Secs Management Pty Ltd v George Town Council
[2012] TASSC 49
•8 August 2012
[2012] TASSC 49
COURT: SUPREME COURT OF TASMANIA
CITATION: SECS Management Pty Ltd v George Town Council [2012] TASSC 49
PARTIES: SECS MANAGEMENT PTY LTD
v
GEORGE TOWN COUNCIL
ARCHER, Gail Maree
v
GEORGE TOWN COUNCIL
FILE NO/S: 686/2011
713/2011
DELIVERED ON: 8 August 2012
DELIVERED AT: Hobart
HEARING DATE: 30 July 2012
JUDGMENT OF: Blow J
CATCHWORDS:
Real Property – Rates and charges – Rating of land – Types of rates – Differential rates – Relevance of capacity to pay – Whether minimum rate may be varied – Whether general rate must apply to some part of municipal area.
Local Government Act 1993 (Tas), ss90, 107(1).
Parramatta City Council v Pestell (1972) 128 CLR 305; Wellington City Council v Woolworths New Zealand Limited (No 2) [1996] 2 NZLR 537; Sunwater v Burdekin Shire Council (2002) 125 LGERA 263; Xstrata Coal Queensland Pty Ltd v Council of the Shire of Bowen [2010] QCA 170, referred to.
Aust Dig Real Property [1769]
REPRESENTATION:
Counsel:
Applicants: S Brown
Respondent: M E O'Farrell SC
Solicitors:
Applicants: Shields Heritage
Respondent: Abetz Curtis
Judgment Number: [2012] TASSC 49
Number of paragraphs: 24
Serial No 49/2012
File Nos 686/2011713/2011
SECS MANAGEMENT PTY LTD v GEORGE TOWN COUNCIL
GAIL MAREE ARCHER v GEORGE TOWN COUNCIL
REASONS FOR JUDGMENT BLOW J
8 August 2012
These two applications concern a dispute as to the validity of a resolution of the George Town Council by which it fixed the rates for its municipal area for the 2011/12 financial year. In substance, the council decided to require the payment of rates that were calculated on the basis of the "assessed annual value" of each piece of rateable land, but to charge a different number of cents in the dollar, and to fix different minimum amounts, according to zoning and land use. The resolution required higher rates to be paid on industrial and commercial land than on residential land.
The power to impose rates is conferred by the Local Government Act 1993 ("the Act"). The applicants contend that the resolution in question was not authorised by that Act; that it therefore involved an error of law; and that it amounted to an improper exercise of power. Each applicant has applied for the review of the resolution under the Judicial Review Act 2000. They contend that the resolution should be quashed.
The applicants are seeking relief on three bases:
· They contend that the council took into account an irrelevant consideration, namely the capacity of ratepayers to pay rates.
· They contend that the council did not have the power to set different minimum amounts for different categories of land.
· They contend that the council fixed a general rate, and then purported to vary that rate in respect of every piece of rateable land in its municipal area, and that that was not authorised by the Act.
The Act does permit the charging of rates on different bases for different categories of land. A council must first make a general rate pursuant to s90 of the Act, which read as follows at the relevant time:
"(1) A council may, not earlier than 1 June and not later than 31 August in any year, in respect of each financial year, make one general rate for that year on all rateable land in its municipal area.
(2) A council may make a general rate on rateable land whether or not it provides any services in respect of that land.
(3) A general rate is to be based on one of the following categories of values of land:
(a)the land value of the land;
(b)the capital value of the land;
(c)the assessed annual value of the land.
(4) In making a general rate, a council may set a minimum amount payable in respect of that rate if that rate does not include a fixed charge."
By the resolution in question, the council, pursuant to s90(1), made a general rate of 6.5 cents in the dollar on the assessed annual value of all rateable land. It then went on to set a minimum amount of $600 pursuant to s90(4). It then went on to declare that the general rate varied within the municipal area "according to use or predominant use of land, the non use of land, the locality of land and planning zone". It had the power to do that under s107, the first two subsections of which read as follows:
"(1) A council, by absolute majority, may declare that the general rate, a service rate or a service charge varies within the municipal area or within different parts of the municipal area according to any or all, or a combination of any or all, of the following factors:
(a)the use or predominant use of the land;
(b)the non-use of the land;
(c)the locality of the land;
(d)any planning zone;
(e)any other prescribed factor.
