Australand Land and Housing No. 5 (Hope Island) Pty Ltd & Ors v Gold Coast City Council

ADMINISTRATIVE LAW - JUDICIAL REVIEW - GROUNDS OF REVIEW - IRRELEVANT CONSIDERATIONS - respondent constructed infrastructure works and imposed special levy in purported exercise of Local Government Act 1995 s 971 - whether financial effect upon affected owners and alleged need for works were irrelevant considerations

ADMINISTRATIVE LAW - JUDICIAL REVIEW - GROUNDS OF REVIEW - UNREASONABLENESS -whether the respondent's opinion as to the benefit flowing from the works justifying the special levy was unreasonable - whether the scope of operation of the respondent's special rate was unreasonable

REAL PROPERTY - RATING OF LAND - RATES UNDER LOCAL GOVERNMENT LEGISLATION - POWER TO RATE - SPECIAL RATES - construction of Local Government Act 1995 s 971 - interaction between subss (1) and (6) - whether subs (6) is a saving provision for subs (1) - effect - whether the respondent's special levy is authorised under s 971

Judicial Review Act 1991 (Qld), s 20

Alan E Tucker Pty Ltd v Orange City Council (1969) 18 LGRA 314, followed

Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24, cited

Parramatta City Council v Pestell [1972] HCA 59; (1972) 128 CLR 305, followed

Shanvale Pty Ltd v Council of the Shire of Livingstone [1999] QCA 483; (1999) 105 LGERA 380, followed

Watson v Bankstown Municipal Council (1977) 34 LGRA 403, followed

Mr G Gibson QC with him Mr D O'Brien for the first applicants

Mr D Gore QC with him Mr B Cronin for the second applicants

Mr M Hinson SC with him Mr S Fynes-Clinton for the respondent

[1] The last meander of the Coomera River before it flows into the waters of southern Moreton Bay encloses land known as Hope Island. The land is low and flat. Until recently it was poorly drained and flood-prone. After a severe storm the waters of the Coomera River did not follow the loop of the meander but flowed across the southern part of Hope Island, more or less directly to the river mouth. This flow path was known as the Boykambil flood plain. Boykambil is a settlement on the east of Hope Island adjacent to the river mouth.

[2] On 8 December 1976 the Albert Shire Council ('ASC'), a predecessor to the respondent, declared most of Hope Island to be a drainage problem area and, in 1995, introduced a planning scheme which included a development control plan ('DCP') and a preferred dominant land use plan ('PDLUP') for the island. These plans designated the Boykambil flood plain as 'drainage and access reserve'.

[3] In the meantime land in the northern portion of Hope Island had been developed into expensive residential communities, Sanctuary Cove and Hope Island, which included golf courses, marinas, shopping villages and a hotel. Land to the south of these developments adjacent to the 'drainage and access reserve' had its potential for development constrained by its susceptibility to flood and the respondent's designation.

[4] Accordingly, for a number of years from about 1990 the respondent and several landowners negotiated for the construction of a canal to be built in the general vicinity of the drainage and access reserve. The purpose of the canal was to confine flood waters in the canal and so divert it from the flood plain, thereby increasing the area of land available for development and reducing the cost and physical constraints on development.

[5] On 17 March 1995 the ASC and the Hope Island Canal Association ('HICA') signed an agreement ('the canal agreement') which provided that the respondent would coordinate the construction of a canal to be built by the owners of the land through which the canal would be dug. They were represented by HICA which contracted on their behalf. The canal agreement contained a number of recitals which are relevant for present purposes:

'A. [HICA] represents persons who own land within the "Drainage and Access Reserve" designation under the Hope Island Development Control Plan ...

B. The DCP makes provisions for the erection and construction of a major drainage flow path;

C. The drainage flow path (hereinafter "the canal") will also have the character of a navigable canal so that ... land abutting will have direct frontage to a navigable waterway;

D. In order to construct the canal:-

D.1 Land owned by members of the [HICA] must be dedicated as a drainage reserve; and

D.2 The canal must then be excavated and completed with ... appropriate works ...;

E. Members of [HICA] have entered into agreements with [ASC] for the required dedication.'

[6] By cl 7 of the agreement the ASC promised to use its best endeavours to obtain approval of the canal drainage scheme as approved works under the City of Brisbane (Flood Mitigation Works Approval) Act 1952 ('the Flood Mitigation Act').

[7] The relevant minister recommended to the Governor in Council that approval be given, under the Flood Mitigation Act, for 'drainage channel works to ease flooding at Boykambil on Hope Island'. The explanatory memorandum which accompanied the recommendation noted:

'The drainage channels designated by the Council will convey flood waters across Hope Island to thereby achieve better land efficiency and cater for flood flows.'

[8] On 5 October 1995 the Governor in Council gave approval to the construction of the canal 'to ease flooding in Boykambil on Hope Island ... conditional upon the

Gold Coast City Council being responsible for future maintenance of the works.'

[9] A convenient history is set out in a report to the respondent of May 1996:

'The original draft Hope Island [development control plan] prepared in 1988 was based on a concept of open space drainage paths, 175 metres wide, designed to accommodate flood flows. Following submissions from landowners, this was changed to a canal concept to enhance adjacent private land.

The important point is that the Boykambil area has always been a flood-prone area, even before the Sanctuary Cove and Hope Island Resort developments, and in 1976, Council declared virtually all of the island as a drainage problem area.

...

The summary of Council's objectives

... It is recommended that Council affirm ... as follows.

(a) Council supports the objective of promoting and encouraging co-ordinated and orderly development ... by the landowners.

(b) Any development of the land, canal and infrastructure at Hope Island is to be funded by the developer or landowner ...

...

Canal

The purpose of [this chapter] is to provide background information on the scope and estimated cost of the canal.

To the west of the canal across Santa Barbara Road the canal would meet up with the canal in the Hope Island Resort. However a tidal weir is required between the two canals at the Santa Barbara Road crossing ... to separate tidal flows and thus reduce tidal erosion ... Such a weir ... would provide an engineering control over flood waters from the Coomera River that flow through the Hope Island Resort in an easterly direction and pass over the weir and continue down the canal to the Broadwater at the east of the island.

Prior to the 1980s Hope Island was largely ignored in terms of forward planning. It was low-lying and surrounded by the tidal and flood sensitive salt water creek at Coomera River. Provision of services was seen as uneconomic and drainage problems were seen as a major barrier to development. In the early to mid-1980s, however, Sanctuary Cove was established and Hope Island Resort ... was approved. A bridge link was established to Paradise Point. All of this brought urban services to Hope Island and made it more accessible. Interest began to be shown in development of the balance of the area (that is the area not covered by Sanctuary Cove (Hope Island) or the historic townships of Boykambil and Santa Barbara). The drainage was seen as the major physical constraint to further development, with development sites requiring filling and with filling having a possible adverse effect on upstream land by obstructing flood flows ... The first mention of a canal scheme appears to be in a letter dated 8 March 1989 ... sent on behalf of ... a number of ... landowners ... The letter made no secret of the fact that the thinking behind the proposal was that the same drainage objectives could be achieved as in the draft DCP proposal while at the same time opening up the Boykambil land to development of a ... similar type to the ... developments on either side ...

