Australia: Queensland Supreme Court dismisses challenge to differential rating categories

WHO SHOULD READ THIS

  • Council CEOs, CFOs, Council finance managers, Council corporate services and governance managers and in-house legal counsel

THINGS YOU NEED TO KNOW

  • As it is budget time for Queensland Local Governments, the article provides guidance on the exercise of establishing rating categories for differential rating and challenges that may occur to decisions made.

WHAT YOU NEED TO DO

  • Councils should carefully consider, as part of the budgeting process:
    • how differential rating categories are established and described
    • the procedures to be adopted for the identification of rateable land into rating categories and any need for delegation of Council's statutory powers
    • the definitions used in a Revenue Statement.

Update
On 15 June 2017, Mullins J of the Supreme Court of Queensland handed down her decision in Ugarin Pty Ltd v Lockyer Valley Regional Council [2017] QSC 122 (Ugarin's Case). Our firm acted for Council.

The Ugarin's Case dealt with a judicial review challenge of two decisions made by Lockyer Valley Regional Council (Council) relating to differential general rates. The first decision was made by Council on 28 July 2015 under sections 80 and 81 of the Local Government Regulation 2012 (Qld) (LGR) to adopt categories of rateable land and different rates for different categories at its budget meeting.

The second decision made by Council between 28 July and 10 August 2015 under section 81(4) of the LGR related to the identification of differential general rates by applying 'category 8' as the rating category applicable to the applicant's land.

The application for judicial review was dismissed and costs were ordered in favour of Council.

Facts and legislative regime
The applicant owned land within Council's local government area upon which the Plainland Shopping Centre was located.

Under the Local Government Act 2009 (Qld) (LGA) every local government in Queensland must levy general rates on all rateable land and may also categorise rateable land and decide differential rates for rateable land.

Under sections 81(1),(2) and (3) of the LGR any local government which adopts a differential rating system must do the following at its budget meeting:

  1. decide the different categories of rateable land in the local government area;
  2. make that decision by resolution at Council's budget meeting;
  3. ensure that the resolution states:
    1. the rating categories of rateable land in the local government area; and
    2. a description of each of the rating categories.

The above process requires a local government to embark on an exercise of setting out the 'description' of rating categories for rateable land and decisions must be made by resolution.

Separately, under section 81(4) of the LGR after the rating categories and descriptions have been decided, the local government must identify the rating category to which each parcel of rateable land in the local government's area belongs. Council may do so in any way it considers appropriate.

This process is typically understood to be the 'identification' exercise which does not need to occur at Council's budget meeting but can occur after that meeting, often by Council officers exercising powers under delegation.

The adoption of Council's 2015/2016 budget
At Council's budget meeting held on 28 July 2015, Council resolved to adopt 45 rating categories. The category that was under scrutiny in Ugarin's Case was as follows:

8 Shopping Centres >7,000 sq m Land used or capable of being used for a Shopping Centre that has a property land area greater than 7,000 sq metres, or more than 120 onsite carparking spaces. Includes all land of the relevant size with land use code 16 and as otherwise identified by the Chief Executive Officer.

Council's Revenue Statement contained a definition of 'land use code' which meant 'those land use codes approved by the Lockyer Valley Regional Council effective from 1 July 2015'. The term 'Shopping Centre' was also defined in that Revenue Statement to mean land which has a 'predominant use' of major retail activities or retail warehouses or to which land use code 16 applies.

Grounds for review
There were a number of grounds for review but the primary argument in relation to the first decision under challenge involved answering the following two questions summarised by Her Honour:

  • was the 'land use code' an integral component of the description of category 8?
  • if so, did the 'land use code' have to be approved by resolution of the respondent?

The grounds of challenge generally related to allegations of Council taking into account irrelevant considerations and that the decisions being so unreasonable that no reasonable Council would make them.

Land use code
Council regularly received 'land use code' information by the Department of Natural Resources and Mines (DNRM). Evidence was provided by Council that its rating system is linked to the land valuation process administered by DNRM. DNRM maintains a State-wide database of Queensland Valuation and Sales Information (QVAS). The QVAS information in this case was replicated in Council's land record which is a fully electronic record and is updated and reviewed from time to time.

The applicant's land was assigned, land use code no. 16 'Drive In Shopping Centre' and that information for that land was included in Council's land record database.

It was conceded by Council that there was no document setting out the land use codes before the meeting when the first decision was made and that the identification of category 8 for the applicant's land was based on the content of Council's electronic land record and was a decision not made at Council's budget meeting or any other ordinary meeting.

