Council of the City of Sydney v South Sydney City Council

[2002] NSWLEC 129

Land and Environment Court

of New South Wales

CITATION:	The Council of the City of Sydney v South Sydney City Council [2002] NSWLEC 129
PARTIES:	APPLICANT The Council of the City of Sydney RESPONDENT South Sydney City Council
FILE NUMBER(S):	0263 of 2002
CORAM:	Pearlman J
KEY ISSUES:	Judicial Review :- rates - sub-categories of rateable land - whether determination of sub-categories valid - power to determine sub-categories - relevant considerations - manifest unreasonableness
LEGISLATION CITED:	Local Government Act 1993 ch 15, s 529 South Sydney Council Development Control Plan 1997 - Urban Design
CASES CITED:	Associated Provincial Picture Houses Ltd v Wednesbury Corporation (1948) 1 KB 223; Minister for Aboriginal Affairs and Anor v Peko-Wallsend Ltd and Ors (1986) 162 CLR 24; Parramatta City Council v Pestell (1972) 128 CLR 305; Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355; Taveli & Ors v The Minister for Immigration, Local Government and Ethnic Affairs (1989) 86 ALR 435; Weal v Bathurst City Council and Anor (2000) 111 LGERA 181
DATES OF HEARING:	19/07/2002, 22/07/2002
DATE OF JUDGMENT:	08/07/2002
LEGAL REPRESENTATIVES:	APPLICANT Mr F M Douglas QC with Ms J M Jagot (Barrister) SOLICITORS Blake Dawson Waldron RESPONDENT Mr N A Hemmings QC SOLICITORS Marsdens

JUDGMENT:

IN THE LAND AND 0263 of 2002
ENVIRONMENT COURT

Pearlman J

OF NEW SOUTH WALES 7 August 2002

THE COUNCIL OF THE CITY OF SYDNEY

Applicant

v

SOUTH SYDNEY CITY COUNCIL

Respondent

JUDGMENT

Introduction

1. These proceedings involve a challenge by the Council of the City of Sydney to the rating regime adopted by South Sydney City Council for the 2002 - 2003 rating year.

2. The Council of the City of Sydney (“the City of Sydney”) seeks declarations that the resolutions of South Sydney City Council (“South Sydney”) determining sub-categories for residential and business categories of rateable land, and its resolutions determining different ad valorem amounts of rates for those sub-categories, are invalid and of no effect. The City of Sydney seeks orders restraining South Sydney from levying any rate based upon those determinations.

3. There are three alternative grounds of challenge. The City of Sydney alleges that:

(1) the conditions precedent for the exercise of the discretion to determine sub-categories of land for rating purposes did not exist. Accordingly, South Sydney’s power to make such determinations was not enlivened and the consequence is that the determinations are a nullity;

(2) in making its determinations, South Sydney took into account irrelevant considerations; and

(3) its determinations were manifestly unreasonable.

The statutory context

4. The Local Government Act 1993 (“the LG Act”) makes provision for:

· the making and levying of rates, which may be ordinary or special;

· the making and levying of ordinary rates annually on all rateable land within a council’s area;

· the division of rateable land into categories and sub-categories for the purpose of making and levying rates;

· two choices regarding the amount of an ordinary rate – ad valorem (the amount in the dollar) or a base amount to which an ad valorem amount is added;

· public participation in the rating regime, by means, principally, of the preparation and public notification of draft management plans which contains statements about rates and categories and sub-categories;

· a limit or peg upon increases in rates by reference to a percentage (if any) by which a council’s general income may be varied.

5. The specific provisions that constitute this regime may be outlined as follows. Chapter 15 of the LG Act deals with how councils are financed. One source of a council’s income is rates (s 491), and rates may be ordinary or special (s 492). Section 493 provides that there are four categories of an ordinary rate and four categories of rateable land. They are farmland, residential, mining and business. Section 493(2) provides that these categories may, at a council’s discretion, be divided into sub-categories in accordance with s 529. Ordinary rates are made and levied annually on all rateable land (s 494).

