Nash Bros Builders Pty Ltd v Riverina Water County Council

[2016] NSWCA 225

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:	Nash Bros Builders Pty Ltd v Riverina Water County Council [2016] NSWCA 225
Hearing dates:	15 June 2016
Decision date:	25 August 2016
Before:	Basten JA at [1]; Macfarlan JA at [38]; Ward JA at [40]
Decision:	Appeal dismissed with costs.
Catchwords:	ENVIRONMENT AND PLANNING – whether council has power to levy development servicing charges for provision of water supply to retirement village under Water Management Act 2000 (NSW), s 306 or Local Government Act 1993 (NSW), s 608 – whether application for compliance certificate must be made to council before power to levy charges arises – whether statutory provision for levying of annual charges for services provided by council precludes fees for services not provided annually – appeal dismissed with costs
Legislation Cited:	Environmental Planning and Assessment Act 1979 (NSW), ss 81, 94, 109J Land and Environment Court Act 1979 (NSW), s 58(1) Local Government (General) Regulation 2005 (NSW), cll 20, 21 Local Government Act 1993 (NSW), ss 64, 387, 394, 400, 405, 491, 493, 494, 496, 501, 503, 608, 610, 610A, 610B, Ch 15, Ch 5, Pt 3, Div 2; Ch 12, Pt 5; Pt 10 Water Management (General) Regulation 2011 (NSW), cll 223, 224 Water Management Act 2000 (NSW), ss 283, 305, 306, 307, Div 5, Ch 6, Pt 2
Cases Cited:	Airservices Australia v Canadian Airlines [1999] HCA 62; (2000) 202 CLR 133 Allandale Blue Metal Pty Ltd v Road and Maritime Services [2013] NSWCA 103; (2013) 195 LGERA 182 Anthony Hordern & Sons Ltd v Amalgamated Clothing & Allied Trades Union of Australia [1932] HCA 9; (1932) 47 CLR 1 Ferdinands v Commissioner for Public Employment (2006) 225 CLR 130; [2006] HCA 5 Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom [2006] HCA 50; (2006) 228 CLR 556 Nash Bros Builders Pty Ltd v Riverina Water County Council (No 2) [2015] NSWLEC 156 Plaintiff M70/2011 v Minister for Immigration and Citizenship [2011] HCA 32; (2011) 244 CLR 144 Re McJannet; Ex parte Minister for Employment, Training and Industrial Relations (Qld) (1995) 184 CLR 620 Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Live-stock Corporation [1980] FCA 38; 44 FLR 455 Regional Express Holdings Ltd v Dubbo City Council (No 3) [2014] NSWLEC 87, (2014) 212 LGERA 41 The King v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141
Category:	Principal judgment
Parties:	Nash Bros Builders Pty Ltd (First Appellant) Nash Bros Constructions Pty Ltd (Second Appellant) Riverina Water County Council (Respondent)
Representation:	Counsel: A Galasso SC with T Prince (Appellants) RPL Lancaster SC with NM Eastman (Respondent)   Solicitors: Bradley Allen Love (Appellants) Local Government Legal (Respondent)
File Number(s):	2015/00314961
Publication restriction:	Nil
Decision under appeal	Court or tribunal: Land and Environment Court of New South Wales Jurisdiction: Class 4 Citation: [2015] NSWLEC 156 Date of Decision: 02 October 2015 Before: Pepper J File Number(s): 14/40028

HEADNOTE

[This Headnote is not to be read as part of the judgment]

This judgment relates to an appeal from a decision of a judge in the Land and Environment Court finding that Riverina Water County Council (Riverina Water) had the statutory power to charge the appellant developers (Nash Bros Builders Pty Ltd (Nash Bros) and Nash Bros Constructions Pty Ltd (NBC)) development servicing charges in relation to the development of a retirement village.

The appellants were responsible for the construction of the retirement village. Riverina Water was the provider of the water supply to the village. The development consent for the village was given in July 2008 and contained a condition, the source of power for which was expressly identified as being s 64 of the Local Government Act 1993 (NSW) and Div 5 of Pt 2 of Ch 6 of the Water Management Act 2000 (NSW), that, prior to the issue of a construction certificate, a compliance certificate be obtained (for which a compliance certificate fee applied) in respect of water management works.

From March 2012, Riverina Water issued notices to the appellants for development servicing charges and those invoices were paid. In September 2013, the solicitor for Nash Bros wrote to Riverina Water objecting to the payment of the charges. Thereafter, payment by the appellants of the charges was expressly made under protest and on a without prejudice basis. In January 2014, the appellants commenced proceedings in the Land and Environment Court seeking a declaration that Riverina Water had no power to levy the charges.

The primary judge refused the declaratory relief sought, finding that two statutory provisions – s 608 of the Local Government Act (by operation to s 400(1) of that Act) and s 306 of the Water Management Act (by operation of ss 64 and 400(1) of the Local Government Act) – provided Riverina with the authority to levy the charges. Section 608 of the Local Government Act empowers councils to charge fees for any service other than one for which it is authorised to make an annual charge under s 496 or 501. Section 306 of the Water Management Act provides that a water supply authority may impose fees before granting a certificate of compliance.

The appellants appealed from the decision of the primary judge, challenging her Honour’s conclusions on both sources of statutory power.

Held, dismissing the appeal with costs:

(1) by Ward JA (at [90]-[91]) (Macfarlan JA (at [38]) agreeing), the primary judge erred in finding that there was power to levy the charges under s 306(2) of the Water Management Act on the basis that, in the absence of the making of an application for a compliance certificate, the power to levy a charge under s 306(2) does not arise. The finding by the primary judge that there was no application made by the appellants to Riverina Water for a compliance certificate was determinative of this issue.

(2) by Basten JA (dissenting on this ground) (at [18], [21]), s 306 of the Water Management Act was available as a relevant source of power in circumstances where the construction of the development was ongoing. In the present case, under the development consent for the retirement village, the appellants could not build without such a certificate; therefore s 306 allowed Riverina Water to impose a development servicing charge.

(3) by Basten JA (at [34], [36]); Ward JA (at [113]-[114]) (Macfarlan JA agreeing with Basten and Ward JJA at [38]), there was power to levy the development servicing charges pursuant to the broad power under s 608 of the Local Government Act. The fact that Riverina Water could choose to provide the services comprised in its water delivery system on an annual basis (and hence levy a fee under s 501 of that Act) did not preclude the power under s 608 being exercised where it did not provide or propose to provide the relevant services on an annual basis. It was not necessary to show that the developers had been the direct recipient of the water supply before a development service charge could be levied.

Judgment

1. BASTEN JA: The appellants are two builders (“the developer”) responsible for the construction of a retirement village, known as The Grange Retirement Village, on land at Lake Albert near Wagga Wagga in the south of the state. The land is within the local government area, constituted as a city, for which the council is the Wagga Wagga City Council (“the City Council”). The City Council was the consent authority for development sought to be carried out on the land. The issue in dispute is whether the developer is required to pay the respondent, Riverina Water County Council, an amount of some $470,000, referred to as a “development servicing charge”, as an upfront fee for the supply of potable water to the retirement village.

2. The respondent relied upon two statutory provisions as authority for its power to levy the development servicing charge. The developer contended that neither provided the necessary authority. In the Land and Environment Court, Pepper J held that both sources of authority were available. [1] The present appeal challenges that decision.

   1. Nash Bros Builders Pty Ltd v Riverina Water County Council (No 2) [2015] NSWLEC 156.

3. It may be noted at the outset that the unarticulated premise underlying the developer’s case was that it was entitled to have the respondent build the infrastructure to supply potable water to a large residential development without it being required to pay the costs incurred by the respondent. Because unarticulated, the legal basis for that proposition was not explored. In fact, it was inconsistent with the structure and purposes of the Local Government Act 1993 (NSW) (creating the respondent and regulating its finances) and the Water Management Act 2000 (NSW) (which identified its water supply functions). Far from the developer’s approach of seeking to read down any express power under which fees might be charged, a purposive approach to statutory construction required that the financial powers should not be read in a way which undermined the commercial viability of the respondent, for which the legislation provided and which it subjected to regulation and requirements of transparency.

