Tweed Valley Fruit Processors Pty Ltd v Tweed Shire Council
[1988] NSWLEC 153
•12/13/1988
Land and Environment Court
of New South Wales
CITATION: Tweed Valley Fruit Processors Pty Ltd v Tweed Shire Council [1988] NSWLEC 153 PARTIES: APPLICANT
RESPONDENT
Tweed Valley Fruit Processors Pty Ltd
Tweed Shire CouncilFILE NUMBER(S): 30081; 30113 of 1987 CORAM: Holland J KEY ISSUES: :- LEGISLATION CITED: Local Government Act, 1919
Local Government (Rates and Charges) Acts of 1986 and 1987CASES CITED: Baldwin v. Orange City Council (1964) ;
K.C.R. Pty. Limited v. Orange City Council (1968);
Philp Trustee Co. Limited v. Blacktown Municipal Council (1976) ;
Parramatta City Council v. Pestell (1972) ;
Western Stores Limited v. Orange City Council (1973);
Allan E. Tucker Pty. Limited v. Orange City Council (1969) ;
Picture Houses Ltd. v. Wednesbury Corporation (1948);
Bankstown Municipal Council v. Fripp (1919) ;
Bankstown Municipal Council v. Fripp (1919);
Strathcab Nominees v. Fairfield City Council (1985) ;
Pacific Outdoor Advertising Pty. Limited v. North Sydney Municipal Council (1979)DATES OF HEARING: DATE OF JUDGMENT:
12/13/1988LEGAL REPRESENTATIVES:
JUDGMENT:
HIS HONOUR: Tweed Valley Fruit Processors Pty. Limited appeal under s.133 of the Local Government Act, 1919 against the levy by the Tweed Shire Council of a local rate under s.121(1) of that Act for the years 1987 and 1988. The two rates were levied under the title "Murwillumbah Publicity Local Rate". When the 1987 rate was levied the appellant owned Lot 2 in Deposited Plan 717401 and the rate was levied upon that land. In 1988 the appellant owned, as well as that parcel of land, Lot 4 in Deposited Plan 258122 and the rate for that year was levied upon both parcels of land
The appellant claimed that both rates were invalidly made because each failed to comply with the requirements of s.121(1) according to its terms and, as well, the interpretation thereof established by the authorities. In relation to the 1988 levy, the appellant puts forward a separate ground of invalidity based upon the provisions of the Local Government (Rates and Charges) Acts of 1986 and 1987 which I will deal with later. However, it is convenient to quote the relevant statutory provisions at the outset:-
"LOCAL GOVERNMENT ACT, 1919
121 (1) For or towards defraying the expenses of executing any work or service or for or towards repaying with interest any advance made by the Minister or debt incurred or loan raised in connection with the execution of any work or service where, in either case, such work or service in the opinion of the council would be of special benefit to a portion of its area to be defined as prescribed, the council of a municipality or shire may make and levy a local rate on the land value or on the improved capital value of ratable land within such portion.
139 (2) Every rate shall -
(a) be made by resolution of the council;
....
Tourist bureaux
483 (1) The council may advertise the advantages of the area or of any place outside the area but in the vicinity thereof to attract settlers or tourists and may provide, control and manage tourist bureaux.
(2) The council may subsidise the construction of any works in its area for the purpose of attracting settlers or tourists or developing any industry in the area.
(3) The council may act as agent for any Government tourist bureaux or any person, firm or company conducting a tourist business.
(4) The council may manufacture, purchase or obtain and supply promotional and souvenir material, whether relating to the council's area or any other area.
Delegation
530A (2) The council may, by resolution, delegate the exercise of any of its functions, other than a function relating to-
(a) the making of any rate, the fixing of any charges or fees or the borrowing of any money;
LOCAL GOVERNMENT (RATES AND CHARGES) ACT, 1986
(2). (1) The Local Government Act 1919 is referred to in this Act as the Principal Act.
(2) This Act shall be construed with, and as if it formed part of, the Principal Act.
(3) In this Act -
"general purpose rate" means a general rate,.... local rate....
1987 GENERAL PURPOSE RATES
Making of rates for 1987
15. (1) Notwithstanding anything in the Principal Act, but subject to this Act, a council shall not make any general purpose rate for 1987.
(2) A council may, with the consent of the Minister given under subsection (3), make a general purpose rate for 1987.
(3) The Minister may, by instrument in writing -
(a) consent, in special circumstances, to the making by a council of a general purpose rate for 1987;
....
18. (1) A general purpose rate made by a council for 1987 is wholly invalid if it is made in contravention of this Act or in contravention of any condition attached to the consent given under section 15(3) with respect to the making of the rate.
....
(3) The Minister may, by order published in the Gazette, exempt a general purpose rate from the operation of subsection (1) or (2).
LOCAL GOVERNMENT (RATES AND CHARGES) ACT 1987
3. (As in above Act).
4. In this Act -
"general purpose rate" (as in above Act).
