Why council rates and charges are just so special
A recent decision of the Supreme Court of Queensland in Kozik & Ors v Redland City Council [2021] QSC 233 was handed down on 13 September 2021, which required Redland City Council (Council) to refund the full amount of special rates and charges that it had levied with respect to land adjacent to its canal estates since 2011. The Council expended considerable funds in dredging, maintenance and managing environmentally relevant activities in relation to the canal estates and had sought to cover these costs because the service provided a special benefit to the landowners adjacent to the canal estates.
What happened
From July 2011 to 30 June 2017, the Council had passed resolutions to levy special rates and charges (Special Charges) against landowners whose land was adjacent to the Aquatic Paradise Canal Reserve and Marina, Sovereign Waters Lake Reserve and Raby Bay Canal Reserve and Marina (Reserves) within the Redland local government area.
The Council has the power to levy Special Charges under the Local Government Act 2009 (LGA) and Local Government Regulation 2012 (LGR) and, before the enactment of the LGR, under section 28 of the superseded Local Government (Finance, Plans and Reporting ) Regulation 2010 (2010 LGR) which has similar provisions as the LGR.
Under the LGR, a local government may levy Special Charges for services, facilities and activities that have a special relationship to particular land because the land or occupier of the land:
- specially benefits; or
- has or will have special access; or
- the land is, or will be, used in a way that specially contributes to the need; or
- the occupier specially contributes to the need for the service facility or activity.
In this case, the Special Charges were to fund capital and operational expenditure for the services undertaken in the Reserves by the Council and for which the adjacent landowners were considered to receive a special benefit.
The Council issued rates notices from 2011-2017 and included the Special Charges to be paid by the landowners who dutifully paid the rates notices, including the Special Charges. However, around March 2017, the Council became aware that the Resolutions it had passed each year to levy the Special Charges were not validly made.
As a result, the Council refunded, with interest, the balance of the Special Charges that had not been expended for the services to each affected landowner.
The landowners then commenced proceedings in the Supreme Court to recover all the Special Charges they paid since 2011, which included the amount of the funds already spent by the Council to provide the services.
What does the law say
A local government must levy general rates for rateable land, a requirement under section 94 of the LGA. However, in addition to the general rates and charges, a local government may levy Special Charges if it chooses to do so and must follow the process set out in section 94 of the LGR. In this case, both the 2010 LGR and the LGR were relevant.
To levy rates and charges, a local government must pass the appropriate resolutions at its budget meeting each financial year, stating what rates and charges will apply for the coming financial year.
However, to levy Special Charges, a local government must also comply with the process set out in section 94B of the LGA and section 94 of the LGR. If it intends to levy Special Charges, a local government must pass a resolution that identifies the rateable land to which Special Charges will apply and adopt an overall plan.
The overall plan must be adopted when the local government first resolves to levy Special Charges and must include the following:
- a description of the service, facility or activity that is the subject of the Special Charge
- identifies the rateable land to which the Special Charge will apply
- include an estimate of the cost of carrying out the overall plan
- include an estimated time frame to carry out the overall plan.
In addition to the above, a local government must adopt an annual implementation plan if the proposed service, facility or activity costs need to be recovered over more than one financial year. The annual implementation plan, which sets out the activities of the overall plan that will be undertaken that financial year, must be adopted at the annual budget meeting until the service facility or activity identified in the overall plan has been completed.
Section 94 (14) of the LGR also provides that a resolution or overall plan is not invalid merely because it does not identify all rateable land to which the Special Charges could apply or where rateable land is included where the Special Charges should not have been levied.
Section 95 of the LGR also states that surplus Special Charges collected in a financial year can be retained for the following financial year's annual implementation plan if it is not spent in the financial year in which it was collected. However, this is only the case for the duration of the overall plan. Once the overall plan expires, any surplus Special Charges must be refunded to the relevant ratepayer.
More relevant is section 98 of the LGR, which requires a local government to refund Special Charges if "a rates notice includes special rates and charges that were levied on land to which the special rates or charges do not apply or should not have been levied". This section provides that while the rate notice is not invalid, the local government must return surplus Special Charges as soon as practicable.
