Atzeni v Chief Executive, Department of Natural Resources and Mines [2001] QLC 62

LAND COURT BRISBANE Re: Appeals against Valuations Valuation of Land Act 1944 Property ID Nos: 40026557, 40026556, 40026558 Local Government: Cambooya (AV00- 301, AV00-302, AV00-303) 22 June 2001 Lawrence B & Delcia S Atzeni v. Chief Executive, Department of Natural Resources and Mines (hearing at Toowoomba) D E C I S I O N The Lots These appeals are against valuations pursuant to section 55 of the Valuation of Land Act 1944 (“the Act”). The Chief Executive has valued 3 lots belonging to the appellants, Mr and Mrs Atzeni, separately pursuant to Section 25 of the Act. The three lots abut and are in the locality of Hodgson Vale, about 10 kilometres radially south of Toowoomba in the Cambooya Shire, and each is located in the Parish of Drayton, County of Aubigny. Lot 1 on SP 127620 (Appeal AV00-301) has an area of 2.269 hectares and is a broadly triangular block bordered respectively by Carrolls Road to the west, Highgate Road to the north and north-east and Lot 2 to the south-west. Lot 2 on SP 127620 (Appeal AV00-302) has an area of 6.426 hectares and comprises a larger triangle bordered by Lot 40 on SP 130903 to the east, Lot 1121 to the south and Highgate Road, Lot 1 and a tiny part of Carrolls Road to the west. Lot 1121 on A 342430 (Appeal AV00-303) consists of 12.052 hectares. Lot 1121 is almost square and is bordered by Carrolls Road to the south and west, Lot 2 to the north and some sort of horse trail for the rural residential subdivision to the east.1 The Issues Three main issues were raised by the appellants whose case was presented and argued by the male appellant. It was argued that each of the lots should have been valued as one lot by reference to its use for farming pursuant to s. 17 of the Act. 1 The respective locations, shapes and areas of the three lots can be ascertained by reference to the Blinmap extracts contained in the reports of Mr Doyle, the valuer called by the respondent, being Exhibits 2, 3 and 4, respectively. [2001] QLC 62 -- 1 of 14 -- 2 The second issue related to whether s. 25 of the Act applied to Lots 1 and 2 requiring that each of those lots be valued separately because of the registration of a subdivision plan adjusting slightly the boundaries of Lots 1 and 2 in order to give Lot 2 access to the currently unconstructed Carrolls Road. The appellants argued that the Lots should not be valued separately. Third, the appellants argued that the valuation placed on each of the Lots failed to give sufficient weight to the disadvantages in access and services experienced by each Lot. A further disadvantage was an electricity easement which cuts across each of the three lots and upon which 100 kV electricity lines are carried on wooden towers. The onus of proof in appeals of this kind lies on the appellants2. The Valuations The date of each valuation, determined by the Chief Executive, pursuant to s. 20 of the Act, was 10 October 1999. The law has been applied as at that date. Lot 1 was valued by the Chief Executive at $41,500. Lot 2 was valued at $70,000 and Lot 3 was valued at $75,000. Each lot was valued by Mr Doyle, a valuer, who gave evidence for the respondent, at its highest and best use as a residential allotment. Mr Doyle’s evidence drew upon many comparative sales. Mr Doyle believed that, in his analysis, he had placed appropriate weight on the disadvantages in access and service experienced by each of the three lots. He acknowledged, freely, that none of his comparative sales involved circumstances truly analogous to those of the Lots, the subject of the appeal. Mr Doyle also believed that he had given sufficient weight to the presence, in each case, of the electricity easements. The section 17 Point Section 17 of the Act, at the relevant date, read as follows:- “17.(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 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 See subsection 56(2) of the Act which reads as follows: “56(2) Such notice shall state the grounds of appeal and the appeal shall be limited to the grounds so stated, and the burden of proving any and every such ground shall be upon the owner.” -- 2 of 14 -- 3 (2) In subsection (1) - “a single dwelling house” means- (a) a dwelling used solely for habitation by not more than 1 family, or (b) a dwelling occupied by the resident owner and used solely for habitation - (i) part of which stands converted for use as a flat; or (ii) part of which is used or for use as a furnished room or furnished room; by a person or persons other than the owner’s family; or (c) a building used solely for habitation