Brumpton v Chief Executive, Department of Natural Resources [1998] QLC 128

LAND COURT BRISBANE 29 OCTOBER 1998 Re: Appeal against General Valuation Valuation of Land Act 1944 Valuation Roll No.: 84077 Local Government: Ipswich (V98-73) Darryl W and Jennifer K Brumpton v. Chief Executive, Department of Natural Resources (Hearing at Ipswich) D E C I S I O N Background: This matter relates to a property located at Russells Road, Pine Mountain, and described as Lot 387 on Plan CH31214, Parish of Brassall. The subject land (the subject) is located about 12 km north-west of the Ipswich Post Office, has an area of 36.73 ha, and has electricity and telephone services available. The land has good access to Russells Road which is bitumen sealed. The key issues are the nature of the land, the impact of an adjoining quarry, the use of the land for farming, changes in the valuation, relativity and the comparison of sales. The subject is zoned "Rural" under the Moreton Shire Town Planning Scheme effective at the date of valuation of 1 October 1996, and effective at the new general valuation at 27 November 1997. The subject comprises lightly timbered softwood scrub country along the eastern side (Cameron Scrub), with some forest intrusion, with black wattle interspersed with eucalyptus in the gullies. Part of the land (80%) has been previously cleared, and carries good grass. On 27 November 1997 the Chief Executive, Department of Natural Resources, issued a new general valuation at $90,000. Following an objection, the Chief Executive confirmed that figure on 25 February 1998. A subsequent application for acceptance as "farming" under s.17 was refused on 13 March 1998. The appellants have now appealed that figure, claiming the correct unimproved value should more property be $58,000. [1998] QLC 128 -- 1 of 19 -- 2 Mr DW Brumpton appeared and gave evidence for the appellants. Mr D O'Connor, Senior Valuer, appeared for the respondent, calling evidence from Mr BJ McDonald, senior registered departmental valuer who was responsible for determining the valuation. The Evidence: The appellants argue that the valuation by the Chief Executive was made in an arbitrary manner and in the absence of any evidence from the land owners; and has accordingly incorrectly removed a former assessment of the land as being used for farming purposes. They also argue that, in assessing the valuation, the Chief Executive has not adequately considered the environmental impact of an adjoining quarry, and that the unimproved value so determined bears inappropriate relativities with surrounding parcels. (1) The Nature of the Land - There is agreement that the subject is of medium elevation at its frontage to Russells Road, falling away to a gully in the middle of the lot, and rising then to the eastern boundary. There is a main gully flowing from south to north across the subject, with a secondary gully entering the subject from the east. The higher land of the subject is along the southern boundary. There are two dams upon the land, and three unequipped bores, which are seen as back-ups for water supply for the cattle. The main and most productive bore is very saline with a high magnesium content, which makes the water unsuitable for crops and other livestock, but suitable for cattle. The bore water is suitable for some grasses such as Rhodes grass. There is also a soak about the centre of the land. The main dam is located towards the northern boundary and has a capacity of 3,000 m, which is estimated by the appellants to provide up to four years of good water for the cattle on the subject. Another smaller dam (300 m) is in the east of the subject. Mr Brumpton concedes that the main dam had in fact been dry during a drought period many years ago, but the dam has certain features which allow it to sustain water even when some other dams in the area are dry. He claims that the dam does not leak, and is quite deep compared to its surface area, thus minimising evaporation. He bases his estimate of four years of sustainability during droughts on a consumption rate of 1,000 litres daily for each beast, and a corresponding allowance for evaporation. Water from the eastern gully drains into the smaller dam, and then into the main dam. -- 2 of 19 -- 3 A matter of concern for the appellants is the management arrangements of the adjoining quarry to the south of the subject. Any contamination of surface water from that source would flow across the subject, and unless deviated around the dams, could impact the water supply for the cattle. The quarry land has some land fill of CCA treated timber, which would be toxic should burning-off occur. There is also a small two-bedroom residence upon the subject, which was occupied by the former lessees (Shirleys), prior to the purchase of the subject by the appellants in October 1997. The appellants do not reside upon the subject, living some 1.8 km to the south in Stokes Road, Pine Mountain. Other improvements to the subject include fencing, cattle yards and sheds, and the subject is now used for the grazing of cattle in conjunction with their home lot. (2) The Impact of the Quarry - The present quarrying operations are not of concern to Mr Brumpton, who has extensive personal experience of such matters in his capacity as a qualified mine manager, having managed a major hard rock quarry in the Beenleigh area. However, from his experience he has real concerns about the potential for contamination of the subject as a consequence of the apparent continuing bad management practices of the adjoining quarry. He notes, for example, that the environmental siltation ponds at the quarry are constantly full and not pumped