"(2) For the purposes of subsection (1)(a), use means use for any of the following purposes:
(a)residential purposes;
(ab)commercial purposes;
(ac)industrial purposes;
(b)public purposes;
(c)primary production;
(d)sporting or recreation facilities;
(e)quarrying or mining."
Clauses 2.1 to 2.2 of the resolution read as follows:
"2.1Pursuant to Section 107 of the Act Council declares, by absolute majority, that the general rate varies within different parts of the municipal area according to use or predominant use of land, the non use of land, the locality of land and planning zone as follows:
(a) For land used or predominantly used for residential purposes, and which is zoned Closed Residential as defined in the planning scheme the general rate is varied by decreasing it by 4.2537 cents to 2.2463 cents in the dollar on AAV;
(b) For land used or predominantly used for industrial purposes, and which is zoned Heavy Industrial as defined in the planning scheme the general rate is varied by increasing it by 15.5 cents to 22.0 cents in the dollar on AAV;
(c) For land used or predominantly used for industrial purposes, and which is zoned Bell Bay Major Industrial as defined in the planning scheme the general rate is varied by increasing it by 15.5 cents to 22.0 cents in the dollar on AAV;
(d) For land used or predominantly used for industrial purposes and which is zoned Utility Services as defined in the planning scheme, the general rate is varied by increasing it by 15.5 cents to 22.0 cents in the dollar on AAV;
(e) For land used or predominantly used for industrial purposes and which is zoned Maritime as defined in the planning scheme, the general rate is varied by increasing it by 15.5 cents to 22.0 cents in the dollar on AAV;
(f) For land used or predominantly used for industrial purposes and which is not zoned Heavy Industrial, Bell Bay Major Industrial, Utility Services or Maritime as defined in the Planning Scheme the general rate is varied by increasing it by 2.5 cents to 9.0 cents in the dollar on AAV;
(g) For land used or predominantly used for commercial purposes, the general rate is varied by increasing it by 2.5 cents to 9.0 cents in the dollar on AAV;
(h) For land used or predominantly used for residential purposes, and which is zoned Low Density Residential as defined in the planning scheme, the general rate is varied by decreasing it by 4.3118 cents to 2.1882 cents in the dollar on AAV; and
(i) For land used or predominantly used for residential purposes, and which is zoned Village as defined in the planning scheme, the general rate is varied by decreasing it by 4.3674 cents to 2.1326 cents in the dollar on AAV.
2.2Pursuant to Section 107 of the Act Council declares, by absolute majority, that the minimum amount payable in respect of the general rate varies within different parts of the municipal area according to use or predominant use of land, non-use of land, the locality of the land and any planning zone as follows:
(a) For land used or predominantly used for industrial purposes and which is zoned Heavy Industrial as defined in the planning scheme, the minimum general rate payable is varied by increasing it by $3,900 to $4,500;
(b) For land used or predominantly used for industrial purposes and which is zoned Bell Bay Major Industrial as defined in the planning scheme, the minimum general rate payable is varied by increasing it by $3,900 to $4,500;
(c) For land used or predominantly used for industrial purposes and which is zoned Utility Services as defined in the planning scheme, the minimum general rate payable is varied by increasing it by $3,900 to $4,500;
(d) For land used or predominantly used for industrial purposes and which is zoned Maritime as defined in the planning scheme, the minimum general rate payable is varied by increasing it by $3,900 to $4,500;
(e) For land used or predominantly used for industrial purposes and which is not zoned Heavy Industrial, Bell Bay Major Industrial, Utility Services or Maritime, as defined in the planning scheme the minimum general rate payable is varied by increasing it by $900 to $1,500;
(f) For land used or predominantly used for commercial purposes the minimum general rate payable is varied by increasing it by $900 to $1,500; and
(g) For land used or predominantly used for residential purposes, and which is zoned Closed Residential as defined in the planning scheme the minimum general rate is varied by increasing it by $250 to $850."
