Marrickville Metro Shopping Centre Pty Ltd v Marrickville Council - [2010] NSWCA 145

No judgment structure available for this case.

Reported Decision: 174 LGERA 67

New South Wales

Court of Appeal

CITATION: Marrickville Metro Shopping Centre Pty Limited v Marrickville Council [2010] NSWCA 145
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 20 April 2010

JUDGMENT DATE:
24 June 2010

JUDGMENT OF: Tobias JA at 1; Basten JA at 197; Handley AJA at 228

DECISION: Appeal dismissed with costs

CATCHWORDS: ADMINISTRATIVE LAW – Prerogative writs and orders – Certiorari – Discretion of court and matters precluding relief – Delay - ADMINISTRATIVE LAW – Judicial review – Grounds of review – Jurisdictional fact – Manifest unreasonableness – Improper purpose – Apprehension of bias – Procedural omission - REAL PROPERTY – Rates – Rating of land – Review of decisions – Judicial review – Respondent determined to establish sub-category of rateable land applicable to appellant’s land – Respondent fixed ad valorem amount of ordinary rate applicable to that sub-category of land – Appellant challenged validity of respondent’s decisions

LEGISLATION CITED: Environmental Planning and Assessment Act 1979
Judicial Officers Act 1986
Local Government Act 1919
Local Government Act 1993
Recovery of Imposts Act 1963
Supreme Court Act 1970
Valuation of Land Act 1916

CATEGORY: Principal judgment

CASES CITED: Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564
Associated Provincial Picture Houses, Ltd v Wednesbury Corporation [1948] 1 KB 223
Bodruddaza v Minister for Immigration and Multicultural Affairs [2007] HCA 14; 228 CLR 651
British American Tobacco Australia Services Ltd v Laurie & Ors [2009] NSWCA 414
Bromley London Borough Council v Greater London Council [1983] 1 AC 768
Bruce v Cole [1998] NSWCA 45; (1998) 45 NSWLR 163
Fares Rural Meat and Livestock Co Pty Ltd v Australian Meat and Live-stock Corporation [1990] FCA 139; (1990) 96 ALR 153
Gardner v Dairy Industry Authority (NSW) (1977) 52 ALJR 180
House v The King [1936] HCA 40; (1936) 55 CLR 499
Inland Revenue Commissioners v National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617
IW v City of Perth [1997] HCA 30; 191 CLR 1
Marrickville Metro Shopping Centre Pty Ltd v Marrickville Council [2009] NSWLEC 109
McGovern v Ku-ring-gai Council [2008] NSWCA 209; (2008) 161 LGERA 170; (2008) 72 NSWLR 504
Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24
Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611
Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources [2005] NSWCA 10; (2005) 138 LGERA 11
Notaras v Waverley Council [2007] NSWCA 333; (2007) 161 LGERA 230
Old St Boniface Residents Association Inc v City of Winnipeg [1990] 3 SCR 1170
Parramatta City Council v Pestell [1972] HCA 59; (1972) 128 CLR 305
Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355
Puhlhofer v Hillingdon London Borough Council [1986] 1 AC 484
Samrein Pty Ltd v Metropolitan Water Sewerage & Drainage Board (1982) 56 ALJR 678
Save Our Streets Inc v Settree [2006] NSWLEC 570; (2006) 149 LGERA 30
Steuart v Oliver (No 2) (1971) 18 FLR 83
The Queen v Toohey; Ex parte Northern Land Council [1981] HCA 74; 151 CLR 170
Thompson v Randwick Corporation [1950] HCA 33; (1950) 81 CLR 87
Vanmeld Pty Ltd v Fairfield City Council [1999] NSWCA 6; 46 NSWLR 78
Westfield Management Ltd v Perpetual Trustee Co Ltd [2006] NSWCA 245
Woolworths Ltd v Pallas Newco Pty Ltd [2004] NSWCA 422; (2004) 136 LGERA 288; (2004) 61 NSWLR 707

TEXTS CITED: Allars, Introduction to Australian Administrative Law (1990) Butterworths
Aronson, Dyer and Groves, Judicial Review of Administrative Action, 4th ed (2009) Lawbook Co

PARTIES: Marrickville Metro Shopping Centre Pty Limited
Marrickville Council

FILE NUMBER(S): CA 2009/298439; 40335/09

COUNSEL: A: A Galasso SC / M Seymour
R: J A Ayling SC / A M Pickles

SOLICITORS: A: Gadens, Lawyers, Sydney
R: Marrickville Council

LOWER COURT JURISDICTION: Land & Environment Court

LOWER COURT FILE NUMBER(S): LEC 40940/08

LOWER COURT JUDICIAL OFFICER: Pain J

LOWER COURT DATE OF DECISION: 7 August 2009

LOWER COURT MEDIUM NEUTRAL CITATION: Marrickville Metro Shopping Centre Pty Limited v Marrickville Council [2009] NSWLEC 109

CA 40335/09
LEC 40940/08

TOBIAS JA
BASTEN JA
HANDLEY AJA
Thursday 24 June 20101

MARRICKVILLE METRO SHOPPING CENTRE PTY LTD v MARRICKVILLE COUNCIL

Judgment

1 TOBIAS JA: The appellant, Marrickville Metro Shopping Centre Pty Ltd, is the owner and operator of a large mall-style shopping centre complex known as the Marrickville Metro Shopping Centre fronting Victoria Road, Murray Street and Smidmore Street, Marrickville (the Centre). It comprises approximately 100 tenancies including a Woolworths Supermarket and a Kmart discount department store as well as numerous speciality shops. It is the only complex of its kind within the Marrickville local government area (the LGA).

2 There are a number of other retail areas within the LGA of the traditional, if not old-fashioned, strip shopping style where the shops and the land upon which they are located are individually owned or leased and operated.

3 As will appear from [16] below, the ad valorem amount of a rate is relevantly defined as an amount in the dollar determined for a specified year by a council and expressed to apply, in the case of an ordinary rate, to the land value of all rateable land within a category or sub-category of the ordinary rate. Accordingly, when I refer in this judgment to an ad valorem rate it should be taken as a reference to that definition.

4 Prior to 23 April 2002 the Centre, which was constructed in 1987, was rated by Marrickville Council (the Council) for the purpose of levying its ordinary rate in the same manner and subject to the same ad valorem rate as all other retail properties in the LGA. That changed as and from 1 July 2002 (being the commencement of the 2002/2003 rating year) due to the Centre being placed by the Council into a different sub-category to that of the other retail properties in the LGA whereupon a differential ad valorem rate was applied to it. At the time this occurred, the Centre was owned by Bevillesta Pty Ltd (Bevillesta). The Centre was acquired by the appellant from Bevillesta on 14 October 2004. Relevantly, on 23 April 2002 the Council determined to declare a new sub-category of the category of “business” which applied only to the land occupied by the Centre. At the same time it fixed the ad valorem rate in respect of that sub-category at an amount 20% greater than that fixed with respect to other retail properties in the LGA.

5 The ordinary rate was levied upon Bevillesta and, after 2004, the appellant, in accordance with that decision for the year commencing 1 July 2002 as well as for the following rating years up to and including the year commencing 1 July 2006, there being some minor changes to the ad valorem rate from year to year. With respect to the rating year commencing 1 July 2007, the Council determined the ad valorem rate to be levied upon the land occupied by the Centre in an amount which, as a consequence of a substantial increase in the land value of that land for rating purposes, had the effect of the appellant paying rates some 90% greater than those paid by it the previous year.

6 With respect to the rating year commencing 1 July 2008, the Council increased the ad valorem rate to be levied upon the Centre’s land by a further 10%.

7 In Class 4 proceedings instituted in the Land and Environment Court on 16 September 2008, the appellant challenged the validity of the decisions of the Council both with respect to the creation of the new sub-category applying only to the land of the Centre as well as to its decisions determining the ad valorem rate agreed to that land in respect of the 2002 to 2008 rating years. It also sought consequential relief by way of repayment of the sum of $374,314.45 being the amount paid by the appellant over and above that which it would have paid if the Centre’s land had been rated the same as the other retail land in the LGA. Ultimately that form of relief was, except with respect to the 2007 and 2008 rating years, abandoned as a consequence of the effect of ss 2 and 5 of the Recovery of Imposts Act 1963.

8 The grounds of challenge advanced by the appellant with respect to the Council’s decisions to create a sub-category specific to the Centre’s land and to fix the ad valorem rate applicable to that sub-category were that those decisions were manifestly unreasonable; made for an improper purpose; and affected by an apprehension of bias on the part of three councillors who were present and voted at the meetings when the relevant decisions to fix the ad valorem rates were made. The appellant also alleged that the creation of the rate was not according to the Council’s own resolution pertaining to the creation of the rate and ultra vires for not describing a “category” of land use.

9 The original grounds of challenge also alleged a failure by the Council to take into account a mandatory relevant consideration, namely, whether the creation of the sub-category and the fixing of a higher ad valorem rate for that sub-category was “fair”. It was further alleged that the creation or, more accurately, the declaration of the sub-category was in breach of the Council’s duty to act fairly. Both these grounds of challenge were abandoned on the appeal.

10 Finally, there was a challenge alleging breach of certain procedural sections of the Local Government Act 1993 (the Act) which, it was submitted, also rendered the making and levying of the relevant rates invalid.

11 The proceedings were heard by Pain J who, on 7 August 2009, dismissed the appellant’s application: Marrickville Metro Shopping Centre Pty Ltd v Marrickville Council [2009] NSWLEC 109. In so doing her Honour rejected each of the challenges to which I have referred except that alleging a breach of what I have referred to as the procedural provisions of the Act. However, although her Honour found that those provisions had been breached, she determined that those breaches did not lead to invalidity of the relevant Council decisions. It is also apparent from her reasons that she would have refused relief to the appellant with respect to those breaches on discretionary grounds.

THE RELEVANT STATUTORY PROVISIONS

12 Chapter 15 of the Act is headed “How are councils financed?” Part 1 of that chapter is headed “An overview of rates and charges”. Section 491 provides that a council may, in accordance with Chapter 15, obtain income from, amongst other things, rates. Section 492 provides that the types of rates that can be raised by a council are ordinary rates and special rates. In the present case the relevant rates were ordinary rates.

13 Section 493 provides for categories of ordinary rates and categories of rateable land. It is in the following terms:

“(1) There are 4 categories of an ordinary rate and 4 categories of rateable land:

(2) These categories may, at a council’s discretion, be divided into sub-categories in accordance with section 529.”

business

14 Section 494 of the Act provides that a council must make and levy an ordinary rate for each year on all rateable land in its area. Sub-section (2) provides that:

“Each category or subcategory of ordinary rate is to apply only to land of the same category or subcategory.”

15 Section 495 relates to the making of a special rate and sets out in sub-section (2) the requirement that the council hold an opinion with respect to certain matters; in particular, that the rateable land in respect of which the special rate is to be levied will benefit from the works or services the cost of which the special rate is to be made towards meeting. I mention this provision because, as will appear, at one stage it was contemplated that the Council might make a special rate with respect to the Centre, a proposal which was abandoned as it was accepted that the criteria referred to in s 495(2) for the making of a special rate with respect to the Centre’s land could not be satisfied.

16 Sections 497 and 498 are relevantly in the following terms:

497 What is the structure of a rate?

A rate, whether an ordinary rate or a special rate, may, at a council’s discretion, consist of:

(a) an ad valorem amount (which may, in accordance with section 548, be subject to a minimum amount of the rate), or

(b) a base amount to which an ad valorem amount is added.

