Van v Chief Executive, Department of Lands
[1995] QLC 24
•31 March 1995
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BRISBANE
31 March 1995
Re: Appeal against an unimproved valuation -
Valuation of Land Act 1944.
Shire of Atherton
(AV94-0297)
Margaret M Van
v.
Chief Executive, Department of Lands(Hearing at Atherton)
DECISION
This appeal relates to the unimproved value of land described as Lot 2 on RP 728730, Parish of Barron, County of Nares, containing an area of 16.24 hectares.
On the basis that the land should be valued as a rural homesite, the unimproved value has been assessed by the Department of Lands in the amount of $220,000, as at 30th June, 1993.
The appellant, in the Notice of Appeal, lodged by her solicitors, contends for a valuation of $47,000. The grounds of appeal are as follows:1.The valuation is excessive.
2. The subject land is exclusively used for purposes of farming.
3. The subject land is used for the business or industry of grazing.
4. The business or industry of grazing represents the dominant use of the subject land.
5. Has a significant and substantial commercial purpose or character.
6. Is engaged in for the purpose of profit on a continuous or repetitive basis.
It should be said at the outset that the Department agrees with the appellant's
estimate of value if it is found the land should be valued on the basis that it is exclusively used for the purposes of farming in terms of the Act. The relevant provision which came into force as an amendment to s.11(1)(vii) of the Act eventually became s.17 which insofar as it relates to farming is as follows:
"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.
In terms of the grounds of appeal, the first matter to be decided is whether the land is exclusively used for the purposes of farming, as defined.
The appellant's case was conducted by Mr J.R. Wake, a registered valuer in private practice. Van (as the appellant wished to be addressed) gave evidence as to the use of the property since its acquisition by her (settlement 1st April, 1992). It was intended that the property be used for a farming and plant nursery venture. It was in a neglected condition and with assistance Van set about cleaning it up. "We got rid of tobacco bush, rebuilt fences including mutual fences with neighbours, repaired the yards, repaired the pumps, replaced and repaired the orchard irrigation system...put in a booster pump, computerised timer and 6 acres of irrigation, purchased a tractor and slasher." The grazing operation with Droughtmaster stock was commenced, with the maximum herd of steers and heifers being 42 head during 1993. Van estimates the maximum carrying capacity to be "one beast to the acre". Sales were made to show a profit. Some interruption occurred to the planned grazing operation through drought and management dispute, but the decision was made to run a breeding herd and to sell progeny at 15 months with an anticipated return of $500-$600 per head in average years. At the time of the hearing (21st February, 1995) the herd comprised 22 breeders and 18 progeny.
Van has also commenced trialling the grazing of alpacas which, when conditions are suitable, are able to be run in significantly greater numbers than are cattle. Six wethers were purchased, the first three of which were delivered in December, 1994.
A nursery shade house was constructed at a cost of $20,000, with the intention of producing native fruit and nuts, but again initial hopes were disappointed through disruption to the management plan. "Very little return ever eventuated from the shade house but I believe there is good prospect of substantial income."
Van "set aside five acres of my property for an agro-forestry scheme" and spent $2,500 in establishment costs but is "not happy with it" and is currently negotiating to begin a plantation of fodder trees.
The appellant has carried out some research into valuations applied to neighbouring properties. The subject property before her purchase had been valued on the basis that it qualified for the protection given to land used for farming purposes. Neighbouring properties enjoy that protection. She considers that she is producing more than did the previous owner and furthermore she has been prepared to put capital into experimentation. She cannot understand why she has been "singled out for classification as a home site". She considers "the whole experience to be a gross invasion of my privacy".
Mr Wake agrees with the "singled out" contention which he sees as being grossly unjust and erroneous. In his opinion the fact that some of the uses "in train" at the date of the hearing did not exist at the date of valuation "does not deny that their potential existed nor that they were being constructed or in the planning stages." In his opinion the land should have been regarded as qualifying as being exclusively used for the purposes of farming as at the relevant date. He did not deal specifically with the "business or industry" of the activities set out in s.17(2)(a) or (b) of the Act as representing the "dominant" use of the land, but was convinced that the land use qualified in terms of s.17(2)(c) and (d). He referred to the Land Court decision dated 23rd December, 1993 in the matter of G.T. and B.G. Taylor v. Chief Executive, Department of Lands and the "substantial investment in improvements to the property solely for the purpose of deriving future income..."; the "substantial investment in stock, plant and machinery..."; the employment of two persons "on a permanent part-time basis" and the maintenance of "regular books of account". He pointed out that since her acquisition of the property there had been circumstances beyond the appellant's control, but there had been continual research into various enterprises and diversification of income to maximise the return from the property.
For the use of the land to qualify as being exclusive for the purposes of farming each criterion contained in s.17 needs to be considered. I am unable to agree with Mr Wake's submission that potential uses, based on activities subsequent to the relevant period, are also to be considered. It was held by the Land Appeal Court in R.G. Murray v. Valuer-General (1983) 9 QLCR 35 that the relevant period within the Court's jurisdiction to consider activities qualifying for protection under the legislation, is between the date of valuation and "the date of issue of the notice of valuation". I am advised that in this matter the relevant period is between 30th June, 1993 and 31st January, 1994.
However, on the evidence before me, I am satisfied that the activities on the subject land met the requirements of s.17(2)(a) and (d). The questions remaining are:-
(1)Does the business or industry represent the dominant use of the land?