Applicant's arguments
The applicant argued that the reference to 'land use codes' is essential to determining which of the potential rating categories apply to the applicant's land. It was argued that Council is required to approve the 'land use codes' by resolution. The applicant argued that Council was stymied by its own definition of 'land use codes' in its Revenue Statement and that the reference to 'approved' meant 'approved by resolution'.

The way the categories were structured, there were a number of inclusionary and exclusionary words and it was submitted that the applicant's land could fall within either category 6 or category 8 (if the reference to the land use codes was not included in those categories).

Council's arguments
It was argued that the fully accurate description of category 8 is the first part of what appears next to category 8 in the resolution, namely 'land used or capable of being used for a Shopping Centre that has a property land area of greater than 7,000 sq m, or more than 120 onsite carparking spaces'.

It was submitted that the concluding words 'includes all land of the relevant size with land use code 16 and as identified by the Chief Executive Officer' are an explanatory inclusion but that becomes irrelevant if the subject land falls within the primary description of land within category 8.

Council noted in its submission that what it did by adding in the description of category 8 the words of inclusion was to commence undertaking the 'identification exercise' that was otherwise delegated to the Chief Executive Officer. This resulted in a conflation by Council of the description and the identification processes.

In response to the argument that the 'land use codes' had to be approved by resolution, authority was provided that the word 'approved' should not be construed in an overly technical way. Context was provided in that those codes were included in Council's land record database and there was no uncertainty or ambiguity as to what land use codes were referred to in the description of the categories of differential general rates.

Findings of the court
The Court noted that most of the categories established by Council in its resolutions contain references to the relevant 'land use codes' in the description of the categories.

Her Honour noted that there may have been some conflation by Council in setting out the description for each rating category between description and identification, but Council elected to use 'land use codes' in the descriptions which assist in adding another criterion to the description of the category. It was held that the reference to the 'land use codes' within the description for a differential category of rateable land must therefore be categorised as part of the description of that category.

In dealing with the issue of whether land use codes needed to be approved by resolution, Her Honour noted the evidence provided by Council that it is unequivocal that the 'land use codes' obtained by Council from DNRM were in use in Council's land record database when the descriptions for the categories were approved by resolution of Council.

Her Honour acknowledged that perhaps the definition of 'land use codes' in the Revenue Statement could have been more precise. However, in context Council's existing statutory land record database (of which the councillors must have been taken to be aware) and the incorporation of the 'land use codes' in the descriptions of the differential rating categories must be construed as a reference to those 'land use codes' used by Council in the descriptions, and thereby approved.

Her Honour found that the use of the word 'approved' in this context within the Revenue Statement does not mandate any separate resolution being required for Council adopting the 'land use codes' with the 'effective date' according to the timing of the relevant resolutions required under the LGR.

Her Honour also found that the reference in the description of each differential rating category to the effect of 'as identified by the Chief Executive Officer', in context, is merely a reference to the process of identification. Her Honour also did not consider that use of 'rateable value' as a criterion for some categories resulted in the categorisation being unreasonable.

In relation to the second decision of Council, Her Honour, in finding that the reference to the 'land use codes' in the description of the differential rating categories is valid, found no difficulty in classifying the applicant's land as category 8. Her Honour stated that the land is used for shopping centre, as that term is defined in the Revenue Statement and fulfils all the other criteria that are set out in the description, including being land with the land use code of 16.

Her Honour then proceeded to dismiss the application and ordered the applicant to pay Council's costs.

Key takeaways
The case demonstrates the broad discretion that a Queensland local government has in deciding the different categories of rateable land and how it goes about describing each of the categories.

The case also shows that references to terms such as 'land use codes' which can be defined in a 'Revenue Statement' need to be considered in the context of a relevant local government land record system in terms of how those land use codes are incorporated. In that context, subject to how a relevant 'Revenue Statement' deals with this issue (if at all), the reference to how codes of this nature are 'approved', may not involve them needing to be 'approved by resolution'. In this regard, the Court took an approach of councillors at the budget meeting being taken to have been aware of matters associated with Council's land record and any incorporation of 'land use codes' into that record.

Queensland local governments, in preparing its rating categories as part of the budgeting process, should bear in mind the differences set out in section 81 of the LGR in terms of the 'description exercise' and the 'identification exercise'. It would be better to avoid any conflation of those two concepts when a rating category is established.

The 'identification exercise' is not typically undertaken at Council's budget meeting but is a power that is delegated to Council's Chief Executive Officer (and ordinarily sub-delegated to managers).

Overall, Ugarin's Case is consistent with a fairly established line of authority in Queensland that demonstrates difficulties for a ratepayer in challenging differential general rating category resolutions under judicial review.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

    Disclaimer

    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

    Registration

    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

    Cookies

    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

    Links

    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

    Mail-A-Friend

    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

    Emails

    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

    Security

    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions