Newcastle City Council v Gippsreal Limited

C. THE ISSUES

1. Gippsreal in its defence filed by its director and secretary (apparently a practising solicitor) [13] admitted that it is a mortgagee, but otherwise does not admit the claim. The substance of any defence is not clearly identified in the defence, although there is an assertion that Council is estopped from asserting its claim against Gippsreal "personally until the property is sold" [14] apparently on the basis that "the Defendant has requested the Plaintiff…to exercise its right…to sell the property itself but the Plaintiff has refused to exercise that right". [15]
2. Whatever be the merits or absence of merit of such an asserted defence, Gippsreal has now retained solicitors and seeks leave to file the amended defence which also admits "that it has been the mortgagee in possession of the Property" [16] but denies the application of certain provisions of the Local Government Act 1993 and denies liability.
3. In respect of service of the rates notice, Gippsreal, in its proposed amended defence, "[r]elies upon the notice", [17] says it was not a notice in compliance with s 546(5) of the Local Government Act so as to levy a rate under s 560(1) of that Act, or alternatively the arrears of rates and otherwise does not admit service.
4. In submissions, the defendant conceded that it was the mortgagee in possession entitled to the rents of the property and thus was an owner within the meaning of that term in s 3 of the Act. [18] Nevertheless, Gippsreal submitted that it was not liable because: 1. the 2015 rates notice relied upon by Council in referring to "arrears" is not a statutory notice in respect of those arrears creating a liability; 2. the notice was not properly addressed to Gippsreal and thus is not a valid service of a valid notice; and 3. Gippsreal could not be liable for any rates prior to the date of becoming a mortgagee in possession.
5. These matters, and proof of them to the required level indicated by General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 129-30 on a summary judgment application, constituted the issues in the application.

D. SUMMARY RELIEF

1. Gippsreal submitted that its defence must be "so obviously untenable that it cannot possibly succeed" and "manifestly groundless" that this demanding requirement requires "exceptional caution" and a "high degree of certainty about the ultimate outcome of proceedings". [19] I note that the Court retains a discretion to refuse such an order.
2. None of these principles are in doubt. However, in this application it is of significance that there is no real disagreement about factual matters and to the extent that there was any disagreement, the facts were, as they must be, assumed to be in favour of the party resisting summary judgment.
3. Rather, the arguments between the parties centred on the construction of certain statutory provisions. Whilst it may be appropriate to defer a final determination of complex questions of statutory construction until the trial, the need for a full trial is less obvious than when there are no contested factual issues and the legal argument can be fully canvassed on this application.
4. Further, the "overriding purpose" of the rules and the Civil Procedure Act 2005 of a "just, quick and cheap resolution of the real issues in the proceedings" mandated by s 56 of the Civil Procedure Act 2005, must inform the application of r 13.1 and r 14.28. There is little utility in postponing the determination to a trial if that is merely to re-agitate the same questions of construction of the statutory provisions. To have any additional hearing on the genuine issues in dispute without any identified further relevant factual material would serve to increase the time and cost to the parties with no additional likelihood of reaching a just conclusion.

E. FISCAL LEGISLATION

1. Gippsreal referred to passages in Anderson v Commissioner of Taxes (Vic) (1937) 57 CLR 233 at 239 indicating that a taxation is not to be imposed "by inference or by analogy, but only by the plain words of a statute" and that a person who "comes within the letter of the law" must be taxed, but if not, the tax is not to be imposed no matter "however apparently within the spirit of the law a case might otherwise appear to be".
2. Reference was also made to page 243 in Anderson where Rich and Dixon JJ referred to the need for "clear and unambiguous language" for the application of a taxing statute.
3. There may be a question about the current application of these principles given the well settled purposive approach to statutory interpretation. [20] Although Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [21] was referred to in the Court of Appeal in Deputy Commissioner v Zammitt [2014] NSWCA 104 at [67], no reference was made to Anderson. The construction exercise in Zammitt involved the purposive approach set out in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 and Certain Lloyd's Underwriters v Cross [2012] HCA 56 at [23] to [25]. No reference was made to the need for clear words in imposing a taxation.
4. As Zammitt is binding on me, I cannot adopt a different approach to construction from that propounded in Zammitt at [67] and [72]. In this respect, as stated by Bathurst CJ in Rail Corporation New South Wales v Brown [2012] NSWCA 296 at [39]: "the process of construction begins with the construction of the ordinary and grammatical meaning of the words in question, having regard to their context and legislative purpose".