and that consists of 2 flats, 1 of which is occupied by the resident owner. “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 three lots had, formerly, constituted part of a grazing property of 65.25 hectares and had been valued pursuant to s. 17. By a sale which was settled in August 1999, the easternmost two Lots were sold and have since been subdivided. This sale meant that a stock proof fence had to be constructed along the eastern boundaries of Lots 2 and 1121 to allow continued use of the subject Lots for farming purposes. In the light of the sale, all stock were removed from the property on 19 July 1999. The appellants retained an intention to have the property used for rural pursuits -- 3 of 14 -- 4 and attempted to engage a fencing contractor. Difficulty in this regard ensued (including the death of one contractor the night before he was to start work). Eventually, the fencing was completed and the three lots were leased to a Mr DA Blake by an agreement dated 28 April 2000. Soon after that date, Mr Blake commenced to use the property as part of his Limousin cattle stud whose principal operations are located at Speeds Road, Oakey. It is virtually uncontested that s. 17 was satisfied prior to 19 July 1999 and shortly after 28 April 2000. The question is whether it was satisfied as at 20 October 1999, the date of the valuation3. The application of s. 17 to the present facts depends on whether one can properly say that, despite the nine months interruption, farming was still engaged in “on a continuous or repetitive basis as at 20 October 1999 by reference to the events before and after4. The application of subparagraph (d) of the definition of “farming” was considered in Major’s case5 at some length as follows: “The respondent’s contention that the land was not used for grazing on a ‘continuous or repetitive basis’ is based on the results of Mr Malone’s inspection when he did not in fact find any cattle present. We are of the view that this argument must also fail. While ‘continuous’ (as opposed to “continual”)6 suggests an unbroken pattern of use, the word “repetitive” suggests that the use need not be continuous. Indeed, one must stop something, at least notionally, before one can repeat it. It would follow, in our view, that one could cease grazing cattle on a particular area for periods of time (say, because of varying seasonal conditions) and still be using the area on a repetitive basis. The short answer to the argument on the part of the respondent is that one does not have to have cattle on land all the time to be using the land for grazing. It is inherent in the nature of grazing that cattle will go to different parts of their range at different times of the day, the season, and the year. It is also inherent in the nature of grazing that one is still using land even when it is being rested for regeneration purposes. The flexibility inherent in the meaning of “use” has been recognised on numerous occasions. Perhaps, the locus classicus is the following 3 The application of section 17 is discussed at some length in Major v Department of Natural Resources, Land Appeal Court, 10 December 1999. 4 See paragraph (d) of the definition of farming above. 5 Op cit, see Footnote 2 above. 6 For example, see Stephen Murray-Smith, Right Words – a Guide to English Usage in Australia, Penguin, 1990, page 97. -- 4 of 14 -- 5 passage from the judgment of Lord Denning in Newcastle City Council v Royal Newcastle Hospital7: ‘An owner can use land by keeping it in its virgin state for his own special purposes. An owner of a powder magazine or a rifle range uses the land he had acquired nearby for the purpose of ensuring safety even though he never sets foot on it. The owner of an island uses it for the purposes of a bird sanctuary even though he does nothing on it, except prevent people building there or disturbing the birds. In the same way this hospital gets, and purposely gets, fresh air, peace and quiet, which are no mean advantages to it and its patients.’8”9 In the present matter, I am unable to conclude that the relevant business or industry (in this case grazing) was engaged in for profit on a continuous or repetitive base. “Continuous” suggests an unbroken pattern. The facts of this case suggest that the original grazing use came to an abrupt end and, despite the appellant’s best efforts, was not substituted by a new grazing use for nine months. Even a liberal application of “continuous” is not satisfied by these circumstances. “Repetitive” suggests some form of seasonal or other pattern falling short of unbroken use. The break in farming use in this case did not involve a