Bartlett & Bartlett v Gatton Shire Council [1992] QPEC 86

IN THE PLANNING AND ENVIRONMENT COURT HELD AT TOOWOOMBA QUEENSLAND P. & E. Appeal No. 16 of 1992 BETWEEN: W. A. and J. R. BARTLETT Appellants GATTON SHIRE COUNCIL Respondent REASONS FOR JUDGMENT O'SULLIVAN, D.C.J. Delivered the { \S , 1992, This is an Application by W.A. & J.R. Bartlett for the subdivision of Lot 4 on R.P. 838688 Parish of Clarendon County of Cavendish comprising 36. 48 hectares ( "the land"). The proposed subdivision is for two lots, comprising a lot of approximately 3.18 hectares to be excised from the north-eastern corner and a balance area of approximately 33.3 hectares ("the proposal") . The lot proposed to be excised contains the existing house and shed. The balance area includes the orchard and dams. The land is located between Krugers Road and Millers Road and presently has 924 mango trees (approximately 4 hectares) and 400 windbreak trees. In 1991 the Respondent approved a one lot subdivision (now Lot 6 on R. p. 838688) to Mr and Mrs Bartlett for their son Daniel, aged 17. A house has been constructed on this lot, in which Daniel resides. The disputed issues in the appeal were: the subdivision is contrary to Clause 444 (a); the subdivision is contrary to the -- 1 of 21 -- 2 discretion provisions in Clause 444 (d) in that the owners are not considered to be bona fide rural producers, nor to obtain their primary source of income from the farming of the land, nor bona fide producers who wish to retire from farming; the proposal does not comply with any other discretionary subdivision provis- ions; the subdivision is contrary to the Council's planning intentions; the subdivision would result in further fragmentation of rural holdings and would result in creation of a de-facto rural residential subdivision. The land is in the "Rural General Farming" Zone in the Respondent's Town Planning Scheme. The Statement of Intent for this Zone is as follows: "Land zoned Rural General Farming in the town planning scheme is land within the Shire which is used or is suitable for use for rural production. In this Zone, those defined uses which are associated with the farming of land are as of right uses. Unless except- ional circumstances exist, land zoned Rural General Farming is reserved for rural production." Since an earlier Appeal (P & E Appeal No 4 of 1992), the Respondent's Town Planning Scheme has been amended, so that the relevant parts of Clause 444 are now as follows: "(d) Notwithstanding the minimum allotment area and road frontages set out in subclause (a) of this clause 444, the Council may permit a subdivision which meets the following: (i) the owners of the subject land shall be bona fide rural producers whose primary source of income is obtained from the farming or grazing of the subject land. The Council may require documentary evidence in support of this; (iii) the subdivision shall be for one ( 1 ) of the following purposes: -- 2 of 21 -- '\ =., { j) .~:/;~~cCoU l.;, ~.,, 3 ~~ ~ ~:--. ';:-. - • • • • • . • • . . . . . . "'~-I:~£~~~·>/.~\~. ( 2 ) . th e erection and use of a dwelling house or the ··•-oom•-~· continued use of an existing dwelling by bona fide rura~ produce~s who wish to retire from farming or grazing and dispose of the farm property." Mr Bartlett agreed that the only factual differences between the evidence in this Appeal and that in the earlier Appeal are his ill-health, his financial and physical inability to continue farming and his desire to retire from farming. He tendered a short Affidavit which states that Dr. Crawford "advised him to cease farming". Clause 444 (a) provides that for the Rural General Farming Zone the minimum area is 40 hectares and the minimum frontage to a road is 200 metres. Mr Hecksher, the Respondent's Town Plan- ner, considered that the proposal does not meet either of these requirements. Mr Bartlett considered that it does meet sub- clause 444 (d)(vi)(4) which refers to a ratio of frontage to depth of 1: 4, the Krugers Road frontage being 237 metres and Millers Road frontage being 366 metres. • 1 d " d " • The terms "bona fide rura pro ucers an primary source of income" in Clause 444 are not defined in that Clause, or else- where in the Scheme. Mr Hecksher is concerned that the proposal, together with the earlier approved subdivision, would reduce the area by some 7.18 hectares, or almost one-fifth of its previous size, which he considered is somewhat inconsistent with continued viable rural production. -- 3 of 21 -- 4 The Respondent is concerned that the subdivision of rural land by way of excision lots contributes