One result of this resolution, assuming for the moment that it was valid, is that only three residential properties in the municipality were subject to ad valorem rating for the year in question, with the other 2,900 attracting the "minimum amount payable". One of the applicants, SECS Management Pty Ltd, owns some land with an assessed annual value of $53,200 which it uses for a steel fabrication business. Under cl 2.1(c) of the impugned resolution, the annual rates on that property are $11,704. A residential property with the same assessed annual value, if cl 2.1(a) were applicable, would attract annual rates of only $1,195.03.
Taking into account capacity to pay
It is not stated anywhere in the impugned resolution, nor anywhere in the minutes of the meeting at which it was passed, that the council took into account the capacity of ratepayers, or of any particular class or classes of ratepayers, to pay. The applicants contend that capacity to pay was taken into account. They rely on a submission that the council's mayor and general manager made to a State Government committee in late 2010. The mayor and general manager were authorised by the council to make the submission on its behalf. For present purposes I accept that the impugned resolution was intended by the council to impose the burden of rate assessments in a way that was fair and equitable having regard, amongst other things, to a perception that the owners of industrial and commercial land would, generally speaking, have a greater capacity to pay than the owners of residential land.
There was nothing in the Act that expressly precluded the council from taking into account capacity to pay when exercising its powers under s107(1). There was neither a list of matters that a council was required to take into account nor a list of matters that a council was required not to take into account. The subsection limited the factors that could be used to define different categories of land in respect of which different rates would apply. Otherwise, councils were given a discretion, without legislative fetter, to impose differential rates. It is therefore necessary to consider whether the Act, by implication, made capacity to pay a consideration that the council was obliged not to take into account.
The Act gives councils a great deal of scope to make such decisions as they think fit for the government of their municipal areas. Section 20(1) provides as follows:
"(1) In addition to any functions of a council in this or any other Act, a council has the following functions:
(a)to provide for the health, safety and welfare of the community;
(b)to represent and promote the interests of the community;
(c)to provide for the peace, order and good government of the municipal area."
There are a number of reported cases that support the view that a council has a wide discretion as to what considerations it takes into account when fixing special or differential rates. In Parramatta City Council v Pestell (1972) 128 CLR 305, the High Court was required to determine the validity of a local rate. The applicable legislation allowed a council to impose such a rate for the executing of a work or service which would be of special benefit to a portion of its area. At 313 Barwick CJ said:
"… it must be borne in mind that the council is a representative body of limited tenure of office. The question whether or not the given works or services are of special benefit to a portion of the local government area is very much a matter of opinion probably involving many imponderables and a great deal of local knowledge."
In Wellington City Council v Woolworths New Zealand Limited (No 2) [1996] 2 NZLR 537, some commercial ratepayers had challenged the validity of a council's decision to fix a rating differential as between residential and commercial ratepayers. Although that case concerned different legislation, and an argument as to invalidity on the ground of unreasonableness, which this case does not, it is worth noting some of the comments of the New Zealand Court of Appeal. At 544 Richardson P, delivering the judgment of the court, said:
"… the provisions for making and reviewing rates are to enable the local authority to carry out its statutory functions and to perform the activities which it undertakes for the benefit of the community. A territorial authority has very wide rating powers. The exercise of those powers inevitably affects and is intended to affect the relative incidence of rates on properties within the district.
…
… the authority to adopt a differential system for its general rate assumes the entitlement to discriminate as between types or groups of properties. The very concept of differential rates involves casting a heavier burden than justified solely by relative capital values on one sector rather than another."
At 546 his Honour said:
"Finally, there are constitutional and democratic constraints on judicial involvement in wide public policy issues. There comes a point where public policies are so significant and appropriate for weighing by those elected by the community for that purpose that the Courts should defer to their decision except in clear and extreme cases. The larger the policy content and the more the decision making is within the customary sphere of those entrusted with the decision, the less well equipped the Courts are to reweigh considerations involved and the less inclined they must be to intervene."
In Sunwater v Burdekin Shire Council (2002) 125 LGERA 263, Cullinane J (of the Supreme Court of Queensland) dealt with an application for judicial review concerning a decision imposing differential general rates on different categories of land. At par[35] his Honour said:
"It is the local authority which has the statutory function of determining whether a differential rating system should be adopted and if so, what are the relevant criteria to be applied in determining the relevant categories of land. Substantial latitude must be allowed a local authority in choosing such criteria for the purposes of achieving an equitable sharing of the general rate revenue burden across the ratepayers as a whole."