mere resting of certain paddocks but a complete break from farming activity. Mr Blake’s subsequent operation, while both grazing and farming activity, was a new operation. In my opinion, as at 19 October 2000, the subject Lots were not subject to any repetitive pattern of farming activity. For the same reason, subparagraph (d) of the definition is not satisfied by reference to any extended notion of use as spelled out in the case of Newcastle City Council v Royal Newcastle Hospital10. For these reasons, the appellants have not established that the Chief Executive was in error in failing to value the land pursuant to s. 17 of the Act. If I am wrong in this regard and the three Lots should be valued (together) as farming land pursuant to s. 17 of the Act, the parties are in agreement that the valuation for all three lots should be $25,000. 7 [1959] AC 248; [1959] 1 All ER 734; (1959) 100 CLR 1. 8 AC at 255; All ER at 735; CLR at 4. 9 Paragraphs 42-45. 10 [1957] AC 248, 255; [1959] 1 All ER 734, 735; (1959) 100 CLR 1. -- 5 of 14 -- 6 This valuation was provided by Mr Doyle in supplementary oral evidence and not challenged by the appellants. I have no hesitation accepting Mr Doyle’s evidence on the matter. Accordingly, if s. 17 were held to apply to the three lots such that they should be valued as farming land, the appropriate order would be to allow the appeal in each case and to substitute, for the three valuations under appeal, one valuation of the three lots, in the amount of $25,000. The Section 25 Issues Mr Doyle relied on s. 25 in his valuations of Lots 1 and 2. For example, Mr Doyle states in Exhibit 211: “The land was valued as a residential allotment. The valuation was assessed using analysed sales of vacant residential land in the locality. Any potential as a future subdivisional land has been ignored. … The land is valued under Section 25 of the Valuation of Land Act as S.P. 127260 was regarded as plan of subdivision. Under Section 25 each undeveloped lot in a subdivision is issued as a separate valuation and the local authority provides a rate discount on the valuation for a maximum period of two financial years.” A copy of S.P. 127260 was not provided to the Court. Oral evidence from Mr Atzeni, however, disclosed that the only effective change resulting from the registration of the plan was a change in the respective boundaries of Lots 1 and 2 near their respective south-west boundaries.12 The change was effected for the purpose of providing access to Carrolls Road for Lot 2. At the time, Mr and Mrs Atzeni had an expectation that Carrolls Road, then and now, unconstructed to the west of the three lots, would be constructed because of subdivisional construction to the west of Carrolls Road. Prior to the change, the boundary between Lots 1 and 2 continued in a general south-westerly direction from where it left Highgate Road in an unbroken straight line till it met Carrolls Road at a point where Lots 1, 2 and 1121 all met. From this, it can be seen that SP 127260 caused an adjustment of that boundary so that, in its final ten or 20 metres, it continued in a westerly rather than south-westerly direction. This provides, as Mr Atzeni said, a means by which Lot 2 would access Carrolls Road. It also has the effect that Lots 1 and 1121 do not meet at any point. 11 Concerning Lot 1 on SP 127620 (appeal no. AV00-301). 12 The evidence of Mr Atzeni can be understood by reference to the Blinmap extract in Exhibit 2. -- 6 of 14 -- 7 The registration of the plan means that Lot 2 has a slightly increased (240 m²) and Lot 1, a slightly reduced area (the same). The number of lots in existence remains the same. It is not immediately obvious from section 25 that the fact of subdivision requires resultant subdivided parcels to be valued separately. Section 25 of the Act reads as follows: Valuation – discounting for subdivided land “25.(1) This section applies to a parcel of land (“parcel”) if - (a) the parcel is 1 of the parts into which land has been subdivided; and (b) the person who subdivided the land (the “subdivider”) is the owner of the parcel; and (c) the parcel is not developed land. (2) For making and levying rates on the parcel under a rating Act for the discounted valuation period, the rating authority must cause the unimproved value of the parcel to be discounted by - (a) from 1 July 1997 to 30 June 1998 – 40%; and (b) after 30 June 1998 – the percentage prescribed under a regulation. (3) For the Local Government Act 1993, section 1027² and the City of Brisbane Act 1924, section 70³ a change or alteration in the unimproved value of the parcel is taken to happen when the discounted