Sisters of Mercy Property Association v Town of Newtown and Chilwell

The Sisters of Mercy Property Association (the appellant) appealed to the High Court of Australia from a decision of the Supreme Court of Victoria. The dispute concerned the rating of a block of land occupied by the appellant, which contained a convent, a chapel, a college, and a small building used for preparing altar bread and mending church vestments. The Town of Newtown and Chilwell (the respondent) had levied rates on the entire block of land, and the appellant contended that part of the land was exempt from rating under section 249(5) of the *Local Government Act 1928* (Vic) as amended.

The legal issues before the High Court were twofold: first, the proper interpretation of section 249(5) of the *Local Government Act 1928* (Vic) and, in particular, the extent of land that could be considered exempt under this provision; and second, whether the appellant could raise the partial exemption of the land as a defence to a claim for the recovery of rates levied on the entire block.

A majority of the High Court (Latham C.J., Rich, Starke, and Williams JJ.) held that the phrase "upon which is situated any hall or other building" in section 249(5) referred only to the specific land on which the building was erected, and potentially its curtilage. Therefore, only that limited portion of the land was exempt from rating, not the entire block. The Court further held, applying established Victorian case law and section 343 of the Act, that where a block of land is rated as a whole, the fact that part of it is exempt does not constitute a defence to proceedings for the recovery of the full rates. The proper remedy for the appellant was to appeal against the rate under Part X, Division 7 of the Act. McTiernan J. dissented on the interpretation of section 249(5).

The High Court dismissed the appeal, affirming the decision of the Supreme Court of Victoria. The appellant was ordered to pay the rates claimed by the respondent.