Land and Environment Court of New South Wales CITATION : Marrickville Metro Shopping Centre Pty Limited v Marrickville Council [2009] NSWLEC 109 APPLICANT PARTIES : Marrickville Metro Shopping Centre Pty Limited RESPONDENT Marrickville Council FILE NUMBER(S) : 40940 of 2008 CORAM: Pain J JUDICIAL REVIEW :- justiciability - whether decision of council to create rating sub-category and levy applicant justiciable RATING - decision of council to introduce rating sub-category - can a sub-category refer to single site - whether sub-category refers to a centre of activity - whether determination of sub-category made by council RATING:- whether notification of sub-category given to applicant in annual rates and charges notice KEY ISSUES: JUDICIAL REVIEW- whether fairness a relevant consideration under scheme of the Local Government Act and council's charter in s 8 - whether failure to consider relevant consideration of fairness in introducing sub-category and levying at higher rate than other business rating categories - whether consideration of reducing other rates an irrelevant consideration in introducing and levying sub-category because discriminatory - whether decisions to introduce and levy sub-category manifestly unreasonable BIAS - whether apprehension of bias of councillors in decisions of council to introduce and levy sub-category of rates - whether interest as trade competitor not requiring disclosure under Local Government Act can give rise to apprehension of bias DISCRETION - whether to exercise discretion of court to grant relief where lack of notice of 2002 sub-category determination - whether delay in commencing proceedings relevant Environmental Planning and Assessment Act 1979 Interpretation Act 1987 s 35 Local Government Act 1993 s 8, 232(2), 439, 440, 441, 442, 444, 448, 451, 460-468, 471-486A, 491, 492, 493, 494, 495, 497, 498, 499, 500, 509, 514, 518A, 520, 521, 525, 526, 528, 529, 531, 532, 533, 534, 535, 536, 543, 546, 574, 712 Local Government Act 1919 (repealed) s 121, 133 LEGISLATION CITED: Local Government Amendment (Discipline) Act 2004 (repealed) Local Government (General) Regulation 2005 r 127, 193 Local Government (Rates and Charges) Regulation 1999 (repealed) Ratings Powers Act 1988 (NZ) Telecommunications Act 1997 (Cth) Uniform Civil Procedure Rules 2005 r 42.1 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 Bayside City Council v Telstra Corporation Ltd (2004) 216 CLR 595 Burns Philp Trustee Co Ltd v Blacktown Municipal Council [1976] 1 NSWLR 531 Cody v J H Nelson Pty Ltd (1947) 74 CLR 629 Council of the City of Sydney v South Sydney City Council [2002] NSWLEC 129 Cutelli v Wyong Shire Council [2007] NSWLEC 137 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 Eljo Pty Ltd v Casino Council (1994) 84 LGERA 373 Fares Rural Meat & Livestock Co Pty Ltd v Australian Meat & Livestock Corporation (1990) 96 ALR 153 Gales Holdings Pty Ltd v Minister for Infrastructure and Planning [2005] NSWLEC 617 Garrett v Freeman (2006) 68 NSWLR 729 Gedeon v Commissioner of the New South Wales Crime Commission (2008) 236 CLR 120 Hastings Point Progress Association Inc v Tweed Shire Council (2008) 160 LGERA 274 Hope v Bathurst City Council (1980) 144 CLR 1 Hot Holdings Pty Ltd v Creasy (2002) 210 CLR 38 Kioa v West (1985) 159 CLR 550 Kruger v Commonwealth (1997) 190 CLR 1 McGovern v Ku-ring-gai Council (2007) 153 LGERA 308 McGovern v Ku-ring-gai Council (2008) 161 LGERA 170 CASES CITED: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 Minister for the Arts, Heritage and Environment v Peko-Wallsend Ltd (1987) 75 ALR 218 Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 Muin v Refugee Review Tribunal (2002) 190 ALR 601 Murlan Consulting Pty Ltd v Ku-Ring-Gai Municipal Council [2008] NSWLEC 318 Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources (2005) 138 LGERA 11 Najjar v Haines (1991) 25 NSWLR 224 Newcastle City Council v Caverstock Group Pty Ltd (2008) 163 LGERA 83 Old St Boniface Residents' Association Inc v City of Winnipeg [1990] 3 SCR 1170 Parramatta City Council v Pestell (1972) 128 CLR 305 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 Salemi v MacKellar (No 2) (1977) 137 CLR 396 Save Our Street Inc v Settree (2006) 149 LGERA 30 Sharples v Minister for Local Government [2008] NSWLEC 328 Smits v Roach (2006) 227 CLR 423 Sutton v Blue Mountains City Council (1972) 40 LGRA 51 Teoh v Hunters Hill Council [2008] NSWLEC 263 Wellington City Council v Woolworths New Zealand Ltd (No 2) [1996] 2 NZLR 537 Woolworths Ltd v Pallas Newco Pty Ltd (2004) 61 NSWLR 707 Wyton v Tweed Shire Council (1998) 98 LGERA 72 TEXTS CITED: Allars M, Introduction to Australian Administrative Law, Butterworths, Sydney 1990 Aronson M and Dyer B, Judicial Review of Administrative Action, 4th Edition, Lawbook Co, Sydney 2009 6 April 2009 DATES OF HEARING: 7 April 2009 8 April 2009 9 April 2009 (written submissions) DATE OF JUDGMENT: 7 August 2009 APPLICANT Mr A Galasso SC with Mr M Seymour SOLICITORS LEGAL REPRESENTATIVES: Gadens Lawyers RESPONDENT Mr J Ayling SC with Mr A Pickles SOLICITORS Marrickville Council JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Pain J 7 August 2009 40940 of 2008 Marrickville Metro Shopping Centre Pty Limited v Marrickville Council JUDGMENT 1 Her Honour: The Applicant challenges a series of decisions made since 2002 by Marrickville Council (the Council) to levy ordinary rates on a single site, the Marrickville Metro Shopping Centre (Marrickville Metro) as a sub-category of business rates. The Metro site is a shopping centre in Victoria Road, Marrickville, which presently has about 100 retail shop tenants and is the only freestanding mall-style centre in the Marrickville local government area (LGA). The Applicant has been the owner of the site (or it is accepted to be for the purposes of these proceedings) since October 2004. The previous owner was Bevillesta Pty Limited (Bevillesta). 2 The Applicant claims the following relief: A. Challenge to 2002 decisions 1. A declaration that the resolution of the Council of 19 February 2002 to resolve in principle to introduce a large shopping centre rate was invalid and/or ultra vires the Local Government Act 1993 (the LG Act). 2. A declaration that the resolution of the Council of 23 April 2002 to create a sub-category of "Business-Marrickville Metro" for the category of rateable land of business, and to apply a rate that was 20 per cent above the rate for other commercial properties was invalid and/or ultra vires the LG Act. C. Challenge to 2007 decision 3. A declaration that the resolutions of the Council of 17 April 2007 and 19 June 2007 to determine an ad valorem rate for the sub-category of "Business-Marrickville Metro" for the rateable land of business for the year 2007-2008 was invalid and/or ultra vires the LG Act. D. Challenge to 2008 decisions 4. A declaration that the resolutions of the Council of 29 April 2008 and 17 June 2008 to increase the rate yield from the Marrickville Metro for the year 2008-2009 was invalid and/or ultra vires for the LG Act. B. Challenge to 2004-2008 decisions 5. A declaration that the levying of a rate on the land known as 100/DP715231 by the Council specified in the rates notices dated July 2004, 29 July 2005, 31 July 2006, 25 July 2007 and 25 July 2008 was invalid and/or ultra vires the LG Act (Prayer 5 would result if the Applicant is successful in relation to the earlier challenges identified in prayers 1, 3, 4). 6. An order that the Council pay the Applicant the sum of $374,314.45 as money had and received to the use of the Council. (This order seeks the return of amounts paid above what would have been paid if the Metro site was rated in the Business – General category since 2004. The making of this order depends on whether the Applicant succeeds in its grounds of challenge.) 3 Pursuant to s 674 of the LG Act any person may commence proceedings in this Court to remedy a breach of the LG Act. Section 676 of the Act outlines the functions of the Court as follows: (1) If the Land and Environment Court is satisfied that a breach of this Act has been committed or that a breach of this Act will, unless restrained by order of the Court, be committed, it may make such order as it thinks fit to remedy or restrain the breach. … Applicant's Amended Points of Claim 4 The Applicant filed Amended Points of Claim (APOC). The essential elements of the case are contained in paragraphs 12, 13, 13A and 14. A. Challenge to 2002 decisions 12. The creation of the sub-category of the category of Business, namely the sub-category of Business – Marrickville Metro, was ultra vires the LG Act. Particulars (a) The creation of the sub-category was not the creation of a 'category' but rather a single item or site which is not capable of description as a category of itself; (b) The creation of the sub-category was not according to a 'centre of activity' in that the sub-category applies to only a single site or parcel of land; (c) In making the decision to create a sub-category, the Respondent failed to take into account a mandatory relevant consideration, namely whether the creation of the sub-category and the higher rate for that sub-category was "fair"; (d) In making the decision to create a sub-category, the Respondent took into account irrelevant considerations, namely that the creation of a sub-category of Business – Marrickville Metro would enable the Respondent to receive a disproportionate amount in rates levied from a single landowner that would enable alleviating rates paid by other landowners, including other landowners with land within the category of Business. (e) The decision to create a sub-category of Business – Marrickville Metro was invalid for the reason that that decision was affected by bias in that councillors of the Respondent have businesses in the LGA and could benefit from a shift in the burden of rates paid in the category of Business to impose a greater burden on the landowner with land allocated to the sub-category of Business – Marrickville Metro; (f) The creation of the sub-category was manifestly unreasonable, in that: a. No reasonable decision-maker in the position of the Respondent would have decided to create a sub-category according to a single site rather than a "centre of activity"; as alternatively b. The Respondent unreasonably discriminated against a particular landowner by the creation of the sub-category. (g) The creation of the sub-category was for an improper purpose of imposing a greater single burden on a particular landowner with respect to the collection of rates. (h) The creation of the sub-category was not effected in accordance with s 520 of the Local Government Act, 1993. (i) The creation of the sub-category was not in accordance with the duty to act fairly in the making of a rate. B. Challenge to 2004-2008 decisions 13. The structuring and determination of the rate applicable to the sub-category Business – Marrickville Metro for each year from 2002 to the present was invalid and ultra vires the LG Act. Particulars (a) In determining the ad valorem amount of the rate to apply to the sub-category, the Respondent failed to take into account a mandatory relevant consideration, namely whether the determination of the amount was "fair"; (b) In determining the ad valorem amount of the rate to apply to the sub-category, the Respondent took into account irrelevant considerations, namely that the determination of an ad valorem amount for the sub-category of Business – Marrickville Metro that was greater than that for other sub-categories within the category of Business would enable the Respondent to receive a disproportionate amount in rates levied from a single landowner that would enable alleviating rates paid by other landowners, including other landowners with land within the category of Business. (c) The determination of the ad valorem amount of the rate to apply to the sub-category was invalid for the reason that the decision was affected by bias in that councillors of the Respondent have businesses in the LGA and could benefit from a shift in the burden of rates paid in the category of Business to impose a greater burden on the landowner with land allocated to the sub-category of Business – Marrickville Metro; (d) The determination of the ad valorem amount of the rate to apply to the sub-category, was manifestly unreasonable in that the Respondent unreasonably discriminated against a particular landowner by the determination to create a different ad valorem amount for the sub-category than for other sub-categories in the category of Business, or alternatively as no reasonable decision maker would have so imposed the rates. (e) The determination of the ad valorem amount of the rate to apply to the sub-category was made for an improper purpose of imposing a greater single burden on a particular landowner with respect to the collection of rates. C. Challenge to 2007 decisions 13A. The resolution of 17 April 2007 and 19 June 2007 were invalid and ultra vires the LG Act. Particulars A. The Respondent repeats the particulars at paragraph 13 above. D. Challenge to 2008 decision 14. The resolution of 29 April 2008 was invalid and ultra vires the LG Act. Particulars A. The Respondent repeats the particulars at paragraph 13 above. Evidence of Council decisions on rates in 2002 - 2006 5 The Applicant relied on an affidavit of Anthony Whealy, solicitor for the Applicant, affirmed 29 January 2009. Mr Whealy's affidavit is a summary of the relevant decisions and actions of the Applicant and the Council. Mr Whealy describes the documents contained in the two folders annexed to his affidavit. This includes the evidence of the Council's rating approach adopted in 2001, the decisions leading up to the creation and the implementation of a Marrickville Metro special rate in 2002, and subsequent decisions of the Council in 2003 to 2008 concerning the rates to be paid by the Applicant. Based on documents annexed to his affidavit, Mr Whealy also summarises the relevant interests and voting history on the relevant Council resolutions of the councillors to whom the Applicant's allegation of an apprehension of bias in the rating decisions relates (APOC cl 12(d) and cl 13(c)). Mr Whealy sets out the payment of rates by the Applicant since the Applicant's purchase of Marrickville Metro on 13 October 2004 and the difference in the rates paid by businesses in the Business-General category from 2002. 6 The Applicant relied on the documents annexed to Mr Whealy's affidavit. The Council relied on documents annexed to the affidavits of Grant Christmas (affirmed 17 February 2009) and Anna McNally (sworn 3 April 2009). The following chronology of the Council's decisions relating to the introduction and levying of the Marrickville Metro sub-category in 2002 (prayers 1 and 2) can be constructed from the documents: (i) The 2001-2004 Draft Management Plan and 2001-2002 Draft Budget was before the Council for decision at an Extraordinary Council Meeting on 30 April 2001. The General Manager's report sets out the Council's proposed rating structure including the proposal for an overall rate increase of 2.8 per cent. The report sets out the rating structure and estimated yields for the different rating categories being the ordinary rate categories of Residential, Business – General, Business – Industrial – Marrickville, Business – Industrial – St Peters, Business – Industrial St Peters North and Business – Industrial – Camperdown and the special rate categories for the Newtown, Marrickville, Petersham and Dulwich Hill Mainstreets. (ii) A second General Manager's report titled "Proposed Rating Structure for 2001/02 Following Revised Land Valuations as at 1 July 2000" was also before the Council meeting on 30 April 2001. The report outlined the framework for assessing and levying rates. It refers to the benefit principle concerning the identification of what services are provided by the Council to the ratepayer and the capacity of the ratepayer to pay. The options for levying rates in light of new valuations of properties as at 1 July 2000 are discussed. (iii) At this meeting on 30 April 2001 a resolution was passed to adopt the 2001-2004 Draft Management Plan and 2001-2002 Draft Budget. A table setting out ad valorem rates and estimated yields for each category of ordinary and special rates was before the Council. (iv) At a Council meeting on 19 June 2001 the 2001-2004 Management Plan and 2001-2002 Budget was adopted. A motion proposed by Councillor Hale that Council officers investigate the feasibility and appropriateness of introducing a special rate for large shopping centre developments such as Marrickville Metro was also put to the Council and passed. (v) At the Council meeting of 21 August 2001 the General Manager reported on the feasibility and appropriateness of introducing a special rate for large shopping centre developments such as Marrickville Metro. The Council considered the General Manager's report to that meeting which described the power of the Council to levy rates and create rating categories, indicating that introducing a sub-category within the general rate rather than introducing a special rate as there must be applied for a particular purpose the rationale for the relativities between different rating categories in Marrickville over the last 20 years and the recommendation of further investigation of the introduction of a special rate. Liverpool Council is referred to as the only Sydney metropolitan council with a rating category for a shopping centre, Westfield Liverpool. The report refers to the capacity to pay principle and the benefit principle and that both need to be considered in determining whether to proceed further. A motion was unanimously carried for a further report to be submitted concerning the possible introduction of a separate rate for large shopping centres including comparative data from Liverpool Council. (vi) At the Council meeting of 19 February 2002 the General Manager reported on the experience of Liverpool Council in creating a rating sub-category for the Westfield Shopping Centre in 1994. It notes that no rationale for imposing the levy was provided by Liverpool Council. The effect of imposing a sub-category for the Marrickville Metro as the only large shopping centre in the LGA was discussed in light of the cap on rate income able to be raised under the LG Act. A table was provided that set out possible rates payable by Marrickville Metro and the saving that possible ad valorem rates would yield for the Business-General category (on the assumption that the increased rate revenue generated by Marrickville Metro would be used to reduce rates payable by the Business-General category). A discussion of the feasibility of introducing the new sub-category including the requirement that rates be levied fairly followed. The report concluded that "Council needs to consider both the Metro's capacity to pay and benefit principles in determining whether to proceed with the investigation of introducing a separate rate for large shopping complexes." (at p 61). A motion was unanimously passed that the Council resolve in principle to introduce a large shopping centre rate and that a further report be submitted to the Council regarding the proposal. (vii) Transcripts of this meeting were annexed to the affidavit of Ms McNally. At this meeting Councillor Hale, in support of the motion, stated that she saw a need for the shops in Marrickville Metro to pay an equivalent rate where possible to that being paid by the shops in the shopping strips. Councillor Thanos discussed the recommendations of the General Manager and the arguments for and against the creation of the sub-category including that while the main strip of shops has amenities funded by the Council that the Marrickville Metro does not, those are a benefit for the whole community not just the shop owners. (viii) At a Council meeting of 23 April 2002 a further report of the General Manager was presented on the introduction of a large shopping centre sub-category in similar terms to previous reports. The report recommended that Council determine to introduce a separate rate and determine a rate in the dollar for that new rate. The report notes that there is no single formula to determine what may constitute a fair rate to apply to large shopping centres (at p 5), and that Council could determine a rate for large shopping centres as high as 2.300683 cents in the dollar, an increase of 80 per cent on the current Business-General rate, and still remain below the highest rating LGAs (at p 5). The report included the following text which has appeared in the earlier reports of the Council officers referred to above. In respect of the benefit test: "Council may wish to consider the following factors: · Larger shopping centres may attract additional traffic to the LGA and may concentrate traffic emanating from within the LGA placing a proportionately greater pressure on existing road and footpath infrastructure than other shopping configurations. · Larger shopping centres attract larger retailers who are more likely to draw from a wider employment pool than that available within the LGA. Small shops along shopping strips and local businesses may be more likely to employ local staff enhancing local employment and local economic prosperity. · Council may determine that the rate to be applied to shopping strips should be proportionately less than that applying to larger shopping areas to promote the survival of shopping strips. Apart from the more obvious issue of maintaining the economic vitality of local businesses, this action would support the following Council initiatives: · Mainstreet strategies to promote local business · Streetscape works designed to enhance the look and feel of shopping areas · Community Safety objectives which are enhanced when people are attracted to prosperous, pleasant, well lit, local shopping areas · Access for the elderly to shopping facilities particularly where car transport is not available. · Enhancing the economic viability of suburban businesses may assist in maintaining the individual character of shopping and business zones within the Marrickville LGA. This would reflect the cultural, social and economic needs of the diverse range of residents within these areas and may help to promote the unique characteristics of the Marrickville Council area from a tourist perspective. Conversely, Council could consider the following factors mentioned in previous reports (being the report to the 21 August 2001 and 19 February 2002 Council meetings): · Marrickville Metro pays for the disposal of all waste including that created by shoppers. In strip shopping areas Council funds the clearance of litter bins. · Marrickville Metro provides and maintains its own carparking area for shoppers. In strip shopping areas Council funds the provision and maintenance of carparks. · Lighting provided within the Marrickville Metro complex and its surrounding parking areas is funded by the centre owner. Council funds an extensive network of Whiteway lighting for strip shopping centres in addition to normal street lighting. · Council has spent considerable amounts for Shopping Centre strip upgrades from funds obtained by the levying of an additional 5% rate increase on ALL ratepayers." (ix) At the 23 April 2002 meeting a motion was unanimously passed to approve the introduction of the new rate. Councillor Pearce proposed that the rate be fixed at 20 per cent above the rate for other commercial properties with the increase being applied to reduce residential rates. In the transcript of this meeting (annexed to the affidavit of Ms McNally) Councillor Pearce refers to the capacity of Marrickville Metro to pay, the high rates currently paid by residents in the LGA and the rates revenue spent on the shopping centre. Councillor Hanna then suggested a 20 per cent increase would still result in Marrickville Metro paying less per shop than each shop in the shopping strip (that is, the special rate paid by business in the Marrickville Mainstreet category). Councillor Hanna stated that he wanted a higher percentage increase above the other commercial rates of 40-50 per cent. Councillor Hale supported this increase and proposed a rate of 40 per cent above that of the ordinary commercial rate with half the extra revenue being used to reduce the residential rate and the other half to reducing the ordinary commercial rate. A motion on this proposal did not pass (Councillors Hale, Hanna and Thanos in favour) after Councillor Pearce commented on the proposal. The proposal of a 20 per cent higher rate was then unanimously passed (GM 22). The proposal specified that the increased rate revenue received by the imposition of the new sub-category be used to reduce residential rates. The 2002-2005 Draft Management Plan and 2002-2003 Draft Budget was amended to include an estimated yield from the rate category of Business-Marrickville Metro of $157,597.27 and was adopted by the Council (GM 23). (x) At a Council meeting on 18 June 2002 the 2002-2005 Draft Management Plan and 2002-2003 Budget was adopted (annexed to the affidavit of Mr Christmas). (xi) After being sent a rates notice dated 26 July 2002 which stated the category of Business-Marrickville Metro applied to Marrickville Metro, a letter dated 24 October 2002 was sent from the Group Financial Controller of Bevillesta to Marrickville Council noting the creation of the Marrickville Metro sub-category, requesting the notification of the sub-category to be provided and requesting the opportunity to comment on the proposed change. (xii) A letter dated 5 February 2003 from the finance manager of the Council to Bevillesta stated that the change in rating category had been notified by a rates notice dated 26 July 2002. The letter stated that the change was also set out in the 2002-2005 Draft Management Plan and 2002-2003 Draft Budget advertised in three local newspapers which was also displayed at the Council for a 28 day exhibition period. 