Hume Doors & Timber (Qld) P/L v Logan City Council
[2000] QCA 389
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- Hume Doors & Timber (Qld) P/L v Logan City Council[2000] QCA 389
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Hume Doors & Timber (Qld) P/L v Logan City Council[2000] QCA 389
Hume Doors & Timber (Qld) P/L v Logan City Council[2000] QCA 389
SUPREME COURT OF QUEENSLAND
CITATION: | Hume Doors & Timber (Qld) P/L v Logan City Council [2000] QCA 389 |
PARTIES: | HUME DOORS & TIMBER (QLD) PTY LTD ACN 009 994 996 (Plaintiff/Respondent) v LOGAN CITY COUNCIL (Defendant/Appellant) |
FILE NO/S: | Appeal No 11187 of 1999 SC No 5158 of 1999 |
DIVISION: | Court of Appeal |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 26 September 2000 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 11 August 2000 |
JUDGES: | Pincus and Thomas JJA, Ambrose J Separate reasons for judgment of each member of the Court, each concurring as to the orders made |
ORDER: |
|
CATCHWORDS: | REAL PROPERTY – RATING OF LAND – WATER, SEWERAGE AND DRAINAGE RATES – MAKING AND LEVYING RATE – QUEENSLAND – appellant Council imposed water rate consisting of access and consumption components – whether "two-part tariff" within the meaning of s 772 Local Government Act 1993 – whether s 973 Local Government Act 1993 can support two-part tariff even if not properly levied under Ch 10 Local Government Act 1993 REAL PROPERTY – RATING OF LAND – WATER, SEWERAGE AND DRAINAGE RATES – GENERALLY – requirements of Ch 10 Local Government Act 1993 in imposing two-part tariff – whether local government already imposing two-part tariff required to abandon it on Ch 10 becoming law Local Government Act 1993, s 545, s 769(d), s 772, s 773, s 774, s 779, s 780, s 781, s 783, s 784, s 785, s 963, s 973 |
COUNSEL: | P J Lyons QC with P J Flanagan for the appellant R G Bain QC with A M Daubney for the respondent |
SOLICITORS: | Corrs Chambers Westgarth for the appellant Stubbs Barbeler Grant for the respondent |
- PINCUS JA: This is an appeal against a judgment of Chesterman J, holding that a water rate purporting to have been levied by the appellant Council is invalid as conflicting with provisions of the Local Government Act 1993.
- The resolution which has been held unlawful charged properties such as the respondent's with "an annual water charge of $200.00 multiplied by the factor/s as set out in the Flow Capacity Table plus metered water supply". Read with the Table, the resolution's effect was that the respondent became liable to pay a sum considerably greater than was previously charged, having two components. The first, which does not depend on the amount of water consumed, is based on a formula in which the only variable is the diameter of the water pipe. The second depends purely on the water consumption and is at the rate of 70 cents per kilolitre. The Council's previous tariff also had two components, one which did and one which did not depend on the volume of water consumed.
- The learned primary judge held the new tariff to be invalid as not complying with certain requirements which Ch 10 of the Local Government Act 1993 ("the Act") prescribed for a "two-part tariff"; those requirements were introduced by an amending Act of 1997 ("the 1997 Act"). An initial difficulty is that the judge held that the tariff (resolved upon on 14 July 1998) which is attacked is not a "two-part tariff" within the meaning of Ch 10. If that is so, it is not easy to understand how it could be invalid for want of compliance with the law's requirements for introduction of a two-part tariff. His Honour held that a "two-part tariff" is one which charges different rates for water, depending upon the size of the pipe through which it is supplied.
- The expression "two-part tariff" is defined by s 772 of the Act as meaning:
"... a basis for a utility charge for water services consisting of access and consumption components with the objective of achieving efficiency and sustainability in the use of water". (emphasis added)
This means no doubt a component for access irrespective of consumption and a component which depends on the volume of water supplied. But there is a remarkable inconsistency, raising the suspicion that the provisions of the 1997 Act were subjected, before their enactment, to no careful scrutiny. Both s 769(d) and s 783(b) contemplate that charges under the chapter will be based on consumption; they make no mention of charges for access. We were told that the inconsistency could be resolved by reference to a document called "Local Government Finance Standard 1994" (Reprint 1B); but on examination it can be seen to contain just the same contradiction: see s 91 and s 92(5).
