Muntz v Chief Executive, Department of Natural Resources
[1997] QLC 67
•16 May 1997
LAND COURT, BRISBANE 16 MAY 1997
[1997] QLC 67
Re:Determination of Unimproved Values - Local Authority: GCCC-Albert. (V95-462, V96-58, V96-545, V96-546, V96-547 & V96-548).
Ethel Rebecca Muntz and Estate HD Muntz
v.
Chief Executive, Department of Natural Resources (formerly Department of Lands)
(Hearing at Coolangatta) D E C I S I O N
Six appeals have been filed by the abovementioned appellants against determinations of unimproved value of certain lands made by the respondent Chief Executive as at relevant dates of 1 January 1995, and 1 January 1996. Essentially, the appeal lands embrace an aggregation of adjoining parcels situated in Hotham Creek Road, Willowvale, approximately 32 km north-west of the Bundall Post Office and 55 km south of Brisbane. The real property description of the lands in the aggregation, which collectively are also known as "Willowvale", together with the respondent Chief Executive's valuations and the appellants' valuations, are:
RefV95-462 - Lots 23 and 33 on Plan M332543 and Lot 34 on Plan W31315 and Lot
996 on RP 164946, parish of Pimpama - area 42.98 hectares - Chief Executive's valuation $250,000 - appellants' valuation as contained within the notice of appeal $97,500 - relevant date 1.1.1995.
RefV96-58 - Same real property description and area as for Ref V95-462 - Chief Executive's valuation $320,000 - appellants' valuation as contained within the notice of appeal $97,500 - relevant date 1.1.1996.
RefV96-545 - Balance Lot 23 and balance Lot 996 RP 164946 and Lot 34 on Plan W31315 and Lot 33 on Plan W332543, parish of Pimpama - area
38.98 hectares - Chief Executive's valuation $250,000 - appellants' valuation as contended for within the notice of appeal
$62,500 - relevant date 1.1.1995.
RefV96-546 - Same real property description and area as for Ref V96-545 - Chief Executive's valuation $250,000 - appellants' valuation as contained within the notice of appeal $75,000 - relevant date 1.1.1996.
RefV96-547 - Part Lot 23 on Plan M332543 and Part Lot 996 on RP 164946, parish of Pimpama - area 4 hectares - Chief Executive's valuation $140,000
- appellants' valuation as contained within the notice of appeal
$35,000 - relevant date 1.1.1995.
RefV96-548 - Same real property description and area as for Ref V96-547 - Chief Executive's valuation $140,000 - appellants' valuation as contained within the notice of appeal $42,000 - relevant date 1.1.1996.
Two of the appeals (Ref V95-462 and Ref V96-58) are against the valuations of the whole of the lands in the aggregation, while the balance of the appeals are against the valuations of two parts of the "Willowvale" aggregation created as parcels by the respondent Chief Executive pursuant to the provisions of s.34(2) of the Valuation of Land Act 1944.
For many years prior to the valuations with a relevant date of 1 January 1995, the unimproved values placed upon the subject land aggregation were made under the protective provisions of s.17(1) of the Valuation of Land Act 1944, or as the case may be, s.11(1)(vii) of the now repealed Valuation of Land Act. This was so since, in the view of the Chief Executive, the land had been used for the purpose of "farming" (as provided for in the current Act) or for the "business of primary production" (as provided for in the repealed Act). But the valuations here under appeal were not made pursuant to the provisions of s.17(1) of the Valuation of Land Act insofar as they relate to the use of the land for the “purposes of farming" or "primary production" as the case may be. They were made under the provisions of the same section of the Act (s.17(1)) as lands which are "exclusively used for the purposes of a single dwelling house".
John Thomas Muntz, who is an executor of the Estate of Hugh D Muntz, and a registered valuer, conducted the case for the appellants and furnished evidence in the matters. Central to the appellants' case in each appeal is that the valuation concessions extended to "Willowvale" under the "farming" or alternatively, the "primary production" provisions of the Valuation of Land Act, should continue to be applied for assessment of the valuations in dispute. Mr Muntz contends that on this basis the unimproved value of the appeal aggregation lands should be
$97,500 as at both relevant dates of 1 January 1995 and 1 January 1996, (Ref V95-462 and Ref V96-58) which value was the subsisting value established by the Chief Executive in his previous valuation of lands within the Gold Coast City Council - Albert Division. The respondent Chief Executive has indicated that should the land be valued as used for the “purposes of farming”, then he does not dispute the value of $97,500 for the aggregation as at each relevant dates. It is
on the same basis (farming) that the appellants contend for the aforementioned values within the remaining respective notices of appeal.
