Reported Decision: 153 LGERA 219 New South Wales Court of Appeal CITATION: Baulkham Hills Shire Council v Wrights Road Pty Limited [2007] NSWCA 152 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S): 1 June 2007 JUDGMENT DATE: 26 June 2007 JUDGMENT OF: Spigelman CJ at 1; McColl JA at 23; Gzell J at 24 DECISION: 1 Appeal upheld; 2 Respondent to pay the Appellant's costs; 3 Proceedings No 657 of 2006 in the District Court of New South Wales are dismissed with costs. CATCHWORDS: LIMITATION OF ACTIONS - Statutes of limitation - Recovery from council of monetary contribution - Limitation period - Applicable if monetary contribution was a tax within the meaning of the act - Statutory construction - Limitation period applicable - Recovery of Imposts Act 1963 (NSW), ss 1A, 2, 5 - Environmental Planning and Assessment Act 1979 (NSW), s 94 - LOCAL GOVERNMENT - Payment by developer to council of monetary contribution as a condition of development consent - Action to recover part of payment from council - Limitation period - Applicable if monetary contribution a tax within the meaning of the act defined as "fee, charge or other impost" - Limitation period applicable - Recovery of Imposts Act 1963 (NSW), ss 1A, 2, 5 - Environmental Planning and Assessment Act 1979 (NSW), s 94 Environmental Planning and Assessment Act 1979, s94 LEGISLATION CITED: Recovery of Imposts Act 1963, s1A, s2, s5 Uniform Civil Procedure Rules 2005, r13.4 Baulkham Hills Shire Council v Group Development Services Pty Limited [2005] NSWCA 2315 CASES CITED: Group Development Services Pty Limited v Baulkham Hills Shire Council [2004] NSWLEC 537 Meriton Apartments Pty Limited v Minister for Urban Affairs and Planning (2000) 107 LGERA 363 PARTIES: Baulkham Hills Shire Council (Appellant) Wrights Road Pty Limited (Respondent) FILE NUMBER(S): CA 40529/06 COUNSEL: D E Grieve QC, J M Hennessy (Appellant) P B Walsh, R T Menassa (Respondent) SOLICITORS: A I Petersen, Pricewaterhouse Coopers Legal (Appellant) R T Menassa, Church & Grace (Respondent) LOWER COURT JURISDICTION: District Court LOWER COURT FILE NUMBER(S): 657 of 2006 LOWER COURT JUDICIAL OFFICER: Johnstone DCJ LOWER COURT DATE OF DECISION: 28 July 2006 LOWER COURT MEDIUM NEUTRAL CITATION: 3 DCLR (NSW) 171 - 6 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40529/06 SPIGELMAN CJ McCOLL JA GZELL J Tuesday 26 June 2007 BAULKHAM HILLS SHIRE COUNCIL v WRIGHTS ROAD PTY LIMITED JUDGMENT 1 SPIGELMAN CJ: This application arises from an interlocutory judgment of Johnstone DCJ in the District Court. The Appellant challenges his Honour's finding that a monetary contribution under s94 of the Environmental Planning and Assessment Act 1979 ("the EPA Act") is not a "tax" within the meaning of the Recovery of Imposts Act 1963 ("the Imposts Act") and is therefore not affected by the limitation provisions in s2 and s5 of the Imposts Act. 2 His Honour's findings of fact were not in issue. The Respondent (Wrights Road Pty Limited) is a property developer which received consent from the Appellant (Baulkham Hills Shire Council) to subdivide a property and construct townhouses and an apartment building. The consent was subject to a condition, inter alia, that the Respondent make a monetary contribution pursuant to s94 of the EPA Act and the formula laid down in "Contributions Plan No 8 Kellyville/Rouse Hill" (collectively "the s94 Contribution") for the improvement of amenities or services. The Respondent paid this amount on 4 July 2003. The amount included a land acquisition component which, in turn, included an indexation component of $279,799.94. It is the indexation component that is in issue in the proceedings. 3 The practice of indexing the land acquisition component of a s94 Contribution was subsequently held to be invalid in Group Development Services Pty Limited v Baulkham Hills Shire Council [2004] NSWLEC 537, upheld in Baulkham Hills Shire Council v Group Development Services Pty Limited [2005] NSWCA 2315. The parties accept the application of these decisions to the s94 Contribution in this case. 4 The Respondent commenced proceedings in the District Court to recover the indexation payment on 21 February 2006, some two and a half years after it had paid the amount. The Appellant asserted by way of defence that, by force of s2 and s5 of the Imposts Act, the proceedings had not been commenced in time and, accordingly, any entitlement to receive a refund of the interest payment had been extinguished. The Appellant filed a Notice of Motion in the District Court seeking an order that the proceedings be dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005. His Honour dismissed the Notice of Motion. It was, and is, common ground that, if the limitation period was applicable, the proceedings should be dismissed. 5 The issue which falls for consideration in this matter is the interpretation of the definition of "tax" under s1A of the Imposts Act. That definition is: "tax" includes a fee, charge or other impost; 6 Section 2 of the Imposts Act relevantly states: "2(1) No proceedings shall be brought to recover from the Crown or the Government or the State of New South Wales or any minister of the Crown, or from any corporation, officer or person or out of any fund to whom or which it was paid, the amount or any part of the amount of any tax paid, under the authority or purported authority of any Act: … subsequent to the commencement of this Act, after the expiration of twelve months after the date of payment. …" Section 5 of the Imposts Act states: "5 If because of this Act money paid by way of tax or purported tax ceases to be or is not recoverable, the right to recover the money is extinguished." 7 Johnstone DCJ first determined that the s94 Contribution was not a tax. His Honour relied on decisions which state that a s94 Contribution is not a tax in the common law sense. See Baulkham Hills Shire Council v Group Development Services Pty Limited [2005] NSWCA 315 at [15]-[16] and Meriton Apartments Pty Limited v Minister for Urban Affairs and Planning (2000) 107 LGERA 363 at [47]-[52]. The passage in this Court's judgment in Group Development Services was obiter. (See at [17].) However, the reasoning in Meriton Apartments was in point. 