Sydney City Council v Garbett Pty Ltd

1. The relevant sections of this Act were repealed by the Local Government (Consequential Provisions) Act 1993 NSW.

(1) Subject to the provisions of this Act every rate shall be made and levied for one year commencing on the first day of January in the year in which the rate is made or the year following the year in which the rate is made.

Provided that the liability of any person for rates shall not be affected by reason only of the fact that notice has not been given to such person within the year for which the rate is made.

This proviso shall have effect as if it had been inserted in this Act on the first day of January, one thousand nine hundred and thirty-six.

It is common ground that a rate was levied when it was served on the ratepayer. By s 143 of the Act, every rate was due and payable to a council on the expiration of one month after the service of the rate notice. Section 628 of the Act authorised four modes of service for a rate notice. The section provided:

(1) Any notice required by or under this Act to be served upon any ratable person may be served as provided in this section.

(b) by delivering the notice at or on the premises at which the person to be served lives or carries on business, and leaving the same with any person apparently above the age of fourteen years resident or employed thereat; or

(c) by posting the notice by prepaid letter addressed to the last known place of abode or business or post office box of the person to be served; or

(d) by affixing the notice on any conspicuous part of the land building or premises.

Section 631 also provided: Any reference in this Division to the service of a notice shall include a reference to the giving or sending of a notice or to any similar expression in relation thereto.

In its natural and ordinary meaning, the purpose and effect of the proviso to s 139(2) was to preserve the liability of a ratepayer in respect of a rate levied by the service of a notice outside the year for which it was made. Prior to this case, that was the view that prevailed in the courts of New South Wales. [2] That view also accords with the history of the proviso.

1. See Birt & Co Pty Ltd v Leichhardt Municipal Council (1951) 18 LGR 78 at 85; Bland Shire Council v Rural Bank of New South Wales (1955) 56 SR (NSW) 14 at 18.

In Blue Mountains Shire Council v Perpetual Trustee Co (Ltd) , [3] the District Court of New South Wales held on 29 March 1935 that under the Act a rate could not be levied on a person outside the year in which the rate was made. In 1945, the then proviso to s 139 was amended with retrospective effect from 1 January 1936. Plainly, the proviso was amended in 1945 to overcome the decision in Blue Mountains Shire Council . The terms of the new proviso and its retrospective operation to the commencement of the year following the decision in that case make it clear that the legislature intended that a rate would not be invalidly levied merely because the notice levying the rate was served outside the year in which the rate was made. Thus, the notices in the present case were valid although they were not served during the years for which the rates were made.

The respondents assert, however, that Local Government Ordinance 5 NSW, cl 24(2) of the Ordinances made by the Governor, pursuant to s 576 of the Act, required a rate to be levied in the year for which it was made. Clause 24 provided:

(1) Any rate made by a Council must be made on or before 31 March of the year for which it is made.

(2) A rate must be levied during the year for which it is made.

It is conceded by the respondents that, if cl 24(2) is inconsistent with the proviso to s 139(2), the latter must prevail. However, the Court of Appeal held in the present case that there was no inconsistency between the two provisions and that the disputed notices served on the respondents were invalid. Priestley JA, with whose judgment Kirby P and Handley JA agreed, said:

Section 143 provides that "Every rate shall be due and payable to the Council on the expiration of one month after service of the rate notice". This seems to be a clear indication that a rateable person does not become liable for a rate until after service of the rate notice. The proviso to s 139(2) also, fairly clearly, assumes that a person can be liable for rates although notice has not been given to that person within the year for which the rate was made. Such a person can only be liable for the rate without notice having been given to that person if the rate has been levied by the service of a rate notice (that is by one of the methods in s 628) without service in fact having been effected upon the rateable person. The proviso would therefore only operate in respect of rateable persons deemed to have been served within the meaning of the Act, but not served in fact. On this reading of the provisions there is no inconsistency between them.