"rating Act" means..... the Local Government (Rates and Charges) Act 1986;
18. (1) Notwithstanding anything in the Principal Act, but subject to this Act, a council shall not make any general purpose rate for 1988.
(2) A council may, with the consent of the Minister given under subsection (3), make a general purpose rate for 1988.
(3) The Minister may, by instrument in writing -
(a) consent, in special circumstances, to the making by a council of a general purpose rate for 1988;
19. (1) If, in accordance with a rating Act, a council made a general purpose rate for 1987 or extended a general purpose rate to 1987, the council by resolution may, and shall if the rate was one which the council was required to make, determine that the rate be extended to 1988.
(2) If, under subsection (1), a council determines to extend a rate to 1988, the council by resolution may also determine that the rate as so extended be increased or decreased by a specified percentage for 1988, but any such increase shall not exceed -
(a) 6.5 per cent; or
(b) if, in the case of a particular council and its rate, the Minister by instrument in writing determines a greater percentage - that greater percentage.
(5) a parcel of land is subject to a rate extended under this section in the same way as if the rate had been made and levied in 1988.
(6) For the purposes of the Principal Act, the amounts payable in respect of a rate extended under this section shall be deemed to be the amounts payable in respect of a rate made in 1988.
22. (1) A general purpose rate made by a council for 1988 is wholly invalid if it is made in contravention of this Act or in contravention of any condition attached to the consent given under section 18(3) with respect to the making of the rate.
(3) The Minister may, by order published in the Gazette, exempt a general purpose rate from the operation of subsection (1) or (2).
Going back to s.121(1), it is critical, under the terms of that provision, to the making and levying of a valid local rate that the purpose is to raise revenue for or towards defraying the expenses of executing a work or service and that such work or service, in the opinion of the Council, would be of special benefit to a portion of the Council's area and that such area be defined by the Council. I disregard for the purposes of the present case the alternative purposes of raising money to repay advances by the Minister, debts incurred or loans raised in connection with the execution of any work or service. Disputes as to the validity of local rates made under this section and as to its proper interpretation have led to the establishment of a number of principles to be applied.
Where the section refers to "any work or service" it means a work or service that a council is authorised under the Local Government Act, 1919 to do or provide; Baldwin v. Orange City Council (1964) 10 L.G.R.A.356 at p.359; K.C.R. Pty. Limited v. Orange City Council (1968) 16 L.G.R.A. 153 at p.156. Whilst, as the case last mentioned decided, there is no reason why the words "work" and "service" should not be given an extensive meaning, they cannot be given a meaning which would include work or service for which there is no authority in the Act for councils to undertake. It is to be remembered that, as was pointed out in Baldwin's case, the section follows s.120(1) which confers power to levy special rates "for any purpose which may lawfully be undertaken by the Council".
As the Council must form the opinion that the work or service would be of special benefit to a specific portion of its area which it must define, the formation of the opinion involves a decision and definition by the Council of the work or service the expense of which is to be defrayed from the proceeds of the local rate to be made and levied; Burns Philp Trustee Co. Limited v. Blacktown Municipal Council (1976) 1 N.S.W.L.R.531 at p.541. As the area to be the subject of the local rate has to be precisely defined by the council as one which in its opinion will take special benefit from the work or service, it follows that the area could not properly be defined until the work or service was determined and decided upon by the Council with sufficient precision to indicate the area that would be capable of being benefited by it: Burns Philp (supra). There must be correlation, in the Council's opinion, between the land to which the execution of the work will be of special benefit and the land determined by the Coun
cil to be subject to the rate; Parramatta City Council v. Pestell (1972) l28 C.L.R.305 at p.322; Western Stores Limited v. Orange City Council (1973) A.C.774 at p.781. In Allan E. Tucker Pty. Limited v. Orange City Council (1969) 18 L.G.R.A.314 at p.321, Else-Mitchell J. said:-
".....It is obviously not open to the Council to form an opinion that has no basis in fact nor to reach an opinion by the exercise of considerations or factors which have no relevance to the benefits ensuing from the provision of the works or services to be financed from the local rate."
As the Privy Council observed in the Western Stores case (supra), the "correlation", in the Council's opinion, to which I have referred, which is described in Pestell and Allan E. Tucker, is to be judged according to the nature of the benefit alleged. It would seem to follow, therefore, that a determination by the Council of the work or service to be executed must be made with some clarity for the requisite opinion to be properly arrived at by the Council.
It follows from the fact that, for the making of the rate to be valid, the Council must hold the requisite opinion, that it is open to a party to impugn the validity of the rate by showing that in fact that opinion was never formulated by the Council: Pestel, per Barwick C.J., at p.313; but, if the Council did have the opinion required, it cannot be challenged on the ground that it is unsound. As Menzies J. said in Pestel, at p.327:-
"A court has no power to override the council's opinion on such a matter simply because it considers it to be wrong. However, a court may interfere to ensure that the council acts within the powers confided to it by law. If, in purporting to form its opinion, a council has taken into account matters which the Act, upon its proper construction, indicates are irrelevant to its consideration, or has failed to take into account matters which it ought to have considered, the opinion will not be regarded as validly formed. Even if the council has not erred in this way an opinion will nevertheless not be valid if it is so unreasonable that no reasonable council could have formed it (see Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation (1948) l K.B. 223, at pp.228-229 and 233-234, and see also Bankstown Municipal Council v. Fripp (1919) 26 C.L.R., at p.403."