dry. Further he notes that the ponds are allowed to simply overflow, and they are also clogged with weeds, which generate ammonia, as evidenced by water samples he has conducted upon the subject. As further evidence of the bad management, he notes the presence of large areas of Mother of Millions weeds which infect the quarry land, and which are also washed down onto the subject, and are a risk to cattle. While Mother of Millions has not been declared as a noxious pest under Queensland's legislation, its severe impacts are well documented. Any lack of actual declaration of a noxious weed possibly reflects more the realisation of the wide impact of such a declaration, rather than any lack of severity upon the rural landscape. The subject is the only property which directly receives run-off from the quarry. While the current water quality is not a concern, the potential for deterioration is seen by the appellants as a matter which should be considered in the valuation. Mr Brumpton claims that run-off from the quarry, compared to run-off from the gully to -- 3 of 19 -- 4 the east, has higher comparative levels of ammonia (50%), iron (1,000%) and nitrates (300%). Mr McDonald concedes that the past history of the quarry management has not been good. However, he claims that Ipswich City Council (the Council) was likely to not allow the same leniency in the future operations. Mr McDonald notes that the quarry is a fettered use allowed by the former Moreton Shire Council, and the current Council was unlikely to move to prevent continuation of the quarry operations. However, he has allowed for an approximate 30% reduction in the unimproved value as a consequence of the quarry. If the quarry did not exist, he claims that the unimproved value of the subject would be about $110,000 to $120,000. (3) The Use of the Land for Farming - A key issue for the appellants is the decision by the Chief Executive to remove the former classification of the land as being used for the purposes of farming under the Valuation of Land Act 1944. Mr Brumpton is well informed on the requirements of s.17 of the Act, and decisions of this Court in respect of that matter. He is aware that any intentions to use the land for farming must be supported by evidence, and that the desired outcomes are realistic. Both appellants had their origins in rural areas and have a track record in farming, particularly the breeding of beef cattle. Mr Brumpton has a good appreciation of the economics of primary production, and the appellants are the owners of current registered brands for horses and cattle. They were registered as a primary production partnership (1.10.97) before acquiring the subject on 20 October 1997. In presenting their evidence, the appellants provided a well-structured and presented statement outlining the thrust of their operation, including a basic business plan for the future operations. Mr Brumpton bases his projections upon conservative estimates of carrying capacity, compared to some stocking rates currently being used by their neighbours in the Pine Mountain area. The business plan is for the operation of the house area and the subject (total 42.35 ha), and involves the breeding of their own progeny, and the commercial sale of young cattle. There is some need to supplement the feed of the cattle, and the appellants undertake all of their own animal husbandry services. The appellants average 10 working hours in each week upon the subject, which is visited daily. -- 4 of 19 -- 5 The subject is mortgage free, and the business plan was developed to demonstrate an economic return of 4.9% on the investment over a period of five years. Mr Brumpton claims such a return on investment is to be compared with a 3.48% (bank term deposit); 5.76% (agistment of horses) or 5.23% (rented to a tenant). Based upon those figures, and the appellants' desire to engage in the business of farming, Mr Brumpton sees the current breeding and sale of cattle as a significant farming use of the land as required by s.17(2)(c) of the Act. In respect of the combined use of the two lands, the house site is only a two- minute drive from the subject, and cattle will be moved between the two properties. As a consequence of the need to move cattle between the properties, the appellants objected to a proposal to close part of Russells Road. While the road has been temporarily closed, the appellants have unfettered use of the closed road. In estimating their return from the sale of the cattle, Mr Brumpton argues that the appellants have chosen not to borrow to stock the subject at a higher rate, and the plan provides for average stock sales over the next five years of $4,100 annually. During the initial first few years there will be no return while the herd is built up. There will be gains in the value of the herd during this period of about $1,800 per year. Eventually it is planned to graze 27 head of cattle (cows and progeny) plus two bulls, providing a gross income of over $6,000 per year. He supports that carrying capacity by his experience on the Stokes Road land which carries two beasts per ha (with supplements). He admits that in dry years he had to reduce the number of cattle. Mr Brumpton notes that his planned average return of $4,100 represents 11% of his taxable income for the current year. The investment is also seen as a potential income-earning business for the appellants' son while he continues his education. Mr Brumpton draws some comfort from an ABC publication "The Business of Farming" which postulates that an average return of 5% is not unusual in primary industry. Mr Brumpton's business plan uses a standard approach he follows when preparing