence bitumen sealed roads. Electricity, telephone and mail delivery services are available to the subject.
Approximately 25 ha of the subject in it’s north-eastern parts comprise a high rocky hill of shallow red to brown basalt soils, timbered with silver leaved ironbark, mountain coolabah and wilga. This area provides expansive views across the Linthorpe Valley to the south and west. The remaining 16.88 ha has an easy to moderate slope to the south-west, and comprises mainly red to brown clay soil eucalypt woodlands with areas of exposed gravel and stone. Most of the area has been cleared for cultivation and is contoured.
On 31 October, 1995 the Chief Executive, Department of Natural Resources issued a valuation to $52,500 at 1 January, 1995. The appellants objected that figure and on 3 September, 1996, the Chief Executive disallowed the objection and confirmed the valuation at $52,500. The appellants subsequently have appealed to the Court claiming that the Chief Executive has failed to recognise that the subject is used for farming purposes under s.17(1) of the Valuation of Land Act, and the correct valuation should more properly be $20,000. This is now the subject of this appeal.
Ms Ann P Michael appeared and provided evidence for the appellants. Mr B M Tannock, Senior Valuer, appeared for the respondent, calling evidence from Mr Mark C Farrington, the Departmental Valuer responsible for determining the valuation.
Evidence:
Ms Michael provided evidence that the appellants have owned the land since 1989 when they purchased Lot 104 on Plan A 342817 with a total area of 89.7 ha. They have had a continuous history of primary production on the subject since that time, initially as a dairy farm and subsequently as a mixed farming enterprise. Initially they raised vealer calves, agisted and fattened cattle and developed a core of commercial Murray Grey breeders. They also commenced a small pony stud of Australian and Welsh ponies, maintaining the livestock by providing fodder and cereal crops for food.
In September 1995, following the subdivision of Lot 104 into two parcels, the appellants relocated to Lot 2, bringing with them approximately 30 head of agisted cattle, 12 head of their own cattle, and 8 horses and ponies. Cultivation of crops for feed for the livestock was also maintained. During the period of 13 September, 1991 to 2 March, 1992, and again in 11 August, 1994 to 1 July, 1996, the Pittsworth Shire was drought declared, and the subject suffered serious disadvantage which forced the appellants to reassess their farming initiative. As a consequence greater emphasis was shifted to the agistment of other peoples cattle, and they sold their own stock. Silage pits for fodder storage were installed.
Evidence was given that about this time the appellants decided to shift their farming emphasis on grazing to the cultivation of an olive grove plantation. This agricultural enterprise they believe will optimise the potential use of the land, bearing in mind the climatic and economic conditions. After seeking grower advice from “Olives Australia” the appellants have entered a contract on the 30 September, 1996 to purchase 300 olive trees (3 varieties), taking delivery of the initial trees with a payment of $300 on 30 September, 1996.
Further payments are due:
May/June 1997 - $350
October/November 1997 - $350
April/May 1998 - $350
Total contract equals $1,350
The contract specifies a total of 300 trees including 3 varieties, all in 100 mm pots:
I.100 Manzanillo
II.100 Mission
III.100 Hardy’s MammothThe purchase price comprises $1 for each tree plus a nursery service fee for each olive tree at $3.50 each.
Prior to the planting program for the trees, which commenced in the first week of May 1997, the appellants prepared the site by bulldozer ripping, fertilising, and fencing, and installed an irrigation system, with the physical work on the site commencing January 1997. Costs of improvements for the financial year 1996/97 were supplied at:
I.Dams $2,300
II.Bore $7,324 (Mill and installation - Licence No. G94172)
III.Tanks $3,660 (68,000 litres)
IV.Pump $ 700
V.Yards $3,638
VI.Fencing $1,000
VII.Water/Irrigation $1,000
VIII.Site Preparation $ 880 (Bulldozer and fertilisers)
IX.Trees $ 450 (100 trees planted)
$ 200 (200 still growing at the nursery)
Total cost equals - $21,152
The appellants gave evidence that projected financial returns were supplied to them in a document titled “Financial Assumptions for an Irrigated Olive Orchard”, supplied by Olives Australia which projected the likely costs and returns from a planting of 250 olive trees with dual purpose Manzanillo variety for pickling and olive production. The predictions estimated that a gross loss of the order of $3,845 for the initial year may be expected, moving to a break even point about the fourth year and gradually rising to an annual profit of $21,695 over 10 years. The appellants claim that their actual costs approximately equate to the projection plan provided. The 250 trees were estimated to occupy 1 ha at spacings of 8 metres by 5 metres.
