Thomason v Chief Executive, Department of Lands
[1995] QLAC 4
•3 March 1995
|
LAND APPEAL COURT
BRISBANE
Re: Appeal against determination of the Land Court.
Valuation of Land Act 1944.
AV93-103.
Allan Raymond Thomason
v.
Chief Executive, Department of Lands
J U D G M E N T
Delivered this third day of March 1995.
This appeal raises the issue whether the subject land is "exclusively used ... for purposes of farming" and so should be valued under section 17(1) of the Valuation of Land Act 1944 (the "Act").
In 1992, the Land Appeal Court held that the subject land was not "exclusively used ... for the purposes of the business of primary production" and so was not to be valued pursuant to section 11(1)(vii) of the Act (AR Thomason v. The Valuer-General, AV91-347, unreported decision dated 3 April 1992). That sub-section was amended in 1991 and the amended provision, renumbered as section 11(9) and (10), was in operation at the relevant date of valuation. In a more recent reprint of the Act, section 11(9) and (10) has been renumbered section 17(1) and (2).
The appellant argues that, although the uses to which the subject land is put have not changed since the 1992 decision of the Land Appeal Court, the relevant statutory provision has changed in such a way that the land should be valued under section 17(1) and not on the basis that its highest and best use is for rural residential purposes.
Before considering the present statutory provisions, it is appropriate to set out the uses to which the land is put and to summarise the decision of the Land Appeal Court in the previous proceedings.
The facts
The subject land is located at Mount Mee, west of Caboolture, and comprises two parcels - Lots 1 and 2 on RP 13729 in the Parish of Byron, County of Stanley. The lots have a combined area of 24.28 hectares and are zoned "Rural". The subject land and an adjacent block (Lot 2 on RP 152227, area of 24.97 hectares) were used together as a dairy farm owned by the appellant's father. The dairy ceased in 1977. Separate titles were subsequently taken by the appellant and by his brother.
Mr Thomason resides on the subject land.
Some pasture is grown on the subject land.
Mr Thomason has an agistment agreement with another person (who trades under the name of Leslie Sellin & Co) to graze between 30 and 40 dairy heifers on most of the land. At the relevant time, Mr Thomason was paid an agistment fee of $200 per month, a total of $2,400 per year.
Mr Thomason has on the land some meteorological recording equipment (comprising a manual rain gauge and an electrically operated digital recorder) from which he takes rainfall readings which he reports to the Bureau of Meteorology. He is paid only for reading and reporting rainfalls. Mr Thomason's evidence to the Land Court in previous proceedings was that $1,200 each year might be a fair estimate of his remuneration for recording and reporting the information. Before this Court he estimated that the income could be $1,500 - $1,600.
The unimproved value of the subject land for the purpose of the annual valuation of the Area as at 31 March 1992, was determined at $130,000. The valuation was made on the basis that the highest and best use of each parcel was as a residential site. Mr DR Lucas, a registered valuer in the employ of the Department of Lands, calculated the valuation as follows:
Lot 1 RP 13729 (23.472 ha) $ 90,000
Lot 2 RP 13729 (8,094m2) $ 48,000
$138,000
Less allowance for bulk 5% $ 6,900
Adopt $130,000
Evidence was given to the Land Court of sales of sites in the area. The Court held that the evidence supported the valuation of the two lots comprising the subject land. Mr Thomason has appealed against that decision.
The 1992 decision of the Land Appeal Court
The conclusions reached in the 1992 Land Appeal Court proceedings are summarised below.
(a)The production of pasture on the subject land did not constitute a "business" of primary production in itself.
(b)The use of the subject land did not, in itself, constitute a "business" of primary production in terms of dairy farming.
(c)There was insufficient evidence that, considered together, the enterprise of pasture production and of grazing cattle for the purpose of dairy farming would constitute a "business" of primary production when the only area of land involved was the subject land.
(d)Accordingly, it could not be said that, considered in isolation, the subject land is used for the purposes of "the business of primary production".
(e)Although the subject land is used for the business of primary production (predominantly because of the activities of a person other than the owner of the land), the segment of the primary production cycle is not of sufficient scope to demand incidental on-site management as an adjunct to the predominant segment of the cycle (the production and sale of milk) and so the residential use of the subject land by the appellant cannot be characterised as incidental to the use of the land for the business of primary production.
(f)The appellant's predominant use of the subject land is of a rural residential nature and any input into the primary production scheme of things is incidental to such residential use, satisfying the personal standards of the appellant.
(g)Because there is a dual use of the land, it is not exclusively used for the purposes of the business of primary production, nor is it used exclusively for the purposes of a single dwelling house, as those purposes were defined in section 11(1)(vii) of the Act.
(h)In addition, a small part of the subject land is used for the purposes of housing meteorological equipment, recording rainfall measurements and reporting those measurements to the Bureau of Meteorology. That use is not incidental to either the purposes of a single dwelling house or the purposes of the business of primary production.
