Major v Chief Executive, Department of Natural Resources

[1999] QLC 39

[1999] QLC 39

 

LAND COURT

BRISBANE

30 APRIL 1999

Re:     AV98-457 –

An Appeal against an Unimproved Valuation –
Valuation of Land Act 1944 –
  Shire of Inglewood

Lloyd R Major

v.

Chief Executive, Department of Natural Resources

(Hearing at Inglewood)

D E C I S I O N

The chief executive's unimproved valuation of land situated with frontage to Gledson Road, off Millmerran-Inglewood Road, about 4 km from Inglewood, described as Lot 4, RP 156020, Parish of Inglewood, County of Clive, containing 61.7782 ha, was $50,000 as at 1 October 1997. 
           The owner has appealed against that valuation contending in the Notice of Appeal for a valuation of $10,000. 
Mr WG Major (who will be referred to as Mr Major), the father of the appellant, appeared on his son's behalf and gave evidence in support of the appeal. It was Mr Major's primary submission that the use of the land had not changed since the previous valuation and the land should continue to be valued pursuant to s.17(1) of the Valuation of Land Act, as land used for purposes of farming (grazing).  Although the basis of the previous valuation is not relevant, the subject land had previously been owned in amalgamation with adjoining land (Lot 90 MH 63 – 43.122 ha).  That adjoining land had been sold to Mr and Mrs Lund and its valuation as at 1 October 1997 is also subject of an appeal (AV98-461 – PD and AJ Lund) the decision in which is also delivered today.

The evidence in both this and the Lund appeal is that the owner of another adjoining block, a Mr Powell, who is recognised by the chief executive as using his land in conjunction with other lands, for purposes of farming, had run cattle on agistment on the appellant's total aggregation, before the sale of part of the aggregation to the Lunds.  Subsequent to that sale the Lunds "leased" (by way of a gentleman's agreement) the subject land for $100 per month.  The Lunds' block is subject to flooding and can be totally inundated under extreme conditions.  The overall evidence is that the Lunds rented the subject land to have high flood-free ground as well as to enhance their grazing activities.  Mr Powell now has an arrangement with the Lunds to agist cattle on their land, also for $100 per month.  As it happens, the Powell cattle are permitted by the Lunds to graze both their land and the subject land.  Mr Powell has not since the sale of the land to the Lunds, had any direct arrangement with the appellant.
           Mr Major had also represented the Lunds in their appeal.  He had submitted that they had purchased their land purely for purposes of farming and were using it for such purposes in conjunction with this subject land.  He saw the flooding disability of the Lund land as deleteriously affecting its value as a rural homesite.  He agreed in this matter that the subject land was superior to the Lund land, if considered for pure residential use, because of the flood-free area, but then inferior for farming purposes.
           In his opinion the fair unimproved value of the subject land for purely residential purposes was $15,000.
           The chief executive's valuation had been made by Mr MW Malone, registered valuer employed by the Department of Natural Resources.  He described the land as "an elevated easy sloping sandy forest ridge running down onto the southern frontage of Canning Creek" (with good waterholes) …"good rural and creek views" … "power and telephone are available to the site".  Gledson Road is of earth and gravel construction off the bitumen sealed Inglewood-Millmerran Road.
           Mr Malone said the land was vacant, used for grazing cattle.  He had not seen any cattle on the land at the time of an inspection after the relevant period.  He had not been made aware of any agistment or letting arrangements with the neighbours.
           In Mr Malone's opinion, the highest and best use of the land was as a rural homesite and he had valued it on that basis, relying primarily on the sale of the adjoining land to Mr and Mrs Lund.  Brief details of that sale are repeated in this matter as follows:

Lot 90 MH 63, 43.12 ha, sold by the appellant on 27 August 1996 for $65,000, analysed to show an unimproved value of $46,000, applied value (as a rural homesite) $45,000, considered overall inferior to the subject land as a rural homesite.

Supporting evidence was obtained from a second sale, brief details of which are:

Lot 161 BNT 1334, 84 ha, situated Cunningham Highway north of Coolmunda Dam, 15 km east of Inglewood, sold March 1996 for $35,000 – analysed to show an unimproved value of $23,838 – applied valuation $23,500.  The land was described as easy sloping forest regrowth country with fair rural views.  Mr Malone said the land had no view of the waters of Coolmunda Dam.  In his opinion it was significantly inferior as a rural homesite in comparison with the subject land because of its distance from Inglewood and inferior local environment and views.

Mr Major challenged the degree of inferiority of the second sale in comparison with the subject land, as indicated by the applied values.  In his opinion, distance from Inglewood was a factor to be considered but not to the degree suggested.  He felt that in its unimproved state the subject land would not have been regarded as having good views.

Valuation Considerations
           Use for Purposes of Farming
Section 17(2) of the Valuation of Land Act 1944 defines "farming: as meaning:

"(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."

It is accepted that the subject land is used for "the business or industry of grazing".  The relevant question in this matter, is – by whom?  Although it is not clear on the evidence whether the appellant was running any cattle of his own on the land during the period relevant to the valuation, it is known that the neighbours, Mr and Mrs Lund, had negotiated an agreement with the appellant at a rental of $100 per month, which permitted them to graze cattle, and if necessary, horses, on the subject land.

