Clift v Maryborough City Council [2000] QLC 16

LAND COURT, BRISBANE 29 March 2000 Re: Appeal against categorisation under the Local Government Act 1993. Valuation Roll No: 9433 Local Government: Maryborough City (VC99-239). Anthony G and Diana G Clift v. Maryborough City Council (Hearing at Hervey Bay) D E C I S I O N Background: This appeal relates to the categorisation of land under the Local Government Act 1993, of a property at Walkers Point Road, Maryborough, and described as Lot 1 on RP 108927. The subject land has an area of 2.023 hectares, and is currently categorised for differential rating purposes as Category 4 (Rural Residential). The appellants argue that the subject land, and its use, meet the definition of Category 3 (Rural), and should be amended accordingly. Mr AG Clift appeared and gave evidence for the appellants. Mr M Hinson SC appeared for the respondent, calling evidence from Mr Kevin Joseph Slade, Director of Finance for the respondent. The Evidence: (1) The Nature of the Land – Mr Clift argues that the subject land meets the definition of land eligible for categorisation as rural land under the provisions of the differential general rating arrangements of the Maryborough City Council (the Council), adopted by the Council on 15 April 1992. Mr Clift argues specifically that the subject land can be described as "river flat land used for grazing purposes", in accordance with the requirement of Council's approved policy which states: [2000] QLC 16 -- 1 of 11 -- 2 "Category 3 (Rural) All parcels of land comprising an area of not less than 4 ha, providing such land is being reasonably used for primary production or cannot be put to any profitable use. Subject to Application and Council approval, this Category may include land with an area of less than 4 ha, providing such land:- (a) Otherwise satisfies the criteria for land in this category and which, together with adjacent land in the same ownership, comprises a total area of not less than 4 ha. OR: (b) is river flat land used for grazing purposes." It is Mr Clift's contention that the Council has wrongfully disallowed the appellants' objection to the categorisation of the land, based upon criteria not specified in the formal category definitions. That is particularly so in respect of the scale of primary production activity, or its exclusive use, upon the subject land. Mr Clift argues that the subject land is used primarily for grazing purposes, with three head of cattle currently grazing upon natural pastures on the land. He further argues that the subject land is further supplemented by a 24 megalitre irrigation licence from the Lower Mary River Irrigation Scheme, with a 100mm main water line that services a spray line. There is also a small dam in the south-west corner of the subject land, and 80% of the land is used for grazing purposes. Mr Clift concedes that the family home of the appellants, together with a storage shed, is located on a small part in the north-eastern corner of the subject land, which fronts directly onto the Mary River on its eastern boundary. There is about a 5.5 metre fall from the general level of the subject land to the water level at normal tides. This is supported by photographs of steps to the river bank in Exhibit 6. The shed is apparently used to store one of the appellants' vehicles and a tractor, and as a workshop and hobby area. Mr Clift argues that the dwelling and shed are typical of other residences and outbuildings normally found on rural farming lands. It is his argument that the subject land had been farmed in the past, and the majority of the land continues to be used for grazing purposes. Mr Clift confirms that the appellants purchased the subject land in late-1995, and undertook restumping and slight alterations of the dwelling in 1996. At the time -- 2 of 11 -- 3 of purchase there were some cattle grazing upon the land, which, once they had been removed by the former owner, were replaced by new stock of the appellants about January 1996. Stock numbers have continued at between four and three to the present, although there have been no sales of stock since 1996. The stock are beef cattle. Mr Clift agrees that the general topography of Walkers Point Road to the north of the subject land, is on a lower level, at a height of about 4 to 5 metres on Australian Height Datum (AHD). The general level of the subject land is about 7 metres AHD on a higher river terrace, which extends about 4 kms to the south to the Beaver Rock turnoff. The Walkers Point Road area is a fairly narrow north/south peninsula about 600 to 800 metres wide in an east/west direction. The major land use of the lower terraced areas is for sugar cane growing, mainly on larger parcels greater than 4 hectares. The area of the subject land is generally flood-free, particularly where the houses are built. The highest recorded flood of the Mary River in 1893 was estimated at a height (near the subject land) of 6.4 metres AHD. The only known area of