Wingecarribee Corporation v Reynolds
[1966] HCA 41
•2 June 1966
Question 2. If the answer to question (1) above is in the affirmative, whether the respondent council had power to re-determine or vary the said area at a later point of time?
Answer. The opinion of the council formed at or prior to its application for the Governor's approval of the loans did not and does not preclude the council from forming its opinion as to the area to which the works of water supply would be of special benefit at the time at which it from time to time exercises the discretion given to it by s. 124 to levy a local loan rate for the repayment of the loans which were raised for such works and of payment of interest thereon.
Question 4. Whether the area to be benefited within the meaning of s. 124 (4) must be decided upon and defined by the council at the time when the loan is raised and not at any later date.
Answer. No.
Cur. adv. vult.
The following written judgments were delivered:—
- (1963) 80 W.N. (N.S.W.) 1513.
In the year 1948 the Council of the Shire of Wingecarribee (the council) made an agreement with the Minister for Public Works of the State of New South Wales under which the Minister agreed to construct works of water supply principally to supply a number of towns within the shire, and by which it was agreed that the cost of the works should be provided as to part by a grant of public moneys by the State and as to the other part by moneys provided by the council.
In May 1959 the council sought the approval of the Governor pursuant to s. 173 (2) of the Local Government Act, 1919-1954 N.S.W. (the Act) to raise an ordinary loan of £75,000 for the purpose of the construction of these works of water supply. The Governor gave his approval to the borrowing of that sum. In July of the same year a like application and a like approval was given in respect of a loan of £93,000, and in September of the following year there was a further similar application and approval in respect of a loan of £45,000. The works of water supply (the works) are said to have been finished about 1962.
The council was given permission for a time not to levy a loan rate in respect of the loans which were approved pursuant to these applications, but in the year 1963 the council levied a water supply local rate pursuant as it thought to the provisions of Pt XIV of the Act. But for reasons which appear in Simpson v. Wingecarribee Shire Council [1] , the attempt to levy this rate proved abortive.
In January 1964 the council passed a resolution imposing a loan rate upon an area which it decided in the latter part of 1963 to be an area to which the works would be of special benefit (the limited area). This area was a larger area than the area which it had formerly described as the proposed district water supply area in the said application for approval to borrow.
The respondent, a ratepayer, having ratable land within the limited area, by proceedings in the Land and Valuation Court challenged the validity of the council's assessment of the local loan rate for 1964 in respect of the whole of his grazing property. The Supreme Court judge sitting as the Land and Valuation Court stated a case for the opinion of the Supreme Court asking four questions as follows:
(1) Whether the information contained in the applications for loans constituted evidence of an opinion having been formed by the respondent council of the area which would have the special benefit of the works for which the loans were raised within the meaning of s. 124 (4) of the Local Government Act, 1919.
(2) If the answer to question (1) above is in the affirmative, whether the respondent council had power to re-determine or vary the said area at a later point of time.
(3) Whether the provisions of s. 124 (4) of the Local Government Act—contained in Pt VII of the said Act and in pursuance of which the assessment was made—extend to a case such as the present.
(4) Whether the area to be benefited within the meaning of s. 124 (4) must be decided upon and defined by the council at the time when the loan is raised and not at any later date.
The primary judge found as a fact that at or immediately prior to making its applications for approval to borrow sums of money I have mentioned, the council had formed an opinion that an area then described by it as the proposed district water supply area was the area to which the works would be of special benefit, and he held that upon the proper construction of s. 124 (4) of the Act the formation of that opinion was final and fixed unalterably the area of ratable land on which the local loan rate could be levied in respect of the said loans for which approval has been sought.
He held that Pt XIV of the Act did not provide the exclusive method by which the council could levy a rate in respect of works of water supply and favoured the view that s. 124 allowed the council to form its opinion as to the limited area at any time up to the time when it levied the local loan rate. But that, having once formed an opinion as to such area, it could not, in his Honour's opinion, depart from it.
On appeal, the Supreme Court of New South Wales, by majority, held that the opinion as to the limited area must be formed at the time of the raising of the loan, and that when so formed it was final and unalterably definitive of the area of special benefit. The majority agreed with the view of the primary judge that Pt XIV did not provide the exclusive method by which the council could levy a local rate in respect of the works of water supply, being of opinion that the method provided by s. 124 and the method provided by Pt XIV for levying a local loan rate were alternative and that, whilst s. 177 (4) was mandatory, the council could satisfy the obligation to levy a loan rate by resort to provisions either of s. 124 or of s. 378 (3).