plans in his main business as a consultant to clients. In quantifying the present numbers of stock upon the two properties, Mr Brumpton notes that they have 11 cattle on the subject and five weaners held on the home property. There is also their working bull and a young bull that they have bred themselves. He sees his comparative analysis of how the $155,000 could be utilised, as providing the sound commercial benchmark for establishing the appellants' claim for primary industry status. The business plan is to spend $2,000 in the current year to -- 5 of 19 -- 6 build up the blood line, and to buy some new stock, probably three to four reasonable cows. The business is for straightforward meatworks production, and receipts were supplied of regular sales to a local meatworks. Mr O'Connor draws some distinction between the decision of the Land Appeal Court in Chief Executive, Department of Lands v. KW Whackett [1994-95] 15 QLCR 311. In that matter Mr Whackett grazed some 70 head of mixed cattle on two parcels of land of total area 105.83 ha, with an annual gross income in the order of $5,000. The Land Appeal Court disallowed the request for the land to be considered as "farming" under the Act, and saw the land as two rural residential sites. Mr O'Connor also drew comparison with the adjoining land to the north of the subject (24.22 ha), which was the subject of an appeal to this Court (DJ Mahon v. Chief Executive, Department of Lands (AV95-39), 6 September 1995, unreported). In that matter the appellants grazed up to 70 head of cattle in good times, with a gross income of some $5,000 to $6,000. The subject land in that case was also used in conjunction with other lands such that the total enterprise utilised 210 ha of land. While that use of the land was seen to be the dominant use, and to be of a commercial purpose or character, it was not seen to be of a significant and substantial nature, and s.17 status was denied. Mr O'Connor argues that on the basis of those two cases alone, the subject would not appear to satisfy the requirement of the Act for farming status. Mr McDonald argues that the dominant use of the subject in this matter is also for the grazing of cattle, and it is used on a continuous basis, for a commercial purpose. However, he does not believe it satisfies the requirements of being of a significant and substantial nature. (4) Changes in the Valuation - A concern also of Mr Brumpton was the manner in which the Chief Executive changed the coded use of the subject from farming to rural residential. When the appellants purchased the subject on 20 October 1997, they negotiated the contract with the former owner (Chester) on the understanding that the land was assessed as "farming" land under the Valuation of Land Act. Their calculations allowed for rates and charges applied for that use. The freehold title was transferred into their name on 20 November 1997. A change of valuation notice was sent to the former owner (Chester) on 27 November 1997, with effect from that date. The former owner passed on the notice to the -- 6 of 19 -- 7 appellants, who subsequently unsuccessfully objected to the change in unimproved value. However, at that time they were unaware that the status of the use of the land had been amended. A subsequent application for reassessment of that status was also refused. Mr Brumpton argues that it was not logical that the status should be changed until it was determined what the use of the land for the purchaser was to be. To change the status, he argues, without any consultation, was premature and unfair to the new owners. He argues that previously the subject was leased to tenants (Shirleys) who operated the land with other lands at Moggill. This, he argues, is quite similar to the current use by the appellants, only they live much closer to the subject, and now regularly visit and work the site daily. He argues that had the Shirleys purchased the site, then the use would not have changed and it would have been inappropriate to remove the farming status. Mr McDonald advises that the use of the subject for farming had only been approved on its use in conjunction with the Shirleys' other land at Moggill. When the Shirleys purchased alternative land they applied for a farming concession for that land, advising that they were discontinuing their use of the subject. As a consequence, the Chief Executive moved to review the farming concession on the subject. The Department was also dealing with an application for a road closure at that time, and both negotiations to that date had been with Mr Chester. Mr Brumpton, however, argues that while the Chief Executive has the power to amend the valuation under s.28, he also has the responsibility to issue a notice of that new valuation to the owner of the land, and not the former owner, under s.50 of the Act. He argues that to send the valuation notice to Mr Chester was inconsistent with the Act. Mr Brumpton also sought reasons why the notice of the new valuation made no reference to the reason for the change, or whether the recognised use of the land had been amended. In responding to the above claims, Mr McDonald advised that s.50 refers only to the actual valuation of the land, and has no reference to the use of the land or what sections of the Act had been involved. He also explained that at the time of the issuing of the new valuation (27 November 1997), the valuation data base in the Integrated Valuation and Sales system (IVAS) continued to record that Mr Chester was the owner. He concedes that subsequently he had been advised that ownership had transferred through the Automated Titling System (ATS) on 20 November 1997, -- 