Sunwater v Burdekin Shire Council
[2002] QSC 433
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- Notable Unreported Decision
- Sunwater v Burdekin Shire Council[2002] QSC 433
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Sunwater v Burdekin Shire Council[2002] QSC 433
Sunwater v Burdekin Shire Council[2002] QSC 433
SUPREME COURT OF QUEENSLAND
CITATION: | Sunwater v Burdekin Shire Council [2002] QSC 433 |
PARTIES: | SUNWATER (applicant) v BURDEKIN SHIRE COUNCIL (respondent) |
FILE NO/S: | S 704 of 2002 |
DIVISION: | Trial |
PROCEEDING: | Application for Statutory Order of Review |
ORIGINATING COURT: | Supreme Court at Townsville |
DELIVERED ON: HEARING DATE: | 18 December 2002 11 December 2002 |
DELIVERED AT: | Townsville |
JUDGE: | Cullinane J |
ORDER: |
|
CATCHWORDS: | LOCAL GOVERNMENT – POWERS AND FUNCTIONS AND DUTIES OF COUNCILS GENERALLY – where respondent Council imposes a liability to rates on lands held by the applicant in the Burdekin Shire – where applicant challenges decision of respondent Council by way of judicial review – whether the criteria adopted by the respondent Council with respect to categorisation of land was permissible criteria under the Local Government Act 1993 (Qld) - whether irrelevant considerations were taken into account – whether respondent acted unreasonably in the Wednesbury sense with respect to categorising the applicant’s lands in category G, striking a general rate of 46.289 cents in the dollar and a minimum general rate of $15,000 for lands in category G Government Owned Corporations Act 1993 (Qld) Local Government Act 1993 (Qld) Valuation of Land Act 1944 (Qld) Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162 CLR 24 applied |
COUNSEL: | JA Logan SC for the applicant RW Gotterson QC for the respondent |
SOLICITORS: | Connolly Suthers Lawyers for the applicant King & Company Solicitors for the respondent |
[1] The Applicant challenges by way of judicial review certain decisions of the Respondent Council imposing a liability to rates on lands held by the Applicant in the Burdekin Shire.
[2] The Applicant is a ”non-exempt government corporation” within the meaning of the Government Owned Corporations Act 1993 and as such is liable to pay rates made and levied by local authorities.
[3] The Applicant controls the supply of water in the Burdekin-Houghton Water Supply Scheme and supplies water through its infrastructure to land owners throughout the area in which the scheme operates. This activity is carried on a commercial basis.
[4] The lands which it holds were previously administered by various government departments.
[5] I was told that the lands, the subject of this application first became liable to be rated in the hands of the Applicant in the financial year ending 30th June 2002 but that valuations by the Chief Executive of the Department of Natural Resources and Mines in respect of the lands only became available for the financial year commencing on 1st July 2002.
[6] At its budget meeting on 16th July 2002 the Respondent adopted for the 2002 financial year a differential rating system which included a number of differential general rates pursuant to part 3 of Chapter 14 of the Local Government Act 1993 as amended. This followed the adoption of a revenue policy in those terms for the 2002 and 2003 financial years.
[7] By a letter of 1st August 2002 the Respondent informed the Applicant of its decision and supplied it with a copy of the revenue policy that it had adopted.
[8] The Respondent in its resolution set out the various factors it had taken into account in determining to adopt a differential rating system involving seven differential categories. These were: (a) social and environmental factors, (b) access to services, (c) equity.
[9] Under the last of these headings, the following appeared:
“Equity – Equity is the corner stone of the Burdekin Shire Council’s revenue raising policies. In arriving at its rating policies, Council is satisfied that the rating burden for the current financial year is distributed in a fair manner.
The annual valuation made by the Department of Natural Resources and Mines of all lands in the Burdekin Shire area shall have force and effect for the period of twelve months commencing on 30th June 2002.