The first question to be dealt with, not expressly but only inferentially asked in the stated case, is whether Pt XIV of the Act does provide the council with the sole source of authority to impose a local rate in respect of loans for works of water supply. I would therefore deal with that question before passing to consider the Full Court's judgment on other questions.
Having closely considered the various sections of the Act, I have reached the conclusion that not only does Pt XIV not provide the exclusive method by which a council may levy a rate in respect of a work of water supply, but that, upon its proper construction, that Part, and particularly s. 378 (3), does not authorize the council to raise a loan rate in respect of the capital cost of works of water supply at all. In my opinion, it merely enables the council to raise a rate for the maintenance of a work of water supply which has been handed over to it after its construction by the Minister for Public Works, its power in this respect extending to levy a local rate or charge for the repayment of a loan raised for the maintenance or management of the works of water supply.
The power of the Minister to construct a work of water supply is to be found in s. 373 (1). Prior to its amendment, in 1935 by No. 30 of that year, the only source of money available to the Minister for such work was money voted by Parliament; but the amendment of 1935 allowed of the work being done by the Minister partly out of moneys voted for that purpose by Parliament and partly by moneys otherwise lawfully made available by the council for the purpose, or wholly out of moneys made available by the council for carrying out the work.
In the instant case, it is common ground that the money provided for the works came as to one-half from non-repayable grants made out of public funds and as to the other half out of money borrowed by the council with the approval of the Governor from external sources including the said loans. It is thus common ground that there was not at any time any debt due to the Treasurer of the State in respect to the carrying out of the works.
Section 378 (1) in Pt XIV deals with the case where the works have been handed over to a council, either complete (see s. 374) or incomplete (see s. 377) in circumstances where a capital debt remains due to the Treasurer. In that case a council has an obligation to levy a rate sufficient to provide for the repayment of such capital debt and the payment of interest thereon as well as for the maintenance and management of the works. The Act in Pt XIV does not determine the ratable land upon which such rates must be levied but by s. 379 gives a power with certain express limitations to levy a rate on the ratable land described in the section.
Section 378 (3) is in the nature of a counterpart to s. 378 (1). It provides for the case where on the handing over to a council of complete or incomplete works there is no capital debt due to the Treasurer. In that event, as the sub-section stood before its amendment in 1937, the power, without obligation, to levy a rate was clearly enough restricted to the levying of a rate for the maintenance and management of the completed works.
The nature of the power given to the council, namely, to levy a rate or a charge or both is consonant with the raising of money for maintenance and management, but a charge for excess water is not such an appropriate means of raising money for repayment of the loans providing the whole or part of the capital cost of the works.
By s. 4 of No. 10 of 1935, s. 373 was amended to permit the Minister to construct works for the council wholly or partly out of moneys provided by the council: but no contemporaneous amendment was made to s. 378 (3). But in 1937 by s. 10 of No. 10 of that year, s. 121 (1) was amended to permit a council to levy local rates towards repaying any debt incurred or loan raised in connexion with any work of special benefit to a limited area, and s. 378 (3) was amended by the Minister by the words "or for or towards repaying with interest any debt incurred or loan raised in respect thereof" as they now appear in that sub-section.
As a matter of grammatical construction, the expression "in respect thereof" refers, in my opinion, to the maintenance and management of the works, and not to the works themselves. If it had been intended to make the debt or loan referable to the construction of the works, an express mention of their construction I think would have been made. In contrast, the words inserted in s. 121 (1), because of their placement in the section, were made expressly referable to the execution of the works. The circumstance that the amendment was made not concurrently with the amendment of s. 378 but with the amendment of s. 121 assists to indicate to my mind that the grammatical meaning was intended. For these reasons I am of opinion that the rate authorized to be levied under s. 378 (3) is a rate for the maintenance and management of completed works, the payment of any debt incurred in, and the repayment of any loan raised for, such maintenance and management being within the purpose for which the rate may be levied. As I am of this opinion, I have no need to consider whether in any case s. 378 (3) is not limited in its operation to that situation in which there has been a debt due to the Treasurer which has been repaid. My answer to the question whether Pt XIV provides the exclusive source of authority to levy a local loan rate for the repayment of loans raised for the construction of works of water supply is that it does not provide any power to do so.