(2)Does the business or industry have a significant and substantial commercial purpose or character?
Interpretation of s.17 of the Act as it applies to the exclusive use of land for the purposes of farming, has very recently been addressed by the Land Appeal Court. Judgements were delivered on 3rd March, 1995, in the matters of Chief Executive, Department of Lands v. K.W. Whackett and K.W. and M.R. Whackett (majority judgement); A.R. Thomason v. Chief Executive, Department of Lands; and Chief Executive, Department of Lands v. J.W. and K. Higbie (majority judgement).
What is recognised in the Thomason judgement is that a number of factors could be considered in deciding "dominant" use in any particular case, and "when undertaking this exercise, one cannot ignore the conclusion that an objective observer would reach from viewing the land as a whole." The question of "exclusive" use does not now arise, if a dominant use in s.17(2)(a) or (b) is established. It seems to me that matters such as the local environment (in this case frontage to and views over Lake Tinaroo) are not intended to form an independent basis of consideration of "dominant" use. Such an environment might of course encourage a dominant use other than farming.
In this matter, valuation evidence was given by Mr R.G. Moroney. He had visited the property on three occasions, including October, 1993. He had come to the conclusion that the dominant use of the site was as a rural homesite associated with "small scale grazing activities".
I have formed the opinion that an objective observer, viewing the land as a whole, including the presence of infrastructure for farming activities, and observing the numbers of stock grazing on the land, could reasonably conclude that the dominant use of the land was for the purposes of farming.
The final test is the question (2) above. The Land Appeal Court majority judgement in the Whackett matter allowed the appeal by the Chief Executive, Department of Lands against the finding of the Land Court that the Whackett land (which carried its maximum capacity of 70 head of mixed cattle) was used for the purposes of farming. The evidence was that the "average recent gross return" over the three years preceding the date of valuation was $5,000 per annum derived from the sale of 25 head per annum. Comment was made that no books of account or trading figures of any kind were provided and that no explanation was given "as to why an enterprise running 70 head of cattle, 40 of which were breeders, had such a small return for the last three years. It may well have been because of the drought conditions which have affected so much of the State, but no evidence of that was forthcoming." Further comment was made that "an enterprise which can run 70 head of cattle may be shown to have a significant or substantial commercial purpose or character" but that had not been demonstrated. It is clear that the result in the judgement (with Ambrose J dissenting) was influenced by the monetary return, although the judgement quoted with approval comments in a Land Court decision in Taylor v. Chief Executive, Department of Lands (1993) 14 QLCR - "it will still be necessary to consider each case on its own merits and it is still 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 for all or any of them." Further reference was made to the Taylor decision, where it was said that "each of the words used in the phrase 'significant and substantial commercial purpose or character' are capable of a number of meanings but in combination they appeared to require a trading or business activity of important or considerable size."
A gross annual income of $11,760 per annum was being achieved by Mr Taylor with a resultant net loss, although a modest profit "of say $10,000 per annum" was expected after establishment. The Land Court had held that the Taylor grazing activity (agistment of horses) "could only be described as modest at that stage and could not be said to have a significant and substantial commercial purpose or character." The Land Appeal Court observed that the Land Court had left open the possibility that the Taylor situation may be different in the future. The Whackett cases were seen to be distinguishable on the facts from Taylor, because "the evidence points to only a limited financial return being possible, even in reasonable seasons". It was however again left open - "It may well be that at some future time, when the details of Whacketts' business activities are presented in more detail, the matter could again be considered, with quite different results."
It seems a reasonable conclusion to draw that, while financial detail is not the only criterion in determining "significant and substantial purpose or character", such detail has been seen by the Land Appeal Court as critical to consideration of the "importance" of the particular enterprise.
In the subject Van matter there was, as I understand the evidence, no activity other than the grazing of cattle in the relevant period. The plant nursery business is not a matter requiring consideration as it was not an activity during the relevant period, even if the shade house had been constructed, in anticipation of a business being commenced.
Some detail was tendered as to the purchase and sale of cattle in the period subsequent to Van's acquisition of the property, but, guided by the Whackett judgement, I am unable to find that the grazing business in the relevant period had a "significant and substantial commercial purpose or character" as that terminology has been interpreted.
It is recognised in this matter that it is seen as inequitable by the appellant and Mr Wake that many properties in the locality with perceived comparable or lesser use qualifications enjoy the protection of the legislation, as indeed did the subject prior to this relevant date. Inequitable as it may be, if other lands enjoy the valuation concession when they should not, the position is, as the Land Appeal Court said in Tobin v. The Valuer-General (1986-87) 11 QLCR 29 at p.32:"It is a matter of deciding whether or not the activities carried out on the subject land, or the usage to which it was put, conform to the test...It is not a matter of making such a decision by way of comparison with, or reference to, the level or nature of the activities carried out on other lands which allegedly have been viewed as coming within the terms of the concession. "
While Mr Wake challenged some of the evidence put forward by Mr Moroney in support of his valuation on the basis of highest and best use as a rural homesite, it is seen that the sale of the subject property in April, 1992 analysed
to show an unimproved value of $252,090 supports the level of value adopted primarily from two, more recent, sales of nearby rural sites.
As I am unable to find that the land is "exclusively used for purposes of farming" or that the valuation as a rural homesite is excessive, the appeal is dismissed and the valuation of the Chief Executive affirmed.
Member of the Land Court
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