Shanvale Pty Ltd v Council of the Shire of Livingstone [1999] QCA 483

LOCAL GOVERNMENT - REGULATION AND ADMINISTRATION - LEGAL PROCEEDINGS - PARTICULAR PROCEEDINGS AND PARTIES - BREACH OF LEGISLATION OR DELEGATED LEGISLATION - appeal from unsuccessful judicial review application - development of historic township with no dedicated road access - decision to impose road levy on benefited area - lots subject to notice of resumpton were levied - adjacent lots treated inconsistently - whether Council lacked statutory power to impose levy - whether the rate was levied on land which "in the local authority's opinion has or will benefit from, or have access to" the road - construction of s 21(4) of the Local Government Act 1936

Local Government Act 1936, s 21

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

Sheffield City Council v Grainger's Wines Ltd [1977] 1 WLR 1119, considered

Re W [1971] AC 582, considered

LOCAL GOVERNMENT - POWERS, FUNCTIONS AND DUTIES OF COUNCILS GENERALLY - POWERS IN GENERAL - EXERCISE OF - whether the Council's decision to impose levy was ultra vires, unreasonable or in bad faith - whether no reasonable Council could have come to the decision to impose levy on the lots levied - Wednesbury test applied

Associated Provincial Picture House Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223, applied

Secretary of State for Education and Science v Tameside Metropolitan Borough Council [1976] UKHL 6; [1977] AC 1014, considered

ADMINISTRATIVE LAW - JUDICIAL REVIEW LEGISLATION - GROUNDS FOR REVIEW OF DECISION - IMPROPER EXERCISE OF POWER - appeal from unsuccessful judicial review application - whether the resolution was an improper exercise of power - whether resolution made in bad faith - dominant or substantial purpose - whether resolution was unreasonable

Judicial Review Act 1991, ss 20(2)(e), 23(c) and 23(g)

Samrein v Water, Sewerage and Drainage Board [1935] ArgusLawRp 105; (1982) 41 ALR 467, applied

Thompson v Randwick Corporation [1950] HCA 33; (1950) 81 CLR 87, applied

LOCAL GOVERNMENT - REGULATION AND ADMINISTRATION - LEGAL PROCEEDINGS - PRACTICE MATTERS - COSTS - whether justice of situation requires that costs follow the event

Judicial Review Act 1991, s 49(2)

Mr J Gallagher QC with him Mr T Trotter for the respondent

Minter Ellison as t/a for Swanwick Murray & Roche for the respondent.

[1] McMURDO P: This is an appeal from the dismissal by a judge of the Trial Division of an application for judicial review of the decision of the respondent dated 27 July 1993 under s 21(4) of the Local Government Act 1936 ("the Act") to undertake roadworks in an area near the Old Marlborough Township at a cost of $750,000 to upgrade Coorumburra Road from the intersection with the Sarina-Marlborough Road to Turner Street by raising the road level for flood immunity, constructing and sealing an 8m wide 1.3km long two lane road and constructing culverts across Marlborough and Coppermine Creeks, the funding for which was to be provided by a levy of a separate charge of $900 on each of the allotments within a proposed benefited area. The learned primary judge rejected the appellant's arguments that the respondent's decision lacked statutory power under s 21 of the Act and was otherwise unreasonable and in bad faith. Those matters remain the issues in this appeal.

[2] In December 1991, the appellant, a property developer run by Mr Donald Creevey, purchased a grazing property comprising a number of separate land titles. Included in the property was an 1862 subdivision of the township of Old Marlborough which comprised 965 lots consisting of 930 small freehold lot of 1012m2 - 1350m2 and the remainder mostly larger freehold lots between 2810m2 and 3.653ha. These old town lots were never developed or used for purposes other than grazing. The lots were located about one kilometre from the bitumen highway between Sarina and Rockhampton, about seven kilometres from the town of Marlborough and a one and a half hour drive from Rockhampton.

[3] The appellant obtained separate title deeds to each surveyed lot and advertised the smaller lots for sale in interstate newspapers for $4,990 "Ready to Build" with guaranteed finance and free legals. The advertisements did not mention that the lots had no water, telephone, electricity, sewerage or formal road access.

[4] The use of these lots for residential land was not in accordance with the respondent's Strategic Plan.

[5] In May 1992 the appellant requested building applications from the respondent. The appellant completed contracts of sale in respect of a considerable number of individual lots and some purchasers informed the respondent of their interest in building houses.

[6] The respondent was understandably concerned about a potentially large residential development on land with no infrastructure: ensuing health and social problems were envisaged; for example, E.coli had been found in bore water used by one owner/resident, probably sourced from that resident's human waste.

[7] On 8 December 1992 the respondent considered whether it should form the opinion that some delineated old town lots were incapable of being drained, thereby effectively prohibiting the erection of buildings on the land.[1]

[8] There was no dedicated road to the old town lots, although an unsealed access road known as Coorumburra Road had developed and was maintained by the respondent. Coorumburra Road did not follow its gazetted route and cut across several old town lots. Many old town lots had no direct access to a formed road. In December 1992, apparently with a view to correcting or improving this, the respondent gave notice of intention to resume in respect of 22 lots or parts of lots. At a general meeting of the respondent on 21-22 September 1993 the respondent proceeded with a more limited resumption of land for road building purposes. The resumption of the road was gazetted on 18 August and 15 November 1995. Affected land owners could apply for compensation under the Acquisition of Land Act 1967[2] in respect of land affected by either notice of intention to resume or the notice to resume.

[9] On 24 September 1992, the respondent amended its Town Planning Scheme so that despite the old town lots' zoning as Rural A in which building a dwelling house was an as of right use, the building of a dwelling house became a consent use requiring the respondent's approval.

[10] In the past an airstrip had been constructed on the old town lots for the use of the grazing property; it was also used occasionally by the Flying Doctor and by the military for training exercises. On 8 January 1993 the respondent issued a notice of intention to resume the land which had been used as the airstrip and other surrounding land, affecting 697 of the lots. On 21 September 1993 the respondent resolved to discontinue the resumption having secured another suitable site.[3] As already stated, affected land owners could apply for compensation in respect of land affected by the notice of intention to resume the land under the Acquisition of Land Act 1967.[4]

[11] At a meeting of the respondent on 28 April 1993, following discussions concerning the old town lots, it was resolved that, inter alia:

"The application of a 'benefited area' rating structure be considered during pre-budget deliberations."

[12] The disputed decision was made at a meeting on 27 July 1993. The respondent discussed an assessment of public infrastructure requirements for the old town lots in the presence of its solicitor, Mr Ware, and its Senior Planning Officer, Mr Pearson. The minutes noted that although dwelling houses could not be built without consent the lots could be used for the remainder of the permitted Rural A uses in the planning scheme. Although the appellant still owned the majority of lots, 200 had been sold and the appellant would continue to sell its remaining lots over time. Lots would be developed for permitted non-residential uses, probably agricultural or pastoral activities, until a sustainable level of use evolved. Owners would reside at Marlborough, Rockhampton or elsewhere within travelling distance. Active land use would commence on the lots near Marlborough and Coppermine Creeks where there were good prospects of an adequate water supply. This more intense development of the lots would generate an increase in traffic volume not yet able to be accurately quantified until land ownership and use stabilises but:

"... the increased volume will only use Coorumburra Road from the Sarina-Marlborough Road to the Township and will not affect the remainder of Coorumburra Road beyond the Township. There is a severe limitation on external road access to the Township allotments along Coorumburra Road from the sealed Sarina-Marlborough Road arising from the periodic flooding of Marlborough and Coppermine Creeks. Depending on how the pattern of land ownership and land use stabilises, there will be a need for the formation, grading and drainage of the unmade gazetted internal roads in the Township area at some future time.