to the fragmentation of rural holdings and diminishes the integrity of an area for rural pursuits. The proposed subdivision may alienate land from rural production. The mango trees are not presently producing any realised cash flow. Mr Bartlett gave evidence that this year he stripped flowers off the trees, in order to obtain greater yields in future years. Mr Hanlon, of RCS Hassall Pty. Ltd., an Agricultural Consultant, gave evidence on behalf of the Respondent. He supplemented his report tendered at the hearing of the earlier Appeal. He agrees with Mr Bartlett that the land is well cared for. He remains of the view that the land is not viable for rural production; that it is no more than a useful adjunct to other sources of income. It is necessary to determine whether Mr and Mrs Bartlett are "bona f ide rural producers'' within Clause 444. Mr Bartlett relied on the recognition of them as such by the Australian Taxation Office, the Australian Sales Tax Office, and the Queensland Stamp Duties Office. The letter to Mr Bartlett from the Australian Taxation Office of 10 August 1992 states, inter alia, that: "it has been established that your (sic) are in the business of primary production. Any income or loss made -- 4 of 21 -- 5 each year from the sale of mango trees will be included in your assessable income". He also relied on the letter of 16 August 1991 from the Respondent which referred to he and his wife being engaged in a bona fide agricultural pursuit. Mr Bartlett gave evidence that he and his family worked the following hours on the land: he works on average 20-30 hours per week, his wife works 35-40 hours per week, his son (who is 17) worked 697 hours for the year ended 30 June 1992 and his daughter (who is 14) worked 440.75 hours for that year; for that year he hired extra help for 50 hours. In the week prior to the hearing he had worked 3.5 days mowing and 1 day fertilizing. He gave evidence of starting work at 4.30 a.m. in connection with fertil- izing. On a regular basis they have to prune, weed, sprinkle, backwash filters and clean out drippers. I accept the evidence of Mr Bartlett that his involvement with the orchard activities is not "part-time". Mr Bartlett gave evidence that he is not engaged in medical studies on a full-time basis; he is studying science subjects part-time at the University of Southern Queensland which involves 2 days per week and study at night, approximately 20-25 hours per week in all. on balance I am satisfied from the evidence that the Appell- ants are "bona fide rural producers" within Clause 444 (d)(i). -- 5 of 21 -- 6 The second test under Clause 444 (d)(i) is whether they ar~ bona fide rural producers whose "primary source of income is . obtained from the farming or grazing of the subject land". Mr Bartlett receives income from a rented industrial shed at Northgate and from a family discretionary trust which owns an industrial property at Slacks Creek. He works 1½ days per month for a former client of his Accountancy practice. He has received no income from the sale of mangos. Mr Bartlett submitted that the land has a dual purpose, namely, income from produce and income from development of the orchard. He referred to sections 6 (1) and 25 (1) of the Income Tax Assessment Act. He submitted that as any profits on sale of the mango trees will be assessable under section 25 (1), then the capital growth should be recognized as "income" for purposes of Clause 444. I find that the increase in value of the mango trees is not "income" for purposes of Clause 444. I find that the Appellants do not satisfy the "primary source of income" test in Clause 444 (d){i). Retirement: Mr Bartlett sought to rely on sub-clause 444 (d)(iii)(2). -- 6 of 21 -- 7 Mr Hecksher considered that Mr Bartlett's position did not come within the word "retire" because this connoted ceasing significant, full-time work on a regular basis. He considered that Mr Bartlett had not done this, especially as he had never produced any income from the rural activities. On balance, I find that the Appellants satisfy sub-clause 444 (d)(iii)(2). However, as I have already indicated, they do not satisfy sub-clause 444 (d)(i). In exercising my general discretion whether the excision ought nevertheless be permitted, it is necessary for me to cons.ider the whole of the Respondent's Town Planning Scheme, including the Statement of Intent for the Rural General Farming Zone. Taking into account all the provisions of the Scheme, the matters of concern raised by the Respondent and included in the evidence of Mr Hecksher, and the evidence presented on behalf