Marrickville Metro Shopping Centre Pty Ltd v Marrickville Council
[2009] NSWLEC 109
•7 August 2009
Land and Environment Court
of New South Wales
CITATION: Marrickville Metro Shopping Centre Pty Limited v Marrickville Council [2009] NSWLEC 109 PARTIES: APPLICANT
Marrickville Metro Shopping Centre Pty Limited
RESPONDENT
Marrickville CouncilFILE NUMBER(S): 40940 of 2008 CORAM: Pain J KEY ISSUES: JUDICIAL REVIEW :- justiciability - whether decision of council to create rating sub-category and levy applicant justiciable
RATING - decision of council to introduce rating sub-category - can a sub-category refer to single site - whether sub-category refers to a centre of activity - whether determination of sub-category made by council
RATING:- whether notification of sub-category given to applicant in annual rates and charges notice
JUDICIAL REVIEW- whether fairness a relevant consideration under scheme of the Local Government Act and council's charter in s 8 - whether failure to consider relevant consideration of fairness in introducing sub-category and levying at higher rate than other business rating categories - whether consideration of reducing other rates an irrelevant consideration in introducing and levying sub-category because discriminatory - whether decisions to introduce and levy sub-category manifestly unreasonable
BIAS - whether apprehension of bias of councillors in decisions of council to introduce and levy sub-category of rates - whether interest as trade competitor not requiring disclosure under Local Government Act can give rise to apprehension of bias
DISCRETION - whether to exercise discretion of court to grant relief where lack of notice of 2002 sub-category determination - whether delay in commencing proceedings relevantLEGISLATION CITED: Environmental Planning and Assessment Act 1979
Interpretation Act 1987 s 35
Local Government Act 1993 s 8, 232(2), 439, 440, 441, 442, 444, 448, 451, 460-468, 471-486A, 491, 492, 493, 494, 495, 497, 498, 499, 500, 509, 514, 518A, 520, 521, 525, 526, 528, 529, 531, 532, 533, 534, 535, 536, 543, 546, 574, 712
Local Government Act 1919 (repealed) s 121, 133
Local Government Amendment (Discipline) Act 2004 (repealed)
Local Government (General) Regulation 2005 r 127, 193
Local Government (Rates and Charges) Regulation 1999 (repealed)
Ratings Powers Act 1988 (NZ)
Telecommunications Act 1997 (Cth)
Uniform Civil Procedure Rules 2005 r 42.1CASES CITED: Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223
Bayside City Council v Telstra Corporation Ltd (2004) 216 CLR 595
Burns Philp Trustee Co Ltd v Blacktown Municipal Council [1976] 1 NSWLR 531
Cody v J H Nelson Pty Ltd (1947) 74 CLR 629
Council of the City of Sydney v South Sydney City Council [2002] NSWLEC 129
Cutelli v Wyong Shire Council [2007] NSWLEC 137
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337
Eljo Pty Ltd v Casino Council (1994) 84 LGERA 373
Fares Rural Meat & Livestock Co Pty Ltd v Australian Meat & Livestock Corporation (1990) 96 ALR 153
Gales Holdings Pty Ltd v Minister for Infrastructure and Planning [2005] NSWLEC 617
Garrett v Freeman (2006) 68 NSWLR 729
Gedeon v Commissioner of the New South Wales Crime Commission (2008) 236 CLR 120
Hastings Point Progress Association Inc v Tweed Shire Council (2008) 160 LGERA 274
Hope v Bathurst City Council (1980) 144 CLR 1
Hot Holdings Pty Ltd v Creasy (2002) 210 CLR 38
Kioa v West (1985) 159 CLR 550
Kruger v Commonwealth (1997) 190 CLR 1
McGovern v Ku-ring-gai Council (2007) 153 LGERA 308
McGovern v Ku-ring-gai Council (2008) 161 LGERA 170
Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24
Minister for the Arts, Heritage and Environment v Peko-Wallsend Ltd (1987) 75 ALR 218
Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507
Muin v Refugee Review Tribunal (2002) 190 ALR 601
Murlan Consulting Pty Ltd v Ku-Ring-Gai Municipal Council [2008] NSWLEC 318
Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources (2005) 138 LGERA 11
Najjar v Haines (1991) 25 NSWLR 224
Newcastle City Council v Caverstock Group Pty Ltd (2008) 163 LGERA 83
Old St Boniface Residents’ Association Inc v City of Winnipeg [1990] 3 SCR 1170
Parramatta City Council v Pestell (1972) 128 CLR 305
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
Salemi v MacKellar (No 2) (1977) 137 CLR 396
Save Our Street Inc v Settree (2006) 149 LGERA 30
Sharples v Minister for Local Government [2008] NSWLEC 328
Smits v Roach (2006) 227 CLR 423
Sutton v Blue Mountains City Council (1972) 40 LGRA 51
Teoh v Hunters Hill Council [2008] NSWLEC 263
Wellington City Council v Woolworths New Zealand Ltd (No 2) [1996] 2 NZLR 537
Woolworths Ltd v Pallas Newco Pty Ltd (2004) 61 NSWLR 707
Wyton v Tweed Shire Council (1998) 98 LGERA 72TEXTS CITED: Allars M, Introduction to Australian Administrative Law, Butterworths, Sydney 1990
Aronson M and Dyer B, Judicial Review of Administrative Action, 4th Edition, Lawbook Co, Sydney 2009DATES OF HEARING: 6 April 2009
7 April 2009
8 April 2009
9 April 2009 (written submissions)
DATE OF JUDGMENT:
7 August 2009LEGAL REPRESENTATIVES: APPLICANT
Mr A Galasso SC with Mr M Seymour
SOLICITORS
Gadens LawyersRESPONDENT
Mr J Ayling SC with Mr A Pickles
SOLICITORS
Marrickville Council
JUDGMENT:
THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALESPain J
7 August 2009
JUDGMENT40940 of 2008 Marrickville Metro Shopping Centre Pty Limited v Marrickville Council
1 Her Honour: The Applicant challenges a series of decisions made since 2002 by Marrickville Council (the Council) to levy ordinary rates on a single site, the Marrickville Metro Shopping Centre (Marrickville Metro) as a sub-category of business rates. The Metro site is a shopping centre in Victoria Road, Marrickville, which presently has about 100 retail shop tenants and is the only freestanding mall-style centre in the Marrickville local government area (LGA). The Applicant has been the owner of the site (or it is accepted to be for the purposes of these proceedings) since October 2004. The previous owner was Bevillesta Pty Limited (Bevillesta).
2 The Applicant claims the following relief:
- A. Challenge to 2002 decisions
1. A declaration that the resolution of the Council of 19 February 2002 to resolve in principle to introduce a large shopping centre rate was invalid and/or ultra vires the Local Government Act 1993 (the LG Act).
2. A declaration that the resolution of the Council of 23 April 2002 to create a sub-category of ”Business-Marrickville Metro” for the category of rateable land of business, and to apply a rate that was 20 per cent above the rate for other commercial properties was invalid and/or ultra vires the LG Act.
C. Challenge to 2007 decision
3. A declaration that the resolutions of the Council of 17 April 2007 and 19 June 2007 to determine an ad valorem rate for the sub-category of “Business-Marrickville Metro” for the rateable land of business for the year 2007-2008 was invalid and/or ultra vires the LG Act.
D. Challenge to 2008 decisions
4. A declaration that the resolutions of the Council of 29 April 2008 and 17 June 2008 to increase the rate yield from the Marrickville Metro for the year 2008-2009 was invalid and/or ultra vires for the LG Act.
B. Challenge to 2004-2008 decisions
5. A declaration that the levying of a rate on the land known as 100/DP715231 by the Council specified in the rates notices dated July 2004, 29 July 2005, 31 July 2006, 25 July 2007 and 25 July 2008 was invalid and/or ultra vires the LG Act (Prayer 5 would result if the Applicant is successful in relation to the earlier challenges identified in prayers 1, 3, 4).
6. An order that the Council pay the Applicant the sum of $374,314.45 as money had and received to the use of the Council. (This order seeks the return of amounts paid above what would have been paid if the Metro site was rated in the Business – General category since 2004. The making of this order depends on whether the Applicant succeeds in its grounds of challenge.)
3 Pursuant to s 674 of the LG Act any person may commence proceedings in this Court to remedy a breach of the LG Act. Section 676 of the Act outlines the functions of the Court as follows:
- (1) If the Land and Environment Court is satisfied that a breach of this Act has been committed or that a breach of this Act will, unless restrained by order of the Court, be committed, it may make such order as it thinks fit to remedy or restrain the breach.
…
4 The Applicant filed Amended Points of Claim (APOC). The essential elements of the case are contained in paragraphs 12, 13, 13A and 14.
A. Challenge to 2002 decisions
- Particulars
- B. Challenge to 2004-2008 decisions
- 13. The structuring and determination of the rate applicable to the sub-category Business – Marrickville Metro for each year from 2002 to the present was invalid and ultra vires the LG Act.
- Particulars
- C. Challenge to 2007 decisions
- 13A. The resolution of 17 April 2007 and 19 June 2007 were invalid and ultra vires the LG Act.
Particulars
A. The Respondent repeats the particulars at paragraph 13 above.
- D. Challenge to 2008 decision
- 14. The resolution of 29 April 2008 was invalid and ultra vires the LG Act.
- Particulars
A. The Respondent repeats the particulars at paragraph 13 above.
5 The Applicant relied on an affidavit of Anthony Whealy, solicitor for the Applicant, affirmed 29 January 2009. Mr Whealy’s affidavit is a summary of the relevant decisions and actions of the Applicant and the Council. Mr Whealy describes the documents contained in the two folders annexed to his affidavit. This includes the evidence of the Council’s rating approach adopted in 2001, the decisions leading up to the creation and the implementation of a Marrickville Metro special rate in 2002, and subsequent decisions of the Council in 2003 to 2008 concerning the rates to be paid by the Applicant. Based on documents annexed to his affidavit, Mr Whealy also summarises the relevant interests and voting history on the relevant Council resolutions of the councillors to whom the Applicant’s allegation of an apprehension of bias in the rating decisions relates (APOC cl 12(d) and cl 13(c)). Mr Whealy sets out the payment of rates by the Applicant since the Applicant’s purchase of Marrickville Metro on 13 October 2004 and the difference in the rates paid by businesses in the Business-General category from 2002.