The requirement that the road access to the Township be upgraded is identified as an immediate priority to be undertaken by the Council in the current financial year. The work would comprise upgrading of the Coorumburra Road intersection with the Sarina-Marlborough Road ($100,000), engineering studies to establish the required level of flood immunity. The existing culverts across the Creeks provide little flood immunity and the Shire Engineer suggests a Q5 level would be appropriate for the anticipated level of development of the allotments and this should be confirmed as Council's flood records for this area are very limited. The length of Coorumburra Road should be a sealed 8 metre wide two lane road between the intersection and the Township across the lowest level of the Township area ($50,000 - for engineering studies and $600,000 for road upgrading). The public infrastructure requirement of the Township will need to be monitored and assessed on a continuing basis as the pattern of development unfolds.

Members are aware of the tight funding constraints in the current budget discussions. There is no available funding capacity within the existing revenue base. The projected pattern of development of the Township reasonably demonstrates the relationship between the development of the allotments and the purpose for which the Council revenue is to be expended on the upgrading of Coorumburra Road. The land which will directly benefit from the undertaking of the roadworks is all of the allotments within the Township area including an allotment to the south west adjacent to the Township and to the east of Marlborough Creek. The roadworks directly and specifically benefit only these allotments and it is only fair and equitable that the land which directly benefits from the roadwork should bear the cost of such works. There should be no distinction made between the larger and smaller allotments or between the more valuable and the less valuable. The benefit of the roadworks will essentially accrue equally to each allotment irrespective of the area or value of the allotment. The area concerned is quite small and specific.

It is suggested that Council make and levy a separate rate under section 21(4) of the Local Government Act, 1936, equally on all such allotments which are rateable land in an amount of $900 per allotment for the cost of the roadworks. Due to the inherent lack of stability in the rating base until the pattern of development settles, Council should not borrow the cost of the works but should rather pay the cost of the roadworks from the amount of the separate rate recovered."

[13] Consideration was given at the meeting to Councillor Smith's queries about land owners who owned their land on Coorumburra Road before the appellant commenced to develop and sell the old town lots. The minutes note:

"It was explained that their lands were equally benefited by the roadworks and it would not be a reasonable exercise of Council's power under section 21(4) to exclude such land from the separate rate."

[14] Councillor Wall was concerned that land owners further along the Coorumburra Road would also obtain the benefit of the roadworks but Councillor Mather observed that but for the development of the allotments there would be no need for the roadworks.

[15] The Council then resolved to undertake the roadworks and under s 23(1)(i)(c) of the Act establish the Old Marlborough Township Infrastructure Fund - Area E and to levy a separate charge of $900 on each of the allotments within the proposed benefited area which is rateable land for the purposes of s 24 of the Act. This land was almost exclusively limited to the old town lots, hundreds of which were still owned by the appellant.

[16] Reports on the estimated cost of the proposed road works were presented by the Shire Engineer, Mr Murphy, and the Deputy Engineer, Mr Windress: studies/surveys $50,000; Sarina-Marlborough intersection $100,000 Coorumburra Road construction $600,000, a total of $750,000. The levy would raise $868,500; a levy of $777.20 on each designated lot would have raised $750,000. Mr Derbyshire, the engineer called by the appellant estimated the costs of the flood study and road construction at $356,400, whereas the engineer called by the respondent, Mr McMurtrie, anticipated these costs at $663,232.

[17] The respondent's meeting of 10-11 August 1993 considered a Report on the Development of Old Marlborough Township and the Requirement for Public Infrastructure Provision which was a statement of the respondent's policy on the development of the old town lots as adopted by the respondent at its budget meeting on 27-28 July 1993. The report noted:

"Council accepts that it has an obligation to plan for the emerging reality that ownership of all of the allotments will pass into the hands of end users over time and that the allotments will be brought into active use. The inexorable laws of supply and demand combined with the limitless bounds of human ingenuity will ensure that there will be development of the Township allotments on a sustainable basis over time."

"1. There is a severe limitation on external road access to the Township allotments along Coorumburra Road from the sealed Sarina-Marlborough road arising from the periodic flooding of Marlborough and Coppermine Creeks.

2. The more intense development of the Township allotments for the remaining permitted uses under the Planning Scheme will generate an increase in the volume of traffic using Coorumburra Road to access the Township allotments. It is not possible to accurately quantify the increase in the volume of traffic until the pattern of land ownership and land use stabilises. However the increased volume will only use Coorumburra Road from the Sarina-Marlborough Road to the Township and will not affect the use of the remainder of Coorumburra Road beyond the Township.

3. Depending on how the pattern of land ownership and land use stabilises, there will be a need for the formation, grading and drainage of the unmade gazetted internal roads in the Township area.

The requirement that the road access to the Township be upgraded has been identified and accepted by Council as an immediate priority to be undertaken by Council in the current 1993/94 financial year. The existing concrete culverts where Coorumburra Road crosses Marlborough and Coppermine Creeks provide little flood immunity and upgrading of the road to a sealed eight metre wide two lane highway with flood immunity to the Q5 level is considered appropriate to reduce the flooding limitation on the road access and cater for the increased volume of traffic accessing the Township allotments. It will be necessary to confirm this assessment by separate engineering studies in view of the limited information on flood levels and flood severity that are available. The intersection of Coorumburra Road with the Sarina-Marlborough Road should be undertaken as part of the upgrading. The anticipated cost of the roadworks has been assessed at $750,000."

[19] Later in the report under the heading "Funding of the Roadworks", it was noted:

"The land which will directly benefit from the undertaking of the roadworks is all of the allotments within the Township area and an adjacent allotment to the west of the Township on the eastern side of Marlborough Creek. This includes not only the allotments purchased by Shanvale Pty Ltd and onsold and the allotments still held by Shanvale Pty Ltd but also the allotments that were held in third party ownership before Shanvale Pty Ltd made its original purchase. The area includes all allotments within regulatory map number 1.

Completion of the roadworks will have not only the tangible benefit to the owners of providing better road access to the Township allotments but also have the prospective benefit of an increase in the value and marketability of the allotments as a consequence."

Some of the lots designated as benefiting had no frontage to the proposed road works and were not as close to the road works as other land not within the designated benefited area.

[20] Mayor Wildin conceded in cross-examination that land other than land in the E area was benefited but stressed that the subdivision of the old town lots had generated the need for the road; she did not see that it was the responsibility of the wider community to pay for the resulting need for the road upgrade; other users of Coorumburra Road had done nothing to cause the change in circumstances which resulted in the need for the levy. A similar approach was also taken by Councillor Hinz.

Was the decision authorised by s 21 of the Local Government Act 1936?