of the Appellants, I consider that the discretion ought not be exercised. Mr and Mrs Bartlett have therefore failed to discharge their onus of proving that the subdivision ought to be approved. I accordingly dismiss the Appeal. -- 7 of 21 -- IN THE PLANNING & ENVIRONMENT COURT HELD AT TOOWOOMBA QUEENSLAND P&E Appeal No. 4 of 1992 BETWEEN: W.A. & J.R. BARTLETT Appellants AND: COUNCIL OF THE SHIRE OF GATTON Respondent REASONS FOR JUDGMENT - O'SULLIVAN D.C.J. DELIVERED THE DAY OF Jvuf , 1992. This is an Application by W.A. & J.R. Bartlett lodged on 17th January, 1992 for the subdivision of their property, Lot 4 on R.P. 838688 Parish of Clarendon County of Cavendish into two lots comprising a 4.0 hectare lot excised from the southeastern corner of the property and a balance area containing 32.48 hectares. The property is located between Krugers Road and Millers Road and presently has 924 mango trees and 400 windbreak trees ("the property"). The total area of the orchard is 6.5 hectares. The proposed excised lot has frontage to Millers Road and is for Mr. Timothy Bartlett, the brother of one of the Applicants, Bill Bartlett. In the letter submitted with the Application Mr. Bartlett stated that his brother requires the -- 8 of 21 -- 2 allotment in order to build his house there as he intends to work and invest in the existing mango orchard and that the orchard is to be expanded with further plantings after he settles. In 1991 the Respondent approved a similar one lot subdivision (now Lot 6 on R.P. 838688) to Mr. and Mrs. Bartlett for their son Daniel, a Year 12 student. A house has been constructed on this lot in which Daniel Bartlett is to reside. The Respondent refused the Application by letter dated 16th March, 1992 and gave as its reasons of refusal the following:- "1. The proposal is contrary to the provisions of Council's Planning Scheme contained in the Subdivision of Land By-laws - Chapter 16, particularly By-law 444. 2. The proposal is con_trary to the amended provision of the above Subdivision of Land By-law 444. 3. The proposal is contrary to Council's adopted Policy on One Lot Subdivisions in Rural Zones. 4. The circumstances in this case do not warrant the exercise of discretion or any departure from the adopted provisions and requirements. s. The subject land does not provide the primary source of income of all or any of the parties involved and would certainly not support three households as is proposed by the subdivision. 6. Subdivision as proposed would result in undue fragmentation of rural lands. 7. Subdivision as proposed would result in a de-facto rural residential subdivision without a commensurate level of services." -- 9 of 21 -- 3 Mr. and Mrs. Bartlett previously owned some cattle but as a result of various problems which arose they sold them in December 1991 and do not propose to continue to graze cattle. They gave evidence that the property is not suitable either for cattle grazing or small crops. Mr. Bartlett strenuously challenged the assertion of Mr. Hecksher, the Respondent's Shire Planner, that the property may "be described as a rural retreat or hobby farm". The property is included in the "Rural General Farming" Zone. The Statement of Intent for the Rural General Farming Zone is as follows:- "Land zoned Rural General Farming in the town planning scheme is land within the Shire which is used or is suitable for use for rural production. In this Zone, those defined uses which are associated with the farming of land are as of right uses. Unless exceptional circumstances exist, land zoned Rural General Farming is reserved for rural production." By-Law 444(c) of the Respondent's Subdivision of Land By-Law provided as follows:- "In the subdivision of land for Rural Purposes, except in a Rural Residential Zone and Rural Agriculture Zone, the Council may at its discretion and subject to such conditions as it may determine, permit an allotment having an area between 8,000 square metres and 2,000 square metres to be subdivided from a Rural property if a dwelling-house is to be erected on the allotment by the owner or spouse, child, mother or father or employee of the owner -- 10 of 21 -- 4 engaged in a bona fide rural activity. No further allotment will be so approved by the Council until a dwelling-house has been erected on the allotment first so subdivided". Amendments to the subdivision provisions of the Respondent's Town Planning Scheme were published in the Queensland Government Gazette on 13th March, 1992. Clause 444, like By-Law 444, refers to a minimum area of 40 hectares and minimum frontage of 200 metres. However, new