the subject land that has been flooded, is the river embankment to the east of the dwelling. The dwelling is highset on stumps, and is at the approximate same level as an adjoining residence to the south (Cripps). From recorded flood levels maintained by the Council, the subject land varies in height from 1.5 metres AHD at the waters edge (mean sea level), to a maximum height of reduced level 7 metres AHD. The depth of inundation by water was therefore 6.4 metres less 1.5 metres, or 4.9 metres above mean sea level mark. The flood levels demonstrate that the subject land would have remained above flood level in 1893. Mr Slade confirms that the notation by Council officers on the Flood Level Inquiry Document (Exhibit J) showing that the subject property floods, refers only to the small area of the river bank fronting the river. (2) The Categorisation Process – The Council has differentiated lands used for "Rural" purposes, from those used for "Rural Residential" purposes, by establishing categorisation criteria which address both the nature of lands and their use. It is Mr Slade's evidence that Council, in that locality, interprets lands defined as "river flat", as land which would be inundated periodically by flood waters. In that regard he sees the lower lands to the north of the subject land as satisfying that criteria. -- 3 of 11 -- 4 Mr Slade concedes that the interpretation of rural land under section 3(b) is subjective, but argues that the subject land neither meets the nature of the land requirements as river flat land, nor the land use requirements as land being used for grazing purposes. Mr Clift refutes both interpretations for the subject land, noting that the definition of "river flat" land is imprecise, and could be interpreted to include the wider geomorphological description of river flat land for both the lower and higher terraces of the Walkers Point Road locality. Mr Clift also argues that the meaning of "grazing" is not defined specifically in the Council policy, and could be interpreted to include the grazing of only a limited number of cattle. Mr Clift differentiates his appeal for a Land Use Code under the Local Government Act, from such a purpose under the Valuation of Land Act. Mr Slade advises that, following adoption of the differential rating categories, the Council sought the assistance of the Department of Natural Resources in 1992 to categorise all lands in the city, using the Council's criteria. Those categorisations of the lands remain current to the present, although some have been re-assessed where lands were bought and sold. The subject land was considered to have remained as Category 4 land (rural residential) at the date of purchase by the appellants in 1995. The adjoining parcel to the south (Cripps) is also categorised for rural residential purposes. However Mr Clift notes that that parcel is unfenced, and would not satisfy the land use requirements for primary production, or for grazing purposes. Mr Clift also notes that categorisation criteria only mentions use for primary production, and not, as in the Valuation of Land Act, the definition of "business of primary production". Because of the small size of the subject land (2.023ha), Mr Clift argues that it would be unreasonable to require large numbers of stock to be maintained on the subject lands. Mr Slade agrees with the limited scope of a small parcel, and argues that primary production is very questionable on a small parcel of land. In explaining the Council's reasoning for introducing the differential rating categories, Mr Slade argues that the purpose was to introduce a level of equity into the rating system. Mr Slade notes that Council sought to distinguish between lands which are genuinely used for rural purposes (Category 3), and those lands which are predominantly used for residential purposes (Category 4), which provide a level of amenity typical of a hobby farm activity, have larger living areas, and are more free from the constraints of urban living. -- 4 of 11 -- 5 Mr Slade argues that such criteria are typical of many areas of Queensland, and rural residential living is often a much sought after locality. The rural residential category is seen as an intermediary step between urban and rural living, and the rating charges reflect that relationship. Mr Slade notes that in respect of the subject land, the difference between a categorisation for rural purposes, compared to rural residential purposes, would represent a difference in annual rating liability of approximately $100. However he notes that rating charges depend upon annual valuations, which are established by the Department of Natural Resources. To Mr Slade's knowledge the current appeal against a Category 4 classification by the appellants, is the first to query the differentiation of Categories 3 and 4. In explaining the Council's philosophy in respect of the first limb of Category 3, sub-section (a) was included to provide for cases where two parcels held in