One further point of interpretation to be noted is that it is the land which is to be considered as deriving a special benefit from the work or service in question (such as by accretion in value) not the present owner of the land or the business being carried on upon the land at the relevant time: Pestel at pp.315, 323, 328, 329; and see Bankstown Municipal Council v. Fripp (1919) 26 C.L.R. 385 at 395.
I note that the principles to be applied were recently reiterated by Perrignon J. in Strathcab Nominees v. Fairfield City Council (1985) 57 L.G.R.A. 31 at p.37.
The appellant bears the onus of establishing the invalidity of the rates in question. The Council purported to make the 1987 rate on 21 January 1987 by a resolution which, in part, reads:-
"It is hereby resolved that a Murwillumbah Publicity Local Rate of zero decimal 57 cents (0.57c) in the dollar on the land value of all ratable land within the areas herein defined be now made for the year 1987 for the purpose of publicising and promoting and in the opinion of the Council for the special benefit of the Murwillumbah Publicity Local Rate area. Definition of the area is attached."
The attached defined area included the appellant's Lot 2. The Council purported to make the 1988 rate on 20 January 1988 by a resolution which read, in part, as follows:-
"It is determined in accordance with the Local Government (Rates and Charges) Act 1987 and as notified by the Department of Local Government Circular No. 87/70 that the Murwillumbah Publicity Local Rate for 1987 shall be extended to 1988 and that the Murwillumbah Publicity Local Rate so extended shall be increased by 6.5%.
The area to be rated is herein defined, for the purpose of publicising and promoting, and in the opinion of the Council for the special benefit of the Murwillumbah Publicity Local Rate Area. Definition of the area is - (described by meets and bounds)."
The area defined included the applicant's Lots 2 and 4.
The appellants contend that neither of these resolutions is adequate to demonstrate that the rates were properly made; but, also, the appellant has adduced evidence going behind the resolutions in an endeavour to prove that any evidentiary value in favour of validity derived from the form of the resolutions is nullified by the facts. It is contended that the facts and the proper inferences to be drawn therefrom establish that in neither year did the Council make the necessary determinations as to the works or services for the payment of which the rate was to be levied or as to the portion of its area liable to be specially benefited thereby so as to enable the opinion called for by the section to be formed by the Council. Although, in relation to certain facts, there was an issue as to relevance to which I will return, there was virtually no dispute between the parties as to the facts themselves. Accordingly, the Court came to be greatly assisted by the presentation of an agreed statement of facts and a set o
f the documents referred to therein. These are Exhibits "A" and "B". On the basis of the material in those documents together with the oral evidence that was given and the additional exhibits tendered at the hearing, I am satisfied that the appellant has discharged its burden of proof and that neither of the rates in question were validly made by the Council.
Firstly, as to the form of the resolutions themselves, bearing in mind that s.139(2)A requires that a rate shall be made by the Council by resolution. In each year the resolution uses the formula "for the purpose of publicising and promoting, and in the opinion of the Council for the special benefit of (the nominated area)". These words do not purport to state what works or services have been determined by the Council to be executed or performed but merely state "the purpose" for which the rate is being made. If it be contended that the words "publicising and promoting" are intended as a description of the works and services decided upon by the Council for the making of the rate, several questions arise: (l) Are the words too vague and uncertain of themselves to serve as an adequate definition of works and services for the purposes of s.121(1); (2) If not, are works and services so described within the Council's powers under the Local Government Act; (3) If, of themselves, they are too vague and uncertain, do
they merely describe in globo particular authorised works or services which the Council has determined upon prior to and for the purposes of making the rate; and (4) if there has been a determination by the Council of authorised works or services are they capable of being, in the opinion of the Council, of special benefit to the chosen portion of its area.
In my opinion, standing alone the words "publicising and promoting" are not an adequate description of works or services for the purposes of s.121(1). They leave completely at large the type, manner and target of the publicity and the form of promotion so as to make it virtually impossible to postulate the possible benefits to be derived therefrom and, thereby, to define a portion of the Council's area which, in its opinion, would derive special benefit. In my opinion, the resolution by itself would not be enough to establish the validity of the rate but its terms would suggest that, perhaps, considerations and decisions upon works or services made by the Council leading to the making of the resolution would, upon being revealed, supply the missing ingredients.