[21] Section 21 of the Act at the relevant time provided:

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

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

(4B) A separate rate or charge may be made and levied on such bases as the local authority considers appropriate.

(4C) A local authority's resolution making a separate rate or charge must identify the rateable land to which the rate or charge applies.

(4D) Parcels of rateable land may be identified for the purposes of making or levying a separate rate or charge in whatever way the local authority considers appropriate.

[22] The appellant contends that the rate has not been applied to all lands that benefit from the proposed upgrading and as a result is unlawful.

[23] The primary judge concluded that the object of the imposition of the separate rate was to burden only those lands which the local authority perceived to be benefited to such an extent by the works as to make it right to require those owners to pay a special rate over and above the general rate; it would be absurd if landowners who benefited only by infrequent use of the road were required to contribute equally.

[24] The High Court considered similar legislation in Parramatta City Council v Pestell[5] where the Council resolved to levy a rate for the construction of roads, kerbing and guttering, concrete footpaths, drainage and the embellishment of an area described generally by metes and bounds but from which some 90 lots described by lot or street number were excluded. The excluded lots were residential lots whilst the prescribed area contained only industrial lots. The rate was levied under s 121 of the Local Government Act 1919 (NSW) which provided:

"121. (1) For or towards defraying the expenses of executing any work or service or for or towards repaying with interest any advance made by the Minister or debt incurred or loan raised in connection with the execution of any work or service where, in either case, such work or service in the opinion of the council would be of special benefit to a portion of its area to be defined as prescribed, the council of a municipality or shire may make and levy a local rate on the unimproved capital value or on the improved capital value of rateable land within such portion.

(1A) For or towards meeting any liability transferred to the council of a municipality or shire consequently upon the alteration of the boundaries of the area, the council may make and levy a local rate on the unimproved capital value or on the improved capital value of the rateable land added to the area.

(2) The council of a municipality or shire may by notice in the Gazette from time to time define part of the area to be known as a 'town improvement district' within which a 'town improvement local rate' may be levied under the provisions of this section."

[25] Barwick CJ, Menzies, Gibbs (as he then was) and Stephen JJ (McTiernan J dissenting) found the levy was invalid, firstly because the rated land was not described as required by the section by metes and bounds and secondly and relevantly because the Council could not reasonably have formed the view under the statute that the rated land enjoyed a special benefit not enjoyed by the excluded land.

[26] Barwick CJ found that "special benefit" here meant a benefit which is not necessarily enjoyed by all the land in the local government area:

"... the special benefit of which the section speaks is a benefit which some other parts of the area may not enjoy, a benefit particular to the land selected though not exclusively so. The concept of special benefit in connection with local government works and services is somewhat nebulous. The nature of a special benefit, as well as the choice of a portion to be subject to a local rate, are both matters apt to be committed to the opinion of the local government authority. In this connection it must be borne in mind that the council is a representative body of limited tenure of office. The question whether or not the given works or services are of special benefit to a portion of the local government area is very much a matter of opinion probably involving many imponderables and a great deal of local knowledge. The purpose of the legislature in committing the selection of the portion in respect of which a local rate is to be levied to the opinion of the local council reflects such considerations. On the other hand, it is no doubt contemplated that the burden of a local rate should be distributed over all the land which might reasonably be thought especially to benefit by the performance of the works or the rendering of the services. But the selection of the land to carry that burden is left, in my opinion, to the opinion of the local government body. But of course, the council must in fact have the necessary opinion that the portion it has chosen will derive special benefit. Whether or not it in fact holds the opinion may be challenged in the courts; but, if the necessary opinion is in fact held, the correctness of the council's view in selecting the portion cannot be reviewed by the courts. ...

... if a council in fact holds the opinion that the portion of its area in respect of which it decides to impose a local rate will derive special benefit from the execution of the works or services to which the proceeds of the local rate are to be devoted, the rate resulting from its resolution in that behalf will be valid, though it might reasonably be thought that other land in the council's area would derive equal benefit from the execution of those works or services.

... bearing in mind the nature of the proposed works or services, no rational basis could exist for holding at the same time an opinion that the land surrounding these island lots would derive a special benefit from the execution of those works and services and the opinion that those island lots would not. ...

... It is the land which is to be considered as deriving a special benefit from the execution of the works, not the owner of the land. No doubt that benefit must result in the availability to the owner of some advantage such as accessibility or accretion in value. But though the use to which the land is presently devoted may in some circumstances emphasise that advantage, that use can scarcely be the determinant as to whether or not the land will derive special benefit from works or services."[6]

[27] Menzies J noted the statute required that the council form an opinion whether any and what portion of its area would be specially benefited by the works and this opinion determined the land to be rated. He added:

"There is, however, a world of difference between justifiable opinion and sound opinion. The former is one open to a reasonable man, the latter is one that is not merely defensible - it is right. The validity of a local rule does not depend upon the soundness of a council's opinion; it is sufficient if the opinion expressed is one reasonably open to a council. ...

A court may interfere only when it appears that the portion defined is so obviously not the land which the execution of the work benefits specially but the court can say that the council's professed opinion that it is, is one that is not in keeping with the section so that the making and levying of a rate on the basis of that opinion is outside its power. ...

It is, therefore, at the land the council must look, not to the circumstances of owners or occupiers of the land who will be liable to pay the rate which should be imposed. [7]

[28] Gibbs J (as he then was) noted the first question was whether:

"... the work or service in the opinion of the council would be of special benefit to that portion of the area within which is the land on whose value the rate is to be levied. ...

... if in the opinion of the council two parcels of land would benefit equally from a work, the council could not define a portion under s 121(1) so as to include one parcel and exclude the other ... Such portion will not be defined if the definition excludes land which the council in fact considers, or which no reasonable council could fail to consider, would derive from the work a benefit equal to that derived by the lands within the portion.

A ratepayer who asserts that the opinion which a council has purported to form for the purposes of section 121(1) is one not reasonably capable of being held has a heavy burden, since due weight must be given to the fact that the council is a responsible elected body with a particular knowledge of local conditions." [8]

"... is not concerned with advantages in fact conferred upon individuals but with benefits conferred upon land.

This distinction is important and the history of the legislation, the judgments of this and other courts, and the words of the section itself all point, in my view, to the conclusion that 'special benefit' refers exclusively to benefits conferred upon land, which will be reflected in the value of that land, and is unrelated to what may be the quite different question whether or not the owner or occupier of a property chooses to, or is in a position to, avail himself of the benefit conferred."[9]

[30] I can see no relevant differences beneficial to the respondent between the statute considered in Pestell and s 21 of the Act.[10]

[31] It is common ground that other lots which were not within the defined benefited area also benefited from the land. These lots included mining leases to the south of the old town lots to which access was gained solely by Coorumburra Road and rural properties. Whilst some of the land adjacent to the old town lots used access other than Coorumburra Road, a number of lots not subject to the levy such as the Coyne's property 2LI334; the Hair's property 10LI21 and Chak San Cheung's property 1LI318 all had sole access from Coorumburra Road. This land would benefit equally with the owners of the old town lots through the improvement in access to their properties by the upgraded all weather road and creek crossings. Many of the levied old town lots did not have frontage on Coorumburra Road and would arguably have less benefit than some properties not subject to the levy.