498 The ad valorem amount

(1) The ad valorem amount of a rate is an amount in the dollar determined for a specified year by the council and expressed to apply:

(a) in the case of an ordinary rate – to the land value of all rateable land in the council’s area within the category or sub-category of the ordinary rate, or

(b) …

(2) …

(3) An ad valorem amount specified for a parcel of land may not differ from an ad valorem amount specified for any other parcel of land within the same category or subcategory unless:

(a) …

(b) …”

17 Part 3 of Chapter 15 is headed “Ordinary rates”. Section 514 requires a council, before making an ordinary rate, to have declared each parcel of rateable land in its area to be within one or other of four categories of which, as I have noted above, that of “business” is presently relevant. Section 520, which her Honour found to have been breached, and s 521 provided as follows:

520

Notice of declaration of category

(1) A council must give notice to each rateable person of the category declared for each parcel of land for which the person is rateable.

521

When does the declaration of a category take effect?

A declaration that a parcel of land is within a particular category takes effect from the date specified for the purpose in the declaration.”

18 Sections 525 and 526 provided for a limited review and appeal mechanism where a rateable person disputed the category (or sub-category) in which that person’s land had been placed. Relevantly, those provisions were as follows:

525 Application for change of category

(1) A rateable person (or the person’s agent) may apply to the council at any time:

(a) for a review of a declaration that the person’s rateable land is within a particular category for the purposes of section 514, or

(b) to have the person’s rateable land declared to be within a particular category for the purposes of that section.

(2) …

(3) The council must declare the land to be within the category nominated in the application unless it has reasonable grounds for believing that the land is not within that category.

(4) …

(5) …

(6) If the council has not notified the applicant of its decision within 40 days after the application is made to it, the council is taken, at the end of the 40-day period, to have declared the land to be within its existing category.

526 Appeal against declaration of category

(1) A rateable person who is dissatisfied with:

may appeal to the Land and Environment Court.

(2) An appeal must be made within 30 days after the declaration is made.

(3) The Court, on an appeal, may declare the date on which a declaration is to take effect or the category for the land, or both, as the case requires.”

19 Sections 528, 529 and 531 are of particular significance to the present case and relevantly are in the following terms:

528 Rate may be the same or different for different categories

529 Rate may be the same or different within a category

(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:

Note

(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.

(4) …

531 What provisions of this Part apply to the determination of sub-categories?

(1) Sections 519–527 apply to the determination of sub-categories for a category of rateable land in the same way as those sections apply to the declaration of a category.

(2) Notice of determination of a sub-category may be given in the same notice as the notice of declaration of a category.”

20 I interpolate an important - in fact a fundamental - observation at this point with respect to the sections of the Act referred to in the preceding paragraph. It is this. The effect of ss 528(1) and 529(3) is that the Act expressly contemplates that the ad valorem rate may be different for different categories or different sub-categories. In other words, these provisions expressly permit the ad valorem rate determined with respect to a particular sub-category to be different from the ad valorem rate determined with respect to any other sub-category or any other category. In the LGA there are, relevantly, only two categories: residential and business. If one assumes that the business category has been divided into a number of sub-categories (a), (b), (c) and (d), the combined effect of ss 528(1), 529(3) and 531(1) is that the Council can determine the ad valorem rate for sub-category (a) which is different from the ad valorem rate determined with respect to sub-categories (b), (c) and (d) as well as being different from the ad valorem rate determined with respect to the residential category. Equally, a different ad valorem rate may be determined with respect to each of sub-categories (a), (b), (c), (d) and (e) which also, in turn, may differ from that determined with respect to the residential category. The only limitation is that the ad valorem rate specified for a parcel of land may not differ from the ad valorem rate specified for any other parcel of land within the same category or sub-category: s 498(3).

21 Part 4 of the Act is headed “Making of rates and charges”. Section 532 requires that a council must not make a rate until it has given public notice of its draft management plan for the year for which the rate is to be made and has considered any matters concerning that draft management plan including submissions made by the public. Section 533 provides that a rate must be made before 1 August of the relevant year. Section 534 provides that each rate is to be made for a specified year being the year in which the rate is made or the following year.

22 Section 536 is of relevance to the issues in the appeal for the same reason as is s 495, namely, because those two provisions are the only relevant provisions in Chapter 15 which lay down criteria that must be satisfied for, in the case of s 495 a special rate and, in the case of s 536, a base amount of a rate. Thus s 536(1) relevantly provides:

536 What criteria are relevant in determining the base amount?

(1) In determining a base amount of a rate, the council must have regard to (but is not limited to) the following:

(2) …”

23 What is noteworthy is that the criterion of s 536(1) to which I have referred above, is conspicuously absent from what is required for the determination of a sub-category pursuant to s 529 and from the ad valorem rate to be applied to the rateable land in that sub-category determined pursuant to s 498(1).

24 As will appear, the sub-category determined by the Council on 23 April 2002 with respect to the Centre’s land was said by the appellant to have been described as “Business Marrickville Metro”. As I have already noted, the Centre was known as the Marrickville Metro Shopping Centre. However, there is no provision in the Act that requires a sub-category to be identified by a particular name although there is such a requirement with respect to the amount of the ordinary rate. Section 543(1) thus provides:

“A council must, when making an ordinary rate, give a short separate name for each amount of the ordinary rate.”

25 Section 544 mandates that a council must include the name of each rate, in full or abbreviated form, in the rates notice by which the rate is levied. Thus in the present case, each of the relevant rates notices served on Bevillesta and the appellant, in compliance with s 544, included the name of the ordinary rate being levied as “Business Marrickville Metro”.

26 Finally, it is necessary to refer to Part 2 of Chapter 15 which is headed “Limit of annual income from rates and charges”. Section 509(1) provides, in effect, that a council must not make rates for a year so as to produce general income of an amount that exceeds the notional general income for the council for the previous year subject only to any variation of that amount by a percentage specified by the Minister pursuant to s 506. This is colloquially referred to as the capping provision. In other words, the effect of Part 2 of Chapter 15 is that, relevantly, a council cannot generate an amount of income from the levying of rates for a particular year which is greater than the rate income generated for the previous year except to the extent to which the Minister specifies a percentage variation.

27 The documentary evidence before the primary judge indicated that the Minister, generally speaking, exercised his discretion to permit the Council to increase its general rate income on an annual basis by approximately 3.5%.

28 Accordingly, when setting the rate for any particular year, a council first determines the maximum amount of rate income which it may lawfully generate by the levying of rates and which will depend upon the land value (determined under the Valuation of Land Act 1916 by the Valuer-General) subject to any increases or estimated increases of those values which a council may request the Valuer-General to provide pursuant to s 513 of the Act and subject to any percentage variation specified by the Minister pursuant to s 506. The council then prepares a draft management plan that includes its revenue policy for the relevant rating year which it then publicly exhibits with or without amendment. It then, by resolution, makes the relevant rates for the rating year in question.

29 However, a council, knowing the approximate maximum amount of the general rate income which it can generate, is then required, in light of the land values of rateable land within its area, to determine the ad valorem rate which, when applied to those land values, will generate the permitted amount of income. In that exercise a council is empowered to set differential ad valorem rates in respect of different categories and sub-categories of rateable land within its area.

THE BACKGROUND FACTS

30 As I have already noted, prior to 23 April 2002, the Council had levied rates upon the Centre’s land no differently (in terms of category or the ad valorem rate) than other retail businesses in the LGA. It had increased rates generally in accordance with that permitted under Part 2 of the Act but not so as to effect an increase with respect to the rates levied on the Centre’s land over and above those levied on other business retail premises.

31 As part of the annual rate fixing process for the rating period 2001/2002, the General Manager of the Council provided a Draft Management Plan that included the 2001/2002 Budget. The General Manager’s report relating to the Plan contained a table that referred to the category Residential and to five Business sub-categories of which four related to various industrial areas within the LGA and the fifth was referred to as Business–General. An ad valorem rate of 1.278164 cents in the dollar on all rateable land in that sub-category was recommended.

32 The report identified two broad options available to the Council: it could allow the movement of land values to flow on to the rate structure which would redistribute the rate burden both between and within rating categories or it could maintain the yield for each rating category and apply the new land values within each category which would redistribute the rate burden within rating categories but maintain the overall relativity between each category.

33 The report referred to the fact that over time the Council had balanced two competing principles. The first was referred to as the “benefit principle” and the other was the “capacity to pay principle” using land value as the indicator of that capacity. Reference was also made to the fact that the Council had adopted a Business-General sub-category rate and a number of Business-Industrial sub-categories with ad valorem rates which recognised that properties within these sub-categories placed a greater burden on public infrastructure and derived a larger benefit from Council expenditure than did those in the residential category.

34 At its meeting on 30 April 2001 the Council resolved that its officers were to report on:

“(a) Council’s relativities between rating categories for the last 20 years;

(b) the rationale and supporting evidence for the current relativities; and

35 At its meeting held on 19 June 2001 the Council adopted a motion from Councillor Hale that its officers investigate and report back to Council on the feasibility and appropriateness of introducing

“a special rate for large shopping centre developments such as Marrickville Metro.”

36 The General Manager provided such a report to the meeting of the Council held on 21 August 2001. After setting out the genesis of the report and the legislative background including reference to the relevant provisions of the Act empowering the Council to determine a sub-category of the business category according to a centre of activity, the report then set out the relativities between rating categories in the Council’s area for the last 20 years. Under the heading “Rating Rationale” the General Manager referred, amongst other things, to the provisions of s 8 of the Act, being the Council’s Charter which included, relevantly, “to raise funds for local purposes by the fair imposition of rates …”. It was further stated that in determining an appropriate rating structure for Marrickville, successive councils since 1993 had been required to balance the “benefit” principle with the “capacity to pay” principle.

37 Under the heading “Feasibility of introducing a special rate for large shopping centre developments such as Marrickville Metro” the following was relevantly stated:

“Council could introduce a further sub-category of Business rate focusing on, say Marrickville Metro, as a centre of activity without the levying of a special rate. The proceeds of a special rate must be applied for the purpose for which it was raised. No such ‘purpose’ test applies to an ordinary rate. Proceeds from a new business sub-category could be applied for any purpose Council saw fit to apply it.

There is no prohibition in the LGA to creating a sub-category of an ordinary rate that encompasses only one property. However, there is a requirement to levy rates fairly. Theoretically, Council could determine an additional sub-category of Business rate encompassing a centre of activity comprising only the property housing Marrickville Metro.

Only one Sydney Metropolitan Council contacted had a sub-category of their Business ordinary rates that encompasses a shopping centre complex in isolation. Liverpool City Council rates the Westfield Shopping complex in isolation as a centre of activity. …

On the face of it, Council could consider that a shopping centre such as Marrickville Metro has a greater capacity to pay than other businesses within the Marrickville Local Government Area. In the absence of information on the rental stream and outgoings associated with the centre this may be a difficult judgment to make. Should Council decide to investigate the introduction of a further sub-category on the basis of the capacity to pay principle alone, information could be obtained to substantiate the Centre’s capacity to pay.

…

Council needs to consider both the capacity to pay and benefit principles in determining whether to proceed further with the investigation of introducing a separate rate for large shopping complexes.”

38 The matter next came before Council at its meeting on 19 February 2002. A further report of the General Manager was tabled in which it was noted that Liverpool Council officers could not identify any report explaining the rationale for introducing the Westfield rate sub-category. Under the heading “Large Shopping Centres in the Marrickville Local Government Area (LGA)”, the General Manager relevantly stated:

“Only one large shopping centre presently exists within the Marrickville LGA. This centre is known as Marrickville Metro. The centre comprises one rateable property and is presently rated in the Business General category. … As many other properties in the Business General category increased by a greater percentage the actual rates payable on that property reduced from $128,465.44 to $127,816.40.

