Mahon v Chief Executive, Department of Lands
[1995] QLC 103
•6 September 1995
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BRISBANE
6 SEPTEMBER 1995
In the matter of an appeal against a valuation
Valuation of Land Act 1944
Valuation Roll No.: 115443
Local Government: Moreton (AV95-39)
Denis J Mahon
v.
Chief Executive, Department of Lands
(Hearing at Ipswich)
D E C I S I O N
In this matter the Chief Executive determined a value of $92,000 for the subject land as at 30 June 1993 in accordance with the provisions of the Valuation of Land Act 1944. The appellant does not accept this valuation and, in his appeal, contends for a figure of $77,000.
Mr Denis John Mahon appeared in person and gave evidence on his own behalf, whilst Mr Brian Joseph McDonald, registered valuer employed by the Department of Lands, gave evidence for the Chief Executive. Mr McDonald described the subject land as having an area of 24.22 hectares and being situated approximately 8 kilometres north of the intersection of Pine Mountain Road and the Warrego Highway. Access to the site comprises bitumen sealed road to gravel shoulders of which 4.6 kilometres is along Pine Mountain Road and the remainder along Russells Road. Russells Road is bitumen sealed up to the entrance to the property, then reverts to gravel, running along the western and northern boundaries of the land. Telephone and electricity are connected to the property and a mail service operates in the area. No reticulated water supply or sewerage service is available. I note that the electricity was connected at the expense of the appellant, however, this is not a matter that I can take into account in assessing the unimproved value for the reasons set out in the matter of James A Farrell v. Chief Executive, Department of Lands (decision delivered 6 September 1995).
The land comprises gentle to moderate sloping open forest country, however, falls away steeply to the east. The house is situated at the peak of the slope, offering extensive rural views. The land is zoned "Rural" under the Moreton Shire Council Town Planning Scheme which applied at the relevant date.
The grounds of appeal are as follows:"1.Heavy quarry traffic & quarry operations.
2.Lack of services.
3.Unsealed roads adjoining boundary of property.
4. Air traffic from Amberley Air Force Base.
5. Adjoining properties reflect lower values.
6. It does not properly reflect the use of the land.
7. Property is exposed to severe climatic changes.
8. The land is unable to be subdivided."
In a statement tendered by Mr Mahon, he outlined the absence of a large number of services such as street lighting, footpaths, sewerage, public transport, water reticulation and mentioned the distance from shops and schools. Though he was asked whether a school bus was available during cross-examination, I note that Mr McDonald does not assert that there is. Moreover, Mr McDonald agrees with the appellant with respect to the lack of services. Mr Mahon mentioned that the wheelie bin had to be transported some 300 metres from the house to the front gate, however, this is a relatively minor matter and, in any event, is an outcome of the location of the house in an appropriate position on the highest point of the subject land and away from the road. I will deal with the question of unsealed roads mentioned in the grounds of appeal when dealing with the issue of quarry traffic.
Mr Mahon mentioned that air traffic from Amberley Air Force Base created noise near the subject land and television interference. Whilst there may be some minor differences in the nature of this nuisance on the basic properties referred to later in this decision, I think that this is a matter that could be said to generally impact on properties in the area in one way or another. Similarly, the strength of westerly winds, which have been known to cause damage on the subject land, impacts on a large number of properties in the geographic area in question and would not, as I appreciate the evidence, be a matter that would distinguish the subject property as being particularly disadvantaged.
The ground of appeal stating that the land is unable to be subdivided is not one that I will pursue further in this decision as the evidence shows that this is a feature which applies to all of the basic properties referred to in evidence and Mr McDonald expressly mentioned that subdivision potential was not a matter that should form part of his valuation. I agree with this.
Mr Mahon argued that the subject land ought to be afforded the protection provided by s.17 of the Valuation of Land Act as the land is used for "farming" purposes. He explained that he uses the subject land for cattle grazing and has access to other family land and some long-term agistment, providing him overall with an area of about 210 acres for the enterprise. Whilst, at the moment, the land was carrying 20 head of breeders only due to drought, he said that it could carry about one beast to 4 or 5 acres in normal seasons, that is, 50 or more head. He also said that in good times he had run up to 70 head of cattle. In cross-examination he agreed that gross income in the vicinity of $5,000 to $6,000 could be generated from his use of the subject land and the other lands mentioned.