Background facts

4. The original development consent for the retirement village was given on 21 July 2008. It was subsequently amended on a number of occasions. The proposed development now covers 196 detached residential dwellings, 63 assisted living units and a community centre. It was described as a “staged residential development for seniors living”.

5. Condition 3 was in the following terms:

“Pursuant to s 64 of the Local Government Act 1993 and Division 10 of Part 2 of Chapter 6 of the Water Management Act 2000, prior to the issue of the Construction Certification a compliance certificate is to be obtained in respect of water management works (as defined in s 283 of the Water Management Act 2000) relating to the development. See Engineering Advice for contributions required.

(Advisory condition: With respect to Condition 3, a compliance certificate fee of $470,077.14 applies. The required compliance certificate fee will be calculated with each Construction Certificate application and payable prior to the release of the certificate.)

6. The development consent envisaged a two-stage development. However, a statement of agreed facts noted that an amendment to the consent on 17 June 2011 enabled the developer “to build units in various locations to meet demand and without the need to complete one stage before proceeding with the next.”

7. At trial there was some uncertainty as to what precisely was envisaged by way of a “compliance certificate”. There was a disagreement at trial as to whether any compliance certificate had been applied for for the purposes of condition 3 and, in any event, whether such a certificate had been granted. The trial judge found that none of the documents proffered in evidence constituted a certificate of compliance for the purposes of condition 3, nor had any application been made by the developer for a certificate. [2]

   2. Judgment at [176].

8. These findings of fact led to an unexplained anomaly. Condition 3 required that a compliance certificate be obtained in respect of water management works prior to the issue of a construction certificate. Pursuant to s 81A of the Environmental Planning and Assessment Act 1979 (NSW) (“the EP&A Act”), the erection of a building in accordance with a development consent must not be commenced until a construction certificate for the building work has been issued. [3]

   3. EP&A Act, s 81A(2)(a).

9. Apparently in conformity with the agreed fact that the development could proceed by constructing units to meet demand, the development servicing charge appears to have been recouped by a series of separate invoices issued by Riverina between March 2010 and July 2014. Neither the statement of agreed facts, nor the agreed chronology filed in the Land and Environment Court, indicated whether, and if so when, construction certificates were issued, having regard to the payments. The City Council was not a party to these proceedings.

10. One of the agreed facts was that the respondent, being a county council established under the Local Government Act, exercised “water supply” functions under Ch 6, Pt 3, Div 2 of the Local Government Act. These functions included that provided under s 64, which was in the following terms:

64   Construction of works for developers

Division 5 of Part 2 of Chapter 6 of the Water Management Act 2000 applies to a council exercising functions under this Division in the same way as it applies to a water supply authority exercising functions under that Act.

11. Section 64 of the Local Government Act is expressly identified as the source of power referred to in condition 3 of the development consent. That consent also refers to “Division 10 of Part 2 of Chapter 6 of the Water Management Act”. That must be a typographical error, as there is not and never has been a Division 10 of that Part. Rather, it should be understood as referring to Division 5, consistently with the reference to s 64 of the Local Government Act, which refers to Division 5 in the relevant part of the Water Management Act. As will be seen shortly, that contains the relevant sections upon which reliance was placed.

12. As will be noted shortly, it is the developer which is expected to apply for a certificate of compliance and the respondent which is to grant the certificate. The respondent is clearly not intended to certify its own compliance, but rather that of the developer. Further, it is the developer’s performance of any conditions imposed by the respondent, and in particular the payment of the disputed fees, which is to be certified.

13. The calculation of the fees was regulated. The respondent, as a county council subject to the Local Government Act, was required to prepare “operational plans”, which were to be publicly exhibited in draft form, pursuant to s 405 of the Local Government Act. The first relevant plan in evidence was the respondent’s 2008/2009 management plan. It provided (in s 11.2) for a development servicing charge calculated in accordance with a development servicing plan. Subsequent plans were adopted in each of the following years. The developer relied upon the description of the charges and fees set out at the beginning of that section, which was in the following terms:

“11.1   Connection costs

Connection fees have two basic components – a development servicing charge (a contribution towards infrastructure based on the potential increase in demand on the system), and a Service Connection Fee (the (averaged) cost of physically installing the connection and meter). Land developers are also required to meet the reticulation costs.”

First source of authority – certificate of compliance

14. The respondent was not a “water supply authority” for the purposes of the Water Management Act, but a "council" for the purposes of the Local Government Act. In the latter capacity, pursuant to s 64 of the Local Government Act (set out above) it had the functions of a water supply authority under the specified division within the Water Management Act. It is convenient to set out the whole of Ch 6, Pt 2 Div 5 of the Water Management Act (referred to below as “Div 5”).

Division 5 Developer contributions to the construction of works

305   Application for certificate of compliance

(1)   A person may apply to a water supply authority for a certificate of compliance for development carried out, or proposed to be carried out, within the water supply authority’s area.

(2)   An application must be accompanied by such information as the regulations may prescribe.

306   Authority may impose certain requirements before granting certificate of compliance

(1)   This section applies to such kinds of development as are prescribed by the regulations for the purposes of this section.

(2)   As a precondition to granting a certificate of compliance for development, a water supply authority may, by notice in writing served on the applicant, require the applicant to do either or both of the following:

(a)   to pay a specified amount to the water supply authority by way of contribution towards the cost of such water management works as are specified in the notice, being existing works or projected works, or both,

(b)   to construct water management works to serve the development.

(3)   In calculating an amount for the purposes of subsection (2) (a):

(a)   the value of existing water management works and the estimated cost of projected water management works may be taken into consideration, and

(b)   the amount of any government subsidy or similar payment is not to be deducted from the relevant value or cost of the water management works, and

(c)   consideration is to be given to any guidelines issued for the time being for the purposes of this section by the Minister.

(4)   If a water supply authority imposes a requirement under this section on the Crown, the Crown may request the Minister for Urban Affairs and Planning to determine whether such a requirement should be imposed and, if so, in what terms.

(5)   The determination made by the Minister for Urban Affairs and Planning in response to such a request is final and is taken to be the determination of the water supply authority.

(6)   Any water management works constructed in compliance with a requirement under this section are the property of the water supply authority.

307   Granting of certificates of compliance

(1)   A water supply authority must grant a certificate of compliance for development:

(a)   within 60 days after an application for the granting of such a certificate is made, or

(b)   if, within that period, the water supply authority imposes a requirement on the applicant under this Division, as soon as it is satisfied that the requirement has been complied with.

(2)   A water supply authority may be satisfied that a requirement under this Division has been complied with if the applicant lodges with the water supply authority such security for compliance with the requirement as the water supply authority may approve.

(3)   If a water supply authority fails or refuses to give a compliance certificate within the period of 60 days after an application is duly made in that regard, the applicant may appeal to the Land and Environment Court, within 12 months after the expiration of that period, against the failure or refusal.

15. The scope and purpose of Div 5 is by no means clear on its face and was not clarified in the course of submissions by the parties. Section 305(1) envisages that the certificate may relate to development which has been carried out and to development which is proposed to be carried out. Section 306 envisages that, by way of condition on the granting of a certificate, the authority may specify a charge to be paid by the developer or may require the developer to undertake water management works (or both). Section 307 envisages that, where a condition is imposed, the certificate is to be granted only when the condition has been complied with (subject to the lodging of security for compliance).

