Special Charges - To Charge or Not to Charge?

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Published by Preston Law on 05/10/2022

The Queensland Court of Appeal in Redland City Council v Kozik & Ors [2022] QCA 158, recently dismissed the Council’s appeal requiring it to repay the full amount of the special charge incorrectly levied under the Local Government Regulation 2012 (and the former 2010 Regulation) (“the LG Regs”).

What actually happened

Between July 2011 and July 2017, Council levied a ‘Special Charge’ on a group of ratepayers (“the Ratepayers”) for the cost of canal works and maintenance within specific waterfront locations.

It passed the required resolutions to levy the special charge, however, the document referred to as the ‘overall plan’ did not include the cost estimates of carrying out the work or time for doing so (as required by the LG Regs). 

This has been acknowledged by Council as being non-compliant with LG Regs and it sought to pay back affected ratepayers, but only the portion of unspent monies that had been collected through the special charge.

Council’s justification for this was that it had spent many millions of dollars on revetment walls and dredging required to maintain the canal area which enhanced the enjoyment and value of land for the Ratepayers. To pay back the full amount collected over that period of time (reported to be over $3 million) would be a significant impact on the rest of the community, who have not had the benefit that the canal ratepayers have had and it would see the Ratepayers ‘unjustly enriched’.

The Ratepayers argued that they each paid the special charge in the mistaken belief that they were obliged to pay it.

The Court accepted that Council had performed the canal maintenance that was funded by a special charge, however, confirmed that the resolutions made over the 6-year period were invalid.

The Appeal Court refused to accept that the Ratepayers would be unjustly enriched, determining that it was the Ratepayer’s state of mind, that they were legally obligated to pay the charge, that is relevant to an unjust enrichment argument, not any benefit that resulted from the payment.

Council has recently confirmed its decision to challenge the Appeal Court’s decision.

What does this mean for Queensland Councils?

The matter is yet to be finally determined by the High Court, subject to Council being granted the right to appeal.

In the meantime, what we know so far is that failure to adhere to the strict legal requirements of the LG Regs can have serious implications for Council and its ratepayers.

It is not uncommon for Councils to impose a ‘special charge’ for a service, facility or activity that has a special association with particular land because of the benefits derived by the land or its occupier, and Councils should not shy away from this where the need arises.

However, we recommend that when seeking to introduce such a charge, that Councils work through (and ensure they can meet) the LG Reg requirements before passing a resolution to give effect to it.

Our government team at Preston Law are experts in assisting local governments with disputes concerning rating decisions and assisting local governments in levying special rates and charges. If you have any queries or would like to know how we may be able to help, please contact our government team at Preston Law. 

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