6 The Applicant relied on the documents annexed to Mr Whealy’s affidavit. The Council relied on documents annexed to the affidavits of Grant Christmas (affirmed 17 February 2009) and Anna McNally (sworn 3 April 2009). The following chronology of the Council’s decisions relating to the introduction and levying of the Marrickville Metro sub-category in 2002 (prayers 1 and 2) can be constructed from the documents:
(i) The 2001-2004 Draft Management Plan and 2001-2002 Draft Budget was before the Council for decision at an Extraordinary Council Meeting on 30 April 2001. The General Manager’s report sets out the Council’s proposed rating structure including the proposal for an overall rate increase of 2.8 per cent. The report sets out the rating structure and estimated yields for the different rating categories being the ordinary rate categories of Residential, Business – General, Business – Industrial – Marrickville, Business – Industrial – St Peters, Business – Industrial St Peters North and Business – Industrial – Camperdown and the special rate categories for the Newtown, Marrickville, Petersham and Dulwich Hill Mainstreets.
(ii) A second General Manager’s report titled “Proposed Rating Structure for 2001/02 Following Revised Land Valuations as at 1 July 2000” was also before the Council meeting on 30 April 2001. The report outlined the framework for assessing and levying rates. It refers to the benefit principle concerning the identification of what services are provided by the Council to the ratepayer and the capacity of the ratepayer to pay. The options for levying rates in light of new valuations of properties as at 1 July 2000 are discussed.
(iii) At this meeting on 30 April 2001 a resolution was passed to adopt the 2001-2004 Draft Management Plan and 2001-2002 Draft Budget. A table setting out ad valorem rates and estimated yields for each category of ordinary and special rates was before the Council.
(iv) At a Council meeting on 19 June 2001 the 2001-2004 Management Plan and 2001-2002 Budget was adopted. A motion proposed by Councillor Hale that Council officers investigate the feasibility and appropriateness of introducing a special rate for large shopping centre developments such as Marrickville Metro was also put to the Council and passed.
(v) At the Council meeting of 21 August 2001 the General Manager reported on the feasibility and appropriateness of introducing a special rate for large shopping centre developments such as Marrickville Metro. The Council considered the General Manager’s report to that meeting which described the power of the Council to levy rates and create rating categories, indicating that introducing a sub-category within the general rate rather than introducing a special rate as there must be applied for a particular purpose the rationale for the relativities between different rating categories in Marrickville over the last 20 years and the recommendation of further investigation of the introduction of a special rate. Liverpool Council is referred to as the only Sydney metropolitan council with a rating category for a shopping centre, Westfield Liverpool. The report refers to the capacity to pay principle and the benefit principle and that both need to be considered in determining whether to proceed further. A motion was unanimously carried for a further report to be submitted concerning the possible introduction of a separate rate for large shopping centres including comparative data from Liverpool Council.
(vi) At the Council meeting of 19 February 2002 the General Manager reported on the experience of Liverpool Council in creating a rating sub-category for the Westfield Shopping Centre in 1994. It notes that no rationale for imposing the levy was provided by Liverpool Council. The effect of imposing a sub-category for the Marrickville Metro as the only large shopping centre in the LGA was discussed in light of the cap on rate income able to be raised under the LG Act. A table was provided that set out possible rates payable by Marrickville Metro and the saving that possible ad valorem rates would yield for the Business-General category (on the assumption that the increased rate revenue generated by Marrickville Metro would be used to reduce rates payable by the Business-General category). A discussion of the feasibility of introducing the new sub-category including the requirement that rates be levied fairly followed. The report concluded that “Council needs to consider both the Metro’s capacity to pay and benefit principles in determining whether to proceed with the investigation of introducing a separate rate for large shopping complexes.” (at p 61). A motion was unanimously passed that the Council resolve in principle to introduce a large shopping centre rate and that a further report be submitted to the Council regarding the proposal.
(vii) Transcripts of this meeting were annexed to the affidavit of Ms McNally. At this meeting Councillor Hale, in support of the motion, stated that she saw a need for the shops in Marrickville Metro to pay an equivalent rate where possible to that being paid by the shops in the shopping strips. Councillor Thanos discussed the recommendations of the General Manager and the arguments for and against the creation of the sub-category including that while the main strip of shops has amenities funded by the Council that the Marrickville Metro does not, those are a benefit for the whole community not just the shop owners.
(viii) At a Council meeting of 23 April 2002 a further report of the General Manager was presented on the introduction of a large shopping centre sub-category in similar terms to previous reports. The report recommended that Council determine to introduce a separate rate and determine a rate in the dollar for that new rate. The report notes that there is no single formula to determine what may constitute a fair rate to apply to large shopping centres (at p 5), and that Council could determine a rate for large shopping centres as high as 2.300683 cents in the dollar, an increase of 80 per cent on the current Business-General rate, and still remain below the highest rating LGAs (at p 5). The report included the following text which has appeared in the earlier reports of the Council officers referred to above. In respect of the benefit test:
- “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.
· Council may determine that the rate to be applied to shopping strips should be proportionately less than that applying to larger shopping areas to promote the survival of shopping strips. Apart from the more obvious issue of maintaining the economic vitality of local businesses, this action would support the following Council initiatives:
· Mainstreet strategies to promote local business
· Streetscape works designed to enhance the look and feel of shopping areas
· Community Safety objectives which are enhanced when people are attracted to prosperous, pleasant, well lit, local shopping areas
· Access for the elderly to shopping facilities particularly where car transport is not available.
· 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 to promote the unique characteristics of the Marrickville Council area from a tourist perspective.
Conversely, Council could consider the following factors mentioned in previous reports (being the report to the 21 August 2001 and 19 February 2002 Council meetings):
· Marrickville Metro pays for the disposal of all waste including that created by shoppers. In strip shopping areas Council funds the clearance of litter bins.
· Marrickville Metro provides and maintains its own carparking area for shoppers. In strip shopping areas Council funds the provision and maintenance of carparks.
· Lighting provided within the Marrickville Metro complex and its surrounding parking areas is funded by the centre owner. Council funds an extensive network of Whiteway lighting for strip shopping centres in addition to normal street lighting.
· Council has spent considerable amounts for Shopping Centre strip upgrades from funds obtained by the levying of an additional 5% rate increase on ALL ratepayers.”
(ix) At the 23 April 2002 meeting a motion was unanimously passed to approve the introduction of the new rate. Councillor Pearce proposed that the rate be fixed at 20 per cent above the rate for other commercial properties with the increase being applied to reduce residential rates. In the transcript of this meeting (annexed to the affidavit of Ms McNally) Councillor Pearce refers to the capacity of Marrickville Metro to pay, the high rates currently paid by residents in the LGA and the rates revenue spent on the shopping centre. Councillor Hanna then suggested a 20 per cent increase would still result in Marrickville Metro paying less per shop than each shop in the shopping strip (that is, the special rate paid by business in the Marrickville Mainstreet category). Councillor Hanna stated that he wanted a higher percentage increase above the other commercial rates of 40-50 per cent. Councillor Hale supported this increase and proposed a rate of 40 per cent above that of the ordinary commercial rate with half the extra revenue being used to reduce the residential rate and the other half to reducing the ordinary commercial rate. A motion on this proposal did not pass (Councillors Hale, Hanna and Thanos in favour) after Councillor Pearce commented on the proposal. The proposal of a 20 per cent higher rate was then unanimously passed (GM 22). The proposal specified that the increased rate revenue received by the imposition of the new sub-category be used to reduce residential rates. The 2002-2005 Draft Management Plan and 2002-2003 Draft Budget was amended to include an estimated yield from the rate category of Business-Marrickville Metro of $157,597.27 and was adopted by the Council (GM 23).
(x) At a Council meeting on 18 June 2002 the 2002-2005 Draft Management Plan and 2002-2003 Budget was adopted (annexed to the affidavit of Mr Christmas).
(xi) After being sent a rates notice dated 26 July 2002 which stated the category of Business-Marrickville Metro applied to Marrickville Metro, a letter dated 24 October 2002 was sent from the Group Financial Controller of Bevillesta to Marrickville Council noting the creation of the Marrickville Metro sub-category, requesting the notification of the sub-category to be provided and requesting the opportunity to comment on the proposed change.
(xii) A letter dated 5 February 2003 from the finance manager of the Council to Bevillesta stated that the change in rating category had been notified by a rates notice dated 26 July 2002. The letter stated that the change was also set out in the 2002-2005 Draft Management Plan and 2002-2003 Draft Budget advertised in three local newspapers which was also displayed at the Council for a 28 day exhibition period.
7 Below is a summary of the relevant decisions of the Council between June 2001 and June 2006 based on documents annexed to Mr Whealy’s affidavit:
Date of resolution Resolution Result 19/6/2001 Council to investigate introducing large shopping centre rate Passed 21/8/2001 Further report on large shopping centre rate Passed 19/2/2002 In principle introduction of large shopping centre rate & further report Passed 23/4/2002 Rate introduced, fixed at 40% above other commercial rates Not passed 23/4/2002 Rate introduced, fixed at 20% above other commercial rates (GM 22) Passed 23/4/2002 Adoption of 2002-2005 Draft Management Plan and 2002-2003 Draft Budget (incorporating introduction of Marrickville Metro sub-category, rated 20% higher than other commercial rates) (GM 23) Passed 18/6/2002 Adoption of 2002-2005 Management Plan and 2002-2003 Budget Passed 15/4/2003 Adoption of 2003-2006 Draft Management Plan and 2003-2004 Draft Budget (incorporating a predicted 3% permissible increase in rate revenue) Passed 17/6/2003 Adoption of 2003-2006 Management Plan and 2003-2004 Budget (amending draft to provide for a 3.6% increase in rate revenue, ad valorem rate for the Metro set at 1.632700 cents in the dollar) Passed 18/5/2004 Adoption of 2004-2007 Draft Management Plan and 2004-2005 Draft Budget (incorporating a predicted 3.4% permissible increase in rate revenue, ad valorem rate for the Metro set at 1.215715 cents in the dollar after consideration of new land values in the LGA resulted in a 39% increase in value of the Metro site, relativities between rating categories from prior financial year maintained) Passed 29/6/2004 Adoption of 2004-2007 Management Plan and 2004-2005 Budget in accordance with draft plan and budget Passed 19/4/2005 Adoption of 2005-2008 Draft Management Plan and 2005-2006 Draft Budget (incorporating a predicted 3.5% increase in rate revenue, ad valorem rate for the Metro set at 1.25875 cents in the dollar, relativities between rating categories from prior financial year maintained) Passed 21/6/2005 Adoption of 2005-2008 Management Plan and 2005-2006 Budget in accordance with draft plan and budget Passed 18/4/2006 Adoption of Draft Marrickville Community Plan, Draft Strategic Plan 2006-2011 and Draft Annual Management Plan and Budget 2006-2009 (incorporating a permissible increase in rate revenue of 3.6%, ad valorem rate for the Metro set at 1.286037 cents in the dollar, relativities between rating categories from prior financial year maintained) Passed 20/6/2006 Adoption of Marrickville Community Plan, Strategic Plan 2006-2011 and Annual Management Plan and Budget 2006-2009 in accordance with draft community plan, strategic plan, management plan and budget Passed
8 To summarise, for the financial year 2002/2003 the Business-Marrickville Metro rating subcategory was introduced and that ad valorem rate was set 20 per cent higher than the Business-General category. This rating differential, incorporating rises in council rate revenue of between 3.4 per cent and 3.6 per cent per annum was maintained for financial years 2004/2004, 2005/2006 and 2006/2007. Rating decisions for the financial year 2007/2008 and 2008/2009 are set out later in the judgment at par 134 and par 143 respectively.