6. A council has a discretion, under s 497, as to whether an ordinary rate may consist of (a) an ad valorem amount (which may, in accordance with s 548, be subject to a minimum amount of the rate) or (b) a base amount to which an ad valorem amount is added. However, before making an ordinary rate, the council must have declared each parcel of rateable land in its area to be within one or other of the categories of farmland, residential, mining and business (s 514).

7. Section 516 deals with categorisation as residential. It provides as follows:

(1) Land is to be categorised as “residential” if it is a parcel of rateable land valued as one assessment and:


(a) its dominant use is for residential accommodation (otherwise than as a hotel, motel, guest-house, backpacker hostel or nursing home or any other form of residential accommodation (not being a boarding house or a lodging house) prescribed by the regulations); or

(b) in the case of vacant land, it is zoned or otherwise designated for use under an environmental planning instrument (with or without development consent) for residential purposes; or

(c) it is rural residential land.

8. Section 518 provides that land is to be categorised as business if it cannot be categorised as farmland, residential or mining.

9. It is to be noted that the dictionary to the LG Act contains the following definition:

“rural residential land” means land that

(a) is the site of a dwelling, and

(b) is not less than 2 hectares and not more than 40 hectares in area; and

(c) is either:


(i) not zoned or otherwise designated for use under an environmental planning instrument; or

(ii) zoned or otherwise designated for use under such an instrument for non-urban purposes; and

(d) does not have a significant and substantial commercial purpose or character.

10. Provision is made, in ss 519 to 527, for the categorisation of vacant land, for notice of the declaration of a category to be given, for when a declaration of a category takes effect or ceases or may be reviewed, for appeals against a declaration of a category and adjustment of rates following a change in category. These provisions also apply, pursuant to s 531, in respect of the determination of sub-categories.

11. Section 528 provides that the ad valorem amount (the amount in the dollar) of the ordinary rate may be the same for all categories of land or it may be different for different categories. Importantly, for the present proceedings, an ordinary rate may be the same or different within a category as provided for in s 529, which is in the following terms:

529(1) Before making an ordinary rate, a council may determine a sub-category or sub-categories for one or more categories of rateable land in its area.

(2) A sub-category may be determined:


(a) for the category “farmland” – according to the intensity of land use or economic factors affecting the land; or

(b) for the category “residential” – according to whether the land is rural residential land or is within a centre of population; or

(c) for the category “mining” – according to the kind of mining involved; or

(d) for the category “business” – according to a centre of activity.
Note: In relation to the category “business”, a centre of activity might comprise a business centre, an industrial estate or some other concentration of like activities.
(3) The ad valorem amount (the amount in the dollar) of the ordinary rate may be the same for all land within a category or it may be different for different sub-categories.

12. Section 532 provides that a council must not make a rate until it has given public notice of its draft management plan for the rating year. Provisions relating to the making of management plans are to be found in ch 13 of the LG Act, which regulates how councils are accountable for their actions. Section 402 provides that, during each year, a council must prepare a draft management plan with respect to the council’s activities for at least the next three years and with respect to the council’s revenue policy for the next year. Provision is made for the contents of the draft management plan with respect to the council’s work and activities (s 403) and with respect to the council’s revenue policy (s 404). Relevantly, a draft management plan must include statements with respect to each ordinary rate and special rate proposed to be levied (s 404(1)), and, pursuant to s 404(2), the statement with respect to an ordinary rate must include particulars of the ad valorem amount of the rate, whether the rate is to have a base amount, and the estimated yield of the rate. Particulars must also be included as to the categories or sub-categories of land in respect of which the council proposes to levy the rate.

13. A limit, or peg, may be imposed upon increases in rates. Thus, under s 506, the Minister may, by order published in the Gazette, specify the percentage by which councils’ general income for a specified year may be varied. A council must not make rates and charges for a year so as to produce general income of an amount that exceeds the notional general income of the council for the previous year as varied by the percentage (if any) applicable to the council under s 506 (s 509(1)).