requirements have been inserted which are as follows:- "(d) Notwithstanding the minimum allotment area and road frontages set out in sub clause (a) of this clause 444, the Council may permit a subdivision which meets the following: (i) the owners of the subject land shall be bona fide rural producers whose primary source of income is obtained from the farming or grazing of the subject land. The Council may require documentary evidence in support of this; (ii) the subject land shall be included in either the Rural Conservation, the Rural General Farming or the Rural Agriculture Zones; (iii) the subdivision shall be for one (1) of the following purposes:- (1) the erection and use of a dwelling-house by a person over the age of eighteen (18) years and whose primary source of income is obtained from employment in the farming or grazing of the subject land, whether such person is related to the land owner or not;" The proposed excision does not comply with the minimum lot size in Clause 444(a). -- 11 of 21 -- 5 Prior to the amendment of By-Law 444, the Respondent approved the Application by letter· to the Appellants dated 16th August, 1991. Mr. Hecksher gave evidence that he considered that the proposal does not comply with either the previous By-Law 444 or the existing Clause 444. The Application was decided by the Council on 12th March, 1992. Mr. Hecksher advised that the Scheme amendments were approved by Order in Council on that same day. The amendments were not published, and thus did not become "effective" until 13th March, 1992. He said that the Council gave significant weight to the Scheme amendments in making its decision on the Application. I accept that this is an appropriate course. The term "bona fide rural activity" in By-Law 444(c), and the terms "bona fide rural producers" and "primary source of income" in Clause 444(d), are not defined. Mr. Bartlett is concerned that the Respondent is discriminating against him as an orchard grower, and submitted that if he had been a lettuce grower then the Respondent would have approved the proposed excision. Mr. Hecksher considered that this criticism is not valid, because it overlooks the necessity for the Applicant for an excision to show a necessary relationship between the rural -- 12 of 21 -- 6 activities and the excision. Mr. Hecksher submitted (and I accept) that·1.·t 1.·s f d necessary or Mr. an Mrs. Bartlett to show that the rural activities in which Mr. Timothy Bartlett will be engaged are necessary for the rural activities of the orchard. Mr. Hanlon, of RCS Hassall Pty. Ltd., an Agricultural Consultant, gave evidence, based on experience with clients who are mango growers, that the number of persons required to care for mango trees is quite small. He considered that pre- harvest one person can manage 3,000 mango trees and for mature trees one person can manage 2,500 trees. He considered that based on these figures there is no necessity for Mr. Timothy Bartlett to join Mr. and Mrs. Bartlett in caring for 924 trees (although he acknowledged that at time of picking and packing they would need to engage some casual labour). I accept this evidence. Mr. Hecksher interpreted the word "primary" in "primary source of income" as meaning main or principal income. I accept this interpretation, and I prefer it to those advanced by Mr. Bartlett in his written submission of 20th May, 1992, including the contentions that income in Clause 444 can include "deferred income", "investment income" or "unrealised income" and that income in Clause 444 can be income "in the past, present or future (which can be projected)". I consider these contentions -- 13 of 21 -- 7 ignore the plain meaning of the words in the Clause. One of Mr. Hecksher's concerns is that there may be a "proliferation" of excision lots. Mr. Bartlett gave evidence that he does not propose to sell the excised lots and there is thus no danger of it being a "de-facto rural residential subdivision", as stated in the Respondent's reasons for refusal. Mr. Hecksher characterised the land use in the area as low level rural pursuits, predominantly grazing with some tree cropping, forestry and cultivation. He considered that the parcel size in the locality is reasonably large, but this was challenged by Mr. Bartlett. Having regard to Figure 4 in Mr. Hecksher's report, I consider that the parcel size in the locality varies in size, and that some are smaller than the 30 hectare figure in para. 6.2 of the report. Mr. Bartlett gave evidence that when he acquired the property, he obtained a report from Mr. Porter, a Senior Lecturer at the Gatton