Allan v Chief Executive, Department of Lands [1996] QLC 120

LAND COURT MOSSMAN 10 SEPTEMBER 1996 Re: Appeal against an Annual Valuation Valuation of Land Act 1944 Shire of Douglas (AV95-449) John S and Elaine Allan v. Chief Executive, Department of Lands (Hearing at Mossman) REASONS FOR DECISION This is an appeal by Mr and Mrs Allan against the unimproved value of Lot 162 on Plan SR 180, Parish of Whyanbeel, with an area of 2.17 hectares. It essentially involves the question of whether the concessional provisions of s.17 of the Valuation of Land Act 1944 apply. The valuation was made as at 1 January 1995 by the Chief Executive under the provisions of the s.37(3) of the Valuation of Land Act at which time he determined the unimproved value of the subject land at $121,000. Mr and Mrs Allan objected to that valuation and that objection was disallowed. They then appealed to the Land Court, advising that their estimate of the unimproved value was $34,000, which Mr Allan explained was based on a comparison with the unimproved value applied to a nearby poultry farm. At the hearing Mr JS Allan appeared for the appellants, while the Chief Executive was represented by Mr Kevin Allan and valuation evidence was given by Mr Ian Quirk-Anderson. The subject land is situated, as described in Mr Quirk-Anderson's report, in the Rocky Point locality, about 10 kilometres north of the Mossman Post Office, about two kilometres south of Wonga Beach and 95 kilometres north of Cairns on the Mossman-Daintree Road, which is a bitumen sealed dual carriageway. Services to the property include power, town water and telephone, although telephone was not connected. The land is described by Mr Quirk-Anderson as being above road level, rising from the front to a moderately sloping ridge. A cleared and benched home site is located on this part of the property. The property rises steeply to the rear and is broken by a gully. There is a [1996] QLC 120 -- 1 of 7 -- 2 cutting for an access track from the road to the house site. The site provides substantial coastal views. Apart from the house site, the property is uncleared tropical scrub. Mr Allan went on to explain further that only about a quarter to one half of an acre has been cleared for the house site and for the other improvements. Mr Allan explained that he purchased the subject land about 30 years ago with the intention of using the land for the purposes of beekeeping. Initially he built a shed and later a house on the land. He once had up to 40 beehives on the land, but explained that this was reduced to 20 hives, which he uses for the purposes of keeping queen bees for breeding replacement stock. The balance 100 of his hives are kept on leasehold land in the Mt Molloy area, which is owned by another person. The shed on the subject land is used for storage, maintenance and for cleaning frames and also for building boxes etc. The extraction and other equipment are kept at Mt Molloy. The extraction of honey is undertaken at Mt Molloy and the honey is then brought back to the subject land for bottling and distribution for sale at various outlets in the area. Mr Allan explained that in normal years the gross income from the property would be about $6,000 to $7,000 per annum, while the net income would be something less than $5,000. He explained that in recent years because of the severe drought conditions, he has not achieved that income. I accepted this evidence of the income in the absence of evidence of books of account, because it was uncontested by the representatives for the Chief Executive. Mr Quirk-Anderson gave evidence that he did not consider the subject land qualified for valuation under the concessional provisions of s.17 of the Valuation of Land Act, because he regarded the dominant use of the land as a rural homesite. Secondly, he thought that the enterprise did not have a significant and substantial commercial purpose or character. Before proceeding, further it is necessary to consider the provisions of s.17 of the Valuation of Land Act. The relevant provisions of s.17 state that in making the unimproved value of land exclusively used for purposes of “farming”, any enhancement in that value because the land has a potential for any other purpose shall be disregarded. “Farming” is defined as meaning the business or industry of a number of pursuits and includes “apiculture”, if the business or industry represents the dominant use of the land and -- 2 of 7 -- 3 has a significant and substantial commercial purpose or character and is engaged in for the purpose of profit on a continuous or repetitive basis. It has been held in the recent authorities concerning that particular section, that in order to qualify for valuation under this section, the subject land must fulfil each of those requirements. If one of those requirements is not fulfilled then the land fails to qualify for valuation under s.17. In this case Mr Allan, the appellant, argues that the dominant use of the land is for the purposes of beekeeping. He has 20 hives on the land. It is the headquarters for his enterprise and the fact that there is a substantial brick two-bedroom house on the land means nothing, as a beekeeper must have headquarters and must live somewhere. Section 17 and its predecessor s.11(i)(vii) of the Act, have been the subject of numerous Court decisions over the years. The most recent authority is contained in two cases where the protective provisions of s.17 have been explained and they are in respect of Whackett v. Chief Executive, Department of Lands and Thomasson v. Chief Executive, Department of Lands, as yet unreported judgments of the Land Appeal Court delivered on 3 March 1994. It is necessary at this stage also to indicate that the predecessor to s.17 which was s.11(1)(vii) of the Valuation of Land Act also came in for judicial consideration by the Land Appeal Court. The leading case prior to Whackett and Thomasson was Walker v. Valuer-General. In that case the Land Appeal Court considered the provisions of the Act as they then were. Such cases are still helpful in the sense that the Land Appeal Court pointed out that not all primary production activities can qualify land for the concessional valuation. At that stage the enterprise had to qualify as a “business of primary production” and the Court held there that there must be significant and substantial commercial purpose or character before the enterprise can qualify. That case was followed by Crawford v. Valuer-General, where the Land Appeal Court had for consideration a smaller enterprise and the Land Appeal Court there gave careful consideration to whether or not that small enterprise should qualify. In the event the Land Appeal Court held that the scale of the enterprise was not as important as the actual activities that were carried on, and referring to a case that reached the