Nash Bros Builders Pty Ltd v Riverina Water County Council - [2015] NSWLEC 156 - NSWLEC 2014 case summary — Zoe

NSWNSWLEC

Nash Bros Builders Pty Ltd v Riverina Water County Council

[2015] NSWLEC 156

Land and Environment Court (NSW)|2014-09-03|Before: Pepper J

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At a glance

Source facts

Court

Land and Environment Court (NSW)

Decision date

2014-09-03

Before

Pepper J

Catchwords

(1988) 165 CLR 462 Airservices Australia v Canadian Airlines International Limited [1999] HCA 62
(1999) 202 CLR 133 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41
(2009) 239 CLR 27 Allandale Blue Metal Pty Ltd v Road and Maritime Services [2013] NSWCA 103
(2013) 195 LGERA 182 Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia [1932] HCA 9

Source

Original judgment source is linked above.

Catchwords

(1988) 165 CLR 462 Airservices Australia v Canadian Airlines International Limited [1999] HCA 62(1999) 202 CLR 133 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41(2009) 239 CLR 27 Allandale Blue Metal Pty Ltd v Road and Maritime Services [2013] NSWCA 103(2013) 195 LGERA 182 Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia [1932] HCA 9(1932) 47 CLR 1 ANZ Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17(1988) 164 CLR 662 Auburn Municipal Council v Szabo (1971) 67 LGRA 427 Bardsley-Smith Penrith City Council [2013] NSWCA 200(2013) 195 LGERA 34 Baulkham Hills Shire Council v Koveda Holiday Park Estate Ltd [2009] NSWCA 160(2009) 167 LGERA 395 Baulkham Hills Shire Council v Wrights Road Pty Ltd [2007] NSWCA 152(2007) 153 LGERA 219 Botany Bay City Council v Saab Corp Pty Ltd [2011] NSWCA 308(2011) 183 LGERA 228 Certain Lloyd's Underwriters v Cross [2012] HCA 56(2012) 248 CLR 379 Commissioner of Police (NSW) v Eaton [2013] HCA 2(2013) 252 CLR 1 Commissioner of Taxation v Consolidated Media Holdings (ACN 009 071 167) Ltd [2012] HCA 55(2012) 250 CLR 503 David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48

Judgment (17 paragraphs)

[1]

bah Homes Pty Ltd [2005] NSWCA 455; (2005) 64 NSWLR 695 Meriton Apartments Pty Ltd v Council of the City of Sydney (No 3) [2011] NSWLEC 65; (2011) 80 NSWLR 541 Minister for Immigration and Multicultural and Indigenous Affairs v Nystrom [2006] HCA 50; (2006) 228 CLR 566 Minister for Urban Affairs and Planning v Rosemount Estates Pty Ltd (1996) 91 LGERA 31 Nash Bros Builders Pty Ltd v Riverina Water County Council [2014] NSWLEC 140 Ovidio Carrideo Nominees Pty Ltd v Dog Depot Pty Ltd [2006] VSCA 6; (2006) V ConvR Parks and Playgrounds Movement Inc v Newcastle City Council [2010] NSWLEC 231; (2010) 179 LGERA 346 Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 Regional Express Holdings Limited v Dubbo City Council (No 3) [2014] NSWLEC 87 Reysson Pty Ltd v Roads and Maritime Services [2012] NSWLEC 17; (2012) 188 LGERA 252 Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516 Sydney Serviced Apartments Pty Ltd v North Sydney Municipal Council (No 2) (1993) 78 LGERA 404 Taylor v Smith [1926] HCA 6; (1926) 38 CLR 48 Taylor v The Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 88 ALJR 473 Thiess v Collector of Customs [2014] HCA 13; (2014) 250 CLR 669 VAW (Kurri Kurri) Pty Ltd v Scientific Committee (Established Under s 127 of the Threatened Species Conservation Act 1995) [2003] NSWCA 297; (2003) 58 NSWLR 631 Westfield Management Ltd v Perpetual Trustee Company [2006] NSWCA 245 Woolwich Equitable Building Society v Inland Revenue Commissioners [1992] 3 All ER 737; [1993] AC 70 Category: Principal judgment Parties: Nash Bros Builders Pty Ltd (ACN 145 518 378) (First Applicant) Nash Bros Constructions Pty Ltd (ACN 001 752 405) (Second Applicant) Riverina Water Country Council (Respondent) Representation: Counsel: Mr A Galasso SC with Mr T Prince (First and Second Applicants) Mr R Lancaster SC with Mr N Eastman (Respondent)

[2]

Solicitors: Bradley Allen Love (First and Second Applicants) Local Government Legal (Respondent) File Number(s): 14/40028

[3]

Table of Contents TOPIC Paragraph No Riverina Charges Nash Bros Development Servicing Charges for the Supply of Water to a Retirement Village [1] Application to Amend the Summons Refused [6] Jurisdiction of the Court to Grant the Relief Sought [9] The Retirement Village Development and the Imposition of the Charges [11] Issues for Determination [83] Statutory Framework [84] Does Riverina Have the Power to Levy the Development Servicing Charges? [90] (Issues (a) to (e)) Relevant Principles of Statutory Construction [90] Power to Impose the Development Servicing Charge Under s 608 of the LGA [101] Power to Impose the Development Servicing Charge Under s 306 of the WMA [133] Riverina Cannot Recover the Development Servicing Charges Already Paid [179] (Issue (f)) Conclusion and Orders [204]

[4]

Riverina Charges Nash Bros Development Servicing Charges for the Supply of Water to a Retirement Village

The applicants, Nash Bros Builders Pty Ltd ("Nash Bros") and Nash Bros Constructions Pty Ltd ("NBC"), seek a declaration that the respondent, Riverina Water County Council ("Riverina"), has no power to impose development servicing charges in relation to the supply of water to the Grange Retirement Village, a seniors living residential development at Lake Albert, a suburb of Wagga Wagga ("the retirement village"). Nash Bros also seeks recovery of $127,234 (plus interest) in development servicing charges it has previously paid Riverina.
The proceedings raise two principal questions for resolution. First, whether Riverina has any statutory authority to impose the development servicing charges. And second, if it does not, whether Nash Bros can recover the development servicing charges it has already paid.
Riverina contends that the proceedings should be dismissed because it has the legislative power to charge the applicants development servicing charges conferred either by s 608 of the Local Government Act 1993 ("the LGA") and/or s 306 of the Water Management Act 2000 ("the WMA"). Originally Riverina also contended that s 552 of the LGA empowered it to levy the charges, but this was abandoned at the outset of the hearing.
Further, Riverina asserts that no order for repayment ought to be made because, in addition to the argument that Riverina was empowered to receive payment for the development servicing charges, the applicants have received, and continues to receive, a material benefit as consideration for the payments that they have made to Riverina, namely, the benefit of water supplied to the retirement village. Riverina asserts that it has not been unjustly enriched by receipt of the charges and that it would therefore be inequitable to require repayment to the applicants. Riverina also submits that the applicants have not discharged their onus of establishing that they have not passed on the charges to other persons, in which case, s 4 of the Recovery of Imposts Act 1963 ("the Recovery Act") provides a defence to the claim for repayment, or in the alternative, that the payments were made under compulsion or colour of office, so as to enliven any right of recovery or restitution of the payments.
In my opinion, the applicants' appeal must be dismissed because Riverina has the legislative power under both s 608 of the LGA and s 306 of the WMA to impose the development servicing charges. Furthermore, even if it did not, s 4 of the Recovery Act would preclude recovery of the charges because the fees have been recovered from another person, namely, the owner of the land upon which the retirement village is being developed, The Grange Lifestyle Village Pty Ltd ("Grange") .

