Telstra Corporation Ltd v Hurstville City Council [2002] FCAFC 92 | Case summary

Federal Court of Australia (Full Court)|2002-01-01

INTRODUCTION 1 These appeals were heard by Sundberg, Finkelstein and Katz JJ. Regrettably, after the hearing of the appeal, Katz J became unable to continue as a member of the Full Court. In accordance with s 14(3) of the Federal Court of Australia Act 1976 (Cth), the parties consented to the appeal being completed by a Full Court constituted by Sundberg and Finkelstein JJ. Since then Justice Katz has resigned his commission as a Judge of the Court. 2 Telstra Corporation Limited and Telstra Multimedia Pty Limited (collectively "Telstra") brought proceedings against eleven New South Wales local authorities and four Victorian local authorities for declarations that the State legislation under which rates and charges were purportedly levied or made was either invalid or inapplicable. The New South Wales legislation is s 611 of the Local Government Act 1993 ("the New South Wales Act"). The Victorian legislation is Pt 8 of the Local Government Act 1989 ("the Victorian Act"). Telstra also claimed that, even if valid and applicable, the resolutions by which the rates and charges were imposed were vitiated on various administrative law grounds. Optus Vision Pty Limited and Optus Networks Pty Limited (collectively "Optus") brought proceedings against three New South Wales local authorities and one Victorian local authority seeking declarations to the same general effect as those sought by Telstra. They also sought orders quashing resolutions of the various authorities. The proceedings were heard together. The primary judge dismissed them. Telstra and Optus have appealed.

ISSUES BEFORE PRIMARY JUDGE 3 The primary judge identified the issues for determination as follows:

(a) Section 611 of the New South Wales Act, to the extent it authorises New South Wales councils to make, levy and recover charges in respect of the possession, occupation and enjoyment of telecommunications cables erected or placed on, under or over a public place; and

(b) Part 8 of the Victorian Act, to the extent it authorises Victorian councils to declare and recover rates and charges on land occupied by telecommunications cables:

(i) imposes a duty of excise contrary to s 90 of the Constitution, and is therefore invalid;

(ii) is a law of a State that "relates to the occupancy or use of a building, structure or facility" within the meaning of cl 60 of Sch 3 to the Telecommunications Act 1997 (Cth) ("the Telco Act") and is therefore inapplicable to the subject cables; or

(iii) discriminates against a carrier, or carriers generally, contrary to cl 44(1) of Sch 3 to the Telco Act.

If issue 1(iii) is answered in the affirmative in respect of either s 611 of the New South Wales Act or Pt 8 of the Victorian Act, whether cl 44(1) is a law that validly operates to prevent such discrimination having regard to:

(a) the extent of the Commonwealth's legislative powers; and

Whether the decision of any of the New South Wales authorities to make and levy a charge on the appellants was:

(a) taken for a purpose extraneous to s 611 of the New South Wales Act ‑ namely to penalise the installation of above‑ground telecommunications cables and discourage further installation of any such cables; or

(b) taken without regard to a relevant consideration required by s 611(3) of the New South Wales Act to be taken into account ‑ namely the nature and extent of the benefit enjoyed by the relevant telecommunications carrier; or

Whether the decision of any of the Victorian authorities to declare rates and charges on the land occupied by the subject cables was taken for purposes extraneous to Pt 8 of the Victorian Act ‑ namely to penalise the installation of above‑ground telecommunications cables and encourage the relocation of existing cables and installation of new cables underground.

Whether the decision of any of three of the Victorian authorities (Bayside City Council, Moreland City Council and Frankston City Council) to declare a differential rate on "overhead cable land" in 1998‑1999:

(a) was taken without regard to the considerations prescribed by s 161(1)(b) of the Victorian Act; or

(b) imposed a differential that was selected without regard to considerations of fairness, or to amenities provided for, or the demands of, "overhead cable land" and other land.

Whether the Court has jurisdiction to determine issues 3, 4 and 5.

If the Court has jurisdiction, whether it ought to exercise that jurisdiction having regard to the existence of provisions for challenging the relevant imposts in both the New South Wales Act and the Victorian Act.

(ii) the provisions do not relate to the occupancy or use of a building, structure or facility within cl 60 of Sch 3 to the Telco Act

Clause 44 is not a law upon which s 109 of the Constitution may operate so as to render a State law ineffective.

(a) The decisions of the New South Wales authorities were not taken for any extraneous purpose.

His Honour did not entertain these issues (see 6 and 7 below).

The decisions of the Victorian authorities were not taken for any extraneous purpose.

His Honour did not entertain these issues (see 6 and 7 below).

The court had jurisdiction to determine issues 3, 4 and 5.

In the exercise of his discretion his Honour decided to entertain issues 3(a) and 4 and declined to entertain issues 3(b) and (c) and 5.

Telstra and Optus have appealed against the primary judge's decision on issues 1(a) and (b)(i), (2), 3(a) and 4. They also claim that his Honour should have determined issues 1(a) and (b) (iii) by holding that s 611 and Pt 8 discriminate against them within cl 44(1) and is to that extent inconsistent with cl 44(1) within s 109 of the Constitution. They do not appeal against his Honour's treatment of issues 1(a) and (b)(ii), 3(b) and (c), 5, 6 and 7.

NEW SOUTH WALES LEGISLATION 5 The purposes of the New South Wales Act are set out in s 7:

"(a) to provide the legal framework for an effective, efficient, environmentally responsible and open system of local government in New South Wales,

(b) to regulate the relationships between the people and bodies comprising the system of local government in New South Wales,

· the ability to provide goods, services and facilities, and to carry out activities, appropriate to the current and future needs of local communities and of the wider public

· the responsibility for administering some regulatory systems under this Act

· a role in the management, improvement and development of the resources of their areas,

(e) to require councils, councillors and council employees to have regard to the principles of ecologically sustainable development in carrying out their responsibilities."

The expression "principles of ecologically sustainable development" in par (e) is defined by way of a statement of the principles and programs that make ecologically sustainable development achievable. They include:

"(d) improved valuation, pricing and incentive mechanisms ‑ namely, that environmental factors should be included in the valuation of assets and services, such as:

(i) pollutor pays ‑ that is, those who generate pollution and waste should bear the cost of containment, avoidance or abatement,

(ii) the users of goods and services should pay prices based on the full life cycle of costs of providing goods and services, including the use of natural resources and assets and the ultimate disposal of any waste,

(iii) environmental goals, having been established, should be pursued in the most cost effective way, by establishing incentive structures, including market mechanisms, that enable those best placed to maximise benefits or minimise costs to develop their own solutions and responses to environmental problems."

6 Section 8(1) sets out the charter of each council. The charter imposes obligations on councils, including the following:

"· to properly manage, develop, protect, restore, enhance and conserve the environment of the area for which it is responsible, in a manner that is consistent with and promotes the principles of ecologically sustainable development

· to have regard to the long term and cumulative effects of its decisions

· to bear in mind that it is the custodian and trustee of public assets and to effectively account for and manage the assets for which it is responsible

· to raise funds for local purposes by the fair imposition of rates, charges and fees, by income earned from investments and, when appropriate, by borrowings and grants

Section 8(2) requires a council "in the exercise of its functions" to "pursue its charter".

7 Chapter 5 of the Act refers to the functions of councils, though it does not list them. Rather it provides that a council has the functions conferred or imposed on it by or under the Act itself (s 21) or any other Act or law (s 22). Section 23 provides that a "council may do all such things as are supplemental or incidental to, or consequential on, the exercise of its functions". Chapter 6 concerns the service functions of councils. Chapter 7 deals with councils' regulatory functions. Chapters 9 to 14 concern the constitution of councils, their governance, staffing, organisation and accountability. 8 Chapter 15 deals with finance, and authorises the imposition of rates, fees and charges. Section 611 provides in part as follows:

"(1) A council may make an annual charge on the person for the time being in possession, occupation or enjoyment of a rail, pipe, wire, pole, cable, tunnel or structure laid, erected, suspended, constructed or placed on, under or over a public place.

(2) The annual charge may be made, levied and recovered in accordance with this Act as if it were a rate but is not to be regarded as a rate for the purposes of calculating a council's general income under Part 2.

(3) The annual charge is to be based on the nature and extent of the benefit enjoyed by the person concerned.

(b) the Sydney Water Corporation Limited, the Hunter Water Corporation Limited or a water supply authority, or

(d) the owner or operator of a light rail system (within the meaning of the Transport Administration Act 1988), but only if the matter relates to the development or operation of that system and is not excluded by the regulations from the exemption conferred by this paragraph."

9 In addition to the exemptions in s 611(6), other utilities are exempted from the charges, namely electricity network operators (s 50 of the Electricity Supply Act 1995 (NSW)), licensed operators of a pipeline (s 40 of the Pipelines Act 1967 (NSW)) and gas network operators (s 51 of the Gas Supply Act 1996 (NSW)), though this provision has not yet been proclaimed. 10 The New South Wales authorities all resolved to make a charge, at a rate per kilometre, for one or both of the financial years 1997‑1998 and 1998‑1999. The charges were imposed on "cabling" or "cables". Sometimes the resolution was limited to cabling over or under "Council property", which includes public streets and reserves. Sometimes the charge was higher for overhead cabling than for underground cabling.

VICTORIAN LEGISLATION 11 Section 6(1) of the Victorian Act provides that the purposes of a Council are ‑

"(a) to provide for the peace, order and good government of its municipal district; and

(b) to facilitate and encourage appropriate development of its municipal district in the best interests of the community; and

(c) to provide equitable and appropriate services and facilities for the community and to ensure that those services and facilities are managed efficiently and effectively; and

(d) to manage, improve and develop the resources of its district efficiently and effectively."

"It is the intention of Parliament that the provisions of this Act be interpreted and every function, power, authority, discretion and duty conferred or imposed by or under this or any other Act on a Council be performed or exercised so as to give effect to the purposes and objectives of Councils."

12 Section 7 sets out the objectives a Council has in seeking to achieve its purposes. They include:

"(c) to ensure adequate planning for the future of its municipal district;

(d) to represent and promote the interests of the community and to be responsive to the needs of the community;

(e) to formulate comprehensive policies and set performance targets;

(f) to develop, implement and monitor its strategic plans and budgets;

(h) to raise funds for local purposes by the equitable imposition of rates and charges and by obtaining borrowings and grants;

(l) to promote and undertake research into any matter relating to the Council's objectives, functions or powers."

13 Section 8 deals with a Council's functions and powers. It is in part as follows:

(b) any other function conferred on a Council by or under this Act;

(3) A Council has the power to do all things necessary or convenient to be done for or in connection with the performance of its functions and to enable it to achieve its purposes and objectives.

(4) The generality of sub‑section (3) is not limited by the conferring of specific powers on a Council by or under this Act or any other Act.

(5) Schedule 1 does not limit the functions or powers conferred on a Council by or under this Act or any other Act."