I turn now to consider the terms of s. 124, and particularly s. 124, sub-s. (4), which is the other suggested source of the council's power to levy a loan rate. But, before doing so, it is instructive to observe what the council's borrowing powers are and what obligations come upon it by reason of its borrowing. The council may only borrow as provided by the Act or by any other Act: s. 173 (1). In the instant case, it can only borrow as provided by the Act.
There are three methods by which a council may borrow. They are itemized in s. 173 (3). The borrowing may be by way of limited overdraft or renewal loan or ordinary loan. A loan to carry out works of water supply as in the present case is an ordinary loan as appears by s. 171 (1). Such a loan may only be raised with the approval of the Governor. The Governor's approval must be upon a recommendation by the Minister; thus, the council must apply through the Minister for approval for its borrowing on ordinary loan. Ordinance No. 24, made under the provisions of the Act, prescribes a form—form No. 3—in which the council is to apply for approval of an ordinary loan. This form provides for the council to inform the Minister, and through him the Governor, of the amount of the loan rate which it is proposed will be levied in respect of the loan. The form contemplates that the council may, in the alternative, to informing the Minister of the amount of the proposed loan rate, seek the permission of the Minister to refrain from levying a loan rate. In the instant case, the council both informed the Minister of the amount of the loan rate it proposed and sought his permission to refrain from levying the loan rate. The form also provides for the Minister, and through him the Governor, to be informed as to whether or not the loan is proposed to be used for the benefit of the whole or only part of the council's area, and, in the latter case, the part is to be both described and to be particularized by metes and bounds. The council is also to state on what ratable land the loan rate will be levied, i.e. whether on the ratable land in the whole of its area or upon ratable land in a designated part of the area.
Section 177 (4) is mandatory in terms and says that "a loan rate shall be levied" in respect of an ordinary loan.
Section 124 provides the power to the council to raise a loan rate and, having regard to the opinion I have already expressed, in my opinion, it provides the only power. The power in s. 121 is a power to levy a local rate which appears to be distinguished in the Act from a loan rate: see s. 117. A rate levied under s. 378 (3) is an example of a local rate. It is a local rate although the purpose of its levy includes the payment of a debt or repayment of a loan: see s. 378 (3) final clause.
Section 124 (1) gives the council power to make and levy a loan rate upon all the ratable land in its area for the purpose of paying the principal of and interest upon a loan. Sub-section (3) imposes a duty upon the council annually to make and levy a loan rate of ratable land commencing in the year when the first instalment of interest or of principal falls due in every case where by any other provision of the Act the council is required to levy a loan rate in respect of a loan. Thus, in the instant case, by virtue of s. 177 (4), the terms of the loan and s. 124 (3), the council became bound in the year in which the first instalment of interest or principal fell due to levy a loan rate on ratable land, unless the Minister granted permission to the council to refrain from so doing: see s. 124 (6). Thus by requiring the council to make and levy a loan rate annually, s. 124 (3) has particularized the duty imposed generally by s. 177 (4).
It is in this context that s. 124 (4) operates. As much turns on its precise terms, I shall set out the sub-section in full: "(4) Where a loan is raised for any work or service which in the opinion of the council would be of special benefit to a portion only of its area, the loan rate may, at the discretion of the council, be levied as a local loan rate only on the ratable land within such portion."
Sub-section (4), it seems to me, is a provision to permit the council, in the discharge of that obligation, to levy the loan rate on ratable land in part only of its area. The discretion which s. 124 (4) thus gives to the council arises, it seems to me, at the point of time at which the obligation or the duty to make and levy a loan rate on ratable land itself accrues. The discretion is conditioned upon the formation by the council of an opinion as to the portion of its area which would specially benefit from the works for the construction of which the loan to the repayment of which the loan rate is to be devoted was raised. There is, in my opinion, nothing in the section which refers expressly to the time at which the council should form that opinion. That is to be gathered by implication from the terms and purpose of the sub-section. In default of some compelling circumstance, the opinion would be expected to be formed at or about the time when the discretion falls to be exercised: and whenever formed, one would expect that it would be held at that time. It is of course not impossible that the exercise of a discretion can be conditioned upon the entertainment of an opinion at some earlier or even some remote time. But I can find nothing in the language of the statute or in the circumstances with which it is dealing which lends support to the view that sub-s. (4) is contemplating the formation of an opinion at some time other than the time at or about which the discretion has to be exercised.