7 Below is a summary of the relevant decisions of the Council between June 2001 and June 2006 based on documents annexed to Mr Whealy's affidavit: Date of resolution Resolution Result 19/6/2001 Council to investigate introducing large shopping centre rate Passed 21/8/2001 Further report on large shopping centre rate Passed 19/2/2002 In principle introduction of large shopping centre rate & further report Passed 23/4/2002 Rate introduced, fixed at 40% above other commercial rates Not passed 23/4/2002 Rate introduced, fixed at 20% above other commercial rates (GM 22) Passed 23/4/2002 Adoption of 2002-2005 Draft Management Plan and 2002-2003 Draft Budget (incorporating introduction of Marrickville Metro sub-category, rated 20% higher than other commercial rates) (GM 23) Passed 18/6/2002 Adoption of 2002-2005 Management Plan and 2002-2003 Budget Passed 15/4/2003 Adoption of 2003-2006 Draft Management Plan and 2003-2004 Draft Budget (incorporating a predicted 3% permissible increase in rate revenue) Passed 17/6/2003 Adoption of 2003-2006 Management Plan and 2003-2004 Budget (amending draft to provide for a 3.6% increase in rate revenue, ad valorem rate for the Metro set at 1.632700 cents in the dollar) Passed 18/5/2004 Adoption of 2004-2007 Draft Management Plan and 2004-2005 Draft Budget (incorporating a predicted 3.4% permissible increase in rate revenue, ad valorem rate for the Metro set at 1.215715 cents in the dollar after consideration of new land values in the LGA resulted in a 39% increase in value of the Metro site, relativities between rating categories from prior financial year maintained) Passed 29/6/2004 Adoption of 2004-2007 Management Plan and 2004-2005 Budget in accordance with draft plan and budget Passed 19/4/2005 Adoption of 2005-2008 Draft Management Plan and 2005-2006 Draft Budget (incorporating a predicted 3.5% increase in rate revenue, ad valorem rate for the Metro set at 1.25875 cents in the dollar, relativities between rating categories from prior financial year maintained) Passed 21/6/2005 Adoption of 2005-2008 Management Plan and 2005-2006 Budget in accordance with draft plan and budget Passed 18/4/2006 Adoption of Draft Marrickville Community Plan, Draft Strategic Plan 2006-2011 and Draft Annual Management Plan and Budget 2006-2009 (incorporating a permissible increase in rate revenue of 3.6%, ad valorem rate for the Metro set at 1.286037 cents in the dollar, relativities between rating categories from prior financial year maintained) Passed 20/6/2006 Adoption of Marrickville Community Plan, Strategic Plan 2006-2011 and Annual Management Plan and Budget 2006-2009 in accordance with draft community plan, strategic plan, management plan and budget Passed 8 To summarise, for the financial year 2002/2003 the Business-Marrickville Metro rating subcategory was introduced and that ad valorem rate was set 20 per cent higher than the Business-General category. This rating differential, incorporating rises in council rate revenue of between 3.4 per cent and 3.6 per cent per annum was maintained for financial years 2004/2004, 2005/2006 and 2006/2007. Rating decisions for the financial year 2007/2008 and 2008/2009 are set out later in the judgment at par 134 and par 143 respectively. 9 Also annexed to Mr Whealy's affidavit was a letter dated 1 June 2006 sent by AMP Capital Investors (which owns the Applicant), objecting to the higher ad valorem rate applicable for the Marrickville Metro sub-category. It maintained this was without basis and unusual considering the rating structure adopted by other LGAs. This letter was referred to in the Draft Annual Management Plan and Budget 2006-2009 which was presented for decision at the Council meeting on 20 June 2006. The General Manager's report notes that AMP Capital Investors has raised concerns with Council about the proposed rating of the sub-category for 2006/2007. The submissions are attached to the report and a short summary of the concerns is set out in the report. The report reiterates the rationale for introducing the rate in 2002 in similar terms to previous reports. The report includes the proposed rating structure for 2006/2007 based on a permissible 3.6 per cent increase in rate yield as approved by the Minister. Evidence of activity at Marrickville Metro 10 The Applicant relied on the affidavit of Sue Wright sworn 25 March 2009. Ms Wright, centre manager of the Marrickville Metro Shopping Centre, has responsibility for negotiating leases with tenants. Ms Wright attests that there are currently 101 tenants of the shopping centre. Of the 101 tenants, 49 leases provide a contractual ability for the shopping centre to recover a contribution from the tenant specifically for general rates. The contribution recoverable under these leases is based upon the size of the tenanted area. Annexed to her affidavit is an example of a lease providing for recovery of rates from the tenant. Leases that do not provide for a contribution to rates specify a gross rent rather than a net rent plus outgoings. Annexed to her affidavit is a schedule prepared by Ms Wright setting out the total amount of money recovered from tenants towards rates for 2004-2008. Ms Wright attests that the present lease agreements for the whole of the shopping centre do not permit the shopping centre to recover all of its rates liability from tenants. The total percentage of rates recovered from tenants has increased from 19 per cent in 2004/2005 to 51.1 per cent in 2008/2009. 11 The Council relied on the affidavit of Mr Christmas. In his affidavit Mr Christmas stated that Marrickville Metro is the only free-standing purpose built mall-style shopping centre in the LGA and has approximately 100 retail tenancies. Mr Christmas also describes the LGA's strip style shopping centres, four of which are rated as sub-categories of a special Mainstreet category. 12 Annexed to Mr Christmas's affidavit were store listings for Marrickville Metro obtained from Marrickville Metro' s website as at February 2009, a list of all sites leased within Marrickville Metro as at October 2008 obtained from the Land and Property Information (LPI) database, and examples of six leases (commencing 28 October 2003, 1 July 2007, 30 March 2005, 28 August 2006, 1 August 2004 and 17 September 2001 respectively) of shops in the Metro obtained from the LPI database. Mr Christmas states in his affidavit that the leases show the Applicant is able to recover rates from the tenant. 13 Mr Christmas was cross-examined by counsel for the Applicant on the preparation of the annexures to his affidavit. He agreed he did not consider whether the leases of other premises in the LGA by the tenants of Marrickville Metro also made provision for the collection of outgoings such as rates from the tenant. Local Government Act 1993 The following sections in Ch 15 "How are council's financed?" of the LG Act are relevant to these proceedings: Part 1 "An overview of rates and charges". 491 Some sources of a council's income A council may, in accordance with this Chapter, obtain income from: • rates • charges • fees • grants • borrowings • investments. 492 What are the types of rates? The types of rates that can be made by a council are: • ordinary rates • special rates. 493 Categories of ordinary rates and categories of land (1) There are 4 categories of an ordinary rate and 4 categories of rateable land: • farmland • residential • mining • business. (2) These categories may, at a council's discretion, be divided into sub-categories in accordance with section 529. 494 Ordinary rates must be made and levied annually (1) A council must make and levy an ordinary rate for each year on all rateable land in its area. (2) Each category or sub-category of ordinary rate is to apply only to land of the same category or sub-category. 495 Making and levying of special rates (1) A council may make a special rate for or towards meeting the cost of any works, services, facilities or activities provided or undertaken, or proposed to be provided or undertaken, by the council within the whole or any part of the council's area, other than domestic waste management services. (2) The special rate is to be levied on such rateable land in the council's area as, in the council's opinion: (a) benefits or will benefit from the works, services, facilities or activities, or (b) contributes or will contribute to the need for the works, services, facilities or activities, or (c) has or will have access to the works, services, facilities or activities. … 497 What is the structure of a rate? A rate, whether an ordinary rate or a special rate, may, at a council's discretion, consist of: (a) an ad valorem amount (which may, in accordance with section 548, be subject to a minimum amount of the rate), or (b) a base amount to which an ad valorem amount is added. 498 The ad valorem amount (1) The ad valorem amount of a rate is an amount in the dollar determined for a specified year by the council and expressed to apply: (a) in the case of an ordinary rate—to the land value of all rateable land in the council's area within the category or sub-category of the ordinary rate, or (b) in the case of a special rate—to the land value of all rateable land in the council's area or such of that rateable land as is specified by the council in accordance with section 538. (2) The ad valorem amount of a rate is to be levied on the land value of rateable land, except as provided by this or any other Act. (3) An ad valorem amount specified for a parcel of land may not differ from an ad valorem amount specified for any other parcel of land within the same category or sub-category unless: (a) the land values of the parcels were last determined by reference to different base dates, and (b) the Minister approves the different ad valorem amounts. Note. Land value is defined in the Dictionary for this Act. Generally, it is a value determined specially for rating purposes by the Valuer-General under the Valuation of Land Act 1916. 499 The base amount (1) A council may, in a resolution making a rate, specify a base amount of the rate, or a base amount for a category or sub-category of an ordinary rate. (2) The base amounts so specified may be the same or different amounts. (3) The appropriate base amount so specified is to form part of the rate levied on each separate parcel of rateable land subject to the rate. (4) A base amount specified for a parcel of land may not differ from a base amount specified for any other parcel of land within the same category or sub-category unless: (a) the land values of the parcels were last determined by reference to different base dates, and (b) the Minister approves the different base amounts. 500 Limit on revenue that can be raised from base amount The amount specified as the base amount of a rate (or the base amount of the rate for a category or sub-category of an ordinary rate) must not be such as to produce more than 50 per cent of the total amount payable by the levying of the rate (or of the rate for the category or sub-category concerned) on all rateable land subject to the rate (or the rate for the category or sub-category concerned). … Part 2 "Limit of annual income from rates and charges" . This part applies to general income of a Council (s 505). 506 Variation of general income The Minister may, by order published in the Gazette specify the percentage by which councils' general income for a specified year may be varied. … 509 Maximum general income for a year (1) A council must not make rates and charges for a year so as to produce general income of an amount that exceeds the notional general income of the council for the previous year as varied by the percentage (if any) applicable to the council under section 506, 508 (2) or 508A for the year for which the rates and charges are made, except as provided by section 511 or 511A. … Part 3 "Ordinary rates" . 514 Categorisation of land for purposes of ordinary rates Before making an ordinary rate, the council must have declared each parcel of rateable land in its area to be within one or other of the following categories: • farmland • residential • mining • business. Note. Land falls within the "business" category if it cannot be categorised as farmland, residential or mining. The main land uses that will fall within the "business" category are commercial and industrial. … 518 Categorisation as business Land is to be categorised as business if it cannot be categorised as farmland, residential or mining. … 520 Notice of declaration of category (1) A council must give notice to each rateable person of the category declared for each parcel of land for which the person is rateable. (2) The notice must be in the approved form and must: (a) state that the person has the right to apply to the council for a review of the declaration that the land is within the category stated in the notice, and (b) state that the person has the right to appeal to the Land and Environment Court if dissatisfied with the council's review, and (c) refer to sections 525 and 526. 521 When does the declaration of a category take effect? A declaration that a parcel of land is within a particular category takes effect from the date specified for the purpose in the declaration. … 525 Application for change of category (1) A rateable person (or the person's agent) may apply to the council at any time: (a) for a review of a declaration that the person's rateable land is within a particular category for the purposes of section 514, or (b) to have the person's rateable land declared to be within a particular category for the purposes of that section. (2) An application must be in the approved form, must include a description of the land concerned and must nominate the category the applicant considers the land should be within. (3) The council must declare the land to be within the category nominated in the application unless it has reasonable grounds for believing that the land is not within that category. (4) If the council has reasonable grounds for believing that the land is not within the nominated category, it may notify the applicant of any further information it requires in order to be satisfied that the land is within that category. After considering any such information, the council must declare the category for the land. (5) The council must notify the applicant of its decision. The council must include the reasons for its decision if it declares that the land is not within the category nominated in the application. (6) If the council has not notified the applicant of its decision within 40 days after the application is made to it, the council is taken, at the end of the 40-day period, to have declared the land to be within its existing category. 526 Appeal against declaration of category (1) A rateable person who is dissatisfied with: (a) the date on which a declaration is specified, under section 521, to take effect, or (b) a declaration of a council under section 525, may appeal to the Land and Environment Court. (2) An appeal must be made within 30 days after the declaration is made. (3) The Court, on an appeal, may declare the date on which a declaration is to take effect or the category for the land, or both, as the case requires. 527 Adjustment of rates following change in category A council must make an appropriate adjustment of rates paid or payable by a rateable person following a change in category of land. 528 Rate may be the same or different for different categories (1) The ad valorem amount (the amount in the dollar) of the ordinary rate may be the same for all categories of land or it may be different for different categories. (2) The regulations may provide that the ad valorem amount of the ordinary rate for land categorised as mining is to be not more or less than a specified percentage of the ad valorem amount of the ordinary rate for land categorised as business. The regulations may apply to all councils or one or more councils specified in the regulations. 529 Rate may be the same or different within a category (1) Before making an ordinary rate, a council may determine a sub-category or sub-categories for one or more categories of rateable land in its area. (2) A sub-category may be determined: (a) for the category "farmland"—according to the intensity of land use, the irrigability of the land or economic factors affecting the land, or (b) for the category "residential"—according to whether the land is rural residential land or is within a centre of population, or (c) for the category "mining"—according to the kind of mining involved, or (d) for the category "business"—according to a centre of activity. Note. In relation to the category "business", a centre of activity might comprise a business centre, an industrial estate or some other concentration of like activities. (3) The ad valorem amount (the amount in the dollar) of the ordinary rate may be the same for all land within a category or it may be different for different sub-categories. … 531 What provisions of this Part apply to the determination of sub-categories? (1) Sections 519–527 apply to the determination of sub-categories for a category of rateable land in the same way as those sections apply to the declaration of a category. (2) Notice of determination of a sub-category may be given in the same notice as the notice of declaration of a category. Part 4 "Making of rates and charges" . 532 Publication of draft management plan A council must not make a rate or charge until it has given public notice (in accordance with section 405) of its draft management plan for the year for which the rate or charge is to be made and has considered any matters concerning the draft management plan (in accordance with section 406). Section 405 requires that the draft plan of management must be publicly exhibited for a minimum of 28 days and state that submissions can be made to the Council. Section 406 requires the Council to consider any submissions made when adopting the management plan. 533 Date by which a rate or charge must be made A rate or charge must be made before 1 August in the year for which the rate or charge is made or before such later date in that year as the Minister may, if the Minister is of the opinion that there are special circumstances, allow. 534 Rate or charge to be made for a specified year Each rate or charge is to be made for a specified year, being the year in which the rate or charge is made or the next year. 535 Rate or charge to be made by resolution A rate or charge is made by resolution of the council. 536 What criteria are relevant in determining the base amount? (1) In determining a base amount of a rate, the council must have regard to (but is not limited to) the following: • its general administration and overhead costs • the extent to which projected ad valorem rates on individual properties do not reflect the cost of providing necessary services and facilities • the level of grant or similar income available to provide necessary services and facilities • the degree of congruity and homogeneity between the values of properties subject to the rate and their spread throughout the area • whether a rate that is wholly an ad valorem rate would result in an uneven distribution of the rate burden because a comparatively high proportion of assessments would bear a comparatively low share of the total rate burden • in the case of a special rate—the cost of providing the works, services, facilities or activities to the parcels of land subject to the rate (ignoring the rateable value of those parcels). (2) The council, in having regard to its general administration and overhead costs, must use net costs, with income being included in the calculation of standard costs for all community service functions, library services, recreational and cultural facilities and amenities and the like. 543 Each form of rate and each charge to have its own name (1) A council must, when making an ordinary rate, give a short separate name for each amount of the ordinary rate. (2) A council must, when making a special rate, give the special rate a short name. (3) A council must, when making a charge, give a short separate name for each amount of the charge. Note. The names given to the ordinary rate could include names like: Farmland—Ordinary Farmland—Poultry farms Residential—A Residential—B The names given to special rates could include names like: Upper Smithtown water rate Lower Smithtown water rate Leisure centre—primary rate Leisure centre—secondary rate The names given to charges could include names like: Waste management services—domestic Waste management services—commercial 544 Inclusion of names in rates and charges notices A council must include the name of each rate and charge, in full or in an abbreviated form, in the rates and charges notice by which the rate or charge is levied. Part 5 "Levying of rates and charges" 546 How is a rate or charge levied? (1) A rate or charge is levied on the land specified in a rates and charges notice by the service of the notice. (2) The notice may be served at any time after 1 July in the year for which the rate or charge is made or in a subsequent year. (3) A notice that is required to effect an adjustment of rates or charges may be served in the year for which the rate or charge is made or a subsequent year. (4) The notice may include more than one rate, more than one charge and more than one parcel of land. (5) It is not necessary to specify the name of the rateable person or the person liable to pay the charge in the notice if the council does not know the person's name. 14 To summarise, under Pt 1 of Ch 15 councils must categorise all rateable land in one of four categories (residential, business, mining, farmland) in their LGA for the purpose of rate setting (s 493, s 514). Sub-categories can be created (s 493(2)). There are two kinds of rates, ordinary (s 492) and special (s 495). This case concerns ordinary rate setting. Ordinary rates must be levied annually in relation to the categories or sub-categories (s 494). It is accepted that the Metro site would fall into the business category. Ordinary rates generally consist of a base rate (s 499) and an ad valorem rate (s 498). The ad valorem rate under s 498 is an amount in the dollar levied on the land value of all rateable land. This case concerns the setting of the ad valorem rate for a sub-category of the business category. There are no criteria identified in the LG Act as to how the ad valorem rate is set. Criteria to which the Council must have regard in setting a base rate are identified in s 536. Under Pt 2 of Ch 15 of the LG Act the amount of general income that can be raised from rates is capped by the relevant Minister (s 506, s 509). 15 Under Pt 3 of Ch 15 the owner of land categorised for rate setting must be given notice of certain information and can seek a review of the rate category and appeal against the date of declaration of a category to the Court. Part 4 of Ch 15 identifies the process a council must undertake in making a rate. It must give public notice of a draft management plan for the year a rate is to be made. A rate must be made before 1 August in the year it is made and must be made by resolution of the council. Part 5 of Ch 15 provides for the levying of rates by annual notice. 16 I further note that s 529 provides for the determination of a sub-category whereas s 514 provides for the declaration of a category. While I refer respectively to declaration in relation to the making of a category and determination in relation to the making of a sub-category, no practical difference between the two words is apparent from the issues considered in these proceedings. Preliminary issue – whether ad valorem rate setting decision justiciable 17 The issue of justiciability raised by the Council should be dealt with at the outset before considering the Applicant's substantive grounds of challenge. Council's submissions 18 The Council argues that the decision of a council to strike or fix a rate per se is not justiciable in any court. It is a decision made in respect of a policy matter or alternatively is a decision which is legislative in nature and effect and therefore not amenable to judicial review. Although rating decisions before the introduction of the LG Act 1993 have been the subject of judicial review, in those cases the quantum of the rate levied was not relevant. Parramatta City Council v Pestell (1972) 128 CLR 305 concerned whether a particular opinion required to be formed in making a ratings decision (special rates) was in fact formed. In this case no opinion is required to be formed under s 494 when levying an ordinary rate and the Council has liberty to fix rates as it sees fit. Not every decision attracts a duty to act fairly and is subject to judicial review; per Mason J in Kioa v West (1985) 159 CLR 550 at 584. 19 Further the existence of a review and appeal mechanism such as that under s 525 and s 526 of the LG Act is contra-indicative of a concomitant right on the part of the disaffected person to remedies such as those sought here. Applicant's submissions 20 The discretion to levy an ad valorem rate must be exercised in accordance with the Act and is subject to judicial review. The Applicant submits that the Court has power to judicially review whether a special rate is invalid, relying on Pestell, Sutton v Blue Mountains City Council (1972) 40 LGRA 51 and Burns Philp Trustee Co Ltd v Blacktown Municipal Council [1976] 1 NSWLR 531. Although these cases were decided prior to the enactment of the LG Act 1993, there is nothing in the text or structure of the Act to indicate any change to the Court's jurisdiction. That the Court has power to grant restitutionary relief for an invalid impost was recognised in Sharples v Minister for Local Government [2008] NSWLEC 328 citing Newcastle City Council v Caverstock Group Pty Ltd (2008) 163 LGERA 83. Kioa v West which the Council relies upon dealt with a challenge to a decision on the grounds of procedural fairness and is distinguishable on this basis. Mason J's comments in Kioa v West also dealt with decisions which affected "citizens generally" whereas the Council's decisions in this case affected the Applicant individually and not because of its membership of the public or a class of the public. 21 The Applicant disputes that the Court should refuse relief on the basis that it has not exercised its rights of appeal. The ability to challenge inclusion of the Applicant's land as falling within the sub-category created would not have provided the Applicant with the full ability to contest the creation of the category itself and would not have provided the restitutionary remedies sought. The appeal right under s 526 is a Class 3 merit appeal that does not enable the Court to strike down the creation of the sub-category. Finding on justiciability 22 Whether a decision of a local council under a statute is justiciable depends on whether the decision concerns a matter that is largely one concerning policy and/or political considerations. A lengthy consideration of justiciability was necessary in the full Federal Court in Minister for the Arts, Heritage and Environment v Peko-Wallsend Ltd (1987) 75 ALR 218. The Federal Court had to consider whether the exercise of a prerogative power by the Cabinet rather than a decision made under a statute was justiciable. The decision of the Federal Cabinet to nominate a national park for inclusion on the UNESCO World Heritage list was held to be non-justiciable as it involved a number of complex policy questions which were more appropriately dealt with in the cabinet rather than by a court. The lead judgment of Wilcox J at 244 - 253 analyses the leading cases and the relevant history leading to his determination that a cabinet decision could be justiciable depending on the nature of the decision made and its effect, see also Bowen CJ at 223 - 225. 