It should be noted that creating a new sub-category of rates for large shopping centres will not increase the overall level of rates income received by Council under the present rate pegging regime. Assuming Council maintains the existing relativities between the Residential and Business Categories, if a new sub-category was to be created with a higher rate in the dollar than exists for the Business General category, the income received from the Business General category would reduce by the total rates paid in the new category. While the rates paid by ratepayers in the Business General category would reduce marginally, there would be no overall increase in income to Council.

If Council considered it appropriate to create a sub-category of rates for Marrickville Metro a rate in the dollar would need to be set. The following table outlines the impact of increasing the rate in the dollar on the rates levied on the owners of Marrickville Metro. The first line assumes the rate is set at the Business Industrial rate applicable to other Industrial sub-categories in Marrickville. It also shows the effect of increasing the rate in the dollar on the rates payable together with the corresponding reduction in rates that would result for other properties in the Business General category.”

39 There followed the table referred to which, apart from the first line, set out the effect of fixing an ad valorem rate from 1.5 to 2.5 cents in the dollar. The table then set out the amount of the rates which would be payable by Marrickville Metro in respect of each of the nominated amounts in the dollar; it also indicated the percentage increase which would result from the amount of rates paid by Marrickville Metro for the 2001/2002 year and which varied from 17.36% to 95.59% depending upon the ad valorem rate adopted. The final column of the table indicated the rates saving for average Business General properties (based on an average land value of approximately $260,000) in respect of each amount in the dollar which might be adopted for Marrickville Metro and which ranged from a saving of $11.31 to $62.31 per property.

40 It was submitted by the appellant that what the General Manager was doing by providing that table was encouraging the Council to “pick a box”. However, as will appear, such a submission was far too simplistic. If anything it was providing the Council with a series of choices or options from which it could determine a “fair” ad valorem rate to potentially apply to the Centre’s land if it decided to declare a new sub-category applicable to that land.

41 The General Manager’s report then repeated what had been set out in his previous report under the heading “Feasibility of introducing a new rate for large shopping developments such as Marrickville Metro” including, with reference to the “benefit principle”, the fact that Marrickville Metro paid for the disposal of all its own waste including that created by its shoppers; provided and maintained its own car parking area for shoppers and provided its own lighting within the complex and its surrounding parking areas whereas the Council provided for each of those matters in the strip shopping areas. It was recommended that the Council determine whether to introduce a separate rate for large shopping complexes which it adopted by resolving “in principle to introduce a large shopping centre rate” and requiring that a further report be submitted to Council regarding “the proposal [sic – capacity] and benefit test”.

42 During the course of the debate on this issue at the meeting of 19 February 2002 (a transcript of which was in evidence), Councillor Hale observed that the shops in the Centre should pay an equivalent rate where possible to that being paid by the shops in the shopping strips. She considered that that would be fair. There was also discussion with respect to the “benefits” which had been identified by the General Manager, it being noted that the items for which the Centre paid were all within its own land rather than on public land and that in relation to the strip shopping areas, the facilities provided by Council benefited not only the shopkeepers but also the local residents. It was further noted that the shopping strips were the subject of special rates levied to meet the cost of particular council facilities provided for those areas.

43 I interpose here that the appellant submitted that if any part of the table in the General Manager’s report to which I have referred at [39] above was adopted, it would have the effect of imposing on one ratepayer (Bevillesta) a rate for the improper purpose of relieving the burden on other ratepayers. This was a constant theme throughout the appellant’s submissions and arose in respect of a number of grounds of challenge. Similarly, the appellant’s submissions were replete with the assertion that the adoption of any differential ad valorem rate for the proposed so-called Business–Marrickville Metro sub-category, would involve an arbitrary decision by the Council without the councillors having any probative evidence or information before them that any ratepayers including those in the Business-General sub-category or the residential category would otherwise bear a disproportionate burden of the overall rating income of the Council.

44 These arguments reached their zenith with respect to the decisions taken by the Council at its meeting of 23 April 2002 to which I now turn.

45 The General Manager’s report to the Council at that meeting repeated much of his report of 19 February 2002. In particular, under the heading “Large Shopping Centres in the Marrickville Local Government Area (LGA)”, the General Manager repeated what he had earlier said on this topic and which I have extracted at [38] above. However, he provided a new and more detailed table which I reproduce below:

Land Value	Rate in the $	Rates payable by Marrickville Metro	%increase over 2001/02	Rates saving per $100,000 of valuation	Rates saving for average Business General property (valued at approx $260,000)
$10,000,000	1.278164	$127,816	0.00%	$0.00	$0.00
$10,000,000	1.291009	$129,101	1.00%	$0.25	$0.66
$10,000,000	1.303695	$130,370	2.00%	$0.50	$1.30
$10,000,000	1.316471	$131.647	3.00%	$0.75	$1.95
$10,000,000	1.329247	$132.295	4.00%	$1.00	$2.61
$10,000,000	1.342023	$134,202	5.00%	$1.26	$3.26
$10,000,000	1.354799	$13,5480	6.00%	$1.51	$3.91
$10,000,000	1.367575	$136,758	7.00%	$1.76	$4.56
$10,000,000	1.380401	$138,040	8.00%	$2.01	$5.21
$10,000,000	1.391086	$139,109	8.83%	$2.22	$5.76
$10,000,000	1.533845	$153,385	20.00%	$5.03	$13.04
$10,000,000	1.661676	$166,168	30.00%	$7.54	$19.56
$10,000,000	1.789458	$178,946	40.00%	$10.05	$26.08
$10,000,000	1.917189	$191,719	50.00%	$12.57	$32.59
$10,000,000	2.045120	$204,512	60.00%	$15.08	$39.11
$10,000,000	2.172852	$217,285	70.00%	$17.59	$45.63
$10,000,000	2.300683	$230,068	80.00%	$20.11	$52.15

46 The General Manager’s report then sought to compare the rates that would be payable by the Centre in accordance with the above table with the rates paid by some 18 other large shopping centres in other local government areas. He observed:

“The table highlights the fact that there is no single formula to determine what may constitute a fair rate to apply to large shopping centres. It also shows that Council could increase the current rate quite considerably and still remain well below the rate in the dollar charged by many other LGA’s. For instance, Council could determine a rate for large shopping centres as high as 2.300683c in the dollar, an increase of 80% on the current Business General rate and still remain below the highest rating LGA’s shown above.

Council should determine to set the rate for a large shopping centre based on what it considers to be fair. The balance of this report lists some factors that could be considered by Council in forming a view on what constitutes a fair rate.”

47 The table to which the General Manager referred in the above extract indicated that the Centre’s rates for the 2001/2002 year, if maintained at its present ad valorem amount, would be $127,816, which set it in ninth place out of a total of 19 shopping complexes surveyed.

48 The General Manager then continued:

Feasibility of introducing a new rate for large shopping centre developments such as Marrickville Metro

Council could introduce a further sub-category of Business rate focusing on, say Marrickville Metro, as a centre of activity without the levying of a special rate.

There is no prohibition in the [Act] to creating a sub-category of an ordinary rate that encompasses only one property. However, there is a requirement to levy rates fairly. Theoretically, Council could determine an additional sub-category of Business rate encompassing a centre of activity comprising only the property housing Marrickville Metro.

Rationale for introducing a new rate for large shopping centre developments such as Marrickville Metro

Council may wish to consider the following factors:

■ Larger shopping centres may attract additional traffic to the LGA and may concentrate traffic emanating from within the LGA placing a proportionately greater pressure on existing road and footpath infrastructure than other shopping configurations.

■ Larger shopping centres attract larger retailers who are more likely to draw from a wider employment pool than that available within the LGA. Small shops along shopping strips and local businesses may be more likely to employ local staff enhancing local employment and local economic prosperity.

■ Enhancing the economic viability of suburban businesses may assist in maintaining the individual character of shopping and business zones within the Marrickville LGA. This would reflect the cultural, social and economic needs of the diverse range of residents within these areas and may help promote the unique characteristics of the Marrickville Council area from a tourist perspective.”

49 The report then repeated what the General Manager referred to as the “converse” factors relating to the expenditure of the Centre in disposing of its own waste, and providing and lighting its own carpark. The report then recommended that Council

separate rate

separate sub-category”

50 There was a deal of debate by the councillors relating to this matter at the 23 April 2002 meeting, the transcript of which was also before the primary judge. Much of the debate related to paragraph 3 of the General Manager’s recommendation, namely, the determination of the amount in the dollar to be adopted for the proposed new rate for large shopping complexes.

51 Councillor Pearce moved that the rate for the new sub-category be 20% above that for the sub-category of Business-General. Councillor Hanna considered that the increase should be 40% or 50% with the savings to benefit the residential ratepayers. Councillor Hale sought an increase of 40% over that applicable to the Business-General sub-category with half of the increase to be applied in reducing the Residential rate and half to reducing the Business-General rate. She asserted that the shops in the Centre enjoyed considerable benefits over those in the conventional shopping strips. Councillor Thanos is recorded as observing that Marrickville Metro paid around $127,816 a year in rates and that a 20% increase would take that figure to $159,150

“which isn’t really a significant increase when we talk about figures and the net worth and net turnover of Marrickville Metro’s business.”

52 Councillor Pearce responded noting that there were a number of items in the General Manager’s report that related to the “fairness of a large shopping centre paying a higher rate”. That was why he moved that the rate be increased by 20%. He further asserted that he knew that many more people used the Centre than other shopping centres (meaning thereby the shopping strips). He is recorded as observing

“[t]hat lots more people go through it [the Centre] and therefore there is a lot more turnover and all sorts of things like that and they have a certain capacity to pay … [T]here are certain things that happen in Marrickville Metro that the costs are covered by Marrickville Metro whereas in other shopping centres some of those things are paid for by a Council out of the rates paid by the shops. I believe a 20% increase in rates for a particular premises is quite a significant increase … I think [what] we’re doing is a reasonable thing.”

53 Councillor Pearce is recorded as then referring to the fact that historically the Council had imposed a higher rate for industrial areas

“because of trucks and there are big trucks that go [to] the Marrickville Metro as well. And that’s one of the arguments for increasing the rate. I believe a 20% increase is quite suitable.”

54 When the matter came to a vote, the Council adopted paragraphs 1 and 2 of the General Manager’s recommendations (paragraph 2 being to “introduce a separate rate for large shopping complexes”) and adopted paragraph 3 amended as follows:

“3. the rate in the dollar be increased by 20% over that for other commercial properties and that the increase in rates for large shopping centres be applied to reducing residential rates.”

Business–Marrickville Metro

55 On 17 June 2003 the Council resolved to increase the ad valorem rate for the financial year 2003/2004 with respect to the so-called Business-Marrickville Metro sub-category from 1.57597 cents in the dollar to 1.6327 cents in the dollar, which increased the rates levied on the Centre’s land from $157,597 to $163,270.

56 On 18 May 2004 the Council resolved to increase the ad valorem rate with respect to the sub-category for the 2004/2005 financial year to 1.215715 cents in the dollar which increased the rates levied on the Centre’s land to $168,984.39 which, according to the evidence, resulted in the appellant paying $49,284.26 more than if it had been retained in the Business-General sub-category.

57 On 21 June 2005 the Council resolved that the ad valorem rate for the 2005/2006 financial year for the Centre’s land should be increased to 1.241348 cents in the dollar, yielding $172,547.37 or $50,323.42 more than if the centre had remained in the Business-General sub-category.

58 On 20 June 2006 the Council resolved to increase the ad valorem rate for 2006/2007 financial year for the Centre’s land to 1.286037 cents in the dollar, yielding $178,759.14 or $52,727.28 more than would have been levied upon that land had it remained in the Business-General sub-category.