[32] The respondent argued that rural properties were accustomed to lack of access during floods and were not responsible for the needed road improvements; the lots not levied did not bring about the need for the improved road the subject of the levy and therefore the respondent was entitled to consider that land as not benefited under s 21(4A) of the Act.[11]

[33] The principles stated in Pestell and the clear wording of s 21(4A) of the Act which require the respondent to levy land which in its opinion "has or will benefit from or have access to the work, service, facility or activity because of which the rate is made and levied" do not support this argument.

[34] I have sympathy for the difficult position in which the respondent has been placed in respect of the old town lots and as Menzies J noted in Pestell, the application of the principles in a particular case is often difficult.[12] In the end however the irresistible conclusion is that all land which had primary access from Coorumburra Road would benefit from the proposed road improvements, especially in wet weather. The question is whether the improved access benefits the land not the users of the land.[13] The respondent, in forming its opinion under s 21 of the Act as to which land "will benefit from, or have access to" the proposed improved road, was demonstrably wrong and irrational in determining this issue on the basis of which land brought about the need for the improved road the subject of the levy. The question for the respondent's consideration should have been which land would "benefit from or have access to" the improved road. The levy was not imposed by the respondent as required by s 21(4A) of the Act and is outside the power conferred by the Act. The respondent's decision is therefore invalid and the primary judge erred in failing to so hold.

[35] It follows that the appeal must be allowed but in order to fairly deal with the issue of costs it is necessary to consider the other arguments raised by the appellant.

[36] The appellant claims the respondent's decision of 27 July 1993 was unreasonable in ways other than under s 21 of the Act. To succeed it must demonstrate that no reasonable Council could have come to the decision reached by the respondent; it is not what this Court considers reasonable but whether the respondent's decision was unreasonable in the sense that this Court considers it to be a decision that no reasonable body could have reached: see Associated Provincial Picture Houses Ltd v Wednesbury Corporation.[14]

[37] The appellant relies on the following facts to demonstrate unreasonableness.

(i) As the respondent had declared some of the old town lots incapable of being drained and thus lots on which construction of dwellings was prohibited,[15] it was unreasonable to impose a levy on these lots.

(ii) The respondent had issued a notice of intention to resume 22 of the lots for road purposes. The respondent had given notices of intention to resume the entire balance of the lots for aviation and associated purposes. It was unreasonable to levy these lots.

(iii) The February 1993 amendments to the Town Plan required the respondent's consent for construction of a dwelling house and it was at the least unlikely that such consent would be obtained. Many purchasers had bought a number of lots so that the number of end users had to be considerably less than the number of old town lots. There had been no completed sales since January 1993. Only two of the lots had been occupied by owners in temporary structures. As at 27 July 1993 no lots were occupied nor were any lots used for pastoral or agricultural purposes. Most purchasers resided outside Queensland. These factors do not suggest significant increased use of the road.

(iv) Nevertheless, the respondent intended to build an 8m wide sealed bitumen road. The respondent's own policy indicated that an 8m wide sealed bitumen road was only required where expected vehicle movements were between 1000 and 8000 per day and a dwelling house could be expected to generate 6 vehicle movements per day; at least 166 dwelling houses would be needed to justify such a road. At the time of the decision, the respondent had no actual knowledge of the frequency, duration or severity of any flooding or the impact of any flood on the creek crossings and on the old town lots. No request had been made by any owners of the lots subject to the levy to upgrade the road and nor had their opinions been sought.

[38] The land shown in the map to be potentially incapable of drainage was a small portion of the total land subject to the rate. Although buildings could not be constructed on it, it could be used for agricultural purposes. Like the other old town lots, the separate ownership or the potentiality for it could generate traffic in the future for which planning was needed. The land itself would benefit from the better access provided by the road improvements including crossings of Marlborough and Coppermine Creeks which were subject to periodic flooding. Some improvement in the value of this land, even if incapable of drainage, could be expected from the road construction.

[39] The respondent's resumption of 22 of the old town lots for road purposes was in circumstances where there was uncertainty as to the status and positioning of the road. This was later clarified at the respondent's meeting in September 1993 when it decided upon a more limited resumption of land for road building purposes, consistent with its July 1993 decision. At the time of the impugned decision, the land was subject only to a notice of intention to resume for road purposes. The land not ultimately resumed would benefit from the improved road access to be provided by the levy, even those lots without direct access to the road; landowners affected by either a notice of intention to resume or by a notice of resumption were entitled to apply for compensation,[16] although as Derrington J points out, this cannot include compensation for any special levy paid.

[40] Similarly although the resumption of land for the airstrip was not revoked until the respondent's meeting in September 1993, land owners were able to apply for compensation in respect of the notice of intention to resume, which was not, after all, a notice of resumption.[17]

[41] The respondent considered the fact that the building of dwelling houses on the lots was not an as of right use when deciding to upgrade the road; it was nevertheless satisfied that the multiple ownership of the land would generate sufficient traffic to justify the upgrading of the road as proposed. As the learned primary judge noted, it was possible that, in the future, consent to erect a dwelling house on the larger blocks or on an amalgamated block may have been given. Furthermore, interstate owners may have wished to exercise their proprietary rights enjoying short holidays, camping, caravanning or staying in farm sheds. The respondent was entitled to plan for the future.

[42] The respondent's replies to letters of objection from rate payers indicated that it saw the need for improved road access was, at least in part, related to the potential residential use of the land which was not totally precluded by the amendments to its Town Planning Scheme.[18]

[43] Consultant town planner Mr Challoner called by the appellant was of the view that in July 1993 it was unlikely any consent applications to erect dwelling houses on the old town lots would be approved; nor was there any real prospect of significant growth in the use of Coorumburra Road as a result of people going to the land for non-residential purposes; he could see no need for the upgraded road; the present road was of a good standard and would be adequate for many years even if the Town Planning Scheme had not been amended to make the building of dwelling houses a consent use. He concluded that the respondent's conduct in levying the rate payers to build such a road was in the circumstances "inexcusable".

[44] Mr Derbyshire, an engineer called by the appellant, was of the view that the respondent could not determine the required flood immunity of the proposed road before a flood study had been undertaken. Counsel for the appellant stressed that the respondent did not know the duration or severity of floods in the area. This submission is not borne out by the evidence. Mr Haack, the respondent's roadworks supervisor, was based in Marlborough and had seen the creeks in flood; Coppermine Creek usually flooded every year but in recent dry years not as often; sometimes it could flood three, four or five times a summer, rising quickly and rendering the road impassable for part of or an entire day. It was not unreasonable to require those who were to benefit from the road to pay for the flood study once satisfied in general terms that the road must be improved because of flood problems.

[45] Mr Derbyshire noted the respondent's policy for developers[19] provided for a range of road standards depending on the traffic volume; for roads carrying less than 100 vehicles per day a 5.5 metre gravel pavement is considered satisfactory whilst for roads carrying between 1000 and 8000 vehicle per day an 8 metre bitumen seal is required. His view was that the current road, except at the creek crossings, was 5 metres wide and sufficient to allow vehicles to safely pass each other; there was insufficient anticipated change in traffic patterns to justify the proposed upgrading of the road.