The terms and operation of section 17 of the Valuation of Land Act
The parts of section 17 that are relevant to these proceedings are as follows:
"Exclusive use for single dwelling house or farming
17.(1) 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.
(2) In subsection (1) -
...
'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 question is whether, at the relevant date of valuation, the subject land was "exclusively used ... for purposes of farming".
This case is among the first involving section 17 to come to the Land Appeal Court. The section is similar to, but not the same as, section 11(i)(vii) which it replaced. The law relating to the operation of section 11(1)(vii) was developed in a series of decisions of the Land Court and the Land Appeal Court and the policy of the previous provision was discussed by the Land Appeal Court in AR Thomason v. The Valuer-General, AV91-347. The more recent history of section 11(1)(vii) and its amendment to the form of the present section 17 is discussed in detail in the judgment of the majority of the Land Appeal Court in KW and MR Whackett v. Chief Executive, Department of Lands (AV93-163, AV93-164) delivered on the same day as this decision and need not be repeated here.
The definition of "farming" in section 17(2) has four elements, namely:(a)a business or industry of a specified type or involving activity of a specified type;
(b)a business or industry which represents the dominant use of the land;
(c)a business or industry that has a significant and substantial commercial purpose or character;
(d)a business or industry that is engaged in for the purpose of profit on a continuous or repetitive basis.
It is clear from the use in the definition of "and" and "if" that each of the four elements of the definition must be satisfied to establish that the land is being "exclusively used ... for purposes of farming".
The land must be "used", that is, it must be applied to, employed for some purpose, put into service, turned to account (see Macquarie Dictionary). The word "use" has been held to be "a word of wide signification" (British Motor Syndicate Ltd v. Taylor & Son [1900] 1 Ch 577 at 583 per Stirling J) and "a word of wide import" (Shell-Mex & BP Ltd v. Clayton [1955] 3 All ER 102 at 106 per Court of Appeal) the meaning of which in any particular case depends to a great extent on the context in which it is employed (Ryde Municipal Council v. Macquarie University (1978) 139 CLR 633 at 637 per Gibbs ACJ, 651 per Stephen J, 658 per Aickin J). For land to be "used" it must be actually used, not be contemplated or intended to be used nor be suitable for use (London & South Western Ry Co v Blackmore (1870) LR 4 HL 610 at 617 per Lord Hatherley LC.). That does not mean that there must be activity on all the land. An owner can use land by keeping land in its unimproved state where retaining it in that state is relevant to a particular purpose (Newcastle City Council v. Royal Newcastle Hospital [1959] AC 248 at 255, 1 All ER 734 at 735, 100 CLR 1 at 4, Privy Council).
If land is to be valued under section 17(1) on the basis that the land is "exclusively used ... for purposes of farming", each of the following questions must be answered in the affirmative:1.Is the land used for the purposes of:
(a)the business or industry of a type specified (namely, 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 an activity of a type specified (namely, the cultivation of soils, the gathering in of crops or the rearing of livestock)?
2.Does the use of the land for the purposes of that business or industry represent the dominant use of the land?
3.Does the use of the land for the purposes of that business or industry have:
(a)a significant and substantial commercial purpose; or
(b)a significant and substantial commercial character?
4.Is the use of the land for the purposes of that business or industry engaged in for the purpose of profit on:
(a)a continuous basis; or
(b)a repetitive basis?
Before considering the elements of the definition of "farming" in section 17(2), it is appropriate to make some observations about the approach to be taken in interpreting the relevant parts of section 17.
First, there are elements of the section which initially appear to be difficult to reconcile or appear to be tautological. It is our task, however, to interpret the words used in a way which is sensible and gives meaning and effect to each of the words and phrases used (see DC Pearce and RS Geddes Statutory Interpretation in Australia, 3rd edn, paragraph 2.7 and cases cited). The approach to be taken is to determine the meaning of each element of the definition of "farming", not in isolation but in the light of each other element.
Second, although the legislative history of the section may suggest that the general objective in amending the legislation was to limit the categories of land which could take the benefit of the concession, the section must be interpreted by reference to the terms used. If, on a proper construction of the words, some areas of land are valued under section 17(1) despite the apparent policy objective of the amendment then that may indicate an infelicity of drafting to which further attention may need to be given.
The various elements in the definition of "farming" are considered in detail in KW and MR Whackett v. Chief Executive, Department of Lands (AV93-163, AV93-164). The following discussion draws on the conclusion there expressed by the majority of the Land Appeal Court.
(a) The relevant business or industry
The Act defines farming in terms of the "business or industry" of grazing, dairying, pig farming, viticulture, orcharding, apiculture, horticulture, aquiculture, vegetable growing, the growing of crops of any kind, forestry, or any other business or industry involving the cultivation of soils, the gathering in of crops or the rearing of livestock.
