Vella v Department of Natural Resources and Mines
[2007] QLC 2
•31 January 2007
LAND COURT OF QUEENSLAND
CITATION: Vella v Department of Natural Resources and Mines [2007] QLC 0002 PARTIES: Martin George & Lynette Rita Vella
(appellants)v. Chief Executive, Department of Natural Resources and Mines
(respondent)FILE NO: AV2005/0374 DIVISION: Land Court of Queensland PROCEEDING: An appeal against an annual valuation of land under the Valuation of Land Act1944. DELIVERED ON: 31 January 2007 HEARD AT: Mackay DELIVERED AT: Brisbane MEMBER: Mr RS Jones ORDER: The appeal is dismissed. CATCHWORDS: Valuation of Land Act 1944 – s.17 considered – consideration of evidence concerning the dominant use of land and value of farm improvements. APPEARANCES: Mr MG Vella, in person for the appellants
Ms C Liu, Senior Legal Officer, Department of Natural Resources and Water, for the respondent
Background
Mr and Mrs Vella have appealed against the assessment of the unimproved value of their land by the Chief Executive, Department of Natural Resources and Mines, the respondent to the appeal. The valuation under appeal is an annual valuation for the purposes of the Valuation of Land Act 1944.
The unimproved value determined by the respondent pursuant to the Valuation of Land Act 1944 (VLA) as at 1 October 2004 (effective as at 30 June 2005) is $245,000. In their notice of appeal, the appellants' estimate of the unimproved value is stated to be $100,000.
Mr M Vella represented the appellants and was the only witness called on their behalf. The respondent was legally represented by Ms C Liu, a senior legal officer employed by the respondent and relied on the evidence of Mr L Gilbert, a registered real estate valuer also employed by the respondent. Mr Gilbert was the valuer originally responsible for the assessment of the unimproved value assigned to the land.
The subject land is situated approximately 18 kilometres northwest of the city of Mackay and is more properly described as Lot 2 on Registered Plan 749092 and Lot 1 on Road Licence 200978, Parish of Bassett. The land comprises a total area of 12.741 hectares of which 11.832 hectares is freehold land. The land is of a generally irregular shape having a moderate sloping topography and is zoned "Rural" under the Town Planning Scheme of the Mackay City Council.
Issues in the Appeal
The main issue in this appeal is whether or not the appellants are entitled to the benefit of s.17(1) of the VLA in the making of the annual valuation by the respondent. Also of importance in appeals such as this is that pursuant to s.33 of the VLA, the valuation appealed against is deemed to be correct and therefore the appellants bear the burden of proving that it is wrong. In Brisbane City Council v Valuer General (1977-78) 140 CLR 41 at 56-57 the High Court considered that the presumption in favour of correctness of the statutory valuation may be rebutted where it can be shown that the valuation was based on a wrong principal and/or involved a significant error of fact and/or was made by a fundamentally erroneous method. Pursuant to s.45 (4) of the VLA, the appellants also bear the burden of proving each and every ground of appeal relied on.
Section 17 of the VLA relevantly provides:
"(1)In making a valuation of the unimproved value of land exclusively used for purposes of a single dwelling house or for purposes of farming, any enhancement in value because 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) –
farm improvements includes appropriate sheds, other structures, facilities, farm plant and land development for the particular farming business but does not include a dwelling or car accommodation.
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; and
if the business or industry represents the dominant use of the land, and –
(c) has a substantial commercial purpose or character by -
(i)having an average gross annual return, calculated over a 3 year period, of at least $5,000; or
(ii) …
(iii)…
(iv) having -
(A) a minimum value of farm improvements or plantings of forest or orchard trees of $50,000; and
(B)the appearance of being maintained for farming or expenditure on crops, forest trees, maintenance of farm improvements, livestock or orchard trees; and
(d)is engaged in for the purpose of profit on a continuous or repetitive basis…"
The evidence of the appellants is that if s.17 has no application in this appeal then they had no complaint with the unimproved value assigned to their land in the amount of $245,000. Somewhat ironically, Mr Gilbert, the valuer called on behalf of the respondent, says that if the appellants are in fact entitled to the benefit of s.17 of the Act their estimate of the unimproved value in the amount of $100,000 is excessive and that the appropriate level of value would be between $26,000 and $27,000. It seems to me that in such circumstances s.66 of the VLA is also relevant. That section provides as follows:
"66. Order of Court
Upon an appeal under section 55 the Land Court or, upon the rehearing of any such appeal, the Land Appeal Court may –
(a) affirm the valuation appealed against; or
(b) reduce or increase the amount of that valuation to the extent necessary in its opinion to determine the same correctly under, subject to, and in accordance with this Act; …"
In my opinion, the best evidence of the value of the land as at 1 October 2004, if s.17 is applicable, is the evidence of Mr Gilbert and, that it would then follow that pursuant to s.66 of the VLA it would be necessary to reduce the unimproved value to about $26,500. As mentioned above there is no debate that if s.17 is not applicable then the valuation under appeal is considered reasonable.
The s.17 evidence
The evidence in this appeal evolved in a somewhat unusual manner. It was initially contended on behalf of the appellants that they were entitled to the benefit of s.17 for the reasons identified in their letter to the Land Court dated 10 July 2006, (Exhibit 5)[1] which in part states:
[1] See also Exhibit 1 being the Notice of Appeal filed 11 July 2005 and attachments.
"To sum up, the four elements of section 17 have been met as follows.
1.A business or industry of a specific type or involving activity of a specified type.
Section 17(2)(a) "The growing of crops of any kind" – sugarcane/pasture grass.
2.A business or industry which represents the dominant use of the land. I think I have explained clearly enough at the beginning of this letter that crops and cultivation are the dominant use of this land.
