Posted on October 30, 2019 by Sue Puckeridge
Seeking a land rating re-categorisation – Does delay matter?
The Land and Environment Court (‘Court‘) has recently refused 3 appeals against a council decision to declare that a land rating re-categorisation was to operate from a date significantly later than the dates sought by the applicant. In doing so, it distinguished earlier decisions of the Court and found that in the circumstances, the delay in making the application for the land re-categorisation and the prejudicial impacts on the council’s finances warranted refusal.
Karimbla Properties (No 13) Pty Limited and others v The Council of the City of Sydney  NSWLEC 133 (‘Appeals‘) involved three sites owned by the Meriton Group of companies (‘Meriton‘) and three separate rating categorisations in the Sydney local government area. The Appeals were heard by Moore J.
The City of Sydney Council (‘Council‘) had granted applications to re-categorise land being used for service apartments from business to residential .
The Council declared that each re-categorisation was to operate from 1 July 2017, which was a date substantially later than the dates sought by Meriton. The dates sought by Meriton ranged from September 2005 to May 2013. If the earlier dates had been declared as the operative dates, Meriton would have overpaid rates by approximately $2.9 million.
The Court refused to order the earlier operative dates as sought by Meriton.
The Court accepted that it had the power to declare the date on which a re-categorisation declaration is to take effect (526(3) Local Government Act 1993 (‘LG Act‘)), but such a power is discretionary and may not be exercised even if the facts support a date different to the one adopted by a Council.
Despite earlier decisions of the Court which did not consider delay to be dissentitling conduct operating to limit the exercise of the discretion (Bayside Council v Karimbla Properties (No 3) Pty Ltd (2018) 236 LGERA 1 (‘Bayside‘) – although this case went to the Court of Appeal, the Court did not overturn this finding) and Meriton Apartments Pty Limited v Parramatta City Council  NSWLEC 309 (‘Meriton Apartments‘) ), Moore J took a different view.
First, Meriton was unable to the explain the delay and why it had not complied with the mandatory requirement to notify Council of the changed category under s524 of the LG Act. This section mandates that if a person’s rateable land category changes, that person must notify a council within 30 days, seeking a change of categorisation (s524 of the LG Act). Moore J did not feel compelled to follow the earlier decision of Meriton Apartments because in that case, s524 was not brought to the Court’s attention.
The Court did not accept that the Council was under a unilateral obligation to reconsider land categories. Although s532 empowers a council to review a declaration as part of a general review of the categorisation of all, or a number of, parcels of land, or because it has reason to believe that a parcel of land should be differently categorised, this is not a mandatory obligation.
Secondly, to order the adjustment to operate from the time proposed by the applicant would result in unacceptable negative impacts because:
- ‘the Council’s ability to deliver services to its ratepayers and/or discharge its other statutory functions in future would be diminished to the extent of $2.94 million spread over one or more years; or
- the Council would need to increase the rates on other current or future ratepayers over that period of such forward adjustments being made in order to compensate the Council’s revenues (and thus maintain services) for what would otherwise be the revenue that would have accrued to the Council had such s 527 mandated adjustments not been required to be effected’ (at ).
In making this finding, Moore J was not persuaded by the applicants’ submissions that any disruption to Council’s finances should not outweigh the right to a proper assessment and levying of rates according to the appropriate rating category (Sheahan J in Bayside). Instead he held:
‘Had the Meriton interests each made a timely application, as mandated by s 524 of the Local Government Act, the Council would have been able to plan for future consequences of that and how that should fall on its then existing rate base. The Council has been denied that opportunity solely because of the entirely unexplained failure of each owning company to meet its statutory obligation to inform the Council.
That the Council should now be required, if I was to make each retrospective operative re-categorisation date sought by an owning company, to adjust its future rating to accommodate the consequences of unexplained delays of varying between some four and twelve years and imposing that burden on the present rate roll of the Council is simply inappropriate’ (at  and ).
In light of this decision and the earlier Court decisions, whether or not delay will impact on the date from which a re-categorisation may be declared to operate arguably depends on the reason for the delay and if a council will suffer prejudice as a result of the delay. Unfortunately, the decision meant that the Court was not required to consider whether it had the power to order a refund, so this issue still remains unresolved.
A copy of the judgment of the Appeals can be found here.
Should you wish to discuss the issues raised in this post, please contact Sue Puckeridge, Partner on 8235 9702.