14 Schedule 1 lists, in an inclusive manner, a number of functions. It does so under seven general headings, with particular functions subjoined thereto. Amongst the functions appearing under the heading General public services including are "Fire prevention and protection" and "Plant control". Amongst those under the heading Health, education, welfare and other community services including are "Prevention and abatement of nuisances". Under the heading Planning and land use including appears "Building Control". The functions listed under the heading Property services including comprise, amongst others, "Water, drainage, sewerage, gas and electricity" and "Street maintenance and cleaning". The fifth heading is Recreational and cultural services including. The functions listed under the heading Roads including comprise, amongst others, "Footpaths, bicycle paths and nature strips" and "Lighting and drainage of roads". Under the heading Any other functions relating to the peace, order and good government of the municipal district including appear, amongst other things, "Environment control, protection and conservation". 15 Part 8 of the Act deals with "Rates and Charges on Rateable Land". Division 1, which consists of ss 154 to 166, is headed "Declaration of Rates and Charges". Section 154(1) provides:

"Except as provided in this section, all land is rateable."

Sub‑section (2) then lists categories of land that are not rateable land. They include land that is unoccupied and is the property of the Crown, and land that is owned by the Crown and is used exclusively for public or municipal services (which seems to include water distribution to households and other premises and road structures such as signs, lights and signals). In addition, s 46(1A) of the Electricity Industry Act 1993 (Vic) gives limited exemptions to electricity companies from paying rates by providing: "Despite anything to the contrary in the Local Government Act 1989, land is not occupied land for the purposes of that Act merely because any pole, wire or cable of a distribution company, transmission company or generation company is on, under or over that land."

Section 52(2) of the Gas Industry Act 1994 (Vic) provides a similar exemption in favour of retail gas suppliers.

16 Section 155 empowers a council to declare various rates and charges on rateable land. They include general rates under s 158. The owner of land is liable to pay the rates: s 156(1). If the owner cannot be found or identified, the occupier is liable: sub‑s (2). Section 157 empowers a council to use the site value, net annual value or capital improved value system of valuation. It must publish notice of its decision to change its system of valuation. Section 158(1) provides in part:

"A Council must at least once in respect of each financial year declare by 31 August the following for that year ‑

(a) the amount which the Council intends to raise by general rates, municipal charges, service rates and service charges;

(b) whether the general rates will be raised by the application of ‑

(ii) differential rates (if the Council is permitted to raise such rates under section 161(1)) …."

"A Council may levy general rates, municipal charges, service rates and service charges by sending a notice to the person who is liable to pay them."

If a Council declares that general rates will be raised by the application of a uniform rate, it must specify a percentage as that rate. The general rate for any rateable land is then to be determined by multiplying the value of the land (as determined under the valuation system used) by that percentage: s 160.

"A Council may raise any general rates by the application of a differential rate if ‑

(a) it uses the capital improved value system of valuing land; and

(b) it considers that the differential rate will contribute to the equitable and efficient carrying out of its functions."

"(a) specify the objectives of the differential rate which must be consistent with the equitable and efficient carrying out of the Council's functions and must include the following ‑

(i) a definition of the types or classes of land which are subject to the rate and a statement of the reasons for the use and level of that rate in relation to those types or classes of land;

(b) specify the characteristics of the land which are the criteria for declaring the differential rate."

The highest differential rate in a municipal district is not to be more than four times the lowest differential rate in the district: sub‑s (5).

18 Division 2 of Pt 8 deals with "Payment of Rates and Charges". The only provision that need be noted is s 169, which empowers a Council to grant a rebate or concession in relation to any rate or charge. SCOPE OF CLAUSE 44 19 In dealing with the constitutional issues, it is convenient first to consider the validity of cl 44. Sub‑clause (1) is as follows:

(a) a law of a State or Territory has no effect to the extent to which the law discriminates, or would have the effect (whether direct or indirect) of discriminating, against a particular carrier, against a particular class of carriers, or against carriers generally;

(b) without limiting paragraph (a), a person is not entitled to a right, privilege, immunity or benefit, and must not exercise a power, under a law of a State or Territory to the extent to which the law discriminates, or would have the effect (whether direct or indirect) of discriminating, against a particular carrier, against a particular class of carriers, or against carriers generally;

(c) without limiting paragraph (a), a person is not required to comply with a law of a State or Territory to the extent to which the law discriminates, or would have the effect (whether direct or indirect) of discriminating, against a particular carrier, against a particular class of carriers, or against carriers generally."