Tests for the application of the definition of "farming" provided in s.17 of the Act were set out by the majority decision in the Land Appeal Court in Chief Executive, Department of Lands v. KW Whackett (as yet unreported 3 March 1995) where at page 10 the majority judgment said that to satisfy the requirement that the land be "exclusively used ... for purposes of farming" each of the following questions must be answered in the affirmative:
Is the land used for the purposes of:
(a)the business or industry of a type specified (namely, 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 an activity of a type specified (namely, the cultivation of soils, the gathering in of crops or the rearing of livestock)?
2.Does the use of the land for the purposes of that business or industry represent the dominant use of the land?
3.Does the use of the land for the purposes of that business or industry have:
(a)a significant and substantial commercial purpose; or
(b)a significant and substantial commercial character?
4.Is the use of the land for the purposes of that business or industry engaged in for the purpose of profit on:
(a)a continuous basis; or
(b)a repetitive basis?"
I have no difficulty in finding that the land is used for the business of grazing cattle and is so used on a continuous or repetitive basis. My conclusions in these regards rely on the guidance provided in Whackett.
I turn now to the question of whether the business of grazing represents the "dominant use of the land". Guidance is provided in this regard in the decision of the Land Appeal Court in Thomason v. Chief Executive, Department of Lands (as yet unreported 3 March 1995) from which I have taken the following words from page 11:"In our opinion, the expression `dominant use' implies that some other use may be made of at least part of the land. Further, it does not necessarily follow that the other use must be incidental or ancillary to the dominant use before section 17(1) can apply to the land. Uses of land which were distinct from but incidental to the business of primary production (such as dairy farmer's home on the land) did not exclude the operation of section 11(1)(vii) to the land. There would have been no reason to use the expression `dominant use' in section 17(2) to apply only to those cases which previously came within section 11(1)(vii)."
In the subject case, having regard to the evidence that I heard, the question is not one of whether the land is used for the business of farming and some non-farming purpose, but whether the dominant use is residential or farming. In considering this question, which is really one of asking whether living on the land is an incident of carrying on the business there or whether the business is an adjunct to the main purpose of living in a rural environment, I will mention two matters. The first of these is to note that whilst Mr Mahon argued for the application of s.17 to his valuation, all of the basic evidence that he tendered was of rural residential lands and his comparisons with these were clearly on a site basis and not on the basis of productive capacity. Indeed, he said on one occasion that the market did not pay substantially for larger areas of land and said, under cross-examination, "I am aware from looking at property values that 10-acre sites quite often sell for the same value as 60-acre sites."
Considering further the question of "dominant use", I would say that whilst the legislation and the cases generally separate this question from that of whether the business has a significant and substantial commercial purpose or character, in the instant case I see an interplay between these two questions. That is, if there is a "significant and substantial commercial purpose" or character to the business carried out on the land, then the residential use of part of the land would be incidental to the business use. It is the question of whether the business has a significant and substantial commercial purpose or character that poses the greatest difficulty for Mr Mahon. His only evidence-in-chief was quite inadequate to demonstrate satisfaction of this question, most of the information coming from cross-examination from the Chief Executive. On the evidence that I heard, which is set out above, I am of the view that the test is not satisfied. There is certainly a commercial purpose in the grazing of cattle, however this can by no means be described as "significant and substantial". It may be that better evidence from the appellant would produce a different result, however, I venture no opinion about this.
It follows that I find that the subject land is not used exclusively for the purposes of farming, such that s.17 of the Valuation of Land Act is satisfied.
Some distance to the north of the subject land lies the Brisbane River and a sand quarry operation has been established there. Trucks servicing the sand quarry pass the subject land travelling along the gravel road which bounds the subject. Approximately 144 trips past the subject occur each week day, starting at 6 a.m. and finishing at about 3 p.m. These trucks create dust and noise, travelling as close as 300 metres to the house on the subject, (travelling over a grid adds to the noise problem); and create hazardous driving conditions for other road users.
