Posted on October 20, 2015 by Megan Hawley
No 30 day time limit on legal challenges to rates notices
The Court of Appeal has considered the scope of the rates exemption for bodies claiming to be charities and, significantly for councils, whether challenges to rates notices must be commenced within 30 days of receipt of the notice.
In Community Housing Limited v Clarence Valley Council  NSWCA 327, Community Housing Limited (CHL) challenged the validity of rates notices issued by six separate councils in respect of various parcels of land it owned.
CHL’s constitution states that its object is to be a non profit corporation that acquires and manages land and buildings so that ‘shelter is provided to persons in crisis…housing may be provided to low income persons..and/or other households in need.. provides housing advice and referral services which may assist homeless persons…provide training, vocational and related education and skills development’.
CHL claimed that it used the land the subject of the rates notices to provide subsidised housing.
It was argued that the land was exempt from rates under s556(1)(h) of the Local Government Act 1993 (LG Act) which exempts ‘land that belongs to a public benevolent institution or a public charity and is used or occupied by the institution or charity for the purposes of the institution or charity’.
The councils claimed that CHL could not bring the proceedings because s574 of the LG Act provides that an appeal against a rates notice on the basis that the land is not rateable must be made within 30 days after the service of the rates notice. The proceedings were commenced more than 30 days after the relevant notices were issued.
Were the proceedings out of time?
CHL had commenced the proceedings under s674 of the LG Act pursuant to which any person can commence proceedings to remedy or restrain a breach of the LG Act. CHL claimed that the councils breached the LG Act by issuing notices in respect of land which was exempt from rates.
The Court of Appeal found that whilst s574 of the LG Act limited the time for an appeal against a rates notice to 30 days, s674 was a separate power to commence judicial review proceedings challenging the validity of the notices, and was not subject to s574. Proceedings under s674 are not an ‘appeal’.
Therefore, a person dissatisfied with a rates or charges notice can either appeal within 30 days under s574 (if their concern with the notice falls within the matters set out in s574), or, if the notice is alleged to be in breach of the LG Act, commence proceedings under s674 of the LG Act challenging the validity of the notice.
Was CHL a charity?
The parties accepted that for CHL to be a public charity CHL’s purposes needed to be ‘exclusively’ charitable. They could not be a mix of charitable and non-charitable purposes.
The Court held that provision of housing to low income persons was a charitable purpose for the relief of poverty, as ‘poverty’ was not confined to meaning ‘abject poverty’ but could cover people in some degree of financial necessity.
The Court also accepted that charity extends to ‘training that is of a vocational or practical nature’.
Therefore, the Court was satisfied that all of CHL’s purposes were charitable. The next question was whether the relevant land was being used for those purposes.
Use of land
The Court referred to earlier cases where it was held that land could be exempt from rates even if leased to another entity which was not a charity, provided it was still used for the charitable purpose. Therefore the fact CHL leased its properties to residents did not prevent it from being able to rely on the exemption.
The councils had argued that some of CHL’s land was vacant and untenanted. The Court held that that did not mean the land was not used for the charitable purpose, as inevitably tenanted property would from time to time be vacant.
The primary judge in the Land & Environment Court had held ‘I do not consider the fact that some of the properties are or may be temporarily untenanted means that they are not relevantly being ‘used’ by the company for its purposes. Part of the use includes the holding of properties in anticipation of letting them to appropriate tenants’.
Finally, the councils claimed some properties were leased to people on ‘moderate incomes’. However the evidence was to the effect that those described by CHL as on ‘moderate incomes’ did not have sufficient income to obtain adequate safe and secure housing. Therefore the leasing of properties to those people fell within the charitable purpose.
The case highlights the need for councils to give careful consideration to claims that land is exempt from rates on the basis that it is owned by a charitable institution. To determine if the exemption applies, both the purpose of the institution and the use of the land are relevant. However, the use must be considered in the context of the purpose for which the land is held. Whilst in this case, vacant land was still held for the charitable purpose, a different result could arguably result where land is vacant for a significant period of time, and there is no attempt being made to find a tenant or to put the land to use for the charitable purpose.
Significantly for councils, however, is the finding that a legal challenge to the validity of a rates notice can be commenced after the 30 day period specified in s574 of the LG Act.
Councils need to bear in mind that the issuing of a rates notice improperly could give rise to both appeals under s574 (within 30 days), and also legal challenges under s674 of the LG Act, which are not constrained by the 30 day time limit.
The decision of the Court of Appeal can be read here.