Ashburn v Chief Executive, Department of Lands [1995] QLC 185

[1995] QLC 185 .. LAND COURT BRISBANE 10 NOVEMBER 1995 Re: Appeal against Valuations Valuation of Land Act 1944 Town of Roma (V94-459) and (V94-460) Archibald J Ashburn V. Chief Executive, Department of Lands (Hearing at Roma) DECISION Mr Ashburn is the owner of two adjoining parcels of land described as Lots 22 and 23 on Plan R863, Parish of Roma, County of Waldegrave, with areas of 5.122 hectares and 6.03 hectares respectively. As at 30 June 1993, the respondent determined the unimproved value of these lands at $30,000 each. Mr Ashburn appealed to the Land Court against these determinations. According to the reports tendered on behalf of the respondent, these lands are situated about 1.1 kilometres north-east of the Roma Post Office. Both have frontages to Edwardes Street, which has a bitumen centre strip with gravel shoulders and no concrete kerbing and channelling. _Lot 23 also has frontage to Miscamble Street along its northern boundary, which is a gravel road. Apart from Lot 23 being situated on a corner, both lots are described similarly as level to gently sloping, falling easterly to a low-lying area in the lower one-third of the parcel, before rising to the levees along Bung ii Creek. Bung ii Creek forms the eastern boundary of both lots. They are mostly cleared and cultivated, timbered only with a few scattered poplar box and river red gums. Both lots are zoned "Rural A" under the Roma Town Plan and each has a dwelling-house constructed upon it. They have town water, electricity and telephone services, while sewerage is available but not connected. The reports state that the lands suffer more from earlier flooding from Bungil Creek than most surrounding lands because the natural levees of Bungil Creek have been lowered by about 1 metre. This has resulted from the Roma Town Council grading the Miscamble Street crossing of the creek. -- 1 of 10 -- 2 The reports go on to state that a 1987 flood map prepared by consulting engineers, GJ Brandon & Associates, shows that the maj?rity of Lot 22, except for a strip along the western boundary, is subject to inundation during flood events. The map also indicates that almost all of Lot 23, except for a small area in the south- western corner, is subject to inundation by Bungil Creek during flood events. However, the owner had advised the Department that in earlier floods, waters have backed up under the house located in the south-western corner of lot 23. Mr Ashburn was represented by Mr A Pack of AC Pack & Company, Solicitors of Roma. However, Mr Ashburn gave evidence on his own behalf. He stated that the subject lands have been held by his family for about 80 years and he has lived there all his life. He stated that in that time the land has always been used for crop growing and primary production. He said that at the relevant date, 30 June 1993, he was recognised as a primary producer for taxation purposes. Mr Ashburn produced copies of his 1992/93 and 1993/94 income tax returns to demonstrate that he was earning income from primary production for those years. They show that his gross income from this source was $1,755 and $750 respectively for those tax years, expenditure was $4,239 and $2,756, resulting in tax losses of $2,484 and $2,006 respectively. Mr Ashburn went on to say that for the purposes of primary production activity conducted on the subject lands, he has a tractor, a plough, a scarifier, a combine, as well as cattle yards and water troughs. He stated that he does not crop the land for grain, but for crop fattening. Although he admitted that his income from primary production had been minimal over the last five years, he said it had "probably been better in the previous five years", but he could not recall. Because of the drought, Mr Ashburn said that over the last five years his stocking rate had been somewhat limited. However, as most of the subject lands, except the swampy areas, are cultivated, he could have summer and winter crops in a normal season. He said that over the last 12 months he had up to 20 head of cattle on the property for some months. However, he said he did not have this number for any length of time as cattle were coming and going. At the date of hearing, he said that there were seven or eight head on the property. When asked for his opinion of the highest and best use of the lands, Mr Ashburn replied that the highest and best use of each block was for "agriculture and primary production". -- 2 of 10 -- 3 Various photographs were tendered showing that the whole of the two lots have been under water during flood times, except for small areas on each parcel. Mr Ashburn said that major floods had affected the lands in 1951/52, 1956, 1963 and 1983. After 1983, he said that there had been smaller floods three times in the next 16 months, plus other minor floods. Flood water enters the land from three directions, according to Mr Ashburn. These three streams converge on the northern boundary and this is accentuated by water coming from the Miscamble Street crossing of Bungil Creek, where the Council had cut back the creek bank to make the road more accessible. He said that even after normal rain, water lies in the centre of the two lots for up to three to four months. Bungil Creek on the eastern boundary of both lots has a higher levee bank along the creek, then to the west of the land falls away into the swamp area and then rises slightly again to where the houses are built. Mr Ashburn explained that even though the house on Lot 23 is built on the highest point in the south-west corner, water came up under the house in 1983, when he estimated that 99.9% of the lot was under water. Mr Ashburn did not agree with the flood lines shown on the official flood map. He marked where he thought the flood waters had been, indicating that only a