Privitera v Chief Executive, Department of Natural Resources

[1999] QLC 40

[1999] QLC 40

 

LAND COURT

BRISBANE

30 APRIL 1999

Re:     AV98-454

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

R and R Privitera

v.

Chief Executive, Department of Natural Resources

(Hearing at Inglewood)

D E C I S I O N

This appeal is against the chief executive's unimproved valuation of $36,000 as at 1 October 1997 of land described as Lot 7 RP 849203 and Flood Reserve Lease A, Parish of Coolmunda, County of Clive, containing 33.8 ha.  In the Notice of Appeal, the owners estimated the unimproved value to be $20,000.
           The land is situated with frontage to the bitumen sealed Coolmunda Dam Access Road, off the Cunningham Highway, about 16 km east of the Town of Inglewood.  Electricity and telephone services are available.
           The evidence was that the land has been valued by the chief executive on the basis that its highest and best use is as a rural homesite, being "an elevated easy sloping box and gum ridge with an easterly aspect.  It has good rural and dam views."  It is observed that the freehold Lot 7 containing 20.32 ha, being on the western side of the Coolmunda Dam Access Road, is severed by that road from the balance area Flood Reserve Lease which is adjacent to the waters of the Dam.  It is assumed that pursuant to s.35(1)(b), the chief executive has directed that the two severed parcels be included in one valuation.
           Mr WG Major acted as agent for the appellants and gave evidence on their behalf.  He pointed out that the property had been purchased by Mr and Mrs Privitera early in 1997 with the specific intention of "backgrounding" cattle for sale to the Wyalla Feedlot.  Mr Privitera is one of the three partners of the "Privitera Partnership" which owns and operates a property of 1,973 ha on the Dumaresq River near Yelarbon, known as "Oak Park".  A mixed herd of about 600 head of breeding cattle are run on "Oak Park".  The acquisition of the subject land allowed the appellants to purchase steers from the partnership and fatten them, for profit.  It was decided not to stock the land immediately after purchase, allowing some spelling of the pastures, general maintenance, together with a cleanup and removal of rubbish.  Unfortunately, when the property was near ready to receive cattle for fattening, Mr Privitera suffered a serious accident, in November 1997, requiring his hospitalisation for a long period then an even longer period of rehabilitation.  However, 10 steers were purchased from the partnership in June 1998, nine of which were sold to the feedlot in December 1998 when another 10 head were purchased from the partnership. 

The property when purchased, enjoyed the benefit of a waterworks licence for irrigation from the dam, with a nominal annual allocation of 45 megalitres.  According to Mr Major the appellants' development proposal which had been delayed by the recuperation of Mr Privitera, was to establish improved pastures, install irrigation equipment to make beneficial use of the water allocation and to "background at least 60 head a year with a net profit of $19,650."

Mr Major said that, as an individual operation, the appellants have and will spend about 20 hours of their time each week on the running of the property and have spent "quite a lot on a tractor and machinery, fencing …". In his opinion, although admittedly not stocked until subsequent to the period relevant to the valuation appealed against, the land should be seen as being used in conjunction with the appellants' interests in the "Oak Park" property for the business of grazing. It should therefore, in his opinion, be valued pursuant to s.17(1) of the Valuation of Land Act, as being used for purposes of "farming", as defined in s.17(2) of the Act. On that basis and in relativity with valuations applied to adjacent lands which were being used for purposes of farming, he estimated the value of the subject land to be $5,800.
           In the alternative, if it was to be valued as a rural  homesite the purchase price, according to Mr Major, should be ignored because the land was not acquired for that purpose and, for example, the water licence "would be of no use so could be sold".
           Although agreeing that the site offered a good view of the dam, he said that it suffered the disability of "millions of insects and mosquitoes" and "no peace at a weekend" when there is high public visitation of the Dam recreational and picnic facilities with resultant noise, rubbish pollution and loss of privacy.  Furthermore, the nature of the soils which he described as light black being originally timbered with brigalow/belah, created building foundation difficulties and required gravelling to the periphery of any selected house site. 
           In relativity with his opinion of homesite values which should be applied in the Tobacco Road area, the subject land would be valued by him in the amount of $10,000.
           Mr MW Malone, registered valuer, employed by the Department of Natural Resources, had made the valuation appealed against.  In his verbal evidence he described the land as comprising good quality brigalow and forest soils.  The basis of the valuation had been obtained primarily from the sale of the property itself with support from the sale of another rural site a relatively short distance to the south.
           The subject property had been purchased by the appellants in February 1997, for $77,750.  Mr Malone had analysed the sale to show an unimproved value for the land of $40,828, the added value of the improvements having been assessed as totalling $36,922.  Under cross-examination Mr Malone provided the apportionment of the added value of the improvements as being – fencing $8,845; structures (shed) $3,269; water improvements (mill, bore, dam, etc.) $6,678; timber treatment $18,130.  That analysis was not challenged by Mr Major.
           The subject sale was one of the several sales of rural sites throughout the Shire which had been adopted by Mr Malone as having been representative of the market which existed for rural homesites.  As had been explained in other appeals in which Mr Major had been involved, the sale had supplied part of the evidence which had led to the application of a general increase of 80% above the valuations previously in force for lands which were broadly categorised as rural homesites.
           The second sale was of Lot 6 RP 800273, containing 17.18 ha, situated in Tobacco Road.  The vendor/purchaser parties were Dean/Smith and the sale price had been $31,000, analysed, again without challenge, to show an unimproved value of $25,075.  The valuation applied to the sale land had been $23,000.  That land in comparison with the subject was described by Mr Malone as being of "smaller area, consisting of an elevated easy sloping sandy forest site" with "small views east to Coolmunda Dam", and overall inferior to the subject land.  This second sale had also been seen by Mr Malone to have been representative of the general rural homesite market  and also supported the 80% increase over the previously existing valuation for the sale land.
           Mr Malone said that the view from the second sale site was restricted to an elevated section near the front of the site adjacent to the road and then limited by trees between the site and the waters of the Dam.  Mr Major, to the contrary, was of the opinion that the views from the selected homesite on the sale land were very good and generally comparable with those from the subject land.  However, he felt that the location of the subject land, being exposed to the disadvantages of the public visitation of the nearby picnic and recreational facilities was inferior to the sale land which was not so affected. 