There is, of course, a preliminary question: on its true construction what is the scope of cl 44(1)? Is it confined in operation to prevent discrimination against a carrier by laws which affect the provision of telecommunications services? Or does it purport to grant a carrier exemption from all discriminatory State or Territory laws? The answer to the preliminary question will go a long way toward resolving whether the clause is valid. And for both purposes (construction and validity) it is necessary to have regard to the central features of the Telco Act. As to the first purpose (construction) it is not necessary to cite authority, for the proposition is trite. As to the second purpose (validity) it is sufficient to refer to the often cited passage from the judgment of Latham CJ in the Bank Nationalisation case: Bank of New South Wales v Commonwealth (1948) 76 CLR 1 at 186: "In determining the validity of a law it is in the first place obviously necessary to construe the law and to determine its operation and effect (that is, to decide what the Act actually does), and in the second place to determine the relation of that which the Act does to a subject matter in respect of which it is contended that the relevant Parliament has power to make laws. A power to make laws with respect to a subject matter is a power to make laws which in reality and substance are laws upon the subject matter." 20 One of the main objects of the Telco Act is to provide a regulatory framework that promotes "the efficiency … of the Australian telecommunications industry": s 3(1)(b). That object may be achieved by promoting the effective participation, and thereby maximising the efficiency, of carriers (the holder of a carrier licence under the Act) and service providers (either a carriage service provider or a content service provider) which are the primary suppliers of Australia's telecommunications services. Subject to certain immaterial exceptions, an organisation that wishes to supply carriage services (defined in s 7 to mean "a service for carrying communications by means of guided and/or unguided electromagnetic energy") must hold a carrier licence: s 42. Provision is made for the application, grant, refusal and cancellation of a carrier licence in Pt 3, Div 3. If granted, a carrier licence is subject to the conditions specified in Sch 1: s 61. The conditions in Sch 1 include the following: (1) A carrier must comply with the Telco Act (Pt 1); (2) A carrier must have an industry development plan for the development, in connection with the carrier's business, of industries involved in the manufacture and supply of telecommunications infrastructure as well as research and development in those industries (Pt 2); (3) A carrier must provide other carriers with access to its facilities (Pt 3), to certain network information (Pt 4) and to its telecommunications transmission towers and underground facilities (Pt 5). Telstra Corporation, Telstra Multimedia and Optus Networks hold carriers licences. 21 Since Federation telecommunications services have been provided either by government (the Postmaster General), by a statutory corporation (eg Australian Telecommunications Commission) or by an ordinary public company (eg Optus) including a company in which the Government holds a majority of the shares (Telstra). It has always been necessary for the Commonwealth Parliament to confer powers upon the department or corporation (as the case may be) to conduct and operate the facilities that are necessary to provide telecommunications services. These powers are now to be found in Sch 3 which is given effect by s 484. The powers are summarised in Div 1 of Pt 1 in what is called "a simplified outline" of the relevant part of the Schedule. Much of what follows is taken from that outline. By Div 2 a carrier is given power to enter on any land (including public places) and carry out an inspection for the purpose of determining whether the land is suitable for the carrier's purposes. By Div 3 a carrier is given power to install certain types of facilities on the land. In Div 4 the carrier is empowered to maintain its facilities. A carrier may be authorised to install a facility by a facility installation permit. A facility installation permit will only be issued if, among other things, (a) the carrier has made reasonable efforts to negotiate in good faith with the owner of the land and any relevant administrative authority, (b) where the facility is a designated overhead line, each relevant administrative authority has approved the installation of the line, and (c) the telecommunications network to which the facility relates is or will be of national significance. In exercising its powers under Divs 2, 3 and 4 a carrier must take all reasonable steps to ensure that it causes as little detriment and inconvenience as is practicable: Div 5 cl 8. It must also take reasonable steps to ensure that if it engages in activity on any land, the land is restored to a condition that is similar to its condition before the activity began: Div 5 cl 9. Before a carrier can engage in an activity under Div 2, 3 or 4 in relation to any land, it must give written notice of its intention to do so to the owner and occupier of the land: Div 5 cl 17. In particular, it must give notice of its intention to cut down any trees or clear any undergrowth: Div 5 cl 18. It must also give notice to the responsible authority of its intention to close or narrow any road or bridge, install a facility on, over or under a road or bridge, or alter the position of a water, sewerage or gas main or electricity cable or wire: Div 5 cl 19. 22 Division 7 (comprising cls 36 to 39) is important. It is headed "Exemptions from State and Territory laws". Clause 36 provides that subject to the next clause, Divs 2, 3 and 4 do not operate so as to authorise an activity to the extent that the carrying out of the activity would be inconsistent with the provisions of a law of a State or Territory. Clause 37 sets out certain exemptions from cl 36. The clause provides that a carrier may engage in an activity authorised by Div 2, 3 or 4 despite certain laws of a State or Territory that would otherwise regulate that activity. The particular laws of a State or Territory in respect of which the exemption is given include laws about "(c) town planning … (e) the powers and functions of a local government body … [and] (f) the use of land." Clause 38 deals with the concurrent operation of State and Territory laws by providing that: "It is the intention of the Parliament that, if cl 37 entitles a carrier to engage in activities despite particular laws of a State or Territory, nothing in this Division is to affect the operation of any other law of a State or Territory, so far as that other law is capable of operating concurrently with [the Telco] Act." Clause 39 states that: "This Division [7] does not affect the liability of a carrier to taxation under a law of a State or Territory." (In passing we note that the respondents placed no reliance on this clause when dealing with the effect of cl 44. We attribute this decision to a view that, if valid, cl 44 is intended to cover all discriminatory legislation including taxation legislation). Finally, reference must be made to Div 8 (comprising cls 40 to 55) which contains a number of miscellaneous provisions. Clause 42 deals with compensation and provides that "[i]f a person suffers financial loss or damage because of anything done by a carrier under Division 2, 3 or 4 in relation to" any of his property he is entitled to reasonable compensation from the carrier. Clause 43 is concerned with certain powers conferred by Divs 2, 3 and 4, and provides that those powers can also be exercised by an employee of the carrier, a person acting for the carrier under a contract, and an employee of that person. Clause 44 is set out in par 19. Clause 52 provides that "Divisions 2, 3 and 4 do not authorise a carrier to engage in any activity contrary to the requirements of another law of the Commonwealth." 23 This survey of Sch 3 shows that one of its objects is to make lawful the conduct of a carrier when engaged in the activities described in Divs 2, 3 and 4 that might otherwise be unlawful, either because of a provision of a State or Territory statute, such as a local government statute, or because of a rule of the common law, for example, trespass or nuisance. This is the context in which the operation of cl 44 must be considered. Once it is seen that the principal purpose of Sch 3 is to authorise a carrier to engage in the activities mentioned in Divs 2, 3 and 4, it is but a short step to conclude that the discrimination against which cl 44, if valid, gives protection must relate to the carrying out of those activities. To give cl 44 any wider operation would be to give it an operation which is inconsistent (in the general, not the constitutional sense) with the evident purpose of the provision, and an effect which is not in harmony with the other clauses in Divs 7 and 8 to which we have referred. 24 Viewed in this light it can be seen that the object cl 44 is designed to achieve (in the sense explained by Brennan CJ in Cunliffe v Commonwealth (1994) 182 CLR 272 at 319 and Leask v Commonwealth (1996) 187 CLR 579 at 591, or as Dawson J put it in Leask at 603 "what the law [cl 44] does in fact") is to prevent State or Territory legislatures from enacting potentially unfairly discriminatory legislation which would burden the activities of a carrier in the course of providing the telecommunications services for which the carrier holds a permit. VALIDITY OF CLAUSE 44 25 Now that the scope and object of cl 44 have been ascertained it is possible to determine whether it is within a head of power. The Constitution provides in s 51(v) that the Commonwealth may make laws for the peace, order and good government of the Commonwealth with respect to "postal, telephonic, telegraphic and other like services." In R v Brislan; Ex parte Williams (1935) 54 CLR 262 at 277 Latham CJ said of this placitum: "It appears to me to be impossible to attach any definite meaning to sec. 51(v) short of that which gives full and complete power to Parliament to provide or to abstain from providing the services mentioned, to provide them upon such conditions of licences and payment as it thinks proper, or to permit other people to provide them, subject or not subject to conditions, or to prohibit the provision of such facilities altogether." Hence the power under s 51(v) extends to matters such as the establishment of a corporation that will provide telecommunications services, the licensing of a private organisation to provide those services, the imposition of conditions with which the provider of the services (government or private organisation) must conform, and the grant of special powers to enable the provider of the services to construct and maintain the requisite infrastructure: see generally Jones v Commonwealth (No 2) (1965) 112 CLR 206. 26 To determine whether a statute is within the relevant Commonwealth head of power one applies a test which in most aspects is uncontroversial. Once the true character of the law has been determined, having regard to both its text and practical operation, it must be shown that the law has a sufficient (that is a substantial) connection with the head of power: Strickland v Rocla Concrete Pipes Ltd (1971) 124 CLR 468 at 490‑491 per Barwick CJ; Leask at 591 per Brennan CJ, 605 per Dawson J, 616 per McHugh J, 621-622 per Gummow J. In Cunliffe, Mason CJ said (at 294): "There is authority for the proposition that, for the purpose of determining whether a law can be described as one 'with respect to' a particular head of legislative power, the character of that law is to be determined by reference to its direct legal operation according to its terms. Thus, the character of the law is to be ascertained by reference to the nature of the rights, duties and privileges which it creates, changes, abolishes or regulates. But this is not to deny the validity of a law which exhibits in its practical operation a substantial or sufficient connexion with the relevant head of power. Nor does it necessarily mean that a law whose direct legal operation is upon the rights, duties and privileges of persons who ordinarily stand outside the head of power … can only be supported as a law which touches what is incidental to the subject matter of the relevant power." Brennan J said (at 314) that the substantiality of the law's connection with the head of power was to be ascertained by reference to the law's operation and effect. He went on (at 315): "The true character of [the particular law] must be ascertained by reference to both its text and its practical operation in the circumstances to which it applies. Its validity must be ascertained by reference to the degree of connexion between its text and operation on the one hand and the subject matter of the relevant head of Commonwealth power …on the other." See also per Dawson J at 351. 27 Accordingly, if a connection exists between the law and a head of power the law will be "with respect to" that head of power. Of course there may be some cases where the connection is "so insubstantial, tenuous or distant" (to use the language of Dixon J in Melbourne Corporation v Commonwealth (1947) 74 CLR 31 at 79) that the law will not be within the head of power. For that reason "[e]stablishing the requisite connection is often a matter of degree": Leask at 602 per Dawson J. It will not matter that the law has more than one character, and that its other character or characters fall outside the head of power. Again reference should be made to the judgment of Dixon J in Melbourne Corporation where (at 79) he said: "Speaking generally, once it appears that a federal law has an actual and immediate operation within a field assigned to the Commonwealth as a subject of legislative power, that is enough. It will be held to fall within the power unless some further reason appears for excluding it. That it discloses another purpose and that the purpose lies outside the area of federal power are considerations which will not in such a case suffice to invalidate the law." 28 The provisions of the Telco Act to which reference has been made, apart from the provisions in Divs 7 and 8, deal with the licensing of an organisation to act as a carrier, and establish the rights and duties of the licensed carrier. The provisions in Divs 7 and 8 show that for most, but not all, purposes a carrier is subject to all applicable laws of the land, whether they be Commonwealth, State or Territory. It could not be doubted that these provisions are within s 51(v). A head of power such as s 51(v) will also enable Parliament to confer a measure of protection on the organisation which has been granted permission to provide telecommunications services, including protection against what Parliament regards as unfair treatment at the hands of State or Territory legislation, such as discriminatory laws that could inhibit the efficient provision of telecommunications services. In this regard, reference need only be made to three decisions. The first case is Australian Coastal Shipping Commission v O'Reilly (1962) 107 CLR 46. The Commonwealth Parliament established the Australian Coastal Shipping Commission in exercise of the trade and commerce power in s 51(i) of the Constitution. The function of the Commission was to establish, maintain and operate shipping services. It was not in dispute that s 51(i) authorised the establishment of the Commission with authority to carry out its function: at 61. The question was whether s 36 of the enactment was valid. Section 36 provided that the Commission was subject to taxation under the laws of the Commonwealth, but was not subject to taxation under a law of a State or Territory. The High Court declared the section to be valid. Dixon CJ explained (at 55): "The legislative power [s 51(i)]seems ample not only to enable the Parliament to establish a corporate agency of the Commonwealth to carry on an overseas and inter‑State shipping line, but also to protect the Commonwealth Government body from what may be considered the embarrassment of taxation by the various States. It is not material to enquire into the motive of the provision. Its validity depends upon its relevance to, or connexion with, the purpose." 29 The second case is Strickland v Rocla Concrete Pipes Ltd (1971) 124 CLR 468. The question to be decided in that case was whether certain provisions of the Trade Practices Act 1965 (Cth) were valid. In part the answer depended upon the correctness of Huddart Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 where the High Court found that ss 5(1) and 8(1) of the Australian Industries Preservation Act 1906 (Cth) were invalid. Section 5(1) prohibited combinations with the intent to restrain trade or to injure any Australian industry by means of unfair competition. Section 8(1) rendered illegal certain monopolies. In Strickland, Huddart Parker was overruled. The High Court held that ss 5 and 8 were valid. The provisions both regulated and controlled the trading activities of corporations. Their object was to protect Australian industry and Australian trade and commerce and this brought them within the scope of the corporations power, s 51 (xx). 30 The third case is Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd (1982) 150 CLR 169 which considered the validity of the secondary boycott provisions, s 45D of the Trade Practices Act 1974 (Cth). The question was whether s 45D was authorised by the corporations power. The appellants argued that s 45D was invalid because it did not regulate the activities of the corporation and the corporations power did not permit the making of a law that was for the protection of corporations. The argument was rejected. There is a passage in the judgment of Mason J (at 205‑206) which is worth setting out in full: "The appellants seek to draw a distinction between a law which regulates the trading activities of a trading corporation and a law which protects such activities. When we speak of a law which regulates the trading activities of a trading corporation we mean a law which controls the subject matter by prohibiting the corporation from engaging in certain trading activities or permitting it so to do either absolutely or subject to condition. Such a law is within power because it necessarily operates directly on the subject of the power ‑ it is a law about trading corporations. But when we speak of a law which protects the trading activities of a trading corporation our statement is not so specific. It may be understood as signifying a law which operates directly on the subject of the power. So understood the law is within power and valid. But it may be understood in a different sense so as to denote a law which, though it protects the trading activities of trading corporations, does so by a legal operation outside the subject matter of the power. A law which prohibits the levying of taxes and duties on trading activities generally may be said to protect or promote the trading activities of corporations, but it is neither a law with respect to corporations nor a law with respect to trading corporations. It protects the trading activities of non-corporations as well as protecting the trading activities of corporations and the protection which it gives to non-corporations is not merely incidental to the protection given to corporations. The law does not operate directly upon corporations and it cannot be characterized as a law about them." According to this view, a law which protects the trading activities of a corporation will be within power provided it has a direct legal operation on the head of power. 