very small portion of the land on Lot 22 was flood free. The house situated on that highest land is rented out periodically, with the balance being used for primary production. In flood times, Mr Ashburn said, both lots are cut off from town. In dry times, the houses on the two lots are affected by dust. Mr Ashburn explained that Miscamble Street is the access to the town dump and being unsealed and heavily trafficked, dust is blown by the prevailing north-east wind over the two houses. Mr Ashburn could not understand why each of the lots had been valued separately. He said that in the 1992 valuation they were valued together at $27,500. In the following valuation they were valued separately for a total of $71,000. This was reduced on objection to the present $60,000 ($30,000 on each). Evidence on behalf of the respondent was given by Mr Rhys Allison, a registered valuer employed by the Department of Lands. Mr Allison said that he had valued each lot as a rural residential homesite or hobby farm, rather than land used for the business of "farming". As they were zoned "Rural A", they had no potential -- 3 of 10 -- 4 for subdivision, because, he said, under that zoning the minimum size lot is 20 hectares with a minimum frontage of 200 metres. As the basis for his valuation, Mr Allison relied on the sales of three properties zoned "Rural B" in the vicinity of the subject land. Sale No. 1 is situated in McPhie Street, a little to the north of the subject land. It has an area of 2.256 hectares and sold in June 1992 for $37,000. This analysed to show an unimproved value of $26,100 and an unimproved value of $24,000 was applied as at 30 June 1993. Mr Allison said that McPhie Street is a gravel street, the land being a level low-lying inside parcel, subject to flooding from Bungil Creek. It had similar services to the subject land, although sewerage was not available. The sale is smaller than each of the subject properties, and Mr Allison considered it to be inferior because of its situation, access and land type, although he conceded that it is superior in zoning and suffers less from flooding. However, overall he considered the sale property to be inferior to the subject land. Elaborating on this comparison, Mr Allison said that the sale is completely flooded and that in order to build a house on it, it was necessary to construct a pad. He said it was unlikely that the sale property would ever get sewerage as it was too low. Mr Allison's Sale No. 2 is situated in Edwardes Street, only slightly to the north of the subject land. It has an area of 2.481 hectares and sold in June 1992 for $42,500, which analysed to an unimproved value of $39,570 and an unimproved value of $38,500 was applied as at 30 June 1993. Mr Allison described this land as an inside lot with a low sandy ridge along the frontage, falling to a hollow at the rear. Most of the land is subject to flooding, except for the sand ridge. It has similar services to the subject land, although sewerage is not connected. This sale property is also smaller than either of the subject lands, and Mr Allison considered that it had similar situation, access and land type, but was superior in zoning and suffers less from flooding. He commented that overall the sale property is considered to be more valuable than the subject land. In addition to its flood-free site, it did not suffer from the early flooding problems, nor from the problems of wind-generated dust from traffic along Miscamble Street. -- 4 of 10 -- 5 He said just to the south of the sale property there is a well-established, good quality residential subdivision and it backed on to one of the better residential subdivisions in Roma. He considered that its situation probably influenced the value of that property. On the other hand, he said, directly across Edwardes Street from the subject lands is a ribbon type development of essentially Government housing, which tends to detract somewhat from their value. Mr Allison's Sale No. 3 is situated on the corner of Edwardes and McPhie Streets. It has an area of 1.128 hectares and sold in June 1992 for $20,000, which analysed to show an unimproved value of $18,700 and an unimproved value of $17,400 was applied as at 30 June 1993. Mr Allison described this sale as a low-lying corner lot, subject to flooding, with frontages to the bitumen sealed Edwardes Street and the gravel McPhie Street. It had similar services to the subject land, although sewerage was not available. This sale property is also smaller than the subject lots and Mr Allison considered it had inferior situation and land type, although it had similar access and superior zoning and suffered less from flooding. Overall, he considered the sale property to be less valuable than either of the subject lands. Mr Ashburn knew the sale properties well. He stated that they are not as badly flooded as the subject lands. Although Sales Nos. 1 and 3 were flooded according to the flood map, Mr Ashburn does not think that they were. In any case, ' he said, flooding on the sales would be by back-up water only, not flowing water. However, he conceded that they would be similarly cut off in flood time. In addition to the three basic sales, Mr Allison included the details of two after date sales, which were not available to him atthe time of making his valuations, but which he considered supported them. Supplementary Sale No. 1 is situated in Edwardes Street, has an area of 1 hectare, is zoned "Rural 8" and sold in September 1993 for $25,000. This sale analysed to show an unimproved value of $21,400 and an unimproved value of $17,400 had been applied as at 30 June 1993. Mr Allison described this sale property as a level, low-lying inside lot, subject to flooding, with the same services as the subject land, except that sewerage was not available. This sale property is much smaller than