59 No particular submissions were addressed by the appellant to each of the increases for the 2004/2005, 2005/2006 and 2006/2007 financial years, it being submitted that the invalidity of the Council’s determination on 23 April 2002 to declare the sub-category Business-Marrickville Metro and the setting of the ad valorem rate for that sub-category at 20% above the ad valorem rate fixed for the Business-General sub-category infected the subsequent resolutions determining the ad valorem rate for the Centre’s land for the financial years referred to.

60 For those years the land value of the Centre’s land was $13.9 million. That value was increased by the Valuer-General to $26.6 million, effective during the financial years 2007/2008 and 2008/2009. The appellant appealed against that valuation, which was later reduced to $22.8 million.

61 On 19 June 2007 the Council resolved that notwithstanding the increase (as at that date) of the land value of the Centre’s land from $13.9 million to $26.6 million, the ad valorem rate should remain the same as for the 2006/2007 financial year, namely, 1.286037 cents in the dollar. However, due to the increase in land value and after taking into account the reduction of the Centre’s land value to $22.8 million, that ad valorem rate yielded the Council $293,216.44 which was $106,125.79 more than would have been paid by the Centre had its land remained in the Business-General sub-category.

62 On 17 June 2008 the Council resolved to increase the ad valorem rate in respect of the Business-Marrickville Metro sub-category by 10% over that which prevailed for the financial year 2007/2008, resulting in an increase to 1.414641 cents in the dollar which, on a land value of $22.8 million, yielded $322,538.15 or $130,031.36 more than the rates the Centre would have paid had its land remained in the Business-General sub-category.

63 As a separate submission was made challenging the setting of the 2007/2008 and 2008/2009 ad valorem rates on the ground of manifest unreasonableness and/or improper purpose, it is necessary to refer to the history of the making of those rates.

64 In a Councillor Briefing Paper dated 19 March 2007 the General Manager noted that the Council had received new valuations for rating purposes that were to be used to calculate rates for the 2007/2008 rating year. He further noted that within the Business–General sub-category there was a general increase in land value of 13.9% whereas with respect to the Business-Marrickville Metro sub-category, the increase was 91.4% (on the basis of a land value of $26.6 million). Under the heading “Business Metro” the following was stated:

“To maintain the status quo, rates in the dollar would need to be decreased as indicated in the table above. The rate in the dollar for Business Metro would be the lowest amount but would continue to deliver the same rate yield (plus 3.5%) - $185,015. If the current rate in the $ was applied the yield would increase to $342,085, (an increase of $157,070). Council would need to reduce its General Rate revenue by $157,070 equivalent to an average of $8.96 per residential ratepayer (more for higher valued properties, less for lower valued properties).

65 At its meeting on 17 April 2007 the Council resolved to adopt the draft 2007/2008 budget including a rating structure for the 2007/2008 year comprising a 3.5% increase in the rate yield and incorporating and maintaining the ad valorem rate for the so-called Business–Marrickville Metro sub-category.

66 Although there was no doubt debate and discussion at that meeting relating to the setting of these rates, no transcript thereof was before her Honour. The effect of the Council’s decision was that the ad valorem rate for the Centre’s land was fixed at 1.286037 cents in the dollar whereas that adopted for rateable land within the Business–General sub-category was reduced from 0.906704 cents in the dollar to 0.820573 cents in the dollar, a difference of 56.7%.

67 On 29 May 2007 the appellant wrote to the Council complaining that the Marrickville Metro rate had been maintained whilst the ad valorem rate for all other categories and sub-categories within the Council’s area had been adjusted downwards. By letter dated 30 July 2007 the Council wrote to the appellant acknowledging that the ad valorem rate for the Centre’s land had been adjusted upwards while generally the ad valorem rates of other categories had been adjusted downwards. This was not strictly correct, as the ad valorem rate for the Marrickville Metro land remained the same as it had been for the 2006/2007 year. The letter then stated that the councillors had not articulated the rationale for that decision except as previously advised in relation to its decision of 23 April 2002.

68 In the Draft Annual Management Plan for the four year period 2008-2011 and the Budget for 2008/2009, the Business–General ad valorem rate was recommended at 0.846831 cents in the dollar and the Business-Marrickville Metro ad valorem rate at 1.327190 cents in the dollar yielding $302,599.32 (on a land value of $22.8 million).

69 However, at its meeting on 29 April 2008 an amendment to the adoption of the General Manager’s report was moved to the effect that the rating structure be amended to increase the rate yield from the Marrickville Metro land by 10% to $322,538.08 and to reduce the yield from the Business-General sub-category to $7,496,693.24 and to adjust the rate in the dollar for that sub-category accordingly. The amended motion was carried.

70 A transcript of the debate and discussion at that meeting relating to this issue was in evidence before her Honour. The 10% increase was moved by Councillor Byrne, who is recorded as saying that such an increase

“just shifts the mix and we take a bit more from the Metro and we reduce the rates for business general, which is the commercial shopping strips in our area … So we take a little bit more from the Metro and the airport and we take a little bit less from business general. It’s an amendment that we’ve done in the past and it’s one that I think is right to try and redress the balance between the real cost that the airport and the Metro have on our community and that they have on the local shopping strips in particular … It’s a minor thing but I think it moves us further in the right direction to getting the balance of rates right in our area.”

71 Councillor Cotter who asserted that any such increase was “arbitrary” opposed the amendment. The vote for the amendment was tied six all and Councillor Thanos, who was in the Chair, exercised his casting vote in favour of the motion being carried.

SOME SUBSIDIARY ISSUES ADVANCED BEFORE THE PRIMARY JUDGE AND ON THE APPEAL

The Council’s Notice of Contention

72 A preliminary issue was taken by the Council before her Honour, namely, whether an ad valorem rate setting decision by a Council was justiciable. For the reasons her Honour gave at [22]-[33] of her judgment, she considered that the issues raised by the appellant were justiciable in judicial review proceedings. The Council has filed a Notice of Contention with respect to this finding but due to the view I take with respect to the validity of the various challenges mounted by the appellant to her Honour’s decision, I find it unnecessary to reach a conclusion on the justiciability issue.

The appellant’s grounds of challenge before the primary judge

73 At paragraph 36 of its written submissions on the appeal, the appellant summarised its challenges before the primary judge to the resolutions of the Council creating the sub-category Business–Marrickville Metro and its determinations pursuant to s 498(1)(a) of the Act of the ad valorem amount of the ordinary rate in respect of that sub-category for each of the years in question:

“a) That the creation of the rate was:

1 not according to the Council’s own resolution pertaining to the creation of the rate and

2. ultra vires for not describing a ‘category’ of land use

(both maintained in this appeal);

b) That the creation of the rate was invalid for failure to comply with an essential step of giving notice under s 520 (maintained in this appeal);

c) That the creation of the rate and subsequent increases had each been motivated by an improper purpose or bias (maintained in this appeal);

d) That the creation of the rate and the subsequent decisions to maintain a grossly disproportionate rate burden on a particular landowner was a manifestly unreasonable exercise of the power (maintained in this appeal);

I shall deal with grounds (b), (c) and (d) under separate headings later in these reasons as they formed the main issues on the appeal.

The fairness ground

74 Although ground (e) above was not maintained on the appeal, nevertheless at paragraph 52 of its written submissions on the issue of manifest unreasonableness and in support of the submission that the Council had failed to demonstrate justification for what was there referred to as an excessive expropriation from a single landowner, it was alleged that the Council had failed in its duty as a quasi-taxing authority to act fairly in the administration of its taxation powers. Reliance was placed upon the following passage from the speech of Lord Scarman in Inland Revenue Commissioners v National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617 at 651F-G where his Lordship said:

“… I am persuaded that the modern case law recognises a legal duty owed by the revenue to the general body of the taxpayers to treat taxpayers fairly; to use their discretionary powers so that, subject to the requirements of good management, discrimination between one group of taxpayers and another does not arise; to ensure that there are no favourites and no sacrificial victims. The duty has to be considered as one of several arising within the complex comprised in the care and management of a tax, every part of which it is their duty, if they can, to collect.”

75 It is appropriate and convenient to state at this point that in my view the principle articulated by Lord Scarman has no place in the detailed rating regime contained in Chapter 15 of the Act. That was a case of a selective enforcement of a legal obligation to pay tax whereas the present case involves the differential allocation of the rating burden within the LGA as permitted by law. It is thus noteworthy in this context that the appellant abandoned its challenge based upon s 8 of the Act which provides that the Council’s charter is, amongst other things, “to raise funds for local purposes by the fair imposition of rates”. In my view some abstract notion of fairness is irrelevant to the issues in this case. Furthermore, mere “unfairness”, whatever that might mean in the present context, cannot (at least of itself) support a finding of manifest unreasonableness in the Wednesbury sense: Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 229-230 per Lord Greene MR.

The single site ground before the primary judge

76 It was submitted that the Council’s resolution of 23 April 2002 purporting to determine the sub-category “Business-Marrickville Metro” was invalid for the following reasons:

(a) being a single site and a single land ownership, it could not be described as a category of itself; and

centre of activity

77 Both these contentions were rejected by her Honour. As to the first, at [43] she considered that there was no explicit or implied prohibition in the Act on a single site being a category or, more relevantly to the present case, a sub-category. Whether a sub-category could be determined depended upon whether it could be considered as a centre of activity as required by s 529(2)(d). Furthermore, at [44] she held that the name or description “Marrickville Metro” merely reflected the activity of the large shopping centre on the site and that as there was only one such shopping centre in the LGA, there was nothing legally wrong with identifying the relevant category by reference to the name of the activity at that site. I do not detect any error in this reasoning.

78 In its written submissions in reply the appellant shifted ground somewhat. It submitted that although a class could be determined which might only have one member, in the present case no class was determined but only a particular individual who was to be rated was described. I have, with respect, some difficulty in understanding this submission if only for the reason that the reference to “Marrickville Metro” was not to an individual or even to the owner of the Centre but to the name by which the Centre was publicly known. In my view the terms of the Council’s resolution are critical for that was, and defined, its decision. The fact that it subsequently gave the name “Business-Marrickville Metro” to the ordinary rate to be applied to the sub-category of “large shopping complexes” is irrelevant. Equally irrelevant is the fact that there was only one parcel of land in the LGA that fell within that designated sub-category. The appellant’s challenge to the validity of the Council’s decision to create the new sub-category should therefore be rejected.

The centre of activity ground

79 With respect to the second limb of the appellant’s argument, her Honour rejected the submission that a single landholding could not be a centre of activity. Such an expression was undefined in the Act. Applying the ordinary meaning of the words “centre of activity”, her Honour held (at [47]) that the concentration of activities at the Marrickville Metro site, being a large number of retail shops, fell within the description “centre of activity”. That must be so in a case such as the present involving what is clearly a large integrated shopping complex.

80 I did not detect in the appellant’s written or oral submissions on the appeal any challenge to her Honour’s findings that a single site can constitute a sub-category within the meaning of s 529 of the Act or that the Marrickville Metro constituted a centre of activity within the meaning of s 529(2)(d). If there was such a challenge it was but faint and without merit.

The description of the sub-category ground

81 However, it was submitted that the vice in the Council’s resolution of 23 April 2002 was that the sub-category was defined by reference to a particular landholding or landowner rather than with respect to a centre of activity. Such a submission overlooked the terms of the Council’s resolution, which adopted the recommendation of the General Manager “to introduce a separate rate for large shopping complexes”. As I point out at [49] above, it was accepted, properly, that the reference in that recommendation to “a separate rate” should be construed as a reference to a separate sub-category. It cannot be gainsaid that the determination of a sub-category for “large shopping complexes” was a sub-category in respect of a centre of activity. The complaint was that the sub-category created was “Business–Marrickville Metro” and not “Business–Large Shopping Complexes”.

