Olofsen v Chief Executive, Department of Lands

[1995] QLC 100

[1995] QLC 100

 

  LAND COURT

BRISBANE

6 SEPTEMBER 1995

In the matter of an appeal against a valuation
Valuation of Land Act 1944
  Valuation Roll No.: 3447
  Local Government:           Kingaroy  (AV94-664)

Ernst and Carmencita Olofsen
  v.
  Chief Executive, Department of Lands

(Hearing at Kingaroy)

D E C I S I O N

This is an appeal against the value of $47,500 placed on the subject land by the Chief Executive as at 30 June 1993.  The appellants contend for a value of $15,600. 
           Ernst Olofsen appeared and gave evidence on behalf of the appellants.  Evidence on behalf of the Chief Executive was given by Anthony Gordon Clift, a registered valuer employed by the Department of Lands.
           Mr Clift described the subject land as having an area of 37.138 hectares and being situated on the western side of the Hodgleigh Road, approximately 11 kilometres by road south of the Town of Kingaroy Post Office.  The access road is a formed decomposed granite surface carriageway and offers good access to the subject land.  Electricity and telephone services are connected to the property and a rural mail service is available.  Water from the Tarong Power Station pipeline is connected to the land via a private line of approximately 1700 metres.  Such water may be used for domestic and stock purposes, but not for irrigation.
           The land is elevated and is mainly of easy to partly moderate sloping country of red to light red loams.  Original vegetation most likely comprised softwood scrub with some forest influence.  The majority of the property had in the past been improved to contoured cultivation which has since reverted back to grass and some weeds.  The property has good rural views, especially to the north-east.
           The land is zoned "Rural A" under the Town Planning Scheme for the Shire of Kingaroy which applied at the relevant date.  The land is improved with a dwelling. 
The major point in contention is the highest and best use that ought to apply to the land. Mr Clift valued the land as having a highest and best use of "large rural home residential", whilst Mr Olofsen in effect, submits that the land ought to be valued as "farming" land pursuant to the provisions of s.17 of the Valuation of Land Act 1944. The relevant parts of s.17 state:

"17(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 that value for that 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.

...

"`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 significant and substantial commercial purpose or character; and

(d)is engaged in for the purpose of profit on a continuous or repetitive basis."

The appellants purchased the subject land in May 1993 for an all-up price of $100,000. The land had not been cultivated for several years and remediation work was required to bring the property into productive capacity. Whilst Mr Olofsen had inspected a number of properties in the area and had some appreciation of the market before the purchase, he feels, in retrospect, that he paid about $30,000 above market for the land. Mr Clift agrees that the price is above market, however, puts the premium paid by the Olofsens at about $22,000. Mr Clift inspected the subject land following the purchase and said in evidence that the property had probably not been inspected for statutory valuation purposes since 1984 or 1985. His inspection convinced him that the property ought not to be treated as farming land for the purposes of s.17, although it previously had been, hence the annual valuation of $15,600 which had applied at the 1992 relevant date. Mr Clift is unaware of the circumstances which gave rise to the then Valuer-General's view that the protective provisions of s.17 (in its previous guise of s.11(1)(vii)) should apply, but if valued as a single block, in Mr Clift's view, the land would have been marginal for the growing of peanuts or similar crops.
There is a limit to the period from which evidence can be taken in considering the subject valuation and, in particular, in considering the applicability of s.17. In the subject case that period commences with the relevant date of the valuation, that is 30 June 1993, and concludes on the date of issue of that valuation, that is 15 November 1993. Authority for the adoption of these dates is found in Walker v. The Valuer-General (1978) 5 QLCR 128 at 131:

"As it is relevant to my consideration of the evidence I should at this stage mention that my jurisdiction as to the use to which the subject lands are put is confined to the period commencing with the date as at which the value has to be found (31st March 1975) and finishing on the date as at which the Notice of valuation issued (28th October 1976). If a business of primary production commenced later than 28th October 1976 its effect, if any, on the unimproved value of the land is properly a matter for an application for revaluation in terms of section 13 of the Valuation of Land Act."