either of the subject lands, and Mr Allison considered it to have an inferior situation, access and land type, although it suffered less from flooding. Overall he considered the property to be less valuable than either of the subject lands. -- 5 of 10 -- 6 MrAllison's Supplementary Sale No. 2 is situated directly opposite the subject land on the corner of Edwardes and Miscamble Streets. This property has an area of 15.4868 hectares and is zoned "Rural A". It sold in June 1994 for $56,000, which analysed to show an unimproved value of $52,280 and an unimproved value of $50,000 had been applied as at 30 June 1993. This property is larger than either of the subject lands and Mr Allison described it as a low-lying corner lot, subject to flooding from Bungil Creek, which forms its eastern boundary. It had similar situation and services to the subject land, although sewerage was not available. Mr Allison considered that this sale was probably the most comparable to the subject lands. Although in many respects similar, he said, the whole of the property was flooded whereas the subject properties each had some relatively flood-free land. He thought that a flood-free site was what people were most interested in purchasing. Mr Ashburn knew these two sales and made the point that none of the sales were used for primary production purposes. He generally agreed with what Mr Allison had to say about Supplementary Sale No. 2, stating that it only had a small area of swamp in the south-west corner. He said it had been purchased in 1994 for purposes of a pony paddock, by people whose children were interested in pony club and equestrian activities. Mr Allison said that he had valued the subject lands as two parcels because each had a dwelling upon it which was capable of separate occupation. He had ascertained that the house on Lot 22 was being let and made the decision to "split" the valuation accordingly. Mr Allison was well aware of the flooding on the subject land and generally agreed with what Mr Ashburn had to say about the flooding and the swamp area. While he agreed that about 99% of Lot 23 goes under water, the area where the house was located was not as severely flooded as the balance of the land. He felt that the area could be raised further from flood by the construction of a house pad. Just such a pad had been constructed on Sale No. 1 and a shed built upon it. Mr Allison had analysed these improvements in arriving at his unimproved value, attributing a value of $300 to the pad. He did not agree with Mr Pack that a pad would cost significantly more than $300. Mr Allison agreed with Mr Pack that the Sale No. 2 had been purchased by a builder and was being built up by the disposal of soil from building sites. While -- 6 of 10 -- 7 he conceded that it may be seen as a purchase for a special purpose, he did not think that this rendered it inappropriate for use as a basis. When questioned by Mr Pack about the usefulness of his supplementary sales, Mr Allison said that he thought they would be of some assistance to the Court, as they indicated that there had been no increase in values. He said that the revaluation as at 1 January 1995 had been rewritten. Mr Allison agreed with Mr Pack that none of the three basic sales was exactly comparable to the subject lands. He conceded that none actually adjoined Bungil Creek, none were fenced to run livestock, none were situated on a road to the dump, most of them have no swamp or drainage channels and they were of different zoning. However, Mr Allison said that all differences had been acknowledged and taken into account in arriving at the valuations. The highest and best use of each parcel of land was as a rural homesite with some hobby farming, according to Mr Allison. He agreed that except for the dwellings, the whole of the subject land was used for grazing and cultivation purposes. However, he said that he did not believe that the growing of sorghum and the running of a few head of cattle constituted "a significant and substantial commercial purpose", sufficient to qualify for concessional valuations as lands used for "farming". Mr Allison said that in the absence of sales of any "Rural A" land he had resorted to the use of sales zoned "Rural B". He acknowledged that there were differences, particularly in the minimum lot size. However, he had come to the conclusion that at the date of valuation the market was not paying more for "Rural B" land, which had some potential for subdivision, than it was paying for land with that zoning that had no such potential. He concluded, therefore, that such sales could be used to value the subject lands. This case raises two issues. The first is whether the two parcels of land should have been included in the one valuation. The second issue is whether the . land should have been valued under the provisions of what is now s.17 of the Valuation of Land Act 1944, as land exclusively used for purposes of "farming". The first issue may be dealt with simply. At the date of valuation the relevant statutory provisions were contained in s.14 of the Valuation of Land Act 1944 which stated: -- 7 of 10 -- 8 "Unless the Chief Executive otherwise directs, there shall be included in one valuation - (a) several parcels of land which adjoin, and are owned by the same person, and where either no part is leased or all the parcels are let to one person; ... Provided that any such parcels of land shall be valued separately if buildings are erected thereon which are obviously adapted to separate occupation and which may respectively be lawfully held under separate ownerships." The discretion of the Chief Executive to "otherwise direct" was considered in detail by the Land Appeal Court in RM & AJ Bean/and v. The Valuer-General ( 1990- 91) 13 QLCR 113. However, it seems to me that the use of the word "shall" in the proviso to this