82 In my view there is no merit in this submission. There was no statutory requirement to identify the sub-category by any particular name and as it was accepted that the Marrickville Metro was, indeed, a large shopping complex, to suggest that the Council had failed to determine the relevant sub-category according to a centre of activity simply because it labelled the rate fixed with respect to that sub-category “Marrickville Metro” or “Business-Marrickville Metro” is devoid of any substance.

83 What the Council did, as it was required to do by s 543(1), was to give a name to the amount of the ordinary rate that it had struck. As the rates notice to which I have referred at [25] above makes clear, and as s 544 required, the name given to this particular rate was that of Business-Marrickville Metro. In other words, that was the name of the rate not the name of the sub-category. The only sub-category created by the Council’s resolution of 23 April 2002 was one for “large shopping complexes”. The appellant frankly acknowledged that if this was so, it had some difficulty in challenging the Council’s decision to create or declare that sub-category.

84 I should note for completeness under this sub-heading that although s 520 mandates the Council to give notice to each rateable person of the category “declared” for each parcel of land for which the person is rateable, s 529 only requires a determination of a sub-category and not a declaration. In this respect it is clear, and it is not disputed, that the Council resolved to make such a determination on 23 April 2002.

THE MANIFEST UNREASONABLENESS CHALLENGE

The 23 April 2002 decision

85 Before the primary judge the appellant submitted that the determination of the sub-category “Business-Marrickville Metro” was manifestly unreasonable because no reasonable decision-maker would determine a sub-category according to a single site rather than a centre of activity and/or that there was unreasonable discrimination against the Marrickville Metro land in the determination of the sub-category.

86 As her Honour acknowledged (at [108]), these submissions extended not only to the creation of the sub-category but also to the determination of the ad valorem rate to be applied thereto. Reliance was first placed upon a passage from the judgment of Gummow J in Fares Rural Meat and Livestock Co Pty Ltd v Australian Meat and Live-stock Corporation [1990] FCA 139; (1990) 96 ALR 153 at 167 where his Honour referred to the work of Dr Allars, Introduction to Australian Administrative Law (1990) Butterworths at 189 [5.55] where the learned author referred to three “paradigms” of which, relevantly, the second involved discrimination without justification where a benefit or detriment is distributed unequally amongst the members of a class who were the objects of the power and who were equally deserving.

87 However, as the learned author observes, the unarticulated basis for unreasonableness with respect to this paradigm is the infringement of the principle of equality, “treat like cases alike and different cases differently”. Reference was made in the text to the decision of the High Court in Parramatta City Council v Pestell [1972] HCA 59; (1972) 128 CLR 305 which was a case involving the making and levying by the council in that case of a local rate, the then equivalent of a special rate made under the Act pursuant to s 495 to which I have referred at [15] above. The present is not a case involving such a rate.

88 Furthermore, as I have observed at [20] above, the Act expressly contemplates inequality in the rate burden imposed on different categories and sub-categories: see ss 528(1) and 529(3). The relevant “class” or “classes” for the purpose of Dr Allars’ second paradigm are those categories and sub-categories. The Act permits different classes to be treated differently although within a particular class or category or sub-category the members thereof must be treated the same or equally: see s 498(3) which in fact preserves Dr Allars’ second paradigm and gives it statutory force. But the creation of the so-called sub-category Business-Marrickville Metro and the fixing of an ad valorem rate applicable to the land in that sub-category which was different from that fixed with respect to land in the sub-category Business-General, does not offend that paradigm. It is perfectly consistent with it and its underlying principle of equality amongst members of the same class.

89 The appellant nevertheless submitted to her Honour that no council acting reasonably would have created the Marrickville Metro sub-category, as it could not have considered that the appellant contributed so significantly and disproportionately to the Council’s costs of providing services and facilities as to justify its creation. Reliance was placed upon the decision of the High Court in Pestell to which I have already referred at [87] above. But as I have remarked, that case involved the validity of a local rate under s 121 of the Local Government Act 1919 which now finds its place in s 495 of the Act (now described as special rates).

90 The issue in Pestell was one that arose out of the statutory requirement that in order to create the relevant rate, the council was required to hold the opinion that the work or service, the cost of which was to be paid for from the rate, would be of special benefit to the land rated. In other words, the relevant statutory provision stated criteria that were required to be satisfied before the rate could be validly imposed.

91 It was held that the rate was invalid because the council could not reasonably have formed the view that the rated land enjoyed a special benefit not enjoyed by land excluded from the rate. In my view that decision has no bearing whatsoever on the present case. Her Honour was of this view (at [120]) and in my opinion she was correct in finding that Pestell did not support the appellant’s arguments given the particular statutory regime for the making of the rate under challenge in that case and which was more akin to the making of a special rate under the Act.

92 Her Honour also rejected, in my view correctly, the appellant’s reliance upon Fares Meats. Although she accepted that the appellant’s argument on manifest unreasonableness was described in terms of discrimination without justification, any determination of whether Dr Allars’ second paradigm applies in any particular case must depend upon the relevant statutory provisions pursuant to which the relevant power is exercised.

93 As I have indicated, it is plain that the relevant provisions of the Act expressly permit differential rating between categories and sub-categories and, therefore, discrimination in the imposition of rates between those categories and sub-categories.

94 The appellant’s essential argument both below and on appeal was that when it determined the sub-category on 23 April 2002 and at the same time specified and determined an ad valorem rate which was 20% above that adopted for the Business–General sub-category, it was acting “without justification” in that it did not exercise its power to make that decision based on any rationally probative or relevant material. Thus, much emphasis was placed by the appellant on the assertion that the challenged decisions were first, “essentially arbitrary” and, second, had selected one parcel of rateable land for special treatment by removing it from the sub-category in which it had been included for many years, namely, that of Business-General.

95 It was submitted that there was “no evidence” to support the decisions and that basing a decision on lack of evidence was an error of law: Bruce v Cole [1998] NSWCA 45; (1998) 45 NSWLR 163 at 188 per Spigelman CJ. In that case the Court was dealing with a decision of the Conduct Division of the Judicial Commission of New South Wales constituted under the Judicial Officers Act 1986 whereby, by majority, it formed the opinion that a complaint against a Supreme Court judge as to his capacity to perform his judicial functions was extant as at the date of the report.

96 It is true that the Chief Justice stated that as a matter of principle, acting without probative evidence is the equivalent of no evidence and thus an error of law. But his Honour was stating those principles and applying them in the context of that particular case which required a finding of fact that the judicial officer’s incapacity was continuing at the time of the report. It made a finding of fact of continuing incapacity, which was the basis of the majority opinion. The finding of that fact was necessary for its decision and, being a finding of fact, it was required to be supported by probative evidence.

97 It cannot be gainsaid that where the exercise of a statutory power by a body such as a council is dependent upon the existence of a fact or the holding of a particular opinion, then the absence of any evidentiary basis upon which that fact can be found to exist or that opinion held would vitiate a council’s decision. Pestell was such a case. But it is not this case. As her Honour observed (at [106]) there is nothing in the scope of the Act or the rate setting scheme in relation to the fixing of an ad valorem rate that suggests that it is an irrelevant consideration giving rise to illegality to seek to impose a greater rate burden on one category or sub-category than another category or sub-category. Equally, the fact that the statute permits such a form of discrimination militates against any finding of manifest unreasonableness founded on that consideration.

98 The Council submitted that in the absence of any criteria in the Act for the setting of an ad valorem rate, it had a wide discretion allowing it to take into account whatever matters it regarded as relevant, but that it was not obliged to act judicially. It did not require “evidence” before it made its decision. As long as the Act permitted it to do what it did, its decision must be allowed to stand.

99 The Council was a collegiate body made up of community representatives who were relevantly performing in the present instance a quasi-legislative function. It was setting a tax, but one in which the empowering statute permitted differentiation and/or discrimination. It was not acting as a decision-maker determining some form of dispute between parties. There were no relevant statutory criteria that were required to be satisfied before it exercised the power.

100 Nevertheless, it was submitted by the appellant that the Council’s decision, at least to set the ad valorem amount applicable to the sub-category of Business–Marrickville Metro, was based on an arbitrary choice as to what particular amount in the dollar to adopt. But in the present case the Council had before it the various reports of the General Manager, the relevant portions of which I have extracted earlier in these reasons as well as the benefit of the views of the various councillors during the course of the debate before a vote was taken.

101 Of course, in one sense, a decision to impose an ad valorem rate for the so-called sub-category of Business–Marrickville Metro which was 20% higher than the rate determined for the sub-category Business–General was arbitrary, but it was determined after a debate that considered that a higher percentage (40% or 50%) was unfair whereas 20% achieved the right balance once the various matters relating to the Centre and its impact upon Council infrastructure including the strip shopping areas were taken into account. I interpolate that the appellant properly eschewed any suggestion that that was an irrelevant consideration. Given that the owner of the Centre would, in one form or another, pass on any unusual rate increase or even the whole of the rates levied on the Centre’s land to its tenants, there is something to be said for the statement by Councillor Hale at the Council meeting of 19 February 2002 that shops in the Centre should pay an equivalent rate where possible to that being paid by shops in the traditional shopping strips: see [42] above.

102 The appellant then submitted that a number of statements by the General Manager and several councillors were not the subject of probative evidence. It further submitted that there was no evidence of any benefit to the Centre in terms of Council infrastructure which would be paid for by the increase in its rates or that it even had the capacity to pay any such increase. However, in my view, no such probative evidence in the sense in which that concept is used in the context of a decision-maker who is required to make findings of fact or form an opinion as a condition of exercising a power, was required in the present case.

103 In any event the councillors must be taken to have local knowledge as to the success or otherwise of the Centre and in fact there are references in the material that I have extracted as to the drawing power of the Centre. The councillors were aware of the amount of the increase which, for the 2002/2003 year, appears to be less than $50,000 over and above what otherwise the Centre would have paid had its land remained in the Business-General sub-category. After all, this was a complex containing some 101 tenancies. It is the only such complex in the LGA which thus gave it a degree of monopolisation.

104 Finally, as her Honour noted at [115], in Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources [2005] NSWCA 10; (2005) 138 LGERA 11 Spigelman CJ, with whom Beazley JA and myself agreed, stated at [129]:

Wednesbury

105 This formulation was adopted by myself in Westfield Management Ltd v Perpetual Trustee Co Ltd [2006] NSWCA 245 at [71]. It was also adopted and applied by myself, with the agreement of Mason P and Hodgson JA, in Notaras v Waverley Council [2007] NSWCA 333; (2007) 161 LGERA 230 at [122]. In Notaras I cited (at [124]) [31] of the judgment of Biscoe J in Save Our Streets Inc v Settree [2006] NSWLEC 570; (2006) 149 LGERA 30 where his Honour drew a distinction between a decision which the court considers is unreasonable and a decision which the court considers is so unreasonable that no reasonable body could have come to it. The latter required “something overwhelming”: Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611 at [44].

106 In Wednesbury itself, Lord Greene MR at 229 referred to the relevant unreasonableness as “something so absurd that no sensible person could ever dream that it lay within the power of the authority”. In Bromley London Borough Council v Greater London Council [1983] 1 AC 768 at 821, Lord Diplock defined Wednesbury unreasonable decisions as those which “looked at objectively, are so devoid of any plausible justification that no reasonable body of persons could have reached them”. In Puhlhofer v Hillingdon London Borough Council [1986] 1 AC 484 at 518, Lord Brightman said that the unreasonableness must be “verging on an absurdity”.

107 Other synonyms have been described in the authorities. They are collected in Aronson, Dyer and Groves, Judicial Review of Administrative Action, 4^th ed (2009) Lawbook Co at 376-377 [6.215].