If, contrary to my view, publicising and promoting the rated area is a sufficient description of works and services for the purposes of s.121(1), they do not, in my opinion, describe works and services which the Council is authorised to carrying out under the Local Government Act. A perusal of the Act does not reveal any head of power in the terms "publicity" or "promotion" and no equivalent head of power or ancillary power except in so far as s.483, which I have quoted, provides for publicity or promotion to the limited extent described by that section. The Local Government Act does not confer upon councils any general powers to undertake works or services for the welfare or advancement of its area or the people who live in it. With very limited exceptions, none of which would extend to cover the present case, the authority and powers given to a council are quite specific. Section 279, for example, gives power to the Council to do all things necessary from time to time for the promotion and preservation of p
ublic health, safety and convenient. The ambit of this power is confined by the stated objects, public health, safety and convenience, and, as well, the power is given expressly "for the purposes and subject to the provisions of this Act". As Lee J. said in Pacific Outdoor Advertising Pty. Limited v. North Sydney Municipal Council (1979) 39 L.G.R.A. 207 at p.216:-
"....It can be said that such a section does not confer a power upon a council to do whatever it chooses to do in regard to the matters mentioned in the section but merely permits a council, in respect of the purposes expressed in the Act, to do whatever is necessary, subject to the provisions of the Act, for the carrying out of those purposes."
Another example is s.504 which provides that, subject to the Act, the Council may expend for purposes not authorised but not expressly prohibited by law a sum not exceeding in any one year one percentum of the general rate levied in that year and, if one percentum does not yield $2,000 in that year, may expend $2,000. The very existence of the authority given by s.504 implies that, without such specific legislative authority, the Council has no power to act at large in the execution of works or provision of services or the expenditure of money. Section 504A authorises the Council to expend its funds for the purpose of promoting any function, pageant or demonstration arranged in connection with the celebration of any event of national or historic importance or in contributing towards the erection of buildings of national importance. These two sections and numerous others are collected in Part XXIII of the Local Government Act under the heading "Miscellaneous Powers", a perusal of which only reinforces the impr
ession that councils were not intended to have general powers or powers at large but only powers directed to specified subject matters or purposes. Part XXIV contains another collection of powers under the hearing "Ancillary Powers" which are in like mould. That Part contains s.529 which provides: "The council may do any acts not otherwise unlawful which may be necessary to the proper exercise and performance of its powers and duties." Even this generally expressed power is contained by the word "necessary", the word "proper" and the words "powers and duties" which must be taken to mean powers and duties under the Local Government Act.
Reverting to s.483 of the Act, it is apparent that this section does not confer upon a council power to go at large with publicity or promotion. By ss.(1) the Council may "advertise" advantages of the area or its vicinity "to attract settlers or tourists and may provide, control and manage tourist bureaux". Subsection (2) and (3) are not material here and ss.(4) is confined to the acquisition by the Council, whether by manufacture, purchase or otherwise, of promotional and souvenir material relating to the Council's area or any other area, and the supply of such material. The section does not authorise the publicising and promoting at large of a portion of the Council's area and, in my opinion, the words "for the purpose of publicising and promoting" in the resolutions here in question cannot, of themselves, demonstrate the validity of the rates by way of an exercise of the powers in s.483 because they are not capable of being read as intending to be limited to the purpose of attracting "settlers or tourists"
or to the purpose of acquisition and supply of promotional and souvenir material.
It is necessary then to see whether there was any, and if so what, supporting material before the Council at the time of making the resolutions in order to decide whether such material indicates that the Council proceeded on a proper basis in arriving at its decision to make and levy the rate. It appears that the Council first levied a "Murwillumbah Publicity Local Rate" in 1957 in response to a request by an unincorporated body called the Murwillumbah Retail Traders Association to levy a local rate on the business section of the town for expenditure on tourist publicity and the establishment of tourist attractions and amenities. Such a rate was levied by resolution in relation to an area which did not include the appellant's lands. However, the nature of the works or services to be paid for by the rate revenue was not described in the resolution nor in any report to the Council relating to that rate. In 1980 the Council extended the boundaries of the area to be subject to the Murwillumbah Publicity Local Rat
e to include Lot 2 of the appellant's lands. In 1984 the Minister for Local Government authorised an extension of the area subject to the rate on a condition that the income from the levy was to be expended solely by the Council on the promotion of the Murwillumbah business area. The affairs of the Murwillumbah Retail Traders Association were taken over by the Murwillumbah Business Corporation which, on 22 September 1987, came to be incorporated as a company limited by guarantee under the Companies (New South Wales) Code.
The Council developed a practice, for the purpose of making the Murwillumbah Publicity Local Rate, of requesting the Murwillumbah Retail Traders' Association, and later the Murwillumbah Business Corporation towards the end of the year preceding the rating year, to provide a budget of expenditure for the Murwillumbah Publicity Local Fund. The Association or the Corporation provided a budget after which the Council prepared an estimate of income and expenditure for the fund for the coming year, the estimate was based upon the budget that had been provided. It appears that the Council's procedure and practice has never been to formulate for itself any list or description or program of the works or services intended to be paid for out of this fund.