31 Clause 44 is a valid exercise of power because it operates directly on the powers that have been vested in a carrier. The clause provides a measure of protection to the carrier when it exercises the powers conferred by Divs 2, 3 and 4. Put another way, the power to license a corporation to provide telecommunications services, and to empower that corporation to carry out those activities in particular ways, includes the power to protect the corporation when it carries out those activities. That last‑mentioned power is clearly an aspect of the subject matter of the power conferred by s 51(v). DO THE STATE LAWS DISCRIMINATE AGAINST CARRIERS? 32 The next question is whether cl 44 is inconsistent with State law (s 611 of the New South Wales Act and Pt 8 of the Victorian Act) so that the State law becomes inoperative by the force of s 109 of the Constitution. So framed, the question has two parts: (1) is the State law inconsistent with cl 44 (a question which the primary judge found unnecessary to answer), and (2) does cl 44 engage the operation of s 109. Having regard to the position taken by the parties, both parts of the question must be considered. 33 Clause 44 seeks to displace State and Territory laws that discriminate, or would have the direct or indirect effect of discriminating, against a carrier. The distinction between a law that would discriminate and one that would have the effect of discriminating is a distinction between, on the one hand, a law which is on its face discriminatory and, on the other, a law which is discriminatory in the manner in which it operates. The question here is what is meant by "discrimination" in the present context. It is the creation of the exemptions referred to in pars 7, 8 and 14 that is said to give rise to discrimination. 34 The concept of discrimination is well known in the Constitutional context. Section 117 of the Constitution precludes the States from discriminating against residents of other States. There is an implied constitutional limitation that prevents the Commonwealth from passing laws that discriminate against the States: Melbourne Corporation v Commonwealth (1947) 74 CLR 31; Queensland Electricity Commission v Commonwealth (1985) 159 CLR 192; Leeth v Commonwealth (1992) 174 CLR 455. A law which imposes a discriminatory burden upon interstate trade can infringe s 92 of the Constitution: Cole v Whitfield (1988) 165 CLR 360; Castlemaine Tooheys Limited v South Australia (1990) 169 CLR 436. 35 The respondents place heavy reliance on the meaning given to the word "discrimination" in s 117. In Street v Queensland Bar Association (1989) 168 CLR 461 the validity of the Queensland Supreme Court's rules relating to the admission of barristers was called into question. The rules required a person who applied for admission to be a resident of the State and to cease to practise as a barrister in his home State. The High Court found that the rules did infringe s 117. In the course of her judgment Gaudron J dealt with the meaning of the word "discrimination". She said (at 570-571): "Although in its primary sense 'discrimination' refers to the process of differentiating between persons or things possessing different properties, in legal usage it signifies the process by which different treatment is accorded to persons or things by reference to considerations which are irrelevant to the object to be attained. The primary sense of the word is 'discrimination between'; the legal sense is 'discrimination against'." 36 In Castlemaine Tooheys Limited v South Australia (1990) 169 CLR 436 the High Court was required to consider whether certain South Australian legislation (the Beverage Container Act 1975)was protectionist and discriminatory so that it infringed s 92 of the Constitution. Gaudron and McHugh JJ discussed what is meant by discriminatory for the purpose of determining whether a law infringes s 92. They said (at 478): "In Street v Queensland Bar Association, Gaudron J made reference to the general considerations which, statute aside, result in particular treatment being identified as discriminatory. By reference to those considerations it is possible to identify the general features of a discriminatory law. A law is discriminatory if it operates by reference to a distinction which some overriding law decrees to be irrelevant or by reference to a distinction which is in fact irrelevant to the object to be attained; a law is discriminatory if, although it operates by reference to a relevant distinction, the different treatment thereby assigned is not appropriate and adapted to the difference or differences which support that distinction. A law is also discriminatory if, although there is a relevant difference, it proceeds as though there is no such difference, or, in other words, if it treats equally things that are unequal ‑ unless, perhaps, there is no practical basis for differentiation." 37 A different approach is evident when the question is whether a particular law discriminates between the States. In Queensland Electricity Commission v Commonwealth Gibbs CJ said (at 207): "Obviously enough, laws may distinguish between the different needs of the various States. The laws forbidden by this principle are those which discriminate against all the States or any one of them by subjecting them or it to a burden or disability which is not imposed on persons generally, a law whose very object is to restrict, burden or control an activity of the States or of one of them." After a review of the authorities Mason J (at 217) said that the applicable principle has two elements: "(1) the prohibition against discrimination which involves the placing on the States of special burdens or disabilities; and (2) the prohibition against laws of general application which operate to destroy or curtail the continued existence of the States or their capacity to function as governments … The second element of the prohibition is necessarily less precise than the first; it protects the States against laws which, complying with the first element because they have a general application, may nevertheless produce the effect which it is the object of the principle to prevent." [Citations omitted] 38 There is a limit on how far one can take the cases that discuss the meaning of the word "discriminate" in a constitutional setting and apply them to the task of deciding the meaning of the word "discriminate" in a particular statute. Although the language in Street and Castlemaine Tooheys seems to be of general application, it should be confined to its constitutional setting. So much was recognised by the High Court in Leeth v Commonwealth (1992) 174 CLR at 468. Here we are dealing with a provision in which the word "discriminate" is to be given its ordinary English meaning, that is, its linguistic meaning having regard to the context in which the word is found. To the extent that the constitutional cases provide assistance in determining the ordinary meaning of the word, they can be considered. In the end, however, as with most cases involving the interpretation of a statute, little assistance is to be derived from other cases that involve different statutes. 39 In its ordinary signification discrimination means differential treatment, or put another way, the failure to treat all persons equally where there is no reasonable distinction to justify different treatment. The discrimination may be positive, such as by conferring a benefit, or negative, for example by imposing a restriction. Yet in each case there will be discrimination. 40 Do the State laws discriminate against a carrier in accordance with this meaning? In our view there is discrimination when a tax is imposed on a carrier in respect of certain of its activities, for example, on the occupation of a public place by underground or aboveground cables through which communications are sent, but is not imposed on other bodies which make a similar use of public places, such as electricity, gas or water utilities which lay pipes or cables over or under public places to transmit their "goods". It is discrimination against the carrier because it accords to it less favourable treatment than to the other occupiers of public space. 41 So far as authority is concerned we refer to only one case, a constitutional case, and to a dissenting judgment in that case. In Department of Revenue of Oregon v ACF Industries Inc 510 U.S. 332 (1994) the Supreme Court of the United States considered the effect of s 306 of the Railroad Revitalization and Regulatory Reform Act 1976. The statute forbade States from "imposing another tax that discriminates against a rail carrier providing transportation". Oregonhad imposed an ad valorem tax upon all real and personal property within its jurisdiction save for certain classes which were exempt. The respondents, eight companies that leased railroad cars to railroads and shippers, sought injunctive relief against the assessment and collection of the ad valorem tax against their railroad cars. The Court of Appeals upheld the respondents' argument, holding that the State tax was discriminatory because of the exemptions. The Court of Appeals said (at 961 F 2d 813 (1992), 822): "[A]ny exemption given to other taxpayers but not to railroads" is forbidden, perhaps apart from a de minimis level of exemption. This decision was reversed on appeal. The majority of the Supreme Court held that as a matter of construction the statutory exemption was not intended to apply to an ad valorem property tax. Stevens J was in dissent on this point of construction. Having found in the respondent's favour on that issue, he considered whether the anti-discrimination provision struck down the State law. He reached the same conclusion as the Court of Appeals that it did. He said (at 349): "A State might discriminate against a disfavored class of taxpayers in a variety of ways. The absence in the 4‑R Act of a provision specifically addressing exemptions is no more significant than the absence of a provision addressing deductions, credits, methods of collecting or protesting state taxes, or penalties. Surely a state tax law that allowed a substantial tax deduction for all taxpayers except rail carriers would readily be recognized as discriminatory. That conclusion would not be affected by the fact that the antidiscrimination statute does not speak specifically to deductions. Indeed, the Court suggests that an exemption for all taxpayers except rail carriers would make the tax discriminatory." The reasoning of both the Court of Appeals, and Stevens J in dissent, support the conclusion we have reached on the discriminatory effect of the State laws. 42 If it were necessary to go to the Explanatory Memorandum for assistance in the resolution of the meaning to be given to the word "discriminate" (as to the permissibility of which see s 15AB(2)(e) of the Acts Interpretation Act 1901 (Cth), and as to the common law position, see also TCN Channel Nine v Australian Mutual Provident Society (1982) 42 ALR 496 at 507-508 and Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 99, following CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408), that would also confirm our conclusion. The Explanatory Memorandum gave the following explanation of cl 42 of the Bill, which ultimately became cl 44: "This clause provides that a State or Territory law has no effect to the extent to which it discriminates, or has the effect of discriminating, directly or indirectly against a carrier, or a user or potential user of a carrier's services. It is based on s. 120 of the 1991 Act. The clause is intended to deal with laws which have an indirect effect of discriminating against carriers or users of carrier services, not just a law which, for example, on its face treats a person differently to someone else. The indirect discrimination which this clause is intended to prevent includes the following examples: · laws that impose a burden on facilities of a carrier that is not imposed on similar facilities (for example a tax on 'street furniture' which is in effect discriminatory against carriers because other bodies owning such equipment such as electricity authorities would be exempt from paying that tax); · laws which have the effect of giving powers or immunities to a person or body in relation to the installation, maintenance or operation of a facility which do not apply to carriers generally (for example, where a public utility may rely on general land access powers given to that utility under State or Territory law to install telecommunication facilities without obtaining the approvals which would ordinarily be required for that activity under the law of that State or Territory); and · laws which discriminate against people by reason of their use of the facilities of a carrier." 43 It is a rare day when an explanatory memorandum provides much assistance in the construction of a statute. It is even more unusual for an explanatory memorandum to give as an example of the mischief sought to be avoided, the very subject matter of the litigation. What is still more remarkable is that the explanatory memorandum gives an explanation of the meaning of a term which accords with what an ordinary lay person would accept as correct. Here the explanatory memorandum does each of these things. 44 Earlier we suggested that an application of the constitutional meaning of discrimination to the facts in this case should have produced the conclusion that the State laws were discriminatory. Let us explain what we mean. Assume for a moment that a Victorian instrumentality still operates an interstate freight railroad. Let it also be assumed that the engines and rolling stock travel over rail tracks in New South Wales owned by an instrumentality of that State. Now assume that New South Wales legislation taxes all carriers that use its tracks, but exempts all New South Wales railroad companies carrying passengers. Could Victoria claim that it had been discriminated against? According to the implied constitutional limitation cases, the answer would be yes. The same view would be reached by the officious railroad fanatic. Moreover, if, in the above example, the Victorian railroad operation were not conducted by the body politic, but by a resident of the State, the cases would show that to be discrimination contrary to both s 92 and s 117. The instant facts are analogous. DOES CLAUSE 44 ENGAGE SECTION 109? 45 The second part of the question is whether cl 44 displaces the State laws. It is not necessary for this purpose to attempt to state an exhaustive test of inconsistency under s 109. It is sufficient for present purposes to make the following points. First, a State law, if valid, that would "alter, impair or detract from" a Commonwealth law is to that extent invalid: Victoria v Commonwealth (1934) 58 CLR 618 at 630 per Dixon J; Ex parte McLean (1930) 43 CLR 472 at 483 per Dixon J. Second, it is permissible for a Commonwealth law to exclude the operation of State law by express words such as may be found in cl 44. In Australian Coastal Shipping Commission v O'Reilly (1961) 107 CLR at 56-57 Dixon CJ explained the principle that was involved. He said: "The argument that under a legislative power of the Commonwealth the operation of State laws cannot be directly and expressly excluded has been used without effect in a succession of cases beginning with The Commonwealth v Queensland. It may be worth remarking that the interpretation, long since adopted by this Court, of s. 109 is hardly consistent in thought with such an argument. The Court has interpreted s. 109 as operating to exclude State law not only when there is a more direct collision between federal and State law but also when there is found in federal law the manifestation of an intention on the part of the federal Parliament to 'occupy the field'. Surely, consistency with that doctrine demands that a legislative power, such as that given by s. 51 (i) together with s. 98, must extend to a direct enactment which expressly excludes the operation of State law provided the enactment is within the subject matter of the federal power. Indeed there can really be no other way of expressing the intention and accomplishing the federal legislative purpose." [citations omitted] That is to say, if the Commonwealth Parliament intends to do no more than exclude State legislative power, that will be ineffective. But a Commonwealth law can prevent State law adding to the liabilities, duties, immunities, liberties, powers or rights that have been conferred by the federal law. Thus, in an earlier case, Wenn v Attorney-General (Vic) (1948) 77 CLR 84 at 120 Dixon J said: "To legislate upon a subject exhaustively to the intent that the areas of liberty designedly left should not be closed up is, I think, an exercise of legislative authority different in kind from a bare attempt to exclude State concurrent power from a subject the Federal legislature has not effectively dealt with by regulation, control or otherwise. It is still more widely different from an attempt to limit the exercise of State legislative power so that the Commonwealth should not be consequentially affected in the ends it is pursuing. This is not a case which, in my opinion, falls within the description of legislation so powerfully attacked by Evatt J. in West v Commissioner of Taxation (NSW). There is no doubt great difficulty in satisfactorily defining the limits of the power to legislate upon a subject exhaustively so that s. 109 will of its own force make inoperative State legislation which otherwise would add liabilities, duties, immunities, liberties, powers or rights to those which the Federal law had decided to be sufficient. But within such limits an enactment does not seem to me to be open to the objection that it is not legislation with respect to the Federal subject matter but with respect to the exercise of State legislative powers or that it trenches upon State functions. Beyond those limits no doubt there lies a debatable area where Federal laws may be found that seem to be aimed rather at preventing State legislative action than dealing with a subject matter assigned to the Commonwealth Parliament." See also Botany Municipal Council v Federal Airports Authority (1992) 175 CLR 453 at 465; The Queen v Credit Tribunal; Ex parte General Motors Acceptance Corporation (1977) 137 CLR 545. 46 These cases show that the Commonwealth can evince an intention that its laws will make exclusive provision for the rights and immunities the Parliament has decided should be enjoyed, and thereby bring s 109 into operation. That is precisely what has occurred. Clause 44 is not a bare attempt to oust State law. It is but one aspect of the "liabilities, duties, immunities, liberties, powers [and] rights" which have been either afforded to or imposed upon carriers which, but for s 109, the State laws "would alter, impair or detract from". Because of s 109, the State laws are to that extent invalid. 47 This conclusion differs from that of the primary judge. Rather than summarise his views, it is best to set out a passage from his reasons where he provided his own summary. The areas of difference with our views will be apparent. The primary judge said (par 197): "(i) Clause 44(1)(a) appears in legislation which is concerned with telecommunications, a matter within the legislative competence of the Commonwealth pursuant to s51(v) of the Constitution;