3.A business or industry that has a substantial commercial purpose of character.
Section 17(2)(c)(iv) minimum value of farm improvements of $50,000.00.
Shed ($125,000 approx. total cost) includes excavation, construction and wiring costs. Partially used for storage of farm equipment and repairs and maintenance of same.
¼ of total cost $31,250.00
Tractor and slasher (I have also acquired a hay rake and offset bumpers at no cost from my brother). $15,000.00
Clearing of fence lines and drainage works
½ of total cost $8,000.00
Drilling, testing and equipping of water bore partially used for irrigating of small crops
½ of total cost $9,000.00
Honda ATV (various uses including chemical spraying)
½ of total cost $3,000.00
Seed and fertilizer $1,500.00
TOTAL $67,750.004.A business or industry that is engaged in for the purpose of profit on a continuous or repetitive bases.
We have outlaid enough funding to suggest that we hope to receive a return on that investment in the future. Financially we are unable at present to complete all tasks necessary."
When the appeal came on for hearing the appellants contended that they might also be entitled to the benefit of s.17 because, as at the date of valuation, (1 October 2004) the subject land was being used for the growing of sugar cane.[2] It would appear that when the appellants purchased the land in or about April 2004, the contract of sale was subject to terms and conditions whereby the vendor was entitled to harvest and keep the profits associated with the sugar cane crop then being grown on the subject land. The evidence of Mr Vella, which I accept, is that effectively the whole of the subject land was under cane when the land was purchased and the appellants could not carry out any activity which would interfere with the cane crop. Harvesting commenced at or about August 2004 and was completed in late October 2004.[3] The date of the completion of the harvesting of the sugar cane is of course after the date of valuation being 1 October 2004 but before the date of issue of the valuation on 29 March 2005[4] and the date of effect of the valuation being 30 June 2005. There is no dispute that the cane being grown on the subject land was a part of an adjoining and long-standing commercial sugar cane farming enterprise.
[2] See Exhibit 2.
[3] See Exhibit 3.
[4] as identified in the Notice of Objection at p.15 of Exhibit 6.
The uncontested evidence of the appellants is also to the effect that after the sugar cane on the land had been harvested by the vendor they considered growing cane on the land but after a down turn in cane prices, at or about December 2004, this idea was abandoned and it was decided instead to plant pasture grass for bailing and/or the rearing of livestock. It is that activity or use about which the facts and information contained in Exhibits 1 and 5 are particularly relevant.
In Walker v Valuer General[5] the Land Appeal Court was of the opinion that for the purposes of determining the operation and effect of s.11(1)(vii) of the VLA as it then was, the Court could not have regard to uses to which occurred after the date the notice of valuation was issued. A similar conclusion was reached by the President of this Court, Mr Smith, in Weisenberger v Valuer General.[6] It is beyond doubt that there are significant differences between wording of the then s.11(1)(vii) and s.17 of the VLA. However, in my opinion, the differences in the wording of the relevant past and present statutory provisions (s.11(1)(vii) and s.17) are not such as to weaken the authority of the reasoning of the Land Appeal Court in Walker insofar as this issue is concerned.
[5] (1978) 5 QLCR 347 at 349.
[6] (1978) 5 QLCR 125 at 127.
In this case the date of issue of the notice of valuation is 29 March 2005. Insofar as the growing of sugar cane is concerned the evidence, such as it is, leads me to conclude that up until late October 2004 the dominant, if not exclusive, use to which the land was put was the growing and cultivation of sugar cane. I also find that this use effectively came to an end by late October 2004 despite the opportunity to continue growing sugar cane existing up until December 2004. I have no evidence as to what the gross annual return from the sugar cane crop might have been nor of the value of any farm improvements on the land. In these circumstances, it is clear that the appellants cannot succeed in their appeal relying only on the sugar cane being grown on the land by their neighbour. As much was conceded by Mr Vella in cross-examination.
Turning then to the present use of the land, to satisfy s.17(2) the relevant use must also be the dominant use of the land. In Thomason v Department of Lands[7] the Land Appeal Court relevantly said:
"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 for 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."
[7] (1994-95) 15 QLCR 286 at 303.
Essentially the appellants rely on the fact that the vast majority of the subject land is used for cultivation purposes and that in total more than $50,000 as been spent on farm improvements and planting including the planting of some small crops. Up to the present the appellants have not made a profit from their farming enterprises and there is no meaningful evidence as to the extent of the gross annual return (if any) the farming enterprises generate.
During the course of the cross examination of Mr Vella a number of matters became clear. The more important of these are:
(i)the shed on the land was not built until about June 2005 some 2 to 3 months after the date the valuation notice was issued.
(ii)the dominant use to which the shed was put was for the boiler making and fabrication business of Mr Vella. Consistent with his costing of the shed in Exhibit 5, Mr Vella's evidence was that the shed was proportionally used 75% for boiler making and fabrication activities and 25% for farming purposes.
On balance, after having regard to all of the evidence relevant to this appeal I am unable to find that either s.17(2)(b) or s.17(2)(c)(iv) are satisfied for the following reasons. First, the shed was not built until after the valuation notice was issued. If the shed is subtracted from the calculations carried out in Exhibit 5 the total falls below $50,000. Second, even if the shed had existed at the relevant time it, in my opinion, could not be properly described as being a "farm improvement" for the purposes of the VLA. By far the dominant use of the shed is for commercial activities unrelated to the farming of the land. Third, when the evidence concerning the overall use to which the land was being put is looked at objectively it could not be reasonably said that the dominant use of the land was farming.
For the reasons set out above I have reached the conclusion that the appeal ought be dismissed.
Order
The appeal is dismissed.
R S JONES
MEMBER OF THE LAND COURT
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