[5]

Application to Amend the Summons Refused

On the second day of a two day hearing, the applicants applied for leave to amend their further amended summons ("the summons") and points of claim to add as a third applicant, viz, Grange, in order to claim repayment of $107,159. That application was dismissed for the reasons given in Nash Bros Builders Pty Ltd v Riverina Water County Council [2014] NSWLEC 140 (especially at [21]).
An application to amend the originating process to increase the amount claimed by Nash Bros from Riverina from $93,710 to $127,234 was, however, allowed, with the consent of the parties.
A further application to amend the points of claim to add a claim in contract, which was not sufficiently disclosed by the current state of the pleadings, was ultimately not pursued by Riverina.

[6]

Jurisdiction of the Court to Grant the Relief Sought

Initially there was a dispute between the parties as to whether or not the Court had jurisdiction to grant the relief sought in the summons. In order to avoid the argument, Nash Bros commenced a separate proceeding in the Supreme Court of New South Wales seeking identical relief, and on 23 April 2014, that proceeding was transferred to this Court pursuant to s 148B(2) of the Civil Procedure Act 2005 ("the CPA").
The effect of that order, together with s 148E of the CPA, was to confer on this Court the jurisdiction of the Supreme Court in relation to the matter thereby resolving all outstanding concerns as to the Court's jurisdiction to grant the relief prayed for in the summons by the applicants.

[7]

The Retirement Village Development and the Imposition of the Charges

Subject to one preliminary matter, the facts upon which the application was brought were largely uncontentious and were contained in an agreed statement of facts, an agreed chronology and an eight part tender bundle.
That matter concerned the relationship between NBC and Nash Bros. NBC was incorporated in 1979 and Nash Bros was incorporated in 2010. The evidence of Mr Chris Nash, a director and shareholder of both Nash Bros and NBC, was, however, that when Nash Bros was incorporated in 2010, it became the main trading entity and effectively, but not legally, took over all of NBC's obligations in respect of the retirement village development. As part of this arrangement, invoices issued to NBC by Riverina were paid by Nash Bros on behalf of NBC.
Other evidence relied upon by the parties included, on behalf of the applicants: two affidavits of Mr Chris Nash (affirmed on 20 May 2014 and 18 June 2014), one affidavit deposed to by Mr Scott Nash, Mr Chris Nash's brother, (affirmed 18 June 2014), and an affidavit by Ms Alison Pearce (affirmed 16 June 2014). And on behalf of Riverina, an affidavit of Mr Tamarin Langley (sworn 29 May 2014) and an affidavit of Ms Natalie Eisenhauer, the Works Engineer at Riverina from 16 November 2006 to 22 March 2013 (sworn 26 May 2014).
Riverina is a county council established in 1997 under s 387 of the LGA. It exercises water supply functions under Div 2 of Pt 3 of Ch 6 of the LGA.
The proclamation constituting Riverina indicates that its functions are to "comprise the functions of a council for the provision, care, control and management of water supply works, services and facilities within its area of operations". The principle objectives of Riverina are to be a successful business, to protect the environment by conducting its operations in compliance with the principles of ecologically sustainable development, and, in respect of the supply of potable water, to protect public health by supplying safe drinking water to its customers and other members of the public.
By reason of s 400(1) the LGA, the LGA applies to Riverina in the same way as it applies to a local council: 400 Application of Act to county councils (1) This Act (except Part 1 and Divisions 1 and 2 of Part 2 of Chapter 9, Chapter 10, section 365 and the provisions of Chapter 15 concerning the making and levying of ordinary rates) applies: (a) to county councils in the same way as it applies to councils, and (b) to the members of county councils in the same way as it applies to the councillors of councils, with such exceptions and modifications (if any) as the regulations may provide.

[8]

The developer Charge for any newly created parcel of land or development will be based on a minimum of one E.T. The extra connection fee to serve the rural residential areas south of Red Hill Road is to remain at $1,200 per allotment. This is to meet the additional cost of supply mains to such areas, and the same principle is applied to other areas, remote from the existing capacity of the reticulation. Its application to all new subdivisions in rural residential zones will recognise the additional demand and infrastructure costs of this type of development.

In addition, there were various "Service Connection Fees" set out in sections 11.4 to 11.6, and the "Retriculation Mains Construction Costs" were passed on to land developers in section 11.7.
The "Urban (Residential)" "Recommended Development Servicing Charges" were set out for various lots in section 11.8.1.
On 21 July 2008 NBC obtained development consent (no DA05/0258) ("the development consent") from Wagga Wagga City Council ("the council") for a residential development for seniors living comprising 185 detached residential dwellings, 63 assisted living units, community care centre, recreational facilities and associated landscaped gardens/open space, car parking, internal roadways and an access road on the land described as lot 15 DP 1143209 and known as 74 Gregadoo Road, Lake Albert ("the land").
The land is owned by Grange as trustee for The Grange Lifestyle Village Unit Trust ("the unit trust").
The development consent was subsequently amended by modification on 1 December 2010, 17 June 2011 and 29 March 2012, ultimately providing for 196 detached residential dwellings, 63 assisted living units and a community centre.
By letter dated 27 October 2008, Riverina advised the applicants' consulting engineers, Hughes Trueman, of the details of these various fees and charges, including the development servicing charges and connection fees for the provision of a water supply to the retirement village, which included $353,830 for development servicing charges.
Riverina further advised Hughes Trueman of updated fees and charges by letters dated 15 December 2009 and 22 March 2010.
In early 2009, Mr Chris Nash made an arrangement with the council for development servicing charges in relation to sewerage and stormwater for the retirement village to be paid on a pro rata basis.