It has been said in argument and the view obtained favour with a majority of the Supreme Court that, by reason of the history of the Act, the opinion of the council must be formed at the time when the loan is "raised": and that it cannot be changed. Further that, if it be not then formed, the discretion given by s. 124 is never available to the council in respect of the levy of a loan rate to repay the loan; that is to say, that unless it forms the opinion at the time the loan is "raised" it must throughout the period of the loan levy a loan rate on the ratable land in the whole of its area.
The history of the amendments of the Act is set out fully in the judgments of the Supreme Court and I have no need to repeat any part of it. Summed up, it seems to me to amount to this: Section 124 was in the original Act passed in 1919. Then there were local poll provisions which required the taking of a poll before a loan could be raised. Naturally, the poll was to be taken of those ratepayers whose lands were to be rated for its repayment. Therefore, if there was an intention to rate a portion only of the council's area, the poll must be taken of the ratepayers in that area. In consequence of this practical necessity, the council must decide prior to the taking of a poll, and thus, prior to raising the loan, what area it thought would specially benefit from the works to which the loan is to be devoted. It is said this practical outcome of the need to hold a poll reflected itself upon the meaning to be given to s. 124 (4) and attached an attribute to the word "would" so that thereafter, although the poll provisions were removed from the Act and the practical necessity for the council to form its view prior to raising the loan no longer remained, this meaning of s. 124 (4) continued and ought still to be given to it and that the attribute of the word "would" persisted. On this view, s. 124 (4) requires the council to form the opinion apparently before the loan is raised, at some time comparable to the time of the former holding of a poll.
With great respect to the views of the Supreme Court, I cannot accept that this is an admissible way to construe the section. It seems to me that it did not derive any meaning from the practical necessities imposed upon the council by the presence of the now repealed provisions. I feel bound to say that I am unable to derive any assistance on the construction of the sub-section from the history of the Act or from its amendments. I must read it in the context of the Act as it now is and for what its words mean in that context.
"Where a loan is raised" as found in the sub-section cannot be converted, in my opinion, to "when a loan is raised" in a temporal sense. The expression "where a loan is raised for any work", in my opinion, refers to a state of affairs without any relationship to a point of time. As a minor matter in passing, I do not gather from the submissions of the respondent a clear impression as to when it is thought that a loan is "raised". It seems to me the loan was not "raised" when approval was applied for, and it may not be raised for the purposes of s. 124 until such time as the money is made available by the lender. No doubt in the practical working of the council's affairs, arrangements of a tentative but reliable nature are made with a lending institution before the actual application for approval of the loan is made. But that circumstance does not, it seems to me, mean that the loan is raised at the time these inchoate arrangements are made with the lending institution.
Some weight was placed in argument on what is claimed to be an element of futurity in the use of the expression "would be of special benefit": but, in my opinion, there is no temporal element in this expression nor does it import a temporal relationship either to the raising of the loan or to the performance of the work. It seems to me to be the natural expression to be used to cover cases where the work has yet to be done, cases where it is partly done with money already raised, and cases where the loan is raised at or towards the completion of the work. In s. 121 (1), in relation to a debt incurred, it certainly covers the case of work completed before the opinion is formed.
It was further submitted that there is some element of continuity of the loan rate during the life of the loan which supports the view that the opinion of council as to the area benefited (or as the submission put it—to be benefited) by the work should be made once and for all and be operative throughout. No particular provision, except one, is brought to attention in this connexion, though it is suggested that there is an air of continuity of the loan rate pervading sub-ss. (6) and (9). That provision is s. 124 (10) which reads as follows: "Where by reason of the increase or decrease of the valuations of lands subject to any loan rate the amount produced by the rate exceeds or is less than the sum necessary to make provision for interest and repayment as prescribed, council may levy a reduced rate if the valuations have increased, or an increased rate if the valuations have decreased."
It is rightly pointed out that whether land within a local government area is under the Valuation of Land Act, 1916, or under the provisions of Sch. III of the Act, the valuation is to take effect as from 1st January, the date as from which the rates are to be levied: see s. 139. Thus, any change in valuation made during a year can only operate as from 1st January of the succeeding year. A rate struck as from 1st January will be the rate for the whole year. It is therefore said that sub-s. (10) of s. 124 can only be explained on the assumption that there is some rate of a continuing nature which continues to be the "loan" rate for more than the period of a year. I must concede that I can find no operation of sub-s. (10) which is consistent with the striking of an annual loan rate. But failure to find some such meaning does not require that I should not give effect to what I conceive to be the plain meaning of s. 124 (3) and (4).
