Chief Executive Department of Lands v Higbie [1995] QLAC 7 (1994-1995) 15 QLCR 277

IN THE LAND APPEAL COURT OF QUEENSLAND Re: Appeal against determination of unimproved value by the Land Court - Valuation of Land Act 1944. AV93- 374 Chief Executive, Department of Lands v. Jack W Higbie and Kari Higbie Delivered at Brisbane this third day of March 1995. J U D G M E N T O F M A J O R I T Y This is an appeal by the Chief Executive, Department of Lands (the appellant), against the determination of the Land Court allowing an appeal by Jack W Higbie and Kari Higbie (the respondents) against the decision of the appellant to value Lot 212 on Plan CSH 1381, parish of Cressbrook, in the sum of $88,000 for the purposes of the annual valuation of the local government area of Esk as at 31 March 1992. The valuation is required to be made under the Valuation of Land Act 1944 (the Act). Before the Land Court the respondents contended for an unimproved value of $30,000. The disparity in value is dependant upon the correct manner in which the subject land should be valued. It is the contention of the respondents that the land should be valued as "farming" land for the purposes of the Act. For that purpose the appellant would submit that the land should be valued at $48,000. The appellant however submits that the land should be valued as a rural residential site. For that use the appellant contends and the respondents agree that the appropriate value is $88,000. The subject land contains an area of 64.31 hectares. The lot is situated about 11 kilometres north of Esk with access obtained from the bitumen sealed Brisbane Valley Highway. Power, telephone, school bus and mail services are available. The land is described in the report and valuation of Mr EG Ridley, registered valuer in the employ of the Department of Lands, as comprising mostly steep slopes of Mt Ottaba with some easier slopes towards the Brisbane Valley Highway. It is not in dispute that the summit of Mt Ottaba provides a building site which affords panoramic views to the extent of 360 degrees including views of part of Lake Wivenhoe. There also appears to be no dispute that the building site can only be accessed by the construction of a cut and fill track at considerable expense. The attraction that the site had to offer had something to do with the purchase of the land by the respondents in 1976 in a vacant [1995] QLAC 7 -- 1 of 8 -- 2 state, mainly for "recreation and investment" purposes. By mid-1981 (commenced at the end of 1980) a cabin or kit home of about 60m2 was constructed on the site of Mt Ottaba. Roof water was collected for domestic and septic purposes. The purpose of construction of the cabin was for recreational use - "just a weekender". This use was described by Mr Higbie as sporadic until about 1990. Since then they have not used the cabin. The use of the land for "farming" purposes began shortly after purchase. The respondents did not want to see the land lie idle. The lot was fenced. A dam was installed and a bore sunk. Shortly after the construction of these improvements, an arrangement was entered into with a dairy farmer (Mr Slaughter) to "lease" the land in return for the payment of rates of about $240 per half year. He eventually relinquished his rights and an agreement was entered into on similar terms with Mr and Mrs Dennehy who are dairy farmers in the neighbourhood of the subject land. In this arrangement it was tacitly agreed that the "lessees" would maintain these farming improvements and this apparently has been done. Rates levied on the property at the time of hearing of the matter in the lower Court were of the order of $1,500 per annum. Mr Higbie and Mrs Dennehy gave evidence in the lower court. While the cabin was not used by the owners (or the "lessees") during the relevant valuation period, it is clear from the evidence given in the Land Court and in the submission by Mr Higbie before us, that the owners did not see the arrangements with the "lessees" as excluding their rights to residential/recreational use of the land and cabin. It is also clear that Mr Higbie did not participate in the farming activities carried out on the land by the "lessees" nor did he contend that he was in the business of agisting cattle. The learned Member found that "both the owners and the Dennehys agree that the 'lessees' may use the cabin if they so wish". As it was accepted that the business conducted by Mr and Mrs Dennehy on the land in conjunction with their farm was a business of "farming" within the meaning of s.17 of the Act, the appeal was allowed. We are satisfied after hearing Mr Higbie that it was never intended that exclusive use was given or intended to be given over the whole property to Mr and Mrs Dennehy. Thus there is a dual use of the land (a) for residential/recreational purposes by the owners in part and (b) by a "farmer" in part in return for the payment of rates levied on the property by local government. The relevant section of the Act containing the definition of farming is set out in the decision of the Court below. The interpretation given the section by the Land Appeal Court is contained in the judgment of AR Thomason v. Chief Executive, Department of Lands (AV93-103) (which case was heard at these sittings of the Land -- 2 of 8 -- 3 Appeal Court). We do not propose to repeat these reasons. Shortly stated in the context of the facts of this case the Court has held - (a) that the issue is to be determined by asking the question whether the business or industry of grazing the subject land represents the dominant use of the land; (b) that the parameters in determining the issue are not confined (economically) to the activity of the grazing of cattle on the subject land in isolation when that activity forms part of a business of grazing conducted on other land; and (c) that "the proper approach to be taken when ascertaining the dominant use of land is to consider such matters as the amount of land actually used for any purpose, the nature