The words "business" and "industry" have a range of meanings. The Australian Concise Oxford Dictionary includes among the definitions of "business", "habitual occupation, profession, trade" and "buying and selling, trade". The Macquarie Dictionary includes:"n. 1. one's occupation, profession, or trade. 2. Econ. the purchase and sale of goods in an attempt to make a profit.
3. ... an established or going enterprise or concern: to be in business. 4. volume of trade; patronage. ... 6. that with which one is principally and seriously concerned."
It is clear from the numerous cases in which the meaning of "business" has been considered, that the word is "of large and indefinite import" (Re Condon and City of Winnipeg (1975) 65 DLR (3d) 568 at 571 per Wilson J), "has and has long had a wide and flexible meaning" (Grieve v. Inland Revenue Commissioner [1984] 1 NZLR 101 at 106 per Richardson J) and that it may mean "almost anything which is an occupation, as distinguished from a pleasure". Accordingly the term must be construed according to its context (see Rolls v. Miller (1884) 27 Ch D 71 at 88 per Lindley LJ; also Halsbury's Laws of England, 4th edn, volume 47 para 2).
A broad reading of "business" is sensible and appropriate in the context of the definition of "farming" because paragraphs (c) and (d) of the definition provide the qualifications that the business must have a significant and substantial commercial purpose or character and that the business must be engaged in for the purpose of profit on a continuous or repetitive basis. The net result is that, although a wide meaning is to be given to the word "business" in paragraph (a), the type of business which comes within the definition of "farming" is circumscribed by other parts of the definition. Read together, the indices of "farming" for the purposes of section 17(1) of the Act will have the effect of excluding such things as activities which are really not in the nature of commercial enterprises.
A similar conclusion is reached in interpreting the word "industry" in this context. Dictionary definitions include such meanings as "habitual employment in useful work" (Australian Concise Oxford Dictionary) and "5. systematic work or labour. 6. assiduous activity at any work or task" (Macquarie Dictionary). Such meanings are appropriate in this definition of "farming".
For the appeal to succeed the appellant must first show that the subject land is used for one of the businesses or industries listed. Given that the cattle graze there on agistment and that no activity which is peculiar to the dairying process takes place on the subject land, it would need to be established that the land is used for the purposes of the business of grazing.
In JE Clinton Enterprises Pty Limited v. Camden Municipal Council (1977) 35 LGRA 9, Mr Justice Rath considered in some detail what is involved in the business of grazing for the purpose of the test of "rural land" in section 118 of the Local Government Act 1919 (NSW). His Honour noted various dictionary definitions including the following definition from The Universal Dictionary of the English Language: "To eat growing grass, feed in pasture". The word is also used transitively to mean: "To eat, feed on" as in the example "To graze herbage". The word is used of persons in the sense: "To use grass-land as pasture, put cattle to feed on it", as in the example: "to graze a field before haying it"; and also in the sense: "to put out to graze".
Rath J concluded:"The basic connotation of the word is that of animals feeding themselves by cropping the grasses, or pastures, natural or improved. The word does not include the notion of feeding by eating hay, or other produce taken from the soil by man. Mr Clinton's animals are not grazing when they are being fed lucerne harvested from the paddocks" (at 13).
He quoted with approval the view of Waddell J in Humphries v. Penrith City Council (unreported 23 June 1976) that the expression "carrying on the business of grazing" in its usage in Australia means "to carry on the business of grazing animals such as sheep or cattle (or) goats for the purpose of selling them or their offspring or their wool". Waddell J expressly distinguished grazing from dairying which is listed separately in section 118. In a subsequent case, Walker v. Wyong Shire Council (unreported 15 July 1976), Waddell J set out his views in more detail.
"In my opinion the expression 'grazing' as used in the definition means the grazing of stock for the purpose of breeding and selling offspring of the stock, or for the purpose, as in the case of sheep, of selling their wool, or grazing of stock to bring them into a condition in which they are more suitable for sale or some like activity. I am inclined to think that the kind of stock which may be the subject of grazing for the purpose of the definition includes any stock which are the subject of those kinds of activities. Clearly horses and cattle come within the definition, as do also sheep. "
Rath J observed that Waddell J was saying that the business purpose, the end result of the grazing activity, is a relevant consideration on the question as to whether the business being conducted is a grazing business. He concluded that where "the end result is the sale of the animals or their progeny, or their produce, such as wool or hair, the business would fall within the ordinary understanding in this country of a grazing business" (at 14).
In the present case it is clear that heifers agisted on the subject land feed themselves on the grasses or pastures, whether improved or natural. They do so for the purpose of later sale of their produce (milk), and possibly themselves or their progeny, as part of an enterprise conducted by Mr Sellin and they benefit from pasture grown on the subject land. Accordingly, on a broad reading of "business" or "industry", we conclude that the subject land is being used for the purposes of the business or industry of grazing.
(b) The dominant use of the land
Although section 17(1) of the Act refers to land "exclusively used" for purposes of a single dwelling house or for purposes of farming, the definition of "farming" expressly provides that the relevant business must represent the "dominant use" of the land.