9 Also annexed to Mr Whealy’s affidavit was a letter dated 1 June 2006 sent by AMP Capital Investors (which owns the Applicant), objecting to the higher ad valorem rate applicable for the Marrickville Metro sub-category. It maintained this was without basis and unusual considering the rating structure adopted by other LGAs. This letter was referred to in the Draft Annual Management Plan and Budget 2006-2009 which was presented for decision at the Council meeting on 20 June 2006. The General Manager’s report notes that AMP Capital Investors has raised concerns with Council about the proposed rating of the sub-category for 2006/2007. The submissions are attached to the report and a short summary of the concerns is set out in the report. The report reiterates the rationale for introducing the rate in 2002 in similar terms to previous reports. The report includes the proposed rating structure for 2006/2007 based on a permissible 3.6 per cent increase in rate yield as approved by the Minister.
- Evidence of activity at Marrickville Metro
10 The Applicant relied on the affidavit of Sue Wright sworn 25 March 2009. Ms Wright, centre manager of the Marrickville Metro Shopping Centre, has responsibility for negotiating leases with tenants. Ms Wright attests that there are currently 101 tenants of the shopping centre. Of the 101 tenants, 49 leases provide a contractual ability for the shopping centre to recover a contribution from the tenant specifically for general rates. The contribution recoverable under these leases is based upon the size of the tenanted area. Annexed to her affidavit is an example of a lease providing for recovery of rates from the tenant. Leases that do not provide for a contribution to rates specify a gross rent rather than a net rent plus outgoings. Annexed to her affidavit is a schedule prepared by Ms Wright setting out the total amount of money recovered from tenants towards rates for 2004-2008. Ms Wright attests that the present lease agreements for the whole of the shopping centre do not permit the shopping centre to recover all of its rates liability from tenants. The total percentage of rates recovered from tenants has increased from 19 per cent in 2004/2005 to 51.1 per cent in 2008/2009.
11 The Council relied on the affidavit of Mr Christmas. In his affidavit Mr Christmas stated that Marrickville Metro is the only free-standing purpose built mall-style shopping centre in the LGA and has approximately 100 retail tenancies. Mr Christmas also describes the LGA’s strip style shopping centres, four of which are rated as sub-categories of a special Mainstreet category.
12 Annexed to Mr Christmas’s affidavit were store listings for Marrickville Metro obtained from Marrickville Metro’ s website as at February 2009, a list of all sites leased within Marrickville Metro as at October 2008 obtained from the Land and Property Information (LPI) database, and examples of six leases (commencing 28 October 2003, 1 July 2007, 30 March 2005, 28 August 2006, 1 August 2004 and 17 September 2001 respectively) of shops in the Metro obtained from the LPI database. Mr Christmas states in his affidavit that the leases show the Applicant is able to recover rates from the tenant.
13 Mr Christmas was cross-examined by counsel for the Applicant on the preparation of the annexures to his affidavit. He agreed he did not consider whether the leases of other premises in the LGA by the tenants of Marrickville Metro also made provision for the collection of outgoings such as rates from the tenant.
Part 1 “An overview of rates and charges”.
Local Government Act 1993
The following sections in Ch 15 ”How are council’s financed?” of the LG Act are relevant to these proceedings:
491 Some sources of a council’s income
A council may, in accordance with this Chapter, obtain income from:
• rates
• charges
• fees
• grants
• borrowings
• investments.
493 Categories of ordinary rates and categories of land492 What are the types of rates?
The types of rates that can be made by a council are:
• ordinary rates
• special rates.
- (1) There are 4 categories of an ordinary rate and 4 categories of rateable land:
- • farmland
• residential
• mining
• business.
- 494 Ordinary rates must be made and levied annually
495 Making and levying of special rates(1) A council must make and levy an ordinary rate for each year on all rateable land in its area.
(2) Each category or sub-category of ordinary rate is to apply only to land of the same category or sub-category.
(1) A council may make a special rate for or towards meeting the cost of any works, services, facilities or activities provided or undertaken, or proposed to be provided or undertaken, by the council within the whole or any part of the council’s area, other than domestic waste management services.
(2) The special rate is to be levied on such rateable land in the council’s area as, in the council’s opinion:
- (a) benefits or will benefit from the works, services, facilities or activities, or
(b) contributes or will contribute to the need for the works, services, facilities or activities, or
(c) has or will have access to the works, services, facilities or activities.
498 The ad valorem amount497 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.
(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) in the case of a special rate—to the land value of all rateable land in the council’s area or such of that rateable land as is specified by the council in accordance with section 538.
(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 sub-category unless:
- (a) the land values of the parcels were last determined by reference to different base dates, and
(b) the Minister approves the different ad valorem amounts.
- Note. Land value is defined in the Dictionary for this Act. Generally, it is a value determined specially for rating purposes by the Valuer-General under the Valuation of Land Act 1916.
- (1) A council may, in a resolution making a rate, specify a base amount of the rate, or a base amount for a category or sub-category of an ordinary rate.
(2) The base amounts so specified may be the same or different amounts.
(3) The appropriate base amount so specified is to form part of the rate levied on each separate parcel of rateable land subject to the rate.
(4) A base amount specified for a parcel of land may not differ from a base amount specified for any other parcel of land within the same category or sub-category unless:
- (a) the land values of the parcels were last determined by reference to different base dates, and
(b) the Minister approves the different base amounts.
500 Limit on revenue that can be raised from base amount
The amount specified as the base amount of a rate (or the base amount of the rate for a category or sub-category of an ordinary rate) must not be such as to produce more than 50 per cent of the total amount payable by the levying of the rate (or of the rate for the category or sub-category concerned) on all rateable land subject to the rate (or the rate for the category or sub-category concerned).
Part 2 “Limit of annual income from rates and charges” .…
This part applies to general income of a Council (s 505).
- 506 Variation of general income
The Minister may, by order published in the Gazette specify the percentage by which councils’ general income for a specified year may be varied.
- …
- 509 Maximum general income for a year
- (1) A council must not make rates and charges for a year so as to produce general income of an amount that exceeds the notional general income of the council for the previous year as varied by the percentage (if any) applicable to the council under section 506, 508 (2) or 508A for the year for which the rates and charges are made, except as provided by section 511 or 511A.
…
- 514 Categorisation of land for purposes of ordinary rates
Before making an ordinary rate, the council must have declared each parcel of rateable land in its area to be within one or other of the following categories:
• farmland
• residential
• mining
• business.
- Note. Land falls within the “business” category if it cannot be categorised as farmland, residential or mining. The main land uses that will fall within the “business” category are commercial and industrial.
…
520 Notice of declaration of category518 Categorisation as business
Land is to be categorised as business if it cannot be categorised as farmland, residential or mining.
…
(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.
(2) The notice must be in the approved form and must:
- (a) state that the person has the right to apply to the council for a review of the declaration that the land is within the category stated in the notice, and
(b) state that the person has the right to appeal to the Land and Environment Court if dissatisfied with the council’s review, and
(c) refer to sections 525 and 526.
A declaration that a parcel of land is within a particular category takes effect from the date specified for the purpose in the declaration.
- 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.
526 Appeal against declaration of category(2) An application must be in the approved form, must include a description of the land concerned and must nominate the category the applicant considers the land should be within.
(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) If the council has reasonable grounds for believing that the land is not within the nominated category, it may notify the applicant of any further information it requires in order to be satisfied that the land is within that category. After considering any such information, the council must declare the category for the land.
(5) The council must notify the applicant of its decision. The council must include the reasons for its decision if it declares that the land is not within the category nominated in the application.
(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.
(1) A rateable person who is dissatisfied with:
- (a) the date on which a declaration is specified, under section 521, to take effect, or
(b) a declaration of a council under section 525,
(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.
528 Rate may be the same or different for different categories527 Adjustment of rates following change in category
A council must make an appropriate adjustment of rates paid or payable by a rateable person following a change in category of land.
(1) The ad valorem amount (the amount in the dollar) of the ordinary rate may be the same for all categories of land or it may be different for different categories.
(2) The regulations may provide that the ad valorem amount of the ordinary rate for land categorised as mining is to be not more or less than a specified percentage of the ad valorem amount of the ordinary rate for land categorised as business. The regulations may apply to all councils or one or more councils specified in the regulations.
- 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:
- (a) for the category “farmland”—according to the intensity of land use, the irrigability of the land or economic factors affecting the land, or
(b) for the category “residential”—according to whether the land is rural residential land or is within a centre of population, or
(c) for the category “mining”—according to the kind of mining involved, or
(d) for the category “business”—according to a centre of activity.
(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.
- …
- 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.
- 532 Publication of draft management plan
A council must not make a rate or charge until it has given public notice (in accordance with section 405) of its draft management plan for the year for which the rate or charge is to be made and has considered any matters concerning the draft management plan (in accordance with section 406).
Section 405 requires that the draft plan of management must be publicly exhibited for a minimum of 28 days and state that submissions can be made to the Council. Section 406 requires the Council to consider any submissions made when adopting the management plan.
533 Date by which a rate or charge must be made
A rate or charge must be made before 1 August in the year for which the rate or charge is made or before such later date in that year as the Minister may, if the Minister is of the opinion that there are special circumstances, allow.
- 534 Rate or charge to be made for a specified year
Each rate or charge is to be made for a specified year, being the year in which the rate or charge is made or the next year.
- 535 Rate or charge to be made by resolution
A rate or charge is made by resolution of the council.