What went wrong
The fundamental issue was that the resolutions passed by the Council in 2011 and 2012 identified a document as the overall plan, but this document did not include an estimate of costs or time to complete the overall plan. As such, the adoption of the overall plan, which was non-compliant with the requirements of the LGR, was invalid.
Failing to adopt a valid overall plan at the time the Council first resolved to levy Special Charges meant that the resolutions passed (by the Council) over the subsequent years were also invalid because the overall plan is, as held by the Court, the "central feature of the regulatory scheme for special rates and charges".
The Court also held that because each of the resolutions was invalid, it "makes it appropriate to regard them as of no effect from the beginning and incapable of ever having provided legal effects".
While the Council refunded unspent Special Charges (when it became aware that the resolutions were invalid), it did not refund an amount equivalent to the spent portion of the Special Charges, arguing that to refund the full amount would "unjustly enrich" the landowner who had, and would continue to, receive the benefit of the services already provided.
On this point, the Court held that "The Council cannot avoid or diminish its statutory obligation to return the amount of the Special Charges to each person who paid them, by a defence that the payers will be unjustly enriched by the return". This is because the Special Charges were not valid from the beginning, and if the Council did not return the Special Charges in total, it would in effect retain funds to which it has no entitlement.
The Court held that the full amount of the Special Charges had to be returned to the relevant ratepayers because the Special Charge itself was invalid and should not have been levied. Therefore, by operation of section 98 of the LGR, the Council is required to refund the Special Charges in full.
It may be that the Council will appeal this decision given the implications and the Special Charges that will have to be refunded. Local governments throughout Queensland including those with canal estates for which Special Charges are levied will also be watching on with interest.
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applicable principles.
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1016
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safety.
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Gamble [2021] VCAT
1084
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application for costs associated with enforcement proceeding under
section 114 of the Planning and Environment Act 1987. 1 The
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Gamble is refused.
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[2021] VCAT 1081
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Administration Act 1998 - application for costs and reimbursement
of fees associated with enforcement proceeding under section 114 of
the Planning and Environment Act 1987.
1 The respondent, Basem Soas, is ordered to pay the costs of the
applicant, Moreland City Council, fixed in the sum of
$4,000.00.
Deputy Secretary of the Department of
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[2021] NSWCATAD 279
LOCAL GOVERNMENT - whether councillor breached the Local Government
Act 1993 (NSW), the Local Government (General) Regulation 2005 and
the Council's Code of Conduct.
Walker v Northern Beaches
Council [2021] NSWCATAD
277
ADMINISTRATIVE LAW - access to government information - restraint
order in place - leave required for applicant to apply for
information under Government Information (Public Access) Act 2009
(NSW) - Transitional Provisions Northern Beaches Council.
Trevor Allan McBride v MidCoast
Council [2021] NSWLEC
100
VALUATION - compulsory acquisition - before and after valuation
method - highest and best use as a manufactured home estate -
hydrological and ecological constraints on development - market
value - Severance - injurious affection - disturbance.
Drake v Randwick City
Council [2021] NSWLEC
98
COSTS - applicant commences Class 4 proceedings seeking declaratory
relief - proceedings concerned application of cl 4.1A of the
Randwick Local Environmental Plan 2012 to nominated development
proposal plans - Applicant subsequently amends relief - amended
relief seeks abstract judicial advice concerning cl 4.1A - not
appropriate to give judicial advice sought - related Class 1
proceedings based on cl 4.1A fail because design merit proceedings
fail - Class 4 proceedings dismissed - no reason to depart from
presumption that costs follow the event - applicant to pay
Respondent's costs of Class 4 proceedings - applicant to pay
Respondent's costs of Class 4 costs consideration.
Caulfield v Bellingen Shire
Council [2021] NSWCATAD
267
HUMAN RIGHTS - discrimination - enforcement of settlement - whether
Deed of Settlement and Release precludes applicant for continuing
with claim.
