Prefabricated Buildings Pty Ltd v Bathurst Regional Council

[2017] NSWLEC 44

Land and Environment Court

New South Wales

Medium Neutral Citation:	Prefabricated Buildings Pty Ltd v Bathurst Regional Council [2017] NSWLEC 44
Hearing dates:	27 February 2017
Date of orders:	24 April 2017
Decision date:	24 April 2017
Jurisdiction:	Class 3
Before:	Robson J
Decision:	See orders at [56]
Catchwords:	STATUTORY INTERPRETATION – whether Council can charge for services based on availability of services and actual use of services – Local Government Act 1993 (NSW) s 501 and s 502
Legislation Cited:	Interpretation Act 1987 (NSW) s 9(1) Land and Environment Court Act 1979 (NSW) s 19(d) Local Government Act 1993 (NSW) ss 405, 491, 496, 501, 502, 574(1)
Cases Cited:	Adrenaline Pty Ltd v Bathurst Regional Council (2015) 322 ALR 180; [2015] NSWCA 123 Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129 Australian Securities and Investments Commission (ASIC) v Administrative Appeals Tribunal (2009) 181 FCR 130; [2009] FCAFC 185 Botany Bay City Council v Minister for Local Government [2016] NSWCA 74; (2016) 214 LGERA 173 BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 Buyinbin Aboriginal Corporation v Richmond Valley Council [2005] NSWLEC 702; (2005) 143 LGERA 168 C & J Clark Ltd v Inland Revenue Commissioners [1975] 1 WLR 413 Cain v New South Wales Land and Housing Corporation (2014) 86 NSWLR 1; [2014] NSWCA 28 Cooper Brookes (Wollongong) Pty Ltd v The Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297; [1981] HCA 26 Deputy Commissioner of Taxation v Ganke [1975] 1 NSWLR 252 Deputy Federal Commissioner of Taxation v Sheehan (1986) 86 ATC 4718 Ex parte Gleeson [1907] VLR 368 Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1971) 127 CLR 106 Grey v Pearson (1857) 6 HLC 61 K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309; [1985] HCA 48 Lee v Minister for Immigration and Citizenship (2007) 241 ALR 363; [2007] FCAFC 62 Marrickville Metro Shopping Centre Pty Ltd v Marrickville Council [2010] NSWCA 145; (2010) 174 LGERA 67 Meriton Apartments Pty Ltd v Council of the City of Sydney (No 3) (2011) 80 NSWLR 541 Nash Bros Builders Pty Ltd v Riverina Water County Council [2016] NSWCA 225 Newcastle City Council v GIO General Ltd (1997) 191 CLR 85; [1997] HCA 53 Perpetual Executors and Trustees Association of Australia Ltd v Federal Commissioner of Taxation (1948) 77 CLR 1; [1948] HCA 24 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 Reseck v Federal Commissioner of Taxation (1975) 133 CLR 45; [1975] HCA 38 Thompson v Goold & Co [1910] AC 409 Ward v Williams (1955) 92 CLR 496; [1955] HCA 4 Western Australian Trustee Executor and Agency Co Ltd v Commissioner of State of Taxation of WA (1980) 147 CLR 119; [1980] HCA 50
Texts Cited:	D C Pearce & R S Geddes, Statutory Interpretation in Australia, (8th ed, 2014)
Category:	Principal judgment
Parties:	Prefabricated Buildings Pty Ltd (Applicant) Bathurst Regional Council (Respondent)
Representation:	Counsel: R White (Applicant) P Clay SC with M Seymour (Respondent)   Solicitors: Horton Rhodes (Applicant) Crennan Legal Pty Ltd (Respondent)
File Number(s):	2016/00259688

Judgment

1. This matter concerns water availability charges and sewerage access charges (‘Availability Charges’) being levied by the respondent, Bathurst Regional Council (‘Council’), against Lot 2 DP 270264, 369 Stewart Street, Mitchell 2795 (‘Premises’). The Premises are within the Bathurst Regional Council Local Government Area and are capable of being levied with a charge under the Local Government Act 1993 (NSW) (‘Act’). The Premises are owned by the applicant Prefabricated Buildings Pty Ltd (‘Prefabricated’), of which Raymond Carter is the director and authorised officer.