The factual background

14. On 19 June 2002, South Sydney resolved as follows:

· to adopt the 2002/2005 Management Plan (“the Management Plan”);

· to determine sub-categories for rateable land categorised as residential;

· to determine sub-categories for rateable land categorised as business;

· to make ad valorem rates with respect to the various sub-categories.

15. The sub-categories of residential land were as follows:

Residential Population Centre A – comprising the following suburbs:

Alexandria, Beaconsfield, Centennial Park, Darlington, Erskineville, Eveleigh, Moore Park, Newtown, Paddington, Redfern, Rosebery, St Peters, Surry Hills, Waterloo and Zetland.

Residential Population Centre B – comprising the following suburbs:

Camperdown, Chippendale and Ultimo.

Residential Population Centre C – comprising the following suburbs:

Darlinghurst, Elizabeth Bay, Potts Point, Rushcutters Bay and Woolloomooloo.

16. The sub-categories of business land were as follows:

Business Activity Centre A – comprising the following suburbs:

Alexandria, Beaconsfield, Centennial Park, Darlington, Erskineville, Eveleigh, Moore Park, Newtown, Paddington, Redfern, Rosebery, St Peters, Surry Hills, Waterloo and Zetland.

Business Activity Centre B – comprising the following suburbs:

Camperdown, Chippendale and Ultimo.

Business Activity Centre C – comprising the following suburbs:

Darlinghurst, Elizabeth Bay, Potts Point, Rushcutters Bay and Woolloomooloo.

17. A copy of a map depicting all these sub-categories is annexed to this judgment. It can be seen from this map and from the descriptions of the suburbs included in each sub-category that the residential sub-categories and the business sub-categories cover identical areas.

18. South Sydney’s rate resolution did not proceed by way of a base amount to which would be added an ad valorem amount. Instead South Sydney determined to make ad valorem rates as follows:

0.201 cents in the dollar upon residential population centre A with a minimum of $338;

0.165 cents in the dollar upon residential population centre B with a minimum of $327;

0.165 cents in the dollar upon residential population centre C with a minimum of $327;

1.079 cents in the dollar upon business activity centre A with a minimum of $476;

0.9 cents in the dollar upon business activity centre B with a minimum of $460;

0.9 cents in the dollar upon business activity centre C with a minimum of $460.

19. In 2000/2001, Professor Kevin Sproats conducted an inquiry (“the Sproats inquiry”) into the structure of local government in the inner city region. He recommended adjustment of the boundaries of the area of the City of Sydney to take in residential areas, some of which were parts of South Sydney. The proposals were referred to the Local Government Boundaries Commission for examination and report (pursuant to the LG Act), and in March 2002, the Commission recommended that the boundary alterations proposed by the Sproats inquiry should proceed.

20. Maps and overlays were tendered in evidence to show that the areas comprised within the residential and business sub-categories determined by South Sydney are substantially the same areas as recommended by the Boundaries Commission for transfer to the City of Sydney.

21. Included in the material before South Sydney at its meeting on 19 June 2002 at which the resolutions I have described were made was a minute by the general manager. It reported on the public exhibition of the Management Plan and on the submissions that had been received. It then contained the following:

Justification of sub-categories

The report of the Boundaries Commission dated March 2002 recommended transferring the areas of Camperdown, Chippendale and Ultimo, Darlinghurst, Elizabeth Bay, Potts Point, Rushcutters Bay and Woolloomooloo to the City of Sydney. The Commission during their enquiry and in accordance with Section 263(3) of the Local Government Act 1993 recognised the unique characteristics of these areas, giving particular consideration to the “community of interest, geographic cohesion, historical, traditional values and requirements” of these areas.

During the course of the Sproats Enquiry and most recently the enquiry by the Boundaries Commission, analysis has revealed an imbalance between revenue derived from these areas and expenditure in these areas. The analysis gave credence to the long held belief that the Northern areas contribution to city wide infrastructure was disproportionate to that of the Southern areas, e.g. the North Ward comprises just 24.2% of Councils area, 23.6% of Road Length and 12% of Parks yet contributed some 36.1% of Rate Revenue. Recognition of sub-categories will go some way to addressing inequities in the rating system.