and extent and intensity of the various uses of the land, the extent to which land is used for activities which are incidental to a common business or industry of a type specified in section 17(2), the extent to which land is used for purposes which are unrelated to each other, and the time and labour and resources spent in using the land for each purpose. When undertaking this exercise, one cannot ignore the conclusion that an objective observer would reach from viewing the land as a whole." In the subject case the area of the lot is about 64 hectares. The appellants occupy (spasmodically) a very small part of the land. The remainder is improved and used for grazing purposes by farmers - Mr and Mrs Dennehy who have run up to 30 head of cattle on the property for periods of up to nine months in a year. It is not in question that the business or industry of grazing conducted on the subject land by the farmers in conjunction with other land held by them satisfies the criteria specified in paragraphs (c) and (d) of the definition and having regard to the intensity, visual and spacious aspects of the uses made of the land, we are led to the conclusion that the dominant use of the land is for farming purposes. The value which would be applied by the Chief Executive for this purpose is in the sum of $48,000. This opinion of value was given by Mr EG Ridley, who is a registered valuer in the employ of the Department. We prefer his opinion to that of the appellants. The valuation will accordingly be determined in the sum of $48,000. The appeal is allowed, the determination of the Land Court is set aside and the unimproved value of the subject land as at 31 March 1992 is determined in the sum of Forty-eight thousand dollars ($48,000). J. -- 3 of 8 -- 4 Justice of the Supreme Court President of the Land Court Member of the Land Court -- 4 of 8 -- LAND APPEAL COURT BRISBANE In the matter of an appeal against a decision of the Land Court - Valuation of Land Act 1944 AV93-374 BETWEEN: Chief Executive, Department of Lands (Appellant) AND: Jack W Higbie and Kari Higbie (Respondent) Delivered this third day of March 1995. BY: R.E. Wenck, Member of the Land Court I have had the benefit of reading the judgement of Ambrose J and Mr White, in which the factual matters surrounding this appeal and the relevant legislation are detailed. If s.17 of the Valuation of Land Act should be interpreted, as it relates to "exclusive use for purposes of farming," as it has been by the Land Appeal Court in A.R. Thomason v. Chief Executive, Department of Lands (AV93-103), heard also at these sittings, then the majority opinion here would become unanimous, for I could not disagree with the result based on that interpretation of the legislation. However, I am unable to agree that the intent of the meaning of "farming" should be construed as to extend the meaning of "exclusively used" to include uses not incidental to farming. To extend the benefit flowing from the original provision relevant to "the business of primary production", seems to me to be going behind the substantive part of s.17. The words "exclusively used" possess a meaning which I see to be both practical and logical in interpretation of the protection intended by the legislation. S.17 has resulted from an amendment to the original provision, inserted as part of s.11(1)(vii) of the Act in 1971. The intent of that provision was clear and as described by the Minister in his speech when moving that a Bill be introduced to amend the Act. Reference to that speech was made in the Thomason judgement and is repeated here. " The Bill also provides that land used exclusively for primary production in a potentially higher-use area is to be valued without regard to the potential. ...The provision regarding primary production has been inserted to ensure that a primary producer caught up in urban development is not valued on the potential until he ceases using the land for primary production. This will enable a primary producer to carry on economically for as long as possible, and is parallel to the -- 5 of 8 -- 2 single-unit residential owner in a higher use zone." (Parliamentary Debates, Legislative Assembly, 1 December 1971 at 2401-2.)" The difficulties which that provision caused, in valuation terms, were numerous but otherwise largely restricted to the interpretation of what constituted the "business" of primary production. When s.11(1)(vii) was amended in 1991 to eventually become s.17, the word "farming" was inserted and a meaning given to such term in lieu of the previous reference to "the business of primary production". In the substantive part, the words "exclusively used" remained. Correct interpretation of the term "farming" turns on a number of criteria, but we are here concerned with the intent of the "dominant use" criterion. "Farming" means, inter alia, the business or industry of the various named activities "if the business or industry represents the dominant use of the land ..." (emphasis added). In the Thomason judgement the Land Appeal Court said: " In our opinion, the expression 'dominant use' implies that some other use may be made of at least part of the land. Further, it does not necessarily follow that the other use must be incidental or ancillary to the dominant use before section 17(1) can apply to the land. Uses of land which were distinct from but incidental to the business of primary production (such as dairy farmer's home on the land) did not exclude the operation of section 11(1)(vii) to the land. There would have been no reason to use the expression 'dominant use' in section 17(2) to apply only to those cases which previously came within section 11(1)(vii). " I hold the view that as the words "exclusively used" have not been deleted, it could reasonably follow that the "some other use" should be "incidental or ancillary to the dominant use" before s.17(1) provides the intended protection. There was, in my opinion, a reason to use the expression "dominant use" in s.17(2), other