Mreef Project Company No. 15 Pty Ltd v Department of Natural Resources and Water
[2007] QLC 13
•8 March 2007
LAND COURT OF QUEENSLAND
CITATION: Mreef Project Company No. 15 Pty Ltd v Department of Natural Resources and Water [2006] QLC 0013 PARTIES: Mreef Project Company No. 15 Pty Ltd
(applicant)v. Chief Executive, Department of Natural Resources and Water
(respondent)FILE NO: AV2005/1853 DIVISION: Land Court of Queensland PROCEEDING: Appeal against an annual valuation under the Valuation of Land Act1944. DELIVERED ON: 8 March 2007 DELIVERED AT: Brisbane HEARD AT: Ipswich MEMBER: Mr PA Smith ORDER: The appeal is allowed, the valuation of the Chief Executive set aside and the unimproved value determined at One Million Three Hundred and Fifty Thousand Dollars ($1,350,000) as at 1 October 2004. CATCHWORDS: Valuation - unimproved value - statutory construction - Valuation of Land Act 1944 - s.17 - farming - dominant use - substantial commercial purpose or character - purpose of profit APPEARANCES: Mr M D Ambrose of counsel for the appellant
Mr P Rabaa of counsel for the respondentSOLICITORS: Clarke Kann Lawyers for the appellant
Crown Solicitor, Crown Law, for the respondent
Background
This matter relates to land at Redbank Plains, located on School Road, and described as Lot 2 on RP 13542, Lot 1 on RP 13544, Lot 2 on RP 140937, Lot 71 on S 151854 and Lot 2 on SL 4604, Parish of Bundamba. The subject land has a total area of 91.8424 hectares. The appellant, Mreef Project Company No. 15 Pty Ltd (Mreef), has appealed against the respondent's valuation of the subject land of $10,400,000 as at 1 October 2004. The appellant originally contended for a valuation of $910,000.
The matter was heard by the Land Court at a preliminary conference held on 22 February 2006 before myself. As a result of the preliminary conference, only one issue remains in dispute between the parties. That issue is whether or not the subject land is used for the purpose of farming, resulting in s.17 of the Valuation of Land Act 1944 (the "VLA") applying. The parties have reached agreement that if s.17 of the VLA applies, the appropriate valuation should be $1,350,000, and that if s.17 does not apply, the original valuation of $10,400,000 applies.
The question as to whether or not s.17 of the VLA applies in this matter was not considered by me at the preliminary conference and the parties indicated that they had no objection to my hearing the substantive appeal in this matter.
The appeal was heard in Ipswich over a two-day period. The evidence and the submissions were limited to the point as to whether or not the subject land is used for the purpose of "farming" and accordingly whether s.17 of the VLA applies.
Evidence at the hearing was given on behalf of the appellants by Robert Walter Friedler, the Deputy General Manager of Lone Pine Koala Sanctuary, and Grant Botica, the State Manager of Urban Pacific Limited. Urban Pacific Limited is a wholly owned subsidiary of Macquarie Bank Limited. Mreef is a company owned by the closed end wholesale property equity fund promoted, managed and 20% capitalised by Macquarie Bank Limited.
The respondent relied on evidence by Daniel James O'Connor who is a registered valuer employed by the respondent as a specialist/coordinating valuer.
Each witness provided extensive affidavit evidence to the Court, as well as giving oral evidence. Although each witness was subject to cross-examination, the facts of this matter are clear. Taking into full account the evidence of each witness, I make the following findings with respect to the history, ownership and use of the land insofar as same are relevant with respect to the question of carrying on of farming on the subject land.
History and Use of the Subject Land
On 7 February 2005, the appellant exercised an option and contracted to buy the subject land from Kamori Australia Pty Ltd (Kamori). The sale was completed on 20 March 2005. The contract of sale from Kamori to the appellant contained the following special conditions:-
"7 EASMENT – BORE PUMP
7.1Within a reasonable time prior to the Settlement Date the Buyer shall deliver to the Seller an easement in triplicate (with an assessment plan attached noting the Servient Tenement in a location generally as depicted in the plan in Schedule 1) duly signed by the Buyer in the form contained in Schedule 1 for the supply of irrigation water to the Plantation Land.
7.2On settlement the Seller shall provide the Buyer with the Easement duly signed by the Seller and the Buyer shall lodge the easement for registration in the Land Titles Office immediately following the lodgement of the Buyer's transfer.
The Buyer will cause the easement plan and the Easement to register in the Land Titles Office immediately after registration of the Buyer's transfer.
8ACCESS TO PLANTATION LAND
8.1Within a reasonable time prior to the Settlement Date the Buyer shall deliver to the Seller an easement in triplicate (with an easement plan attached noting the Servient Tenement in a location substantially the same as the location of the temporary internal access road which traverses Lot 116 on CP M3172 as at the Contract Date) duly signed by the Buyer in the form contained in Schedule 2 for the Seller to gain access to the Plantation Land, including but not limited to, with vehicles.
8.2On settlement the Seller shall provide the Buyer with the Easement duly signed by the Seller and the Buyer shall lodge the easement for registration in the Land Titles Office immediately following the lodgement of the Buyer's transfer.
The Buyer will cause the easement plan and the Easement to register in the Land Titles Office immediately after registration of the Buyer's transfer.
9ACCESS LICENCE – HARVESTING OF LEAVES FROM EUCALYPT TREES
9.1On settlement the Buyer grants to the Seller a personal licence to access the Property to maintain existing koala food eucalypt trees ("trees") on the Property and to harvest leaves and branches from those trees.
The term of the licence commences on the Settlement Date and continues whilstever the Buyer is the registered owner of the Property or part thereof. In consideration of the grant of this licence, the Seller will pay to the Buyer the sum of $1.00 per annum (if demanded). For clarity the licence is deemed to be surrendered in respect of the Property of those parts thereof the Buyer is subsequent to the Settlement Date no longer the registered owner.
9.2The Seller must comply with all laws in relation to the maintenance and harvesting of the trees on the Property and must hold all necessary licences, permits and approvals for the maintenance and harvesting of the trees.
9.3In exercising its rights pursuant to this special condition, the Seller does so at is sole risk and indemnifies the Buyer against any claim arising out of or caused or contributed to by the Seller exercising its rights under this special condition. The Seller must before accessing the Property pursuant to this special condition effect and keep current appropriate public liability, workers compensation and property damage insurance as required by the Seller acting reasonably.