- 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:
- • its general administration and overhead costs
• the extent to which projected ad valorem rates on individual properties do not reflect the cost of providing necessary services and facilities
• the level of grant or similar income available to provide necessary services and facilities
• the degree of congruity and homogeneity between the values of properties subject to the rate and their spread throughout the area
• whether a rate that is wholly an ad valorem rate would result in an uneven distribution of the rate burden because a comparatively high proportion of assessments would bear a comparatively low share of the total rate burden
• in the case of a special rate—the cost of providing the works, services, facilities or activities to the parcels of land subject to the rate (ignoring the rateable value of those parcels).
- 543 Each form of rate and each charge to have its own name
(1) A council must, when making an ordinary rate, give a short separate name for each amount of the ordinary rate.
(2) A council must, when making a special rate, give the special rate a short name.
(3) A council must, when making a charge, give a short separate name for each amount of the charge.
Note. The names given to the ordinary rate could include names like:
Farmland—Ordinary
Farmland—Poultry farms
Residential—A
Residential—B
The names given to charges could include names like:The names given to special rates could include names like:
Upper Smithtown water rate
Lower Smithtown water rate
Leisure centre—primary rate
Leisure centre—secondary rate
Waste management services—domestic
Waste management services—commercial
- 544 Inclusion of names in rates and charges notices
A council must include the name of each rate and charge, in full or in an abbreviated form, in the rates and charges notice by which the rate or charge is levied.
Part 5 “Levying of rates and charges”
- 546 How is a rate or charge levied?
(1) A rate or charge is levied on the land specified in a rates and charges notice by the service of the notice.
(2) The notice may be served at any time after 1 July in the year for which the rate or charge is made or in a subsequent year.
(3) A notice that is required to effect an adjustment of rates or charges may be served in the year for which the rate or charge is made or a subsequent year.
(4) The notice may include more than one rate, more than one charge and more than one parcel of land.
(5) It is not necessary to specify the name of the rateable person or the person liable to pay the charge in the notice if the council does not know the person’s name.
14 To summarise, under Pt 1 of Ch 15 councils must categorise all rateable land in one of four categories (residential, business, mining, farmland) in their LGA for the purpose of rate setting (s 493, s 514). Sub-categories can be created (s 493(2)). There are two kinds of rates, ordinary (s 492) and special (s 495). This case concerns ordinary rate setting. Ordinary rates must be levied annually in relation to the categories or sub-categories (s 494). It is accepted that the Metro site would fall into the business category. Ordinary rates generally consist of a base rate (s 499) and an ad valorem rate (s 498). The ad valorem rate under s 498 is an amount in the dollar levied on the land value of all rateable land. This case concerns the setting of the ad valorem rate for a sub-category of the business category. There are no criteria identified in the LG Act as to how the ad valorem rate is set. Criteria to which the Council must have regard in setting a base rate are identified in s 536. Under Pt 2 of Ch 15 of the LG Act the amount of general income that can be raised from rates is capped by the relevant Minister (s 506, s 509).
15 Under Pt 3 of Ch 15 the owner of land categorised for rate setting must be given notice of certain information and can seek a review of the rate category and appeal against the date of declaration of a category to the Court. Part 4 of Ch 15 identifies the process a council must undertake in making a rate. It must give public notice of a draft management plan for the year a rate is to be made. A rate must be made before 1 August in the year it is made and must be made by resolution of the council. Part 5 of Ch 15 provides for the levying of rates by annual notice.
16 I further note that s 529 provides for the determination of a sub-category whereas s 514 provides for the declaration of a category. While I refer respectively to declaration in relation to the making of a category and determination in relation to the making of a sub-category, no practical difference between the two words is apparent from the issues considered in these proceedings.
- Preliminary issue – whether ad valorem rate setting decision justiciable
17 The issue of justiciability raised by the Council should be dealt with at the outset before considering the Applicant’s substantive grounds of challenge.
Council’s submissions
18 The Council argues that the decision of a council to strike or fix a rate per se is not justiciable in any court. It is a decision made in respect of a policy matter or alternatively is a decision which is legislative in nature and effect and therefore not amenable to judicial review. Although rating decisions before the introduction of the LG Act 1993 have been the subject of judicial review, in those cases the quantum of the rate levied was not relevant. Parramatta City Council v Pestell (1972) 128 CLR 305 concerned whether a particular opinion required to be formed in making a ratings decision (special rates) was in fact formed. In this case no opinion is required to be formed under s 494 when levying an ordinary rate and the Council has liberty to fix rates as it sees fit. Not every decision attracts a duty to act fairly and is subject to judicial review; per Mason J in Kioa v West (1985) 159 CLR 550 at 584.
19 Further the existence of a review and appeal mechanism such as that under s 525 and s 526 of the LG Act is contra-indicative of a concomitant right on the part of the disaffected person to remedies such as those sought here.
Applicant’s submissions
20 The discretion to levy an ad valorem rate must be exercised in accordance with the Act and is subject to judicial review. The Applicant submits that the Court has power to judicially review whether a special rate is invalid, relying on Pestell, Sutton v Blue Mountains City Council (1972) 40 LGRA 51 and Burns Philp Trustee Co Ltd v Blacktown Municipal Council [1976] 1 NSWLR 531. Although these cases were decided prior to the enactment of the LG Act 1993, there is nothing in the text or structure of the Act to indicate any change to the Court’s jurisdiction. That the Court has power to grant restitutionary relief for an invalid impost was recognised in Sharples v Minister for Local Government [2008] NSWLEC 328 citing Newcastle City Council v Caverstock Group Pty Ltd (2008) 163 LGERA 83. Kioa v West which the Council relies upon dealt with a challenge to a decision on the grounds of procedural fairness and is distinguishable on this basis. Mason J’s comments in Kioa v West also dealt with decisions which affected “citizens generally” whereas the Council’s decisions in this case affected the Applicant individually and not because of its membership of the public or a class of the public.
21 The Applicant disputes that the Court should refuse relief on the basis that it has not exercised its rights of appeal. The ability to challenge inclusion of the Applicant’s land as falling within the sub-category created would not have provided the Applicant with the full ability to contest the creation of the category itself and would not have provided the restitutionary remedies sought. The appeal right under s 526 is a Class 3 merit appeal that does not enable the Court to strike down the creation of the sub-category.
Finding on justiciability
22 Whether a decision of a local council under a statute is justiciable depends on whether the decision concerns a matter that is largely one concerning policy and/or political considerations. A lengthy consideration of justiciability was necessary in the full Federal Court in Minister for the Arts, Heritage and Environment v Peko-Wallsend Ltd (1987) 75 ALR 218. The Federal Court had to consider whether the exercise of a prerogative power by the Cabinet rather than a decision made under a statute was justiciable. The decision of the Federal Cabinet to nominate a national park for inclusion on the UNESCO World Heritage list was held to be non-justiciable as it involved a number of complex policy questions which were more appropriately dealt with in the cabinet rather than by a court. The lead judgment of Wilcox J at 244 - 253 analyses the leading cases and the relevant history leading to his determination that a cabinet decision could be justiciable depending on the nature of the decision made and its effect, see also Bowen CJ at 223 - 225.
23 The obiter passage in Kioa v West of Mason J relied on by the Council to argue that these judicial review proceedings are not justiciable is in the context of His Honour stating that the common law duty to act fairly applies to administrative decisions which affect rights, interests and legitimate expectations of individual citizens. As an example of a decision to which the duty does not attach, his Honour gave the imposition of a rate on ratepayers and at 584 quoted Jacobs J in Salemi v MacKellar (No 2) (1977) 137 CLR 396:
- …the duty [to act fairly] does not attach to every decision of an administrative character. Many such decisions do not affect the rights, interests and expectations of the individual citizen in a direct and immediate way. Thus a decision to impose a rate or a decision to impose a general charge for services rendered to ratepayers, each of which indirectly affects the rights, interests or expectations of citizens generally does not attract this duty to act fairly. This is because the act or decision which attracts the duty is an act or decision:
- " ... which directly affects the person (or corporation) individually and not simply as a member of the public or a class of the public. An executive or administrative decision of the latter kind is truly a `policy' or `political' decision and is not subject to judicial review." (Salemi [No 2] [99] , per Jacobs J.)
24 I agree with the Applicant’s submissions that the obiter statements of Mason P in Kioa v West are not binding authority that any rating decision is not able to be challenged under any other ground of judicial review. As it happens and as the Applicant submitted, on the facts of this case there is one landholder affected by the rating decisions of the Council so that the facts of this case are not those referred to in Salemi, which differentiate between an individual and a class of members of the public.
25 The Applicant relied on Pestell as an example of a judicial review case of a rating decision. In Pestell the High Court considered whether the levying of a special rate under s 121 of the Local Government Act 1919 (the LG Act 1919) in order to finance the construction of a road was invalid. It was necessary pursuant to the Act that the council form the opinion that the portion of land subject to the special rate would derive a special benefit from the works being financed by the rate. The majority of the High Court held in separate judgments that whether the council had that opinion was an issue which could be challenged in the courts but if the opinion was held then the council’s reasons for having that opinion could not be challenged. On whether there was such an opinion, the majority was satisfied that no opinion could reasonably have been formed that the land subject to the special rate benefited from the works over and above other (residential) land. Therefore for the purposes of the Act no opinion had been formed (Barwick CJ at 312, Menzies J at 325, Gibbs J at 324 and Stephen J at 332, McTiernan J dissenting). As submitted by the Council, the different statutory regime for special rates, requiring specified criteria to be addressed, distinguishes this case from the Applicant’s appeal in this matter against the setting of an ordinary rate. It is not therefore conclusive of the issue of justiciability.
26 Another case Burns Philp (1976) relied on by the Applicant was a decision of a single judge in equity determining if the decision of a council to require payment of a local rate on the basis that work or service would be of special benefit to specified land under s 121 of the LG Act 1919 was valid. A ground of challenge was, inter alia, that the council had failed to form the opinion that the lands included in the rated area would be specially benefited by the works. The first issue that had to be determined was whether the validity of the rates notice could be raised in the proceedings as there was a mechanism available under s 133(2) of the LG Act 1919 to appeal against the levying of the rate on the ground that the land or some part thereof was not rateable (which had not been invoked). Wootten J considered that on the authorities he had to hold that judicial review proceedings were available. On the substantive challenge he upheld the applicant’s claim for declaratory relief that the resolution to impose the rate was invalid as the requirements of s 121(1) for the setting of the rate were not satisfied in relation to the opinion the council was required to form. As submitted by the Applicant this case, if determined today, would probably be couched in terms of the council failing to determine a jurisdictional fact or a condition precedent to its decision. Once again there is no such requirement in the setting of ordinary rates so that this case is also distinguishable on its facts.