[10] Consequent upon Executive Council approval the canal was excavated and constructed by the adjacent landowners save for the easternmost section adjacent to the Coomera River at its entrance to the Broadwater. This section of the canal has been designated in documents tendered in the application as 'section A'. It has recently been constructed by the respondent. The other sections, B, C and D, were constructed by the adjacent landowners who hoped to benefit from the canal. There is no particular importance, for present purposes, in the separate designation of those three sections of canal.

[11] For part of its length, just west of section A, the canal is bifurcated and flows east in two parallel channels between which is an island. There is a road which runs along the length of the island, Grant Avenue, which connects at the western end with a road, Sickle Avenue, which runs in a north-south direction across the flood plain. This road has been interrupted by the construction of the two channels of the canal. Two bridges had to be built to reinstate Sickle Avenue. They have been designated 'Sickle Avenue Bridge (North)' and 'Sickle Avenue Bridge (South)'. Boykambil has been divided, and separated, by the construction of section A of the canal. Communication between the two parts has been re-established by the construction of a pedestrian and bicycle bridge joining Crescent Avenue which was severed by the canal. Some parkland was also destroyed by the construction of section A of the canal. The Council acquired land in the vicinity of an area called Shinnecock Close and developed that into a park in substitution for the other.

[12] The respondent has acted to recover the cost of its part in constructing the canal. On 17 June 2005 it resolved to levy a special charge pursuant to s 971 of the Local Government Act 1993 (Qld) ('the Act') in these terms:

'Hope Island Canal Infrastructure Special Charge

That Council levy a special charge under s.971 of the Local Government Act 1993, to be known as the Hope Island Canal Infrastructure Special Charge, (the "special charge") as follows:

(1) Council make and levy a special charge on the rateable land described below to fund the cost of, and repayment of loan funds used for, construction of the Hope Island Canal Infrastructure works to facilitate development of land within the Hope Island Canal Catchment.

(2) The overall plan for those works be identified as follows:-

(a) The rateable land to which the plan applies is all of the lands specified and described in the table of special charges below.

(b) Those lands are contained within the locality identified by Council as the Hope Island Canal Catchment, and have been developed, or are suitable for development.

(c) The service facility or activity for which this overall plan is made is the construction, and funding of construction, of the new canal system and associated infrastructure works ("the infrastructure works") which provides necessary development infrastructure to service, and facilitate[s] further development of, the lands to be levied. A more detailed description and itemisation of the infrastructure works constructed (or to be constructed) is set out in Attachment A.

...

(4) The council is of the opinion that the rateable land proposed to be levied with the special charge specially benefits and will specially benefit from, and has and will have special access to, the infrastructure works generally because the specific purpose and function of those works is to provide necessary development infrastructure to service and facilitate development of the rateable land. The land could not be developed and used for such purposes without provision of the infrastructure works, and the provision of the works by the Council, and levy of the special charge, means that future development approvals for the land will not be subject to development conditions requiring the provision of, or payment of the cost of, essential development infrastructure.

(5) The council is further of the opinion that:

(a) the special benefit of the canal infrastructure works is enjoyed by all of the lands proposed to be levied;

(b) as the development potential and likely forms of development for all of the lands to be levied are generally similar, the most appropriate basis of apportioning the total cost of implementation of the overall plan among the identified parcels of rateable land is on a pro rata valuation basis (relying on the valuation report prepared by Alex J Saunders Valuations dated 24 May 2005), excluding State land and in the case of Community Titles Scheme 24715 the special charge applicable to the scheme land is to be apportioned between the lots included in the Scheme in proportion to the interest schedule lot entitlement for each lot.'

[13] The infrastructure works detailed in Attachment A to the resolution which relevantly provided:

'Acquisition of Land

• Lot 6 RP 161326 - This parcel of land is one of two that is subsumed by the canal at the two bifurcations of the canal ...

• Lot 186 RP 80019 - This parcel of land is the other parcel that is subsumed by the canal at its western bifurcation ...

• Lot 216 and 217 RP 80019 - The Canal traverses through existing parkland resulting in parkland being lost. In 1993 Council approached the South East Queensland Electricity Board (SEQEB) with a proposal to purchase Lots 216 and 217 on RP 80019 for new parkland.

• In summary, the purchase of Lots 216 and 217 on RP 80019 represents the cost to Council for the replacement of parkland lost due to the construction of the canal through Banksia and Boykambil Parks.

• Road Closure & Associated Property Costs. Additional costs have been incurred as a result of the acquisition of the above properties and road closures associated with the canal construction (refer Figure 1).

Canal Construction

• Canal Construction - Section A (Lot 10) - The canal is to be constructed through private as well as Council controlled land. The cost to construct the canal through private land is to be met entirely and directly by private landowners separate to the Special Charge. The cost to construct the canal through Council controlled land (both Council freehold land and State land) is to be included in the special charge.

• Parks Development - The amount relates to the construction of replacement facilities in the new part on Lots 216 and 217 Sickle Avenue and the making good of facilities within the remaining Banksia and Boykambil Parks. These facilities were removed as a result of the canal consuming parts of Banksia and Boykambil parks and need to be replaced.

• Sewerage & water - The relocation of a sewer and water main has been identified as a direct result of the canal construction. The cost of these works is approximately $95,000.

[14] The costs of performing the works was said to be:

'CANAL INFRASTRUCTURE WORKS

Item Cost

Acquisition of land

 Lot 6 RP 161326 $587,480

 Lot 186 RP 80019 $749,139

 Lot 216 & 217 RP 80019 $1,586,837

 Road Closure & Associated Property Costs $16,471

___________________________________________

Canal Construction

 Canal Construction - Section A (Lot 10) $4,257,799

 Parks Development (Tennis Court Relocation & $394,825

Tennis Clubhouse, Amenities, & Park Works)

 Relocate Sewer & Water $95,000

 Canal Construction - Lots 1, 6, 216, 217 $344,231

____________________________________________

Bridges

 Sickle Ave Bridge (North) - construction $4,523,490

 Sickle Ave Bridge (South) - construction $4,390,060

 Crescent Ave - Ped & Cycle Bridge - construction $1,640,935

 Sickle Ave Bridge (North) - design $132,159

 Sickle Ave Bridge (South) - design $178,482

 Superintendent for canal infrastructure $44,905

 Developer Input for Raising Bridges $405,221

_____________________________________________

Professional Fees

 Canal Design Section a & Associated Works $571,636

(includes Crescent Ave Ped Bridge design)

 Environmental Study $45,490

 Weir Study $13,809

 Approvals & Licences fees $10,697

 Flood Modelling Study $12,275

 Hydraulic Study $10,740

 Drainage Study $6,274

Royalty for sand $7,466

Council officer time $12,904

[15] All of the land which the respondent resolved to make subject to the special charge (respectively the 'charged land' and 'the charge') adjoins the canal. That is, all the charged land has a frontage onto the canal. It is only such land that has been made subject to the charge. The charged land is most clearly depicted in map 8 of exhibit 2.

[16] The applicants in both applications are all owners of charged land. Not all the owners of the charged land are applicants, though most are.

[17] The applicants seek orders, by way of review pursuant to the Judicial Review Act 1991 (Qld) ('the JR Act'), which will overturn the respondent's resolution of

[18] The respondent has moved to collect the amount of the charge, $19,227,883, by the issue of a series of rates notices each dated 12 September 2005.

'(1) A local government may make and levy a special rate or charge on rateable land if -

(a) the rate or charge is for a service, facility or activity; and

(b) in the local government's opinion -

(i) the land, or the occupier of the land, has or will specially benefit from, or has or will have special access to, the service, facility or activity; or

(ii) ...