9.4The Seller must comply with the reasonable directions of the Buyer in relation to exercising its rights pursuant to this special condition and must not interfere with, obstruct, hinder or delay the Buyer's development of this Property.
9.5During the term of the licence, the Buyer must not harvest the leaves or branches nor remove any trees, save as may be required by the progressive development of the Property pursuant to any bona fide development approval."
Easements with respect to the bore pump and access to the plantation land consistent with the contract terms above were subsequently entered into with the consideration for each easement being the sum of $1.
The appellant is a subsidiary of Macquarie Bank Ltd. Another subsidiary of Macquarie Bank Ltd, Alloca No.4 Pty Ltd, has entered into a joint venture agreement with the appellant for the development of the subject land. The joint venturers propose to subdivide the subject land into a residential housing estate of over 1,000 standard housing allotments together with the normal roads, open space and infrastructure and to progressively develop the housing estate over the next ten years approximately.
Although the joint venturers have issued press statements confirming their intent to develop the land, no residential allotments had, as at the hearing date, yet been created and the subject land remains essentially as it was at the date of purchase by the appellant.
Kamori, the vendor of the subject land in February/March 2005, owns and operates Lone Pine Koala Sanctuary. Lone Pine Koala Sanctuary is a major tourist attraction located at Fig Tree Pocket in Brisbane. Lone Pine Koala Sanctuary was established in 1927 and is the world's largest koala sanctuary. Lone Pine Koala Sanctuary is operated by Kamori with a view to profit, with shareholders of Kamori receiving a distribution of profits by way of dividends. In the last 20 years, Lone Pine Koala Sanctuary has operated at a profit in all but two months.
Kamori currently owns approximately 130 koalas. It can only legally keep and display koalas while it holds a licence under the Nature Conservation Act 1994. As part of its licence, Kamori is required to guarantee access by its koalas to adequate fresh supplies of eucalypt leaf from at least five suitable species. Approximately 1,000 trees are required to provide enough leaf to support the feeding needs of each koala.
Kamori owns four plantations of eucalypt trees, including a plantation at Redbank Plains. Part of the Redbank Plains plantation is on the subject land. Approximately 15% of the subject land is under eucalypt plantation. The remainder of the Redbank Plains plantation is on land which borders the subject land. The easements from the appellant to Kamori referred to in the contract of sale relate to the eucalypt plantation at Redbank Plains, as does the access licence.
The appellant has agreed with Kamori to develop the subject land in such a way as to maximise the amount of time during which the plantation on the subject land can remain viable.
Approximately 12,000 eucalypt trees are planted on that part of the plantation on the subject land. The trees are planted in rows. The total number of eucalypt trees planted by Kamori on all of its land for its Redbank plantation totals between 50,000 and 70,000 covering 12 indigenous species.
Kamori employs two full-time workers, at a cost of over $60,000 per annum, to work across all of the company's plantations. Kamori spends between 50 cents and $2.50 to plant each eucalypt tree.
Kamori has expended a considerable sum on plant and equipment for the Redbank plantation, including two dams at a cost of over $13,000; a bore at a cost of $11,800; water reticulation at a cost of $16,600; a shed at a cost of $13,000; internal roads at a cost of $53,700; tractors and slashers at a cost of over $50,000; other tractors and loaders at a cost of over $85,000; and other like equipment. Kamori has also purchased at considerable cost other equipment including a truck mounted herbicide sprayer at a cost of $94,000 and motor vehicles for use at all of its several plantations. The effective life of such equipment is approximately five years.
Each eucalypt tree has an effective life of approximately 12 years. Kamori harvests 625 kilograms of leaf each week to feed its koalas. Kamori uses special harvesting techniques unique to this form of forestry designed to maximise regrowth of leaf material and to ensure the quality of leaf for the koalas. It is essential that the cut leaf is kept fresh and made available to the koalas before 2.30 p.m. each day.
The supply of eucalypt leaf to koalas for feed is a very specialised business. As Mr Friedler said in his affidavit of 19 May 2006:-
"23.Moggill Koala Hospital approached the Sanctuary to supply sufficient cut eucalypt leaf to feed about 20 to 30 koalas. I offered to supply leaf at a cost of $5000 per month. The Moggill Koala Hospital declined the offer because that price was equal to it[s] own costs of cultivating, harvesting and transporting leaf….
41.It is nearly impossible to buy in sufficient eucalypt leaf from external suppliers because:
(a)the market is too thin, with only limited demand from a limited number of customers
(b)Local laws prevent the harvest of eucalypt leaf in certain local government area (including Ipswich City or Redlands Shire);
(c)Other sources of supply are too far from Fig Tree Pocket, so that cut leaf will arrive in a deteriorated condition and too late to fit our schedules for feeding, resting and displaying koalas
42.Leaf material is occasionally stolen from the Redbank plantation. I suspect the culprits are the operators of other zoological parks who are unable from time to time to source eucalyptus leaf elsewhere."
The 85% of the subject land not subject to the eucalypt plantation was deliberately left uncultivated by Kamori. The amount of plantation required by Kamori is dependent upon the number of koalas it holds and the number of trees currently under cultivation. Further, Kamori has a policy of deliberately leaving uncultivated land around its plantations to act as a buffer in order to minimise dust, chemical overspray, smoke and fire damage to the plantation.
A report in the South-West News contained in the real estate section on page 23 headlined "Growth planned for former plantation" included the following:
"Developer Urban Pacific will transform a former eucalypt plantation at Redbank Plains into a residential community of more than 1100 allotments.
Urban Pacific Queensland state manager Grant Botica said the land was in the heart of a growth corridor identified in the draft SEQ Regional Plan.
'We are delighted with this acquisition as it gives us the opportunity to create a residential community of more than 1100 allotments with extensive parklands and nature corridors,' Mr Botica said.
He said the 108ha development was forecast to achieve more than $150 million in gross sales over 18 stages in the next 10 years."
On 10 May 2006 the South-West News/Springfield News, under the headline "New community christened" contained the following report:
"Construction has started on a $175 million master-planned community at Redbank Plains.
Developer Urban Pacific has started work on Fernbrooke, with a turning of the first sod on Monday morning.
Fernbrooke's Stage One will include $1.4 million being spent on a park at the entrance to establish a semi-rural and family friendly atmosphere.
Ipswich Mayor Paul Pisasale turned the first sod on Monday, starting what will be a master planned community with 1300 homesites.