valuation period ends. (4) For calculating the rate levied on the parcel after the change under the Local Government Act 1993, section 1027 - (a) the previous unimproved value of the land is taken to be the unimproved value of the parcel as discounted under subsection (2); and (b) the new unimproved value of the land is taken to be the unimproved value of the parcel without regard to the discount. (5) For adjusting the amount of a rate levied by the council on the parcel after the change under the City of Brisbane Act 1924, section 70 - (a) the unimproved value of the land is taken to be the unimproved value of the parcel as discounted under subsection (2); and (b) the altered unimproved value of the land is taken to be the unimproved value of the parcel without regard to the discount. -- 7 of 14 -- 8 (6) This section does not affect the operation of section 17.4 (7) In this section - “developed land” means land improved by the construction of a building or other facility reasonably capable of being used. “discounted valuation period”, for a parcel of land, means the period starting when the land of which the parcel was a part was subdivided and ending on the earlier of the following days - (a) 30 June in the year immediately following the financial year to which the land of which the parcel was a part was subdivided. (b) the day on which there is a change in the ownership of the parcel; (c) the day the parcel becomes developed land. “rating Act” means - (a) The City of Brisbane Act 1924; or (b) the Local Government Act 1993. “rating authority” means the local government in whose area the parcel is located. ². Local Government Act 1993, section 1027 (Change in unimproved value of land) ³. City of Brisbane Act 1924, section 70 (Levy of rate on alteration in unimproved value etc.) 4. Section 17 (Exclusive use for single dwelling house or farming).” In order to understand the impact of subdivision, one has to consider from where the discretion to value separate parcels as one originates. The Chief Executive’s discretion in this regard comes from section 34 of the Act which reads as follows: “Lands to be included in 1 valuation 34.(1) Unless the chief executive otherwise directs, there shall be included in 1 valuation - (a) several parcels of land which adjoin, and are owned by the same person, and where either no part is leased or all the parcels are let to 1 person; (b) several parcels of land in the same area which do not adjoin but are worked as 1 holding and used exclusively for the purposes of -- 8 of 14 -- 9 farming, and are owned by the same person and which, if let, are all let to 1 person. (2) However, any such parcels of land shall be valued separately if buildings are erected thereon which are obviously adapted to separate occupation and which may respectively be lawfully held under separate ownerships. (3) Despite section 35, subsection (1) applies to valuations used for rating and land tax purposes and does not apply to valuations for rental purposes. (4) In this section - “parcel” does not include a parcel the unimproved value of which must be discounted under section 25.5 5. Section 25 (Valuation – discounting for subdivided land).” It is the exclusory definition of “parcel” in subsection 34(4) on which Mr Doyle has relied for concluding that he was required to value Lots 1 and 2 separately. I am in agreement with Mr Doyle’s construction of the combined effect of sections 25 and 34 of the Act. The conclusion is supported by the explanatory notes to the Natural Resources Legislation Amendment Act No. 41 of 1997 which Act substituted a new s. 25 and amended s. 34 of the Act to provide a different scheme for rate relief on subdivided land to that which had prevailed previously13. The explanatory notes, as they describe clauses 8 and 9 of the amending Act, are as follows: “Clause 8 omits the current section 25 which deals with the valuation of subdivided land and provides the machinery for a separate value for land held in subdivision, the power for a local government to discount the value of the land held by a subdivider, the period for the discounted value to apply, and the change mechanism for rating following the expiry of a discount period, a change of ownership of the land, or a change from the vacant status of the land, for example, the land is built upon. Clause 9 excludes a land parcel which is subject to the discounted valuation process from being amalgamated for valuation purposes in terms of section 34.” The question remains whether the registration of the plan SP 127260 constitutes a subdivision for the purposes of s. 25 of the Act. 13 For discussion of s. 25 of the Act in its earlier emanation, see Galli Developments v. the Chief Executive (1997) 17 QLCR 25, per Mr Scott. -- 9 of 14 -- 10 The definition of “subdivide” in s. 3 of the Act refers one to s. 8 of the Act. Section8 reads as follows: “Meaning of “subdivide” 8.