High Court of Australia, Hope v. -- 3 of 7 -- 4 Bathurst Shire Council. In that case the High Court was considering a small stud enterprise which did not make a significant and substantial profit in normal terms. The Court held that it was more important that the enterprise was carried on for the purpose of profit rather than the extent of the profit. As a result of that decision the Legislature changed the provisions from s.11(1)(vii) to what is now contained in s.17. To make the matter absolutely clear it incorporated the relevant parts of the Walker decision into legislation and that is now contained in paragraphs (c) and (d) of s.17, that is, that the enterprise must have a significant and substantial commercial purpose or character and be engaged in for the purpose of profit on a continuous or repetitive basis. If an enterprise fails to meet those two characteristics then it does not qualify, but the Legislature went further, it also added the requirement that the business or industry represents the dominant use of the land. That term "dominant use of the land" has been considered by the Courts over recent years and they have perhaps not finally determined the extent of that criterion. However, the Thomasson and Whackett cases do give us sufficient guidance to be able to say that it is not the dominant aspect of area that is important. It has been put in terms by Ambrose J. in one decision that perhaps the test could be what a casual observer would appreciate to be the dominant use of the land. In this case we have a parcel of land on which is a substantial brick house and on which are 20 hives which are used for the purpose of breeding replacement stock for a beekeeping enterprise. It is also used as the headquarters, as it were, for maintenance, for the bottling of honey and for the place for the beekeeper to live. In my view it is not necessary to go beyond the first two requirements of s.17 to decide the matter of whether or not the concession should apply. It was conceded by Mr Quirk-Anderson for the Chief Executive, that the land is used for the industry of beekeeping. I accept that the land is used for the industry of beekeeping. The next provision that requires consideration of whether the business or industry represents the dominant use of the land. I have given this matter considerable thought. I -- 4 of 7 -- 5 have been influenced in arriving at my decision by a number of factors. First, the land is situated in an area which is zoned residential. Second, it is conceded that the dominant use of the surrounding land is for rural residential purposes. Mr Allan conceded that there's very few primary production uses on small acreage properties in the area although it appears to be surrounded by large commercial cane farms but they are a different category altogether. Third, the land has been the home for Mr and Mrs Allan for well over 20 years. Fourth, there are 20 beehives on the land to my mind would indicate not the dominant use of the land, but an ancillary use of the land used for residential purposes. I do not think it could be said that from all the evidence that the dominant use of this land is for beekeeping. I find that the dominant use of this land is for rural residential purposes. I might add that it is not necessary to consider whether or not this business or industry of beekeeping has a significant or substantial commercial purpose or character or is engaged in for the purpose of profit on a continuous or repetitive basis, so I will not make any finding in that regard. It is sufficient to say that in my view the land does not qualify for a concessional valuation under the provisions of s.17. However, Mr Allan raised in the alternative in his grounds of appeal, that the valuation is excessive and was made not taking into account proper valuation principles. Mr Quirk-Anderson has valued the land by having regard to four sales of land in the area. Some of those sales are well removed from the subject land, but they are still in the general vicinity of the Mossman area. In my opinion, they represent a basis for the valuation of the subject land which is situated on the Mossman-Daintree Road, with views to the ocean. Mr Quirk-anderson gave his appreciation of each of the sales and why he considered the subject land to be superior to three of them and inferior to the other. Perhaps the closest both in terms of location and in terms of scope, is sale No. 4 which sold for $280,000, analysed to $275,000 and had an applied value as at 1 January 1995 of $160,000. That sale took place somewhat after the relevant date, July 1995. However, it was only six months after date and it is an indication of the value of the land close to the date of valuation. Although Mr Quirk-Anderson conceded that that is a superior site, when supported -- 5 of 7 -- 6 by the other three sales, it demonstrates that the valuation of $121,000 for the subject land is not excessive. Therefore, the first ground of appeal fails. -- 6 of 7 -- 7 The second ground of appeal was that the land was valued by wrong valuation principles. In this regard I refer to the case of Clough v. Valuer-General, (1981-82) 8 QLCR 70, where at p.76 the Land Appeal Court said: "It has been traditionally laid down many times and in many jurisdictions that in ascertaining unimproved value sales of unimproved land of comparable quality, situation etc. to the subject parcel if they are available, are to be preferred as the best guide for arriving at an improved value." That case more recently was expanded upon in the case of Grahn v. Valuer-General (1992-93) 14 QLCR 327, where the Land Appeal Court dealt with sales as opposed to relativity as a basis for valuation. There the Land Appeal Court found that sales of land of unimproved or lightly improved land, although they may not be ideal, are to be preferred to a basis which is based on relativity of values applied to other lands. In the present case, Mr Allan, the appellant, was not able to produce any sales of unimproved land or lightly improved land. He referred in general terms to the sales of some improved properties, but I did not find those helpful. Therefore I really only have the evidence of Mr Quirk-Anderson before me in this regard, so in that regard the second ground of appeal fails. I find that the respondent’s valuation was based on the traditional methods, which have been endorsed by the Land Appeal Court. In the circumstances I cannot find that the appeal has succeeded. I am satisfied that the valuation is not excessive, it was based on correct valuation principles and the provisions of s.17 of the Act do not apply. Therefore I find that the appeal should be dismissed. Accordingly, the appeal is dismissed and the valuation of the Chief Executive determined at $121,000 is affirmed. JJ TRICKETT PRESIDENT OF THE LAND COURT -- 7 of 7 --