(ii) It would have been open to the Commonwealth, using s51(v), to provide that State law or particular State laws, should not apply to licensed carriers;

(iii) However, the Parliament did not do this. Instead, in cl 44(1), it imposed a regime that required an inquiry and value judgment on the question: whether the imposition of a particular State law would have the effect of discriminating against a particular carrier, a particular class of carriers or carriers generally.

(iv) The effect of this regime is not to proscribe the imposition on licensed carriers of any burden imposed by relevant State law - that burden may be retained in a non-discriminatory way - but to proscribe 'discrimination' against carriers in respect of that burden.

(v) There is a question whether it is more appropriate to say that:

(a) the result is a law about discrimination, rather than telecommunications; or

(b) it is a law about telecommunications, and discrimination against telecommunications carriers, but is not a law that is inconsistent with the relevant State laws, within the meaning of s109 of the Constitution.

(vi) In my view, sub-para (b) better describes the situation. However, it does not matter which description is adopted; on either view cl 44(1)(a) is ineffective to exclude otherwise applicable State law."

DO THE STATE LAWS PURPORT TO IMPOSE DUTIES OF EXCISE? 48 Having reached the conclusion that the States laws are relevantly invalid it is not appropriate for us to deal with the remaining constitutional issue, which is whether the State laws infringe s 90 of the Constitution. It is inappropriate, especially for an intermediate court of appeal, to determine a constitutional issue unless it is necessary to do so: see Multicon Engineering Pty Ltd v Federal Airports Corporation (1997) 47 NSWLR 631 at 642 per Mason P and the cases therein cited. This is all the more so when the constitutional issue raises a matter of great importance which has not been considered by the High Court, namely whether the "communications" that pass through the appellants' cables are "goods" for the purposes of s 90. Perhaps one reason why it is inappropriate is that judges who stand in the hierarchy below the High Court "know too little to risk the finality of precision": Denver Area Educational Telecommunications Consortium Inc v Federal Communications Commission 518 US 727 (1996) at 778, a passage cited by Mason P in Multicon Engineering Pty Ltd. On the other hand it is appropriate for us to consider the final issue, namely whether the respondents' decisions were lawfully taken, though the answer will not affect the outcome of these appeals. It is to that issue that we now turn.

EXTRANEOUS PURPOSE Legal principles 49 It was common ground that the legal principles applicable to a claim that a local authority has taken a statutory decision for a purpose extraneous to the enabling legislation was correctly enunciated by Kirby P in Warringah Shire Council v Pittwater Provisional Council (1992) 26 NSWLR 491 at 507‑511:

"1. A local government authority, established pursuant to the Act, has large powers both as a legal corporation and as one established to perform functions of local government to control the working and business of local government under the Act. The powers conferred on a local authority must be given meaning in the light of the structure of the statute establishing it and the duty owed by the authority to all of its ratepayers: see Bromley London Borough Council v Greater London Council[1983] 1 AC 768 at 821. … The exercise of those powers is, as s 84 of the Act provides, subject to the provisions elsewhere contained in the Act … It is also subject to the general law. But, if a local government authority uses its statutory powers bona fide and reasonably, its actions will not be interfered with by courts exercising judicial review: Westminster Corporation v London and North-Western Railway Co [1905] AC 426;

The common law requires that a donee of statutory powers … must exercise such powers strictly for the purposes for which the powers have been given, ultimately by Parliament. Unreviewable administrative action is a contradiction in terms, at least in the case of the exercise of statutory powers. The donee of statutory powers, being a public authority, may only act reasonably and in good faith and upon lawful and relevant grounds of public interest. This is so because the powers are given only in order that they may be used for the public good: see, eg, R v Tower Hamlets London Borough Council; Ex parte Chetnik Developments Ltd[1988] AC 858 at 872. Such powers are not to be exercised for extraneous, illicit or irrelevant purposes or purposes that can be catalogued as extraneous to the reasons behind the legislative grant of power. The exercise of powers for such purposes is described as an 'abuse' or an 'excess' of powers. Being limited in its powers, a local government authority, its council and employees must take care to remain within the powers given by Parliament and to exercise those powers reasonably and in good faith …

Good general intentions or even misguided philanthropy will not sustain an exercise of powers by a body enjoying powers limited by Parliament: see Roberts v Hopwood [1925] AC 578. Such an exercise will be ultra vires. Thus, in Sydney Municipal Council v Campbell [1925] AC 338, the council was empowered by statute to resume land required for the purpose of 'carrying out improvements in or remodelling any portion of the city'. It also enjoyed powers to open up new public streets and to widen or extend public ways. Ostensibly for the purpose of extending a city street, the council resolved to resume an area of land. No plan for improvement or remodelling had been decided upon by the council. It was concluded that the Council, when it resolved to resume the land, had not been actuated by the stated authorised purpose but by an unauthorised (and therefore improper) purpose of enabling the Council to benefit from an expected increase in the value of the land on re-sale. The exercise of power was struck down by the Privy Council. There are many like cases in Australia, in England and elsewhere …

In the nature of human affairs, it is rare that individuals, still less corporations such as local government authorities, act as they do exclusively for a particular purpose. It is of the nature of human motivation (and still more, if it can be ascertained, the motivation of corporations governed and directed by numerous individuals) that their purposes are complex and multifarious. From this truism a controversy has arisen as to the extent to which an illicit, irrelevant or impermissible purpose for the exercise of statutory powers will render that exercise beyond power, with the serious consequences that follow. In England, the courts have adopted a test which requires the complainant to prove that the 'achievement of the irrelevant, illicit or unlawful purpose was the dominant purpose of the donee of statutory power in doing what it did'. … In Australia, a different test has been adopted which makes it more difficult to establish the improper purpose ground of review. In Thompson v Randwick Municipal Council[(1950) 81 CLR 87 at 106] the High Court held that an abuse of power occurs if the purpose of the administrator is an improper one and 'a substantial one' in the sense that no attempt would have been made to exercise the power if it had not been for that purpose. The test has been criticised as internally contradictory …. But whatever the test, it is difficult to establish an improper purpose. Without a right to reasons conferred by law, there will often be evidentiary difficulties. Furthermore, where a decision maker is a collective body, discerning its intentions, purposes and motives will necessarily be more problematical …"

50 The primary judge referred to a divergence in view as to whether it is permissible to go behind the formal resolution of a corporation in order to discern the purpose of its action, and concluded that it is. His Honour accepted (at par 236) Telstra's submission that

"the purposes of, and considerations taken into account by, Councils are best inferred from the documents brought into existence by their officers (primarily reports to the Council but also memoranda and the like leading up to those reports) and the resolution of the Councils in response thereto. In particular, where a recommendation is adopted without more, it can and ought properly be inferred that the 'intentions, purposes, motives, beliefs and state of mind' of the Council (as a collegiate body) are as disclosed in the reports and other documents brought into existence by its officers."

Although no authority was cited that supports his Honour's approach, we think it is correct. Thus in Municipal Council of Sydney v Campbell [1925] AC 338 the court looked at the council resolutions, which in turn referred to a minute of the Lord Mayor that indicated the general purpose of the council's action. De Smith, Woolf and Jowell, Judicial Review of Administrative Action 5th ed (1995) at 6‑083 express the view that motive or purpose may be established from sources such as council minutes and committee reports. In Reg v Somerset County Council; Ex parte Fewings [1995] 1 WLR 1037 the Court of Appeal resorted to a paper circulated to council members with the agenda that showed that the motive for the decision to ban deer hunting was moral repugnance rather than the relevant statutory considerations. See per Sir Thomas Bingham MR at 1046 and Swinton Thomas LJ at 1052‑1053. Supperstone and Goudie say that where a body takes decisions on formal documents, as is usual for a local authority, the documents before the body will provide clear evidence of what considerations were drawn to its attention and by inference, presumed to have been taken into account: Judicial Review 2nd ed (1997) at 5.44. See also Pearce and Argument, Delegated Legislation in Australia 2nd ed (1999) at 225‑226.

NSW Local Government Association 51 Before examining the resolutions of the individual councils, the primary judge canvassed a large body of evidence relating to the activities of the Local Government Association of New South Wales ("the LGA") connected with the issue of overhead cables. All members of the LGA are councils. The primary judge said (at par 238) that it was "consistent with its presumed functions that LGA should provide information and advice to municipal councils in relation to the performance of their functions and their exercise of powers, and that LGA should represent them in making representations to government entities and other organisations". 52 The relevant activities of the LGA between early 1996 and October 1997 are described in the primary judge's reasons at pars 239 to 261. They can be summarised as follows. On 7 June 1996 the LGA considered legal advice obtained by Paramatta City Council in relation to s 611. The executive resolved to set up "a section 611 Task Force" to establish "differential and justifiable rates for the levying of aerial and underground telecommunications cables" under s 611. In a report to members on this decision the LGA said:

"The Act provides that the rate charged should be based on 'the nature and extent of the benefit enjoyed' by the person concerned, providing a strong basis for differential rates between underground and overhead cabling. On this basis, the Associations anticipate that the power may provide a significant disincentive to aerial cabling and a basis for negotiation in areas where aerial cabling is already erected, while also generating income from the use of councils' assets for a profit‑making activity by telecommunication carriers."

On 2 August the LGA executive resolved that a rating schedule for underground and overhead cables be established "based on the costs and impacts that may accrue to local communities from underground and overhead cables and with regard to other considerations under section 611". Later that month Councillor Peter Wood, President of the LGA, called a meeting of mayors from the Sydney, Hunter and Illawarra areas to discuss overhead cabling amongst other things. He drew attention to the possible use of s 611 to rate telecommunications carriers and to provide incentives for the "undergrounding" of cables. The meeting resolved that the task force be asked "urgently to consider a recommended charging mechanism under s 611".

53 The LGA obtained advice from Bentleys, chartered accountants, on an appropriate mechanism. Bentleys reported that a reasonable levy rate for the cables would be in the range of $275 to $500 per kilometre. They considered it would be reasonable to add a component, in respect of overhead cables, reflecting the cost saving attached to these cables as distinct from underground cables. They estimated the cost saving at $100,000 per kilometre, and thought it not unreasonable for the overhead component charge to be in the range of 5% to 10% of this saving. The report was discussed at a meeting of 27 Sydney councils on 28 November. A media release after the meeting stated, amongst other things, that it had been decided that telecommunications carriers should be taxed on the basis of the length of their cable network in a local area (whether underground or overhead), with an additional charge on the basis of "the length of cable network which it runs above ground (to save installation costs)". It was stated that the effect of the differential rate would be to provide "a major cost incentive to go underground". In December 1996, after having received legal advice about the formal requirements for making a charge, the LGA sent a briefing paper to all metropolitan councils in which it was stated that the primary objects of imposing the charge were to provide an incentive for carriers to go underground with cables, and to recognise that they are using publicly owned space to generate private profit. Later that month Councillor Wood sent a memorandum to all metropolitan mayors in which he stressed the need for consistency as between councils in calculating the charge, and recommended a common figure for each component of the charge ‑ $500 per kilometre for the "all cables" component, and $500 per kilometre for the overhead cables component. At its meeting on 2 October 1997 the LGA executive noted that a survey of the 52 councils in the Sydney, Hunter and Illawarra regions revealed that 34 had resolved to make a s 611 charge in respect of cables.