22. Against that background, I turn to each of the grounds of challenge.

The question of power

23. There is no dispute that the power to determine sub-categories is to be found in s 493(2) and that the ambit of that power is to be found exclusively in s 529, and, in particular, so far as concerns land which is categorised as residential, in sub-s (2)(b). The parties differ as to the proper construction of s 529(2)(b), which, it is convenient to repeat, provides as follows:

(2) A sub-category may be determined:

(b) for the category “residential” – according to whether the land is rural residential land or is within a centre of population.

24. The argument of the City of Sydney is that the power to determine a sub-category of the residential category is enlivened by the presence, as a condition precedent to the exercise of the power, of both types of land, that is, land which is rural residential and land which is within a centre of population. Absent both types of land within the residential category, there is no power to determine any sub-category. There is no rural residential land within South Sydney. Hence the power to determine a sub-category in respect of land categorised residential in South Sydney did not arise, and the purported determination of South Sydney is a nullity.

25. South Sydney argues to the contrary. It claims that, on its proper construction, s 529(2)(b) permits the determination of sub-categories of the residential category simply according to whether there is rural residential land or whether there is land within a centre of population. The ordinary grammatical meaning of the sub-section does not require both types of land to be present as a condition precedent to the exercise of power.

26. In my opinion, South Sydney’s argument is correct. Section 529(2)(b) does not set up the presence of both types of land as a condition precedent to the exercise of the power to sub-categorise. Rather, the condition precedent for the exercise of the power is that the council must have declared rateable land within its local government area to be within the category “residential” in accordance with ss 514 and 516. If land has been categorised as residential, then the power to determine a sub-category of that residential category is enlivened. However, the power is circumscribed. The sub-categories which may be determined in the exercise of the power are only two – rural residential land sub-category and centre of population sub-category. Those two notions – of rural residential land or land within a centre of population – describe not only the ambit of the power but also its outcome. They describe the ambit of the power because of the use of the words “according to whether”. That is, there must be land which fits within the term “rural residential land” (as defined) for there to be a rural residential land sub-category, and there must be land which fits within a centre of population (according to its ordinary and natural meaning, since it is undefined) for there to be a centre of population sub-category. The notions also describe the outcome of the exercise of the power, because the sub-categories so determined can only be one or both of the two that are described – no other type of sub-category is permissible.

27. Such a construction accords, in my opinion, with the language of s 529(2)(b). The term “according to” indicates that the determination of a sub-category must correspond to or be in conformity with the descriptions that follow. The use of the word “whether” indicates choices or alternatives, and that is emphasised by the repetition of the word “is”. Accordingly, where there is land that is categorised residential, then sub-categories of land may be determined so long as the land that is to be so sub-categorised corresponds with one or other of the two descriptions.

28. Whilst s 6 provides that the charts do not form part of the LG Act, but are “provided to assist understanding”, it is relevant to note that the construction I have set out accords with the chart that introduces pt 3 of ch 15 of the LG Act. That chart relevantly provides as follows:

29. It can be seen that the chart indicates that, in relation to the residential categories, the sub-categories of “rural” and “centre of population” are optional. That reflects the element of choice or alternatives expressed in the legislation itself.

30. Section 529(2)(b), so construed, does not impose any limit on the number of sub-categories of residential land that may be determined. There may, in land that is categorised residential, be more than one parcel of land that fits the description of rural residential land, and there may be more than one parcel of land that fits the description of centre of population. So long as the particular parcel fits one or other of the alternatives, then a sub-category in respect of that land may be determined.