27 The LG Act 1993 also specifies that a council must, in determining a special rate, form an opinion that the land to be subject to the rate will benefit from the works or services for which the special rate is levied (s 495). Wyton v Tweed Shire Council (1998) 98 LGERA 72 is an example of a judicial review case considering the setting of special rates under the LG Act 1993.
28 None of the above cases considered the setting of an ordinary rate. The LG Act does not require any opinion to be formed by a council in relation to the setting of the ad valorem rate component of an ordinary rate. Only one case of judicial review proceedings concerning the determination of an ordinary rate under the LG Act 1993 has been found. In Council of the City of Sydney v South Sydney City Council [2002] NSWLEC 129 the applicant council sought declarations that the resolution of South Sydney council to determine sub-categories for residential and business categories of rateable land and the resolutions determining ad valorem rates for the sub-categories were invalid and of no effect. There was no discussion in that decision of whether the court had jurisdiction to consider the issues raised, no doubt because no such issue was raised. The grounds of challenge considered in the court were that the necessary condition precedent was not enlivened so that the council lacked power to make the sub-categories, that irrelevant considerations were considered and that the determinations were manifestly unreasonable. The focus of the case was the creation of the sub-categories within the residential category under s 529 of the LG Act rather than the specific ad valorem rates the council determined to impose. Pearlman J held that the determination of the sub-categories was in accordance with the requirements of the LG Act, that South Sydney City Council had not taken into account irrelevant considerations determining the sub-categories and that it had not acted with manifest unreasonableness.
29 One case supporting the Applicant’s argument is the earlier case of Sutton in the Supreme Court in which the plaintiff challenged a council’s decision to impose a general rate, water supply rate, sewerage local rate, and a special rate (library) for 1976 and 1977 under the LG Act 1919 by imposing a certain minimum rate. The setting of a minimum rate was challenged because the amount set by the council resulted in the bulk of rates being collected by payment of the base rate rather than the ad valorem rate. This per capita approach was to be contrasted with the much smaller amount collected by an approach where a high ad valorem rate and a low base rate such that the bulk of rates collected correlates with land values. Holland J considered that the rating scheme was to predominantly rely on an ad valorem system to which per capita rates were to be subordinate. His Honour concluded that the council had misused its powers and declared the decision to impose the base rate invalid.
30 While there is not a decision which has specifically considered the issue of justiciability in the context of ordinary rate setting, the lack of specific criteria in the Act to be satisfied when setting such a rate alone does not suggest the decision is non-justiciable. That there is broad discretion under the LG Act for the setting of an ordinary rate by a council in the context of the detailed statutory regime for the setting of rates also does not indicate the matter cannot be subject to a judicial review challenge. The Council has argued that the decision involves a balancing of policy considerations rendering it non-justiciable. The reasoning in Peko Wallsend of the full Federal Court that decisions of the Federal Cabinet were not automatically immune from judicial review also suggests that a finding of lack of justiciability in relation to a decision made under a statute should not be made lightly. In Wellington City Council v Woolworths New Zealand Ltd (No 2) [1996] 2 NZLR 537 relied on by the Council in relation to the nature of council decision-making on rates, discussed at par 112 below, the New Zealand Court of Appeal refers to rating decisions being judicially reviewable on grounds such as manifest unreasonableness.
31 An essentially different point raised by the Council but in this part of its case was that the existence of an appeal against the rating category was available under s 526 and had not been availed of by the Applicant. In various areas of the Court’s jurisdiction parties commonly pursue judicial review proceedings as well as exercising an appeal right concerning the merits of a decision. That does not ground a successful argument that the ordinary rating decisions the subject of these proceedings are not justiciable.
32 Also supportive of a finding that the issues are justiciable, and as submitted by the Applicant, the Court is able to make the orders for the payment of money already paid to the Council by way of restitution.
The Court has wide powers to remedy a breach of the LG Act under s 676. Also as submitted by the Applicant, the power of the Court to grant restitutionary relief for an invalid impost was recognised in Sharples v Minister for Local Government citing Newcastle City Council v Caverstock Group Pty Ltd.
33 On balance I consider that the issues raised by the Applicant are justiciable in these judicial review proceedings. On a different but related issue I also agree with the Applicant’s submission (par 21) that the existence of the appeal rights under s 525 and 526 does not mean that such appeal rights must be exhausted before these judicial review proceedings can be commenced. The remedy sought in these proceedings concerning the declaration of invalidity of the sub-category Business – Marrickville Metro in 2002 would not be achievable in Class 3 proceedings.
A. Challenge to 2002 decisions (APOC cl 12(a)(b), prayers 1, 2)
No sub-category created
Applicant’s submissions
34 The first issue raised by the APOC is the exercise of the Council's discretion under s 493(2) to determine a sub-category of the business rating category. The Applicant seeks declarations that the resolution of the Council on 23 April 2002 to introduce the Business – Marrickville Metro sub-category and apply a rate higher than that for other business categories was invalid.
- 1. “Not a category” (APOC cl 12(a))
35 For numerous reasons the Applicant argues that the purported determination of the sub-category did not legally implement the sub-category:
(i) The Marrickville Metro is a single site which cannot be described as a category of itself. A category implies the concept of a class or species which necessarily requires more than one lot of rateable land to fit into the description of the sub-category. There can be no process of categorisation by placing land parcels in or out of that category because, by its very terms, the category will only ever include one parcel of land. This process of categorisation is central to the notion of a category and a statutory right to protest categorisation exists under s 525 and s 526 of the LG Act. By introducing a sub-category into which only one parcel of land can fall, this right of appeal and review is rendered meaningless which could not be the legislative intention of the provisions.
(ii) The name of the sub-category as Business-Marrickville Metro confirms that it is not a sub-category. It refers to one operator only.
(iii) The process followed by the Council in 2001/2002 did not give rise to the determination of a sub-category. When the Council passed the motion in February 2002 it resolved to introduce a large shopping centre rate. There is no reference to a category being created. On 23 April 2002 the General Manager’s report to the Council referred to the introduction of a separate rate for large shopping centres and to the determination of a rate in the dollar for the new rate. No reference to a category was made in the report. The description of the category as Business-Marrickville Metro appears in an amendment to the 2002-2005 Draft Management Plan and 2002-2003 Draft Budget despite the Council’s resolution to introduce a “large shopping centre rate”. Under s 521 the sub-category crystallises at the point where the declaration of the parcel of land occurs within a particular category. No such declaration was made. There has been no compliance with s 529(2) for the determination of a sub-category. It does not matter what appears in the rates notice in the absence of that determination. The rates notice cannot constitute a declaration for the purposes of s 529(2).
2. “Centre of activity” (APOC cl 12(b))
36 The Applicant argues that the creation of the sub-category was not based on Marrickville Metro being a “centre of activity” because it is only a single site or parcel of land. “Centre of activity” is not defined in the LG Act. The phrase “centre of activity” would have its ordinary meaning and like those phrases used in s 529(2) would relate to the activity carried out on the land, not the actor using the land; see Hope v Bathurst City Council (1980) 144 CLR 1. This distinction is important because in the circumstances of this case the whole of a sub-category has been used by the Council to discriminate against a single rate payer, and the purported vehicle of a sub-category attempts to camouflage this fact. The Marrickville Metro sub-category has been created by reference to a specific land user rather than by reference to a type of use of the land as intended by the centre of activity requirement in s 529(2)(d). Further, the balance of Ch 15 proscribes against identification of individual land holdings in the creation of rate sub-categories in order to prevent single ratepayers being subject to a distinct rate.
Council’s submissions
1. “Not a category” (APOC cl 12(a))
37 The Council submits that the Applicant’s argument that there cannot be only one member of a category is false.
- (i) It is quite appropriate to categorise a certain activity as a class even if it is the only entity which falls within a particular class. A commonsense approach to language should be taken.
(ii) Also, the category was not created solely by reference to a particular individual (for example, Marrickville Metro Shopping Centre Pty Ltd, the Applicant) but rather the description is based on the use of the land, namely a large mall-type shopping centre (Business – Marrickville Metro). This categorisation does not deprive the Applicant of any right to protest its inclusion in this category on the grounds of an incorrect characterisation of the land with respect to the sub-category description pursuant to s 525.
(iii) A single member category does not avoid the statutory right to appeal in relation to the declaration of the category in s 526.
(iv) The LG Act does not prohibit the creation of a category with only one member.
38 There is no basis to argue that the name of the category Business-Marrickville Metro does not meet the requirements of the Act for the declaration of a sub-category. Section 543(1) requires that the Council must give a short separate name for each category of ordinary rate when an ordinary rate is made. The name does that.
39 The Council argues that the Council did resolve on 23 April 2002 to determine a sub-category and separately to fix the rate (resolution GM22). Resolution GM23, referring to the Business-Marrickville Metro sub-category, was the determination required by s 529(2)) contrary to the Applicant’s argument that no sub-category was determined on 23 April 2002. The Act is loose about the way a category is determined. The act of levying that took place in the following month by the rates notice dated 26 July 2002 was the final declaration and notification of the category. It does not matter precisely how it happened. Pursuant to s 520, the declaration takes effect from the date specified but no such date is specified in resolution GM 22, resolution GM 23 or in the rates notice. It is however obvious that the making of the rate was created, declared, levied and paid. As the 2002-2005 Management Plan and 2002-2003 Budget came into effect from 1 July 2002 that is the date the sub-category was intended to come into operation. Prior to 1 July it had no work to do. The rating year began on that date also. The new rate has been levied by the Council and paid by the Applicant or the previous owner for seven years. Resolution GM22 was passed, followed by resolution GM 23, specifying the Business-Marrickville Metro sub-category, which firmly determined the sub-category. The amount of the rate charged for the rating year commencing on 1 July was carried.
40 If the giving of notice under s 521 was not complied with, since Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 whether or not a failure to comply with a statutory requirement or directive is fatal to the validity of a particular administrative act depends on the question of whether the legislature intended that non-compliance with a provision would be fatal to the validity of the act on which it is based. The defect, if it exists, is of little significance. The rate was levied, the category is specifically described in the rates notice, the rates notice went to the owner who complained to the Council about the change in rate by a letter dated 24 October 2002. No date for the commencement of the new rate is identified in the rates notice but it is plain that it was intended to take effect from 1 July 2002 as that is when the rates notice took effect.
