Rating categories is a highly technical and often controversial area of Council decision-making.
A recent decision of the Land Appeal Court has provided some clarity to local governments in the context of an argument about which rates category applied to the same parcel of land, in circumstances where there was no dispute about the uses being made of the registered owner.
The Case
On 13 March 2020, the Land Appeal Court delivered its decision in Western Downs Regional Council v Geldard.
In that case, a landowner had purchased land from a gas company that continued to hold petroleum leases over the land, and maintained infrastructure such as gas wells on the land. The landowner, however, was using the land for grazing and cropping.
Council categorised the land within a category called “Petroleum Other”, which had the following definition:
Land, other than a Petroleum Lease, with an area 400 ha or greater, which is used or intended to be used, in whole or in part, and whether predominantly or not, for:
(a) gas and/or oil extraction; and/or
(b) processing of gas and/or oil; and/or
(c) transportation of gas and/or oil by pipeline; or
(d) for any purpose ancillary to or associated with (a) to (c), including water storage, compressor stations or block valves.
The landowner argued that the appropriate category was “Rural”, which had the following definition:
Land used principally for rural purposes, which is not otherwise categorised, and has an area not less than 100 ha.
The landowner’s main arguments were that:
- The predominant use of the land was for Rural purposes;
- The landowner did not use the land for any petroleum-related purposes;
- The presence of the gas company on the land was because the gas company had statutory rights to be on the land (notwithstanding that the landowner and the gas company had negotiated a Conduct and Compensation Agreement, under which the landowner was entitled to be paid compensation);
- Council was rating the gas company’s use by rating its petroleum leases.
The landowner’s position was accepted by the Land Court at first instance. The Council appealed.
The Appeal Court’s conclusion
The Court upheld Council’s appeal, and, in doing so, Council’s decision that the land be categorised within the “Petroleum Other” category remained.
In carrying out its analysis, the Court identified that its role, when reviewing rates matters such as this, is “to give a practical, sensible, broad and fair reading to [Council’s] revenue statement and ratings categories”. In forming this view, the Court cited a 2018 case, Moreton Bay Regional Council v White, in which the Court held:
“… the rating categories were not formulated on the spur of the moment, bearing a relationship to debate in Council. They were a considered technical document introduced as a resolution to a special general meeting of the Council. For that reason, I think the Court is right to look at the words the Council chose to use.”
In deciding the appeal in favour of the Council, the Land Appeal Court reasoned that:
- The identity of the owner of the land is immaterial to rates categorisations. This is a long-established principle in this area of law. The Court concluded that “Rates are a tax on land, not on the owner. Rating categories are framed around usage of the land”, and “the use of the land, not solely the principal activity of the owner of the land, [is what] determines categorization”.
- The wording of the “Petroleum Other” category did not require the use of the land to be the principal activity.
- The wording of the “Rural” category contemplated land falling within that category if it was “not otherwise categorised”. In this case, the land was otherwise categorised.
- The rating categories and Council’s Revenue Statement was clear that Council “devised a structure” that “specifically pursued a categorisation which was not based on the primary or predominant use of land”. The Court considered that such an approach was not unfair or unreasonable, and was “an appropriate exercise of a local government’s power to levy differential general rates on land within its local government area having regard to its use”.
What this means for Council
As local governments start thinking about their upcoming 2020-21 budgets, the Land Appeal Court’s decision in Geldard is a timely reminder that the wording of rating categories and Revenue Statements generally must be carefully and methodically considered, and, consistently with that, Courts are continuing to take a very narrow, technical approach when interpreting the wording of those instruments.
Preston Law’s Government Team has extensive experience assisting local governments with developing financial documents required under the Local Government Act 2009 and Local Government Regulation 2012, and ensuring those documents are consistent with the legislation and the web of case law guiding its interpretation. If you wish to discuss please contact Julian Bodenmann on 07 4052 0717.