Agricultural College. This report states "this study was to appraise the feasibility of mango and low chill nectarine production at Lot 4, Krugers Road, Clarendon Shire, Cavendish County". It includes information about varieties of mangoes and nectarines, vegetation, soils, site appraisal and water. He assesses the various alternatives for the property, and includes -- 14 of 21 -- 8 a number of schedules and tables. It details varieties, yields, costs, drainage, soil and other matters. statement: At page 4 of the report there appears the 11 4 ha sui· table f t or ree crops after drainage and mounding work." I agree with Mr. Hecksher when he states in his report that Mr. Porter's report does not include a statement of the likelihood of success of the various drainage and soil amendment measures nor does it express any opinion as to the viability or feasibility of a mango orchard on the land. Mr. Hecksher opines that "some doubt therefore exists as to the potential_of the land for sustainable, viable, agricultural production, and consequently any capacity to support a number of households". Mr. Hecksher is concerned that the proposal, together with the earlier subdivision, would reduce the land area of the property by some 8 hectares or one-fifth of its previous size. The Respondent is concerned that the subdivision of rural land by way of excision lots contributes to the fragmentation of rural holdings and diminishes the integrity of an area for rural pursuits. The proposed excision will alienate 4 hectares from rural production. Mr. Bartlett gave evidence of plans to expand the orchard and tendered a diagram showing where this -- 15 of 21 -- 9 was proposed. The Krugers Road land is better for growing mangoes because of better drainage. It is proposed that his brother would live on a house on the excised lot and would help him with the orchard. They had reached an arrangement that should income be received from the trees at some time in the future his brother will receive his share. Mr. Bartlett agreed that the mango trees are not presently producing any realised cash flow and this will continue to be the case for some years. In the meantime his brother will have some opportunity for other work, and Mr. Bartlett obtains some income from rental properties in Brisbane. Mr. Bartlett referred in particular to Table 1.11 in Mr. Porter's report which is a table of "most likely cash flow for a 6 hectare mango orchard"~ This shows that nett cash returns will begin to be generated in year 8, will reach $24,327 in year 15 and $169,074 in year 25. Mr. Hanlon challenged the accuracy of the figures shown in Table 1.11. He said that they were compiled in 1983, are now out of date, and cannot be relied upon because the yields on which they are based have been shown not to be realisable. He preferred instead to refer to information obtained from the Department of Primary Industries in 1990, which shows lower yields. He considered that the -- 16 of 21 -- 10 particular variety of mango which is to be grown, Kensington Pride, is an erratic bearer. He considered that prediction of returns from mango orchards is particularly difficult because of variable yields and prices. He did not consider it valid to assume that the mango trees which are presently approximately three years old will necessarily yield and produce prices in the manner suggested in Table 1.11 of Mr. Porter's report. Moreover, in 15 years time there will be more mango trees grown elsewhere. Mr. Hanlon conceded that his views were not based on a site specific assessment but were based on information available to his office, his experience in agriculture consultancy generally and his knowledge of specific mango growers who were clients of his firm. Mr. Hanlon conceded that Mr. Bartlett's orchard is well-managed. He was not able to make any comment about Mr. Bartlett's evidence that his trees are not subject to anthracnose disease, notwithstanding the vulnerability of Kensington Pride to that disease. The main thrust of Mr. Hanlon's concerns were that the number of trees grown by Mr. Bartlett will produce "a most likely mature yield price" in the order of $11 per tray in 1992 dollars. He estimated using Gatton costs and likely prices that at full -- 17 of 21 -- 11 production the gross margin per tree will be approximately $24, which does not take into account fixed costs like rates, insurance, telephone and permanent labour costs and would result in a gross margin in the vicinity of $22,400 per annum. The yield of fourteen trays per tree will be achieved in year 11 and beyond. He noted that prices for