31. In my opinion, the construction of s 529(2)(b) which I consider is correct conforms with the statutory context for two reasons. First, it is consistent with the remainder of s 529. Although each of the subsections adopts different formulations of words, each provides alternatives and those alternatives limit the ambit of the power. Thus, for the category farmland, the sub-categories must be determined to correspond with the intensity of land use or economic factors affecting the land (sub-s 2(a)). For the category mining, the sub-categories must be determined to correspond with the kind of mining involved, which implies alternatives (sub-s (2)(c)). For the category business, the sub-categories must be determined to correspond with a centre of activity, and the note to the subsection itself indicates choices that may be made (sub-s (2)(d)).

32. Secondly, that construction recognises reality and promotes the underlying legislative purpose of permitting a council to make and levy different rates. The reality is that land which is categorised as residential within a city or urban context (such as South Sydney) is unlikely to have within it land that is rural residential (as defined), yet it is quite likely to have land within a centre of population. The flexibility of making and levying different rates for different categories and sub-categories (which is permitted by s 528(1) and s 529(3)) would be rendered considerably reduced for most city or urban local government areas if the construction of s 529(2)(b) which the City of Sydney urges is adopted. The land within such areas would, realistically, be entirely within a residential or a business category; and yet, if the City of Sydney’s construction of s 529(2)(b) is correct, the power to sub-categorise and thus make and levy different rates would be severely curtailed. Sub-categories of land categorised business could be determined, but sub-categories of land categorised residential could not.

33. No issue was raised about the categorisation of land within the South Sydney local government area as being residential, and, although there was no precise evidence upon the point, I am content to assume that the land the subject of these proceedings has been categorised as residential. Accordingly, the power of South Sydney to determine sub-categories was enlivened. It was common ground that there is no rural residential land in South Sydney. As to land within a centre of population, it was not seriously put that there was no such land in South Sydney. Therefore, in accordance with the reasons above, I conclude that South Sydney was entitled to determine the sub-categories which it did in relation to land categorised residential, despite there being no rural residential land within the South Sydney local government area. Its power to do so was enlivened by the presence of a residential category, and by there being parcels of land within the residential category that fitted the description of land within centres of population.

34. This ground of challenge must fail.

Irrelevant considerations

Background to the issue

35. According to the evidence of Mr M J Duffy, the chief financial officer of South Sydney, he raised the possibility of determining sub-categories at a budget meeting of councillors in early May 2002. The meeting resolved to adopt his proposal.

36. On 15 May 2002, Mr Duffy prepared a report relating to the determination of sub-categories. He commenced his report with the following statement:

In order to improve equity amongst Councils ratepayers and in accordance with Section 529 of the Local Government Act, 1993, Council has identified sub categories based on centres of population and activity for residential and business categories respectively.

37. He then identified the sub-categories, and continued by making a statement of justification based on the disproportionate contribution made by the north ward to rate revenue in comparison with its utilisation of infrastructure. A statement in identical terms was carried through to the general manager’s report which I have quoted in par 21 above.

38. Mr Duffy’s report was considered at a meeting of South Sydney on 16 May 2002, at which it was resolved to place the Management Plan upon public exhibition. Ultimately, at a meeting of 19 June 2002 to which I have referred in par 14, South Sydney determined sub-categories as Mr Duffy had outlined. At that meeting, the minute from the general manager of South Sydney was available, which contained the statements of justification which I have set out in par 21.

The City of Sydney’s claim

39. Mr Douglas QC, appearing for the City of Sydney, submitted that the Court should infer from the documents outlined in pars 35 and 38 that two considerations were taken into account by South Sydney in determining sub-categories. The first was the inequity in the rating system identified by South Sydney as arising from the proportionate disparity between contribution to revenue and services received. The second was the identification by South Sydney that the land within the proposed sub-categories exhibited unique characteristics in terms of community of interest, geographical cohesion, historical, traditional values and requirements.

40. In Mr Douglas’s submission, neither of these considerations was relevant. The only relevant considerations, he said, were whether the land was rural residential land or was land within a centre of population. He said that the legislature had, in s 529(2)(b), exhaustively stated those matters as the matters to be taken into account. This is so, he submitted, not simply from the words used in s 529(2)(b) but also by implication from other powers vested in councils by ch 15 of the LG Act. He pointed, as an example, to s 536(1), which explicitly provides for the considerations to be taken into account in determining a base amount, one of which is the uneven distribution of a rate burden, and another of which is the cost of providing works, services, facilities or activities to parcels of land subject to a special rate. Had the legislature intended that considerations such as these were relevant in the determination of sub-categories it would have said so, as it did, for example, in relation to the determination of a base amount.