[9]

Issues for Determination

By agreement between the parties, the following issues must be determined in order to resolve the existing controversy the subject of these proceedings: 1. does s 608 of the LGA authorise Riverina to charge or levy either or both of the applicants with a charge in the nature of a development servicing charge? 2. does condition 3 and/or paragraph f) on p 37 under "Plumbing Section" of the development consent granted to NBC by the council require NBC to obtain a certificate of compliance from Riverina in relation to the water management works being carried out at the retirement village? 3. are either or both of the applicants required to apply to the respondent for a certificate of compliance under s 305 of the WMA? 4. have either or both of the applicants applied to Riverina for a certificate of compliance under s 305 of the WMA? 5. are the applicants legally obliged to pay an amount specified pursuant to s 306(2)(a) of the WMA if they do not wish to be granted a certificate of compliance under Div 5 of Pt 2 of Ch 6 of the WMA? 6. can Nash Bros recover from Riverina the amount of development servicing charges, or some part of it, paid to Riverina on the ground that: 1. the said charges were paid by mistake; and/or 2. the said charges were paid by reason of the effective compulsion created by Riverina's demand for payment colore officii; and/or 3. the said charges were paid by reason of Riverina's ultra vires demands for payment?

[10]

Statutory Framework

Sections 64, 68, 501, 608, 610 and 610A-D of the LGA relevantly provide as follows: 64 Construction of works for developers Division 5 of Part 2 of Chapter 6 of the Water Management Act 2000 applies to a council exercising functions under this Division in the same way as it applies to a water supply authority exercising functions under that Act. … 68 What activities, generally, require the approval of the council? (1) A person may carry out an activity specified in the following Table only with the prior approval of the council, except in so far as this Act, the regulations or a local policy adopted under Part 3 allows the activity to be carried out without that approval. (2) This section does not apply to the carrying out of an activity specified in Part B of the following Table: (a) on land within the area of operations of the Sydney Water Board under the Sydney Water Act 1994 , or (b) on land within the area of operations of the Hunter Water Board under the Hunter Water Act 1991. (3) This section does not apply to the carrying out of an activity specified in item 1, 2, 3, 4 or 6 of Part B of the following Table on land within the area of operations of a water supply authority constituted under the Water Management Act 2000. Table Approvals Part A Structures or places of public entertainment 1 Install a manufactured home, moveable dwelling or associated structure on land Part B Water supply, sewerage and stormwater drainage work 1 Carry out water supply work 2 Draw water from a council water supply or a standpipe or sell water so drawn 3 Install, alter, disconnect or remove a meter connected to a service pipe 4 Carry out sewerage work 5 Carry out stormwater drainage work 6 Connect a private drain or sewer with a public drain or sewer under the control of a council or with a drain or sewer which connects with such a public drain or sewer … 501 For what services can a council impose an annual charge? (1) A council may make an annual charge for any of the following services provided, or proposed to be provided, on an annual basis by the council: • water supply services • sewerage services • drainage services • waste management services (other than domestic waste management services) • any services prescribed by the regulations. (2) A council may make a single charge for two or more such services. (3) An annual charge may be levied on each parcel of rateable land for which the service is provided or proposed to be provided. … 608 Council fees for services (1) A council may charge and recover an approved fee for any service it provides, other than a service provided, or proposed to be provided, on an annual basis for which it is authorised or required to make an annual charge under section 496 or 501. (2) The services for which an approved fee may be charged include the following services provided under this Act or any other Act or the regulations by the council: • supplying a service, product or commodity • giving information • providing a service in connection with the exercise of the council's regulatory functions-including receiving an application for approval, granting an approval, making an inspection and issuing a certificate • allowing admission to any building or enclosure. … 610 Effect of other Acts (1) If the amount of a fee for a service is determined under another Act: (a) a council may not determine an amount that is inconsistent with the amount determined under the other Act, and (b) a council may not charge a fee in addition to the amount determined under the other Act. (2) If the charging of a fee for a service is prohibited under another Act, a council must not charge a fee for the service under this Act. … 610A Application of Division (1) This Division applies to a fee charged by a council for any service relating to the following activities: … (c) the carrying out of a water supply or sewerage service (other than a service provided, or proposed to be provided, on an annual basis for which the council is authorised or required to make an annual charge under section 501), … (2) This Division does not apply to a fee charged by a council for a service relating to the following activities: (a) the issuing of a certificate under Part 4A of the Environmental Planning and Assessment Act 1979, (b) an activity prescribed by the regulations for the purposes of this subsection. 610B Fees to be determined in accordance with pricing methodologies (1) A council may determine a fee to which this Division applies only in accordance with a pricing methodology adopted by the council in its operational plan prepared under Part 2 of Chapter 13. (2) However, a council may at any time determine a fee otherwise than in accordance with a pricing methodology adopted by the council in its operational plan, but only if the determination is made by a resolution at an open meeting of the council. 610C Application of Division This Division applies to a fee for a service other than a fee to which Division 2 applies. 610D How does a council determine the amount of a fee for a service? (1) A council, if it determines the amount of a fee for a service, must take into consideration the following factors: (a) the cost to the council of providing the service, (b) the price suggested for that service by any relevant industry body or in any schedule of charges published, from time to time, by the Department, (c) the importance of the service to the community, (d) any factors specified in the regulations. (2) The cost to the council of providing a service in connection with the exercise of a regulatory function need not be the only basis for determining the approved fee for that service. (3) A higher fee or an additional fee may be charged for an expedited service provided, for example, in a case of urgency.

[11]

Does Riverina Have the Power to Levy the Development Servicing Charges? (Issues (a) to (e))

[12]