108 What Lord Brightman said in Puhlhofer at 518 and, in particular, his Lordship’s reference to the relevant body’s decisions being, in effect, immune unless it was acting perversely, was cited by Gleeson CJ and McHugh J in Eshetu at [41]. The essential point relevant to the present appeal which their Honours made in that case was, as Mason J pointed out in Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 42, the necessity for a court to “proceed with caution … lest it exceed its supervisory role by reviewing the decision on its merits”.

109 The cases are replete with this warning with the consequence that the success of a challenge on the Wednesbury unreasonable ground is confined to extreme cases involving, as Aronson et al opine at 376, “demonstrably absurd decisions”.

110 In the present case, the matters in respect of which complaint is made and which are relied upon to support a finding of Wednesbury unreasonableness, do not come close to satisfying the tests to which I have referred. Her Honour rejected the manifest unreasonableness ground with respect to the challenged decisions of the Council made on 23 April 2002 and in my view she was correct in doing so. There was nothing absurd, irrational or implausible with respect to those decisions that were, in any event, supported by information and arguments. Whether or not one might disagree with those arguments is irrelevant where a merits review of the Council’s decisions is impermissible. The challenge to her Honour’s decision in this regard should be rejected.

The 17 April 2007 decision

171 Given the limitations as to the current authority of Steuart referred to by Campbell JA in McGovern at [252] with which I agree, in my opinion, at most, Steuart provides some very limited support for the proposition, which I would adopt, that in a case such as the present, where councillors are exercising the power (and duty) to annually determine the ad valorem rate with respect to the categories and sub-categories of rateable land within its area, such an exercise, which is obviously capable of affecting all ratepayers in one way or another in that area, is more akin to a quasi-legislative process.

172 Accordingly, the fair-minded observer would understand that the very nature of the rate fixing process would result in the determination of differential rates which would inevitably affect, either beneficially or adversely, the councillors themselves as being owners of rateable land in either the residential or business categories or sub-categories or both. Furthermore, that observer would realise and understand that social and political consideration might well influence the decisions of a collegiate body of elected councillors. The appellant acknowledged as much.

173 In such circumstances, in my opinion that observer would not conclude that the three councillors in question might be improperly influenced in the exercise of their public duty. Furthermore, on one view of the matter, the nature of the appellant’s challenge founded on apprehended bias is not confined to the three identified councillors. All the other councillors would, at the very least, have been residential ratepayers.

174 The decision of the Council, particularly that made on 23 April 2002, was that the increase in the ad valorem rate fixed with respect to the Centre’s land should be used to reduce the residential rate. All councillors would therefore be likely to benefit although the amount of that benefit to individual ratepayers would, one would anticipate, be miniscule. Yet, disqualification for apprehended bias of the whole council would frustrate the legislative purpose of the rate fixing process. A fair-minded observer would not contemplate such a result on the basis that each councillor’s interest in having their residential rate reduced dictated the conclusion that all of them might be improperly influenced in the exercise of their public duty.

175 For these additional reasons in my opinion the appellant’s challenge to the various decisions on the ground of apprehended bias on the part of the three nominated councillors should be rejected.

THE CHALLENGE TO THE PRIMARY JUDGE’S DECISION WITH RESPECT TO THE BREACH OF S 520 OF THE ACT

176 Section 520(1) of the Act mandated that the Council give notice to each rateable person of the category (or sub-category) declared for each parcel of land for which the person is rateable. By sub-section (2) the notice was to be in the approved form but it was common ground that there was no such form. Her Honour found (at [71]) that the appellant had established a breach of s 520(1) and that the Council had not given notice to Bevillesta of its decision on 23 April 2002 to declare a new sub-category “Business-Marrickville Metro” in respect of the land for which it was rateable. There is no challenge by the Council to that finding.

177 Although it was not an issue that was pleaded, her Honour also found that s 521, which provides that a declaration that a parcel of land is within a particular sub-category takes effect from the date specified for the purpose in the declaration, had not been complied with. However, there is no ground of appeal alleging a failure of her Honour to declare that the sub-category referred to by the appellant as “Business-Marrickville Metro” had never taken effect. Nor is the matter addressed in the appellant’s written submissions.

178 Nevertheless, the appellant did submit that her Honour erred at [194] of her reasons in finding that the Council’s failure to comply with the procedural requirement of s 520(1) for the giving of a notice did not lead to invalidity of its determination of the relevant sub-category. In so finding, her Honour applied the test articulated in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [93], namely, whether it was a purpose of the legislation that an act done in breach of a provision should be invalid.

179 Relevant to the present case is the following passage from the joint judgment of McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky at [91]:

“An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition. Unfortunately, a finding of purpose or no purpose in this context often reflects a contestable judgment. The cases show various factors that have proved decisive in various contexts, but they do no more than provide guidance in analogous circumstances. There is no decisive rule that can be applied; there is not even a ranking of relevant factors or categories to give guidance on the issue.”

See also Woolworths Ltd v Pallas Newco Pty Ltd [2004] NSWCA 422; (2004) 136 LGERA 288; (2004) 61 NSWLR 707 at [10].

180 It is also not without relevance that the plurality in Project Blue Sky stated at [97] that courts

“have always accepted that it is unlikely that it was a purpose of the legislation that an act done in breach of a statutory provision should be invalid if public inconvenience would be a result of the invalidity of the act.”

181 In the present case her Honour observed (at [193]) that if she held that the rates notices for the rates issued over the relevant years in respect of the Centre were invalid upon the ground that no valid notice was served on the owner for the time being of the Centre for the whole period under challenge, that is from 2002, that would upset the collection of all rates levied for that seven year period. Further, her Honour considered it unclear what the impact of the invalidity of the 2002 determination with respect to the sub-category “Business-Marrickville Metro” would have on the rate fixing for all ratepayers in 2002 and subsequently. The appellant had submitted that only it was affected by the rating decision so that the shortfall of the collection of approximately $300,000 was very small in the context of the $33 million annual rate income collected by the Council.

182 However, at [194] the primary judge observed that:

“…the statutory scheme in the [Act] and the complex process of rate setting to apportion rates amongst a number of categories and sub-categories of land at the same time suggests that declarations of invalidity due to lack of appropriate notice do not give rise to invalidity. As submitted by the Council, the scheme for setting rates under the Act requires that the amount of rates to be paid by various categories are interdependent because of the statutory requirement that the Council’s rate income is capped. Disturbing one category has implications for rate setting in all categories. While it is highly desirable that notice provisions in the [Act] such as s 520 are complied with, failure to provide adequate notice of the determination of a new sub-category should not give rise to a declaration of invalidity of the sub-category in 2002.”

183 Her Honour also determined, separately from the invalidity issue, that she was disinclined to provide relief with respect to the breach of s 520(1) because there was no evidence that Bevillesta was disadvantaged in exercising any review rights under s 525 or appeal rights under s 526 as a result of the late or inadequate notice it received. As I understand her Honour’s observation, as a matter of discretion she would have refused to grant the appellant a declaration of invalidity particularly as the party prejudiced, if at all, was not the appellant but Bevillesta.

184 As I would understand her Honour’s reasoning on this point, it was based, at least in part, on the fact that a rateable person was entitled to apply to the Council under s 525 “at any time”. Accordingly, failure to give a notice under s 520 to Bevillesta did not prevent the appellant, after it became the owner of the Centre, from exercising its right to seek review under s 525.

185 However, as the appellant pointed out, and her Honour acknowledged, the failure to give the mandated notice to Bevillesta did have an effect on that company’s ability to appeal to the Land and Environment Court if it would otherwise have been dissatisfied with the date on which the declaration that its land was within the new sub-category was to take effect. This is because s 525 does not extend to a review of that date by a council but only to the declaration that a person’s rateable land is within a particular category or sub-category for the purposes of s 514. If a rateable person is dissatisfied with the declaration as to the date from which a particular sub-category takes effect, then that person must appeal directly to the Land and Environment Court. But by virtue of s 526(2), that appeal must be made within 30 days after the declaration is made. As a matter of construction that must refer to the declaration determining the sub-category.

186 In the present case, as the relevant Council resolution was made on 23 April 2002, it follows that any such appeal must have been filed within 30 days of that date. The difficulty, of course, is that the determination or declaration of 23 April 2002 did not comply with s 521. Therefore, so it was submitted, her Honour properly held that any appeal with respect to the date from which the sub-category was to take effect was frustrated. However, as such an appeal could only have been brought by Bevillesta, it follows that the failure to comply with s 521 had no detrimental effect upon the appellant.

187 The appellant further submitted that her Honour was in error in refusing to find invalidity on the basis of Project Blue Sky. It submitted that the scheme of the Act provided for a specific process when a new category or sub-category is “declared” under s 514 for which notice is required to be given to an affected ratepayer by s 520(1). This is because the legislature considered that notice of the change in status of the ratepayer’s land would then enable that ratepayer to make an informed decision about whether to seek a review under s 525 or to appeal directly to the court pursuant to s 526(1)(a). The clear intention of ss 520 and 521, so it was submitted, was that failure to comply with those provisions required the conclusion that the sub-category “Business-Marrickville Metro” had never taken effect.

188 It was further submitted that her Honour erred in finding that a breach of s 520(1) did not warrant the making of any order for relief in the absence of evidence of disadvantage. Reliance was placed upon the provision of s 676(1) of the Act whereby the court is empowered to provide such relief as it considers fit where there has been a breach of the Act. That section does not require the appellant to provide evidence of disadvantage in order to be entitled to relief under that provision. This may be so, but the existence or otherwise of disadvantage is clearly relevant to whether the court should exercise its discretion to grant relief under s 676(1).

189 The Council relied upon a number of matters, all of which it is unnecessary to record. However, it did submit two matters that justify consideration. The first is that the appellant was aware that the Council had created the so-called sub-category “Business-Marrickville Metro” that applied only to its land when it acquired the Centre on 14 October 2004. It had made no complaint with respect to the Council’s failure to comply with ss 520 and 521 until it instituted the present proceedings on 16 September 2008.

190 Second, it was submitted that the Council, in conformity with the requirements of the Act, had levied a total amount of rates for each year since 2002 according to its expected expenses for that year. Having levied rates designed to recover the total amount of revenue permitted by the Act, it followed that if any particular rate were disallowed, the rates for all other ratepayers would have to be commensurately increased to cover the shortfall. Catching up the shortfall is permitted pursuant to s 511 of the Act only for the two years following the years where the shortfall has occurred. Accordingly, the Council could not lawfully recover a shortfall prior to 2007.

191 The Council further submitted on the authority of Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564 at 581 per Mason CJ, Dawson, Toohey and Gaudron JJ and Gardner v Dairy Industry Authority (NSW) (1977) 52 ALJR 180 at 188 per Mason J that declaratory relief should not be granted where such a declaration will produce no foreseeable consequences for the parties.

192 Ainsworth establishes that declaratory relief is available even where the relevant breach of the law has no legal effect or consequence but where it has a practical effect. However, the Council submitted in the present case that a declaration of breach of the Act consisting of a failure to give a notice to Bevillesta pursuant to s 520(1) would have no utility either from a legal or practical viewpoint.

193 I am of the view that her Honour was correct in finding that, in accordance with the principles of Project Blue Sky, the failure to comply with ss 520 and 521 did not lead to invalidity of the determination of the Council on 23 April 2002 to create the sub-category referred to as “Business-Marrickville Metro”. The structure of the Act is that pursuant to s 546 a rate is levied on the land specified in a rates notice by the service of the notice: that notice was required by s 544 to include the name of the rate. Although there was no statutory requirement for the Council to state a name in respect of a particular sub-category, clearly the name of the rate levied in respect of that sub-category by its very nature identified that sub-category. Furthermore, the making of the rate and the service of the rates notice by their very nature informed the ratepayer, relevantly the appellant, that the sub-category in respect of which the rate was levied had relevantly taken effect in respect of the year to which the rates notice was directed.

