Putland v Chief Executive, Department of Lands
[1994] QLC 45
•12 August 1994
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BRISBANE
12 AUGUST 1994
Re: Appeal against Categorisation for purposes
of Differential General Rating
Local Government Act 1936
Shire of Laidley (VC94-156, VC94-157, VC94-158)
Rex H Putland and Fay C Putland
v.
Chief Executive, Department of Lands
(Hearing at Gatton)
D E C I S I O N
These are three appeals against the categorisation of land for differential general rating purposes by the Laidley Shire Council under the provisions of section 27 of the Local Government Act 1936. At its budget meeting held on 28 July 1993, the Council resolved to make and levy differential general rates on the rateable value of rateable land within the Shire of Laidley for the financial year ending 30 June 1994. The Council specified criteria for seven categories of rateable land within its Local Government area and requested the valuation authority (Chief Executive, Department of Lands), to identify the lands within each category. In accordance with section 27A of the Valuation of Land Act 1944, the Chief Executive provided the required information.
Mr and Mrs Putland are the owners of three parcels of land which for differential general rating purposes were included in Category 3. The owners objected to this categorisation on the ground that their lands should have been included in Category 5. The respondent, as decision maker, disallowed their objections and the owners appealed to the Land Court against these decisions.
The criteria for the relevant categories of the differential rating scheme adopted by the Laidley Shire Council are as follows:"Category 3: All rateable lands (except those in Category 7) in the area of the Shire of Laidley which are vacant and vacant englobo rural residential land or used for dwellings or outbuilding on rural residential land and coded with primary land use codes 04 to 06 and 72."
"Category 5: All rateable lands (except those in Category 7) in the area of the Shire of Laidley which are used for the business of primary production and are coded with primary land use codes 60 to 71 and 73 to 89."
The lands owned by Mr and Mrs Putland are as follows:
(i)Lot 4 on Registered Plan 802867, Parish of Thornton, containing an area of 15.81 hectares (Parcel A). This land is situated about 6.5 kilometres south of the Town of Mulgowie on a bitumen road. Electricity, telephone and mail services are available. It is zoned "Rural A" under the Laidley Shire Council town planning scheme and is used for residential purposes and for the grazing of cattle.
(ii)Lot 4 on Registered Plan 156373, Parish of Thornton, containing an area of 12.31 hectares (Parcel B). This land is situated about 12 kilometres south of the Town of Mulgowie on a bitumen road. Electricity, telephone and mail services are available. The land is zoned "Rural A" under the Laidley Shire Council town planning scheme and is used for the grazing of cattle.
(iii)Lot 10 on Plan CH311958, Parish of Thornton, containing an area of 85.49 hectares (Parcel C). This land is situated about 9 kilometres south of the Town of Mulgowie with unformed dedicated access off Main Camp Creek Road. Access is gained along a gravel and earth track through neighbouring property, and no services are available. It is zoned "Rural A" under the Laidley Shire Council town planning scheme and is used for the grazing of cattle.
Mr RH Putland appeared and gave evidence. He explained that after he was transferred by the Education Department from Mackay to Walloon, the appellants began seeking a rural property. In January 1989 they purchased Parcel B with the intention of building. It was then, and still is, vacant grazing country. Later that year they purchased Parcel A which had previously been a dairy farm and upon which was constructed a house, sheds, etc., and they moved there in November 1989. They then negotiated an agreement to use an adjoining 32 hectares of land and commenced to build up a cattle herd.
Two years of drought demonstrated that the properties which had run one beast to 2 acres in 1989-90, were not a viable proposition in bad years, so the appellants negotiated the purchase of Parcel C in early 1993. They increased their herd to 80 head by mid-1993, with potential for further increase. However, the drought forced a reduction in this number to approximately 50 head.
Mr Putland went on to state that the distance between the three properties has mixed blessings, with the movement of stock between them posing some problems, but compensated for by the ability to separate various types of cattle.