the same ownership, one 4 hectares or more in area, and the other less than 4 hectares, and both used for primary production, could be categorised as rural lands. The definition also allows for lands which "cannot be put to any profitable use", to be included in the rural category. Mr Slade further argues that it is inappropriate to seek to interpret the categorisation of land as "rural" (Category 3), by referring only to one limb of that category, without taking note of the general thrust of the rest of the definition. Mr Slade argues that taken in isolation, the linkage between "use for primary production" and "river flat land used for grazing", would be overlooked and could lead to an incorrect conclusion. Mr Slade also confirms that the categorisation of the subject land, and the adjoining land (Cripps), by the Department of Natural Resources, both of which remain current, were Category 05 (large homesite-dwelling-rural residential) Exhibits H, K and L. Mr Clift notes that the Land Use Code 05 really refers to actions under the Valuation of Land Act, and not the Local Government Act. Mr Slade concedes that, but notes that the document from the Department of Natural Resources is used in conjunction with the Council's property registrar to ascertain the nature of the land usage. Decision: I turn first to the Legislation and note that the Maryborough City Council has powers under section 963(1) of the Local Government Act 1993 to make and levy rates and charges, and in particular, under section 963(1)(a) to levy general or -- 5 of 11 -- 6 differential rates. I note that such differential charges may be levied only once the local government has categorised all land in its area under section 976. The criteria and categories of land are established under section 977; and powers either for the local government itself, or the valuation authority of the State of Queensland (the Department of Natural Resources), to categorise the lands, are found in section 978(1)(a) and (b). I note also that the valuation authority must provide written notice to the local government of the category of parcels of land (section 978(2)), and the category of rateable lands must be identified in any way that either the valuation authority or the local government considers appropriate (section 978(4)). The specification of categories of land may be identified in any way that the local government considers appropriate (979(2)). Those directions are also paralleled in section 75(1) of the Valuation of Land Act (1944). In the context of those directions, I find in the current matter that the Council has effectively discharged its responsibilities in respect of the current categorisation of the subject land. What I must then consider is whether the Council has correctly interpreted its own criteria for deciding that categorisation. The powers for an owner to object against a categorisation are provided in the Local Government Act in section 984; and for an appeal to the Land Court against any decision in section 987. A decision of the Land Court is exercised under section 990. I note also that a record of any parcel of land in its area is required under section 994; and any changes to the record, where necessary to ensure compliance with the regulations, is exercised under section 996. (1) The Use of the Land – As noted previously the criteria for determining how the subject land should be categorised, was adopted by the Council on 15 April 1992. In addition to the criteria for Category 3 (rural) land previously detailed, the Council determined that the following criteria should be applied to Category 4 (rural residential lands): "Category 4 (Rural Residential) – All parcels of land being of an area of less than 4ha, which are not able to be connected to a reticulated water supply, and which are not included in Categories 1, 2 or 3." (Exhibit D). In the Information Booklet (1998-99), supplied to ratepayers (Exhibit 5), that definition was elaborated to include the additional words "and all parcels of land -- 6 of 11 -- 7 being of an area of 4 hectares or more which do not meet the criteria for Category 3 (Rural)". In that regard, the potential tension in resolving into which categories certain lands should be categorised, finds its genesis in the possible confusion that might arise over the defined area of lands either less than 4 hectares, or 4 hectares and more. On the one hand, lands of area less than 4 hectares, but owned by a single owner in a locality, and used for primary industry purposes in conjunction with those other lands, may be categorised as rural. On the other hand, lands which have an area of 4 hectares or more, but do not satisfy the criteria for rural, may be categorised as "Rural Residential". However the purpose of the former is to ensure that lands "reasonably" used for primary industry do not fail to achieve the concessional rating; while the purpose of the latter is to ensure that lands which satisfy the minimum area requirement, but