7 of 19 -- 8 however, that transfer had not at that stage been transmitted to the IVAS data base. Mr McDonald therefore argues that the owner at that time, as shown on the "Roll" was in fact Mr Chester. In respect of why the status of the subject was changed from farming to rural residential, Mr McDonald argues that the use of the land was still for either residential or farming, but the use of the subject for farming was no longer seen to be of a significant and substantial nature. That assessment had been made following the change of ownership, when the Shirleys vacated the property. The actual implementation of the change under s.28(1)(g) had not occurred until the time of the objection against the loss of the farming status. Mr McDonald also notes that in that area of Ipswich the majority of people purchase for rural homesite purposes. In seeking explanation of why the IVAS data base continued to show Mr Chester as the "owner" after the ATS data base had recorded the appellants as the new owners, Mr O'Connor explained how the then manual process of updating occurred. Mr McDonald confirmed that manual updates were then undertaken on a monthly basis, at the end of each month. Any changes that had occurred during the month were then amended into IVAS. Mr Brumpton argues that the current assessment process for determining s.17 status is retrospective, in that it requires a record of historical data to substantiate a claim. Where a change of ownership occurs, such records do not exist. Mr McDonald advises that the historical data is sought in order to assess the continuous nature of the use. However, he argues, that the record of historical data is only the beginning of the process of assessment. (5) Relativity - To support his estimate of the unimproved value Mr Brumpton provides comparisons with 10 properties in his locality as follows: Property Area ha Unimproved Value Rate per ha Approved Land Use Comments 1 (Lot 387) 36.73 $90,000 $2,450 Grazing Subject 2 (Lot 300) 5.625 $76,000 $13,511 Residential Home site 3 (5 lots) 92.03 $144,000 $1,565 Farming Similar to subject 4 (10 lots) 134.39 $212,500 $1,581 Farming 300 metres of river front Property Area Unimproved Rate per Approved Comments -- 8 of 19 -- 9 ha Value ha Land Use 5 (Lots 501 & 631) 78.509 $101,000 $1,286 Farming Adjoins to the east 6 (8 lots) 206 $250,000 $1,214 Farming 1.35 km of river frontage 7 (Lot 488) 38.75 $68,000 $1,755 Farming Reduced on objection 8 (Lot 386) 31.84 $72,000 $2,261 Farming Reduced on objection. River front 9 (8 lots) 52.14 $74,000 $1,419 Farming Fronts bitumen road 10 (2 lots) 51.975 $65,000 $1,251 Residential Access to gravel extraction works Mr McDonald confirms the recognised land use of the above, and notes that properties 7 and 8 had previously been reassessed under s.17 as house sites at unimproved values representing $100,000 (7) and $120,000 (8). Following a departmental policy direction, their former farming status had been restored, and the values reduced to $68,000 (7) and $72,000 (8). In respect of the multiple number of lots involved in properties 3, 4, 5, 6, 9 and 10, Mr McDonald notes that those parcels were valued as single valuations, in line with directions given in s.17 of the Act. Any potential for subdivisional purposes in those parcels was ignored. When drawing his comparative relativities Mr Brumpton had not been aware of the recognised land use status of all of those parcels. However, he notes that there would seem to be some inconsistency also with the unimproved values of the quarrying land to the south (Lot 385 - $110,000), another quarry on Pine Mountain Road ($110,000), and a sand extraction operations on parcel 10 ($65,000). In his opinion, such inconsistencies provide little confidence for Mr Brumpton that the valuations are correct. In seeking comment on those relativities, Mr McDonald notes that it is inappropriate to compare unimproved values for one land use (farming) with those for a different land use (rural residential). Mr McDonald also advises that the former unimproved value of the subject, when it had been afforded the farming status, had been $66,000. Mr Brumpton argues that it is inappropriate to compare parcels of considerable variations in size, particularly for homesites varying from 16 ha to 100 ha. Mr -- 9 of 19 -- 10 McDonald argues that, because of his experience as a valuer, he has no difficulty in comparing parcels of 16 ha to 36 ha, but has some difficulty in comparing parcels of 100 ha to the smaller parcels. Mr Brumpton argues that the preferred market for rural homesites is about 4 ha, and really only extends up to about 10 ha. Parcels larger than that, in his opinion, are too big to manage as a rural homesite. Mr McDonald advises that Mr Chester originally purchased the subject as a hobby farm for his daughter to run horses. In respect of the departmental policy decision to restore former farming status to properties which had been long term recognised as farmers, Mr McDonald confirmed that policy was not formally approved by the Chief Executive. The policy was intended as an interim arrangement until the current Valuation of Land Act could be reviewed in respect of s.17. That departmental decision was taken by senior management in an attempt to recognise widespread discontent with the outcomes of former amendments introduced into s.17 in the early 1990s. The impact of that policy is that some properties, which may not satisfy s.17 in its current form, were given a continuing interim status until the Act could be reassessed, in fairness to the existing owners. Where there was a land use classification change as a result of new ownership, as had occurred with the subject, then the policy, in Mr McDonald's opinion, would not apply. The policy was enacted early in 1998. (6) Comparison of Sales - Mr McDonald provided the following sales of comparable lightly improved or vacant lands:  Sale 1 - (Russells Road, Pine Mountain - Lot 2 on RP 889174). This is a 16.08 ha parcel, zoned "Rural" and located 0.5 km south of the subject. The sale is of medium elevation, rising to an elevated point at the centre, then falling to a gully near the northern boundary. The sale is inferior to the subject in size, with lesser access to a good building site. It has less impact from the quarry. The sale sold in November 1996 for $115,000 which, after allowing for improvements, was analysed at $94,650, and applied at $83,000.  