Individual NSW Council decisions 54 The primary judge set out the resolutions of each of the thirteen New South Wales Councils. In relation to ten of them (Hurstville, Kogarah, Leichhardt, Penrith, Randwick, Hornsby, Drummoyne, Burwood, Strathfield and Blacktown), the material disclosed little more than the making of charges for one or both of the years in question. Most Councils adopted the dollar components proposed by the LGA. No resolutions were in evidence in relation to Concord Council, though there were invoices that had been sent to the carriers. The evidence as to Parramatta was more extensive. As already mentioned, it had obtained advice from its solicitors and senior counsel. A copy of the advice of the latter was provided to the LGA. On 6 May Council resolved that any charges received from the carriers under s 611 would be allocated to maintenance and upgrading of the "Civil Infrastructure of Council". Council imposed a charge for each financial year of $500 per kilometre for underground cables and $1000 per kilometre for overhead cables. The position of Warringah Council was also more complete. In March 1997 Council considered a report proposing that all revenues from the s 611 charge be allocated to a fund to support "undergrounding" all cables. It noted that a differential charge may provide an incentive for carriers to install their cables underground. The report also observed:

"Based on length of cables and not carrier revenues, and structured to provide an incentive for telecommunications carriers to place their cables underground, the charge is rationally related to the purpose of reducing the adverse environmental effects of aerial broadband telecommunications cables and is unrelated to the fact that the person charged is a telecommunications carrier."

Primary judge's reasoning (New South Wales councils) 55 The primary judge noted the paucity of evidence concerning the decisions of the various Councils to make the s 611 charges. In those cases where a Council had before it a report of an officer containing information relevant to the imposition of the charge, his Honour thought it proper to conclude that the Council took that information into account in making its decision. In this connection he referred to Parramatta City Council v Hale (1982) 47 LGRA 319 at 346. But he added (at par 335):

"However, it does not follow that the council adopted all the purposes expressed, at any time, by LGA or its officers or executives. Individual councillors may have read or heard media reports attributing views to LGA officers or executives. Individual councillors may have engaged in discussions with such persons. But none of those circumstances means any councillor, still less any council, must be taken to have adopted these views, or any purposes they might have included. A councillor might take into account a multitude of matters, some perhaps bearing one way and some the other, before making a decision actuated by only one of them; or none of them."

His Honour went on to say that he saw nothing wrong with a council officer or a councillor taking into account the views of the LGA or its President on matters such as cabling and how to deal with it.

56 Although the primary judge thought it impossible to determine to what extent individual councillors were aware of the views expressed by the LGA, he thought it reasonable to infer that they were aware of public concern about the unsightliness of overhead broadband cable and that many, if not most, of them were actuated (at least in part) by a desire to encourage telecommunications carriers to place their cables underground. But he rejected the carriers' submission that this invalidated the decisions to make the charges. He said (at pars 339‑340):

"Section 611 is not to be considered in isolation from the remainder of the Act. It is located in a Chapter of the Act that is concerned with finance; however, the whole of the Act is informed with the purposes stated in s 7 and the charter set out in s 8.

One of the purposes of the Act is to provide a legal framework 'for an effective, efficient, environmentally responsible and open system of local government in New South Wales': sees 7(a). Another is to require councils 'to have regard to the principles of ecologically sustainable development in carrying out their responsibilities' (sees 7(e)), including the making of decisions under Chapter 15. The principles of ecologically sustainable development include the 'polluter pays' principle. The word 'polluter' includes the visual polluter. The principles include the notion that users of services (including users of telecommunications services) should pay prices based on the full cost of providing those services, including the use of natural resources and assets (such as public land). Further, incentive structures should be established to encourage 'those best placed to maximise benefits and minimise costs to develop their own solutions and responses to environmental problems'. It might cogently be argued that the imposition of a charge for use of public land by a commercial organisation, being a charge that fairly reflects the nature and extent of the benefit enjoyed by that organisation, fell squarely within the charter rules that the councils were obligated bys 8(2) of the Act to observe. At the least, as it seems to me, it was open to the respondent councils to take into account the purposes of the Act, as specified ins 7, and the terms of the charter, set out ins 8."

For those reasons his Honour rejected the contention that the decisions of the Councils were invalidated by the pursuit of extraneous purposes.

Contentions on appeal 57 Optus adopted Telstra's extraneous purpose submissions. Telstra relies upon the primary judge's finding that it was reasonable to infer that many, if not most, councillors were actuated at least in part by a desire to encourage carriers to place their cables underground. It challenges his Honour's conclusion that this was not a purpose extraneous to s 611 because it was open to the Councils to take into account principles of ecologically sustainable development. It was said that s 611 does not contemplate charges being imposed in order to pursue environmental or regulatory objectives since s 611(3) requires any charge to be "based on the nature and extent of the benefit enjoyed by the person concerned". It was submitted that this section precludes the fixing of the charge by reference to environmental effect or damage caused by the use of a public place. 58 In our view the terms of s 611(3) are not in conflict with his Honour's conclusion that the assailed purpose was not extraneous. Section 611 contemplates the taking of two steps. The first, which is the subject of sub‑s (1), is the decision whether or not to make an annual charge. The considerations relevant to that decision, apart from the factual matters mentioned in sub‑s (1), are those derived from a reading of the Act as a whole, including the purposes referred to in ss 7 and 8. Once a decision is made to impose a charge, the second step involves the determination of the amount of the charge. That is the sub‑s (3) step. The amount is to be based on the nature and extent of the benefit enjoyed. It is true that the provision does not use the word "amount". But the structure of the section supports our construction ‑ sub‑s (1) dealing with the facts that entitle a council to make a charge, and sub‑s (3) dealing with quantum. Thus sub‑s (4) enables a person aggrieved by the "amount of the annual charge" to appeal to the Land and Environment Court. That is naturally to be seen as a grievance about the charge referred to in sub‑s (3). Accordingly we do not accept the argument that sub‑s (3) prevents s 611 from being utilised to impose charges in pursuit of environmental or regulatory objectives. 59 Telstra then submitted, as it had to the primary judge, that the structure of the Act told against the approach his Honour had adopted. Chaper 15 deals with revenue raising ("How Are Councils Financed?") and other parts of the Act deal with councils' service functions (Ch 6) and regulatory functions (Ch 7). This, so it was said, showed that the only consideration properly to be taken into account in the decision to make a charge under s 611 is revenue raising. It was submitted that while material before the LGA and some Councils referred to the goal of raising money, this was ultimately disavowed as a motivating factor by the LGA and was not identified as a factor of any significance by any of the Councils. 60 The history of s 611 somewhat weakens the "structure" argument. The section first appeared as s 105 of the Local Government Extension Act 1906. It was found in Part X ‑ "Supplemental and General". It then became s 209 of the Local Government Act 1906, which was in Part XXXI ‑ "Miscellaneous". It found its way into the Local Government Act 1919 where it was in Part VII ‑ "Finance". It has remained in that part in later versions of the Act. While the history of s 611 weakens the "structure" argument, there are more powerful considerations that require its rejection. In our view provisions such as s 7 (setting out the purposes of the Act) and s 8 (setting out the charter of councils) are eminently part of the structure of the Act. As Kirby P said in Warringah at 508 "the powers of a local authority must be given meaning in the light of the structure of the statute establishing it". While Telstra uses the concept of "structure" to compartmentalise councils' functions and powers, the proper approach is to consider the Act as a whole. It is apparent from the location of the stated purposes and the charter at the commencement of the Act that Parliament intended the later provisions to be read and understood in the light of those purposes and the matters set out in the charter. Purpose (e) is the most important of these, not only because it refers to the principles of ecologically sustainable development, but because it is directed to a matter councils are required to have regard to in carrying out their responsibilities. There is nothing in s 611, or in the fact that it is a revenue raising provision, that suggests that Parliament would not have wanted purpose (e) to apply to a decision under s 611(1). Indeed one would think the notion of "polluter pays" is plainly a matter relevant to the decision whether to impose a charge in respect of pipes, wires, cables and structures on public land. 61 Telstra also submitted that the person in possession of cables etc is already authorised to install them on, under or over the "public place". It was said that since the power to permit and regulate the use of cables is vested either in a council by provisions found elsewhere in the Act or in another authority by other legislation, the employment of s 611 to achieve environmental or regulatory goals would constitute a control of the use of land which is inconsistent with the scheme of control established elsewhere. In our view this submission exaggerates the aim of the Councils' which was simply to provide an incentive to carriers to go underground. Telstra relied on Brownells Ltd v Ironmongers Wages Board (1950) 81 CLR 108. There a body with power to fix wage rates set a rate that in effect penalised shops for being open beyond a particular time. This was held to be using the power for an extraneous purpose because the power to regulate shop hours had been dealt with by other legislation. Latham CJ said (at 120):

"the Board has sought to use its powers to determine overtime rates for the purpose of bringing about the closing of shops at an hour other than that required by the Legislature in the Shops Act, 1925‑1945. … there can be no doubt that the Board is, under the guise or pretence of fixing rates for overtime, seeking to impose what are in substance penalties upon employers for keeping shops open at a time when the Legislature has said that it shall be lawful to keep shops open. Accordingly, in my opinion, the power possessed by the Board has been illegitimately exercised …."

62 We were taken, via the extended definition of "public place", to various examples of so‑called inconsistency. Thus, where a public place is a "public road", the Roads Act 1993 (NSW) prescribes a separate road authority for each different type of road: the Roads and Traffic Authority for freeways, the Minister for Crown roads and local councils for other roads within their municipalities. Section 138 provides in part that:

"A person must not: (a) erect a structure or carry out a work in, on or over a public road; or (b) dig up or disturb the surface of a public road; or (c) remove or interfere with a structure, work or tree on a public road … otherwise than with the consent of the appropriate roads authority."

Section 139 empowers the relevant authority to give consent on such conditions as it thinks fit. It was submitted that any employment of s 611 that has the effect of regulating the use of a public road would be inconsistent with the scheme of the Roads Act and thus an extraneous purpose.