[46] The respondent called civil engineer, Mr McMurtrie, who was familiar with the Coorumburra Road. In his view, the principal cost of road construction was not the seal but the gravel component and in this case the comparatively expensive drainage areas; the standard of road proposed was appropriate in the circumstances.

[47] The differing opinions of expert witnesses are of no particular assistance to the appellant in the circumstances of this case. Nor am I persuaded the amount of the levy was unreasonable; the appellant conceded the respondent would be obliged to repay any unspent funds. Although minds may well differ as to the reasonableness of the conduct of the respondent in planning these roadworks and funding them by the levy, it cannot be said that no reasonable Council could have reached this decision: it was entitled to plan for the future and to begin to provide the infrastructure of an upgraded road to an increased and potentially increasing number of land owners who were likely to use the road more frequently than it had been used in the past. The respondent was not obliged to wait for land owners to request this service. Whilst the levy imposed on land that will be wholly resumed for road purposes must be unreasonable, the appellant otherwise fails in respect of the many remaining matters raised by it, either individually or collectively, to establish unreasonableness on behalf of the respondent.

[48] The appellant submits that the respondent's resolution dated 28 July 1993 was an improper exercise of power within the meaning of s 23(c) of the Judicial Review Act 1991 because it was exercised not for the purpose for which it was conferred, but to preclude the further sale of the old town lots, to deprive the appellant of profits from past and future sales and to use the levy as a bargaining tool on the question of compensation for injurious affection.

[49] The appellant relies upon the evidence of Mr Creevey, who had heated discussions in early January 1992 with Mr Pearson, an employee of the respondent, who was not called below, in respect of the sale by the appellant of the old town lots. Comments which may have been made by an employee of the respondent in a heated discussion in January 1992 do not persuade me the respondent acted in bad faith.

[50] The appellant also relies upon a Background Paper prepared by the Town Planning Department of the respondent dated 22 February 1993. The paper was produced to supplement and explain oral submissions by the respondent's Chairman to the Minister for Housing, Local Government and Planning in relation to the respondent's position on the development of the old town lots with a view to seeking the assistance of the Queensland government. The paper expressed the respondent's disapproval of the conduct of the appellant in selling the land and gave examples of health issues which flowed upon purchasers residing on the lots. It noted that appropriate infrastructure (a bridge, roads, sewerage, water, parks and a community centre) would involve a capital cost of $23.92 million and that Mr Creevey had not agreed to provide any such services. The respondent expressed its opinion in the paper that the development of a township on the old town lots was contrary to the respondent's planning strategy and expenditure of funds on the provision of services would be utterly uneconomic and wasteful, adding:

"9.17 ... However should the development be left to proceed without the provision of infrastructure, it will produce substandard shanty development with frightening public health implications and other social problems. It can be anticipated that the residents will become a vocal and persistent lobby group for the provision of services by both the Council and the Queensland Government.

9.18 The individuals who have purchased the blocks are in the main victims of circumstance and the unprincipled greed of the developer, Shanvale Pty Ltd. Council is very sympathetic to their plight and has done what it reasonably can to notify them that the blocks are unsuitable for residential development. However, both they and Council are left to deal with the situation as best they both can while the developer moves on. The developer takes his money and runs, the individuals are left to endure and Council wins the prize of picking up the tab!"

[51] The background paper discussed six options for dealing with the Development of Old Marlborough Township:

"Option 1 Do nothing and allow the development of the Township to proceed.

Option 2 Queensland Government to take legislative action.

Option 3 Proceed with the amendment of the Planning Scheme to limit the use of land for the erection of dwelling houses and take no further action.

Option 4 Proceed with the amendment of the Planning Scheme but declare the blocks a benefited area for rating purposes for the purpose of the imposition of a user pay regime.

Option 5 Assistance by the Queensland Government to achieve the selected option.

Option 6 A combination of some of the preceding options."

"Under section 21(4) of the Local Government Act, Council is empowered in each year to make and levy a separate rate and/or charge for a particular function or functions of Local Government for the special benefit of all or any land in the area of its jurisdiction. The relevant functions are to be specified in the resolution making and levying the separate charge and/or charge and the local authority is required to define the land to be specially benefited by the particular function or functions in question. For the purpose of defining the land, the local authority is required to define the land by delineation on a map or by reference to the meets (sic) and bounds or the real property description. A local authority has a discretion to determine the basis or bases on which the separate rate and/or charge shall be made and levied in respect of the rateable land in the benefited area."

[53] The respondent's preference expressed in the paper was to proceed by way of option 6, a combination of the available options, including option 4 but:

"The benefited area separate rate would only be for the purpose of providing flood free constructed roads to and within the Township."

[54] The respondent had been placed in a difficult position because of the sale of the old town lots and was understandably annoyed with the appellant which the respondent saw as the cause of these difficulties. The Background Paper was, as his Honour noted, prepared for a particular political purpose, an attempt to obtain some funding or other support from the Queensland Government to assist the respondent in its unfortunate predicament in respect of the old town lots. The report does demonstrate a genuine and logical attempt by the respondent to find a practical solution to the lack of infrastructure for the old town lots; it suggests that the rate levy was a legitimate attempt by the respondent to fund the first step in the provision of basic infrastructure to the old town lots.

[55] The substantial, dominant or true purpose[20] for which the rate was levied was to commence to develop suitable infrastructure for the land, not, as the appellant suggests, to stop further sales, nor to punish it by taking some of its profits from the sale of the old town lots, nor to provide a sum of money as a negotiating tool to offset compensation claims.

[56] The appellant has been successful on only two of the numerous bases argued by it in its application for judicial review. The judicial review took over 9 court days and the points upon which the appellant was unsuccessful both below and in this appeal took up much of that time. The issues upon which it has been successful were relatively straight forward. After considering the matters set out in s 49(2) of the Judicial Review Act 1991,[21] I am satisfied in the circumstances it would be unjust to require the respondent to pay the successful appellant's costs in full. In my view, the respondent should be liable for only 50 per cent of the appellant's costs of the primary proceedings.

[57] The appeal is allowed with costs. The judgment at first instance is set aside; the decision of the respondent, dated 28 July 1993, to make and levy a separate charge of $900 on each of the allotments within Regulatory Map No 1 is set aside. The respondent is to pay 50 per cent of the applicant's costs of and incidental to the judicial review, including reserved costs to be taxed.

[58] DERRINGTON J: The facts and issues in this matter have been set out by the President and will not be repeated except in respect of specific discussion.

[59] First, it should be observed that the appellant's submission that the Council acted dishonestly and with an ulterior motive in making the relevant special levy of rates is completely groundless. It has no evidence whatever to support it either directly or by any reasonable inference. The Council was very properly concerned at his questionable commercial morality in his dealings with the relevant land, and he has mischievously translated such concern into improper motives and conduct. Such reasoning can easily be used to besmirch people who act with suitable propriety which, however, happens to be unsympathetic to his financial interests.

[60] The evidence establishes that the Council acted with all due concern for the future occupiers of the development, and although its construction of an upgraded road to a suitable quality is premature for immediate needs, it was entitled and indeed obliged to plan for the future. If the development of a suitable road at this stage would be more practical and economic than piece-meal upgrading over a period of time, then that would have been both reasonable and understandable. Its practical judgment of these matters, which could not be predicted with great precision, should be respected, having regard to its extensive collective experience in such matters, its local knowledge, and the benefit which it had of assessing the quality of the expert recommendations upon which it relied. The court should not lightly conclude that its decision on such matters is flawed, much less dishonest, because of the applicant's undue emphasis upon particular isolated matters taken out of context. The court's respect for the experienced judgment of Councils in such practical matters has been observed in many cases.