Accordingly, for the appellants to discharge the onus resting upon them in accordance with section 56(2) of the Valuation of Land Act, they must satisfy the Court that the subject lands fall to be valued in cases Ref. V95-462 and V96-58 under s.17(1) of the Valuation of Land Act as lands being used for the “purposes of farming”. I say in only those appeals because, if the aggregation is to be valued as used for the purposes of farming as at each relevant date, then it must follow that the remaining valuations under appeal (Ref V96-545/548)(as single unit dwelling house sites) are ultra vires s.17(1) of the Act and are the nullities.
By now it is well settled that the period during which activities carried out on land are such as to quality it to be valued under s.17(1) of the Act commence on the relevant date of the valuations and end on the date of issue of such valuations. These dates are, in respect of:
Ref. V95-462 - 01.01.95 to 03.04.95
Ref. V96-58 - 01.01.96 to 19.02.96
Further, for appellants to establish that lands fall to be valued under s.17(1) of the Act insofar as they are used for the “purposes of farming”, they must satisfy the Court that the farming activities carried out on the appeal lands need all the tests outlined in the judgment of the Land Appeal Court dated 3 March 1995, in Re: Thomason v. Chief Executive, Department of Lands (Ref AV93-103) - not yet reported. The tests are:
"1. 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 purpose 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)significant and substantial commercial purpose; or
(b)significant and substantial commercial character?
4.Is the use of the land for the purposes of that business or industry engaged in for the purposes of profit on:
(a)a continuous basis; or
(b)a repetitive basis? "
I turn now to the evidence and submissions made by Mr Muntz on behalf of the appellants, particularly in relation to appeal references V95-462 and V96-58 (the valuation of the aggregation). "Willowvale" has been held in the ownership of the Muntz family since 1860. Mr Muntz outlined the farming operations on the property since this time most of which, while being of interest historically, is not relevant to the appellants' claim for s.17(1) valuation concession, since they have not taken place within the time frame previously mentioned. What is relevant is, that during the relevant period, John Archie Muntz, who is a son of Mr John Thomas Muntz, occupies one of two dwelling houses on "Willowvale", with the other being occupied by Mr Muntz's mother, Ethel Rebecca Muntz. Mr Muntz says that John Archie Muntz manages the grazing interests of Ethel Rebecca Muntz, as well as himself being totally reliant upon primary production in the form of growing bananas, pawpaws and small crop farming on “Willowvale” for at least 10 years prior to the dates of valuations. Ethel Rebecca Muntz and John Archie Muntz have resided continuously on the property since 1946 and 1978 respectively. Accordingly, Mr Muntz submits that the dominant activity on the property has been farming conducted on a continuous and repetitive basis over the years.
During the course of evidence in the matters, it became apparent that John Archie Muntz also farmed land as a tenant on a property owned by a Mr D Payne. Mr Muntz is not sure when this tenancy and the use of the Payne land terminated but thought it was during the calendar year of 1995.
Mr Muntz informed the Court that the improvements on "Willowvale" comprise the two dwelling houses, a packing shed, a machinery shed, cattle yards with crush and ramp, water supply from a creek named Hotham Creek which is pumped to the dwellings and yards, approximately 2 hectares established banana plantation, and 0.6 hectares alluvial creek flat commanded by irrigation facilities and utilised for the production of vegetable crops. The remainder of "Willowvale", except for about 3 hectares of standing green forest, is naturally watered from Hotham Creek and a permanent gully and there are established native and improved pasture species which, he says, is well suited to both cattle breeding and cattle fattening. Mr Muntz estimates the carrying capacity of "Willowvale" at 35 breeding cattle and progeny to weaning age on a year-in-year-out basis.
