Douglas Shire Council v Queensland Ombudsman

[1] The applicant seeks a declaration that fees it determined by resolution of 15 June 2004 as fares to travel by ferry across the Daintree River are lawfully imposed.

[2] The applicant is a local government constituted under the Local Government Act 1993 (Qld) _(_the Local Government Act). Its local government area is the Shire of Douglas (the shire) declared under that Act.

[3] The Daintree River (the river) relevantly for present purposes, is completely situate in the shire. The area north of the river includes the wet tropics world heritage area and is, primarily for that reason, a consistently popular tourist and visitor destination. Substantially all of the private land north of the river is rateable land.

[4] By virtue of s 930 of the Local Government Act the applicant has an exclusive right to provide a ferry service across the river and has entered into a contract with Daintree Ferry Pty Ltd which operates the Daintree River Ferry (the ferry).

[5] The ferry is the only convenient means of accessing the area of the shire north of the river from the south.

[6] The resolution of 15 June 2004 determined the fares to be paid by users of the ferry (the fares). They are structured to include a component the applicant places in a conservation and infrastructure management fund (the conservation component). That component is expended on conservation measures for land north of the river and on infrastructure to support the conservation values of that land.

(i) acquisition of private land for conservation purposes;

(ii) measures promoting the conservation, maintenance and protection of both private and public land, including conservation agreements with private owners and weed and pest management;

(iii) public education measures in relation to the conservation and environmental values of that land;

(iv) information services and physical infrastructure for the benefit or use of visitors;

(v) capital and maintenance expenditure on the road from Daintree River.

[8] The operating surplus in respect of the ferry (including the conservation component) exceeds 50 per cent of the costs of the ferry's operation and maintenance.

[9] The fares are also structured so that eligible residents and ratepayers of the shire and adjacent shires, business operators, visitors and tradespeople travelling to the premises of eligible residents and designated others do not pay the conservation component. Consequently that component is paid predominantly by tourists and other visitors to the area north of the river.

[10] It is an offence to travel on the ferry without paying the fare or to attempt to avoid paying the fare and the applicant may recover unpaid fares by court action (Local Government Act s 1038).

[11] The Queensland Ombudsman (the respondent) investigated complaints about the applicant setting the fares. The respondent concluded, in terms of ss 49 and 50 of the Ombudsman Act 2001 (Qld) (the Ombudsman Act) that s 36(2)(c) of the Local Government Act does not authorise the making of the charge that included a tax component and that the conservation component of the fares was a tax.

[12] The respondent therefore concluded that the applicant's administrative actions in setting the fares were contrary to law or based wholly or partly on a mistake of law in terms of s 49(2)(a)(f) of the Ombudsman Act. It was recommended that the applicant take immediate action to cease charging the conservation component and amend its register of charges and fees. There was a recommendation to the effect that there be no refund of monies already paid.

[13] The power to tax is a function of government.

[14] A tax is characterised as a compulsory extracture of money by a public authority for public purposes, enforceable by law, which is not a payment for services rendered, Mathews v Chicory Marketing Board (Vic) [1938] HCA 38; (1938) 60 CLR 263, at 276

[15] The applicant contends it has acted within its power and seeks a declaration that the fares for travel on the ferry as currently determined are lawful. The respondent appeared, took no point in terms of the decision being no more than a recommendation to the Minister or otherwise and made submissions to controvert the applicant's submissions.

[16] There is much to be said for the proposition that at common law a ferry is a monopoly toll franchise created by Act of Parliament or grant for the benefit of the public (21 Halsbury's Law of Australia [889-933]).

[17] That said the parties are agreed that the outcome of the application turns on whether s 36(20)(c) of the Local Government Act authorises the charging of the fares.

[18] The applicant submits that the section permits it to charge fares including a "revenue making purpose" or "commercial charges" which provide a surplus over operating costs and that is what it has done.

[19] The respondent submits that s 36(2)(c) does not authorise the charging of a fare which is or which includes a tax. The fare set by the applicant included a tax and was not a fee "for" a service supplied by the respondent. It was further submitted that the subsection does not justify a charge of more than the costs of ferry services and to the extent to which it does so by the conservation component it is imposing a tax.

