Supreme Court of Queensland determines whether a local government is required to refund special charges levied under invalid resolutions, including amounts already spent

In brief

The case of Kozik & Ors v Redland City Council [2021] QSC 233 concerned issues arising from rates notices, which included special charges levied as a result of resolutions passed by the Redland City Council (Council) between June 2011 and July 2016 (Resolutions) which were not in compliance with the requirements under the now repealed Local Government (Finance, Plans and Reporting) Regulation 2010 (Qld) (LGR 2010) and the Local Government Regulation 2012 (Qld) (LGR 2012).

Background

Between June 2011 and July 2016, the Council passed the Resolutions to levy special charges in order to fund capital and operational expenditure on services relating to the Aquatic Paradise Canal Reserve, the Sovereign Waters Lake Reserve, and the Raby Bay Canal Reserve (Services), following which the Council issued rates notices in respect of the land and those rates notices included the amount of the special charges.

In or before March 2017, the Council identified that the Resolutions had not complied with the requirements under the LGR 2010 and LGR 2012. As a consequence, the Council refunded to the relevant landowners the same percentage of the amount of the special charges including interest other than for the portion which had been expended on the Services. However, the Council contended that it was not obliged to refund the portion of the special charges which was spent on the Services for the benefit of the ratepayers who paid the special charges.

Court determined whether section 32(1) of the LGR 2010 applies to the rates notices issued before 14 December 2012

In determining whether section 32(1) of the LGR 2010 was applicable to the rates notices, the Supreme Court of Queensland (Court) held that the Council had identified a document as the "overall plan" as required by section 28 of the LGR 2010 and found that it did not comply with the following requirements:

1. The overall plan did not state the estimated cost of and the estimated time for carrying out the overall plan as required by sections 28(4)(c) and (d) of the LGR 2010.

2. By reason of the defects identified in item 1 above, the Resolutions, which were made in 2011 and 2012, did not identify "the overall plan for the service, facility or activity to which the special rates or charges apply" as required by section 28(3)(b) of the LGR 2010, and the Council did not "adopt the overall plan before, or at the same time as, the local government first resolves to levy the special rates or charges" as required by section 28(5) of the LGR 2010.

The Court also held that due to the failure to comply with those requirements set out above, the Resolutions, which were made in 2011 and 2012, did not have legal effect to levy special charges. However, the rates notices issued before 14 December 2012 were not invalid by operation of section 32 of the LGR 2010, which relevantly stated as follows:

"32 Returning special rates or charges incorrectly levied

(1) This section applies if a rate notice includes special rates or charges that were levied on land to which the special rates or charges do not apply.

(2) The rate notice is not invalid, but the local government must as soon as practicable return the special rates or charges to the person who paid the special rates or charges."

Court determined whether section 98(1) of the LGR 2012 applies to the rates notices issued after 14 December 2012

The LGR 2010 was repealed on 14 December 2012 by the commencement of the LGR 2012, and accordingly the Court considered the rates notices issued after 14 December 2012 in the context of the relevant provisions of the LGR 2012.

The Court considered section 94 and section 98 of the LGR 2012, which are equivalent to sections 28 and 32 of the LGR 2010, in the context of the Resolutions made between 2013 and 2016, and identified that a document identified as the "overall plan" did not comply with the following requirements:

1. The document did not state the estimated cost of and the estimated time for carrying out the overall plan as required by sections 94(3)(c) and (d) of the LGR 2012.

2. In making the Resolutions to make each of the special charges, the Council did not identify the overall plan for the service, facility, or activity to which the special rates or charges apply as required by section 94(2)(b) of the LGR 2012.

The Court made the same finding in respect of the Resolutions made between 2013 and 2016 as it did in respect of the Resolutions made in 2011 and 2012 above, and held that section 98(1) of the LGR 2012 applied to the rates notices issued after 14 December 2012 such that the rates notices were not invalid.

Court was satisfied that the Council was liable under a cause of action in debt

By operation of section 32(2) of the LGR 2010 and section 98(2) of the LGR 2012, the Court was satisfied that the Council was liable to the plaintiffs under a cause of action in debt as the Council did not refund the portion of the special charges that had been expended in circumstances where it was required to "as soon as practicable return the special rates or charges to the person who paid the special rates or charges".

Further, the Court held that "[t]he 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." (at [99]).

Conclusion

In light of its findings, the Court concluded that it will hear the parties in respect of further steps which ought to be taken to finalise the proceeding.