F. LIABILITY FOR PAST RATES AND ARREARS

1. One issue raised by Gippsreal was that it was not liable for arrears. [22] This submission relied on the terms of s 560(1) of the Local Government Act, which provides that "The owner for the time being of land on which a rate is levied is liable to pay the rate to the council…"
2. Gippsreal submitted that the owner "for the time being" means either "at the time of levy of the rates and charges" or "at the time of the final hearing". [23] I did not understand the reference to "final hearing" to be other than another way of expressing "at the date of judgment". If that is today, it is conceded that Gippsreal is relevantly the owner and so it would not, in that event, be excused by the reference to the words "for the time being".
3. It might seem unlikely that the legislature would intend that an accrued liability of a person for rates would be excused by the transfer of the property prior to judgment.
4. In my view, the proper meaning of the term "for the time being" in s 560(1) is the first meaning proposed by Gippsreal, namely as at the date of the levy of the rates and charges. Thus, in respect of any rates and charges levied prior to Gippsreal becoming an owner, s 560(1) might not render Gippsreal liable. The evidence before me indicates and it does not appear to be in contest that Gippsreal has been a mortgagee in possession for about five to seven years, perhaps six to eight years to date. Some of the arrears might date from a prior period.
5. However, s 560 is not the only provision that imposes a liability for rates and taxes. Section 571(3) of the Local Government Act provides that: "A person who becomes liable for rates and charges levied on land is liable to the council for a rate or charge owing in respect of the land even though the person was not so liable when the rate or charge was levied."
6. Accordingly, a party who is liable for rates and charges becomes also liable for past rates and charges under this provision.
7. It follows that as the owner "for the time being" Gippsreal is liable in respect of the current rates and those for the past five to seven years as at 28 April 2015 when it was the mortgagee in possession. Further, although Gippsreal may not have been liable for the rates prior to the time it became mortgagee in possession, by becoming liable for rates it became liable for arrears. It is thus both an owner for the time being liable for the current rates under s 560(1) and by virtue of that fact liable for arrears of rates under s 571(3). Gippsreal has become liable for the rates even though some of those rates predate the time when Gippsreal became an "owner" under the Act.

G. NOTICE OF RATES AND CHARGES WAS NOT PROPERLY ADDRESSED

1. This matter is referred to as element 2 in the defendant's written submissions. The reference in the notice to Gippsreal was preceded by the symbol "C -", which I read to be "C/-" or "care of". Gippsreal relies upon the decision in Vean of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 204 ALR 80 at [38] to [42]. In that case, a letter was addressed to the appellant care of the authorised recipient. That decision is authority for the submission that service was not effected on the authorised recipient in circumstances where: "the authorised recipient did not consider the letter was addressed to her. She notified the appellant of the letter addressed to him at her address, and the appellant in fact arranged the collection of the letter from the post office." [24]
2. Of course this is not what occurred here. Gippsreal does not deny receipt of the rates notice or suggest that it handed the correspondence unopened on to the registered proprietors, who were referred to in the notice prior to the reference to "C - GIPPSREAL". Gippsreal relies on the terms of the rates notice in paragraph 8 of its proposed amended defence.
3. Perhaps more importantly, liability for rates does not depend on personal service. I have already referred to s 571(3), which imposes liability for past rates because a person has become liable for rates and to s 560(3), which imposes liability on an owner for the time being of land on which a rate is levied. Further, s 711 of the Local Government Act provides that: "A notice duly served on a person binds any person…who is a subsequent owner or occupier to the person, as if the notice had been served on that person."
4. Thus, the real question is whether rates have been properly levied, for once they have, Gippsreal as an owner is liable for them. Service of a notice is relevant because that is the way a levy arises. Section 546(1) provides: "A rate or charge is levied on the land specified in a rates and charges notice by the service of the notice".

H. HAS THE NOTICE BEEN SERVED?

1. Section 546 does not specify upon whom or even how a notice is to be served so as to levy the rate or charge on the land. A number of provisions were referred to in argument as being relevant.
2. First, the Act indicates that the name on the notice is not crucial. Section 710(5), which deals not with "Service of notices" but with "Service of notices on persons" states that: "The notice may be addressed by the description of 'rateable person' or 'owner' or 'occupier' of the land, building or premises (naming or otherwise sufficiently indicating the same) in respect of which the notice is served, and without further name or description."
3. The parenthetical phrase "naming or otherwise sufficiently indicating" must, in context, refer to the land rather than the person. Thus, the provision contemplates that the person need not be named. Further, s 546(5) dealing with the levying of rates states: "It is not necessary to specify the name of the rateable person or the person liable to pay the charge in the notice if the council does not know the person's name."
4. However, Gippsreal submits that the converse of s 546(5) also applies: if Council does know the person's name, it is necessary to specify it. Gippsreal submits that the correspondence in evidence establishes that Council did know the name of "Gippsreal Limited". For the purposes of this summary judgment application, I accept this to be so. Thus, it is submitted, by addressing the correspondence "C - GIPPSREAL" rather than to Gippsreal, the relevant name has not been specified.
5. In the context that s 710(5) excuses the naming of a person in all contexts of service on that person, it seems unlikely to me that the converse proposition to s 546(5) does apply. In other words, I do not read s 546(5), especially in the context of s 710(5), as requiring the name of the owner to be specified on the notice in circumstances where Council is aware of the name.
6. I also have had regard to reg 127 of the Local Government (General) Regulation 2005, which specifies a number of matters that must be included in a valid rates notice. Naming an owner is not one of them. Thus, I do not accept the converse of s 546(5), namely that it was mandatory that known owners be named.
7. In any event, an owner is named. The registered proprietors are named and they are also owners under the Act. So also is Gippsreal named in the notice even if the notice is not addressed in a formal sense to Gippsreal. I do not regard the omission of the Christian names of the registered proprietors (the notice names them only by initials and surnames) or the omission of "Limited" from Gippsreal as not relevantly naming them.
8. In my view, the registered proprietors and Gippsreal are named and identified, even if their full formal names are not specified. In a context where "occupier", "owner", or "rateable person" is sufficient, I cannot accept that a name is deficient because it is not the full name of a person or company. I also would doubt whether s 546(5) requires every owner to be named (if known by Council), although I do not need finally to determine that matter.
9. As the owners were relevantly named, the form of the notice was sufficient.
10. Service of the notice was effected by sending it to the post office box of Gippsreal. Section 710(2)(c) of the Local Government Act permits service "by posting the notice by prepaid letter addressed to the last known place of residence or business or post office box of the person to be served". It is not disputed, and is established by correspondence, that the post office box to which the notice was sent was Gippsreal's postal address and prepaid postage of the notice was established by evidence.
11. Thus, in my view, there has been "service of the notice" under s 546(1), and so the charge is levied. The notice names the registered proprietors and Gippsreal, although that was not necessary. The letter was sent to Gippsreal's postal address, one of the means of service of notices on a person, so I conclude that it was sufficient service to enliven the levy under s 546(1).
12. I conclude therefore that there has been valid service of the notice and Gippsreal is liable for the rates. The incomplete reference to "care of" before Gippsreal, in a context not of personal service but of service in accordance with the Act so as to create a levy on the land, does not raise a doubt about validity. [25]