Prior to the implementation of a differential rating system, The Burdekin Shire’s rating and revenue policy was generally based on traditional financial divisional boundaries with one general rate for each of the four divisions –
HOWEVER
(a)
(i)The Council formed the opinion following the release of the Department of Natural Resources and Mines valuations of land report which became effective on 1st July 1996, that the valuations at that time would lead to rating inequities and a distortion of relativities in the amount of rates paid in various areas of the Shire, if only one general rate was adopted. With the introduction of new valuations to have force and effect from 30th June 2001, Council still maintains the view that the Department of Natural Resources and Mines current valuations of the Shire which became effective from 30th June 2001 will continue to lead to rating inequities and unfairness in that a distortion of relativities in the amount of rates paid in various areas of the Shire, will occur if only one general rate is adopted. This outcome is reinforced in the particular case of the unimproved valuations recently issued for lands used for purposes of and incidental to the Burdekin-Haughton Water Supply Scheme, because those valuations are significantly lower than the valuations for similarly located and otherwise comparable rural land, thus leading to an unfair result in terms of equitable sharing of the overall revenue burden unless these lands are subject to differential rating treatment;
(ii)Such an outcome is unacceptable to Council;
(ii)For these reasons, the council is of the opinion that a system of differential general rating will achieve a fairer and more equitable distribution of the rating burden, and exhibit the following features:
(1) It is flexible so that the Council can adapt its rating system to the circumstances of its community;
(2) It is equitable in relation both to the ratepayers’ ability to pay or to the benefit he or she receives from the expenditure of rates;
(3) It is simple and easily understood;
(4) It is economical to administer relative to the revenue derived; and
(5) It ensures that ratepayers in similar situations are treated in a like manner;
The Council determines that a method of differential general rating be applied to all rateable land in the Shire on the basis set out hereunder.
(b)In making and levying differential general rates for the 2002/03 financial year, Council has done so to raise an amount of revenue it sees as being appropriate to maintain and improve assets and provides services to the Shire as a whole. In deciding how that revenue is raised, Council took into account the following factors –
● The rateable value of land, including valuation relativities between land, and the rates which would be payable if only one general rate was adopted; and
● The level of services provided to that land and the cost of providing the services compared to the rate burden that would apply under a single general rate; and
● The use of the land in so far as it relates to the extent of utilisation of Council services; and
● Location and access to services.”
[10] The procedure to be followed when a differential rating system is adopted is found in Division 1 of Part 3 of Chapter 14 of the Act. The relevant provisions for present purposes are ss 976 to 979 inclusive.
“976 Land must be categorised for differential general rates
A local government may make and levy a differential general rate for a financial year only if all the rateable land in its area has been categorised under this part.
977 Establishing criteria and categories
Before making and levying a differential general rate for a financial year, a local government must decide by resolution –
(a)the categories into which rateable land in its area is to be categorised; and
(b)the criteria by which land is to be categorised
978 Identification of categories for parcels of land
(1) After the categories and criteria have been decided, all rateable land in the local government’s area must be categorised by the local government identifying the category in which each parcel of rateable land is included.
(2) The category in which a parcel of rateable land is included may be identified in any way the local government considers appropriate.
979 Specification of categories for parcels of land
(1) If a local government resolves to make and levy a differential general rate, the resolution must specify the categories in which rateable land is to be included.
(2) The rateable land included in a category may be identified in any way the local government considers appropriate.
(3) The accidental omission from categorisation of parcels of rateable land does not prevent the making and levying of the differential general rate.”
[11] Where differential rates are adopted these are general rates and the fundamental principles of equality of treatment and treating like with like apply.
[12] An owner must receive, pursuant to s 983 a notice of categorisation of his land which specifies the categories of rateable land and the criteria by which land is categorised and specifying the rating category in which the owner’s land is included. There is a right to object against such categorisation and a right of appeal to the Land Court from the decision on the objection.
[13] The first ground advanced by the Applicant is that the criteria which the Respondent has purported to adopt and apply are not permissible criteria under the Act.
[14] The Respondent on the other hand contends that it has acted in accordance with the requirements of the Act.
[15] At its meeting the Respondent Council established seven categories (A to G).
[16] The resolution states so far as the relevant land is concerned:
“(d) The categories and criteria for each category are;-
----
CATEGORY G – COMMERCIAL WATER BUSINESS
Land used for purposes of and incidental to commercial water delivery and drainage.”
[17] The resolution then went on;
(e)The Council has identified the category in which each parcel of rateable land in the area is included, applying the criteria specified in clause (d) hereof, as set out in the Table on page 4.