23 The obiter passage in Kioa v West of Mason J relied on by the Council to argue that these judicial review proceedings are not justiciable is in the context of His Honour stating that the common law duty to act fairly applies to administrative decisions which affect rights, interests and legitimate expectations of individual citizens. As an example of a decision to which the duty does not attach, his Honour gave the imposition of a rate on ratepayers and at 584 quoted Jacobs J in Salemi v MacKellar (No 2) (1977) 137 CLR 396: …the duty [to act fairly] does not attach to every decision of an administrative character. Many such decisions do not affect the rights, interests and expectations of the individual citizen in a direct and immediate way. Thus a decision to impose a rate or a decision to impose a general charge for services rendered to ratepayers, each of which indirectly affects the rights, interests or expectations of citizens generally does not attract this duty to act fairly. This is because the act or decision which attracts the duty is an act or decision: " ... which directly affects the person (or corporation) individually and not simply as a member of the public or a class of the public. An executive or administrative decision of the latter kind is truly a `policy' or `political' decision and is not subject to judicial review." (Salemi [No 2] [99] , per Jacobs J.) 24 I agree with the Applicant's submissions that the obiter statements of Mason P in Kioa v West are not binding authority that any rating decision is not able to be challenged under any other ground of judicial review. As it happens and as the Applicant submitted, on the facts of this case there is one landholder affected by the rating decisions of the Council so that the facts of this case are not those referred to in Salemi, which differentiate between an individual and a class of members of the public. 25 The Applicant relied on Pestell as an example of a judicial review case of a rating decision. In Pestell the High Court considered whether the levying of a special rate under s 121 of the Local Government Act 1919 (the LG Act 1919) in order to finance the construction of a road was invalid. It was necessary pursuant to the Act that the council form the opinion that the portion of land subject to the special rate would derive a special benefit from the works being financed by the rate. The majority of the High Court held in separate judgments that whether the council had that opinion was an issue which could be challenged in the courts but if the opinion was held then the council's reasons for having that opinion could not be challenged. On whether there was such an opinion, the majority was satisfied that no opinion could reasonably have been formed that the land subject to the special rate benefited from the works over and above other (residential) land. Therefore for the purposes of the Act no opinion had been formed (Barwick CJ at 312, Menzies J at 325, Gibbs J at 324 and Stephen J at 332, McTiernan J dissenting). As submitted by the Council, the different statutory regime for special rates, requiring specified criteria to be addressed, distinguishes this case from the Applicant's appeal in this matter against the setting of an ordinary rate. It is not therefore conclusive of the issue of justiciability. 26 Another case Burns Philp (1976) relied on by the Applicant was a decision of a single judge in equity determining if the decision of a council to require payment of a local rate on the basis that work or service would be of special benefit to specified land under s 121 of the LG Act 1919 was valid. A ground of challenge was, inter alia, that the council had failed to form the opinion that the lands included in the rated area would be specially benefited by the works. The first issue that had to be determined was whether the validity of the rates notice could be raised in the proceedings as there was a mechanism available under s 133(2) of the LG Act 1919 to appeal against the levying of the rate on the ground that the land or some part thereof was not rateable (which had not been invoked). Wootten J considered that on the authorities he had to hold that judicial review proceedings were available. On the substantive challenge he upheld the applicant's claim for declaratory relief that the resolution to impose the rate was invalid as the requirements of s 121(1) for the setting of the rate were not satisfied in relation to the opinion the council was required to form. As submitted by the Applicant this case, if determined today, would probably be couched in terms of the council failing to determine a jurisdictional fact or a condition precedent to its decision. Once again there is no such requirement in the setting of ordinary rates so that this case is also distinguishable on its facts. 27 The LG Act 1993 also specifies that a council must, in determining a special rate, form an opinion that the land to be subject to the rate will benefit from the works or services for which the special rate is levied (s 495). Wyton v Tweed Shire Council (1998) 98 LGERA 72 is an example of a judicial review case considering the setting of special rates under the LG Act 1993. 28 None of the above cases considered the setting of an ordinary rate. The LG Act does not require any opinion to be formed by a council in relation to the setting of the ad valorem rate component of an ordinary rate. Only one case of judicial review proceedings concerning the determination of an ordinary rate under the LG Act 1993 has been found. In Council of the City of Sydney v South Sydney City Council [2002] NSWLEC 129 the applicant council sought declarations that the resolution of South Sydney council to determine sub-categories for residential and business categories of rateable land and the resolutions determining ad valorem rates for the sub-categories were invalid and of no effect. There was no discussion in that decision of whether the court had jurisdiction to consider the issues raised, no doubt because no such issue was raised. The grounds of challenge considered in the court were that the necessary condition precedent was not enlivened so that the council lacked power to make the sub-categories, that irrelevant considerations were considered and that the determinations were manifestly unreasonable. The focus of the case was the creation of the sub-categories within the residential category under s 529 of the LG Act rather than the specific ad valorem rates the council determined to impose. Pearlman J held that the determination of the sub-categories was in accordance with the requirements of the LG Act, that South Sydney City Council had not taken into account irrelevant considerations determining the sub-categories and that it had not acted with manifest unreasonableness. 29 One case supporting the Applicant's argument is the earlier case of Sutton in the Supreme Court in which the plaintiff challenged a council's decision to impose a general rate, water supply rate, sewerage local rate, and a special rate (library) for 1976 and 1977 under the LG Act 1919 by imposing a certain minimum rate. The setting of a minimum rate was challenged because the amount set by the council resulted in the bulk of rates being collected by payment of the base rate rather than the ad valorem rate. This per capita approach was to be contrasted with the much smaller amount collected by an approach where a high ad valorem rate and a low base rate such that the bulk of rates collected correlates with land values. Holland J considered that the rating scheme was to predominantly rely on an ad valorem system to which per capita rates were to be subordinate. His Honour concluded that the council had misused its powers and declared the decision to impose the base rate invalid. 30 While there is not a decision which has specifically considered the issue of justiciability in the context of ordinary rate setting, the lack of specific criteria in the Act to be satisfied when setting such a rate alone does not suggest the decision is non-justiciable. That there is broad discretion under the LG Act for the setting of an ordinary rate by a council in the context of the detailed statutory regime for the setting of rates also does not indicate the matter cannot be subject to a judicial review challenge. The Council has argued that the decision involves a balancing of policy considerations rendering it non-justiciable. The reasoning in Peko Wallsend of the full Federal Court that decisions of the Federal Cabinet were not automatically immune from judicial review also suggests that a finding of lack of justiciability in relation to a decision made under a statute should not be made lightly. In Wellington City Council v Woolworths New Zealand Ltd (No 2) [1996] 2 NZLR 537 relied on by the Council in relation to the nature of council decision-making on rates, discussed at par 112 below, the New Zealand Court of Appeal refers to rating decisions being judicially reviewable on grounds such as manifest unreasonableness. 31 An essentially different point raised by the Council but in this part of its case was that the existence of an appeal against the rating category was available under s 526 and had not been availed of by the Applicant. In various areas of the Court's jurisdiction parties commonly pursue judicial review proceedings as well as exercising an appeal right concerning the merits of a decision. That does not ground a successful argument that the ordinary rating decisions the subject of these proceedings are not justiciable. 32 Also supportive of a finding that the issues are justiciable, and as submitted by the Applicant, the Court is able to make the orders for the payment of money already paid to the Council by way of restitution. The Court has wide powers to remedy a breach of the LG Act under s 676. Also as submitted by the Applicant, the power of the Court to grant restitutionary relief for an invalid impost was recognised in Sharples v Minister for Local Government citing Newcastle City Council v Caverstock Group Pty Ltd. 33 On balance I consider that the issues raised by the Applicant are justiciable in these judicial review proceedings. On a different but related issue I also agree with the Applicant's submission (par 21) that the existence of the appeal rights under s 525 and 526 does not mean that such appeal rights must be exhausted before these judicial review proceedings can be commenced. The remedy sought in these proceedings concerning the declaration of invalidity of the sub-category Business – Marrickville Metro in 2002 would not be achievable in Class 3 proceedings. A. Challenge to 2002 decisions (APOC cl 12(a)(b), prayers 1, 2) No sub-category created Applicant's submissions 34 The first issue raised by the APOC is the exercise of the Council's discretion under s 493(2) to determine a sub-category of the business rating category. The Applicant seeks declarations that the resolution of the Council on 23 April 2002 to introduce the Business – Marrickville Metro sub-category and apply a rate higher than that for other business categories was invalid. 1. "Not a category" (APOC cl 12(a)) 35 For numerous reasons the Applicant argues that the purported determination of the sub-category did not legally implement the sub-category: (i) The Marrickville Metro is a single site which cannot be described as a category of itself. A category implies the concept of a class or species which necessarily requires more than one lot of rateable land to fit into the description of the sub-category. There can be no process of categorisation by placing land parcels in or out of that category because, by its very terms, the category will only ever include one parcel of land. This process of categorisation is central to the notion of a category and a statutory right to protest categorisation exists under s 525 and s 526 of the LG Act. By introducing a sub-category into which only one parcel of land can fall, this right of appeal and review is rendered meaningless which could not be the legislative intention of the provisions. (ii) The name of the sub-category as Business-Marrickville Metro confirms that it is not a sub-category. It refers to one operator only. (iii) The process followed by the Council in 2001/2002 did not give rise to the determination of a sub-category. When the Council passed the motion in February 2002 it resolved to introduce a large shopping centre rate. There is no reference to a category being created. On 23 April 2002 the General Manager's report to the Council referred to the introduction of a separate rate for large shopping centres and to the determination of a rate in the dollar for the new rate. No reference to a category was made in the report. The description of the category as Business-Marrickville Metro appears in an amendment to the 2002-2005 Draft Management Plan and 2002-2003 Draft Budget despite the Council's resolution to introduce a "large shopping centre rate". Under s 521 the sub-category crystallises at the point where the declaration of the parcel of land occurs within a particular category. No such declaration was made. There has been no compliance with s 529(2) for the determination of a sub-category. It does not matter what appears in the rates notice in the absence of that determination. The rates notice cannot constitute a declaration for the purposes of s 529(2). 2. "Centre of activity" (APOC cl 12(b)) 36 The Applicant argues that the creation of the sub-category was not based on Marrickville Metro being a "centre of activity" because it is only a single site or parcel of land. "Centre of activity" is not defined in the LG Act. The phrase "centre of activity" would have its ordinary meaning and like those phrases used in s 529(2) would relate to the activity carried out on the land, not the actor using the land; see Hope v Bathurst City Council (1980) 144 CLR 1. This distinction is important because in the circumstances of this case the whole of a sub-category has been used by the Council to discriminate against a single rate payer, and the purported vehicle of a sub-category attempts to camouflage this fact. The Marrickville Metro sub-category has been created by reference to a specific land user rather than by reference to a type of use of the land as intended by the centre of activity requirement in s 529(2)(d). Further, the balance of Ch 15 proscribes against identification of individual land holdings in the creation of rate sub-categories in order to prevent single ratepayers being subject to a distinct rate. Council's submissions 1. "Not a category" (APOC cl 12(a)) 37 The Council submits that the Applicant's argument that there cannot be only one member of a category is false. (i) It is quite appropriate to categorise a certain activity as a class even if it is the only entity which falls within a particular class. A commonsense approach to language should be taken. (ii) Also, the category was not created solely by reference to a particular individual (for example, Marrickville Metro Shopping Centre Pty Ltd, the Applicant) but rather the description is based on the use of the land, namely a large mall-type shopping centre (Business – Marrickville Metro). This categorisation does not deprive the Applicant of any right to protest its inclusion in this category on the grounds of an incorrect characterisation of the land with respect to the sub-category description pursuant to s 525. (iii) A single member category does not avoid the statutory right to appeal in relation to the declaration of the category in s 526. (iv) The LG Act does not prohibit the creation of a category with only one member. 38 There is no basis to argue that the name of the category Business-Marrickville Metro does not meet the requirements of the Act for the declaration of a sub-category. Section 543(1) requires that the Council must give a short separate name for each category of ordinary rate when an ordinary rate is made. The name does that. 39 The Council argues that the Council did resolve on 23 April 2002 to determine a sub-category and separately to fix the rate (resolution GM22). Resolution GM23, referring to the Business-Marrickville Metro sub-category, was the determination required by s 529(2)) contrary to the Applicant's argument that no sub-category was determined on 23 April 2002. The Act is loose about the way a category is determined. The act of levying that took place in the following month by the rates notice dated 26 July 2002 was the final declaration and notification of the category. It does not matter precisely how it happened. Pursuant to s 520, the declaration takes effect from the date specified but no such date is specified in resolution GM 22, resolution GM 23 or in the rates notice. It is however obvious that the making of the rate was created, declared, levied and paid. As the 2002-2005 Management Plan and 2002-2003 Budget came into effect from 1 July 2002 that is the date the sub-category was intended to come into operation. Prior to 1 July it had no work to do. The rating year began on that date also. The new rate has been levied by the Council and paid by the Applicant or the previous owner for seven years. Resolution GM22 was passed, followed by resolution GM 23, specifying the Business-Marrickville Metro sub-category, which firmly determined the sub-category. The amount of the rate charged for the rating year commencing on 1 July was carried. 40 If the giving of notice under s 521 was not complied with, since Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 whether or not a failure to comply with a statutory requirement or directive is fatal to the validity of a particular administrative act depends on the question of whether the legislature intended that non-compliance with a provision would be fatal to the validity of the act on which it is based. The defect, if it exists, is of little significance. The rate was levied, the category is specifically described in the rates notice, the rates notice went to the owner who complained to the Council about the change in rate by a letter dated 24 October 2002. No date for the commencement of the new rate is identified in the rates notice but it is plain that it was intended to take effect from 1 July 2002 as that is when the rates notice took effect. 2. "Centre of activity" (APOC cl 12(b)) 41 The requirement that the determination of a business sub-category be made according to a centre of activity has not been breached. It is not necessary that the centre of activity be described by reference to a planning category, such as retail, conducted by more than one individual operator. The Council suggests that centre of activity, which is not defined, probably means no more than a place in which businesses are concentrated in physical proximity in a way which enables it to be said that the area demonstrates a degree of unity of purpose which makes a single categorisation of the site appropriate. A draft Council Rating and Revenue Raising Manual (annexed to the affidavit of Mr Christmas) issued by the Department of Local Government and Cooperatives in April 1994 after the enactment of the LG Act 1993 stated that a centre of activity "could be a parcel of rateable land in which a business activity of a like character is conducted in a fairly concentrated manner and with a high degree of congruity and homogeneity, having regard to the geographic cohesion of the land, the use to which it is put and the comparative independence and self-relatedness of the activity or activities carried out in the area". 42 The note to s 529 refers to "centre of activity" as "might comprise a business centre, or industrial estate or some other concentration of like activities". While notes are not considered part of the statute for construction purposes (s 35 of the Interpretation Act 1987), they can provide a guide to interpretation. Finding on sub-category/centre of activity (issues 1, 2) Can sub-category/centre of activity be single landholding? 43 Some of the Applicant's arguments that no sub-category was created by the Council appear to rely on form over substance. There is no explicit or implied prohibition in the LG Act on a single site being a category. Whether that is appropriate will depend on whether it can be considered as a centre of activity, which I consider below in par 46-47. In this case the only large mall-style shopping centre in the LGA is the subject of the category. There is nothing inherent in the commonsense meaning of category to suggest it cannot be a single site on which several activities are located. I agree with the Council's arguments set out above in par 37 in this regard. 44 The Applicant objected to the name of Business–Marrickville Metro because it refers to one operator. The name Marrickville Metro reflects the activity of the large shopping centre on the site. When asked what if the category had been called Business-Large Shopping Centre the Applicant's counsel stated this argument had far less weight. As there is only one large shopping centre in the Marrickville LGA there is nothing wrong legally with identifying the category by reference to the name of the activity at that single site. The Council's report and decision making in relation to the name of the sub-category as Business-Marrickville Metro complies with the naming requirement in s 543(1) which states only that each part of the ordinary rate that is, each sub-category, must have a short separate name. As submitted by the Council had the name of the category been that of the owner (in 2002 Bevillesta) there may have been cause for complaint but that has not occurred. The distinction between the activity on the land and the owner of land in Hope v Bathurst City Council is accepted but in any event the activity on the land is the focus of the name of the category, not the owner of the Metro site. 45 The Applicant also argued that to name the sub-category Business-Marrickville Metro denied the owner of that site the right to apply to the Council for a change of category under s 525. That circumstance would also apply if the name of the category were Business-Large Shopping Centre because there happens to be only one such centre in the Marrickville LGA. As submitted by the Council a review seeking a change of category by the Council under s 525 was available (and continues to be available) to the Applicant. If the review is refused by a council a right of appeal lies to this Court under s 526. I do not agree that to be the only member of a category renders the review right nugatory as it would be open to the Council (and the Court under s 526) to declare the Metro site to be in the Business-General rather than the Business - Marrickville Metro category, for example. If that occurred the Business – Marrickville Metro category would simply be empty. "Centre of activity" 46 I have held that a sub-category can be a single landholding. The Applicant also argues that a single landholding cannot be a centre of activity. Centre of activity is undefined in the Act. Principles of statutory construction suggest that the plain meaning of the words is preferred where that is apparent in the statutory context (see Cody v J H Nelson Pty Ltd (1947) 74 CLR 629 per Dixon J at 647, cited by McHugh J in the High Court's decision in Muin v Refugee Review Tribunal (2002) 190 ALR 601 at [102], inter alia). As submitted by the Council, the note to the section refers to a centre of activity as being a concentration of activities. Notes are not part of the statute (s 35 of the Interpretation Act 1987) but they do provide some guidance of what the draftsperson intended. 47 The Council also relied on the reference to the explanation of centre of activity in the draft Council Rating and Revenue Raising Manual issued by the Department of Local Government and Cooperatives in April 1994 (par 41). Applying the ordinary meaning of the words "centre of activity" the interpretation in this manual should be adopted. The concentration of activities at the Metro site is a large number of retail shops. This is clear from the evidence of Mr Christmas that the Marrickville Metro contains approximately 100 retail tenancies, which was confirmed in the affidavit of the Applicant's centre manager, Ms Wright, which stated there were 101 tenancies. There is consequently no prohibition on a sub-category relating only to a single land user provided that the category relates to a centre of activity based on land use, as the sub-category Business – Marrickville Metro does. Was a sub-category determined? 48 The Applicant also argued that no sub-category of Business-Marrickville Metro was determined by the Council in 2002. The Applicant argued that no sub-category was determined as provided for under s 493(2) and s 529. Section 493 states that a council may determine sub-categories for rateable land and requires compliance with s 529(1). Section 531 states that s 519 to s 527 apply to the determination of a sub-category. The Applicant argued that the recommendation in the General Manager's report to the Council meeting on 19 February 2002 of striking a "large shopping centre rate" and its adoption by the council was a failure to comply with the Act because the words "category" or "declaration" or "determination" were not used. Reliance on this point elevates form over substance. When the course of conduct of the Council in February and April 2002 is considered as a whole, there was a determination of a sub-category called Business – Marrickville Metro. As submitted by the Council the passing of resolution GM22 determined the sub-category. The sub-category is then identified in resolution GM 23 made at the Council meeting on 23 April 2002 (see chronology at par 6(ix)). As submitted by the Council, the rates have been paid by Bevillesta or the Applicant over the last seven years. This behaviour is consistent with the creation of the sub-category. I consider that a sub-category was determined as provided for by s 493(2) and s 529 on that date. 49 The Applicant is unsuccessful on the grounds of challenge in the APOC cl 12(a) and (b). 2. Failure to notify under s 520 of the LG Act (APOC cl 12(h)) 50 The Applicant argued that the statutory notice requirements of the declaration of the sub-category in s 520 were not complied with. As a result the sub-category was not created in 2002. This is raised in the APOC cl 12(h) and I will consider it as the next issue. 51 Section 520 requires that notice be given in the approved form of certain matters concerning a declaration of category. Section 521 states that the declaration of a category takes effect from the date specified for the purpose in the declaration. These provisions also apply to the determination of a sub-category (s 531(1)). Notice of the determination of a sub-category can be given in the same notice as the notice of the declaration of a category (s531(2)). 