Two questions arise. The first is whether the dominant use of the land for specified purposes can satisfy the test that land is "exclusively used" for those purposes. If the answer to that question is yes, the question arises whether land which is exclusively used for a specified purpose is excluded from the relief offered by section 17(1).
A number of decisions were made by the Land Court and the Land Appeal Court concerning the operation of the expression "exclusively used ... for purposes of the business of primary production" as used in the now repealed section 11(1)(vii) of the Act. The approach taken in those cases is well exemplified in the following passage from Bowden v. The Valuer-General where the Land Appeal Court expressly accepted:
"that the use of the word 'exclusively' in section 11(1)(vii) 'confines the use of the property to the purpose stipulated (the business of primary production) and prevents any use of it (the property) for any purpose, however minor in importance, which is collateral or independent as distinguished from incidental to the stipulated use' - Randwick Corporation v. Rutledge 102 C.L.R. 54 - Wyndeyer J. at p.94." (1980-81) 7 QLCR 138 at 141.
Other examples of the application of that approach to reject the operation of section 11(1)(vii) to the valuation of particular parcels of land are found in John v. The Valuer-General (1988-89) 12 QLCR 219 (where part of a single unit dwelling house was used by the owner/occupier for the purpose of conducting a real estate business), Curtis v. The Valuer-General (1979) 6 QLCR 83 (where land was used for cattle grazing but a room in the residence on the land was used as an office for an accounting business) and Benson and Hudlow v. The Valuer-General (1990-91) 13 QLCR 102 and 252 (where a rural residential use of the land by the owners was not incidental to the use of parts of the land by another person for the agistment of dairy cattle).
We agree that the correct approach was taken in the cases applying the "exclusively used" test in section 11(1)(vii) of the Act.
The first question in this case must be answered in the terms of the section, not by some predetermined attitude to the use of "exclusively" in section 17(1) which follows the approach taken previously to section 11(1)(vii).
In our opinion, insofar as section 17(1) applies to land used for purposes of farming, a change to the "exclusively used" test has been effected by the wording of section 17(2) of the Act. The Act provides its own dictionary which, at least with respect to farming, gives a meaning to "exclusively" which is at variance with its ordinary English meaning of "singly or solely" or "excluding all but what is specified" (see Australian Concise Oxford Dictionary and Macquarie Dictionary). If the expression "exclusively used ... for purposes of farming" is read by reference to the definition of "farming", section 17(1) applies with respect to land which is predominantly used for one of the specified purposes, such as grazing. In that sense, at least, section 17(1) is significantly different from the previous provision of section 11(1)(vii).
For statutory interpretation purposes, the definition of "farming" in section 17(2) of the Act can be contrasted with the definition of "single dwelling house" in the same sub-section. The latter definition has three parts, each of which refers to a dwelling or building "used solely for habitation". Any one part must be satisfied to attract the operation of section 17(1). In its operation with respect to land "exclusively used for the purposes of a single dwelling house", section 17(1) protects land used solely for the purpose specified.
In our opinion, the expression "dominant use" implies that some other use may be made of at least part of the land. Further, it does not necessarily follow that the other use must be incidental or ancillary to the dominant use before section 17(1) can apply to the land. Uses of land which were distinct from but incidental to the business of primary production (such as dairy farmer's home on the land) did not exclude the operation of section 11(1)(vii) to the land. There would have been no reason to use the expression "dominant use" in section 17(2) to apply only to those cases which previously came within section 11(1)(vii).
As a consequence of this construction of section 17(1), some cases which would have failed to attract the operation of section 11(1)(vii) for the sole reason that the land was not exclusively used for the purposes of the business of primary production, may meet the threshold test of "exclusively used ... for purposes of farming". Of course, the fact that land is not excluded under section 17(1) merely because the farming use is dominant rather than exclusive does not necessarily attract the operation of the section. The other criteria of the definition of "farming" must be met.
Although we are unanimous in our interpretation of section 17(1) and (2), we recognise that the conclusion we have reached on this matter may not be shared by all. If we have misunderstood what Parliament intended then, with respect, that misunderstanding arises from the use of "exclusively used" in section 17(1) and "dominant use" in section 17(2). If the Parliament intended to retain the previous "exclusively used" test then consideration could be given to an appropriate amendment, for example by omitting "dominant use" from the definition of "farming" and inserting "sole use".
With respect to the second question, Mr Thomason argued that, if the expression "exclusively used ... for purposes of farming" is construed to apply to land predominantly used for that purpose, it logically follows that land used solely for that purpose could not be valued pursuant to section 17(1). In our view, such a construction cannot be sustained. The apparent intention of amending section 11(1)(vii) in this respect was to broaden its operation so that the strict tests of exclusivity which applied previously would no longer be relevant. There is no suggestion that the Parliament intended to eliminate the very categories of land which section 11(1)(vii) was enacted to protect. Furthermore, the fact that the meaning of "exclusively" is now broader than its ordinary English meaning should not be construed as having as its corollary that the ordinary English meaning is thereby eliminated.