Relevant Principles of Statutory Construction

At the core of almost all questions concerning the existence of legislative power to exercise an administrative function is an issue of statutory interpretation. This case is no exception.
The modern principles of statutory construction are well known. In short, the task of construction of any provision must begin with the consideration of the text itself and only then should recourse be had to its context, which will include the general purpose and policy of the provision in question and of the enactment itself (and see s 33 of the Interpretation Act 1987). The determination of the purpose of the particular provision or statute may be found not only in an express statement of the purpose in the statute itself, but also by reference to textual and structural indicators, and where appropriate, by reference to extrinsic material. The task is one of ascertaining the objective, and not the subjective, intention of those who drafted and promulgated the legislation (see generally the principles summarised in Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 at [47]; Commissioner of Taxation v Consolidated Media Holdings (ACN 009 071 167) Ltd [2012] HCA 55; (2012) 250 CLR 503 at [39], Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 379 at [23]-[26], Taylor v The Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 88 ALJR 473 at [65]-[66], Thiess v Collector of Customs [2014] HCA 13; (2014) 250 CLR 669 at [22] and [23]).
There are two particular aspects of the interpretative task that were relied upon by the parties which warrant specific attention in this instance. The first was the principle of the harmonious construction of statutes enacted by the same legislature. That is to say, the presumption that the legislature did not intend to contradict itself but intended that both statutes should operate contemporaneously (Commissioner of Police (NSW) v Eaton [2013] HCA 2; (2013) 252 CLR 1 at [98] per Gageler J).
The principle was succinctly summarised by Biscoe J in Parks and Playgrounds Movement Inc v Newcastle City Council [2010] NSWLEC 231; (2010) 179 LGERA 346 (at [83]-[85]): 83. The question of conflict has been expressed in various ways: whether the two items of legislation can stand or live together, whether there is contrariety or direct conflict, whether they are irreconcilable: Shergold at [35]. 84. Conflict between statutory provisions can be present even where there is no direct contradiction between them. For example, where it appears, as a matter of construction, that special provisions were intended exhaustively to cover their particular subject matter and where general provisions, if held to be applicable to the particular subject matter, would constitute a departure from that intention by encroaching on that subject matter: Fernance v Nominal Defendant (1989) 17 NSWLR 710 at 720 per Gleeson CJ (Clarke JA agreeing at 731), quoting Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat and Live-stock Corporation (No 2) [1980] FCA 38; (1980) 44 FLR 455 at 468-469 (Deane J). 85. Where there is conflict between Acts of the same legislature, courts endeavour to reconcile their texts. If they cannot do so, they resort to established canons of construction including priority to the law made later in time (Goodwin v Phillips [1908] HCA 55; (1908) 7 CLR 1 at 7; Travinto Nominees Pty Ltd v Vlattas [1973] HCA 14; (1973) 129 CLR 1 at 33-34) and priority to a more specific law over a more general law (Smith v The Queen [1994] HCA 60; (1994) 181 CLR 338 at 348; Minister for Immigration and Multicultural and Indigenous Affairs v B [2004] HCA 20, 219 CLR 365 at [176]; Ferdinands v Commissioner for Public Employment [2006] HCA 5, 225 CLR 130 at [106]; Hillpalm Pty Ltd v Heaven's Door Pty Ltd [2004] HCA 59, 220 CLR 472 at [100]).

[13]

Power to Impose the Development Servicing Charge Under s 608 of the LGA

It was uncontentious that the power in s 608 applies to Riverina in the same way it applies to councils (see s 400(1) of the LGA).
There was no issue that the development servicing charges were determined, as required by s 610B of the LGA, in accordance with various pricing methodologies set out and adopted by Riverina in its 2004 Riverina Water Council County Development Servicing Plans for Water Supply (and the 2007 version), the Riverina Water County Council Management Plan 2008/2009 (section 11.2. It was uncontentious that the subsequent Management Plans did not materially differ from each other), and the Riverina Water County Council Operational Plan 2010/2011 (and again in 2011/2012 and the Riverina Water County Council Delivery Program and Operational Plan 2012/2013).
The 2004 Riverina Water Council County Development Servicing Plans for Water Supply set out the basis for the calculation of the charges in accordance with the relevant guidelines (see section 3.1). They were upfront charges imposed to pay for the infrastructure costs in the servicing of new developments.
It is not contended that the preparation of the various Development Servicing Plans and Operational Plans were not a valid exercise of power by Riverina. Nor is it asserted that the actual development servicing charges were not calculated in accordance with those plans.
The applicants submitted that, properly construed, s 608 of the LGA did not authorise Riverina to charge development servicing charges for two principal reasons.
The first was that on its terms, s 608 only authorises a council to charge a "fee for any service it provides" and that at a minimum it must be possible to identify some service provided to the payee of the fee for which the fee is payable. Unlike the water connection fees and fees for water meters, no service was provided by Riverina to the applicants for the fees charged. Rather, the fees were no more than a contribution towards infrastructure based on the potential increase in demand on the system. In other words, a capital contribution directed towards defraying Riverina's current and future infrastructure costs.
On its face, as the applicants accepted, s 608 provides a wide power to Riverina to charge fees for services. There are few words of limitation in the text of s 608(1) and there are no constraints in sub-sec (2), which provides a non-exhaustive list of services for which a fee may be charged (Regional Express Holdings Limited v Dubbo City Council (No 3) [2014] NSWLEC 87 at [112] and [116] per Pain J).

[14]

Power to Impose the Development Servicing Charge Under s 306 of the WMA

Section 64 of the LGA provides that Div 5 of Pt 2 of Ch 6 of the WMA applies to a council exercising functions under that Division in the same way as it applies to a water supply authority exercising functions under that Act. Therefore, s 64, when read together with s 400(1) of the LGA, provides that the power conferred by s 306 of the LGA is available to Riverina.
As a result, pursuant to s 306(2) of the WMA, Riverina may, as a precondition to granting a certificate of compliance for development, require an applicant for such certificate to pay a specified amount to it towards the cost of water management works, provided that a notice is served in writing on the applicant by the council.
Under cl 224 of the Water Management Regulations, certificates of compliance can be issued for nominated development that includes the erection of a building on land (cl 224(a)), or in this instance, the villas at the retirement village.
The applicants submitted that s 306 of the WMA was not engaged because, first, there had been no application by them, in writing or otherwise, for a certificate of compliance under s 305 of the WMA. That is to say, there had been no "definite and unequivocal act by the applicant" at a specified time which constituted the making of an application for the purpose of that provision. Second, and reinforcing the first submission, there was no legal or practical obligation on the applicants to obtain such a certificate. The only statutory provision requiring the applicants to apply for a certificate of compliance is s 109J of the EPAA, which has no application to the retirement village development because it did not involve a subdivision.
Riverina argued in reply, that, first, on the proper construction of the development consent the applicants were obliged to obtain a certificate of compliance from Riverina, pursuant to condition 3 and/or paragraph f) under the section entitled "Plumbing Section", and second, there had there been various applications in writing by the applicants for such certificates.
It is convenient to deal initially with the issue of whether the applicants were required to obtain certificates of compliance pursuant to s 306 of the WMA under the development consent.
The development consent included the following relevant conditions: 2. Pursuant to s 94 of the Environmental Planning and Assessment Act 1979 and City of Wagga Wagga Section 94 Contributions Plan 2006, prior to the release of a Construction Certificate the applicant is to pay to the Council a monetary contribution of $798,736.74 towards the costs of Contributions plan preparation and management, Civic, Community and Cultural - Future, Civic, Community and Cultural - Recoupment, Roads and Traffic Management - Future, Open Space and Recreation - Recoupment, Open Space and Recreation - Future (without land and dedication), Open Space and Recreation - Future (with land and dedication), to meet the development. The amount payable under this condition is to be indexed in accordance with Clause 2.13 of the City of Wagga Wagga Section 94 Contributions Plan 2006. The required Section 94 contribution will be calculated with each Construction Certificate application and payable prior to the release of the certificate. A copy of the City of Wagga Wagga Section 94 Contributions Plan 2006 is available for inspection at Wagga Wagga City Council Chambers, corner Baylis Street and Morrow Street Wagga Wagga. 3. Pursuant to s 64 of the Local Government Act 1993 and Division 10 of Part 2 of Chapter 6 of the Water Management Act 2000, prior to the issue of the Construction Certification a compliance certificate is to be obtained in respect of water management works (as defined in s 283 of the Water Management Act 2000) relating to the development. See Engineering Advice for contributions required. (Advisory condition: With respect to Condition 3, a compliance certificate fee of $470,077.14 applies. The required compliance certificate fee will be calculated with each Construction Certificate application and payable prior to the release of the certificate.) … 62. A Water Plumbing Certificate from Riverina Water Country Council is to be submitted to Wagga Wagga City Council prior to the issue of a Final Certificate on any building work. … ENGINEERING SECTION a) With respect to Condition 3, a compliance certificate fee of $470,077.14 applies. The required compliance certificate fee will be calculated with each Construction Certificate application and payable prior to the release of the certificate.) PLUMBING SECTION a) A hose tap is to be provided near the grease trap. b) A Plumbing Permit is required by a licensed plumber and drainer for any sewer and stormwater prior to commencement of work and final inspection to be carried out upon completion of plumbing works. c) The Australian Standards specify that the minimum pipe size for stormwater is 100mm for this Development. d) Rod out points are to be placed as close as possible to the toilets; e) With regard to Condition 1 (Plumbing Section). Plans of proposed plumbing services should be submitted and approved prior to the release of the Construction Certificate. f) Applicant is to obtain Plumbing Permit from Riverina Water County Council before any water supply / plumbing works commence and a Compliance Certificate upon completion of works. Contact Riverina Water's Plumbing Inspector Stuart Rose on 0417234924, you will be required to quote your Construction Certificate number. Note Occupation/Final Building Certificate will not be issued unless Riverina Water's Certificate is received by Council.

