Rates Ruling Could Have Major Effect

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A recent ruling by the Supreme Court could impact up to 20 regional council budgets, and impact $300 million in rates across Queensland.

The case in point, Paton & Ors v Mackay Regional Council, concerned the issue of limits on a Council’s ability to charge different general rates for non-owner occupied homes.

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    The applicants in the case owned various parcels of land within the jurisdiction of the Mackay Regional Council.

    Between them, the applicants owned land that under the new categorisations of land by the Mackay Council would be classified as:

    1. Investor Residential Band 2;
    2. Investor Residential Band 1; and
    3. Investor Residential Other.

    The applicants contented these new categorisations of land introduced during the 2013-2014 Mackay Council budget unjustly took into account the capacity of the landowner to pay the increased rates, and not the aspect of the land upon which rates were being charged.

    A previous decision by the Court of Appeal, Xstrata Coal Qld P/L & Ors v Council of the Shire of Bowen, determined that rates set by Councils must be in reference to the capacity of the land and not the personal capacity of the owner to pay rates.

    The Council contended that they took into account permissible aspects of land, including the purpose of the land, the burden the land imposes on the Council budget, the value of the land and its potential to earn income, and the capacity of the land to produce a capacity to pay rates.

    But the effect of the Mackay Councils decision was highlighted by His Honour McMeekin J at:

    [31] It can be immediately seen that the effect of the categories adopted by the Council is that it would be quite possible to have two neighbouring blocks of land, identical in every respect, each owned by an individual, with one occupied by tenants – say a family of two adults and two children – and the other occupied by the owner – say his (or her) family of two adults and two children – with the former being categorised as `Investor` and the latter not.
    [32]: The burden of the two households on the local council is precisely the same. The highest and best use is the same. The actual use as a residence is precisely the same. In the circumstances postulated one lot has precisely the same capacity to generate income as the other. It is true that the land does generate income for the owner in one case and not the other. But it is not any characteristic of the land which causes it to be differentiated but rather the decision of the owner whether to live on one block or the other and his or her decision to rent out the other block. The owner has that choice because he or she owns two (or more) blocks of land. Hence it is the personal characteristics of the owner? here that the owner owns more than one lot -that results in the differing treatment.

    His Honour ultimately determined that:

    …the Council impermissibly took into account characteristics personal to the owners of the land and failed to restrict itself to characteristics of the subject land itself.

    Following this, it was determined that the new categories 1.1i, 1.2i, 1.3i, 1.4i, 1.5i, 2.1i, and 2.2i were created by an improper exercise of power.

    The Council, backed by the Local Government Association of Queensland has announced that it will launch an appeal to the Court of Appeal. An appeal, however, may not be required, as the Queensland Government has also been asked by the Local Government Association of Queensland to simply amend the Local Government Act.


    If you have any queries regarding the above, please do not hesitate to contact us at Big Law Lawyers on (07) 3482 6999 or email us at mail@biglaw.com.au.

    At Big Law we provide holistic legal solutions to legal matters.

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