The remaining issue is how to apply section 17(1) where land is used for more than one purpose. More specifically, how does one determine which business or industry constitutes the dominant use of the land?
The ordinary English meaning of "dominant" includes "prevailing, most influential" (Australian Concise Oxford Dictionary) and "1. ... most influential ... 3. main; major; chief" (Macquarie Dictionary).
Section 17(1) provides an exception to the general principle that land should be valued having regard to its highest and best use, and that potential forms part of the unimproved value. The exception should not be applied too readily. Clearly the use of a small part of an area of land in a way that is not incidental or ancillary to the main use of the land, and which is minor in all other relevant respects, should not inhibit the sensible characterisation of the dominant use of the land. As with the concession in the repealed section 11(1)(vii), the concept and purpose of section 17(1) are easily appreciated, but it may be difficult to apply the concept to the facts of particular cases.
It is not easy to state precisely how to determine the dominant use of land in every case. One approach could be to ascertain the use to which most of the land is put. Another could be to ascertain from time to time which use of the land produces the main source of revenue or of gross profit, irrespective of the proportion of the land used to generate that income.
Some assistance can be gained from decisions of New South Wales courts interpreting section 118 of the Local Government Act 1919, which defined "rural land" to be land which is "wholly or mainly used" for specified primary businesses or industries. In McClelland v. Goulburn City Council, Rath J considered the meaning of the phrase "wholly or mainly used" as it applied to 10 acres of land used for residential and grazing activities. Having quoted dictionary definitions of "wholly" and "mainly" he wrote:"Thus the expression 'wholly or mainly' could mean either 'solely or chiefly' thus relating to the use of the land; or 'wholly or in the most part', thus referring to the amount of the land that is used. In my view the expression 'wholly or mainly' is not used in the definition with either of these meanings exclusively, and the expression is wide enough for the emphasis in some cases to be on the extent of the land used, and in others on the extent or intensity of the use. If this is so, the appellants' grazing activities do not fall within the denotation of 'parcel ... wholly or mainly used' merely because 9 acres are devoted to that use and only 1 acre to the residential use. As at 1st January, 1976, the residential use was the dominant use of the parcel, and it is immaterial that that use might not have extended to all the land, or even the greater part of it. This was the view adopted by Pike J. in Mason v. Young Municipal Council (1935) 12 LGR (NSW) 111 where he held that the main user of the land was residential, though about two thirds of it was leased to a vegetable grower." ((1976) 35 LGRA 1 at 8).
A similar approach was taken by Perrignon J in Hope v. Bathurst City Council (No 2), where the question was whether 15.55 acres of land within the City of Bathurst should be described as "rural land". Approximately 13 acres were used for grazing and for workshop, storage and access areas, the use of which was attributable to the grazing activity. The appellant and his wife lived in a house on the property and the appellant carried on his practice as a consulting engineer from the house. He also carried out some experimental and developmental engineering work on the property. Mr Hope argued that the word "mainly" should be construed as referring to area only, so that if more than half of the subject land is used for one or more of the businesses specified then the definition of "rural land" is satisfied. Perrignon J disagreed. He held that:
"the proper approach to the question is to consider all the evidence relating to the uses to which the land is put and if upon such a consideration it appears that the land is mainly used for one or more of the businesses or industries specified then it is 'rural land'. Such an approach calls for the weighing of the evidence relating to the various uses to which the land is put, including, but not being limited to, the nature and intensity of such uses, the physical areas over which they extend, and the time and labour spent in conducting them. If it can be said, weighing the uses which would bring the land within the definition of 'rural land' against the other uses to which the land is put, that the former uses constitute the main or the major use of the land, or, what I think is the same thing, that the land is mainly devoted to such uses, it is 'rural land': see McClelland v. Goulburn City Council (1976) 35 L.G.R.A. 1 at 8; cf. Bunce v. Wyong Shire Council (1975) 31 L.G.R.A. 12 at 14, 15; Fawcett Properties Ltd v. Buckingham County Council [1961] A.C. 636 at 669; (1960) 3 All E.R. 503 at 512." ((1984) 52 LGRA 79 at 84)
Perrignon J was not satisfied that the land in that case was mainly used for the business of grazing. An appeal against that decision was dismissed by a majority of the New South Wales Court of Appeal. In the leading judgment for the majority, Mahoney JA also expressed the view that there are two main possible meanings for the phrase "wholly or mainly", namely that the words may refer to the surface area of the land, or they may refer to the end to be achieved by the use. In determining which of the spectrum of possible meanings should be adopted he considered the function which the phrase was intended to perform, namely, to specify the land which may be given preferential rating treatment. He concluded that the phrase "wholly or mainly" was used to deal with the situation where the land is used for several purposes. Thus:
"If it be accepted that 'wholly or mainly' is not limited to surface area usage but extends to the kinds of problems involved in multiple use then ... what is 'wholly or mainly' the use of his land is determined, not solely by reference to area, but by reference to other criteria of which area use may be one of the relevant factors" (at 396).