It will be built on 124ha of land on School Rd, with 40ha allocated for open space, including the rejuvenation of Six Mile Creek.
Urban Pacific state manager Grant Botica said Fernbrooke was the first development to start construction following Ipswich City Council's recent endorsement of the South Redbank Plains draft structure plan."
The development of Fernbrooke referred to in the newspaper articles above includes the subject land in this appeal.
The developer has made an application to the Ipswich City Council for a material change of use for a strip of about seven lots for a display village within Fernbrooke. The evidence is unclear as to whether or not the display village is being located on the subject land or on the balance land of Fernbrooke. In any event, as at the hearing date, no subdivision has occurred with respect to the subject land and Kamori continues to maintain and harvest eucalypt leaves from the plantation on the subject land.
Section 17 of the Valuation of Land Act 1944 (VLA)
As already indicated the key question to be determined in this appeal is whether or not the concession allowed by s.17 of the VLA applies. Section 17 is in the following terms:
"17 Exclusive use for single dwelling house or farming
(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 value because 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) -
farm improvements includes appropriate sheds, other structures, facilities, farm plant and land development for the particular farming business but does not include a dwelling or car accommodation.
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 substantial commercial purpose or character by –
(i)having an average gross annual return, calculated over a 3 year period, of at least $5000; or
(ii)if the business is the establishment and harvesting of native or non-native forests – having an average anticipated gross annual return, calculated over the period from establishment to harvesting, that is usual for the particular species of tree, of at least $5000; or
(iii)if the business is the maintenance and harvesting of native forests - having an average anticipated gross annual return, calculated over the period from the start of maintenance to harvesting of the particular species of tree, of at least $5000; or
(iv)having -
(A)a minimum value of farm improvements or plantings of forest or orchard trees of $50000; and
(B)the appearance of being maintained for farming or expenditure on crops, forest trees, maintenance of farm improvements, livestock or orchard trees; and
(d) is engaged in for the purpose of profit on a continuous or repetitive basis.
…
(3)For subsection (1), land is not exclusively used for purposes of a single dwelling house or farming if -
(a)the land is divided into individual lots; and
(b)there is evidence, including advertising or actual sales, of intention to sell the individual lots."
In the case of Wild v Department of Natural Resources & Mines[1] Land Court Member Dr Divett provided a useful summary of the legislative context of s.17 at paragraphs [50]–[53] as follows:
[1] [2004] QLC 104
" [50]Now the history over recent years in respect of the application of s.17 of the Act is a matter worth reporting in the interests of the appellant. Before 1971 there was no protection of land used for a primary production purpose. In 1971 the Valuation of Land Act 1944 was amended to include the provision under s.11(1)(vii) as it then was, to include concessions for 'farming' purposes. The purpose of those amendments was expressed by the then Minister in the Parliament on 1 December 1971, when introducing the Bill he said 'the provision regarding primary production has been inserted to ensure that a primary producer caught up in urban development is not valued on the potential until he ceases using the land for primary production. This will enable a primary producer to carry on economically for as long as possible,'. That history was set out by the Land Appeal Court in its decision in Chief Executive, Department of Lands v KW Whackett (1994-95) 15 QLCR 311, at 318.
[51]In the Whackett decision the Land Appeal Court went on to detail the history of subsequent decisions of the Courts in respect of s.17, until further amendments of the Act under the Lands Legislation Amendment Act 1991, which recasts the terms of the exceptions now included in s.17(1) and (2) of the Act at that time. Those amendments in 1991 included, among others, the requirements of the use of the land to be a 'significant and substantial purpose or character'. As noted in GT and BT Taylor v Chief Executive, Department of Lands (1992-93) 14 QLCR 477, the Land Appeal Court found at 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 protected provisions as being used for purposes of farming.'
That was later examined in GR and M McGuire v Department of Natural Resources (1997-98) 17 QLCR 123, at 138.
[52]Following those 1991 amendments, the judicial interpretation of the new conditions of s.17(2) resulted in many 'genuine' farmers failing to satisfy the higher test then required. To overcome what was seen by the Government as an unanticipated outcome of their 1991 amendments, the Valuation of Land Amendment Act of 2000, Act 31, clause 5, introduced a further amendment of s.17(2), as now described in paragraph [40]. Those amendments were designed to provide some measurable criteria for eligibility, and to enable 'the genuine attempt by an owner to establish a farm business including a plantation and native timber forestry or an orchard may also qualify. This type of venture is often excluded under the current eligibility criteria as no actual profit is being realized at the time of the valuation.' (Queensland Acts (2000), Volume 2. Explanatory Notes, p.1212).
[53]Since those more recent amendments, the criteria now required for s.17(2) status has resulted in a greater variety of 'farmers' now receiving concessional valuations." …
The Relevant Test
Counsel for both parties in this matter agree that the relevant test to be applied to determine whether or not the s.17 concession applies is an amended version of that set out in the Land Appeal Court decision of Chief Executive, Department of Lands v Whackett.[2] The relevant change to the Whackett test is that question 3 of the Whackett test now relates to the question of whether or not the activity falls within the definition of substantial commercial purpose as set out in s.17(2)(c) of the VLA.
[2] (1994-95) 15 QLCR 311 at 322
Applying Whackett and taking into account the subsequent amendments of s.17, for a concession to apply to the subject land on the basis that such land is "exclusively used for the purposes of … farming" it is necessary for each of the following questions to be answered in the affirmative:
1. Is that land used for the purposes of:
(a)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 type of business or industry of a type specified (namely, cultivation of soils, the gathering in of crops of 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 substantial commercial purpose as defined by s.17(2)(c), or
(b) a substantial commercial character as defined by s.17(2)(c)?
4.Is the use of the land engaged in for the purpose of profit on a continuous or repetitive basis?
It is noteworthy that counsel for the appellant and respondent have used this same test, principally the same authorities, and the same basic facts to arrive at different conclusions regarding essential elements of each question. Where necessary and relevant, I will deal with the submissions put by each party in my consideration of each element of the relevant test.
Question 1 – The relevant business or industry use
As the facts clearly show, the appellant is a commercial developer and is not itself using the subject land for a business or industry to which s.17 of the VLA applies. As Member Scott said in the Land Court case of Grice v The Chief Executive, Department of Lands[3]
"I must first of all make it clear that it is open to satisfy the definition of 'farming' where the relevant use of a subject land is carried on by someone other than the appellant".
