Milevskiy v Chief Executive, Department of Lands

[1995] QLC 33

[1995] QLC 33

 

  LAND COURT

BRISBANE

26 May 1995

Re:     Appeal against categorisation -
  Dalrymple Shire Council -
  Land Act 1962
  VC94-362.

Warren A Milevskiy
  v.
  Chief Executive, Department of Lands

D E C I S I O N

(Hearing at Charters Towers)

This is an appeal against the decision of the Chief Executive, Department of Lands, to categorise the land of the appellant as a Category 3 lease for rental purposes.
           Under the Land Regulations 1988, a Category 3 lease is defined as follows:

12A.(1) A lease that may be used, and is used, solely for residential purposes is a category 3 lease.

(2)A lease that would otherwise be a category 1 lease or a category 2 lease is a category 3 lease if -

(a)it is located close to a city, township or closer settled area; and

(b)a dwelling house is, or under the lease, could be, erected on it; and

(c)its market value would be based on its value as land able to be used for residential purposes.

(3)  A special lease for grazing purposes is a category 3 lease if -

(a)a dwelling house is, or under the lease could be, erected on the land; and

(b)the lease is not otherwise a category 1 lease.

The appellant contends that the lease should be placed in Category 1 which leases must satisfy the following criteria:

11.(1) A lease is a category 1 lease if its primary use may be, and is, grazing or broadhectare agriculture.

(2) A lease for grazing purposes over a State Forest or a reserve is a        category 1 lease.

The subject lease is described as Grazing Homestead Perpetual Lease 11/761, Lot 201 on Plan DV579, parish Charters Towers, containing an area of about 166 hectares.  The land is situated about 23 kms north of Charters Towers with access by 20kms of bitumen road and the balance by formed earth and gravel road.  The lot is finger-shaped, bounded by the Burdekin River on the east and an anabranch of the river on the west.  Access to Charters Towers can be cut by the anabranch for several weeks in times of flood.
           Mr Michael McDougall, registered valuer in the Department of Lands, described the lot as comprising -

"... a narrow wedge of land between the Burdekin River and its anabranch described as the tail of a rocky basalt wall, running to easy sloping moreton bay ash and gum flats."

The land is zoned "Rural A" under the Shire Town Plan under which zoning the construction of a dwelling house is an as-of-right usage.  There is also no restriction on the construction of a dwelling house on the land under the terms and conditions of the lease. 
           The appellant bought the land in 1984 and took up residence in 1986 in a shed in which he continues to reside.  Other structural improvements include a set of cattle yards.  About 40 hectares of the area has been sown to improved pastures.  He commenced the grazing usage with 13 breeder cattle and one bull and over the years has allowed the herd to built up to about 90 head which, at present, are all away on agistment due to drought.  In the financial year 1993-94, some 24 head were sold to butchers and through agents returning a gross sum of about $12,000.  For the previous financial year, less than 12 head were sold.  Mr Milevskiy said that the lot is the only land owned by him.  He is a builder by trade but describes himself as a grazier and said that he would be prepared to pay $40,200 for the land for that purpose.  That sum is the sum applied by Mr McDougall for rental purposes and it is based on the opinion that the highest and best use of the land is for rural residential living; that is to say, that the dominant value in the land is in the residential/site usage of the land.
           Mr McDougall gave the land a carrying capacity in an average season of around 12 head of stock, or 1 beast to 13 hectares which appears to be consistent with the carrying capacity he has applied to large scale grazing lands in the district which have come before the Court at this sittings.  In his experience, rural homesites are quite often purchased and used for hobby farms or agriculture in conjunction with the residential usage.  This, of course, is part of the attraction of such sites in the marketplace.  Inherent in his reasoning is that if the subject lot were put on the market, the hypothetical prudent purchaser would see the land as best suited for rural residential living and would pay a price geared to that market, taking into account features which may detract from that value such as access and the provision of services, etc.
           In resolving the appropriate category, a third category should be defined.  A Category 2 (Regulation 12) lease is defined as one that is not a category 1 or a category 3 lease but that may be used, and is used for intensive farming or primary production.  Mr McDougall found that the appropriate category for the subject lease is Category 3 because it is a lease of land which -

(a)is located close to a city or township or closer settled area;

(b)may have a dwelling constructed thereon;

(c)if sold, its market value would be based on its value as land able to be used for residential purposes (paragraph (2)).

In moving back from this category to Category 2 leases which speaks of leases "used for intensive farming or primary production", it is noted that the word "farming" is to have the meaning given to it under s.17 of the Valuation of Land Act 1944. In the context of the usage made of the subject land, s.17 would require that the "business or industry of grazing" conducted on the subject land represent "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 and repetitive basis." (s.17(2)).

These provisions were recently considered by the Land Appeal Court in Chief Executive, Department of Lands v. Whackett (AV93-163, AV93-164) 3 March 1995.
Whilst a consideration of the visual and spacious aspects of the use made of the subject land may lead to a conclusion that the dominant use of the land is for farming (grazing) purposes, the economic aspects of the use in terms of the Land Appeal Court decision is critical in the overall assessment.            In that particular case, a business of grazing a herd of 70 mixed cattle on a property with an average gross return of about $5,000 per annum was held to be not sufficient to qualify as a business possessing substantiality and viability.  In Taylor v. Chief Executive, Department of Lands (1993) 14 QLCR 477 which decision was affirmed by the Land Appeal Court in Whackett, the owner in the relevant period was receiving a gross annual income of about $11,760 from the agistment of horses.  At the date of valuation, the business was showing a loss but the owner expected "to show a modest profit (say $10,000 per annum) within a year or so".  The Court held that the farming activity could only be described as modest at that stage and could not be said to have a significant and substantial commercial purpose or character.
           When these examples and reasoning are tested against the facts of the subject case, I have no difficulty in concluding that the business of grazing conducted on the subject land by the appellant does not have a significant and substantial commercial purpose or character.  It follows that the land cannot be categorised as a Category 2 lease.  Having so concluded I find that it would be completely anomalous to include the subject lease within Category 1 which clearly is intended to cover leases the primary use of which may be and is "broadhectare" grazing and "broadhectare" agriculture as distinct from the use of the words "intensive farming or primary production" as used in Regulation 12.  Neither expression in my opinion could be used to describe the activity conducted on the subject land.  The appeal must therefore be dismissed.
           Accordingly, the appeal is dismissed and the determination of the Chief Executive is affirmed.

(DM White)           
  President of the Land Court