Section 124 (2) provides that the rate is to be commensurate to the amount of principal and interest to be paid in the period for which the rate is levied, and s. 124 (3) requires that the rate shall be levied annually commencing with the first period in which instalments of principal or interest fall due. It seems to me, therefore, inescapable that the council, if it is to perform its duty, must strike a loan rate annually and must make it commensurate with the obligations it has in that year in respect of interest, repayment or sinking fund against repayment. Section 124 (2) in providing for the destination of any surplus of the annual yield of the rate over the annual commitment emphasizes this situation. That the annual rate may vary is of course obvious because some loans may possibly have a scale of repayments ascending or descending, and the interest which is chargeable on a loan repayable by instalments will of course itself vary from year to year. It seems to me, therefore, that sub-s. (4) confers on the council a discretion to fulfil its obligation to strike a loan rate annually on ratable land by making and levying a local loan rate upon the ratable land in a portion only of its area, and, it seems to me, that the time at which a council is to decide what is that area is the time at which it exercises the discretion. There is nothing in the legislation which, in my opinion, makes any one determination as to that area final and unalterable. I do not think that the council is bound in relation to its power to raise a local loan rate by what it has conveyed to the Minister for information of the Governor and the Minister as to the area which in its view will specially benefit from the work when constructed with the loan money for the raising of which the council is then seeking the Government's approval.
In my opinion, upon its true construction, s. 124 (4) allows the council when striking a loan rate in performance of the duty cast upon it by a combination of s. 177 (4) and s. 124 (3) of the Act to decide what is the area which then would derive special benefit from the work for which the particular loan or loans was or were raised.
Accordingly, in my opinion, the second question asked in the stated case should be answered: that the opinion of the council formed at or prior to its application for the Governor's approval of the loans did not and does not preclude the council from forming its opinion as to the area to which the works of water supply would be of special benefit at the time at which it from time to time exercises the discretion given to it by s. 124 to levy a local loan rate for the repayment of the loans which were raised for such works and the payment of interest thereon. Question 4 should be answered in the negative. With these answers the appeal should be allowed.
In the Land and Valuation Court the respondent to this appeal, a landowner in the Wingecarribee Shire, challenged the validity of a local loan rate made and levied by the appellant council for the year 1964 under s. 124 (4) of the Local Government Act. Before setting out the facts, it is convenient to give a general outline of some of the many provisions of the Act to which we were referred. Section 124 is in Pt VII of the Act which contains various provisions empowering councils to make and levy rates for the purpose of financing their local government activities. Division 2 of that Part, which is headed "Rates", provides by s. 117 that rates of four kinds may be levied, general rates, special rates, local rates and loan rates. A general rate is one which is to be made and levied annually on the unimproved capital value of all ratable land in the shire or municipality (s. 116 (1)). A special rate may be made and levied either on the improved capital value or the unimproved capital value of all land in the council's area for any purpose which it may lawfully undertake (s. 120 (1)). A local rate is one which may be made and levied on the improved or unimproved capital value of portion only of the ratable land in the council area for or towards the purpose of 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 connexion 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 that portion of its area (s. 121 (1)). Section 124 deals with loan rates and provides that:
(1) A council may make and levy a loan rate on the unimproved capital value, or on the improved capital value, of all ratable land in its area.
(2) The purpose of a loan rate shall be to pay interest on and repay the principal of a loan. If in any year there be a surplus remaining after meeting the commitments of that year such surplus may be used either for the completion of the loan works, for additional works of a similar character, for the repayment of other loans expended upon similar works, or to reduce or suspend the loan rate in the following year.
(3) Where by any other provision of this Act a council is required to levy a loan rate in respect of a loan the council shall (except as by this Act otherwise provided), in the year when the first instalment of interest or repayment, or both, falls due, and in every succeeding year until the loan is repaid, make and levy a loan rate on the unimproved capital value, or on the improved capital value, of ratable land accordingly.
(4) Where a loan is raised for any work or service which in the opinion of the council would be of special benefit to a portion only of its area, the loan rate may, at the discretion of the council, be levied as a local loan rate only on the ratable land within such portion.
(5) Except as hereinafter provided a loan rate shall be sufficient to provide the sum required for the payment of interest and the provision of instalments of repayment or of reserve for loan repayment (or sinking fund) as stated in the loan proposal approved by the Governor.
