Stevens v Chief Executive, Department of Lands

[1995] QLC 144

[1995] QLC 144

 

  LAND COURT

BRISBANE

27 October 1995

Re:     Appeal against annual valuation -
Valuation of Land Act 1944 -
  Shire of Bungil.
  (AV94-687)

Ernest P Stevens and Wendy F Stevens
  v.
  Chief Executive, Department of Lands

(Hearing at Roma)

D E C I S I O N

Mr and Mrs Stevens are the owners of land described as Lot 325 on Plan WV8, Parish of Euthulla, County of Waldegrave, containing an area of 64.75 hectares. Under the provisions of the Valuation of Land Act 1944, the Chief Executive determined the unimproved value of that land as at 30 June 1993, at $59,000. The owners objected against that valuation and were subsequently advised that their objection had been disallowed. They then appealed to the Land Court against that decision upon their objection, advising that in their opinion the unimproved valuation should be $39,000.
           From the information contained in the report tendered on behalf of the Chief Executive, it appears the subject land is situated about 13 kilometres north of Roma, with access by 12 kilometres of bitumen sealed highway and then by formed earth and gravel road.  The country is described as comprising undulating brigalow, box, wilga and sandalwood.
           Mr EP Stevens appeared and gave evidence.  He explained that he and his wife purchased the subject land in August 1992 for $230,000.  At that time it was improved with a house and three bay shed, two equipped bores and fenced into four paddocks.  The previous owner had used the land to run cattle.
           Mr Stevens said it was their intention to re-establish a Droughtmaster Stud similar to one which they had previously conducted on a property at Mt Crosby.  For various reasons, they were unable to continue that stud and it had been dispersed.
           Mr Stevens went on to explain that the subject property has been drought stricken for the past four years and, because of this, they have been unable to carry out their plans of commencing a Droughtmaster Stud.  However, in late 1993 and early 1994, sufficient rain was received to allow them to purchase 22 Hereford steers for the purpose of resale.  In March 1995 they purchased another 10 head.  At the date of hearing there were 32 head of steers running on the property, as none had been sold.
           Although Mr Stevens agreed that running a commercial herd on such a small area would not be a viable proposition, he was of the opinion that when a stud was established, it would make a substantial profit.  However, they would not be able to establish a stud operation until economic and climatic conditions improved.
           Mr Stevens went on to say that since purchasing the property he had stickraked approximately 60 acres (24 hectares) of the land, sown it to buffel grass and fertilised with urea, for the purpose of increasing the carrying capacity.  He purchased a tractor, a slasher, a 4-wheel motor bike, and various other items of plant. In addition, he installed water troughs and carried out fencing and other improvements on the property.            He stated that all the work carried out on the property was done for the purpose of conducting a grazing business and preparing the property for the production of stud cattle.
           Mr Stevens said at the time of the previous valuation, the unimproved value of the subject land had been assessed at $45,000 on the basis of its use for the business of primary production.  The present valuation was assessed on the basis of its use as a rural residential property and increased to $59,000.  He said that since purchasing the property he had been accepted by the Department of Primary Industries as a grazier and he had received a property number for use in his business.  He had also been accepted by the relevant Departments for sales tax exemption as a grazier, for taxation deductions in respect of expenditure on the property and by the Customs Department for diesel rebates.
           He believes that in arriving at the valuation, the respondent placed undue weight on the fact that the property was small and would not lend itself to profitable production of herd cattle.  He stated that the land is used for grazing purposes and is not simply a residential block.  He believed that some consideration may have been given by the valuer to the possible subdivision of the property into smaller areas for hobby farm type activity. 
Mr Stevens contended that the property is being used within the scope of the definition of "farming" under the provisions of s.17(2) of the Valuation of Land Act 1944, and that the valuation should be made accordingly. In this regard, he referred to the decision of the Land Appeal Court in the case of Walker v. Valuer-General (1978) 5 QCLR 347.
           Evidence for the respondent was given by Mr TE Herberts, a registered valuer employed by the Department of Lands.  Mr Herberts considered that the highest and best use of the subject land was for rural residential purposes.  Although the land was not zoned, he refuted any suggestion that it had potential for subdivision, as under the by-laws of the Bungil Shire Council it could not be further subdivided.
           Mr Herberts valued the land as a rural homesite on the basis of sales of two properties in the vicinity of Roma.  Mr Herberts' Sale No. 1 is situated closer to Roma than the subject land, has an area of 64.952 hectares and sold in July 1992, for $75,000.  The sale was analysed to show an unimproved value of $63,000 and a valuation of $60,000 applied in the 1993 valuation.
           Mr Herberts described that land as a level to gently undulating rural homesite, comprising mostly open myall with some box and wilga.  He considered that it had a superior location to the subject land, was similar in size but inferior in access.  Overall, he considered the two properties to be similar.
           Mr Herberts' Sale No. 2 is situated on the Warrego Highway to the east of Roma.  It contains an area of 64.75 hectares and sold in September 1992, for $70,000.  The sale was analysed to show an unimproved value of $61,840 and a valuation of $59,000 was applied in the 1993 valuation.
           Mr Herberts described that land as a level to gently undulating rural homesite, timbered with mostly box, wilga and sandlewood.  He considered that it had superior access to the subject land, was similar in size but inferior in location.  Overall, he considered the two properties to be similar.
           Mr Herberts regarded the two sales as providing a good basis for the valuation of the subject land at the date of valuation.  At that date, he said, there was still some demand in the district for rural residential sites.  The previous twelve months had seen significant growth in the rural homesite market, as people were seeking such properties essentially to live in a rural environment close to town and to run a few head of cattle.  Since then, and particularly in the last 12 months, he said that the market had flattened out somewhat.
           Mr Herberts said that the subject land could not be used to run cattle on a commercial basis.  He felt that the carrying capacity year round would be a maximum of 12 to 15 breeders, which would not be a viable proposition.  However, he conceded that if a stud was established, then the position may be different.  However, he made the point that it takes time to establish a stud and particularly to establish a name.
At the date of valuation, Mr Herberts said the property was carrying no cattle. He did not consider that the running of 32 head of steers qualified the land for valuation under the provisions of s.17(2) of the Valuation of Land Act, particularly having regard to the latest decisions of the Land Appeal Court as to the criteria to be applied in that regard.
           I turn now to consider the requirements of the Act and the principles of valuation.
In this case the appellants argue that the land should be valued under the concessional provisions of s.17(1) of the Valuation of Land Act 1944, as "land which is exclusively used for purposes of farming". The sub-section states:

"In making a valuation of the unimproved value of land exclusively used 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.  "

In sub-section (2) of s.17, "farming" is defined to mean:

"(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.  "

Mr Stevens has referred me to the case of Walker v. Valuer-General (1978) 4 QLCR 347 which, for many years, was the leading case on s.11(1)(vii), the predecessor to s.17 of the Valuation of Land Act. However, the present valuation was not made under s.11(1)(vii), but under the provisions of sub-sections (9) and (10) of s.11 of the Act, which themselves became sub-sections (1) and (2) of s.17, following the 1994 reprint of the Act. Although the definition contains a number of similarities to the Walker test, it is expressed somewhat differently.
           The Land Appeal Court has recently considered s.17 in Chief Executive, Department of Lands v. Whackett (AV93-163 and AV93-164) judgment delivered 3 March 1995, (not yet reported). In that case, the Court traced the history of the concessional provision, including judgments of the Land Appeal Court under the previous legislation. It then considered the differences between that legislation and the present provisions, before considering each of the criteria set out in s.17(2).
           In the event, the majority of the Court found that neither the objective character nor the subjective purpose of the grazing enterprise carried on by the Whacketts, could be said to be significantly and substantially commercial.
In the present case, the date of valuation is 30 June 1993. Mr Stevens admits that he did not conduct any primary production enterprise on the land until he purchased the first steers in early 1994. Although he purchased more steers in March 1995, none had been sold. Therefore, at the relevant date, it could not be said that there was a business or industry of "farming" on the land, in terms of the criteria set out in s.17(2).
           Although that is sufficient to dispose of the present matter, for the guidance of the parties I should indicate that on the basis of the reasoning in Whackett's case, I am of the opinion that the grazing enterprise conducted on the property at the date of hearing, cannot be said to have a significant or substantial commercial purpose or character.  If, however, in the fullness of time, the appellants are able to establish a viable stud operation, then the matter might be quite different.
           In the circumstances, it is useful to repeat the words which the Land Appeal Court endorsed in Whackett's case:

"It will still be necessary to consider each case on its own merits and it is not possible to pose a simple test in this regard ... Each enterprise is different and it is not possible to set numerical or financial requirements which would be applicable in all or any of them.  "

The subject land must be valued in accordance with the requirements of s.3(1) of the Act at "... the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that ... the improvements did not exist."
           Mr Herberts has assessed the unimproved value in the approved manner by direct comparison with the sales of comparable land.  I can find no reason on the evidence before me to alter his assessment.
           In the present case, it is clear that the appeal must fail.  Therefore, the appeal is dismissed and the valuation of the Chief Executive of $59,000 is affirmed.

(JJ Trickett)      
  Member of the Land Court