Mr Putland provided the following stocking details:Parcel A, with all the structural improvements, operated as the breeding block and which, in conjunction with the adjoining 32 hectares, carried about 25 females. The drought had forced a reduction to 15, plus one bull.
Parcel B operated as the female weaner block. It had carried up to 18 unjoined females, but this has been reduced to 14 head.
Parcel C is particularly steep country but carries a heavy body of native grass. It carried 40 head of male cattle through the 1993 drought and Mr Putland estimates it could comfortably support 60 to 80 head in a good year. Numbers have been reduced to 20 head, but this will be increased when finance permits.
The water improvements comprise: a dam on Parcel A, which has had no run-off rain to fill it since December 1991; two dams on Parcel B which have been dry for most of the last three years and the appellants have carted water during that time; and two dams on Parcel C, one of which has been dry since 1993.
Mr Putland completes his statement with the following paragraph:"Together, the three portions make up what should become a viable property, in isolation, none is viable. After my retirement from my present position next year, I will not have the interest payments to meet and should be able to make a modest income from the property."
Mr Putland also gave details of stock purchases and sales. He admits there have been very few sales because they have been building up numbers, mainly buying cheap females. By mid-1993, they had about 25 breeding cows, about 15 unjoined females, two bulls and approximately 40 steers, either purchased or bred themselves.
Mr Putland agreed that the highest and best use of the two smaller blocks situated on bitumen roads would be as rural homesites. However, he emphasised that they were actually used as grazing land. He thought Parcel C was different because of its access. There was no road and present access is through the previous owner's adjoining land. Any access on the dedicated road would involve making an all-weather road over 1 kilometre in length, with a similar distance to bring services to the land. He could not imagine anyone living there.
Details of the appellants' tax returns from their primary production enterprise were given, but it is not necessary to set these out in detail. It is sufficient to say that in the last three tax years the expenditure has substantially exceeded income. Because the three parcels are separated, much of the expenditure was involved in trucking and fuel costs.
Mr Putland said that their present herd numbers approximately 70 head, which they hope to double in the next couple of years to provide a modest income. He said that the appellants have been learning by their mistakes. They have concluded that it is more profitable to buy male cattle, hold them for about 12 months and then resell them. If all goes well, Mr Putland said they could make a gross income of $15,000 per year from the three properties. However, he admitted that at this stage they do not have reliable water supply on any of the three blocks.
When questioned about his estimate of carrying capacity on Parcel C, Mr Putland admitted its seclusion and roughness had appealed to him and that when he saw it, he decided he wanted it. He said that he had no intention of clearing much of this property as he was a conservationist addicted to environmental education and hoped to use the top portion of it as a camp site for school camps, if this could be economically arranged.
Evidence on behalf of the respondent was given by Mr Jonathan Millar, registered valuer, employed by the Department of Lands. Mr Millar was the valuer responsible for valuing these properties in the 1992 valuation, had applied the land use codes to each of them and was also the officer delegated by the respondent to deal with the objections to the categorisation.
Mr Millar said that he had regarded each of the subject lands as having a highest and best use as a rural residential site. He considered that the activities carried out on the three properties did not meet the requirements for valuation under section 11(9) of the Valuation of Land Act 1944, as land being used for "farming" as defined in that Act.
Mr Millar went on to say that in arriving at that decision, he had regard to a number of matters. First, there were water problems on all three properties, none of them could be said to have permanent water. Second, his estimate of the carrying capacity was much more conservative than Mr Putland's. Third, the outgoings had far exceeded the income for the previous three years and this had resulted in losses up to this stage.
Taking into account all these things, Mr Millar said that the properties do not come close to qualifying for valuation under section 11(9). They have not illustrated that there was a significant and substantial commercial purpose or character or that they were engaged in for the purpose of profit on a continuous or repetitive basis.