(6) The Minister may grant permission to the council to reduce or refrain from levying the loan rate where the council satisfies him that it has made or will make provision from the appropriate fund for the payment of part or the whole of the interest and instalments of repayment or amounts payable for depreciation or for loan repayment or sinking fund
(7) Such permission shall operate for such period as may be specified therein and may be renewed.
(8)
(9)
(10) Where by reason of the increase or decrease of the valuations of lands subject to any loan rate the amount produced by the rate exceeds or is less than the sum necessary to make provision for interest and repayment as prescribed, the council may levy a reduced rate if the valuations have increased, or an increased rate if the valuations have decreased.
(11)
(12)
(13) Where a loan is or has been raised for the construction or reconstruction of a main road as defined by the Main Roads Act, 1924, and the Main Roads Board of New South Wales has granted the council a subsidy for or towards the payment of interest on or the repayment of principal of such loan the Minister may grant permission to the council to reduce or to refrain from levying the loan rate during the continuance of the subsidy.
(14)
Section 132 (1) defines ratable land but makes a number of exceptions to that definition. Subject to the provisions of the Act, every rate is to be made and levied for one year commencing on 1st January next preceding the making thereof (s. 139 (1)) and is made by resolution of the council and levied by the service of a rate notice (s. 139 (2)). Division 4 of Pt VII deals with the borrowing power of councils and specifies the three kinds of loans which a council may raise (s. 173 (3)). They are limited overdrafts, renewal loans and ordinary loans and in the case of renewal and ordinary loans the Governor's approval must first be obtained (s. 173 (2)). In the case of a renewal loan, that is to say a loan for the purpose of repaying any other loan (s. 176 (1)), s. 176 (2) requires that a loan rate shall be levied. An ordinary loan is one not being a loan on overdraft or a renewal loan, raised for the purpose of enabling or assisting the council to exercise and discharge any powers, authorities, duties, obligations or functions conferred or imposed upon it (s. 177 (1)), and here again it is provided that a loan rate shall be levied in respect of it. With some exceptions, moneys borrowed by way of renewal or ordinary loan are not to be expended except for the purpose for which the loan was raised (s. 183 (2)).
Part XIV of the Act is headed "Water, Sewerage, Drainage or Electricity Works". It authorizes the Minister for Public Works, on application by the council, to construct out of moneys voted by Parliament or provided wholly or partly by the council or otherwise lawfully available for that purpose water, sewerage, drainage or electricity works for any municipality or shire (s. 373 (1)). Upon completion of such works the Governor is to notify the council concerned that the works are complete and that the council is charged with the care and management of them (s. 374 (1)). The amount expended on them is to be certified by the Minister for Public Works and that amount is to be the capital debt due by the council to the Treasurer (s. 374 (3) and (6)). The Governor is to notify the amount of the capital debt, the terms of repayment (s. 374 (7)) and fix the rate of interest thereon (s. 374 (8)). Where a capital debt is owing to the Treasurer the council is directed to levy by rates or rates and charges a sum sufficient to provide for the maintenance and management of the works and for the payment of the instalments of capital debt and interest thereon owing to the Treasurer in respect of those works and such rates and charges shall not be less than those notified by the Governor (s. 378 (1) and (2)). Section 378 (3) provides that:
(3) Where a council has water, sewerage, or drainage works on which there is no capital debt owing to the Treasurer, such council may make and levy rates for the maintenance and management thereof, or for or towards repaying with interest any debt incurred or loan raised in respect thereof, or, in the case of a water supply, may either (a) make and levy a rate; or (b) make and levy charges by measure for all water supplied, and may make a minimum charge; or (c) both make and levy a rate, and make and levy charges by measure for excess water. Rates levied under this subsection shall be local rates.
We should add that in the present case there was no capital debt owing by the council to the Treasurer in respect of its water supply works.
As s. 378 (3) stood until 1937 it did not contain the words "for or towards repaying with interest any debt incurred or loan raised in respect thereof". Where there was no capital debt owing to the Treasurer the only rate that could be made and levied under the sub-section was for the maintenance and management of such works and, as far as we can discover, the only power available to a council to make and levy a rate for the purpose of repaying moneys borrowed from non-governmental sources and paying interest thereon was to be found in Pt VII of the Act. This is, we think, of significance as is the fact that s. 378 (3), by the use of the word " may ", confers a discretionary power. In this respect it may be compared with s. 378 (1) and some of the other rating sections which use the word "shall" and appear to be mandatory in their effect. Section 379 (1) provides that water supply local rates may be levied upon land which is supplied with water from any council water pipe notwithstanding that such land is in any other Act or in any section of the Local Government Act exempted from rates, and on any ratable land which is situated within two hundred and fifty yards of a council waterpipe measured in a direction at right angles to such pipe although the land is not actually supplied with water from any council water pipe. Section 379 (4A) and (4B) exempt certain lands from levies for water supply local rates and by sub-ss. (5) and (7) a discretion is vested in the council to make further exemptions. The exemptions differ in many respects from those which are set out in s. 132 of Pt VII.