mangoes have shown the usual trend of declining as supplies increase. He agreed with Mr. Bartlett's general proposition that mangoes from the Gatton area will bear at a different time from mangoes in North Queensland, and this will have some effect on price but he considered that the prices would not equal those achieved when mangoes first come on to the market at the beginning of the season. He did not share Mr. Bartlett's optimism concerning the opportunities which are available for mangoes. He considered that there is little opportunity for processing mangoes and that there are only limited opportunities for export. I accept that there is some validity in the calculations of Mr. Bartlett and Mr. Porter, and also the calculations of Mr. Hanlon. The returns from the mangoes are likely to be somewhere in the range from $22,000 to $170,000. It is not necessary for me to make a specific finding as to what the returns will be. Of more relevance is, whether, pursuant to Clause 444, Mr. Bartlett is a "bona fide rural producer whose primary source of income is -- 18 of 21 -- 12 obtained from the farming or grazing of the subject land". I n the letter of 16th August, i-991, the Respondent acknowledged the Appellants are "engaged in a bona fide agricultural pursuit". Mr. Hanlon and Mr. Bartlett agreed that for purposes of interpreting the concept of "bona fide" in the subdivision By-Law this equated more or less with viability. In view of this I have some doubt as to whether Mr. and Mrs. Bartlett are bona fide rural producers. The second limb of the Clause 444 (and it must be noted that it is a two-pronged test) is that the primary source of income is obtained from the farming or grazing of the subject land, and it is this I will now turn. Mr. Bartlett gave evidence that he obtained $13,722 from a rented industrial shed at Northgate, Brisbane. He also obtains income from a family discretionary trust, which owns an industrial property at Slacks Creek. Last year he was a full- time medical student and spent 40-50 hours per week~ including study, in that pursuit and he intends to continue with it this year. Mr. Bartlett works 1½ days per month for a former client of his Accountancy practice. Figures supplied by Mr. and Mrs. Bartlett to the Respondent show that for the years ended 30th June, 1990 and 30th June, 1991, they incurred a loss from -- 19 of 21 -- 13 their farming activities and this is borne out in the income tax return for the year ended 30th June, 1990. Mr. Bartlett stressed the inevitable delay between the planting of mangoes and the realisation of cash flow some years down the track. I note that the words used in Clause 444 are "whose primary source of income is obtained is, and not the words will be obtained. The By-law refers to "income". Mr. Bartlett submitted that the capital gain attributable to the increase in value of the tree as it grows can be classified as income for this purpose. I do not accept this submission. However if I am wrong in this and Mr. and Mrs. Bartlett are as a matter of law able to satisfy the test in Clause 444 (d)(i), there nevertheless remains the further requirement set out in Clause 444(d)(iii)(1). This necessitates them showing that Mr. Timothy Bartlett's primary source of income is obtained from employment in the farming or grazing of the subject land. Mr. Timothy Bartlett did not give evidence at the hearing of the Appeal. Some of his financial circumstances are set out in the written submission of Mr. Bill Bartlett dated 20th May, 1992, including the fact that he was a truck driver but is no longer able to continue in that pursuit. on the material before me, and based on the evidence at the hearing, I am not satisfied that Mr. Timothy -- 20 of 21 -- 14 Bartlett is a person whose primary source of income is obtained from employment in the farming or grazing of the subject land within the meaning of Clause 444. Accordingly, Mr. and Mrs. Bartlett have not satisfied one of the requirements of Clause 444(d). In exercising my discretion whether the excision ought nevertheless be permitted, I agree with the submission of Counsel for the Respondent that it is necessary to look at the whole of the Town Planning Scheme, including the Statement of Intent for the Rural General Farming Zone. Taking into account all the provisions of the Scheme, and the matters of concern raised by the Shire Planner, I consider that the discretion ought not be exercised. Mr. and Mrs. Bartlett have therefore failed to discharge their onus of proving that the subdivision ought to be approved. I accordingly dismiss the Appeal. -- 21 of 21 --