- 2. “Centre of activity” (APOC cl 12(b))
41 The requirement that the determination of a business sub-category be made according to a centre of activity has not been breached. It is not necessary that the centre of activity be described by reference to a planning category, such as retail, conducted by more than one individual operator. The Council suggests that centre of activity, which is not defined, probably means no more than a place in which businesses are concentrated in physical proximity in a way which enables it to be said that the area demonstrates a degree of unity of purpose which makes a single categorisation of the site appropriate. A draft Council Rating and Revenue Raising Manual (annexed to the affidavit of Mr Christmas) issued by the Department of Local Government and Cooperatives in April 1994 after the enactment of the LG Act 1993 stated that a centre of activity “could be a parcel of rateable land in which a business activity of a like character is conducted in a fairly concentrated manner and with a high degree of congruity and homogeneity, having regard to the geographic cohesion of the land, the use to which it is put and the comparative independence and self-relatedness of the activity or activities carried out in the area”.
42 The note to s 529 refers to “centre of activity” as “might comprise a business centre, or industrial estate or some other concentration of like activities”. While notes are not considered part of the statute for construction purposes (s 35 of the Interpretation Act 1987), they can provide a guide to interpretation.
- Finding on sub-category/centre of activity (issues 1, 2)
Can sub-category/centre of activity be single landholding?
43 Some of the Applicant’s arguments that no sub-category was created by the Council appear to rely on form over substance. There is no explicit or implied prohibition in the LG Act on a single site being a category. Whether that is appropriate will depend on whether it can be considered as a centre of activity, which I consider below in par 46-47. In this case the only large mall-style shopping centre in the LGA is the subject of the category. There is nothing inherent in the commonsense meaning of category to suggest it cannot be a single site on which several activities are located. I agree with the Council’s arguments set out above in par 37 in this regard.
44 The Applicant objected to the name of Business–Marrickville Metro because it refers to one operator. The name Marrickville Metro reflects the activity of the large shopping centre on the site. When asked what if the category had been called Business-Large Shopping Centre the Applicant’s counsel stated this argument had far less weight. As there is only one large shopping centre in the Marrickville LGA there is nothing wrong legally with identifying the category by reference to the name of the activity at that single site. The Council’s report and decision making in relation to the name of the sub-category as Business-Marrickville Metro complies with the naming requirement in s 543(1) which states only that each part of the ordinary rate that is, each sub-category, must have a short separate name. As submitted by the Council had the name of the category been that of the owner (in 2002 Bevillesta) there may have been cause for complaint but that has not occurred. The distinction between the activity on the land and the owner of land in Hope v Bathurst City Council is accepted but in any event the activity on the land is the focus of the name of the category, not the owner of the Metro site.
45 The Applicant also argued that to name the sub-category Business-Marrickville Metro denied the owner of that site the right to apply to the Council for a change of category under s 525. That circumstance would also apply if the name of the category were Business-Large Shopping Centre because there happens to be only one such centre in the Marrickville LGA. As submitted by the Council a review seeking a change of category by the Council under s 525 was available (and continues to be available) to the Applicant. If the review is refused by a council a right of appeal lies to this Court under s 526. I do not agree that to be the only member of a category renders the review right nugatory as it would be open to the Council (and the Court under s 526) to declare the Metro site to be in the Business-General rather than the Business - Marrickville Metro category, for example. If that occurred the Business – Marrickville Metro category would simply be empty.
“Centre of activity”
46 I have held that a sub-category can be a single landholding. The Applicant also argues that a single landholding cannot be a centre of activity. Centre of activity is undefined in the Act. Principles of statutory construction suggest that the plain meaning of the words is preferred where that is apparent in the statutory context (see Cody v J H Nelson Pty Ltd (1947) 74 CLR 629 per Dixon J at 647, cited by McHugh J in the High Court’s decision in Muin v Refugee Review Tribunal (2002) 190 ALR 601 at [102], inter alia). As submitted by the Council, the note to the section refers to a centre of activity as being a concentration of activities. Notes are not part of the statute (s 35 of the Interpretation Act 1987) but they do provide some guidance of what the draftsperson intended.
47 The Council also relied on the reference to the explanation of centre of activity in the draft Council Rating and Revenue Raising Manual issued by the Department of Local Government and Cooperatives in April 1994 (par 41). Applying the ordinary meaning of the words “centre of activity” the interpretation in this manual should be adopted. The concentration of activities at the Metro site is a large number of retail shops. This is clear from the evidence of Mr Christmas that the Marrickville Metro contains approximately 100 retail tenancies, which was confirmed in the affidavit of the Applicant’s centre manager, Ms Wright, which stated there were 101 tenancies. There is consequently no prohibition on a sub-category relating only to a single land user provided that the category relates to a centre of activity based on land use, as the sub-category Business – Marrickville Metro does.
Was a sub-category determined?
48 The Applicant also argued that no sub-category of Business-Marrickville Metro was determined by the Council in 2002. The Applicant argued that no sub-category was determined as provided for under s 493(2) and s 529. Section 493 states that a council may determine sub-categories for rateable land and requires compliance with s 529(1). Section 531 states that s 519 to s 527 apply to the determination of a sub-category. The Applicant argued that the recommendation in the General Manager’s report to the Council meeting on 19 February 2002 of striking a “large shopping centre rate” and its adoption by the council was a failure to comply with the Act because the words “category” or “declaration” or “determination” were not used. Reliance on this point elevates form over substance. When the course of conduct of the Council in February and April 2002 is considered as a whole, there was a determination of a sub-category called Business – Marrickville Metro. As submitted by the Council the passing of resolution GM22 determined the sub-category. The sub-category is then identified in resolution GM 23 made at the Council meeting on 23 April 2002 (see chronology at par 6(ix)). As submitted by the Council, the rates have been paid by Bevillesta or the Applicant over the last seven years. This behaviour is consistent with the creation of the sub-category. I consider that a sub-category was determined as provided for by s 493(2) and s 529 on that date.
49 The Applicant is unsuccessful on the grounds of challenge in the APOC cl 12(a) and (b).
2. Failure to notify under s 520 of the LG Act (APOC cl 12(h))
50 The Applicant argued that the statutory notice requirements of the declaration of the sub-category in s 520 were not complied with. As a result the sub-category was not created in 2002. This is raised in the APOC cl 12(h) and I will consider it as the next issue.
51 Section 520 requires that notice be given in the approved form of certain matters concerning a declaration of category. Section 521 states that the declaration of a category takes effect from the date specified for the purpose in the declaration. These provisions also apply to the determination of a sub-category (s 531(1)). Notice of the determination of a sub-category can be given in the same notice as the notice of the declaration of a category (s531(2)).
52 “Approved form” was (and currently is) defined in the dictionary to the LG Act as:
- (a) the form prescribed by the regulations for the purposes of the provision in relation to which the expression is used, or
(b) if no such form is prescribed, the form (if any) approved by the Director-General for the purposes of the provision in relation to which the expression is used, or
(c) if no such form is prescribed and no form is approved by the Director-General, the form approved by the council for the purposes of the provision in relation to which the expression is used.
53 It is agreed that there was no specific approved form for the purposes of s 521(2) specified in the Act or Regulation or approved by the Director-General in 2002.
54 Clause 11 of the Local Government (Rates and Charges) Regulation 1999 in force at the relevant time (now repealed but the same provision now exists in cl 127 of the Local Government (General) Regulation 2005) provided:
- 11 Rates and charges notices
- A rates and charges notice must contain the following information:
- (a) the land to which it relates,
(b) the land value of the land to which it relates and the base date of the general valuation from which the land value is derived,
(c) particulars of each rate or charge levied on the land by the notice,
(d) if the rate consists of a base amount to which an ad valorem amount is added, particulars of the base amount,
(e) the date the notice is taken to have effect,
(f) particulars of any outstanding arrears of rates and charges levied on the land and of any interest payable on those amounts,
(g) the total amount due and the dates for payment of the rates or charges concerned,
(h) the amounts payable for, and the due dates for payment of, instalments of rates or charges,
…
(q) the text, or a summary, of the following provisions of the Act (if applicable):
- Section 524 (Notice of change of category)
Section 525 (Application for change of category)
Section 526 (Appeal against declaration of category)
Section 555 (What land is exempt from all rates?)
Section 556 (What land is exempt from all rates, other than water supply special rates and sewerage special rates?)
Section 557 (What land is exempt from water supply special rates and sewerage special rates?)
Section 562 (Payment of rates and annual charges)
Section 563 (Discount for prompt payment in full)
Section 564 (Agreement as to periodical payment of rates and charges)
Section 566 (Accrual of interest on overdue rates and charges)
Section 567 (Writing off of accrued interest)
Section 574 (Appeal on question of whether land is rateable or subject to a charge).
- Evidence of giving of notice of 2002 sub-category determination and rate setting decision
55 Rates notices (annexed to the affidavit of Mr Whealy) were issued by Council to Bevillesta (posted 27 July 2000, 27 July 2001, 26 July 2002, 26 July 2003 and 14 July 2004), Marrickville Metro Shopping Centre Pty Ltd (posted 29 July 2005) and AMP Capital Investors Limited (posted 31 July 2006, 25 July 2007 and 25 July 2008).
56 The Council relies as the necessary notification of the determination of the sub-category Business-Marrickville Metro on the annual rates and charges notice sent by it in July 2002 to the then owner of the Metro site (Bevillesta). Where the rates notices in 2001 and preceding years referred to Business-General the 2002 notice referred to Business-Marrickville Metro. That this was the notice was told to Bevillesta in the Council’s letter dated 5 February 2003 (par 6(xii)). The Council in that letter also referred to fact that the new sub-category was referred to in the 2001-2004 Draft Management Plan and 2001-2002 Draft Budget which was advertised in local newspapers and was on public exhibition for 28 days. The Council’s letter was a reply to a letter dated 24 October 2002 from Bevillesta asking when notice of the change of category had been sent as none had been received and asking for the opportunity to comment.
163 The apprehension of bias is particularly acute in relation to the 29 April 2008 decision to adopt the draft plan of management and annual budget including increasing the Marrickville Metro rate by 10 per cent (see par 134 and par 143 for the chronology of decisions post-2006). One of the three councillors with business interests had a casting vote (Councillor Thanos) so that his decision had real effect. There was an added burden that an apprehension of bias that someone might not bring an impartial mind to the issue arose as there was no justification for the increase in rates. That arises even before the resolution is considered. When the actual resolution is considered the case is clear.