Based upon these figures gross profits for 2, 3 and 4 ha olive groves were projected over a 10 year period to accumulate to:
I.$43,390 (for 2 ha)
II.$65,085 (3 ha)
III.$86,780 (4 ha)
The appellants provided no evidence of any planning for expansion of their initial contract for 300 trees, although noting the potential to expand.
In respect of the actual income and expenditure by the appellants in the matter of the grazing of cattle and horses, the following was provided for the total period between September 1995 to 15 April, 1997:
Income:
I.Profit on livestock trading (3 ponies) = $2,050.00
II.Interest received = $ 24.42
III.Other revenue (agistment fees) = $3,244.58
IV.Excavation income (on neighbour’s properties) = $1,065.00
Total income = $6,384.00
Expenditure:
Fuel and oil, horse expenses, insurance, motor vehicle costs, repairs and maintenance, sundry expenses, tractor repairs, veterinary expenses.
Total = $3,853.05
Net profit = $2,530.95
It was noted that the income of $1,065 was for excavation work by the appellants on local farms, and is not directly attributed to the farm activity on the subject.
During the period up to May 1997 the agistment of cattle continued with approximately 31 head on the subject. This was then reduced to 13 cattle from May 1997. At the time of shifting to Lot 2 (the subject) in September 1995 there were approximately 31 head of cattle on the subject. Mr Farrington noted that at the time of his physical inspection of the subject in August of 1995, as part of considering the objection, he counted 23 agisted cattle, plus 12 of the appellants own cattle, plus 8 horses and ponies in addition to noting some cultivation.
In his evidence Mr Farrington noted that he considered the highest and best use of the subject was for rural homestead purposes, and on this basis he compared the subject with the following comparable sales:
I.Sale 1 - (O’Maras Road, Mount Wyangapinni - Lot 14 on Plan A 34236). This is a 64.55 ha sale, which is zoned “Rural B”, and is situated about 13 kms north of Pittsworth and 45 kms south-west of Toowoomba. Access to the sale is dry weather only and is via 2.5 kms of earth/gravel track and thence by bitumen sealed road. The land has approximately 15 ha of cleared easy sloping forest land along the western boundary, the balance being rough rocky ridges heavily timbered with mixed forest and softwood scrub. Electricity and telephone services are available. The sale is larger than the subject, is not as well situated, has inferior access and is overall inferior quality land. The sale is considered overall to be slightly inferior to the subject. The sale sold in May 1994 for $90,000, which after allowing for improvements of $37,725 provided an analysed unimproved value of $52,275 and an applied value of $50,000.
II.Sale 2 - (Biddeston-Linthorpe Road, Biddeston - Lot 1 on RP 161517). This is a 31.83 ha sale, which is zoned “Rural A”, and is situated about 3.5 kms south-west from Biddeston and 29 kms west of Toowoomba via bitumen roads. The land slopes easily from north to a gully near the southern boundary. Two-thirds of the area is cultivated, and the balance has a broken watercourse frontage. Soils are black/brown clays, and there is a limited outlook. Electricity, telephone and mail services are available. The sale is smaller than the subject, with inferior views, but is better situated and is better quality land. Overall the sale is superior to the subject. The sale sold in June 1994 for $93,000, which after allowing for improvements of $26,500 provided an analysed unimproved value of $66,500, and an applied value of $59,000.
III.Sale 3 - (Gietzels Road, Aubigny - Lot 2 on RP 845692). This is a 32.08 ha sale which is zoned “Rural A”, and is situated about 7 kms north-west of Biddeston and 32 kms west of Toowoomba via 2.5 kms of gravel road and thence bitumen. The sale is well elevated with rural views to the west. The entire area is cleared, and is easy sloping red/brown stony basalt soil with eucalypt woodlands. Electricity, telephone and mail services are available. The sale is smaller than the subject, is similarly situated and serviced, and comprises superior country type. Overall the sale is considered superior. The sale sold in January 1995 for $70,000, which after allowing for improvements of $9,800 provided an analysed unimproved value of $60,200 and an applied value of $59,000.From his inspection of the subject, Mr Farrington concluded that the grazing of cattle on the rangelands of the subject, because of it’s limited size, could not be assessed as meeting the definition of “significant and substantial” as noted in s.17(2)(c) of the Valuation of Land Act, and as interpreted by the Courts. For these reasons he concluded that the highest and best use of the subject was as a rural homesite, and not for farming purposes under the Act.
In the end there is no difference between the parties in respect of the quantum of the valuations, only the method of valuation is in dispute. Mr Farrington agrees that if the subject satisfied the requirements of s.17(2) then it would have an unimproved value of $20,000. However he contends that the “dominant” use of the subject is for rural residential purposes, and it does not have a “significant and substantial commercial purpose or character” as a farming unit.