52 "Approved form" was (and currently is) defined in the dictionary to the LG Act as: (a) the form prescribed by the regulations for the purposes of the provision in relation to which the expression is used, or (b) if no such form is prescribed, the form (if any) approved by the Director-General for the purposes of the provision in relation to which the expression is used, or (c) if no such form is prescribed and no form is approved by the Director-General, the form approved by the council for the purposes of the provision in relation to which the expression is used. 53 It is agreed that there was no specific approved form for the purposes of s 521(2) specified in the Act or Regulation or approved by the Director-General in 2002. 54 Clause 11 of the Local Government (Rates and Charges) Regulation 1999 in force at the relevant time (now repealed but the same provision now exists in cl 127 of the Local Government (General) Regulation 2005) provided: 11 Rates and charges notices A rates and charges notice must contain the following information: (a) the land to which it relates, (b) the land value of the land to which it relates and the base date of the general valuation from which the land value is derived, (c) particulars of each rate or charge levied on the land by the notice, (d) if the rate consists of a base amount to which an ad valorem amount is added, particulars of the base amount, (e) the date the notice is taken to have effect, (f) particulars of any outstanding arrears of rates and charges levied on the land and of any interest payable on those amounts, (g) the total amount due and the dates for payment of the rates or charges concerned, (h) the amounts payable for, and the due dates for payment of, instalments of rates or charges, … (q) the text, or a summary, of the following provisions of the Act (if applicable): Section 524 (Notice of change of category) Section 525 (Application for change of category) Section 526 (Appeal against declaration of category) Section 555 (What land is exempt from all rates?) Section 556 (What land is exempt from all rates, other than water supply special rates and sewerage special rates?) Section 557 (What land is exempt from water supply special rates and sewerage special rates?) Section 562 (Payment of rates and annual charges) Section 563 (Discount for prompt payment in full) Section 564 (Agreement as to periodical payment of rates and charges) Section 566 (Accrual of interest on overdue rates and charges) Section 567 (Writing off of accrued interest) Section 574 (Appeal on question of whether land is rateable or subject to a charge). Evidence of giving of notice of 2002 sub-category determination and rate setting decision 55 Rates notices (annexed to the affidavit of Mr Whealy) were issued by Council to Bevillesta (posted 27 July 2000, 27 July 2001, 26 July 2002, 26 July 2003 and 14 July 2004), Marrickville Metro Shopping Centre Pty Ltd (posted 29 July 2005) and AMP Capital Investors Limited (posted 31 July 2006, 25 July 2007 and 25 July 2008). 56 The Council relies as the necessary notification of the determination of the sub-category Business-Marrickville Metro on the annual rates and charges notice sent by it in July 2002 to the then owner of the Metro site (Bevillesta). Where the rates notices in 2001 and preceding years referred to Business-General the 2002 notice referred to Business-Marrickville Metro. That this was the notice was told to Bevillesta in the Council's letter dated 5 February 2003 (par 6(xii)). The Council in that letter also referred to fact that the new sub-category was referred to in the 2001-2004 Draft Management Plan and 2001-2002 Draft Budget which was advertised in local newspapers and was on public exhibition for 28 days. The Council's letter was a reply to a letter dated 24 October 2002 from Bevillesta asking when notice of the change of category had been sent as none had been received and asking for the opportunity to comment. 57 An affidavit of Martin Turner sworn 31 March 2009 was read for the Council. Mr Turner has been the Council's rates supervisor since 1994. In his affidavit Mr Turner describes the two step process of issuing a rates and charges notice. First, a template of the rates and charges notice for the relevant financial year is prepared. The template includes payment options and information required by the LG Act and the relevant regulations. The relevant data relating to a rateable property is then inserted onto the template rates and charges notice. This data includes the name and address of the property owner, the real property description of the rateable land, the categorisation of the land, the amount of rates levied for that financial year and the amount payable for each quarter in that financial year. This two step process followed by the printing and mailing of the notice has been done by an external agency since 1994. Annexed to Mr Turner's affidavit is a copy of the paper template rates and charges notice for the period 1 July 2002 to 30 June 2003. This includes the information required by cl 11 of the now repealed Local Government (Rates and Charges) Regulation 1999. Also annexed is a copy of the rate data for the Metro site for the period 1 July 2002 to 30 June 2003. This document is identical to the July 2002 rates notice annexed to Mr Whealy's affidavit. Mr Tuner attests that an exact copy of the rates and charges notices issued to Bevillesta in 2002 is not held by Council. There is only one original rates and charges notice issued for each rateable property each financial year which is mailed to the owner of the property. 58 Annexed to the affidavit of Mr Whealy was a submission made by the owners of Marrickville Metro to the Council objecting to the sub-category and rate determination by letter dated 24 October 2002 (referred to at par 6(xi)). Bevillesta noted that the new category had been created but that no notification of the creation of the sub-category had been provided. The Council responded by letter dated 5 February 2003, also annexed to Mr Whealy's affidavit, stating that the notification of the change was provided in the rates notice issued 26 July 2002. Applicant's submissions 59 The Applicant argued that the sub-category was not effected in accordance with the notice requirements of s 520 of the LG Act. There was no notice of the declaration of the sub-category to the owner of the Metro site in 2002. Although there is no approved form as referred to in s 520(2), the requirement of sending a notice containing the information remains. The purpose of the notice is to allow ratepayers to make an informed decision about whether or not to seek a review of or appeal the decision under s 525 and s 526. The failure to properly notify has the result that there was no valid determination of the sub-category by the Council in 2002. Council's submissions 60 The Council submitted that there is no evidence that a notice was not received after the decision was made. The copies of the rates and charges notice tendered in evidence by the Applicant (annexed to Mr Whealy's affidavit) are not complete and the Applicant bears the onus of proving that any notice was not given in accordance with s 520. The Council has tendered a template of the rates and charges notice that would have been sent to Bevillesta which contains the necessary information. This is adequate notice for the purposes of s 520. 61 The Council further submits that the Applicant, since owning the Metro site in 2004, has been aware of its inclusion in the sub-category and has not exercised rights of review or appeal under s 525 and s 526 of the LG Act. Advising of that review and appeal right is in part the intention of the notice under s 520 and there has been no mischief resulting from a failure to comply with the notice requirements if there was such a failure. Finding on whether notice given 62 Section 531 states that s 519 – s 527 of the LG Act which apply to the declaration of a category pursuant to s 514 also apply to the determination of a sub-category. The question arises on the Applicant's arguments of whether all these sections were complied with. Section 519 is not relevant as it deals with vacant land. The Council must give notice to each rateable person of the category declared for his or her land (s 520(1)). Section 520(2) states that notice must be given in the approved form and must include matters specified in ss (a), (b) and (c). The Council relies on the annual rates and charges notice sent to the owner of Marrickville Metro in July 2002 as the notice under s 520. The Local Government (Rates and Charges) Regulation (then in force) in cl 11 specified the content of a rates notice in some detail. Clause 11 referred to all the matters in s 520(2) and required the text or summary of s 525 and 526 to be included in the notice if applicable. 63 As already stated at par 51, s 531(2) provides that notice of the determination of a sub-category may be given in the same notice as the notice of declaration of a category. This provision suggests that the LG Act contemplates that the form of notice used to notify the determination of sub-category is the same as that used for a declaration of a category. I note that it is unlikely that notice of a category and sub-category would be provided as the same time, which is what the section read literally suggests. That is because the process followed by this Council makes clear that once land is placed in a sub-category there is no need to advise separately of the general category to which the land belonged previously. That the annual rates and charges notice posted on 26 July 2002 provided the information of the change of sub-category is identified in the affidavit of Mr Turner (par 57). The front of the notice stated that the category of the land was Business-Marrickville Metro. It can be inferred by reference to the rates and charges template that the notice stated that the recipient had the right to apply to the Council seeking a review of the declaration that the land is within the category stated in the notice (required by s 520(2)(a)), that there was a right of appeal to this Court (required by s 520(2)(b)) and reference was made to s 525 and s 526 (required by s 520(2)(c)). The content of the annual rates and charges notice satisfies s 520(2). 64 One issue that remains outstanding however is whether the determination of the sub-category taking effect from a specified date was notified to Bevillesta at all, including whether the notice was in time for it to exercise any review or appeal rights it had. Section 521 states that the declaration that a parcel of land is within a particular category takes effect from the date specified for the purpose in the declaration (in this case the determination of the sub-category pursuant to s 531). The Council has relied on the resolutions of the Council on 23 April 2002 (par 6(ix)) as the date of the determination of the sub-category Business – Marrickville Metro. That process suggested by implication that the date for the commencement of the sub-category is the start of the rating year, then 1 July 2002. That arises from the General Manager's report to the Council meeting of 23 April 2002 which recommends a resolution to introduce the rating sub-category together with a resolution to adopt the draft budget for the financial year commencing 1 July 2002. The date the determination of the rating sub-category was to take effect is not made explicit in the Council's decision on 23 April 2002. 65 Section 526 provides for appeals to this Court on two bases, identified in s 526(1)(a) and (b). Firstly there is an appeal to this Court under s 526(1)(b) in relation to the declaration of a council under s 525 following an application to a council under s 525(1) for a change of rating category. Such an application can be made at any time by a ratepayer. While s 525(3) states that the council must declare the land to be within the category nominated unless it has reasonable grounds for believing otherwise and s 525(4) requires the council to declare a different category and give notice for its decision under ss (5) if the council does have reasonable grounds for believing otherwise, no timeframe for making the declaration is specified. There is a catch-all provision in ss (6) that if there is no notice within 40 days of the application the land is deemed to be declared to be within its existing category. The 30 day appeal period to this Court in s 526(2) would therefore run from that deemed date. This was the right of appeal referred to on the back of the rates and charges notice sent in July 2002 in relation to s 526. 66 The second appeal provided for under s 526(1)(a) is an appeal against the initial declaration (determination) that land is in a certain category (or sub-category) takes effect from the date specified. If the date the determination of a sub-category takes effect under s 521 is not clear then the date of expiration of the period for appeals to the Court of 30 days provided in s 526(2) will be unknown to a ratepayer. Further, in order to exercise such an appeal right, adequate notice is necessary. 67 The annual rates and charges notice relied on by the Council as providing the required notice was posted on the date shown on it, being 26 July 2002 for the rating year 1 July 2002 to 30 June 2003. The rate category was stated as Business-Marrickville Metro. This was the first written notice Bevillesta received of the determination of the sub-category on 23 April 2002. The rates notice has a number of dates on it. At the top the period for the rates and charges is shown as 1 July 2002 to 30 June 2003. The due date for the first instalment of rates is shown as 31 August 2002 and the due date for subsequent quarterly instalments is also shown. The rates notice does not state explicitly the date on which the sub-category took effect but the implication is that it is 1 July 2002 as that is the commencing date of the rating period the notice relates to. The notice of the determination of a new sub-category in this case arrived after that sub-category purportedly was made. 68 The annual rates and charges notice does not refer to the date that the determination of the sub-category was made by the Council on 23 April 2002 or the appeal right in s 526(1)(a) specifically. The Act does not require it to do so under s 520(2) but s 520(1) states that notice of the category declared for each parcel of land is to be provided. As the annual notice is relied on by the Council as the notice of determination of the change of sub-category in this case this means that the effective date for the change of sub-category under s 521 was not provided to Bevillesta until well after the determination on 23 April 2002 and not in a way that made clear when the determination took effect. Assuming that the annual rates and charges notice was intended as the relevant notice under s 521, it failed to provide the date of the determination by the Council that Marrickville Metro was in a new sub-category. A statement on the back of the notice that a rateable person may appeal against a declaration of category under s 526 would not assist the recipient in knowing when the determination was made. 69 A further issue also arises in relation to s 526(2) which states that an appeal under s 526(1) must be filed within 30 days of the declaration being made. The date the determination of sub-category was made in this case is different from the date that it took effect under s 521. According to the Council the new sub-category was first determined on 23 April 2002 as part of the budget planning process (as submitted by the Council) and this decision was confirmed on 18 June 2002 when the draft budget became final for the 2002-2003 financial year. It was intended (by implication) to take effect from 1 July 2002. The annual rates and charges notice was posted on 26 July 2002. There is no information in the notice of when the new sub-category was determined. It did not therefore provide a date from which the time for the commencement of the appeal right in s 526(1)(a) could be determined. Further, the 30 day appeal period commences when the declaration (or determination) was made (s 526(2)). From 23 April 2002 the 30 day appeal period therefore expired well before the annual rates and charges notice was posted on 26 July 2002. 70 Reliance on the exhibition of the 2002-2005 Draft Management Plan and 2002-2003 Draft Budget after 23 April 2002 is not adequate notice of the date of determination, as suggested in the Council's letter of 5 February 2003 to Bevillesta. Where the period of appeal to the Council or a court is provided in an Act, specific written notice of a decision within a specified time frame or that the appeal must form the receipt of notification are usual provisions. Such provisions provide certainty to the person having the appeal right. 71 The Applicant is successful on this ground of challenge (cl 12(h) of the APOC). As to whether such failure should give rise to a declaration of invalidity of the determination of the Business-Marrickville Metro sub-category, I will consider that issue when all the other grounds of challenge have been determined. 72 It has to be said that the LG Act as currently drafted lacks clarity concerning the steps required for the giving of all relevant notices under Ch 15 of the LG Act to ensure that a ratepayer is advised in a timely manner of changes in rating category which have review or appeal rights. The interaction of s 520, s 521 and s 526 in particular is unclear. For example, s 520(1) states that a council must give written notice to each rateable person of the category declared for each parcel of land. Section 520(2) does not state explicitly that notice must be given of the date the declaration of a category is to take effect under s 521 yet states in s 520(2)(c) that any notice must refer to s 526. Section 526 provides for two appeals, the first being under s 526(1)(a) in relation to the date on which a declaration is specified under s 521 to take effect. In order for a person to exercise an appeal right adequate notice of that right must be provided and the time for which the appeal right is available must also be clear. The LG Act as presently drafted does not require such notice in clear, unambiguous terms in relation to the declaration of a category and hence also for the determination of a sub-category. 3. "Fairness" (APOC cl 12(c),(d)) Applicant's submissions 73 The APOC raise fairness in two ways. Paragraph 12(c) refers to failing to take into account as a mandatory relevant consideration whether the creation of the sub-category and the higher ad valorem rate for the sub-category compared to the Business-General category was "fair". Paragraph 12(d) states that in creating the sub-category Business-Marrickville Metro the Council took into account an irrelevant consideration of enabling the Council to levy a disproportionately higher amount in rates from a single landowner which was an irrelevant consideration. The two grounds will be considered together as they are both based on the Applicant arguing that fairness is relevant to the creation of the new sub-category and the setting of the ad valorem rate for that category. I note for completeness that APOC cl 12(i) refers to the creation of the sub-category not being in accordance with the duty to act fairly in the making of a rate but that ground and the written submissions (par 98-119 of the Applicant's written submissions) devoted to it were not pressed. (i) Scheme of the LG Act generally 74 The requirement to impose rates fairly is clear from the scheme of the LG Act. Under s 494(2) each sub-category of an ordinary rate is to apply only to land within that sub-category. The principle of equality between ratepayers can be found throughout the scheme. The purpose is to avoid arbitrary determinations of rates. The concept of substantive equality is found in Pt 1 of Ch 15 in various ways. Section 497 provides for the creation of a base amount which is the minimum which all ratepayers are liable for, suggesting equality between ratepayers. Section 498 states that the ad valorem rate applies to the land value of all rateable land in the LGA within the category or sub-category of the ordinary rate. Section 493(3) provides that the ad valorem rate may not differ for any parcel of land in the same category or sub-category. Pt 3 of Ch 15 identifies the process for the making of ordinary rates. That includes providing notice of the rate determined to each rateable person of the category declared for each parcel of land under s 520. Chapter 15 includes specific references to the concept of fairness including not charging a different ratepayer within the same category a different rate (s 498(3)), the notion of a base rate to which an ad valorem amount is added in order to create a minimum amount to which all persons are liable (s 497) and the requirement in establishing a special rate that the rateable land is going to reasonably benefit from the rate revenue (s 495(2)). 75 Section 536 identifies matters that must be taken into account when setting the base rate. A failure to take these matters into account would constitute a breach of the Act. That section is also a guide to matters that must be considered when determining the ad valorem rate. (ii) Charter s 8 of the LG Act 76 Section 8 is contained in Ch 3 "What is a council's charter?" and provides: 8 The council's charter (1) A council has the following charter: • to provide directly or on behalf of other levels of government, after due consultation, adequate, equitable and appropriate services and facilities for the community and to ensure that those services and facilities are managed efficiently and effectively ["the first bullet point"] … • to raise funds for local purposes by the fair imposition of rates, charges and fees, by income earned from investments and, when appropriate, by borrowings and grants ["the fourth last bullet point"] … • to ensure that, in the exercise of its regulatory functions, it acts consistently and without bias, particularly where an activity of the council is affected … ["the second last bullet point"] (2) A council, in the exercise of its functions, must pursue its charter but nothing in the charter or this section gives rise to, or can be taken into account in, any civil cause of action. 77 In addition to indications in the overall scheme of the Act, the Council's charter (s 8 of the LG Act) identifies that the levying of rates is to be fair and that decisions of the Council cannot be discriminatory. Section 8 includes references to the Council acting fairly in the imposition of rates and acting consistently and without bias. 78 While the Applicant submitted that s 8(2) prevents a plaintiff from relying on the charter in a civil cause of action, s 8 may be used in construing other provisions in the LG Act (Eljo Pty Ltd v Casino Council (1994) 84 LGERA 373). Pearlman J in The Council of the City of Sydney v South Sydney City Council referred to the charter as demonstrating fairness and equity as a legitimate consideration in the exercise of a council's powers. Further these judicial review proceedings are not properly characterised as a civil cause of action for the purposes of s 8(2), which should be read narrowly. (iii) Council's decision-making process 79 The setting of the rate was arbitrary as can be seen from the way the setting of the rate was decided in 2002 and in the events leading up to that decision. At the time of consideration of the 2001/2002 budget in April 2001 a rating structure for land in Residential, Business-General and Business-Industrial (in several sub-categories for Marrickville, St Peters, St Peters North and Camperdown) were set. The General Manager's report (par 6(ii)) advised of receipt from the Valuer General's office of revised assessments for land values and advised that the Council could allow the movement in land values to flow onto the existing rate structure (thus increasing rate revenue) or it could maintain the yield for each rating category by considering the new land values and reducing ad valorem rates within each category. The report stated that the recommendation to the Council would be based on two factors, the user pays principle of equal contribution and the capacity of persons to pay in each category with land value as the indicator of that capacity. The report recommended a rating structure that maintained a common rate in the dollar for the Business-Industrial categories and this was adopted by the Council in June 2001. At the 19 June 2001 meeting the Council resolved that a report be prepared on the appropriateness of introducing a special rate for large shopping centre developments such as Marrickville Metro (par 6(vi)). 80 The General Manager's report for the 21 August 2001 meeting (5(v)) stated that the obligation on the Council's power to levy rates had to be done fairly under s 8 of the LG Act. It also noted that it was appropriate for property located within a business category to pay a greater proportion of the rates burden because properties in those categories place a greater burden on public infrastructure and derived a larger benefit from council spending than those in the residential category. The report noted that the Council had introduced four geographical business industrial categories in 1995/96 due to the impact of these areas on roads and infrastructure. The relationship between categories had changed only marginally since then. The report stated that a further sub-category comprising only one property was not prohibited but that there is a requirement to levy rates fairly. The report then detailed inquiries made of other councils to see how they treated large shopping complexes for rating purposes. If the Council wanted to investigate the introduction of the sub-category the report stated further information could be obtained in relation to the capacity of the Marrickville Metro centre to pay. The benefit principle was also referred to in relation to the services the Council provided to the shopping strip areas for litter collection, lighting and roads compared to what Marrickville Metro paid for disposal of its own waste, internal roads and lighting in the site (the same text is set out above in a later report of the General Manager to the Council meeting of 23 April 2002, see par 6(viii)) The Council resolved to note the report and sought a further report on the possible introduction of a large shopping centre rate. 81 In February 2002, the report of the General Manager largely repeated what had been provided in the previous report to the 21 August 2001 meeting. The report did not identify any additional cost burden imposed on the Council by Marrickville Metro (see par 6(vi)) so that there was no benefit obtained by that site identified to justify an increase in costs (the benefit principle). At the 19 February 2002 meeting the Council resolved to introduce a large shopping centre rate but sought a further report on the proposal. The report prepared after that meeting (the text of which is extracted above in par 6(viii)) was the only information before the Council when it determined to make a sub-category affecting only the Applicant. The Applicant submits that this was not proper consideration of the factors required to be considered. 