194 In the foregoing circumstances, and given the obvious public inconvenience which would result from a finding of invalidity with respect to Council’s determination of 23 April 2002, I detect no error on her Honour’s part in finding that a breach of s 520(1), or for that matter s 521, did not invalidate Council’s determination to create the sub-category referred to as “Business-Marrickville Metro”.

195 Alternatively, in my opinion it was open to her Honour to exercise her discretion to refuse declaratory relief based on those breaches. No House v The King [1936] HCA 40; (1936) 55 CLR 499 error in the exercise of that discretion has been demonstrated. Accordingly, in my opinion the appellant’s challenge to her Honour’s refusal to grant it relief in respect of the breach of s 520 should be rejected.

CONCLUSION

196 As I have indicated, in my view each of the challenges by the appellant to her Honour’s findings should be rejected. I would therefore propose that the appeal be dismissed with costs.

197 BASTEN JA: As appears from the judgment of Tobias JA (with which I agree) this appeal involved a challenge to certain rating decisions made by the respondent Council in respect of land owned by the appellant. In short, the first challenge was directed to a determination of the Council in 2002 to establish a sub-category of rateable land (within the category of “business”), applicable to the appellant’s land. The second set of challenges concerned annual determinations fixing ordinary rates applicable to that sub-category of land.

198 The appellant’s submissions were wide ranging and have been comprehensively addressed by Tobias JA. In many respects, they were simply untenable. The fact that his Honour has addressed detailed arguments based on the transcripts of Council meetings, at which various matters were discussed, and other factual issues should not be allowed to detract attention from the underlying conclusion that the arguments based on that material were largely misconceived. These points can be demonstrated by reference to the challenge to the validity of the resolution creating the sub-category. (Except where otherwise indicated, the relevant provisions of the Local Government Act 1993 (NSW) are now as they were in February 2002.)

199 The Local Government Act creates four categories of land for the purpose of a council exercising its powers to make and levy an ordinary rate: ss 493 and 494. The categories are identified as categories of both “an ordinary rate” and “rateable land”. The relevant category in respect of the appellant was identified as “business”: s 493(1). As explained by Handley AJA, the purpose of creating a new sub-category is to permit the levying of a differential rate.

200 The first question is to identify the grounds on which it was open to the appellant to challenge the creation of the new sub-category. A second question arises on the assumption that an available ground of challenge is made good, namely the effect of the lapse of time between the date of the determination, which was either 19 February or 23 April 2002, and the commencement of the proceedings in the Land and Environment Court, on 16 September 2008.

201 Addressing the first question, the Council is a body constituted under the Local Government Act and exercising powers (relevantly for present purposes) conferred by that Act. A purported exercise of power, not in compliance with the Act, may be invalid.

Jurisdictional fact

202 The appellant argued there were statutory constraints on the exercise of the power to form sub-categories. In particular, s 493 stated that categories may be divided into sub-categories “in accordance with s 529”. Section 529 relevantly provides that a sub-category may be determined, for the category business, “according to a centre of activity”. The words “according to” were understood to mean ‘by reference to’. It appears to have been assumed that that language was mandatory: thus, a sub-category of the category “business” could only be determined according to a centre of activity. Nothing turned on this point of construction, because, as Tobias JA has demonstrated, there can be no doubt that the sub-category “Marrickville Metro” was determined according to a centre of activity.

203 However, there was an antecedent question, which was not properly identified or addressed. Whether the appellant’s land could properly be identified as a “centre of activity” may involve a facet of jurisdiction, fulfilment of which could be independently assessed by the Court in judicial review proceedings, or a condition, the fulfilment of which could be determined by the Council. The case appears to have been decided below on the basis that the need to identify a “centre of activity” involved a jurisdictional fact. Support for that view may perhaps be found in the analysis undertaken by this Court (in the judgment of Spigelman CJ) in Woolworths Ltd v Pallas Newco Pty Ltd [2004] NSWCA 422; 61 NSWLR 707. However, on that approach, the appellant needed to prove by admissible evidence that its land was not a “centre of activity”. No attempt was made to identify an erroneous factual finding in the Court below.

204 Even if the reviewing Court were required to determine the existence of the fact, the applicant’s argument was untenable for the reasons noted by Tobias JA at [79]-[80] above. It follows that, on the alternative approach, it was open to the Council to treat the appellant’s land as a centre of activity.

Improper purpose

205 The appellant also mounted a challenge to the validity of the creation of the sub-category on the basis of an improper purpose held by the Council. As was explained by Aickin J in The Queen v Toohey; Ex parte Northern Land Council [1981] HCA 74; 151 CLR 170 at 233:

“Generally speaking executive or administrative powers are conferred for a purpose ascertainable, with greater or lesser difficulty, from the terms of the instrument conferring the power. In the case of legislative powers it is not always possible to discern a purpose, as distinct from subject matter or content.”

206 The power presently under consideration was conferred for a readily discernable process, being that effected in the present case, of levying a differential rate on a particular category of land. As Handley AJA notes, it was open to the appellant, in terms of principle, to assert invalidity on the basis that the Council exercised the power for a purpose other than that for which it was conferred: see Toohey at 187 (Gibbs CJ), 203 (Stephen J), 225-226 (Mason J), 232-234 (Aickin J). The difficulty faced by the appellant was to establish what purpose was sought to be effected, other than that authorised by the statute. Its complaint that the relevant purpose was to impose upon it a differential and therefore discriminatory rate was not unauthorised: indeed, it fell squarely within the primary, if not the sole, purpose of the power. No unauthorised purpose was ever formulated, let alone proved.

Manifest unreasonableness

207 The appellant challenged the creation of the sub-category as invalid because it was “manifestly unreasonable”. That was sought to be supported by the imposition of an additional label, namely that the decision was “arbitrary”.

208 To describe a decision as irrational or arbitrary, so as not to constitute a valid exercise of a statutory power, will usually involve a comparison between the actual outcome and that which might have been expected, in the rational exercise of the power. To avoid asking the Court to exceed its powers, which are confined to ensuring that the legal boundaries of the power are not exceeded or disregarded, a claim of irrationality is usually a claim that there must have been a legally erroneous step taken, although it is not possible (particularly in the absence of reasons) to identify the precise error. Where it can be seen that the power has been exercised for a proper purpose, and no mandatory considerations have been ignored, nor impermissible considerations taken into account, the challenge of irrationality will be hard to make good. Particularly is that so where the legal limits of the power assume that there will be an apportionment of the burden of rates between different categories of landholder and where there is no objective standard against which to judge a particular result. While it may be accepted that the test of manifest unreasonableness is available with respect to the exercise of a discretionary power, such as that under challenge in the present case, the challenge was correctly rejected.

Apprehended bias

209 The appellant alleged bias, and apprehended bias, on the part of three councillors, of whom it was said that each had a conflict of interest because each had an interest in a business operating in the same local government area, and thus had an interest in reducing the rates on business outside Marrickville Metro and increasing the rates on businesses operating within the sub-category. Although the notice of appeal referred to both bias and apprehended bias, the case was argued upon apprehension of bias, based on the noted conflict of interest.

210 The councillors and mayor are holders of “civic office” as defined in the Dictionary to the Local Government Act. To be qualified to hold civil office, a person must be entitled to be enrolled as an elector: s 274(a). For the purposes of an election, a council’s area may be divided into wards: s 210. To vote in an election, a person must be a resident of the ward, the owner of rateable land in the ward or the occupier or ratepaying lessee of rateable land in the ward: s 266. It is therefore highly likely (if not inevitable) that a councillor will be a ratepayer or will indirectly bear the burden of rates. One might therefore infer that being a ratepayer would not disqualify a councillor from voting on the creation of sub-categories or the fixing of rates. However, it is not necessary to rely upon such an implication. Chapter 14 of the Local Government Act deals with duties of disclosure of councillors, particularly in relation to pecuniary interests. Under that Chapter, a “pecuniary interest” was defined in 2002 as “an interest that a person has in a matter because of a reasonable likelihood or expectation of appreciable financial gain or loss to the person or another person with whom the person is associated”: s 442(1). The definition does not operate where a person’s interest is “so remote or insignificant that it could not reasonably be regarded as likely to influence any decision the person might make in relation to the matter”: s 442(2). A councillor who has a pecuniary interest in a matter with which the council is concerned must disclose the nature of the interest and must be absent from the meeting whilst that matter is addressed: s 451. However, interests which do not require disclosure include “an interest as a ratepayer or person liable to pay a charge”: s 448(b).

211 It is not self-evident that the effect of fixing or varying a rate would be liable to fall within the definition of “pecuniary interest”. It was not established that the determinations presently under challenge would have given rise to a pecuniary interest, as defined, of any councillor. However, even if it had been, the exception from the disclosure requirement is inconsistent with any general law principle operating in those circumstances, which would lead to the obligation of a councillor either to disclose the interest or take no further part in the business in question.

212 That may not determine issues relating to an apprehension of bias, but it provides a basis for requiring that a party complaining of reasonable apprehension of bias must establish a conflict of interest going beyond a non-disclosable pecuniary interest. In the present case, the appellant relied upon the proposition that three councillors were, or might be, liable to pay rates in the category of business, which might be reduced to some extent because of the higher rates payable by Marrickville Metro. There was a muted suggestion that their businesses might benefit from the lower rates, to the extent that they were in competition with businesses within Marrickville Metro. However, no factual basis was proved which might have given rise to a reasonable apprehension of bias based on these considerations.

213 Had the relevant apprehension of bias been established the appellant would have faced further hurdles, including the need to assess the consequences in relation to a collegiate body, where a minority of members are said to be affected by the apprehension of bias: see IW v City of Perth [1997] HCA 30; 191 CLR 1 at 32-33 (Toohey J); 50 (Gummow J) and 66 (Kirby J). These questions do not call for resolution in this case.

Procedural omission

214 There remains the challenge based upon the procedural omission of the Council in failing to provide notice to the appellant (or its predecessor in title in 2002), as required by s 520 of the Local Government Act. The appellant submitted that the failure to give a notice under s 520(1) had one of two effects, namely either that the declaration had failed to take effect, or that it was invalid.

215 Chapter 15, Pt 3 (which contains s 520) governs the process of categorising land and imposing ordinary rates. Section 520, set out above at [17], requires that notice must be given to each rateable person “of the category declared” for the relevant parcel of land, in an approved form and making certain statements. That section applies also to the determination of sub-categories: see s 531.

216 The notice was required to refer to ss 525 and 526 of the Local Government Act: s 520(2)(c). Section 525 provides for the rateable person to apply to council “at any time” for a review of a declaration that the person’s rateable land is within a particular category for the purposes of s 514: s 525(1). However, s 514 does not apply to the determination of sub-categories, nor is it directly applied by s 531. On the other hand, s 531 envisages that s 525 will so apply. It should be assumed that a right of review under s 525 was (and is) available.

217 Section 526 permits a rateable person to appeal to the Land and Environment Court. That appeal may relate to a declaration of the Council on a review under s 525, or to the date on which a declaration is specified under s 521 to take effect.

218 There are four aspects of these provisions and their context which are significant. First, while the notice under s 520(2) must be “in the approved form”, there may be (and was at the relevant time) no approved form. Secondly, there is no specification of the time within which the notice must be given. Thirdly, s 523 provides that the Council “need not annually review a declaration” as to a particular categorisation, but may do so, either as a part of a general review of the categorisation of a number of parcels of land or because it has reason to believe that a parcel of land should be differently categorised. Fourthly, there is a general prohibition on reviewing the validity or effectiveness of a decision of a council by legal proceedings commenced three months or more after the date of the decision: s 729. (In relation to a similar provision in the Environmental Planning and Assessment Act 1979 (NSW), see Vanmeld Pty Ltd v Fairfield City Council [1999] NSWCA 6; 46 NSWLR 78.)