[20] Before turning to the section it is necessary to say something about the scheme of the Act. The applicant has "jurisdiction to make local laws for, and otherwise ensure, the good rule and government" of the Douglas Shire (s 25).

"In exercising its jurisdiction of local government, a local government has -

[22] It may be accepted, as the applicant submits, that these provisions are a change from the scheme of the previous legislation. That legislation separately specified individual functions of local government and the extent of the limiting effects could be a cause of contention; see Bone v Mothershaw [2002] QCA 120; (2002) 121 LGERA 75 and the Minister's second reading speech; Hansard, 3 December 2002. That said in my view s 36(2)(c) is not ambiguous it its application in the circumstances of this case.

[23] A local government is given express power to make a levy:-

[24] Section 1071 A to E deals with regulatory fees. A regulatory fee may not be more than the cost of providing the service or taking the action for which it is charged and may include a tax component authorised under the Act; s 1071A. Sections 1071B to D provide the circumstances in which there may be a tax component. It is common ground that the fares in issue here are not in respect of a subject matter referred to in s 1071A.

[25] The Local Government Act deals specifically with ferries. As I have said, s 930 gives the applicant an exclusive right to operate a ferry which it has exercised with respect to the ferry.

[26] By s 933 of the Act the applicant has power to make local laws for managing and regulating the use of ferries operated or leased by it. By s 972(1) the applicant may make a levy, a separate rate or charge for a service facility or activity in the way it considers appropriate.

[27] As I have said this case turns on s 36(2)(c). The power to charge for a service conferred by s 36(2)(c) is one of the powers of an individual conferred on the Council acting as a public authority.

(1) A local government has, in the exercise of its jurisdiction, all the powers of an individual.

(b) acquire, hold, deal with and dispose of property; and

(c) charge for services and facilities it supplies, other than a service or facility for which a regulatory fee may be fixed; and

(d) do all other things necessary or convenient to be done in the exercise of its jurisdiction."

[29] The use of "for" in s 36(ii)(c) in its ordinary meaning connotes a connection between the charge and the service or facility supplied; Oxford English Dictionary "for" 8, 9 Macquarie Dictionary "for" 1 and 2. As a consequence the subsection in my view does not justify a charge other than for the services and facilities in respect of which the charge is levied save if a regulatory fee is fixed, and that is not a relevant consideration here.

[30] The conservation component fund is used for public purposes other than the provision of services or facilities by the ferry.

[31] It is not suggested that the activities on which it is expended are confined to activities connected to the provision of the ferry service.

[32] It follows that the conservation component lacks the necessary connection with the ferry services required by s 36(2)(c).

[33] It may be that a local government can set "commercial charges" under s 36(2)(c) in the same way that a private sector entity or an individual can. The charges must nevertheless be 'for" the relevant services and facilities.

[34] The issue in this case is not whether the applicant can impose charges generating a surplus but whether it can impose the conservation component. As I have said that component is not however "for" the provision of the services the ferry provides but is for the explicit purposes of the fund to which that component is paid.

[35] Determination of whether an imposition is a genuine fee for a service may have the consequence it is not a tax. On the other hand an imposition which is not connected with the provision of a service may be a tax. See for example the considerations canvassed in Air Caledonie International v Commonwealth (1988) 165 CLR 462; Air Services Australia v Canadian Airlines International Ltd & Ors (1999) 202 CLR 133.

[36] In the latter case the court held that in the particular circumstances of that case the necessary relationship was not limited to that between the charge and the cost of the particular service or services provided but between the charge and such expenses with respect to the provision generally of the services and facilities to which it related and hence did not amount to taxation.

[37] As I have already said that cannot be said with respect to the conservation component which is used for conservation measures and infrastructure to support conservation values not "for" the provision of the ferry service and hence not within the power given by s 36(2)(c).

[38] That consideration does not arise here because, as I have said, in my view the purposes for which the conservation component is used cannot be said to be "for" the provision of the ferry service.