At the request of the respondent Chief Executive by letter dated 27 June 1994, the appellants filed a form with him dated 29 June 1994, indicating the nature of the farming activities on "Willowvale". A copy is in evidence. This suggests that at that time 2.4 hectares was utilised for banana growing, and 0.6 hectares was used for small crops (tomatoes, cucumbers and capsicum). Also provided to the respondent were copies of the 1992, 1993 and 1994 Income
Tax Returns for Mrs ER Muntz. These covered the cattle grazing component of the farming activities carried out on "Willowvale". Livestock on hand at 30 June 1992 comprised 25 head and during that financial year the returns showed that 20 head were sold for $3,404, 1 beast was purchased for $800 and the natural increase numbered 20 head. Gross profit from the cattle grazing activity in 1992 was $2,892, and after expenses, that activity resulted in a taxable loss for the 1991-92 financial year of $2,437.
As for the financial year ending 30 June 1993, livestock on hand at the end of that year numbered 39 head, there were 7 head sold for $1,281 during the year, and the natural increase numbered 21 head. Gross profit was $1,464. After expenses, the taxable loss for the 1992-93 financial year was $400.
As for the financial year ending 30 April 1994, livestock on hand at the end of the year comprised 24 head. There were 16 head of cattle sold for $4,350 and there was no natural increase. One beast was purchased during the year at a cost of $600. Gross income for the year was $3,581. After expenses, Mrs Muntz's grazing activity on the property produced a net taxable income of $2,011.
The appellants provided to the Department similar information in respect of the income received by John Archie Muntz from his farming activities. As for the financial year ending 30 June 1993, Mr John Archie Muntz's farming operation show a gross income from growing pawpaws of $9,072, from growing tomatoes $11,590 and from banana growing of $21,704. This resulted in a total gross income for that year for JA Muntz of $42,366. Unfortunately, the copy of the return form for this year, as filed by Mr Muntz, is not completely legible insofar as expenses for that year are concerned, but they are probably in the order of $18,000. This would result in a taxable net income of about $24,000.
As for the financial year ending 30 June 1994, gross profit from Mr JA Muntz's farming activities for growing bananas was $7,092, from growing cucumbers $534, and from growing tomatoes $6,502, from growing pawpaws $2,476, from share farming $2,544, and from cattle grazing $685. This resulted in a total gross income for the financial year of $19,833. The exhibited document does not show the expenses for that financial year.
Also in evidence is another return for the farming activities of Mr JA Muntz for the financial year ending 30 June 1994. Gross crop income from banana production was $10,000 and from tomato growing $12,000. This return shows that during the 1994 year, the tenancy agreement with Mr G Payne had terminated.
Mr Muntz was invited to provide the Court with details of the income received from the farming activities on "Willowvale" in the 1995 year. Unfortunately, he was not in a position to provide this information. However, he does claim that a combined gross income as between his mother and his son of $43,647 and $28,183 for the years 1992-93 and 1993-94 respectively is not insignificant, and believes it is sufficient for the land to qualify for it to be continued to be valued
concessionally as land used for the purposes of farming. He further submits that both Mrs ER Muntz and JA Muntz are classified as primary producers in terms of the Income Tax Assessment Act, but it is by now well established that this is not a relevant test bearing on the farming valuation issue in these cases.
Mr Muntz is of the opinion that the decision by the respondent Chief Executive to remove the protective provisions of s.17(1) of the Act insofar as the use of the land for “purposes of farming” is concerned flows from the majority judgment of the Land Appeal Court dated 3 March 1995, in Re: Chief Executive, Department of Lands v. KW and MR Whackett (Refs. AV93-163 and AV93-164). Mr Muntz has read this judgment and believes that "Willowvale” has similarity to the Whackett properties. He refers to passages in Mr Justice Ambrose's minority judgment, but I do not feel the need to place emphasis upon these remarks for reasons which will become obvious later in this decision.