- The respondent's argument before us put forward a reconciliation of the inconsistent provisions. Counsel exemplified his reconciliation by referring to a tariff containing two components, one providing for a charge of X dollars per kilolitre consumed and the other a charge of Y dollars per kilolitre consumed. This does not solve the problem, since neither component is an access charge. Nor, with respect, can I see any indication in the statute that Ch 10 has the purpose of requiring different consumption charges, each depending on the size of the supply pipe.
- The two statements – that a two-part tariff consists of an access and a consumption component, and that charges must be based on consumption - are irreconcilable. One must be treated as a mistake. There is no compelling reason for treating either as a mistake, but on the whole I prefer to treat the statement that the tariff must be based on consumption as one; what must have been meant is, based partly on consumption. Admittedly, giving preference to the definition, with its reference to a consumption and an access component, makes the other provisions hard to explain. But perhaps those who conceived the 1997 Act thought that in some way a tariff based on access plus consumption can be described as one based on consumption. Also, it seems to make more practical sense to apply the definition than to hold that the tariff under Ch 10 must be based purely on consumption, but must nevertheless be a two-part tariff, the "two-part" requirement's content being on that view entirely a matter of speculation.
- I would therefore hold that Ch 10 deals only with tariffs based on both access and consumption. The tariff the Council had imposed before Ch 10 came into force, on 24 October 1997, and that which it imposed subsequently (the attacked tariff), are therefore both two-part tariffs. But there may be two-part tariffs which comply and two-part tariffs which do not comply with Ch 10. The respondent argues that the impugned tariff is not a two-part tariff because it depends on access as well as consumption; for some reason it supposedly must comply with Ch 10, which deals only with two-part tariffs.
- The impugned two-part tariff was resolved upon after Ch 10 came into force. But does Ch 10 contemplate that all two-part tariffs, after the Chapter became law (24 October 1997), must comply with Ch 10? On 24 October 1997 the Council had an existing power to charge a two‑part tariff, as can be seen from s 973(4) and from Example 2 under s 973(7); those provisions remained in force, after 24 October 1997. The learned primary judge held in effect that once Ch 10 came into operation, any existing two-part tariff power could no longer be used.
- Although I can understand that minds might differ on this point, it is my respectful opinion that it would have been lawful for the Council to resolve on a two-part tariff, not complying with Ch 10, when it did so, in July 1998. One reason for that conclusion is that the statute does not say otherwise; when Ch 10 came into force the legislature left in place the earlier provisions, as I have mentioned. The learned primary judge thought it made no sense to have these powers running concurrently.
- Chapter 10 lays down what might be called procedural requirements of a "complying" two-part tariff – i.e. one complying with Ch 10 – as well as substantive requirements. The procedural requirements, which the learned primary judge held had been in some respects infringed, include that there be an assessment of the cost-effectiveness of a two-part tariff (s 773); that the report on that subject must be completed in time to allow compliance with other provisions: ss 780, 781 and 784; and that the report must be presented to a Council meeting as soon as practicable after its completion (s 775(2)). In addition, after presentation of the report, it must be open for inspection (s 779) and within a certain time there must be a resolution whether or not there is to be a two-part tariff; if there is to be one, then the resolution must among other things approve strategies for its application, including a timetable: s 780.
- The procedural requirements have to be completed by a date which is, prima facie, 31 December 1998: s 781; it should be added that it is s 781(a) which is relevant: see s 545. Then Pt 5 of Ch 10 deals with the process of implementation, after the steps I have mentioned which culminate in the making of a Council resolution. That resolution is to approve strategies for application of the two-part tariff and evidently those strategies will be carried out after the resolution is made, which may be done as late as 31 December 1998. Then under s 785, which applies to a local government required to act under s 783, implementation must be complete, in a case of the present kind, by 1 July 2000.