[15]

Riverina Cannot Recover the Development Servicing Charges Already Paid (Issue (f))

There are several reasons why the applicants are not entitled to recover any of the money paid to Riverina in the form of the development servicing charges.
First, as I found above, Riverina was statutorily entitled to charge and receive payment for the development servicing charges under the LGA and the WMA. There was, therefore, no mistaken belief by either NBC or Nash Bros that they were legally obliged to pay the charges. They were so obliged under s 608 of the LGA and s 306 of the WMA.
Second, the applicants have not discharged their onus of demonstrating that each payment was, or that even some of the payments were, made under compulsion (or colore officii) to enliven any recovery or restitution of the payments. Although the evidence establishes that the latter payments of the development servicing charge were clearly made under protest by the applicants on the well founded belief that if the charges were not paid Riverina would withhold the provision of water services to the development, the applicants have failed to show that the payments made were not lawfully due. To the contrary, the Court has held that they were.
Third, by operation of s 4 of the Recovery Act, the applicants are precluded from recovering the money.
Sections 2(1) and 4(1) and (2) of the Recovery Act state that: 2 Limitation on time for the bringing of proceedings to recover taxes (1) No proceedings shall be brought to recover from the Crown or the Government or the State of New South Wales or any Minister of the Crown, or from any corporation, officer or person or out of any fund to whom or which it was paid, the amount or any part of the amount paid by way of tax or purported tax and recoverable on restitutionary grounds (including but not limited to mistake of law or fact): (a) in the case of a payment made before the commencement of this Act, after the expiration of the time within which such proceedings but for the enactment of this Act might have been brought or the expiration of twelve months after the date of the commencement of this Act, whichever period first expires, or (b) in the case of a payment made subsequent to the commencement of this Act, after the expiration of twelve months after the date of payment. … 4 Passing on of tax (1) Proceedings referred to in section 2 or 3 (4) to recover an amount paid are however maintainable only to the extent that the person bringing the proceedings ("the claimant") satisfies the court that the claimant has not charged to or recovered from, and will not charge to or recover from, any other person any amount in respect of the whole or any part of the amount paid. This applies whether or not any such amount has been itemised or otherwise separately identified in any invoice or other documentation. (2) A reference in this section to the claimant extends to a predecessor, successor or assignee of the claimant.

[16]

Conclusion and Orders

It follows that because the development servicing charges having been lawfully imposed on the applicants, the application for relief must be dismissed.
Furthermore, these being Class 4 proceedings where costs generally follow the event, costs ought to be awarded in Riverina's favour.
The formal orders of the Court are therefore that: 1. the second further amended summons is dismissed; 2. the first and second applicants are to pay the respondent's costs of the proceedings; and 3. the exhibits are to be returned.

[17]

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 October 2015

Section 3 concerned the "Developer Charges Process", namely, the process by which developer charges were levied. It provided that: 3.1 Introduction Developer charges are up-front charges levied to recover part of the infrastructure costs incurred in servicing new developments or additions/changes to existing developments. Developer charges serve two related functions: • They provide a source of funding for infrastructure required for new urban development. • They provide signals regarding the cost of urban development and thus encourage less costly forms and areas of development. The Developer Charges calculation is based on the net present value (NPV) approach adopted by the Independent Pricing and Regulatory Tribunal (IPART) for the metropolitan water utilities. The fundamental principle of the NPV approach is that the investment in assets for serving a development area is fully recovered from the development. The investment is recovered through up-front charges (i.e. developer charges) and the present value (PV) of that part of annual bills received from the development in excess of operation, maintenance and administration (OMA) costs. i.e. Developer Charge = Capital Charge (cost of providing the assets) - Reduction Amount (cost recovered through annual bills). The Capital Charge and Reduction Amount are discussed further in the following sections. The developer charges process is described fully in the Developer Charges Guidelines for Water Supply, Sewerage and Stormwater (December 2002). NSW local water utilities (LWUs) which propose to levy developer charges for water supply and/or sewerage need to prepare development servicing plans (DSPs). The DSP details the calculation of the developer charges and is required to be fair and transparent. LWUs need to calculate and report developer charges in accordance with section 306 (3) of the Water Management Act 2000 and the Guidelines, and to register their DSPs with MEU by 30 June 2004. Developer charges relating to a particular DSP should be reviewed by the LWU after a period of 5 to 6 years. If the review indicates that the developer charges in the DSP remain valid, the DSP will apply for a further 5 to 6 years after the utility releases a public notice to this effect. However, if it is considered that a new DSP is warranted a new DSP shall be prepared, exhibited and registered. If a major change occurs in the LWUs circumstances such as the need for significant capital works that had not been included in the DSP, the LWU may carry out a review in less than 5 years, subject to approval by the Department of Energy, Utilities and Sustainability.