The facts are that in 1948 the Minister for Public Works, on the application of the council made pursuant to s. 373, had agreed to construct water supply works in the shire, one-half of the cost to be met by the Government and the balance to be found by the council. The works consisted of the construction of reservoirs and water mains. To obtain the money to finance its share of the cost, the council proposed to borrow money from non-governmental sources and, pursuant to s. 173, applications were made to the Governor for his approval. Each such application described (inter alia) the purpose for which the loan was required and that it was proposed to be used for the benefit of "the whole of the proposed district water supply area". It appears that the land so described was that upon which water supply local rates might be made and levied under s. 379, that is to say land supplied with water from any council water pipe and ratable land within two hundred and fifty yards of a council water pipe although not in fact supplied with water from such pipe. The necessary approvals were given, the council borrowed from various sources the money required and the works were constructed. The details of the terms on which the land was obtained need not be set out but it should, perhaps, be mentioned that no repayments of capital or payments of interest were required to be made for the first three years.
The local rate, the validity of which is under attack in the present case, was made and levied in 1964 for the purpose of providing for the repayment of the principal sums thus borrowed and the payment of interest thereon. In December 1963 and before the rate was made, a map was prepared by the council's officers and approved by the council showing the portion of the shire area which would, in the opinion of the council, derive special benefit from the construction of the water supply works. The whole of the respondent's land lay within this portion although part only of his land lay within the area which would be ratable under s. 379. The portion of the shire area shown on the map was greater than what we will call the special benefit area described in the applications for the Governor's approval of the earlier borrowings.
In the Land and Valuation Court, Hardie J. found that at the time when the council sought the Governor's approval to borrow the moneys which it required to meet its share of the cost of constructing the water supply works, it had formed the opinion that the special benefit area was that described in the applications for approval. His Honour held that, once having formed that opinion and stated it in its applications for the Governor's approval and obtained that approval, the council could not, at the date when it decided to make and levy the rate now in question, validly form a different opinion as to the portion of its area which would be specially benefited. For this reason he was of opinion that the rate was not validly made. He considered but did not find it necessary to decide a further contention put on behalf of the present respondent that Pt XIV of the Act makes exclusive provision for the levying of rates for the purpose of the repayment of moneys borrowed for water supply construction purposes and the payment of interest thereon and that the council could not therefore exercise the powers conferred upon it by s. 124 (4). Upon the application of the council, however, he stated a case for the opinion of the Full Supreme Court upon a number of questions only three of which are relevant on this appeal. One of these (question 3) related to this last contention and asked in effect whether Pt XIV of the Act contained the exclusive source of the council's power to make and levy a rate upon portion of its area for the purpose of repaying moneys borrowed to construct water supply works. The Full Court, by a majority, answered this in the council's favour, Sugerman and Walsh JJ. taking the view, which Hardie J. had favoured, that it was open to the council to exercise its local rating powers either under s. 124 (4), that is to say under Pt VII, or under Pt XIV. Taylor J., on the other hand, considered that Pt XIV was the sole source of power and that the rate was therefore not validly made.
The other two questions which were argued before this Court are numbered 2 and 4 in the stated case. Question No. 2 asked, in effect, whether in view of the fact that at the time of applying for the Governor's approval of the proposals to borrow money for the construction of the water supply works, the council had formed the opinion and stated in its applications for approval that what we have called the special benefit area was the portion described in those applications, it had power at the time of making the rate to form a different opinion as to the portion of its area which would be benefited. Question No. 4 asked whether under s. 124 (4) the area to be benefited must be decided upon and defined by the council at the time when the loan is raised and not at any later date. Both these questions were answered by a majority in the Full Court. Sugerman and Taylor JJ. were of opinion that question No. 2 should be answered in the negative and that question No. 4 should be answered "Yes". Walsh J. considered that question No. 2 should be answered "Yes" and question No. 4 "No".