(1) “Subdivide” land means divide land into parts. (2) Land may be divided into parts by - (a) sale, conveyance, transfer or partition; or (b) an agreement, conveyance or instrument between living persons under which a part of the land becomes immediately available for separate disposition or occupation; or (c) the issue of a certificate of title under the Land Title Act 1994 for a part of the land. (3) An agreement, conveyance or instrument mentioned in subsection (2)(b) includes a lease only if - (a) the lease’s terms exceeds 5 years; or (b) the lease’s term, together with any period of renewal available under the lease, exceeds 5 years. The effect of SP 127260 does not readily fit the ordinary meaning of “divide land into parts”. As Mr Atzeni pointed out, one has the same number of lots after as before registration of the plan. What in effect has happened is a simultaneous dividing into parts and reconstructing one of those parts back into a larger unit. While not in evidence, I am prepared to assume that the registration of the plan resulted in new certificates of title becoming available so as to satisfy paragraph 8(2)(c) of the section. It is noteworthy that section 25 retains the concept of “subdivide” as defined in s. 8 and not “reconfiguration of a lot” a newer terminology used in the Integrated Planning Act 1997. In my opinion, while the predecessors to Lots 1 and 2 may well have been reconfigured, they were not subdivided for the purposes of sections 8, 25 and 34 of the Act. As a result, I disagree with Mr Doyle’s application of s. 25 in valuing Lots 1 and 2. It follows that the failure to exercise the discretion to value Lots 1 and 2 as one parcel, pursuant to s. 34, resulted from a wrong view of the factual situation and the discretion should be exercised. -- 10 of 14 -- 11 I am of the opinion that s. 34 is properly applicable to Lot 1121 as well as Lots 1 and 2 since the several parcels adjoin; they are all in one ownership and, at the date of the valuation, were not leased. After 28 April 2000, as I understand Mr Atzeni’s evidence, they were leased to one person, namely, Mr Blake. Evidence as to what should ensue from valuing the three lots in one valuation was not adduced by Mr Atzeni. However, in answer to questions from the Court, Mr Doyle indicated that, in his opinion, where lots are valued as home sites, their valuation as one should result in a bulk discount of 2.5 percent. While it is not obvious to me that this is necessarily the correct approach, Mr Atzeni did not seek to challenge this evidence either in cross-examination or by adducing contrary evidence. In the circumstances, I find that the valuation of each lot should be assessed at 2.5 percent less than the result I otherwise have reached in considering the other issues in the appeals. It also seems to me that the appellants will not necessarily benefit from their success on this point. While I am not aware of the approach by which later annual valuations were carried out, there seems every likelihood that the section 17 concessions might well apply to the three lots. Thus the appellants have lost the prescribed section 25 discount and gained the rather moderate discount referred to above. These possibilities were, however, raised with Mr Atzeni during argument and he was quite definite in wishing to proceed with the appeals on this ground. The Valuations – on their merits Lot 1 As part of his careful analysis, Mr Doyle reproduced in Exhibit 1 details of 6 sales. He carefully compared each of these and expressed his opinion as to the manner in which it was comparable to Lot 1. Both in his written proof of evidence, Exhibit 5 and in his oral evidence, Mr Atzeni related how access to Lot 1 (other than by four wheel drive vehicles only) would have to be provided by constructing approximately 450 metres of gravel road including a gully crossing. This would cost slightly more than $22,000 and provide access to both Lots 1 and 2. Electricity would cost $19,000 and reticulated water would cost $15,000. Presumably, this expenditure would service both Lots 1 and 2. Mr Atzeni also gave evidence that the best view on the site was in the north- west corner but that this was very close to the existing power lines and easement. -- 11 of 14 -- 12 While the evidence as to impact of the power lines on land values in the locality, generally, was