In a follow up email later that day, Ms Langley said to Mr Chris Nash that: As per our earlier conversation I have attached to this email a copy of the Water Prices for the new financial year. As we discussed, I have also summarised our conversation on various aspects of the Grange Development below. In regards to your concerns pertaining to the increase in development services charges for The Grange, the following applies: in previous pricing RWCC left units to be classified as commercial / industrial properties. This meant that a unit, classified in accordance with the Water Directorate Guidelines, assumed a commercial factor of 0.6 therefor, a three bedroom unit 0.8 ET became 0.8 * 0.6 * $3800 = 1825 (Nearest $5) per 3 bedroom until. This was amended and clarified with the adoption of RWCC's new DSP the start of this financial year which now ensures a housing unit is classified as a standard residential tenancy, not multiplied with a commercial factor. A 3 bedroom unit is therefore now calculated as 0.8ET * $4800 = $3840. No Commercial factor applies as it is a standard residential property. In addition to all of the above, I have looked into the way payment and invoicing is currently being done for The Grange development. It appears as though previously the release of meters has occurred prior to payment being made. This is not standard protocol. Payment must be made and receipted prior to the release of any meters. I have issued an the administration and store sections of RWCC will ensure the standard protocols are followed from this point forward. Please ensure that if you wish to connect units you send your request to RWCC and allow enough time for an invoice to be sent back to you and paid for prior to notice being given to the RWCC store to allow for the collection of meters. It also appears as though staging for The Grange development is not currently being followed and that units are being connected in small amounts, scattered over the entire development. RWCC requires an entire stage to be paid for upfront i.e. The Grange Stage 3 - 15 Lots, for both Development Servicing Charges and Service Connection Fees prior to any connection within that stage taking place. RWCC's role is not to allow connection of single units as individual sales are made or connections required. I will review all of the current connections and the originally provided staging plan and provide more information on what fees are outstanding and need to be paid. Additionally, any future connections will be reviewed to ensure they are part of a stage which has been fully paid for, or to ensure calculation and invoicing of the outstanding amount payable prior to connection. I will contact you to further discuss once I have had a more in-depth look into exactly what Development Servicing Charges and Connection Fees have been paid for the development, including DSC's for things such as amenities blocks. I will also contact you to further discuss once I have had a more in-depth look into exactly what Development Servicing Charges and Connection Fees have been paid for the development, including DSC's for things such as amenities blocks. Should you have any further questions or concerns in relation to this matter, do not hesitate to contact me on my details below.

In respect of the certificates of compliance, Ms Langley stated during questioning that: 1. as far as she was concerned certificates of compliance were issued when a plumber or certifier approached Riverina and requested occupancy for a specific villa (T70.25); 2. some of the certificates of compliance comprised standard forms produced by New South Wales Fair Trading, thus bearing that logo, but they were issued by Riverina to the council (T71.49 and 84.12); 3. a certificate of compliance was issued for every villa constructed, and a certificate of compliance would be issued for the entire development upon its completion (T72.23). This latter certificate of compliance was required as a condition of the development consent (T72.31), in particular condition 3 (T74.05 and 85.07); 4. later she agreed that the documents that she claimed were certificates of compliance were certificates issued after the construction certificate had been issued, or in other words after the work had been completed (T75.05): 5. the certificates of compliance relied upon by her in Ex D Part 7 were certificates referred to in condition 62 of the development consent (T78.48) and item f) under "Plumbing Section" in that approval (T79.21); and 6. it was her belief that the certificates of compliance related to condition 3 of the development consent by reason of the change in practice in the application of the condition when the applicants approached Riverina to alter the way the fees and charges were to be paid. Typically the condition was satisfied by Riverina requiring a large lump sum upfront payment, however, it was agreed that the payments would be deferred and charged on a per villa basis. As a result, the certificates of compliance were issued per individual villa and after there had been a request to connect to the water supply. Once these steps had been completed, condition 3 of the consent was met and Riverina would issue a certificate of compliance in respect of the entirety of the development (T85.17-85.43). However, she later conceded that this evidence, namely, that when it was agreed that payment of the fees and development servicing charges would be deferred, the certificate of compliance would also be deferred, was not based on her direct knowledge but on her "interpretation of reviewing the documents" (T86.19-86.31).

Sections 305 to 307 of the WMA concern certificates of compliance and relevantly state that: 305 Application for certificate of compliance (1) A person may apply to a water supply authority for a certificate of compliance for development carried out, or proposed to be carried out, within the water supply authority's area. (2) An application must be accompanied by such information as the regulations may prescribe. … 306 Authority may impose certain requirements before granting certificate of compliance (1) This section applies to such kinds of development as are prescribed by the regulations for the purposes of this section. (2) As a precondition to granting a certificate of compliance for development, a water supply authority may, by notice in writing served on the applicant, require the applicant to do either or both of the following: (a) to pay a specified amount to the water supply authority by way of contribution towards the cost of such water management works as are specified in the notice, being existing works or projected works, or both, (b) to construct water management works to serve the development. (3) In calculating an amount for the purposes of subsection (2)(a): (a) the value of existing water management works and the estimated cost of projected water management works may be taken into consideration, and (b) the amount of any government subsidy or similar payment is not to be deducted from the relevant value or cost of the water management works, and (c) consideration is to be given to any guidelines issued for the time being for the purposes of this section by the Minister. … … 307 Granting of certificates of compliance (1) A water supply authority must grant a certificate of compliance for development: (a) within 60 days after an application for the granting of such a certificate is made, or (b) if, within that period, the water supply authority imposes a requirement on the applicant under this Division, as soon as it is satisfied that the requirement has been complied with. (2) A water supply authority may be satisfied that a requirement under this Division has been complied with if the applicant lodges with the water supply authority such security for compliance with the requirement as the water supply authority may approve. (3) If a water supply authority fails or refuses to give a compliance certificate within the period of 60 days after an application is duly made in that regard, the applicant may appeal to the Land and Environment Court, within 12 months after the expiration of that period, against the failure or refusal.