The questions of construction raised by the case are difficult and it is not surprising that they have given rise to differences of opinion. We propose to deal first with question 3, that is to say whether, in the circumstances of the case, the only power to make and levy a water supply local rate that the council could exercise is to be found in Pt XIV of the Act. The conclusion to which we have come is that Pt XIV is not the sole source of power in a case such as this. The power to make and levy a rate pursuant to s. 378 (3) of Pt XIV is limited to the making and levying of rates for the maintenance and management of water, sewerage and drainage works or for or towards repaying with interest any debt incurred or loan raised "in respect" of the maintenance and management thereof. The history of the legislation, in our view, supports the construction that the concluding words introduced in 1937 into s. 378 (3)—"in respect thereof"—must be taken to refer to the maintenance and management of works of the character to which the sub-section refers. This being so, there is no reason to suppose that there is any conflict between that provision and s. 124 (4). It is to be noticed also, as Sugerman J. pointed out, that Pt XIV confers no power upon a council to borrow money from non-governmental sources for the purpose of constructing water supply works. That power is to be found in Pt VII which contains its own provisions for making and levying a rate upon a special benefit area for the purpose of repaying moneys borrowed. It cannot be doubted, we think, that, on its face, s. 124 (4) would permit the council to exercise the discretion which that sub-section confers. The loans which it desired to repay had been raised for and expended upon a work or service and it was of the opinion that that work or service would be of special benefit to a portion of its area. Where then is to be found in Pt XIV a prohibition against the exercise by a council of the discretion which s. 124 (4) gives? There is no express provision to that effect and it is, as we have said, significant that s. 378 (3) is permissive and not mandatory. If when that sub-section was amended in 1937 it had been intended to make Pt XIV the sole source of power to make and levy a rate upon a special benefit area in a case such as the present, we would have expected to find some clear indication to that effect. But we do not find it and we are asked to say that the construction for which the respondent contends follows by necessary implication from the fact that if a council is at liberty to apply s. 124 (4) to a case such as this and not confined to its power under s. 378 (3), anomalies and difficulties may arise. But these anomalies and difficulties do not seem to us to be of such a nature as to compel the conclusion that Pt XIV impliedly prohibits the exercise by a council in a case such as this of the power conferred by s. 124 (4). In our opinion question 3 should be answered "No".
Questions 2 and 4 may be dealt with together and should be answered, in our opinion, in the way proposed by Walsh J., that is to say question 2 should be answered "Yes" and question 4 "No". The discretion given by s. 124 (4) to make and levy a local loan rate is conditional upon the council holding the opinion to which the sub-section refers and that opinion must, it seems to us, exist at the time when the decision is made to make the rate. It may be that the same opinion was held at an earlier date or it may be that a different opinion was then held and that the council stated its then opinion in its application to the Governor for approval of the loan which it proposed to raise to carry out the contemplated work or service. But it is the opinion which it holds at the time it makes the rate that is the relevant matter in considering whether it may act under s. 124 (4) and it is not to the point, we think, to say that at an earlier time when it sought approval of the proposal to borrow money it held a different opinion as to the area which would be benefited. For the respondent, however, reliance was placed upon the use of the words " would be of special benefit" in s. 124 (4). This, it was said, showed that the requisite opinion must be formed at the time when the loan is raised and before the work has been completed or the service provided. The next step in the argument, if we understood it correctly, was that the sub-section could have no application to a case such as this where the water supply works had been completed before the decision was made to make and levy the rate. We are unable to agree that this is so. The sub-section was, no doubt, intended to operate in various circumstances. At the time the rate is made the work may not have been begun or it may be in progress or it may have been completed. "Is" or "will be" would not be appropriate words to use to cover all these contingencies. Further arguments were addressed to us based upon the earlier history of the legislation which, it was said, pointed to the conclusion that the opinion of which s. 124 (4) speaks must be formed at the time when the council seeks the Governor's approval for a proposed loan or at the time when the loan is raised and that, once having formed that opinion, it became irrevocable and unchangeable. This contention was discussed at some length in the judgments in the Supreme Court and, with all respect to those who took a different view, we agree with the reasons given by Walsh J. for rejecting it.
For these reasons we would allow the appeal with costs.
Key Legal Topics
Areas of Law
-
Administrative Law
-
Statutory Interpretation
Legal Concepts
-
Judicial Review
-
Statutory Construction
-
Standing
-
Natural Justice
0
0
0