- The processes which are to take place between 31 December 1998, the latest date for the resolution, and 1 July 2000, the latest date for implementation of the resolution seem to consist of carrying out the strategies resolved upon for introduction of a two-part tariff (see s 784) and ensuring that the requirements of s 783 are, if there is to be a two-part tariff, observed. Those requirements include full cost recovery as well as identification and disclosure of certain cross-subsidies. The local government considering the s 783 requirements will ordinarily, as it appears to me, do so before the two-part tariff's form is finally settled. The general idea is I think that the Council will resolve whether to have a two-part tariff of the kind contemplated by Ch 10, and then work out the details of the tariff, if there is to be one.
- What I have called the procedural requirements for a tariff complying with Ch 10 must be completed by 31 December 1998 and the substantive requirements by 1 July 2000; the total period allowed by Ch 10 amounts to over 3 years from 22 May 1997, the date of its enactment, and over 2½ years from 24 October 1997, the date it came into force.
- When Ch 10 was brought in, it appears that no-one thought of enacting a transitional rule, for example that no two-part tariff other than one complying with all the requirements of Ch 10 could come into force after Ch 10 became law; or that no non-complying two-part tariff could be resolved upon after the last date for a Ch 10 resolution, 31 December 1998; or that no non-complying two-part tariff could be implemented after the last date for implementation of a Ch 10 two-part tariff, 1 July 2000. It is not necessary completely to resolve that problem; the attacked resolution was made during the period between Ch 10 becoming law and the last date for a Ch 10 resolution. For the purposes of the present case, the choice lies between saying that during that period the Council may under its existing tariff powers resolve upon and implement a two-part tariff not complying with Ch 10, and saying that during that period it may not do so.
- There are difficulties about the latter conclusion, that it may not do so. One is that the statute does not express that notion; illegality should not readily be derived from mere implication. Another is that if the latter conclusion is right, then even at a date immediately after Ch 10 came into force, when it would hardly have been possible for Councils (such as the appellant Council) to have gone through the lengthy procedures contemplated by Ch 10, it would have been unlawful for them to continue an existing practice of imposing a two-part tariff. It is difficult to see why, as a matter of policy, that should have been thought necessary. Chapter 10 is not, on the face of it, a set of provisions designed to prevent, immediately, use of two‑part tariffs other than those complying with the Chapter; its main purposes appear rather to be: (a) to require proper consideration to be given by 31 December 1998 to introduction of a two-part tariff; (b) if it is decided to introduce one, to require that by 1 July 2000 it be implemented and fulfil certain criteria, e.g. full cost recovery. Those who made the statute apparently saw no particular urgency in achieving the goals it had; so one might reasonably infer that a water tariff, of whatever kind, which did not purport to achieve those goals might continue to be imposed, at least until 31 December 1998.
- It is my view, then, that at the date when the impugned tariff was resolved upon, 14 July 1998, being about 2 years before the last date mentioned in Ch 10 for implementation of a Ch 10 tariff, even a two-part tariff which made no pretence of complying with Ch 10 would have been lawful. The Council's tariff which is attacked here rested upon its pre-existing and continuing powers to impose a two‑part tariff, to be found elsewhere in the statute. It should be added that a Council which does not comply with the timetable set out in Ch 10 acts unlawfully; but the illegality arises only at the dates set out in the Chapter.
- There is no evidence that the tariff applied achieved full cost recovery, nor does there seem to have been any attempt to comply with s 783(d) or (e). For that and other reasons, there may be no need to discuss the alleged procedural irregularities, the existence of which was debated before us. But some comment on that subject may, perhaps usefully, be made.