As it happens, the Council was unable to produce, in respect of the year 1987, any record of a request made in 1986 from the Council to the Corporation to provide a draft budget for the fund for the coming year nor any record or copy of a letter or other communication from the corporation to the Council submitting a draft budget. There is, however, a brief note in the minutes of a general meeting of the Murwillumbah Business Corporation of 9 December 1986, under the heading "Outward Correspondence", which reads, "to Tweed Shire Council re 1987 publicity rate levy". When the Council published, pursuant to s.138 of the Local Government Act, its estimates of income and expenditure for the year 1987 there was included an expenditure estimate of $55,550.00 as "Murwillumbah Publicity Local Rate". On 25 November 1987 the Council passed a resolution that the estimates be adopted and the Murwillumbah Publicity Local Rate be increase by 6.5%. Then on 21 January 1987 the Council passed the resolution which, after reciti
ng the adoption of the estimates, was in the terms earlier quoted by me.
The procedure for the 1988 rate began with a letter from the Duty Shire Clerk to the Secretary of the Murwillumbah Business Corporation, dated 23 October 1987, stating:-
"Re 1988 budget"
Council is currently preparing the 1988 budget. It is requested that you submit the 1988 budget for the Corporation as soon as possible so that it may be incorporated in the overall Council budget."
The minutes of a special meeting of the Board of the Murwillumbah Business Corporation held on 27 October 1987 contained the following:-
"Budget 1988.
Recommends an increase in levy of 6.5% to realise income of $58,575.00.
With the exception of the Administration item of $8,292.00 which provoked considerable discussion, particularly from the existing Secretary who claimed that he did not have any imput into it and in many items it was not realistic, the remaining items, viz
Promotions Officer allowance $10,000.00
Financial Assistance - contributions 13,200.00
Promotions 25,000.00
Special Projects 10,000.00
Contingency allowance 15,000.00
__________
Totalling $57,592.00
Leaving a credit balance of $583.00
were agreed to.
It was resolved that even though the Secretary may care to submit a revised estimate of administration expenses, the budget as stated be submitted to Council as a draft for 1988 Estimates."
On 29 October 1987 the Secretary of the Murwillumbah Business Corporation replied to the Shire Clerk of the Council as follows:-
"Re 1988 Murwillumbah Publicity Fund Levy
Please be advised that the Murwillumbah Business Corporation wishes you to strike the Murwillumbah Publicity Levy to bring in an income of $58,575.00. This figure is arrived at by taking last year's rate income and applying the maximum allowable increase of 6.5%.
Enclosed is a draft budget for 1988 as requested.
We hope this satisfies the requirements for estimates day."
The enclosed budget gave a list of administrative expenses and salaries and of financial assistance payments to be made to other associations and then a sum of $22,000 for "promotions including advertising, printing and other expenses" and $10,000 for "special projects/t.v. advertising at least three times per year".
In the estimates for the year 1988 the Council showed under "Murwillumbah Publicity Local Fund" expenditure consisting of "administration expenses $2,200" and "publicity expenses $55,875" and an income from rates of $58,075. The resolution making the rate for 1988 was passed on 20 January 1988. After reciting that the estimates had been adopted, the resolution was in the terms which I have earlier quoted.
There was no other material provided to the Council in connection with the presentation or adoption of the estimates for the passing of the resolution making and levying the rate. The Council had not formulated any program of its own for publicity or promotion and gave no consideration to the form, content or objects of publicity or promotion envisaged by the Murwillumbah Business Corporation before adopting the estimates or passing the rate making resolution.
According to the evidence, the Council's staff prepare for the Council's consideration estimates of expenditure and revenue based almost entirely upon the budget of expenditure and representations as to the rate to be levied provided by the Murwillumbah Business Corporation or its predecessor and, whilst the Council separately considers and adopts the estimates, the officers of the Council themselves and the Council do not independently or at all prepare any sort of description or program of works or services or, to be more specific, publicity and promotions for the ensuing year.
In my opinion, the material actually before the Council at the time of making the two rates in question was not capable of conveying to the Council and was not used by the Council to determine any description or specification of works or services sufficient to enable the Council to form the opinion required by s.121(1) as a condition precedent to the making of a valid local rate under that section.
It may be argued, however, that the Council should be presumed to have acted upon its knowledge of past dealings with the Murwillumbah Business Corporation and its predecessor and the publicity and promotion paid for by the fund in previous years. It could then be contended that, underlying the resolution to make the rate, was a determination by the Council that works and services performed and paid for in previous years would be repeated in the rating year. On this approach to the matter two points need to be considered. What was the Council's relationship with the Murwillumbah Business Corporation and its predecessor and what was the nature of the publicity and promotion for which the past levies of rates had been used.