16. The developer contended that s 307(1)(b) was not engaged in the present case, because there had been no application and the requirement to pay a fee was not imposed after such an application was received. Indeed, there being no application, it was said that s 307 was not engaged at all.

17. The purpose of Div 5 may be inferred from its context, namely prescribed development, which covered this case. [4] Land development is regulated by the EP&A Act. There is provision in the EP&A Act for a certificate of compliance in relation to a water supply authority, providing that a “subdivision certificate” must not be issued absent a certificate of compliance. A “subdivision certificate” is required for registration of a subdivision. [5] However, this regime is not engaged in this case.

    4. Water Management (General) Regulation 2011 (NSW), cl 224.

    5. EP&A Act, s 109J(1)(e).

15. It remains the fact that Div 5 assumes the need for a certificate of compliance, but does not identify the source of, nor limit the purpose of, any such requirement. In the present case the requirement is found in the instrument of consent issued by the consent authority. There is no reason to read Div 5 down so as to reject its application in circumstances where a development consent requires a certificate of compliance in respect of water management works. The development consent in the present case prevents the construction of the proposed development commencing without such a certificate; legally, the appellants cannot build (or continue to build) without such a certificate.

16. What then is to be certified? It must either be steps undertaken by the authority, or by the developer, or by a third party. No submission identified any step to be taken by a third party, so that possibility may be excluded. The terms of s 306 are inconsistent with the proposition that the section refers to steps being taken by the authority. Indeed, the ordinary usage of the term “certification” would militate strongly against the possibility that the authority is to certify its own compliance with some requirement. In any event, no submission supported such a reading. It follows that what is to be certified must be steps taken by the developer. However, because no extrinsic requirements are identified, the steps must be those required to comply with the authority’s requirements of the developer. The power to impose requirements is found in s 306(2). This is a provision of a kind which is not uncommon, but awkward in form, and has a dual function. [6] In this case, it both identifies that which must be complied with and impliedly confers the power to impose those requirements.

    6. See, eg, The King v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141, 165-166 (Dixon J); Re McJannet; Ex parte Minister for Employment, Training and Industrial Relations (Qld) (1995) 184 CLR 620, 655 and 658 (Toohey, McHugh and Gummow JJ).

17. Pursuant to s 306(2), the authority could thus either require the developer to construct water management works to serve the development, or charge a fee for their construction. It did the latter.

18. It appears that, in the past, the consent authority (the City Council) did not insist on compliance with condition 3, and the provision of a certificate of compliance, in order to issue construction certificates; at least, the evidence does not establish that it did. However, the facts are irrelevant for present purposes. The developer accepts it cannot recover past payments. The construction of the development is ongoing. The only question is whether the respondent can impose a development servicing charge with respect to the ongoing development. Section 306 allows it to do so.

19. The appellants submitted that Div 5 was not engaged because it depends on there being an application for a certificate of compliance (provided for in s 305(1)), on whom a notice in writing must be served requiring compliance with preconditions to the grant of the certificate, in accordance with s 306(2).

20. At trial some little effort was devoted to the search for an “application” and for the relevant notice in writing. However, because the appeal is limited to a question of law and the developer no longer seeks to recover payments already made, what has and has not happened in the past is irrelevant. The power of the respondent to impose fees may be found in Div 5, for the reasons explained above. It may be that payment cannot be required until an application is made and notice in writing given, but under the consent instrument no construction can be done until the certificate is obtained.

Second source of authority – s 608

24. Chapter 12, Pt 5 of the Local Government Act deals with county councils; the functions of a county council, such as the respondent, are set out in s 394:

394   Functions of county council

(1)   The functions of a county council may, in accordance with a proclamation made for the purposes of this Part, comprise any one or more of the functions of a council under this or any other Act.

(2)   A council may not undertake a function conferred on a county council whose area of operations includes the whole or any part of the council’s area, subject to the regulations or a proclamation made for the purposes of this Part.

(3)   Subsection (2) does not prevent a council from exercising a function delegated to it by a county council.

25. Relevantly for present purposes, the Local Government Act makes further provision in s 400 in the following terms:

400   Application of Act to county councils

(1) This Act (except Part 1 and Divisions 1 and 2 of Part 2 of Chapter 9, Chapter 10, section 365 and the provisions of Chapter 15 concerning the making and levying of ordinary rates) applies:

(a)   to county councils in the same way as it applies to councils, and

(b)   to the members of county councils in the same way as it applies to the councillors of councils,

with such exceptions and modifications (if any) as the regulations may provide.

26. Chapter 15 of the Local Government Act deals with the financing of councils. Part 10 deals with fees and Pt 10, Div 1 deals with council fees generally. The exclusion in s 400 with respect to Ch 15 is limited to provisions relating to the making and levying of ordinary rates, which may include ss 493 and 494 and, more particularly, Pt 3. It does not exclude Pt 10, Fees, which therefore applies to county councils. The respondent relied upon the power conferred in s 608 which, so far as relevant, provides:

608   Council fees for services

(1) A council may charge and recover an approved fee for any service it provides, other than a service provided, or proposed to be provided, on an annual basis for which it is authorised or required to make an annual charge under section 496 or 501.

(2)   The services for which an approved fee may be charged include the following services provided under this Act or any other Act or the regulations by the council:

●   supplying a service, product or commodity

….

27. The developer relied further upon the terms of s 610 which reads as follows:

610   Effect of other Acts

(1)   If the amount of a fee for a service is determined under another Act:

(a)   a council may not determine an amount that is inconsistent with the amount determined under the other Act, and

(b)   a council may not charge a fee in addition to the amount determined under the other Act.

(2)   If the charging of a fee for a service is prohibited under another Act, a council must not charge a fee for the service under this Act.

28. The term “services” is broadly defined in s 608(2) inclusively, but not exhaustively. There is no reason to doubt that the supply of water would fall within that express language, as would the provision of infrastructure to allow potable water to be delivered to the development. It follows that a fee may be charged for the provision of the necessary infrastructure which could, subject to statutory regulation, cover the capital expenditure.

29. The developer submitted that s 608 did not support the levying of the development servicing charge, for a number of reasons.

30. First, it contended that the legislative scheme would not support alternative bases for levying a charge, namely one under the Local Government Act and the other under the Water Management Act.

31. That submission depended on the proper construction of the statute. As explained by Gleeson CJ in Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom,[7] in addressing a similar argument for limiting two powers conferred on the Minister under the Migration Act 1958 (Cth) to separate spheres of operation:

“If there is such a reason, it must be found in a process of statutory construction. The provisions of s 501(2), on the one hand, and ss 200 and 201 on the other, are not repugnant, in the sense that they contain conflicting commands which cannot both be obeyed, or produce irreconcilable legal rights or obligations. They create two sources of power, by which a person in the position of the respondent may be exposed, by different processes, and in different circumstances, to similar practical consequences. There is nothing novel, or even particularly unusual, about that. It does not of itself mean that only one source of power is available. If, however, by reason of the apparent exhaustiveness with which one provision, or group of provisions, dealt with the position of a person such as the respondent, there were an incompatibility of a kind that required a conclusion that only one provision or group of provisions was intended to apply, then that would be a reason for accepting the respondent's contention[8] . Again, if one provision, or group of provisions, were directed with particularity to the case of a person such as the respondent, and the other were merely of general application, the same could be said[9] . As explained by Heydon and Crennan JJ, and also by Gummow and Hayne JJ, neither proposition can be made good when regard is had to the legislative history and context.” [10]

7. (2006) 228 CLR 566; [2006] HCA 50 at [2] (Gleeson CJ).

8. Ferdinands v Commissioner for Public Employment (2006) 225 CLR 130; [2006] HCA 5.

9. Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Live-stock Corporation [1980] FCA 38; 44 FLR 455 at 468-469; 29 ALR 333 at 347.