On the basis that this was the proper construction of the definition, Mahoney JA agreed in the result at which Perrignon J had arrived and considered that Perrignon J had acted upon a construction of the definition which accorded with the one which he had adopted. Mahoney JA considered it unnecessary for the purposes of that case to state exhaustively the factors which may be taken into account in determining whether a use is one mainly for that which the definition specifies.
In his concurring judgment, Priestley JA stated that strong arguments can be made in support of both the opposing constructions of the definition of "rural land" in section 118 of the Local Government Act 1919. He concluded, however, that the construction favoured by Mahoney JA "fits somewhat better with the purposes at which the statute is directed (such purposes being those deducible from the statute itself) than does the alternative construction", even though the alternative may be somewhat simpler to apply in some situations.
In his dissenting judgment, McHugh JA stated that the construction of the definition was one of "considerable difficulty". He concluded, however, that the word "wholly" does not mean "solely", but requires that the whole area of the parcel of land should be used for one or more of the specified purposes. On that basis he concluded that "mainly" refers to the main part of the land which is used for one or more of the relevant purposes. He did not think that at least 50.1 per cent of the land must be utilised for a relevant business or industry before the land is "mainly used" within the definition. Some part of the land - perhaps a large part - may not be used at all. If 80 per cent of the land was heavily timbered and not used in a practical sense, but 10 per cent of the land was used for a business or industry of the specified kind, the land would be "mainly used" for that business or industry. That meaning of "wholly or mainly used" provided, he thought, a practical and reasonably simple test.
Neither party to this present appeal contended for an approach whereby the dominant use of the subject land would be determined by reference to the area or proportion of the land used for purposes of farming. Rather, each party urged this Court to make that determination by reference to commercial considerations such as the amount of money, or at least the gross profits, derived from the land as a consequence of the various uses to which the land is put.
In the appellant's submission, commercial significance must be assessed and "dollar value seems to be the obvious measuring device" (Exhibit 3). In a similar vein, the respondent submitted that the business of farming "must be of considerable size" and that an agistment agreement which generates fees of $200 per month could not be said to be of "a significant and substantial commercial purpose and character" within the meaning of section 17 of the Act.
In our view, the proper approach to be taken when ascertaining the dominant use of land is to consider such matters as the amount of land actually used for any purpose, the nature and extent and intensity of the various uses of the land, the extent to which land is used for activities which are incidental to a common business or industry of a type specified in section 17(2), the extent to which land is used for purposes which are unrelated to each other, and the time and labour and resources spent in using the land for each purpose. When undertaking this exercise, one cannot ignore the conclusion that an objective observer would reach from viewing the land as a whole.
In the present case it is necessary to weigh the uses of the land for farming purposes against other uses to which the land is put to determine whether the use of the land for farming businesses or industries is the dominant use.
Most if not all of the subject land is used for, or in relation to, one or more purposes. Most of the land is used for growing pasture and for the grazing of heifers on agistment. Some of the land (about one third of an acre) is used solely for residential purposes. A very small area of the land is used for the purposes of measuring, recording and reporting rainfall. The growing of pasture and the grazing of cattle are related uses of the land. So far as the definitions in section 17(2) are concerned, the residential and meteorological uses are unrelated to each other and are not incidental, concomitant or ancillary to the farming activities (although there may be a benefit to the agistee of having someone on the property who can "keep an eye on things"). Relatively little by way of labour and resources (including money) is expended by the appellant or the agistee in the growing of pasture and in the grazing of cattle. The amount of income generated from the agistment is $2,400 per annum, a modest sum both in terms of the cost to the agistee as part of his dairy business and in terms of the amount of income to the appellant.
The use of a negligible proportion of the land for meteorological purposes draws an income of approximately $1,200 (or up to $1,500 - $1,600) per annum, depending on the frequency of rainfall. That part of the land which is used by the appellant for his own residential purposes is not a source of revenue but would, Mr Thomason estimated, attract a rent of approximately $120 per week or $6,240 per year. In our view, the important factor is that the appellant has his home on part of the land and that he lives there, not the quality or lettable value of the dwelling.
We have reservations about adopting an income approach to determine the question of dominant use, although it may be relevant in considering other criteria contained in Section 17(2). To apply a test related to relative incomes could, in the majority of cases, distract the enquirer from the primary question of determining the dominant use of land. On some limited occasions income may be helpful in conjunction with all other criteria in assisting to determine the question, but care must be taken not to allow income generated by a use to become the primary determinant.
It is only by comparing the income the owner receives from agistment of dairy cattle with that which he receives from the Bureau of Meteorology (and, perhaps, the value to him of the occupancy of his house upon the land) that one would be able to conclude that, in spite of the fact that 30 or 40 dairy heifers continually graze the 24 hectare block, the dominant use of the land is for purposes other than farming. We are of the opinion, however, that a person viewing the area of land and the number of cattle on it would, as a matter of commonsense, say that the main or major use of the 24 hectare block was for the grazing of cattle. Consequently, we are satisfied that the dominant use of the land is for the business of grazing.