[3] (V95-54) 28 June 1996 at p 5
In arriving at this conclusion, Mr Scott relied on the Land Appeal Court decision of Chief Executive, Department of Lands v Higbie.[4] While that decision pre-dates the 2000 amendments of the VLA and an important aspect of the decision of the Land Appeal Court related to the then meaning of "exclusively used" for farming under s.17 of the VLA, the Land Appeal Court’s decision with respect to someone other than the appellant undertaking the farming remains relevant. As Justice Ambrose and Mr White pointed out in their joint judgment, on the facts it was clear that the appellant "did not participate in the farming activities carried out on the land by the 'lessees' nor did he contend that he was in the business of agisting cattle".[5] Nevertheless, they found that the use of the land by the farmers satisfied the farming criteria of s.17.[6]
[4] (1994-95) 15 QLCR 277
[5] Ibid p 280
[6] Ibid p 281
Although Mr Wenck in Higbie wrote a dissenting decision, his reasons for dissenting related to the issue of "exclusively used" for the purpose of farming. On the point of someone other than the appellant undertaking the farming, Mr Wenck was in agreement with the majority. As Mr Wenck said:[7]
"The land is not put to the farming use by the owner, but by another, whose activities are not restricted to the land in question. Whether it is a matter which should have been addressed or not, the amended legislation is not seen to alter the concept that the 'farming' use may exist even if such use is in conjunction with other lands, not necessarily in the same ownership."
[7] Ibid pp 284-5
In my view, applying both Higbie and Grice, the fact that the activities that are said to be farming are carried out on the subject land by Kamori and not the appellant does not preclude the operation of s.17 of the VLA, provided of course that all other relevant parts of s.17 are met.
Accordingly, in order to answer question 1 of the test, it is necessary to determine if the activities undertaken by Kamori on the subject land can be classified as falling within a business or industry specified in s.17(2)(a) or (b) of the VLA as faming.
Mr Rabaa for the respondent contends strongly that there is no business or industry of farming on the subject land. Relevantly, he said:[8]
"Sir, on the majority of cases which come before this Court are of farming being carried on on the subject land. This case is somewhat different in that the activity that is carried on on the land is clearly not a business, it's not an industry but it is an adjunct to Lone Pine Sanctuary. The evidence is clear before from Mr Botica that no money changes hands and that the food by way of gum leaves is important for the maintenance of the well being of those koalas. There's no business or industry, so right at the very beginning the case for the appellant fails."
[8] T 38
Mr Rabaa contends that the word forestry means "for the purpose of cutting timber",[9] although he did not present any definition to support that view. He conceded that it may be possible to find that the activity undertaken on the subject land falls within "expenditure on crops".[10]
[9] T 47
[10] Ibid. See also s.17(2)(L)(iv)(B) VLA
Mr Ambrose at paragraphs 7 and 12-16 of his written submissions made the following observations:
"7. Section 17 as it currently stands its similar to its predecessor save that it now properly defines in subsection (c) what is required to order to qualify as a …'substantial
commercial purpose of interest…' The material terms used in s.17 have been the subject of judicial scrutiny, most notably in Chief Executive, Department of Landsv K W Whackett (1994-95) 15 QLCR 311, cited with approval and applied in Thomason v Chief Executive, Department of Lands (unreported AV93-103 delivered 3 March 1995) where the Court made the following statements:'[pg 10] It is clear from the numerous cases in which the meaning of the word 'business' has been considered, that the word is "of large and indefinite import" … "has and has long had a wide and flexible meaning" … and that it may mean "almost anything which is an occupation, as distinguished from a pleasure". Accordingly the term must be construed according to its context…
…
[pg 11] A broad reading of "business" is sensible and appropriate in the context of the definition of "farming" because paragraphs (c) and (d) of the definition provide the qualifications that the business must be engaged in for the purpose of profit on a continuous or repetitive basis. The net result is that, although a wide meaning is to be given to the word "business" … the type of business which comes within the definition of "farming" is circumscribed by other parts of the definition. Read together, the indices of "farming" for the purposes of s.17(1) of the Act will have the effect of excluding such things as activities which are not really in the nature of commercial enterprises.
…
A similar conclusion is reached in interpreting the word "industry".' …
12.The planting, management and harvesting of leaves falls within both the 'growing' (17(2)(a)) and 'gathering in' (17(2)(b)) of 'crops'. Neither of those terms are defined in the Act and so fall to be defined using their ordinary meanings which are:
'crop' or 'crops'
'1.The cultivated produce of the ground, as grain or fruit, while growing or when gathered. 2. The yield of such produce for a particular season. 3. The yield of some other product in a season: the lamb crop. 4. A supply produced.' - Macquarie Dictionary, 3rd ed.
'6a(1)a plant or animal or plant or animal product that can be grown and harvested for profit or subsistence'" - Webster's Third New International Dictionary.
'9aWith qualification or contextual specification: The yield or produce of some particular cereal or other plant in a single season or in a particular locality. b. The annual or season's yield of any natural product.' - Oxford English Dictionary, 2nd ed.
'gather'
'3.To collect (flowers etc) from the place of growth; to cull, pick, pluck, to collect as harvest.' – The Shorter Oxford English Dictionary, 3rd ed.
'4.To pick (any crop or natural yield) from its place of growth or formation: to gather grain, fruit flowers.' – Macquarie Dictionary, 3rd ed.
13.The definitions of the words 'business or industry' are noted above. While they are wide in terms, they are to be limited by the context in which they are used. However, they are not to be restricted to a point which so alters their usual meaning that, had it been properly intended for the words to be so differently defined, the legislature would have proscribed that definition.
14.In the Respondent's material, much is made of the fact that the leaf is grown and provided to another commercial section of Kamori Pty Ltd, namely Lone Pine Koala Sanctuary. To suggest that production of a crop which does not result in an immediate cash return at the farm gate is to unduly restrict the meaning of the words 'crop' and 'business or industry'. It would be no different to a cotton grower owning his own gin, a grape grower owning his own winery, a feedlot owning its own sorghum plantation. The critical question is not whether the growing of crops forms part of a larger activity, it is whether the land in question is being used for the purpose specified in s.17(2)(a).