(2) The special rate or charge may be made and levied on the bases the local government considers appropriate.

...

(3) Without limiting subsection (2), the amount of the special rate ... may vary according to the extent to which, in the local government's opinion -

(a) the land ... has or will specially benefit from ... the ... facility ...; or

(b) ...

(4) The local government's resolution making the special rate ... must identify -

(a) the rateable land to which the rate ... applies; and

(b) the overall plan for the supply of the service, facility or activity.

...

(6) Subsection (1) is taken to have been complied with if the special rate or charge is made and levied on -

(a) all rateable land that, at the time of making and levying the rate or charge, could reasonably be identified as land on which the rate or charge may be made and levied; or

(b) all rateable land on which the rate or charge may be made and levied, other than land accidentally omitted.'

The dictionary in schedule 2 to the Act defines 'facility' to 'include work'. There is no definition of 'service' or of 'activity'.

[20] The leading authority on the operation of provisions such as to s 971 is Council of the City of Parramatta v Pestell [1972] HCA 59; (1972) 128 CLR 305. The provision there in contention was s 121(1) of the Local Government Act 1919 (NSW) which provided:

'For or towards defraying the expenses of executing any work or service ... where ... such work or service in the opinion of the council would be of special benefit to a portion of its area to be defined as prescribed, the council ... may make and levy a local rate ...'

[21] The council undertook road works in an identifiable part of its area. It levied a local rate on some properties in that area but excluded land which had been improved with cottages which served as residences for owners or tenants. The area was in transition from an old residential one to an industrial one, and the effect of the local rate was to tax land used for industry but to exempt the homes.

[23] The majority opinion is found in the separate judgments of Menzies, Gibbs and Stephen JJ. Menzies J said (at 322-323):

'The basic principle behind this provision is, without doubt, that owners of rateable land ... which would be specially benefited by the execution by a council of proposed works or services, can be called upon to make a special contribution towards the expenses of their execution by means of the imposition of a local rate. ... A council must therefore form an opinion whether any and what portion of its area would be specially benefited by the execution of what is proposed. This opinion determines the land that may be rated. There is thus a correspondence, dependent upon the opinion of the council, between (1) the land to which the execution of the work will be of special benefit and (2) the land to be rated. If it could be shown that the portion defined included land about which the council concerned could not in reason hold the opinion that it would be specially benefited by the ... works, the section would not authorize the making ... of a local rate. Thus ... if the works ... were the drainage of low-lying land, a council could not, in reason, be of the opinion that high land ... would be specially benefited by the execution of the works.

Less obviously perhaps, if the portion defined did not include land which any reasonable man ... must be of the opinion would be specially benefited by the ... works equally with the land within the portion defined, the section would not authorise the making ... of a local rate ... This, to take the same instance, if, part of the low-lying land to be drained, were to be omitted from the defined portion, that portion would not be defined as required by the section. The section does not authorize a council to pick and choose among lands that would be specially benefited.

Limitations of the sort just referred to are implicit in the section. The definition of the land that may be subjected to a local rate is determined by the council's justifiable opinion of special benefit so that, if the so-called opinion could not be justified on any reasonable ground, then, the requisite opinion is lacking. There is, however, a world of difference between justifiable opinion and sound opinion. The former is one open to a reasonable man; the latter is one that is not merely defensible - it is right. The validity of a local rule does not depend upon the soundness of a council's opinion; it is sufficient if the opinion expressed is one reasonably open to a council. Whether it is sound or not is not a question for decision by a court.

'Work done in a local authority area may be of benefit only to portion of the area or it may benefit the whole area; in the latter case, all the lands in the area will not necessarily benefit in equal measure. A work is of special benefit to a portion of a local authority area if the lands comprising that portion derive from the work a benefit which is not shared by other lands or a benefit which is additional to, or greater than, that which is derived by other lands ... It may of course prove disputable whether a work benefits a particular parcel of land and, if so, whether it benefits that parcel more than another. For obvious reasons therefore, the legislature has left it to the council to form its opinion as to whether a particular work is of special benefit to a portion of the area. A court has no power to override the council's opinion on such a matter simply because it considers it to be wrong. However, a court may interfere to ensure that the council acts within the powers confided to it by law. If, in purporting to form its opinion, a council has taken into account matters which the Act, upon its proper construction, indicates are irrelevant to its consideration, or has failed to take into account matters which it ought to have considered, the opinion would not be regarded as validly formed. Even if the council has not erred in this way an opinion will nevertheless not be valid if it is so unreasonable that no unreasonable council could have formed it ...'

'Section 121(1) is not a sub-section conferring upon councils any broad discretionary powers; it does no more than leave to a council two questions of fact for it to determine by the formation of its own opinion, the main fact being whether or not specified works or services are such as "would be of special benefit to a portion of its area". Inherently involved in answering this main question is the need for an answer to the subsidiary question "What portion?" The legislation leaves it to councils to form their own opinions on these questions and those opinions will be conclusive; but there are well defined limits to such conclusiveness, it is not absolute. Thus, in Bankstown Municipal Council v Fripp ... Isaacs and Rich JJ said that a council's opinion on the main question ... was conclusive so long as the work or service "is reasonably capable ..." of being considered as of special benefit to a portion of the council area. In K.C.R. Pty Ltd v Orange City Council ... Ellis-Mitchell J expressed the test negatively in denying conclusiveness where the work or service "cannot be said to be reasonably capable of being regarded by the Council as of special benefit to the particular area defined."

Likewise, the council's answer to the subsidiary question will not be conclusive if the portion defined by the council cannot be said to be reasonably capable, in the view of the court, of being regarded as that portion receiving special benefit from the works or services proposed. Conclusiveness will also not attach to a council's opinion if it be shown to have been formed having regard to extraneous or irrelevant matters ...'.

[26] These passages, which I have quoted at length, contain the ratio of Pestell. McTiernan J dissented and Barwick CJ, who agreed in the result, expressed his opinion in terms which would give greater sanctity to the opinion of a council and which would restrict the circumstances in which a court might set aside a special rate for non-compliance with the statutory basis for it.

[27] Pestell was considered and followed by the Court of Appeal of this Court in Shanvale Pty Ltd v Council of the Shire of Livingstone [1999] QCA 483; (1999) 105 LGERA 380. The section relevant in Shanvale was s 21 of the Local Government Act 1936 which provided:

'(4) A separate rate or charge is a rate or charge made and levied on all or any rateable land in the local authority's area for or towards meeting the cost of any works, services, facilities or activities supplied or undertaken ... by or on behalf of the local authority.

(4A) A separate rate or charge must be made and levied on the rateable land in the local authority's area that, in the local authority's opinion, has or will benefit from, or have access to, the work ... because of which the rate is made and levied.'

The section spoke of 'benefit' not 'special benefit' as did the section under consideration in Pestell and as does s 971 of the Act. The court in Shanvale saw no significance in the different terminology.

[28] In Shanvale the council proposed to levy a special rate on landowners to defray the cost of building a new all-weather sealed road to a remote part of the shire. The road was thought to be required because part of that area was the site of an historical subdivision of small allotments which had been sold into separate ownership. The land was undeveloped and unused save for grazing. The rate was levied on the small allotments but not on adjacent and adjoining grazing properties. The result was that some of the allotments which were to be resumed to make the road were subjected to the rate and properties on one side of the proposed road were specially rated but those on the other side were not.