(c) Significant and substantial commercial purpose or character
To be characterised as farming, the relevant business or industry must have a "significant and substantial purpose or character".
Among the ordinary English meanings of "commercial" are "of, engaged in, bearing on, commerce; interested in financial return rather than artistry" (Australian Concise Oxford Dictionary and Macquarie Dictionary) and "capable of returning a profit; ... preoccupied with profits or immediate gains" (Macquarie Dictionary). "Commerce" includes the interchange of goods or commodities or services, especially on a large scale, and trade or business.
The relevant "purpose" is the "object to be attained, thing intended" (Australian Concise Oxford Dictionary) or, in other words "the object for which anything ... is done, ... an intended or desired result; end or aim" (Macquarie Dictionary). In this context (and by contrast with "character") the word "purpose" seems to be subjective in nature or at least have a subjective component. So for the business or industry to have a commercial purpose there must be some intention or desire on behalf of those engaged in the business or industry to pursue commercial goals rather than to be engaged in the enterprise for recreational or some other purpose.
The word "character" has a more objective connotation, being "the aggregate of qualities that distinguish one person or thing from others" (Macquarie Dictionary). The commercial character of a business or industry could be ascertained by reference to a range of criteria, quite independently of the intention or desire of those engaged in the business or industry or their goals.
The commercial purpose or character must be both "significant" and "substantial". Each word is imprecise.
The dictionary definitions of "significant" include "noteworthy, of considerable amount or effect or importance" (Australian Concise Oxford Dictionary) and "important; of consequence" (Macquarie Dictionary). In Hope v. Bathurst City Council [1979] 2 NSWLR 471 at 477, Samuels JA suggested that, although the word "significant" as used in the expression "significant commercial purpose" is "perhaps inadequate for the work here required of it", it is intended to mean "important", or "real", or "genuine", or "weighty" (see also Hope v. Bathurst City Council (1980) 144 CLR 1 at 9 per Mason J).
The word "substantial" has been judicially described as "not a word of fixed meaning in all contexts" (Terry's Motors Ltd v. Rinder [1948] SASR 167 at 180 per Mayo J) and as a word that "is not only susceptible of ambiguity" but that is "calculated to conceal a lack of precision" (Tillmanns Butcheries Pty Ltd v. Australasian Meat Industry Employees Union (1979) 42 FLR 331 at 348 per Deane J). In the present context, it would seem to connote something of real importance, worth or value and of considerable amount which pertains to the essence of the purpose or character (see Australian Concise Oxford Dictionary, Macquarie Dictionary).
It is difficult, and unnecessary, to state a precise and compendious meaning of the expression "significant and substantial commercial purpose" and "significant and substantial commercial character". Bearing in mind the various connotations of the words "significant" and "substantial" it is perhaps sufficient for present purposes to say that for section 17(1) of the Act to apply to the subject land there must be evidence that:(a)the business or industry is being carried on with a genuine and sizeable intention or desire that there will be reward, if not profit and is not being engaged in merely for recreational or some other purpose; or
(b)the qualities or distinguishing features of the business or industry demonstrate that it is being carried on in a way which (ordinarily, at least) will generate reward, if not profit.
There is insufficient evidence to show that the production of pasture and the grazing of cattle would constitute a commercially viable enterprise if the only area of land involved was the subject land.
The issue here is not whether the appellant is using the land for a business or industry which has a significant and substantial commercial purpose or character. We accept that it is the use of the land for the relevant purposes which is important, rather than the identity of the person or persons using it. So, for example, the person who owns the land and who will gain the benefit of the operation of section 17(1) need not be the person using the land for the relevant purposes (cf BB Smith v. The Valuer-General (1983) 9 QLCR 22).
The issue is whether the subject land, used in conjunction with other land owned by another person as part of a business or industry with a significant and substantial commercial character, can be valued in accordance with section 17(1) of the Act. In our view, it can.
Section 17(1) applies to "land" exclusively used for specified purposes and it is the potential of "the land" which shall be disregarded. The relevant business or industry must be the dominant use of "the land". It is implicit that the commercial purpose should be intended to be met, or the commercial character of the enterprise should be evident, from the use of the subject land, either on its own or in conjunction with other land.
That conclusion is supported by reference to the purpose of the original section 11(1)(vii) and the amended provision reprinted as section 17(1). The purpose is evident from the legislative context and from statements made by the relevant Ministers at the time when the sections were being debated in the Parliament. For example, the Honourable WAR Rae (then the Minister for Local Government and Electricity) said to the Legislative Assembly on 1 December 1971 when moving that a Bill be introduced to amend the Valuation of Land Act 1944-1970:
"The Bill also provides that land used exclusively for primary production in a potentially higher-use area is to be valued without regard to the potential. ... The provision regarding primary production has been inserted to ensure that a primary producer caught up in urban development is not valued on the potential until he ceases using the land for primary production. This will enable a primary producer to carry on economically for as long as possible, and is parallel to the single-unit residential owner in a higher use zone." (Parliamentary Debates, Legislative Assembly, 1 December 1971 at 2401-2.)
