In brief

The case of Island Resorts (Apartments) Pty Ltd v Gold Coast City Council [2020] QSC 145 concerned an originating application to the Queensland Supreme Court seeking judicial review of the Council's decision to adopt certain differential rating categories and levy a minimum general rate for each category, and the Council's decision to issue rates notices in relation to approximately 70 properties owned by the Applicant within the Couran Cove Resort on South Stradbroke Island. 

The Applicant argued that, in respect of the Council's decision to adopt certain differential rating categories and levy a minimum general rate for each category, the Council had taken into account an irrelevant consideration being the personal characteristics of the persons occupying the properties, which is not an attribute or characteristic of the property.

Further, the Applicant argued that, in respect of the Council's decision to issue rates notices in relation to the relevant properties, the Council failed to take into account relevant considerations being in relation to the value of the properties and the services provided to the properties. The Applicant also argued, in the alternative, that the Council's exercise of power in the circumstances was so unreasonable that no reasonable person could so exercise the power.

The Court held that the Council had permissibly defined the differential rating categories by reference to the use to which the land might be put, and had therefore permissibly levied the minimum general rate for each category. The Court also held that the considerations identified by the Applicant were not relevant considerations, and was not persuaded that the Council's exercise of power was so unreasonable that no reasonable person could so exercise the power. The Court therefore dismissed the application and ordered that the Applicant pay the Council's cost of and incidental to the proceeding to be assessed on the standard basis. 

Background

Between 2014 and 2019 the Council passed resolutions adopting differential rating categories and a corresponding minimum general rate within those categories. Each relevant Revenue Statement and Resolution of Rates and Charges contained a statement along the following lines:

"When categorising land for differential rating purposes, Council has also had regard to the extent to which tourism and tourism-related business and industry uses continue to contribute to the demand for the provision of Council services across the City. Council considers that land used for those businesses (including premises used to provide rental accommodation to itinerants) and industries should generate a greater contribution to general rate revenue than land that is not used for a commercial purpose (including premises used to provide rental accommodation to itinerants."

In each resolution, the Council adopted relevantly two rating categories being 2T and 3T. 

Category 2T is relevantly described in each resolution as "[a] residential lot … used to provide rental accommodation to permanent residents at any time during the financial year;". 

Category 3T is relevantly described in each resolution as "[a] residential lot … used to provide rental accommodation to itinerants at any time during the financial year." An "itinerant" is defined as "a visitor or tourist, as distinct from a permanent resident" and a "permanent resident" is defined as "a person who lives in the local government area, as distinct from an itinerant". 

The Applicant sought judicial review of the following decisions:

  1. First Decision - The Council's decision to adopt Category 2T and levy the corresponding minimum general rate in 2014, 2015 and 2016, and the Council's decision to adopt Category 3T and levy the corresponding minimum general rate in 2016, 2017, 2018 and 2019. 

  2. Second Decision - The Council's decision to issue rates notices pursuant to the First Decision, in accord with which the Council determined that the properties were within Category 2T up to and including 31 December 2016, and thereafter in Category 3T.

The Applicant relied on the following grounds:

1. Irrelevant consideration - In making the First Decision, the Council took into account an irrelevant consideration, being the personal characteristics (either a "resident" or an "itinerant") of the person occupying the relevant properties.

2. Relevant consideration - In making the First and Second Decisions, the Council failed to take into account the following relevant considerations:

a. The unimproved value of each of the relevant properties was only $12,500.

b. The Council does not provide any services to the relevant properties of the type falling within the definition of "general rates" under section 92 of the Local Government Act 2009.

c. The Applicant, or the body corporate for the relevant properties, provides the essential and other services to the relevant properties, being the subject of an agreement between the Council and the developer.

d. The minimum general rates comprised almost 20% of the unimproved value of the relevant properties.

3. Wednesbury unreasonableness - The Council's exercise of power in the circumstances was so unreasonable that no reasonable person could so exercise the power.

Use of the relevant properties by itinerants or permanent residents is a permissible consideration

The Applicant argued that each relevant resolution made a distinction between accommodation which is let to permanent residents or to itinerants, being a personal characteristic of the person occupying the relevant property, and that this distinction bears no relation to the burdens of tourism upon the provision of the Council's services.

The Council relied upon the decision in Xstrata Coal Qld Pty Ltd v Council of the Shire of Bowen [2010] QCA 170 (Xstrata Decision) in which the Queensland Court of Appeal recognised "that it is permissible to take into account:

(a) the use to which land might be put, including its highest and best use;

(b) the burden the land or its use may place upon the Council's budget;

(c) the value of the land; and

(d) the potential for the land to earn income for its owner" (at [29]).

The Court held that the distinction between letting to a permanent resident or an itinerant relates to an attribute of the land, namely the use to which it is put, and "did not accept the applicant's key submission that a decision by an owner to let to a permanent resident, as opposed to an itinerant, is an irrelevant consideration in setting categories and minimum rates". 

The Court went on to also hold that "[t]he use of land is a relevant consideration in making a decision as to differential rating categories" and relied on the Xstrata Decision in so finding, as well as Otswald Accommodation Pty Ltd v Western Downs Regional Council [2016] 2 QD R 14; [2015] QSC 210 (all at [55]). The Court made this finding emphatically, also stating "[l]est it not be clear, I conclude that it is permissible to define differential rating categories and levy a minimum general rate for such a category by taking into account the use to which the land might be put or the use to which it is in fact put, and the burden that use may place upon the Council's budget" (at [59]). 

This ground of the judicial review challenge therefore failed.

Matters which the Applicant contended were relevant considerations were irrelevant considerations

The Court held that a local government may decide to create a separate differential rating category for land with an unusually low unimproved value. The Court also held that a local government is not bound to take into account the unimproved value of land when making rating category decisions.

The Court held that the Applicant had not established that the Council did not provide any services falling within the definition of "general rates" under section 92 of the Local Government Act 2009 as many of the services that the Council provides are for the community at large. In particular, the Court stated "one would have thought that the provision of services, facilities and activities on the mainland benefited residents on the island, including tourists, who might use local roads to come and go from the island, to shop and to seek a range of services such as medical treatment" (at [94]).

This ground of the judicial review challenge therefore failed.

Council's exercise of power in the circumstances was reasonable

The Court held that there was a rational basis for the Council to make the First Decision and the Second Decision.

This ground of the judicial review challenge therefore failed.

Conclusion

The Applicant's judicial review challenges failed on all accounts, and the Court dismissed the originating application. The Court ordered that the Applicant pay the Council's costs of and incidental to the proceeding to be assessed on the standard basis.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2021.

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