[29] The court set aside the special rate on the basis that the council had not properly exercised the power conferred on it by s 21 and had not formed the opinion the section made a precondition to the exercise of the power. My judgment went further and held, in addition, that the opinion of the council was unreasonable.

[30] The council acted as it did because it considered that it was the sale of the subdivided allotments to separate owners, with the potential for closer settlement of the area, that gave rise to the need to build the road. McMurdo P said (at 390):

'The respondent, in forming its opinion under s 21 ... as to which land "will benefit from ..." the proposed improved road, was demonstrably wrong and irrational in determining this issue on the basis of which land brought about the need for the improved road ... The question for ... consideration should have been which land would "benefit from or have access to" the improved road.'

'As for [the failure to impose the levy upon other lands that would receive some benefit from the road], the legislation in force at the time made it mandatory for the Council to levy any separate rate upon all the land that would benefit from the provision of the road. This cannot be confined to the land the development of which led to its need. Any land that would benefit from it had to be included.'

'The exercise of the power conferred by s 21(4A) is made subject to the local authority forming an opinion as to which properties will benefit from the work to be funded from the separate rate. It is clear from ... Pestell ... that if a local authority does not in fact form such an opinion or if the opinion is beyond the bounds of reason the occasion for the exercise of the power will not arise. The statute does not authorise a separate rate made in the absence of the requisite opinion. When a power to raise revenue by rates or charges is circumscribed, the terms of the circumscription must be exactly complied with before the power can be exercised: see Sheffield City Council v Grainger's Wines Ltd [1977] 1 WLR 1119 at 1125.

...

Lord Diplock explained the concept of unreasonableness in this context in Secretary of State for Education & Science v Tameside Metropolitan Borough Council [1976] UKHL 6; [1977] AC 1014 at 1064:

"... in public law 'unreasonable' as descriptive of the way in which a public authority has purported to exercise a discretion vested in it by statute has become a term of legal art. To fall within this expression it must be conduct which no sensible authority acting with due appreciation of its responsibilities would have decided to adopt.

The very concept of administrative discretion involves the right to choose between more than one possible course of action upon which there is room for reasonable people to hold differing opinions ... What [the decision-maker] had to consider was whether the way in which they proposed to give effect to that preference would, in the light of the circumstances as they existed ... involve such interference ... that no sensible authority acting with due appreciation of its responsibilities under the Act could have decided to adopt the course ..."'

[33] There is nothing in the wording of s 971 of the Act to make these principles inapplicable. Indeed the section appears to have been drafted with them in mind. The terms of subsection (6), in particular, appear to be an explicit statutory expression of the principle expounded by Menzies and Gibbs JJ in Pestell, and by Derrington J in Shanvale.

[34] Section 971 contains other restrictions and powers but for present purposes it is sufficient to have regard to subsections (1) and (6).

[35] The effect of s 971 is that a local authority may impose a special rate or charge only where it forms the reasonable opinion (in the sense just described) that all the land which it proposes to burden with the special rate will benefit from the service, facility or activity provided, and it has not excluded from the rate any land which would similarly benefit. There is an exception with respect to land accidentally omitted from the rate.

[36] In forming its opinion the council must not have regard to matters that are irrelevant and must not ignore relevant factors. What are relevant considerations are determined by the proper construction of s 971 in its statutory context. The factors which may be taken into account are those to be found in the subject matter of the section, its scope and purpose: see Minister for Aboriginal Affairs

v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24 at 39-40 per Mason J.

[37] The respondent disputes this view of s 971. It submits that subsection (6) is a 'saving' provision which will validate a special rate which might otherwise be susceptible to attack by reason of some circumstance affecting the formation of the opinion required by subsection (1). The submission is that, if, notwithstanding such a defect, the rate happens to be levied upon all land that could reasonably be identified as that on which the rate may be made and levied s 971(1) will be 'taken to have ... [been] complied with'.

[38] I cannot accept the submission. It amounts to an argument that s 971 is meant to effect a departure from the principle which has stood for many years, and which was expressly recognised by the High Court in Pestell and the Court of Appeal in Shanvale. If the section were meant to effect such a departure the draftsman would have chosen clear words for his purpose. There is nothing in the terms of the section which would allow one to read it as though it conferred on local authorities a charter to pick and choose land to be subject to a special rate regardless of whether the land included or excluded would or would not benefit from the facility, payment for which gave rise to the need for the rate. Subsection (6) is properly to be understood as a qualification of subsection (1): the opinion which the local government is obliged to form as a prerequisite to the exercise of the power to levy a special rate is that the land on which it proposes to levy the rate is all the rateable land which will derive a special benefit from the facility. The opinion must be reasonable.

[39] It follows from this exposition of s 971 that an investigation whether a council which levies a special rate or charge has done so in the manner required by the Act must examine four points:

1. The service, facility or activity must be precisely identified.

2. The proposed rate must be 'for' that facility, i.e. the rate must be levied to defray or recover the costs of providing the facility.

3. The benefit which land enjoys as a consequence of the facility must be identified so that the land which enjoys the benefit may be identified.

4. The benefit must come from the facility, i.e. the special benefit must be a causal consequence of the facility.

[40] Point 4 is an extension or corollary of point 3. It is worth bearing in mind that there must be a close, indeed immediate, connection between the facility and the benefit. Point 2 is implicit in the terms of the section which empowers a council to recover all or part of the cost which it incurs to provide a facility which will benefit only part of the land in its jurisdictional area. The rate must be a means of securing reimbursement for the council's expenditure on the facility.

[41] The applicants' arguments are, in essence, that the respondent has not levied the charge on all the lands which enjoy special benefit from these facilities; and that part of the charged land does not enjoy any special benefit from the facility or part of it. These facts are said to show that the respondent could not reasonably hold the opinion required by s 971(1), or it acted on a wrong perception of what the section required, or had selected the lands to be subject to the rate by reference to criteria not recognised by the section. These errors are said to give rise to a right to have the respondent's resolution reviewed and set aside pursuant to s 20 of the JR Act.

[42] Because of the importance of the litigation to the parties the application was argued at length and in detail. It is not necessary to mention all of the points addressed because the helpful submissions from all counsel served to identify the critical points for determination. They can be discussed relatively briefly. The obvious and convenient starting point is the reason which led the respondent to select the canal front land as the land, and the only land, to be subject to the charge.

[43] The parties' arguments accepted as the appropriate denotation of 'special benefit' the description given by Gibbs J in Pestell (at 327):

'A work is of special benefit to a portion of a local authority area if the lands comprising that portion derive from the work a benefit which is not shared by other lands or a benefit which is additional to, or greater than, that which is derived by other lands'

I agree with the approach. The arguments proceeded by reference to whether the respondent could reasonably be of the opinion that the charged lands will specially benefit from the infrastructure works. The arguments did not separately address the question whether the charged lands will have special access to the works. I agree also with this approach. There is nothing in the facts of this case that makes it necessary to distinguish between the two concepts, 'benefit from' or 'access to' the 'service, facility or activity' provided by the respondent.