82 The proposal to introduce a large shopping centre rate was considered at the 23 April 2002 meeting and approved. An amendment to fix the rate at 20 per cent above other commercial properties and to use the increase in revenue to reduce residential rates was proposed and passed. An amendment to increase the rate by 40 per cent was not passed. The Applicant submits that this process of decision-making discloses the arbitrary nature of the Council's decision. There is no logical basis provided for the ad valorem amounts set to guide the exercise of the Council's discretion to collect rates from one operator out of 33,000 . This also supports the argument that the Council's decision-making process was manifestly unreasonable (APOC cl 12(f), see par 108-111). The purpose of the introduction of the rate sub-category Business-Marrickville Metro appears simply to be the reduction of residential rates. There is no rational or fair basis identified for doing that. It is not fair to pick out Marrickville Metro and require it to pay 20 per cent more than other commercial properties in Marrickville. (iv) Discrimination – irrelevant considerations (APOC cl 12(d)) 83 The test for discriminating decisions is identified in Bayside City Council v Telstra Corporation Ltd (2004) 216 CLR 595. The treatment of the Applicant is different from all other members of the Business category as it pays higher rates. There is no evidence that the reasons for the differentiation of Marrickville Metro are relevant or appropriate. There has been no differentiation based on relevant criteria in the LG Act. Council's submissions 84 The Council denies that fairness is a prerequisite for the validity of either the creation of a sub-category or the fixing of an ad valorem rate for that sub-category. (i) Scheme of the LG Act generally 85 None of the sections of the LG Act (s 519 - s 527, s 531) place any constraint on the exercise of the Council's discretion in s 493(2) to divide categories into sub-categories. The Act specifies nothing to which the Council must turn its mind when fixing the ad valorem rate. The fixing of base rates (provided for in s 499) is limited by s 500, which prevents the fixing of land revenue of more than 50 per cent within a sub-category (or category). Section 536 also applies to require a council to fix a base amount by considering six matters (including the capacity of an ad valorem rate alone to produce sufficient revenue). The base rate enables a council to fix a minimum rate if a failure to do this will mean that the majority of ratepayers pay very little in rates due to low land values. Such limitations do not expressly apply to the fixing of an ad valorem rate. 86 The Applicant places reliance on s 536 which identifies criteria relevant to determining the base rate (provided for in s 499) as providing "significant guidance on matters that may not be taken into account as irrelevant to the task of setting rates". This submission overstates the function of the section. In combination with s 499, s 536 primarily provides a convenient method for a council to avoid the inevitable consequence of a purely ad valorem rate in an LGA where land values are low but the demands upon a council's revenue are not. It avoids the necessity for a choice to be made between raising the ad valorem rate to a level where payment of rates becomes onerous for owners of high value land, and depressing the rate to make it affordable to the majority, which will mean that high value owners do not pay enough. The sections are not intended to operate as a guide to matters which are relevant or irrelevant to the process of setting rates in general, and it would be wrong to read into them some general principle which obliges councils to exercise their discretion in the process according to some perception of "fairness" or "equality". Section 536, which provides relevant criteria for determining the base amount to be collected by the Council, should not be read as stating a general principle which obliges a council to exercise its discretion according to principles of fairness and equality. 87 In response to the submissions on fairness in creating a sub-category, the Council submits that a decision to create the sub-category in order that a new rate can be fixed for the ratepayer or payers in that category is not limited by any statutory directions which would bind the Council to levy all rates in a way which yields equity to every ratepayer. The LG Act implicitly accepts that the function of determining rates, with all its consequences, is for a council alone to exercise. The overall approach of the Applicant in reviewing Ch 15 to support its argument that decisions on rates must be fair and that all ratepayers must be treated equally is not justified in the absence of any explicit requirement of fairness. (ii) Charter s 8 of the LG Act 88 By virtue of s 8(2) the charter in s 8 cannot be taken into account in civil proceedings, in this case the challenge to the decision of the Council to make and levy a ordinary rate under s 494. It is also incorrect to assert that the claim is not a civil cause of action because the proceedings are a matter of judicial review. In any event there is no elucidation of what is "fair" in the context of rating. The charter is not a set of legal requirements against which a Council's activities are to be measured in order to determine whether behaviour is lawful. Garrett v Freeman (2006) 68 NSWLR 729 at [51] and [67] per James J is authority for the opposite conclusion. Eljo is also not authority that s 8 may be used in construing other provisions of the LG Act. Bignold J did not use s 8 as an aid to construction. The distinction drawn by the Applicant between a civil cause of action and relief sought under s 674 is not valid. 89 Further, the raising of financial imposts is not a regulatory function to which the second last bullet point in s 8(1) applies so that the requirement of acting consistently and without bias is not relevant (leaving aside s 8(2)). Section 8(1), the provision referring to fairness which is relied upon by the Applicant, is not intended to operate as a set of legal requirements for council decision-making. This is recognised in s 8(2) which notes that the obligation in s 8(1) cannot give rise to any civil cause of action. The Applicant's reliance on Eljo for the proposition that s 8 may be used in construing other provisions is incorrect. There are no other indications in the statutory scheme which lead to a conclusion that the Act requires all ratepayers to be treated fairly. (iii) Council's decision-making process 90 The views of the Council's General Manager as found in various reports to the Council as to relevant matters to consider when determining rating matters are not binding on the councillors. The Applicant's submissions that the Council's decision-making processes were arbitrary are not relevant. Nor was it relevant that the councillors did not have any material before them to satisfy themselves in relation to the benefit principle and the capacity of the owners of Marrickville Metro to pay. 91 Further, the transcripts of the councillors' discussions in February and April 2002 disclose the reasons behind the decision to impose higher rates on Marrickville Metro where over 100 retail outlets are located. (iv) Discrimination – irrelevant considerations (APOC cl 12(d)) 92 That the Metro sub-category ad valorem rate is higher than any other category or sub-category (except Business-Airport, a sub-category created in 2007) does not demonstrate discrimination in relation to the Applicant. Similarly, the Applicant's claim that the rating decisions are invalid due to being discriminatory in nature is unfounded. Differential rating is recognised by the scheme in Ch 15. Discrimination is the same as fairness so that if fairness is not required by the enabling statute, discrimination is not forbidden. Bayside City Council concerned the operation of a Commonwealth law which took precedence over a state law to the extent of any conflict. No overriding Commonwealth statutory measure prohibits "discrimination" in relation to the LG Act and the LG Act allows for unequal treatment of ratepayers as it is inherent in the setting of rates by category. The High Court in Bayside City Council was not seeking to make a new principle and is distinguishable. Nevertheless the High Court in that case reiterated the legislative power of Parliament to make laws which operate differentially if it desires. The Council's power to make rates exists under the LG Act and the power to differentiate necessarily flows from that power. Finding on fairness 93 The Applicant argues that setting ad valorem rates (s 498) within the general framework of the LG Act required that fairness be accorded to the previous owner when the new sub-category of Business-Marrickville Metro was introduced and the ad valorem rate set in 2002 and it was not. That Marrickville Metro had to pay an ad valorem rate 20 per cent higher than any other business category was not fair. The Applicant should not be the only member of a sub-category and should pay no more than other land in the Business-General category which was Marrickville Metro's rating category until 2002. The Applicant argues that fairness is a mandatory relevant consideration in the introduction of a rating sub-category and in the setting of a rate (APOC cl 12(c)). The Applicant also argues that any benefit other ratepayers would receive by treating Marrickville Metro differently was a mandatory irrelevant consideration (APOC cl 12(d)). The Applicant also argues, in the absence of an explicit statement to that effect in the LG Act, that there is a duty to act fairly on the part of the Council in making decisions about creating sub-categories and setting rates for those categories (APOC 12(d). Before addressing these specific grounds of challenge I will consider the scheme of the Act as identified in the parties' arguments. (i) Scheme of the Act generally 94 As submitted by the Council, there is no statutory requirement in the LG Act that a council must deal with similar categories of ratepayers on the same basis. The Act specifically provides for the creation of sub-categories and the setting of different rates for each sub-category. An important requirement is that all the properties in the same category or sub-category must pay the same amount of rates. As the rate for one category is increased the other rates will decrease as an overall ceiling on rate income set by the Minister for Local Government must be maintained (s 506). There is nothing inherent in or implied by the scheme of Ch 15 which suggests that fairness to each sub-category, meaning equal treatment with other categories, is a fundamental implied principle in the Act. The various provisions in the Act relied on in argument by the Applicant do not explicitly, or implicitly, support that argument. 95 Even if fairness is an essential part of the approach required by the LG Act, what fairness means has to be assessed in the context of the whole of the rate setting exercise. That one large ratepayer pays more than others, and has a sense of grievance about that does not lead automatically to the conclusion that that ratepayer has been treated unfairly. I have held at par 43-45 that a category can consist of a single site in one ownership where that site is a centre of activity. There is only one centre of activity in the Marrickville area which is a large retail shopping centre and that is Marrickville Metro. The Council has broad discretion under Ch 15 for deciding ad valorem rates. No criteria which must be considered or satisfied are referred to in the Act unlike the provisions concerning the base rate or special rates. (ii) Charter s 8 of the LG Act 96 In relation to the significance of the charter, it is a broad statement of s 8(2) states that the charter does not give rise to nor can be taken into account in any civil cause of action. Judicial review proceedings are civil causes of actions. In Eljo Bignold J had to consider the exercise of the regulatory functions of a council in relation to the granting of an approval for the transport of waste under s 68 of the LG Act. His Honour referred to s 8 as part of the relevant statutory context in which a council operated and noted the limitation in s 8(2). In concluding that he should give effect to particular provisions of the LG Act his Honour noted that this conclusion was reinforced by s 8. It is clear that his reasoning took into account s 8 as confirmatory of his approach. The judgment does not suggest that s 8 provides any basis to support the argument by the Applicant that s 8 is an aid to construction and specifies matters that are for the mandatory consideration of a council. 97 As referred to by the Council, James JA (McColl and Grove JA concurring) in Garrett v Freeman considered at [69] that s 8(2) was aimed at preventing a failure by a council to observe its charter grounding a civil cause of action against the council or being taken into account in a civil cause of action against the council. That case was a stated case in criminal proceedings considering the extent of the immunity of liability of an employee for acts done while employed under s 731 of the LG Act. That decision, while addressing a different part of the LG Act suggests that the Applicant cannot rely on the charter in s 8 as containing a set of legal requirements against which the Council's actions in setting rates can be measured, as submitted by the Council (see par 88). (iii) Council's decision- making process 98 The Applicant reviewed in detail the decisions of the council in 2001 and 2002 relevant to the introduction of the sub-category and setting the ad valorem rate in April 2002, as identified above in par 79-82. As set out in par 81-82 the Applicant argued that an examination of the decisions demonstrates that there was no rational of fair basis for the relevant decisions made and that the decisions were instead arbitrary in the treatment of Marrickville Metro. There was not proper consideration of the benefit and capacity to pay principles. As submitted by the Council, the processes under the LG Act do not require consideration of the benefit principle or the capacity to pay rates contrary to what appears in the General Managers reports to the Council. The transcripts of the Council meetings in evidence (par 6(vii),(ix)) show that there was discussion about why the sub-category should be created and the rationale for doing so in light of the large number of retail outlets located on the Metro site. 99 I would also add that, based on the transcripts of the councillors' discussions in February and April 2002 in evidence, there was discussion amongst the councillors of why it was appropriate that a large ratepayer which has over 100 separate businesses located on the one site should pay more rates than other rating categories and that the rates for these other categories should be reduced. Part of that discussion included a recognition by the councillors (contrary to the comparison contained in the General Manager's report to the councillors) that the benefits provided to the shops in the strip shopping areas were on public land and therefore of benefit to the whole community, unlike Marrickville Metro where the improvements paid for by the owner were wholly on private land. That was part of the consideration by the Council of deciding what rates across all categories were appropriate. (iv) Failure to take into account relevant consideration (APOC cl 12(c)) 100 Turning to the specific grounds of challenge in the APOC, the Applicant argued there was a failure by the Council to consider a mandatory relevant consideration of fairness when the sub-category was created and a substantially higher rate was levied. The test for whether a matter is a relevant mandatory consideration is identified by Mason J in Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 40 (Gibbs CJ, Brennan, Dawson and Deane JJ concurring with this formulation): In the context of judicial review on the ground of taking into account irrelevant considerations, this Court has held that, where a statute confers a discretion which in its terms is unconfined, the factors that may be taken into account in the exercise of the discretion are similarly unconfined, except in so far as there may be found in the subject-matter, scope and purpose of the statute some implied limitation on the factors to which the decision-maker may legitimately have regard: see Reg v Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd [33] , adopting the earlier formulations of Dixon J in Swan Hill Corporation v Bradbury [34] , and Water Conservation and Irrigation Commission (NSW) v Browning [35] . By analogy, where the ground of review is that a relevant consideration has not been taken into account and the discretion is unconfined by the terms of the statute, the court will not find that the decision-maker is bound to take a particular matter into account unless an implication that he is bound to do so is to be found in the subject-matter, scope and purpose of the Act. 101 The consideration of fairness within the scheme of the Act outlined above in par 94 suggests that the Council had (and continues to have) very wide discretion in setting ad valorem rates within the overall limits identified in the Act. These include the overall ceiling on rates, that all properties in each category must pay the same amount of rates, and that the setting of the base rate must take into account specified matters. A rate can consist of an ad valorem amount (which is subject to setting a minimum amount as required by s 548) or a base amount to which an ad valorem amount can be added. Fairness is not specified as a mandatory relevant consideration within Ch 15 or elsewhere in the Act. Nor can the charter in s 8 be relied on to found a judicial review challenge. Fairness as defined by the Applicant, to mean equal treatment of all ratepayers in, or who should be in, the Business-General category is not a mandatory relevant consideration. (v) Discrimination- irrelevant considerations (APOC cl 12(d)) 102 This ground of challenge as expressed in the APOC is that the Council took into account an irrelevant matter of levying a disproportionately higher amount in rates from a single landowner in determining the sub-category and setting the ad valorem rate. As stated by Mason J in Peko-Wallsend at 40, in order to succeed on a challenge based on a decision-maker considering irrelevant matters those matters must be either expressly or by implication matters which the decision-maker must ignore. There are no matters which are specifically referred to under the LG Act which the Council had to ignore in making the rating decisions under challenge. Accordingly, in order to succeed the Applicant must establish that the matters it says are irrelevant had to be ignored as a matter of statutory interpretation in light of the objects and purposes of the legislation. 103 The Applicant relied on Bayside City Council which considered whether state legislation breached Commonwealth legislation prohibiting discrimination. The Telecommunications Act 1997 (Cth) prohibited state laws from discriminating against a particular carrier, class of carriers or carriers of telecommunications generally. The state legislation under challenge made provision for levying rates and charges on land occupied by, inter alia, cables, wires, pipes and poles. Exemptions for Crown carriers of non-telecommunication services such as water supply and distribution, electricity, pipeline networks and retail gas supply applied. After considering that the Commonwealth legislation was constitutionally valid, Gleeson CJ, McHugh, Gummow, Kirby, Hayne and Heydon JJ (Callinan J dissenting on the question of constitutional validity for breach of the Commonwealth law) held that the state legislation exempting Crown authorities from being subject to rates was invalid as it breached the Commonwealth legislation. The legislation discriminated against telecommunications carriers (including the applicants, Telstra and Optus) by comparison with the treatment of non-telecommunication suppliers and distributors. 104 In making this finding, the majority judgment of Gleeson CJ, Gummow, Kirby and Heydon JJ (McHugh J concurring, Callinan not considering this issue) considered the meaning of discrimination. At [40] the majority stated: Discrimination is a concept that arises for consideration in a variety of constitutional and legislative contexts. It involves a comparison, and, where a certain kind of differential treatment is put forward as the basis of a claim of discrimination, it may require an examination of the relevance, appropriateness, or permissibility of some distinction by reference to which such treatment occurs, or by reference to which it is sought to be explained or justified. In the selection of comparable cases, and in forming a view as to the relevance, appropriateness, or permissibility of a distinction, a judgment may be influenced strongly by the particular context in which the issue arises. Questions of degree may be involved. The distinction between discrimination and permissible differentiation was made at [41]: …it is in the nature of taxing statutes that not all taxpayers are treated with absolute equality, and the fact that some taxpayers enjoy exemptions that are not available to others does not necessarily involve discrimination. It may involve nothing more than differentiation based upon criteria within its constitutional power which it is well open to the legislature to regard as appropriate. … 105 I agree with the Council's submission that Bayside City Council is entirely distinguishable from this matter as the statutory context is quite different to that under the LG Act. I also agree with the Council's submission that alleging discrimination as an irrelevant consideration does not found a separate challenge from the ground based on fairness. Given my finding above in relation to the APOC cl 12(a) and (b) that it is legally open for a council to create a sub-category referring to a single site where that satisfies the requirement of being a centre of activity, this ground falls away. It is entirely open under the scheme of the Act to determine and levy sub-categories differently for rating purposes. The same essential issue was considered in relation to whether fairness was a relevant consideration and I held it was not. 106 Further, even if this ground of challenge could exist separately from the ground of challenge based on fairness as a mandatory relevant consideration, there is nothing in the scope of the LG Act and the rate setting scheme in relation to ad valorem rates that suggests that it is an irrelevant consideration giving rise to illegality to seek to impose a greater rates burden on one category than another similar sub-category. The fact alone that the Applicant pays more that the other business categories (being Business-General, Business-Industrial-Marrickville, Business-Industrial-St Peters, Business-Industrial St Peters North and Business-Industrial Camperdown, amongst which there is also variation of the ad valorem rate) when it is the only centre of activity of its kind in the LGA does not lead immediately to a conclusion of discrimination. Being treated differently is not necessarily discriminatory in the context of the whole complicated exercise that is rate setting under the LG Act. As referred to by the majority of the High Court in Bayside (quoted above), whether discrimination exists will depend on the particular context of decision-making in determining the permissibility of differentiation between different rating categories. The distinction between discrimination and permissible differentiation was elaborated upon (par 104). That distinction applies in this case in relation to the setting of a different ad valorem rate for one sub-category as permissible differentiation. 107 The Applicant is unsuccessful in relation to the grounds of challenge in APOC 12(c) and (d). 4. "Manifestly unreasonable" (APOC cl 12(f)) Applicant's submissions 108 The Applicant argues that the determination of the sub-category Business-Marrickville Metro was manifestly unreasonable because no reasonable decision-maker would impose a sub-category on a single site rather than a centre of activity and/or there was unreasonable discrimination against Marrickville Metro in the determination of the category. Although not stated in the APOC this ground of challenge also extends to the ad valorem rate set for the sub-category. The Applicant relied particularly on the judgment of Gummow J in Fares Rural Meat & Livestock Co Pty Ltd v Australian Meat & Livestock Corporation (1990) 96 ALR 153. 109 The Applicant submits that no council acting reasonably would have created the sub-category. It could not have considered that the Applicant contributed so significantly and disproportionately to the Council's costs of providing services and facilities as to justify the creation of a sub-category, relying on Pestell. Some of the arguments raised in relation to fairness are also relevant to this ground of challenge, particularly the arbitrary nature of the decision to determine the sub-category and levy a higher ad valorem rate, and the lack of any change of circumstances or rational explanation for why the change was needed. In written submissions the Applicant submitted there were only three factors identified by the Council for the decisions under challenge, that shopping centres put pressure on infrastructure, that they attract non-local employees to the LGA and that they increase the risk of economic disadvantage to other local shops. There is no evidence that any material to support these factors was before the Council at the meeting on 23 April 2002. No rational, probative material to support the council's decision to determine the new rate such as a comparison of the impact of other businesses on Council infrastructure to enable a link to be drawn between the Metro site and other land users existed. Any information in relation to the attraction of non-local employees and economic disadvantage to other local shops are not relevant to the mandatory considerations in s 536 of the LG Act. These were wholly irrelevant considerations to the task the Council had to set a valid general rate. Without the necessary information to support the factors the Council considered relevant the Council was not able to unfairly discriminate against the Applicant, see Pestell at 314 per Barwick CJ, at 323 per Menzies J. 110 The situation is similar to (albeit the reverse of) what occurred in Pestell, which concerned the making of a special rate. The council wished to make a rate to cover the cost of roadworks for an area of mixed industrial and residential purposes in relation to industrial land only. The rate was not imposed on current residential users. This rate was struck down by the High Court because the power required that the council consider whether the land enjoyed the benefit not the user of the land. Here the Council has used a power to impose a general rate to create a special rate for Marrickville Metro which exempts other surrounding land users. 