Until 1984 there was no resolution of the Council dealing with its relationship with the Murwillumbah Retail Traders Association with respect to the expenditure of monies raised by the Murwillumbah Publicity Local rate. On 19 December 1984 the Council passed a resolution that accounts as submitted by that Association and listed before the Council be paid from the Murwillumbah Publicity local fund and that the Shire Clerk be delegated authority to pay Murwillumbah and Tweed Heads Publicity Fund accounts as approved by the Murwillumbah Retail Traders Association and the Tweed Heads Chamber of Commerce respectively. In May 1987 the Shire Clerk recommended a review of the procedure involved in authorising and accounting for expenditure of publicity funds. One of the organisations involved was the Murwillumbah Business Corporation not then incorporated. He pointed out that that Corporation was administering funds raised under the Murwillumbah Publicity Local Rate. On 27 May 1987 the Council passed the following re
solution:-
"(a) All previous delegation of authority to each or any of the Murwillumbah Chamber of Commerce, Murwillumbah Retail Traders' Association, Murwillumbah Business Corporation Inc., Tweed Heads Promotions Corporation Limited, Tweed Heads Chamber of Commerce and Tweed Coast Tourism Association Inc., be withdrawn;
(b) Council engaged the Murwillumbah Business Corporation Inc., Tweed Heads Promotions Corporation Limited and the Tweed Coast Tourism Association Inc., as consultants to advise on expenditure of the respective Funds;
(c) Delegation of Authority;
Pursuant to the powers conferred on it by Section 530A of the Local Government Act 1919, the Council hereby authorises the Shire Clerk, and in the absence of the Shire Clerk, for any reason, the Deputy Shire Clerk, to authorise payment of any accounts submitted to Council for payment out of any of the Murwillumbah Publicity Local Fund, Tweed Heads Publicity Fund or the Tweed Coast Publicity Fund provided payment of such accounts has been approved by a duly constituted Meeting of the Murwillumbah Business Corporation Inc., Tweed Heads Promotions Corporation Limited or the Tweed Coast Tourism Association Inc., respectively."
As I have said, the Murwillumbah Business Corporation Limited took over in 1987 from the Murwillumbah Retail Traders' Association. The objects of the Corporation are not limited to the promotion of tourism or to attracting settlers and tourists to the area. The principal object in the memoranum of association of the Corporation is to promote, advance and support by all lawful means the commercial, tourist and industrial interests and the industrial, mercantile, tourist and professional community of Murwillumbah and its New South Wales environs. Throughout the other objects reference is made to the interests of commerce and industry and to professional and mercantile interests of Murwillumbah and its New South Wales environs as well as tourists' interests. One of the objects provides for the Corporation to engage in "any other activity deemed by the Board for the time being to be in the best interests of the town". Membership qualifications include any personal corporation owning real estate within the area pr
oclaimed by the Tweed Shire Council for the time being as being within the commercial and industrial area of Murwillumbah, and any personal corporation not falling within that geographical area but owning real estate within the Shire of Tweed upon payment of the levy which would have been payable had that person or corporation been the owner of real estate within the said area. The Articles of Association define the word "levy" to mean the annual levy made by the Council of the Shire of Tweed for the Murwillumbah Publicity Local Rate and provide that the levy paid by levy payers shall "when received by the company" to the extent of the annual subscription payable by members under the Articles, comprise such annual subscription for the corresponding subscription year and be accepted by the company as such.
On 6 January 1988 the Deputy Shire Clerk of the Council wrote to the Secretary "Murwillumbah Publicity Fund Committee, Murwillumbah Business Corporation", advising that the Council had appointed the Shire President and two other Councillors as delegates on that Committee for the ensuing year. However, neither the Council nor the Corporation possess a constitution or rules for a body known as the "Murwillumbah Publicity Fund Committee". The Council has not by any resolution delegated to a body by that name any of its functions, nor does the Council nor the Corporation have minutes or agendas for meetings of a body of that kind. There is no committee formed by the Council which manages or has managed the expenditure of the Murwillumbah Publicity Local Fund in the years 1987 and 1988.
In practice the expenditure of money raised by the Murwillumbah Publicity Local Rate has been made by the Council in three ways: (l) The Council receives accounts from the Corporation for approval by the Shire Clerk and then, if approved, the Council pays the accounts out of the fund; (2) The Council receives requests from the Corporation for reimbursement of expenses incurred by the Corporation which expenses, if approved by the Shire Clerk, are reimbursed to the Corporation out of the monies in the fund; (3) The Council applies to its own purposes monies from time to time for the Council's costs of administration of the fund. This procedure for dealing with monies from the fund has been followed by the Council for many years.
The foregoing still leaves the question, on what works and services has the money been expended? Counsel for the respondent objected to evidence tendered by the appellant for the purpose of showing how the funds raised by the levy had been utilised in order to demonstrate that in fact the rate was being made and levied to provide funds to pay for "works and services" which the Council had no power or authority to execute and also to show that these works and services were incapable of conferring any benefit, let alone special benefit, on the lands owned by the appellant. By consent, I admitted the evidence subject to objection to be ruled on at the end of the hearing.
In my opinion, all of the evidence tendered was admissible. Counsel for the respondent contended that the Court's inquiry was limited to determining whether, at the moment of its making, the levy was valid. It was submitted that such a validity could not be determined by reference to how the money raised by the levy was subsequently expended because it might, conceivably, be expended unlawfully after having been raised lawfully. Whilst that is true, a regular history of expenditure out of a particular fund raised annually provides evidence from which an inference may be drawn that a new levy, made in the same way as past levies, was made in contemplation and with the intention that the monies raised would be applied for the purposes for which they were actually spent.