In the table, “Land Use Codes” means those land use codes used by the Department of Natural Resources and Mines to classify land within the Burdekin Shire boundaries during the period of valuation which becomes effective for rating purposes from 1st July 2002”
[18] Then follows the Table. The Table consists of two columns. The left hand column is headed “Category” and the right hand column is headed “Criteria”.
[19] In the case of category G land, in the right hand column there appears the following:
“Land having any of the following Valuation Numbers:-
2193-20000, 2352-20000, 2358, 2563-50000, 2693-10000, 7533-50000,7669-72000,7680 and 7937.”
[20] The reference to the valuation numbers is a reference to the number which the chief executive assigns to a valuation in respect of a parcel of land or parcels of land in the case of a valuation of more than one parcel. It is thus a means of identifying the land concerned.
[21] In the right hand column of the table category F (sugar milling) is similarly described by valuation numbers which appear in that column. In all other categories land use codes are used with, in some instances, certain parcels being referred to by their valuation numbers by way of excluding them.
[22] It was common ground between the parties that if the Respondent had adopted for the purposes of s 977 of the Act criteria in terms only of valuation numbers, this would be impermissible.
[23] The Respondent contended that it in fact had adopted permissible criteria and that the relevant criteria (so far as category G is concerned) appears in paragraph (16) above. It is said on behalf of the Respondent that when one reads the resolution as a whole it is clear that the term “Criteria” in column 2 is a misnomer and that plainly what the Respondent was doing in column 2 was identifying the categories into which rateable land in the shire was included. The Respondent pointed to the language of (e) and it was submitted that it is clear that the table was intended to provide for the category of land in the left hand table and the identification of the lands which fell into each category in the right hand table.
[24] To construe the resolution in the way contended for by the Applicant it seems to me is to ignore the express language of the resolution where it refers to “the categories and criteria for each category” or to treat that part of the resolution as having been contradicted by the last entry in the right hand column in the table. It would also have the effect that the Respondent failed to comply not only with its obligation to fix upon permissible criteria but it also failed to perform its obligation under s 978 to identify the categories into which rateable land in the shire falls.
[25] Looking at the resolution as a whole I am satisfied that the Respondent has adopted permissible criteria, namely those set out at page 37 of the budget meeting of 16th July 2002. The first ground therefore fails.
[26] The Respondent adopted the following differential rates:
“Category A – 2.087 cents in the dollar on the unimproved capital value of all rateable land in the category.
Category B – 2.109 cents in the dollar on the unimproved capital value of all rateable land in the category.
Category C – 1.949 cents in the dollar on the unimproved capital value of all rateable land in the category.
Category D - 1.949 cents in the dollar on the unimproved capital value of all rateable land in the category.
Category E - 1.949 cents in the dollar on the unimproved capital value of all rateable land in the category.
Category F – 14.442 cents in the dollar on the unimproved capital value of all rateable land in the category.
Category G – 46.289 cents in the dollar on the unimproved capital value of all rateable land in the category.”
[27] In addition the Respondent adopted the following minimum general rates under section 967(1) in the following terms.
“Category A - $344
Categories B, C, D & E - $578
Category F - $11,472
Category G – $15,000”
[28] Two other grounds of challenge were advanced. Firstly it was said that the Respondent had taken into account an irrelevant consideration.
[29] All of the lands which fall into category G are lands of the Respondent used for the purposes of the delivery of water to purchasers of water from the Respondent. There are other lands of the Respondent which are not included in category G.
[30] The irrelevant consideration which it was said the respondent took into account was its belief that the valuations of the land which came to be included in category G were too low. It was argued that the Respondent had, in substance, adopted its own idiosyncratic notion of the value of the lands and of the relative value of those lands and others. The Respondent on the other hand argued that it did not take into account an irrelevant consideration.
[31] On this issue the parties were inclined to emphasise the importance of different aspects of the statutory regime pursuant to which land is valued by the chief executive on the one hand and general rates are made and levied by local authorities on the other.