111 In oral submissions the Applicant's counsel stressed that the Council had to be satisfied as to the capacity of the owner of Marrickville Metro to pay and the level of benefit it received from Council services provided as a result of the Council's use of rate revenue before it could levy Marrickville Metro. As the General Manager's report before the Council at its meeting on 23 April 2002 makes clear, there is no benefit to Marrickville Metro from the rates paid as Marrickville Metro pays for the lighting in the centre and the centre carparking. In the strip shopping centres elsewhere in the Marrickville area the Council provides the lighting and carparking. There is no evidence in the reports prepared for the Council of any analysis behind singling out Marrickville Metro for an added rates burden. When the history of rating decisions are viewed historically over 15 years, no previous distinction has been found to justify a new category levied at a higher rate and the reports before the Council do not suggest a change of circumstances which support a change in the application of the benefit principle. The decision was manifestly unreasonable because no reasonable council would have exercised its discretion to create a sub-category in the absence of any justification to do so. Council's submissions 112 The dicta in Wellington City Council v Woolworths New Zealand Ltd (No 2) [1996] 2 NZLR 537 suggests that the exercise of the discretion to impose rates does not meet the stringent legal test of irrationality required by this ground. In terms of what the Council actually did, the reports of the General Manager are not the views of the councillors. The Council, as elected councillors, is entitled to take a different approach to that of the General Manager in his report and did so. This is clear from the transcripts which refer to discussions between the councillors about why the large number of shops in Marrickville Metro pay far less rates than the shops in the shopping strips. There is also criticism by the councillors (set out in transcripts for the council meeting on 19 February 2002, see par 6(vii)) that the General Manager's report only considers the expenditure of the Council on works as benefiting the strip shopping when the works are on public land and therefore benefit the community generally, not just the strip owners. There are also views expressed by the councillors that there are costs caused to the Council by Marrickville Metro because of the large number of trucks that visit the site. This discussion shows that there was a rational basis for the determination of the sub-category and the levying of a rate pursuant to that decision. Finding on manifestly unreasonable 113 The Applicant's counsel considered this ground was the strongest ground of challenge. This ground requires the Court to find that the Council's discretionary decision to determine the sub-category and set a certain rate were unreasonable in the sense described by Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223. That case has received much judicial consideration in Australian administrative law cases. Brennan CJ in Kruger v Commonwealth (1997) 190 CLR 1 stated the basis of a claim of manifest unreasonableness at 36: when a discretionary power is statutorily conferred on a repository, the power must be exercised reasonably, for the legislature is taken to intend that the discretion be so exercised. 114 In Peko-Wallsend Mason J commented at 40-41: The limited role of a court reviewing the exercise of an administrative discretion must constantly be borne in mind. It is not the function of the court to substitute its own decision for that of the administrator by exercising a discretion which the legislature has vested in the administrator. Its role is to set limits on the exercise of that discretion, and a decision made within those boundaries cannot be impugned (Wednesbury Corporation, at p.228). ...in some circumstances a court may set aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to a relevant factor of no great importance. The preferred ground on which this is done, however, is not the failure to take into account relevant considerations or the taking into account of irrelevant considerations, but that the decision is "manifestly unreasonable". This ground of review was considered by Lord Greene M.R. in Wednesbury Corporation , at pp.230, 233-234, in which his Lordship said that it would only be made out if it were shown that the decision was so unreasonable that no reasonable person could have come to it… 115 A number of decisions in NSW have considered the application of Wednesbury in determining whether a decision was unreasonable in a particular case. In Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources (2005) 138 LGERA 11 Spigelman CJ (with whom Beazley and Tobias JJA agreed) stated at [129]: Perhaps the most appropriate formulation is whether the decision is 'illogical, irrational or lacking a basis in findings or inferences of fact supported on logical grounds': Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165. 116 This formulation has since been quoted with approval in this Court in Gales Holdings Pty Ltd v Minister for Infrastructure and Planning [2005] NSWLEC 617 (Bignold J at 193), Save Our Street Inc v Settree (2006) 149 LGERA 30 (Biscoe J at [29]), Cutelli v Wyong Shire Council [2007] NSWLEC 137 (Jagot J at [35]), Hastings Point Progress Association Inc v Tweed Shire Council (2008) 160 LGERA 274 (Pain J at [127]) and Teoh v Hunters Hill Council [2008] NSWLEC 263 (Sheahan J at [12]). 117 In Fares Meats the applicant, a live-stock exporter, had been granted approval by an order of the respondent corporation to export sheep to Saudi Arabia. This approval was then revoked after the applicant had purchased the sheep due to the rejection of several shipments of sheep by Saudi Arabia. The original order granting approval did not provide for revocation of that approval. In purporting to revoke the approval the respondent considered that if the shipment was rejected the sheep would need to be slaughtered at sea which could in turn force the Australian Government to ban the trade entirely due to animal welfare concerns. Gummow J held that the approval was not validly revoked however his Honour rejected, inter alia, that the respondent had exhibited manifest unreasonableness. On the unreasonableness ground, Gummow J referred to three paradigms of unreasonableness outlined in Allars M, Introduction to Australian Administrative Law, Butterworths, Sydney 1990. The second of the three paradigms was described at 167 as "discrimination without justification, a benefit or detriment being distributed unequally amongst the class of persons who are the objects of the power." That is the passage the Applicant particularly relies on. I note that Gummow J sets the paradigms out without stating explicitly his support for these, nor does he disavow them. This formulation does reflect the tenor of the Applicant's argument on manifest unreasonableness in these proceedings, which is described in terms of discrimination, and can be usefully considered as another description of the manner in which manifest unreasonableness might arise in relation to an administrative decision (assuming that it can be established that discrimination is a relevant consideration in this context). 118 For the Applicant to establish that the decision to create the new sub-category in 2002 and set the ad valorem rate higher than other business categories was manifestly unreasonable requires that it must establish matters which have a high threshold. Firstly, in relation to the determination of the sub-category, I have already held that the determination of the sub-category Business-Marrickville Metro was valid in relation to the arguments in APOC cl 12(a) and (b) (par 47). That included a finding that the sub-category does relate to a centre of activity. The first basis for the claim of unreasonableness in the APOC cl 12(f) therefore cannot arise. The other aspect of the unreasonableness ground raises the issue that the determination was unreasonably discriminatory against Marrickville Metro. Whether the decision to determine the sub-category was unreasonable must be assessed by reference to the statutory framework for the making of such categories. The specific requirements of Ch 15 have been met (leaving aside the giving of notice which requirement arose after the decision was made). 119 I held above in par 105 that the ground based on discrimination being taken into account as an irrelevant consideration is not materially different from arguing the Council had to consider fairness as a mandatory relevant consideration. I have held consideration of fairness (as defined by the Applicant) was not a mandatory relevant consideration for the Council when determining the sub-category. If acting in a discriminatory way can be raised as a basis for arguing a decision is manifestly unreasonable (referring to Fares Meats), it is not correct to characterise the Council's actions as discriminatory and lacking in justification for the reasons I have already given above (par 106). There is overlap between the matters raised in relation to the fairness ground of challenge above and this ground of challenge. I also accept the submissions of the Council identified in par 112 that there was a rational basis for the Council's decision making process as disclosed in the transcript in evidence, also relying on Wellington City Council which I refer to below. It follows that I do not accept the Applicant's submissions that the Council had to be satisfied about the benefit principle or the capacity of the Applicant to pay before it determined the sub-category or that there was no rational basis for the Council's decision. Accordingly, I do not consider the determination of the sub-category by the Council in 2002 demonstrates manifest unreasonableness. 120 The setting of the ad valorem rate at a substantially higher amount than other business categories is also the focus of the unreasonableness ground of challenge. The framework in Ch 15 of the LG Act provides little guidance to, or imposes few requirements on, councils setting ad valorem rates. That no criteria are specified for the setting of an ad valorem rate confirms the wide discretion of the Council to set such rates. No specific matters such as the benefit principle or the capacity of a ratepayer to pay are required to be considered in relation to setting the ad valorem rate. Ad valorem rates by definition are linked to the land values of all rateable land in the same category (s 498). They will rise if land values assessed by the Valuer-General do. That circumstance is in marked contrast to the setting of the base rate. Criteria to consider in relation to the base rate are specified in s 536. While the Applicant relied heavily on s 536 as providing guidance for the setting of ad valorem rates it applies specifically to the setting of a base rate. Pestell does not support the Applicant's arguments because the statutory regime for the making of the rate challenged in that case was more akin to the making of a special rate under the LG Act to which different provisions apply (as identified in the finding on justiciability in par 25). Section 495 in particular requires a council to levy the land that will benefit from the works the subject of the special rate or will contribute to the need for the works. While the Applicant argues that there was no relevant material before the Council which supported its decision to set the rate on a rational basis there is nothing under the Act which required any such material to be considered. 121 The Act specifies a process requiring the Council to agree a draft annual budget and management plan (s 405 and 406) and place these on public exhibition and receive submissions before their finalisation (s 532). The evidence establishes that these steps were taken by the Council in 2002 (see par 6(ix),(x),(xii)) and in the following years (see table at par 7). As part of the process of consideration required under the LG Act, and as submitted by the Council (par 112), the transcripts of the councillors' discussions at the relevant meetings in 2002 (par 6(vii),(ix)) suggest why they decided to introduce and levy the sub-category as they did. The matter was considered by the Council on a number of occasions before the final decision to determine the sub-category and set a higher ad valorem rate was made on 23 April 2002 (resolution GM 22 and GM 23, see par 6(ix)). 122 The wide discretion of a council in setting rates is well articulated in Wellington City Council, a New Zealand Court of Appeal decision relied on by the Council. The statutory scheme considered in that decision differs from that in the LG Act in numerous ways, for example the Ratings Powers Act 1988 (NZ) provides for more categories of rates which a council may impose and provides a council with broad discretion to determine the application of the various rates under the Act. While the statutory framework may vary, in broad terms that decision correctly identifies the nature of rate setting which is applicable to the LG Act also. The following quotation [544]-[545] is useful to consider in the context of this case: The legislation contains no express criteria or purpose statement applicable in this case for making the various choices under those three heads. It imposes significant process obligations providing for public participation, openness and accountability in the decision making. But the substantive decisions are not expressly circumscribed. The legislation proceeds on the premise that the wider substantive judgments are made by the popularly elected representatives exercising a broad political assessment, and of particular relevance in the present case, having regard to the full range of matters specified in the s 84(1)(c) explanation which forms part of the resolution introducing or altering differential rating, and without the explicit mandatory linkage to benefits required where special purpose authorities adopt differential rating. To confirm the justification for the differentiation to those differences as correspond or are reasonably related to enjoyment of the benefit of services provided by the territorial authority is to ignore the scheme of the legislation and to disregard the breadth of the statutory powers. The legislation permits a territorial authority in making those choices which impact on the incidence of rates to make its own judgment as to what is appropriate and equitable. That decision-making is the prerogative of the local authority subject to the statutory limitations and process constraints already referred to – and to amenability to judicial review. 123 That passage also applies to rate setting under the statutory scheme in the LG Act. The setting of rates by councils is a complex exercise which the LG Act circumscribes in a number of ways, but which also provides to councils broad powers to set rates. No change of circumstances necessary 124 Decisions have been made annually by the Council over an extended period of many years about what rates should be set (including under the LG Act 1919). The Applicant argues that for a decision not to be manifestly unreasonable there has to be a reason why the Council decided to set a new rate for a single site in 2002 and none has been identified. The Applicant relied on the General Manager's report (extracted at par 6(viii) above) as failing to provide any rational basis for why Marrickville Metro should pay more rates given there was no benefit to the centre identified in that report to justify such action. Such a decision has to satisfy the "benefit" principle according to the Applicant. A change of circumstances to cause the Council to change the sub-categories of rates charged is not required under the specific terms of the LG Act. None of the matters relied on by the Applicant suggest that such a requirement arises by implication. Given the broad discretion the Council has to set sub-categories under the Act, I do not agree that a change of circumstances justifying a new sub-category is a prerequisite for the exercise of the Council's discretion in relation to the creation of a new sub-category. 125 That there is an unreasonable impact on the Applicant as the current owner is also not made out in light of the evidence of Ms Wright that the newer tenancy agreements in Marrickville Metro require the tenant to pay the outgoings of the landlord which include council rates. This is also confirmed by the terms of the six leases attached to Mr Christmas's affidavit (par 12). 126 The scheme of the Act and the councillor's actions do not suggest that they have acted in a way that was illogical or lacking any rational basis. The Applicant is unsuccessful on this ground. 5. "Improper purpose" (APOC cl 12(g)) 127 The Applicant submitted that the creation of the sub-category was for the improper purpose of imposing a greater rate burden on a single landowner as a sponsorship or promotion of the shopping strips in the LGA by paying a higher proportion of rates than the category for the shopping strips in the LGA. There is no warrant, express or implied, that the power to collect rates under the LG Act from one ratepayer can be used to reduce the rates payable by others. The Applicant submitted that this ground was interchangeable with the ground concerning irrelevant consideration. The Council denied that there was any improper purpose in its actions. Finding 128 Improper purpose requires that there be a finding that a decision was not within the power conferred by legislation (per Aickin J in R v Toohey; Ex parte Northern Land Council (1981) 151 CLR 170 at 232–233 (Gibbs CJ, Stephen, Mason, Murphy and Wilson JJ concurring in separate judgments as to this requirement). The ground as expressed in the APOC focuses on the treatment of a single landowner but I have already held that the determination and the naming of the sub-category Business – Marrickville Metro was lawful because it is not imposed on a single landowner but a centre of activity. The sub-category relates to the land use on the site not the owner. That finding largely removes this ground of challenge. 129 This issue was otherwise largely dealt with in relation to the numerous grounds of challenge based on fairness, including discrimination considered above. The short answer to this ground is as stated by the Council. It is inherent in the setting of a rate by a council that if different rates are set, as Ch 15 provides for, that some ratepayers will pay more than others. If the category of Business – Marrickville Metro is otherwise lawful (as it is), there is no basis for arguing that having a category that is required to pay rates at a higher rate than other categories is for an improper purpose. B. Challenge to rating levy from 2004 to 2008 (APOC cl 13, prayer 5) 130 Five grounds of challenge to the rate setting from 2004 to 2008 are identified in cl 13 of the APOC based on the grounds already considered above namely (a) failure to consider fairness as a mandatory relevant consideration, (b) discrimination in the setting of the ad valorem rate, (d) the ad valorem rate set was unreasonable and (e) was made for an improper purpose. Ground (c), apprehension of bias in setting the ad valorem rate, is also raised but I will consider this issue separately and last in the judgment. The evidence of the Council's various rating decisions are summarised in the table above at par 7 for the relevant decisions between 2002 and 2004 and below at par 134 and par 144 for the relevant decisions in 2007 and 2008, respectively. I note for completeness that prayer 5 does not seek a declaration that the rates levied in 2003 in the rates notice were invalid, only the rates from 2004 because the Applicant became the owner from that year. 131 The Applicant's written submissions state that the Council confirmed and affirmed for these years the rating structure set in 2002 with the Marrickville Metro category ad valorem rates being continually higher than the Business-General category in all these years. The submission was made that no additional research or review of the rationale for the making of the Marrickville Metro rate was provided in any of these years. The submissions refer to the resolution of the Council on 18 May 2004 to adopt a rating structure that would "maintain relativities between rating categories and redistribute the rate burden within each category based on … 2003 land values." Further the Applicant referred to a letter from the Council's General Manager to the Applicant dated 14 June 2007 stating that the current policy on rates was the Council's decision of 23 April 2002. A summary of part of the General Manager's report of 23 April 2002 which refers to the factors the Council may wish to consider are repeated in the letter but not the factors which suggest that a sub-category was not necessarily justified. 132 That the Council continued to act on the same basis after 2002 as it did in 2002 does not alter any of my conclusions above in relation to the challenge to the determination of the sub-category in 2002. I have held above that the sub-category Business-Marrickville Metro was validly made in 2002 in relation to the same grounds of challenge now raised in relation to the rate setting decisions from 2004 to 2008. For the reasons already provided in relation to the 2002 decision, these grounds also fail in relation to the later rates set by the Council as these essentially continue what was decided by the Council in 2002. The Applicant fails on the challenges raised in cl 13(a) (b) (d) and (e) of the APOC. C. Challenge to 2007 decisions (17 April 2007, 19 June 2007) (APOC cl 13A, prayer 3) 133 Additional evidence and expansion of some of the Applicant's grounds of challenge are raised in relation to the 2007 ad valorem rate decision due to the arbitrary decision by the Council, suggesting manifest unreasonableness according to the Applicant, to adjust down all rates due to increases in land values except for the Business – Marrickville Metro category. Improper purpose is also alleged. 134 The process for the making of the 2007 rates as identified in documents annexed to Mr Whealy's affidavit is as follows: i. In a Councillor Briefing Paper dated 25 February 2007 (annexed to the affidavit of Mr Christmas) councillors are informed of new property valuations by the Valuer General which report an average increase in values of 9.7 per cent for residential properties and 18.0 per cent for non-residential properties. Marrickville Metro had a 91.4 per cent increase in value. The paper explains that if rate revenue is to be maintained (subject to a permissible 3.5 per cent increase), ad valorem rates will need to be reduced (either uniformly or otherwise). ii. In a Councillor Briefing Paper dated 19 March 2007 the effect of the revaluation of properties in the LGA is discussed. In order to maintain an increase of rate revenue of 3.5 per cent (predicted to be the permissible increase) a decrease in ad valorem rates is required on all rateable land. Assuming the reduction in rates was to occur evenly across all rateable properties, the ad valorem rate for Marrickville Metro would need to be reduced from 0.01286037 cents in the dollar (as it was in 2006/2007) to 0.00695548. If the rate was maintained Marrickville Metro would pay an additional $157,070 compared with the previous year. The Briefing Paper states that such increase in revenue could be dealt with by reducing the residential or business-general ad valorem rate further. iii. The Draft Annual Management Plan and Budget 2007-2010 was presented for decision at a Council meeting of 17 April 2007. The General Manager's report proposed that the rate in the dollar applying to the Business-Marrickville Metro rating category be maintained. The report notes the objection of Marrickville Metro against the valuation of land and notes that if the objection is upheld then the rates in the dollar will need to be recalculated. A motion at the meeting was carried that the Marrickville Metro ad valorem rate be maintained to provide for an estimated yield of $342,086 (an increase of approximately 117 per cent on the previous year). This was presented as an alternative to increasing rate revenue by 3.5 per cent from all categories and sub-categories. After considering an average increase in land value of 13.9 per cent, the ad valorem rate for the Business-General category was reduced by approximately 10 per cent on the previous year to provide for a 3.5 per cent increase in rate revenue from that category compared to the previous year. The other business sub-categories (Business-Industrial St Peters, Business-Industrial St Peters North and Business-Industrial Camperdown) also experienced a 3.5 per cent increase in rates payable on the previous year. As a result of the increased revenue from the Business-Marrickville Metro rating category, the revenue from the residential rate category was increased by approximately 2.8 per cent increase in rate revenue from that category. iv. The Annual Management Plan and Budget 2007-2010 was before the Council meeting on 19 June 2007. The General Manager's report notes the submissions made by AMP Capital Investors in response to the Draft Annual Management Plan and Budget 2007-2010 and the request that Council justify the disproportionate rate increase. The report also notes a maximum permissible rate increase of 3.4 per cent was approved by the Minister rather than the 3.5 per cent which the draft budget (adopted at the Council meeting on 17 April 2007) was based upon. A table sets out the new ad valorem rates required to meet the permissible increase. The ad valorem rate and yield for Marrickville Metro is unchanged. All other rating categories apart from Business-Airport have the ad valorem rate reduced from those set out in the draft budget adopted in April. The motion that the ad valorem rates as set out in the table be adopted was carried. v. The Applicant wrote by letter dated 29 May 2007 to the Council to complain about what was proposed in the 2007-2010 draft budget as no downward adjustment of the ad valorem rate was proposed for the Business-Marrickville Metro category rate but was for all other rate categories. The General Manager of the Council responded by letter dated 14 June 2007. This letter states that the objections have been noted and will be included in the General Manager's report to the Council meeting on 19 June 2007. The letter extracts a passage from the General Manager's report of 23 April 2002 as to the rationale for the introduction of the sub-category (extracted at par 6(viii)). vi. The Applicant wrote again on 19 June 2007 as it did not consider the Council's response was adequate. This letter attached a table comparing ad valorem rates for the different rating categories in 2006 and 2007. By letter dated 30 July 2007 the General Manager wrote acknowledging that the ad valorem rate for the Marrickville Metro sub-category had been adjusted upwards over previous years. The letter stated that councillors had not articulated the rationale for the decision apart from at the time of the decision to introduce the sub-category on 23 April 2002. 