8 Judge Johnstone then focused on the word "impost". His Honour said that the word should be given what he considered to be its ordinary meaning, namely, "a compulsory exaction of money in the nature of a tax". 9 Finally, his Honour addressed "fee" and "charge". His Honour determined that to give these words their ordinary meaning would make the operation of the Imposts Act too wide, indeed absurdly so. His Honour concluded that the words "fee" and "charge" required something in the nature of an impost. The Respondent adopts this approach in its submissions. 10 On the basis of his Honour's interpretation of the word "tax", as defined, he concluded that the s94 contribution was not a "tax" within the meaning of the Imposts Act. 11 Section 94 of the EPA Act relevantly provides: "(1) If a consent authority is satisfied that a development … will or is likely to require the provision of or increase the demand for public amenities and public services within the area, the consent authority may grant consent to that application subject to a condition requiring: (a) the dedication of land free of cost, or (b) the payment of a monetary contribution, or both. (2) A condition referred to in subsection (1) may be imposed only to require a reasonable dedication or contribution for the provision, extension or augmentation of the public amenities and public services mentioned in that subsection. …" 12 It is pertinent to note that s94 expressly provides that any payment pursuant to such a condition is made for a public purpose and is characterised as a "contribution". Furthermore, s94(2) of the EPA Act refers to a s94 Contribution as a "condition … imposed". 13 The Respondent contended, in oral argument, that taxes and imposts share the characteristic of "non-equivalence" between the exaction and the thing obtained. In contrast, it submitted, a s94 Contribution is part of the payment in return for the Council consent and its attendant commercial advantage. I do not see that there is any relevant "equivalence" between a s94 Contribution and a consent. In no sense can the imposition of a condition be characterised as some kind of bargain. In any event this submission cannot apply to the words "fee" or "charge". 14 The Appellant contends that his Honour's interpretation is flawed for two principal reasons. First, it gives "fee" and "charge" a construction that gives them no work to do. Secondly, it ignores the intention of Parliament to widen the common law meaning of tax whilst retaining the term "tax" as convenient shorthand. The Appellant contends that his Honour's interpretation leads to the result that s1A of the Imposts Act tautologically defines "tax" to include a "tax, tax or other tax". In my opinion, these submissions should be accepted. 15 Section 2(1) of the Imposts Act extends to any amount "paid under the authority or purported authority of any Act". Each of the words, "tax", "fee", "charge" and "impost", are confined in their possible scope by this definite criterion. The words, whilst wide, are not of extraordinary scope. There is no warrant to give them a meaning of the character for which the Respondent contends. The directly relevant inquiry is whether a payment was made under the authority of an Act. It was not, nor in my opinion could it have been, suggested that payment of the s94 Contribution was not "under the purported authority" of the EPA Act. 16 The word "impost" extends, in my opinion, to a requirement to make a payment for a public purpose imposed, pursuant to statutory authority expressly providing for monetary payment, as a condition for the exercise of a statutory power. 17 A clear indication of the Parliamentary intention about the scope of the definition of "tax" is found in the fact that the word "Impost" appears in the title of the Act. It is not the Recovery of Taxes Act, but the Recovery of Imposts Act. This confirms the intention that the scope of the Act goes beyond common law jurisprudence on the meaning of "tax". 18 The long title of the Act reinforces this proposition: "An Act relating to the time within which actions may be brought against the Crown and certain other persons for the recovery of certain taxes, fees, charges and other imposts; to provide that certain taxes, fees, charges and other imposts are not recoverable in certain circumstances; and for purposes connected herewith." 19 The natural and ordinary meaning of the word "tax" would not usually extend to a "fee" or "charge". The inclusive definition was clearly intended to expand the concept of a tax, as it had developed in case law over many years in a variety of statutory and common law contexts. There is no warrant to construe the word "impost" so narrowly as to be equivalent to the word "tax" as so understood. The purpose of the extended definition was to avoid any such result. As a matter of drafting convenience the single word "tax" was used in the operative provisions of the Imposts Act. 20 In its operation as a condition of consent, the developer is not obliged to make the payment unless the development is to proceed. However, s7 of the Imposts Act expressly states that the Act applies "to money paid whether voluntarily or under compulsion". Once a s94 Contribution is paid, the payment can accurately be described as having been imposed pursuant to statutory authority. 21 In my opinion, a s94 Contribution is an "impost" and, accordingly, a "tax"' within s1A of the Imposts Act. The Respondent's claim for recovery of those funds is time barred by s2 and s5 of that Act. 22 Orders 1. Appeal upheld. 2. Respondent to pay the Appellant's costs. 3. Proceedings No 657 of 2006 in the District Court of New South Wales are dismissed with costs. 23 McCOLL JA: I agree with Spigelman CJ. 24 GZELL J: I agree with Spigelman CJ. ********** 02/07/2007 - Amend Orders and Solicitors - Paragraph(s) Coversheet DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.