15.There is uncontested evidence that the use of the leaf is an integral operation in a larger activity which operates at a profit,[11] in addition to exceeding the minimum spend on improvements which also defines the operation as having a 'substantial commercial' aspect.[12]
16.Further, while it may be admitted that the market for eucalypt leaf is boutique, or at least not mainstream, that does not mean that a market does not exist. There is a need of every entity which feeds koalas to have access eucalypt leaf.[13] Of the 600 known species of eucalypts, only 28 of the type koalas will eat are native to south-east Queensland.[14] As noted in paragraph 23 of Mr Friedler's first affidavit at paragraph 23, his company has been approached in the past in relation to the supply of leaf for koala feeding."
[11] Para 15 of R Friedler's 1st affidavit
[12] See para 26 below
[13]See 1st affidavit of R Friedler para 24-30, 2nd affidavit of R Friedler para 11, entities such as Dreamworld, Australia Zoo, Moggill Koala Hospital
[14] Paras 24-26 of R Friedler's 1st affidavit
I agree with Mr Ambrose. In my view, Kamori is undertaking the "business" or "industry" of farming on the subject land for the purposes of answering the first question of the test, that being use. Kamori has clearly planted a eucalypt plantation. It has done so by the cultivation of soils. In particular, I note that the New Shorter Oxford Dictionary includes the following in its definition of "cultivate":[15]
"Break up (ground) with a cultivator. Give attention to (a plant) to promote growth, improve fertility, etc; produce or raise by agriculture or horticulture".
[15] 1993 Edition, Volume 1, p 568
Question 2 – The Dominant Use of the Land
As previously indicated, only approximately 15% (14.5 ha) of the subject land is taken up by the plantation, together with additional land for a dam and machinery sheds. The balance of the land is described as a buffer to avoid contamination of the leaf.
Mr Rabaa contends that the current use of the land for the plantation is an incidental use[16]. He also submits that the dominant purpose is subdivision, not farming[17]. Mr Ambrose, after again referring to Thomason, argues that the whole of the land is in "use" for the purposes of the plantation. In this regard, he relies specifically on the Privy Council decision of Newcastle City Council v Royal Newcastle Hospital[18].
[16] T 38
[17] T 50
[18] (1959) 100 CLR 1
The Newcastle City Council case concerned the question of what land was "used or occupied" by a hospital for rating purposes. The facility was a chest hospital for the treatment of tuberculosis. The chest hospital had buildings on a defined area of 36 acres. The balance of the hospital land was 291 acres of rough bushland substantially in its natural condition. The Privy Council dismissed the city council’s appeal, and affirmed the decision of the High Court that all of the land in question was "used" by the hospital. Lord Denning, in delivering the judgement of Their lordships, had this to say[19]:-
"There is no doubt that the hospital acquired all the land for the purposes of the hospital. Indeed, when the latest portion of it (two hundred and twenty acres) was compulsorily acquired in 1946, the Government Gazette expressly stated that it was 'resumed for the purposes of the Newcastle Hospital.' According to the evidence these purposes were to keep the atmosphere clear and unpolluted : to prevent building upon the land and so act as a barrier against the approach of factories and houses : to provide quiet and serene surroundings for the patients : and to give room to expand the activities of the hospital. The land was undoubtedly acquired and owned for those purposes. But was it used or occupied for those purposes? That is the question.
Their Lordships are of opinion that it was used for those purposes. Mr MacKenna submitted that an owner of land could not be said to use the land by leaving it unused: and that was all that had been done here. Their Lordships cannot accept this view. An owner can use land by keeping it in its virgin state for his own special purposes. An owner of a powder magazine or a rifle range uses the land he had acquired nearby for the purpose of ensuring safety even though he never sets foot in it. The owner of an island uses it for the purposes of a bird sanctuary even though he does nothing on it, except prevent people building there or disturbing the birds. In the same way this hospital gets, and purposely gets, fresh air, peace and quiet, which are no mean advantages to it and its patients. True it is that the hospital would get the same advantages if the land were owned by the Crown or by a trust which had determined to keep it in a natural state, or by an owner who was under a restrictive covenant not to build on the land. But the advantages then would be fortuitous or at any rate outside the control of the hospital. Here they are intended, and that makes all the difference."
[19] Newcastle City Council pp 3-4
Land Court Member Scott went further in the case of Libella Dion Pty Ltd v Chief Executive, Department of Natural Resources[20] when he said[21]:-
"On my conclusions on the evidence, 5,000 m² is used for turf production and 7,000 m² is prepared for that purpose, whilst 1,000 m² contains a nursery enclosure. This adds up to about 1.3 ha out of a total of 6.9 ha. The question arises as to whether the absence of any use of the bulk of the land is a factor which calls for consideration. Having regard to the language of Thomason quoted above, I am led to the view that it is the presence of the active uses of horticulture and turf growing to which I must have regard, therefore, if these are the only active uses on the land, then the land is being exclusively used for those uses and the question of 'dominant use' does not arise. Section 17 of the Act is concerned with the protection of the use and is not concerned with whether the user is the owner or some other party (BB Smith v. The Valuer-General (1983) 9 QLCR 22) nor with the level of protection that the landholder receives. For example, if one were to carry out farming on a block of land fronting Brisbane’s Queen Street Mall which would otherwise attract a very high value, the land would be valued as farming land, even though the level of 'discount' in value would be substantially greater than that which would apply in a case where the highest and best use of the land attracts a value which is only marginally higher than its farming value. The presence of a farming use is sufficient. I therefore conclude that the fact that part only, indeed a proportionately small part of the subject land, is put to the use of horticulture and turf growing, and that the balance of the land is not used apart from what I say in the next paragraph is not relevant to the question of whether the subject land is used for 'farming'.
Whatever the benefit perceived by Galli in locating a sign on the subject land, it is a use which is collateral not incidental to the plant nursery and turf growing use, however, having regard to the matters that the Land Appeal Court said in Thomason are relevant considerations in deciding the question of 'dominant use', I conclude that the nursery and turf growing activities constitute the dominant use of the land."
[20] (199798) 17 QLCR 67
[21] AV95-581, p.12
A clear tension continues to exist in s.17 of the VLA in that s.17(1) refers to land exclusively used for farming, while s.17(2) refers to the dominant use of the land. I can only repeat what the Land Appeal Court said in Thomason[22]:
"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).