- It follows from what I have said that the resolution of 14 July 1998 adopting a two‑part tariff was, if not one complying with Ch 10, nevertheless valid under s 973, which was at relevant times a concurrent rating power. Whether or not the resolution would have been valid as one relying on Ch 10 depends in part on the extent to which the Court is entitled or required, in construing the statute, to make implications against the Council. The learned primary judge took the view that the provisions of Ch 10 should be read as requiring (the penalty for any deficiency being invalidation) that the s 773 report deal with all the matters which the Council said the consultants must deal with; that the report must "specify a particular tariff structure (or perhaps several such structures) and address specifically how each would work in terms of the effects it had on consumers and revenues"; and that it had to determine whether any strategies were necessary to implement a two-part tariff. I do not, with respect, agree that any of these implications should be made; a statute such as Ch 10 of the 1997 Act which has such Delphic explanations of its very subject matter – the two-part tariff – does not encourage interpretation based on a view as to what the legislators would have provided on various subsidiary topics, had they considered them.
- It appears to me to be a strong step to read into Ch 10 that a report in perfect compliance with the express terms of s 773 invalidates the levy which ultimately ensues, if the report fails to deal with any matter on which the Council had expressed a desire to be informed; the omission from the report might be because the matter in question was thought irrelevant, or too hard to answer. There appears to me, also, to be a particular difficulty about the view that the two-part tariff report must recommend a specific tariff or tariffs; under the statutory scheme a considerable time may lawfully be devoted to the implementation work – particularly that in s 783(b) and (c) – which under s 784 may be started as late as 31 December 1998, the last date for passage of the resolution deciding whether or not to have a two-part tariff.
- It is contemplated by the 1997 Act that approval of the strategies and the process of implementation may under the dates given in the statute take at least 18 months. The process of implementation is that set out in Pt 5 of Ch 10, as the heading of that Part and of s 783 indicate; it includes ensuring that consumption is the basis for the charge (an apparently mistaken provision), that there is full cross-recovery and the other matters set out in s 783. This suggests that Ch 10 may be complied with although (as occurred in the present case) the two-part tariff report gave no more than general advice on the way in which a tariff should be fixed, leaving it to the council to work out, perhaps with further advice, the mode of implementation of the "in principle" decision.
Summary
- In my opinion –
- If, as the learned primary judge held, the tariff attacked is not a "two-part tariff" within the meaning of s 772 of the Act, then the question of its compliance with Ch 10 does not arise.
- The tariff attacked is in my opinion such a tariff as is mentioned in s 772, in that its basis consists of access and consumption components; whether or not properly levied under Ch 10, it is adequately supported by s 973 of the Act.
- Chapter 10 required that certain steps towards adoption (or rejection) of a two-part tariff of a kind complying with the requirements of Ch 10 be taken by the dates specified in the chapter, but did not require that a local government already levying a two‑part tariff immediately abandon its practice, when Ch 10 became law.
I should add that the index to the record is inadequate; consideration by a lawyer involved in the case and understanding the issues should not have produced an index without even an identification of the very tariff document which the case is about, or one with 200 pages of unindexed budget documents.
- I would make the following orders:
- appeal allowed;
- declaration and orders made on 26 November 1999 set aside;
- action dismissed;
- subject to (e), respondent to pay costs of appeal and costs of the proceedings at first instance, to be assessed;
- no costs relating to the index to the record.
- THOMAS JA: I agree with the reasons of Pincus JA which I have had the advantage of reading. I would make the following further observations.
- At its budget meeting in July 1998 the Council decided to make a charge in relation to water supply on the basis of two components. So far as the respondent's property is concerned, one component was based on water consumption and the other on the size of the access pipe. In my view the Council's power to impose such a levy existed under chapter 14 of the Local Government Act 1993 (ss 957-1058). Those provisions had been in force for a considerable time.
- The Local Government Legislation Amendment Act 1997 which introduced the present chapter 10 into the Local Government Act was the direct result of a federally driven impetus for change in accounting methods and approaches by local authorities to a recoupment of charges and to economic matters generally. As the explanatory notes to the Local Government Legislation Amendment Bill 1997 indicate, a Competition Principles Agreement was adopted by the Commonwealth, States and Territories on 11 April 1995. The explanatory notes continue –
"To commence the implementation process" [ie of National Competition Policy under the Competition Principles Agreement] "legislation was passed in November 1996 to require seventeen councils with the largest local government business activities to assess by 30 June 1997 the costs and benefits of applying competitive neutrality reforms (ie corporatisation, commercialisation and full cost pricing)."