2. Prefabricated specifically challenges the validity of the ‘Rates and Charges Notice Assessment Number 232909’ dated 25 July 2016 (‘Notice’) issued by Council, and appeals the Notice under s 574(1) of the Act. Prefabricated’s position is that Council is only permitted under the Act to charge for actual use of services, and is not permitted to make charges based on availability of services. Prefabricated accordingly seeks orders that:

1. the appeal against the levying of the ‘100mm Water Availability Charge’ in Rates and Charges Notice 1/7/2016-30/6/2017 (Assessment No 232909) is upheld; and

2. the appeal against the levying of the ‘100mm Sewer Availability Charge’ in Rates and Charges Notice 1/7/2016-30/6/2017 (Assessment No 232909) is upheld.

3. For the reasons below I am satisfied that the Act permits Council to charge both for actual use of services and based on availability of services, and therefore do not consider that the Availability Charges are unlawful under the Act.

Background

4. The facts that form the basis of these proceedings are largely agreed between the parties.

5. It is agreed between the parties that the Premises have been capable of being subject to an annual charge levied under the Act by Council since 18 July 2001. Council has levied the Availability Charges against the Premises since 2004, and such charges have been paid by the applicant. The charges are said to be levied under the authority of s 501 of the Act. Council also issues separate water usage charges and sewer usage charges under s 502 of the Act every three months in arrears, which are included in the rate notices.

6. The Notice was issued by Council on 25 July 2016 with the following annual charges:

1. 100mm Water Availability Charge Non-Res $4,083.00; and

2. 100mm Sewer Availability Charge Non-Res $11,293.60.

7. At the beginning of each year (I note that a “year” is defined in the Dictionary to the Act as being the period from 1 July to the following 30 June), Council is required under s 405 of the Act (set out below) to prepare a draft operational plan, give public notice of the plan and invite and consider submissions in relation to the plan. Council is also required to adopt an operational plan each year that includes a statement of its revenue policy for that year.

8. On 4 May 2016 Council resolved to put the 2016/17 financial planning documents, comprising the draft Bathurst Delivery Plan, Annual Operating Plan and Revenue Policy Plan for 2016/17 on public exhibition. Prefabricated made a submission in respect of the 2016/17 financial planning documents on 3 June 2016, complaining, inter alia, that the charges imposed under s 501 of the Act should be subject to s 502 of the Act. This submission incorporated, by reference an earlier submission made on 4 June 2015, which was made on similar terms.

9. On 15 June 2016 Council resolved to adopt the 2016/17 financial planning documents, which included the imposition of the Availability Charges.

Legislative framework

10. The jurisdiction of the Court is enlivened by s 19(d) of the Land and Environment Court Act 1979 (NSW).

11. The relevant sections of the Act for the purpose of these proceedings are:

405   Operational plan

(1)  A council must have a plan (its operational plan) that is adopted before the beginning of each year and details the activities to be engaged in by the council during the year as part of the delivery program covering that year.

(2)  An operational plan must include a statement of the council’s revenue policy for the year covered by the operational plan. The statement of revenue policy must include the statements and particulars required by the regulations.

(3)  A council must prepare a draft operational plan and give public notice of the draft indicating that submissions may be made to the council at any time during the period (not less than 28 days) that the draft is to be on public exhibition. The council must publicly exhibit the draft operational plan in accordance with the notice.

(4)  During the period of public exhibition, the council must have for inspection at its office (and at such other places as it may determine) a map that shows those parts of its area to which each category and sub-category of the ordinary rate and each special rate included in the draft operational plan applies.

(5)  In deciding on the final operational plan to be adopted, a council must consider any submissions that have been made concerning the draft plan.

(6)  The council must post a copy of its operational plan on the council’s website within 28 days after the plan is adopted.

496   Making and levying of annual charges for domestic waste management services

(1)    A council must 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.

(2)    A council may make an annual charge for the provision of a domestic waste management service for a parcel of land that is exempt from rating if:

(a)   the service is available for that land, and

(b)   the owner of that land requests or agrees to the provision of the service to that land, and

(c)   the amount of the annual charge is limited to recovering the cost of providing the service to that land.

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.

502   Charges for actual use

A council may make a charge for a service referred to in section 496 or 501 according to the actual use of the service.

12. Section 9(1) of the Interpretation Act 1987 (NSW) relevantly provides:

9   Meaning of may and shall

(1)   In any Act or instrument, the word “may”, if used to confer a power, indicates that the power may be exercised or not, at discretion.