Valuation Considerations

Use for Purpose of Farming
Section 17(2) of the Valuation of Land Act 1944 defines "farming" as meaning–

"(a)     the business or industry of grazing, dairying, pig farming, poultry farming, viticulture, orcharding, apiculture, horticulture, aquiculture, vegetable growing, the growing of crops of any kind, forestry; or

(b)any other business or industry involving the cultivation of soils, the gathering in of crops or the rearing of livestock;

if the business or industry represents the dominant use of the land, and –

(c)has a significant and substantial commercial purpose or character; and

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

It was the submission of Mr Major that Mr Privitera was clearly in the business of grazing, through his partnership association with the property "Oak Park".  Then, in Mr Major's submission, because cattle from "Oak Park" were fattened on the subject land, the subject land should be regarded as being used in conjunction with "Oak Park".  Under those circumstances, the overall business would qualify as being significant and substantial.  There could, in his submission, be no argument that the grazing use of the subject land was its dominant use, because grazing was in fact its only use.
The facts are that, due to the unfortunate circumstances surrounding the accident suffered by Mr Privitera, the subject land was not being used for the grazing of cattle in the period relevant to this valuation. I accept that period as being between the date of valuation – 1 October 1997 – and the date of notification of the valuation – 30 March, 1998. Mr Major submitted that as "Oak Park" was being used for the purposes of farming it was irrelevant that the subject land was not physically carrying cattle during that period, because the two properties were being used by Mr Privitera, in conjunction one with the other.
           I do not accept that there is any disclosed integration between the use of "Oak Park" and the subject land.  The evidence presented to the Court was that Mr Privitera purchased cattle from the partnership business apparently, but not clearly proven, at a price discounted by his third interest.  Such a discounting arrangement would obviously enhance the potential for profit to be made.  However, the cattle once purchased were fully owned by the appellants.  The "Privitera  Partnership" had no interest in the cattle after their sale.
           For the purpose of deciding this issue, it would have been seen as a different matter had the "Privitera Partnership", on an agistment or rental arrangement, been entitled to use the subject land during the period relevant to the valuation, for the fattening of partnership cattle bred on "Oak Park".
           However, the evidence indicates to me that the use of the subject land by the appellants is entirely independent of the use of "Oak Park" by the partnership.  The two properties are not therefore used by the appellants, or the partnership, in conjunction.
           The land was not used for purposes of farming in the period relevant to the valuation.  Furthermore, the business of grazing which was conducted subsequent to the relevant period, whilst the dominant use of the land, could not be regarded as having a significant and substantial commercial purpose or character – being far too small an enterprise.  If the property, through development of pastures and their irrigation, is at some future time, capable of producing the level of profit as predicted by the appellants, through Mr Major, then it could well be that the business would then be regarded as meeting the tests of having a "significant and substantial commercial purpose or character".
           Rural Homesite
           It seems clear that all rural lands in Inglewood Shire which were considered by the chief executive not to have been used for purposes of farming, were categorised generally as "rural homesites".  It is assumed that the sales evidence of lands which were, in fact, used for the purpose of farming had shown the significantly lower level of hectarage values with apparently no increase above the previously existing level of value for those lands. 
           The appellants here, through Mr Major, are adamant that the subject property, although small in size, is regarded locally as being one of the prime fattening paddocks in the area and was purchased for no purpose other than farming, as defined.  If the land was to be assumed as having highest and best use for purposes of farming, then it would seem arguable that the level of value actually paid for it should represent the true "farming" value.
           However, it would seem more logical to accept that with the price paid for the land being demonstrably higher than the "farming" value, the highest and best use of the subject land in the eyes of the market was not for farming, but as a rural site which has the potential to combine a residential component with small-scale rural orientated activities.
           The evidence in this matter and, indeed in the rural site valuation appeals throughout the Shire, indicates as would be expected, that rural sites with potential for more intensive use than pure residential (and allied recreational type activities) attract higher sale prices.  Similarly as would be expected, and as was found in Appeal AV98-338 – RJ and BL Coleman v. Chief Executive, Department of Natural Resources, in the decision also delivered today, rural sites with good views of the waters of Coolmunda Dam, are shown to sell at higher prices than sites with lesser or, in particular, no such views.  It seems to me logical that a rural site with availability of water for irrigation would sell for a price greater than an otherwise comparable site with no access to irrigation water.
           It seemed inherent in Mr Major's submission in this matter, that if the use of a rural site did not qualify that land to be valued as being used for purposes of farming, as defined, then features such as soil quality and availability of water for irrigation either added no value to a "rural homesite" or such features were to be disregarded.  That submission is, in my opinion, contrary to the principles of valuation and the provisions of the Valuation of Land Act 1944 (s.3(1) and s.3(2) – meaning of unimproved value).
           In my opinion, there is no disclosed reason why the sale of the subject land at a date close to the date of valuation, should not be regarded as the best evidence of value of that land for its highest and best use, which includes a residential component, together with small-scale rural orientated activities. 

Finding

The single valuation applied by the chief executive is fully supported on the evidence before the Court.
           The appeal is disallowed and the valuation of the chief executive affirmed.

RE WENCK

MEMBER OF THE LAND COURT