Council’s submissions
164 The requirements for disclosure of interests by councillors is set out extensively in the LG Act in Ch 14. Section 448(b) of the Act provides that a rateable interest is not an interest that would need to be disclosed or that would prevent a councillor from voting. This section is grounded in the fact that if disclosure and exclusion from voting was required it would be unlikely that a quorum could ever be reached in a council vote to set a rate. Where the Act and the Council’s own code of conduct (which does not expressly require any disclosure of rateable interests) do not require disclosure, it is unlikely that failure to disclose could give rise to a reasonable apprehension of bias on the part of the three named councillors in the mind of a fair minded observer.
165 The scheme of Ch 14 identifies that there is only one basis on which a councillor can decline to vote or be present during voting and that is if he has a discloseable pecuniary interest. Under the statute he is otherwise expected to vote.
166 Although it is not necessary in a case of apprehended bias to demonstrate that relevant votes were determinative of any decision, examination of the votes show that at the meeting of 23 April 2002 the motion to set the rate at 40 per cent above other commercial rates (which was voted for by Councillors Hanna and Thanos) was defeated. The motion to set the rate at 20 per cent above other commercial rates was successful with unanimous support from the councillors. In April 2007 the motion to maintain the ad valorem rate for the Marrickville Metro sub-category in light of new property valuations was supported by Councillor Macri (who was not a councillor in 2002) and Councillor Hanna. Councillor Thanos voted against the motion. The Councillors voted in the same way in June 2007 concerning the maintenance of the ad valorem rate after adjustments were required due to the increase in rate revenue permitted by the Minister.
167 The motion in 2008 to increase the rate payable by Marrickville Metro by 10 per cent was supported by Councillor Thanos however Councillor Macri (who was not a councillor in 2002) and Councillor Hanna voted against the motion. Councillor Hanna voted differently between 2002 and 2008 as to whether Marrickville Metro should be subject to an increase in rates payable despite continuing to be a ratepayer in the Business-General category over that period.
Finding on apprehension of bias
168 The importance of neutrality of statutory decision-makers is underlined by the administrative law principle that a decision-maker should not be biased or give rise to an appearance of bias in making administrative decisions, as identified in discussion in Aronson M and Dyer B, Judicial Review of Administrative Action, 4th Edition, Lawbook Co, Sydney 2009 at p 639-641.
169 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 is recognised as providing a relevant test for whether an apprehension of bias arises for those exercising statutory functions. The facts in Ebner concerned whether there was an apprehension of bias resulting from a judge holding shares in a bank which had a financial interest in the outcome of the litigation and contributed to the funding of the litigation as a creditor of the bankrupt appellant. The test propounded in Ebner in the judgment of Gleeson CJ, McHugh, Gummow and Hayne JJ (Kirby J dissenting, Callinan and Gaudron JJ delivering separate judgments) is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the issue before them. As the decision recognises at [4], that principle has been extended to many other kinds of decision-making and decision-makers. The application of the principle is described in two steps at [8]:
- The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an "interest" in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.
170 The application of the test in Ebner was considered by the Court of Appeal in McGovern in the context of a multi-member elected decision-making body, a local council. The test for apprehended bias applies to statutory decision-makers and is affected by the functions they are required to perform and the identity and nature of the decision-maker who is obliged to perform those functions. This requires a context specific approach, usually as part of a process of statutory interpretation, and the judicial paradigm is not universally applicable (per Spigelman CJ at [2], [7] and [10]). Similar findings were made by Basten JA at [71] and [75] referring to Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 per Hayne J at [179]-[187] as an example of how different standards to those applying to judges will operate in relation to ministerial decision-making in that case, because of the need to take into account the particular role and functions of the decision-maker.
171 In McGovern the alleged apprehension of bias was based on prejudgment on the part of certain councillors in the approval of a development application. In this matter an apprehension of bias is said to arise from a perceived conflict of interest arising from the interests of the three councillors in the various rate setting decisions of the Council because they have interests as small business owners or owners of land zoned for business purposes and therefore compete with Marrickville Metro as trade competitors. According to the Applicant, these interests could give rise to an apprehension of bias in the mind of a fair minded observer that when acting as councillors their decisions would not be made impartially.
172 In McGovern Spigelman CJ discussed the differences between cases of prejudgment and conflict of interest at [26]-[29] as follows:
- A conflict of interest requires a different analysis as to the relationship, as reasonably perceived, between the interest and the decision. Questions of fact and degree do not arise in the same way. In a pre-judgment case it is necessary to consider the degree of ‘closure’ of the allegedly closed mind. Where a relevant conflict of interest is established the reasonable apprehension follows almost as of course.
Secondly, in my opinion, a different approach is appropriate when the vote or votes of the allegedly biased decision-maker(s) was not determinative. In a conflict of interest case it appears to me appropriate to conclude without further inquiry, that the statutory requirements of a valid decision-making process have not been complied with or that an adverse conclusion of what an independent observer might believe would more readily be drawn.
In Canada the basic authority is Old St Boniface Residents Association . In that case Sopinka J who delivered the judgment of the majority said at 1196:… Where a person’s involvement in the decision-making process can be characterised, in substance, as constituting him or her a party to the proceedings the issue is not, in my opinion, one of ‘pre-judgment’ but one of ‘conflict of interest’.
- “I would distinguish between the case of partiality by reason of pre-judgment on the one hand and by reason of personal interest on the other. It is apparent from the facts of this case, for example, that some degree of pre-judgment is inherent in the role of a councillor. That is not the case in respect of interest. There is nothing inherent in the hybrid functions, political, legislative or otherwise, of municipal councillors that would make it mandatory or desirable to excuse them from the requirement that they refrain from dealing with matters in respect of which they have a personal or other interest ... Where such an interest is found, both at common law and by statute, a member of Council is disqualified if the interest is so related to the exercise of public duty that a reasonably well-informed person would conclude that the interest might influence the exercise of that duty. This is commonly referred to as a conflict of interest.”
173 These findings, albeit obiter, suggest that once a conflict of interest has been made out a finding of apprehension of bias must follow. It is necessary to consider the interest alleged by the Applicant to determine if such a conflict of interest can arise separately from the regime in Ch 14 given the requirements for disclosure in Ch 14 of the LG Act.
- Does lack of requirement to disclose interest under Ch 14 answer common law apprehension of bias challenge?
174 The interest relied on by the Applicant is argued to arise separately from the regime for the disclosure of specified pecuniary and non-pecuniary interests in Ch 14 of the LG Act and the Council’s code of conduct required by s 440 of the LG Act, summarised above at par 152-157. The Council argues that the scheme in Ch 14 “covers the field” so that pecuniary interests as defined must be disclosed and if not required to be disclosed then such interests could not give rise to an allegation of conflict of interest. No allegation is raised by the Applicant that there was a failure to disclose a pecuniary interest as required by Pt 2 of Ch 14. Interest as a ratepayer is not required to be disclosed (s 448) so that being a ratepayer for land in the business rating category is not a discloseable interest.
175 The Applicant argues that separately to the scheme for the disclosure of interests in the LG Act there is a common law duty not to act in a way which gives rise to an apprehension of bias which three councillors breached by participating in the decision-making process under challenge. It submitted that the lack of a requirement to disclose an interest in Ch 14 of the LG Act is not an answer to the Applicant’s apprehension of bias case. Councillors continue to have common law obligations to exercise their functions under the acts they administer in conformity with administrative law principles. That includes the duty to act in a manner that does not give rise to an apprehension of bias including in relation to conflict of interest. I agree with that submission, as McGovern demonstrates, amongst other cases.
176 McGovern concerned the exercise of duties by councillors under the Environmental Planning and Assessment Act 1979 and whether an apprehension of bias arose on the basis of prejudgment in the course of those duties. Generally, the exercise of statutory duties by councillors must be carried out lawfully and is subject to judicial review. There are several cases referred to in McGovern at first instance and in the Court of Appeal where the duty of councillors to act without bias is recognised. In McGovern v Ku-ring-gai Council (2007) 153 LGERA 308 at first instance I referred to the LG Act setting out the roles and responsibilities of local councillors in their duties as councillors at [63]. I also referred to the consideration of pecuniary and non-pecuniary interests in the LG Act and considered non-pecuniary interests in particular at [66]-[67]. I held this statutory context was relevant in assessing the claim of apprehension of bias. This discussion was noted by Basten JA in the Court of Appeal at [151]. In this case the Council’s rating functions are contained within the LG Act and the relevant statutory context is outlined above at par 13. While Ch 14 (summarised at par 152-157) provides for the disclosure of interests both pecuniary and non-pecuniary there is no statutory indication that this scheme is intended to oust any judicial review proceedings raising apprehension of bias based on conflict of interest.
177 A further reason supporting the existence of a common law duty of councillors to act without bias or the perception of bias in their statutory duties beyond their responsibilities to disclose interest under Ch 14 concerns the relief which can be granted in successful judicial review proceedings, namely a declaration of invalidity of a decision. This is not available in the scheme in Ch 14 of the LG Act. As identified by the Applicant, the penalty for the failure to comply with Ch 14 is that a complaint can be made and investigated and ultimately suspension of a councillor can be imposed (s 482). Under s 440(8) failure to comply with the Council’s code of conduct does not give rise to a civil cause of action.
- Is there an interest giving rise to an apprehension of bias?
178 There is no appreciable difference in meaning between a financial interest and a pecuniary interest referred to in Ch 14. The Macquarie Dictionary, 3rd ed (Macquarie University, Sydney: The Macquarie Library Pty Ltd, 2001) defines pecuniary, inter alia, as “of or relating to money” and financial, inter alia, as “relating to monetary receipts and expenditures; relating to money matters; pecuniary”. The Applicant seeks to distinguish a pecuniary interest as a ratepayer, referred to specifically in s 448(c), from a financial interest as a trade competitor being the owner of land or the operator of a business on land in a business category for rating purposes.
179 Whether an interest as a trade competitor alleged by the Applicant is an interest that could give rise to an apprehension of bias should be informed by the regime for the identification and disclosure of pecuniary interests identified in the LG Act. It is unlikely that an interest which is not required to be disclosed under s 448, for example, an interest as a ratepayer, could give rise to a conflict of interest which would ground a challenge based on apprehension of bias. Other matters which are not required to be disclosed under s 448 also concern potential financial benefits which may arise from the council’s decision making, for example, (h) an interest in a contract as a result of a beneficial interest in shares in a company that does not exceed 10 per cent of the voting rights and (k) an interest relating to the payment of fees to councillors. Whether an interest as a trade competitor in a business zone is different from being a ratepayer in a business zone and whether such an interest can give rise to an apprehension of bias requires consideration.
