Coleman v Chief Executive, Department of Natural Resources [1999] QLC 46

LAND COURT BRISBANE 30 APRIL 1999 Re: AV98-338 An Appeal against a Determination of Unimproved Value – Valuation of Land Act 1944 Shire of Inglewood RJ and BL Coleman v. Chief Executive, Department of Natural Resources (Hearing at Inglewood) D E C I S I O N Mr and Mrs Coleman are the owners of land described as Lot 1 RP 127371, Parish of Coolmunda, County of Clive, containing 27.54 ha, with frontage, on the western side, to Coolmunda Dam Access Road, about 15 km east of Inglewood. As at 1 October 1997, the chief executive's unimproved valuation of the land was $28,500. An objection against that valuation was disallowed. In the Notice of Appeal against that decision, the owners' estimate of unimproved value was $20,000. Mr WG Major acted as agent for the owners and gave evidence in support of the appeal. The thrust of his submission was that the land should have been valued pursuant to s.17(1) of the Valuation of Land Act 1944, as being used for purposes of farming. On that assumption and in relativity with valuations applied to adjacent lands based on their use for purposes of farming, Mr Major suggested that the subject land should be valued in the rounded amount of $3,000. It was his evidence that the land had been purchased by the appellants in February 1996 in improved condition, with a dwelling. The owners had purchased the property with the intention of grazing/fattening cattle and had set about further improving the land to achieve its full carrying capacity potential. Mr Coleman had off-farm employment but spent about 15 hours each week working the property. In the financial year to 30 June 1997, 12 head of cattle had been sold grossing $5,076.38. A similar number of cattle were sold in the 1998 financial year for $5,810.34. Up until the date of hearing, 15 head had been sold in the 1999 financial year to gross $7,099.72. At the time of the hearing, as a result of pest and weed control; pasture improvement and crop assistance; new [1999] QLC 46 -- 1 of 6 -- 2 subdivisional fencing; yard construction; the property was carrying 25 head. Mr Major said that the owners were confident that they will be able to sell, on the average, 20 head per annum and after stock purchases, predicted a net profit from sales of $6,950 per annum. The majority of the land was used for the grazing business and a relatively small area for residential purposes. In Mr Major's opinion the business of grazing was the dominant use of the land and that would be the perception of a casual passer-by. The business was conducted for the purpose of profit on a continuous basis. In Mr Major's opinion, the business had a significant and substantial commercial purpose or character influenced by the farm improvements constructed by the appellants since their purchase of the property. In the alternative, if it was found that the land was not being used for purposes of farming, as "farming" was defined in s.17(2) of the Act, then the rural homesite value of the land, based on relativity with Mr Major's opinion of the correct value of other rural homesites in the locality, was suggested by him as being $5,000. Mr Major said that, whilst in close proximity to Coolmunda Dam, the land suffered the traffic and noise disabilities of significant public visitation of the Dam's recreational facilities, but was "tucked in behind" the earth wall of the Dam. It was his evidence that no views of the waters of the Dam were available from the site. Further disabilities were the "millions of insects and mosquitoes" and snake infestation. Mr Major agreed that a supply of water for domestic purposes was a positive feature of the Dam's proximity. The valuation appealed against was made by Mr MW Malone, a registered valuer employed by the Department of Natural Resources. He described the access as being bitumen sealed and the services as including electricity, telephone and "reticulated water from the DNR borewater system is connected". The property has a licence for supply of domestic water from the Coolmunda Dam. Mr Malone described the land as being of regular shape "flat to easy sloping box and ironbark forest country with areas of melonholes. It has an easterly aspect and views of the dam wall." In his verbal evidence he said that about half of the land comprised pebbly box/ironbark country while the balance was melonholey brigalow. Mr Malone stated in his tendered report that the land had, in part, provided "the site of the original settlement for the workers who constructed the Dam. It has a number of old grease traps and septic tanks and drains still on the site from the old -- 2 of 6 -- 3 dwellings/quarters." Mr Major had tendered several photographs of the area affected by the remains, including concrete stumps. In Mr Malone's opinion the dominant use of the land was "as a rural homesite". He had valued it accordingly. The valuation was said to have been made "having regard to all the sales in the Inglewood Shire, in particular those sales on the attached schedule". The schedule attached to the tendered report contained information relative to two sales, the brief details of which are as follows: (1) Foster to Privitera, Coolmunda Dam Access Road, 33.8 ha, sold 22 February 1997 for $77,750, improvements comprising timber treatment, mill/bore and fencing, with assessed added value of $36,922 leaving an analysed unimproved value of $40,828. An unimproved value of $36,000 had been applied at the relevant date. In comparison with the subject land the sale land was described as being a site of "good quality elevated country with good rural and Coolmunda Dam views … overall superior to subject." (2) Dean to Smith, Tobacco Road, 17.18 ha, sold 3 July 1997 for $31,000, improvements comprising dam, fencing, shed/caravan with assessed added value of improvements being $5,925, leaving an analysed unimproved value of $25,075, with an applied unimproved value of $23,000. In comparison with the subject land, the sale land was described as having a "smaller area, consisting of an elevated easy sloping sandy forest site" with "small views east to Coolmunda Dam" and overall inferior. Mr Malone was of the opinion that the subject land provided a desirable rural homesite in close proximity to the recreational facilities provided by the Dam. He saw the quality of the country, through the brigalow component, as affording potential for hobby-type grazing activities ancillary to the dominant residential use. Mr Malone in response to cross-examination said that he had formed the opinion "after investigation of the sales evidence" and from his discussion with the appellants relative to their purchase of the subject land, that views of the waters of the Dam had not been a requirement of the various purchasers. Valuation Considerations Use for Purposes of Farming Section 17(2) of the Valuation of Land Act 1944 provides the meaning of farming as being: " (a) the business or industry of grazing, dairying, pig farming, poultry farming, viticulture, orcharding, apiculture, -- 3 of 6 -- 4 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." There is no doubt that the land was being used in the relevant period for activities associated with the business of grazing. There was a difference of opinion between Mr Malone and Mr Major as to whether that business represented the dominant use of the land. As I understood it, Mr Malone's opinion that the dominant use of the land was for "rural-residential purposes" resulted from there being no significant or substantial commercial purpose or character associated with the grazing activities. As I see it, the intent of the legislation is that the tests of "dominant use of the land" and the "significant and substantial commercial purpose or character" of the business, be considered as separate issues. I accept, as Mr Major submitted, but not for the reasons of income potential, that the dominant use of the subject land was associated with the business of grazing. However I am unable to agree that an operation associated with the business or industry of grazing which, at best, is capable of earning a gross profit from the sale of 12 or even 20 head of commercial cattle, could for any reason, including the extent of personal effort involved in bringing the grazing property to that level of potential production, be regarded as one possessing a significant and substantial commercial purpose or character. It is an activity small in scale by any standard. I have also discussed the issue of "significance and substantiality" in appeals by JG and IM Ramsay (AV98-450); DP and M Rigney (AV98-442); MJ Weber (AV98-459) and R & R Privitera (AV98-454) in which Mr Major acted for the appellants. The decisions in those matters are also delivered today. In this appeal, I am unable to find that the grazing activities conducted on the subject land meet the test of having "a significant and substantial commercial purpose -- 4 of 6 -- 5 or character". The land is therefore not used for purposes of "farming" pursuant to s.17(1) of the Act. Rural Homesite It was Mr Major's opinion that, as a rural homesite, the basic sale properties used by Mr Malone were not capable of comparison, if for no other reason than the subject land has no view of the waters of the Dam. Those sales, together with the sale of an 80 ha site of easy sloping sandy forest country fronting the Cunningham Highway, near the north-eastern extremity of the Coolmunda Dam pondage area, but apparently with no or very limited water views, were used as the primary basis for Mr Malone's valuation of the land in Appeal AV98-448 – PC and TA Pallett, the decision in which is also delivered today. Mr Major submitted that because the subject land has no Dam views, it should be valued in relativity with the larger sites on the western side of Tobacco Road to the south. I do not accept that the subject land is readily comparable with those sites. The quality of the Tobacco Road lands for uses ancillary to a pure homesite, is, on the evidence, significantly inferior. Furthermore the location of the subject land and the availability of domestic water, identifies closely with the dam. The submission for the chief executive was that the market for rural homesites is made by buyers with different preferences and it is possible to make comparisons between rural homesites with different features. It is academic however, that "like with like" comparisons provide the more convincing evidence of value. I am unable to accept, as seen to be inherent in Mr Malone's verbal evidence, that availability of a view of the waters of the Dam (depending on the extent of that view), would not have an enhancing effect on the market value of a nearby rural homesite, in comparison with one without such view, all other things, (such as availability of electricity at comparable cost) being equal. Both Sales 1 and 2 enjoy water views to varying degree, whilst, on the evidence, the subject land does not. However, the evidence of value derived from sales of rural sites throughout the Shire also indicates to me, as would be expected, that land with the better quality of country, and enhanced potential for more intensive use for rural orientated activities, is capable of attracting higher sale prices than sites with little potential other than for residential use.. It seems to me that with consideration to the available view from the land in Mr Malone's Sale 1, its lake frontage, water supply and irrigation potential, superior -- 5 of 6 -- 6 overall soil quality and to a lesser degree its larger area, there is insufficient difference in the applied values of $36,000 to the sale land and $28,500 to the subject. Then there is the further disability of the old construction site remnants on the subject property which Mr Malone assessed as having a depreciating effect of $1,000. Sale 2 is more difficult to compare with the subject land because it would seem likely that the purchaser of that land was significantly influenced by the available view and more than likely would not have been interested in the subject land because of its different potentialities and lack of view. It is seen as appropriate to mention that in Appeal AV98-456 – AR Barnby, the land comprised 40 ha of apparently similar soil types to that of Sale 2, situated on the western side of Tobacco Road, but with no water view. Although of significantly larger area, the unimproved value of that land was determined in a decision delivered today in the amount of $17,000. The valuation applied to Sale 2 had been $23,000. That indicates to me the significance of the effect of the view. All things considered, I am inclined to the opinion that although the two blocks are most difficult to compare for the reasons given, the unimproved site value of the subject land should not be greater than that which was applied by the chief executive to the land in Sale 2. Finding The appeal is allowed, the determination of the chief executive set aside and the unimproved value of the land determined in the amount of Twenty-three Thousand Dollars ($23,000). RE WENCK MEMBER OF THE LAND COURT -- 6 of 6 --