41. The City of Sydney’s claim, therefore, was that South Sydney took into account irrelevant considerations in determining sub-categories, and hence that determination is invalid.

South Sydney’s response

42. Mr Hemmings QC, appearing for South Sydney, submitted that the determination of sub-categories was simply a step in a whole rating process. The process involved the drafting of the Management Plan, its public exhibition, the consideration of submissions relating to its adoption, the determination of sub-categories and the fixing of rates, whether ad valorem or by way of a base amount to which an ad valorem amount is added (South Sydney chose the former rate basis).

43. Mr Hemmings submitted that, in that process as a whole, a number of factors were relevant. Matters of equity and proportionality were catalysts or triggers for the determination of sub-categories. Matters of community of interest, geography etc were relevant to the determination of the actual boundaries of sub-categories, and matters of equity were also relevant to the determination of the actual rate. South Sydney was entitled, indeed, bound, to take into account matters of equity in its rating process because that is a principle of its statutory charter as stipulated in s 8 of the LG Act, where it provides that a council has a charter “to raise funds for local purposes by the fair imposition of rates …”. That principle of its charter was explicitly stated in the Management Plan, and, furthermore, South Sydney’s mission statement (also stated in the Management Plan) referred to “… the efficient and equitable management and allocation of resources …”.

44. Hence, South Sydney claims that its determination of sub-categories was valid.

The proper approach

45. I repeat s 529(2)(b) again for convenience:

(2) A sub-category may be determined:

(b) for the category “residential” – according to whether the land is rural residential land or is within a centre of population; or

46. Having regard to the terms in which s 529(2)(b) is couched, there is, in my opinion, a distinction to be drawn between, on the one hand, the ambit of the power to determine sub-categories and, and on the other hand, the factors which may be taken into account in making that determination. Dealing first with the ambit of the power, it is to be observed that there is a condition precedent to the exercise of power under s 529(2)(b). That is the presence of land categorised residential. The reference to rural residential land and land within a centre of population is a constraint upon the exercise of that power. Put another way, the power may only be exercised if there is a residential category but the power is not unconfined – there is a constraint upon its exercise. There can only be sub-categories of land which fit the description of rural residential or centre of population. If there is such land, then sub-categories fitting those descriptions may be determined (see my discussion of this point earlier in pars 26 - 32). In my respectful opinion, the following passage from the dissenting judgment of Brennan CJ in Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355 at 373 illustrates the point:

… a provision conferring the power must be so construed as to conform with a provision governing the manner of its exercise … the constraint on the exercise of the power defines the ambit of the power granted. A purported exercise of a power in breach of the provision which governs the manner of its exercise is invalid, since there is no power to support it.

47. However, that is not the same thing as saying that the constraints on the exercise of the power are the only relevant considerations that may be taken into account and any other considerations are irrelevant. Section 529(2)(b) confers a discretion upon a council. It can only exercise that discretion within the ambit of the power, but the factors relevant to the exercise of that discretion are unconfined. Mr Douglas’s submissions on this point treat as the same the manner of the exercise of the power and the matters that may be taken into account in exercising it. In my opinion, they are not the same.

48. As Mason J pointed out in Minister for Aboriginal Affairs and Anor v Peko-Wallsend Ltd and Ors (1986) 162 CLR 24 at 39, the statute may expressly state the considerations to be taken into account, and if so, it may be necessary for the court to decide whether those enumerated factors are exhaustive or merely inclusive. But s 529(2)(b) does not list the relevant considerations at all, let alone exhaustively. It merely confers a discretionary power upon a council to be exercised within the constraints it has stipulated. The factors which a council might take into account in exercising its discretion are unconfined, except so far as there may be found within the LG Act some implied limitation on the factors to which it may legitimately have regard – see Minister for Aboriginal Affairs v Peko-Wallsend at p 40.