The explanation of the purpose of section 11(1)(vii) has been similarly described by the Land Court and the Land Appeal Court in a number of cases (for example, TR Groom v. The Valuer-General (1978) 5 QLCR 116, Walker v. The Valuer-General (1978) 5 QLCR 347, WH Bowden v. The Valuer-General (1980) 7 QLCR 138, Crawford v. The Valuer-General (1990-91) 13 QLCR 138). The interpretation we have adopted would allow, for example, a person who owns two or more blocks of land and who uses them together to conduct the business of farming to take the benefit of section 17(1). The interpretation would also allow a person to make the land available for use by another person as part of that other person's business of farming.
In coming to that conclusion we have adopted an approach consistent with at least one decision of the Land Court concerning the operation of section 11(1(vii) of the Act (BB Smith v. The Valuer-General (1983) 9 QLCR 22) and one decision of the Land Appeal Court (Johnston and Others v. The Valuer-General (1981) 8 QLCR 61).
We have concluded that the use of the subject land for the purposes of grazing, considered in isolation from any other land, does not have a significant and substantial commercial purpose or character. Considered as part of the dairying enterprise of Leslie Sellin & Co, the subject land is being used as part of a business which has a significant and substantial commercial purpose or character.
(d) Engage in for the purpose of profit on a continuous or repetitive basis
The final statutory criterion of "farming" is that the business or industry is engaged in for the purpose of profit on a continuous or repetitive basis.
In this context also the word "purpose" seems to have a subjective character in the sense that it refers to the intention of the persons engaged in the business or industry. The question whether a particular business or industry is engaged in on a continuous or repetitive basis must be answered in light of the factual circumstances surrounding the business, or businesses of that type. Some types of farming may require frequent and intensive amounts of activity while in other cases "the activity may be intermittent with long intervals of quiescence in between" (American Leaf Blending Co v. Director-General of Inland Revenue [1978] 3 All ER 1185 at 1189 per Lord Diplock. See also Bartholomew v. The Valuer-General (1978) 5 QLCR 253 at 259).
We are satisfied that the subject land is used for the purposes of grazing on a continuous or repetitive basis for the purpose of profit.
Conclusion
In summary, we have concluded that the answers to the four questions set out earlier in these reasons for decision are as follows:1.Is the land used for the purposes of:
(a)the business or industry of a type specified (namely, 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 an activity of a type specified (namely, the cultivation of soils, the gathering in of crops or the rearing of livestock)?
Most of the subject land is used for the business or industry of grazing cattle.
2.Does the use of the land for the purposes of that business or industry represent the dominant use of the land?
Yes.
3.Does the use of the land for the purposes of that business or industry have:
(a)a significant and substantial commercial purpose; or
(b)a significant and substantial commercial character?
The use of the subject land together with other land for the purposes of grazing does have a significant and substantial commercial purpose or character.
4.Is the use of the land for the purposes of that business or industry engaged in for the purpose of profit on:
(a)a continuous basis; or
(b)a repetitive basis?
The subject land is used for the purposes of grazing on a continuous or repetitive basis for the purpose of profit.
Having arrived at those answers, we find that the subject land must be valued under the provisions of section 17 of the Act as land exclusively used for purposes of farming.
However, our difficulty is to arrive at an appropriate valuation. Before us, no further evidence was offered, the parties relying entirely upon submissions and the Record in the Court below. A perusal of that Record indicates that Mr Thomason contended for a valuation of $48,500, which he said was derived by applying pro rata the value applied to a "very comparable" property owned by EBA Robinson, situated a few kilometres to the south of the subject land which had been valued by the respondent as land used for purposes of farming.
Neither before us, nor in the Court below, did the respondent submit a valuation other than that based on the highest and best use of the land. However, in the Land Court Mr DR Lucas, the valuer for the respondent, was asked to comment on the approach adopted by Mr Thomason in determining his estimate of unimproved value of the subject land. Mr Lucas responded by saying that Mr Thomason was entitled to do that in terms of finding a value for land used for primary production. In the light of the previous Land Appeal Court decision finding that the land should be valued at its highest and best use, he thought that it was inappropriate.
It is unfortunate that the respondent has not addressed the question of the appropriate valuation to be applied should the Court find that the land was used for purposes of farming. In the circumstances the only evidence in that regard that we have before us is the estimate made by Mr Thomason of $48,500. We accept that evidence.
Accordingly, the appeal is allowed and the unimproved value of the subject land is determined at Forty-eight thousand, five hundred dollars ($48,500).
J.
Justice of the Supreme Court
Member of the Land Court
Member of the Land Court
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