I. VALID LEVY OF PAST RATES

1. This is referred to as element 1 in Gippsreal's submissions.
2. Gippsreal alleged that without proof of service of past notices, the arrears of rates have not been validly established. I was referred to s 698 of the Local Government Act, which provides for judicial notice of certain documents, although it is not apparent to me that that provision is applicable. Section 698(1) applies to signed documents, and s 698(2) applies to published or certified documents. A rates notice does not appear to fall into either of those categories. However, a rates notice is a business record and is evidence both of the levy of the current rates and the existence of the rates arrears. Substantial rates arrears are conceded by Gippsreal in its correspondence, including arrears of "in excess of $350,000.00". There is no assertion that the calculation of arrears is incorrect. The non-payment of any amount of rates is conceded and the amount sought is proved by affidavit.
3. In any event, an application for summary judgment is not the occasion for every element of a cause of action to be formally proved, but to establish that there is no defence, including, for example, by affirming in an affidavit the opinion of there being no defence to the claim.
4. Accordingly, I am satisfied that there is no genuine factual dispute about the existence of the arrears of rates in the amount evidenced in the rates and charges notice. The defence is, in my view, manifestly hopeless.

J. DISCRETION

1. As this matter involves a question of construction of legislation and what is proved by a rates notice, I think it is an appropriate case for summary judgment. I am fortified in this view by s 56 of the Civil Procedure Act 2005: it is quicker and cheaper to decide such a matter now with no adverse impact on the justness of the outcome. I also bear in mind that for two years, at least, Gippsreal has conceded the existence of substantial arrears in rates, so there is no substance to the argument of a substantive lack of notice, whatever be the arguments about the form of that notice.
2. Accordingly, I find that leave to amend the defence would be futile and should not be granted, and that there should be judgment for the Council in the amount claimed by the 2015-2016 rates notice, being the sum of $420,565.10.

K. ORDERS

1. The orders of the Court are: 1. Dismiss the defendant's motion for leave to amend. 2. Judgment for the plaintiff in the sum of $420,565.10. 3. Defendant pay the plaintiff's costs. 4. Grant a stay of these orders for 14 days.

Endnotes

1. Exhibit 1, p 54.
2. Exhibit 1, p 57.
3. Exhibit 1, p 54.
4. Exhibit 1, p 54.
5. Exhibit 1, p 55.
6. Exhibit 1, p 56.
7. Exhibit 1, p 57.
8. Exhibit 1, p 61.
9. Exhibit 1, p 62.
10. Exhibit A, p 1.
11. Exhibit 1, p 63.
12. Exhibit 1, p 64.
13. See Peter Tsathas' affidavit of 27/10/2016 at [7] and see Exhibit 1, p 25.
14. Defence at [21].
15. Defence at [20].
16. Exhibit 1, p 68 at [4b.].
17. Exhibit 1, p 68 at [8a.].
18. See at (b)(ii) of the definition of "owner".
19. Defendant's written submissions, 4/11/16 at [12(b) and (c)].
20. See Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41 at [41] and [56].
21. [2009] HCA 41.
22. Defendant's written submissions, 4/11/16, Element 3.
23. Defendant's written submissions, 4/11/16 at [42].
24. At [38].
25. It follows that the decision in Vean of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2003) 204 ALR 80 is inapplicable. 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: 17 February 2021