Sale 2 - (F Holts Road, Pine Mountain - Lot 4 on RP 883306). This is a 16.13 ha parcel, zoned "Rural", and located 0.5 km west of the subject. The sale is of medium elevation, falling from the road to a gully, then rising to an elevated building site, and the falling to the rear. The sale fronts F Holts Road (formed gravel) to the west, and also Bryces Road (unformed) to the east. The sale is open forest country. -- 10 of 19 -- 11 The sale is inferior in size and access, but otherwise comparable, except for lesser impact from the quarry. The sale sold on 27 October 1997 for $115,000 which, after allowing for improvements, was analysed at $105,500, and applied at $90,000.  Sale 3 - (Russells Road, Pine Mountain - Lot 387 on CH31214). This is the sale of the subject on 21 October 1997 for $155,000, which was analysed at $101,660 and applied at $90,000. In seeking comparison with those sales, Mr Brumpton challenges the direct acceptance of the selling price as representing the improved value of the property. In his analysis of the sale of the subject, Mr Brumpton has allowed for the costs associated with commission to the selling agent, as well as costs of auctioning the property, legal, mortgage release and relocation costs. In his opinion, those outgoings represent costs to the seller which need to be allowed for in order to assess what the seller actually receives for the property. In assessing the unimproved value of the subject, Mr Brumpton has further allowed for improvements such as the dwelling, dams, bores, fencing, cattle yards and sheds, clearing, power, fencing, septic and sewerage. After allowing for the above values, he arrives at an unimproved value for the subject of $71,800. In comparing the improvements upon the subject, I have the following comparisons: Item Mr Brumpton Mr McDonald Commission etc $15,500 - Dwelling (Septic and Power) $42,900 $24,560 Dams and Bores $10,450 $5,900 Fencing $6,650 $4,380 Cattle Yards $3,000 - (included in structures) Clearing $4,700 $18,500 Total Improvements $83,200 $53,340 Mr Brumpton bases his estimate of the added value of the dwelling upon his personal knowledge of a smaller but comparable dwelling he owns in Ipswich. He has then allowed for such a dwelling to be relocated upon the subject, and for septic and power to be constructed at an estimated total cost of $42,900. Mr McDonald sees little value in the dwelling as he believes that as a rural homesite, an owner would -- 11 of 19 -- 12 seek a more substantial residence, probably located further away from the road for privacy. Decision I note first that there is general agreement in respect of the nature of the land and the availability of water. While Mr McDonald feels that the appellants may be overstating the capacity to provide water from the dam during periods of drought, there is no doubt that the main dam is the major source of water and the bores provide further back-up for cattle. There is also agreement that the management of the adjoining quarry leaves something to be desired, and there is some potential for contamination of the dam upon the subject as a consequence. The evidence of the high ammonia nitrate and iron contents in the water samples testify to that potential impact. There is also agreement in respect of the nature of improvements upon the subject, but there are some differences with the added value of the dwelling and the clearing. The general impact of the quarrying operations has been recognised by the respondent, and Mr McDonald has allowed a reduction of some 30% for that purpose. (i) Use for Farming - The key difference between the parties lies in the assessment of the subject for its use as either farming or as a rural homesite. Mr McDonald agrees that the subject has an unimproved value for a homesite at $90,000, and if approved as a farming status, then based upon the value for the previous year at $66,000, the unimproved value would be of that order. In support of his case Mr Brumpton seeks to establish, in his opinion, a benchmark for comparing whether the use of the subject may be considered to be significant and substantial. He sees that in the context of his business plan which establishes that the proposed return on investment is soundly based and of a commercial nature. He draws support for that conclusion from the findings of the Land Court in KW Whackett v. Chief Executive, Department of Lands (AV93-163), 20 May 1994, unreported, where the learned Member found at p.8: " The intent of the legislation may be objective, yet the determining criteria remains subjective and no doubt will not lessen the intensity of argument which may be expected as to correct interpretation of the terminology employed. The words 'significant and substantial' are to be considered in terms of the 'commercial purpose or character' of the particular business. -- 12 of 19 -- 13 There can be no artificial base, for determining