The principles of construction of development consents are well known and may be summarised as follows: 1. consents are to be construed, "not as documents drafted with legal expertise, but to achieve practical results" (Westfield Management Ltd v Perpetual Trustee Company [2006] NSWCA 245 at [36] per Hodgson JA, Baulkham Hills Shire Council v Ko veda Holiday Park Estate Ltd [2009] NSWCA 160; (2009) 167 LGERA 395 at [96]-[100] and Botany Bay City Council v Saab Corp Pty Ltd [2011] NSWCA 308; (2011) 183 LGERA 228 at [80]); 2. consents are to be construed fairly and liberally, with the meaning of their text to be determined objectively, having regard to the context in which the consent was issued, and taking into account the fact that, unlike a contract, a consent operates in rem and is for the benefit of subsequent owners and occupiers, as well as for the applicant (House of Peace Pty Ltd v Bankstown City Council [2000] NSWCA 44; (2000) 48 NSWLR 498 at [23] and [37]-[41] per Mason P, Stein and Giles JJA agreeing and K and M Prodanovski Pty Ltd v Wollongong City Council [2013] NSWCA 202; (2013) 195 LGERA 23 at [23] per Meagher JA); 3. as a general rule, a development consent should be construed without reference to extrinsic evidence other than to identify a thing or place referred to in it (Sydney Serviced Apartments Pty Ltd v North Sydney Municipal Council (No 2) (1993) 78 LGERA 404 at 407, Allandale Blue Metal Pty Ltd v Road and Maritime Services [2013] NSWCA 103; (2013) 195 LGERA 182 at [42] and Bardsley-Smith Penrith City Council [2013] NSWCA 200; (2013) 195 LGERA 34 at [66]); 4. plans and other documents may be incorporated in a development consent expressly or by necessary implication (Allendale at [24], [43]-[48] and [153]-[163] and Bardsley-Smith at [66]). A mere reference in a development consent to another document, such as a development application, will not usually be sufficient to incorporate that document into the consent (Allandale at [45], [157]-[158] and Bardsley-Smith at [67]). However, if a development consent expressly incorporates another document, or part of it, or if a document is attached to a development consent, or referred to, in it for the purpose of identifying or describing something dealt with in the consent, this will generally be sufficient for the purposes of incorporation (Auburn Municipal Council v Szabo (1971) 67 LGRA 427 at 434, Allandale at [45] and Bardsley-Smith at [67]); and 5. the words of a development consent have the meaning that the consent authority is objectively taken to have intended them to have. Ordinarily that meaning will correspond to the grammatical meaning, but not always. The context of the words, the consequences of a literal or grammatical construction (such as absurdity or inconsistency), the purpose of the development consent, and orthodox cannons of construction may require an alternative interpretation (Reysson Pty Ltd v Roads and Maritime Services [2012] NSWLEC 17; (2012) 188 LGERA 252; at [28] per Biscoe J).

However, the evidence disclosed that the applicants have in fact passed on the development servicing charges to another person, viz, Grange. This was conceded by Mr Chris Nash during his cross-examination, wherein he stated that: 1. while NBC and Nash Brothers both acted for Grange in obtaining approvals and carrying out the development, Nash Bros was the current principal company carrying out the development and NBC had "fallen into the background" in terms of the day to day operation of the development (T38.45); 2. the land is owned by Grange as trustee of the unit trust. The units in the unit trust are owned by two family trusts, one controlled by Mr Scott Nash and the other controlled by Mr Chris Nash, or their respective families, namely, Mr Chris Nash and his wife and Mr Scott Nash and his wife (T34.15 - 34.45); 3. it was his understanding that the trustee company provided for the reimbursement to Grange of all costs and expenses incurred in respect of the management and operation of the trust (T35.25); 4. the accommodation in the retirement village was occupied on a loan and lease agreement, part of which comprised a non-refundable contribution from each resident covering fixed costs which was stipulated by the retirement village (T35.40); 5. the purpose of the trustee company (Grange) was to make a profit out of the development for the benefit of its unit holders. The trustee company stipulated the required contributions from incoming residents in order to eventually make a profit out of the development (T35.45 - 36.15); 6. both NBC and Nash Brothers had been paid for the services rendered in respect of carrying out the development of the retirement village. The agreement entered into between NBC, Nash Brothers and Grange, was a construction management contract on a 'cost-plus' basis. In other words, Nash Brothers and NBC provided services, incurred costs, and recouped their expenses, plus a profit, from the trustee by way of management fee (T39.10); 7. the management fee comprised overheads, including all of the fees and development servicing charges that Nash Brothers or NBC were required to pay Riverina in respect of the development. This included the recovery of all money paid as development servicing charges to Riverina. Nash Bros or NBC had issued invoices to Grange for recovery of the development servicing charges to Riverina, and they were not out of pocket in relation to development servicing charges charged by Riverina. In other words, the costs for the development services charges paid had already been recovered from another entity (T40.27- T40.42); 8. Nash Bros and NBC were bringing a claim seeking repayment for amounts paid by someone else, namely, Grange, on the basis that Grange was out of pocket (T40.45); 9. his statement that "Nash Brothers has not passed on the costs of the development servicing charges to purchases of the villas" was not correct for a number of reasons (T42.32 - T43.31): Q. You said there, "Nash Brothers has not passed on the costs of the development servicing charges to purchasers of villas." Do you see that? A. Yes. Q. You couldn't pass it on to a purchaser of the villa, I suggest to you, for a number of reasons. Firstly, as you've told me, there aren't any purchasers of the villas, it's a loan and rental and payback arrangement? A. Yep. Q. Do you accept that correction? A. Yep. Q. I suggest to you the second reason it couldn't be right is that Nash Bros is not the vendor or the lessor of these residences, that role is exercised by the trustee company that owns the land, Grange. Do you accept that? A. Yes. Q. So that's another reason that sentence can't be correct; do you agree? A. Yeah. Well - yeah Q. When you wrote in the first sentence of paragraph 41, "Nash Bros has not passed on the costs of the development," you did that for the purpose of indicating to the Court, I suggest to you, that the costs of the development were costs that Nash Bros had to pay and continued to have a liability for and was out of pocket to that extent. That's what you were trying to suggest, wasn't it? A. Well, there's a difference in the entity but, you know, the family is the family, I guess. Yes, we're out of pocket. Q. You know enough about commercial life to know that companies are separate legal personalities, don't you? A. Yes. Q. You know enough about the obligations of a director and that the directors of particular companies are to exercise their duties for the best interests of the shareholders of that company? A. Yes. Q. The shareholders of the Grange trustee company exercised their powers for the purpose of furthering the best interests of the unit trust beneficiaries by their independent decision‑making. That's your understanding, isn't it? A. Pretty well. Q. You know quite well, don't you, that Nash Bros is not the entity that controls the arrangements by which a resident comes into the retirement village? A. Yep. Q. It's quite wrong of you to have suggested implicitly in the first sentence of paragraph 1 that Nash Bros remains out of pocket for these costs. Do you accept that? A. Yep. 1. Nash Brothers has recovered from Grange "every last cent" of the cost of the money that it paid to Riverina (T44.03 - T44.15); and 2. his explanation for not stating in his affidavit that the development servicing charges for which the applicants claim repayment had already been paid to the applicants was as follows (T44.29 - T44.40): Q. What explanation are you willing to offer to the Court for not saying in your affidavit that the development servicing charges for which you claim repayment have already been paid to the applicant companies? A. Yeah. I would explain that I've not been in a proceeding like this before and I have not appreciated the subtle difference in that. Q. The subtle difference between the two applicant building companies and the trustee company of the unit trust. Is that what you're referring to? A. Yep. Q. Do you have any other explanation or is that your explanation? A. That's pretty well it.