Different legislation applied in that case, but those comments are equally valid in the present context.
In Xstrata Coal Queensland Pty Ltd v Council of the Shire of Bowen [2010] QCA 170, a council had charged differential general rates under Queensland legislation. The owners and operators of two coal mines applied for judicial review, and were unsuccessful at first instance, but successful in the Queensland Court of Appeal. That court decided that the capacity of a particular landowner to pay, as distinct from any quality of the subject land, was not a relevant consideration in the decision to set rates. At par[39] Chesterman JA, with whom de Jersey CJ and Holmes JA agreed, said:
"The Act connects the obligation to pay rates with the value of the property owned, not the value of the property owner which may derive from sources wholly unconnected with the rated land, or any other land."
In this case there is no suggestion that the council took into account information relating to any particular landowners' financial circumstances. The council decided to impose rates at a variety of levels on different categories of land. It discriminated in favour of the owners of residential land, and against the owners of industrial and commercial land. That was something that the Act authorised. If the council, or individual councillors, believed that the owners of industrial and commercial land had a greater capacity to pay than the owners of residential land, it does not follow that an irrelevant consideration was taken into account. They were entitled to make political decisions. The first ground of review must fail.
Variation of minimum payments
As I have said, the council resolved to set a "minimum amount payable" in respect of the general rate, namely $600, pursuant to s90(4), but then purported to vary that amount in respect of seven different categories of land by cl 2.2 of the impugned resolution. The applicants contend that this was not authorised by s107(1). That subsection empowered the council to "declare that the general rate … varies within the municipal area" according to certain factors. If the setting of a minimum amount payable pursuant to s90(4) amounted to part of the making of the general rate, then s107(1) empowered the council to vary the minimum amount payable. But, if the setting of a minimum amount payable pursuant to s90(4) was something separate and distinct from the making of the general rate, no such power existed.
Section 90(4) does not say, "After making a general rate, a council may set a minimum amount payable …". It says, "In making a general rate, a council may set a minimum amount payable …". The choice of the preposition "In", rather than "After", is an indication that the setting of a minimum amount payable, if any, forms part of the making of a general rate, and is not something separate and distinct from, and subsequent to, the making of a general rate.
Such an interpretation is consistent with a council having flexibility in setting different rates for different categories of land. It is quite clear from the wording of s107(1), which allowed categorisation by reference to different parts of the municipal area, use, predominant use, non-use, locality, planning zone, and any other prescribed factor, that Parliament intended councils to have a high degree of flexibility.
In my view it follows that the setting of a minimum amount payable pursuant to s90(4) formed part of the process of "making a general rate" with the result that the minimum rate could be varied pursuant to s107(1) in relation to different categories of land. The second ground of review must therefore fail.
General rate not applicable to any land
It is an agreed fact that the effect of the impugned resolution was to vary the general rate in relation to every piece of rateable land in the council's municipal area.
The applicants contend that s107(1) did not empower the council to make declarations that the general rate was varied that applied to every piece of rateable land in its municipal area.
Section 90, which requires a council to "make one general rate … on all rateable land in its municipal area" in respect of every financial year, does not impose any requirement as to majority voting. Section 18(3) requires a meeting of a council to be conducted in accordance with prescribed procedures. The Local Government (Meeting Proceedings) Regulations 2005, reg28(1), provides that a motion at a meeting is determined by a simple majority of votes unless an absolute majority is required. However s107(1) requires an absolute majority for a council to declare that the general rate varies within the municipal area. Thus it can be seen that s90, when it requires each council to make a general rate, is dealing with a "default" situation, which will apply to any categories of land in the municipal area that do not become the subject of s107(1) variations, which can only be declared by means of an absolute majority vote.
The Act does not expressly state that a council may not exercise its powers under s107(1) in respect of all rateable land in its municipal area. Such a requirement would serve no purpose. It would unnecessarily restrict a council's power to do what it thought fit for the good government of its municipal area. There is therefore no reason to construe s107(1) as containing an implied restriction precluding the council from varying the general rate in respect of all rateable land in its municipal area. The third ground of review must therefore fail.
Conclusion
For these reasons, both applications are dismissed.
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