Day v The Valuer-General [1990] QLC 171

,,, t lAND COURT, BRISBANE. 5th December, 1990. Re: An appeal against a determination of the Valuer-General, Beaudesert Shire - V90-367. D.L Day v. The Valuer-General (Hearing at Beaudesert) DECISION As at 31st March, 1989, the Valuer-General has determined the unimproved value of land described as Lot 19 on WD3427 and Lot 1 on RP 172321 Parish of Tamborine, County of Ward, containing 11.66 hectares, at $120,000. The property is situated at the corner of Geiger and Lamington National Park Roads, Canungra and is zoned "Rural 11 • The appellant contends for a valuation of $23,000, with the grounds of appeal being comprehensive. Mr Day was of the opinion that the valuation of the subject property was excessive and quite out of line with the valuations on other farming properties in the locality. It was established during the hearing that the subject property had not been provided with the benefit which would apply under Section ll(l)(vii) of the Valuation of Land Act if the use of the property was deemed to qualify as the business of primary production. The Valuer-General accepts that if the property was to be valued on this basis then the valuation would be $23,000. Mr Day attended the hearing and gave evidence in support of the appeal. He informed the Court that the property comprised the balance area of a once larger dairying and grazing holding of about 100 hectares. He had suffered a heart attack in 1980 after a lifetime of farming and had been forced to dispose of all but the subject area. He freely admitted that he doesn't make a living from this balance area, but [1990] QLC 171 -- 1 of 5 -- income from his primary production activities puts "the jam on top of the butter". The property carries a mixed herd averaging about 20 head of cattle with the grazing activity assisted by cropping on an area of about 3 hectares of cultivation. This level of activity had been maintained consistently since 1980. At the date of hearing there were 6 cows (2 of which were purebred Murray Greys), 1 purebred Murray Grey bull and seven steers. Mr Day expected total numbers to reach 20 by the end of the year with natural increase. No sales had been effected during 1989 (due, it seems, to previous calving losses). In 1990 up to the date of hearing, four head had been sold, one beast had been killed for private use and Mr Day predicted that three more would be sold by the end of the year depending on the weather. Average prices of $500 plus per head had been achieved. Mr Day had not compiled evidence of a financial nature to assist his case. The use of the property is for residential and primary production purposes but the crucial question is whether the use constitutes the "business" of primary production, rather than a rural lifestyle or hobby pastime capable of producing some income. Mr I.G. Savage the registered valuer responsible for the valuation has given consideration to the use of the property and has concluded that it does not constitute a realistic interpretation of a business. On his inspection he had seen some cattle and Mr Day had given him generally similar information as the evidence before the Court. Mr Savage had not asked for precise figures but Mr Day had informed him that in the 1988 financial year stock sales of about $5,000 had been made and expenses had been about $2,000. No sales were effected in 1989. Mr Savage felt that even when the land formed part of the larger parcel, the dairying operation had not been a viable proposition due to the quality of the country and the lack of intensified development. He had been told that with the small balance area, in addition to breeding vealers, the management plan included buying in some yearlings for later sale as bullocks. He was aware that at one stage fairly recently there had been a high calving mortality rate which -- 2 of 5 -- could have resulted in no sales being made in the relevant valuation period. He felt that the grazing activity lacked some diligence in that there was some noticeable lantana infestation. Also no attempt at provision of pasture improvement had been made, although he felt that the soil quality was deficient and heavy fertilisation and possibly irrigation would be required. He said that fencing was old but serviceable and the cultivation was well maintained. The reasoning behind Mr Day's appeal is quite obvious. He is seriously disadvantaged when compared with the situation of his neighbours who qualify for the protection flowing from the business of primary production. He is concerned that the impost of rates and taxes consequent upon the high site value will force him to move from the property. While such a result would be regrettable, the question of the definition of "business of primary production" needs to be decided on the facts. The Land Appeal Court has recently found the necessity to review the authorities relevant to this definition and these have been discussed at length in K. Crawford v. The Valuer-General in a yet unreported judgment delivered on 27th August, 1990. This judgment set out to remove any undue influence that might otherwise be given to terminology such as "scale of operation" and "significant commercial purpose or character" and found that the correct interpretation of the "Walker test" (derived from Walker v. The Valuer-General (1978) 5 QLCR 347, and on which great reliance had been placed) was that while "scale" may be relevant in the overall exercise, it is wrong to regard it in general as a decisive factor. Referring to the conclusion of Mason J. in Hope v. Council of the City of Bathurst (1979-1980) 144 CLR 1, the Land Appeal Court in Crawford (supra) said - II His Honour's remarks do not suggest any magnitude or size of the activities as being necessary to constitute a business, and indeed they underline the fact that a business may be small and that concentration upon the size or significance of the business is prone to lead to e"or." -- 3 of 5 -- By widely accepted connotation of the business of grazing of beef cattle, the activities on the subject property are small, or indeed very small, in scale, and there is little doubt that prior to the Crawford judgment the subject grazing activity would have been seen by many to have failed the "Walker test" as it had been popularly interpreted. However, without concentration on the aspect of scale in this matter, positive criteria in interpretation of qualifying use include:- Grazing activity has been continuous and repetitive and for the purpose of making profit. While Mr Savage perceives a lack of continuity this is considered to be against the evidence but presumably derived from the lack of sales in the relevant period. This was caused by no lack of continuity of activity however, but an abnormally high mortality rate in one season's natural increase. The activity had a permanent character having been carried on without interruption for many years. The land, though small in area, and with some natural quality deficiency is considered to have been put to its best practical potential use. Some criticism was levelled at the lack of establishment of improved pasture to intensify carrying capacity but the economics of the heavy fertilisation and any necessary irrigation required were not explored. The owner was experienced in the management of the property over many years and the property sustained a relativity high carrying capacity by crop assistance from the well maintained cultivation. The availability of this cultivation is seen as an important factor in the carrying capacity potential of the property. There is no suggestion that the grazing activity use is other than genuine and real. Negative criteria include:- Suggestion of lack of diligence in the maintenance of some lantana infestation. The age and health of the owner were considered as mitigating against this apparent lack of diligence. The cost of employing outside labour when related to any potential increased production may well have been a relevant factor in management decisions. Lack of any detailed trading information. The owner informed the Court that proper accounting figures were kept for taxation purposes but he had not been aware of the need to supply the Court with this information. -- 4 of 5 -- There comes a position where a very fine line may separate the difference between a particular activity qualifying or failing in the interpretation of a "business" activity. Regardless of the assistance one would hope to glean from the Crawford judgment, I find the circumstances of this matter to create uncertainty. The onus is on the appellant to prove the grounds of the appeal and the lack of financial evidence would in matters such as this influence a failure to prove. However the background to the matter and the forthright manner in which the evidence was given, by both parties, leads me to the decision that the appellant was engaged in the business of grazing on a small scale, but in keeping with the particular experience he has gained on this and previously the larger property. The purpose of the valuation exercise is for revenue gathering and I have purposely resolved the benefit of doubt in favour of the appellant. This should not be seen as criticism of the Valuer-General's attitude, because in light of the Crawford judgment it is a matter which should reasonably have been determined by the Court. The appeal is allowed, the determination of the Valuer-General set aside and the unimproved value of the property as at 31st March, 1989, in terms of Section ll(l)(vii) of the valuation of Land Act of 1944 (as amended) is determined at $23,000. ---- ---- - ------ -------- -- r.··· /r, 1/\ (R.E. Wenck) I _. ', Member of the Land Court. -- 5 of 5 --