The principle in Woolwich, and its likely application in Australia (it has not yet been applied here) was discussed in Meriton (No 3) (at [155]-[160]): 155. …In that case a building society paid tax oninterest and dividends that Inland Revenue had statutorily demanded. Woolwich successfully challenged the validity of the regulation pursuant to which the tax was levied. In the interim it paid the tax to avoid any adverse publicity and to avoid penalties and interest. By majority, the House of Lords held that the tax ought to be repaid by reason of an absence of consideration for the payment (at 166, 197-198 and 201-202). Their Lordships cited the constitutional principle enshrined in the Bill of Rights 1688 (Imp) (1 Will & Marysess 2 c 2) that taxes ought not be imposed absent the authority of Parliament.Lord Goff, in particular, relied on the principles of unjust enrichment andnoted the injustice of Inland Revenue retaining the interest earned on money towhich it was never lawfully entitled. 156. Woolwich has been subsequently endorsed by the House of Lords (DeutschMorgan Grenfell Group plc v Inland Revenue Commissioners [2006] UKHL49; [2007] 1 AC 558) and the Canadian Supreme Court in relation to taxesdemanded under an unconstitutional law (Kingstreet Investments Ltd v NewBrunswick [2007] 1 SCR 3; (2007) 276 DLR (4th) 342. Cf Air Canada). 157. In Australia, the principle in Woolwich has not been recognised by the HighCourt, although I note that it is the view of the learned authors of Mason &Carter's Restitution Law in Australia 2nd ed (2008) LexisNexis Butterworths,Australia that it will be (at [2020]-[2032]). They also offer the opinion that the principle espoused in Woolwich extends to local government bodies, such ascouncils (at [2034]). Having said this, the authors go on to note that even if Woolwich is applicable in Australia, not all unlawful imposts will berecoverable, and more significantly, as is discussed below, some imposts willreadily attract defences obviating repayment irrespective of their invalidity. 158. In my opinion, it is neither necessary nor desirable to resolve whether or notthe principle in Woolwich should be applied to the present facts. Suffice it tosay, that the application of s 4 of the Imposts Act and a defence to therestitutionary claim Meriton makes in relation to the fees, means that this issuecan be left for another day. Thus whatever the position is at common law, s 4of the Imposts Act makes it tolerably clear that Meriton's recovery of the feesis limited to the extent that fees have not, and will not, be passed on. 159. Accordingly, in Avon Product Pty Ltd v Commissioner of Taxation [2006]HCA 29; (2006) 230 CLR 356 the High Court stated (at [9]-[10]) in relation to Commonwealth legislation that was not materially different from s 4 of theImposts Act and a sales tax not materially different from the fees: "[9] That sales tax is expected to be passed on depends upon the circumstance that sales of goods occur within an economy geared to making profit. It is the profit-making motive of business which, in the nature of things, generally results in sales tax being passed on. This is because, leaving aside rare cases where sales tax is separately identified and superadded to the invoice price after sale, sales tax can only be passed on indirectly through the price mechanism. In a profit-making structure, businesses will set prices so as to ensure at least that all foreseeable costs are recovered, anything above this being conceptualised as a margin of profit. Because sales tax is levied upon the vendor prior to the ultimate sale by retail in the manner explained by Dixon J in Ellis & Clark, it forms part of the cost structure of doing business. There is nothing extraordinary in the proposition that in the usual course of things sales tax will be passed on. [10] As has been explained, it is for the taxpayer to establish a circumstanceout of the ordinary, namely that the amount of the overpayment of sales tax has not been passed on. Where the whole or part of the economic burden of sales tax may have been passed on indirectly through prices, the inquiry in this regard is likely to be complex. The complexity arises because prices may be set with reference to a wide range of factors (including considerations of cost of production, competitive advantage, operational cash flow and customer goodwill). However the starting point must be the seller's pricing policy and practice." (Citations omitted) [160] In light of the limited recourse that ought to be made to extrinsic materials inconstruing statutes (Saeed v Minister for Immigration and Citizenship [2010]HCA 23; (2010) 241 CLR 252 at [32]-[34]), I note only in passing that thereasoning articulated by the High Court is consistent with the ExplanatoryNote to the Limitation of Actions (Recovery of Imposts) Amendment Bill1993. It is this Bill that amended the Imposts Act to made it explicit (at 2) "thats 4 prevents recovery of taxes unless the claimant satisfies the court that theyhave not been passed on, and will not be passed on, to another person."

After discussing the leading authorities (such as Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221, ANZ Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; (1988) 164 CLR 662, David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48;(1992) 175 CLR 353 and Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68; (2001) 208 CLR 516) the Victorian Court of Appeal held that the landlord had a good defence to the tenant's claim for restitution because, unlike the position of the payees in David Securities or Roxborough, the tenant had received good consideration for the money it paid, namely, exclusive possession of the premises that were of use and benefit to it. Justice Chernov said (at [21]): 21. As I have said, I consider that the landlord has a good defence to the tenant's restitutionary claim and that is because, broadly, it seems to me, it would not be unjust or unconscionable for it to retain the money in question notwithstanding that it was paid under a genuine mistake. I say this for the following reasons. First, I think that, unlike the position of the payers in David Securities and Roxborough, the tenant here has received good consideration for the money it paid, namely, exclusive possession of the premises that were obviously of use and benefit to it, as is demonstrated not only by the fact that it occupied them since entry for its business purposes, but also by its continued possession of them after it became entitled to terminate the lease pursuant to s.8(2)(c) of the Act. And it is irrelevant that the landlord might have been under an obligation to provide the premises under the lease. The question is not whether the landlord was under such an obligation, but rather whether the tenant gained or accepted a benefit in the form of exclusive use of the premises (as a quid pro quo for the payments in question). As I have said, on the evidence, it is apparent that the tenant received such a benefit and, thus, from its point of view, it received good consideration for its payments. Moreover, it has not been suggested that the contents of the disclosure statement had any relevant bearing on the benefit that the tenant secured under the lease. For instance, there was no suggestion that the statement revealed that the premises, or any matter relating to them, have been misdescribed in the lease, or during the negotiations leading to its execution, such that it would now be unconscionable for the landlord to retain the money.

Nash Bros Builders Pty Ltd v Riverina Water County Council

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