[32] The Applicant pointed out that it was the statutory function of the Chief Executive to value lands and the obligation of local authorities to accept those valuations and to apply them. The valuation was described by Senior Counsel for the Applicant as a “given” for a local authority. A Council cannot, so the argument ran, subvert the system where it disagrees with such valuations by applying its own concept of appropriate valuations nor can it adopt a differential rating system based upon a different set of valuation relativities. This, it is said, is what the Respondent has done here and in doing so has taken into account an irrelevant consideration, namely its disagreement with the chief executive’s valuations and applied its own idiosyncratic notions of value.
[33] On the other hand the Respondent pointed to the changes which were effected by the introduction in 1985 of the power to establish a differential rating system. It was said that these amendments had as their aim (as the Minister said on the second reading speech at the time of the introduction of the amendments – see s 14B of the Acts Interpretation Act 1954 the achievement of a more just and equitable sharing of the general rate burden. Such a system when introduced, necessarily involved a departure from the system of applying a general rate across the board to valuations under the Valuation of Land Act 1944). The Respondent argued that when considering whether to introduce a differential rating system and if so, what lands should be grouped with what other lands in categories determined by reference to criteria adopted by the local authority it is inevitable that amongst the considerations to be addressed are the valuations of land and those valuations relative to other lands. In the present case this point was developed in the evidence of Graham John Webb, the Respondent’s local government manager in which he made a comparison between the activities carried out on category G lands and their impact on Council infrastructure compared with other rural lands. He also compared the unimproved value of the lands which became category G lands with the unimproved values of other rural categories including lands which adjoin in many instances category G lands. The application of the same rate in the dollar, it was argued, when these factors are considered would result in the other rural lands bearing an unfairly high share of the general rate revenue while the lands that were placed in category G would have borne an unfairly low share.
[34] I take the relevant statement of principle in relation to this question to be that of Mason J (as he then was) in Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162 CLR 24 at page 40:
“In the context of judicial review on the ground of taking into account irrelevant considerations, this court has held that, where a statute confers a discretion which in its terms is unconfined, the factors that may be taken into account and the exercise of the discretion are similarly unconfined, except in so far as there may be found in the subject matter, scope and purpose of the statute, some implied limitation on the factors to which the decision maker may legitimately have regard.”
[35] It is the local authority which has the statutory function of determining whether a differential rating system should be adopted and if so, what are the relevant criteria to be applied in determining the relevant categories of land. Substantial latitude must be allowed a local authority in choosing such criteria for the purposes of achieving an equitable sharing of the general rate revenue burden across the ratepayers as a whole.
[36] The Applicant pointed to the documents of the Respondent (including that part of the resolution set out in paragraph 9 of these reasons) in which it was made clear that the Respondent held the belief that the values ascribed to the Applicant’s lands used for the supply of water to landowners within the area affected by the scheme are too low when compared to the valuations of other lands. It also pointed to evidence that the Respondent in its pre-budget discussions approached them having in mind a particular level of income from these lands and, it would appear, an understanding of what the Applicant had estimated it would have to meet by way of expenditure for rates.
[37] The category G lands were lands which had just become rateable within the shire and involved substantial areas used for a particular commercial use. It is inevitable that the Respondent in undertaking the exercise to which I have just referred would necessarily have had to address how those land were to be treated.
[38] I think that the Respondent is correct in its submission that when considering whether to adopt a differential rating system and if so the criteria to be applied to determine the categories of land subject to a differential general rate, one of the relevant considerations to which a local authority must or at least may have regard is the valuation of such lands and such valuation relative to other lands. There are of course as was accepted by the Respondent many other considerations which may be relevant.
[39] I am not then persuaded that the Respondent took into account an irrelevant consideration as the Applicant contended or that it adopted its own idiosyncratic value of the lands concerned as was argued by the Applicant.
[40] The final argument raised was that the Respondent in categorising the Applicant’s lands in category G and in striking a general rate of 46.289 cents in the dollars and a minimum general rate of $15,000 for lands in category G, acted unreasonably in the Wednesbury sense.
[41] The arguments advanced were advanced collectively in support of a challenge to these decisions and there are separate challenges to each of them viewed individually.
[42] There is in the affidavit of Mr Webb to which I have already referred evidence which is intended to provide the Respondent’s reasons for grouping the Applicant’s lands in category G. There are two statutory Boards, the North Burdekin Water Board and the South Burdekin Water Board which supply water within the local authority area to agricultural users. There is also a privately owned system (Davco) which enables a major grower to deliver water to his extensive farming operations and to those of others. The lands of the Boards and of Davco are in Category E.
