Doolan v Chief Executive, Department of Lands [1993] QLC 165

r Re: Appeal against Annual Valuation Valuation of Land Act 1944 Shire of Atherton (AV93-90) LAND COURT BRISBANE 23RD DECEMBER 1993 Francis Michael Doolan and Noela Ma ry Doolan V. Chief Executive, De partment of Lands (Hearing at Atherton) DECISION Mr and Mrs Doolan are the owners of land described as Lot 1 on Registered Plan 749568, Parish of Barron, County of Nares, containing an area of 11.86 hectares. In accordance with the provisions of Section 168(3) of the Valuation of Land Act 1944, the Valuer-General assessed the unimproved value of this land as at 31st March 1992 at $105,000. Mr and Mrs Doolan objected to this valuation and by letter dated 29th March, 1993, they were advised that their objection had been disallowed and that the valuation remained at $105,000. Mr and Mrs Doolan then lodged an appeal to the Land Court against the decision on their objection, advising that their estimate of the unimproved value is $47,000. Their grounds of appeal are that the property should be valued as land used for the purposes of farming as they use it solely for the purpose of breeding and fattening beef cattle. There is no dispute that if the land should be valued under the provisions of Section 11 (9) of the Valuation of Land Act 1944 as land used for the purposes of farming, the valuation should be $47,000. The representatives of the Chief [1993] QLC 165 -- 1 of 7 -- 2 Executive, Department of Lands, agree that this represents a fair value if the Court finds that the land should be valued for the purposes of farming. Between the date of valuation and the date of hearing of this matter, the Lands Legislation Amendment Act 1992 has substituted the Chief Executive, Department of Lands, for the former statutory office of Valuer-General. Therefore, it is appropriate that the Chief Executive be the Respondent in this matter in place of the former Valuer-General. The land is situated in Pasetti Road, approximately 4.1 kilometres north-east of the Kairi Post Office. Access is by means of a good bitumen road to within about 300 to 400 metres of the property, when access is by means of Pasetti Road which provides only fair formed gravel access. According to the Departmental report tendered on behalf of the Chief Executive, the land comprises easy slopes falling from the south to the north and north-east, originally timbered with dense lawyer vine scrub, the land has red soils now fully cleared and pastured. It has good views to the north and towards Lake Tinaroo. Power and telephone services are available and it is watered by a bore. The land is zoned "Rural B" under the provisions of the town planning scheme for the Shire of Atherton and is used as a rural site for the purpose of small-scale grazing. The Department has valued the land as a rural site. Mr F M Doolan gave evidence on behalf of the owners and tendered a written statement upon which he elaborated. Mr Doolan's submission is that the land is used solely for the fattening and very limited breeding of beef cattle and should be valued on the same rate per hectare as farms and cattle properties in the area. He compared the valuation of the subject land with the valuations on a -- 2 of 7 -- 3 number of adjoining properties as follows: Owner B Geraghty J Tomasetig D Godfrey 59.5 hectares 52.3 hectares 56.5 hectares Valuation $107,100 $147,000 $159,273 Value p er Hectare $1,800 $2,810 $2,819 On the basis of these figures, Mr Doolan considers that the subject land should be valued at the rate of $3,962 per hectare, or a total of $47,000. He said that he arrived at this figure after considering the rates applied to the other properties, making adjustments for the differences of quality of land and the size of the subject property. The owners purchased the subject land from a Mr" Stevens, who was a farmer. He had subdivided part of his farm into three blocks each of about 11 hectares, which he then sold. The subject land was purchased in March 1990 for $156,000. At that time the land was cleared but vacant, with some contouring and a bore as the only improvements. Mr Doolan said that he and his wife purchased the land with the intention of fattening cattle and since the time of purchase have spent $42,000 on improvements. These improvements comprise fencing, cattle yards, crush and ramp at a cost of $7,160.90 for material only; a shed 8 metres by 12 metres of steel and galvanised-iron construction with a concrete floor, which is a storage shed with shower and toilet, for a cost of $21,986, which Mr Doolan constructed himself; water improvements comprising a 6,000 gallon water tank, two troughs, pump, piping and fittings at a cost of $9,047. Electricity has been connected to various parts of the property at a cost of $2,683. Other items of small plant and equipment made up the total of $42,000. -- 3 of 7 -- 4 These improvements have been effected over the last couple of years. Stock purchases and sales are as follows: On 10th December, 1991, 10 heifers were purchased at a cost of $3,490 from the sale yards at Mareeba. On 14th February, 1992, 10 steers were purchased for $2,800. On 26th May, 1992, the 10 heifers were sold for $4,885. On 2nd March, 1993, the 10 steers were sold for $6,100. On 12th February, 1993, a further 7 steers were purchased for $2,705. On 16th January, 1993, a further 12 steers were purchased for $3,366. On 20th March, 1993, 4 heifers were purchased for $990. Mr Doolan thinks that the subject land was running 23 head of cattle at the date of valuation, 31st March 1992 and it is presently running the same number. He stressed that the district has been through a very dry period during the whole time they have owned the property. When the seasons improve, he is of the opinion that they will be able to run 30 head of cattle and, without supplementary feeding, turn off this number each year. He realises that the operation will never make a big profit, but he hopes that the enterprise will show some profit within the next couple of years. Mr Doolan said that he realised that the price that the appellants paid for the land was high, particularly for a small grazing operation. However, they intend to build a house and live on the property at some time in the future. Mr R G Moroney, registered valuer employed by the Department of Lands, gave evidence on behalf of the Chief Executive. Mr Moroney said that he valued the land as a rural residential site by reference to sales of two properties in the -- 4 of 7 -- 5 area, including the sale of the subject land. He analysed that sale to show $129,210 after deducting the value of improvements which he estimated at $17,790 for timber treatment, $1,000 for contouring and $8,000 for water improvements. He applied an unimproved value of $105,000 in the 1992 annual valuation, as he said that it achieved better relativity than would have been the case if he had applied the analysed figure. The second sale is a property subdivided at the same time as the subject allotment from the land originally owned by Mr Stevens. It has an area of 8.905 hectares, zoned "Rural B", which sold in January 1991 for $140,000. Mr Moroney analysed this sale to show an unimproved value of $121,275 after deducting the value of timber treatment, water and fencing. He applied $100,000 in the 1992 valuation because he said that this also achieved better relativity than applying the analysed figure. Mr Moroney said that this property has gravel road frontages, with power and telephone services available. It comprised similar country to the subject land with easy slopes falling from the south to the north. It has good views to the north and towards Lake Tinaroo. Mr Moroney said that it is similar to the subject land in location, topography, aspect and services but is smaller. It has slightly better access as it is closer to the bitumen road. He notes that it resold in March 1993 for $155,000. Mr Moroney said he valued the subject land as a rural residential site as he considered that the owners were not using the land for the purposes of farming as defined in Section 11 (10) of the Valuation of Land Act 1944. The property was running only 13 head of cattle when he inspected it in December 1992. -- 5 of 7 -- 6 Mr Moroney did not disagree that the subject land may be able to carry the number of cattle estimated by Mr Doolan. However, he considered that the property was not used for the purposes of farming at the relevant period. He said that even if the property was able to run more cattle, he still thought that it would not qualify as it was not an enterprise which had significant and substantial commercial purpose or character. In this case the one issue is whether the subject land should be valued under the provisions of Section 11 (9) of the Valuation of Land Act 1944 as land used for purposes of farming. Prior to the amendments to Section 11 of the Act by the Lands Legislation Amendment Act 1991, Section 11 (1) (vii) of the Act required that land exclusively used for purposes of the business of primary production should be valued as such and any enhancement in that value because it had a potential for any other purposes should be disregarded. The 1991 Act replaced Section 11 (1)(vii) with Section 11 (9), which reads as follows: "In making under this section ... the valuation of the unimproved value of land exclusively used for purposes of farming, any enhancement in that value for that the land .. . has a potential for industrial, subdivisional or any other purpose shall be disregarded ... " Subsection (10) defines "farming" to mean: "(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- (d) has a significant and substantial commercial purpose or character; and -- 6 of 7 -- I ' 7 (e) is engaged in for the purpose of profit on a continuous or repetitive basis." The provisions of Section 11 (9) and (10) differ considerably from the former provisions of Section 11 (1)(vii). The essential requirement is that an enterprise have a "significant and substantial commercial purpose or character". I have analysed the difference between the former requirements and those contained in the present legislation in my decision in Taylor v. Chief Executive, Department of Lands, which was also delivered today. I do not propose to repeat that analysis. It is sufficient to say that there seems little doubt that the Legislature was making its intention clear in amending the Act as it has done. There is a distinction to be drawn between a small primary production enterprise and one which has a "significant and substantial commercial purpose or character". I am of the opinion that the grazing use of the subject -land does not come within that category and therefore the appeal must fail. Accordingly, the appeal is dismissed and the valuation of the Chief Executive is affirmed in the sum of $105,000. J J TRICKETT MEMBER OF THE LAND COURT -- 7 of 7 --