are not "reasonably" used for primary industry, do not receive a concession to which they have no equitable claim. The purpose of the criteria, as we are told, is to ensure equity in the ratings system. It is noted that the reasons provided to the appellant by the Council, when refusing the objection on 28 April 1999, highlighted that the reasonable use for primary production had not been established. The word "reasonable" was part of the official criteria adopted by Council, and its use in communicating to the appellants demonstrate Council's policy in that regard. While the words "reasonably used" are not defined specifically in the Legislation, the ordinary reading of the language would understand "reasonable" to mean, among others, "of such an amount, size, number etc, as is judged to be appropriate or suitable to the circumstances or purpose" (The Shorter Oxford English Dictionary, Volume 2, page 1758). The words "reasonable use" were also considered by the Court of Appeal in Hale v. Hants and Dorset Motor Services Limited and Another (1947) 2 All ER 628, where Lord Greene considered the "reasonable use" of a highway along which trees had been planted. The Court found that the public authority was liable where a driver, who was making a reasonable use of the highway, struck overhanging trees. It was found that the authority should have considered the inevitable growth and spread of the trees when it made its reasonable decision to plant the trees. While that matter provides little direct comparison in the current matter, the implications of making a "reasonable use" of something, would infer, in my opinion, -- 7 of 11 -- 8 that the actions involved could be taken to represent the actions normally anticipated to occur by a person of good faith. The meaning of the words "primary production" were analysed by the High Court in Southern Estates Pty Ltd v. Federal Commissioner of Taxation [1966-67] 117 CLR 481. In that matter the High Court considered whether a taxpayer could be considered as engaged in primary production during the period when he was improving the land for the purpose of on-selling it at a profit. Barwick CJ said at page 488: "To prepare land for primary production, even for primary production thereon by the person making the improvement is not of itself, in my opinion, to engage in primary production. …. It cannot be construed, in my opinion, to include as a person engaged in primary production, a person who no more than intends to so engage whilst he is doing no more than make preparations to enable him to do so. " The thrust of those considerations could appear to be that it is not sufficient to just appear to be engaged in primary production, but a person must actually be engaged in those activities. In seeking further guidance I note that the words "primary production" were analysed by the Land Appeal Court in GA and BH Walker v. Valuer-General (1978) 5 QLCR 347, at 349. Under the former section 11(1)(vii) of the Valuation of Land Act, that Legislation defined "primary production" as: " 'The business of primary production' means the business of agriculture, pasturage, horticulture, viticulture, apiculture, forestry (including the planting or tending in a plantation or forest of trees intended for felling), poultry farming, dairy farming or any other business consisting of the cultivation of soils, the gathering in of crops or the rearing of livestock." That provision has subsequently been recast in the revision of that Act, in the current section 17, which now defines "farming" to mean – "(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;" Clearly the old definition of "the business of primary production" is now recast as "farming". While the term used in the current matter refers only to "primary -- 8 of 11 -- 9 production", and not to the business of that enterprise, the intention of the Legislation is that it relates to the type of activities undertaken. The further refining of those activities as a "business" relates more to the level of intensity of those activities. That differentiation was clarified in the later decision of the Land Appeal Court in Chief Executive, Department of Lands v. KW Whackett (1994-95) 15 QLCR 311, which discussed the Walker case in depth. In the current matter it is Mr Clift's argument that the failure to define the meaning of "primary production" by the Council as a business, leaves room for a lesser level of intensity of those activities. It is Mr Clift's assertion that, even the keeping of only three head of cattle, may be construed to mean the use of the "river flat land used for grazing purposes". In seeking clarification of what the Council may have intended in its subordinate Legislation (the By-Law on differential rating), I note the directions of the Acts Interpretation Act 1954 in respect of interpretation of Acts. In section 14(A) it states: "14A(1)In the interpretation of the provision of an Act, the interpretation that will best achieve the