Mazzarol v Shire of Gnowangerup

[1968] HCA 78

HIGH COURT OF AUSTRALIA

Barwick C.J., Kitto and Menzies JJ.

MAZZAROL v. SHIRE OF GNOWANGERUP

(1968) 119 CLR 213

6 December 1968

Local Government (W.A.)

Local Government (W.A.)—Finance and works—Power to borrow for works—Power to authorize expenditure—Construction of inter-denominational church—Approval of work by Governor—Local Government Act, 1960-1965 (W.A.), ss. 527, 529 (e)*, 548 (4),* 598**, 601.***

Decisions

December 6.
The following written judgments were delivered:-
BARWICK C.J. AND MENZIES J. The appellants are a group of ratepayers of the Shire of Gnowangerup resident in and ratable for land in a particular area of the Shire which was on 22nd June 1967 declared by the Governor, under and by virtue of the provisions of the Local Government Act, 1960-1967 (W.A.), to be an area within which the Gnowangerup Shire Council might impose, in respect of ratable property therein, a specified area rate for the purpose of financing a loan for the construction of an inter-denominational church on lot 120, Jerramungup, a block of land belonging to the Shire. This declaration of a specified area had been preceded by the Governor's approval on 20th January 1966 of the construction of the church as a work and undertaking for which money might be borrowed by the Shire under Pt XXVI of the Act. On 26th July 1967 the Shire Council resolved inter alia to impose a specified area rate of $0.00088 on the unimproved value of all ratable property within the special area aforesaid and notice of this resolution was published in the Government Gazette on 11th August 1967. It will be necessary hereafter to consider more fully the authority of a council to impose rates. (at p218)

2. On 10th November 1967 the plaintiffs commenced an action in which they claimed against the Shire - the first defendant - as follows:

(a) A declaration that the first defendant has no power to borrow money for the purpose of constructing the said church. (b) A declaration that the first defendant has no power to impose the said special rate and that the attempted imposition of the said special rate is ultra vires and void. (c) An injunction restraining the first defendant from borrowing money to carry out and from carrying out the building of the proposed church. (d) Costs, and (e) Such further or other relief as to the Court seems just.

On 13th November 1967 at a time when the Shire had incurred indebtedness to lenders for a loan raised pursuant to the authority of 20th January 1966, and the church had been partly erected, the plaintiffs obtained an interim injunction in the action and building operations ceased on 19th November, at a time when the building had reached roof height and the roofing beams had been ordered and constructed. (at p218)

3. Upon the action coming on for trial before the learned Chief Justice of the Supreme Court of Western Australia his Honour dismissed the claim against the Shire and against other persons joined as defendants to the action. This is an appeal by the plaintiffs against that judgment in so far as it is dismissed the plaintiffs' claims against the Shire. (at p218)

4. The statutory power to impose rates is to be found in Pt XXV, Div. 4, of the Act, and s. 548 provides for the imposition of a general rate on ratable property in the district of a municipality for an amount sufficient to meet the deficiency between estimates of receipts and disbursements prepared in accordance with the provisions of s. 547. Section 548 (4) provides for a differential rate as follows:

"(4) (a) In this subsection - 'specified area' means - (i) a ward; (ii) a portion of a district, declared by Order made under paragraph (b) of this subsection to be an area to which this subsection applies. (b) The Governor may at the request of a council of a municipality by order declare portion of its district the boundaries of which portion are not coterminous with the boundaries of a ward or two or more wards of the municipality to be an area to which this subsection applies. (c) Where - (i) the council proposes that expenditure, including loan interest and repayments, be incurred in providing specific works, undertakings, or services, for the benefit of the inhabitants of a specified area; (ii) the proposal is set out in the budget with sufficient clarity to indicate that the expenditure is to be so incurred; and (iii) a resolution of the council imposing the differential rate is passed by an absolute majority of the council; the council may, in order to meet that expenditure, impose in respect of the rateable property in the specified area a greater rate than that which it imposes elsewhere in the district but not exceeding the maximum prescribed by subsection (2) of this section."