…

Applicant’s submissions

13. In summary, Prefabricated’s position is that Council is only able to charge for water services and sewerage services according to the actual use of the service. Prefabricated submits that Council has no power to make the Availability Charges, which are imposed independently of actual use. Prefabricated relies on the reasoning in Marrickville Metro Shopping Centre Pty Ltd v Marrickville Council [2010] NSWCA 145; (2010) 174 LGERA 67 at [201] (per Basten JA) to submit that the Availability Charges in the Notice are ultra vires and unlawful.

14. Prefabricated submits that Council’s Revenue Policy Plan is demonstrative of the fact that the Availability Charges are based on the size of the meter at the Premises, which, Prefabricated argues, ignores the demands and loads placed on the system by the property. Prefabricated relies on the second reading speech of the Minister in relation to Amending Act No 69 of 1997 which amended s 502 to submit that charging in the manner of the Availability Charges is contrary to the Act, the intention of which is to permit Council to make an annual charge for services only in accordance with actual use (I note that while Prefabricated identified the relevant amending act to be Amending Act No 61 of 1997, it is in fact Amending Act No 69 of 1997).

15. Prefabricated further relies on the structure of the Act to submit that charges for services may only be made based on actual use. Prefabricated submits that Chapter 15 of the Act, titled ‘How are Council’s financed?’ sets out the means by which Council may obtain income. Prefabricated further notes the wording of s 491 of the Act, which states that:

A council may, in accordance with this Chapter, obtain income from:

•  rates

•  charges

…

(emphasis added)

16. Prefabricated relies on Leeming JA in Adrenaline Pty Ltd v Bathurst Regional Council (2015) 322 ALR 180; [2015] NSWCA 123 at [46] to submit that, “the detailed nature of the statutory scheme governing rates and charges identifies that Part 10 of Chapter 15 ‘exhausts’ the universe of rates and charges which may be applied by a council.”

17. The above characterisation of the Act is supported, according to Prefabricated, by the principles of statutory construction. In essence, Prefabricated submits that Council’s power under s 501 of the Act is not unfettered, but is in fact circumscribed by the words of s 502 of the Act. The provisions are, according to Prefabricated, to be read together, and the general power referred to in s 501 of the Act is qualified and limited by s 502. Prefabricated relies on the following statement in Botany Bay City Council v Minister for Local Government [2016] NSWCA 74; (2016) 214 LGERA 173 at [37]:

The principles of statutory construction are well settled: “the task of statutory construction must begin with a consideration of the text [of the legislation]”: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at [47]. The meaning of text may require consideration of its context, which includes the general purpose and policy of a provision: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355.

18. Prefabricated further relies on Basten JA in Adrenaline Pty Ltd v Bathurst Regional Council (2015) 322 ALR 180; [2015] NSWCA 123 at [49] to submit that rates and charges are “compulsory exactions and therefore conventionally regarded as taxes”. Consequently, Prefabricated submits that the onus is on Council to “show that a taxing statute imposes a charge on the person sought to be taxed”; C & J Clark Ltd v Inland Revenue Commissioners [1975] 1 WLR 413 at 419 per Scarman LJ. Prefabricated submits that the weight of authority is against reading words into an act, particularly as against a fiscal subject, and that a tax should only be given effect if there is a clear intention to impose the tax; see BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 at 280; Western Australian Trustee Executor and Agency Co Ltd v Commissioner of State of Taxation of WA (1980) 147 CLR 119 at 126; [1980] HCA 50.

19. Prefabricated further submits that the word “may” in s 502 of the Act is not indicative of a discretion on the part of Council. Prefabricated contends that s 9 of the Interpretation Act 1987 (NSW) (relied upon by Council) applies only where there is a conferral of power, and that s 502 of the Act does not confer a power, but rather limits how the power in s 501 is to be interpreted. Prefabricated further relies on D C Pearce & R S Geddes, Statutory Interpretation in Australia, (8th ed, 2014) to submit that the word “may” can, depending on the context, mean “must”.

