Tarbrax Pastoral Holding v Minister for Lands
[1994] QLAC 57
•17 October 1994
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TOWNSVILLE 17 OCTOBER, 1994
Re:Appeals from Decisions of the Land Court - Determination of Rents Hughenden District - "Tarbrax" Pastoral Holding No. 23/154 and Grazing Homestead Perpetual Lease No. 23/16088.
J U D G M E N T
These are two appeals against the determinations of the Land Court that the rent to be charged during the first decennial rental period for "Tarbrax" Pastoral Holding No. 23/154 ("Tarbrax") be $1,400 per annum and the rent for Grazing Homestead Perpetual Lease No. 23/16088 ("Marathon") be $1,890 per annum. The previous rent for "Tarbrax" was $630 per annum (3.86 cents per hectare) and for "Marathon" $731.43 per annum (3.8 cents per hectare).
These increases in rent arise from the implementation by the Crown of recommendations contained in a report by Mr C.H. Carter, Member of the Land Court. This report was the result of an inquiry conducted at the request of the Minister for Lands under the provisions of s.37(2) of the Land Act 1962, into rental standards for arable and grazing lands for Pastoral Leases and Grazing Homestead Perpetual Leases in Queensland. Mr Carter was required, among other things, to inquire into and
recommend upon the following:
" In respect of each Land Agent's District of the State, the maximum net rate per beast or per sheep which (having regard to the present state of the grazing industries and the state of such industries during the term of this inquiry) should reasonably be charged by way of rent for the best quality Crown lands held under the said tenures for the 10 year rental period commencing 1st January, 1990."
Mr Carter furnished his report to the Minister in March 1989, recommending that there be increases in both the cattle rental standards and sheep rental standards. These recommendations were made after receiving evidence from officers of the Department of Lands and from representatives of the United Graziers Association, the Cattlemen's Union, and the Queensland Graingrowers' Association.
Although "Tarbrax" and "Marathon" are now predominantly cattle properties, they
are situated in an area which is regarded as traditional sheep country and where rents have been assessed on the basis of the sheep rental standards. So far as is material in these cases, the Carter Report recommended an increase in the sheep standards for the Hughenden District from 12.6 cents to 30 cents and in the Cloncurry District from
8.4 cents to 20 cents.
These increased rental standards were applied throughout the State by the Department of Lands, but were challenged in several industry related "test cases" in the Land Court and Land Appeal Court. In Determinations of Rent - Pastoral Holding Stawellton No. 23/2004 Hughenden District and Other Grazing Selections, decision delivered 20 March 1992 (to be reported), the Land Appeal Court confirmed the increased rental standards for cattle country, but adopted sheep rental standards 20 per cent less than those recommended by Mr Carter.
The reason for so finding was that in the interim period the legislation had
changed. At page 12 of its decision the Land Appeal Court said:
" Mr Carter, who heard evidence in 1988 and produced his recommendations in 1989, was confronted with the task of ascertaining a fair rent which would remain fixed for a period of 10 years from 1st January, 1990. The President in the lower Court was confronted with the same task but he had for his consideration more recent evidence than was available to Mr Carter. In the short period between the date of the hearings in the lower Court and the date of the hearings before this Court, there is further evidence of change and of revised forecasts. Overriding all that however is a change in the law which we cannot ignore - the rental period has been shortened."
The Land Appeal Court was there referring to the provisions of the Lands Legislation Amendment Act 1991 which provided for annual rental periods to commence on 1st July 1993. As the Court pointed out, the practical effect is that the rental period of 10 years, the period on which Mr Carter's recommendations were founded, (as was the decision of the Land Court), no longer applied. The rentals were for the period from 1 January 1990 to 30 June 1993. The evidence before the Land Appeal Court at that time demonstrated clearly that the shortened rental period was a time of major rural recession, of particular economic hardship in the grain and wool industries.
In arriving at its decision in respect of the sheep rentals, the Land Appeal Court
reaffirmed that it is the duty of the Land Court to determine the rent for a whole period, not only for the year in which the assessment is made or that the rental period commences, but for every year of the assessment period. (See Determination of Rents
- Grazing Selections - Barcaldine, Blackall and Longreach Districts - (1971) 38 CLLR 130 at 134 and the cases cited therein).
At page 20 of its decision the Land Appeal Court said:
" As opposed to the troughs and peaks which might be expected to level out predictions over a ten year period, on the best information currently available including the actual conditions which existed during the expired portion of the new term of 3.5 years, it would be wrong, in our opinion, not to recognise that with regard to at least the grain and sheep industries, the period is dominated by an economic trough."