[44] The respondent's rationale for choosing the canal front land appears from a number of reports submitted to it over the years when it was considering the construction and funding of the canal and associated works. They are:

(i) Hope Island Canal Report No 15, dated 7 March 1997:

'The 1994/95 review of the Hope Island Infrastructure Levy apportioned the total cost of canal infrastructure works over the ... area [which] not only included the properties which front the canal but also a small portion of non-canal front properties, including some ... located quite a distance from the canal. The anomaly here is that some non-canal front properties have been inexplicably included in the benefit area, yet clearly they do not receive the same benefit as canal front properties do. In effect, these non-canal front properties are subsidising the canal front properties. Developers of these non-canal front properties have expressed concern on the canal benefit area including their properties. Their argument has been that the canal infrastructure costs stem directly and only from the canal's construction and since the canal is funded entirely by canal front landowners, the cost of infrastructure works necessitated by the canal (principally bridges and the canal's entrance channel) should be funded entirely by those same canal front landowners and not subsidised by any non-canal front landowners. There is little one can argue against this proposition. Canal front landowners obtain significant benefit by virtue of being able to market waterfront developments and accordingly are more readily able to pass on these costs to the end purchaser than non-canal front developers could. As will be discussed later, non-canal front landowners do contribute to other components of the infrastructure levy but there is no justifiable reason to levy them for canal infrastructure. Removal of these non-canal properties from the canal benefit area reduces the size of the benefit area from 175 hectares to 96.7 hectares.'

(ii) Hope Island Canal Report No 35, dated 9 March 1998:

'The cost of bridges has been apportioned over the widest area of canal fronting landowners as possible. The reason for selecting canal fronting landowners was explained in considerable detail on page 34 of the Council report on the proposed Hope Island Infrastructure Contributions Policy (refer to Hope Island Canal Report No. 15). The principal reason is that the need for bridges is entirely created by the construction of the canal cutting through existing roads. As it is the canal fronting landowners (and not any other landowners) that are constructing the canal and therefore creating the need for bridges, these same landowners should bear the cost of providing the bridges necessitated by their canal works.'

(iii) The Hope Island Infrastructure Contributions Policy, which was attachment 3 to Report No 35, and which was adopted by the respondent, stated:

'As the canal is to be funded and constructed entirely by canal front landowners, the costs of infrastructure items necessitated by the canal will be apportioned to those same canal front landowners, as shown on the canal benefit area map. Canal front landowners obtain significant benefit by virtue of being able to market waterfront developments and accordingly are more readily able to pass on these costs to the end purchaser than non-canal front developers could. Non-canal front landowners do contribute to other components of the infrastructure levy as described in this policy.'

(iv) The Hope Island Infrastructure Contributions Policy Guidelines adopted by the respondent in 2004, which stated:

'Parks Development - The amount relates to the construction of replacement facilities in the new park on Lots 216 and 217 Sickle Avenue and the making good of facilities within the remaining Banksia and Boykambil Parks. These facilities were removed as a result of the canal consuming parts of Banksia and Boykambil Parks and need to be replaced. This implies that the costs associated with the replacement of these community facilities should be included as a canal infrastructure charge as it is a direct cost of constructing the canal.

As the canal is to be funded and constructed entirely by canal front landowners, the costs of infrastructure items necessitated by the canal will be apportioned to those same canal front landowners, as shown on the canal benefit area map. Canal front landowners obtain significant benefit by virtue of being able to market waterfront developments and accordingly are more readily able to pass on these costs to the end purchaser than non-canal front developers could. Non-canal front landowners do contribute to other components of the infrastructure levy as described in this policy guideline. The canal infrastructure gross benefit area amounts to 98.55 hectares.'

(v) Hope Island Canal Report No 75 dated 23 July 2004 which stated:

'The General Infrastructure category of works ... includes an item of $900,000 for Parks Development ... the amount relates to the construction of replacement facilities in the new park of Lots 216 and 217 Sickle Avenue and the making good of facilities within the remaining Banksia and Boykambil Parks. These facilities were removed as a result of the canal consuming parts of Banksia and Boykambil Parks and need to be replaced. This implies that the costs associated with the replacement of these community facilities should be included as a canal infrastructure charge as it is a direct cost of constructing the canal. Based on this principal, the items should be removed form the General Infrastructure Works category and recovered under canal infrastructure.'

[45] The content of the opinion required by s 971 was said by the respondent's counsel to be found in para 4 of its resolution. That was:

'That the rateable land proposed to be levied with the special charge specially benefits and will specially benefit from, and has and will have special access to, the infrastructure works generally because the specific purpose and function of those works is to provide necessary development infrastructure to service and facilitate development of the rateable land. The land could not be developed and used for such purposes without provision of the infrastructure works, and the provision of the works by the Council, and levy of the special charge, means that future development approvals for the land will not be subject to development conditions requiring the provision of or payment of the cost of essential development infrastructure.'

[46] This, I suppose, is an example of post-modern expression. The paragraph is made obscure by being ungrammatical in parts, as well as unnecessarily repetitive. The author appears to have been unable, or refused, to say what he meant. One can, I think, obtain some understanding of what the resolution means by omitting unnecessarily repetitious words. So reduced the resolution, which is said to express the respondent's opinion, becomes:

'The rateable land ... specially benefits ... from ... the infrastructure works ... because the ... purpose and function of those works is to ... facilitate development of the rateable land.'

This is still circular, but is at least intelligible. The benefit is that the land becomes developable.

[47] When pressed to identify the special benefit, the existence of which justified the imposition of the charge, senior counsel for the respondent said it was the conversion of land from flood-prone parcels with significant development constraints into waterfront parcels suitable for high quality residential development.

[48] Two concepts are intertwined in the answer. One is that the land is freed of the development constraint of being flood-prone because the canal confines flood water within its channels. The second is that the amenity of the land adjacent to the canal is improved, and its value enhanced, because of the fact that it is waterfront land.

[49] The answer creates a number of difficulties for the respondent. The first is that the expression of the respondent's opinion in para 4 of the resolution does not refer to improved amenity of the land. It speaks of facilitating the development of land which, without the works, could not be developed, or could only be developed subject to expensive conditions. In context this can only be a reference to flood mitigation. The purpose and function of the works removes development constraints because, with the construction of the canal, the land cannot be inundated, at least in any storm not more severe than a Q100 event.

[50] There is nothing in the resolution which speaks of, or even hints at, the improved amenity of land adjacent to the canal as being the special benefit which will follow from the execution of the works. This suggest that the respondent did not advert to the benefit which it now asserts justifies the charge. The opinion is suspect.

[51] The next difficulty for the respondent is that the charged land is not the only land which will benefit from the confinement of flood waters within the canal. This is the common view of the hydraulic engineers who investigated the point. It is clearly demonstrated by reference to exhibit 8A which shows the extent of the lands which will enjoy flood alleviation from the construction of the canal. The charged land is only some of those lands which will be improved by the canal.

[52] It is, I think, consciousness of this fact which led the respondent to emphasise the enhanced amenity of the charged land, with its canal frontage, and identified that as a special benefit justifying the charge.

[53] There is a further problem with this approach. It is that the enhanced amenity is said to come from the fact that the charged land has water frontage. This overlooks the point that the charged land will certainly be developed into residential allotments. Once subdivided only a portion of the charged land will adjoin the canal. Most of the allotments will not enjoy that amenity.

[54] A second, more serious, problem is that this special amenity is not the result of the respondent's work, the cost of which it seeks to recover from the charge. With the exception of section A, that part of the canal at the easternmost part of Hope Island, the canal was constructed by private landowners among whom were some of the applicants. It is true that there would be no functioning canal without the construction of section A by the respondent, but it is equally true that the charged land's frontage to the canal is not the consequence of the respondent's work. With a minor exception the canal was dug by private landowners through their own lands.