49. Having regard to the charter by which South Sydney is bound under s 8 of the LG Act (in common with all councils), fairness and equity are legitimate considerations in the exercise of its powers, including its power to determine sub-categories. Similarly, matters of the community of interest, geographical cohesion etc in relation to the proposed categories were also legitimate considerations in the exercise of its powers. As Mr Hemmings was at pains to point out, such matters had been recognised in South Sydney’s Development Control Plan 1997 – Urban Design (“the DCP”). For example, map 5 in the DCP outlines the areas of urban villages, and shows the urban villages of Woolloomooloo, Kings Cross, East Sydney and Darlinghurst in the north, and the urban villages of Camperdown and Chippendale in the west. It refers to “thematic character” and, in relation separately to the urban villages I have noted, its lists the features which give those villages their thematic character.

50. For these reasons, I find that South Sydney did not take into account irrelevant considerations in its determination of sub-categories, and its determination is not invalid on that account.

Manifest unreasonableness

51. The basis for this ground of challenge is that South Sydney’s determination of sub-categories was unreasonable in the Wednesbury sense, that is, the determination was so unreasonable that no reasonable council could ever have come to it – Associated Provincial Picture Houses Ltd v Wednesbury Corporation (1948) 1 KB 223. Mr Douglas relied in particular upon the following passage from the judgment of Wilcox J in Taveli & Ors v The Minister for Immigration, Local Government and Ethnic Affairs (1989) 86 ALR 435 at 453:

Probably the ground (of unreasonableness) has its most frequent application in cases in which the challenger can demonstrate an illogicality in, or misapplication of, the reasoning adopted by the decision-maker; so that the factual result is perverse, by the decision-maker’s own criteria.

52. Mr Douglas endeavoured to demonstrate manifest unreasonableness in the sense outlined by Wilcox J by the following propositions:

(1) The objective of South Sydney in determining sub-categories was to (a) redistribute the burden of rates; (b) achieve greater equity; and (c) align the sub-categories with identified communities of interest:

(2) The factual result, however, when measured against these objectives, is illogical and perverse;

(3) That conclusion is demonstrated by four matters:

(a) the perceived imbalance in the burden of rates was stated in the minute of the general manager to involve the north ward because it had been shown to have contributed a disproportionate amount of revenue in comparison to the services which it received. However, some suburbs of the north ward remain in Centre A (which is to be burdened with a greater rate impost) and others fall within Centre C (which is one of the sub-categories to receive a lesser rate impost). Furthermore, some of the suburbs in Centre C are from the south ward, not the north ward. In Mr Douglas’s submission, there is no rational reason for treating parts of the north ward differently from others, and, likewise, there is no rational reason for treating parts of the south ward differently from others;

(b) the consequence of the determination of sub-categories and the subsequent making and levying of lesser rates in respect of Centres B and C in comparison to Centre A is that Centre A will absorb the whole of the rate increase, but Centre A was the area identified by South Sydney in its submissions to the Sproats inquiry and the Boundaries Commission as being, by reason of its disadvantaged position, least able to bear the impact of South Sydney’s revenues. This result is illogical and perverse;

(c) the evidence of Mr G Cirillo, who was formerly in the employ of South Sydney as a strategic planner and who is now employed by the City of Sydney, indicates some areas which have been identified by South Sydney as falling within a particular sub-category have “a high degree of similarity” with areas falling within another sub-category, so that there is no apparent basis for distinction, and that is also illogical and perverse; and

(d) the fact that the boundaries of the residential sub-categories of centres of population are co-extensive with the business sub-categories of centres of activity demonstrates that the determination of the boundaries was not made on any rational basis.