the scale of any particular activity, which will meet the qualification of significance and substantiality." While that decision in favour of the appellant was overthrown by the Land Appeal Court (Chief Executive, Department of Lands v. KW Whackett) [1994-95] 15 QLCR 311), in the minority dissenting decision Ambrose J said at p.343: " If significance or substantiality (under section 17(2)) does connote a relativity to be found by comparison with some standard, the question which must be decided is what is that standard?" In seeking to establish a "standard" for the subject, which should be considered on its individual merits, Mr Brumpton would appear to be following guidance of the Land Appeal Court in Crawford v. The Valuer-General (1990-91) 13 QLCR 138, where the Land Appeal Court said at p. 149: " In truth it is impossible to pose a simple test which will give the correct answer to the great variety of personal enterprises undertaken from place to place. It is true that the volume of operations needs to be understood and that it is relevant to an understanding of the enterprise as a whole. Its smallness may in the end help in leading to a conclusion that it is not a bona fide commercial exercise, just as its largeness may help to place it clearly beyond characterisation as a hobby and assist in the conclusion that it is a business. Alternatively, its size when considered with other factors may show that it could never be reasonably capable of commercial viability, in which case it will fail the test. But there must be no preconceptions against little enterprises." Mr Brumpton sees the commercial viability of the enterprise upon the subject purely in the context of a return on the capital investment. However, the correct principle to be adopted has been established in a series of Land Appeal Court decisions on this matter. In the Whackett decision (supra) the Land Appeal Court agreed "that there can be no artificial base for determining the scale of any particular activity" (p.329); and "that an enterprise which can run 70 head of cattle may be shown to have a significant or substantial commercial purpose or character" (p.330). However, on the evidence before them, the Land Appeal Court allowed the appeal of the Chief Executive, and declined the farming status, leaving open the door for a subsequent appeal should Mr Whackett be able to better document his business activities. The principle was also considered in AR Thomason v. Chief Executive, Department of Lands [1994-95] 15 QLCR 286. In that matter the Land Appeal Court found that, "It is the use of the land for the relevant purposes which is important, -- 13 of 19 -- 14 rather than the identity of the person or persons using it." (p.306). The Land Appeal Court went on to find that the use of the land in isolation would not satisfy s.17(2)(c) but "considered as part of the dairying enterprise of Leslie Sellin & Co, the subject land is being used as part of a business which has a significant and substantial commercial purpose or character." (p.308). See also Chief Executive, Department of Lands v. JW and K Higbie [1994-95] 15 QLCR 277. As further support, Mr Brumpton drew comparison with the findings in GR and M Maguire v. Chief Executive, Department of Natural Resources (AV96-79), 23 April 1997, to be reported, where the Member found that s.17(2)(c) did apply. However, the circumstances in that matter may be distinguished as Mr Maguire had been a self-employed primary producer for all of his working life and had never been on a wage. His gross income from the nursery business upon the land varied from $16,805 to $51,000; and he was about to further venture into the export business. Mr McDonald draws support also from DJ Mahon v. Chief Executive, Department of Lands (AV95-39), 6 September 1995, unreported, where the learned Member failed to find any evidence that the business on that land was of a significant and substantial commercial purpose or character. The Mahon matter related to the adjoining property to the north of the present subject, which at that time was carrying only 20 head of breeders due to drought. However, the Mahon land was used in conjunction with a total area of 210 acres (84 ha), with the capacity to run 70 head of cattle in good times. The gross income was estimated for the total enterprise in that matter at $5,000 to $6,000 per annum. Two relevant matters noted in the Mahon decision were the impact of the quarry and the heavily laden trucks passing from the sand extraction quarry on the banks of the Brisbane River (associated with Mr Brumpton's parcel 10). The possible impacts upon the subject were noted, particularly any contamination from the filling of the quarry land to the south. Mr McDonald also drew support in the findings of GT & BG Taylor v. Chief Executive, Department of Lands (1992-93) 14 QLCR 477; CH & MC Peck v. Chief Executive, Department of Natural Resources (AV95-94), 1 August 1997, to be reported; and finally McAdam and Anor v. The Valuer-General (V80-298), 18 September 1981, unreported. In Taylor (supra) the Land Court found that while the appellant's hope was to produce a net income of $10,000 per annum, in spite of having not made any profit -- 14 of 19 -- 15 over a period of three preceding years, the use did not satisfy the purpose of the Act for farming. Likewise, in Peck (supra), the Land Appeal Court considered the use of a 4.083 ha property with an orchard for the production of palms, macadamias and other trees. While the Pecks had invested $89,122 of capital investment in the farm, the only income they had received was $120 in 1994, and $2,000 in 1995. Bearing in mind the difficulties experienced