In summary, it is the appellants' case that “Willowvale” has been used as a predominantly farming enterprise on a continuous and repetitive basis for a significant period of time and was so operated at the respective dates of valuation. It is Mr Muntz's view that it is inconceivable that the Department of Natural Resources can now determine that profitability can be the determining factor in the future use of "Willowvale", and that it is further inconceivable that the appellants must now produce income figures on an annual basis to even be considered for the concessional valuation applicable to rural industry under s.17 of the Act. Mr Muntz also says he is at a loss to understand why so much emphasis is placed upon “the significant and substantial commercial purpose or character” when determining whether a farming business is being carried out on the land since there is no reference to such a test within the provisions of the Valuation of Land Act. This is so, but the test or guidelines are set out for us in Thomason v. Chief Executive (supra). Mr Muntz submits that "Willowvale" remains a primary industry resource, and should be valued accordingly.
Called in evidence by the respondent Chief Executive was Dominic Thomas Treston who is a registered valuer in his employ. It is Mr Treston who was responsible for removing the previously applied protective provisions of s.17 of the Act for the valuations with which we are here concerned. As at the relevant date of 1 January 1995, Mr Treston values the "Willowvale" aggregation land in the sum of $250,000 as land exclusively used for the purpose of a single dwelling house and he values the same land as at the relevant date of 1 January 1996 for the same purpose in the sum of $320,000.
Mr Treston is of the opinion that "Willowvale" does not qualify to be valued under s.17 of the Act as land used for the purposes of farming. Accordingly, he took action to remove the protective farming provisions of that section in the valuations under appeal. Valuation Ref V95- 462 was made under the provisions of s.28(1)(f) of the Act which empowers the Chief Executive to make an alteration to a valuation if, in his opinion, the land ceases to be used for the purpose
of farming. The valuation of the land in Ref V96-58 continues to remove the “purposes of farming” protection.
Mr Treston told us that a review was effected in the valuations of all properties in the area which were made under the provisions of s.17 of the Act. A form was sent to all landholders. The response from the appellants has already been covered in this decision. After examining the returned forms, Mr Treston carried out an inspection of "Willowvale" on 3 March 1995, in the company of Mr Muntz and Mr Archie Muntz. Based on that inspection, and on his understanding of the provisions of s.17, Mr Treston came to the conclusion that the land did not qualify to be valued under that section as land being used for the “purpose of farming”. Mr Treston says that, when the farming activities carried out on "Willowvale" were in conjunction with those on the land rented from Mr Payne, then the department considered that the combined activity qualified "Willowvale" to have been valued as land used for farming. Mr Archie Muntz was growing bananas and some pawpaws on the land rented from Mr Payne, and after the rental agreement concerning Mr Payne's land ceased in 1994, Mr Treston considered that the activities on "Willowvale", standing alone, were insufficient to indicate that the land would quality to be valued as used for the “purposes of farming”, especially since he considers that the farming activities "have been down-sized". As a result of these conclusions, Mr Treston instigated action which resulted in the alteration to the valuations so that they were based on the alternative arm of s.17(1) - as land used exclusively for purpose of a single dwelling house.
Mr Treston confirms that there are two occupied single dwelling houses on “Willowvale”. He commendably concedes that when he made the initial altered valuations (V95-462 and V96-58), he did not realise there were two occupied dwelling houses on the property. Accordingly, he made an error valuing the land as exclusively used for the purpose of a single dwelling house. As a result, further valuations issued, and these are the subject of appeals not yet discussed in this decision (V96-545, 546, 547 and 548).
Section 56(2) of the Valuation of Land Act 1944 places upon owners the onus or burden of proving any and every ground of appeal. Now, on the evidence before the Court in cases V95-462 and V96-58, it is impossible to find, during the relevant periods as set out earlier in this decision, that Mr Muntz has satisfied me that this onus has been discharged. I am satisfied on the evidence that the farming activities carried out on "Willowvale" during the financial years ending 30 June 1993 and 30 June 1994 are such as to qualify the land to have been valued as land used for the “purpose of farming”. But there is simply no evidence about the activities carried out during the relevant periods in these cases, without which the Court is not in a position to assess whether the farming activities on “Willowvale” meet any of the tests set out in Thomason v. Chief Executive. For this reason alone, the appellants must fail with their claim that the protective provisions of s.17 of the Act insofar as they apply to the use of "Willowvale" for the “purposes of farming”, are applicable to the valuations of the property under appeal.