As a consequence of this construction of section 17(1), some cases which would have failed to attract the operation of section 11(1)(vii) for the sole reason that the land was not exclusively used for the purposes of the business of primary production, may meet the threshold rest of 'exclusively used … for purposes of farming'. Of course, the fact that land is not excluded under section 17(1) merely because the farming use is dominant rather than exclusive does not necessarily attract the operation of the section. The other criteria of the definition of 'farming' must be met.
Although we are unanimous in our interpretation of section 17(1) and (2), we recognise that the conclusion we have reached on this matter may not be shared by all. If we have misunderstood what Parliament intended then, with respect, that misunderstanding arises from the use of 'exclusively used' in section 17(1) and 'dominant use' in section 17(2). If the Parliament intended to retain the previous 'exclusively used' test then consideration could be given to an appropriate amendment, for example by omitting 'dominant use' from the definition of 'farming' and inserting 'sole use'."
[22] (1994-95) 15 QLCR 286 at 299
Although, as previously referred to, s.17 VLA was amended in 2000, such amendment did not alter the wording of the section regarding exclusive vis. dominant use.
It is clear on the facts that the appellant proposes using the subject land for residential development. However, that future development proposal does not have the essential characteristics necessary to move the dominant use of the land from "farming" to "subdivision", as contended by Mr Rabaa. Indeed, that proposition is expressly contrary to the plain language of s.17(1). That argument cannot succeed.
Taking the facts and the authorities referred to above into account, it is my view that the whole of the subject land is used for the purposes of a plantation, including that part of the land deliberately left vacant, and as such the dominant use of the land is for farming.
Question 3 – Substantial Commercial Purpose or Character
I have already referred to the legislative development of s.17 VLA, as set out by Dr Divett in Wild. In particular, Dr Divett made reference to many "genuine" s.17 farmers failing to satisfy the test following the 1991 amendments. That gave rise to the 2000 amendments, which have particular relevance here.
Prior to the 2000 amendments, it was a matter for the Land Court to determine what was sufficient to qualify as a "significant and substantial commercial purpose or character". However, following the 2000 amendments, a substantial commercial purpose or character is determined by four alternative criteria.
On this aspect, Mr Rabaa has submitted that the activities undertaken on the land do not have a substantial commercial purpose or character. In Mr Rabaa’s submission[23]:
"When you move from the business or industry representing the dominant use of the land there is a conjunctive there which requires additional criteria to be met and in sub-s.(c) of sub-s.(2) has a substantial commercial purpose or character and then goes on to use the examples of the value of annual return or having improvements of $50,000. In my submission sir the commercial purpose there attaches to Kamori and Lone Pine Sanctuary. It can never attach to the developer but the commercial purpose is just not there. There is nothing of a commercial purpose. They are growing feed for the koalas. You heard the evidence of Mr Friedler saying that they grow feed at Lone Pine, they grow leaves at Lone Pine. If my learned friend’s submissions which I foreshadow were to be accepted by you Lone Pine could it be regarded as a farming activity. That would be ridiculous. Because it’s remote from Lone Pine it neither constitutes a business, there is no buying or selling a product, there’s no commercial purpose. The purpose might be commercial when it gets to Lone Pine but certainly not on the subject land."
[23] T 38
Mr Rabaa continued[24]:
"The appellant has sought to use s.17(2)(c)(iv) in relation to the minimum value of farm improvements or plantings of forest or orchard trees of $50,000 and the appearance of being maintained for farming or expenditure on crops, forest trees, maintenance of farm improvements, livestock or orchard tress. That may well be a limb in s.17 that might be able to be used by the appellant, but it’s qualified by the initial words in sub-s.(c) 'has a substantial commercial purpose or character by' and that then takes you down to sub-s.(iv). Even the wording in sub-s.(iv) in my submission poses some difficulties for the appellant. It talks about plantings of forest. Forest in the ordinary definition of the term means trees that are required for their timber value. In this case the only value is leaf and similarly when you go to sub-s.(B) of sub-s.(iv) forest trees are also mentioned there."
[24] T44
Mr Ambrose, on the other land, has provided succinct submissions focusing on s.17(2)(c)(iv) VLA. In Mr Ambrose’s submission[25]:
[25] Appellant's submission pp 23-29
"23. S.17(2)(c) for the first time quantifies what is required to satisfy the criteria of substantial purpose of character. In this instance the easiest was [way] of establishing the criteria (and the language of the subsection makes it clear that the criterial in (c) are alternate, not cumulative) is to isolate subsection (c)(iv).
24. That subsection required a minimum expenditure on farm improvements of $50,000.00 and the appearance of being maintained for farming.
25. Farm improvements are defined in s.17(2) as including 'appropriate sheds, other structures, facilities, farm plant and land development for the particular farming business…'.
26. At paragraphs 43, 44 and 45 of his first affidavit Mr Friedler identifies the following improvements:
(a) travelling sprinkler: $4,500.00;
(b) 20 foot shipping container: $1,200.00;
(c) Ford tractor and slasher: $40,000.00;
(d) Ford tractor with cab and slasher: $11,006.00;
(e) Mustang 940 skid-steer loader: $40,000.00;
(f) Kubota tractor and slasher: $16,300.00;
(g) Kubota tractor and slasher: $26,071.00;
(h) self propelled slasher: $3,000.00;
(i) Nissan panel van for leaf transportation;
(j) Nissan utility truck;
(k) truck mounted herbicide sprayer;
(l) dam construction with diesel pump: $3,298.00;
(m) second dam construction: $10,000.00;
(n) 4 inch bore with diesel pump: $11,800.00;
(o) water reticulation system: $16,600.00;
(p) machinery shed: $13,00.00 [$13,000.00]
(q) internal roads: $53,700.00;
(r) historical cost of planting (at say $0.75 per tree by 60,000 trees, being a median of both cost and tree numbers as contained at paragraph s 32 and 33 of Mr Friedler’s first affidavit): $45,000.00.
27. Neither the existence nor the quantum of the above items has been contradicted by the Respondent. That expenditure falls within the definition of 'Farm improvement' and easily surpasses the threshold of $50,000.00.
28.Further, Mr Friedler has sworn[26] that there are:
[26] Paras 37 and 39 of his 1st affidavit
(a) two full time workers over the plantations;
(b) the plantation is:(i) regularly slashed;
(ii) the subject of herbicide treatment;
(iii) regularly watered;
(iv) regularly harvested.