63 We do not agree that there is such an inconsistency. The Roads Act requires the consent of the relevant authority for erecting a cable or other structure on or over a public road. The grant of consent makes lawful what would otherwise be unlawful. Section 611 is concerned with a different topic. It empowers a council to make a charge on the person who is in possession of the cable or structure. In determining whether to impose such a charge the council may take into account any consideration made relevant by the Act. The present case is a far cry from Brownells where the wages board used its powers in order to bring about a result that was directly inconsistent with other legislation, and outside the purview of its own source of power. Here the legislature, which uses the expression "public place" in s 611(1), defines it by way of an extensive series of definitions ("public place", "public reserve", "public road" etc), and in those definitions refers to the Roads Act. In circumstances such as these, where both sets of provisions can operate together, it is appropriate to give full operation to each of them. Cf Butler v Attorney‑General (Vict) 1961 106 CLR 268 at 276. 64 Essentially the same submission was made in relation to Crown reserves and Crown land. These are dealt with in the Crown Lands Act 1989 (NSW). Under s 155(1) it is an offence for a person, without lawful authority, amongst other things, to erect a structure on such land or to clear, dig up or cultivate the land. Provision is made for the grant of consent: ss 102 and 103. Section 158(2) empowers the Minister to cause any structure that is on public land without lawful authority to be removed. This was said to be a significant degree of control. Most other land within the definition of "public place" is classified as "community land" and is vested in the council in whose municipality it is located. Councils are required to formulate plans of management which must specify the purposes for which the land can be used: Local Government Act ss 35, 36. No plans of management were in evidence. Provision is made for the grant of leases and licences of community land in accordance with Ch 6 of the Act: ss 45, 46. What we have said about the public roads example is applicable to Crown reserves, Crown land and the numerous types of community land. In each case the land can only be used for particular purposes with the consent of the authority in which it is vested. There is no inconsistency between the legislation dealing with these types of land and s 611. We note that the definition of "public reserve", the first of the categories of land in the definition of "public place", refers to land vested in councils under the Crown Lands Act and land of which a Council has control under Pt 2 of Ch 6 of the Local Government Act (as well as land under the control of a council under the Roads Act). 65 Finally, we must say we find unrealistic the submission that revenue raising is the only consideration properly to be taken into account in the decision whether or not to make a charge under s 611. As the New Zealand Court of Appeal said in Wellington City Council v Woolworths New Zealand Ltd (No 2) [1996] 2 NZLR 537 at 544, a power to make rates is conferred so as to enable a local authority to carry out its statutory functions and to perform the activities it undertakes for the benefit of its community. Municipal councils impose rates in order to enable them to discharge the duties imposed, and exercise the powers conferred, on them by their constating legislation. Thus, one of the purposes set out in s 7 of the Act is to give councils "the ability to provide goods, services and facilities, and to carry out activities, appropriate to the current and future needs of local communities …". One of the obligations imposed by the charter in s 8(1) is to "raise funds for local purposes by the fair imposition of rates, charges and fees …". Put shortly, the power to impose rates and charges is not a power that exists in the abstract, as Telstra's submission treats it, but a power necessarily linked to the achievement of objects and the fulfilment of functions. 66 For the reasons we have given, we agree with the approach adopted by the primary judge in the passage set out in par 56. Telstra and Optus have not established that his Honour's rejection of their extraneous purpose contention was erroneous.

Victorian Councils CORE Working Group 67 The material before the primary judge relevant to the extraneous purpose attack on the Victorian Councils included evidence about the activities of a body called "CORE Campaign Working Group". CORE is an acronym for "Commercial Operators Rate Equity". The group was formed by the four respondent Victorian Councils in mid‑1997 as a result of their concern about the Telstra and Optus cable roll out. The essential features of the campaign CORE waged during 1997 and 1998 can be summarised as follows:

· private utility services occupying public land or space for commercial gain or reward should, like all other business operators, pay a fair business related return for that occupation

· the implementation of a differential rate would provide a direct incentive for the underground installation of cables

· legal advice indicated that councils are obliged to impose rates on telecommunications carriers using public land or space

· a rating framework should be established to ensure that local ratepayers are not providing a hidden subsidy to a select group of commercial operators

· the clearing of trees from around cables is a cost incurred by councils as part of their responsibility for the amenity of their streets.

CORE prepared a brief for prospective valuers, and in December 1997 appointed AT Cocks & Partners Pty Ltd as the valuer consultant. Between April and July 1998 AT Cocks provided CORE with advice as to valuation methodology. It did so on three alternative bases ‑ site value, capital improved value and net annual value.

Moreland 68 On 23 June 1997 Moreland Council accepted a recommendation from its officers that "in principle" carriers be rated as from 1 July 1997, that a rate concession be offered to those with underground facilities and that consideration be given to setting aside revenue from rating carriers to a special fund for the "undergrounding" of all cables. The paper containing the recommendations noted legal advice that telecommunications companies and their infrastructure are rateable, that the web of cables added significantly to "urban blight", and that the "undergrounding" of all cables (powerlines and telecommunications cables) was part of Council's aim to improve Moreland's streetscapes. On 14 July 1997 Council declared a general rate for the period 1 July 1997 to 30 June 1998. The rate was to be raised by the application of a uniform rate. On 9 June 1998 Council accepted a supplementary valuation of the telecommunications cables prepared by AT Cocks and resolved to levy such rates as were payable by reason of the valuation, to grant a concession of 100% in relation to general rates payable on underground cables. It noted that the concession would preserve places of environmental interest. On or about 12 June rate notices were served on Telstra and Optus for the 1997/1998 year. 69 On 27 July 1998 Council resolved that the general rate declared for the 1998/1999 financial year be raised by the application of differential rates. Overhead Cable Land (which was defined) was to be rated by multiplying its capital improved value by 0.0183380%, and other land (which was defined so as to exclude Overhead Cable Land) by multiplying its capital improved value by 0.0045845%. A schedule contained the matters required to be set out by s 161 of the Act. In relation to Overhead Cable Land the objective of the differential rate was described as being

"To ensure that all rateable land makes an equitable financial contribution to the cost of carrying out the functions of Council, including the ‑

construction and maintenance of public infrastructure;

development and provision of health and community services;

increased program of undergrounding aerial services inclusive of telecommunications and electrical cables in order to protect and enhance the streetscape; and

minimise the environmental and aesthetic impact of the overhead cable network."

The "objective" in relation to other land included the first three of the above matters together with

"4. equitable distribution of amalgamation savings to ratepayers, having regard to historical contributions."

We have not found a resolution adopting the recommendations in the report. However rate notices were issued to Telstra and Optus on the basis of the recommendations, and we infer from this that the recommendations were adopted by Council.

Bayside 70 At a Bayside Council meeting on 18 May 1997 a Council committee resolved that rates and charges be declared for the carriers' cable network. In a radio release of 23 June the Mayor explained the bases of Bayside's decision to rate the carriers. These included the user pays principle and community concerns about visual amenity and equity. On 13 July the Council declared rates and charges for 1998/1999. The general rate was to be raised by the application of differential rates, one for Overhead Cable Land and the other for land other than Overhead Cable Land. It was recorded that Council considered that each differential rate would contribute to the equitable and efficient carrying out of Council functions. The objectives of each differential rate were specified in a schedule to the resolution. The objectives were the same as those in Moreland's schedule referred to in par 69. The resolution recorded that the differential rate would be used to fund those objectives, and that the rate had been set at the level Council considered necessary to achieve the objectives. The objectives in relation to other land were the same as the first three of Moreland's objectives (see par 69). Valuation and Rate Notices were issued.

Frankston 71 On 30 June 1997 Frankston Council resolved to support the notion of striking a supplementary rate for telecommunications cables for the 1997/1998 year. The Council had before it a paper prepared by its officials recording that the three basic principles for rating carriers were to deter further aerial cabling, to ensure that private companies pay for the use of public land and that Council collects rates from those liable to pay them. Rate notices were issued to Foxtel (Telstra) and Optus in May 1998 pursuant to Council's decision to rate them. At a meeting on 30 June 1998 Council declared differential rates, one for Overhead Cable Land and one for other land. Council recorded that it considered that each differential rate would contribute to the equitable and efficient carrying out of Council functions. The objectives of each differential rate were specified in a schedule. They were:

"To ensure that all rateable land makes an equitable financial contribution to the cost of carrying out the functions of Council, including the:

construction and maintenance of public infrastructure; and

development and provision of health and community services; and

Rate notices for the year ending 30 June 1999 were issued in August 1998.

Yarra 72 In late May 1998 Yarra issued notices of supplementary valuation and rate levy to Foxtel (Telstra) and Optus for the year ended 30 June 1998. In a press release relating to the rate notices Yarra explained its decision to rate the carriers: they had been getting a free ride at the expense of other business and household ratepayers, and Council and the community were concerned about amenity. In August 1998 Yarra issued Telstra with a Valuation and Rate Notice for the year ended 30 June 1999. No supporting documents are in evidence. Unlike the other Councils, Yarra did not move to a differential rate for the 1998/1999 year.

Primary judge's reasoning (Victorian Councils) 73 The primary judge reviewed the evidence relating to the decisions reached by each Council. His Honour noted that there was no evidence of anything that occurred in the course of debate at any of the council meetings. He then said (par 403):

"Where it is established that a particular report was before a particular council during the meeting at which a particular resolution was passed, it may be inferred that the contents of the report were taken into account by those members of council who assented to the resolution. However … it does not follow that all (or any) of the matters mentioned in the report actuated any particular councillor, still less council as a whole, to make any particular decision."

His Honour then observed that the evidence did not establish that any CORE campaign material was endorsed by any council, and the fact that councillors may have been familiar with that material did not mean it was proper to attribute to any particular councillor, or group of councillors, all (or any) of CORE's views. Having thus adverted to the appellants' difficulty in proving the purposes underlying the relevant resolution, the primary judge said he preferred to decide the issue on a more fundamental basis. This was that he did not accept the appellants' submission that the power of a Victorian council to declare rates on rateable land is a discrete power divorced from its other functions. On this issue he referred to s 6(2) of the Victorian Act and continued (par 406):

"The functions, powers, authorities and duties conferred by the Act include the function of levying rates under Part 8 of the Act. The purposes of the Act include the 'good government' of the municipal district (s 6(1)(a)), the encouragement of 'appropriate development' of the district (s 6(1)(b)) and the efficient and effective management, improvement and development of the district's resources (s 6(1)(d)). All these statements of purpose are relevant to the proper management of public land, such as streets, the control of infrastructure development on that land and its maintenance for public use and enjoyment."

His Honour then referred to s 7(a) and (d) of the Act and said:

"The effect of these provisions, read with s 6(2), is that, in exercising their powers, the respondent councils were obliged to listen to members of the community, promote the interests of the community and be responsive to community needs. If there was concern within the community about the proliferation of overhead cables resulting from the broadband rollout, this was a matter that the councils were obliged to take into account in determining whether or not, and if so how, to exercise powers given to them by the Act."

74 The primary judge then dealt with the appellants' general argument about the extraneous purposes of the Councils ‑ deterring the employment of aerial infrastructure, encouraging carriers to place their cables underground, raising money to carry out a program of placing aerial cables underground, responding to the community's visual amenity concerns, and implementing a user‑pays principle. As to this his Honour said (par 407):

"it assumes the councils had a discretion whether or not they would rate the cables. It seems to me that assumption is incorrect. Section 154(1) of the Act provides that 'all land is rateable', other than land caught by the exceptions referred to ins 154(2). It is now conceded by Telstra and Optus that the cables are 'land', within the meaning ofs 154(1), and that none of the exceptions ins 154(2) applies. It follows that the cables are rateable. Section 155 gives a council a discretion as to the type of rates and charges it will declare in respect of any particular year; ands 157 allows the council to choose its system of valuation. However, as I understand the scheme of the Act, if a council decides to declare a general rate for a particular year, using a particular system of valuation, that decision applies to all rateable land within the municipal district. The members of council need have no intention concerning, or even knowledge of, land burdened by the rate. The resolution applies, by force of the Act itself, to each parcel of rateable land (s 154) and the owner of each parcel of rateable land (s 156)."