I now turn to consider the respondent Chief Executive's valuations in appeal references V95-462 and V96-58. There seems to be no doubt that the provisions of s.17 of the Valuation of Land Act insofar as they relate to the making of a valuation of land exclusively used for the purpose of a single dwelling house have no application to the valuation of "Willowvale" as a whole due to the existence of two dwelling houses on the properties, both of which were separately occupied during the relevant periods. These valuations have been made ultra vires the provisions of s.17(1) of the Valuation of Land Act. Notwithstanding that the appellants have failed to discharge their onus, both appeals reference V95-462 and V95-58 are allowed, and both valuations under appeal are set aside upon the ground that they have been made contrary to law and are nullities.
As a corollary to the foregoing decisions, I should say that the finding will offer the opportunity to the appellants, when fresh valuations of the aggregation issue, to consider whether they should continue with objections and/or appeals and the opportunity to collate and present evidence as to the farming activities on "Willowvale" during the relevant period within which it is competent for them to so do (between the relevant date for the valuations and the date of issue of such valuations.
I now consider the balance of the appeals in these cases (V96-545, 546, 547 and 548). These appeals, as previously commented upon, are against separate valuations of the "Willowvale" aggregation issued by the respondent Chief Executive in accordance with the powers vested in him under the provisions of s.34 of the Valuation of Land Act, the relevant subsections of which read:
" 34(1)
Unless the chief executive otherwise directs, there shall be included in 1 valuation -
(a) several parcels of land which adjoin, or are owned by the same person, and whether either no part is leased or all the parcels are let to 1 person;
(b) several parcels of land in the same area which do not adjoin but are worked as 1 holding and used exclusively for the purposes of farming, and are owned by the same person and which, if let, are all let to 1 person.
(2) However, any such parcels of land shall be valued separately if buildings are erected thereon which are obviously adapted to separate occupation and which may respectively be lawfully held under separate ownerships."
The evidence is clear, and not in dispute, that during the period which is relevant for valuation purposes, there are two separate single dwelling houses on "Willowvale", each of which is adapted to, and indeed are the subject of, separate occupation. Now, the parcels
included within each of the four appeals have been created by the Chief Executive under the provisions of s.34(2) of the Valuation of Land Act. He created by notional survey a 4-hectare parcel from the "Willowvale" aggregation, upon which one of the single dwelling houses stands, and this parcel is the valuation under appeal in appeal Refs V96-547 and V96-548. The other parcel is the balance area of "Willowvale" comprising an area of 38.98 hectares upon which the other single dwelling house is located, and this parcel is the valuation under appeal in Appeal Refs. V96-545 and V96-546. The respondent Chief Executive has valued each parcel under the provisions of s.17(1) of the Act as land exclusively used for the purpose of a single dwelling house.
Mr Muntz continues in these cases with his claim that the parcels should be valued as lands used for the purpose of farming. In this respect, he relies upon his evidence in Appeals Refs. V95-462 and V96-58. I have already dealt with this aspect of the appeals.
Mr Muntz suggests that the issue of the split (separate) valuations here under appeal are discriminatory as there is ample evidence to suggest that split valuations are not issued in all cases involving aggregations upon which there are erected two dwelling houses. He further suggests that although there is a possibility that the Local Authority would approve of a 4-hectare subdivision, no allowance is made for the fact that such a subdivision may not be a practical alternative or be in the best interest for the “Willowvale” aggregation should further subdivision of the total aggregation be planned for the future. But I cannot see that the notional subdivision of 4 hectares for rating valuation purposes can in any way influence any future proposals for the actual subdivisional development of "Willowvale". Further, I offer no comment upon Mr Muntz's suggestion that the action taken by the respondent Chief Executive is discriminatory towards "Willowvale", since the matters before the Court only involve the valuation of that property.
Another matter raised by Mr Muntz is that an area of only 1,000 square metres should have been excised as a parcel from the aggregation as this equates the actual area occupied by one of the dwellings and its curtilage. On a pro rata area valuation basis, on the assumption that a 4-hectare parcel is valued at $140,000, then Mr Muntz suggests that the value of appeal ref. V96-547 and appeal ref. V96-548 parcels should be $3,500. But I should comment that an area of 1,000 square metres could not be legally excised from the parent parcel which is zoned "Rural" under the current Albert Shire Town Planning Scheme which provides for a 4-hectare minimum subdivision in that zone. However, as will be later observed, this is not a relevant consideration in these appeals.