I feel distinctly uncomfortable in adopting what seems to me to be a rather artificial construction of the provisions. However I do so because the construction at least has the following features, which seem to me to be virtues. First, the construction seems to me, at least semantically, to be open; it serves to give some effect to both the section and the clause in the ordinance, and I can see no other approach which would not invalidate the ordinance. Second, the policy in cl 24 seems to me to be a sound one and the construction allows it to be implemented. The clause will promote efficiency among councils and will mean that potential rateable persons will know from year to year where they stand, rather than being exposed to retrospective taxation which could reach back for any number of years. Finally, the construction should not greatly impede the financial operations of councils. The provisions of Pt 7 of the Local Government Act provide them with very ample powers to ensure all rates may be collected. To require compliance with cl 24 should not impede a council's operations. If I am wrong in this assessment of the situation, then either the Government or Parliament can readily correct the position.

The construction that the proviso applies only to notices deemed to be served but not served in fact is, with great respect, not easy to reconcile with the purpose of the 1945 amendment. It would seem that implicit in his Honour's comments is acceptance of a proposition advanced by the respondents in the Court of Appeal and repeated in this Court, namely that the proviso to s 139(2) was simply concerned with the question of notice and was not concerned with any question of service.

Counsel for the respondents pointed out that the expression "notice has not been given" was used in the proviso in contrast to the expressions "levied" and "service of" which were used in par (b) of s 139(2). He also pointed out that actual receipt of a notice was not necessary for there to be service under s 628. Reasoning from these premises, he contended that the proviso was directed to those cases where, although a rate notice had been served by delivering the notice to another person [4] or by posting [5] or affixing it, [6] the addressee had not received the notice within the year for which the rate was made, that is to say, where there had been no "service in fact" within that year. The purpose of the proviso, he said, was simply to declare that, in cases of deemed service, liability was not affected " by reason only of the fact that notice has not been given to such person within the year for which the rate is made" (our italics). On this construction, therefore, the proviso to s 139(2) had nothing to say concerning the time when a rate must be levied. It merely preserved a liability otherwise imposed. If, for some reason other than lack of notice, no liability was imposed, the proviso did not conflict with any enactment that provided that reason. Consequently, cl 24(2), in directing that a rate must be levied during the year for which it was made, did not conflict with s 139(2).

1. s 628(2)(b). 2. s 628(2)(c). 3. s 628(2)(d).

This argument stands or falls on the proposition that the legislature in using the expression "given to such person" was drawing a distinction between notifying a ratepayer and serving a ratepayer. But the history of the proviso and the terms of s 631 show that no distinction was intended between the term "given to" and the terms "levied" and "served" in s 139(2). Prior to the 1945 amendment, the proviso to s 139(2) read:

Provided that where the lessee of private land is liable for rates, such liability shall not (unless the name of the lessee is on the roll of ratepayers) be affected by reason only of the fact that notice has not been given to the lessee. The pre-1945 proviso obviously drew no distinction between service of a rate notice and notice being "given to" the lessee. If a lessee was liable [7] for rates prior to the 1945 amendment then, unless the lessee was on the roll of ratepayers, the effect of the pre-1945 proviso was to preserve any liability of a lessee for a rate even if the lessee had not been served with a rate notice. The expression "given to" in the pre-1945 proviso was identical with the expression "service of". There is no reason for thinking that the meaning of the expression "given to" in the 1945 amendment had a different meaning from that which the expression had before 1945 or that it sought to distinguish between notice and service. That conclusion is supported by the purpose of the 1945 amendment which was to ensure the validity of a notice purporting to levy a rate outside the period for which the rate was made. The mischief which the amended proviso sought to remedy did not depend on how the notice was served. In Blue Mountains Shire Council , the District Court had held that a notice of a rate could not be served outside the year in which it was made. The Court's reasoning applied to every form of service. The terms of s 631 also indicate that, for the purpose of s 139(2), there was no difference between the giving of a notice to a person and the serving of a notice. In s 628, serving a notice included giving a notice. 1. See s 139(4).