20. Prefabricated notes that the judgment of Talbot J in Buyinbin Aboriginal Corporation v Richmond Valley Council [2005] NSWLEC 702; (2005) 143 LGERA 168 (‘Buyinbin’) at [9] appears to be contrary to its submission, with his Honour stating in obiter that a charge levied under s 502 according to “actual use” was an alternative charge levied under s 501, which is a “fixed charge” imposed irrespective of actual use. Prefabricated however submits that his Honour’s statements are not applicable to these proceedings for a number of reasons, including:

1. the construction of s 502 did not ultimately arise in that case;

2. the decision is wrong as there is no warrant in s 501 of the Act for distinguishing between a “fixed charge” and a charge for an “intermittent or elective service”; and

3. the paragraph misunderstands the relationship between s 501 and s 502, as s 501 identifies the source of power to make a charge for a service, and s 502 qualifies how that charge is to be exercised.

Council’s submissions

21. Council submits that there is no express limitation on its power to make an annual charge under s 501. Further, Council submits that a limitation should not be implied for the following reasons:

1. the power is aimed at allowing councils to recover their operating costs, and the requirement that local councils prepare budgetary papers (including notice of any proposed charges) in advance of making charges could not be complied with if services were only able to be charged based on actual use – as the charges would not be known in advance;

2. the language of s 501, stating that a charge may be imposed for services “proposed to be provided”, is not consistent with a charge only for actual use of existing services; and

3. it would be difficult or impossible to measure the actual use of certain services, such as rubbish collection. The imposition of a charge irrespective of actual use therefore gives councils flexibility to adapt the method of charging to the particular service.

22. Council disputes Prefabricated’s construction of s 501 and s 502, submitting instead that s 501 is the source of power for the Availability Charges and that s 502 is a separate source of power that allows for usage charges. Council disputes Prefabricated’s construction of the second reading speech to the Amending Act No 69 of 1997 (while noting that a second reading speech should not be given undue weight), submitting that the Minister was actually clarifying that councils may levy charges for actual use in addition to the annual charge which applies under s 501.

23. Council also disputes Prefabricated’s characterisation of the word “may” in s 502 of the Act, submitting that Prefabricated’s submission invites the Court to read the word “may” as “must”. Rather, Council relies on s 9(1) of the Interpretation Act1987 (NSW) to submit that the word “may” indicate a discretionary power, unless a contrary intention exists in the Act. Council further relies on the statement of Leeming JA in Cain v New South Wales Land and Housing Corporation (2014) 86 NSWLR 1; [2014] NSWCA 28 at [45] to support this construction, with his Honour stating:

The construction of s 91(1) of the Residential Tenancies Act 2010 favoured by the primary judge displaces the ordinary meaning of “may”. That ordinary meaning is confirmed by s 9 of the Interpretation Act 1987. Accordingly, it is necessary to discern a contrary intention: s 5(2). In accordance with ordinary principles of statutory construction, a contrary intention may be discerned from the text or the context (which may include the legislative purpose: see for example Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd [2008] HCA 9; (2008) 232 CLR 314 at [19]). There is no simple formula for discerning a contrary intention: Deputy Commissioner of Taxation v Mutton (1988) 12 NSWLR 104 at 108 per Mahoney JA.

24. Council points to various sections in Part 1 of Chapter 15 of the Act which use the terms “must make” and “may make” – submitting that there is a clear distinction between those powers that are discretionary and those that are not, and that there is no contextual indication to suggest that the word “may” in s 502 means “must”.

25. Further, Council submits that Prefabricated’s construction of s 502 leads to absurd results when read in conjunction with s 496 – as for example it would require a council to check every week whether a garbage bin had been emptied by council and how much waste was in each bin. Similarly, Council contends that a council must be entitled to make annual charges for water supply services as this power is complementary to the power under s 608 of the Act to charge for services, and the power to charge fees for services is not limited to the recovery of costs associated with actual use: Nash Bros Builders Pty Ltd v Riverina Water County Council [2016] NSWCA 225; Meriton Apartments Pty Ltd v Council of the City of Sydney (No 3) (2011) 80 NSWLR 541 at [44].

26. Finally, Council relies on Bunyinbin which Council submits is consistent with the fact that s 501(1) is a power to charge for services provided on an annual basis irrespective of use.