[55] This leads to a point which confused the argument. It was the identification of the 'service, facility or works' for which the charge has been levied. This is the starting point of any inquiry into a claim that s 971 has not been complied with. The section authorises a local government to levy a special charge if it is 'for a service, facility or activity'. That is to say the local government may levy the charge to pay for a service, facility or activity it has provided or proposes to provide. During the hearing of the application argument swirled between two points: whether the services etc. were the individual activities identified in the resolution, or whether the service etc. was the canal to be considered as an integral whole, including ancillary structures such as the bridges and parks.

[56] The ambiguity is to be observed in the respondent's own resolution of 17 June 2005 and is repeated in the pleadings. Paragraph 2 of the resolution which described the 'overall plan' for the infrastructure works, the cost of which was to be recovered by the charge, explained:

'The service, facility or activity for which this overall plan is made is the construction, and funding of construction, of the new canal system and associated infrastructure works ('the infrastructure works') which ... facilitate further development of ... the lands to be levied.'

Note the reference to a 'canal system' and also to the 'infrastructure works' which are separately described and costed.

[57] The respondent's particulars of its pleading asserted that each item of the infrastructure works was:

'... an integral element of the creation of the subject land as a predominantly residential subdivision comprised of lots with the frontage to a tidal navigable canal.'

[58] It is necessary to identify the 'service, facility or activity' for which a special rate or charge is levied because a local authority is obliged to form an opinion about the land which will derive a special benefit from that service, facility or activity. One cannot identify the benefit, and the lands which will enjoy it, unless one first identifies the 'service, facility or activity'. In this case the respondent did not differentiate between the three categories but the respondent's infrastructure works are properly to be regarded as a 'facility'.

[59] The confusion is removed by looking at the purpose of s 971. It is to allow a local authority, in the circumstances defined by the section, to recover the cost of providing a facility, which confers an identifiable benefit on an identifiable part of its area, by an imposition of the special charge or rate. A local authority may only recover by special charge what is spent on providing a facility. Given the statutory limitation of the choice of land which may be subject to the charge, that is land which receives a special benefit from the facility, one must, I think, look at the works which constitute the facility and then ascertain what benefit is conferred by those works and so identify the land which receives the benefit. It is to be noted that the local authority must form an opinion of what land specially benefits 'from' the facility.

[60] This approach is, I think, supported by the judgment in Alan E Tucker Pty Ltd

v Orange City Council (1969) 18 LGRA 314. The case concerned a local rate imposed by the council pursuant to the same section which the High Court considered in Pestell. The council resolved to impose a local rate upon land comprising most of the business district of Orange. The works which were to be financed by the special rate included road works and associated drainage, improvement to parking areas, improved street lighting, the construction of a 'women's rest centre and tourist office', and advertising to promote the city. The works were to be conducted in different parts of the city. The rate was struck down.

'... there is one matter of construction raised by the appellants ... namely, that s 121 does not authorize the levy of a local rate to finance the cost of a conglomeration of works and services, but is limited to authorizing the levy of a local rate in a defined area to finance only one work or ... service ... I should myself not be disposed to agree that s 121 can be invoked in respect of one work or one service only, and many instances can be imagined in which a combination of two or more works may be authorized together provided that the area of benefit from each of the works is the same. The submission, however, highlights the problem of the definition of a single static area as one which derives similar special benefit from a variety of works and services of a widely differing character. This submission, rather than being one of construction, becomes ... one of fact or degree ... whether ... the several categories of works and services were not reasonably capable of being regarded as of special benefit to the ... area defined in the resolution.'

[62] Having reviewed the evidence which established that many of the works would benefit parts only of the defined area and that various works would define different parts, his Honour continued (at 323):

'These factors ... emphasise such an absence of similar or common benefit from the several categories of works ... that there can be no basis upon which the council could reasonably form the opinion that all lands in the defined area would be likely to derive special benefit from each and every one of the proposed works and services. True it is that in many cases there will be some special benefit from one or other of the works and services, but in others there can be no benefit at all and between these extremes there will be innumerable instances of benefits of varying degree ... In such circumstances I find it difficult to say that there is any basis upon which a council acting reasonably could reach the conclusion that every parcel of land in the defined area would derive a special benefit, that is, a benefit over and above some common or general benefit, from each of the works and services.'

[63] The infrastructure works themselves, as described by the respondent, fall into three distinct categories. They are:

(i) the construction of part of the canal (really section A);

(ii) the construction of three bridges across the canal; and

(iii) the acquisition of land for the construction of a new park.

There are two distinct sub-categories within category (ii). The Sickle Avenue bridges are vehicular while the bridge to join Crescent Avenue is limited to pedestrian and bicycle usage. None of the works encompassed by categories (ii) and (iii) can easily be regarded as an integral part of a new canal system, or an integral element of the creation of the charged land as a residential subdivision of lots with frontage to a canal.

[64] In my opinion the proper construction of s 971 requires the court to look at the facility provided by the respondent, the particular infrastructure works undertaken, when considering whether the respondent properly formed its opinion as to the land which specially benefited from the facility.

[65] The applicants and the respondent all engaged experts to provide reports for use in the application in four separate disciplines: traffic engineering, hydraulics, town planning and valuation. None of the expert witnesses was called to testify but their reports were tendered without objection. By arrangement between the parties the respective experts in each discipline met and produced what was called a 'conclave report' which set out briefly the points on which they agreed.

[66] There is always some awkwardness in the receipt of expert evidence in applications for the judicial review of an administrative decision. It is for the decision-maker to find the facts on which to base his decision. It is no ground of review that the court might take a different view of the facts. Nevertheless the points of agreement reached in conclave between the experts are relevant. An issue in the litigation was whether the respondent's opinion, which is a necessary prerequisite to the exercise of the power given by s 971, was reasonable, or fell beyond the boundaries of what a reasonable council might conclude. It is relevant to that enquiry to know what were the points about which all experts agreed.

[67] The traffic engineers agreed on the following:

• The three proposed bridges restore, to varying degrees, access previously provided by roads which existed prior to the construction of the canal.

• A significant proportion of the traffic on the Sickle Avenue bridges is generated by developments not included within the charged land.

• The two road bridges will be used by traffic generated by the use of the land subject to the special charge but also by other land including Hope Harbour, Shinnecock Close, Boykambil North and parts of Sanctuary Cove.

• The Crescent Avenue bridge will reinstate pedestrian and cyclist accessibility primarily to the Boykambil North area and lands immediately adjacent.

• The general effect of the construction of the Hope Island canal is to lower flood levels in the Hope Island area ... The area which receives a flood level benefit for both a 20 and 100 year average recurrence interval events extends beyond the charged land.

• The benefits to areas that experience lower flood levels resulting from the construction of the Hope Island canal include the following:

(a) For currently undeveloped areas with development rights:

(i) Lower final allotment levels resulting in less fill and earthworks costs.

(ii) Reduced stormwater drainage costs.

(iii) Increased development area.

(b) For developed areas

(i) Decreased flood levels

...

• Without the canal development could only have occurred in the Hope Island region by compensated cut and fill earthworks requiring dedication of a large part of each site for drainage purposes so that the remainder could be reclaimed and elevated above flood level. With the canal increased development can be achieved because of its flood conveyance capacity.

• If the canal was designed solely for flood mitigation its alignment and dimensions would have been different.