219 There is no express provision making the declaration of a sub-category invalid, absent the giving of proper notice pursuant to s 520(1); nor is there any clear basis for implying such a result. Nevertheless, there are three considerations which tend to support such a conclusion. First, s 520 is expressed in mandatory terms. Secondly, despite the absence of a specified time, it may be inferred that the notice is expected to be served within a reasonable time, thus give warning to the ratepayer of the relevant category in time for it to seek a review prior to being liable for the first payment of annual rates under the new category. Thirdly, the right to appeal against the date on which the declaration is to take effect, to the Land and Environment Court, may be lost if notice is not received within 30 days after the declaration is made.

220 There are other circumstances which do not support that conclusion. First, but perhaps of least weight, the legislature used mandatory language also in relation to the mechanical requirement of a form which might or might not exist when a particular declaration was made. Secondly, there is no specified time within which notice is to be given. Thirdly, the right of review may be made at any time. Fourthly, the right of appeal to the Land and Environment Court remains available in respect of the outcome of the review. Fifthly, the declaration of a category or sub-category will apply for a particular year, but may be reviewed, presumably in relation to any later financial year, on the application of the rateable person. Sixthly, the rateable person will receive notice of the category or sub-category in respect of which rates are to be levied for the particular year when it receives the rate notice. (Thus, in the present case, the predecessor in title to the appellant received a rate notice dated 27 July 2002 specifying the category and sub-category and the rate.) Seventhly, as explained by Tobias JA, there would be significant public inconvenience if failure to serve the prescribed notice led to invalidity of the declaration: see Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [97].

221 This case involved a single landowner, but it is readily foreseeable that a declaration as to the category relevant to land, or the creation of a sub-category for land, may affect many ratepayers. If notice were given to all but one, is the declaration wholly inoperative, or operative in respect of those who get notice, but not in respect of a ratepayer who did not? In relation to the appellant’s alternative argument a similar analysis applies: there is a difficulty in concluding that the declaration is partly invalid, that is, invalid in respect of any person who did not get notice but valid in respect of those affected ratepayers who did.

222 The factors identified at [219] above are not sufficient to outweigh the considerations favouring the conclusion that failure to give notice does not result in invalidity. That conclusion causes little prejudice to the ratepayer. The absence of a fixed time within which to give the notice, the availability of an internal review at any time, the quite limited time available in any event to appeal to the Land and Environment Court, and the fact that an appeal with respect to the effective date can be taken from the internal review, demonstrate that quite limited prejudice is likely to be caused by the failure to give a timely notice under s 520. The ground should therefore be rejected.

Delay

223 If these conclusions were not correct, there would be strong reasons for refusing relief in the exercise of the Court’s discretion. The appellant did not suggest that relief in the present case was not subject to discretionary refusal: see generally, Aronson, Dyer and Groves, Judicial Review of Administrative Action (4^th ed, 2009) at [12.155-12.180]. Assuming that s 729 does not impose a three month limitation period on the commencement of proceedings challenging the decision of the Council, it nevertheless provides an indication of the period within which proceedings should generally be commenced. Similarly, although there are no time limitations on proceedings in the nature of certiorari under s 69 of the Supreme Court Act 1970 (NSW), there are in several jurisdictions extendable time limits for seeking certiorari which vary up to a period of six months: Aronson et al, [12.180] and, in respect of the High Court Rules, r 25.06, see Bodruddaza v Minister for Immigration and Multicultural and Indigenous Affairs [2007] HCA 14; 228 CLR 651 at [32]ff and at [43], in relation to the UK. These provisions give guidance as to what is considered a reasonable period, generally, within which to challenge an administrative decision.

224 The commencement of proceedings in September 2008, more than six years after the relevant sub-category was created, is a significant factor in refusing relief, were a basis otherwise made good. The delay occurred when the appellant, and its predecessor in title, knew of the existence of the sub-category and the differential rate, confirmed on an annual basis. No attempt was made to seek to have the Council review the declaration. Further, there would be the public inconvenience caused by the grant of relief setting aside the declaration at this stage, even though, because of statutory restrictions, the right of recovery of rates in excess of those which would have been payable had the category not been declared, is limited to two years.

225 Accordingly, the challenge to her Honour’s indication that she would have refused relief in respect of the declaration, if otherwise available, on discretionary grounds, should also be rejected.

Later rate-fixing resolutions

226 As has been explained by Tobias JA, the challenges to the later resolutions of the Council varying the rate from time to time should be rejected for the reasons given by his Honour. The resolutions were impugned largely on the same bases as the 2002 declaration of the new sub-category and therefore fail for the further reasons given above.

227 I agree with the orders which his Honour proposes. The appeal should be dismissed and the appellant ordered to pay the respondent’s costs in this Court.

228 HANDLEY AJA: I agree with Tobias JA and will add some brief supplementary observations.

229 Section 493(2) of the Local Government Act 1993 gives a Council the power to divide any of the four categories of rateable land, and the ordinary rates to be levied thereon, into sub-categories in accordance with s 529.

230 Section 529(1) enables the Council to determine a sub-category for any category of rateable land and subs 2(2)(d) enables a sub-category for the category business to be determined “according to a centre of activity”.

231 The only possible reason for creating a sub-category is to levy an ad valorem rate on land within that sub-category which is different from the rate levied upon other land in that general category.

232 The Act imposes no specific limits on the exercise of this power and the Council must be able to exercise it. Accordingly the appellant’s valiant efforts to identify relevant legal limits on the power or grounds for challenging its exercise in this case must necessarily fail. The power like all legal powers, must be exercised for a proper purpose. Its exercise for the purpose of forcing a ratepayer out of business would be open to legal challenge. This has no relevance in the present case.

233 The appellant’s submissions based on the ostensible bias of Councillors who were actively interested in small businesses elsewhere in its area founders on the rock created by ss 442(2) and 448(b).

234 The former provides that a person does not have a pecuniary interest in a matter “if the interest is so remote or insignificant that it could not reasonably be regarded as likely to influence any decision”, or if the interest is within s 448. The latter relevantly includes in para (b) an interest as a ratepayer.

235 Section 451 requires a Councillor who is relevantly interested to declare that interest, and to absent himself when the relevant matter is being discussed or voted on.

236 The relevant interest of the Councillors concerned in the decisions to create the relevant sub-category and to levy differential rates on it is their direct and indirect interest as a ratepayer.

237 The Act entitled those Councillors to take part in the Council’s deliberations on the rating of the appellant’s land and to vote on that question without disclosing their interest. The Court is not entitled to create a disqualification which trumps these provisions in the Act.

238 I agree with the orders proposed by Tobias JA.

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26/09/2012 - Typographical error - Paragraph(s) 222

Citations

Marrickville Metro Shopping Centre Pty Ltd v Marrickville Council [2010] NSWCA 145

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CITATION:	Marrickville Metro Shopping Centre Pty Limited v Marrickville Council [2010] NSWCA 145 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	20 April 2010
JUDGMENT DATE:	24 June 2010
JUDGMENT OF:	Tobias JA at 1; Basten JA at 197; Handley AJA at 228
DECISION:	Appeal dismissed with costs
CATCHWORDS:	ADMINISTRATIVE LAW – Prerogative writs and orders – Certiorari – Discretion of court and matters precluding relief – Delay - ADMINISTRATIVE LAW – Judicial review – Grounds of review – Jurisdictional fact – Manifest unreasonableness – Improper purpose – Apprehension of bias – Procedural omission - REAL PROPERTY – Rates – Rating of land – Review of decisions – Judicial review – Respondent determined to establish sub-category of rateable land applicable to appellant’s land – Respondent fixed ad valorem amount of ordinary rate applicable to that sub-category of land – Appellant challenged validity of respondent’s decisions
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979 Judicial Officers Act 1986 Local Government Act 1919 Local Government Act 1993 Recovery of Imposts Act 1963 Supreme Court Act 1970 Valuation of Land Act 1916
CATEGORY:	Principal judgment
CASES CITED:	Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564 Associated Provincial Picture Houses, Ltd v Wednesbury Corporation [1948] 1 KB 223 Bodruddaza v Minister for Immigration and Multicultural Affairs [2007] HCA 14; 228 CLR 651 British American Tobacco Australia Services Ltd v Laurie & Ors [2009] NSWCA 414 Bromley London Borough Council v Greater London Council [1983] 1 AC 768 Bruce v Cole [1998] NSWCA 45; (1998) 45 NSWLR 163 Fares Rural Meat and Livestock Co Pty Ltd v Australian Meat and Live-stock Corporation [1990] FCA 139; (1990) 96 ALR 153 Gardner v Dairy Industry Authority (NSW) (1977) 52 ALJR 180 House v The King [1936] HCA 40; (1936) 55 CLR 499 Inland Revenue Commissioners v National Federation of Self-Employed and Small Businesses Ltd [1982] AC 617 IW v City of Perth [1997] HCA 30; 191 CLR 1 Marrickville Metro Shopping Centre Pty Ltd v Marrickville Council [2009] NSWLEC 109 McGovern v Ku-ring-gai Council [2008] NSWCA 209; (2008) 161 LGERA 170; (2008) 72 NSWLR 504 Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611 Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources [2005] NSWCA 10; (2005) 138 LGERA 11 Notaras v Waverley Council [2007] NSWCA 333; (2007) 161 LGERA 230 Old St Boniface Residents Association Inc v City of Winnipeg [1990] 3 SCR 1170 Parramatta City Council v Pestell [1972] HCA 59; (1972) 128 CLR 305 Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 Puhlhofer v Hillingdon London Borough Council [1986] 1 AC 484 Samrein Pty Ltd v Metropolitan Water Sewerage & Drainage Board (1982) 56 ALJR 678 Save Our Streets Inc v Settree [2006] NSWLEC 570; (2006) 149 LGERA 30 Steuart v Oliver (No 2) (1971) 18 FLR 83 The Queen v Toohey; Ex parte Northern Land Council [1981] HCA 74; 151 CLR 170 Thompson v Randwick Corporation [1950] HCA 33; (1950) 81 CLR 87 Vanmeld Pty Ltd v Fairfield City Council [1999] NSWCA 6; 46 NSWLR 78 Westfield Management Ltd v Perpetual Trustee Co Ltd [2006] NSWCA 245 Woolworths Ltd v Pallas Newco Pty Ltd [2004] NSWCA 422; (2004) 136 LGERA 288; (2004) 61 NSWLR 707
TEXTS CITED:	Allars, Introduction to Australian Administrative Law (1990) Butterworths Aronson, Dyer and Groves, Judicial Review of Administrative Action, 4th ed (2009) Lawbook Co
PARTIES:	Marrickville Metro Shopping Centre Pty Limited Marrickville Council
FILE NUMBER(S):	CA 2009/298439; 40335/09
COUNSEL:	A: A Galasso SC / M Seymour R: J A Ayling SC / A M Pickles
SOLICITORS:	A: Gadens, Lawyers, Sydney R: Marrickville Council
LOWER COURT JURISDICTION:	Land & Environment Court
LOWER COURT FILE NUMBER(S):	LEC 40940/08
LOWER COURT JUDICIAL OFFICER:	Pain J
LOWER COURT DATE OF DECISION:	7 August 2009
LOWER COURT MEDIUM NEUTRAL CITATION:	Marrickville Metro Shopping Centre Pty Limited v Marrickville Council [2009] NSWLEC 109