[43] The argument in favour of establishing category G may be said to be:
(a)the fact that the Applicant is a monopoly water supplier carrying on a large scale business with revenue of about $10 million per year.
(b)its drains and channels particularly elevated channels cause impediment to flood flows and damage to Council roads.
(c)the comparative valuations of those lands compared to other lands including adjacent lands which have a much higher unimproved value per acre.
[44] The factors which according to Mr Webb led the Respondent to allocate the lands used by the Applicant to a separate category cannot in my view be regarded as irrational. As I have already said, a comparison of the valuation of those lands with rural lands including adjacent rural lands are a relevant consideration. This taken with the other factors which it is said call for some differentiation between the lands upon which the commercial supply of water is carried on and other lands on which rural activities are carried on provide a rational basis for categorising the lands used for the purposes of a commercial water supply in a different category.
[45] So far as the non inclusion of the lands of the Boards and Davco are concerned the Respondent sought to justify this by a comparison between on the one hand the commercial nature of the activities in category G lands and their scope with, in the case of the Boards, the fact that the operations which they carry on are not required to be carried on on a commercial basis. There are some financial records before the court which show that the Boards do not always recoup their costs. In the case of Davco it is said that this operation is really incidental to cane farming operations and falls into a different category.
[46] It was argued by the Respondent that even if the distinction in the treatment between the lands of the Boards and the Applicant’s lands cannot be justified this would not help the Applicant if the adoption of a separate category (Category G) for the supply of water is justified. The fact that there were other lands which ought to have been included in it but were not, is not of any assistance to the Applicant. It is not, in my view, necessary to reach a conclusion about this because here again I am satisfied that it cannot be said that the different treatment of the lands in category G from that of the lands of the two Boards is without rational justification when the commercial nature and scope of the activities of the lands in category G are compared with the nature and scope of the use of the Boards’ lands even though common to both is the delivery of water to agricultural users. I accept the distinction that is drawn in the nature of the Davco operation.
[47] The general rate adopted for category G land is a much higher rate per dollar of unimproved value than that adopted in any other category. It was said that a rate fixed at such a level is an unreasonable exercise of the local authority’s powers. On the other hand the Respondent contended that when consideration was given to the fact that the total rates payable in respect of category G lands represent somewhere about 3 or 4 percent of total revenue and represents a similar proportion to the rates payable in respect of lands in category F (sugar milling) which is the only other category of lands used for a particular commercial activity together with a comparison of the average rates per hectare for lands in category G compared to other categories, it cannot be said that the Respondent has used its powers in striking the general rate for category G land unreasonably.
[48] No doubt there are cases in which the effect of adopting a particular differential rating system is to throw an excessively high proportion of the overall rates upon a particular rate payer or group of rate payers or cases in which a rate per dollar is itself so high that it can be regarded as capricious and outside the boundaries of a reasonable exercise of a local authority’s powers to make and levy rates. Although the general rate is certainly a high one I am not persuaded that it can be regarded as so lacking in any rational justification as to invalidate it.
[49] I think a different conclusion ought however to be reached in relation to the minimum general rate in relation to category G lands. The application of such a rate in this case produces results so anomalous that they can be regarded as unreasonable in the relevant sense.
[50] In this case, where the minimum general rate has been applied, general rates have been levied in virtually all cases at a sum which exceeds the valuation of the land concerned rising to a high of 700% of that value in one case.
[51] I therefore set aside the decision of the respondent Council of the 16th July 2002 in so far as it adopted a minimal general rate of $15,000 for lands falling into category G – Commercial Water Business.
[52] It is common ground that the court does not have the necessary information to determine what rates are payable in respect of those parcels of land to which the minimum general rates have been applied and that it will be necessary for the Respondent (or the parties) to give further consideration to this matter. It will be sufficient if I make an order in the following terms:
[53] I direct the Respondent to re-calculate the general rates payable in respect of such lands and to notify the Applicant within 21 days of the rates payable in the light of the setting aside of the minimum general rate for category G lands.
[54] In all other respects the application is dismissed.
[55] I give each party liberty to apply in writing on the issue of costs on two days notice to the other party.