The evidence proved that the monies were spent on newspaper, radio and television advertising of various kinds, all of which were decided upon by the Murwillumbah Business Corporation. There was no evidence that the Council had any input whatever as to the objects, form or content of the publicity and promotions procured or organised by the Corporation. The advertising and publicity was dominated by a heavy emphasis upon commercial interests, particularly the advertising of shops and shopping facilities. Some of the funds were applied to publicity about individual business personalities who were prominent in the community; but most of the activities fostered by the Corporation centred on promoting the shopping centre and advertising particular shops and their wares. The Murwillumbah Business Corporation itself features prominently in the Corporation's advertising. Publicity and promotions directed to the attracting of tourists is a very minor part of the total program, only a few advertising messages being di
rected at tourists or to the promotion of tourism. The targets of the vast majority of the advertisements put out by the Corporation are the inhabitants of Murwillumbah and surrounding areas and, of those, it is the shoppers to whom most of the messages are directed.
It is admitted in the statement of agreed facts that in the years 1986, 1987 and 1988 neither the Council nor the Corporation spent any monies from the Murwillumbah Publicity Local Rates for those years on any form of publicity of the rated area as such, being publicity in which it was possible to identify that it was the rated area itself that was being publicised or promoted.
In my opinion, having regard to the evidence before the Court, both of the rates in issue here must be held to be invalid. A valid exercise of the power to levy a local rate in s.121(1) presupposes that the Council has determined to execute some authorised work or service for defraying the expenses of which the rate revenue will be applied. Dependent upon that determination, is the formation of the required opinion that the work or service so determined will be of special benefit to a specific portion of the Council's area, which the Council is then required to define by its resolution making the rate. In my opinion, the Council did not determine upon a work or service by resolving that the rate was being made for the purpose of publicising and promoting the area. The Council had not decided on any form of advertising program or promotion of any sort. The Council had not laid down the nature or content of the publicity or the form of the promotion or to whom it was to be directed or for what purpose. It is ev
ident that the Council made no such determination for itself because it always intended that these matters would be decided upon, then executed and administered entirely by the Murwillumbah Business Corporation and decided upon, not before, but after the rate had already been made and levied. The Council could not, in advance, depend upon the Corporation to target its publicity and promotion to advance either the interests of land in the area which it had defined or objects which the Council was authorised to serve. The objects of the Corporation under its constitution were not restricted to tourism but provided for promotion of commercial, mercantile and industrial interests and persons engaged in the professions. The Council could not depend upon the Corporation to stay within the bounds by which Council's own authority and power were limited. In so far as it could be said that the Council must be deemed to have employed the Corporation to execute works or services on the Council's behalf, the Council is st
ill left in the position that it did not make any decision before making the rate as to what the works or services would be.
In my opinion, it was not open to the Council to decide in advance that it would adopt whatever works or services the Corporation decided to perform because, firstly, that was for the Council to decide, secondly, the Council was confined, whereas the Corporation was not, to works and services authorised by the Local Government Act and, thirdly, the Council must be taken to have been aware that works and services which the Corporation had done in previous years, at the expense of the fund in question, had been of a nature and for purposes beyond the Councils' authority. Furthermore, the Council must be taken, from past experience, to have anticipated that work which the Corporation would do at the expense of the fund would include for the most part publicity and promotion not directed to and incapable of benefiting the rated lands as whole. Whilst the resolutions passed to make the rates expressed an opinion that the rated land would obtain special benefit, that was an opinion either not held or not capable ra
tionally of being held because there were no works or services decided upon by the Council upon which such an opinion could have been based.
The appellant also contended that even if the works and services performed by the Murwillumbah Business Corporation and paid for by the Council out of the local rate could be considered works and services attributable to the Council, no council acting reasonably could have formed the opinion that the appellant's land would be benefited.
The appellant's lands were located in an industrial estate at a considerable distance and cut off by watercourses from the commercial and shopping centre for the benefit of which the vast bulk of the advertising and promotional material was directed. The Buchanan Industrial Estate in which the appellant's land was located accommodated a mixture of industrial and some commercial enterprises with virtually no shops or retailers. Moreover, the appellant's land was likely, having regard to the nature of its business, to be continued indefinitely to be used and suitable for its present use for the manufacture of industrial raw materials made from fruit and vegetables for which there was no local market and no local trade. The appellant trades outside of the Council's area and its business is such that it is not advertised on local radio or television or in the local press, except two or three times a year to buy fruit.
The Buchanan Industrial Estate is on the east of the retail and commercial centre of Murwillumbah on the route from the town to the rubbish tip. The road between the Estate and the town caters for local traffic visiting the tip, the Estate and a handfull of farms beyond. At the end of the road is a state forest. Persons coming to the town from the Gold Coast, Sydney or any of the towns or cities of the area do not come along that route. The Estate is used essentially for manufacturing or service industry and not for retail trade.