Relevant principles of statutory construction

27. The issue of whether s 502 of the Act limits s 501 of the Act is ultimately a question of statutory construction. As with any exercise of statutory interpretation, the Court is to adopt the ordinary and natural meaning of the language used in the act: Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129 at 161-2; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28. This rule is of course qualified by the principle established in Grey v Pearson (1857) 6 HLC 61 at 106, that:

…the grammatical and ordinary sense of the word is to be adhered to, unless that would lead to some absurdity, or some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified, so as to avoid that absurdity and inconsistency, but no farther.

28. Further, provisions are to be construed in the context of the Act as a whole rather than in isolation; see Cooper Brookes (Wollongong) Pty Ltd v The Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297; [1981] HCA 26 at 304; K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309; [1985] HCA 48 at 315. The contextual approach to statutory construction means that in some circumstances the scope of a section may be limited by another section in the act, so as to give each section a purpose; see Lee v Minister for Immigration and Citizenship (2007) 241 ALR 363; [2007] FCAFC 62 at [39].

29. It is important to note that where an act contains two inconsistent provisions, the general provision is to give way to the specific provision; see e.g. Perpetual Executors and Trustees Association of Australia Ltd v Federal Commissioner of Taxation (1948) 77 CLR 1 at 29; [1948] HCA 24. However, this only applies where the ‘contrariety is manifest’ as between the provisions; Reseck v Federal Commissioner of Taxation (1975) 133 CLR 45 at 53; [1975] HCA 38. Importantly, this rule does not apply where the specific provision adds additional powers to those contained in the general provision: Australian Securities and Investments Commission (ASIC) v Administrative Appeals Tribunal (2009) 181 FCR 130; [2009] FCAFC 185 at [78].

Issues

30. Prefabricated raised four discrete arguments to support its contention that s 502 of the Act fetters s 501 and that charges for the services listed in s 496 and s 501 may be made only according to actual use of those services. They are:

1. the word “may” in s 502 is to be read as “must”;

2. the structure of the Act and the rating regime as a whole do not provide for the Availability Charges;

3. the charges currently being levied by Council are taxes, and there is a statutory presumption against provisions imposing a tax in the absence of a clear legislative intention to do so; and

4. there was a legislative intention that charges only be levied according to actual use of services, as indicated by the Minister’s second reading speech to Amending Act No 69 of 1997.

31. I deal with each in turn.

Whether the word “may” in s 502 of the Act should be read as “must”

32. Prefabricated submits that the word “may” in s 502 should be read as “must”. I do not accept this submission. There is a prima facie presumption that the word “may” confers a discretion, with the party seeking to overturn this presumption bearing an onus to demonstrate that the legislative intention was otherwise: Ward v Williams (1955) 92 CLR 496 at 505–6; [1955] HCA 4; Ex parte Gleeson [1907] VLR 368 at 373. This is supported by s 9(1) of the Interpretation Act 1987 (NSW) (extracted above).

33. Prefabricated relies on Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1971) 127 CLR 106 at 134-5 (‘Finance Facilities’) to support its submission. That decision concerned a provision in the Income Tax Assessment Act 1936 (Cth) which stated that the Commissioner “may allow” a taxation rebate to be granted to a private company if satisfied that the shareholder would not pay a dividend to another private company within a certain period. The Court found that, once the Commissioner was satisfied on the facts, he or she must then allow the rebate. The circumstances of that case therefore differ from those in the present proceedings, as, as noted by Windeyer J at 134, the Commissioner’s decision was circumscribed by certain conditions precedent. I further note that Owen J (who also found that “may allow” should be read as “must allow”) noted at 138 that the words “may allow” could not confer a further discretion on the decision-maker once he or she was satisfied on the facts that the rebate was reasonably allowable. The context of the relevant section therefore was crucial to the decision in that case, as by circumscribing the criteria by which the Commissioner’s decision was to be made, the Act did not allow for a further exercise of discretion.

34. There is no such circumscription of Council’s prima facie discretion in s 502 of the Act, and the facts of the present proceedings are therefore distinguishable from those in Finance Facilities.

35. I note also that Finance Facilities was decided prior to the introduction of the Interpretation Act 1987 (NSW). Prefabricated submits that s 9(1) of the Interpretation Act 1987 (NSW) does not apply to s 502 of the Act as s 502 does not confer a power, but rather stipulates how the power conferred in s 501 of the Act is to be exercised. The issue in this submission is essentially whether or not s 501 and s 502 are two distinct powers, which I deal with below.