section makes it mandatory and allows of no discretion. If buildings are erected upon the two parcels of land which are obviously adapted to separate occupation and which may respectively be lawfully held under separate ownerships, then the two parcels must be valued separately. This is the situation in the present case and, notwithstanding that the parcels had been amalgamated previously, the Chief Executive was correct to value them as two parcels on this occasion. The second issue is somewhat more difficult. Mr Pack, for the appellant, argued that the land should be valued under the concessional provisions of s.17(1) of the Valuation of Land Act 1944 as "land which is exclusively used for purposes of farming". The subsection states: "In making a valuation of the unimproved value of land exclusively used for purposes of.' .. farming, any enhancement in that value for that the land has been subdivided by survey or has a potential use for industrial, subdivisional or any other purposes shall be disregarded irrespective of whether or not, in the case of potential use as aforesaid, that potential use is lawful when the valuation is made." In ss.(2) of s.17, "farming" is defined to mean: II (a) the business or industry of grazing, dairying, pig farming, poultry farming, viticulture, orcharding, apiculture, horticulture, aquiculture, vegetable growing, the growing of crops of any kind, forestry; or (b) any other business or industry involving the cultivation of soils, the gathering in of crops or the rearing of livestock; if the business or industry represents the dominant use of the land and -- 8 of 10 -- 9 (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." Mr Pack has referred me to the decision of the Land Appeal Court in the case of Crawford v. Valuer-General (1990-91) 13 QLCR 138, where it was held that the scale and magnitude of operations are not the sole test. However, the present valuation was not made under the provisions of s.11 ( 1)(vii), which were relevant in Crawford's case. That section was amended and the present valuation was made under the provisions of ss.(9) and (10) of S; 11 of the Act, which themselves became ss.(1) and (2) of s.17, following the 1994 reprint of the Act. Although there are a number of similarities to the provisions relevant in Crawford, they are now expressed somewhat differently. The Land Appeal Court has recently considered s.17 in Chief Executive, Department of Lands v. Whackett (AV93-163 and AV93-164), judgment delivered 3 March 1995 (not yet reported). In that case the Court traced the history of the concessional provisions, including judgments of the Land Appeal Court under the previous legislation. It then considered the differences between that legislation and the present provisions, before considering each of the criteria set out in s.17(2). In the event, the majority of the Court found that neither the objective character nor the subjective purpose of the grazing enterprise carried on by the Whacketts could be said to be significantly or substantially commercial. In the present case the date of valuation is 30 June 1993. On the evidence, it could not be said that the primary production activities carried on by the appellant were significantly and substantially commercial. The evidence is that for the last five years these activities have been minimal, only a few head of stock have been carried and the operations have been conducted at a loss. Mr Ashburn thought that they might have been somewhat better for the five previous years, but he was not sure. After considering the whole of the evidence, I have come to the conclusion that, having regard to s.17 of the Act, the primary production activities carried on by the appellant did not have a significant and substantial purpose or character and were not engaged in for the purpose of profit on a continuous or repetitive basis. -- 9 of 10 -- • 10 Therefore, I am of the .opinion that Mr Allison was correct in not valuing the subject lands under the provisions of s.17 of the Act. This being so, the subject land must be valued at its highest and best use in accordance with the requirements of s.3(1) of the Act at" ... the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that ... the improvements did not exist." Mr Pack has attacked the valuations on the basis that the sales used by Mr Allison are all of a higher zoning and were not comparable in a number of resp_ects. However, Mr Allison has said that he took all these aspects into account in making his comparisons with the sales. Comparisons in such circumstances are difficult, particularly when the sales and subject lands are so different. However, to support his valuation Mr Allison has also produced sales after the date of valuation. His reason for doing so is that there had been no market movement between the date of valuation and the date of the sales. One of the sales is small and not very helpful. However, the Supplementary Sale No. 2, situated directly opposite the subject land, with the same zoning and being very similar land, supports Mr Allison's view that there is a market for such properties, even though they are extensively flooded. This sale land is larger than either of the subject lands and sold for $50,000. The whole of the land is subject to flooding and has no high area upon which a house could be built. I have no evidence as to whether a house could be built on the land if a pad was constructed. It seems to me that the unimproved value disclosed by this sale well supports the valuations applied to both the subject lands. In my opinion, the appellant has not discharged the onus of proving the valuations are incorrect. Accordingly, the appeals are dismissed and the valuations applied by the Chief Executive· are affirmed at $30,000 for each of the subject lands. JJ TRICKETT MEMBER OF THE LAND COURT -- 10 of 10 --