135 To summarise, for the financial year 2007/2008 the Council resolved in its draft budget that in light of new property valuations to reduce ad valorem rates for all rating categories other than the Business – Marrickville Metro. The Marrickville Metro land value increased by 91.4 per cent from the previous valuation. The Business - Marrickville Metro ad valorem rate was maintained, which resulted in a 91.4 per cent increase in rates payable by the Applicant from the previous year due to the increase in the land value of Marrickville Metro. At that stage the Council assumed rate revenue could increase by 3.5 per cent. A further resolution in 2007 made in light of the Minister's decision to allow only a 3.4 per cent increase in the permissible rate revenue further reduced ad valorem rates for all other commercial rating categories. The same ad valorem rate was continued for Marrickville Metro. Applicant's submissions (i) Wednesbury unreasonable 136 The decision made by the Council in April 2007 not to adjust down the ad valorem rate for the Business-Marrickville Metro sub-category in light of the increase in property valuation in the LGA and thereby maintain relativities between the sub-category and the other residential and business categories had no rational basis. The decision effectively resulted in the rate payable by Marrickville Metro being doubled. No additional information or research and no review of the rationale for doing so beyond what was carried out in 2002 was before the Council when it made these decisions. There was no report to the Council which identified why the Marrickville Metro sub-category contributed to a disproportionate burden on Council facilities or assets compared to all other business land uses or how, as a distinct land user, the burden Marrickville Metro created was somehow disproportionate. There was no response to the complaint from the Applicant in the letters dated 29 May 2007 and 19 June 2007 which articulated the rationale for the Council's decision. Rather the letter from the Council's General Manager dated 30 July 2007 confirmed that there was no rationale for the decision to set the ad valorem rates at the highest rate for the Business-Marrickville Metro and Business-Airport sub-categories. That demonstrates the completely arbitrary nature of the Council's decision-making and hence its unreasonableness. (ii) improper purpose 137 The Council's decision setting the ad valorem rates for Marrickville Metro in 2007 was done to subsidise the business and residential rates. That is an improper purpose. Council's submissions 138 The Council argued that there was nothing wrong with the Council decision to set the ad valorem rate for the Marrickville Metro sub-category in 2007 as it did and such a decision was not unreasonable or improper. Finding (i) Wednesbury unreasonable 139 The relevant authorities in relation to Wednesbury unreasonableness are identified above in par 113-117. The Council's decision in 2007 to maintain the ad valorem rate for the Metro site and reduce all other ad valorem rates does no doubt heighten the sense of grievance felt by the Applicant that it is paying more rates than it considers it should. Because ad valorem rates are calculated on the basis of land valuations provided by the Valuer-General, an increase in land value will lead to more ad valorem rates being payable in the absence of any adjustment of the rate. 140 The context for the Council's decision under the scheme in Ch 15 for the setting of ad valorem rates in the LG Act is essentially the same as was considered in relation to the rate setting decisions in 2002. The evidence outlined above in relation to the 2007 decisions confirms that the processes required under the Act were carried out. The councillors were advised of the recent increases in land values and the impact on ad valorem rates in light of the overall ceiling on rates income set by the Minister (par 134(i),(ii)), a draft annual management plan and budget was prepared (par 134(iii)) and publicly exhibited (as can be inferred by the General Manager's letter to AMP Capital Investors dated 14 June 2007, see par 134(v)). The submission from AMP Capital Investors dated 29 May 2007 complaining of the ad valorem rate and seeking justification of the amount was notified to the councillors and they were aware of this complaint before confirming the final management plan and budget for 2007. 141 As already held, the scheme in the Act does not require an application of the benefit principle or a determination of the capacity to pay as the Applicant submitted throughout the proceedings. For the reasons already given above, the Council has broad discretion in the setting of ad valorem rates and the Applicant has to satisfy a high threshold in order to succeed. The same reasoning already applied in relation to the 2002 decision also applies to this ground so that I consider the 2007 decisions the Applicant is challenging were not unreasonable. (ii) improper purpose 142 For the reasons already stated at par 128-129 in relation to the 2002 decision and a par 132 in relation to subsequent decisions up until 2006 there was nothing improper in the decision to set rates in 2007 which resulted in lower rates in residential and other business categories. D. Challenge to 29 April 2008 decision (APOC cl 14, prayer 4) 143 Additional evidence and expansion of some of the Applicant's grounds of challenge are also raised in relation to a rating decision made by the Council on 29 April 2008. The Applicant also seeks declarations that the resolution of the Council on 29 April 2008 to determine an ad valorem rate for the Marrickville Metro sub-category by increasing the yield for that sub-category from the rate determined in 2007 is invalid. 144 Mr Whealy's affidavit annexed the relevant documentation: i. The Draft Annual Management Plan and Budget 2008-2011 was before a Council meeting on 29 April 2008. The General Manager's report discusses the proposed rating structure by reference to a table setting out the proposed ad valorem amounts for each rate category. An increase in rate revenue of 3.2 per cent was permitted by the Minister. An across the board increase in rate revenue of 3.2 per cent was proposed. Under this model the estimated yield for the Metro was $302,599.32. ii. The Draft Annual Management Plan and Budget 2008-2011 was adopted with an amendment that the Marrickville Metro rate yield be increased by 10 per cent to $322,538.08 in order to reduce the rate revenue collected from the Business-General category from $7,518,920.05 (provided for in the General Manager's report based upon an across the board increase in revenue of 3.2 per cent) to $7,496,693.24. This reflected an increase in rate revenue from the Business-General category of approximately 2.8 per cent on the previous year iii. Transcripts for this meeting on 29 April 2008 annexed to the affidavit of Mr Whealy show the proposal to increase the rate for Marrickville Metro by 10 per cent was raised by Councillor Byrne. He states that this proposal is an alternative to a 3.2 per cent rate increase across the board. The proposal was described by Councillor Byrne as follows: What's been moved is an increase of 3.2% across the board for all our rates but the amendment I'd like to move is that we raise the rates for the Metro and the airport, which are separate categories, by 10% instead of the 3.2% and that with that increase, it doesn't increase the amount of rates we take in as a total, but it just shifts the mix and we take a bit more from the Metro and we reduce the rates for business general, which is the commercial shopping strips in our area in response to that. So we take a little bit more from the Metro and the airport and we take a little bit less from business general. It's an amendment that we've done in the past and it's one that I think is right to try and redress the balance between the real cost that the airport and the Metro have on our community and that they have on the local shopping strips in particular. Councillor Cotter later responds to this proposal stating that it is an "arbitrary increase" without "any basis". An amendment to provide for the increase of 10 per cent was moved by Councillor Byrne, seconded by Councillor Olive and was passed. iv. By letter dated 7 May 2008 AMP Capital Investors wrote to the Council and referred to the amendment moved by Councillor Byrne in requesting that the Council justify the 10 per cent increase in rates payable. The Council responded by letter dated 27 May 2008. This letter confirmed the amendment and stated that the councillors had not articulated a rationale for the increase but referred to the decision of 23 April 2002 (GM 22 and GM 23) and road and traffic management improvements surrounding the Metro site. The letter attached the minutes of the meeting of 29 April 2008 and invited further submissions on the draft plan. v. The Annual Management Plan and Budget 2008-2011 was adopted by the Council meeting on 17 June 2008. 145 In summary, for the financial year 2008/2009 the Council resolved to increase the rates payable by Marrickville Metro by 10 per cent on the previous year. The rates paid by the Business-General category increased by 2.9 per cent. Applicant's submissions (i) Wednesbury unreasonableness 146 The Council's decisions on the ad valorem rate for Marrickville Metro continued to demonstrate decision-making that was so unreasonable that the decision was invalid. The decision to impose a further 10 per cent increase in the ad valorem rate of Marrickville Metro over and above other business categories was entirely arbitrary and without any rational justification or any material to enable such a justification to be arrived at by the councillors. (ii) improper purpose 147 The Applicant argues that this decision was motivated by an improper purpose to subsidise not only the residential ratepayers but also the other business category ratepayers. Council's submissions 148 There is no illegality in the Council's decision making. Finding 149 In relation to whether the 2008 decision was unreasonable in the Wednesbury sense I observe firstly that the statutory processes required for the making of annual rates by the Council were followed. The Council determined its draft annual management plan and budget (par 143(ii)), this was publicly exhibited (as can be inferred from the letter referred to in par 143(iv)) before the final plan and budget were made on 29 April 2008 (par 143(v)). There was discussion amongst the councillors as to whether the decision to increase the rate by 10 per cent was appropriate, with some disagreement as identified above at 143 (iii) in the transcript references set out. 150 For the reasons already provided in relation to the 2002 and subsequent decisions (par 113-126, 128-129, 132), and the 2007 rate setting decisions (par 139-141), these two grounds of challenge also fail. Apprehension of bias (APOC cl 12(e), 13(c)) 151 The Applicant argued that several of the rating decisions under challenge were affected by an apprehension of bias on the part of several councillors. If upheld that claim would give rise to invalidity of those decisions. An apprehension of bias arose because of the councillors' interests as small business owners in the local Marrickville area and a perception that they could benefit from a shift in the rates burden by imposing a greater burden on the owner of Marrickville Metro. Before considering the arguments in detail it is necessary to identify the provisions of the LG Act which deal with the requirements for disclosure by councillors of pecuniary and other interests. 152 Section 232(2) of the LG Act states: (2) The role of a councillor is, as an elected person: • to represent the interests of the residents and ratepayers • to provide leadership and guidance to the community • to facilitate communication between the community and the council. 153 Chapter 14 - Honesty and Disclosure of Interests includes Pt 1- Conduct generally. Section 439 requires that councillors must act honestly and exercise reasonable care and diligence in carrying out functions. Prior to 2004, s 440 stated that the Minister could prepare a model code of conduct but councils were not required to incorporate this into their code of conduct. Councils were required to have a code of conduct which was "to be observed by councillors, members of staff of the council and delegates of the council". Section 440 was amended in 2004 by the Local Government Amendment (Discipline) Act 2004 to require councils to adopt the provisions of any model code of conduct prescribed by the regulations. The Local Government (General) Regulation 1999 cl 43E prescribed The Model Code of Conduct for Local Councils in NSW, published December 2004. In 2005 this regulation was repealed and replaced by the Local Government (General) Regulation 2005. Clause 193 prescribed that the December 2004 Model Code applied continued to apply. Section 440(5), as it has been since 2004, gives the code a binding effect on councillors. Section 440(8) provides that this requirement for compliance does not give rise to, or cannot be taken into account in, any civil cause of action. Regulation 193 was amended in 2008 to prescribe that The Model Code of Conduct for Local Councils in NSW, as published in the Gazette on 27 June 2008, now applies. 154 The Model Code of Conduct as it was between 2004 and 2008 required the disclosure of non-pecuniary interests. At 6.11 the model code stated that "If you have a non-pecuniary conflict of interests, you must disclose the nature of the conflict. If this is in a meeting, do so as soon as practicable." Non-pecuniary interests were described at 6.8 as "A private or personal interest the council official has that does not amount to a pecuniary interest as defined in the Act (for example; a friendship, membership of an association, society or trade union or involvement or interest in an activity and may include an interest of a financial nature)." The 2008 Model Code, introduced in June 2008, is more comprehensive in its treatment of non-pecuniary interests but does not apply to the decisions under challenge. 155 Pt 2 - Duties of Disclosure of Ch 14 of the LG Act applies to councillors inter alia (s 441). Pecuniary interest is defined in s 442(1) as "an interest that a person has in a matter because of a reasonable likelihood or expectation of appreciable financial gain or loss to the person." Section 442(2) states: A person does not have a pecuniary interest in a matter if the interest is so remote or insignificant that it could not reasonably be regarded as likely to influence any decision the person might make in relation to the matter or if the interest is of a kind specified in section 448. Section 449 provides for the making of returns disclosing pecuniary interests by councillors and designated persons and has not changed over the relevant period. Section 444 requires councillors to prepare and submit written returns in accordance with the procedure set out in s 449. For the purposes of s 449, Div 2 of Pt 8 of the Local Government (General) Regulation 2005 (cl 183 – cl 191) prescribes pecuniary interests which are to be disclosed in returns made pursuant to s 449. The now repealed Local Government (General) Regulation 1999 contained similar provisions in Pt 5A. 156 Section 448 provides what does not need to be disclosed and includes any interest as a ratepayer (s 448(c)). 157 Pecuniary interests must be disclosed at a council meeting where the relevant matter is being disclosed and not attend a meeting in accordance with s 451. Division 1 of Pt 3 of the LG Act (s 460-468) identifies the procedure for the making of complaints about non-disclosure of interests under Pt 2 and the investigation of complaints by the Director-General. The Director-General refers the results of any investigation to the Pecuniary Interest and Disciplinary Tribunal which then decides whether to conduct proceedings in relation to the matter. Division 4 of Pt 3 (s 471 to 486A) sets out the procedures of the Tribunal. The Tribunal can, if the complaint is proved, reprimand, suspend or disqualify a councillor (s 482). Evidence 158 Mr Whealy's affidavit annexed searches of the ASIC company register and the land titles register. Councillor Hanna is the Director of Maurice Menswear Pty Ltd with a principal place of business at 235 Marrickville Road, Marrickville. Iskanderia Pty Ltd, of which Councillor Hanna is a Director, owns the property. Councillor Thanos is the Director of The Smile Shop (Dulwich Hill) Pty Ltd and Thanos & Co (Pty Ltd) both of which have a principal place of business at 494 Marrickville Rd Dulwich Hill. Councillor Thanos is also Director of Aldebaran Nominees Pty Ltd with a registered office at 494 Marrickville Road, Dulwich Hill. Aldebaran Nominees owns the property. Councillor Macri is described on the ASIC register as a person carrying on the business of Fernando's Hair Design with a principal place of business at 253 Marrickville Rd, Marrickville. Mr Whealy's affidavit states that the property appears to be owned by members of Councillor Macri's family as the owners have the same last name. 159 Based on the documents annexed to Mr Whealy's and Mr Christmas's affidavit, the Councillors voted for the resolutions dealing with the Marrickville Metro sub-category as set out in the table: Date of resolution Resolution Hanna Thanos Macri Result 19/6/2001 That Council investigate introducing large shopping centre rate For For Not councillor Passed (unanimous) 21/8/2001 Further report on large shopping centre rate For For Not councillor Passed (unanimous) 19/2/2002 In principle introduction of large shopping centre rate & further report - For Not councillor Passed (unanimous) 23/4/2002 Rate introduced, fixed at 40% above other commercial rates For For Not councillor Lost (3:7) 23/4/2002 Rate introduced, fixed at 20% above other commercial rates (GM 22) For For Not councillor Passed (unanimous) 23/4/2002 Adoption of 2002-2005 Draft Management Plan and 2002-2003 Draft Budget (incorporating introduction of Marrickville Metro sub-category, rated 20% higher than other commercial rates) (GM 23) Against Against Not councillor Passed (8:2) 15/4/2003 Adoption of 2003-2006 Draft Management Plan and 2003-2004 Draft Budget (incorporating a predicted 3% permissible increase in rate revenue) Against Against Not councillor Passed (8:3) 17/6/2003 Adoption of 2003-2006 Management Plan and 2003-2004 Budget (amending draft to provide for a 3.6% increase in rate revenue, ad valorem rate for the Metro set at 1.632700 cents in the dollar) Against Against Not councillor Passed (9:2) 18/5/2004 Adoption of 2004-2007 Draft Management Plan and 2004-2005 Draft Budget (incorporating a predicted 3.4% permissible increase in rate revenue, ad valorem rate for the Metro set at 1.215715 cents in the dollar after consideration of new land values in the LGA resulted in a 39% increase in value of the Metro site, relativities between rating categories from prior financial year maintained) Against Against Against Passed (8:3) 29/6/2004 Adoption of 2004-2007 Management Plan and 2004-2005 Budget in accordance with draft plan and budget For – casting vote as Chair to carry resolution Against Against Passed (6:6) 19/4/2005 Adoption of 2005-2008 Draft Management Plan and 2005-2006 Draft Budget (incorporating a predicted 3.5% increase in rate revenue, ad valorem rate for the Metro set at 1.25875 cents in the dollar, relativities between rating categories from prior financial year maintained) For For For Passed (7:3) 21/6/2005 Adoption of 2005-2008 Management Plan and 2005-2006 Budget in accordance with draft plan and budget For For For Passed (7:4) 18/4/2006 Adoption of Draft Marrickville Community Plan, Draft Strategic Plan 2006-2011 and Draft Annual Management Plan and Budget 2006-2009 (incorporating a permissible increase in rate revenue of 3.6%, ad valorem rate for the Metro set at 1.286037 cents in the dollar, relativities between rating categories from prior financial year maintained) For For For Passed (unanimous) 20/6/2006 Adoption of Marrickville Community Plan, Strategic Plan 2006-2011 and Annual Management Plan and Budget 2006-2009 in accordance with draft community plan, strategic plan, management plan and budget For For For Passed (11:1) 17/4/2007 Maintain Marrickville Metro ad valorem rate (after new property valuations) For Against For Passed (10:1) 19/6/2007 Maintain Marrickville Metro ad valorem rate For Against For Passed (11:1) (after 3.4%rate revenue increase decided) 29/4/2008 Adoption of Draft Annual Management Plan and Budget 2008-2011 with amendment to increase Marrickville Metro rate yield by 10% Against For –casting vote as Chair to carry resolution Against Passed (6:6) 17/6/2008 Adoption of Annual Management Plan and Budget 2008-2011 Against For Against Passed (6:5) Applicant's submissions 160 The decision to create the sub-category and the following determinations between 2002 and 2008 of the ad valorem rate were invalid decisions because they were affected by an apprehension of bias. Some of the councillors who voted on the resolutions had businesses in the LGA which stood to benefit from an increase in the burden of rates paid by the Applicant. Councillors Hanna, Thanos and Macri all had and continue to have business interests on the retail strip in Marrickville which is in competition with Marrickville Metro and therefore stood to benefit from any decision to subsidise Business-General or Business-Industrial rates by creating the Marrickville Metro sub-category. They are owners of businesses or owners of land in the Business-General category and they had an interest in having those rates subsidised. The Court of Appeal in McGovern v Ku-ring-gai Council (2008) 161 LGERA 170 is authority that it is not necessary to decide whether the vote of those relevantly affected was determinative in the Council's decisions. 161 The Applicant further submitted that the provisions for pecuniary interest disclosure in Ch 14 of the LG Act do not cover the field but rather the common law doctrine of apprehended bias exists independently and is not dependent upon the existence of a discloseable pecuniary interest. Interest as a ratepayer does not equate to interest as a trade competitor. The facts in McGovern are an example of apprehension of bias based on a non-pecuniary interest but are different from this matter as the apprehension was based on pre-judgment. The principles identified by Spigelman CJ at [36]-[38] are pertinent to these facts. The continuance of the common law duty on decision-makers in circumstances giving rise to an apprehension of bias is confirmed by the only available remedy to Ch 14 breaches being the imposition of penalties on individual councillors. That regime is distinct from judicial review remedies. Further, if the common law was excluded by Ch 14 then McGovern could not have been argued. 162 A distinction must be drawn between pecuniary interests which must be disclosed under the LG Act and those financial interests which are non-pecuniary in nature. A financial interest does not require that there be a "reasonable likelihood or expectation of appreciable financial gain or loss to the person" being the definition of pecuniary interest in s 442. Financial interest extends further to include the possibility of the councillors' businesses becoming more competitive than their trading competition in the Marrickville Road shopping strip. The three councillors have business interests in land falling within the Business-General category to which Marrickville Metro belonged before 2002. They had a vested interest in ensuring that Marrickville Metro paid higher rates as a business competitor regardless of whether their businesses paid less rates. That is the conflict of interest giving rise to the apprehension of bias. There arises a reasonable apprehension of bias in relation to the councillors' financial interests as trade competitors. This is over and above an interest which any councillor as owner of residential property would have to keep their rates low by subsidising those rates with other ratepayers in different rate categories paying more. Further, s 448, which states disclosure of interests as a ratepayer is not required, does not address the interest of the councillors as trade competitors. 163 The apprehension of bias is particularly acute in relation to the 29 April 2008 decision to adopt the draft plan of management and annual budget including increasing the Marrickville Metro rate by 10 per cent (see par 134 and par 143 for the chronology of decisions post-2006). One of the three councillors with business interests had a casting vote (Councillor Thanos) so that his decision had real effect. There was an added burden that an apprehension of bias that someone might not bring an impartial mind to the issue arose as there was no justification for the increase in rates. That arises even before the resolution is considered. When the actual resolution is considered the case is clear. Council's submissions 164 The requirements for disclosure of interests by councillors is set out extensively in the LG Act in Ch 14. Section 448(b) of the Act provides that a rateable interest is not an interest that would need to be disclosed or that would prevent a councillor from voting. This section is grounded in the fact that if disclosure and exclusion from voting was required it would be unlikely that a quorum could ever be reached in a council vote to set a rate. Where the Act and the Council's own code of conduct (which does not expressly require any disclosure of rateable interests) do not require disclosure, it is unlikely that failure to disclose could give rise to a reasonable apprehension of bias on the part of the three named councillors in the mind of a fair minded observer. 