As it happened, some of the cattle which were grazing the land during the relevant period were owned by another neighbour, Mr Powell, who was engaged in the business or industry of grazing on an aggregation of properties and to the degree that his operations had a significant and substantial purpose or character and were engaged in for the purpose of profit on a continuous basis.  However, the use of the subject land by his cattle was not the result of any existing agreement between him and the appellant.  He had an agistment agreement with the Lunds which required them to provide grazing for, it appears, up to 25 head of his herd.  The agistment fee was, coincidentally or otherwise, $100 per month, the rental which the Lunds paid to the appellant for the use of his land for grazing purposes.  In other words, at no direct monetary cost to themselves, as a result of the agistment fee, the Lunds had obtained the grazing rights to the additional area of 61.7 ha which was contained in the subject land.  To achieve that result they were obliged to provide accommodation for the Powell cattle, but where those cattle were accommodated, was their responsibility.

It seems to me that it was the ownership of their own land which allowed them the opportunity to receive the fee for agisting Powell's cattle.  Although there was some dispute as to the number of cattle which could safely be carried on the Lund land, the carrying capacity history of the land in its developed condition, based on Mr Major's knowledge, indicated that at least under average seasons, most of Mr Powell's agisted cattle could have been accommodated on the Lund land, in the absence of the Lunds' own animals.

It is my view that in this case the use of the appellant's land for the grazing of some or possibly on occasions even all of the Powell cattle, does not constitute use for purposes of Mr Powell's farming activities. Instead the appellants' land is used by the Lunds for purposes of their business activities which include the business of agisting Mr Powell's cattle. It was found in the Lund appeal that their business activities did not meet the "significant and substantial commercial purpose" test in the s.17(2) definition of "farming" paragraph (c). However, because there was a direct link between the Lunds and Mr Powell, through the agistment agreement, it was found that the Lund land was used by Mr Powell for purposes of farming and should be valued accordingly.

Rural Homesite

The evidence of Mr Major was that his son, the appellant, had purchased both the subject land and the adjoining land in 1992, for $90,000.  Apparently the land held in amalgamation had been, subsequent to that purchase, valued on some concessional basis.  The appellant had decided, some time after his purchase, to dispose of one of the blocks to assist in reduction of the mortgage debt but was not concerned as to which block sold.  Both blocks had been listed for sale at $70,000.  There had been few inquiries although apparently some interest could have been generated in the subject land had he been prepared to reduce the asking price substantially.  The Lunds' interest had been generated purely through their need to accommodate brood mares and progeny together with some cattle.  They had the choice of either block, both at the same price, and chose the block northerly of the creek which was smaller in area (43.12 ha) but with superior potential for their grazing requirements.

There have been a number of appeals in the Inglewood Shire against the valuations applied to lands by the chief executive generally categorised as "rural homesites".  Mr Major has acted as agent for the majority of the appellants.  The basis for the chief executive's valuations throughout the Shire has been obtained from several sales, including, where relevant, those adopted as the primary basis in this matter.  It  has been observed that features such as location relative to the amenities of a town (Inglewood or Texas); particular views, such as views available over the waters of Coolmunda Dam; the perceived cost of connection of electricity to preferred homesites; have influenced the market value of rural sites.  However there has also been perceived that rural sites with potential for more intensive use for rural orientated activities of a "farming" nature (albeit activities which have not been shown to have a significant and substantial commercial purpose), in association with residential use, are more valuable than those with potential limited to predominantly residential orientated activities.

The "rural orientated activity use potential" was one feature which attracted the Lunds to their land.  It seems probable that proximity to Inglewood was another attractive feature to the Lunds who live and work in the town where they also have other interests associated with their horse breeding and training activities.  The fact that the Lund block is affected by flooding would deleteriously affect the value of that land, limiting the area on which a dwelling might be constructed and even then the provision of an elevated building platform might be necessary to recognise the potential effects of a major flood.  Had the Lund land been valued as having highest and best use as a rural homesite, including the feature of its development potential for fairly intensive use for rural orientated activities of a farming nature, then I would have accepted Mr Malone's valuation of $45,000 based on the actual sale of that land.

It is accepted by all parties in this matter that the "pure" residential usage potential of the subject land is superior to that of the Lund land, whilst the potential for rural orientated activities of a farming nature is less intensive.  Although larger in area, the subject land is of inferior quality country overall.  For example, it was Mr Malone's opinion which has been accepted, that the "farming" value of the Lund land was $13,000 but had the subject land been valued on that same basis, then its valuation would be $11,300.

While I am persuaded that the best "site value" evidence for the subject land is to be derived from the Lund purchase, the marketing history of both blocks indicates to me that there are considerations other than the pure residential use superiority of the subject land, which need to be considered.  On that basis I see no reason to differentiate between the two blocks, once all positive and negative features are weighed.

It is difficult to obtain any assistance from the second sale used by Mr Malone, except to reinforce the perception that the site valuation appealed against may be too high.

Finding
I find that the land is not used for purposes of farming as defined in s.17(2) of the Act.
           The unimproved site value of the land should be equivalent to that which was shown by the analysis of the sale of the adjoining land to Mr and Mrs Lund.
           The appeal is allowed, the valuation of the chief executive set aside and the unimproved value of the land determined in the amount of Forty-five Thousand Dollars ($45,000).

RE WENCK
MEMBER OF THE LAND COURT