The result was the inclusion of chapter 10 in the Local Government Act (ss 769 – 786). The object of those provisions was expressly stated in s 769 as follows:
"The object of this chapter is, in relation to relevant business activities that provide water and sewerage services, to achieve efficiency and sustainability in the use of water by –
- requiring an assessment by local governments of the cost-effectiveness of introducing two-part tariffs for water services; and
- requiring decisions by local governments whether two-part tariffs are to be applied for water services; and
- if two-part tariffs are to be applied for water services – requiring implementation of the tariffs in accordance with the decision; and
- requiring charges for water services to be based on consumption; and
- requiring full cost recovery for water and sewerage services; and
- requiring identification and disclosure of cross-subsidies and community service obligations in the provision of water and sewerage services; and
- requiring disclosure of a class of consumers who are provided with water and sewerage services at an amount below full cost and the amount."
The very broad objects of the introduction of chapter 10 were the achievement of efficiency and sustainability in the use of water. The local authorities in question were required to obtain an assessment of cost effectiveness of introducing two part tariffs for water services, and to decide whether to apply such tariffs for water services and to follow various other economic or accounting requirements such as "full cost recovery". As the explanatory notes further indicate:
"The Bill also provides for the application of elements of the 1994 Council of Australian Governments (COAG) water resource policy which will be focused on the water supply and sewerage services of the seventeen largest councils.
Queensland stands to gain an additional $2.3 billion from the Commonwealth over 9 years if the NCP and related reforms (including the COAG water reforms) are implemented. The Government recently announced a financial incentive package of up to $150 million to Queensland local governments implementing NCP and related reforms.
The Bill is essential if Queensland is to meet its obligations under the NCP agreements and be eligible for the Commonwealth's special NCP funding."
The legislation seems pointless and even nonsensical unless it is examined in the context of the Federal scheme in the implementation of which it was enacted.
- Unfortunately chapter 10 is ill drawn and ambiguous. The inconsistency between the definition of two-part tariff (s 772) as a charge consisting of access and consumption components, and the statements elsewhere that charges will be based on consumption is all too obvious. The best reconciliation would seem to be that suggested by Pincus JA, namely that "charges based on consumption" are intended to refer to charges at least partly based on consumption.
- The Council had in fact for some years already been imposing a type of two-part tariff for water services, namely by levying a fixed charge independent of consumption in addition to a charge dependent on consumption. The legislative exercise seems to have been designed to induce local authorities to rethink their accounting methods and to adopt what were seen at a national level as economic reforms. Chapter 10 however did not replace or supersede chapter 14, and the essential structure of local government rating and charging in chapter 14 was left intact. Chapter 10 did not give local authorities or take away from them any powers in this respect which they did not already possess. Its objective was to introduce new ideas and practices into decision making, and, importantly, to permit it to be demonstrated to others that the State was complying with its national obligations. Any breach by a local authority of a specific requirement of Chapter 10 would be a breach of statutory duty, the consequences of which are not spelled out by the legislation. It is difficult however to detect any intention to invalidate the making of a levy unless all such duties were performed.
- The Council's power to make charges under chapter 14 included the power to make a utility charge on such bases as it considers appropriate (see ss 963 and 973). The amounts charged may differ on the basis on circumstances peculiar to the supply of the relevant service to particular land, a particular structure or a class of land or structure (s 973(4) and s 973(5)). By contrast, chapter 10 contains no provision giving a local government the power to make and levy a utility charge. The question is whether chapter 10 was intended to restrict the power in chapter 14 to impose such a charge. The procedures in parts 3 and 4 of chapter 10 did not require public consultation. The provisions are directed to economic issues and in particular to cost effectiveness rather than to the protection of consumers or ratepayers, although of course economic efficiency might in the long term be thought to benefit them. Any failure by a local authority to take steps required by chapter 10 may be compared with a failure by a local authority to comply with a new raft of duties and objectives imposed upon them by chapter 8 ("National Competition Reform of Significant Business Activities") and chapter 9 ("Conduct of Competitive Business Activities"). It is difficult to infer any legislative intent that non-compliance with any particular requirement of chapter 10 means that any charge levied under chapter 14 is a nullity. Even if the local authority had failed to comply with the procedures contemplated by chapter 10, this would not in my view have invalidated the charge which was made.