[69] The valuers agreed that land other than the charged land would benefit by way of an increase in market value from the works and from the canal though there was no unanimity on the identification of the other parcels of land which would increase in value by reason of the canal's construction. They did agree that the benefit of enhanced value would extend most noticeably to those properties which will adjoin the canal front properties and which are also owned by those who own waterfront properties (which are to be charged) and can be developed in conjunction with the waterfront land. As well properties along Pearl Street, Sickle Avenue and the northern end of Crescent Avenue will have water and/or park views and will increase in value for that reason.

[70] The town planners agreed that land in addition to the charged land will receive the same or very similar enhancement to amenity from the canal as will the charged land. In particular land along Crescent Avenue and Pearl Street will become canal front land with a similar access and views as the charged land. The same is true of the new parkland which is north of the canal and adjacent to Sickle Avenue. Nearby properties will benefit from the park but some properties which abut the new park are not subject to the charge while land quite remote from it and separated by the canal is made subject to the charge.

[71] One of the bridges is to be utilised by pedestrians and cyclists only. It is at the easternmost end of Hope Island. It is to connect the two parts of Boykambil which will be separated by the canal. The bridge will connect the two parts of what is the one community. It will only benefit the residents of Boykambil. It is really impossible to see any benefit conferred by that bridge upon any of the charged land.

[72] Likewise the land owned by the applicants in BS 9273 of 2005 ('first applicants') is located to the west of the canal. Vehicular access to it does not depend upon either of the Sickle Avenue bridges. It is difficult to see how they can derive any special benefit from the construction of those bridges. The lands owned by the applicants in BS 9748 of 2005 ('the second applicants') which include the island to be formed by the bifurcation of the canal, and the lands to the north of the canal, will benefit from the access provided by the bridges. However it is clear from the evidence that the bridges will be utilised by and be of benefit to residents of and visitors to Sanctuary Cove to the north. Indeed the Sickle Avenue South bridge is to be four lanes because of the additional vehicular traffic expected to be generated from Sanctuary Cove. The point is that the Sickle Avenue bridges will benefit more than the second applicants' land and, as I have said, will not measurably benefit the first applicants' land.

[73] Similarly the relocated park is a considerable distance from the first applicants' land and a lesser, though still a considerable, distance from part of the second applicants' land. It is very close to other land which has not been selected to bear the burden of the charge.

[74] This review of the evidence makes it impossible to accept that each lot of the charged land derives a special benefit from each of the items of infrastructure work which make up the facility provided by the respondent. The categories of work are disparate. They are different in kind and in effect. The infrastructure works are not interdependent. They do not form a unified structure or facility. They are discrete parts and do not coalesce into a single, or whole, facility.

[75] The respondent was obliged to consider the proper extent of land which would obtain a special benefit from each item of the infrastructure works. Deane J pointed out in Watson v Bankstown Municipal Council (1977) 34 LGRA 403 at 409:

'Unless the council directs its attention to determining the precise area which, in its opinion, will be specially benefited by the relevant work or service, the local rate will not be validly made pursuant to the provisions of s 121(1).'

[76] These considerations lead to a finding that the statutory prerequisite for the special charge did not exist. The respondent formed the opinion required by s 971(1)(b) by reference to the wrong criterion. It considered the facility to be the 'canal system' rather than the individual works: the building of bridges, the provision of parks, and the excavation of a section of canal. The respondent, as its reports indicate, considered what benefit was conferred by the 'canal system' and not the works it actually provided. The respondent identifies the special amenity of the charged, waterfront, land as being the special benefit which justified the imposition of the special charge. But that amenity, the propinquity of the land to the canal, is not a consequence of the construction of the bridges or the relocation of the park. It may arguably be a consequence of the completion of the canal but the charge seeks to recover more than just the cost of that work.

[77] The respondent's counsel seeks to justify the charge on the basis that:

'18. The construction of the canal had the following impacts on existing road and park infrastructure in the relevant locality:-

(a) severing of Sickle Avenue, a north-south road at the western end of Section B, in two places by the northern and southern arms of the canal;

(b) severing of Sheehan Avenue a north-south road at the eastern end of Section B, also in two places by the northern and southern arms of the canal;

(c) severing of Crescent Avenue, a north-south road more or less at the junction between Section A and Section B;

(d) loss of a significant portion of Council parkland in the area which became Section A.

19. In order to restore the severed road access and lost parkland, both of which provided existing and satisfactory services to existing residents of the established coastal "village" of Boykambil, and other areas north of the canal, the Council determined that it was necessary to:-

(a) construct a bridge or bridges across the canal to replace the lost road access; and

(b) acquire and develop replacement parkland in the locality.

...

100. As to the first issue, it does not appear to be in contest that, factually, the works in respect of which the special charge was made and levied were carried out only because of the construction of the balance of the canal by the adjoining landowners, and would not have been required to be carried out (by anyone) if the balance of the canal had not been constructed. This is axiomatic in respect of that part of the works charged for which relates to actual canal construction, including land acquisition. For the other components, it does not appear to be in factual contest that:-

(a) the bridges were required to be constructed only because of the severing of the previously existing road access by reason of construction of the canal; or

(b) the park required to be acquired and developed only because of the substantial loss of the previous park by reason of the construction of the canal (Section A) through that park.'

[78] The submissions appear to be a restatement of the respondent's own justification for its choice of the land to be levied which appears in the Hope Island Canal Report No. 35 which I set out in full earlier. It will be remembered the report said:

'The reason for selecting canal fronting landowners was explained ... [in Report No. 15]. The principal reason is that the need for bridges is entirely created by the construction of the canal cutting through existing roads. As it is the canal fronting landowners (and not any other landowners) that are constructing the canal and therefore creating the need for bridges, these same landowners should bear the cost of providing the bridges necessitated by their canal works.'

[79] The respondent's submissions restate the justification relied upon by the Livingstone Shire Council for the imposition of its special rate which was struck down in Shanvale. That council chose to levy the special rate upon the land whose use gave rise to the need for the new road. This was said to be erroneous.

[80] Section 971 requires a council to come to an opinion about what land will benefit from the works undertaken by the council, not what land gave rise to the need for the works. The two enquiries are not the same and will often yield different answers, as they did in Shanvale and as they do here. What gave rise to the need for the works is irrelevant when a council comes to consider whether it can levy a special charge. Section 971 is not concerned with what gave rise to the need for the works. It is concerned with what special benefit the works confer. If the respondent decided to levy the special charge on the land adjoining the canal because the canal necessitated the bridges (and the park) it expressed its opinion about what land should be fixed with the charge by reference to a criterion which the statute does not recognise and it did not have regard to the criterion which the statute requires.

[81] In fact there seems to have been a second aspect to the respondent's choice of the land to be levied. That was that the owners of that land which was yet to be developed and the value of which would be enhanced by the canal were in the best position to pass on the cost of the special charge. This appears in the extracts from the reports which I quoted earlier and which appear in para 44. It is significant that the reports noted:

'Canal front landowners obtain significant benefit by virtue of being able to market waterfront developments and accordingly are more readily able to pass on these costs to the end purchaser than non-canal front developers could.'

[82] That justification was repeated in the respondent's infrastructure contributions policy guidelines adopted in 2004. The respondent appears to have chosen the land to levy by reference to the capacity of its owners to pay the amount of the charge by recovering it from the purchasers of their developed lots. One can understand the economics, and indeed the politics, of recovering the costs of the works from a few wealthy developers who can include the cost in the price of the land they sell but it is not the criterion which s 971 requires a council to address.