With great respect to the learned judges of the Court of Appeal, nothing in the words in the proviso to s 139(2) gave any support to the argument that the proviso was distinguishing between service "in fact" and the deemed forms of service authorised by s 628. Whether or not the ratepayer had received the rate notice personally or "in fact" did not affect that person's liability to pay the rate. It is impossible to find any ground in the proviso or in the rest of s 139 for concluding that the proviso cut down the liability which s 143 imposed once service was effected in accordance with s 628. On the contrary, the whole purpose of the proviso was to preserve the liability of a ratepayer. It specifically preserved liability when the notice was served outside the year in which it was made. Clause 24(2) could not, consistently with the proviso, require notice of a rate to be served in the year that it was made.

Moreover, the suggested distinction between "service in fact" and other forms of service would create practical difficulties in the operation of the legislation. A council could never be sure, without resort to litigation, whether a notice served in accordance with s 628(2)(b), (c) or (d) had "in fact" been served. Consequently, it would not know whether or when a ratepayer became liable for the rate or from what day interest would commence to accrue. One of the purposes of s 628 was to overcome these sorts of difficulties.

Priestley JA also thought that the policy of cl 24 was a sound one and that the construction that he gave to the proviso allowed it to be implemented. But the consistency of cl 24 with s 139 cannot depend on the soundness of the policy that cl 24 implemented. His Honour also said that the construction that he gave to the proviso "should not greatly impede the financial operations of councils". But whether that is right or wrong - and counsel for the appellant disputed its correctness - it had nothing to do with whether cl 24(2) was in conflict with s 139(2).

Counsel for the respondents sought to uphold the Court of Appeal's order by another line of reasoning. He contended that the words "given to" in s 139(2) were to be contrasted with the words "served on" which had a much wider meaning. By not using the words "served on", the legislature had intended to confine the operation of the proviso to personal service which was one of the four modes of services permitted by s 628(2) and which, he said, exactly fitted the description "notice given to". Consequently, the proviso did not operate when a council served a rate notice by delivering, posting or affixing it in accordance with s 628(2)(b), (c) or (d) respectively. It allowed councils to use personal service to serve notices outside any prescribed time limit when service could not be effected within time because of circumstances outside the control of the council. A ratepayer who was overseas or a ratepayer who was avoiding service were given as examples of circumstances being beyond the control of the council. Since there was no personal service in this case, the notices were invalidly served.

This alternative argument must be rejected. For the reasons already given, the proviso drew no distinction between a notice being "given to" a ratepayer and a notice being "served on" a ratepayer. Moreover, if the proviso drew a distinction between personal service and the forms of service described in s 628(2)(b), (c) and (d) of the Act, it would produce strange anomalies. It would mean that a rate invalidly levied by a notice served by post one day could be validly levied the following day - or years later - by personal service on the ratepayer. It would mean that a rate notice served by post outside the one year period would be invalidly levied but a notice for the same general rate served personally on the ratepayer's neighbour on the same day would be valid. Why Parliament would wish to create such anomalies is impossible to imagine. Counsel for the respondent suggested that the explanation was that once any prescribed time limit had expired the legislature intended that a ratepayer should not be liable for a rate until the notice was served personally. But this would mean that the purpose of the proviso was not to preserve a liability, as its terms plainly indicated, but to create a liability outside the year when the rate was made if a council chose to serve a ratepayer personally after that year had expired. Having regard to the terms of ss 143, 628 and 631 and the history of the proviso, it is impossible to accept this explanation.

The arguments for the respondents must be rejected. The appeal should be allowed.

2. Set aside the orders of the New South Wales Court of Appeal and, in lieu thereof, declare that the liability of the respondents for rates was not affected by reason of the fact that a rate notice for a rate was not served within the year for which the rate was made.

3. Remit the matter to the New South Wales Court of Appeal to make such further orders (as to costs or otherwise) as are consistent with the reasons for judgment of this Court.

4. The respondents to pay the appellant's cost of this appeal.