This reasoning was endorsed by the Land Appeal Court on appeal. ((1978) 5 QLCR 47 at 349).
           Evidence of how the property was managed during the period 30 June 1993 to 15 November 1993 is therefore the relevant evidence that I should consider.  Mr Olofsen says that at the time of purchase the property was overgrown and required a lot of work to get it into a suitable condition for production.  He says that whilst up to 40 head of cattle were carried prior to the setting in of the current drought, there were not many carried during the period indicated.
Mr Olofsen has plans to complete the construction of internal fencing which would allow grazing of the block to be managed by way of a "controlled time" method. He says that according to his information, this method would allow up to 40 head to be carried on the block which, if left with its present fencing arrangement, would carry only about 20 head in average seasons. Mr Olofsen also plans to plant about 800 to 1,000 olive trees, although under cross-examination was unable to provide details of expected income and cash flows for this venture. He explained that whilst there was limited water on the property and certainly none available for irrigation, olive trees required water during their initial establishment period only, and could otherwise survive for lengthy periods without water. He plans to establish a small dam to supply any irrigation needed during the establishment period of these trees, though Mr Clift suggests that dams in this sort of country are not very secure. Mr Olofsen argues quite cogently that, given the neglected state of the subject land at the time of its purchase, no-one could be expected to "wave a magic wand" and turn the property into a productive unit; and, secondly, the occurrence of the drought militated against Mr Olofsen's putting into place the plan that he has for the property. In respect of these submissions there are two matters that I need to mention. The task of this Court is to consider the issue of unimproved value in this case and I should not be misled by any sympathies I might have for the circumstances Mr Olofsen finds himself in, by purporting to act as a general drought tribunal. The second point I should mention is that, even if the Olofsens' plans for the land have all the appearances of being economically viable, they were not sufficiently advanced during the relevant period to satisfy the provisions of s.17. The activities during the relevant period do not, in my view, constitute a "business", nor do they have a "significant and substantial commercial purpose or character". In drawing these conclusions, I have made reference to the case of MacAdam and Another v. The Valuer-General 18 September 1981 (V80-298) (unreported) where the Land Appeal Court said:

"We stress that intentions, hopes and aspirations, however sincere, are not sufficient to constitute a business of primary production.  They must be supported and affirmed by substantial and positive actions of a type and magnitude which are approaching or may be reasonably certain to reach commercial viability."

Mr Clift led evidence based on a carrying capacity of 30 head on the subject land which indicated profitability figures which might apply to the subject land were it developed for grazing purposes.  Though the figures provided would be subject to seasons, cost management and markets, they do indicate that a grazing enterprise on the subject land would probably, following full development, still not have a significant and substantial commercial purpose or character.  It may be that once substantial work has been carried out in the establishment of the olive trees and better evidence is available indicating the prospects of returns from that venture, that the conclusion of the Court would be different, however, I express no opinion about this. 
           Mr Olofsen did not provide direct basic evidence of value, but preferred to rely on a continuation of the pre-existing annual valuation.  Mr Clift provided evidence of four sales, including the subject sale, which he referred to in support of the Chief Executive's valuation  of $47,500.  The first sale was of an area of 55.62 hectares, analysed to an unimproved value of $52,000, and was seen by Mr Clift as being slightly superior to the subject.  The second sale was of an area of 12.74 hectares, analysing to $31,500, and was inferior to the subject in Mr Clift's view, whilst his third basis, comprising an area of 45.32 hectares, analysed to an applied value of $47,500, was adjudged to be similar to the subject.  None of these sales was challenged by Mr Olofsen.  Mr Clift referred to the sale of the subject property, which he analysed to a figure of $69,600 applied to $47,500, and which he said sold above the market at the time.  As I mentioned earlier, Mr Olofsen agreed with this, however, would have allowed a premium of $30,000 not $22,000, provided for by Mr Clift.  I am content to set aside this sale and rely on the other basic evidence provided.
           It follows that I accept the valuation evidence of Mr Clift in this matter.  The appeal is therefore dismissed and the valuation of the Chief Executive in the amount of Forty-seven Thousand Five Hundred Dollars ($47,500) is affirmed.

RP SCOTT
  MEMBER OF THE LAND COURT