The Court held that the shorter rental period must be a matter of relevance to either higher or lower rent levels, as must the known and more predictable economic conditions during the shorter period.
The Land Appeal Court accepted the Department's so-called new "factor" system which replaced the previous so-called "gross and net rate" system, saying that both systems are no more than comparison methods which must, in theory and in practice, involve the input of expert valuation opinion to arrive at an acceptable result. The Court went on to say that it was satisfied that the Crown had complied with the statutory requirements contained in s.242 of the Land Act 1962.
Following that decision of the Land Appeal Court, the Crown adjusted rentals accordingly. As both "Tarbrax" and "Marathon" had been assessed on the sheep standard, the rentals which were previously assessed in accordance with the Carter recommendations were reduced by 20 per cent.
In the Court below, Mr Peter Francis Ievers, son of the lessees, accepted the carrying capacities and the factors used in the assessment of rent for both "Tarbrax" and "Marathon". However, he challenged the evidence presented to Mr Carter at the 1988 inquiry and which he had used to make his recommendations in respect of rentals.
Mr Ievers' source for questioning that evidence was drawn from work done by a
Mr Peter Newman, an agricultural economist with the Department of Primary Industries. Mr Ievers tendered extracts from reports prepared by Mr Newman which he said were derived from taxation returns, cash books, account sales, wool returns, etc., and which paint a far from rosy picture in respect of the sheep and cattle industries in north-west Queensland.
Mr Ievers questioned Mr Carter's somewhat optimistic outlook in respect of these industries. It appears that Mr Newman's reports were written to show the dichotomy between increasing land values and the economics based on real returns. His argument could be summarised by saying that an increase in land values does not result from favourable returns from either sheep or cattle and are no justification for a rent increase.
Mr Ievers makes the point that he is not a member of any organisation and that he did not have the opportunity to present evidence in respect of the test cases heard by the Land Court or in the subsequent appeals to the Land Appeal Court.
Before us, Mr Ievers again relied upon Mr Newman's reports and tendered other details of the economics of the grazing industry. These included a Rangelands Issues Paper which showed that in recent years the rural sector had experienced a deteriorating economic situation, and extracts from the Farm Budget Management Guide 1994 which was published as a supplement to the Queensland Country Life of 17 March 1994. Relying upon this evidence, Mr Ievers submitted that the assumptions which underlie the Carter Report, and which were applied by the Land Appeal Court in the test cases, were too optimistic and not soundly based. He does not think there has been any justification for a change to the rentals which have been applied since the previous Smith and Barry Reports in the 1970s.
The relevant statutory provisions are contained in sections 242 and 243 of the Land Act 1962. It is unnecessary to set out these provisions in full. Section 242(1)(a)
states:
" The rent of any leasehold tenure under this Act shall be based on the unimproved value of the land comprised in the holding at the date of the commencement of the rental period in question."
Section 243(1) states:
" In the determination of the rent of a pastoral lease or grazing homestead perpetual lease, regard shall be had to ...
(e)the amount which experienced persons would be willing to pay for land of similar quality in the same neighbourhood;"
While we can understand the situation in which Mr Ievers finds himself, it is difficult at this stage for an individual grazier to come before this Court and successfully argue that the detailed economic evidence which was presented to Mr Carter and to the Land Court and the Land Appeal Court in the test cases was not soundly based. To have any chance of overturning those findings, Mr Ievers would have to produce overwhelming economic evidence refuting what has gone before. Mr Ievers has attempted to do this, relying on the reports of Mr Newman and on various articles and publications. However, as was pointed out in the Court below, he has not called the authors of any of these publications. We cannot place the same weight on such evidence as that which was presented to Mr Carter and in the test cases, where the witnesses were available for cross-examination and the evidence was able to be tested. In any event, it is the factual marketplace, as it is affected by all forces, including economic theories, with which this Court is concerned in this matter, as were the Land Court and Land Appeal Court in other matters concerned with the same rental period. We have had the benefit, as did the Court below, of hearing how Mr K.I. Murray, the registered valuer for the respondent, ultimately arrived at the rent assessment. We have heard his views as to the significance of the amount of rent in the overall cost
structure of operating properties such as "Tarbrax" and "Marathon"
We are not convinced that we should depart from the findings of the Land Appeal Court in the earlier test cases. The results of these cases have been either accepted by the lessees or determined by the Courts throughout the length and breadth of the State.
Accordingly, the appeals are dismissed and the determinations of the Land Court in both cases are affirmed.
(Signed Cullinane J) Justice of the Supreme Court
(Signed R.E. Wenck) Member of the Land Court
(Signed J.J. Trickett) Member of the Land Court
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