75 The primary judge then noted that the foregoing did not apply to a council's decision to impose a differential rate pursuant to s 161. The council will necessarily need to consider the types or classes of land to which the differential rate will apply. His Honour had, in his discretion, declined to deal with the attack on the differential rate (see par 4). He said (par 410) he mentioned s 161 only to recognise that it operates as an exception to the general principle

"that a resolution to declare a rate affects all rateable land within the municipal district regardless of councillors' knowledge about, or attitudes to, particular parcels of land or their owners. A complaint of extraneous purpose really needs to be directed to the resolution declaring the rate for the year, not to a resolution to receive a supplementary valuation in order that council officers may go through the mechanical processes of levying (s 158(3)) and collecting (ss 167-181) the rate."

Discretion to rate cables? 76 Telstra, whose submissions were adopted by Optus, first submitted that the primary judge was wrong in holding that the Councils had no discretion whether or not to rate the cables. The discretion was conferred, it said, by s 158(3):

"A Council may levy general rates, municipal charges, service rates and service charges by sending a notice to the person who is liable to pay them."

Telstra's submission does not sufficiently acknowledge the context in which this provision appears. Under s 154(1) "all land is rateable". There are exemptions in sub‑s (2), but none is applicable here, and in any event they throw no light on the question of construction. Section 155 provides that a council "may declare the following rates and charges on rateable land", and then lists six types of rates and charges, the first of which is "general rates under section 158". Section 156 then makes the owner of land liable to pay the rates and charges on that land. That must mean that the liability to pay the rates and charges results from the declaration of the rates and charges. This is confirmed by s 158(3) itself. Section 157(1) confers a discretion as to the system of valuation to be used. Section 158(1) requires a Council once per year to declare the amount it intends to raise by rates and charges, and the way in which general rates will be raised (uniform or differential rate). Sub‑section (3) is not concerned with the declaration of the rates and charges, which is what gives rise to the liability to pay, but with the levying of the rates and charges on the person "who is liable to pay them". The levying of the rate is done by giving notice to that person. While the verb "levy" can mean impose, exact or collect, the context here shows that it means demand payment or take the necessary steps to enforce payment of that which has been imposed. See R v Southampton Port and Harbour Commissioners (1861) 30 LJQB 244 at 251 and Westminster City Council v London University King's College [1958] 1 WLR 920 at 925. Cf West Hartlepool Corporation v Northern Gas Board [1957] 1 WLR 445 at 450 and North Western Gas Board v Manchester Corporation [1964] 1 WLR 64.

77 But for s 45 of the Interpretation of Legislation Act 1984 (Vic), we would have construed s 158(3), despite the word "may", as imposing an obligation on a Council to send a notice requiring payment of rates. It could hardly have been intended that once a rate had been declared, with the result that owners of rateable land become liable to pay the rates, the Council could pick and choose as to which owners should in fact be required to pay. So to construe the provision would be tantamount to permitting councils to expand the range of land that is, in some detail, declared by s 154(2) to be not rateable. In Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1971) 127 CLR 106 at 134‑135 Windeyer J quoted with approval the words of Jervis CJ in Macdougall v Paterson (1851) 11 CB 755 at 766; 138 ER 672 at 677 ‑ "The word 'may' is merely used to confer the authority: and the authority must be exercised, if the circumstances are such as to call for its exercise". 78 Section 45 of the Interpretation of Legislation Act provides:

"(1) Where in this Act or any Act passed … on or after the commencement of this Act the word 'may' is used in conferring a power, that word shall be construed as meaning that the power so conferred may be exercised, or not, at discretion.

(2) Where in this Act or any Act passed …on or after the commencement of this Act the word 'shall' is used in conferring a power, that word shall be construed as meaning that the power so conferred must be exercised.

(3) The provisions of this section shall have effect notwithstanding any rule of construction to the contrary and any such rule is hereby abrogated with respect to this Act and any Act passed ... on or after the commencement of this Act."

Courts have treated provisions similar to sub‑ss (1) and (2) of s 45 as simply re‑stating the common law. See Derisi v Vaughan [1983] 3 NSWLR 17 at 19 (s 23 of the Interpretation Act 1897 (NSW)) and Re Dunsborough Districts Country Club Inc [1982] WAR 321 (s 56 of the Interpretation Act 1984 (WA)). Because of sub‑s (3) of the Victorian Act, that course is not open in relation to s 158(3). The operation of the section, in a context not unlike the present, was convincingly criticised in Encyclopaedia Britannica (Aust) Inc v Director of Consumer Affairs (1988) ASC 57,840 at 57,850. And see Pearce and Geddes, Statutory Interpretation in Australia 5th ed (2001) 293‑294. In view of what we have said in par 76, we need not pursue the matter. Although he did not refer to s 158(3), the primary judge correctly concluded that councils do not have a discretion whether or not to rate the cables. Once a rate is declared, it affects all rateable land. His Honour correctly said that "if a council decides to declare a general rate for a particular year … that decision applies to all rateable land within the municipal district".

79 Telstra did not contend that, if its submission as to s 158(3) was not accepted, the primary judge erred in concluding that the consequence was that the Councils' purposes or intentions as to particular land were irrelevant. As the primary judge pointed out, this does not dispose of the extraneous purpose contention in relation to those Councils (Moreland, Bayside and Frankston) that imposed a differential rate for the 1998‑1999 year. Section 161, the source of the power to impose a differential rate, clearly confers a discretion on councils. Under the next heading we deal with the extraneous purpose argument as it was put to us by Telstra, that is to say as an argument of general application to all rates imposed by all Councils in the 1997‑1998 and 1998‑1999 years whether differential or uniform. We do this in relation to the differential rates because we have to deal with the contention, and in relation to the uniform rates in case we are wrong in concluding that s 158(3) does not confer a discretion.

Effect of s 6(2) 80 Telstra submitted that Pt 8 (in particular ss 155 and 158) did not authorise the levying of rates to achieve a purpose other than the raising of revenue. It was said that Pt 8, together with Pts 6, 7 and 8A, constitute a scheme for the funding of councils. Part 9 on the other hand deals with the specific functions and powers of councils. Additional regulatory functions are conferred on councils by other legislation, such as the Planning and Environment Act 1987 (Vic). It was said that the basis on which rates may be levied is inconsistent with rates having any regulatory object. The quantum of a uniform rate is determined by applying the rate to the value of the land: s 160(b). It was submitted that there was no scope for demanding additional payment where the occupier uses the land for what a council decides is an undesirable purpose. Further, it was contended that s 6(2) cannot operate to enable ss 155 and 158 to be used for regulatory purposes, because that would undermine the structure of the Act and the conferral of regulatory functions by other Acts. Reference was made in this connection to Brownells Ltd v Ironmongers Wages Board (1950) 81 CLR 108 (see pars 60 and 62). 81 We do not accept these submissions. First, we refer to what we have said in par 65 about the artificiality of treating a power to rate as a concept independent of the purposes for which a local authority is brought into existence. Thus one of the objectives set out in s 7 is "to raise funds for local purposes by the equitable imposition of rates and charges". Secondly, quite apart from the effect of s 6(2), Telstra's approach to the construction of Pt 8 is at odds with Kirby P's observation in Warringah at 508 that

"The powers conferred on a local authority must be given meaning in the light of the structure of the statute establishing it and the duty owed by the authority to all of its ratepayers."

Thirdly, s 6(2) must be given effect. In s 6(1) the purposes of a Council are set out. In s 7 Councils' objectives are laid down. In s 8 (and in the Schedule therein referred to) their functions and powers are described. In that context s 6(2) provides:

This is not a merely aspirational statement of purpose such as that found in the object section of the Trade Practices Act, or a very general purpose such as that in s 4 of the Aboriginal and Torres Strait Islander Heritage Protection Act 1984 considered in Tickner v Bropho (1993) 40 FCR 183. Although the purposes in s 6(1) and the objectives in s 7 are expressed with an unavoidable level of generality, sub‑s (2) in forceful language ties the statement of purposes to "every function, power, authority, discretion and duty conferred or imposed … on a Council". The sub‑section must, however, be approached in a common sense way. It should not be taken to require each purpose or objective to be applied, however inappropriate, to every function etc. The purpose or objective must be one that it is appropriate or sensible to apply.

82 The power or authority to raise money by rates is conferred on councils by Pt 8. Assuming the relevance of an enquiry into a Council's purposes and their propriety (in this case the object of deterring further aerial cabling and encouraging carriers to put cables underground), that object falls within "the purposes and objectives" of which s 6(2) speaks. Of particular relevance in this connection are the purposes in s 6(1)(b) ‑ encouraging appropriate development of the district in the best interests of the community ‑ and in par (d) ‑ to improve and develop the resources of the district efficiently and effectively. Some of the objectives in s 7 are also relevant:

· to ensure adequate planning for the future of the district

· to raise funds for local purposes by the equitable imposition of rates and charges.

The Victorian Councils became concerned about the effects of unsightly cables on the amenity of their streets and the extra work involved in tree maintenance to keep the cables clear of branches. The object of encouraging "undergrounding" and deterring aerial cabling is a means of "encouraging appropriate development" of its streets and "improving the resources" of the district. That object can also be seen as an aspect of planning for the future of the district and the development of a strategic plan. Further, the Councils were obviously concerned to raise funds from the carriers and, as their resolutions made clear, the funds so raised were to be used for local purposes. See pars 69, 70 and 71.

The purpose in s 6(1)(b) speaks of the "best interests of the community". The objectives in s 7(a) and (d) are, respectively:

· to facilitate the involvement of members of the community in the development, improvement and co‑ordination of local government

· to represent and promote the interests of the community and to be responsive to the needs of the community.

The Councils' own view about the inappropriateness of the overhead cabling was based in part on considerable community concern. We agree with the primary judge that this concern was a matter the Councils were obliged to take into account in determining whether or not to exercise the powers conferred by Pt 8, and if so, how.

83 In relation to the New South Wales Councils the primary judge said it was reasonable to infer that many, if not most, councillors were actuated (at least in part) by a desire to encourage telecommunications carriers to place their cables underground. His Honour made no comparable inference in relation to the Victorian Councils. He seems to have assumed the existence of the purposes alleged by Telstra and Optus, and to have decided that they were not extraneous. From the facts summarised in pars 67 to 72, and the body of other material we have examined but have not recorded, we think the inference his Honour drew in relation to the purposes of the New South Wales Councils can be drawn in relation to the Victorian Councils. However we need not pursue that matter for, like the primary judge, we are of the clear view that the purposes alleged to be extraneous are not.

CONCLUSION 84 The appeals must be allowed. I certify that the preceding eighty-four (84) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg and the Honourable Justice Finkelstein.

Counsel for the Telstra Appellants: P Hanks QC and R Beech‑Jones

Solicitors for the Telstra Appellants: Mallesons Stephen Jaques

Counsel for the Optus Appellants: D F Jackson QC, S J Gageler SC and J Griffiths

Solicitors for the Optus Appellants: Gilbert and Tobin

Counsel for the New South Wales Respondents: F Douglas QC and K Connor

Solicitors for the New South Wales Respondents: Deacons

Counsel for the Victorian Respondents: G Nettle QC and M Connock

Solicitors for the Victorian Respondents: Maddock Lonie & Chisholm

Counsel for the Attorney General for New South Wales, intervening: M J Leeming

Solicitor for the intervener: Crown Solicitor for New South Wales

Date of Hearing: 28-30 May 2001

Date of Judgment: 4 April 2002

Telstra Corporation Ltd v Hurstville City Council

At a glance

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Decision date

Source

Judgment (200 paragraphs)

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Legislation Cited (20)

Cases Cited (32)

Cited By (3)