10.    See also [47]-[59] (Gummow and Hayne JJ) and [165] (Heydon and Crennan JJ).

32. The developer’s submission is contradicted by the language of s 610, which expressly envisages both the power to levy a fee under another Act and the provision in another Act for the calculation of the amount to be charged. Such express reference is inconsistent with an implied intention that only a single power can operate in one set of circumstances.

33. Secondly, the developer contended that s 608(1) was not engaged because the service (of water supply) was to be provided on an annual basis and was therefore excluded by the exception referring to provisions authorising annual charges under ss 496 and 501. Section 496 deals with charges for domestic waste management services and is irrelevant for present purposes. Section 501 authorises a council to make an annual charge for “water supply services”, amongst others. It is not necessary to determine the scope of the undefined phrase “water supply services” in s 501(1). The term used in s 608(1) is “any service” and there is no reason to read that phrase down so as to exclude the capital works which fall within the definition in the Local Government Act of “water supply work”.

34. The operation of the exclusion does not depend on whether the council seeks to recover its costs on an annual basis (for example, by amortising the capital expenditure over a period of time) but on whether the service is provided (or proposed to be provided) “on an annual basis”. The construction of the necessary infrastructure to allow the supply of potable water to the village constituted a service provided to the developer, and was provided as a “one-off” service and not on an annual basis. Accordingly, the appellants’ contention to the contrary must be rejected.

35. That conclusion is consistent with s 610A of the Local Government Act, which provides the mechanism by which fees are to be determined in respect of “any service relating to the following activities”, including “the carrying out of a water supply … service”. The fee is required to be calculated (and was calculated in the present case) “in accordance with a pricing methodology adopted by the council in its operational plan prepared under Part 2 of Chapter 13.”[11]

    11. See Local Government Act, s 610B(1) and s 405.

36. Thirdly, the appellants contended that because the respondent did not supply water to them, it was not entitled to recover a fee for a service under s 608(1). That submission should be accepted: not only did the respondent not supply water to the developer, but to the extent that it supplied water, it did so “on an annual basis” and could not recover the cost of that service. The argument is misconceived, however, because what was being recovered was not the cost of supplying the commodity, but the cost of providing the infrastructure for its supply.

Conclusion

37. Although for reasons which differ to some extent from those of the trial judge, the conclusion reached in the Land and Environment Court was correct and the appeal must be dismissed. The appellants must pay the respondent’s costs in this Court.

38. MACFARLAN JA: I agree with the judgment of Ward JA and, subject to the following, with that of Basten JA.

39. Whilst I agree with Basten JA that s 306 of the Water Management Act would have been available as a relevant source of power if an application for a compliance certificate had been made, the primary judge was not satisfied that that had occurred. In those circumstances, as Ward JA concludes, s 306 was not a presently available source of power.

40. WARD JA: This appeal relates to a dispute as to the power of the respondent, Riverina Water County Council (Riverina Water), to impose on the appellant developers (Nash Bros Builders Pty Ltd (Nash Bros) and Nash Bros Constructions Pty Ltd (NBC)), charges referred to as development servicing charges in relation to the development of a retirement village at Lake Albert.

41. The land on which the retirement village was built is owned by the trustee of The Grange Lifestyle Village Unit Trust, that being a company controlled by Messrs Chris and Scott Nash (or their respective families), who were also the controllers of the appellants. NBC, and then Nash Bros, which appears informally to have taken over from NBC in that regard, obtained the relevant approvals for the residential development and carried out the development on behalf of the owner.

42. Riverina Water, a county council established in 1997 under s 387 of the Local Government Act 1993 (NSW), and exercising water supply functions under that Act, is the provider of the water supply for the retirement village. It completed the construction, installation and connection of water supply services to the retirement village in October 2010.

43. Progressively from March 2012, as the residential villas in the retirement village were completed, Riverina Water issued invoices to NBC/Nash Bros for development servicing charges and those invoices were paid. On 26 September 2013, the solicitor for Nash Bros wrote to Riverina Water objecting for the first time to the payment of the charges. Thereafter, payment by the appellants of the development servicing charges was expressly made under protest and on a without prejudice basis.

44. On 23 January 2014, proceedings were commenced by the appellants in the Land and Environment Court challenging the validity of the charges. The appellants sought a declaration that Riverina Water had no power to levy the development servicing charges. As the appellants were seeking relief by way of restitution (a claim no longer pressed), proceedings were also commenced in the Supreme Court of New South Wales. Those proceedings were transferred to the Land and Environment Court to be heard and determined together with the Land and Environment Court proceedings.

45. The primary judge refused the declaratory relief sought and dismissed the appellants’ summons with costs (Nash Bros Builders Pty Ltd v Riverina Water County Council (No 2) [2015] NSWLEC 156), holding that Riverina Water has, and had at the relevant times, the statutory power to charge the appellants the development servicing charges, by reference both to s 608 of the Local Government Act (by operation of s 400(1) of that Act) and to s 306 of the Water Management Act 2000 (NSW) (by operation of ss 64 and 400(1) of the Local Government Act).

46. The appellants now appeal to this Court pursuant to s 58(1) of the Land and Environment Court Act 1979 (NSW), challenging the conclusions reached by the primary judge on both sources of statutory power.

Background

47. The initial development consent for the residential development of the retirement village was granted on 21 July 2008. It was subsequently modified on various occasions. The development consent provided for the development of a number of detached residential dwellings, assisted living units and a community centre.

48. Prior to obtaining development consent, NBC had sought and obtained from Riverina Water advice as to applicable fees and conditions for the development. On 27 October 2008, Riverina Water advised the appellants’ consulting engineers of the details of the various fees and charges, including “development servicing charges” and connection fees.

49. The development consent imposed, relevantly, certain conditions as to certificates to be obtained by the appellants.

50. First, condition 3 provided:

3. Pursuant to s 64 of the Local Government Act 1993 and Division 10 of Part 2 of Chapter 6 of the Water Management Act 2000, prior to the issue of the Construction Certificate a compliance certificate is to be obtained in respect of water management works (as defined in s 283 of the Water Management Act 2000) relating to the development. See Engineering Advice for contributions required.

(Advisory condition: With respect to Condition 3, a compliance certificate fee of $470,077.14 applies. The required compliance certificate fee will be calculated with each Construction Certificate application and payable prior to the release of the certificate.)

…

The Applicant is advised:

…

ENGINEERING SECTION

a)   With respect to Condition 3, a compliance certificate fee of $470,077.14 applies. The required compliance certificate fee will be calculated with each Construction Certificate application and payable prior to the release of the certificate.)

51. Second, condition 62, contained in a section of the consent dealing with plumbing, relevantly provided:

62.   A Water Plumbing Certificate from Riverina Water County Council is to be submitted to Wagga Wagga City Council prior to the issue of a Final Certificate on any building work.

…

The Applicant is advised:

…

PLUMBING SECTION

...

(f)   Applicant is to obtain Plumbing Permit from Riverina Water County Council before any water supply / plumbing works commence and a Compliance Certificate upon completion of works. Contact Riverina Water's Plumbing Inspector Stuart Rose on XXXXX XXX, you will be required to quote your Construction Certificate number. Note: Occupation/Final Building Certificate will not be issued unless Riverina Water's Certificate is received by Council.

52. On 23 March 2010, Riverina Water issued NBC with a tax invoice for $502,334, of which the sum of $38,180 was expressed to be for water service connection fees, $101,354 was for the extension of a water service main to the land, and the remaining $362,800 was for “development servicing charges” for the whole of the retirement village.