[61] This does not mean that the Court will not examine such decisions for reasonableness, for decisions of this kind may sometimes unwittingly go too far in pursuit of one objective or fail to take into account some matters of significance to citizens. At the same time, respect must be paid to reasonable policy considerations, and future planning, a most desirable factor, often requires a generous degree of latitude in the result. For example, in the forecasting of numbers, the adoption of the maximum foreseeable figure may be reasonable in some cases.

[62] For example, in a case such as the present, the Council could well be subject to valid criticism if, after failing to require the appellant to contribute any or enough towards the obvious need for road upgrading now, this community were in the future to find itself with inadequate roads to service the largest population which the appellant's own activity would bring to the area for its profit.

[63] In such matters, the Council is entitled to rely upon the advice of its experts. However, if evidence is placed before it challenging the experts' advice, it should investigate it properly and not rely blindly upon it. But it is entitled to have regard to its experience of its experts' quality, and to adopt the cautious side of alternatives presented, while applying prudence and fairness to both points of view.

[64] Allowing for error or even bias in the appellant's witnesses, they have still raised some issues that at least deserve the Council's further consideration when, as appears below, the matter goes back to it. While I agree with the President that no unreasonableness is established, there are some matters that deserve careful reconsideration, particularly in the light of the evidence at the trial which raises new matters. These must be addressed in any reconsideration that is necessary before the Council adopts any further decision.

[65] It follows from what has been said that, save for what follows, the Council?s decision to proceed with the road cannot be attacked on the basis that it was dishonest or could not reasonably have been reached. On these matters I respectfully agree with the detailed reasons of the President in all respects, and would merely add that the learned trial judge had an opportunity to see and evaluate the expert witnesses, which may well have been an advantage here. The view expressed above must be qualified in respect of two relevant features:

(a) the inclusion in the levy of some lands that will be wholly resumed for the purpose of the road; and

(b) the failure to impose the levy upon other lands in the area that will receive some benefit from the road.

[66] As for (a), it cannot be said that the land which will be resumed for the purpose of the road can possibly benefit from its provision, and consequently the levy is defective in this respect. The compensation payable on resumption cannot include compensation for rates paid, nor for any increase in value of the land due to the benefits brought by the purpose for which the resumption is made.

[67] As for (b), the legislation in force at the time made it mandatory for the Council to levy any separate rate upon all the land that would benefit from the provision of the road. This cannot be confined to the land the development of which led to its need. Any land that would benefit from it had to be included. This encompassed not only the land for which the road provided primary access but also that land for which access to a good all-weather road would constitute a real benefit, even though there may have been alternative primary means of access.

[68] The relevant expression in s 21 was, "the rateable land in the local authority?s area that ... has or will benefit from, or have access to, the work . . .". The criteria are plain and simple and do not refer to grades of benefit. In any case, in respect of those properties which have access to this road, it is difficult to understand how there could be much or any variation in benefit enjoyed, save to the extent that the benefit might be mitigated by the existence of alternative access. I agree with the reasons given by the President that, in failing to levy the rate on all such land, the Council?s action was again flawed and is therefore invalid.[22]

[69] The appeal should be allowed and I agree with the orders in that respect proposed by the President.

[70] On the issue of costs, I agree with the order for costs which the President proposes.

[71] CHESTERMAN J: Facts relevant to the resolution of this appeal are set out in the judgments of the President and Derrington J. In the interests of brevity I will mention only those matters which are of particular relevance to the opinions I have formed.

[72] On 27 July 1993 the respondent met to discuss the need to provide infrastructure to the allotments in what the trial judge described as "the historic town subdivision". It resolved:-

1. Undertake road works on the area of land known as Old Marlborough Township near Marlborough in the 1993/94 financial year at a cost of $750,000.00 such road works to comprise -

(a) upgrading of the intersection of Coorumburra Road with Sarina-Marlborough Road;

(b) the undertaking of all necessary engineering studies to confirm the suggested appropriate level of flood immunity ... for Coorumburra road ... ;

(c) upgrading of Coorumburra Road from the intersection with the Sarina-Marlborough Road to Turner Street ...

2. That pursuant to s 23(1)(i)(c) of the Local Government Act the Council propose to establish a Separate Fund to be known as the Old Marlborough Township Infrastructure Fund - Area E, and levy a separate charge of $900 on each of the allotments within the proposed benefited area which is rateable land for the purposes of section 24 of the Local Government Act 1936.

3. That the draft budget for the proposed Separate Fund be framed as follows:-

4. That it be a recommendation to the Budget Meeting that appropriate resolutions and a budget be adopted to give effect to the above proposals."

1. Pursuant to s 23(1)(i)(c) of the Local Government Act 1936 Council establish a separate fund in relation to a separate charge to be made and levied on each of the allotments within the area outlined in red identified on the map designated Area "E" attached to these Minutes which is rateable land for the purposes of section 24 of the Local Government Act 1936; such fund to be known as the Old Marlborough Township Infrastructure Fund and the area subject to the separate charge to be known as Area "E".

2. The separate charge made and levied for Area "E" be in addition to the differential general rate and the Rural Road Construction and Maintenance charge for ... Area "E" ...

3. For the purposes of section 21(4A) of the Local Government Act 1936, Council is of the opinion that each of the allotments within the area outlined in red ... will benefit from proposed works.

5. Pursuant to [section] ... 21(4A) ... Council hereby makes and levies a separate charge of $900.00 on each of the allotments within the area outlined in red on the Area "E" map ...

7. That the separate charge fund budget for the Old Marlborough Township Infrastructure Fund ... totalling $756,000.00 be adopted ..."

[74] It is common ground that some allotments which were subject to the special rate of $900 were to be resumed by the respondent for the purpose of building the road, the route of which would pass over those lots. Some parcels of land, separated from those subject to the special rate only by the width of the proposed new road, were not made subject to the rate. That is, land on one side of the proposed road was included in the designated lots but land across the road was not.

[75] Section 21(4A) of the Local Government Act 1936 provided that:

"A separate rate or charge must be made and levied on the rateable land in the Local Authority's area that, in the Local Authority's opinion has or will benefit from or have access to, the work, service, facility or activity because of which the rate is made and levied."

[76] It is immediately apparent that the resumed land cannot possibly benefit from the road. Nor is it possible to see how land on one side of the road can benefit from it but land on the other side cannot.

[77] The case has remarkable similarities to The Council of the City of Parramatta v Pestell [1972] HCA 59; (1972) 128 CLR 305 which considered legislation effectively identical in terms. Barwick CJ said (at 313-14):

"... it is no doubt contemplated that the burden of a local rate should be distributed over all of the land which might reasonably be thought especially to benefit by the performance of the works ... the selection of the land to carry that burden is left ... to the opinion of the local government ... if a council in fact holds the opinion that the portion of its area in respect of which it decides to impose a local rate will derive special benefit from the execution of the works ... the rate resulting from its resolution ... will be valid ... I have come to share the ... view that, bearing in mind the nature of the proposed works or services, no rational basis could exist for holding at the same time an opinion that the land surrounding these island lots would derive a special benefit from the execution of those works ... and the opinion that those island lots would not."