inconclusive, I accept that people would not want to build very close to such structures so that, in the case of Lot 1, the ability to utilise the very best views may be lost. It would seem, however, on the evidence of both Mr Doyle and Mr Atzeni, that reasonable views are available further east along Highgate Road (to the north). Of the comparable sales, only Sale 3 (2.157 hectares – applied value $52,000) and Sale 6 (3.537 hectares – applied value $60,000) were significantly greater than 4- 5,000 m². The smaller lots were very much serviced lots being part of rural residential subdivisions with kerbing and channelling to the front gate. I found them of little assistance. Sales 3 and 6 both have electricity and telephone services and superior access being located on bitumen sealed roads. In my view, in his application of these sales to Lot 1, Mr Doyle has given insufficient weight to the disadvantages experienced by Lot 1 including the effect of the electricity easement. In my opinion, the appropriate value for Lot 1, as at the relevant date, was $32,000. Applying the reduction of 2.5 percent, as discussed, earlier, in the context of s. 34 of the Act, the value of Lot 1 becomes $31,200. Lot 2 The figures quoted to provide services to Lot 2 are essentially the same as for Lot 1. One might reasonably assume the lots would share the costs. The best site for a house (with the best views) is on a ridge towards the centre of the eastern boundary between two drainage lines. This constraint ensures that the major part of the $22,000 expenditure would be incurred even with the option of accessing at the north-eastern corner (which would merely transfer the access engineering problem inside the boundary). The same two Sales (3 and 6) are those which provide the better comparisons among the six sales outlined by Mr Doyle. Sale 6 is nearly 3 hectares smaller than Lot 2. However, the access and services disadvantages loom very large. For Lot 2, the electricity easement has little impact crossing well away from the proposed house site. In my opinion, there is something close to a balance between the disadvantages experienced by Lot 2 and the advantage to a purchaser of its extra area. In my opinion, the appropriate value for Lot 2 is $60,000. Adjusting for the application of section 34 of the Act, the value becomes $58,500. -- 12 of 14 -- 13 Lot 1121 Lot 1121 is accessed from the south along Carrolls Road. Because the current access is through land to the west which has been sold, some road construction west along Carrolls Road, costing roughly $2,000-$5,000, would have to occur for a future house owner on Lot 1121. Electricity would also come from the south at a cost of $11,600. Reticulated water is best obtained from Lots 1 and 2, if and when they are developed. The access and service constraints for Lot 1121 are perhaps less pronounced than for the other two sites but still significant. The preferred house sites are towards the middle of the eastern boundary. The power line easement is in that general vicinity but one would be surprised, considering the large size of the lot (12.052 hectares), if a suitable site, sufficiently distant from those lines, could not be found. Because it is accessed from the south, the journey from Toowoomba is some 10 kilometres longer than for Lots 1 and 2. However, I am not convinced by the evidence, generally, that this is of great significance. The comparative sales for Lot 1121 include Sales 3 and 6, discussed previously, (which are 1 and 3 in exhibit 4) and Sale 2 (area of 27.923 hectares – applied value of $110,000). Sale 2 is also accessed by bitumen and has electricity and telephone services available. While Lot 1121 is significantly bigger than Lots 1 and 2 put together, the problem is very similar – what is the right allowance for disadvantage in access, services and for the presence of the electricity easement? In my opinion, in the case of Lot 1121, Mr Doyle has got the balance right. In my opinion, his value of $75,000 is appropriate. However, applying a 2.5 per cent discount through the application of section 34 of the Act, the value becomes $73,125. Finding I allow the appeal in respect of Lot 1 on SP 127620 (AV00-301) and assess the value at $31,200. I allow the appeal in respect of Lot 2 on SP 127620 (AV00-302) and assess the value at $58,500. I allow the appeal in respect of Lot 1121 on A 342430 (AV00-303) and assess the value at $73,125. -- 13 of 14 -- 14 I direct that any submissions on costs should be forwarded in writing to the registry (and to the other party) on or before 4.00 pm on 19 July 2001. SJ KEIM MEMBER OF THE LAND COURT -- 14 of 14 --