[83] It is true that s 971, unlike the section considered in Pestell, now allows a local authority to have regard to the circumstances of the occupier of land in determining on whom to levy a special charge. However the respondent did not, in its resolution, select any benefit accruing to the occupiers of the charged land as justifying the charge. Moreover the particular circumstance noted, the capacity of those landowners to pay the charge, is not a benefit accruing to the landowners from the respondent's infrastructure works.

[84] Even if one should consider the works to be the canal as a whole, including its necessary ancillary structures such as bridges, one still sees considerable difficulties in the respondent's position. A clear benefit, indeed the primary benefit, from the canal will be the transformation of flood-prone land to land which is above flood level and which can therefore be developed without that significant constraint. This benefit which I have designated 'primary' is obviously a 'special' benefit to all the land which will no longer flood because of the canal. This, it has been noted, includes land beyond the land chosen by the respondent to rate.

[85] If one regards flood alleviation as being a special benefit from the works, i.e. the canal, one is forced to conclude that the respondent's opinion was legally unreasonable. No sensible council acting with due appreciation of its responsibilities under the Act could have decided that only the land it chose received the special benefit.

[86] The respondent seeks to answer this difficulty by contending that the function of the canal, and the reasons for its construction, was not flood mitigation but the creation of superior housing allotments, superior because of their location near water. The contention is not factually tenable. The respondent relies principally upon a report to the respondent from its Co-ordination Committee which met on 25 and 26 June 1996. The purpose of the report was to clarify 'misconceptions' concerning the proposal to construct the canal. The report confirmed:

'... that the primary purpose of the Hope Island canal is to facilitate a private sector development and not a public sector development.'

'The position held by HICA is that the canal development is a Council initiated public flood mitigation scheme.

The inaccuracies of HICA's views are as follows:

1. The canal development was not initiated by Council: it was initiated by the private sector ...

2. It is inaccurate to view the canal solely or primarily as a public flood mitigation scheme when the design concept for the development is essentially that of a navigable canal to enhance the value of private waterfront properties. Flood mitigation drains are not navigable and are not built 75 metres wide as is the ... canal.

3. The scheme does have a public element in that it benefits an identifiable locality ... It is not related to a specific development proposal by a single ... developer. That is the basis upon which approval was able to be obtained under the City of Brisbane (Flood Mitigation Works Approval) Act 1952. However, the purpose of implementation of the scheme in the particular form chosen is to facilitate private development of land which otherwise has severe development constraints. ...

It is therefore wholly inaccurate to view this as a public scheme ...'

'... Construction of the canal and infrastructure works is to be completely funded by the private sector ...

It is recommended that Council resolves as follows:

1. Council notes that while the Hope Island canal has some localised public benefit, the primary purpose of the scheme in its present proposed form is to alter natural drainage and flooding patterns specifically to facilitate the private development of canal front land which would otherwise be subject to severe development restraints.'

[88] This document does not require a revision to the conclusion that the primary function of the canal was flood mitigation. It is true that the canal was wider and deeper than would have been necessary had flood mitigation been the only consideration and the canal would have taken a slightly different course. But the effect of the canal is to confine flood waters and increase the area of land that can be developed, or developed without significant additional cost. The fact that the canal was of commercial advantage to private landowners and that its size conferred advantages that a smaller, straighter channel would not, may provide sound reasons for the respondent's refusal to pay for the costs of constructing the canal but does not alter the fact that it was a measure to provide flood mitigation.

[89] This appears with sufficient clarity from the respondent's own documents, particularly 'Report No. 1 on the history and implementation of the (1) Hope Island canal and (2) Canal related infrastructure' prepared by the respondent's

Co-ordination Committee in May 1996 for the respondent's general meeting on

17 May 1996 which is set out in paragraph 9 of these reasons.

[90] There is no suggestion that the Governor in Council was misled or in any way imposed upon in October 1995 when asked to approve the canal under the

Flood Mitigation Act. Approval was sought, and obtained, for the construction of the canal for the purposes of alleviating flooding on Hope Island. It cannot be denied that a consequence of constructing it to its actual dimensions has made it navigable and enhanced the value of adjacent lands but the fact remains that its essential, primary, function is to conduct flood water from the Coomera River and to divert it from the low-lying lands of Hope Island.

[91] In forming the opinion required by s 971 the respondent identified the special benefit to come from the works (service, facility or activity) (treating the works as the canal) as the enhanced amenity of the land immediately adjacent to the canal. It is not, I think, possible to separate that benefit from the primary one of flood alleviation effected by the canal. The improved amenity is an ancillary consequence. The land is improved and its amenity enhanced by the fact that it is flood-free and, no doubt, additionally by the size and quality of the canal. But it is not possible to separate out the two benefits: amenity; and removal of susceptibility to flooding.

[92] It is clear from the authorities that a council cannot pick and choose between land to make the subject of a special rate. It must charge all land which would benefit from the works to be paid for by the rate. It must turn its mind and form an opinion as to the identity of those lands. Likewise I do not think it open to a council to pick and choose between benefits so as to limit the scope of operation of the special rate. It may be different when council works give rise to two distinct sorts of benefit but where, as here, the benefits are inseparable it is not permissible to divide the indivisible and form an opinion with respect to a benefit that is in reality an artificial abstract.

[93] Drawing the threads together it is apparent that the charge is not authorised by s 971 of the Act. The opinion which the respondent formed that the charged lands are those which benefit from the works is unreasonable. No local authority, acting reasonably, could have thought that that was the land which enjoyed a special benefit from the works. This is so whether one considers the works to be the canal as an integral function or whether one regards the works as the three separate components of bridges, parks and canal (section A).

[94] If it be right to make the analysis with respect to the first possibility, that the benefit conferred by the canal was the alleviation of floods and the creation of flood-free, developable land, there is no doubt that that benefit extended beyond the land chosen by the respondent to bear the burden of the special charge. If the analysis be conducted by reference to the second possibility, the component parts of the works, it is clear that the benefit identified by the respondent, enhanced amenity by reason of adjacency to the canal, did not come from those works. They did confer benefits but the respondent made no attempt to assess what they were or what lands enjoyed the benefits.

[95] Having regard to the terms of s 20 of the JR Act it is clear that the respondent's resolution of 17 June 2005, the making of the decision to levy the special charge, was an improper exercise of the power conferred by the enactment (s 971 of the Act) under which it was purported to be made. The exercise of the power is improper because the opinion which the respondent had to form as the precondition to the levying of the special charge was so unreasonable that no reasonable council could have formed it and have exercised the power consequent upon it. It was not an opinion which could sensibly be made having regard to the requirements of

s 971. The benefit which the respondent identified could not reasonably be regarded as being a benefit from the works, be they the canal or the individual components of bridges, canal and parks.

[96] In addition the power which the respondent purported to exercise pursuant to s 971 was an improper exercise of the power because in making the resolution the respondent had regard to irrelevant factors: the capacity of the owners of the charged land to pay the special charge and the fact that the need for the works was occasioned by the development of that land as canal front blocks.

[97] Accordingly, in each application, I declare that the respondent's resolution of

17 June 2005 by which it resolved to levy the Hope Island Canal infrastructure special charge is invalid and of no effect.

I order that the said resolution of 17 June 2005 be set aside as and from that date. I further order that every rate notice dated 12 September 2005 levying the special charge be set aside.