- I did not pursue this point further, because I am satisfied on the following points –
- Chapter 10 did not preclude the Council from levying a water charge which included a component based on access;
- The Council, consistently with its obligations under s 773 and s 774 decided that there should be an assessment of cost effectiveness of the application of a two-part tariff and engaged consultants to report upon appropriate matters;
- The report which was obtained sufficiently conformed with the rather broad requirements laid down by the Council.
- In my view there was no basis upon which the imposition of the charge in question could be regarded as a nullity. The issue is not whether the charge was reasonable or unreasonable. If it is the latter, the solution would seem to be political rather than legal.
- For the above reasons the appeal must be allowed. I agree with the orders proposed by Pincus JA.
- AMBROSE J: I have had the advantage of reading the reasons for judgment of Pincus JA and Thomas JA and agree with them.
- In my view the respondent had for many years in effect adopted and implemented a two-tier water tariff comprising what in essence was an “access” component payable whether or not any water was consumed as well as a “consumption” component payable in respect of water consumed above a specified volume.
- Under the previous tariff in the event that the special water service required on the appellant’s premises was not used as a consequence of fire occurring on those premises – and that was the only occasion upon which the large diameter water pipes would be used to gain access to the headworks water supply – then the only access charge was that payable whether or not any water was consumed. The additional charge applied only if consumption exceeded a specified volume of water – entirely a “consumption” component.
- In my view the adoption and implementation of the tariff under challenge was clearly within the power of the respondent under s 973(5) under Part 14 of the Local Government Act 1993.
- This two-tier tariff was clearly authorised by the terms of Chapter 14 under which it was levied to which Pincus JA and Thomas JA have referred.
- The two-tier tariff challenged by the appellant simply altered the basis upon which the charge for access to water is to be calculated.
- The tariff for access under challenge has regard to the size or capacity of the water pipes connected to the appellant’s premises. It may be that the draftsman of Chapter 10 which includes s 769(d) and s 783(b) had in mind that the size of the access pipes providing water to the appellant’s premises might properly reflect the “potential” consumption of water should a fire occur on those premises triggering an automatic response by a fire sprinkling system which required the delivery of a very high volume of water over a relatively short period of time. The capacity of water supply headworks necessary to supply such a large volume of water within a short period of time might well need to be greater than that necessary to supply water needed only to satisfy normal requirements.
- However that may be it could not be contended that the imposition of an access component under a two-tier tariff calculated upon the size of the pipes giving access to the water supply headworks was not open to the respondent under Chapter 14 quite apart from the provisions of Chapter 10.
- Under s 973(2) the respondent was empowered to levy a charge for supplying water and under s 973(4) to make and levy such a charge “on the basis a local government considers appropriate”. Under sub-section (5) it is provided –
“(5)Without limiting sub-section (4) the amounts of utility charges may differ on the basis of –
- The use made of particular land or a particular structure or a class of land or structure; or
- The improved value of particular land; or
- Any other circumstances peculiar to the supply of the relevant service to particular land a particular structure or a class of land or structure.”
- The amount of the charges levied by the respondent in this case increased dramatically when it replaced the former tariff to which I have referred by one where the access component of the charge for the supply of water was calculated having regard to the size of the pipes providing water to the appellant’s premises and a consumption component which varied with the amount of water consumed during the rateable period.
- I agree that there is nothing in Chapter 10 which expressly or by implication limits or restricts the powers given to the respondent to implement the new two-tier tariff under challenge at relevant times under s 973.
- I agree that the appeal should be allowed and the action dismissed. I agree with the other orders proposed by Pincus JA.