53. The term “development servicing charges” appears to be derived from references in Riverina Water’s Development Servicing Plans (DSPs). In the Riverina Water County Council Development Servicing Plans for Water Supply published in August 2004, there is provision for the calculation of upfront “developer charges” to pay for the infrastructure costs in the servicing of new developments. In the Riverina Water County Council Management Plan 2008/2009, which commenced in July 2008, there is reference to both “development servicing charges” and “connection fees”; the former being described in its operational plans as “a contribution towards infrastructure based on the potential increase in demand on the system”; the latter as “the average cost of physically installing the connection and meter”.

54. Charges under the DSP were to be calculated based on a net present value approach adopted by the Independent Pricing and Regulatory Tribunal (IPART) for metropolitan water utilities, the fundamental principle of which being that investment in assets for servicing a development is fully recovered from the development through upfront charges (that is, developer charges or “development servicing charges”).

52. The primary judge noted (at [102]-[103] of her reasons) that the parties did not dispute that the development servicing charges in this matter had been determined, as required by s 610B of the Local Government Act, in accordance with the various pricing methodologies set out and adopted by Riverina Water; nor was there a dispute as to the preparation of the various DSPs and Operational Plans having been a valid exercise of power by Riverina Water. Rather, the dispute was as to whether Riverina Water was authorised to charge the development servicing charges.

Relevant statutory provisions

Local Government Act

56. Pursuant to s 400(1) of the Local Government Act, the Act applies to Riverina Water in the same way as it applies to a local council (except in relation to a number of specific provisions set out in s 400(1) that are not presently relevant).

57. The principal basis on which the primary judge found that the charges were authorised was the power conferred by s 608. Section 608, which is contained in Chapter 15 of the Local Government Act, provides:

608   Council fees for services

(1)   A council may charge and recover an approved fee for any service it provides, other than a service provided, or proposed to be provided, on an annual basis for which it is authorised or required to make an annual charge under section 496 or 501. (my emphasis)

(2)   The services for which an approved fee may be charged include the following services provided under this Act or any other Act or the regulations by the council:

●   supplying a service, product or commodity

●   giving information

●   providing a service in connection with the exercise of the council's regulatory functions – including receiving an application for approval, granting an approval, making an inspection and issuing a certificate

●   allowing admission to any building or enclosure.

(3)   In particular, a council may charge an approved fee for inspecting premises that are reasonably required to be inspected in the exercise of the council’s functions, whether or not the inspection is requested or agreed to by the owner or occupier of the premises.

(4)   However, a council may not charge an approved fee for the inspection of premises that are not used for a commercial activity, except where it is necessary to inspect the premises in connection with an application for an approval concerning the premises or in connection with any inspection that is reasonably necessary to determine if an approval has been complied with.

(6)   If inspections of premises are reasonably necessary to determine if an approval has been complied with:

(a)   an approved fee may be charged for such an inspection only if the charging of the fee has been included as a condition of the approval, and

(b)   an approved fee may not be charged for such an inspection before the approval is granted, and

(c)   an approved fee may not be charged for the inspection of any thing for which the council relies on a certificate under section 93 that the thing has been done in compliance with the approval.

(7)   An approved fee charged for inspecting premises must be repaid to the person who paid it if the inspection is not carried out.

(8)   An approved fee charged in connection with a service provided at an airport established and maintained by the council may be recovered from the holder of the certificate of registration issued under the Civil Aviation Regulations of the Commonwealth for the aircraft in respect of which the service was provided. This subsection applies whether or not the holder is the person to whom the service is actually provided.

58. Chapter 15 of the Act contains provisions relating to the manner in which councils are financed. Section 491 provides that a council may, in accordance with Ch 15, derive income from rates, charges, fees, grants, borrowings and investments. Relevantly, “rates”, “charges” and “fees” may each be levied in respect of, inter alia, the provision of services.

59. Pursuant to s 496 of the Local Government Act (to which reference is made in s 608(1)) a council is required to make and levy an annual charge for the provision of “domestic waste management services” for each parcel of rateable land for which the service is available. The charges levied in the present case do not encompass domestic waste management services.

60. The other section to which reference is made in s 608(1) of the Local Government Act is s 501, which provides as follows:

501   For what services can a council impose an annual charge?

(1)   A council may make an annual charge for any of the following services provided, or proposed to be provided, on an annual basis by the council:

●   water supply services

●   sewerage services

●   drainage services

●   waste management services (other than domestic waste management services)

●   any services prescribed by the regulations.

(2)   A council may make a single charge for two or more such services.

(3)   An annual charge may be levied on each parcel of rateable land for which the service is provided or proposed to be provided.

61. By contrast with s 496, the power under s 501 is discretionary in nature. The term “water supply services” is not defined in the Local Government Act.

62. As to the relationship between rates and charges, s 503(1) provides that a charge may be made in addition to an ordinary rate and in addition to or instead of a special rate and s 503(2) provides that if land is not rateable to a special rate for a particular service a council may not levy a charge in respect of that land relating to the same service, unless the charge is limited to recovering the cost of providing the service to the land.

63. It is not disputed that the range of “services” that may be subject to a fee under s 608 is broad.

Water Management Act

64. The alternative basis on which the primary judge found that the charges were authorised was the power under s 306(1) of the Water Management Act.

65. Section 64 of the Local Government Act provides that:

64   Construction of works for developers

Division 5 of Part 2 of Chapter 6 of the Water Management Act 2000 applies to a council exercising functions under this Division in the same way as it applies to a water supply authority exercising functions under that Act.

66. Division 5 of Pt 2 of Ch 6 of the Water Management Act is headed “Developer contributions to the construction of works”. Sections 305 to 307, relevantly, provide as follows:

305   Application for certificate of compliance

(1)   A person may apply to a water supply authority for a certificate of compliance for development carried out, or proposed to be carried out, within the water supply authority’s area.

(2)   An application must be accompanied by such information as the regulations may prescribe.

306   Authority may impose certain requirements before granting certificate of compliance

(1)   This section applies to such kinds of development as are prescribed by the regulations for the purposes of this section.

(2)   As a precondition to granting a certificate of compliance for development, a water supply authority may, by notice in writing served on the applicant, require the applicant to do either or both of the following:

(a)   to pay a specified amount to the water supply authority by way of contribution towards the cost of such water management works as are specified in the notice, being existing works or projected works, or both,

(b)   to construct water management works to serve the development.

(3)   In calculating an amount for the purposes of subsection (2)(a):

(a)   the value of existing water management works and the estimated cost of projected water management works may be taken into consideration, and

(b)   the amount of any government subsidy or similar payment is not to be deducted from the relevant value or cost of the water management works, and

(c)   consideration is to be given to any guidelines issued for the time being for the purposes of this section by the Minister.

…

307   Granting of certificates of compliance

(1)   A water supply authority must grant a certificate of compliance for development:

(a)   within 60 days after an application for the granting of such a certificate is made, or

(b)   if, within that period, the water supply authority imposes a requirement on the applicant under this Division, as soon as it is satisfied that the requirement has been complied with.

(2)   A water supply authority may be satisfied that a requirement under this Division has been complied with if the applicant lodges with the water supply authority such security for compliance with the requirement as the water supply authority may approve.

(3)   If a water supply authority fails or refuses to give a compliance certificate within the period of 60 days after an application is duly made in that regard, the applicant may appeal to the Land and Environment Court, within 12 months after the expiration of that period, against the failure or refusal.

67. “Water management work” (a term used in s 306(2)) is defined in s 283 of the Water Management Act to mean “a water supply work, drainage work, sewage work or flood work, and includes a work in the nature of a water supply work (being a work that receives water from a water supply work under the control or management of a water supply authority)”. “Water supply work” is similarly defined as including “any work that receives water from a water supply work under the control or management of a water supply authority”.