"A council must therefore form an opinion whether any and what portion of its area would be specially benefited by the execution of what is proposed. This opinion determines the land that may be rated. There is thus a correspondence, dependant upon the opinion of the council, between (1) the land to which the execution of the work will be a special benefit and (2) the land to be rated. If it could be shown that the portion defined included land about which the Council could not in reason hold the opinion that it would be specially benefited by the execution of the works, the section would not authorize the making and levying of a local rate."

"The section does not authorize a council to pick and choose among lands that would be specially benefited ... The definition of the land that may be subjected to a local rate is determined by the council's justifiable opinion of special benefit so that, if the so-called opinion could not be justified on any reasonable ground, then, the requisite opinion is lacking. There is, however, a world of difference between a justifiable opinion and sound opinion. The former is one open to a reasonable man; the latter is one that is not merely defensible - it is right. The validity of a local rule does not depend upon the soundness of a council's opinion; it is sufficient if the opinion expressed is one reasonably open ... Whether it is sound ... is not a question for ... a court.

A court may interfere only when it appears that the portion defined is so obviously not the land which the execution of the works benefits specially that the court can say that the council's professed opinion that it is, is one that is not in keeping with the section so that the making and levying of a rate on the basis of that opinion is outside its power ..."

"A court has no power to override the council's opinion on such a matter simply because it considers it to be wrong. However, a court may interfere to ensure that the council acts within the powers confided to it by law ... an opinion will nevertheless not be valid if it is so unreasonable that no reasonable council could have formed it. (see Associated Provincial Picture Houses Ltd v Wednesbury Corporation ...)".

[79] The approach taken by Barwick CJ may differ slightly from that taken by Menzies and Gibbs JJ. The Chief Justice thought that the existence of an opinion about what properties would benefit from proposed works was sufficient to justify the special rate but an opinion could not, in fact, exist if there were no rational basis for it. The approach of Menzies and Gibbs JJ was that an opinion actually held which was unreasonable in the sense described in the judgments was not an opinion which would justify the exercise of the statutory power. Stephen J adopted the same approach - see at 331-2.

[80] The distinction drawn by Menzies J between opinions which are right and those which are reasonable was also described by Lord Hailsham in Re W [1971] AC 682 at 700:

"Two reasonable [people] can perfectly reasonably come to opposite conclusions on the same set of facts without forfeiting their title to be regarded as reasonable. The question in any given case is whether a [decision] comes within the band of possible reasonable decisions and not whether it is right or mistaken. Not every reasonable exercise of judgment is right, and not every mistaken exercise of judgment is unreasonable. There is a band of decisions within which no court should seek to replace the individual's judgment with his own."

[81] The question in the present appeal is whether the respondent's opinion, that all of the land made subject to the rate would benefit from the road and that no other land would benefit, was within the band of reasonable opinion. It clearly was not. The land which would cease to exist upon the building of the road could not rationally be regarded as benefiting from the road works. Similarly it was not rational to differentiate between properties separated only by the road. The opinion was wrong. It was also unjustifiable. No reasonable person could have entertained it.

[82] The trial judge came to a different view largely, I think, because of the way the matter was argued before him. The inconsistency in the treatment of adjacent parcels of land does not appear to have been explained with the same clarity with which it was expounded on appeal. Because the hearing was so prolonged no time remained for counsel who then appeared for the appellant to explain his case orally. Instead written submissions were delivered some time later. They ran to over 200 pages and may, not unfairly, be described as diffuse. The trial judge's attention was not drawn with any precision to the problem underlying the respondent's resolution to impose a special rate.

[83] The appellant's submission appears to have been that all land which might have derived a benefit from the proposed road works must have had to be subject to the separate rate and, in particular, all land which had access to any part of the improved road should be subject to the rate. The trial judge said:

"... s 21(4A) requires a local authority to form an opinion as to the rateable land in its area which 'will benefit from or have access to' the relevant work. On one view, all rateable land ... within the whole of the local authority area will have access to the roadwork ... [which] is to be a dedicated roadway to which all members of the public ... will be entitled to access ... The whole object however of the imposition of a separate rate is to burden only those lands within the whole of the local authority area which the local authority perceives to be benefitted [sic] to such an extent as to make it right to require the owners ... to pay a special rate ... In my view the ... applicant's argument based upon the construction of s 21(4A) requiring every parcel of rateable land the owner of which may however infrequently ... make use of the road for access to or from his property or to or from some other part of the local authority area be separately rated is unsupported by the history of similar legislation ..."

[84] His Honour received inadequate assistance and was thus led into error. When attention is focussed on the relevant facts concerning land included and omitted from the special rate it is clear that the opinion was not one that could reasonably be held.

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

[86] The respondent's resolution of 28 July 1993 was not authorised by s 21(4A). The appellant (and the other rate payers) are not obliged to pay the special rate.

[87] The appellant argues there is a wider basis for setting aside the respondent's decision to levy the separate rate. Relying upon s 20(2)(e) of the Judicial Review Act 1991 it is said that the decision was an improper exercise of the power conferred by s 21(4A). The respect in which the exercise of power is said to be improper is that it was so unreasonable that no reasonable person could have so exercised the power: see s 23(g) of the Judicial Review Act. This ground calls for a consideration of factors other than the opinion which is a pre-requisite to the operation of s 21(4A).

[88] The impugned decision which the appellant sought to have reviewed was identified in par 11 of the second further amended statement of claim as being the resolution made on 27 and 28 July 1993 to levy a separate rate of $900 on specified allotments for the purpose of improving Coorumburra Road. It is, I think, important that what is attacked is not the decision to build the road but the decision to fund its construction by imposing a special rate. This argument overlooks the fact that the land on which the rate was levied was irrationally selected. It assumes that the rate applied to all lots which reasonably could be thought to benefit from the road.

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

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

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

[90] It is a mistake to concentrate attention only on whether the respondent might reasonably have decided to provide a better standard of road to the historic town site. The question which must be answered was whether it was reasonable to extract the full cost of doing so from a limited number of ratepayers. The financial burden imposed was considerable. The appellant would be liable to pay more than $335000 in respect of the lots it owned. In my opinion the respondent could not reasonably have decided to impose such a burden unless there were reasonable grounds for the opinion that the road would be sufficiently utilised by those obliged to pay for it.

[91] When Mr Creevey commenced his campaign of selling the subdivided lots the respondent may well have entertained justifiable feelings of alarm that a substantial urban population would quickly emerge in an area devoid of facilities. I do not disagree with the expressions of obloquy which have been directed by the trial judge and other members of this court at Mr Creevey's conduct. But the respondent acted effectively and decisively to prevent residential development at the Old Township. By July 1993 the prospect of such development had faded. The law requires those who exercise statutory powers and discretions to do so dispassionately and with regard to relevant facts. The bounds of reason do not expand because the decision-maker reacts in panic to a threat which is no longer real.