It was this provision that was followed in the declaration of the specified area and the imposition of a differential rate to meet the loan as has already been stated. It follows that what the plaintiffs complained of as a "special rate" was a differential rate of $0.00088 higher than the general rate in the rest of the municipal district, viz. "a greater rate than that which it (the municipality) imposes elsewhere in the district". The attempt of the plaintiffs to attack the imposition of the "special rate" as something separate from the general but differentiated rate has, therefore, its own difficulties. In the result there was but one rate imposed upon ratepayers within the special district. The substance of the matter is, however, whether in the circumstances the Shire had power to borrow money for the purpose of constructing the church and to impose a differential rate in the special area to meet loan interest and repayments, and it is this matter of substance which deserves attention in the first place. (at p219)

5. The Council did, without question, propose that expenditure, including loan interest and repayment, be incurred in providing special works, i.e., the inter-denominational church at Jerramungup for the benefit of the inhabitants of the specified area. Whether those inhabitants wanted the church is an altogether different matter, but a poll having been taken of the 439 eligible voters, 272 voted and of those votes 182 were in favour of the proposal, 86 were against the proposal and 4 votes were informal. (at p220)

6. It is also plain that the Governor had approved the construction of the church as a work for which the Shire might borrow money. That approval was given on 20th January 1966. The power of a council to borrow money for "works and undertakings" is conferred by s.601 of the Act and by virtue of the definition of "works and undertakings" in s. 598 the power extends to works and undertakings approved in writing by the Governor. Prima facie, therefore, the Shire had power to borrow money for the construction of the church. It was, however, contended for the appellants that the works and undertakings for which the Governor could grant approval under s. 601 does not go beyond works and undertakings for which an authority in the council to undertake is to be found in the Act outside the provisions of ss. 598 and 601. We are not prepared to accept this limitation particularly when a comparison is made of pars. (24) and (26) of the definition of "works and undertakings" in s. 598. It seems to us that so much of the definition of "works and undertakings" in s. 598 as appears in par. (26) of that section corresponds closely with s. 529 (e) of the Act which authorizes a council to expend its municipal fund inter alia "in any other manner authorised for the time being by the Minister" and that accordingly there exists in the Minister an over-riding power to authorize expenditure, and in the Governor an over-riding power to authorize the borrowing of money, and that these powers taken together in effect warrant a council undertaking works and undertakings upon which the Minister under s. 529 (e) authorizes a council to expend money out of its municipal fund or for which the council may lawfully borrow money by reason of the approval given by the Governor under s. 598 (26). (at p220)

7. Accordingly, it seems to us that when works and undertakings have been approved and authority has been obtained to raise money by loan for their construction and the council takes the steps set out in (i) (ii) and (iii) of s. 548 (4) (c) of the Act then the council may impose a differential rate to meet the loan interest and repayments. In other words, once the position has been reached that a council has power to borrow money for certain works and undertakings and decides to do so the power to impose rates to cover its financial obligations to lenders follows. (at p220)

8. Accordingly, in our opinion, the plaintiffs are not entitled as against the Shire to the relief which they have sought and it is unnecessary to consider the complication arising from the fact that there was but one rate imposed upon the plaintiffs, notwithstanding that it was a differential rate. (at p221)

9. We would dismiss the appeal. (at p221)

KITTO J. I agree in the judgment of the Chief Justice and Menzies J. (at p221)

2. I may add that, as I read the Act, express authority for the Council to apply the relevant loan fund in carrying out the erection of the inter-denominational church may be found in s. 527 (2). This conclusion assumes, but I think it is a correct assumption, that the erection of the church falls within the expression "work or undertaking" in that provision. The expression there refers, as s. 527 (1) shows, to a work or undertaking in respect of which money has been received by the Council on loan. The Council's power to raise money by loan otherwise than by overdraft (which is the relevant power in this case) exists by virtue of s. 601, and it is a power to borrow for "works and undertakings". This expression is defined by par. (26) of s. 598 to include works and undertakings, other than those previously mentioned in the section, approved by the Governor. It was contended for the appellants that having regard to the inclusion by par. (24) of permanent works and undertakings which a council is authorized or required by an Act to provide, carry out or undertake (a description not applicable in this case) par. (26) should be read as limited to non-permanent works and undertakings. I see no justification for this limitation, however, and I therefore regard par. (26) as making the erection of the church here in question a work or undertaking for the purposes of Pt XXII of the Act (headed "Borrowing Powers"). It is, of course, only for the purposes of that Part that s. 598 defines "works and undertakings", and the Part does not include s.527. Nevertheless it seems to me that when s. 527 speaks of "the work or undertaking" for which a loan was raised it must be understood as using that expression in the sense of s. 598. (at p221)

3. I would dismiss the appeal. (at p221)

Orders

Special leave to appeal granted. Appeal dismissed with costs.