68. The relevant regulations for the purposes of ss 305 and 306 of the Water Management Act are cll 223-224 of the Water Management (General) Regulation 2011 (NSW). Clause 224 provides that the following types of development are prescribed for the purposes of s 306(1) of the Water Management Act:

(a)   the erection, enlargement or extension of a building or the placing or relocating of a building on land,

(b)   the subdivision of land,

(c)   the change of use of land or of any building situated on the land.

Primary judgment

69. As indicated above, the primary judge held that s 608(1) of the Local Government Act authorised Riverina Water to charge the appellants “development servicing charges” as they were “a charge for a service, namely, the supply of water, to the retirement village” ([131]) but that, in the event that that conclusion were incorrect, the power to do so under s 306 of the Water Management Act was lawfully engaged ([178]).

70. As to the principal conclusion, the primary judge noted (at [106]) the appellants’ submission that no service was provided by Riverina Water for the fees charged and that the fees were no more than a capital contribution towards infrastructure based on the potential increase in demand on the system (directed towards defraying current and future infrastructure costs). Her Honour concluded, by reference to the respective council management plans, that the development servicing charge was levied to recover current and future infrastructure costs, including providing the water delivery system she described at [119].

71. The primary judge rejected the appellants’ submission that the power to charge fees for water supply had been specifically carved out of the subject matter of s 608 by reference to ss 501 and 610 of the Local Government Act. Her Honour considered that s 501 was an alternative source of power to s 608(1) and that a council could exercise the power to levy charges for the provision of water supply services either on an annual basis under s 501 or more frequently and on a piecemeal basis under s 608(1) ([110]). Her Honour considered that s 610(1) was concerned with the quantum of the fee and not the power to levy the fee ([112]).

72. The primary judge also rejected the appellants’ argument that s 608(1) was not a valid source of power because s 64 of the Local Government Act, read with ss 305-307 of the Water Management Act, provided for a specific regime by which a contribution to the cost of water management works could be imposed, displacing the more general power in s 608, invoking the Hordern principle (derived from Anthony Hordern & Sons Ltd v Amalgamated Clothing & Allied Trades Union of Australia [1932] HCA 9; (1932) 47 CLR 1 at 7). Her Honour considered that s 608(1) of the Local Government Act and s 306 of the Water Management Act are directed to different subject-matters and capable of operating comfortably beside each other ([126]; [127]).

73. As to the alternative source of power under s 306(1) of the Water Management Act, the primary judge accepted the appellants’ submission that, as a matter of fact, neither of the appellants had applied for a certificate of compliance under s 305 of that Act ([176]) (and Riverina Water does not seek to challenge that finding). Nevertheless, her Honour held that the appellants were obliged under the development consent to obtain a certificate of compliance from Riverina Water, as a precondition to the grant of which Riverina Water had the statutory power to require the payment of a development servicing charge ([151]), and that the prospect of a future application was a sufficient basis upon which the power in s 306(2) could be exercised ([177]).

74. The primary judge identified two parts of the development consent when considering whether the appellants were required to obtain a s 305 compliance certificate, those being the reference to a compliance certificate in the advisory “Plumbing Section” (at (f)) and condition 3 (which her Honour considered made it likely that a certificate of compliance was required both from the consent authority, Wagga Wagga Council, and Riverina Water).

Ground 1 – was there power under s 306(2) of the Water Management Act?

75. Ground 1 of the amended notice of appeal challenges the alternative basis on which the primary judge concluded that there was power to levy the development servicing charges:

1. The trial judge erred (at [177]) in finding that the prospect of a future application for a compliance certificate was a sufficient basis for the power under s 306(2) of the Water Management Act 2000 (NSW) (WM Act) to have been exercised and that this was in fact the manner by which the power was exercised by the Respondent. The power under s 306(2) of the WM Act was not and could not have been.

76. The appellants argue that the primary judge’s reasoning on the application of s 306 is wrong for two reasons.

77. First, they submit that the power in s 306(2) cannot be engaged before there is an application for a certificate of compliance by an applicant. They point to the wording of s 306(2): that it speaks of notification to “the applicant” requiring “the applicant”, relevantly, to pay a specified amount; and that it is prefaced by the words “as a precondition to granting a certificate of compliance”. They maintain that textually the power under s 306(2) is conditioned on there being an extant application since the power to require payment is limited to “the applicant”, i.e., to the person identified in s 305(1) who has applied for a certificate of compliance. They argue that until such an application is made, there is no occasion to consider the grant of a certificate of compliance.

78. Second, the appellants argue that, properly construed, the development consent did not require the appellants to obtain a s 305 certificate of compliance from Riverina Water.

79. As to the reliance placed by the primary judge on the section in the consent under the heading “Plumbing Section”, the appellants point out that this is an advisory part of the consent. They submit that it would not be expected that a substantive condition would be contained in the advisory part of the consent. They argue that in context the compliance certificate to which reference is made at (f) in that advisory section must be understood as being the “Water Plumbing Certificate” required to be obtained pursuant to condition 62. They emphasise that the “Plumbing Section”, as indicated by its heading, is concerned (unlike ss 305-307 of the Water Management Act) specifically with plumbing. They also refer to the local government regulations in force at the time the development consent was issued (cll 20 and 21 of the Local Government (General) Regulation 2005 (NSW)), which imposed certain plumbing requirements in relation to development, including the requirement for a plumbing permit (to which there is express reference in paragraphs (b) and (f) of the plumbing advisory section of the consent), and which required the final inspection and certification of water supply, sewerage and stormwater drainage work by the council or a person approved by the council. They submit that the latter requirement is what is referred to both in condition 62 and paragraph (f) of the advisory section and that the latter should not be read as imposing a fresh requirement (for a certificate of compliance under s 305 of the Water Management Act).

80. As to the reliance placed by the primary judge on condition 3 of the consent, the appellants argue that if this imposed a requirement to obtain a compliance certificate from an authority other than the consent authority (Wagga Wagga Council) it would ordinarily be expected that there would be explicit reference thereto (as was the case with the requirement imposed by condition 62, as explained in the plumbing advisory section).

81. The appellants argue that the fact that the consent identifies (in the advisory note following condition 3) a precise compliance certificate fee ($470,077.14) strongly suggests that only one compliance certificate is referred to in condition 3 (i.e., a certificate from Wagga Wagga Council which would be in the position to specify a precise amount for its certificate but not necessarily for those from other authorities).

82. The appellants further contend (though this is not raised as a ground of appeal) that the primary judge erred in holding inadmissible certain extrinsic evidence that they maintain demonstrated categorically that the compliance certificate referred to in condition 3 was only a compliance certificate from Wagga Wagga Council in relation to sewerage and drainage work; and not a compliance certificate from Riverina Water. In that regard reference is made to a report on the development application that was prepared by Wagga Wagga Council and email correspondence referring to the amount payable in respect of the compliance certificate fee for sewerage and drainage contributions to Wagga Wagga Council as the exact amount referred to in the advisory condition to condition 3 of the consent. The appellants argue that reference to this extrinsic material does not involve the use of evidence to resolve an ambiguity of construction inherent in the document; rather that it is permissible to identify a thing referred to in the development consent (referring to Allandale Blue Metal Pty Ltd v Road and Maritime Services [2013] NSWCA 103; (2013) 195 LGERA 182 at [44] per Meagher JA).

83. In the present proceedings, Riverina Water maintains that it is not necessary for it to rely on the power under s 306(2) of the Water Management Act having regard to the conclusion reached by her Honour on the availability of the power under s 608(1) of the Local Government Act, though it seeks to uphold her Honour’s conclusion on this alternative ground. It does not press its argument that there was an application made by the appellants for a compliance certificate. Rather, it contends that the prospect of a future application is a sufficient basis upon which the power in s 306(2) can be exercised. It notes that there is no express precondition to the exercise of power under s 306(2) that there be an application on foot.