53. However, as Mason P stated in Weal v Bathurst City Council and Anor (2000) 111 LGERA 181 at 188, the Wednesbury unreasonableness test is stringent. The impugned decision must be so devoid of plausible justification that no reasonable person could have taken that course. Menzies J in Parramatta City Council v Pestell (1972) 128 CLR 305 stated in the proper approach in the following passage at 323:

There is … a world of difference between justifiable opinion and sound opinion. The former is one open to a reasonable man; the latter is one that is not merely defensible – it is right. The validity of a local rule does not depend upon the soundness of a council’s opinion; it is sufficient if the opinion expressed is one reasonably open to a council. Whether it is sound or not is not a question for decision by a court.

54. The four matters advanced by Mr Douglas do not, in my opinion, demonstrate that the outcome is so illogical and perverse that it amounts to Wednesbury unreasonableness. There was a justifiable basis for the objectives that South Sydney set for itself. A disproportionate rate burden was revealed by South Sydney’s analysis for the purpose of the Sproats inquiry. And its notion of community of interest etc finds a genesis in the DCP and also in the Strategic Plan (“the Strategy for a sustainable City of South Sydney – 1995”), where concepts of urban village, thematic character and built form and local precincts are expressed. Nor was there any requirement in law or in principle that the objectives it set for itself were to be completely and exhaustively met by the determination of the sub-categories and their boundaries. The objectives it set for itself did not depend entirely upon suburbs being included in the north ward or the south ward, or Centre A being less able to meet the burden of rates imposed upon it, or a complete similarity of areas included within the sub-categories, or the fact that the areas of the sub-categories were identical for both residential and business categories. In this respect, the determination made by South Sydney does not meet the test of illogicality and perversity enunciated by Wilcox J in Taveli v The Minister, if that is in fact the correct test.

55. But the usual test is that the impugned decision is so devoid of plausible justification that no reasonable council could have taken that course. The evidence does not meet that test either. There were factual matters set out in South Sydney’s submission to the Sproats inquiry, and concepts set out in the DCP, the Strategic Plan and the Management Plan that give a plausible foundation for the determination that it made. The ground of manifest unreasonableness has not been made out.

56. There is an implicit undertone to this ground of challenge. It hints at a suggestion that, since the boundaries of the sub-categories are substantially co-extensive with the boundaries of the areas recommended for transfer to the City of Sydney, South Sydney must have been motivated by some improper political purpose to make the determinations of sub-categories and thereby reduce the proportion of revenue which those sub-categories produce. Not one shred of evidence was adduced to prove such a purpose. Improper purpose was not raised as a ground of challenge, nor was it directly put forward as a basis for a finding of manifest unreasonableness, and I reject any suggestion of it.

Two final matters

57. The first matter to note is that, in its points of defence, South Sydney raised as an issue the standing of the City of Sydney to bring these proceedings. It claimed that the only remedy available to the City of Sydney was to appeal to this Court under s 526 as a rateable person who is dissatisfied with the declaration of a category. These are not such proceedings.

58. This issue was faintly raised in the hearing. This is probably because s 674 provides a complete answer to it. It confers open standing upon any person to bring proceedings in this Court for an order to remedy or restrain a breach of the LG Act. The challenge mounted by the City of Sydney alleged such a breach, and it was entitled to bring these class 4 proceedings.

59. The second matter to note is the extent of the evidence adduced at the hearing. With a sinking feeling, the Court received into evidence six large ring binders containing a massive amount of written material. However, both counsel expressly eschewed reliance on the whole of that material. Instead, they each handed up copies of the few documents upon which they in fact relied. The fact that parties think it necessary to copy and tender a massive amount of material which is ignored during the hearing is to be deplored and should not pass unnoticed.

Conclusion

60. The City of Sydney has failed to establish any of the three grounds upon which it relied to challenge the validity of the determination of South Sydney of sub-categories of the residential category. Those grounds were lack of power, irrelevant considerations and manifest unreasonableness, and none have been made out.

61. Accordingly, for the reasons set out above, I make the following formal orders:

(1) The application is dismissed.

(2) The Council of the City of Sydney must pay the costs of the South Sydney City Council as agreed or as assessed.

(3) The exhibits may be returned.