Posted on July 10, 2014 by Sue Puckeridge
Council’s ability to charge a fee for a service held to be wide in scope.
The recent case of Regional Express Holdings Limited (Rex) v Dubbo City Council (Council) (No 3)  NSWLEC 87 (Decision) raises fundamental issues about a Council’s power to charge a fee for service under s608 of the Local Government Act 1993 (LGA).
A council may only charge a fee for service as provided for by statute. The Decision re-affirms the requirement that where an administrative decision affects individual rights or interests, a duty to act fairly applies to the decision. As Rex was an individual corporation and the decision affected Rex directly, the decision to impose the fee was open to review by the Court, even though no express right of appeal existed under the LGA.
The Court’s finding that the ability to charge a fee under s608 of the LGA is wide in scope will be welcome news to councils, many of which conduct business operations in areas that may not traditionally be seen to be local government services, yet may still be classified as being a service appropriate to the needs of the local community and the public.
Dubbo Council operates the airport in its local area and Rex, along with Qantas, operates flights into and out of the airport. Qantas is subject to a Commonwealth statutory requirement that its passengers be screened due to the weight of the aircraft. The planes operated by Rex out of the airport do not require passengers to be screened.
The airport has been developed in such a way as to require all passengers to be screened prior to boarding their plane.
In 2012, Council passed two resolutions, the effect of which was that Council resolved to undertake baggage and checked passenger screening of all passengers flying into and out of Dubbo with the costs of the screening to be passed onto both Rex and Qantas.
Rex challenged both decisions on four grounds. Two of which are briefly considered here.
Did Council have the power to charge Rex a fee under s608 (1) of the LGA for passenger screening services as determined in its two resolutions?
Rex argued that there was no statutory obligation on Council to screen passengers because the weight of its aircraft was below the weight specified for screening under relevant Commonwealth aviation laws.
It further argued that s608 of the LGA did not give Council the power to provide a service to passengers (i.e. screening) but charge Rex for the service when Rex did not receive such service nor requested or required the service.
In considering this issue, the Court found that section 24 of the LGA, which allows a council to provide a service is a widely drafted section. The Council’s decision to provide an area in the airport terminal, which resulted in the necessity of screening all passengers, was within the responsibilities of Council as the airport operator. The security screening of passengers was a service that a council could provide as appropriate to the health and safety of the community and the wider public (s7 (d) of the LGA).
The Court accepted the Council’s argument that s608 is a broad power and adopting a purposive approach to the interpretation of the LGA, no constraints should be implied into the section. As such no limitation should be implied into the section to the effect that Council may only charge the person who is receiving the service.
At , the Court held that “Given the wide range of services which can be provided by a council it would be very difficult to specify how fees are to be charged for all services which may be provided.”
Was a common law right infringed?
Rex also argued that by imposing the fee, a common law right not to have a fee imposed for a service not requested of a council was infringed. The Court did not accept this argument, holding that there was no compulsion on Rex to use Dubbo airport and its decision to continue to fly aircraft, which did not require passengers to be screened, was not a fundamental right to which the principle of statutory construction that where legislation overrides common law rights it must do so clearly, applied. Rather Rex’s decision was one to take a particular course of action.
Did the Council fail to comply with the statutory process required before adopting its revenue policy and charging Rex the security screening fee so that the charge was validly made?
Section 610F(2) of the LGA requires the amount of a proposed fee to be notified.
Council’s public notification did not specify an exact dollar amount to be charged to the airlines but it did show that the fees would be charged on a full cost recovery of contractors’ charges. It was clear that the fees would be invoiced monthly and GST was payable. Rex argued that the notification of the estimated fee Council was proposing to charge and not the actual fee that was charged on a per passenger basis to Rex resulted in a non-compliance with s610F.
The Court held that the LGA permits a difference between the publicly notified fee and the fee that Council ultimately determines to charge.
It is not uncommon for a council’s schedule of fees and services to describe the fees to be charged as being the commercial or market rates, without a specific amount being identified. This reflects the practical reality of managing a business while at the same time complying with statutory requirements and conditions precedent to charging a fee. In this regard, the Court’s decision is to be welcomed.