[92] A number of significant events occurred between December 1991, when the appellant purchased the land of which the historic town subdivision formed part, and July 1993. In that period the respondent had declared some of the lots to be incapable of being drained with the result that no dwelling could be built on them. The respondent had issued notices of intention to resume 22 lots for road purposes and all the other lots for the purpose of building an aerodrome. The notices were not recalled until after the respondent had resolved to levy the rate. In February 1993 the respondent had altered its town plan so that its consent was necessary before a house could be built on any lot. Consents were unlikely to be given.

[93] About 200 of the lots had been sold to 54 purchasers. The last sale was in January 1993. By July 1993 only two lots had been occupied and then on a temporary basis. At the date of the resolution no lot was occupied. Most of those who bought lots lived interstate. There was no reason to think they might suddenly leave the comfort of southern civilisation to take up residence in a desolate tropical savanna. According to the respondent's own planning criteria more than 165 households would be required to generate the amount of traffic which would justify the building of a road to the standard it had resolved upon. In July 1993 the respondent's own assessment was that there was no realistic prospect that such a number of dwellings would be built.

[94] The evidence to establish these conclusions comes from the respondent's own materials. They make it clear that the respondent did not expect urban development to occur in the historic town site, and that the pattern of development that would occur would not be apparent for some time.

The respondent's shire clerk produced a report dated 28 July 1993, assessing

(a) the projected pattern of development at the historic town subdivision consequent upon amendments made to the planning scheme;

[95] It noted that the lots in the historic town were not appropriate for residential development. The lots could be used, without consent, for agricultural and pastoral activity. The planning scheme amendments limited the use of allotments for the construction of dwelling-houses. The report "expected" that the allotments would be used only for the permitted activities. It went on:

"That the allotments cannot for all practical purposes be used for the erection of dwelling houses ... does not mean that the undertaking of other permitted uses ... is meaningless or illusory. The Township is not suitable for use for residential purposes without the necessary infrastructure provision but does have other uses both legally and practically."

"a general rationalisation in the patterns and purpose of land ownership is likely to occur. The first stage of rationalisation might be in respect of those people resident out of the State ... purchasers ... can be expected to be either existing owners of adjoining ... allotments ... the purchasers are likely to be permanently in an existing urban centre ... the process of rationalisation [resulting] in either a change in land values and/or a process of aggregation of individual allotments into more viable areas ... are reasonably likely ..."

[96] The shire clerk expressed confidence that the town planning scheme amendments would restrict urban development to designated areas (which did not include the historic town). He then turned to discuss "planning for the future development of Old Marlborough Township":

"It is not possible to accurately quantify the increase in the volume of traffic until the pattern of land ownership and land use stabilises."

[97] Notwithstanding the major thrusts of the report:

(a) that there would not be urban development on the historic town site;

(b) that the particular pattern of development and use could not be predicted

the report recommended improving Coorumburra Road in the manner and for the cost resolved on.

[98] The respondent's Mayor gave evidence that she knew, at the time of the resolution, that the respondent "had achieved its objective of preventing development of the township allotments for residential purposes".

[99] It must be accepted that the respondent was entitled to plan for the future needs of its area and to build roads or other aspects of infrastructure to meet anticipated needs. It did not have to wait for a need to become pressing before providing services or structures. But the essence of the appellant's criticism is that when the respondent's own assessment was that there would be no urban development at the historic township and that the type and degree of development that would occur could not be predicted, there was no reasonable basis for the decision to build the road. The respondent, it is said, did not plan for the future: it resolved to build a road which was not necessary and when there was basis for thinking it would ever be necessary, and to exact the cost from land owners who would not in reality use the road.

[100] These circumstances suggest to me that the decision was unjustifiable: in legal terminology it was unreasonable: no reasonable decision-maker calmly and rationally assessing the facts could have acted as the respondent did.

[101] The responsibility of local government is given to representatives of local communities. They are answerable to their communities and are equipped with a knowledge of local affairs and conditions to inform their decision making. The law properly affords to local authorities a degree of latitude in their decision making. The court may not substitute its judgment for a local authority's on a matter within the competence of the authority. Decisions need not be shown to be right to be immune from curial intervention. However, they must be lawful and to be lawful they must be reasonable. The statutory power to exact revenue from ratepayers, like any power, can be misused. The court has a responsibility to correct administrative actions which go beyond what is reasonable in the interests of ensuring that citizens are governed rationally and that their money is taken from them only pursuant to decisions lawfully made.

[102] The point is underscored by a comparison of the costs of road construction and the revenue raised to fund it. The respondent's budget for the work was $750000. One of the items in the cost estimate was an allowance for contingencies of 20 per cent. That is, the respondent estimated that the work would cost between $600000 and $750000. The product of the 965 lots multiplied by the rate of $900 per lot is $868000. It becomes easier to conclude the decision was unreasonable when one adds to the factor that an unnecessary road was to be built the consideration that an excessive sum of money was to be raised to build it.

[103] It follows in my opinion that the impugned decision was unreasonable and was therefore an improper exercise of power within the meaning of s 20(2)(e) of the Judicial Review Act.

[104] I agree with the President and with Derrington J that the appellant has not established that the decision was made in bad faith.

[105] The appeal should be allowed with costs and the judgment at first instance set aside. There should be an order that the decision of the respondent dated 28 July 1993 to make and levy a separate rate of $900 on each of the allotments identified in the decision be set aside.

[106] I agree with the order for costs proposed by the President for the costs of the trial. The application for statutory review could and should have been conducted with far greater economy and lucidity.

[1] S 37(10), Local Government Act 1936.

[3] The respondent's resolution to discontinue the resumption was made on 22 September 1993 and the notice of discontinuance dated 5 October 1993. Compensation was payable: see fn 2.

[5] [1972] HCA 59; (1972) 128 CLR 305.

[10] The appellant submits s 21 of the Act should be considered in the context of its prior and subsequent form which referred as in Pestell to "special benefit".

[11] The evidence of Mayor Wildin and Councillor Hinz and Councillor Mather's observation at the meeting on 27 July 1993.

[13] See Barwick CJ at 315; Menzies J at 323; Stephen J at 333.

[14] [1947] EWCA Civ 1; [1948] 1 KB 223, Lord Greene MR at 230.

[15] S 37(10), Local Government Act 1936.

[18] Letters from the respondent to Mr & Mrs W & L Philippi and to Ms KM Goggi, GW & SL Burchell, Mr AD Singh, Mrs E Liso, Mrs N Casey and Mr TI Gordon, all dated 30 September 1993. See also letter from the respondent to Mr & Mrs GM & MS Bills of 5 October 1993.

[19] Policy 6.17-Developer's Contribution to Road Network Upgrading.

[20] See Thompson v Randwick Corporation [1950] HCA 33; (1950) 81 CLR 87, 105-106; Samrein v Metropolitan Water, Sewerage and Drainage Board (1982) ALR 467, 468-9.

[21] Nothing has been placed before this Court to suggest impecuniosity on behalf of the appellant (s 49(2)(a) of the Judicial Review Act 1991); nor is this a public interest matter beyond the personal rights or interests of the appellant (s 49(2)(b) of the Judicial Review Act 1991).

[22] Cf The Council of the City of Parramatta v Pestell [1972] HCA 59; (1972) 128 CLR 305.