Whether the Act confines charges to ‘actual use’ charges

36. Prefabricated submits that the structure and provisions contained in Chapter 15 and the overall circumstance of the rating regime do not provide for the Availability Charges. I am not satisfied that what Prefabricated describes as the “highly detailed and prescriptive nature” of Chapter 15 precludes Council from levying charges other than in accordance with actual use of services. The fact that the Act does not specify alternative means of charging for services is not necessarily determinative of an intention to allow charging based solely on actual use. Essentially, Prefabricated’s submission implies words into s 502, suggesting that the section be read as “a council must make a charge for a service referred to in section 496 or 501 according solely to the actual use of the service”.

37. It is a well-established principle that words should not be implied into an act, as stated by Lord Mersey in Thompson v Goold & Co [1910] AC 409 at 420:

It is a strong thing to read into an Act of Parliament words which are not there, and in the absence of clear necessity it is a wrong thing to do.

38. There is no apparent necessity to confine the Act by implying that charges for the services listed in s 496 and s 502 may be made solely in accordance with actual use of those services. The present proceedings can be distinguished from those cases where such a necessity has been found, e.g. where a provision requires certain acts to take place without specifying the time period; see e.g. Deputy Commissioner of Taxation v Ganke [1975] 1 NSWLR 252.

39. Apart from the absence of a necessity, it would appear that reading these words into the section would also be contrary to the legislative purpose of the section (see Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 113-16; [1997] HCA 53), which I consider below at [43]-[46]. It is not apparent from the Act that actual use charges are the only means of charging for the services set out in s 496 and s 501 and I am not convinced that the Court should draw such an inference.

Whether the statutory presumption against a provision imposing a tax applies to s 501 and s 502

40. Prefabricated submits that s 501 and s 502 are taxing provisions, and that there is a statutory presumption against a provision imposing a tax in the absence of a clear legislative intention to do so. I note first that this principle does not displace ordinary principles of statutory construction, as noted in Cooper Brookes (Wollongong) Pty Ltd v The Commissioner of Taxation of the Commonwealth of Australia (1981) 147 CLR 297 at 323; [1981] HCA 26:

The fact that an Act is a taxing statute does not make it immune to the general principles governing the interpretation of statutes. The courts are as much concerned in the interpretation of revenue statutes as in the case of other statutes to ascertain the legislative intention from the terms of the instrument viewed as a whole.

41. Further, I note the comment of Tadgell J in Deputy Federal Commissioner of Taxation v Sheehan (1986) 86 ATC 4718 at 4728 that:

If, therefore, there are two constructions of which a taxing Act is capable, one of which would facilitate the evident object of the legislature and the other of which would plainly thwart it, one is not justified in preferring the latter merely because it would be more favourable to the subject.

42. Having considered Prefabricated’s submission in light of these authorities, while I accept that the Court should exercise caution in construing a statute in a way that imposes a tax, for the reasons set out below I find that the Act evinces a clear legislative intention that Council may make the Availability Charges as well as charges in accordance with actual use of services.

Whether there was a legislative intention that charges be levied for services set out in s 496 and s 501 solely in accordance with actual use

43. Prefabricated submits that the second reading speech to the Amending Act No 69 of 1997, which amended s 502, is instructive in demonstrating a legislative intention that services listed in s 496 and s 501 are only able to be charged according to actual use.

44. Before amendment, s 502 read:

Charges for actual use provided by the council

A council may make a charge for the actual use of a service provided by a council.

45. Importantly, the Act entitles Council to make an annual charge in respect of other services (e.g. stormwater management services (s 496A) and coastal protection services (s 496B)). Accordingly, by inserting the words “for the services referred to in section 496 or 501”, the intention behind the amendment appears to have been to clarify and confine the services which were amenable to having their use measured and for which therefore Council could charge for actual use. This interpretation is supported by the Minister’s second reading speech to the Amending Act, which provides:

…it is clarified that the ability of a council to charge for the actual use of a service is directed at the same services to which annual charges apply. Further, the charge is applicable only where there is a measurable, “actual use” of the service. (emphasis added)

46. Rather than assisting Prefabricated, I find that the Minister’s second reading speech serves to further highlight the fact that for certain services Council is able to levy both an annual charge and a charge based on actual usage of services. The Minister makes clear that the actual usage charge is directed at the same services to which annual charges apply, with the use of the present tense indicating that the annual charges continue to apply in respect of those services. If Prefabricated’s construction of s 502 were to be applied to the pre-amendment version, it would require all services to be charged based on actual use, which, practically would not have been possible.