180 The Applicant did not refer to any specific case in support of its argument that the financial interest it alleges gives rise to a potential conflict of interest of certain councillors supports a finding that an apprehension of bias might arise in the mind of a fair minded individual. Cases which have considered conflict of interest based on financial (or pecuniary) interests include Ebner, in which a judge had a beneficial interest in a private trust which had numerous shares in a bank. The bank contributed to the funding of the litigation because it would potentially gain a pecuniary benefit from the outcome of the proceedings. The High Court held that there was no apprehension of bias. In Hot Holdings Pty Ltd v Creasy (2002) 210 CLR 438 the High Court considered whether an apprehension of bias arose where two departmental officers who prepared a briefing for a Minister were alleged to have a pecuniary interest in the outcome of the decision by the Minister to grant an exploration licence because the officers or their immediate family had shares in companies which would have benefited from the grant. The Minister’s decision was held not to be impugned by Gleeson CJ, Gaudron, Gummow, Hayne and Callinan JJ (Kirby J dissenting). Both cases are examples of the type of interest that could give rise to an apprehension of bias because there was the possibility of a direct financial benefit resulting from the decision under challenge.
181 In Najjar v Haines (1991) 25 NSWLR 224 the Court of Appeal had to consider whether an apprehension of bias arose in the case of a referee who had been appointed under Pt 72 of the Supreme Court Rules 1970. He had failed to disclose that he was a director of a company which was a party to, and was negotiating substantial contracts with, the government department which was a party to the dispute. The Court of Appeal held that non-disclosure of that interest did give rise to an apprehension of bias. Clarke JA (Kirby P and Rogers AJA concurring in separate judgments) considered at 241 that a fair-minded observer would consider that the nature of the relationship between the company of the referee and the government department was such that the referee might discriminate in favour of the company in the future or because of an understandable desire to promote and maintain harmonious relations between the two, even subconsciously.
182 In Smits v Roach (2006) 227 CLR 423 the High Court had to consider whether a judge should be discharged on the grounds of bias because his brother was a chairman of a law firm which had been sued for professional negligence by the appellants as solicitors for the respondent. The litigation was a dispute over the retainer entered into by the appellant and respondent. The firm of solicitors was argued to have an interest in the outcome of the litigation as the validity of the retainer would effect what the respondent could recover from the law firm if the professional negligence claim was pursued. The interest arose because of the personal association between the judge and his brother, a close family relationship. There was no suggestion that the judge stood to gain anything from the outcome of the case. Gleeson CJ, Heydon and Crennan JJ (Gummow and Hayne JJ concurring, Kirby J in dissent on this issue) considered at [54] the NSW Court of Appeal was wrong to make a finding that there was an apprehension of bias (although the Court of Appeal held that the right to seek disqualification of the trial judge had been waived by the parties). Ebner required that a link be established between the interest alleged and the possible failure to decide a matter impartially. Gummow and Hayne JJ so held at [56]-[59]. Kirby J held that there was an apprehension of bias but agreed that the right to seek disqualification had been waived.
183 In Murlan Consulting Pty Ltd v Ku-Ring-Gai Municipal Council [2008] NSWLEC 318 I had to consider whether an apprehension of bias arose in relation to an acting commissioner of this Court. The challenge was based on the non-disclosure of an alleged pecuniary interest which could give rise to an apprehension of bias. This arose from the acting commissioner’s involvement with the local council, a party in the proceedings, through membership of two council policy advice committees, interactions with council staff on research work, presentation of joint papers and the co-supervision of students with a member of council staff. The acting commissioner was also said to have received from the council the benefit of funding for research students in his faculty at Macquarie University. I held that no such apprehension arose essentially as these benefits were at arms length and simply reflected the experience of an academic pursuing his professional interests in conjunction with the local council.
184 All these cases suggest that the potential financial benefit giving rise to a conflict of interest must have sufficient nexus to the decision under challenge to suggest an apprehension of bias in the mind of a fair-minded observer. The issue arises in this case of whether the alleged interest of certain councillors as trade competitors can be an interest which gives rise to an apprehension of bias at all in a rating determination. There is no suggestion of any direct financial benefit accruing to any of the three councillors which results from the rating determination. There is no evidence apart from the councillors having business interests in retail shops as owners of leased land or as small business operators that they are trade competitors of any of the shops in Marrickville Metro. Any competition can be presumed to exist at a broad level of generality only.
185 Considering case law, no case has been found which identifies as a relevant pecuniary interest an interest as remote as being a trade competitor and therefore trying to cause greater cost burden to another trader rather than obtaining direct financial benefit. This suggests the interest, if it exists, is too remote to give rise to an apprehension of conflict of interest in the mind of a fair minded observer. The passage extracted from the judgment of Spigelman J in McGovern above (at par 172) refers to a conflict of interest arising where a person is essentially a party to the proceedings, referring to the Canadian decision of Old St Boniface Residents’ Association Inc v City of Winnipeg [1990] 3 SCR 1170. That case was concerned with a conflict of interest based on a personal interest. The circumstances in this matter do not give rise to such a conclusion in relation to the role played by the three councillors named by the Applicant.
186 Considering the LG Act, the roles and duties of a councillor are identified and Ch 14 identifies those interests that do require disclosure. Section 442(2) states that a person does not have a pecuniary interest if the interest is so remote or insignificant that it would not be likely to influence any decision that person might make. An interest as a trade competitor, assuming it exists, fits within this description.
187 Another reason why the alleged interest, if it exists, is too remote or tenuous to found a conflict of interest is that it is not clear why an interest as a trade competitor in the business category giving rise to a perception in the mind of a fair minded observer of wanting another business category to pay a higher rate is any different to an interest as a ratepayer in any category in paying a lower rate and therefore seeking to have another rating category pay a higher rate. For example, a councillor who owned residential property could also be perceived as wishing to keep residential rates low and therefore favour higher rates in other rating categories. This situation arose in the Council’s resolution of 23 April 2002 which proposed to use the increase in rate revenue from the introduction of the Metro sub-category to reduce residential rates.
188 As most councillors are likely to have rateable land in the LGA in some category and are therefore potentially motivated by a desire to lower rates in that category, it is arguable that if I found there was an interest giving rise to an apprehension of bias in this case then most councillors would have an interest which may give rise to an apprehension of bias. An interest as a ratepayer is not required to be disclosed under Ch 14. Ultimately councillors are elected from their local community to represent that community. It is highly likely that they will have personal and business interests in that community. These circumstances are not such that a fair-minded lay observer might reasonably apprehend that a councillor might not bring an impartial mind to the resolution of the issue of rate setting before him or her.
189 The table at par 159 identifies the voting patterns of the three councillors on all relevant rate setting decisions. Given my conclusion above that no interest giving rise to a conflict exists it is strictly unnecessary to examine their voting record. In the interests of thoroughness I note that the Applicant particularly challenges the 2007 and 2008 decisions of the Council on this ground. In the 2007 decisions councillor Thanos used his casting vote as mayor to pass the motion maintaining the ad valorem rate for Business-Marrickville Metro. As identified in the Council’s submissions (par 166), close scrutiny of the voting record does not disclose voting patterns by all three councillors consistently adverse to Marrickville Metro in any event. Councillor Macri was not on the Council in 2002. A number of councillors were engaged in proposing motions and voting in relation to Marrickville Metro apart from the three councillors the subject of this ground.
190 The Applicant is unsuccessful on the apprehension of bias ground.
Should Court exercise its discretion to make declaration of invalidity of 2002 determination of sub-category?
191 The Applicant has succeeded in relation to one ground of challenge being the failure to give notice to the then owner of Marrickville Metro, Bevillesta, of the date of determination of the sub-category of 23 April 2002. I have held that there had been a failure to give timely and adequate notice of the date of the determination of the sub-category Business-Marrickville Metro under s 520(1) of the Act (see par 71). I have not found that any other challenge to the legality of that decision has been established. I must therefore consider whether that failure should give rise to the invalidity of the determination of the Business-Marrickville Metro sub-category in 2002. As submitted by the Council the principles in Project Blue Sky require consideration. In Project Blue Sky the joint judgment of four judges of the High Court (Brennan CJ dissenting) stated at [93]:
- The classification of a statutory provision as mandatory or directory records a result which has been reached on other grounds. The classification is the end of the inquiry, not the beginning … A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid.
192 This statement has been applied since in many cases, including Woolworths Ltd v Pallas Newco Pty Ltd (2004) 61 NSWLR 707 per Spigelman CJ at [10]. No case where the issue of lack of timely notice in relation to notification of the determination of a sub-category has been located in the course of this matter. At par 62-70 I have determined that notice of the determination of the sub-category was given in the annual rates and charges notice sent on 26 July 2002 but that was not done in a timely way given that the determination was made on 23 April 2002. The relevant appeal period under s 526(1)(a) of thirty days from the date on which the declaration is specified to take effect had expired by then. I also held the annual rates and charges notice contained no information about the date the determination was made, namely 23 April 2002.
193 The Council submitted that the failure to give timely notice does not result in invalidity of the declaration of the sub-category in 2002. If the Court holds the rates notice was invalid then no valid notice was served on the owner for the whole period under challenge, that is, from 2002. That would upset the collection of all rates levied for that seven year period. It is also unclear what the impact of the invalidity of the 2002 declaration would have on the rate fixing for all rate holders in that year and subsequently. Contrary submissions were made by the Applicant that only it was affected by the rating decision and the shortfall in the collection of approximately $300,000 was very small in the context of the $33 million annual rates income collected by the Council.
194 I agree with the Council that the failure to comply with the procedural requirements of the Act for the giving of notice does not lead to invalidity of the determination of the sub-category, which was clearly made by the Council in resolutions GM 22 and GM 23 on 23 April 2002. The statutory scheme in the LG 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 LG 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.
195 Separately to the principle in Project Blue Sky, I am also inclined to this view because there is no evidence before me that Bevillesta was disadvantaged in exercising any review rights (under s 525) or appeal rights (under s 526) that it had as a result of the late and inadequate notice received.
196 In light of my findings, the Applicant’s Class 4 application is dismissed.
Costs
197 As I have not heard argument on costs I will not finally determine that matter. Under the Uniform Civil Procedure Rules 2005 (rule 42.1) costs follow the event unless the Court exercises its discretion differently. Final orders will be issued when costs are determined.
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