than the interpretation that some non-incidental use may be made of at least part of the land. That reason, in my opinion, was to make more stringent, rather than more liberal, the tests for protective qualification. During the Committee stage of the debate when the amendment was being considered (Parliamentary Debates Legislative Assembly 14th November, 1991 p.2952), reference was made by the Minister to the then recent Land Appeal Court judgement in Crawford v. The Valuer-General (1990) 13 QLCR 138. That judgement had the perceived effect, it seems, of providing a more liberal interpretation than had previously been adopted as to matters going to the constitution of a "business" of primary production. It would seem illogical then, if, at the same time as making more stringent the qualifications relevant to the "business of primary production", it was seen as reasonable to soften the effect of the exclusivity of use provision. It had been well established that the ordinary meaning of "exclusively used", as it applied to s.11(1)(vii), -- 6 of 8 -- 3 disqualified for protection, use for the business of primary production, when associated with non-incidental or collateral use. If that result had been seen to be harsh, in instances where the dominant use was for the purposes of farming, then reference to "exclusive" use could simply have been deleted. If, however, it was not intended to soften the effect of the legislation relative to the exclusive use provision, then there needs to be an argument against the conclusions reached in the Thomason judgement. The circumstances of the Crawford matter provide the answer, in my opinion. Mr Crawford was a strawberry farmer in a once semi-rural area which had become a rural residential suburb of Brisbane. He had carried out the farming activity for many years and was seen to be diligent in his endeavours and to him no doubt, the commercial purpose was both significant and substantial. However, when the financial aspects of his operation were closely analysed, at least in taxation accountancy terms, little real profit was left over at the end of the financial year. Mr Crawford found it necessary to obtain outside work to supplement his income. The suburb in which the land was situated had experienced keen demand associated with its rural residential environment. Unimproved values had risen far above the worth of the land for the business of primary production (growing strawberries). The Valuer-General saw the primary production use as not meeting a reasonable interpretation of what constituted the "business of primary production". The highest and best use of the land was unquestionably for rural residential homesite purposes and it was valued accordingly. After lengthy considerations the Land Appeal Court found that Mr Crawford was conducting a business of primary production. It found that the residential use by Mr Crawford was incidental to that business activity. Now, if Mr Crawford's case was considered in light of the subsequent amendment, it seems to me, that the use of his land might still have "passed the test" of qualification for the purposes of "farming". However as I interpret the amendment not only would that use have needed to satisfy the criteria as set out in s.17(2)(c) and (d) but would also have to be seen to be dominant over the rural residential use which Mr Crawford also enjoyed. The question of recognition of dominance of use is not a simple one to answer. It is however capable of rational consideration on the facts of each matter. It was an unnecessary consideration prior to the amendment to s.11(1)(vii). The amendment recognises that in a case such as Crawford the business of primary production may exist but there is also the potential for that use to become subservient to an associated use - specifically residential. In other words it is recognised that there will be cases (in fact very many cases) where the question arises as to which is the dominant use and which is incidental - residential or farming as it is now defined. In the absence of the amendment and the need for consideration of dominance, the original intent of the -- 7 of 8 -- 4 provision for protection was in danger of being lost. While land intended to be protected would not suffer by being "caught up" in urban expansion, the protection could extend to land not "caught up" in but forming the urban expansion due to demand for and its predominance of use for residential activities. In my opinion, s.17 of the Act as it applies to land exclusively used for the purposes of farming, was not intended to provide a concessional basis of valuation, artificially below market value, to land on which farming use is not dominant nor when uses other than those directly associated with dominant farming use are conducted. Turning to the subject matter, I do not agree, as submitted by the appellant, that the use by the owners of an elevated site for accommodation of a recreational "weekender" dominates the "farming" use. The land is not put to the farming use by the owner, but by another, whose activities are not restricted to the land in question. Whether it is a matter which should have been addressed or not, the amended legislation is not seen to alter the concept that the "farming" use may exist even if such use is in conjunction with other lands, not necessarily in the same ownership. In this case the use of the land by the owners, for the accommodation of a residential structure, regardless of the intensity of the personal occupation of that structure, is not, on the facts, incidental but collateral to the dominant use for farming, by others. The land is not then considered to be "exclusively used" for the purposes of farming. In my opinion the land is not entitled to be valued on a basis protected by the legislation, but on the basis of its highest and best use - as a rural residential site. I would allow the appeal and find an unimproved valuation in the amount of $88,000. MEMBER OF THE LAND COURT -- 8 of 8 --