29. In the premises the plantation not only has the appearance of being maintained, it is in fact being maintained."
Mr Rabaa’s submission may have had some merit had this case occurred prior to the 2000 amendments. However, in my review, s.17(2)(c) as currently drafted, is absolutely clear in its construction. That is, a "substantial commercial purpose or character" is established by showing that a factual situation falls within any one of the four listed alternatives.
The facts of this matter in this regard, as summarised by Mr Ambrose, show beyond doubt that the activities on the subject land fall within s.17(2)(c)(iv) VLA, and accordingly, a substantial commercial purpose or character is established.
Question 4 – The Purpose of Profit on a Continuos or Repetitive Basis
Although the parties are at issue over the answer to this question, this much is common ground. However the activities carried on by Kamori on the subject land may be classified, there is no doubt that such activities are carried on on a continuous and repetitive basis. That then leaves the question of "purpose of profit".
Mr Rabaa for the respondent strongly submits that there is no "purpose of profit" contained within Kamori’s plantation activities on the subject land, but rather what is happening is Kamori is providing feed for its koalas, located at a different site, in order to comply with licensing requirements. As Mr Rabaa submits[27]:
"Is the use of the land for the business or industry engaged in for profit on a continuous basis or repetitive basis? In the Mreef situation the answer is no but business or industry again occurs and clearly there is no profit produced on the subject land. The condition precedent which occurs in s.17 is the business or industry and if, as my learned friend may well suggest to you that there is a business or industry and it relates to the Lone Pine Sanctuary, that business or industry is either the sanctuary, a tourist industry, call it what you might but it can never achieve the characterisation of being a farm, it can never do that. It might be incidental, it might be part of it but if you’re going to use limb to bring in the growing of the leaves clearly it’s not the dominant use of the land, it’s not the dominant use."
[27] T 50-51
Not surprisingly, Mr Ambrose also took a different approach to the question of "profit". Mr Ambrose submits that[28]:
"There is no component in s.17 which says the profit of the farming business or industry must be, to coin a phrase obtained at the farm gate, and that brings back the questions that were raised about what purposes land might be put to where there may not be a farm gate cash payment and it is becoming more and more common it is submitted in commercial industry for there to be what’s known as vertical integration where, for example, a bakery may own not only the bakehouse but may own the farm upon which the wheat for making the bread is being grown. There is no cash payment at the farm gate. It goes through to the bakery, but to suggest that wheat being grown on a commercial basis for the purpose of incorporation off the subject land would not qualify as a farming venture and simply to think through some of the examples would make that clear. It would be no different to a cotton grower owning his own gin, a grape grower owning his own winery, feedlot owner owning his own sorghum paddock. The sorghum isn’t being sold to anyone in particular; it is being used for the express purpose of feeding the cattle. … For a farm to operate it is to grow crops on a commercial basis with a view to obtaining a profit. Whether that happens on the subject land or elsewhere with respect becomes an irrelevancy. It certainly is not required within s.17 that a cash payment is made at the farm gate. All that is required is the subject land is used for a farm or for a farming business. To suggest otherwise, with respect, goes against the words as they appear in s.17. There is nothing that I have been able to locate in the explanatory memoranda or in the Parliamentary Speeches which suggest that the Legislature had such an intention in any event, but even if that is so, even if that were found the Court would have to find that the words in the Act were sufficiently ambiguous that regard then would need to be had to the terms of the Parliamentary Speeches."
[28] T 57-58
Mr Amrbrose also relied on statements from Whackett with respect to the meaning of the word "purpose". Mr Trickett and Mr Neate in Whackett said that[29]:
"The relevant 'purpose' is the 'object to be attained, thing intended' (Australian Concise Oxford Dictionary) or, in other words 'the object for which anything … is done, … an intended or desired result; end or aim' (Macquarie Dictionary). In this context (and by contrast with 'character') the word 'purpose' seems to be subjective in nature or at least have a subjective component. 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."
[29] (1994-95) 15 QLCR 311 at 326
While it is true that this comment was made with respect to the use of the word "purpose" in the then s.17(2)(c) of the VLA, I see no reason why a like meaning should not be given to the use of "purpose" in s.17(2)(d).
What then is the end or desired result for Kamori in having its plantation? Certainly, as Mr Rabaa says, it is to feed Koalas at a tourist venture at another site. But it is more than this. It is the pursuit by a company (Kamori) of a commercial goal – the making of profit. The evidence shows that Kamori makes a profit from its operations. Its operations include the subject (and other) plantations which I have already found fall within the character of "farming" for the purpose of s.17 VLA. It matters not what the classification of land at Lone Pine itself is – the Lone Pine land is not the subject of this appeal.
In my view, the plantation on the subject land is operated and maintained by Kamori for the purpose of commercial profit.
The end result then is that, in my view, each of the questions in the relevant test are properly answered in a way so as to enliven the operation of s.17 VLA. Before closing, however, it is appropriate that I consider some further submissions made by Mr Rabaa with respect to the appellant’s bona fides, and the intention of the legislation.
Appellant’s Bona Fides and the Intention of the Legislation
Mr Rabaa makes strong submissions questioning the intent of the appellant and the proper interpretation the Land Court is to give to s.17 VLA. I will let Mr Rabaa’s words speak for themselves:
"The absolute decision which must be brought down is that the appeal must fail absolutely. The subject land is only partly used by a koala sanctuary for growing food which is not sold either by Kamori or by Mreef. If either party wants to use a $13m. block of land for absolutely no return they cannot come to the Court and misconstrue s.17. The Court cannot be such a party to such a claim. The words 'business or industry', commercial purpose or character', 'engaged in for the purpose of profit', they’re all there, those words all act against either Kamori if they were to bring an appeal to the Court and certainly to the developer who comes before the Court.
What my submissions have essentially been saying is that there is no entitlement of the koala sanctuary to be seen as being involved in farming. That’s essentially what I’ve been saying to this Court, but to establish that is vitally important because, and the developer of the land can’t obtain something that the person who works the land to produce this product can’t obtain themselves, it just can’t be done. If Kamori fails in its characterisation of the words that I’ve highlighted to you Mreef must also fail in it"[30].