by the appellants in that matter the Land Appeal Court, when referring to whether it was significant and substantial, found at p.7: " In making such an assessment it is permissible - and necessary in our view in a case like this in which a business has been established for some time - for consideration to be given to the results achieved by the business after a reasonable interval has elapsed following its establishment. Full allowance must, of course, be made for such things as the uncertainties of the weather, the vagaries of markets, and fluctuations in exchange rates. Having given those factors proper weight, one may conclude that an owner, though generally pursuing profits, is engaged in such an unpromising enterprise that it could not be said, in accordance with any ordinary or reasonable standard, to have a significant and substantial commercial purpose. Such a conclusion was clearly open in this case, as was a conclusion that the appellants' business lacked the requisite significant and substantial commercial character. Where a business or industry is in the process of being established objective criteria other than results, such as a credible business plan, will of course be appropriate." While Mr Brumpton may draw some comfort from the existence of his business plan, the comparable lack of any significant income bears some comparison to the Peck findings. And finally, I note the findings of McAdam (supra) where the Land Appeal Court found at p.8: " We stress that intentions, hopes and aspirations, however sincere, are not sufficient to constitute a business of primary production. They must be supported and affirmed by substantial and positive actions of a type and magnitude which are approaching or may be reasonably certain to reach commercial viability." In seeking to compare the commercial viability of the enterprise upon the subject, I appreciate that each enterprise should be seen on its own merits, for it would be totally unfair to, say, compare Stanbroke Holdings as an owner of major grazing lands with anything the size of the subject. However, in treating the subject on its merits, it would appear reasonable to examine other than just the commercial return upon the investment. -- 15 of 19 -- 16 In the context of primary industry in Australia, the purpose of "farming" would appear to have implications beyond just whether the owner can get a suitable return upon his investment in the land. Indeed, that was noted in DG Lane v. Chief Executive, Department of Natural Resources (V96-216), 12 June 1997, to be reported, where the Member said at p.16: " Philosophically if we are to consider the rules of income generation for the purpose of primary production, then we need to understand that some of the normal principles of business operations are often different. That is to say that the hours worked, the net income received, and the financial benefits obtained from a primary production, or 'farming', operation, often include standards which are peculiar to farming activities. That is why many farmers work their land." Mr Brumpton has demonstrated that his intentions are more than just of a commercial character, and there is no doubt that he has a strong bond to the grazing of cattle. In summarising, I believe that the use of the subject is for grazing, which is the dominant use of the land, and is undertaken on a continuous basis. However, in the context of any real relative comparison with similar enterprises, I believe the operations may be seen to be of a relatively modest nature, and do not, in my opinion, meet the criteria of being of a significant and substantial commercial purpose or character, as required by s.17(2)(c). (ii) Changes in the Valuation - In examining how the change has occurred in the valuation, I note that there was some confusion at the time of the change of ownership. Mr McDonald was dealing with the former owner (Mr Chester) on two separate matters during October 1997, and it was understandable that he sent the notice of the new valuation to Mr Chester on 27 November 1997. Had Mr Chester chosen not to forward that notice onto the appellants, they may have been unaware of the change. While Mr McDonald argues that Mr Chester was noted on the "Roll" at that time as the owner, that really is quite a separate matter, and does not overrule the Chief Executive's responsibility to inform the "owner" under s.50 of the Act. The owner in the current matter as from 20 November 1997 was in fact the registered proprietor (the appellants) under s.2 and s.7(2)(a). That the internal processes of amending the IVAS data base from the ATS data base had not occurred by 27 November 1997, does not diminish that responsibility. In the end the delay did not matter, but had the objection period lapsed following any notice not being received by -- 16 of 19 -- 17 the appellants under s.50, then the appellants would have been likely to have reserved some right to continue with the objection. It is often difficult for the public to understand the administrative processes of Government, with all its intricacies and complexities. In this day of computerised processing there is a tendency for people to conclude that all processes are automatic and pervasive throughout an organisation. While I believe such a strategy would be the ultimate goal of the Chief Executive, its completion is still some time in the future. Until then some delays in transferring data between systems will continue, and sometimes, cause communication problems as in the current matter. However, in exercising his responsibility under s.28(1) of the Act, the Chief Executive has the task of seeking to attain or preserve uniformity in the valuations. In understanding the role of the Chief Executive in this matter I note that s.28 says: "28.