165 The scheme of Ch 14 identifies that there is only one basis on which a councillor can decline to vote or be present during voting and that is if he has a discloseable pecuniary interest. Under the statute he is otherwise expected to vote. 166 Although it is not necessary in a case of apprehended bias to demonstrate that relevant votes were determinative of any decision, examination of the votes show that at the meeting of 23 April 2002 the motion to set the rate at 40 per cent above other commercial rates (which was voted for by Councillors Hanna and Thanos) was defeated. The motion to set the rate at 20 per cent above other commercial rates was successful with unanimous support from the councillors. In April 2007 the motion to maintain the ad valorem rate for the Marrickville Metro sub-category in light of new property valuations was supported by Councillor Macri (who was not a councillor in 2002) and Councillor Hanna. Councillor Thanos voted against the motion. The Councillors voted in the same way in June 2007 concerning the maintenance of the ad valorem rate after adjustments were required due to the increase in rate revenue permitted by the Minister. 167 The motion in 2008 to increase the rate payable by Marrickville Metro by 10 per cent was supported by Councillor Thanos however Councillor Macri (who was not a councillor in 2002) and Councillor Hanna voted against the motion. Councillor Hanna voted differently between 2002 and 2008 as to whether Marrickville Metro should be subject to an increase in rates payable despite continuing to be a ratepayer in the Business-General category over that period. Finding on apprehension of bias 168 The importance of neutrality of statutory decision-makers is underlined by the administrative law principle that a decision-maker should not be biased or give rise to an appearance of bias in making administrative decisions, as identified in discussion in Aronson M and Dyer B, Judicial Review of Administrative Action, 4th Edition, Lawbook Co, Sydney 2009 at p 639-641. 169 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 is recognised as providing a relevant test for whether an apprehension of bias arises for those exercising statutory functions. The facts in Ebner concerned whether there was an apprehension of bias resulting from a judge holding shares in a bank which had a financial interest in the outcome of the litigation and contributed to the funding of the litigation as a creditor of the bankrupt appellant. The test propounded in Ebner in the judgment of Gleeson CJ, McHugh, Gummow and Hayne JJ (Kirby J dissenting, Callinan and Gaudron JJ delivering separate judgments) is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the issue before them. As the decision recognises at [4], that principle has been extended to many other kinds of decision-making and decision-makers. The application of the principle is described in two steps at [8]: The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an "interest" in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed. 170 The application of the test in Ebner was considered by the Court of Appeal in McGovern in the context of a multi-member elected decision-making body, a local council. The test for apprehended bias applies to statutory decision-makers and is affected by the functions they are required to perform and the identity and nature of the decision-maker who is obliged to perform those functions. This requires a context specific approach, usually as part of a process of statutory interpretation, and the judicial paradigm is not universally applicable (per Spigelman CJ at [2], [7] and [10]). Similar findings were made by Basten JA at [71] and [75] referring to Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 per Hayne J at [179]-[187] as an example of how different standards to those applying to judges will operate in relation to ministerial decision-making in that case, because of the need to take into account the particular role and functions of the decision-maker. 171 In McGovern the alleged apprehension of bias was based on prejudgment on the part of certain councillors in the approval of a development application. In this matter an apprehension of bias is said to arise from a perceived conflict of interest arising from the interests of the three councillors in the various rate setting decisions of the Council because they have interests as small business owners or owners of land zoned for business purposes and therefore compete with Marrickville Metro as trade competitors. According to the Applicant, these interests could give rise to an apprehension of bias in the mind of a fair minded observer that when acting as councillors their decisions would not be made impartially. 172 In McGovern Spigelman CJ discussed the differences between cases of prejudgment and conflict of interest at [26]-[29] as follows: A conflict of interest requires a different analysis as to the relationship, as reasonably perceived, between the interest and the decision. Questions of fact and degree do not arise in the same way. In a pre-judgment case it is necessary to consider the degree of 'closure' of the allegedly closed mind. Where a relevant conflict of interest is established the reasonable apprehension follows almost as of course. Secondly, in my opinion, a different approach is appropriate when the vote or votes of the allegedly biased decision-maker(s) was not determinative. In a conflict of interest case it appears to me appropriate to conclude without further inquiry, that the statutory requirements of a valid decision-making process have not been complied with or that an adverse conclusion of what an independent observer might believe would more readily be drawn. … Where a person's involvement in the decision-making process can be characterised, in substance, as constituting him or her a party to the proceedings the issue is not, in my opinion, one of 'pre-judgment' but one of 'conflict of interest'. In Canada the basic authority is Old St Boniface Residents Association . In that case Sopinka J who delivered the judgment of the majority said at 1196: "I would distinguish between the case of partiality by reason of pre-judgment on the one hand and by reason of personal interest on the other. It is apparent from the facts of this case, for example, that some degree of pre-judgment is inherent in the role of a councillor. That is not the case in respect of interest. There is nothing inherent in the hybrid functions, political, legislative or otherwise, of municipal councillors that would make it mandatory or desirable to excuse them from the requirement that they refrain from dealing with matters in respect of which they have a personal or other interest ... Where such an interest is found, both at common law and by statute, a member of Council is disqualified if the interest is so related to the exercise of public duty that a reasonably well-informed person would conclude that the interest might influence the exercise of that duty. This is commonly referred to as a conflict of interest." 173 These findings, albeit obiter, suggest that once a conflict of interest has been made out a finding of apprehension of bias must follow. It is necessary to consider the interest alleged by the Applicant to determine if such a conflict of interest can arise separately from the regime in Ch 14 given the requirements for disclosure in Ch 14 of the LG Act. Does lack of requirement to disclose interest under Ch 14 answer common law apprehension of bias challenge? 174 The interest relied on by the Applicant is argued to arise separately from the regime for the disclosure of specified pecuniary and non-pecuniary interests in Ch 14 of the LG Act and the Council's code of conduct required by s 440 of the LG Act, summarised above at par 152-157. The Council argues that the scheme in Ch 14 "covers the field" so that pecuniary interests as defined must be disclosed and if not required to be disclosed then such interests could not give rise to an allegation of conflict of interest. No allegation is raised by the Applicant that there was a failure to disclose a pecuniary interest as required by Pt 2 of Ch 14. Interest as a ratepayer is not required to be disclosed (s 448) so that being a ratepayer for land in the business rating category is not a discloseable interest. 175 The Applicant argues that separately to the scheme for the disclosure of interests in the LG Act there is a common law duty not to act in a way which gives rise to an apprehension of bias which three councillors breached by participating in the decision-making process under challenge. It submitted that the lack of a requirement to disclose an interest in Ch 14 of the LG Act is not an answer to the Applicant's apprehension of bias case. Councillors continue to have common law obligations to exercise their functions under the acts they administer in conformity with administrative law principles. That includes the duty to act in a manner that does not give rise to an apprehension of bias including in relation to conflict of interest. I agree with that submission, as McGovern demonstrates, amongst other cases. 176 McGovern concerned the exercise of duties by councillors under the Environmental Planning and Assessment Act 1979 and whether an apprehension of bias arose on the basis of prejudgment in the course of those duties. Generally, the exercise of statutory duties by councillors must be carried out lawfully and is subject to judicial review. There are several cases referred to in McGovern at first instance and in the Court of Appeal where the duty of councillors to act without bias is recognised. In McGovern v Ku-ring-gai Council (2007) 153 LGERA 308 at first instance I referred to the LG Act setting out the roles and responsibilities of local councillors in their duties as councillors at [63]. I also referred to the consideration of pecuniary and non-pecuniary interests in the LG Act and considered non-pecuniary interests in particular at [66]-[67]. I held this statutory context was relevant in assessing the claim of apprehension of bias. This discussion was noted by Basten JA in the Court of Appeal at [151]. In this case the Council's rating functions are contained within the LG Act and the relevant statutory context is outlined above at par 13. While Ch 14 (summarised at par 152-157) provides for the disclosure of interests both pecuniary and non-pecuniary there is no statutory indication that this scheme is intended to oust any judicial review proceedings raising apprehension of bias based on conflict of interest. 177 A further reason supporting the existence of a common law duty of councillors to act without bias or the perception of bias in their statutory duties beyond their responsibilities to disclose interest under Ch 14 concerns the relief which can be granted in successful judicial review proceedings, namely a declaration of invalidity of a decision. This is not available in the scheme in Ch 14 of the LG Act. As identified by the Applicant, the penalty for the failure to comply with Ch 14 is that a complaint can be made and investigated and ultimately suspension of a councillor can be imposed (s 482). Under s 440(8) failure to comply with the Council's code of conduct does not give rise to a civil cause of action. Is there an interest giving rise to an apprehension of bias? 178 There is no appreciable difference in meaning between a financial interest and a pecuniary interest referred to in Ch 14. The Macquarie Dictionary, 3rd ed (Macquarie University, Sydney: The Macquarie Library Pty Ltd, 2001) defines pecuniary, inter alia, as "of or relating to money" and financial, inter alia, as "relating to monetary receipts and expenditures; relating to money matters; pecuniary". The Applicant seeks to distinguish a pecuniary interest as a ratepayer, referred to specifically in s 448(c), from a financial interest as a trade competitor being the owner of land or the operator of a business on land in a business category for rating purposes. 179 Whether an interest as a trade competitor alleged by the Applicant is an interest that could give rise to an apprehension of bias should be informed by the regime for the identification and disclosure of pecuniary interests identified in the LG Act. It is unlikely that an interest which is not required to be disclosed under s 448, for example, an interest as a ratepayer, could give rise to a conflict of interest which would ground a challenge based on apprehension of bias. Other matters which are not required to be disclosed under s 448 also concern potential financial benefits which may arise from the council's decision making, for example, (h) an interest in a contract as a result of a beneficial interest in shares in a company that does not exceed 10 per cent of the voting rights and (k) an interest relating to the payment of fees to councillors. Whether an interest as a trade competitor in a business zone is different from being a ratepayer in a business zone and whether such an interest can give rise to an apprehension of bias requires consideration. 180 The Applicant did not refer to any specific case in support of its argument that the financial interest it alleges gives rise to a potential conflict of interest of certain councillors supports a finding that an apprehension of bias might arise in the mind of a fair minded individual. Cases which have considered conflict of interest based on financial (or pecuniary) interests include Ebner, in which a judge had a beneficial interest in a private trust which had numerous shares in a bank. The bank contributed to the funding of the litigation because it would potentially gain a pecuniary benefit from the outcome of the proceedings. The High Court held that there was no apprehension of bias. In Hot Holdings Pty Ltd v Creasy (2002) 210 CLR 438 the High Court considered whether an apprehension of bias arose where two departmental officers who prepared a briefing for a Minister were alleged to have a pecuniary interest in the outcome of the decision by the Minister to grant an exploration licence because the officers or their immediate family had shares in companies which would have benefited from the grant. The Minister's decision was held not to be impugned by Gleeson CJ, Gaudron, Gummow, Hayne and Callinan JJ (Kirby J dissenting). Both cases are examples of the type of interest that could give rise to an apprehension of bias because there was the possibility of a direct financial benefit resulting from the decision under challenge. 181 In Najjar v Haines (1991) 25 NSWLR 224 the Court of Appeal had to consider whether an apprehension of bias arose in the case of a referee who had been appointed under Pt 72 of the Supreme Court Rules 1970. He had failed to disclose that he was a director of a company which was a party to, and was negotiating substantial contracts with, the government department which was a party to the dispute. The Court of Appeal held that non-disclosure of that interest did give rise to an apprehension of bias. Clarke JA (Kirby P and Rogers AJA concurring in separate judgments) considered at 241 that a fair-minded observer would consider that the nature of the relationship between the company of the referee and the government department was such that the referee might discriminate in favour of the company in the future or because of an understandable desire to promote and maintain harmonious relations between the two, even subconsciously. 182 In Smits v Roach (2006) 227 CLR 423 the High Court had to consider whether a judge should be discharged on the grounds of bias because his brother was a chairman of a law firm which had been sued for professional negligence by the appellants as solicitors for the respondent. The litigation was a dispute over the retainer entered into by the appellant and respondent. The firm of solicitors was argued to have an interest in the outcome of the litigation as the validity of the retainer would effect what the respondent could recover from the law firm if the professional negligence claim was pursued. The interest arose because of the personal association between the judge and his brother, a close family relationship. There was no suggestion that the judge stood to gain anything from the outcome of the case. Gleeson CJ, Heydon and Crennan JJ (Gummow and Hayne JJ concurring, Kirby J in dissent on this issue) considered at [54] the NSW Court of Appeal was wrong to make a finding that there was an apprehension of bias (although the Court of Appeal held that the right to seek disqualification of the trial judge had been waived by the parties). Ebner required that a link be established between the interest alleged and the possible failure to decide a matter impartially. Gummow and Hayne JJ so held at [56]-[59]. Kirby J held that there was an apprehension of bias but agreed that the right to seek disqualification had been waived. 183 In Murlan Consulting Pty Ltd v Ku-Ring-Gai Municipal Council [2008] NSWLEC 318 I had to consider whether an apprehension of bias arose in relation to an acting commissioner of this Court. The challenge was based on the non-disclosure of an alleged pecuniary interest which could give rise to an apprehension of bias. This arose from the acting commissioner's involvement with the local council, a party in the proceedings, through membership of two council policy advice committees, interactions with council staff on research work, presentation of joint papers and the co-supervision of students with a member of council staff. The acting commissioner was also said to have received from the council the benefit of funding for research students in his faculty at Macquarie University. I held that no such apprehension arose essentially as these benefits were at arms length and simply reflected the experience of an academic pursuing his professional interests in conjunction with the local council. 184 All these cases suggest that the potential financial benefit giving rise to a conflict of interest must have sufficient nexus to the decision under challenge to suggest an apprehension of bias in the mind of a fair-minded observer. The issue arises in this case of whether the alleged interest of certain councillors as trade competitors can be an interest which gives rise to an apprehension of bias at all in a rating determination. There is no suggestion of any direct financial benefit accruing to any of the three councillors which results from the rating determination. There is no evidence apart from the councillors having business interests in retail shops as owners of leased land or as small business operators that they are trade competitors of any of the shops in Marrickville Metro. Any competition can be presumed to exist at a broad level of generality only. 185 Considering case law, no case has been found which identifies as a relevant pecuniary interest an interest as remote as being a trade competitor and therefore trying to cause greater cost burden to another trader rather than obtaining direct financial benefit. This suggests the interest, if it exists, is too remote to give rise to an apprehension of conflict of interest in the mind of a fair minded observer. The passage extracted from the judgment of Spigelman J in McGovern above (at par 172) refers to a conflict of interest arising where a person is essentially a party to the proceedings, referring to the Canadian decision of Old St Boniface Residents' Association Inc v City of Winnipeg [1990] 3 SCR 1170. That case was concerned with a conflict of interest based on a personal interest. The circumstances in this matter do not give rise to such a conclusion in relation to the role played by the three councillors named by the Applicant. 186 Considering the LG Act, the roles and duties of a councillor are identified and Ch 14 identifies those interests that do require disclosure. Section 442(2) states that a person does not have a pecuniary interest if the interest is so remote or insignificant that it would not be likely to influence any decision that person might make. An interest as a trade competitor, assuming it exists, fits within this description. 187 Another reason why the alleged interest, if it exists, is too remote or tenuous to found a conflict of interest is that it is not clear why an interest as a trade competitor in the business category giving rise to a perception in the mind of a fair minded observer of wanting another business category to pay a higher rate is any different to an interest as a ratepayer in any category in paying a lower rate and therefore seeking to have another rating category pay a higher rate. For example, a councillor who owned residential property could also be perceived as wishing to keep residential rates low and therefore favour higher rates in other rating categories. This situation arose in the Council's resolution of 23 April 2002 which proposed to use the increase in rate revenue from the introduction of the Metro sub-category to reduce residential rates. 188 As most councillors are likely to have rateable land in the LGA in some category and are therefore potentially motivated by a desire to lower rates in that category, it is arguable that if I found there was an interest giving rise to an apprehension of bias in this case then most councillors would have an interest which may give rise to an apprehension of bias. An interest as a ratepayer is not required to be disclosed under Ch 14. Ultimately councillors are elected from their local community to represent that community. It is highly likely that they will have personal and business interests in that community. These circumstances are not such that a fair-minded lay observer might reasonably apprehend that a councillor might not bring an impartial mind to the resolution of the issue of rate setting before him or her. 189 The table at par 159 identifies the voting patterns of the three councillors on all relevant rate setting decisions. Given my conclusion above that no interest giving rise to a conflict exists it is strictly unnecessary to examine their voting record. In the interests of thoroughness I note that the Applicant particularly challenges the 2007 and 2008 decisions of the Council on this ground. In the 2007 decisions councillor Thanos used his casting vote as mayor to pass the motion maintaining the ad valorem rate for Business-Marrickville Metro. As identified in the Council's submissions (par 166), close scrutiny of the voting record does not disclose voting patterns by all three councillors consistently adverse to Marrickville Metro in any event. Councillor Macri was not on the Council in 2002. A number of councillors were engaged in proposing motions and voting in relation to Marrickville Metro apart from the three councillors the subject of this ground. 190 The Applicant is unsuccessful on the apprehension of bias ground. Should Court exercise its discretion to make declaration of invalidity of 2002 determination of sub-category? 191 The Applicant has succeeded in relation to one ground of challenge being the failure to give notice to the then owner of Marrickville Metro, Bevillesta, of the date of determination of the sub-category of 23 April 2002. I have held that there had been a failure to give timely and adequate notice of the date of the determination of the sub-category Business-Marrickville Metro under s 520(1) of the Act (see par 71). I have not found that any other challenge to the legality of that decision has been established. I must therefore consider whether that failure should give rise to the invalidity of the determination of the Business-Marrickville Metro sub-category in 2002. As submitted by the Council the principles in Project Blue Sky require consideration. In Project Blue Sky the joint judgment of four judges of the High Court (Brennan CJ dissenting) stated at [93]: The classification of a statutory provision as mandatory or directory records a result which has been reached on other grounds. The classification is the end of the inquiry, not the beginning … A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid. 192 This statement has been applied since in many cases, including Woolworths Ltd v Pallas Newco Pty Ltd (2004) 61 NSWLR 707 per Spigelman CJ at [10]. No case where the issue of lack of timely notice in relation to notification of the determination of a sub-category has been located in the course of this matter. At par 62-70 I have determined that notice of the determination of the sub-category was given in the annual rates and charges notice sent on 26 July 2002 but that was not done in a timely way given that the determination was made on 23 April 2002. The relevant appeal period under s 526(1)(a) of thirty days from the date on which the declaration is specified to take effect had expired by then. I also held the annual rates and charges notice contained no information about the date the determination was made, namely 23 April 2002. 193 The Council submitted that the failure to give timely notice does not result in invalidity of the declaration of the sub-category in 2002. If the Court holds the rates notice was invalid then no valid notice was served on the owner for the whole period under challenge, that is, from 2002. That would upset the collection of all rates levied for that seven year period. It is also unclear what the impact of the invalidity of the 2002 declaration would have on the rate fixing for all rate holders in that year and subsequently. Contrary submissions were made by the Applicant that only it was affected by the rating decision and the shortfall in the collection of approximately $300,000 was very small in the context of the $33 million annual rates income collected by the Council. 194 I agree with the Council that the failure to comply with the procedural requirements of the Act for the giving of notice does not lead to invalidity of the determination of the sub-category, which was clearly made by the Council in resolutions GM 22 and GM 23 on 23 April 2002. The statutory scheme in the LG Act and the complex process of rate setting to apportion rates amongst a number of categories and sub-categories of land at the same time suggests that declarations of invalidity due to lack of appropriate notice do not give rise to invalidity. As submitted by the Council, the scheme for setting rates under the Act requires that the amount of rates to be paid by various categories are interdependent because of the statutory requirement that the Council's rate income is capped. Disturbing one category has implications for rate setting in all categories. While it is highly desirable that notice provisions in the LG Act such as s 520 are complied with, failure to provide adequate notice of the determination of a new sub-category should not give rise to a declaration of invalidity of the sub-category in 2002. 195 Separately to the principle in Project Blue Sky, I am also inclined to this view because there is no evidence before me that Bevillesta was disadvantaged in exercising any review rights (under s 525) or appeal rights (under s 526) that it had as a result of the late and inadequate notice received. 196 In light of my findings, the Applicant's Class 4 application is dismissed. Costs 197 As I have not heard argument on costs I will not finally determine that matter. Under the Uniform Civil Procedure Rules 2005 (rule 42.1) costs follow the event unless the Court exercises its discretion differently. Final orders will be issued when costs are determined. 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