Decision:
In the matter of the comparison of comparable sales I note that the parties are in agreement that, as a rural homesite, the sales evidence supports the valuation of the Chief Executive at $52,500. In the event that the subject satisfies the requirements of s.17(2) of the Act, both parties agree that a value of $20,000 would be appropriate. On the evidence supplied I accept those valuations.
This then leads to the matter of understanding s.17 of the Act. The purpose of s.17 is to provide a concessional valuation where the property is used for a single dwelling house or for farming purposes. The wording of the Act 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) 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 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 respect of s.17(2)(a) and (b) the farming business carried out on the subject satisfies the Act in that it involves grazing or orcharding, and also involves the cultivation of soils and the gathering of crops, and the rearing of livestock. The respondent does not challenge any of those matters.
However there is difference of opinion between the parties in respect of whether the “farming” purposes are the dominant use of the land. The respondent believes that farming activities are incidental to the major use of the land which he claims is for residential purposes. The appellants on the other hand claim that farming is the major use of the land, although the evidence of income from farming purposes would seem to provide an inadequate financial basis for the appellants.
In seeking to understand what is the “dominant” use of the subject I turn also to s.17(2)(d) and note that the appellants have engaged in the grazing of cattle on the subject since September 1995. They now plan to develop an olive grove plantation, which is in the early stages of development. The existence of a profit over this period, while small, indicates that the appellants have been engaged for the purpose of profit, at least on a repetitive basis.
On the evidence therefore there is a history of using the land for farming purposes. The appellants argue that the use of the dwelling upon the subject is incidental to the dominant use of the land which is for farming purposes, rather than as a separate use for rural residential purposes. In seeking to understand the meaning of “dominant” use, I note the findings of AR Thomason v. Chief Executive, Department of Lands (AV93-103) (LAC), 3 March, 1995, to be reported, where the Court found at p.16:
“In our view, the proper approach to be taken when ascertaining the dominant use of land is to consider such matters as the amount of land actually used for any purpose, the nature and extent and intensity of the various uses of the land, the extent to which land is used for activities which are incidental to a common business or industry of a type specified in s.17(2), the extent to which land is used for purposes which are unrelated to each other, and the time and labour and resources spent in using the land for each purpose. When undertaking this exercise, one cannot ignore the conclusion than an objective observer would reach from viewing the land as a whole.”
In respect of the nature, extent and intensity of use of the subject for farming purposes, I note that the appellants have sought initially to graze approximately 30 head of agisted cattle, plus 12 of their own cattle and 8 horses and ponies, and now following an extensive period of drought, have commenced to invest in an olive tree orchard. During this time the use of the dwelling as a related part of the farming activity could reasonably be concluded.
As the Court found in “Thomason” one must consider the conclusion that an objective observer would reach when observing the subject at the date of the valuation at 1 January, 1995. Bearing in mind the grazing of livestock, the cultivation of fodder and cereal crops, and the development of silage pits for fodder storage, I would conclude that the use of the dwelling would be seen as incidental to the use of the land for farming purposes, which would be its dominant use.
This then leads to the major issue in this case which is whether the farming business can be assessed as satisfying s.17(2)(c), and is of “significant and substantial commercial purpose or character”. Before examining this matter I turned to the evidence in respect of the period of time during which the farming business activities are recorded as occurring.
Under s.18(1) the Chief Executive shall fix the date of any valuation, and under s.18(2) all lands in the area shall be valued at the date so fixed. This sets the effective date for consideration of the new valuation.
Under s.52 of the Act, an owner who is dissatisfied with a valuation made by the Chief Executive may, within 60 days after the date of issue of the notice of valuation, appeal to the Court. This establishes the last date at which any matter affecting a valuation may be considered by the Chief Executive, and therefore the last date from which matters of fact may be appealed.
In respect of this case I note that the period of time for consideration of the valuation extends from the date of the valuation at 1 January, 1995 to the date of issue of the valuation at 31 October, 1995. In this regard I seek guidance from KP and RD Weisenberger v. The Valuer-General (1978) 5 QLCR 125 at p.127:
“I agree with the submission of Mr Butler, Counsel for the Valuer-General, that my jurisdiction in so far as circumstances relating to the subject valuation are concerned does not extend in point of time to uses beyond 28 October, 1976 the date of issue of the valuation.”
This was also established by the Land Appeal Court in RG Murray v. Valuer-General (1983) 9 QLCR 35 where the Court found at p.36:
“As is stated in the decision handed down by the learned President, the Land Court, and on appeal the Land Appeal Court, can only consider the primary production activities carried on on the land between the date of valuation (31 March, 1980) and the date of issue of the valuation (12 February, 1981). We are unable to have regard to anything that has occurred since that date.”
In respect therefore of the farming activities on the subject relevant to this appeal, I must confine my attention to those occurring within the relevant period 1 January, 1995 to 31 October, 1995.
From the evidence it is clear that the moves to shift to olive tree cultivation have occurred after 31 October, 1995, with the major costs of site preparation ($21,152), and tree planting ($350), all occurring during the year 1996/97. On this basis the “farming” activities associated with the olive trees are clearly not for consideration for the valuation as at 1 January, 1995.
In respect of the income from the grazing of livestock I note that the total income and expenditure for the period September 1995 to 15 April, 1997 were given at income ($6,384) and expenditure ($3,853). However as part of this income occurred as a result of bulldozing on other properties ($1,065), the real income associated with the subject was really only $5,319, giving an overall profit for the 20 month period of $1,466, most of which occurred after 31 October, 1995. While income received from the property is not the sole test for determining whether the business of farming is of a substantial and significant commercial purpose or character, it is one test which needs to be addressed. In this matter I note in the decision of GT and BG Taylor v. Chief Executive, Department of Lands (1993) 14 QLCR 477, the learned Member said at p.489:
“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.”
In assessing an enterprise it is also important to assess each enterprise separately for as noted by the Land Appeal Court in Chief Executive, Department of Lands v. KW Whackett (AV93-163/164) 3 March, 1995 (to be reported) at p.17:
“There can be no artificial base for determining the scale of any particular activity which will satisfy the criterion in paragraph (c) of the definition.”
The Whackett case examined at length the impact of the amendments to the Act in 1991, which have had the effect of raising the level of tests which must be met in order to qualify under s.17(2) of the Act. For example the Court found in Whackett 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.”
An again in understanding the meaning of “substantial” the Whackett decision found at p.15:
“In the present context, it would seem to connote something of real importance, worth or value and of considerable amount which pertains to the essence of the purpose or character.”
In this regard the respondent has drawn to my attention the findings of EP and WM Stevens v. Chief Executive, Department of Lands (AV94-687), 27 October, 1995, unreported, where the Court found that at the relevant date the property in Roma sustained 32 head of steers during drought conditions, and where the owner had plans to commence a Droughtmaster stud, and had sown and fertilised the area for the purpose of increasing the carrying capacity. In that case the learned Member (now President) found that the purposes did not satisfy s.17(2) of the Act, and rejected the appeal.
A similar finding was also found in MV Van v. Chief Executive, Department of Lands (AV94-297), 31 March, 1995, unreported, where the appellant in Atherton provided improvements and sought to establish a plant nursery as well as the grazing of 42 head of Droughtmaster cattle and also to commence trialing the grazing of Alpacas, and the construction of a shade house for the intention of producing native fruit and nuts. In that case it was noted that similar properties in this area were accorded the concession under s.17(2) of the Act, however as noted in Tobin v. The Valuer-General (1986/87) 11 QLCR 29 at p.32:
“It is a matter of deciding whether or not the activities carried out on the subject land, or the usage to which it was put, conform to the test of the Walker’s case. It is not a matter of making such a decision by way of comparison with, or reference to, the level or nature of the activities carried out on other lands which allegedly have been viewed by the Valuer-General as coming within the terms of the concession.”
In the Atherton case the learned Member was unable to find that the land in that case was exclusively used for the purpose of farming, and dismissed the appeal.
Comparison was also drawn by the respondent with a case in Boonah in LTJ and JE Potter v. Chief Executive, Department of Lands (AV94-194), 10 March, 1995, unreported, where the appellants sought concession under s.17(2). In that case, the appellants, having provided improvements to the land, sought to hold approximately 30 head of “store” cattle for periods of 12 months before reselling. Over a period of some years they had returned profits from those activities of about $4,000 to $14,000 in a year. The learned Member (now President) found that the activities on the subject provided a useful adjunct to income which is derived elsewhere, but did not qualify for exemption under s.17(2) of the Act.
In the context of those findings I find that the subject falls short of a level expected to satisfy the Act. Perhaps when the olive tree orchard has been further developed, the matter could be further considered.
Summary:
In determining amendments or alterations to the valuations, 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.”
I believe the appellants have not demonstrated that the subject is used for “farming” purposes under s.17(2) of the Act, and is indeed to be valued at its highest and best use as a rural homesite. On this basis I accept the agreement of the parties that an appropriate valuation for that purpose is $52,500.
Conclusion:
After having considered the whole of the evidence I am not persuaded that the appellants have proven their case. The appeal is dismissed and the Chief Executive’s valuation at $52,500 is affirmed.
NG DIVETT
MEMBER OF THE LAND COURT
0
0
0