purpose of the Act is to be preferred to any other interpretation. (2) Subsection (1) applies whether or not the purpose is expressly stated in the Act. " In the Council's By-Law the purpose of that subordinate Legislation is to ensure an equitable liability for general rates, based upon the land use of rate payers, with further service charges such as sewerage and water differentiated according to land use. The thrust of the rural category is to define land which is not urban in nature, and which is used for some form of activity associated with the cultivation of land or the tendering of animals. In my opinion such pursuits are the primary uses of such lands, and not ancilliary to its primary use. The fact that it is not an effective business, as required by the Valuation of Land Act, does not mean, in my opinion, that the meaning of "primary production" has other than its normal meaning. The evidence is that there has never been any sales of cattle, and the intended use of the cattle would appear to be entirely for the domestic use of the appellants. I believe those uses demonstrate more the nature and purposes as a hobby farm, rather than some primary production enterprise. -- 9 of 11 -- 10 I then consider whether the primary, or dominant, use of the subject land should be considered entirely upon the percentage areas used for certain activities. That matter was addressed in GR and M Maguire v. Chief Executive, Department of Natural Resources (1997-98) 17 QLCR 123, where the Member followed guidance from AR Thomason v. Chief Executive, Department of Lands (1994-95) 15 QLCR 286. In Maguire it was found that the dominant use of a 15.811 hectare property was in reality only a small area of 2,000 square metres used for nursery purposes. In the subject matter, in my opinion, the dominant use of the subject land is really as the family residence of the appellants, and the use for the grazing of three cattle is ancillary to that purpose. The question of scale of use of the lands was also analysed in the decision of SJ and DE Bolitho v. Valuer-General (1992-93) 14 QLCR 73, where the learned Member said at page 79: "Generally speaking, the criteria should be applied taking account of the economic activity or use of the land. Area is not necessarily the basis for determining that use." (2) The Nature of the Land – That then leaves an understanding of the nature of the subject land, and whether it may meet the criteria espoused by Council for Category 3 (Rural) lands. In that respect I note that the area of the subject land is less than 4 hectares, and, subject to application and Council approval, may only be considered as Category 3 (Rural), if it meets the criteria for other adjacent lands used for primary production, and if it is used in conjunction with those lands, and it then must be held in the same ownership; or it is river flat land used for grazing purposes. There is no evidence that the subject land is used in conjunction with other lands owned by the appellants, and which are used for Category 3 (Rural) purposes. The appellants argue that the definition of "river flat land" is a provision which could describe the subject land. Mr Clift argues that river flat lands could be interpreted to include both the higher terraces and the lower terraces of that locality. As noted previously, in the overall geomorphological records of the Maryborough region, over the long effluxion of time, much of the town of Maryborough could be classified as old river flats. The meandering nature of the Mary River, and its immediate adjoining lands, are typical of gradual sedimentation. However to extend the meaning of "river flat lands" to that extent, would appear to be -- 10 of 11 -- 11 in direct contrast with the categorisation process by the Council, and in contravention of section 14(A) of the Acts Interpretation Act 1954. The further differentiation of the words "river flat lands", would appear to correlate more closely with more recent records of river flooding. Indeed the description of river beds and banks, in the Water Resources Act 1989 defines "beds and banks" in section 2(1), by noting that it "does not include land abutting or adjacent to the bed or banks that is from time to time covered by floodwater". The periodic nature of flooding would appear to be a determining factor of such river flat lands. The evidence is that the subject land did not flood, even during the maximum recorded floods of 1893, and the Council records confirm that the only part of the subject lands that did flood at that time, were those areas adjacent to the bed and banks of the river. I see no justification for extending the definition of river flat land to include the higher terrace areas of the subject land. I conclude therefore that the subject land is properly included in Category 4 (Rural Residential). The appeal in VC99-239 is dismissed, and the decision of the Maryborough City Council is affirmed. (NG Divett) Member of the Land Court -- 11 of 11 --