47. This purposive reading of s 502 therefore demonstrates a clear intention for actual usage charges to apply in addition to annual charges.

Further consideration

Whether s 502 fetters the exercise of the power in s 501 of the Act

48. Though I have effectively dismissed the various arguments that Prefabricated has raised in support of its submission that s 501 is fettered by s 502 of the Act, it is nevertheless useful to consider the question by applying general principles of statutory construction.

49. There are two constructions available on a literal reading of the section. First, that Council may make a charge referred to in s 496 or s 501 according to actual use of the service, and second, that, for the services listed in s 496 or s 501, Council may make a charge according to actual use of the service. The first interpretation goes towards the actual charge enabled by s 496 and s 501, whereas the second interpretation goes to the services listed in s 496 and s 501. If the first interpretation is adopted, Council may only charge according to actual use of those specific services. If the second interpretation is adopted, Council may charge for actual use of specific services, and may levy an additional annual charge in respect of those same services.

50. For the reasons stated below, I find that the second construction is to be preferred and that the reference in s 502 to s 496 and s 501 is to the services listed in those sections, rather than to the specific charge enabled under those sections.

51. Considering the Act as a whole, the Act clearly envisages two separate charges for certain services. I make this finding by reference to:

1. section 510 of the Act, which prescribes a maximum annual charge for domestic waste services. As a practical matter, Council would not be able to ensure compliance with this section if the ‘annual charge’ was to be levied by reference to actual use – as Council would not be able to predict how much waste each household would dispose of in the coming year;

2. section 539 of the Act, which sets out the criteria relevant to determining the amount of a charge, with subs (2) providing that the amount of a charge need not be limited to recovering the cost of providing the service for which the charge is made. The section therefore contemplates Council being able to make charges not based on usage.

3. section 540 of the Act, which provides that a charge may be expressed as a single amount, a rate per unit or a combination of the two. The note to the section (although not determinative) provides an example of a form of charge, stating that the amount of a charge for a water supply service can be a fixed amount or a rate per kilolitre or a combination. This section clearly contemplates a charge for services otherwise than in proportion to the usage of the service, indicating that services may be charged for other than in accordance with actual use.

4. section 513 of the Act, which provides for a council to request the Valuer-General to provide estimates of increases and decreases in value for purposes of notional rate income. The note to this section (again, though not determinative), is a table of the types of rates and charges available to a council, and in column four, sets out how these rates and charges are to be structured. Importantly, s 501 and s 502 of the Act are listed as distinct ‘types’ of charges, rather than s 502 being listed in the ‘Structure’ column as a means by which a charge under s 501 can be made. Further, conceptually, the table demonstrates a further distinction between the powers in that s 501 is to be levied against each parcel of rateable land for which the service is provided, whereas s 502 is levied against the user of the particular service. While this table is not of itself determinative of the fact that s 501 and s 502 are two distinct powers by which the Council may charge for services, it is indicative of a legislative intention as such.

Whether the Availability Charges are available under the Act

52. Having found that Council is entitled to make both an actual use charge and an annual charge, the question still remains as to whether Council is entitled to charge specifically in the manner envisaged by the Availability Charges.

53. Prefabricated submits that the Availability Charges are not available under the Act as such charges are based on the size of the meter at the Premises and ignore the demands placed on the system by the property. The only argument advanced to support the invalidity of the Availability Charges was therefore premised on the basis that Council is required to consider the demands placed on the system in making charges for services listed in s 496 and s 501, which is quickly disposed of given my finding that Council is not required to charge for such services only by reference to usage.

54. The Act does not specify exactly what methodology should be used to levy annual charges. However, in the absence of any evidence as to why the Availability Charges may be invalid, it is not for the Court to confine that methodology in these proceedings.

Conclusion

55. In the circumstances, I am not satisfied that the Act requires Council to charge for services based only on actual use of those services. On a literal, purposive, and contextual reading of the Act, it appears clear that Council is entitled to charge for services based on both actual use and availability of those services. I am therefore not satisfied that the Accessibility Charges have been unlawfully levied under the Act.

Orders

56. The Court orders:

1. Application dismissed.

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Decision last updated: 27 April 2017