(1) No alteration shall be made in the valuation of any parcel of land during the period during which any general valuation or annual valuation relating to the area in question is in force or, in the case of a general valuation or any annual valuation which has not come into force, during the period between the issuing of an annual valuation notice under part 4, or a notice of valuation under part 6, and the date of valuation coming into force - (g) unless, in the opinion of the chief executive, circumstances affecting the valuation of the land are such as to render an alteration necessary or desirable for preserving or attaining uniformity in values between that valuation and subsisting valuations of other comparable parcels of lands;" Clearly, Mr McDonald had communication from the former lessees (Shirleys) that they were vacating the subject. As the farming status of the subject was associated with Shirleys' use together with other lands, it was appropriate for Mr McDonald to seek to reassess the status of the land. While the subsequent use of the appellants appears to have some analogy with the Shirleys' use, it lacks in both numbers of stock and quantity of gross income. It would be "drawing a long bow" to conclude that the two farming uses were identical. However, following a fresh application from the appellants, the s.17 status was refused. (iii) Relativity - In comparing Mr Brumpton's relativities with his properties 1 to 10, I note that all of those properties, with the exception of property 10, are assessed as farming businesses. Property 10, while shown as residential, is really the access to the sand extraction business. -- 17 of 19 -- 18 In drawing comparisons between different land uses, I note that the Courts have found that process to be flawed. In ACF & Shirleys Ltd v. The Valuer-General (1978) 5 QLCR 370, the Land Appeal Court found that it is difficult, if not impossible, to extend the principle of relativity beyond relativity between lands with similar highest and best use, or land types with some common nexus. To compare the subject with its highest and best use deemed to be as a rural homesite, with adjoining lands used for farming purposes, provides little support for the appellants' case. (iv) Comparison of Sales - And finally I consider the evidence of sales provided by the respondent. While Mr Brumpton may have some difficulty in accepting that the price paid in a bona fide transaction between a prudent purchaser and vendor, really represents the improved value in the marketplace, precedents in Courts at all levels are to the contrary. It is understandable that Mr Brumpton may see the actual value to the vendor as the selling price less certain costs incurred by the vendor in order to achieve the selling price. However, that only considers the transaction from the perspective of the vendor. The general test to be applied to a transaction, in order to verify whether it represents a bona fide arrangement, was laid down many years ago by the High Court of Australia in Spencer v. The Commonwealth of Australia (1907) 5 CLR 418, where Griffith CJ said at p.432: " In my judgment the test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained on a given day, i.e. whether there was in fact on that day a willing buyer, but by inquiring 'What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?' It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. The necessary mental process is to put yourself as far as possible in the position of persons conversant with the subject at the relevant time, and from that point of view to ascertain what, according to the then current opinion of land values, a purchaser would have had to offer for the land to induce such a willing vendor to sell it, or, in other words, to inquire at what point a desirous purchaser and a not unwilling vendor would come together. " On the basis of that direction the allowance for commission, auction costs, legal and mortgage transfer costs, or relocation costs ($15,500) are not relevant in considering the unimproved value of the subject as determined from a normal sale. In considering the respective added value of the improvements to the subject, the major -- 18 of 19 -- 19 difference lies in the value of the clearing and the structures. In the end there is only $14,400 between the two estimates of the added value. However, the key comparison when determining unimproved value is really the analysis of the two vacant or lightly improved Sales 1 and 2 (PH Clough v. The Valuer-General (1981-82) 8 QLCR 70, at p.76). On the evidence supplied, there is nothing to discredit Mr McDonald's comparison of the subject at $90,000. Summary Under s.33 of the Valuation of Land Act all valuations are deemed to be correct unless proved to the contrary. Section 45(4) of the Act places the onus upon the appellant to prove his case, and the Chief Executive's value is held to be correct unless it has been proved that the Chief Executive has made an error or has acted upon a wrong principle or method. (Brisbane City Council v. The Valuer-General (1977- 78) 140 CLR 41, at p.56). In the current matter the appellants have not established that the Chief Executive has failed to determine the unimproved value correctly. Conclusion Having considered the whole of the evidence, I am not persuaded that the appellants have proved their case. The appeal is dismissed and the unimproved value of Lot 387 on Plan CH31214, as determined by the Chief Executive at $90,000 is affirmed. NG DIVETT MEMBER OF THE LAND COURT -- 19 of 19 --