84. In this regard Riverina Water notes the only precondition identified in s 306(2) is that, before a council may issue a certificate of compliance, it may issue a notice requiring “the applicant” to do those things specified in s 306(2)(a) or (b). It accepts that the reference to “the applicant” recognises that there will ultimately need to be an “application” made for the certificate before it is issued, but it submits that it would not have been intended by the legislature that a council be precluded from issuing the notice required by s 306(2) where the course of dealing with the relevant party makes it clear that an application for a certificate would be forthcoming from the party to whom the notice is issued.

76. As to the finding by her Honour that the development consent required the appellants to obtain a compliance certificate from it, Riverina Water says there is no justification for reading condition 3 as relating only to water management works to be supplied by Wagga Wagga Council (noting that condition 3 required a compliance certificate to be obtained in respect of “water management works” as defined in s 283 of the Water Management Act relating to the development and that there was no dispute that the works the subject of the development servicing charges levied by Riverina Water are works that fall within the definition of “water management works” in s 283 of that Act). Riverina Water argues that where there happen to be two separate authorities responsible for the provision of separate aspects of water management works (Wagga Wagga Council for sewerage and drainage works and Riverina Water for water supply) then the proper construction of the condition in the consent is that a certificate is to be obtained from both authorities.

77. It is submitted that it could not reasonably be said that any third party or subsequent owner seeking to ascertain the objective meaning of condition 3 would interpret it in any other way than that compliance certificates would need to be obtained (and the associated fees paid) in respect of the water management works that related to the development.

78. Riverina Water also cavils with the appellants’ suggestion that it would ordinarily be expected that, in the absence of any contrary indication, a requirement imposed in a development consent to obtain a permit, licence, certificate or authority would be to obtain that thing from the consent authority (namely Wagga Wagga Council).

79. As to the reliance sought to be placed by the appellants on the extrinsic evidence, Riverina Water notes that it pre-dated the issue of the assessment report and that there was no reference to or incorporation of those documents in the development consent such as would permit reference to them in order to construe the development consent on the reasoning adopted by this Court in Allandale Blue Metal.

80. Finally, as to the reliance placed by the primary judge on paragraph (f) of the “Plumbing Section” of the development consent, Riverina Water notes condition 62 of the development consent in terms required the appellants to obtain a “Water Plumbing Certificate” from Riverina Water prior to the issue of a final certificate on any building work. It argues that the appellants’ contention essentially requires the court to find that, while the development consent referred to a “Water Plumbing Certificate” in condition 62 and to a “Compliance Certificate” in paragraph (f) of the “Plumbing Section”, in fact it was referring only to the one certificate, being the certification required under cl 21 of the Local Government (General) Regulation 2005 certifying the water supply, sewerage and drainage work. Riverina Water maintains that there is no reason to assume that a reference to two separately defined certificates is a reference to the one thing.

Determination of ground 1

90. I am unable, with respect, to agree with the primary judge’s conclusion that under s 306(2) of the Water Management Act a water supply authority is empowered to require the payment of a sum by way of contribution to the cost of water management works in advance of an application for a certificate of compliance having been made. The opening words of s 306(2) make clear in my opinion that it is only “as a precondition” to the grant of a certificate of compliance that such a contribution can be required. I see nothing in the text of the section, read in the context of the Act as a whole, that indicates an intention on the part of the legislature to empower a water supply authority in effect to anticipate the making of an application for a compliance certificate and call for a contribution to the costs of any water management works simply because there is a prospect of such an application.

91. In my opinion the finding by the primary judge (not here challenged) that there was no application made by the appellants for a compliance certificate to be issued by Riverina Water disposes of the issue raised by ground 1. It is unnecessary to consider whether the development consent, objectively construed, required the appellants to apply for such a certificate. Had it been necessary so to do, I would have concluded that condition 3 does require the appellants to obtain such a certificate, since it extends broadly to “water management works” as defined in s 283 of the Water Management Act and there is no dispute that the water supply functions exercised by Riverina Water fall within that definition. I do not consider that the primary judge erred in ruling inadmissible the extrinsic evidence sought to be relied upon by the appellants.

92. I therefore consider that ground 1 is made good.

Ground 2 – power under s 608(1) of the Local Government Act?

93. This brings me to the principal basis on which the primary judge found in favour of Riverina Water. In this regard, the appellants contend that:

2. The trial judge erred (at [131]) in finding that the Respondent had power to charge and recover fees under s 608(1) of the Local Government Act 1993 (NSW) (LG Act).

94. The appellants argue that the primary judge’s conclusion as to s 608(1) of the Local Government Act is incorrect for a number of reasons.

95. First, they argue that the service identified by the primary judge, namely the supply of water to the retirement village, is expressly excluded from the scope of s 608(1) because, on its terms, s 608(1) does not authorise the charging of a fee for a service “provided, or proposed to be provided on an annual basis for which [the council] is authorised or required to make an annual charge under section 496 or 501”. They argue that since the supply of water to the retirement village is a service provided (or proposed to be provided) on an annual basis (in the sense that it was to be provided by Riverina Water as an ongoing service provided year to year) for which the council is authorised to make an annual charge under s 501, s 608(1) has no application.

96. The appellants point out that the restriction in s 608(1) is not limited to a situation where a council has made an annual charge under s 501. They submit that it is enough that the service provided, or proposed to be provided, is one for which a charge under s 501 could be made. They maintain that, on its terms, s 608(1) is not available where the power in s 501 is capable of being exercised.

97. As to this, Riverina Water emphasises the discretionary nature of the powers under s 608(1) and s 501. They submit that Ch 15 demonstrates the use of clear mandatory language where recourse to a particular levy (rate, charge, fee) is sought to be prescribed (that is, the annual charge for domestic waste management services). Riverina Water argues that broad meaning of s 608 should not be confined by unexpressed limitations and that s 501 is simply an alternative source of power available to impose levies in respect of water supply services. In other words, it argues that a council may either provide or propose to provide the service on an annual basis and seek to levy an annual charge for the provision of water supply services pursuant to s 501 on rateable land, or it can do so more frequently on a piecemeal basis under s 608(1). They argue that the limited exception in s 608(1) will only apply where the council has made the election to provide the service on an annual basis for which it may or must make an annual charge.

98. Riverina Water notes that there was no finding by the primary judge to the effect that the water supply service was a service provided, or proposed to be provided, on an annual basis; nor, it submits, did the appellants seek to prove that proposition before the primary judge. It argues that such a finding would have been inconsistent with the evidence about the basis on which the fees were charged and collected by Riverina Water.

99. Second, the appellants argue that even if the ongoing supply of water to the retirement village was a service to which s 608(1) could apply, it was not a service provided to the appellants (for which Riverina Water could lawfully charge and recover a fee under s 608(1)) because Riverina Water did not supply water to the appellants. The appellants submit, as they did before the primary judge, that s 608(1) only authorises a council to charge, and recover, a “fee for any service it provides” and that it must therefore be possible to identify some service provided to the payee of the fee for which the fee is payable. The appellants call in aid the decision of the High Court in Airservices Australia v Canadian Airlines [1999] HCA 62; (2000) 202 CLR 133 (at [133]) concerning the meaning of the expression “fees for services” in s 53 of the Constitution as being “a fee or charge exacted for particular identified services provided or rendered individually to, or at the request or direction of, the particular person required to make the payment”. There, Gaudron J said:

For an exaction to constitute a fee for service, some service must actually be provided to the person liable to pay. It is not sufficient that the charge be levied to defray the expenses of an authority charged with the performance of functions which benefit the class of persons from whom it is exacted.

100. The appellants submit that the context provided by Ch 15 of the Local Government Act reinforces their argument. They argue that it is the function of ordinary rates, special rates and charges to levy amounts to defray the costs of an authority charged with the performance of functions which benefit a class of person. They submit that to suggest that s 608(1) can be used to recover amounts from persons to whom services are not provided, in order to defray the council’s costs, would be to undermine the scheme put in place by the Local Government Act.

