On 2 July 2010, Queensland’s Court of Appeal handed down a decision which is of particular interest to local governments and the resources sector.

In Xstrata Coal Queensland Pty Ltd & Ors v Council of the Shire of Bowen [2010] QCA 170, the Court of Appeal found that the former Bowen Shire Council (Council) had no power to impose rate increases for particular parcels of land owned by mining companies. The Council had sought to impose a rate increase of more than 400% on the land owned by the mining companies.

The recently repealed Local Government Act 1993 (Qld) authorised a local government to make and levy a differential general rate for a financial year by setting categories of rateable land and the criteria by which land is to be categorised. Similar provisions also exist in the current Local Government Act 2009 (Qld) and Local Government (Finance, Plans and Reporting) Regulation 2010 (Qld).

The evidence before the Court was that the relevant local government had taken into account the ability of the coal mining companies to pay more when setting the new rates to apply to land owned by those companies. The miners argued that this was an irrelevant consideration for the rate setting process and the decision to levy the higher rates was invalid.

The miners conceded that it would be relevant to consider matters such as the use of land, including its highest and best use, the burden the land or its use may have upon the Council’s budget and the value of the land, including its potential to earn income for the landowner. However, the landowner’s capacity to pay was something the local government could not take into account.

The Court of Appeal agreed with the mining companies. As local governments were not well placed to judge the wealth of the landowner and that wealth will change over time, the Court of Appeal found that the capacity of the landowner to pay higher rates was not relevant to the rate setting process.

The case highlights that personal or business attributes of a landowner are an irrelevant consideration in the setting of differential rates by a Queensland local government. The case reinforces that fixing differential rates by a local government must be by reference to the capacity of the land and not to the landowner’s personal capacity to pay.

Further information

For further assistance or enquiries please contact:

Darren White on 07 3233 8866
Kristen Grover on 07 3233 8757
Troy Webb on 07 3233 8928.