Woodbine Park Nominees Pty Limited v
Wingecarribee Shire Council [2021]
NSWLEC 1530
MODIFICATION APPLICATION - bulk water extraction and storage -
removal of trial period condition - contentions resolved - consent
orders.
New v Ku-Ring-Gai
Council [2021] NSWCATAD
263
ADMINISTRATIVE LAW - access to government information - access
application -review of decision that information not held by an
agency.
Eastwood & Anor v Scenic Rim
Regional Council [2021] QCA
197
The District Court judge was correct in her conclusion that the
limitation defence must succeed so that there was no need for a
trial of the action. The application to extend time
should be refused.
license to occupy, caravan parks - Council leases on the property -
occupation of site for the life of the caravan park.
Kozik & Ors v Redland City
Council [2021] QSC
233
LOCAL GOVERNMENT - POWERS, FUNCTIONS AND DUTIES OF COUNCILS
GENERALLY - POWERS GENERALLY - ULTRA VIRES OR ILLEGAL EXERCISE OF
POWER - where the plaintiffs owned waterfront residences on land
within the Redland City local government area - where the defendant
local Council passed resolutions to levy special charges to fund
lake and canal works and services ('the services') - where
the resolutions were passed without compliance with mandatory
provisions in the relevant regulations - where the Council refunded
the amount of the special charges that had not been spent on the
services - where the Council contends that it is not lawfully
obliged to return the spent portion of the special charges -
whether the plaintiffs are entitled to recover the balance of the
special charges
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - CLASS
ACTIONS OR GROUP PROCEEDINGS - where the claim is a representative
action under Part 13A of the Civil Proceedings Act 2011 (Qld) -
where the plaintiffs bring their claim on behalf of a group of
registered home owners in the local government area who paid the
special charges ('the group members') - where the Court is
to decide five questions of law or fact common to the claims of the
group members
REAL PROPERTY - RATES AND CHARGES - RATING OF LAND - RECOVERY OF
OVERPAID RATES - where the Council passed invalid resolutions for
special charges - where the special charges were paid in rate
notices - whether the Council is obligated to return the percentage
of invalid special charges
EQUITY - GENERAL PRINCIPLES - UNJUST ENRICHMENT - where the Council
contends that if it were to return the spent amount would be to
unjustly enrich the plaintiffs and group members - where by reason
of the invalid resolutions, the Council had no right to make, use
or retain any part of the special charges - where the services have
conferred some benefit on the plaintiffs and group members -
whether the Council can avoid its statutory obligation to return
the balance of the special charges by defence that to do so would
unjustly enrich the plaintiffs and group members
RESTITUTION - INVOLVING CROWN OR PUBLIC AUTHORITIES - CLAIMS
AGAINST CROWN OR PUBLIC AUTHORITIES - whether the plaintiffs can
recover the balance of the special charges as money had and
received
Constitution of Queensland 2001 Qld s 65, s 71.
Serratore & Ors v Noosa Shire
Council (No.2) [2021] QPEC
46
PLANNING AND ENVIRONMENT - APPEAL - COSTS - where each appellant
given an enforcement notice under s 168 of the Planning Act 2016 in
relation to vegetation clearing - appeal against decision to give
the enforcement notices - where appeal allowed and enforcement
notices set aside - where declarations and consequential orders
made - whether Council's case against the second, fifth, sixth
and seventh appellants was without reasonable prospects of success,
or alternatively, frivolous or vexatious - whether Council failed
to properly discharge its responsibilities in the proceeding
Planning Act 2016 Qld s 168; Planning and Environment Court Act
2016 Qld ss 59, 60 and 61
Legislation
Victoria
Bills
Date of second reading speech: 16 September 2021
Water and Catchment Legislation Amendment Bill
2021 (Vic)
NSW
State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) Amendment (No 2) 2021 (2021-544) - published LW 17 September 2021
State Environmental Planning Policy (Vegetation in Non-Rural Areas) Further Amendment 2021 (2021-545) - published LW 17 September 2021
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.