To the south of the subject land there is a quarry operation which continues under "existing fettered use" arrangements. A block of about 36 hectares lies between the subject and the quarry land. The quarry is, however, is within the view of the subject house site and therefore impacts upon the otherwise bucolic landscape, however, the greatest concerns raised by Mr Mahon related to the noise pollution, water pollution and rubbish dumping on that site. Noise is generated by a rock crusher located at the quarry and by the blasting of rock on occasions. Overflow from siltation ponds located on the quarry has occurred, on at least one occasion, running through an otherwise dry creek channel which cuts across the corner of the subject land. It is not clear to me what pollutants might be involved and how this overflow affects the subject land.
It appears that the operators of the quarry have a contract to dispose of CCA treated timber and this is dumped on the quarry land and covered with a small amount of soil. Car bodies have also been dumped there. Mr Mahon is concerned that the CCA treated timber may be burned in the future and that his land could become contaminated. Whilst it may be appropriate for an adjoining landholder to raise concerns about the dumping of CCA treated timber on the quarry lands, I have no cogent evidence indicating how this would impact on the subject land directly except to note that the view of the dump area is unattractive until dumped material is covered with earth. I now turn to the evidence of value.
Mr Mahon relied on values applied by the Chief Executive to a number of parcels in the vicinity of the subject land in support of his contention that a figure of $77,000 ought to be applied to the subject.
Relativity property 1 has an area comparable to the subject at river frontage and has no passing quarry traffic, is of low elevation and was valued by the Chief Executive at $52,000. Mr McDonald explained that this property had apparently been valued as if it had no legal access, however, Mr Mahon explained that an easement did exist. Nevertheless, I find that this would be an unsuitable basis.
Mr Mahon's second relativity property comprised an area of just over 4 hectares, has river frontage and is low lying. Mr McDonald said that this was not an attractive block and suffered from the noise and visual pollution of the nearby sand quarry. This disability also, apparently, applies to Mr Mahon's third relativity property which was valued by the Chief Executive at $85,000. This property has an elevated house site, though perhaps not as high as the subject, and has an area of about 27 hectares, therefore, in this regard, is quite similar to the subject.
Mr Mahon's fourth relativity property comprises an area of about 16 hectares, has reticulated water and a permanent creek and is not impacted either by passing traffic or the visual pollution of the sand quarry. The evidence does not make it clear as to whether the rock quarry is visible from this site, however, Mr McDonald put the view that the relativity between this block and that which he applies to the subject is appropriate.
I will now move to Mr Mahon's relativity property No. 6 which has an applied value of $77,000, has river views and does not suffer from passing quarry traffic. Mr Mahon described it as being similar in nature to the subject, though the subject has the advantage of being closer to a bitumen sealed road. Unfortunately, Mr McDonald was not able to comment on this particular property.
I will come to Mr Mahon's relativity property No. 5 in a moment, but before I do, I will include mention of two other relativity properties raised by Mr McDonald. The first of these was valued at $89,000 and is located abutting the left-hand side of the road which provides access to the subject land. It comprises an area of about 15 hectares, is closer to the rock quarry than is the subject, and was valued by the Chief Executive at $89,000. Mr Mahon informed the Court that permanent ground water is available on this land.
Mr McDonald mentioned another relativity property which adjoins the aforementioned block to the south and is therefore even closer to the rock quarry. This land has an area of about 15 hectares, was valued at $89,000 and, on Mr Mahon's evidence, has permanent ground water and is not as steep in topography as the subject.
In making these various comparisons, Mr Mahon suggested that the presence of permanent ground water was a significant factor that ought to be taken into account. I understand the force of the submission and I have studied the sales evidence provided by Mr McDonald (and which will be discussed further below) and must say that I cannot discern from these sales that any substantial premium was paid for access to water, though this would be a matter that would be considered along with other matters, by the parties to these transactions.
Before turning to the sales evidence tendered by Mr McDonald, I should mention that it is such evidence that will weigh more heavily with me than the relativity properties mentioned above and I must say that in considering these properties overall, I am not convinced that the valuation placed on the subject land by the Chief Executive ought to be disturbed. In saying this, I am mindful that the relativity No. 6 property introduced by Mr Mahon would, on the face of it, appear to suggest that the valuation on the subject is somewhat high, however, it would be unwise of me to be guided solely by this basis in circumstances where the other relativities appear to be appropriate and when Mr McDonald, for the Chief Executive, could not assist by comment on relativity No. 6.
It would be useful if I supported the approach that I intend to take by reference to the Land Appeal Court decision in Fischer v. The Valuer-General (1983) 8 QLCR 44 where the Court said this at p.46:"It is indeed a fundamental principle of valuation that the best basis for assessment of unimproved value is the use of sales of vacant or lightly improved parcels. Whilst maintenance of correct relativity is also of considerable importance for rating or revenue type valuations, we cannot prefer in the circumstances of this case, the use of the principle of relativity to the exclusion of the sales evidence."
Mr McDonald's Sale 1 comprises an area of about 8.5 hectares, sold at $85,000, and was applied by Mr McDonald at $78,000. Mr McDonald says that the smaller land area and the poorer quality on the sale, which has a lot of stone on it, are features which make the sale inferior to the subject. Mr Mahon was aware of this property and, whilst he did not refer to the sale of it, did provide evidence concerning it as basis number 5 on his list of relativity properties. On the issue of size, he said that the block was still large enough to provide a rural lifestyle. He emphasised that it would not be subject to passing quarry traffic, had the advantage of a permanent creek and was not as elevated as the subject. Whilst elevation was seen by Mr McDonald to be an advantage, Mr Mahon was concerned that the higher the elevation the closer one would be to the Air Force planes flying overhead. The sale property also has reticulated water.
Mr McDonald's Sale No. 3 was of an area of 34.8 hectares and indicated to Mr McDonald that size was seen as important in the marketplace. Sale 3 sold for a figure of $125,000 and was applied at $100,000, has reticulated water but no permanent ground water available, and is subject to continuous noise being located directly on the highway. Whilst it would be possible on the sale block to establish a house some distance from the highway, Mr McDonald described the vegetation as being open and therefore would not act as a blanket to noise emanating from the highway. Access into the subject land, along a road which forms a junction at the highway, can be extremely hazardous. Mr Mahon pointed out that the sale block would be close to facilities and public transport would be accessible to it.
Whilst it is quite clear that values are not struck on the basis of a price per hectare, Mr McDonald's interpretation of the sales evidence, which indicates to him that size is a matter of significance in the minds of purchasers, is a conclusion which is supported by the evidence. It is, of course, a difficult matter to isolate one feature from a transaction and to say that a purchaser paid a certain sum for that feature,
and to then consider that aspect in valuing another property.
Mr McDonald's second sale was for a price of $82,500 applied to $64,000 and was with respect to a property of about 5 hectares. The block is of irregular elongated shape with a gravel access road travelling along its long boundary. It would be difficult to construct a house in a location any distance from the road to obtain relief from traffic noise from Pine Mountain Road which is nearby. Mr Mahon said that the land had a parkland setting and had the advantage of a school bus, however, I did not understand him to say that this property was superior to the subject block.
Having regard to all of the basic evidence tendered and the comparisons made, I am satisfied that Mr McDonald's valuation of $92,000 is much closer to the mark than the $77,000 suggested by Mr Mahon. Whilst I think that Mr McDonald has adequately catered for the disabilities associated with the nearby quarries and that many of the other disabilities, such as the aircraft noise and westerly winds, impact as much on the value of the basic properties as they do on the subject, I am left with the impression that in his comparisons he has allowed a little too much for the size of the subject land and has not paid sufficient regard to the fact that permanent water is not available on the land. I will therefore make an adjustment by reducing the valuation to $90,000 to cater for these factors.
The appeal is allowed, the valuation of the Chief Executive is set aside and the value of the subject land is determined in the amount of Ninety Thousand Dollars ($90,000).
RP SCOTT
MEMBER OF THE LAND COURT
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