101. As to this argument, Riverina Water points out that there are no words of limitation in s 608(1) with respect to who may be required to pay a fee otherwise approved under s 610B. It argues that no such limitation should be implied. Riverina Water points to Regional Express Holdings Ltd v Dubbo City Council (No 3) [2014] NSWLEC 87, (2014) 212 LGERA 41, where the contention that only persons receiving or benefiting from the service, or whose needs are being met, or who had requested the service, could be charged under s 608(1).

102. Further, Riverina Water argues that while the appellants, as the developers of the retirement village, obtained the water supply services for the benefit of the landowner for whom they were acting (and to whom they passed on the charges) and for the benefit of the paying occupants of the retirement village; and were the direct recipients of the ongoing maintenance and repair service provided by Riverina Water in that they could develop and market a retirement village as a serviced development.

103. Riverina Water emphasises that the power of a council to provide services is broad. It argues that the breadth of the power to provide services, including for example to the “broader public”, must by necessity be supported by a broad power to impose fees in respect of services provided. It is argued that a proponent of a development (which gives rise to the need for the service), who benefits from the service (in the sense that it is a service provided to a development which the developer is undertaking), may be charged a fee for the provision of the service.

104. Riverina Water points out that the issue in Airservices Australia v Canada Airlines arose in a very different statutory context and submits that it provides no basis for a narrow construction of what are a “fee” and a “service” under the Local Government Act.

105. Third, the appellants submit that the primary judge’s reasoning (that the charges reflected the infrastructure costs of providing a water delivery system) elides the fact that a council incurs infrastructure costs in providing a service with the question whether a fee charged is for providing that service.

106. As to this, Riverina Water notes that the primary judge held that the development servicing charges were charges to reflect the cost of providing a water delivery system, with all of the ongoing “services”. It argues that the appellants’ contention does not pay proper regard to the range of services to which the development servicing charges are directed.

107. Fourth, and related to their second argument, the appellants maintain that the “development servicing charges” are not a fee for a service at all; but, rather, they are a fee for defraying general infrastructure costs incurred by the council in the provision of a service to a general class of persons (such general costs being recoverable either by levying a rate or charge or by factoring the cost into the fee which is charged for the actual provision of the service).

108. Finally, the appellants argue that the primary judge erred in rejecting their argument that, having regard to s 64 of the Local Government Act read with ss 305 to 307 of the Water Management Act, s 608(1) should be construed so as not to authorise the levying of a “contribution towards the cost ... of water management works”. The appellants submit that if s 608 of the Local Government Act generally authorised councils to charge developers a fee to contribute to the cost of water infrastructure, then s 306 of the Water Management Act as applied by 64 of the Local Government Act would be redundant. They invoke the principle of construction that statutes should generally be construed to avoid redundancy (citing Plaintiff M70/2011 v Minister for Immigration and Citizenship [2011] HCA 32; (2011) 244 CLR 144 at [97] per Gummow, Hayne, Crennan and Bell JJ).

109. The appellants argue that s 306 operates as a code for the circumstances in which a fee in the nature of development servicing charges may be imposed and that it is intended to cover the field of the circumstances in which a council can charge a fee for contribution to water management works, such that the general power in s 608(1) must be read down accordingly (citing by way of analogy the Anthony Hordern decision at 7).

110. The appellants accept that s 306(2) operates by way of precondition to the grant of a certificate of compliance, whereas s 608(1) operates without reference to a certificate of compliance; but say that there is only one power to take the relevant action (i.e., to charge a fee, recoverable by action.in debt, representing a contribution to the cost of water management works). It is submitted that if s 608(1) empowered the charging of such a fee, then s 306 and the conditions contained in s 306(3) would be redundant. Further, the appellants argue that if the primary judge is correct, and both ss 306(2) and 608(1) are available powers, then a council would be permitted to charge for the same thing twice. They submit that such an unjust result is a strong reason to construe s 608(1) so as not to authorise the charging of a fee for a contribution towards the capital cost of water management works.

111. Riverina Water argues that there is no reasonable basis in either the Water Management Act or the Local Government Act for the proposition that ss 305-307 of the former were intended to operate as a code, capable of excluding the operation of the general power in s 608 of the latter. Riverina Water submits that it is not correct to say s 306 of the Water Management Act confers only one power to take the relevant action, or that the ambit of the power in s 306 is ostensibly wholly within the ambit of s 608 of the Local Government Act (referring to Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom [2006] HCA 50; (2006) 228 CLR 556 at [59] per Gummow and Hayne JJ).

112. Riverina Water submits that ss 305-307 of the Water Management Act are directed to a different subject matter than the broad power to charge a fee for a service under s 608 of the Local Government Act. It submits that there is no warrant to read down the latter on account of the former, and that there is no redundancy to be avoided, as the appellants contend. Riverina Water argues that s 610 of the Local Government Act is a contextual indication that s 608 is not confined in the way contended for by the appellants because, where the legislature envisages the non-application of s 608 (namely where “a fee for a service is determined under another Act”), it has expressly said so. It submits that a charge made as a condition of a certificate of compliance is in no way a fee for a service determined under another enactment.

Determination

113. Both s 608 and s 501 confer power of a discretionary nature on a council. I accept the respondent’s submission that the fact that it could choose to provide the services comprised in its water delivery system on an annual basis (and hence levy a fee under s 501) does not preclude the power under s 608 being exercised where it does not provide or propose to provide the relevant services on an annual basis. I also agree that there is nothing in the evidence to suggest that the services for which the development servicing charges were levied were services being provided “on an annual basis”. That expression has a different meaning from the expression “on an ongoing basis”. Where, as here, it was initially contemplated that the development servicing charge be levied upfront and it was then agreed to impose the charges as each retirement villa was completed, it is not apt to regard the service as being provided on an annual basis.

114. Therefore, on its face the broad power under s 608 of the Local Government Act was available to support the charges that have been levied. As to the balance of the submissions made by the appellants, I do not accept that before a development service charge can be levied on the appellants it is necessary to show that the developers have been the direct recipient of the water supply (i.e., the direct recipient of the potable water supplied to the village). The primary judge has in my opinion correctly identified the services provided by Riverina Water and those services have in any event indirectly benefited the appellants (since without them it can readily be inferred that a serviced development could not have been carried out). I do not regard the Airservices case as analogous or of assistance in this regard. I also do not accept the submission that there is no service involved in the provision of the infrastructure for the water supply to the retirement village and its ongoing maintenance.

115. Finally, I agree with Riverina Water’s submission that there is nothing to indicate that s 306 of the Water Management Act was intended to operate as a code in relation to the power to charge for the supply of water management services. That its operation does not render s 608 redundant is highlighted by the conclusion I have reached that, in the present case, in the absence of the making of an application for a compliance certificate the power to levy a charge under s 306 of the Water Management Act does not arise. Nor do I consider that there is a practical risk that there might be a duplication of fees or charges for the same services; particularly given the requirement that the fee be set in accordance with the pricing methodologies contained in the water supply authority’s operational plans.

116. Ground 2 is in my opinion not made good. In those circumstances the appeal should be dismissed and there is no reason that costs should not follow the event.

Conclusion

117. For the above reasons the appeal should be dismissed with costs.

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Endnotes

Amendments

11 April 2017 - Par 73 - '(at [155])' amended to '(at [151])'

Par 84 - 'it must issue', amended to 'it may issue'

07 April 2017 - Par 10 - 'Ch 5 Pt 3 Div 2' amended to read 'Ch 6 Pt 3 Div 2'

Par 14 - 'Div 5 Ch 6 Pt 2' amended to read 'Ch 6 Pt 2 Div 5'

Decision last updated: 28 April 2017