"Sir, the land in my submission is zoned as future urban. It certainly can be used for a farming activity but in essence the involvement of Mreef Pty Ltd is there as a development company not as a farm. It would be quite incongruous if you were to find that there is farming activity carried on on that land and a development company were to get taxation benefits that would come from such a finding it would be completely against the intention of the Act as evidenced by the exhibit that I tendered yesterday, it’s not for a subdivider. It would be quite incongruous and it would be further incongruous that even though the evidence is that Lone Pine didn’t know about the entitlement to claim a farming concession, that they were never to have had the benefit of that if it were a farm, and I’m suggesting that it’s not the developer who has bought the land purely for development purposes and for whatever reason continues to allow Lone Pine to access that property were to get a reduction in value from $10m to $1m. That would clearly be against the intention of the Act. It says in the debates that this concession is designed for the primary producers caught up in higher development and this is exactly the situation. Sir, you speculated yesterday that there may be situations where a developer comes in, continues the operation that was being carried on on the property and is able to get the benefit of the concession for primary production. There’s no concession on my part, it clearly is available but it’s got to be available in particular situations and this is not one of those situations. Each case in relation to claims for a s17 valuation is based on their own facts and the facts are quite varied and some of them are quite novel but I have to say in this particular instance this is probably one of the more or even the most unusual factual situations, food for koalas that’s not common"[31].
"Sir, the issue of the transfer documents was raised and you made a suggestion that it might be a matter of what weight you would give to it. My submission is that is a document that is required to be placed in the Land Titles register and it should be a document which is honest and properly completed by both parties. It’s quite remarkable that there is a space on the form which is required to be completed as to whether there is any farming activity on the land. That space is vacant. The only part that is filled in on that form is that the land is vacant. Similarly there’s another portion on the form which is stated to be for crops. Again that portion hasn’t been filled in. Now if it were such an important part, and I concede that this particular appeal may not have been in the mind of the appellant at that time, but surely one or both of the parties would have correctly filled that in if it’s such a significant part of the property and it’s so important now, why wasn’t it important then. My submission sir is that that document has a great deal of weight that should be attached to it. I can only say that the state of that form without bearing the correct notations on it indicates that this present appeal is not a genuine claim under s.17 of the Valuation of Land Act but a veiled attempt by a major financier to obtain taxation relief which on the true facts before the Court cannot be sustained, it just cannot be sustained[32]."
[30] T 45
[31] T 47-48
[32] T 49
It is clear that the Property Transfer Information Document[33] relating to the purchase of the subject land by the appellant indicates the "Current Land Use" of the subject land as "vacant". Notably there exists an option to mark "farming" instead of "vacant" on the form, but "farming" was not specified.
[33] See Ex DJOC2 to Mr O’Connor’s affidavit
Mr Ambrose concedes that the information on the Property Transfer Document is "a little awkward"[34] for the appellant, but says that, as the evidence is clear that the document is incorrect, the Court should follow the correct factual position and not the document.
[34] T 54
As Mr Rabaa has submitted, "many of the cases uphold the use of land as farming land, many of the cases reject it, and it’s difficult to find an absolute principle that can be taken from the cases that are in the reports and apply it to this particular case."[35] If nothing else, all the preceding paragraphs of this decision show the difficulties in classifying the plantation activities on the subject land, and in those circumstances, coupled with Mr. Friedler’s evidence, it certainly is not helpful, but perhaps somewhat understandable, that the Property Transfer Document was completed showing the land as vacant. At any rate, the evidence is clear that there is a plantation on the subject land.
[35] T 51
That leaves for consideration the issue of the parliamentary intention. The Explanatory Notes to the 2000 Bill include the following:
"Concern on decisions and difficulties associated with the current section 17 valuation concessions in relation to defining a significant 'farming' business or industry have been addressed by the proposed amendment which prescribes a minimum gross return or capital outlay. Also the proposed amendments recognise the outlay and maintenance in forestry, both plantation and native timbers, and in the establishment of orchard crops in the eligibility test for the valuation concession. These types of enterprises often may not qualify under the existing interpretation of the Act.
A local government has requested that when land is subdivided for the sale of lots, it should no longer qualify for a concessional valuation under section 17. The proposed amendment to section 17 clarifies that the subdivision and the development of the land for the sale of lots would generally no longer mean that it is exclusively used for 'single dwelling house' or 'farming' purposes."[36]
[36] Explanatory Notes, Valuation of Land Amendment Bill 2000, p 2
Although I agree that the result in this matter may be considered curious, in that a developer, who itself is undertaking no farming activity on the subject land, and after paying over $13,000,000 for the subject property, is none-the-less able to claim the concession even though the previous landholder who previously undertook and still undertakes the farming activity on the subject land has never claimed the s.17 concession, such result would appear to be clearly within the intentions of parliament.
Part of the difficulty with this matter is the highly unusual farming operation being conducted. Perhaps the matter could be viewed a little more clearly if all relevant facts remained the same, except that it was an operational vineyard which continued to exist on the subject land, operated by Kamori, which took all the grapes from the vineyard to another site where it bottled and sold specialist wine. I have no doubt that the operation of such a vineyard would constitute "farming", and the concession would apply to the subject site.
To again consider in hypothetical terms the intention of parliament with respect to the application of concessions, there can be no doubt that, were the subject land a normal "farm", undertaking normal farming operations, with the s.17 concession having applied for many years, and the farmer had sold the land to a developer for a very substantial sum, in circumstances where the farmer, after settlement, was permitted by the developer to continue with the farming operations, unchanged, until such time as the developer was ready to commence its development, then the s.17 concession would continue, claimable by the developer. When everything is stripped back to its basic form, the circumstances of this matter at hand are, in effect, little different.
Of course, it may be argued that the VLA does not specify that a developer should receive the concession when it does not undertake the farming (the farming being conducted by a third party), and that as a matter of policy the intention of parliament must be that such developers should not receive the concession. This view certainly came through strongly in some of Mr Rabaa’s submissions. However, both the Higbie and Grice decisions, which establish that it is open to satisfy the definition of 'farming' where the relevant farming use of land is carried on by someone other than the owner (developer), were decided in the mid 1990’s, many years before parliament made the 2000 amendments to s.17. Clearly, if the intention of parliament was that the law established by the Higbie and Grice decisions should not have been followed, then parliament had ample opportunity in 2000 to make relevant amendments to s.17.
Order
Given my findings and reasoning as set out above, in my view the appellant has established that s.17 VLA operates in its favour with respect to the farming activities on the subject land, and accordingly, the appeal is allowed, the valuation of the Chief Executive set aside and the unimproved value determined at One Million Three Hundred and Fifty Thousand Dollars ($1,350,000) as at 1 October 2004.
PAUL A SMITH
MEMBER OF THE LAND COURT
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