Mr Millar considered whether in the fullness of time the activities would amount to a viable venture. He came to the conclusion that with the management of three separated properties, all with water problems and the added expense of transporting stock and carting water, it was difficult to envisage that the activities could ever amount to a business which would be viable. As a breeding proposition with 40 to 50 breeders, the turn-off each year would be a maximum of 40 calves at about $250 per head, a gross return of $10,000.
In considering the highest and best use of the three properties, Mr Millar said that the two smaller blocks, being situated on bitumen roads, would be attractive as rural homesites. While Parcel C had poor access, its very isolation and steepness could make it attractive as a rural retreat. Certainly the price that the appellants paid for the property was well above the farming value.
Under cross-examination, Mr Millar agreed that each of the three properties is being used for grazing purposes and he did not doubt the owners' intention to endeavour to make their activities a viable venture. However, he pointed out that a person's intentions and aspirations, no matter how sincere, will not qualify land as being used for the business of primary production. It was necessary that the activities had a significant and substantial commercial purpose or character and were carried on on a repetitive basis for the purpose of earning profit. So far the activities had showed a substantial loss each year and at this stage it was doubtful if the venture would ever be a viable one.
Mr Putland said that the activities had not been commercially viable for two reasons. First, for financial reasons he had not been able to put money into the quality of stock and the necessary improvements. Second, the seasonal conditions had been adverse. He will retire from the Education Department next year, when he will be able to devote more time to running the properties. With the aid of his superannuation money, he will be able to ensure that the properties are more successful. Mr Putland was hopeful of a gross return of $15,000 per annum, which he said would result in a modest profit.
In order to qualify for valuation under section 11(9), the grazing activities conducted on the land must have a significant and substantial commercial purpose or character and to be engaged in for the purpose of profit on a continuous or repetitive basis. It is necessary therefore to consider the activities of the appellants against this criteria.
Mr and Mrs Putland were attracted to a rural way of life when they purchased Parcel B. They then acquired Parcel A, and obtained the use of the adjoining 32 hectares. In an effort to make the venture more viable, Parcel C was acquired. This is a rough property and, although it managed to carry 40 dry cattle through the drought period, Mr Millar thinks that Mr Putland has over-optimistic expectations of its long-term carrying capacity.
The financial side of this venture does not look promising. So far the activities have been conducted at a substantial loss. In the longer term, it appears that the owners intend to expend further moneys to improve the water supply, make further improvements and upgrade the quality of the stock.
After considering all the evidence, I have come to the conclusion that Mr Millar was correct in arriving at the conclusion that he did in disallowing the objections. The evidence indicates that the appellants have purchased a rural way of life and in the long term hope to show a profit. However, on Mr Putland's own admission, any income will be modest.
There are a number of reasons why this venture does not qualify as land used for "farming" as defined by the Valuation of Land Act 1944. First, the three properties are small and have a limited carrying capacity and that carrying capacity depends upon the temporary use of 32 hectares owned by others. Second, without the expenditure of moneys on water improvements, this carrying capacity cannot be guaranteed without carting water. Third, the properties are separated, which necessitates a larger expenditure than normal on fuel and transport costs, moving cattle around and management generally. Fourth, access to Parcel C depends upon the grace and favour of a neighbour.
It is therefore difficult to see this enterprise ever amounting to a primary production activity which has a significant and substantial commercial purpose or character. Any profit from the venture will, to a large extent, be used up in paying rates and running expenses.
However, it may well be that in retirement with Mr Putland's superannuation moneys to assist, perhaps with the purchase of more land or a more consolidated parcel, the Putlands may in the future have a venture which would qualify the land for valuation as land which is used for purposes of "farming". However, on the present evidence, I am of the opinion that none of the properties qualifies for valuation under the provisions of section 11(9) of the Valuation of Land Act 1944. Therefore they do not qualify for inclusion in Category 5 of the Laidley Shire Council differential rating scheme.
Accordingly, the appeals are dismissed and the decision of the Chief Executive, Department of Lands, to include the three parcels of land in Category 3 of the differential general rating scheme, is affirmed.
JJ TRICKETT
MEMBER OF THE LAND COURT
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