Mr Treston told us that when he recommended that the "Willowvale" aggregation should be notionally subdivided into parcels upon which each of the dwelling houses is located, he was somewhat unsure of the exact location of the subject dwelling houses on the property. He has since further investigated the matter, and with the assistance of a cadastral overlay over an aerial
photograph, he has come to the conclusion that one of the dwelling houses is situated on Lot 996 on RP 164946, and the other is situated on the adjacent Lot 23 on Plan M332543. Mr Muntz is in agreement about the location of the houses, saying that "he always believed that the (survey) boundary is between the two houses and goes through my son's garage".
Possessed with this intervening knowledge, Mr Treston says that by implication he need not have valued the parcels by notionally subdividing the 4-hectare parcel, and that all he needed to do was to value Lot 996 comprising 7.83 hectares as a separate lot with the balance area of the aggregation, being Lots 23 and 33 on Plan M332543 and Lot 34 on Plan W31315 containing
35.15hectares, valued as a separate lot. On this basis he would have applied a valuation of
$175,000 to Lot 996 as at both relevant dates of 1 January 1995 and 1 January 1996, and a valuation of $250,000 to Lots 23, 33 and 34 as at the same relevant dates. Mr Treston points out that each of these valuations would be made under the provisions of s.17(1) of the Valuation of Land Act as land exclusively used for the purpose of a single dwelling house, and that the combined valuations would fall far short of the value of "Willowvale" as for its highest and best use as potential subdivision land. But I need not comment upon this evidence as the valuations of Lot 996 and Lots 23, 33 and 34 as separate parcels are not valuations under appeal.
Now the Court obviously has a problem with appeal refs. V96-545, 546, 547 and 548 valuations. While it cannot be said that the respondent Chief Executive has acted arbitrarily or capriciously in creating the parcels under appeal, it is clear the valuations are affected by error (vide comments of His Honour Mr Justice Gibbs in Re: Brisbane City Council v. Valuer-General (1978) 140 CLR 41 p.56). Further, it was said by the Land Appeal Court in Grahn v. Valuer- General (1992-93) 14 QLCR 327 p.328 in respect of the statutory presumption of correctness in what was then s.13(7) of the Valuation of Land Act (now s.33) that:
" Once it is shown that:
(1) in making the valuation the Valuer-General acted upon a wrong principle, or made a serious error of fact; or
(2) the valuation was made by a method fundamentally erroneous, " the presumption of correctness of a valuation is rebutted.
While it cannot be said that in the matters at hand that the respondent Chief Executive made a serious error of fact, it seems that he inadvertently and unnecessarily acted upon a wrong principle in declaring the parcels which are the subject of the valuations under appeal. In the exercise of his discretion and by creating a notional parcel (V96-547 and V96-548), a miscarriage of the discretion occurred, and as a result, the creation of the parcel was not a correct exercise of the Chief Executive’s discretionary power. In these circumstances, the valuations under appeal are set aside as they are null and void. It follows that the Court is not required to consider each appeal on the merits of the evidence.
Counsel for the respondent submitted that it is within the Court's power to correct the
mistake made by the Chief Executive, and suggested that a possible resolution to the problem was for the Court to determine, in accordance with the evidence of Mr Treston, an unimproved value of $175,000 for Lot 996 on RP 164946 as at relevant dates of 1 January 1995 and 1 January 1996, and an unimproved value of $250,000 for Lots 23, 33, and 34 at the same relevant dates. But to do so would inevitably create an injustice to the appellants, as they came before the Court to contest only the valuations under appeal, and no opportunity would be given to them to contest the above Court's determination. This is especially so since Mr Muntz did not agree with these valuations since they resulted in an overall increase in the value of the "Willowvale" aggregation. I find the best resolution of the problem is for the respondent Chief Executive to revalue the "Willowvale" aggregation lands as at relevant dates of 1 January 1995 and 1 January 1996.
In summary then, each of the appeals ref. V95-462, V96-58, V96-545, V96-546, V96- 547 and V96-548 are allowed, and the valuations appealed against are set aside as being null and void.
CH CARTER MEMBER OF THE LAND COURT
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