It was an agreed fact that neither the appellant nor its property, by reason of the use to which the appellant puts its property, received any benefit whatsoever from the activities of the Corporation paid for out of the monies raised by the Murwillumbah Publicity Local Rates 1987 and 1988, the activities of the Council in expending monies raised by those rates or publicity that might be given to the area the subject of the rates.
In my opinion, it is, in these circumstances, difficult to justify the inclusion of the appellant's lands and, probably other lands in the Buchanan Industrial Estate, in the rated area having regard to the type of publicity and promotion upon which the rate revenues are and are intended to be expended. However, in this respect some of the appellant's complaints are about lack of benefit to its own business which is not relevant. Nevertheless, this is not entirely so as the appellant also has a reasonable basis for complaint in respect of lack of benefit to the land itself, which is the vital consideration. In my opinion, it is not appropriate to decide the validity of the rates for the years in question upon the ground that the Council could not reasonably have supposed that there could be any special benefit to the appellant's lands when, in my opinion, the rates are invalid upon the threshold ground that the Council never did determine a description or program of works and services upon which an opinion as
to special benefit and the portion of its area which would gain thereby might properly have been determined.
It is necessary to add some facts in connection with the making of the Murwillumbah Publicity Local Rate for 1987 to deal with the separate ground of attack made by the appellant upon the making of the 1988 rate. I have already referred to and quoted from the resolution passed by the Council on 21 January 1987 purporting to make the Murwillumbah Publicity Local Rate for that year. That rate was made without the consent of the Minister pursuant to ss.(2) and (3) of s.15 of the Local Government (Rates and Charges) Act, 1986. The making of the rate was therefore in contravention of s.15 and, consequently, was by s.18(1) wholly invalid. However, the Minister, pursuant to s.18(3) granted an exemption of the Murwillumbah Publicity Local Rate from the provisions of s.18(1) of the Act for 1987, such exemption being published in the Government Gazette of 4 December 1987. Then, on 20 January 1988, the Council passed the resolution making the Murwillumbah Publicity Local Rate for that year in the terms which I have quot
ed.
The appellant's argument that the 1988 rate is invalid takes two simple steps. The first is that the 1988 rate is solely supportable upon the power contained in s.19(1) of the Local Government (Rates and Charges) Act, 1987 and that power is granted in unequivocal conditional terms, namely, "if, in accordance with a rating Act, a council made a general purpose rate.... the council by resolution may.... determine that the rate be extended to 1988". This was the power which the Council purported to exercise in extending its 1987 rate to 1988 and increasing it, pursuant to ss.(2) of s.19, by 6.5%. The second step is to contend that the rate made in 1987 was not made "in accordance with a rating Act" because it was made without the consent of the Minister and therefore in contravention of s.15 of the Local Government (Rates and Charges) Act, 1986. It was submitted that although in 1987 the Minister was able to validate the invalid 1987 rate by making an order under s.18(3) this did not change the fact that the 198
7 rate was made in contravention of s.15 of the 1986 Act and was, therefore, not made"in accordance with a rating Act".
In my opinion, the argument fails because it is not proper to say that the 1987 rate was not made "in accordance with a rating Act". The power of the Minister to validate, under s.18(3), a rate made by a council in contravention of s.15 of the 1986 Act is part of the 1986 Act and, even though the rate depends for its validity upon an exercise of that power, once the power is exercised the intention must be that the rate becomes one to be treated as if made in accordance with the Act. The appellant relied upon the act of the Council in making the rate otherwise than in accordance with the 1986 Act as an event which happened once and for all and could never cease to be "not in accordance with a rating Act". It was contended that the validation by the Minister under s.18(3) was a disparate exercise of power which gave the rate validity but could never take it out of the category of a rate that had been made otherwise than in accordance with the relevant Act. In my opinion, the mechanism of s.18 defeats this argu
ment by providing in sub-s.(3) not that the Minister may validate the rate but that he may exempt a rate that has been made from the operation of ss.(1) of s.18. In my opinion, it is the clear intention that the making of the rate is to be treated not only as if the invalidating provision of s.18(1) did not exist, but also as if the rate was properly made and, therefore, made in accordance with the Act. The narrow interpretation given by the appellant's argument is inconsistent with the object of s.18(3) and, in my view, should therefore not be accepted.
For the reasons I have given I will allow both appeals and declare each of the rates in their application to the appellant's lands to be invalid.
The orders of the Court are:-
No. 30113 of 1987
1. Appeal upheld.
2. Declare that the rate levied by Rate Notice for the year 1987, Assessment No. 5.07033.50000, as the Murwillumbah Publicity Local Rate upon the appellant's land, being Lot 2 DP717401, was not validly made by the respondent.
3. Order that the respondent pay the appellant's costs of the appeal.
No. 30081 of 1988
1. Appeal upheld.
2. Declare that the rates levied by Rate Notices for the year 1988, Assessment Nos. 5.07033.50000 and 8.07033.40000, as the Murwillumbah Publicity Local Rate upon the appellant's lands, being Lot 2 DP717401 and Lot 4 DP258122 were not validly made by the respondent.
3. Order that the respondent pay the appellant's costs of the appeal.
Exhibits may be returned.
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